1977-04-25

ROUTINE PROCEEDINGS


Mr. Lincoln M. Alexander (Hamilton West):: Mr. Speaker,
I rise on a matter of urgent and pressing necessity under the provisions of Standing Order 43. My motion relates to statements made by the Minister of Manpower and Immigration that working Canadians are not willing to pay the price for reducing unemployment. With regard to the fact that Her Majesty's ministers are now vying with each other to make statements which most fully spell out the arrogance and callousness of the government in its attitude toward the one million men and women its policies have put on the street, I ask leave to move, seconded by the hon. member for Humber-St. George's-St. Barbe (Mr. Marshall):
That this House direct the government to treat the matter of reducing unemployment as a matter of the highest urgency and further to immediately begin the process of transferring resources out of "dead wood" and non-essential programs into employment creation.


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


Some hon. Members:: No!


NORTHERN AFFAIRS
Mr. Edward Broadbent (Oshawa-Whitby):: Mr. Speaker, under the terms of Standing Order 43 I rise to move a motion of urgent and pressing necessity. This weekend's oil blow-out in the North Sea having underscored the immense risks of offshore drilling, and given that a similar blow-out in the Beaufort Sea could not be properly contained or cleaned up, according to reports from the Department of the Environment, because of limited technology and the inaccessibility of the drilling area, I move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That this House instruct the government not to approve the application from Dome Petroleum for continued offshore drilling in the Beaufort Sea this summer and that a moratorium be placed on such drilling until it is demonstrated that adequate technology exists to prevent an ecological disaster in the event of an oil blow-out.


Mr. Speaker:: The provisions of Standing Order 43 require that unanimous consent be given before such a motion can be presented. Is there such consent?


Some hon. Members:: No!

[ Translation]


FINANCE
Mr. Adrien Lambert (Bellechasse):: Mr. Speaker, under the provisions of Standing Order 43, I ask for the unanimous consent of the House to move a motion dealing with an urgent matter of pressing necessity.
In view of the fact that under Bill C-39 the government is delaying passage and consideration of a bill to review the Bank Act; since the chartered banks create 84 per cent of the money supply by coining the national credit thus contributing to increasing excessively the gross national debt and since the Bank Act now in effect is somewhat a monopoly of credit and thus maintains a private monetary system similar to the public monetary system, I therefore move, seconded by the hon. member for Roberval (Mr. Gauthier):
That the House urge the Minister of Finance (Mr. Macdonald) to introduce as soon as possible a bill to review the Bank Act as well as the Bank of Canada Act so as to authorize the latter to grant long-term loans to the federal and provincial governments at interest rates not exceeding normal administration costs, in order to restrict the growth of public debts.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.
80012 -34V2

April 25, 1977
West Coast Shipping
[ English ]


POST OFFICE
Right Hon. J. G. Diefenbaker (Prince Albert):: On a matter of urgent and pressing necessity, I rise under the provisions of Standing Order 43 to seek the unanimous consent of the House to introduce a motion in condemnation of the government of its latest step in the surreptitious downgrading of the Monarchy by replacing the Queen's head from the 12 cent stamp, this being the first time in history that the definitive stamp does not bear the Monarch's likeness. By this action the government fails to recognize that the Crown is an integral part of the parliament of Canada, along with the Senate and the House of Commons.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


TRANSPORT
Mr. Ron Huntington (Capilano):: I rise on a matter of urgent and pressing necessity concerning the serious condition of isolation and rising costs of freight service to the north coast communities of British Columbia. My motion is prompted by the fact that the Liberal patronage system in B.C. has resulted in considerable hardship for the residents on the north coast of B.C. who are now without a reliable transportation system for their food and goods. In view of the Minister of Transport's removal of the $3.7 million subsidy to Northland Navigation on the basis that Rivtow could provide the same service to the north coast communities with no increase in price and without subsidy, and that in this process the minister scuttled a viable company and the jobs of seamen, longshoremen and personnel working on the B.C. coast, and in light of the recently announced increases in freight rates of between 15 and 70 per cent by Rivtow to the north coast communities coincidental with the fact that the Minister of Transport has allocated a new $8 million subsidy for the mainland-Vancouver Island ferry system, thus adding to the already high cost of living that the north coast residents have to bear-


Mr. Speaker:: Order, please. The preamble permitted to a member in this area of our procedures is solely that sufficient to explain the urgency and pressing necessity of the motion. If the hon. member has a motion would he put it forward.


Arthur Ronald Huntington: Thank you, Mr. Speaker, I move seconded by the hon. member for Victoria (Mr. McKinnon):
That the Standing Committee on Transport and Communications investigate and make recommendations to the House on the whole subject of transport and federal subsidy needs on the west coast of Canada.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


REQUEST FOR EXPLANATION OF FAILURE TO USE BEST HOCKEY PLAYERS ON TEAM CANADA-MOTION UNDER S.O. 43
Mr. Arnold Peters (Timiskaming):: Mr. Speaker, under the provisions of Standing Order 43 I move:
That this House, noting the embarrassing performance of Team Canada in this year's international hockey tournament, urges that the officials of Hockey Canada-Alan Eagleson and Douglas Fisher-be called before the appropriate standing committee to explain why they send second rate players to represent Canada instead of sending the very best Canadian hockey players we have.


Mr. Speaker:: I give the hon. member the benefit of the doubt that there is a connection between the motion and the administrative responsibility of the government. Therefore, I should indicate that the presentation for debate of such a motion can be done only with the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


EXTERNAL AFFAIRS
Mr. Elmer M. MacKay (Central Nova):: Mr. Speaker, I rise on a matter of urgent and pressing necessity pursuant to the provisions of Standing Order 43. Mr. Don North of the CBC and his cameraman were threatened this past weekend outside the Cuban consulate in Montreal by a security officer- allegedly-who pulled a gun while claiming he was an RCMP officer. I move, seconded by the hon. member for Edmonton Centre (Mr. Paproski):
That the Secretary of State for External Affairs and the Solicitor General investigate this affair, particularly how Canadian citizens, working for their national broadcasting corporation, can be threatened in this way while on public property, on what basis Cuba is allowed to retain and instruct security personnel to guard their consulate, and that a suitable protest by Canada be registered through proper diplomatic channels.


Mr. Speaker:: Pursuant to the provisions of Standing Order 43, presentation of such a motion for debate can only be done
April 25, 1977

with the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.



ORAL QUESTION PERIOD


Arthur Ronald Huntington: Mr. Speaker, I would like to ask the Minister of Transport a question concerning the $8 million subsidy that he has given to the British Columbia lower mainland ferry system. On Monday, April 18 the Minister of Transport announced, and I quote:
I am delighted to be a party in an agreement that deals effectively with B.C.'s long standing claim to assistance for mainland to Vancouver Island Ferry connections.
The premier of British Columbia announced that this $8 million subsidy would be reflected in reduced fares between Vancouver Island and the lower mainland. My question is, and has been for months now, what is the minister going to do for the residents of the north B.C. coastal areas now that freight rate increases announced by Rivtow are between 15 per cent and 70 per cent?


Hon. Otto E. Lang (Minister of Transport):: Mr. Speaker, the hon. member did quote me correctly in his preamble but did not quote any words of the premier that I heard him use when I was there. The agreement is, indeed, a breakthrough in terms of recognition of support by the federal government for the service between Vancouver and Vancouver Island. A contribution to the service between Vancouver Island and Prince Rupert, as a continuing part of the service for distribution to those remote northern communities, is quite a breakthrough, and is generally welcomed in British Columbia. As part of the agreement, the over-all supervision and administration of interim provincial ferry services in those waters is undertaken by the provincial government. That is clearly set out there. They have also indicated in the agreement that they will assure reasonable services. I would not want to paraphrase. I would rather obtain the exact words of the agreement.


REASON FOR FAILURE TO IMPLEMENT ACRES REPORT ON TRANSPORTATION ON WEST COAST
Arthur Ronald Huntington: Mr. Speaker, I would like to direct my question to the same minister. Has the minister been briefed on the 1974 submission of Northland Navigation and the Acres report on the subject of transport on the west coast which offered a plan of marine service to the north coast
Oral Questions
of British Columbia that would reduce the subsidy over seven years to a constant dollar low of $250,000 per annum, and if so, can he enlighten the House as to his reasons for not implementing that plan?


Otto Emil Lang: Mr. Speaker, there have been many exchanges in the House concerning those various documents and plans. The documents were based on a wrong view as to how to provide service in the area. The hon. member overlooks a very large capital outlay which would have been required to make those plans come into being. They would have continued the provision of service in an ineffective way compared to the more cost-benefit effective ways which were known to be available at that time.


PLANS FOR CORRECTING TRANSPORTATION SITUATION ALONG NORTHERN COAST OF BRITISH COLUMBIA
Arthur Ronald Huntington: Mr. Speaker, the minister's answer is not quite correct. The large capital outlay was $20.3 million to be provided by a company, not by the government.
I would like to ask a supplementary question. In light of the public statements made by Rivtow that they could provide the north coast service on a scheduled basis without subsidy, and in view of their recent announcement to increase their rates between 15 per cent and 70 per cent, thus seriously affecting the cost of living in the north coast areas, will the minister now admit that he acted impulsively under bad advice from his officials and the hon. member for Skeena, and will he enlighten the House as to what his plans are to correct the transportation mess on the north coast of British Columbia?


Otto Emil Lang: Mr. Speaker, a very necessary step to providing better freight and passenger service to the coastal communities in northern British Columbia was the move toward the provision of separate freight and passenger services which will, in the long run, lead to more cost-effective service and better service for the dollars involved, particularly for much quicker pick-up and delivery to central points for the passengers concerned, who will no longer be delayed by the freight issue.


An hon. Member:: When?


Otto Emil Lang: The increases in rates to which the hon. member referred are somewhat misleading and somewhat selective. Certainly, some cost increases can be expected over time. As I have indicated to him earlier, the basic question of supervision and arrangement for the provision of adequate service in this area is now clearly within the hands and the responsibility of the provincial government. This is one of the traditional advantages of moving toward a decentralization and allowing one government to have that control and operation of the system, rather than have the former confused, divided responsibilities.


An hon. Member:: Leave it for Jack to fix up!

April 25, 1977
Oral Questions


Mr. Allan B. McKinnon (Victoria):: Mr. Speaker, my question is directed to the Minister of Transport as well. At page 1125 of Hansard last November 18, the Minister of Transport said that the removal of the west coast subsidy was not designed to save money, but rather a desire to use the money saved for better transportation in the area. Can the minister advise the House as to the improvements being made for better transportation in the north coast region of British Columbia, to bring it out of its present state of chaos?


Otto Emil Lang: Mr. Speaker, 1 think the information involved would be better sought in another way, because it would be somewhat lengthy.


SUGGESTED RESIGNATION OF MINISTER FOR SPORT IN VIEW OF FAILURE TO IMPROVE SHIPPING SERVICE ALONG COAST OF BRITISH COLUMBIA
Allan Bruce McKinnon: Mr. Speaker, may 1 direct my supplementary question to the Acting Prime Minister. Some months ago the minister of state responsible for fitness and amateur sport said that she would submit her resignation if there was not an improvement in six weeks in the transportation system for the north of British Columbia. As there has been no improvement whatsoever, would the Acting Prime Minister now accept that resignation which it was said would be submitted by the minister of state responsible for fitness and amateur sport?


Mr. Baker (Grenville-Carleton):: Why don't you send her jogging?


Hon. Jean Chretien (Acting Prime Minister):: Mr. Speaker, there is no such idea. 1 think the minister in charge of sports and recreation is a good and useful member of Cabinet, and we want to keep her if she will stay.


ENVIRONMENTAL AFFAIRS
John Edward Broadbent: Mr. Speaker, my question is for the Minister of the Environment. Given that this weekend's massive oil blowout in the North Sea has underlined the immense risks of oil drilling, risks which, incidentally, are even greater in the Beaufort Sea, and considering that an assistant deputy minister of the minister's department said in committee three weeks ago, "Our position is that... we would not be in favour of drilling continuing strictly from an environmental point of view", I ask the minister to confirm if that is the official view of his department, and will he tell the House what recommendation he has made to Cabinet concerning the application by Dome Petroleum for drilling in the Beaufort Sea this summer?


Hon. Rom6o LeBlanc (Minister of Fisheries and the Environment):: Mr. Speaker, I am sure if the hon. member reads reports about drilling conditions in the North Sea, he will not dismiss the difficulties there. It is the opinion of many experts that conditions there can be as difficult as those in the Beaufort Sea, except that access to the Beaufort Sea sites is limited because of ice. On the matter of my department's position, we are now studying the report on the 1976 drilling season. I will be meeting with my officials this week, to assess our position and make recommendations to my colleagues. It is obvious that when you drill in conditions like those of the Beaufort Sea, you cannot have full protection against dangers. I suspect that even after ten more years of technological development there will be no absolutely foolproof way to do it. Nobody pretends that there will be. But those risks must be measured against other factors, and the Cabinet will have to decide this in the weeks to come.


John Edward Broadbent: A supplementary question, Mr. Speaker. No one is talking of foolproof risks. One always talks in those circumstances of real, or minimal risks. I ask the minister this question: Given that reports by his department indicate that corrective measures for a spill in the Beaufort Sea would be ineffective, and considering that Dome Petroleum lost control of one of its two wells last year and had to abandon it without proper sealing, according to a Department of Indian Affairs and Northern Development report, can the minister say why he has come to the conclusion that drilling in the Beaufort Sea in the coming season would be safer than it was during the past season?


Mr. LeBlanc (Westmorland-Kent):: Mr. Speaker, I have not yet come to any conclusion. That is why I am having my officials examine everything that has happened, and under what conditions, to see more stringent conditions should be imposed on future drilling, if drilling is to take place, before we make our recommendations to Cabinet. Obviously, more than one department is involved in this matter, but our primary concern is the protection of the environment. And this we will continue to do.


John Edward Broadbent: A final supplementary question, Mr. Speaker. The minister still has not clarified his department's position, and I wish he would do it this afternoon. I point out that a senior official of his department said before a committee three weeks ago, as I told the House in my first question, that, from an environmental point of view, the department opposes the continuation of drilling. I should like to ask the minister whether anything has happened in the past three weeks that would have changed his view on that and, if not, why is he not recommending from his department's position a moratorium on all drilling in the Beaufort Sea until safe environmental protective measures can be developed?
[ Translation]


Roméo LeBlanc: Mr. Speaker, it seems I find it more difficult to express myself in English than in French; I shall therefore answer in the language in which I feel more at ease. What I said, what I meant and what I repeat is
April 25, 1977


FINANCE
Joseph Adrien Henri Lambert: Mr. Speaker, my question is directed to the Minister of Finance.
As, according to the law, the Canadian government must present a bill to amend the Bank Act every ten years, can the minister tell the House what major reasons of public interest have been invoked to delay the introduction of such a bill? Secondly, as the bill mentions 20 sitting days in December, which would put off to 1978 study of such a bill, can the minister explain to the House what major reasons justify such a delay?


Hon. Donald S. Macdonald (Minister of Finance):: Mr. Speaker, there are two reasons. First, we have received many representations from a few groups, not only those interested in the white paper, but also credit unions and caisses populaires from everywhere in Canada. We are now studying the representations concerning the white paper. We have delayed introducing a bill to amend the Bank Act, in order to make decisions in the light of those representations.
There are also many technical and legal problems involved in that bill. However, 1 trust that by early summer we will have solved them and that by fall we will be in a position to present Parliament with a final text of the bill. I must say that I am willing to discuss the new measures providing for an extension of the present Bank Act, and we will surely have the opportunity of doing so in the House and in committee.


POSSIBILITY OF BANK OF CANADA LENDING MONEY TO PROVINCES FOR MORE THAN SIX MONTHS
Joseph Adrien Henri Lambert: I am grateful to the minister for his explanations and with your permission, Mr. Speaker, may I ask him to advise the House whether, when he introduces the bill he has just mentioned, there will be an additional bill or whether the same bill will include an amendment to the Bank of Canada Act, so that from fiscal year 1977-78 and thereafter, this institution may really fulfill a basic role in our country by lending money to the provincial governments for periods in excess of six months, as currently provided for under the act.
Oral Questions


Donald Stovel Macdonald: I must admit I may have to look into the motions the hon. member introduced early in this session; at present, I do not quite understand the gist of his questions.


FORECAST OF ADDITIONAL JOBS CREATED IN ATLANTIC AREA AS RESULT OF TAX INCENTIVES FOR INDUSTRY
Mr. David MacDonald (Egmont):: Mr. Speaker, my question is for the Minister of Finance. It relates to questions last week arising out of the publication of the report of the Economic Council of Canada on the effect of the government's regional development programs and, of course, to some of the revisions which have taken place to that report over the weekend in terms of the over-all effectiveness of the incentives program of the Department of Regional Economic Expansion. In light of the fact that unemployment has increased very rapidly in the five eastern provinces and that the investment intentions of the private sector indicate that for 1977 in constant dollars there will be an increase of some 3.7 per cent for Canada but a decrease in the Atlantic region of some 10.7 per cent, can the minister indicate what actual forecasts his department has with respect to additional jobs to be created as a result of the special tax incentives-the variable tax rates- which were announced in the budget recently?


Donald Stovel Macdonald: Mr. Speaker, as I responded to a question last week, I do not think one can very effectively give a precise breakdown by region, or even by province, of the exact impact of a measure of economic stimulation of this kind. Therefore, I regret I cannot give the hon. member a precise figure in that regard.
With respect to the preamble to the hon. member's question, I would have to say that we have been and we are very concerned about the rate of growth, particularly in the eastern-most provinces, and because of this, over the years the government has deployed a very substantial amount of funds for the purpose of stimulating economic growth there. We will study with great care the report of the Economic Council and its revisions to find ways by which existing programs can be improved even further.


David Samuel Horne MacDonald: Mr. Speaker, inasmuch as the minister said last Wednesday that he had not received any definite word from the five eastern provinces in terms of their appreciation of the effectiveness of this new tax proposal, and in light of the increase in the number of unemployed, from
87,000	in March of 1976 to 113,000 this year, indicating that even programs like Canada Works will create on an average employment of only 18'/2 days, can the minister indicate when his department will give us justification in employment terms for this particular tax initiative and the extent to which it will be effective because without that information Canadians will get the impression that the government is acting totally in the dark?

April 25, 1977
Oral Questions


Donald Stovel Macdonald: Mr. Speaker, the hon. gentleman seems to be suggesting that with a tax measure of this kind one can instantly determine all the corporate investment decisions which will be made either in the Atlantic provinces or in other parts of Canada. We are in the process of improving the investment environment, and we think the measure put forward in the budget which gives to Atlantic Canada, for example, twice the rate of investment tax credit as that of other parts of the country will be effective in this regard. However, as I have said, I do not think one can give precise figures-nor, sensibly, should one try to give precise figures- in relation to a series of decisions which primarily will be made in the private sector.


POSSIBILITY OF MEETING BETWEEN MINISTERS OF FINANCE, REGIONAL ECONOMIC EXPANSION AND ATLANTIC PROVINCES
David Samuel Horne MacDonald: Mr. Speaker, I hope the minister will not try to escape from making the kind of responsible projections I trust his department has made with respect to this tax initiative, otherwise, confidence in the minister's assumptions about tax changes might be undermined.
As a result of his answer last Wednesday indicating that he would give consideration to a meeting between himself, the Minister of Regional Economic Expansion and the Atlantic governments, can the minister tell us whether a decision has been made to hold that important meeting? If it has not, when will the minister be announcing a decision on it?


Donald Stovel Macdonald: Not at
the moment, Mr. Speaker. There has been no decision in this regard. As I have said, 1 am not aware of any representations which have come to my office with regard either to the budget or to the necessity of having a meeting of that kind at the moment.


SUGGESTED STUDY OF EFFECTIVENESS OF DREE PROGRAMS IN ATLANTIC PROVINCES
Mr. James A. McGrath (St. John's East):: Mr. Speaker, 1 have a supplementary question for the Minister of Finance. The Economic Council of Canada admitted last week that mistakes made in the statistical study of the DREE program may have seriously overestimated the job creation impact of DREE. In light of the fact that the report itself noted that DREE has been far less successful than the government has claimed and that the report grossly overestimated DREE's benefits, is the minister prepared to undertake a major study into the effectiveness of the DREE program with respect to regional disparities and especially with respect to its impact on job creation in the Atlantic provinces?


Donald Stovel Macdonald: Mr. Speaker, 1 think the initial step should be to undertake a major study into the effectiveness of the report of the Economic Council itself. Since the council has conceded it is wrong, we want to approach its analysis and its correction of that analysis

with a little bit of care, and 1 am having my department do just that.


GOVERNMENT ADMINISTRATION
Lincoln MacCauley Alexander: Mr. Speaker, my question is to the President of the Treasury Board. Speaking on the CBC Newsmagazine program the Minister of Manpower and Immigration noted that working Canadians are not willing to pay the price of reducing unemployment. He went on to state that it will cost between some $4 billion and $5 billion. Is it the position of the government that unemployment could be reduced without disastrous consequence but that it simply will not attempt to reduce it? Further, will the President of the Treasury Board take this matter up with the Minister of Manpower and Immigration with a view to tabling the report on job creation from which he appears to have derived his figures?


Hon. Robert K. Andras (President of the Treasury Board):: Mr. Speaker, I note the hon. member's comments, and 1 will discuss this matter with my colleague.


POSSIBILITY OF REDIRECTING MONEY FROM NON-ESSENTIAL PROGRAMS TO JOB CREATION PROGRAMS
Lincoln MacCauley Alexander: Mr. Speaker, I point out to the minister that the vast majority of Canadians are very concerned about the billions of dollars lost in productivity as well as millions in tax revenues as a result of high unemployment. Given the fact that the Minister of Finance indicated last week that all deadwood and non-essential programs were being reviewed, is such a review taking place, and will the President of the Treasury Board be able to tell this House in the very near future the extent of the deadwood programs and the non-essential programs and what moneys directed to those programs could be put toward job creation programs? Is the minister in a position to answer that question?


Robert Knight Andras: Mr. Speaker, in terms of the relevance and effectiveness of certain programs, the examination of government expenditures is a constant endeavour of this government, and particularly of the Treasury Board. 1 point out to the hon. member that in spite of the almost final figures we have for 1976-77-being $750 million less than the original commitment made several months earlier-we were still able to allocate an additional $150 million for local initiatives for the winter of 1976-77. In face of announced expenditure reductions or increased restraint in 1977-78 we were able to provide $358 million to the Department of Manpower and Immigration for job creation. In the budget of March 31 we were able to augment that by $100 million, at the same time successfully exercising
April 25, 1977

restraint. I think that is indicative of what my colleague was talking about.


Lincoln MacCauley Alexander: Mr. Speaker, as announced by the Minister of Finance, that will not take effect for at least five or six months. Is it still the policy of this government that it does not give a damn about the unemployed?


Mr. Speaker:: Order, please. The hon. member for Madawaska-Victoria.


AGRICULTURE
Mr. Eymard Corbin (Madawaska-Victoria):: Mr. Speaker, my question is for the Minister of Agriculture. In view of the apparent reluctance of New Brunswick potato growers to establish a provincial marketing board, has the minister a strategy or plans to foster the creation of such an agency at the regional or national level in order to protect the growers from the ups and downs of the market and from big operators?


Hon. E. F. Whelan (Minister of Agriculture):: Mr. Speaker, the marketing board issue was lost by, 1 believe, 11 votes in the province of New Brunswick. The proposal put forward to the producers was strictly a provincial proposal. My parliamentary secretary explained in the House my concern about this. Of all the commodities in Canada, this one is marketed in the most disorderly manner, as far as I am concerned. I have told these producers to get their house in order, and 1 hope they do so.


TRANSPORT
Mr. Stuart Leggatt (New Westminster):: Mr. Speaker, my question is directed to the Minister of Transport, and it concerns the question of the $8 million subsidy. Could the minister advise the House what commitment, if any, he has received from the province of British Columbia with respect to subsidies for freight traffic in northern communities? In other words, what percentage of this subsidy was the minister guaranteed would be used for subsidizing freight rates, or has there been nothing from the province of British Columbia with regard to a guarantee?


Otto Emil Lang: Mr. Speaker, the agreement contains the undertaking of the province in relation to the provision of adequate levels of service along the coastal waters which had previously been subsidized. In addition, it provides the undertaking by the province of the subsidy support which has remained in relation to several specific
Oral Questions
services. The main thrust of the agreement is to meet the long standing claim by British Columbia for assistance in relation to the mainland ferry connections between Vancouver and Nanaimo as though it were an extension of the trans-Canada and between Port Hardy or the northern part of the island and Prince Rupert and distribution purposes for those remote areas. 1 am quite surprised to hear the hon. member talk as though nothing has been accomplished. A great deal has been accomplished in this new relationship between the government of Canada and the government of British Columbia.


REASON FOR REJECTING OFFER OF NORTHLAND NAVIGATION AND FAILURE TO GRANT PUBLIC HEARING
Stuart Malcolm Leggatt: Mr. Speaker, I hope the minister is now going to table the agreement so that the House can examine what provisions, if any, are in it. The offer by Northland Navigation to spend $20.3 million of its own money to develop roll-on and roll-off facilities as recommended in the Acres report was rejected by the minister. Will he now tell the House why that offer was rejected? Also, why was Northland Navigation not given a hearing in terms of that proposal and not given an acknowledgement in terms of correspondence?


Otto Emil Lang: Mr. Speaker, those matters, of course, occurred quite a long time ago. The analysis which continued to exist to the end of the time when subsidy support was being paid to Northland, indeed the approach being used, was going to cost a good deal more than the solutions which were possible and without appreciable advantage in terms of overall service.


BANK ACT
Walter David Baker: Mr. Speaker, I wish to direct a question to the Minister of Finance. It concerns the document which preceded the first reading of Bill C-39 to amend the Bank Act and the Quebec Savings Banks Act. There have been a number of discussions about a possible reference of that document to the appropriate Standing Committee of the House so that examination of that document, and the approaches contained therein, could be made in advance of the major Bank Act revisions. Has the minister had an opportunity to consult with the government House leader with respect to that matter? If not, will he do this so that the committee can begin an examination in a public way of the approaches set forth in that paper in anticipation that sometime in the future we will be getting a definitive amendment to

April 25, 1977
Oral Questions
the Bank Act. Perhaps public discussion could help in the legislative process.


Donald Stovel Macdonald: Mr. Speaker, the House leader and I have discussed this matter. At the last point of discussion, it was made apparent that certain elements of the House would use the occasion of the order of reference to have a prolonged debate on the matter. If it were possible to make the reference to the committee without using several days of House time, 1 would be delighted to have the order of reference made. Indeed, the committee will in any event be hearing very shortly the bill to extend the Bank Act until early next year. I would be very happy if that order of reference could be made and, indeed, we could also very quickly refer the bill as well to have the committee consider this rather complex subject.


Walter David Baker: 1 think I can assure the Minister of Finance that that type of reference would not involve several days debate. It has been the hope of all parties that a study begin. Will the minister kindly speak to his colleague to see whether this could be done. Perhaps we could have a similar happy experience to the one we had in respect of the immigration bill. It would be very interesting to have this departure from the normal practice and that there be public discussion before bills are dealt with in the House of Commons.


Donald Stovel Macdonald: Mr. Speaker, I would be quite happy to do that. If the House will agree, I suggest we agree right now to a motion that the white paper on banking be referred to the Standing Committee on Finance, Trade and Economic Affairs.


EXTERNAL AFFAIRS
Mr. Howard Johnston (Okanagan-Kootenay):: Mr. Speaker, my question is for the Acting Secretary of State for External Affairs. With the arrival in South Africa of Canadian representatives to form part of a high level delegation from five western powers-the United States, Britain, France, West Germany and Canada-to discuss the future independence of Southwest Africa, can the minister tell the House whether Canada has totally rejected the work done by the Tournhalle conference of last year? If so, what alternate package is being offered in its place by this high powered delegation?


Donald Stovel Macdonald: Mr. Speaker, perhaps on behalf of the Secretary of State for External Affairs I could take note of that question. I regret to say that I was engrossed in the followup of the previous answer and did not get the commencement of the question.


Howard Earl Johnston: Mr. Speaker, the question concerns the conference in South Africa in which Canada is participating. I
[Mr. Baker (Grenville-Carleton).J
would like to ask whether that might be considered a presumption given our own internal political situation. Apart from that, can the minister indicate the extent to which the Canadian delegation is committed to sharing in the expense of the proposed takeover by the United Nations of this territory and does our commitment include another open-ended peace-keeping involvement?


Donald Stovel Macdonald: Mr. Speaker, I would like to give the question a little fuller examination before responding to the hon. member.


Howard Earl Johnston: Ten o'clock.


NATIONAL DEFENCE
Mr. Paul Dick (Lanark-Renfrew-Carleton):: Mr. Speaker, my question is to the Minister of National Defence. Can the minister confirm that departmental policy disallows politicking on DND property, except for coffee parties during the writ period, and whether it is DND policy at all times not to allow parties to put up names of candidates for the parties?


Hon. Barney Danson (Minister of National Defence):: Mr. Speaker, I do not know what the hon. member is referring to specifically. However, members of the services are allowed access to constituency offices of their members of parliament just the same as other citizens.


Paul Wyatt Dick: With respect to the topic of constituency offices, is it the policy of DND to allow a member of parliament to have a constituency office on a base which is DND property?


Barnett Jerome Danson: Yes, Mr. Speaker, under certain circumstances the member of parliament, no matter what his party, may have such an office there if it does not interfere with the operation of the base. I think members of the armed forces should be encouraged to use the services of their members of parliament.


POST OFFICE
Mr. Donald W. Munro (Esquimalt-Saanich):: Mr. Speaker,
I have a question for the Postmaster General. Now that the Parliament Buildings alone appear on the 12 cent definitive which 1 believe is to be issued next week, will the minister say whether he plans to continue indefinitively the current definitive 12 cent issue on which the Queen's cameo appears?


Hon.   J.-J. Blais@Postmaster General: Mr. Speaker, with the hon. member, I regret the erroneous press story that appeared through a CP agency. The 12-cent definitive stamps
April 25, 1977

are going to figure both the Queen and the Parliament buildings.


NAME OF DESIGNER OF NEW TWELVE-CENT STAMP
Donald W. Munro: Mr. Speaker, I would like to ask a supplementary question.
Could the minister tell us whether or not the designer of this new postage stamp is the same American who drew most official stamps issued by the Canadian government?


Hon.   J.-J. Blais@Postmaster General: Mr. Speaker, I do not believe so. Anyway 1 shall inquire. The design already existed and, considering the matter of national unity, I thought it would be in the best interest of Canadians to issue a new 12-cent stamp.
I would like also to point out to hon. members-who incidentally are all invited to the launching of this stamp which will be held in room 200 in the West Block on May 3, 1977-that in fact we are not the only country which issues more than one definitive stamp of main denomination.
[English)


REASON FOR REMOVAL OF QUEEN S PORTRAIT FROM TWELVE-CENT STAMP
John George Diefenbaker: Mr. Speaker, I listened to the alibi of the minister with some interest. Did he not read that one of his officials was asked why the change? Did he not read that the official said "I cannot understand why it was made." The stamp was shown with the Queen entirely removed and when he was asked why it was done he said: "I don't know why they did it." Is this the alibi of Monday for the mistake of Friday?


Hon.   J.-J. Blais@Postmaster General: I regret the report which was made. I am advised that the spokesman for the Post Office did not in fact say what was reported. I might add that I was very pleased to hear the motion under Standing Order 43 since its preamble recognized the fact that parliament is composed of three parts, namely, the House, the Senate and the Queen.


John George Diefenbaker: I am glad the government is beginning to realize that the Queen is an integral part of parliament. 1 congratulated the minister on the production of the stamp marking Her Majesty's 25th Anniversary. But coming back to this matter: has the government learned of the stand taken by the Prime Minister on March 5, 1976, when he said at Quebec City: When we get the constitution back to Canada we shall then be able to decide on a republic and I shall name the first president in the person of Jules Leger-oh, a sound from Manitoba.


Some hon. Members:: Oh, oh!


John George Diefenbaker: -a multicultural sound.
Oral Questions


Some hon. Members:: Oh, oh!


John George Diefenbaker: And he said: When I get it back I, the Prime Minister, will name Jules Leger or Hugues Lapointe. Has the government at last learned its lesson in this connection?


Mr. Blais:: Well, unlike the right hon. gentleman, I was not in Quebec that day.


John George Diefenbaker: You did not even read what he said.


ROYAL CANADIAN MOUNTED POLICE
Miss Flora MacDonald (Kingston and the Islands):: Mr. Speaker, my question is directed to the Solicitor General. Five weeks having elapsed since the hon. gentleman indicated he would shortly be receiving an RCMP report on activities relating to a CANDU reactor to Argentina, may I ask whether the report has yet been received and, particularly, what information has been obtained as to the name, whereabouts and work done, if any, by the elusive agent who was paid a fee of $2.4 million by Atomic Energy of Canada Limited?


Hon. Francis Fox (Solicitor General):: Mr. Speaker, this inquiry is in process and is not yet terminated. I did not yet receive a final report on that matter.


Miss MacDonald:: Can the minister tell us, then, in some detail, what steps have been taken to determine who received this money, since, after all, it does represent public funds? In particular, can he say whether or not the services of Interpol have been employed and, if so, with what result?


Francis Fox: Mr. Speaker, the hon. member can be assured that investigations conducted by the RCMP are always extremely complete and that no source of information is neglected in drafting reports on inquiries. But as the hon. member surely knows, it is not the practice to table in the House the results of ongoing investigations.


BILINGUALISM
Mr. Hal Herbert (Vaudreuil):: Mr. Speaker, my question is addressed to the Parliamentary Secretary to the Secretary of State. Three weeks ago he indicated he was not aware that the Quebec minister of education had forbidden the distribution in

April 25, 1977
Oral Questions
Quebec schools of the federal bilingual kit "O, Canada". Elas the Department of the Secretary of State now made an effort to ensure a distribution adequate to meet the demand for these educational bilingual kits?


Mr. Jacques Guilbault (Parliamentary Secretary to Secretary of State):: Mr. Speaker, we did give consideration to the question of the hon. member. First, I would like to say that the Secretary of State was extremely disappointed by the decision of the Quebec minister of education not to allow the distribution of this kit in Quebec schools, particularly as this kit had been put together by the Commissioner of Official Languages in collaboration with the provincial ministers of education, including the Quebec minister. The Commissioner of Official Languages will respect the Quebec decision and the kit will no longer be directly distributed to Quebec school boards. However, it will be forwarded to any person who will submit a request on an individual basis. Furthermore, the commissioner is prepared to fulfill any request hon. members would submit on behalf of their constituents. Accordingly, I invite all hon. members to collect the requests of their constituents and pass them on to the Commissioner of Official Languages who will fulfill them.


SUPPLY AND SERVICES
Mr. R. E. McKinley (Huron-Middlesex):: Mr. Speaker, 1 have a question for the Minister of Supply and Services in charge of the Mint. It has recently been brought to my attention that many Canadians wishing to purchase 1977 nickel dollars have found themselves unable to procure them either from the Mint or the chartered banks. Will these dollars be available to the public later in 1977 at some point?


Hon. Jean-Pierre Goyer (Minister of Supply and Services):: Mr. Speaker, we still have in stock a certain number of 1976 coins which of course are available to the banks for circulation, and until these coins are sold out we do not intend to mint some for 1977.


Robert Elgin McKinley: Can the minister give us some estimate of when that might be?


Jean-Pierre Goyer: Mr. Speaker, this will be done when all coins are out of stock. If it happens in 1977, then we will mint a new coin, but if it is only in 1978 we will mint one in 1978.


CUSTOMS
Mr. Gordon Towers (Red Deer):: Mr. Speaker, my question is for the Minister of National Revenue. In view of the fact that the Canada Safety Council is concerned about the coinoperated electronic game "Death Race" which can presently be imported into Canada without any control, and since many people south of the border are concerned about its manufacture in the first place, could the minister tell the House whether or not any consideration has been given to this question?


Hon. Monique Begin (Minister of National Revenue):: should like to thank the hon. member for having given me notice of the question. No amendment of the Customs Tariff Act is being prepared. I have checked the precise wording of the section of the act which prohibits the importation of pornography. Violence is mentioned but only, I am sorry to say, as an element which accompanies pornography. I have no power under the act to prevent the entry into Canada of the kind of games described by the hon. member, nor do I have a mandate from the House to prohibit the entry of certain other material with regard to which I have received a number of representations, namely, hate literature. I will support the initiative proposed by hon. members. We know exactly where they stand on this issue.


Thomas Gordon Towers: With the summer fast approaching, will the minister give us an assurance that the necessary action will be taken before the start of this year's exhibition season?


Miss B6gin:: Mr. Speaker, I can only bring the hon. member's representations to the attention of my colleague, the Minister of Consumer and Corporate Affairs, and see the problem from that side. But here again my colleague has no legislative power of prohibition. The only thing which can be done is to send a notice to Canadian consumers on the minister's behalf. I cannot think of other ways and means available to us.


FEDERAL FINANCING OF HOCKEY TEAM TO PARTICIPATE IN INTERNATIONAL EVENTS
William Arnold Peters: Mr. Speaker, I should like to address my question to the Acting Prime Minister. I note that the minister of state responsible for sport has gone over to observe at firsthand our humiliation in Europe. Has the government given any consideration to establishing a team, Hockey Canada, which would be prepared to work together, to become thoroughly familiar with international rules and put forward the best possible effort on behalf of Canada, particu-
April 25, 1977

larly since hockey is regarded as one of the international sports at which we are outstanding? Such a team would be financed by the federal government.


Joseph Jacques Jean Chrétien: Mr. Speaker, I am not aware of the existence of such a program. I take a note of the hon. member's idea but I might tell him that if the match had been scheduled in the month of September rather than in spring, we would have been able to send all our good players and I am sure that we would have won easily like last year.


ENVIRONMENTAL AFFAIRS
Mr. Bob Wenman (Fraser Valley West):: Mr. Speaker, my question is for the Minister of the Environment. Has the government been approached by the United States government or any of its agencies regarding the export of water from Canada to the United States?


Roméo LeBlanc: Not to my knowledge in the department for which 1 am responsible, Mr. Speaker.


Robert Lloyd Wenman: A supplementary question, Mr. Speaker. In view of the concern regarding drought in western Canada and the United States, is the minister able to tell parliament whether or not western Canada has a surplus of fresh water that could be exported to the United States; and does the minister support in principle the policy of exporting Canada's fresh water supply to the United States?


Roméo LeBlanc: Mr. Speaker, 1 would have to find the exact figures for the amount of water flowing into the oceans. On the other matter, this would be a question of policy for which I would not be solely responsible.


AIR TRANSPORT
Mr. J. M. Forrestall (Dartmouth-Halifax East):: Mr. Speaker, my question is for the Minister of Transport. Since both Air Canada and CP have now cancelled their 10 to 30 day excursion fares for domestic travel in favour of a charter class fare structure which, by the airlines' own admission, is available only on a very restricted basis, would the minister use his good offices to intervene with the Canadian Transport Commission to investigate the domestic air fare structure with
Oral Questions
a view to expanding the availability of charter class seats, or at the very least, reintroducing the 10 to 30 day excursion fares so that the average Canadian who wants to travel in his own country may do so a little cheaper than flying to London or Mexico?


Otto Emil Lang: Mr. Speaker, 1 share the hon. member's interest in having low fares available where possible for Canadians travelling in Canada. I am not sure that the technique suggested by the hon. member would be the appropriate one at this stage, but I have had discussions with the two airlines concerning the number of seats allocated to this particular fare, and have expressed my interest in trying to see that the system they have for offering seats, which otherwise might be empty, to Canadians who want to travel is improved during the next review which they have of their fare structures.


J. Michael Forrestall: A supplementary question, Mr. Speaker. Could the minister indicate whether or not as a result of his conversations the airlines have indicated to him that they might be able to increase the number of seats available under this new sort of ccf-if you will pardon the pun-program which they have? In fact, are there more seats available and are the airlines prepared to allocate more and make them available under this program?


Otto Emil Lang: Mr. Speaker, they are specifically looking at this question now under the current arrangements to see how many more seats can be made available. They will be looking at that kind of question as they approach some different ways of perhaps pricing these otherwise potentially empty seats during the next round of tariff changes.


Walter David Baker: Mr. Speaker, I rise on a point of order before we move on to the business of the House. My point of order arises from something said in the question period as a result of the question posed by the right hon. member for Prince Albert to the Postmaster General. If I am addressing any remarks through Your Honour to the Postmaster General, it is in his capacity as deputy House leader of the government.
In the course of his answer to the right hon. member for Prince Albert, the deputy House leader of the government indicated that he concurred in the sentiment that had been expressed in the Standing Order 43 motion which had been advanced by the right hon. member, the operative words of which were, "By this action the government fails to recognize that the Crown is an integral part of the parliament of Canada, along with the Senate and the House of Commons".
I wonder whether the deputy government House leader ought now to clarify his position in this matter: whether the House is now prepared to give unanimous consent to reverting to motions under Standing Order 43; whether he was speaking for the government when he said what he did; or whether he would be prepared to consult with his colleagues so that if a Standing Order 43 motion were put forward tomorrow the necessary consent would be found. Indeed, I listened carefully

April 25, 1977
Oral Questions
and was gratified to hear that statement by the Postmaster General in his capacity as deputy House leader of the government.


Mr. Speaker:: Order, please. Gratified or not, the hon. member for Grenville-Carleton has not raised a valid point of order.


Mr. Knowles (Winnipeg North Centre):: Mr. Speaker, 1 rise on a point of order regarding something which in my view the press ought not to do to any member of parliament, certainly not to the right hon. member for Prince Albert. In this morning's issue of the Toronto Globe and Mail there is a report of a speech made in Toronto on Saturday night by the right hon. member for Prince Albert in which he called on the press to be more accurate and to give more adequate coverage to what goes on in the House of Commons. The press, having been given this admonition about accuracy, then identified the right hon. member for Prince Albert as the "Progressive Conservative MP from Alberta".


Some hon. Members:: Oh, oh!


Stanley Howard Knowles: In view of a certain event which took place last week, Mr. Speaker, I hope that the Globe and Mail, when it makes its correction, as I trust it will, will not refer to the right hon. member for Prince Albert as a Liberal.


Mr. Speaker:: Order. The right hon. member for Prince Albert on the point of order.


An hon. Member:: Come on over, John.


John George Diefenbaker: Mr. Speaker, what 1 endeavoured to do on Saturday was to be of assistance to parliament, and in particular to backbenchers. 1 pointed out that too often a member becomes frustrated when, having worked hard and having researched a great deal in preparing a speech, the press comes out the next day and he does not even get a mention. When that happens two or three times, the result is a depreciation in the appreciation by the individual of parliament. I was advocating in regard to having the newspapers of this country at least go as far as the London Times and saying, "John Jones said", and then one line. Because there is nothing more attractive to a politician than to have his name in print.


Some hon. Members:: Hear, hear!


John George Diefenbaker: So far as the error is concerned, Mr. Speaker, no member from Prince Albert has to be identified. Over the years we have had three who have been members. Most hon. members of the House do not realize that Sir Wilfrid Laurier was elected there in 1896, and so was the Right Hon. W. L. Mackenzie King. Modesty prevents me from identifying the third. But no matter how they describe me, so long as they are able to identify me I will be very happy.


Some hon. Members:: Hear, hear!


Paul Wyatt Dick: Mr. Speaker, I rise on a point of order. It is with a certain amount of regret that I have to draw your attention to page 4860 of Hansard where, under order paper question 1872, I asked the Minister of Regional Economic Expansion whether certain applicants for DREE grants were presently in business. The department did not reply to that question but, instead, replied by placing asterisks beside certain names on a list, indicating that these applicants were in commercial production. In so doing, they missed putting an asterisk beside the name of Acme Seeley Limited of Renfrew, Ontario, indicating by their own designation that that company is no longer in commercial production. Because they erred and did not follow the form of the question, I know they would want it corrected. They gave $800,000 to that firm to make it go into production, and it still is in production. Because of their error in answering the question that way, they have potentially cost the firm a very large commercial contract.


Mr. Lumley:: Mr. Speaker, in reply to the hon. member who just spoke concerning his question on the order paper, unfortunately, the way the question was phrased left it open to some misinterpretation for which the department accepts some responsibility. I believe the deputy minister has written a letter to the Canadian Press, with a copy to the hon. member, explaining the misinterpretations.



ROUTINE PROCEEDINGS


Mr. Ralph E. Goodale (Parliamentary Secretary to President of the Privy Council):: Mr. Speaker, I would ask that all questions be allowed to stand today.



GOVERNMENT ORDERS


Robert Knight Andras: that Bill C-20, respecting the office of the Auditor General of Canada and matters related or incidental thereto, be read the second time and referred to the Standing Committee on Public Accounts.
He said: Mr. Speaker, in recent months, on several occasions 1 have spoken about the importance that my colleagues and I attach to some of the administrative practices in the federal
April 25, 1977

public service. I have had occasion to enumerate several times the various initiatives we are taking in this field. I am very happy to have another opportunity on this occasion.
You may recall the statements I made in mid-November in presenting the House with a progress report on financial administration in the public service. I said then that I trusted the report would demonstrate both the priority the government attached to improvements in financial administration and the substantial progress that had been made already. A few days later I announced that we were appointing a royal commission of inquiry on financial organization and accountability. I said that one of the basic aspects of its mandate was to ensure that our levels of management and control were the highest attainable. In these and other statements, such as when the government expenditure management course for senior executives began, I emphasized the dedication that this government has toward improving and fostering good administrative practices and procedures. Today I want to outline for the House one of the more significant pieces of legislation toward that end.
The bill before the House, Bill C-20, derives its importance from the very unique position held by the office of Auditor General of Canada in the intricate system of checks and balances which is used to ensure that public funds are handled efficiently, effectively and, most importantly, in accordance with the wishes of parliament and this House. Your Honour will recall the efforts that have been made in the past to prepare legislation to clarify the duties of the Auditor General, to broaden his mandate and to reinforce his independence. Those efforts culminated in the establishment, by the Auditor General, of an independent review committee to review and to report upon what should be the role, responsibilities and reporting procedures of that office. That committee's report was tabled in the House on April 14, 1975.
The legislation that we are now considering has been developed from that report, in very close consultation with the Auditor General and members of his staff. With the exception of some minor points that I understand may be raised at the committee stage, I am pleased to report that the Auditor General and the members of the review committee have given their unqualified endorsement to the provisions of this bill. They unanimously feel that it meets the spirit of the independent review committee's report and implements its recommendations.
This draft legislation addressed itself to two basic issues. First, the independence of the Auditor General and, second, the scope of the audit that he will be required to perform. There are several provisions in the bill which clearly show the government's determination, if approved by the House, to strengthen the independence of that office.
Clause 10, for example, would enable the Auditor General to decide whether a request from the governor in council to undertake any special assignment would interfere with his primary responsibilities. He would then have the option to accept or to refuse the assignment if he felt there was any conflict. Clause 14 would authorize the delegation to the Auditor General of the powers, the duties and the conditions
Auditor General Act
normally exercised or set by the Public Service Commission so that he would be able to establish the selection standards used in recruiting staff for his office.


Walter David Baker: Just for his?


Robert Knight Andras: Just for his. That clause would also authorize the Auditor General to contract for whatever professional services he considers necessary to fulfil his responsibilities. Such contracts would have to be written in accordance with the appropriate contract regulations of the government. The Auditor General would be freed from the need to seek the prior approval of Treasury Board.
Clause 15 would delegate to the Auditor General the powers, the duties and the functions of Treasury Board relating to personnel management of his own staff. In other words, Bill C-20 would establish the Auditor General as a separate employer. Clause 17 of the bill would enable the Auditor General to establish the classification levels for the staff of his office. While the Auditor General will continue to submit his estimates to Treasury Board for approval and subsequent deliberation by parliament, clause 19 of the bill would empower him to make a special report to the House in the event that amounts provided for his office in the estimates submitted to parliament are, in his opinion, inadequate to enable him to fulfil the responsibilities of his office.
In addition, this bill empowers the Auditor General at any time to make a special report to this House on any matter of importance or urgency the consideration of which he feels should not be deferred until the publication of his annual report. Finally, in order to provide the Auditor General with the maximum possible flexibility in the utilization of his annual appropriations, clause 20 of the bill exempts that office from the provisions of the Financial Administration Act requiring the division of appropriations into allotments.
I turn at this stage to the second of the basic issues that this bill addresses, which is the scope of the audit that the Auditor General would be required to perform. Clause 7 of the bill would make it mandatory for the Auditor General to report on anything observed in carrying on the work of his office that he considers to be of significant nature that should be brought to the attention of the House of Commons.
Under this new legislation the Auditor General would be expected to make observations whenever it was found that government accounts had not been faithfully or properly kept or public money had not been fully accounted for. He would still be expected to call to the attention of the House any lack of essential record or any cases where procedures were insufficient to safeguard public property or effectively to check the assessment, collection and proper allocation of public revenues. Similarly, he would still be required to report any cases where it had been found that money had been expended for purposes other than those for which it was appropriated by parliament.
These traditional duties of the Auditor General are again detailed in paragraphs (a), (b) and (c) of clause 7 of the bill. In addition, the Auditor General would henceforth be required, under clause 7, to call attention to any case in which

April 25, 1977
Auditor General Act
he has observed that money has been expended without due regard to economy or efficiency, or satisfactory procedures have not been established to measure and report the effectiveness of programs where such procedures could appropriately and reasonably be implemented.
I think it will be seen that those two paragraphs substantially broaden the mandate of the Auditor General. They have been drafted in such a way as to meet two important criteria. First, they maintain the constitutional responsibility of the government to ensure the effectiveness of its programs and the complementary responsibility of the opposition parties to evaluate their effectiveness.
Second, they meet the concern expressed by the independent review committee that the Auditor General be empowered to assess what value for money Canadian taxpayers are getting, but defining this authority to protect him from the possibility of being drawn into policy matters which are not in his domain or mandate, or into partisan political debate. It is because of this need to protect the Auditor General's office that the legislation proposes that the Auditor General shall be empowered to make observations on the economy and efficiency of public expenditures, both being concepts which can be technically defined. His powers or mandate regarding the effectiveness of expenditures, however, will be restricted to an assessment of the procedures which have been established to measure the quality of government programs. Clause 12 of the proposed legislation would clarify and broaden the Auditor General's right of access to the information which he must obtain in order to perform his duties.
I should point out that had the wording of section 57(1) of the Financial Administration Act been retained, it would have been possible, through the passage of any legislation subsequent to the adoption of Bill C-20, to restrict the Auditor General's right to access to information by the simple expedient of including the rather innocuous-sounding phrase, "notwithstanding any other act", and so on. But the introduction to clause 12 ensures that the access to information provisions of the legislation to which I have referred would prevail against all other acts unless parliament itself were to decide specifically and explicitly otherwise in subsequently approved legislation.
In order to assist the Auditor General to fulfil his responsibilities as auditor of the accounts of Canada, clause 13 of this legislation grants him new powers in respect of Crown corporations. The Financial Administration Act in its present form already states that the Auditor General is eligible to be appointed as auditor or joint auditor of Crown corporations. It is felt, however, that his access to information pertaining to Crown corporations, for which he is neither auditor nor joint auditor, should be enhanced. That is why this clause would empower him to request from a Crown corporation such information and explanation which is, in his opinion, necessary to enable him to fulfil his responsibilities as the auditor of the accounts of Canada. Moreover, if the Auditor General should

feel that the response of a Crown corporation to such a request was insufficient, he would have authority to so advise the cabinet, or the governor in council, who in turn would be empowered to direct the Crown corporation to provide that information.
I have purposely been dwelling at some length, Mr. Speaker, on details of this legislation, since the government considers the specific audit duties of the Auditor General of Canada to be of considerable importance. I hope that hon. members will carefully review the proposed legislation at the committee stage in order to ensure that the proposed extension of this officer's mandate will in no way prejudice the most thorough fulfilment of his duties to parliament.
I have already referred to changes in the Auditor General's responsibilities relative to Crown corporations. 1 think hon. members will appreciate that this is only one aspect of the complex matters involved in reviewing the direction and control of Crown corporations. A complete review of Crown corporations is under way by the government and, indeed, draft legislation will be presented in the not too distant future for the consideration of the House. This is another of the initiatives which can be added to the fairly long list I mentioned earlier, and it again demonstrates clearly the importance this government attaches to financial management and control.
This omnibus Crown corporation legislation will propose significant amendments to part VIII of the Financial Administration Act which defines the statutory requirements for financial administration and disclosure by Crown corporations. Although my primary, but by no means exclusive, interest as President of the Treasury Board in this draft legislation centres on matters related to allocations control, I am also interested in matters relating to the administration of funds by Crown corporations.
The selection of the corporate mechanism to achieve the fulfilment of national policy objectives is predicated to a great extent on the operational advantages which are enjoyed by commercial corporations, as opposed to the operating requirements imposed on government departments and agencies. The proposed legislation to which I referred would ensure, I hope, that the financial probity and rectitude which is a basic requirement in the utilization of public funds is retained without unreasonably prejudicing operational flexibility.
I know, through recent discussions of this issue, particularly in the public accounts committee, that hon. members are concerned about this problem. 1 trust, therefore, that they will be able to support the measures which will be detailed in the legislation shortly to be announced and which relate directly to the legislation we are considering. I say this because the one will enhance the other, although the executive decisions will, of course, be left to the government.
I should like to take this opportunity to express the government's intention to create the position of comptroller general of Canada.


Some hon. Members:: Hear, hear!
April 25, 1977


Mr. Mazankowski:: This is a wonderful flip-flop.


Robert Knight Andras: This is being done in keeping with the principal recommendations made in the 1976 annual report of the Auditor General.


William Arnold Peters: Jack is already making his weight felt.


Robert Knight Andras: Judging by the reaction of hon. members, there has been a great deal of speculation and confusion on this matter. Certainly, the government was both puzzled and concerned by the Auditor General's description, on several occasions, of this proposed official as being the chief financial officer or umpire of the government. The potential ramifications of that concept would have impacted on many other facets of management beyond financial administration, per se, important though that function is. Because of the complex issues that it raised and the numerous questions related to it, the government felt that a thorough review of the proposal was required before any organizational changes necessary for its implementation were made.
1 am pleased to report that after a long and detailed series of constructive discussions which 1 held personally with the Auditor General we have been able to clarify the intent of his recommendation and to reach a clear understanding of the duties, responsibilities and reporting relationships of the comptroller general. I am very much reassured to find from these discussions that there never has been any real difference between the views and opinions of the Auditor General and the government's objective to further strengthen administrative controls and to eliminate inefficiencies and waste.
At any rate, that stage of our examination is completed successfully and significantly, and to avoid any misconceptions or possible misunderstandings 1 would like to place on the record the salient duties and responsibilities that will be established for this new position of comptroller general. The comptroller general will report directly to myself as President of the Treasury Board. The office will carry the rank and status of deputy minister. In general terms, the comptroller general will be responsible to Treasury Board for the quality and integrity of the financial controls systems and administrative policies and practices in use throughout the federal public service.
The greater part of the responsibilities of this new office will comprise those which were assigned to the financial administration branch of the Treasury Board secretariat on its creation in March, 1976, which branch will now be absorbed in the new office of the comptroller general. There will be a special functional relationship between the comptroller general and the chief financial administrators of departments, agencies and corporations, thus enabling the comptroller general to provide necessary guidance while maintaining the principle of decentralized management adopted as a result of the Glassco commission's recommendations.
I must make it clear, however, that the entire responsibility for the control and direction of the resource allocation and
Auditor General Act
control processes-that is, the decisions as to which agencies and departments will be allocated resources in the first place, and how much-will not be changed and that responsibility, which is a fundamental policy responsibility, will rest with the secretary of Treasury Board.
The comptroller general's authority and responsibility will apply to expenditure control systems and related administrative practices and procedures designed to operate after and within the authorization of the allocation of resources by the government and, of course, by parliament. By this action, this appointment, which will entail a major restructuring of the Treasury Board secretariat, will reiterate our determination to maintain the highest possible standards of control through the creation of an office which could best be described as that of the chief financial administrator of the federal public service.
All these initiatives which I have listed today, the Auditor General legislation, the very important piece of legislation before us now, the impending Crown corporation legislation which will affect the Financial Administration Act, and particularly the appointment of a comptroller general, have been designed to refine and improve what the Glassco commission termed as essential safeguards for administrative integrity within the federal public service. Such new measures must be introduced periodically if we wish to ensure that our administrative processes keep pace with the ever-increasing complexities of modern government.
1 must, however, draw the attention of hon. members to the fact that although the Glassco commission acknowledged the importance of a suitable system of accountability as an essential safeguard or guarantee of integrity, it stated that the study and development of such a system was beyond its terms of reference. I feel, however, that some formal concept or philosophy of accountability must be recognized, even if it is to reconfirm the existing one, and developed within the over-all public service management system designed for current 1977 requirements.
It was for this reason that the inquiry on financial management and accountability was commissioned last year. 1 do not envy the commissioners their task, particularly having been in my present portfolio as President of Treasury Board for seven or eight months, because I realize more than ever that it will be an extremely intricate problem to outline a system of accountability that will comprehensively and successfully link together the politicial, legislative and executive processes of government.
I have no intention of further complicating that mission. I must make it clear, therefore, that I do not consider that the commissioners' work will be prejudiced in any way by the actions that 1 have announced today. I feel that I have taken every possible care to ensure that these initiatives are not incompatible with the inquiry that is under way, thus confirming the importance that I attribute to this inquiry and the commissioners' ultimate conclusions and recommendations.
In the progress report on financial administration in the public service of Canada I referred to the actions that had been taken with respect to several of the 34 recommendations

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contained in the Auditor General's 1975 report. A recent comparison of those recommendations and the work that has been accomplished to date shows that substantial progress has been made in a relatively short period of time. This comparison has been developed with the assistance and co-operation of the Auditor General and also carries his opinions on the adequacy of the measures taken to date. 1 must say that while I recognize that there is a great deal more to be done, 1 am heartened by the generally favourable nature of his comments. We intend to present this comparison to the Standing Committee on Public Accounts in the near future in order that the committee may be kept fully informed of the actions that have been taken and the progress that has been achieved.
In speaking on this bill, Mr. Speaker, I have ranged over a variety of related topics. This is partly due to the way in which the facets of financial administration and control in an entity the size of the federal government are interwoven and interrelated. My principal reason for this review, however, is the undertaking that I have given members to provide them with all the information necessary for them to fully exercise their constitutional responsibilities for financial control.
Mr. Speaker, I move that Bill C-20, an act respecting the office of the Auditor General and matters related or incidental thereto, be now read a second time and referred to the Standing Committee on Public Accounts for study and subsequent recommendation to this House.
I also move, Mr. Speaker, that the report of the independent review committee on the office of the Auditor General of Canada be referred by this House to the Standing Committee on Public Accounts for consideration in the review of Bill C-20.


Stanley Howard Knowles: You cannot have two motions before the House at the same time.


Donald Frank Mazankowski: Mr. Speaker, after listening to the minister's presentation this afternoon we can only conclude that once again we have been treated to a miraculous flip-flop by this government in the announcement of the creation of the position of comptroller general. I could call it an amazing conversion, having regard to some of the conversions that have occurred in and around this place in the last week or so.
It is encouraging to note that the minister made this announcement today in spite of the many so-called impediments referred to by himself, by the Prime Minister (Mr. Trudeau) and by other members of the cabinet when this recommendation first became a topic for public debate and debate by this parliament. I suppose I have to commend the President of the Treasury Board (Mr. Andras) for his ability to change his mind and also for his sales ability in convincing his cabinet colleagues as well as the bureaucratic elite who vigorously protested and fought the establishment of this particular position. It is encouraging to note that he and his colleagues have now, obviously, seen the benefits of this pro-
[Mr. Andras.)
posal. I certainly commend him for that. I suppose I could say this has come about as a result of the development of the art of salesmanship which he derived in an occupation in which he was involved prior to becoming a minister in this government.
We on this side of the House welcome the minister's announcement this afternoon. Moreover, we support the initiatives the minister has outlined. In making that gesture of support, I think I can say that we probably wonder now, more than ever, about the need for the royal commission which was announced last November, particularly when the minister and the Prime Minister have indicated so often that it would be the royal commission which would have to study the interrelationship and the complexities which would be created by the appointment of a comptroller general.
Back on November 27, as reported in the Toronto Star, the Prime Minister stated that he could not implement Mr. Mac-donnell's proposal for a comptroller general because the ramifications of such a new position would have to be studied in detail, and that it was this problem which led to the appointment of a royal commission. If we have now overcome that obstacle, that will certainly detract from at least a significant portion of the necessity of a royal commission. As reported at page 1273 of Hansard, when speaking about the appointment of a comptroller general the minister stated:
This would begin to change the accountability picture, not in straight terms of financial management and control, as significant and as desirable as those are, but it could possibly challenge the whole structure of parliamentary responsibility, ministerial responsibility to parliament and the rights of members of this House.
As reported in the Citizen of November 24, the minister said that the establishment of a comptroller general means that major constraints of a political, constitutional and technical nature must be resolved. We certainly were oversold on the reasons for not appointing a comptroller general, but today we see a complete conversion of the minister, and we on this side commend him for his action. I think we on this side have to take a certain amount of credit for this because we have vigorously supported this recommendation of the Auditor General.
I only hope that the minister will be successful in obtaining an appropriate person who has proven professional competence and ability and who has extensive experience in a senior financial executive role either in the private sector or in the public sector, because I believe the position which is being created will probably be one of the most important and most vital positions within the government of Canada. We consider the action of the minister today to be one of the first positive responses by this government to the recommendations of the Auditor General. Our major complaint is that it took so long and that the government fought vigorously to refrain from adopting this recommendation at an earlier date.
Turning to the bill before us, this party supports the principle of strengthening the role of the Auditor General. We support any measures which can serve to improve his effectiveness and we support any efforts which will be taken to ensure and enhance his independence. We feel that only by fulfilling
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these criteria can the office of the Auditor General ever hope to achieve and maintain public credibility.
This legislation is supposed to strengthen the capacity of the Auditor General to identify waste, extravagance, inefficiencies and misuse of public funds, but when we examine the bill we find in it some inherent weaknesses which must be corrected if the desired objective is ever to be achieved. So we on this side of the House will be proposing amendments at committee stage in order to rectify the inequities contained in this legislation, and in so doing to make it a more effective piece of legislation which will fulfil the objectives for which it was brought forward.
More importantly, we consider it the obligation of the government to correct, without further delay, areas of inferior management and to bring about the necessary control mechanisms which will bring to an end the waste and inefficiency which successive auditors general have made known. We are taking one step here this afternoon, but evidence has been brought forward by the present Auditor General and by his predecessor, Maxwell Henderson, incidents have been numerous and repetitive, and they have become progressively blatant. One can only conclude that until today this government treated the office of the Auditor General with contempt.


Some hon. Members:: Shame.


Donald Frank Mazankowski: Throughout the reign of successive ministers this government has refused to act upon the advice and recommendations of successive auditors general. In so doing, the government has contributed very little to correcting problems at their source. Those problems have resulted from the improper exercise of financial control and management. To be frank and perfectly blunt about it, if we go back a few years we will remember that this same government tried to stifle the work of the then auditor general, Maxwell Henderson, because it did not like what he said. The government did not like what he exposed and what he recommended. In spite of the constraints which were placed upon him, Mr. Henderson did a great service to the people of Canada and to this parliament.


Some hon. Members:: Hear, hear!


Donald Frank Mazankowski: We need not only an impartial, competent and effective auditor general with broad powers and terms of reference who will report to parliament and recommend courses of action, but more importantly we need a government which values the worth of the taxpayers' dollar and considers that money to be held in trust, to be honourably administered on behalf of the people of Canada. 1 repeat that we need an effective, adequate control mechanism which will minimize the incidence of mismanagement, error, fraud, inefficiency and poor judgment on the part of the government and its officials. In connection with the development of proper procedures, the track record of the government is extremely bad. It is interesting to note the comments of an ex-bureaucrat by the name of Douglas Fullerton who, as reported in the Ottawa Citizen of December 7, 1976, said:
Auditor General Act
In the current ruckus over the adequacy of federal financial controls, one crucial point has been overlooked: The rot runs much deeper than Auditor General J. J. Macdonell suggests, or that cabinet begins to comprehend.
We have today the most inefficient, unproductive and top-heavy central government administration that Canada and most western countries have ever seen.
During the past decade there has been a steady deterioration in the quality and efficiency of management, accompanied by an explosive growth in the public service and higher levels of pay than in the private sector-all this and indexed pensions too.
How has this come about?
One important reason was the decision, following the 1962 Glassco report, to give department heads more power to run their affairs; centralized financial controls were abolished (including an earlier version of Mr. Macdonell's proposed "comptroller").
Unfortunately, during the same period public service unions came into being, with the blessings of a rather naive government. The tough negotiations which followed led to the centralizing of government bargaining in Treasury Board hands, and new grievance procedures were adopted which effectively removed from deputy ministers the right to fire ...
Has parliament lost control of the public purse, as Macdonell suggests?
You bet it has. Even if some of the causes are endemic to all large bureaucracies, Mr. Trudeau and his advisers must accept a large part of the blame for the breakdown in financial controls, and for the decline in the concern of officials about spending from the public purse.
We can only hope that the minister, in his pledge this afternoon to work restoring effective parliamentary control, will combine that pledge with the necessary action and deeds which have to accompany that pronouncement. As Mr. Fullerton pointed out in his article, the system is bad. The rot runs deeper than even the Auditor General suggested in his report. Therefore, we have a very serious state of affairs. I assure the members of this House that they will have the co-operation of our side of the House in restoring the proper kind of control, financial management and accountability to parliament, and thereby to the people of Canada.


Some hon. Members:: Hear, hear!


Donald Frank Mazankowski: Since 1965 the public accounts committee has been recommending separate legislation for the Auditor General and his office. The government dealt with these recommendations, as with many others, by simply failing to act. It should be said that the provisions of the Financial Administration Act which outline the role of the Auditor General have generally withstood the test of time since its origin in the early fifties. The Liberal government, however, in the period 1968-73 felt that the Auditor General had too much independence, too much power, and hence sought to have those powers curtailed. It did so by bringing in a separate bill which would have had the effect of muzzling the Auditor General. That was in November, 1970. Because of widespread indignation and public reaction, the government decided to withdraw the bill in 1970.
While the public accounts committee in the sixties sought a separate piece of legislation, it was never intended that the Auditor General's basic duties and responsibilities be altered. Rather, it was desired to enshrine these duties into a separate piece of legislation in a manner that would enhance his

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independence of the government of the day. While the government in 1970 ostensibly had this objective in mind, it seized the opportunity to water down the ability and independence of the Auditor General,
The matter of separate legislation was again considered by the public accounts committee in 1972. A drafting committee was struck and the draft of a new bill was completed in January, 1973. This was released to the Auditor General and the then president of the treasury board, but was never made public. Nor was it referred to the House or the committee for consideration. The former auditor general, Maxwell Henderson, stated in his last report that the draft bill in that form was highly satisfactory. He had no hesitation in commending it to the House and the committee. However, the draft was never released. It was not referred to parliament or to the independent review committee which was set up in October 1973, upon which this piece of legislation is based.
The independent review committee, composed of three distinguished Canadians, brought down a report containing 47 recommendations which the committee felt should be taken into consideration and included in a separate bill. The government acted on the advice of the committee, and hence we have this bill. I believe it is fair to say that many of the recommendations and proposals of the Wilson committee have been incorporated in this piece of legislation in varying degrees. However, I am of the opinion that in some cases the government's draftsmen have been overly restrictive in their choice of words in order to amply fulfil the spirit and thrust of the recommendations outlined in the Wilson report.
While it is not customary to deal with specific clauses during second reading debate, I wish to refer to a few. Those I will be referring to are fundamental and strike at the very core of this piece of legislation. They deal particularly with the appointment ot the Auditor General, the qualifications, duties, accounting standards, terms of reference, access to information, and Crown corporations. One of the fundamental questions that should be considered has to do with the appointment of the Auditor General. This legislation varies very little from previous drafts. However, the question arises as to whether the government of the day should nominate and appoint its own auditor, the auditor general, or whether parliament, representing the people and the taxpayers of the country, should appoint their watchdog or auditor because shareholders, by law, in Canada are the only people who can appoint company auditors to check on company management.
A problem exists here in that parliament is not an administrative body and does not make appointments. However, in my view, there is nothing to prevent the government of the day nominating an auditor general and then submitting his name and credentials for an affirmative vote of approval by a standing committee of parliament, such as the public accounts committee, or referring the matter to the House for an affirmative vote. I make this observation which 1 think would enhance the credibility of the auditor general as his position relates to the people and the parliament of Canada.
[Mr. Mazankowski.)


Mr. Kaplan:: Do you not think the incumbent has that ability?


Donald Frank Mazankowski: By all means. I will get to that a little later. The former auditor general, Maxwell Henderson, was one of the first qualified accountants ever appointed to the position.
With reference to the opening appointment and salary provisions in Bill C-20, an important clause is omitted. The special parliamentary committee set up by the public accounts committee proposed a qualification section, strongly recommended by the Canadian Institute of Chartered Accountants, that the auditor general be a qualified accountant. To be specific, the recommendation is as follows:
The governor in council shall, by commission under the Great Seal, appoint a qualified auditor to be auditor general of Canada . ..
For the purposes of this act, a qualified auditor is an accountant who, at the relevant time, is a member in good standing of an institute or association of accountants incorporated by or under the authority of the legislature of a province .. .
The purpose of this requirement was to ensure that the auditor general to be appointed possess at least the basic experience and qualifications of an auditor-surely a fundamental requirement for an office of such high responsibility in the Public Service of Canada. No such requirement exists in the present legislation. The government did not propose it in Bill C-190 in 1970, and the independent review committee is completely silent on the point in its 1975 report. Maxwell Henderson was the first properly qualified and experienced professional chartered accountant to be appointed, the six predecessors appointed to the post since 1878 having all been politicians or civil servants without professional degrees, qualifications or auditing experience as such.
The Canadian Institute of Chartered Accountants argued in 1970-73 that it was essential that a properly qualified and experienced professional be appointed to succeed Mr. Henderson and that such qualification should be made a statutory requirement in the new legislation. Fortunately, the government recognized this in its choice and appointment of Mr. Macdonell to succeed Mr. Henderson in 1973. Like Mr. Henderson, Mr. Macdonell came from the private sector and is as experienced an auditor as his predecessor. In the absence of any statutory requirement in the new law, there can be no guarantee that future governments will not revert to the practice of appointing persons inexperienced in professional auditing. Unless this is put into the law, the position will be seen to remain but another job to be filled by a political appointee.
Turning to the duties of the auditor general, I want to point out two serious omissions that should be considered. In clause 5, having to do with the duties of the auditor general, there is no reference to the consolidated revenue fund. Under part VII of the Financial Administration Act, the auditor general is charged with examining all transactions of the consolidated revenue fund. Clause 5 begins:
The Auditor General is the auditor of the accounts of Canada and as such-
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In my view, the wording should read:
The Auditor General is the auditor of the accounts of Canada relating to the consolidated revenue fund and to public property-
That is much the same as it is in section 58 of the Financial Administration Act. This goes to the very core of his duties. This is what exists today. This is what was recognized as the requirement in 1970 in Bill C-190 and again in the 1973 draft bill.
We have to ask this question: why are these words now eliminated? I suppose one reason they are not in this legislation is that the Auditor General or the government would be able to turn over whichever duties they like to private firms. Many of the firms presently working with the Auditor General have openly expressed interest in taking audits away from the Auditor General. There are expressions of interest from Price Waterhouse, Ernst and Cooper, and Lybrand in this connection. We note, as well, that the expenses of the Auditor General for professional and special services rose from $578,000 in 1975-76 to $2,658,000 last year, and that the estimate for this year is $5,674,000. This represents an increase of
1,000	per cent in just two years. One has to wonder aloud whether or not this situation will serve to jeopardize the independence of the Auditor General, rather than strengthen it, as the minister indicated it would. Such a course of action might lighten his workload, but I suggest his independence is seriously jeopardized. This stripping away of the duties of the Auditor General must be stopped.


Some hon. Members:: Hear, hear!


Donald Frank Mazankowski: The second important omission in this clause is the removal of the word "certify" in clause 5. Section 60 of the Financial Administration Act states that the Auditor General shall "examine and certify". This bill provides:
The Auditor General shall examine and shall express his opinion as to whether they present fairly information in accordance with stated accounting policies of the federal government-
The word "certify" is replaced by the word "examine". The auditor general's opinion is to be based upon the accounting policies of the federal government, rather than upon generally accepted accounting principles. In other words, the auditor general no longer has to certify that the public accounts are correct; and this being the case, his reputation as the watchdog of parliament will suffer irreparably in the eyes of the Canadian taxpayer.
What is more, I find it difficult to comprehend how the auditor general is to express his opinion as to whether the accounts present fairly information in accordance with the stated accounting policies of the federal government, when such stated accounting policies as exist today have been so roundly condemned, first by Henderson in the years 1960 to 1973 and by Macdonell ever since. The government's accounting policies, if they can be so described, have always been, and always will be, politically motivated. This is because they stem from a fundamental concept or statement still existing in the
Auditor General Act
Financial Administration Act, section 55, namely that it is the minister of finance alone who is to determine what is an asset and what is a liability of Canada.
It is inconceivable that the president, or chief executive officer of a public company, however large, would be permitted such freedom. It seems to me, therefore, that it would be better if the federal government's accounting were required to conform to generally accepted accounting principles rather than to its own internal stated accounting policies as determined by itself. In fact, the criticism of those accounting policies by both Mr. Henderson and Mr. Macdonell is the result of their having measured those policies against the generally accepted accounting principles of the private sector. It seems to me, therefore, that clause 5 is badly in need of major surgery.
With respect to the requirements to report to the House of Commons as set out in clause 7, we note the insertion of the phrase "that he considers to be of significance". In spite of what the minister said this afternoon, I wish to point out that this phrase is clearly restrictive and could be controversial if one compares it with the latitude provided under the present Act. The act as presently worded leaves discretion in the hands of the Auditor General: I refer to sections 58 and 61. In a period such as the present, when more openness and less secrecy is being demanded, such a restrictive phrase is, to say the least, ill-timed. I believe the following words, selected by the review committee are far more appropriate:
The Auditor General should call attention to anything resulting from his examination that he considers should be brought to the attention of the House of Commons.
That is the wording selected by the review committee. I emphasize the use of the word "anything". Again, in section 7(2)(d) we find difficulty in interpreting the phrase "money has been expended without due regard to the economy or efficiency". Here, again, in spite of the assurance which has been given by the minister, I am concerned about the limitation which is being placed upon the auditor general. It seems that this onus could rest upon him to the point at which his report might fail to disclose waste. The two clauses I have mentioned do not, in my view, broaden the mandate of the auditor general. On the contrary, they restrict his ability to engage in a thorough examination of the accounts. The wording clearly requires him to prove that money was spent without due regard to the economy, or efficiency.
How is he to go about doing this? No public servant will ever admit to it. Suppose, for example, the auditor general, under this clause, reported that the minister of transport had made 133 flights on government-owned Jetstars at a cost of $740,000. How could he prove that this was done "without due regard to economy or efficiency"? The minister himself has sought to justify this expense on both counts, in and out of parliament, although he does not appear to have convinced the taxpayers that he could not have saved public money by travelling more cheaply. The Auditor General could easily be put on the spot to the point at which he might not be willing to disclose such waste in his report. This particular provision

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should be broadened. The language chosen by the independent review committee, which is as follows, is much to be preferred: -money has been expended other than for purposes for which it was appropriated by parliament or value for money has not been obtained for any expenditure or expenditures.
This brings us back to the question of expenditure which is non-productive, expenditure in respect to which no value was obtained. To my mind, such judgments are better left to the auditor general, rather than imposing restrictions such as are envisaged in this clause. It seems to me that the only way we can ensure that value for money is being obtained is to give the auditor general complete freedom to report all cases of nonproductive expenditure which he encounters in the course of his work.
Again, perhaps the most prominent omission is found in section 7(2), where we note the deletion of the words "consolidated revenue fund". To me, Mr. Speaker, it is essential, if the auditor general is to do his job properly, that he must be auditor of the consolidated revenue fund and must see that all public moneys are paid into the fund. The government has quite a record of circumventing the law, and particularly of channelling all funds through the consolidated revenue fund, thereby exempting itself from parliamentary scrutiny. We have witnessed other devious methods which the government has employed: for example, abuse of the $1 vote privilege. Clearly, this government has devious instincts and uses every ploy imaginable to circumvent the authority of parliament. It seems to me that if the auditor general is not to be the auditor of the consolidated revenue fund, he cannot be said to be auditing the accounts of Canada.
Elaving regard to the clause dealing with access to information, we note a very substantial change from the existing legislation which I am sure should cause some concern to the office of the auditor general. The minister's statement certainly has not allayed our fears in this connection. We feel that the clause dealing with access to information is overly restrictive. Subclause (1) of section 12 states:
Except as provided by any other act of parliament that expressly refers to this subsection, the auditor general is entitled to free access-
This is a very substantial change from the existing language now contained in section 57(1) of the present act, which states very specifically that, notwithstanding anything in the act, the auditor general is entitled to free access. Here, again, we see a rather instant change. The government did not propose any such change in its draft bill in 1970, nor were there any such proposals in the 1973 draft. It is extremely important that the auditor general have complete and unrestricted freedom of access to all files, documents and other records which, in his opinion, are essential to the fulfilment of his responsibilities. It is equally important that he have this access regardless of what any other act of the parliament of Canada states.
The provisions in this clause, on the surface at least, when compared with the provisions of the existing act appear to have the effect of restricting the right of access of the auditor

general. It would be very interesting to know what kind or type of information the government wishes to restrict, or why this restriction is in fact included. If this is to be a more open act with more broad powers, it seems to me to be advisable to stick to the existing section in the Financial Administration Act, namely, section 57(1). In my view, as I pointed out earlier, there should be no impediments to access to whatever information the auditor general deems necessary and essential in the discharge of his duties and responsibilities to parliament and, indeed, to the people of Canada.
In conclusion, I want to deal briefly with the section on Crown corporations. Clause 13 is new and deals with the auditing of Crown corporations. Given the experiences of some of our Crown corporations and, indeed, the Auditor General's latest report, one can only conclude that the Auditor General of Canada should be the sole auditor of all Crown corporations and that this should apply right across the board. In my view, this would eliminate patronage, conflict of interest, the audit would be done in conformity with the parliament of Canada, and I think the action would be applauded by the taxpayers of Canada.
The revelations which have surrounded AECL and Polysar clearly beg for tighter control and restoration of ultimate accountability to parliament. The revelations of the Auditor General in his report on financial management and control indicate that financial management and control mechanisms are weak and ineffective and in most cases grossly inadequate. Under the present Financial Administration Act, sections 66, 67 and 77, the legislation provides for the duties of the Auditor General as they apply to his work with Crown corporations. At the present time it is unclear, given the statement made by the minister this afternoon, what kind of new legislation will be proposed, but it seems to me that before we deal with this particular section we should have a better understanding of the contents of the new legislation as it relates to Crown corporations.
My colleagues will be dealing with this particular section in more detail, but we have some major concerns with respect to the private auditing of Crown corporations and sense that this bill will give greater opportunity to private accounting firms to engage in the accounting of Crown corporations and, indeed, departments and agencies of government. While such audits are brought before parliament, in many cases we have evidence, and indeed have witnessed the fact, that these firms are not prepared to disclose information to the House of Commons in the same manner as parliament's own auditor, namely, the Auditor General of Canada.
We feel very strongly about the fact that the accountability of Crown corporations to parliament, and therefore to the people of Canada, must be restored. The very existence of some of the Crown corporations should be reviewed. We think there are many which have outlived and outserved their usefulness. The method by which Crown corporations are established, the very ease with which Crown corporations can be set up, should be the subject of a general tightening up. We firmly believe that Crown corporations should be held accountable to
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the respective committee within this House of Commons, probably a joint committee of the House of Commons and Senate, and that their annual reports should be automatically referred to that committee.
Whether they will be called in any given year is another matter; but the mere fact that they would be asked to submit their reports to a committee, and that they may be invited to appear before that committee would certainly serve to necessitate their engaging in proper management and control, and that we would have the opportunity to review their actions and they would have the opportunity to justify those actions.
We have said many times in this House that Air Canada, a Crown corporation, has not appeared before a parliamentary committee since 1973. Surely that is far too long for a major Crown corporation which has a very vital and profound impact on the people of Canada not to so appear, and it certainly cannot go on. I hope that when the minister talks about improving the financial management and accountability of Crown corporations he will seriously consider ways and means of improving mechanisms whereby these institutions report on a regular basis either directly to the House of Commons or to the appropriate committee.
There are a number of other items that I should like to touch on, but my time does not permit. Colleagues of mine will be outlining other areas of concern within this particular bill, particularly with regard to Crown corporations, because, as Your Honour and I know, there have been a lot of questionable actions taken and tactics employed by Crown corporations in this country. What is very troublesome, very serious and concerns most Canadians is the fact that they are associated and bear the name of Canada which has not stood us in good stead throughout the world.
We are pleased that this bill is before the House, because it does give us an opportunity to engage in debate on a very important and fundamental matter-the proper management and control of public funds. If the minister is conducive to accepting some needed surgery on this particular piece of legislation, he can expect our co-operation in seeing that it is passed.


The Acting Speaker (Mr. Turner):: Is there unanimous consent to allow the President of the Treasury Board (Mr. Andras) to move a motion?


Some hon. Members:: Agreed.


The Acting Speaker (Mr. Turner):: Earlier the President of the Treasury Board proposed that the report of the independent review committee on the office of the Auditor General of Canada be referred to the Standing Committee on Public Accounts. Such a motion requires unanimous consent: is there such unanimous consent?


Some hon. Members:: Agreed.
Auditor General Act


The Acting Speaker (Mr. Turner):: There is a motion by Mr. Andras, seconded by Mr. Danson, that the report of the independent review committee on the office of the Auditor General of Canada be referred by this House to the Standing Committee on Public Accounts for their consideration and review of Bill C-20. Is the motion adopted?


Some hon. Members:: Agreed.


The Acting Speaker (Mr. Turner):: The hon. member for Brant (Mr. Blackburn).


Mr. Derek Blackburn (Brant):: Mr. Speaker, it is a pleasure for me to participate in the debate this afternoon. 1 am not going to make a lengthy speech, because a bill such as this, which is so important, should be passed and implemented as quickly as possible. Certainly, it is not a perfect bill. No bills are. It is very important that we get this legislation into committee as soon as possible, and back to the House for third and final reading, and that it is proclaimed.
I had the privilege of sitting on the public accounts committee for just less than three years. I found that during those three years we ran into a lot of very frustrating circumstances and frustrating instances when we were trying desperately to go beyond the Auditor General's report in trying to find out for ourselves, as a committee, just how we could cope with his findings and recommendations. Unfortunately, there is really nothing in this bill to help the public accounts committee. That is just as important as extended powers being granted to the Auditor General. After all, he can only go so far, and we should carry it farther. When I say "it", I am referring to the annual reports. It has been a frustrating experience. I say, with a little bit of regret, that I am no longer on that committee, particularly in view of the 1976 report of the Auditor General with respect to Atomic Energy of Canada Ltd., and Polysar.
Bill C-20 is essentially a good bill. It is very interesting that the government, the minister, and the President of the Treasury Board (Mr. Andras) have finally decided to accept the advice offered them by the Auditor General late last year in the appointment of a comptroller general. I hope, in the appointing of a comptroller general, that we will not choose someone who is, in the public service sense, so inbred within the hierarchy of the public service that he will never be able to see the forest for the trees, and that he will be thinking more as a top public servant rather than as an independent adjudicator with respect to financial and management control of our various government services. Whether the choice is made within the public service or from outside the public service, the individual will bring a sense of newness to the job, as well as experience as a financial expert, an accountant and a businessman.
It would appear there is nothing in this bill to which we in this party would seriously object. This bill would, in essence, establish in a separate piece of legislation the office of Auditor General. His powers and duties are set out in Bill C-20 in a fairly straightforward manner. We know that the current

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Auditor General has expressed his approval of this bill. My hope is that it will not be unduly delayed.
I am pleased to see that the bill incorporates many of the recommendations of the independent review committee on the Auditor General's office. The most important of these, to my mind, involves the redefinition of just what it is the Auditor General is to report on; a definition and expansion of the powers and duties of the Auditor General with respect to his reports to parliament, and the right, for the first time, to demand information from Crown corporations, which sometimes has been withheld from him. For the first time the Auditor General will be able to report on the cost efficiency of government spending, rather than simply the adequacy of the accounting methods used to record transactions. 1 find this extremely important in that the Auditor General will now be transformed from simply being an accountant into being an agency designed to examine the more general question of value for money.
Value for money is today a very common expression. It goes right down to the family budget. When people have to budget at the family level, they obviously expect that we in parliament will adopt the same methods, even though we have a much greater and a much larger public corporate sector to administer. There has to be accountability. I am amazed that it has taken the government so long. I am not directing my vitriol at the President of the Treasury Board, because he has only held that portfolio for a few months.
I do not know why the government has taken so long to realize what the Auditor General has realized for the last two years in both of his reports ending fiscal year 1975 and fiscal year 1976. He stated pretty bluntly that government spending was getting out of control and that something had to be done about it. I do not know why it has taken the last four months for the government to finally decide that it should have a comptroller general. The government argued vociferously against such an appointment until a commission had brought in recommendations. Where this leaves the commission, I do not know. 1 presume it will continue under its present terms of reference-a commission to inquire into government spending and financial control. I was not here when the minister began his speech and I do not know when the appointment of a comptroller general will take place. I do not know whether it will be after the report or before the report of the commission of inquiry. The sooner the better, as far as as I am concerned.
Another feature of this bill that appeals to me is that the Auditor General, under the proposed legislation, will have the right to make special reports to parliament when he thinks it appropriate, in addition to his regular annual reports. This is very important. Unfortunately, the public accounts committee always seems to investigate government mismanagement a long time after the fact, perhaps as much as 1 Vi years after the alleged incident has occurred. It is difficult to elicit information from witnesses about an incident which took place 1 'A years ago. I suggest that the Auditor General should provide more regular, albeit somewhat smaller, reports to enable this House, through the public accounts committee, to look into

instances of financial mismanagement or lack of governmental control. I applaud the government for allowing the Auditor General to bring in reports when he thinks it necessary to do
so.
When the President of the Treasury Board announced the establishment of the royal commission on financial organization and accountability, I said in the House it was nothing but a cop-out. The government was ordering another inquiry and delaying the putting in order of its finances. I am happy to note that we did not need to wait one year for the appointment of a comptroller general. His appointment, 1 suggest, is the result of pressure by opposition members as well as members on the government side, including members of the public accounts committee, who quietly said, "We had better not delay the appointment of a comptroller general, otherwise it will look like a cop-out. The public do not like the present situation." I take some small credit for this announcement, for I, too, raised the matter with the minister.
You will recall, Mr. Speaker, that appropriately on that day last November when the Auditor General's report was tabled, the minister made a statement on motions in this House. It was no coincidence that the announcement of the commission's appointment was made on the day the Auditor General's report was tabled. In that report the Auditor General confirmed what we in the opposition and the public had known all along: Parliament and, indeed, the government, had lost or was close to losing effective control of the public purse. Those were Mr. Macdonell's words as contained in his report for the fiscal year ending 1976. But instead of acting, the government's reaction was to appoint a commission to study that which had already been studied time and again. I felt, when the royal commission's establishment was announced, that the government was simply buying time in which to lose complete control of the public purse.
My greatest concern about this legislation is that it deals only with the power of the Auditor General and not with federal spending controls within the bureaucracy. Financial management and control in the government will continue to be grossly inadequate unless the public accounts committee is given expanded powers to follow through on the recommendations of the Auditor General.
Clearly, the public accounts committee does not have the tools at hand to deal with matters presented to it. This was demonstrated when the public accounts committee was asked to look into the operations of Atomic Energy of Canada Limited and Polysar. The stonewalling that occurred can best be explained by referring back to what the Glassco commission found in their report of 1963. It noted as follows:
As government grows and penetrates more deeply into the life of the country, there is a steady accretion in the public servant's share of power with each increment of discretionary authority to grant or withhold benefits, to impose or waive restraints. But, there is for officials no retribution at the polls for the misuse of their derived authority. If the machinery of government is to be responsible, at ail levels to the public will, there must be workable safeguards against the irresponsibility of officials, no less than against the more remote
April 25, 1977

danger of unbridled ministerial power. Only if such safeguards exist can public distrust be allayed.
That was said in 1963, and here we are, in 1977, still facing these problems. Our problems seemed to have multiplied many times over since this government took office in 1968. Under this administration there has been virtually unbridled spending within the public service. I know that spending has been cut back in recent months. The AIB has tried to control some government spending. Considering what the Glassco commission said in 1963, all this comes a bit late. At present there are virtually no safeguards against the irresponsibility of officials of the public service. That is my view. No wonder financial controls are minimal or almost non-existent in a Crown corporation like AECL.
Imagine a treasurer being able to approve and dispatch huge cheques to foreign firms of which he has never heard, in return for services which may or may not have been rendered. As the minister knows, evidence to this effect was brought forward by witnesses appearing before the public accounts committee.
Why has the government taken so long to realize that it has been losing or has lost control over spending in certain government departments and Crown corporations? The increasing power of the bureaucracy in Ottawa has not only led to the parliament of Canada losing more control of the public purse, but to the feeling that parliament is becoming, or is already, irrelevant to most of the public.
Let me digress for a moment. Personally, I was dismayed at the way the House of Commons was depicted in a certain sketch. 1 think it showed the attendance of 21 members in the House at 5.30 last Thursday afternoon during private members' hour. Whoever sketched the House at that time in the afternoon must have been sitting in the gallery. But I note that the sketch did not include a single person in the press gallery. Those who read the page in the Toronto Star of last Saturday devoted to condemning this House because only 21 were in attendance at 5.30 p.m. on Thursday should note that at present only one member of the press is in the press gallery.
The decline from relevancy to irrelevancy has been gradual. In terms of parliamentary control over finances, the financial management and control study carried out by the auditor general's office in 1974 suggested that changes in the form of estimates over the past ten years had seriously reduced the effectiveness of parliament's control over governmental expenditures, because the reduction in the number of votes and the broadening of vote wording which had taken place was not accompanied by appropriate supporting information. I am speaking of the blue book. It is a maze. As an example, the study noted that reducing the number of votes and making the wording general gave management greater flexibility, but the loss in parliamentary control was not offset by activity information which more adequately disclosed program costs. For example, the blue book is almost beyond comprehension. Reading it is almost like reading hieroglyphics. The study also pointed out that narrative information provides insufficient indication as to what those involved in programs actually do, who benefits, or the precise results sought.
Auditor General Act
The present estimates, Mr. Speaker, clearly indicate that a significant loss of information results when standardization is carried too far. In making the changes, Treasury Board, while attempting to improve the previous presentation, appears to have given insufficient attention to financial control. Yet another feature which makes parliamentary control difficult is the fact that public accounts do not parallel the estimates structure closely enough for a real comparison on a year to year basis. The committee on public accounts, as I said before, is always studying matters after the fact.
Possibly the biggest problem parliament faces is that we in the opposition do not have enough information at our disposal to probe government policies and actions. The parliamentary system presupposes that the government of the day must justify its policies to an informed and probing opposition. It is by means of this system of continuous challenge that the public interest is to be protected. However, the government of the day has at its disposal the entire public service which provides it with expert advice, and it is not always that expert. For a number of reasons, notably the absurd secrecy of this government, the opposition does not have similar access to public service personnel and to information in their possession. This holds true for both the House of Commons and its committees.
If the public accounts committee is to be effective in dealing with financial controls, it must have more access to professional advice. The committee must be given full-time legal counsel and, as well, it must have the power to carry out investigations independent of the auditor general's office; or perhaps, to put it in another way, to go beyond the auditor general's reports. While the auditor general, under this bill, will be able to report on the cost efficiency of government spending, I think it would advisable that an agency exists to provide the committee on public accounts with an independent and expert opinion on the economy and efficiency of government expenditures.
Bill C-20 is only the beginning. While it is a progressive step toward upgrading the role of the auditor general, it cannot by itself regain for parliament control over how the taxpayers' money is spent. Unless fundamental changes are made in the functioning of committees and the House, the malaise, sense of boredom and sense of drift among members of parliament about which the government House leader spoke on March 18, will continue.
I do not want to take up much more of the time of the House, Mr. Speaker, but let me say, in relation to this bill-I am not speaking beyond the confines of the bill at second reading-that the government will be establishing the office of comptroller general and has upgraded the role of the auditor general. I think that what should go along with this in the debate is a discussion of the standing committees, specifically the committee on public accounts which is directly responsible to parliament.
So we will have a comptroller general some time this year and the auditor general's office will be upgraded and he will
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April 25, 1977
Auditor General Act
have more power. But what about the committee? This is the nub of the problem, although not the whole problem, in my view. When the AECL and Polysar matters were brought before the committee, an army of civil servants came to the committee. Usually there are only two or three witnesses to speak at any one time. Those civil servants should have been back in their offices working, instead of sitting on their butts in committees. That is another thing that galls me at meetings of the committee on public accounts: we are surrounded by a veritable army of staff from various departments, public servants who sit there like bumps on a log and who are never, or very seldom, asked to give testimony. Why are they there? There are 25 or 35 of them surrounding us. Why are they not back in their offices, where they belong, when you consider that a minister very seldom asks anyone lower than an assistant deputy minister or department head to speak at a committee meeting?
We have to reform that committee. I have a few suggestions to make. In the first place, I do not like the idea of witnesses sitting beside the chairman. I think the committee seating plan should be changed so that members of the committee sit in front of the committee and witnesses sit in the centre of the room. The press would be on either side. I think that is one thing that is very important to the committee, that is, the physical change. My second proposal with respect to a committee, particularly the committee on public accounts which is trying to find out where the money went and how it was spent, is that we should establish an investigatory branch attached to the committee.


Arthur Ronald Huntington: Right on.


Derek Nigel Ernest Blackburn: That branch would have the ability to go beyond the Auditor General, because the Auditor General cannot fly to Switzerland and say, "I want the name of the holder of the numbered bank account". If we had investigatory, professional personnel who could dig up information for the committee-and I am not talking about trying to find a Watergate under every ministerial chair; I am just talking about questionable financial transactions of a government agency that the Auditor General sometimes brings before the committee- we could investigate the matter. At present, we are stonewalled. Every time we ask questions, we get answers in beautiful civil service jargon, answers which I consider to be non-answers; or else we are told the witness cannot remember, he does not have a memo, he recalls writing a cheque or a voucher four or five years ago, or something like that. We do not get to the nub of the question.
So we should have an investigatory branch attached to the public accounts committee so that we could go further than the Auditor General and ourselves as parliamentarians, not as civil servants, and be able to dig up the information that we need. After all, it is we on the committee of the House who are responsible to the voters and to the taxpayers, not the civil servants. I make this recommendation with the request that we use care. I do not think the committee should reach the point of controlling the House but, after all, members of the House

who are members of committees have to account to the House as committee members. I really see no danger in this kind of recommendation.
I have vented some of my personal frustrations and I have made some positive recommendations, but I have not gone into detail so far as a clause by clause scrutiny of Bill C-20 is concerned. I hope we can get on with it. I hope we will establish the office of the comptroller general as soon as possible and increase the powers of the Auditor General, but I am still left with a pessimistic feeling that somehow this is a smokescreen and that we will not really achieve what we should be achieving, that is, bringing back financial control to the House of Commons.


Mr. C. A. Gauthier (Roberval):: Mr. Speaker, I am pleased to take part in this second reading debate on the Auditor General's legislation.
The Auditor General has always been viewed by the public at large as a central figure in Canadian government. To Canadians, the Auditor General must ensure that public monies are spent advisedly and according to Parliament's will in order to prevent maladministration. He must also see whether the taxpayer gets his money's worth. In other words, he must see to it that the government be efficient in their expenditures. His is a highly sensitive function that must be protected from political turmoil. This the minister realized, and he deserves commendation for it.
I was especially pleased to read clause 3, which reads:
3. (1) The Governor in Council shall, by commission under the Great Seal, appoint an officer called the Auditor General of Canada to hold office during good behaviour, but the Auditor General may be removed by the Governor in Council on address of the Senate and House of Commons.
Mr. Speaker, such a statute should have been in our book many years ago. But although belatedly, we finally have it. The minister drew a lesson from the experience of recent years, where former auditors general were criticized and almost forced to resign for telling often the government too many truths. They were then extremely vulnerable.
I feel that Bill C-20, in addition to enhancing the Auditor General's functions, gives him the tools needed to discharge his responsibilities in the most efficient way possible. I still recall Mr. Henderson's repeated requests for adequate staffing and full access to the information needed for proper auditing. The auditor reported directly to the minister, and quite often this led to awkward situations. How does one give one's superior serious criticism without getting into trouble? But once he is strengthened in his position and made more independent from the government, he will be in a position to act with much more freedom and fairness.
Add to that the right to information guaranteed by clause 12 of the bill, right denied him or practically nil in the past. The bill states and I quote:
12. (1) Except as provided by any other Act of Parliament that expressly refers to this subsection, the Auditor General is entitled to free access at all convenient times to information that relates to the fulfilment of his responsibilities and he is also entitled to require and receive from members of the public
April 25, 1977

service of Canada such information, reports and explanations as he deems necessary for that purpose.
(2)	In order to carry out his duties more effectively, the Auditor General may station in any department any person employed in his office, and the department shall provide the necessary office accommodation for any person so stationed.
(3)	The Auditor General shall require every person employed in his office who is to examine the accounts of a department or of a Crown corporation pursuant to this Act to comply with any security requirements applicable to, and to take any oath of secrecy required to be taken by, persons employed in that department or Crown corporation.
As for all the guarantees provided for in the bill to ensure a more efficient Auditor General, I am certain that no member in this House will oppose such a bill, even more so when we consider clause 13 relative to Crown corporations. The minister gave the good word with regards to these corporations. It is high time that they were subject to stricter controls. In the past, these corporations submitted their report once a year to the standing House committee and that was it; their annual chore was done and they went back to their own affairs, scot-free. In future, after passing of Bill C-20, all these Crown corporations will be submitted to the scrutiny of the Auditor General.
If the Canadian population must exercise a very strict control over public spending, it must also scrutinize all Crown corporations since the taxpayer must pay the deficit of these corporations. The minister took a stand with regards to these corporations which I believe will please the Canadian population. In this instance also we have the right to know where our tax money goes.



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mr. Ethier):: Order, please. It is my duty, pursuant to Standing Order 40, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Winnipeg North Centre (Mr. Knowles)-Veterans Affairs-Possibility of legislation to extend prisoner of war compensation to veterans of World War I and escapers and evaders of World War II; the hon. member for Brandon-Souris (Mr. Dinsdale)-Post Office- Purpose of increase in rates-Measures to restore efficiency of operation; the hon. member for Egmont (Mr. MacDonald)- Regional Economic Expansion-Prince Edward Island-Date of signing development agreement-Nature of expenditures.
It being five o'clock, the House will now proceed to the consideration of private members' business as listed on today's order paper, namely, notices of motions and public bills.
Residential Taxes


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


Some hon. Members:: Stand.


The Acting Speaker (Mr. Ethier):: Stand at the request of the government.
Notice of motion No. 16, in the name of the hon. member for Scarborough West (Mr. Martin).


Some hon. Members:: Stand.


The Acting Speaker (Mr. Ethier):: Stand at the request of the government.
Notice of motion No. 17, in the name of the hon. member for Hamilton West (Mr. Alexander).


Some hon. Members:: Stand.


The Acting Speaker (Mr. Ethier):: Stand at the request of the government.
Notice of motion No. 22, in the name of the hon. member for Edmonton-Strathcona (Mr. Roche).


Some hon. Members:: Stand.


The Acting Speaker (Mr. Ethier):: Stand at the request of the government.
Notice of motion No. 24, in the name of the hon. member for Hamilton-Wentworth (Mr. O'Sullivan).


Some hon. Members:: Stand.


The Acting Speaker (Mr. Ethier):: Stand at the request of the government.
Notice of motion No. 26, in the name of the hon. member for Winnipeg North (Mr. Orlikow).


Some hon. Members:: Stand.


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


MEASURE TO PROVIDE RESIDENTIAL TAXES AND RENTAL PAYMENTS OF ACCOMMODATION TO BE DEDUCTIBLE FROM INCOME TAX
[Stage Direction]
The House resumed, from November 8, 1976, consideration of the motion of Mr. Haidasz:
That, in the opinion of this House, the government should give consideration to the feasibility of allowing residential taxes on owner-occupied homes and rental payments of accommodation by tenants to be deductible from federal personal income tax up to a maximum allowable of $300 each year.
80012-351/2
[Stage Direction]
April 25, 1977
Residential Taxes
Mr. Ian Watson (Laprairie):: Mr. Speaker, the motion which has been placed before the House by the hon. member for Parkdale (Mr. Haidasz) has certain attractions. However, having read it and considered it, I have come to the conclusion that there are some extreme disadvantages as well, and that on balance it is not the type of motion which I could support or which I feel this government should support. The basic proposal which the hon. member for Parkdale has placed before the House is that property taxes and rental payments be deductible from income tax up to a maximum of $300. He has put forward a number of justifications for this deduction. He notes that some 80 per cent of municipal revenue, excluding government transfers, is derived from the property tax. He states that most of this revenue is derived from residential property ownership, the ownership of which bears little relation to many of the services provided by municipalities such as education.
In reality, and contrary to the hon. member's assertion, on the average only one half of property tax revenues are derived from residential dwellings, including apartments and farms. The remaining half comes from business assessment. In addition, unless municipalities adopt direct user charges or fees for providing services such as education, the financing of the services would, of necessity, bear only an indirect relationship to the actual use of the services.
In his motion and in remarks which he has made on this motion in the past, the hon member for Parkdale has noted that property taxes bear little relation to ability to pay. He has referred to various controversies which we, as members of parliament, find ourselves being made aware of with regard to the fairness of property taxes. The traditional view of the incidence of property tax has been that the portion of the tax on rental housing and that portion levied on business property is fully passed on to renters and consumers in the form of higher rents and prices. Increasingly, however, the property tax has come to be viewed as a tax on the capital invested in business, on rental buildings and on the return from such capital.
Studies along these lines have indicated that the property tax may in fact be progressive as it falls on investors. Any part of the property tax burden that is passed on to consumers and renters is considerably less regressive if it is properly considered in relation to the average lifetime income of renters or consumers rather than in relation to their income in any one year.
The hon. member for Parkdale argued that the measure would increase the level of activity in the housing sector and would stimulate the economy. While housing starts this year are at a lower level, on an annual basis, than the 1976 figure of 273,000, there is increasing indication that housing starts in Canada this year may be almost as high as the 1976 figure.
The reductions in interest rates during the past few months will provide an important incentive for stimulating the demand for housing this year. The Assisted Home Ownership Program
[The Acting Speaker (Mr. Ethier).]
and the Assisted Rental Program, which are available under the National Housing Act, are proving to be extremely popular. They are very successful in stimulating new housing starts. This is where the hon. member's motion is completely off target. The hon. member for Parkdale appears to lose sight of the social objectives which the incentive he proposes could achieve were this dollar value incentive placed in certain specific areas.
If we are going to give this $300 deduction from income tax on interest paid on mortgages for residential homes or for rental payments, the cost to the treasury would be enormous. We must ask what social objectives would be achieved by this measure at a time when we are not even able to give adequate incentives in the budget with regard to energy conservation. I was extremely disappointed by the lack of incentive in the budget with regard to encouraging energy conservation. I believe most Canadians were hoping for income tax credits for the installation of insulation in residential housing, the installation of solar or wind devices as energy-saving mechanisms in private homes and industry and for research into achieving more effective utilization of wind, wave and solar resources. In Canada, these certainly hold out hope for a major reduction in our ultimate consumption of electrical and hydrocarbon energy.
If we want to achieve useful social objectives with tax incentives, we should not merely hand homeowners or renters a bonus by allowing them a $300 deduction from their income tax each year. That kind of budgetary incentive should be used for social purposes such as encouraging better conservation measures, a need which will become increasingly evident to all in government within the next two or three years. It is unfortunate that we always appear be following, rather than leading, in so far as this type of measure is concerned. A more sophisticated metering of electricity entering homes is another possible area for tax incentives.
By offering tax incentives and by encouraging development of new metering systems by provincial hydro authorities, massive energy conservation could be achieved. As hon. members are probably aware, control meters are available which allow suppliers to price supplies of electricity based on consumption during differing load periods. Why should we not encourage the installation of such meters in private homes through the application of tax incentives? I believe they cost in the neighbourhood of $100 to $150. Imaginative collaboration between the federal government and the provinces in this area would encourage home owners to concentrate their usage of electricity during off-peak hours and save money by doing so. The potential saving is enormous. We might easily save the cost of construction of one or two major dams or nuclear stations by moving toward the installation of these meters in every home. This is one area in which the government, if it had any imagination at all, would be moving by way of tax incentives.
I believe the Minister of Energy, Mines and Resources (Mr. Gillespie) is anxious to move along these lines. Unfortunately,
April 25, 1977

he does not seem to be getting the support of the Minister of Finance (Mr. Macdonald). I recently sent a questionnaire to my constituents asking if they thought the government had taken sufficient measures to encourage energy conservation. The response I have received so far-approximately 2,000 replies out of a total mailing of 45,000-shows that 97 per cent of those answering the questionnaire felt the government had not taken adequate measures in the area of energy conservation.
Surely, if we are talking these days about the use of tax incentives, let us apply them in areas where there is genuine social benefit to this country not only in terms of individual taxpayers but in terms of our position in the world, because within eight or ten years our balance of payments will be severely and adversely affected by the drain on our resources in connection with the importation of hydrocarbons. This is not just a matter of conservation from the point of view of the individual taxpayer; it will soon become a matter of national survival, national competitiveness in world trade markets.
I find it strange, indeed, that in the most recent budget, at a time when it was fully expected that the government of the United States would be coming forward with a number of energy conservation proposals, our government should not have seen fit to provide any incentive in the field of energy conservation.
I should like to mention another idea which has worked well in some parts of the United States and which offers an opportunity for the application of tax incentives. I refer to the use of small vans, supplied by companies to groups of employees who encounter difficulties in commuting to and from work. These vans are driven by one employee and carry from 6 to 12 employees to and from their homes and their place of work each day. This results in 10 or 12 cars being taken off the road for a large part of the year, in return for a minimal tax incentive either to the company supplying the vehicle or to individuals composing a group which does the same thing. It is suggestions of this kind that we shall have to consider if we are to use tax incentives in a way which is of benefit to everyone.
The motion before us is useful inasmuch as it allows us an opportunity to discuss the whole question of tax incentives and the way in which they should be used. However, I do not wish to support it. Indeed, I would urge the House to reject it.


James Aloysius McGrath: Mr. Speaker, I should like to congratulate the hon. member for Parkdale (Mr. Haidasz) for bringing forward this motion in the first instance, as well as those who have responsibility for managing the business of the House, especially this segment of our parliamentary day, private members' hour, for allowing the motion to be brought forward once again for debate.
It is a useful vehicle for debate; but more than that, it allows us an opportunity to address ourselves to one of the most serious problems facing the country today, namely, the housing shortage. I believe the motion deserves careful consideration. At first glance I am prepared to support it. Indeed, I
Residential Taxes
would suggest the hon. member has not gone far enough when he suggests the amount which should be deductible from income tax with respect to property taxes. I should like to see $500 there; it would be much more realistic in terms of the property taxes most Canadians are called upon to pay in most municipalities across the country.


Walter David Baker: An excellent point.


James Aloysius McGrath: The government should give serious consideration to allowing some of these more useful resolutions to come to a vote. All we are asking here is that the government give consideration to the feasibility of allowing residential taxes on owner-occupied homes to be deductible.
I have serious reservations about the second part of the motion dealing with rented property. I suggest this is really confusing the issue. There are already substantial programs for rental assistance in federal-provincial housing projects, and there is considerable provision within the Income Tax Act at the present time for the write-off of certain expenses by landlords, and I suggest the advantages are often passed on to the tenants. If the House were to agree to allow this measure to be resolved by a vote today, I am sure the majority of members would support it. It would provide the government with an occasion to direct its attention to this problem, one which, I am sorry to say, the Minister of Finance (Mr. Macdonald) failed to identify when he brought down his budget a short time ago.
It is interesting to look back to the last time the question of housing received the careful attention of the government. This was in 1968 when the government appointed a task force under the chairmanship of the then hon. member for Trinity, the Hon. Paul Hellyer, deputy prime minister and minister responsible for housing. The terms of reference of that task force were:
-To examine housing and urban development in Canada and to report on the ways in which the federal government, in company with other levels of government and the private sector, can help meet the housing needs of all Canadians and contribute to the development of modern, vital cities.
The subsequent resignation of the then minister responsible for housing was a graphic and dramatic exemplification of the failure of the government to act on the recommendation of that task force. Hon. members will recall that that was a major study that covered the country from coast to coast, all major cities and urban areas and some of the smaller municipalities as well.
I believe that the hon. member for Laprairie (Mr. Watson) failed to recognize the problem which obviously the hon. member for Parkdale, representing as he does a major urban constituency in Canada, is very conversant with, and that is the problem that faces the majority of Canadians today, especially young Canadians, when it comes to their ability to be able to buy a house. I refer to what the industry calls the PIT-principal, interest and taxes-which determines the amount of monthly payments. It is not always so difficult to

April 25, 1977
Residential Taxes
save up and borrow money to raise the down payment; the problem is trying to cope with the monthly payment. High interest rates, the growing increase in the rate of property taxes and the cost of housing generally, have made the monthly payment prohibitively high.
When you take into account the fact that about 280,000 families in Canada today pay more than 50 per cent of their family income for housing, that 500,000 families in Canada pay more than 35 per cent of their family income for housing, and that another 120,000 Canadians pay more than 25 per cent, this gives the House some idea of the extent of the seriousness of the problem. Further, Mr. Speaker, when two-thirds of these Canadians in need of housing cannot afford to buy or rent a home without some kind of government subsidy, in my view we face a problem of monumental proportions, a problem, I am sorry to say, to which the government has not adequately addressed itself.
I should like to identify, for the purposes of this debate, what I consider to be two of the major problems in housing today. I have already alluded briefly to the high cost of money. The hon. member for Laprarie seemed to get off on an energy tangent in his speech and for a moment I was wondering what resolution was before the House, as I am sure you were, Mr. Speaker. Obviously, he got his notes mixed up. The small portion of his speech which was relevant to the motion before the House was erroneous inasmuch as he referred to the fact that interest rates were going down. There has not been a marked decline in the cost of mortgages in this country; mortgage rates are still prohibitively high for most Canadians.
Let me cite an example, Mr. Speaker. A $40,000 mortgage, with payments spread over 25 years and a 12 per cent interest rate, carries a price tag of about $413 a month. Using the accepted rule of thumb, that accommodation should take only one-fourth of a family's income. In other words, the accepted standard is about 25 per cent. This means, of course, that that family would have to be earning about $20,000 a year to be able to carry such a house. The same mortgage, with only half that interest rate, 6 per cent, carries a monthly price tag of $256, which would require a gross income of about $12,300 a year.
Given the fact that the average mortgage rate today in Canada is around 12 per cent, I am saying that housing has become an unaffordable luxury. It has become, to quote the often used cliche, an impossible dream for many young Canadians who want to earn their own home. In more and more cases a much higher percentage of family income must be spent on buying a home.
The second major housing statistic that I think tends to distort the picture and which the hon. member for Laprairie and spokesmen for the government generally are very quick to remind us of is the figure showing that housing starts are up. If you examine the statistics, Mr. Speaker, you will find the whole system is out of whack. The government does have one program which is commendable. There is no question that the Assisted Home Ownership Program-AHOP-is one of the most progressive housing steps the government has taken. It is
(Mr. McGrath.]
a good program, one that requires more attention in that it can be established that ceilings for AHOP in major cities like Toronto and Vancouver are unrealistically low, which means that more and more people are not able to take advantage of it. This creates a very serious imbalance between particular types of accommodation.
Since the 1971 removal of the capital cost roll-over which did a great deal to erode investor confidence in the housing market, especially in rental housing-this has since been restored, but I do not think general confidence has been restored with it-construction of new rental accommodation has not kept pace with demand. I suppose there is not a major city in the country today, including the city of Ottawa, in which the vacancy rate for rental accommodation is more than 2 per cent. I think it averages about 2 per cent across the country, though in Vancouver it may be about 1 per cent or even less. People who have to start out in rental accommodation today find themselves locked into a situation in which, even though their salaries and careers progress, they are unable to move on and buy a house, as was the habit prior to the mess in which we now find ourselves.
This, sir, I may say, has not been helped by the imposition of rent controls which, far from serving the best interests of tenants, tend to restrict supply. This is another reason why, apart from the general erosion of investor confidence in the rental housing market in Canada, there has been such a low turnover and we have such a seriously low vacancy rate across the country. I do not know what the rate is for this year, but last year the vacancy rate across Canada was around 1.5 per cent.
Furthermore, while the last few years have seen a declining availability in the rental sector, we have had this tremendous increase in low income housing as represented under the AHOP program. We have had all kinds of houses built under the AHOP program. I am glad people right across the country were able to take advantage of that program. However, it is apparent, when one examines the facts and seriously analyses the statistics, that the middle level type of housing is sadly lacking. I am referring to housing within the $45,000 to $75,000 range. That is where our problem is. That is the problem this resolution addresses itself to-the problem of being able to afford the carrying charges for that middle type housing.
The time has come for the government to give serious consideration, not only to tax deductibility of property taxes, but to the route taken by the United States which has a much more healthy housing situation in terms of inflation than we have. The government should give serious consideration to allowing Canadians to write off interest payments on mortgages, or at least part of the interest payments on mortgages, which would considerably help to reduce principal, interest and tax or, in other words, the monthly carrying charges.
I hope this resolution will commend itself to the House. It is all very well to say that housing starts are up. Housing starts
April 25, 1977

are up because of the AHOP program. Let us not kid ourselves about that. As far as higher income housing is concerned there is no problem. That market is adequately satisfied. But when you get into the middle where the majority of Canadians are now, that is where we have the problem, especially in our cities. It is a problem which will not go away. The AHOP program is absolutely essential to assist lower income people in being able to afford housing. I hope the government will even extend its AHOP program to lift the ceilings in most of our cities to a more realistic level. That is only part of the problem.
We have got to look at the problem of the middle income earner. We have got to look at the problem of the reduction in the supply of adequate rental accommodation. If you examine these two points you will get some idea of the seriousness of the housing crisis, notwithstanding the favourable statistics that the government likes to parade before us every month.
If the government does not allow this resolution to come to a vote, I hope it will give serious consideration to what the hon. member has in mind by way of his resolution. I hope they will allow for an up-to-date study, considering there has not been such a study since the Hellyer task force of 1968. I believe the hon. member for Parkdale is on the right track. He has got a good resolution. I think it requires further study. I hope it commends itself to the House.


Some hon. Members:: Hear, hear!


The Acting Speaker (Mr. Ethier):: I regret I cannot recognize the hon. member for Roberval (Mr. Gauthier). He has spoken on this motion as reported at page 861 of Hansard for November 8, 1976. The hon. member for Saint John-Lancas-ter (Mr. Landers).


Mr. Mike Landers (Parliamentary Secretary to Minister of Justice):: Mr. Speaker, my maiden speech to the House of Commons was on November 26, 1974. At that time I had this to say about housing:
In the constituency of Saint John-Lancaster we have a number of problems. However, we have one urgent need-more housing; especially more low-rental housing and senior citizens' housing. I fully realize, Mr. Speaker, that this problem is not unique to my constituency, and I was pleased to hear the budget proposals in relation to housing. However, due to an industrial construction boom in Saint John-Lancaster, workers are being imported from the rest of the province, the rest of Canada and from countries throughout the world. These workers come armed with lucrative expense accounts and are prepared to pay higher rents than regular citizens of Saint John-Lancaster can afford.
The influx of workmen has caused a serious housing shortage, and because many of these workers are on expense accounts, rents have escalated rapidly, putting them out of the reach of low-income families and out of sight for senior citizens. Each and every week since I was elected I have received a minimum of five supplications for housing. One senior citizens' apartment tower presently under construction received, before construction began, five applications for each unit that would become available. Because of the housing crisis I implore the cabinet generally, and the Minister of State for Urban Affairs specifically, to rush to the assistance of my people. The housing shortage is a fact. It will not go away. If, as a member of parliament, I am unable to convince my government to alleviate this problem over the next four years, I shall call upon the voters of the constituency of Saint John-Lancaster to retire me; to march to the polls and turf me out.


Stanley Howard Knowles: Careful now!
Residential Taxes


Mike Landers: The hon. member for Winnipeg North Centre (Mr. Knowles) was here at that time. He also had something to say at that time. Fortunately I am able to report to you, Mr. Speaker, and to the hon. member for Winnipeg North Centre, that the situation has changed in Saint John-Lancaster. Thanks to a Liberal government, I might add.


An hon. Member:: Hear, hear!


An hon. Member:: Oh, oh!


Mike Landers: The hon. member for St. John's East (Mr. McGrath) said that there was not a major city in the whole of Canada that had a vacancy rate of higher than 2 per cent for apartment rentals. I would like to report the following:


Walter David Baker: Tell us about the vacancy between your ears.


Mike Landers: Five months after I made that maiden speech, the apartment vacancy rate in Saint John stood at 0.4 per cent. That is less than 'A of 1 per cent.


James Aloysius McGrath: You are not boasting about that, surely!


Mike Landers: If the hon. member will listen, at the time that was the second lowest rate in Canada. At the end of 1976, a marked improvement was noted-a rate of 7.9 per cent, the second highest figure in the country. Normally higher vacancy rates mean lower rents. The vacancy rate is probably higher than 7.9 per cent right now; I did not have time to check it today.
Part of this improvement stems from increased participation by the Central Mortgage and Housing Corporation in the riding. The 1975 financial contributions by CMHC in loans and grants amounted to more than $30 million. Similar involvement took place in 1976. While a good deal has been done, much remains to be done. There is still a need for more senior citizens' housing and more low rental housing in Saint John-Lancaster. In the next year every effort will be made to have the government, through CMHC, direct its attention to this problem.
It is encouraging to see that CMHC, as part of a new policy, is starting to shift its emphasis to the development of housing projects designed for Canadians who cannot afford accommodations in the medium to higher price range. If the vacancy rate in Saint John continues to climb, pretty soon it will be as high as the unemployment rate.
The hon. member for Parkdale (Mr. Haidasz) put forward his proposal as a method of providing relief to home owners and renters for increased cost of home ownership. As such the measure is essentially a transfer payment, and considerations of equity are thus of primary importance. Judged on this basis, even including the $300 maximum, the proposal does not appear too desirable. As background to any consideration of the equity of the measure, it should be noted that the property tax component of the Consumer Price Index has risen no faster than other prices and costs. Against this background it seems fair to say that singling out this component of the recent

April 25, 1977
Residential Taxes
inflation and subsidizing these particular costs via the tax system is not a proposal which is generally equitable. The government has, via indexing and increasing the federal tax cut, used the tax system in a much broader fashion to compensate those who are hardest hit by inflation.
In addition it appears that the hon. member is proposing that all rent be deductible up to the $300 maximum. The proposal will thus be discriminatory in favour of tenants as opposed to home owners. Equity would require that a percentage of rent, roughly equal to the property tax content of rents, be deductible. Furthermore, a simple deduction approach, as recommended by the hon. member, would not adequately recognize the income of the recipient. Some reduction in the deduction available, based on the individual's income, would appear to be essential, to ensure that the benefits are directed to those hardest hit by increases in housing costs. Actually the hon. member's approach would provide benefits to taxpayers at all income levels, but dollar benefits would rise as income rises. In order to direct best the benefits of the measure to those most in need, a credit approach appears to be more desirable. While modifications along these lines could be accomplished, any proposal of this nature, regardless of its structure, will involve further inequities.
The ultimate beneficiaries of such a general measure will not be those who receive the initial tax reduction. For example, if house prices and rents rise as a result of the deduction, a substantial portion of the benefits will accrue to developers. Therefore a measure of this sort makes little allowance for the housing needs of different persons.
It could well be argued that larger families require relatively larger dwelling units and should thus be allowed a credit or deduction for a relatively larger fraction of their property tax or rent. In addition, the inequities as between persons residing in different provinces would probably be severe. This is particularly true of New Brunswick. Former Premier Robichaud, now Senator Robichaud, brought in what was known as an equal opportunities program, under which the northern part of the province was to have available the same type of schooling available to the rest of the province, or in the south. Services in the north of New Brunswick were improved, to bring them up to the standards of services provided in the south of the province.
Inequities would occur because provincial and municipal financing arrangements vary significantly from province to province. In particular that share of services provided by provinces, and the share of municipal revenues made up by provincial grants as opposed to property taxes, vary dramatically by province. While this is not a concern to an individual province in structuring its scheme, a federal measure related to property taxes would of necessity, if there were a uniform structure across provinces, result in different benefits to different provinces and would cover a different percentage of total costs of municipal services in each province.
[Mr. Landers.)
In addition, property tax assessment systems in different provinces differ in their treatment of various types of property. This fact would result in interprovincial differences in benefits flowing to various types of housing. The interprovincial inequities resulting from these facts would be substantial.
It is in order to raise several other points, if one is to be able to judge the desirability of this proposal. First, as a result of this measure, municipalities could feel less pressure to hold property tax increases down. As a result these taxes could rise and/or provincial grants fall from the levels which would otherwise obtain. This effect would pervert the aims of the proposal and substantially increase the revenue costs. This scenario is also not the most efficient way for the federal government to transfer resources to municipalities.
Second, while property taxes are undoubtedly a cost of home ownership, they are taxes levied by municipalities and provinces in order to pay for goods and services. Responsibility for these taxes is a uniquely provincial and municipal affair. Further, a deduction along the lines suggested by the hon. member for Parkdale might be regarded by provinces and municipalities as an unwarranted intrusion into their affairs.
Since I understand others on both sides of the House are anxious to participate in this debate, I will resume my seat, Mr. Speaker.


Walter David Baker: Mr. Speaker, I commend the hon. member for Parkdale (Mr. Haidasz) for bringing this matter before the House. He has done parliament and the public a great service. He has raised matters of this kind previously, in the fond hope that residential taxes on owner-occupied homes and rental payments made for accommodation by tenants would be deductible from federal personal income tax. The hon. member, I think recommended a maximum exemption of $300; other hon. members have mentioned a $500 maximum exemption. Indeed, I believe that certain ministers have mentioned the advantages of the hon. member's suggestion. I have supported such suggestions on previous occasions. Once I had the opportunity to second a motion couched in somewhat similar terms and presented by a member of the Social Credit Party. I seconded his motion to enable him to present it to the House for discussion.
Members of the government have delayed acting on this important matter. Any suggestion that the government would act was put to rest in the recent budget. I do not know if the government intends to incorporate the hon. member's suggestion in legislation to be introduced before the next federal election. I suspect that then we shall hear an announcement once again concerning LeBreton flats, the proposed Rideau Centre, and so on. I suggest that these matters should not be introduced in this way.
The cost of owning and occupying a home in Canada is a crushing one. So great is the burden that Canadians are now discouraged from purchasing a home and, in some cases, prefer to invest their money in other ways. Therefore, all in all, the hon. member's suggestion deserves support.
April 25, 1977

When I supported a similar suggestion on a previous occasion, the excuse put forward for its rejection was that it would be administratively difficult to implement. We were told that the idea entailed great difficulty and would mean the review of a host of other matters. I have been a member of this Elouse since 1972; yet here we are, in 1977, and nothing has been done along the lines previously suggested. I therefore commend the hon. member for Parkdale who, although not a member of my party, has again brought this question before the Parliament of Canada for debate.
All this of course demonstrates the importance of the private members' hour. I suggest that hon. members should be entitled not only to bring forward suggestions in the form of motions and bills, but to have those voted on. I see the hon. member for Ottawa West (Mr. Francis) opposite me; 1 hope he is anxious to support this suggestion. My goodness, I do not think he is. Apparently the hon. member is shaking his head. I would have thought he would support this idea. Surely the hon. member recognizes that we are discussing a matter basic to the people of our country. Surely he knows the importance of this suggestion. Why would the hon. member for Ottawa West wish to speak against it?


Mr. Francis:: No, the hon. member misunderstands.


Walter David Baker: I beg your pardon; I misunderstood. I am delighted to note that the hon. member for Ottawa West intends to speak in support of the idea we are discussing. That being so, I shall conclude my remarks in a moment and sit down. Before I do so, may I again commend the hon. member for Parkdale for his initiative in introducing this matter.


Mr. J. Larry Condon (Middlesex-London-Lambton):: Mr. Speaker, we have just witnessed in this House one of the reasons why, as I hope the people of Canada will realize, we have trouble with legislation. It is continuing diarrhoea of the mouth.


Walter David Baker: What did you say?


Joseph Lawrence (Larry) Condon: This particular suggestion brought forward by the hon. member-


Walter David Baker: Mr. Speaker, 1 rise on a point of order. I would ask the hon. member to withdraw the remark he just made if for no other reason than that it is improper parliamentary language. We can have differences of opinion, and the hon. member might not like the fact I have occupied two or three minutes of parliamentary time, although this happens to be my right. He can criticize the way I exercise that right in any way he wants, except in an unparliamentary way, and I respectfully suggest to you, Mr. Speaker, that that remark be withdrawn. It is a flagrant violation of the rules.


The Acting Speaker (Mr. Ethier):: Order, please. Before the hon. member rises let me say that I did not hear the hon. member for Middlesex-London-Lambton (Mr. Condon) men-
Residential Taxes
tion any hon. members. He referred to the House as a whole. I wonder if the hon. member for Grenville-Carleton (Mr. Baker) was speaking of all members of the House. 1 will now hear the hon. member for Middlesex-London-Lambton.


Joseph Lawrence (Larry) Condon: Mr. Speaker, the motion presented by the hon. member for Parkdale (Mr. Haidasz) demonstrates the interest that backbenchers on this side of the House have in home ownership. I also think we have to go back to the reason why the cost of homes has risen so much in the last ten or 12 years. We should look to the municipalities for the reasons. We have seen many cases where municipalities have attempted to live up to the high standards of provincial governments. Of course we have to realize also that on many occasions officials in provincial governments tell people in rural areas and smaller towns to live up to city standards.
I must say that part of the reason for the high costs of housing today is the servicing. The cost has been forced on the municipalities. As a result of planning and bureaucracy, the municipalities have had to assume the cost for servicing because they were either not strong enough to fight this or not willing to refuse it. I wonder sometimes if the municipalities, especially in the smaller areas, have not been goaded into accepting higher costs of municipal services because in the past, in Ontario especially, of up to 80 per cent these costs were covered by provincial governments. These grants are presented by the provincial governments to gain control of individual municipalities.
In the province of Ontario when regional government was first established they said they would broaden the tax base and give the smaller municipalities a better opportunity to pay an equal share and to have the same services as the larger municipalities have. Of course this has not worked out and it has become evident to me, and to people in areas such as Ottawa-Carleton, that the cost of services always rises when grants are offered as carrots at the end of a stick.
One area in which we have missed out-and I think it is important for the government to take a look at it-is the restriction in the construction of modular homes, sometimes known as mobile homes. We certainly have a need for this type of housing. In my area, just outside the town of Strathroy, there is a subdivision mostly inhabited by senior citizens because of the low cost of housing there. Not only do the houses cost less because of the ceiling but the servicing is less costly.
I think the hon. member for St. John's West (Mr. Crosbie) mentioned that instead of the $300 deduction in tax proposed by the hon. member for Parkdale, it should be $500. One of the reasons why 1 do not agree with this motion is that I think the deduction should be $600, and I believe there are very few municipalities where you do not pay at least $600 in taxes. This would alleviate the problem of people whose expectations are larger than their pockets. My wife and I had to wait seven years, during which we saved money for a down payment, before we could buy a house. I am sure that there are many young people who have to do the same as we did. Certainly when we started out we could not afford a house. I believe that
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April 25, 1977
Auditor General Act
if you compared the income of the present average young couple with that of a young couple in the fifties and the measure of their savings in percentage terms, you would find that they are about equal. What I would like to bring to your attention is that I certainly believe that the deduction should be $600.
I ask what is the share of education costs in property taxes? In the past there has been a continual rise in the cost of education. This has been due to the demands of the people or the demands of the provincial government. If you look back at the educational system in Ontario 15 or 20 years ago, you find that the demands on education were high. The same was probably true in other provinces. But ten or 15 years later people have become more realistic. One of the problems is that although the tax on education has gone up, and we saw hydro costs going up-


Mr. Ellis:: I rise on a point of order, Mr. Speaker. The hon. member, who only recently was speaking in language having to do with diarrhoea of the mouth, is now going on about the cost of education. What has that to do with the particular motion before us?


Robert Phillip Kaplan: I rise on a point of order, Mr. Speaker. Considering how many interruptions the hon. member has had, I wonder if the House might agree to permit him to continue for another ten or 15 minutes to conclude his intervention.


An hon. Member:: Not that drivel.


The Acting Speaker (Mr. Ethier):: Order, please. It being six o'clock, and the hour appointed for private members' business having expired, I do now leave the chair until eight o'clock.
At six o'clock the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.


[Stage Direction]
The House resumed consideration of the motion of Mr. Andras that Bill C-20, respecting the office of the Auditor General of Canada and matters related or incidental thereto, be read the second time and referred to the Standing Committee on Public Accounts.
M. Lloyd Francis (Ottawa West):: Mr. Speaker, the bill which is before us tonight comes, I believe, with a broad

measure of bipartisan support. As far as I am aware it has the approval of the independent review committee whose report is about to be examined by the committee to which this bill will be referred. The recommendations go a long way toward resolving the difficulties in which the previous auditor general and, I believe, the present Auditor General have found themselves from time to time.
It has always been of some interest to me to note the way in which both the Public Service Service Commission, which reports independently to parliament, and previous auditors general, who have reported independently to this place, have managed to have sharp differences of opinion on the whole matter of hiring of staff. In this regard I am referring to previous years, not to the years of the incumbent Auditor General. The theory of the independent servant of parliament was put to the greatest test when one independent servant of parliament, Mr. Henderson, frequently expressed in the most unqualified terms his disapproval of the service he received from another independent agency, the Public Service Commission. That matter has been resolved. The Auditor General is now a separate employer, which is a provision of this bill.
The extension of the audit function and the attempt to develop new methods of testing roughly what the taxpayers are getting by way of value for their money spent are dynamic and evolving areas of government operations, and I know that the present Auditor General has the overwhelming confidence of members of all parties represented in this House and that he will make a contribution in this area which will be watched not only by professional accountants but also by members of this House, by members of the other place, and by the public at large.
There are one or two areas where I still have some misgivings as to where we are going and what we are going to do. As a member of the Standing Committee on Public Accounts I have been among those who have examined the operations of Polysar and Atomic Energy of Canada Limited. Those two Crown corporations have been the subject of a great deal of testimony and examination before the Public Accounts Committee. The issues which are being exposed in these Crown corporations are deep and fundamental issues which should be of the greatest concern to all Canadians.
In the case of Polysar it is quite clear that this Crown corporation-I should say government-owned corporation; I want to come back to what is a Crown corporation in a moment-did business abroad through its wholly owned subsidiaries. It engaged in the business of excessive billing of some of its customers and the crediting of certain amounts to numbered bank accounts in Switzerland. The facts surrounding these transactions raise a real question about violation of foreign exchange control regulations. They raise a very serious question about evasion of taxes or possible evasion of taxes within certain jurisdictions, and the possibility of defrauding the minority shareholders.
April 25, 1977

If the shoe were on the other foot, if a fully owned subsidiary of some other nation were to operate in Canada, do those things and be exposed, the indignation of Canadians from coast to coast would be heard in voices that would bear no misunderstanding. We would have indignation, and rightfully so. However, the question of how control is exercised, of how such practices are prohibited and how they are brought to light when they take place, is a challenge which embraces more than the audit function. The audit function is the first line of defence.
It has been said by one or two speakers on the other side that the Auditor General should be the auditor of all Crown corporations. I find that going a little far, although I have not taken a firm position on it. This would require an immense expansion of the Auditor General's staff.
Many private auditors are in a better position to service outside Canada as well as inside Canada, multinational operations. There could be good and sufficient reasons why a private auditor might be engaged for certain set jobs respecting the operation of Crown corporations. However, there has to be a relationship to the Auditor General. The relationship I think would work best would be the co-auditor relationship.
This is not an easy matter to resolve. A private auditor who discovers an irregularity in a private multinational corporation has a major problem. This is being demonstrated from day to day in our neighbour to the south. Many American corporations are coming forward and making voluntary disclosure of payments which have violated the political contribution laws of that country, payments which in one way or another were irregular. When such a situation comes to light, in my opinion there should be an obligation on a private auditor to consult immediately with the Auditor General. The Auditor General always has the ultimate weapon of reporting directly to parliament and bringing public attention to irregularities.
I want to talk about one other matter that gives me a great deal of concern, that is, what is a Crown corporation? In the definition section of this bill we see that a Crown corporation is listed according to the schedules of the Financial Administration Act, but we learn that "ain't necessarily so," as they say.
We have the example of Polymer, which later changed its name to Polysar, listed in the financial schedules. It is listed clearly in black and white. Polysar was purchased by the Canada Development Corporation. At that time it was 100 per cent owned by the Government of Canada through public funds. We then had the remarkable interpretation by the legal officers that when Canada Development Corporation bought the shares of Polysar, it ceased to be a Crown corporation.
Canada Development Corporation by law was not a Crown corporation although it was owned by the Government of Canada. Because it happened to buy the shares of something listed and described as a Crown corporation, the legal advisers said it was no longer a Crown corporation. Acting on that advice, the directors of Polysar, with Canada Development
Auditor General Act
Corporation's approval, I am shocked to say, dismissed the Auditor General as the co-auditor of the accounts on the grounds that Polysar was no longer a Crown corporation. To this day, Polysar is listed in the schedules of the Financial Administration Act.
In 1973 there was an attempt via the estimates-legislating via estimates, the one dollar items-to change Polysar and have it taken off the schedules of the Financial Administration Act. Members opposite objected and threw out the item.
We are told by people with a straight face, holding distinguished positions in the public service in this country, that Polysar today is not a Crown corporation although it is still listed in the schedules of the Financial Administration Act and although there was an attempt to have it de-listed, but that was rejected by parliament.
My question to the President of the Treasury Board (Mr. Andras) is: when is a Crown corporation not a Crown corporation? When is something listed in the schedules of the Financial Administration Act no longer a Crown corporation? We have a statute which relies on the definition of being listed in the schedules of the Financial Administration Act as a criterion for deciding what is and what is not a Crown corporation. We have this precedent and I do not know how many others, stating that something, although it is listed, may no longer be a Crown corporation because of something that happened to it subsequently. I suggest this will have to be examined at the committee stage. It is a small item in the total scope of things in the bill.
I believe the bill is a good one. The expression today of the President of the Treasury Board that the government has accepted the recommendations with regard to a comptroller general has removed the last of the differences that have remained between the Auditor General and the Government of Canada in terms of what has to be done to strengthen and improve the financial accounting of records of Canada, the government's operation and, I hope, Crown corporations.
In the committee we will have an interesting examination of these clauses. I am sure that the broad bi-partisan support which has been evident so far in this debate will continue. I am pleased to support the bill at second reading.


Arthur Ronald Huntington: Mr. Speaker, it is a pleasure for me to make a few comments after a couple of years work on the Public Accounts Committee. I was pleased to hear the hon. member for Brant (Mr. Blackburn) this afternoon make some very sound recommendations with regard to the structure and format of the Public Accounts Committee. I would like to add one that he did not mention.
The hon. member mentioned the need of the Public Accounts Committee for more investigative staff. I think a secretariat should be formed around the chairman, and a budget provided that will allow for proper secretarial services to that committee and its members, as well as the investigative staff called for by the hon. member for Brant. I am sure the hon. member for Ottawa West (Mr. Francis) will agree with anything in that direction which will improve the effectiveness
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of members of this House in their overview and watchfulness of the accounts of Canada.
I would like to compliment the government. I do not have too many compliments for them, but 1 must say I compliment them on the selection of Mr. Macdonell as the new Auditor General. He is a very thorough man. He is doing a very thorough job. He has a thorough understanding of the degree of quality that is needed in controls. With the financial management control study completed under his direction by members of the Chartered Accountants Association of Canada, we moved into a new era of hope for the taxpayers of Canada in the control of public accounts. These two measures are to the credit of the government.
The rapid growth of the federal government is now reaching upwards and over 18 per cent of the gross national product. The incentives system within our government is designed to encourage waste and extravagance, as we have seen these many years. It is a system that has its incentives completely backward to the way they should be and the way incentives are placed in the private sector. We give prestige to ministers and deputy ministers on the basis of the size of their budget and the man-years they have within their control and within their departments. We have heard many times about the growth in the size of government. Both the size and complexity of government departments have grown very rapidly.
More and more we have moved to regulate and supervise the private sector and have found insufficient personnel with accounting abilities available to control the utilization of our tax resources. One of the things that a new member has to get used to when he arrives on the scene is cash flow accounting vis-a-vis the double entry accounting to which people in the private sector are accustomed. We believe outside that people are always accountable to the tax collector, but as a member of this House I find with the cash flow accounting system very poor control on the part of administrators of the government to ensure that department heads and deputies are accountable to the people of Canada through the members of the House.
After two years on the Public Accounts Committee I have found repeatedly that there are too many people in government lacking sufficient accounting skills, and as a result we continually find ourselves outside the provisions of statutes and the regulations of the Financial Administration Act. This most unsatisfactory condition makes the strengthening of the Auditor General's powers and abilities to function absolutely essential.
Also in our work on the Public Accounts Committee we have found that the same errors in departments are being repeated year after year. Although qualifying statements were put on audits, the same questions have arisen repeatedly as if no one cared. I should like to see provision made in the legislation to strengthen the Public Accounts Committee so that the day will come when a deputy minister would never want to see a qualifying statement repeated in an Auditor General's report.

Bill C-20 is moving in the right direction, in my opinion, but a very careful reading exposes some flaws which must be corrected. In reading a bill of this nature, written by a responsible minister as smooth as the incumbent President of the Treasury Board (Mr. Andras), one must search for that which is not said. In the little time I have had to study the bill I have found a few items which cause me some problems.
I notice that in the bill the government has very quietly removed reference to the Consolidated Revenue Fund, which is part and parcel of the definition in sections 53 and 58 of the Financial Administration Act. I have to ask why there is no reference to the Consolidated Revenue Fund, which is omitted in clause 5? What does this mean? Are departments of government being opened up, or is auditing being contracted out to private firms? Is the Auditor General going to have a free hand in the appointment of auditors? If so, as a member of the House I should certainly like to know the rationale of that.
Another part of the bill that causes me difficulty is clause 13(3), which provides:
If, in the opinion of the Auditor General, a Crown corporation, in response to a request made under subsection (2), fails to provide any or sufficient information or explanations, he may so advise the Governor in Council, who may thereupon ...
It is generally accepted that this bill is a move in the right direction, but if we are truly concerned about the condition of the accounts of Canada, Mr. Speaker, surely to goodness the bill does not have to be qualified in that way. I do not know why the wording does not say "who will thereupon". There is no need for a "may" if the intent of the bill is to be fully meaningful to those of us responsible for its passage.
Clause 13 affords the Auditor General the right to secure any necessary information from Crown corporations which will enable him to fulfil his responsibilities as auditor of the accounts of Canada. However, in light of the current investigation of Crown corporations by the Public Accounts Committee it is mandatory that these provisions be further strengthened to assure the Auditor General the right of access to information about these corporations where he is not the auditor. The bill gives him certain powers in the acquisition of information, but it is my claim that the Auditor General must have access to the working papers of Crown corporation auditors when signing off the accounts. If he feels that there are unusual items in the audit, he should have the right to report the matter to the Parliament of Canada as the joint auditor of the Crown corporation concerned. Or if in the future we are going to have private sector audits of departments of government, in all cases this bill should declare that the Auditor General of Canada is the joint auditor of all accounts in all matters pertaining to the Consolidated Revenue Fund. As it stands, Mr. Speaker, he is either the auditor or he is not the auditor. We have a chance to correct this serious omission by insisting that this point be stated more clearly in Bill C-20.
In the case of Polysar which has just been described by the hon. member for Ottawa West, there was no qualifying opinion. It came to the Auditor General's attention that certain
April 25, 1977

unusual practices were going on in the Swiss office of Polysar, and only through his examination of the working papers was he made aware of this. He could only proceed on the basis of the information contained in the working papers of the auditor who had been appointed. Had he not been joint auditor, no one would have ever known of the behaviour of Polysar.
This is why I claim that this legislation can be strengthened and simplified by making the Auditor General joint auditor in all cases. When the boards of Crown corporations are allowed private audits only, we leave open a great weakness, for under this system there seems to be the attitude that "those donkeys in parliament need never know what we are doing and how we are playing the business game". This is just not good enough, Mr. Speaker, in this day and age.
I should like to place further emphasis on this point by reminding the House of an interoffice memo that appeared in the appendix to the Public Accounts Committee minutes No. 23 for March 15, 1977. I found this memo surprising and shocking. It is an interoffice memo from the Zurich office of the Auditors Peat, Marwick, sent by a Mr. Matthews to Mr. Kirkwood at the Toronto office. In the last sentence of the second paragraph he says:
Of course, it will not be such a sensitive matter on the Canadian scene next year when the company is no longer a Crown corporation.
This emphasizes the point made by the hon. member for Ottawa West. The games which have been played by these Crown corporations which say they are no longer Crown corporations because they have been bought by another Crown corporation are far more serious than anything I have encountered in the private sector.
Before I arrived here, I was aware in the private sector that the Polymer Corporation was trading goods off at low values to Swiss companies where the trading profits were maintained overseas so that they could accumulate an account there on a 714 per cent income tax basis, and was lending the money back on the world money market or back into its operations in Canada. I was shocked to find Crown corporations behaving in this way against the interests of the shareholders they were supposed to be serving. The people of Canada must be assured of all the safeguards necessary when examining unusual transactions relating to Crown corporations not audited by the Auditor General. The bill must also ensure that all these matters are reported to parliament. It is therefore my opinion that we must add to this bill provision for a joint audit report by the Auditor General and the private sector auditor appointed by the Crown corporation. If the government is sincere in its attempt to clear up the messes it will change "may" to "will" in clause 13 and add this joint audit provision. As the bill now reads, the Auditor General has access to Crown corporations only when he is appointed the auditor. At the present time he depends upon his professional relationships with other auditors who have been appointed to examine specific Crown corporations.
Auditor General Act
The Polysar case mentioned by the hon. member for Ottawa West is a test case illustrating where this relationship broke down. At the time their questionable behaviour was discovered the then Auditor General expressed serious differences of opinion, and in a letter under date of October 25, 1973, to Mr. Ian C. Rush, President of Polysar, he listed those differences of opinion in one particular paragraph which I think is completely pertinent. I quote here:
The second point relates to the arbitrary way in which the Polysar shareholders fired the Auditor General last May. I do not understand how this action could have been taken, not only under the Defence Production Act, still extant, but also because Polysar still remains a Crown corporation under the Financial Administration Act.
It is interesting to note that those two acts have still not been amended, though amendments have been talked about for a couple of years now. The Auditor General's only recourse was to write to the Prime Minister (Mr. Trudeau). That was the only avenue left to him to report the irregularity. We now know-a long time after the event-that the Prime Minister started the letter on one of his famous cabinet merry-go-rounds and managed to keep the matter hidden from view all these years. With these points in mind, Mr. Speaker, we must press for the inclusion in the bill before us of a guarantee that the Auditor General remain outside the authority of the governor in council. In my opinion he must have access to the House of Commons, otherwise there will be more Polysar deals where letters get on to the cabinet merry-go-round and serious matters are hidden in this type of cover-up.
This brings me to clause 7 of Bill C-20 with particular reference to subclauses (3) and (4). Subclause (3) reads:
Each annual report of the Auditor General to the House of Commons shall be submitted to the Minister of Finance on the 31st day of December in the year to which the report relates.
It goes on to say:
The Minister of Finance shall lay each such report before the House of Commons within 15 days after receipt thereof by him, or if the House is not then sitting, on any of the first 15 days next thereafter when the House is sitting.
If the Chief Electoral Officer can submit his report directly to the Speaker, why can the Auditor General not have the same relationship with parliament? What is the significance of the reference to the Minister of Finance in this clause? Crown corporations report to different ministers. If the Auditor General is responsible for the over-all reporting of their performance to the shareholders who are represented in this House, why can the Auditor General not submit his report directly to the Speaker? Why should the Minister of Finance have the report in his hands for 15 days? If there is a reason for provision of direct referral not being included in the bill, then why not change the bill or the Standing Orders? I will go one step further. Why should the Auditor General not receive direction directly from the audit committee of the House of Commons? If there were a properly structured committee, as was suggested by the hon. member for Brant, if it had a proper secretariat with appropriate investigative abilities, why should not such a committee have the strength and authority to have the Auditor General report to it directly?

April 25, 1977
Auditor General Act
One of the important aspects of the work which has been undertaken by the Public Accounts Committee in connection with the Auditor General's Report, has been the "value for money" concept. A great debate has been going on between the Auditor General and certain senior members of the Treasury Board. At page 33 of the Wilson Report an outline is given of what it is hoped to achieve. One paragraph on that page says:
Essentially, the Auditor General's task is to determine whether value has been received for the money the government has spent.
It is admitted that this is a complex problem, but the point, essentially, was whether money is expended economically and efficiently and whether the program on which it is expended was effective in meeting its objectives. Right there, Mr. Speaker, is one of the key concerns of those who sit on the Public Accounts Committee.
The report goes on to say:
There should be no discrepancy between a policy approved by parliament and the carrying out of this policy by the administration in an economic and efficient manner.
Further on it says:
The right of the Auditor General to report on this aspect of government expenditures has been challenged even in recent years. It has been suggested that the intent of the present legislation is to restrict him to reporting on regularity alone without regard to whether the money was spent economically or efficiently. This narrow interpretation seems inconsistent with our understanding of parliament's intention when it appropriates funds for a particular purpose. In making such an appropriation it surely imposes a trust on the administration not only to use the funds for the specified purposes but, as a trustee, to spend the money prudently, that is, with a view to economy and efficiency. In other words, the administration is expected to ensure that value for money will be obtained.
Nobody in this House who has been doing any kind of homework on estimates and supplementary estimates, and on the budget and in the Public Accounts Committee, can say that this condition prevails other than in the Department of National Defence which has been under such restrictions that they annually go through a zero budget. That is about the only department of government which has subjected itself to real zero budgeting techniques.
It is being said by senior officials in treasury that this point is too political for the government to adopt. Well, I am very pleased to see that the President of Treasury Board has today announced at long last the appointment of a comptroller general. This is an area which needs the overview of a group of professionals not endowed with the attitudes which seems to creep into us when we have been around here too long. It only strengthens the need for an examination of the productivity and the use of our tax resource, and I think we have begun to move in the right direction. The present system simply does not challenge the deputy ministers as to the use made of this precious resource.
Naturally, the deputy ministers fight measures which would give a performance reading. They would have to manage in the same way as those responsible to the tax collector have to manage. They have it pretty easy with an automatic 8 per cent, 10 per cent or 15 per cent add-on over last year's budget. This is an attitude that has been constant over the last ten
years of this government. There is an attitude within the mandarin level that our form of estimates is O.K., that they do not need changing, that the people in this House just do not know how to use them. Mr. Speaker, I do not agree with this.
The estimates are grouped together. We have aggregates. There is no way of getting detail of the need underneath the estimates. The form of estimates is grossed up and mistakes are covered by supplementary estimates. Why supplementary estimates? They are just an excuse for lazy budgeting in the first place. No one outside of the few gamesmen at the deputy minister level know where anything can be found in the public accounts and in the estimates. They are not an effective tool for the average parliamentarian to use.
Where is the comprehensive study on estimate formats that we were promised over a year ago in the Public Accounts Committee? Has the department or the Treasury Board done anything on this? I have seen nothing so far in the way of reform that would make the estimates a useful control document as has been called for by the Auditor General. Where is the intensive discussion with the members of parliament on this subject that was mentioned last year? One year has passed. What has been done?
I remind you that the Glassco Commission report of 1963 is finally seeing a glimmer of hope for some of its recommendations in this Bill C-20. That was 14 years ago. We need two things: first, better disclosure of use of tax resource, and second, a better basis of control for departmental spending. We need a single central control agency responsible for the form and use of estimates. I am very hopeful that the announcements of the President of the Treasury Board today are in that direction. The comptroller general is essential. What progress has been made to correct the serious deficiencies revealed by the financial management control study? We have not seen anything on that which is final. We spent a lot of time looking at that in the last year and doing in-depth studies with members of the Treasury Board staff.
I remind the House that we are in desperate need of measures that will, first, improve the form of estimates and public accounts; second, develop program and activity structures suitable for control purposes; third, integrate performance measurement systems with other financial systems; and fourth, develop a central system for reporting variances between planned and actual financial performance as is done in any well-managed and well-run corporation.


Some hon. Members:: Hear, hear!


Arthur Ronald Huntington: We will not correct the deficient condition of control without a comptroller general as envisioned and recommended by the Auditor General. I trust the umpire concept, as described by the President of the Treasury Board in his speech today, has not really changed the Auditor General's concept as I understood it a year ago.

April 25, 1977

Another thing we need around here, particularly in the area of controls, is some new faces. The old faces allowed the problem to develop. They are masters of gamesmanship.


Mrs. Holt:: They did it with their faces?


Arthur Ronald Huntington: You know what I am speaking of, Simma!


An hon. Member:: But, does she understand?


An hon. Member:: "I grew accustomed to her face!"


Arthur Ronald Huntington: In spite of the present charisma contest that the government keeps playing through its propaganda system, I pray that the Canadian people can see through these masters of deception and permeation and throw the rascals out on the street.


Some hon. Members:: Hear, hear!


Arthur Ronald Huntington: This country needs a fresh government and a new fresh one hundred at the top of its public service. I urge the committee responsible for studying this bill to give serious and urgent consideration to these matters.
Part and parcel of my remarks concern the necessary amendments required to the Financial Administration Act. I believe that should be part of the deliberation of the committee studying the bill. This is an important bill. It should carry all the strength required to assure the House of Commons, and subsequently the people of Canada, that the moral behaviour of our Crown corporations sets an example that we can be proud of in corporate conduct and responsibility.


An hon. Member:: Here comes the fund raiser!


Mr. Fernand E. Leblanc (Parliamentary Secretary to Secretary of State for External Affairs):: Well, I do a good job at it. I hope you can do as well as I do.

Mr. Speaker, because of my many responsibilities as Parliamentary Secretary to the Secretary of State for External Affairs, it may seem somewhat surprising that I should take part in this very important debate. I am a chartered accountant and of course I am very much interested in the topic being discussed by the House. In addition, having served for seven years as chairman of the Committee on Miscellaneous Estimates where the estimates of the Auditor General are discussed, I naturally met his officials several times as well as the Auditor General himself. It must also be remembered that I was a member of the Public Accounts Committee for over 13 years, that is since I first came to the House. Consequently I feel that I know the Standing Committee on Public Accounts and know what has been going on there in the last 13 years. Unfortunately, at the present time, I am not as active a member of that committee as I should like to be, but I do follow its deliberations very closely. You may rest assured that I am as interested as ever in the matter despite the fact that I now have other responsibilities.
Auditor General Act
I have no intention of recounting the history of all the recommendations that have been presented in that time by the Standing Committee on Public Accounts, to which I contributed enthusiastically: nor shall I speak of the number of recommendations accepted by the government in that time, though the opposition claims regularly that the recommendations of the parliamentary committee have not been accepted.
However, I must take exception to those suggestions because I know for a fact that most of the committee's recommendations, when of course it was possible to implement them were accepted by the government.
I want to congratulate the Auditor General whose appointment already dates back to 1973 for the extraordinary and constant work he is doing within his department and the amendments he made to the structures since he was appointed. As soon as he was appointed, of course, he realized that there was a lack within his department. So he immediately called upon an impressive group of experts in this area who studied the problem and made most interesting reports.
When I say, Mr. Speaker, that the new Auditor General deserves congratulations, I am referring to a reporter who is certainly not a Liberal, namely Mr. Douglas Fisher. In the Executive of March, 1976, entitled A Personal Viewpoint, he said the following, Mr. Speaker, and I am, of course, only quoting the title of the article that would be too long to repeat here, because I want to avoid being accused of delaying the bill from being referred as quickly as possible to committee for further consideration. Mr. Douglas Fisher entitled his article:
Auditor General Macdonell Right man at the right time.
... and I would say at the right place!
Mr. Speaker, we are happy with that appointment. Since 1973 the new Auditor General communicated a lot with the committee that was referred to and he put forward astonishing reforms even if there had previously been an also very qualified auditor. I would not want, of course, to try to draw a parallel between the two auditors, which would certainly be unpleasant for certain people. I would also like to extend congratulations-


Jean-Jacques Blais: Particularly the former chairman-


Fernand-E. Leblanc: -I would not dare name him. Congratulations to the President of the Treasury Board (Mr. Andras) for producing Bill C-20 and announcing today the appointment of the comptroller general. There are those in this House who do not think that that possibility has been under consideration by the government ever since the month of February 1975 when I personally made recommendations to the right hon. Prime Minister (Mr. Trudeau) about appointing a comptroller general. There is talk here that the government reversed its position and, if my memory serves me right, the official critic this afternoon even suggested that this was a miracle.

April 25, 1977
Auditor General Act
Not at all, Mr. Speaker, because as early as February 75, before the presentation of the first Auditor General's report concerning the appointment of a comptroller general, I had prepared for the Prime Minister and several ministers a memorandum on that possibility and the whole thing had been discussed since the beginning of 75.
Following that memorandum, I had discussions with the President of the Treasury Board (Mr. Chretien) and the Auditor General and I am pleased to see that following those discussions there has been an agreement concerning the appointment of such a comptroller general which as you know, Mr. Speaker, exists in private enterprise. Of course, private enterprise can often give to the government examples of sound and good administration. In my memorandum I referred to the fact that private enterprise had created such a position and that it was of the utmost importance to avoid the waste that often happens in an enterprise, and particularly in one like ours which is the enterprise of the federal government with a budget exceeding $40 billion. Obviously, we frequently refer to the Glassco report but let us not forget that when that Royal commission produced a report of the utmost importance, amounts of about seven or eight billion were at stake and that, consequently, the recommendations made then might be a little less valid now as the budget has considerably increased since that time.
This afternoon some members referred to amendments. I hope that the amendments to Bill C-20 will be considered seriously, as the Auditor General already gave his support to Bill C-20 as it has been tabled today. And I think it is important that members of the opposition wishing to amend the bill also consult the Auditor General who is, I am sure, at their disposal, to make sure of the relevancy of the amendments they wish to suggest.
It is very difficult, Mr. Speaker, not to act in a partisan way on any committee, whether it be the Public Accounts Committee or the Committee on External Affairs and National Defence, because I do not know one member, either of the opposition or of the government, who is able to express objective views. When we express our views, they certainly stem from other than objective reasons, because we must all, of course, meet the needs and demands of our electors and we must also be loyal to the party we represent, and in my opinion, there is nothing in the House or in the committees, that is perfectly non partisan.
And at the present time, I think we can see unfortunately this partisanship take effect in some cases, not everywhere but still in some cases. When we deal, Mr. Speaker, with the royal commission which was set up and to which hon. members opposite have objected, I think we must refer to what the Auditor General himself said when this Royal commission was established: he said that the terms of reference of this commission were self-evident. The Auditor General was then and is still very interested in this commission which is not a duplication in this case but which will consider some of the existing

control problems in government expenditures and which will have to report of course in the near future.
I said, Mr. Speaker, that as early as February 1975, I had submitted a memorandum to the Prime Minister (Mr. Trudeau) as well as to several ministers on the possible establishment of the position of comptroller general and, of course, I consider myself as the parliamentary sponsor of this happy initiative from the government. In fact, before the 1976 report of the Auditor General, in which he makes this recommendation, to my knowledge no opposition member ever recommended this appointment and such recommendation was never included in the numerous previous reports of the Public Accounts Committee. It is after the publication of the Auditor General's report that the opposition has considered it a very worthwhile proposal which should be followed up by the government. That has actually been done since then. We must now pay tribute to the President of the Treasury Board (Mr. Andras). Of course, the cabinet has agreed to the appointment of this comptroller general.
I mentioned in this regard that I have had very interesting discussions on this proposal with both the Auditor General and the Deputy Auditor General, Mr. Rheal Chatelin, since 1973, and that I also had very lively and interesting meetings with trade and industry representatives, businessmen, professionals and others who had already some experience of a comptroller general. According to them, in view of the increase in federal government estimates, it was timely to provide for such a position and above all to ensure that the incumbent had adequate powers to fulfill his duty efficiently.
Of course, the comptroller general must check into useless expenditures, occasional Financial mistakes by some of our senior officials, lavishness and, in short, the waste of our administrative bureaucracy. Certainly the role of the Treasury Board is to control the preparation of the estimates and, to some extent, the way public funds are spent.
In my view current controls are inadequate, even if we add the control exercised by the Auditor General, and a new position is an absolute necessity if we are to ensure that Canadians are well served by the federal government, that their money is wisely spent. Because they ultimately pay the bill.
I even suggested, and I hope the present members of the Standing Committee on Public Accounts will agree, that the committee's name should be changed. That name suggests that we are scrutinizing public accounts, whereas we discuss perhaps 95 per cent of the time recommendations and remarks by the Auditor General. Therefore, my recommendation in the brief was that we might change the committee's name to that of committee for expenditures control, which would be much more appropriate in my view.
I also feel that certain statements made by the Auditor General in his report of May 1976 concerning co-operation between the federal government, the current government and his own office should be put on record. He said: I am convinced that my concerns over the weaknesses and shortcomings in the financial control are shared by the government and its
April 25, 1977

senior officials. Those are not my words, but the Auditor General's. Ele also had this to say: Since I was appointed Auditor General of Canada in July 1973, the government quickly and positively responded to my requests for additional professional resources in my staff; such requests are fully justified by the situation I have just indicated, and the response obviously proves the government's concern over the problem and the serious support my office is receiving from them.
I also heard the same remarks by his predecessor. When I put the following question, before the Standing Committee on Public Accounts: Mr. Auditor General, did the government ever refuse funds to increase your staff and your efficiency? The answer was: No, the government never refused such funds. This applies not only to the present Auditor General but to his predecessor.
The Auditor General also said: Treasury Board never refused, changed or reduced my requests for additional resources at the top management or professional levels, nor the funds needed to improve professional standards or to undertake special study such as the financial management and control study or other studies mentioned in my report. He also mentioned, in his report for 1976:
Furthermore, I have every reason to believe that most of the key recommendations of the independent review committee which were referred to earlier will probably be integrated in a new piece of legislation on the Auditor General of Canada. These measures as a whole lead me to believe firmly that in 1978, when it has a hundred years of existence, the Auditor General's office will be in a better position than ever to perform efficiently as the watchdog of Parliament.
Therefore, Mr. Speaker, I do not think I should dwell endlessly on the subject but I do want to mention once again that I played a direct part in the fact that we are now on the verge of appointing a comptroller general, and one can be assured that I am honoured and that I feel I made an important contribution to the Canadian people, were it only the appointment of a comptroller general who will surely be in a position to control expenditures beforehand, before the Auditor General can examine them. Thus, the money of the Canadian people will be well spent and I think that they will recognize that the comptroller general has been appointed indeed by a Liberal government for the greatest benefit of the population as a whole.


Thomas Gordon Towers: Mr. Speaker, the hon. member who just spoke said that it is this Liberal government which is appointing a comptroller general. I agree with that, and I am sure a great many hon. members agree that we have to appoint a comptroller general because of this same government.
We now have one of the worst economic situations with which we have ever had to deal. An article in the April 7 Ottawa Journal said the following:
Auditor General Act
The severe slowdown in the economy will affect all regions in Canada with the recent budget doing little to improve the bleak outlook, according to the latest findings of the Conference Board of Canada.
Despite the differing industrial structures of the 10 provinces, all are expected to experience 'diminished economic growth,' the board reported Wednesday.
Total output in Canada is forecast by the board to increase by only three per cent in real terms this year, compared with 4Vi per cent in 1976.
'While this forecast was completed prior to the presentation of the recent federal budget, an analysis of the measures contained therein suggests no major revisions to the outlook for the current year'...
I read that to bring to the attention of the House the reason the financial operations of this government have to be controlled. When we compare our budgetary deficit of $7.2 billion with the over-all budget of some 15 years ago, we realize that there is no way Canada can continue on this road.
I realize, as the hon. member just stated, that the Auditor General is granted certain funds in order to establish a proper facility to audit the financial operations of the federal government. Nevertheless, I think we have to exercise a great deal of care and not throw the baby out with the bath water, thereby losing as much through auditing services as we are saving because of proper auditing.
The Auditor General will have to consider the cost of auditing and the cost of contracts he undertakes with auditing firms. Ultimately he will have to be given authority to investigate the auditing of any Crown corporation, if Canadian taxpayers are to be treated justly. Mr. Macdonell will have to consider these matters seriously in the weeks, months, and years which lie ahead. I am satisfied that these are some of the matters with which future governments will have to come to grips.
We have just experienced a serious situation with regard to Crown corporations such as AECL, Polymer, Polysar and others. We should use these as examples so that we will know what we should do and what we should not do.
We all realize that the duties and responsibilities of the Auditor General are serious, important, and onerous. His task would be much easier to carry out if there were sensible considerations made and a limit in the minds of those who do the actual spending of public funds. This would have to start with the government itself and be followed through by deputy ministers and other senior public servants. Unless those who approve purchases, projects, studies and contracts have their minds on the amounts which should be allocated, there will be waste through purchasing or hiring what is not really needed, and by lax administration once certain measures are approved.
It is all very well for the government to change deputy ministers and cabinet ministers who get into trouble or whose performance is doubtful, but that does not remove waste, mismanagement, and carelessness. Those shortcomings are merely shifted to other individuals or agencies. In the meantime, is any thought being given to Canadian taxpayers, who seem to come last? They pay for all government operations and spending, and they are at the mercy of our entire system of squandering tax dollars and manoeuvring through bookkeeping.

April 25, 1977
Auditor General Act
The Auditor General recommended the appointment of a financial officer to be responsible for spending within each department, corporation, or other government agency. Actually, the existing staff should have someone who checks all expenditures, whether or not that person has the position of financial officer.
The appointment of a comptroller general is a step in the right direction, but I trust that this will not mean the setting up of another expensive, unnecessary bureaucracy. The comptroller general will require a staff, but he should be able to use the services of deputy ministers, assistant deputy ministers or branch heads. If these senior employees do not now take spending seriously, I feel sure that the comptroller general could draw up guidelines, with the co-operation of deputy ministers, which would assist him in his great responsibility and in his effort to eliminate waste and unnecessary spending.
The Auditor General should not be hindered or hampered in performing the audit of federal books. His authority should be strengthened to meet the need, and only he knows where his work runs into stumbling blocks.
I have questioned the advisability of the Auditor General becoming too cosy with any government department or agency. If the Auditor General were to give warning or draw carelessness or weakness to the attention of those in charge, they would have time to clean up their act and then slip back and follow again the same pattern of careless spending or lax management. On the other hand, if senior personnel were aware of the fact that their activities were being carefully and diligently scrutinized and monitored right within their offices, they would certainly be more careful of what they spend, of what they receive in return, and whether tax dollars are used wisely.
Everyone knows the trouble the Public Accounts Committee has experienced. Earlier I mentioned Polymer, Polysar, and Atomic Energy of Canada Limited. If the Auditor General had had the authority he needed to carry out his job, this kind of situation would not have arisen. The answer is not to remove his services from a Crown corporation which is mishandling funds. The answer is to allow him to get to the root of the trouble instead of waiting months and years for it to surface. I believe that the Auditor General has the right and the responsibility on behalf of the taxpayers of Canada to examine the auditing of every Crown corporation in Canada. Tax dollars continue to be squandered. There should not be any loophole whereby money can be spent inside or outside Canada without the Auditor General being furnished with the details. How can he carry out his job as auditor otherwise? No auditor can check books if there is not an accounting of what was purchased or where the money went. An individual could not manage personal finances for long if he or she did not know where the funds were going, how much, when, what was received in return, was it worthwhile or was it waste.
Just because the government has a bottomless pit whereby taxpayers are assessed more to meet an uncontrolled appetite

for more dollars does not mean that government employees should be on a never-ending shopping tour or spending spree. There must be a limit, there must be a value and a need taken into thought prior to that financial action. It is too late once the money has been wasted or spent without explanation or reason.
If the heads of departments, government corporations or agencies do not take seriously the spending of money of others, they should be removed. By the same token, any employee who is not performing to the maximum is a waste of public funds, whether he is at the top or at the bottom of the pay scale. I include in this Crown corporations because so many of them operate at a deficit.
A grand title and a senior position do not necessarily mean best performance and maximum output. Are these people worth the amount paid for their services? The Auditor General cannot check on that type of waste, but the immediate senior can and should, or that employee is not in the right job.
The Prairie Farm Assistance Act is an example of inadequate performance. The Auditor General inspected the books, yet he did not have any way of knowing that improper financial activities were taking place within that administration. A mechanism should be set up whereby there would be a means of establishing not only a measurement of man-hour output but of personal performance. In other words, what are employees doing, is it necessary, and is it of benefit to Canadians whose money is being spent? This bill does not seem to provide for correction of that type of abuse of labour and funds, which cannot be detected unless a person happens to stumble on it, and then no one knows how many similar incidents are missed. This is a soft spot within government financial management.
Everyone has an opinion of the worth or uselessness of royal commissions, better known as stopgaps during times of difficulties. The present royal commission will be working for two or three years and no doubt will come up with many recommendations, which cannot be of benefit unless implemented. Prior to that report, the Auditor General must get on with his job. If this bill is to be of any value at all, it must include provisions to enable the Auditor General to audit and consider every aspect of government spending; amounts, worthiness, necessity, possible duplication, mismanagement, laxity in administration, over-hiring, incompetent hiring, inefficient performance, daily output for man-hours, and many other related facts.
Control is a small word with a big meaning. If the Auditor General is not permitted to get right at the root of the causes of wastage and mishandling of dollars, he certainly cannot advise on control. As long as the government operates as it is now, which apparently is out of control as far as spending is concerned, it will take more than wage and price controls to control expenditures. To assign a man a vital task without giving him the tools to do the job is perhaps a bigger waste of time and money than the accounts he is checking.
Parliament should have more say in where taxpayer dollars are going, and the Auditor General should have sufficient
April 25, 1977

power to audit government books so he can do so without being hampered or frustrated.
I would feel more comfortable if the Auditor General were allowed to report directly to parliament or to the Speaker of this House rather than to the Minister of Finance (Mr. Macdonald) or any minister. Immediately his report is presented it could then be studied in committee. The 15 day allowance before the report is tabled is not necessary.
What are the measures the government suggested this afternoon that will rectify these problems that have been so well spelled out by the Auditor General? I quote from the minister's statement: "Mr. Speaker, this draft legislation addresses two basic issues; first, the independence of the office of Auditor General of Canada, and second, the scope of the audit that he will be required to perform."
These are only two of the measures among many which the government must undertake. Only an increased scope plus the resource to ensure that the Auditor General has adequate staff will suffice. The minister made a gesture under Clause 19 of the bill. I quote from page four of the notes for his speech: "While the Auditor General will continue to submit his estimates to the Treasury Board for approval, Section 19 of the bill would empower him to make a special report to the House of Commons 'in the event that amounts provided for his office in the estimates submitted to parliament are, in his opinion, inadequate to enable him to fulfil the responsibilities of his office'."
In reality, however, it requires a money vote to be passed by this House to bring that objective to fruition. This may not be a bad idea to control public expenditure, and I am all in favour of that, if it is not done with the explicit design to control the Auditor General. In view of this, the Auditor General does not have unlimited resources and it is wrong to state otherwise.
I would have been much happier if the cost of financing the royal commission, that is, the inquiry on financial management and accountability, which the government appointed just a few months ago, had been channelled into a fund to be used at the direction of the Auditor General. That department could make better use of those funds.
We have now seen two annual reports of the Auditor General, 1975 and 1976, where the financial management and control of departments, agencies and Crown corporations have been evaluated and found wanting. The Auditor General has diagnosed the illness and prescribed a remedy in the form of a recommendation to the government to restore the health of these departments and agencies.
One of those recommendations was the appointment of a comptroller general, which goes a long way toward developing and establishing sound financial practices and policies throughout government. We do not require nor is there any need for another commission to tell the comptroller general how to do his job.
I quote further from the minister's statement of this afternoon: "I feel, however, that some formal concept or philosophy of accountability must be recognized and developed within the
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over-all public service management system. It was for this reason that the inquiry on financial management and accountability was commissioned last year."
As I said earlier, we really do not need another royal commission to dabble with the pleasantries and niceties of concepts and philosophies of accountability. We need the practical recommendations of the Auditor General to be applied in order to acquire sound financial management through government departments and Crown corporations.
Speaking about accountability, the first place to look is right here on the floor of the House of Commons, not in the volumes of a Royal Commission Report which will be allowed to gather dust over the years and whose only purpose will be to distract attention from the problem.
Ever since the abolition of the post of Comptroller of the Treasury in 1969 there has been a significant increase in government spending by departments, and a weakening of financial controls within government. No doubt this is why Canada's spending record in per capita terms is so much worse than that of any other country in the western world. Instead of having a strong, unified system of cash management, financial accounting and pre-audit exercised religiously by the Comptroller of the Treasury, government departments developed their own accounting and financial systems designed to suit their own circumstances in the absence of any central direction or guidance from Treasury Board. It was not until departmental spending increased out of all proportion that Treasury Board became embarrassed by publication of the major conclusions of the Auditor General in his reports of 1975 and 1976. Only then did we see any action.
I should like to put on record the statements made by the Auditor General in those reports because they underline the point I have been trying to make:
The study leads to one clear conclusion: the present state of the financial management and control system of departments and agencies of the Government of Canada is significantly below acceptable standards of quality and effectiveness.
That appears on page four, chapter 2.5 of the Report of the Auditor General for 1975. Further, on page nine of the Auditor General's Report of 1976, in paragraph 2.3, we find the following:
Based on the study of the systems of departments, agencies and Crown corporations audited by the Auditor General, financial management and control in the Government of Canada is grossly inadequate. Furthermore, it is likely to remain so until the government takes strong, appropriate and effective measures to rectify this critically serious situation.
The recommendation to appoint a comptroller general will, I hope, help clear up the mess in which we are floundering. It behooves every member of parliament to rally behind the Auditor General and to ensure that future reports by him or his successors do not repeat such criticism as has been necessary in the last two years. Canada is a strong country, but it is not strong enough to withstand the results of a continued lack of financial control such as we have witnessed in the last seven or eight years.

April 25, 1977
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[ Translation]


Hon. Marcel Lambert (Edmonton West):: Mr. Speaker, while reading Bill C-20, I was reminded of the succession of former auditors general, because I became a member of parliament in 1957, at the time of the formidable Mr. Watson Sellar. In 1960 or 1961, I do not remember exactly, we had Mr. Max Henderson, and then, in recent years, Mr. Macdonell.
The Auditor General has always been the protector of public interest in auditing the accounts of the government of Canada. I recall that during my first years in this House, I served on the Committee on Public Accounts for several years. At that time, the reports were different, so that peccadillos and minor and major faults in the administration were very similar to those of today. In fact, we must recognize that the administration of the government of Canada is in the hands of human beings, and, whether they are ministers, administrators, deputy ministers, public servants, there is always the possibility of making mistakes. Then, there are certainly some who serve their own personal interests, as we have seen, one way or the other. After all, in the fifties, we had to have the Glassco Commission to study the whole structure of the government. I also remember that there were commissions and subcommissions of the Glassco Commission. Certain recommendations were perhaps somewhat distant from the administration and far from practical. Naturally, after further consideration, certain changes were made in these recommendations and most of them were implemented.

Mr. Speaker, I do not want to traverse all the ground my hon. friends and members across the Chamber have travelled this evening in consideration of this bill. A great deal has been said with reference to Crown corporations which are subject to some sort of indefinite and unsatisfactory examination by the Auditor General. By their very nature, it must be difficult for Crown corporations of a certain kind-I have in mind the CNR, for example-to fit into the Auditor General's picture. His staff, the structure of his organization, are more fitted to look into the accounts of the public administration sector, the various government departments and so on.
Knowing the number of Crown corporations and the several categories of them which exist, I would think that parliament itself exercises not one iota of control over them. In fact the government does not have any control over them either. Control means that an organization such as a Crown corporation must come under public scrutiny. That is the essence of control. One could envisage the best possible administrators working under a blanket of total silence. No control is imposed upon them.
As for the reports which are presented by the Crown corporations, and which are dutifully tabled by ministers each year according to the law, rarely if ever do they receive any examination from one of our committees. Such are the strictures imposed upon our standing committees that they cannot consider an annual report unless it is the subject of a specific reference from the House.

Going back into history I can recall when the annual report of the Canadian National Railways would occasion a six to eight day debate in this House. But to start with, the debate was a wrangle on the part regretfully of most members who had a lamentable ignorance of what they were talking about. They adopted an adversary attitude with the management of the CNR. The same thing applied in Mr. McGregor's day when he was president of Air Canada. I found it ludicrous that that was the case.
I join with my colleague from Vegreville. He and I have spoken about this in the past. There has to be a much more responsible means of enquiring into the operations of Crown corporations. Why is the government trying to hide them under a patently artificial screen, as it does by putting Polysar under the Canada Development Corporation? Even putting it under the name of that corporation is a play on words. Since when does Polysar have to be developed? Polysar is a Crown corporation regardless of what anybody says.
The legislation referred to by the President of the Treasury Board (Mr. Andras) this afternoon must clearly spell out that any corporation owned directly or indirectly by the Government of Canada shall be subject to scrutiny. That should be so whether the audit is done by the Auditor General or in conjunction with the Auditor General. Better still, the reports of each and every Crown corporation in the four categories listed in the Financial Administration Act should stand referred on tabling, without further debate, to a joint committee of this House and the Senate.
In our statutory instruments we have had cases where documents and orders in council representing delegated legislation had for years and years carried on, affecting the rights of citizens, without one iota of check being made as to their legality. No scrutiny was made as to whether they were within the competence of the administration, whether they were authorized by the act, or whether they traduced the rights of citizens. Now delegated legislation is subject to scrutiny. It is not perfect yet; there is some dispute between those who desire a veil of silence on the part of administrative personnel and those who seek to put control back on through public scrutiny.
It must be an accepted fact, Mr. Speaker, that since 1964 and 1965 the House of Commons and the other place have lost financial control over the government. It used to be that through interim supply and the system of granting government credits, this House could withhold supply, and that was the ultimate sanction on the government. That has now gone and I do not think there is any way of retrieving it unless one were to work a major revolution in this whole system.
It may be that with up-to-date computerized operations it is impossible to impose financial control by withholding interim supply, as was the case. But if parliament has lost control over the administration through the abandonment or gradual usurpation of financial controls, then I say to this House that parliament must insist on maintaining control by openness, by examination, by supervision, by scrutiny. Otherwise all will become lost.
April 25, 1977

I have before me a copy of the 1951 Financial Administration Act which appears at the back, as an appendix, of the one and only fourth edition of Beauchesne. As an aside, Mr. Speaker, may I say that this has almost become a collector's item. It is so out of date with so much of our proceedings in the House that it has become a dangerous book. So far as the Financial Administration Act is concerned, Bill C-20 makes reference to Crown corporations as described in section 66(1). If one goes to the Financial Administration Act which is appended to Beauchesne's fourth edition, the section becomes section 76(1) and the language is not the same.
One rather intriguing point comes up in this bill. At the very beginning of Bill C-20 reference is made, just before the duties of the Auditor General, to the salary that he shall be paid. The old act in 1951 said that the Auditor General would be paid a salary of $15,000. In 1954 that was raised to $20,000. Unfortunately, even following 1954 one had to bring in an amendment to the legislation to increase the salary of the Auditor General, and that was a most difficult thing to do.
Under the new legislation the Auditor General is to be paid a salary equal to that of the Chief Justice of the Federal Court; they walk in locked step. But there is a strange anomaly; the Auditor General must retire at the age of 65. There is no option open to the Crown to grant an extension; the Auditor General must retire at the age of 65. The Chief Justice of the Federal Court is to retire at 70. I thought it was rather strange to have the two march along in locked step so far as their salaries are concerned, but that the Auditor General, whose position is presumably somewhere in the pecking order of senior administrators connected with the Government of Canada, must get off the trolley at the age of 65 whereas his counterpart, the Chief Justice of the Federal Court, may continue on to 70, and then may become a Supernumerary judge. I have always wondered why it was necessary that the Auditor General would have to retire at 65. Then I looked back at the 1951 act. I think somebody in committees should go to work on this particular item and see why the Auditor General has to retire at the age of 65. That is mandatory in the end. I do not see why. Certainly Watson Sellars and Max Henderson after 65 had got more left up in the top storey and more energy. Those men had great energy and were quite well able to carry on. I do not mean any disrespect in saying that. It seems to me that there is an anachronism in this particular bill.
I was just wondering what role the government was proposing for the ever-expanding program that the Auditor General has faced over a number of years, namely, that Canada, from time to time, has to provide the auditor of some international agency to which Canada has contributed. Some years this can prove to be a very onerous burden because it so happens it is Canada's turn to take on a number of major agencies. It means the auditors must go abroad and are often away some considerable time. This is quite prestigious in so far as Canada is concerned. I suppose one might say all right, it is one of those things we take as it comes along. It is a responsibility for
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the Auditor General. He has to provide the staff for it. It is reflected in his budget.
Reverting back to the salary question, why should it be determined that the Auditor General be of a rank of deputy minister, or is he supposed to be above the rank of deputy minister? Certainly now that he is going to be tied into the equivalent of a chief justice, he is taken out of the DM-1, the DM-3 or the DM-4 classifications. Is that because he is supposed to be independent of deputy ministers? Is that because he is to be paid like a judge rather than a deputy minister, although they are all at about the same level? Who decides what will be those relative salary levels?
I come back to a point that has been made by many members of this House. I do not know whether I have been the most vocal about it. It is absolute nonsense that we continue to have this arbitrary distinction or arbitrary setting of salaries on the part of government, which does not disclose for scrutiny the means or the reasons whereby salaries are set at that level. It seems to me that we have got to come around to another feature.
When we compare members of parliament with members of the judiciary, not so many years ago the salary of a member of parliament was the equivalent of that of a county court judge. He does not now receive half the salary of a county court judge. Do not include in there the MP's expense account, because the judge has an expense account which nobody takes into consideration. He receives $48,000 plus whatever may be the expenses of his office. No one says anything to him about that. I do not want to belabour the point, but it seems to me that we come around again to the question that there must be an independent advisory group, under statute, which every year or every second year revises or examines the salaries of the executive group of the public service, the judges, members of parliament, ministers of the Crown, and puts them all in relation. They do not have to be discussed here. They would come into force not on the initiative of the government unless a stated number, a goodly number of members of this House stood in opposition to the level of salaries proposed, or, shall we say, the executive level of government. At the moment there is a mishmash of illogicality, an unfairness. This particular point with regard to the Auditor General is a dead loss.
Now I come to the declaration of the President of the Treasury Board with regard to the new office of comptroller general. This person is to be designated as a deputy minister. Why? Is it for pecking order reasons? Is it for salary reasons? What is the salary going to be for the comptroller general? Is he going to be a DM-1, a DM-2 or a DM-3? What level? Surely to goodness, if there were a properly constituted advisory group whose recommendations have statutory effect, then these matters could be settled and it would not be at the whim of the government as to what level the remuneration would be set.
I will call it ten o'clock because I wish to make my last point tomorrow afternoon, Mr. Speaker.

April 25, 1977
Adjournment Debate



PROCEEDINGS ON ADJOURNMENT MOTION

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

Stanley Howard Knowles: Mr. Speaker, on Friday, March 25, as reported in Hansard at page 4340, I put this question to the Minister of Veterans Affairs (Mr. MacDonald):
In view of the very real sympathy that the minister expressed in committee the other day for the 200 or so living veterans of World War I who were prisoners of war and also the interest he expressed in the Canadian veterans who were evaders or escapers in World War II, can he tell the House whether the chances are good that there will be legislation during this session to extend the prisoner of war compensation to these two groups of Canadian veterans?
The reply of the Minister of Veterans Affairs was to the effect that he was not in a position to make a commitment at that time but that the matter was under study in his department.
I then put to the minister a supplementary question in which I asked him whether study was also being given to the problem created by the fact that widows of veterans, where the veteran's disability pension was less than 48 per cent, are cut off without any pension on the death of the veteran. Again the minister assured me that this matter was under study by his department. Sir, what I have said adds up to three simple but direct questions that 1 should like to put to the minister. I thank him for being here at this hour of the night to respond to my questions. Many of us have made the case for each of these three groups of persons, so I do not feel that I need to make it again in tonight's brief session. I shall simply state each of the points.
It seems to me that there should be no further delay in granting the prisoner of war compensation which was provided last year for World Was II veterans to the 200 or so survivors of World War I. The cost would be infinitesimal compared with the moneys spent around this place, and it would be a declining cost. If we delay much longer, not many of the 200 will be left.
I also plead the validity of the case for escapers and evaders in World War II. A good deal has been written and said in recent months about their experiences during the war years, and it seemed to all of us who are members of the Standing Committee on Veterans Affairs that they, too, should receive the prisoner of war compensation which was provided by a bill we passed last year.
My third point has long been outstanding. It seems grossly unfair that if a veteran's pension was 48 per cent or more, and he dies, his widow gets the full widow's pension, which is 75

per cent of a full disability pension; but if a veteran's pension was below 48 per cent, when he dies his widow is cut off, with no pension at all. Many responsible bodies and groups have recommended that this should be corrected, that a pro rata pension should be paid in such cases. I dare to hope that some day we shall see that pro rata pension.
The three points I raise thus concern World War I veterans who were prisoners of war, World War II escapers and evaders who should get the same benefits as prisoners of war, and the revision of the pension rules regarding the widows of veterans where the veteran's pension was below 48 per cent. I hope the minister can update things for us tonight and indicate when we may expect legislation on those three important issues.


Daniel Joseph MacDonald: Mr. Speaker, may I say what a pleasure it is to answer the questions raised by the hon. member for Winnipeg North Centre (Mr. Knowles). I shall deal with his questions, but in reverse order.
With respect to the suggested provision of pro rata pensions for widows of veterans where the veteran's pension was less than 48 per cent, let me say that the government is aware of all recommendations which have been made to provide pro rata pensions for widows of disability pensioners. At the present time a widow will be pensioned if her husband's death was attributable to service or was incurred during wartime. In addition, if her husband's pensionable disabilities were assessed at 48 per cent or more during his lifetime, the widow, as the hon. member said, would be eligible for widow's pension. This percentage was selected because at that rate the veterans were obviously seriously disabled and it was considered that the pensionable condition might play a part, however small, in the prisoner's death. On the other hand, if someone is pensioned at 5 per cent for flat feet and dies from a different cause, his death bears no relationship to his pensioned condition, and the question arises whether a pension should be paid for an unrelated death.
Canada does not take a back seat to any country in so far as our pension legislation is concerned. The benefits we provide for the disabled serviceman or woman, or their surviving dependants, are far greater than those provided by most other countries. I am not aware of any of our major western wartime allies who pay automatic survivor benefits to widows approaching the 48 per cent basis which we in Canada use.
Having said that, I must also say that the entire matter of veterans' benefits-and that includes pro-rata widow's pensions-is always under constant review by the Department of Veterans Affairs and by the Canadian Pension Commission and the other agencies of my ministry to see what changes can be made to improve the lot of the veterans and their dependants.
In the meantime, in the case of a veteran receiving even a 1 per cent disability pension, when he or she passes on, the surviving spouse and dependants can be supported on war veterans allowance. We do not feel that there is, or should be, any stigma attached to receiving WVA benefits. It is a right as
April 25, 1977

the legislation provides for it. Presently we have over 93,000 recipients of WVA benefits.
There is another matter which I would like to touch on briefly, and that is the possibility of legislation to extend prisoner of war compensation to veterans of World War I and escapees and evaders in World War II. I said recently, in answer to a question from the hon. member for Winnipeg North Centre, that I was not able to give any firm indication regarding this matter at this time.
As some hon. members are aware, representations have been made on behalf of both groups, and the matter is and will continue to be under active consideration.
Both subjects are deserving of careful study and I can assure the House that when progress has been made, I will report accordingly.


POST OFFICE-PURPOSE OF INCREASE IN RATES-MEASURES TO RESTORE EFFICIENCY OF OPERATION
Hon. W. G. Dinsdale (Brandon-Souris):: Mr. Speaker, on March 21 I directed a question to the Postmaster General (Mr. Blais) with respect to matters that I shall outline briefly this evening. I regret that the hon. gentleman is not with us- he was with us until a moment ago-because I think the matter I have to bring before the House would have provided him with an opportunity to give some specific replies that are not possible during the question period.
The first question deals with the rising cost of Post Office services, and was put in these terms:
Can the Postmaster General advise the House whether these regular increases are designed to decrease the Post Office deficit or to maintain the subsidy for an essential service?
The Postmaster General did not reply specifically and I think it was because he misunderstood the purport of my question. We are all concerned about the deteriorating state of Canada's postal service. It is one of the essential means of communication and I think it would have been an excellent opportunity for the Postmaster General to indicate if he regards this vital communications system as a service or as a business. Unfortunately he did not on that occasion, but I trust that whoever speaks for him tonight will indicate it because it is of vital importance and will decide whether or not we will overcome the continuing malaise in our postal service.
Incidentally, I was not necessarily speaking of the increase in the cost of stamps. Actually, in terms of the great distances in Canada it could be argued that perhaps mailing a first class letter is a bargain. What I was really thinking about was some of the more substantial increases, such as the price of postal boxes, the cancellation of the special registration fee as it applies to a special book rate, and so forth, increases that in some instances have gone up as much as 200 per cent or 300 per cent.
The second part of my question was of even greater importance. It was:
Adjournment Debate
... will the Postmaster General inform the House of the steps he has taken since taking over responsibility to restore Canada's Post Office to its former high efficiency?
Particularly I asked the Postmaster General what recommendations from the Hay's consultant report he had implemented. I asked that question because I had placed a question on the order paper asking for a tabling of this report. Unfortunately the tabling of the report was denied. I think that is also an unfortunate gesture on the part of the Postmaster General, because the only way we are going to come to any agreement on solutions is by open and honest discussion and dialogue, not by the consideration of private reports in secret in the offices of the bureaucracy of the Post Office Department.
I say this because in recent weeks I have had the opportunity to visit both Washington in the United States, and London, England, to see how they are dealing with their post office problems. All modern industrial countries have faced the same difficulties, and the solution adopted has been to proceed more or less rapidly toward mechanization and automation. In the United States postal system I discovered that they have come to grips with the problems which have been brought about by mechanization by having open discussion, mostly in congressional committees. Unfortunately we in the House of Commons have been denied that privilege. We do not have access to these reports which are put together at considerable cost to the taxpayers of Canada, and I think that is the only basis upon which we can make honest and fair appraisals of the situation.
The process is even more open in the United Kingdom. That is because they faced the impasse which confronts Canada, where at the moment labour unions are opposing mechanization. In 1972 the union of postal workers in the United Kingdom boycotted mechanization and refused to co-operate at all until they were allowed greater consultation in the process. As a result they have now been brought into the post office board. Their recommendations are listened to, and no major decision is made on mechanization and automation unless the union has had a chance to review it before the fact.
What has happened in Canada? The whole process has been put before the postal unions without any preliminary discussion or consultation. I was informed by both labour and management in the U.K. that some of the best and most useful ideas have come from the representatives of the postal union who sit on the post office board of directors. This is essentially what was behind my question.
1 regret that the Postmaster General did not reply in specific terms. I regret even more that he denied access to the Hays report, the most recent report, by refusing to table it. Incidentally, everyone has a copy of the report, but why should we have to work in secret? Why should the government have to work in secret? We are all anxious to work together to bring about a happier state of affairs in our Canadian post office. In the U.K. and in the U.S.A. the labour unions are strongly in support of mechanization and automation because they feel they are a vital part of the process. I think we could have the

April 25, 1977
Adjournment Debate
same positive reaction from our Canadian Union of Postal Workers if the same open policy of consultation were adopted in Canada.


Mr. Walter Smith (Parliamentary Secretary to Postmaster General):: Mr. Speaker, the questions posed by the hon. member on March 21 may well be on a single topic, restoration of efficiency within the Post Office Department, but I would like to provide a three-part answer, since the original question was so framed.
Are the regular postal increases designed to decrease the Post Office deficit or to maintain the subsidy for an essential service? In reply we can say that a perusal of the 1977-78 estimates shows that the deficit will be reduced slightly-yes, only to a small degree, but this should indicate the intention.
The second part of the hon. member's question related to steps taken by the present Postmaster General (Mr. Blais) to "restore Canada's Post Office to its former high efficiency." To this, we should emphasize that the major effort, the change in tactics, has been to move from confrontation to conversation. I have heard the hon. member say himself, within this House, that "perhaps the military posture of the Post Office is too deeply ingrained". "Consultation", he said, "which is important to human relations, is restricted to issuing an order".
We have introduced a new dimension-intergroup process. Intergroup development is a series of sessions which tend to begin as a confrontation. A third party is used as a moderator. This is designed to identify areas of difference and conflict between two parties. There is then, ideally, an agreement to solve problems jointly. The intergroup process calls for a candid exploration of conflicting points of view with a sincere belief that the two parties can arrive at a joint decision which is better than either could have arrived at individually.
Intergroup development is being tried where traditional labour/management relations methods have been tried and have failed. The Post Office's first intergroup session was begun with LCUC and management on a national level at Montebello last year. These meetings have continued into 1977. Another series of sessions was held near Moncton with regional, district, and local involvement. Now, much better understanding exists between LCUC and management. Further sessions will be established at regional, district, and local levels across the country.
In addition, we are holding preliminary discussions with regard to new contract demands. Our talks with the Letter Carriers' Union have proved encouraging. We have talked with two other unions and, if we cannot say things are as encouraging, at least it is a start.
Perhaps also we should mention that the Post Office has established ComTeam, a two-way employee-employer communications system that has, we believe, diffused some potentially explosive problems. In all, we are talking, we are not fighting, and that we believe is progress.
Finally, the hon. member asks what recommendations we have implemented from the Hays report. In reply to the hon.
[Mr. Dinsdale.J
member's request that we produce this report, motion No. 84, we stated that we would not since it is a confidential report intended for internal use. Following that answer, the hon. member realizes that we cannot comment on any aspect of that report. However, the hon. member knows that he can debate the refusal at a later time.


REGIONAL ECONOMIC EXPANSION-PRINCE EDWARD ISLAND- DATE OF SIGNING DEVELOPMENT AGREEMENT-NATURE OF EXPENDITURES
David Samuel Horne MacDonald: Mr. Speaker, on February 7 I raised with the Minister of Regional Economic Expansion (Mr. Lessard) the situation concerning the agreement in terms of expenditures in the next year or two in the Prince Edward Island comprehensive development plan. It was not until March 14 that the agreement on the expenditure of funds was concluded in Charlottetown, signed jointly by the Minister of Regional Economic Expansion and the premier of Prince Edward Island.
On February 7 I asked the minister whether he could give us a date, which he did not know at that time, and perhaps more significantly whether he could indicate the exact details in terms of the priorities for the federal expenditures that will be made.
It was obvious at that time that some $30 million would likely be the rough figure of expenditure for this fiscal year, and that amount, and amounts almost equal to that over the next two years, as it turned out, will in fact be found in the agreement.
I am particularly concerned to find out from the minister what kind of efforts will be made in the area of public participation with respect to the increasing energy costs which are very much a factor in terms of the development of Prince Edward Island, the persistent problem of seasonal unemployment and, of course, the over-all framework of priorities that the federal government and this department will establish. While the minister was not able to inform me at that time as to the details, he did indicate in the latter part of his answer, after a supplementary, and I quote:
Mr. Speaker, I will try to provide the hon. member with as much detail as possible with regard to expenses and amounts which will be allocated to various sectors of the economic activity in the island, according to the agreement which has been signed. It is very detailed and I think the hon. member might be satisfied with it.
Certainly I hope to get that kind of detailed answer tonight. However, I am not overly optimistic. Frankly, since 1969 there has been a major decline, certainly a decline in terms of commitment to the concept of development, to putting Prince Edward Island more actively into the economic mainstream of Canada, and a serious decline as well in terms of lack of information. Whether the two go together, the decline in over-all commitment and the decline in information, remains to be seen, but I note from the press release issued on the day of the signing that there was virtually no information. In relation to this phase of the development plan it simply said:
April 25, 1977

The agreement signed today provides for a contribution by DREE of $89 million over the next three years for continuation of the phase two strategy. Programs implemented under this agreement are cost-shared on a 90-10 federal-provincial ratio except for school construction, which is 50-50. Emphasis will continue to be placed on the productive sectors: agriculture, fisheries and industrial development.
Interestingly enough, as part of the press coverage given to that signing event in Charlottetown, the Charlottetown Guardian carried the story:
Mr. Lessard indicated the general thrust would be toward job creation, stimulation of primary industry and establishment of small business.
However, the most significant and specific thing the minister said was reported as follows:
Monday's agreement specified that federal cost-sharing of some 300 provincial civil service jobs will be phased out over the next five years. It said the funding, which now amounts to about $5 million annually, will be terminated in roughly equal annual portions.
So it seems that the one specific aspect of this stage of the plan is not the creation of jobs but their reduction by some 300, and that the high-flown language concerning job creation and the stimulation of primary industry is merely window dressing to cover a substantial retreat on the part of the federal government.
The only other news in the local newspapers concerned a three-hour closed door discussion of funding and program proposals by federal and provincial officials. This was a meeting of the joint advisory board, a body well known to the islanders, at least. That three-hour closed door meeting tells more, I think, about the mentality and the psychology of the present approach to development by both the federal and provincial governments than anything I could say.
It seems to me that the joint advisory board is in effect the secret government of Prince Edward Island. This is the body which makes the priority decisions, decisions which are not the subject of public debate and which, very often, are not even announced. Often it is only well after the fact that islanders or Canadians generally learn that anything is going on with respect to the development plan.
I think it is incredible we should be subject to an approach of this kind with regard to developments which are so basic to our needs as the re-ordering of social and economic priorities. We are not told, for instance, about the relationship of priorities in various areas of expenditure to the growing amount of transfer payments in terms of equalization grants, unemployment insurance, old age assistance, or family allowances. We have no idea as to the relationship of priorities between departments in either the federal or the provincial governments and how they may be co-ordinated with the particular thrust of development in Prince Edward Island.
I think it is scandalous that the federal government, which is now committed to major developments in Prince Edward Island, should tell us so little in specific terms about its own priorities or the jointly agreed priorities of the two governments.
Adjournment Debate
This is not a program which started last month or last year. It was inaugurated in 1969, and agreement with respect to the second phase was signed in October, 1975. Yet islanders are increasingly in the dark as to the true nature and thrust of development, policies, and plans for Prince Edward Island. I hope we shall begin to reverse that process this evening and that the parliament secretary will tell us in specific terms the exact nature of the priorities which will be in effect in the next three funding years of the program, or that if he has insufficient time in which to do so this evening he will find an early opportunity of making all these details available.


Mr.   Ed. Lumley@Parliamentary Secretary to Minister of Regional Economic Expansion: Mr. Speaker, first of all I should like to thank the hon. member for agreeing to postpone this debate until after the agreement had been signed.
On March 14 my minister met with Premier Campbell to sign an amendment to the Phase II Comprehensive Development Plan Agreement which provides funding arrangements for the next three years, amounting to $89 million: $30 million in the fiscal year 1977-78, $29,700,000 in 1978-79, and $29,300,000 in 1979-80.
On the same day the joint advisory board met to review the programs brought forward by plan management and to recommend allocation of funds. I would be pleased to provide the hon. member with the board's recommendations on the allocation of funds for the fiscal year 1977-78, as he requested.
However, Mr. Speaker, we would like it to be clearly understood that the development planning is a continuing process and must be capable of responding to opportunities as they arise; programs are instruments of long range objectives and as such are subject to change. It is only possible therefore to provide precise accounting after the fiscal year has ended.
I am also able to provide a detailed account of federal expenditures, in Phase II, for 1975-76. A similar accounting for 1976-77 will be available in a few months.
We believe that if programs and funds are secured too firmly to an inflexible system, many worthy projects could be lost or weakened by delay. For example, in February a project to increase and stabilize the income of Prince Edward Island lobster fishermen was introduced under the development plan although six months earlier it had not been anticipated in the year's budget. The project was designed by both governments and the Prince Edward Island Fishermen's Association in response to a specific need, and should begin to show results this coming lobster season.
In summary then, Mr. Speaker, we have a budget proposal for 1977-78, and a detailed accounting for 1975-76. I am prepared to provide the hon. member with detailed data for subsequent fiscal years as it becomes available.
Further, I am sure the hon. member will be in attendance next week at the committee meetings. We have set aside three days for the Atlantic region. I think he has some very specific questions that he would like to ask, and the minister will be available to answer them in more detail than can be provided here in three minutes.
Motion agreed to and the House adjourned at 10.28 p.m.

Tuesday, April 26, 1977