1977-11-02

ROUTINE PROCEEDINGS


Mr. Dan McKenzie (Winnipeg South Centre):: Mr. Speaker,
I rise under the provisions of Standing Order 43 to put forward a motion on a matter of urgent and pressing necessity. In view of reports in the Argus Journal of the Public Service Alliance of Canada that the alliance is seriously concerned that the President of the Treasury Board (Mr. Andras) is misleading taxpayers and the House of Commons about public service growth, and that members of the alliance are so concerned about government contracting, and contracting out to retired public servants that they plan mass rallies in such cities as Winnipeg to discuss such alarming figures as the fact that 29 departments have taken on 3,700 employees at a cost of $130 million for 1975 and 1976, I move, seconded by the hon. member for Hamilton West (Mr. Alexander):
That this Flouse instruct the President of the Treasury Board to place an immediate freeze on all government contracting out, and contracting out to retired public servants, that the President of the Treasury Board be directed to appear before the Standing Committee on Miscellaneous Estimates to explain the necessity for contracting out work and also that the president of the Public Service Alliance of Canada be invited to testify before this committee.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


ROYAL CANADIAN MOUNTED POLICE
Mr. Edward Broadbent (Oshawa-Whitby):: Mr. Speaker, I, too, rise under the provisions of Standing Order 43 pertaining to an affidavit signed by the Solicitor General (Mr. Fox) on
October 12 of this year. I move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That this House instructs the Prime Minister to inform the House of the contents of a letter dated December 19, 1972 sent by the director general of security services of the RCMP to the then solicitor general on the subject of the illegal break-in at L'Agence de Presse Libre in the fall of 1972.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


REQUEST FOR INQUIRY INTO RAID INTO OFFICES OF SOCIAL CREDIT PARTY IN RIMOUSKI-MOTION UNDER S.O. 43
Mr. Eudore Allard (Rimouski):: Mr. Speaker, pursuant to the terms of Standing Order 43, I request the unanimous consent of the House to present a motion dealing with an important and particularly urgent matter.
As flagrant proof has forced the federal government into revealing the illegal and brutal acts of the RCMP, as those isolated cases may cover up a whole system of undue interference into the affairs of individuals and legally recognized organizations, and as the Rimouski offices of the Social Credit Party of Canada were cleared of all books and documents by agents of the RCMP, which books have yet, to my knowledge, to be returned, and bearing in mind that the agents of the RCMP, by taking all those books and documents-among which lists of the members of that party in Canada-by so doing and by other actions, have led to legal proceedings with the result of confessions obtained through duress, intimidation, and promises of all sorts pertaining to the application of the Canada Elections Act with regard to tax-deductible contributions, and that those circumstances have discredited all members of our party, and finally because the machinations of such a system must be brought to light, I move, seconded by the hon. member for Richmond (Mr. Beaudoin):
That an inquiry be set up to determine to what extent the RCMP overstepped its rights by acting as it did when it searched, on May 7, 1975, the premises of the Social Credit Party of Canada in Rimouski, and to what extent it was entitled to terrorize peaceful and defenceless citizens.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.

November 2, 1977
Paper


FINANCE
Mr. Sinclair Stevens (York-Simcoe):: Mr. Speaker, under the provisions of Standing Order 43 I rise on a matter of urgent necessity. Although the Minister of Finance (Mr. Chretien) has stated that the Governor of the Bank of Canada is not intervening in foreign exchange markets and that the public will not know the day to day fall in our exchange reserves, his own department has published figures today which show our foreign exchange reserves have fallen $605.5 million in one month, confirming earlier estimates. In view of this precarious state of our currency, temporarily stabilized by foreigners financing purchases of Canadian grain, and in view of the minister's misleading and contradictory statements about our exchange position, I move, seconded by the hon. member for York-Sunbury (Mr. Howie):
That this House refer the matter of our declining dollar to the Standing Committee on Finance, Trade and Economic Affairs, and that that Committee be instructed to report on the adequacy of our foreign exchange reserves, the reason for their decline to an all time low in relation to our trade deficit, the reason why new 'stand-by' credits were arranged with private banks when there are already lines of credit available from other countries' Central Banks, and in particular, the terms of the stand-by arrangement.


Mr. Speaker:: This motion under the provision of Standing Order 43 requires unanimous consent for presentation. Is there unanimous consent?


Some hon. Members:: No!


INDUSTRY
Mr. A. D. Alkenbrack (Frontenac-Lennox and Addington):: Mr. Speaker, I rise on a matter of urgent and pressing necessity under the provisions of Standing Order 43. Since 80 per cent of Canada's paper industry is not protected by duties and Canadian boxboard mills cannot compete with mills in the United States because the Canadian government does not provide comparable conditions with regard to taxation, transportation, machinery and equipment costs and export incentives, I move, seconded by the hon. member for Prince George-Peace River (Mr. Oberle):
That the Minister of Finance ask our representatives in the Tokyo round of GATT negotiations now in progress, to protect the Canadian paper and box-board industry against unfair exposure to market conditions which could be ruinous to this industry and the jobs of its employees.


Mr. Speaker:: In accordance with Standing Order 43 such motion can be presented for debate only with the unanimous consent of the Elouse. Is there unanimous consent?


Some hon. Members:: No! Mr. Speaker: Oral questions.



ORAL QUESTION PERIOD


Mr. Joe Clark (Leader of the Opposition):: Mr. Speaker, my question is directed to the Prime Minister who I am pleased to welcome back to the House of Commons. On Friday the Solicitor General indicated that the Cabinet on March 27, 1975 defined the mandate of the security services. The Prime Minister will recall that those illegal offences of which the House of Commons has been informed to date occurred before that definition of the mandate. Will the Prime Minister tell the House what the mandate of the security services was prior to March 27, 1975 and specifically did that mandate, prior to March 1975, deal with the question of illegal activities and what instructions were given to the security services in regard to illegal activities?


Right Hon. P. E. Trudeau (Prime Minister):: Mr. Speaker, as far as I know, the mandate which was that of the security services before the date of the giving of those guidelines to the RCMP, was the traditional mandate carried out by the RCMP under previous governments to mine. As far as I know, they go back as far as the RCMP has existed. We have not been able to find specific guidelines parallel to the ones we issued in March. The reason some were issued in March, 1975 was that at that time we realized the RCMP had been investigating a legal political party. They were asking us for guidance in terms of what they should be doing in order to best protect the security of the country. We indicated to them that the answer would be contained in these guidelines. There was nothing in the guidelines, of course, authorizing any illegal act, nor do 1 believe the common-law guidelines existing before the general mandate given to the RCMP security services under the RCMP Act has ever referred to the fact that the RCMP could commit any illegalities. It was not found necessary by my government, or by I think any previous government, to indicate to the police that they could not act illegally.


Charles Joseph Clark: A supplementary question, Mr. Speaker. I wonder if the Prime Minister could tell the House who, prior to the March, 1975 guidelines had the ultimate authority to authorize security operations and what provisions existed for reporting upon those security operations to either the Prime Minister or the Solicitor General? Further, what actions did the Prime Minister take to satisfy himself that no illegal activities were undertaken?

November 2, 1977

[DOT] (MI7)


Pierre Elliott Trudeau: Mr. Speaker, the practice of reporting security operations is one which existed under my cabinet, as it existed under previous cabinets. There were periodic reports to cabinet of security risks. As infrequently as once a year, 1 believe we had a committee of cabinet listen to the RCMP in order that they may tell us what security risks were incurred by Canada, what they were doing about them, what dangerous groups were being investigated and so on. Of course, there were particular cases where information was given to me individually as the Prime Minister. Perhaps they would have to do with the police thinking that somebody should be declared a persona non grata in the country. In cases like this, they would discuss it with the Secretary of State for External Affairs or myself. Therefore, there were individual cases of security risks coming to the attention of the police; but generally there was an annual report, and sometimes more frequently.


ACTION TO ENSURE NO ILLEGAL ACTIVITIES BY SECURITY SERVICE
Charles Joseph Clark: Mr. Speaker, in order to understand what went on during that period-


Some hon. Members:: Oh, oh!


Charles Joseph Clark: -is the Prime Minister telling this House that apart from an annual meeting, and perhaps occasional briefings which I gather were initiated by the security service, he as Prime Minister took no provision to assure or satisfy himself, as the responsible minister, that the security services were not involved in any illegal activity? Is that the position of the Prime Minister?


Pierre Elliott Trudeau: Yes, Mr. Speaker, and that was also my position with regard to any other agency of government. I took no particular precaution to tell them they should not break the law.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: Mr. Speaker, the Prime Minister has admitted in this House that he became aware the security services were engaged in surveillance of a legitimate political party. At that time did he not ask who authorized that surveillance? At that time did the question not cross his mind as to whether the control he was keeping, as the responsible minister, over security services which were, by his own admission, then undertaking the surveillance of activities of political parties that might have been involved in illegal activities, that it was prudent for him to establish some means to ensure that the law was not being broken and that initiatives such as the surveillance of political parties or ordinary citizens were not being taken?


Pierre Elliott Trudeau: Mr. Speaker, when I heard that a political party was under surveillance, we issued guidelines indicating that that should not be done. The hon. Leader of the Opposition asked me if at that time I did not suspect that in order to
Oral Questions
undertake the surveillance of a political party the police would have to break the law. I do not think that follows at all. Certainly, it did not cross my mind. I imagine we could get a list of the members of the Conservative party just by giving some money to some member of the secretariat who would give us a list. There is nothing illegal about that.


Mr. Hnatyshyn:: Surveillance is a different thing.


Pierre Elliott Trudeau: I just found it offensive that the RCMP had lists and was undertaking the surveillance of a political party.


Ramon John Hnatyshyn: That is right.


Pierre Elliott Trudeau: I do not know if I knew at the time they had lists. They told me they were undertaking the surveillance of a party. 1 would imagine surveillance implied knowing somebody was a member of that party. 1 told them they should not continue to do that. There was no more reason to suspect that they were breaking the law by conducting a surveillance of that party, than to suspect they were breaking the law by conducting a surveillance of any spy or terrorist who was coming into Canada.


Some hon. Members:: Oh, oh!


Some hon. Members:: Hear, hear!


Ramon John Hnatyshyn: Civil libertarian!


DISTRIBUTION OF INFORMATION GAINED BY SECURITY SERVICE
Mr. Bill Jarvis (Perth-Wilmot):: Mr. Speaker, 1 have a question for the Prime Minister. What policy instructions did federal security services have prior to 1975 with regard to the dissemination of information gathered legally or illegally from surveillance of political parties? As a matter of policy, was the information gathered given to the Prime Minister or the cabinet committee on security and intelligence chaired by the Prime Minister?


Pierre Elliott Trudeau: Mr. Speaker, since the time I became Prime Minister in 1968, I know of no surveillance exercise of any political party as such, only the one I referred to in the case of the Parti Quebecois and I had it stopped as soon as I learned about it.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: I am quite sure that the policy of the RCMP until that time had been to exercise surveillance on those who might be considered a security risk, whether they belonged to one party or another or to no party at all. However, the idea of surveillance of a party which was legal under the law was something absolutely unknown to me, and 1 presume previous Prime Ministers, until we realized there had been surveillance of the PQ for a short period of time. I repeat, as soon as we found that out, we asked that it be stopped.

November 2, 1977
Oral Questions


William Herbert Jarvis: Now that the Prime Minister has had an opportunity to check on this unhappy affair, can he say if anyone in government was given notice of the subscription lists taken from the APLQ in 1972 and the membership list and financial information of the Parti Quebecois in 1973? Has the Prime Minister checked and determined that no one in government was given a copy of all that information?


Pierre Elliott Trudeau: Mr. Speaker, 1 have checked that the Solicitors General at the time did not have knowledge of this break-in which obtained lists of members of the PQ. I had no knowledge. I presume if the police were going to pass the knowledge on to anyone, it would be the Solicitor General or myself and they did not. I cannot vouch for the fact that some lists may not be leaked, for all I know to some members of the opposition. Things do leak from the RCMP. We saw just a year ago that a letter from General Dare to Mr. Bourne was leaked to the Toronto Sun. I cannot say that nothing leaked. I do say that this government has no knowledge of the content of those lists nor, as far as I know, any member on this side of the House.
INQUIRY IF PRIME MINISTER HAD LIST OF PARTI QUfiBfiCOIS MEMBERS


John Edward Broadbent: Mr. Speaker, I have a question for the Prime Minister. He is quoted in last Saturday's Globe and Mail as being amazed when he learned of the surveillance of a democratically constituted party in Canada. His words were "Gee, we have got to stop this." Given his alleged state of amazement that such serious and wrong activity was taking place in terms of monitoring political parties in Canada, and given the fact that he said "maybe they" with reference to the RCMP "did tell me" about having a membership list of the PQ, considering at one point in his answer today he said yes he did have a list but then corrected himself and said no he did not have a list, if he was amazed when told about this in 1974 or 1975, he could not remember the year either-


Some hon. Members:: Oh, oh!


John Edward Broadbent: -can he now tell us definitively if he did have a list of the membership of the PQ and why in heaven's name he did not pursue the question to see if it had been obtained legally or not.


Pierre Elliott Trudeau: Mr. Speaker, I believe the leader of the New Democratic Party is distorting my words. I never said in the House or even in my press conference that I might or might not have had a list. I said they, the RCMP, might or might not have told me they had a list. That is something entirely different.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: 1 do know I was informed by the RCMP that they were exercising surveillance of the Parti Quebecois. That was perhaps in 1974 or 1975 because we issued the guidelines

in March 1975. These guidelines were meant to tell the police that they should only exercise certain types of surveillance, those spelled out by the Solicitor General in his speech in the House on Friday. Therefore it might have taken place in 1974 or early 1975. I could check the year by looking at some diaries, but it is not that relevant. The relevant thing is when we found out they were exercising surveillance of a democratically constituted political party, we told them to stop and issued the guidelines.
The hon. member wants to know whether or not I was told then that they had a list. 1 honestly do not remember them having told me they had a list. But I would agree that it is reasonable to presume that if you have police and they are reasonably smart, which they are, and they are exercising surveillance of a party, whether it is one of the parties over there or our party, one of the things they would do would be to get a list. You can buy a list. You can get a list very easily. There is no reason to suppose, as the Leader of the Opposition was supposing, that in order to get this particular piece of information they had to do anything illegal.
The police are getting information all the time. 1 am sure they are getting it from the members opposite but it is not always cooperative. The police are getting information, perhaps, on the activities of agents in this country which are detrimental to our security. The police are getting information on people who might be engaged in acts of terrorism, and so on. There is no reason to suppose that in order to get this information they have to break the law. And I did not presuppose that they broke the law in order to get those lists, assuming they told me at the time that they had them.


Some hon. Members:: Hear, hear!
LEGALITY OF MANNER IN WHICH PARTI QUfiBfiCOIS MEMBERSHIP LISTS OBTAINED


John Edward Broadbent: The Prime Minister's little speech will only persuade those who sit behind him. Considering the right hon. gentleman's serious moral and political responsibility-I say "political" in the context of the times when there was a rising separatist movement in the Province of Quebec and when the Prime Minister discovered that the federal police force were monitoring a political party, the Parti Quebecois-did he not consider it his basic responsibility at least to find out whether they were doing it legally? If not, how can he claim to sit in his present seat with any confidence and assurance?


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


Pierre Elliott Trudeau: Mr. Speaker, I told the Leader of the Opposition that from time to time, perhaps once a year in the earlier stages but much more frequently in the later stages, we had information from the
,
November 2, 1977

police. They would tell the ministers involved with security- the Minister of National Defence, the Secretary of State for External Affairs, the Minister of Justice and myself-certain information. They would tell us about subversive groups in Canada, about terrorist groups in Canada, and so on. We did not ask them each time where they got this information.


John Edward Broadbent: Each time? It only came up once!


Pierre Elliott Trudeau: We did not ask the police where they got the information about these terrorists. We did not say to them: Did you break the law in order to get it? Did you have to infiltrate a group?


Mr. Baldwin:: You should have done!


Pierre Elliott Trudeau: I hear from the hon. member for Peace River that a prime minister should ask that kind of question.


Some hon. Members:: Yes!


John Edward Broadbent: Only if you want to know the truth.


Pierre Elliott Trudeau: To this, I can only say two things. The first is that we on this side presume that the police are an honest group of people.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: This does not mean they do not sometimes make mistakes. But when they do make mistakes and we discover them, for example, breaking the law, we report it to the Attorney General of the province where the act is suspected to have been committed. The second point is that if we on this side are to be urged by both opposition parties to begin monitoring the day by day operations of the police, asking them about their information, how they got it, who they got it from, we shall have secrets on a lot of Canadians and we will hear from the opposition that it is not the role of the government to involve itself in the political direction of the RCMP.


Some hon. Members:: Hear, hear!


BREAK-IN AT L'AGENCE DE PRESSE LIBRE-LETTER DATED DECEMBER 19, 1972, FROM DIRECTOR OF SECURITY TO MINISTER
John Edward Broadbent: Mr. Speaker, the Prime Minister takes five minutes to make little speeches. 1 would simply remind him that the questions which have come from the official opposition and from ourselves are not about things in general, they are about this specific incident concerning the Parti Quebecois. So your baloney is not going to kid anyone, Mr. Prime Minister.
I should like to ask a question on a related matter. The Prime Minister and the former Solicitor General, the present Minister of Consumer and Corporate Affairs, have maintained that they did not learn of the illegal entry into the offices of L'Agence de Presse Libre until March, 1976. Since 1 have learned that, according to an affidavit signed by the present Solicitor General on the twelfth of this month, a letter dated
Oral Questions
December 19, 1972 was sent by the director-general of the security service on the subject of the 1972 break-in to the present Minister of Consumer and Corporate Affairs, would the Prime Minister undertake to inform the House of the contents of this letter, at least as they pertain to that break-in?


Pierre Elliott Trudeau: Mr. Speaker, the leader of the New Democratic Party, like the Leader of the Opposition, was complaining a moment ago that I was not in the House yesterday. Now, they are complaining that I am answering at too great a length, Mr. Speaker. The answer to this question will be given by the Solicitor General.


Some hon. Members:: Hear, hear!


Hon. Francis Fox (Solicitor General):: Mr. Speaker, I am indeed pleased to have the opportunity of responding to the specific question put by the leader of the New Democratic Party. It is my hope that in the months to come the members of the opposition will show as much morality in the pursuit of their parties' objectives as they expect from the police in the pursuit of national security. Perhaps the next time the members of the opposition receive stolen documents, Mr. Speaker, they will think in terms of returning them to the proper authority.


Mr. Speaker:: Order, please. The Solicitor General might confine himself to the answer.


Charles Joseph Clark: He has not done so yet.


Francis Fox: Mr. Speaker, I should like to point out that the leader of the New Democratic Party, who has made a great deal about this letter since last night, captivating the attention of the people across the country and indicating that this letter contains material-


Some hon. Members:: Order.


Mr. Speaker:: If the Solicitor General has a response, will he make it forthwith.


Francis Fox: Mr. Speaker, 1 should like to point out to the leader of the New Democratic Party that all the documents indicated in that affidavit will be made available to the McDonald commission of inquiry. I should like also to point out to the hon. member that the letter in question is not from Mr. Starnes to the Minister of Consumer and Corporate Affairs; rather it is a letter from the present director-general of the security service, General Dare, to the minister. There is a typographical error in the document: the document in question ought properly to be dated December, 1973 and it relates in no manner whatsoever to the break-in at the APLQ headquarters in October of 1972. Had the hon. member communicated with me this morning, Mr. Speaker, I would have been delighted to give him that particular piece of information.

November 2, 1977
Oral Questions


ALLEGED PAYMENT OF WITNESSES FOR TESTIMONY-GOVERNMENT POSITION
Mr. Gilles Caouette (Temiscamingue):: Mr. Speaker, my question is directed to the Solicitor General.
Could the Solicitor General indicate to the House whether it is common practice for the RCMP to pay out rather large amounts of money to witnesses who are to appear in court? In the affirmative, who is responsible for paying such amounts?


Francis Fox: Mr. Speaker, it is not common practice for the RCMP to pay out money to witnesses who are to appear in courts. There are times, however, when we must relocate individuals in other parts of Canada whose lives are threatened because of their willingness to testify in the interest of the administration of justice, especially where organized crime is involved, and we must assume our responsibilities.


Gilles Caouette: I have a supplementary question, Mr. Speaker.
Could the Solicitor General indicate, in the case of individuals who are behind bars, the maximum amount which may be spent for protecting them?


Francis Fox: If the hon. member has a precise case in mind, he should come out with it, Mr. Speaker.


Gilles Caouette: Mr. Speaker, I have a final supplementary question.
It is rather common practice, and I should like to ask the Solicitor General who paid out $25,000 to Frederic Thomas Ford, in British Columbia, and whether a promise was really made by the RCMP to pay out to him $60,000 to appear as a witness in court?


Francis Fox: Mr. Speaker, no promise is ever made. As to the precise case the hon. member is referring to, I shall certainly make inquiry and report to him at a later date.

PARTI QUfiBfiCOIS BREAK-IN-REASON PRIME MINISTER DID NOT ASCERTAIN HOW MEMBERSHIP LISTS OBTAINED


Mr. Allan Lawrence (Northumberland-Durham):: Mr. Speaker, I should like to direct my questions to the right hon. Prime Minister. They relate to the matter brought up just a few moments ago by the hon. member for Oshawa-Whitby. I am sure that the Prime Minister realizes that while I am not attacking the credibility of what he is saying I certainly want to give him the opportunity at this point of improving on the credibility of what he just told the House a little while ago. 1 mean that fairly and most sincerely, Mr. Speaker.
My question is this: Last week he could not remember when exactly this conversation took place with his security people. He said it was either 1974 or 1975. He now tells us that the new mandate came out in March, 1975, so it was obviously prior to that, because it was as a result of the conversation that
[Mr. Fox.)
the new mandate came out. Would the Prime Minister tell the House just how the whole subject matter came up in relation to the so-called surveillance of the PQ, the matter that he was most surprised about? We are not talking about terrorism, we are not talking about an atom bomb in the middle of a city-


Mr. Speaker:: Order, please.


Allan Frederick Lawrence: Mr. Speaker, I am putting my question to the Prime Minister.


Mr. Speaker:: The question has been put.


Some hon. Members:: Sit down.


Allan Frederick Lawrence: My question is, when he was so surprised about this particular matter, did he not ask them what form that surveillance was taking, how they obtained the information that they had, and what was the result of that surveillance? Was it not in the form of lists?


Pierre Elliott Trudeau: Mr. Speaker, in the course of contacts between the security service, cabinet and myself, particularly since the events of October 1970, when there had been terrorism, murder and kidnapping, we directed the RCMP-and I believe this was the will of the House-to pay a little more attention to internal subversion caused by ideological sources in Canada and not only concentrate on externally sponsored types of subversion.
It then became obvious that one of the groups they were going to look at was one composed of those who were trying to break this country, separate it, and who had been using force in order to do it. There was a great deal of indignation on the part of members opposite, and indeed many people across the country, because at the time of the October, 1970, events, the police had to throw a very wide net indeed and arrest many people who were apparently guilty of nothing because the police were misinformed. They did not have inside information on the terrorists, those who had kidnapped Mr. Cross and Mr. Laporte. So obviously we told them-we did not have to tell them because they would have done it by themselves-to concentrate a little more on this threat. So I suppose that as a result of that they began infiltrating the FLQ and they began trying to get more information on those who would destroy the country by force, whether they be in Quebec or in other parts of the country.


Charles Joseph Clark: The Parti Quebecois?


Pierre Elliott Trudeau: I repeat, Mr. Speaker, it was not my objective, and it is not still today, to ask the police how they went about getting information. I would bet my bottom dollar that it was not the practice of the right hon. member for Prince Albert when he was prime minister to intervene in the day to day operations of the security service. They came to us with information. If it was relevant to the security of the state, we tried to take action on it. I never made a practice of asking where they got their information and I shall not begin that
November 2, 1977

practice, unless indeed the House believes that this should be the new orientation, the new dispensation of governments now that they should have the politicians second guess the police, they should have the politicians looking at the files that the police gather and saying, "you can get the information this way but don't do it that way and don't look into so and so because he is my friend". 1 think we would be blamed by the opposition if this were the political role played by the politicians. We have not played it and we do not intend to do it.


Some hon. Members:: Hear, hear!


Allan Frederick Lawrence: My supplementary question to the Prime Minister is as follows. The Prime Minister was shocked because this was not the FLQ, the terrorists or the bombers, this was the Parti Quebecois. He himself was shocked and he said, "gee, don't do that". Well, surely under those circumstances it occurred to the Prime Minister, not in relation to a criminal activity but in regard to a political activity because this was political surveillance, to ask them what they were doing, how they were doing it and where they got their information. Surely, that occurred to the Prime Minister.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: This is a curious doctrine indeed, Mr. Speaker. 1 believe the hon. gentleman, who was at one time attorney general of Ontario, is now putting forth the doctrine that when the police get information on terrorists-


An hon. Member:: No, security.


Pierre Elliott Trudeau: -there should be no political interference.


Some hon. Members:: Oh, oh!


An hon. Member:: That is damn nonsense.


Pierre Elliott Trudeau: 1 am trying to follow the trend of thought of the former attorney general of Ontario. What he is saying is that when they have exercised surveillance of a legitimate democratic party, then you, Mr. Politician, you, leader of the Liberal party, should try to get at that information.


Some hon. Members:: Nonsense.


Pierre Elliott Trudeau: He is telling me that in the case of political surveillance-and I believe this was the burden of the argument of the leader of the NDP-in the case of surveillance of a political party, I should have made it my business to know more about what they found out and how they found it out. That is an absurd doctrine.


Some hon. Members:: Hear, hear!
Oral Questions


REQUEST FOR ASSURANCE INFORMATION OBTAINED BY SECURITY SERVICE NOT DISTRIBUTED TO GOVERNMENT MEMBERS
Allan Frederick Lawrence: I am
afraid the Prime Minister has not increased his credibility as far as I am concerned-


Some hon. Members:: Hear, hear!


Allan Frederick Lawrence: -because there are members of his own cabinet who have boasted of having membership lists in the province of Quebec.


Some hon. Members:: Oh, oh!


An hon. Member:: Who?


Allan Frederick Lawrence: The Minister of State for Urban Affairs has indicated that he has a list of the known separatists in the province of Quebec.
Would the Prime Minister assure me and the House now, if he can, that there has been no passage, no transfer of any of that information gathered by the security officers, not necessarily the RCMP but the security officers of this government, to members of his government who have then later used it for strictly political purposes?


Pierre Elliott Trudeau: Mr. Speaker, the question is so preposterous that I do not know if it is worth trying to answer it.


An hon. Member:: Give it a shot anyway, Pierre.


An hon. Member:: Try it.


Pierre Elliott Trudeau: Maybe I will take a shot at it, Mr. Speaker.


An hon. Member:: Good.


Pierre Elliott Trudeau: The simple answer is that no such list was in the hands of the Minister of State for Urban Affairs.


An hon. Member:: Wherever he may be.


Pierre Elliott Trudeau: He never said he had any such list, nor did any other minister say he had such a list. I can tell you one thing, that if one wants to know the names of the members of the PQ or of those who sympathize with the PQ, one does not have to go to the RCMP. I would not have to go to the RCMP. The subscription lists of those parties are public; you just have to get the official documents and see who is interested in the PQ and you can read the list there. There is no point in suspecting that there is great skulduggery in getting the list. I repeat, the hon. member opposite could probably get a list of the members of my party in any constituency.


An hon. Member:: It is a diminishing list.


Pierre Elliott Trudeau: 1 can tell you, Mr. Speaker, that in Alberta, where I was the day before yesterday, the list of those who still believe in the Leader of the Opposition is very short.


Some hon. Members:: Hear, hear!

November 2, 1977
Oral Questions


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please.
SURVEILLANCE OF PARTI QUfiBfeCOIS-ALLEGED DISCREPANCY IN DATE WHEN PRIME MINISTER ISSUED ORDERS TO STOP


Mr. Erik Nielsen (Yukon):: Mr. Speaker, I have a question for the Prime Minister now that I can be heard. At the Prime Minister's press conference on October 28 he was asked if it was last week that he told the police to stop looking at the PQ. The Prime Minister said, "no" and then he went on to explain: It's back in '73 or '74 that I said "stop looking into the PQ".
My question is based on the letter which the Prime Minister mentioned a moment ago from General Dare to Colonel Bourne, dated February, 1976 wherein General Dare wrote to Colonel Bourne:
Please refer to my letter dated 13 June, 1975 advising that the Prime Minister has issued certain guidelines reiterating the security services inquiries with regard to the Parti Qucbecois.
Can the Prime Minister explain that discrepancy in dates?


Pierre Elliott Trudeau: Well, Mr. Speaker, 1 guess I can explain that if I said 1973 or 1974, and earlier today I said 1974 or 1975-


An hon. Member:: It is a typographical error.


Pierre Elliott Trudeau: -I do not remember exactly the date when I saw the RCMP. I told the House that if it were relevant to the discussion, I would try to obtain it. I am sure the RCMP must have in their records a date on which the discussion took place, and I will undertake to give it to the House.
[DOT] (M52)
On the matter of the letter quoted by the hon. member for Yukon, if my memory is correct-and it may not be correct on that again-it was people on the other side of the House who were objecting at the time because we were not exercising sufficient surveillance of the PQ. Now, obviously they are complaining about the contrary.


Some hon. Members:: Hear, hear!
REASON FOR DELAY IN IMPLEMENTING INSTRUCTION TO STOP SURVEILLANCE OF PARTI QUfiBfiCOIS


Erik Nielsen: I think it becomes important that the Prime Minister present that date because it makes a difference as to when the instruction was issued to General Dare. However, there is an even more serious delay here. The letter was dated February of 1976, and it refers to a discussion between the Prime Minister and General Dare in mid-1975. General Dare apparently acted on the Prime Minister's instructions some eight months after he received them. Did the Prime Minister follow up on his instructions to General Dare to see if they were carried out? Can he tell us now why they were not carried out with more alacrity?
(Mr. Trudeau.]


Pierre Elliott Trudeau: This was discussed in some detail in the House when the matter of the leaked letter was discussed last session. 1 indicated at the time that this directive was based on an understanding that General Dare had formed at a cabinet discussion which he attended. There was a record of the decision of that cabinet discussion stating precisely the guidelines that the Solicitor General made public in the House on Friday. I repeat that these guidelines were issued as a result of information we had had previously- how many months previously I cannot remember and I cannot say, but it was information we had previously about the RCMP exercising surveillance of a political party. As soon as we heard that, we said "stop".
Then they asked, "Well, what is our mandate? If we can't exercise surveillance on political parties, what is our mandate?" I said, "Do you have a mandate? Have you one from the previous government?" It appeared there was no precise directive to the police. At that point in cabinet we went about writing a precise directive. I suppose it may have taken a matter of weeks or months before we got it into shape. It was communicated to the police in March, 1975. I believe that is the date. It was the result, I repeat, of-as far as I know-the first time the Government of Canada deciding that the security service needed some political control in a general sense and that they had to be given some general guidelines. Otherwise, they would be victims of the kind of innuendo we have been hearing from the other side in the past few days.


Some hon. Members:: Hear, hear!


Erik Nielsen: Mr. Speaker, because of the importance of the matter will the Prime Minister undertake to table the document "The Role, Tasks and Methods of the RCMP Security Service" as well as cabinet directive 35, which was the instrument giving effect to the cabinet decision on security policy announced in the House by the then Prime Minister on October 25, 1963?


Pierre Elliott Trudeau: Does that complete the list of documents of cabinet that the hon. member for Yukon would like to have?


Some hon. Members:: Oh, oh!


REASON CABINET COMMITTEE UNAWARE OF ALLEGED ILLEGAL ACTIVITIES-DIRECTIONS GIVEN SECURITY SERVICE
Mr. David MacDonald (Egmont):: Mr. Speaker, my question is for the Prime Minister. I find it strange that since last Friday, during all of the discussions which have taken place in this House, the Prime Minister has not yet clarified the exact role of the cabinet committee which he chairs-and has chaired since becoming Prime Minister-on security and intelligence. I wonder if he can indicate how it was that so much activity could take place beneath this cabinet committee of which this committee was apparently unaware until some years after the incidents took place and whether we are supposed to believe that following the events of 1970, which the Prime Minister at the time described "an apprehended
November 2, 1977

insurrection", there were no new instructions given to the security forces on which they thereupon acted, not an isolated incident but a series of events which are now being reported almost daily.


Pierre Elliott Trudeau: Mr. Speaker, I answered earlier that after the events of October, 1970 we obviously did have meetings with the security branch of the RCMP, and we indicated to that branch that we would appreciate it very much indeed if it would concentrate a little bit more on getting information on the security side about those within Canada who might resort to illegal acts in order to break up our democratic country. Therefore, there were these meetings. We met with the police periodically. I could not give the exact number of times or the dates. We met with them to receive information from them about different groups which had to be put under surveillance. We met to give the police directives of a general nature, that they should perhaps be operating more in this direction or that direction. Very often these meetings were meant to brief us on specific people they had detected exchanging official secrets, and that resulted, as I said earlier, in the declaration of those particular persons to be persona non grata in Canada.
There was a whole series of meetings, the purpose of which was to receive from the security service information and to convey to it in general terms the desires of the cabinet of the day and its general directions so that the police in a sense could be controlled and told what areas they should be more particularly concerned about. This whole area is, once again, where we are constantly faced with the dilemma of how far a security service must go while at the same time respecting the rights of the individual and ensuring the security of the state. It is a dilemma that any police force faces. 1 see that the Leader of the Opposition is shaking his head. I am sure he could face the dilemma with a great deal of ease.


Charles Joseph Clark: I am incredulous.


Pierre Elliott Trudeau: I have invited him, as 1 invited his predecessor, if he wants to be party to these security briefings, to be party to them. 1 have written to that effect, and I wrote to his predecessor in office to that effect.


Charles Joseph Clark: Not to those briefings.


Mr. Baker (Grenville-Carleton):: That is a distortion; you have not.


Charles Joseph Clark: I am sure you would want to set the record straight.


Allan Frederick Lawrence: You surely do need help.


Some hon. Members:: Oh, oh!


Pierre Elliott Trudeau: The record is quite straight. I wrote to the Leader of the Opposition telling him that if he wanted to be party to security briefings by our security service, we would very gladly arrange such briefings.


Some hon. Members:: Hear, hear!
Oral Questions


David Samuel Horne MacDonald: Mr. Speaker, the Prime Minister seems either unwilling or unable to clarify his responsibility in the cabinet committee on security and intelligence. I wonder if he can indicate whether in the enumeration of these investigations or in the work that was to be carried out following the events of the fall of 1970 any distinction was drawn between associations, groups or political parties which might have views different from those of the Prime Minister and his government and those who were prepared to resort to violence and whether there was any requirement established or any direction given with respect to what would be proper in terms of investigation proceedings, because what we are dealing with here is not investigation but in effect new forms of illegal acts, if not some kind of counter-subversion, on behalf of the security forces.


Pierre Elliott Trudeau: That seems to be a repetition of the same question about directives. I repeat that the directives were to find out more about those within Canada who for ideological reasons would destroy this country. Those were the directives, and they were followed as best they could be followed by a police force which sometimes makes mistakes, but which basically has helped this country a great deal in the past and will in the future.


Some hon. Members:: Hear, hear!


BASIS ON WHICH SECURITY OPERATIONS CONDUCTED- INQUIRY AS TO PRIME MINISTER'S POSITION
Hon. Robert L. Stanfield (Halifax):: Mr. Speaker, I would like to ask the Prime Minister whether I am to understand that he is today rejecting the doctrine that the then solicitor general quoted in the House, with approval, when he was establishing the security and research planning group on September 21, 1971 when he quoted the following:
I am sure that members of parliament accept the necessity that much of the security operation is conducted outside our purview. What would be cause for grave concern would be any thought that much of the operation is beyond the ken of the ministry or the Prime Minister; that there are not ministers, elective and responsible members of government to whom the entire security operation is an open book, who have continuing access to everything that is going on in that area, and who give proper, responsible, political, civilian direction to the operation on a continuing basis.
That is the basis on which the then Solicitor General presented that organization to us in 1971. Am I correct in understanding that the Prime Minister is now rejecting that document?


Pierre Elliott Trudeau: Mr. Speaker, the hon. member for Halifax has read a long quotation which I understand is from the then solicitor general.


Robert Lorne Stanfield: Quoting me.


Pierre Elliott Trudeau: Mr. Speaker, there is a quotation of the hon. member for Halifax by the then solicitor general. It is a long one and I cannot say in totality if I-


David Samuel Horne MacDonald: You cannot understand it.

November 2, 1977
Oral Questions


Pierre Elliott Trudeau: I am sorry. I am not as bright as the hon. lady from Kingston.


Some hon. Members:: D'accord.


An hon. Member:: Not as bright as Goyer.


Pierre Elliott Trudeau: The hon. member for Halifax has quoted himself as enunciating some doctrine that the Solicitor General should be informed of every aspect of security. He says no. Would he read it again? We will take time to hear it.


An hon. Member:: You are not the Speaker.


Robert Lorne Stanfield: Mr. Speaker, I will read it slowly for the Prime Minister.


An hon. Member:: You could not read it fast anyhow.


Robert Lorne Stanfield: Mr. Speaker, the Solicitor General was quoting a comment I made at the time the Mackenzie report was tabled in the House. Following a statement the Solicitor General quoted this, with approval:
I am sure that members of parliament accept the necessity that much of the security operation is conducted outside our purview.
That is, members of parliament, Mr. Speaker.
What would be cause for grave concern would be any thought that much of the operation is beyond the ken of the ministry or the Prime Minister; that there are not ministers, elective and responsible members of government to whom the entire security operation is an open book, who have continuing access to everything that is going on in that area, and who give proper, responsible, political, civilian direction to the operation on a continuing basis.


Pierre Elliott Trudeau: Mr. Speaker, the continuing direction is obviously part of our doctrine and our policy. I have repeated earlier that that continuing direction was incorporated in its last form in the directives of March, 1975, so obviously we should believe in continuing direction by the civilian side of the security services, as indeed in any other arm of government.
I am a little bit dubious of the context in which the hon. member says that the operations should be an open book, if I am quoting him correctly. If he means the day-to-day operations-the hon. member for Halifax shakes his head, no. Then we do agree. If he means that all the RCMP know and what is in all their files-if the implication was that we should know about it, in other words, that we should know all the secrets about this country that the RCMP knows, then our answer to that is, that is not our policy. It does exist in some countries but it is not our policy.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: We in this government, and I believe it was the case with previous governments, have removed ourselves from the day-to-day operations of the security services. Indeed, we have done it from the operations of the police on the criminal side. We just make sure that the general directives are those which issue from the government and the example of that kind of directive was given in the guidelines of March, 1975.


Robert Lorne Stanfield: A final supplementary question, Mr. Speaker. Does the Prime Minister not agree that this doctrine, approved by the Solicitor General of the day, certainly included the scope of security operations? Will the Prime Minister not agree that the failure of the government to check whether, in carrying out the mandate given to the security operations by the government whether or not they were investigating a democratic political party, was a breach of this responsibility and was a tremendous disaster for confederation?


Pierre Elliott Trudeau: Of course, Mr. Speaker, the "scope and mandate"-the words used by the hon. member for Halifax- should be under the purview of the government of the day. Indeed, this was the purpose of these security briefings of which I was a member and which other ministers and I attended. In that sense the mandate, the scope, the areas that the police were looking into to protect the security of the country, were all of concern to us and indeed of periodic reporting and discussion with us by the security services. I repeat, we did not know every day-to-day operation.


An hon. Member:: You did not care to know.


Pierre Elliott Trudeau: We did hear at one point that they were investigating a democratic party. As soon as we heard it we asked them to stop that. That seems perfectly straightforward. What seems to have caught the imagination of the House is the fact that a political party was under surveillance by the security services.


An hon. Member:: More than that; a criminal act.


Pierre Elliott Trudeau: Also, that this surveillance was exercised by way of criminal action-alleged criminal action. Mr. Speaker, to these two points we have responded; in the case of the alleged criminal action, by referring the matter to the Attorney General of the province where the act was committed and as regards the surveillance of a political party, by asking that it be stopped. What could be more clear or definite than that?


PRIVILEGE
Charles Joseph Clark: Mr. Speaker, 1 rise on a question of privilege simply to allow the Prime Minister the opportunity to correct a false impression which he gave, I am sure most inadvertently. He had been referring to regular briefings of the security committee of the Privy Council, of which he is the chairman, by the security services to the government of Canada. He had referred quite explicitly to those briefings, and he said in reference to the offer that he made to me that I had been invited to take part in those briefings. I am sure the Prime Minister will agree that is not the nature of the offer that was extended to me as Leader of
November 2, 1977

the Opposition. I will quote from his letter, which reads in part:
Perhaps it is appropriate at this time-
Mr. Speaker, 1 emphasize "at this time". This letter was received in my office on October 18.
-to extend an invitation to you, as Leader of the Opposition, to attend a briefing that could be arranged at your convenience.


Some hon. Members:: Oh, oh!


Charles Joseph Clark: There is a difference between a briefing and regular briefings. There is also a very clear difference, which this Prime Minister appears unwilling to accept, between briefings and responsibility, including the responsibility to ask questions about methods and about potential illegalities.


Pierre Elliott Trudeau: Mr. Speaker, the paragraph read by the Leader of the Opposition referred to practices in the United Kingdom and other countries where a practice has been developed of briefing the opposition from time to time on matters relating to national security. It was, 1 agree, only on October 18 that I made it quite clear that 1 had made the same offer to the previous leader of the opposition, as I am sure Mr. Pearson had made it to Mr. Diefenbaker, and probably Mr. Diefenbaker to Mr. Pearson.
The Leader of the Opposition has not yet had time to decide whether he wants such briefings or not. He has certainly not answered my letter, but he has told us today-he was probably too busy travelling.


Charles Joseph Clark: 1 will reply before 18 months, Prime Minister.


Pierre Elliott Trudeau: He told us today, with great emphasis, that he did not consider it sufficient to attend "a" briefing. That is his emphasis. If he wants more than "a" briefing; if he wants some briefings, if he wants them in different form than have traditionally been accorded the leader of the opposition, let him say so and let him answer my letter. Let him tell us what kinds of briefings he wants, and we will see if they can be given.


An hon. Member:: Oh, sit down; don't waste time.


Pierre Elliott Trudeau: I can tell the Leader of the Opposition that if he thinks that in those briefings he will be able to ask members how they get information, who they get it from, and in which way, he will not get that information unless the law of the country is changed and the practices of time immemorial in this House are changed.


MR. BROADBENT-ALLEGED MISLEADING OF HOUSE IN ANSWER GIVEN BY SOLICITOR GENERAL
John Edward Broadbent: Mr. Speaker, I rise on a most serious question of privilege. In reply to a question put to the Prime Minister, the Solicitor General thinks that he has put to rest a matter which raises the integrity of the government. I want to say at the outset, on this serious question of privilege, that I want to deal with the points
Privilege-Mr. Broadbent
he raised, because he misled the House. Rather than solving or putting aside a certain problem, in my view, he has made it even more serious.
I put this point seriously and I believe it needs to be commented upon. The minister began by saying that morality plays a role in politics. I agree with him. It is for this reason that when I first learned of the alleged contents of the affidavit within two hours I phoned his colleague, the former solicitor general, the Minister of Consumer and Corporate Affairs, and told him that I had been given this serious information.
At that time I asked him if it was true. He said that he did not think so. Also, he indicated that he would look into it. At the same time, I repeated the phone calls to that minister because his integrity is under question here: I do not put it any more strongly than that. Yesterday morning I phoned him twice to see if 1 could receive an answer, and no call came back.


An hon. Member:: Which minister?


John Edward Broadbent: The former solicitor general.


Some hon. Members:: Oh, oh!


John Edward Broadbent: Then I raised it as a serious question by asking the present minister to investigate it. He did not reply to me. 1 waited two hours this morning for a reply, and none was forthcoming. So he raises the question of morality on the issue. I come now to the substance of the issue.


An hon. Member:: It is about time.


John Edward Broadbent: The minister has said that the affidavit, a legal document over his signature, residing with the Quebec inquiry contains a significant typographical error. I should like to point out that it took a question by us in the House of Commons to elicit the information that that very significant error, on which the Quebec inquiry is basing part of its judgment, has come to light. Would it have come to light if it had not been pursued in the House of Commons? I know not, because it was a document that the minister said was not going to be made available to the inquiry. That was a careless mistake. It did not originate from this side of the House; once again, it was from the other side of the House.
There were issues raised in the changing of the date from 1972 to 1973 which do not in one whit cancel the problem. I remind the minister that the Prime Minister and the former solicitor general are on record as saying that no such correspondence on the question of the break-in exists. As reported at page 6793 of Hansard dated June 17, 1977, the present Solicitor General is quoted as saying the following:
Our files and those of the RCMP contain no written report on the unlawful entry to the solicitor general.


An hon. Member:: Pardon?


John Edward Broadbent: Well, you can look it up.


Some hon. Members:: Oh, oh!

November 2, 1977
Privilege-Mr. Broadbent


John Edward Broadbent: All right, I will read it again. It is a quotation from the Solicitor General which occurred on January 17, 1977.


Some hon. Members:: June.


John Edward Broadbent: I am sorry, June.


Some hon. Members:: Oh, oh!


An hon. Member:: That is the same type of mistake.


John Edward Broadbent: It reads as follows:
Our files and those of the RCMP contain no written report on the unlawful entry to the solicitor general.
The document in question, annexed to the minister's own affidavit-


Mr. Knowles (Winnipeg North Centre):: Sworn to.


John Edward Broadbent: -sworn to by himself, is a list of material which, according to paragraph 5 of the affidavit, pertains directly to the break-in of L'Agence de Presse Libre du Quebec in the fall of 1972. The minister cannot have it both ways. Earlier in the question period he said that the document 1 referred to in my question-because I was basing it on his published information-did not pertain to the break-in.
Unless he has committed another incomprehensible error, he said in his own affidavit that all the documents listed on the last page pertain to the break-in. Unless he is going to correct that error, I take it for granted that his sworn statement holds. The document which he thinks if significantly different, because the date changes from 1972 to 1973, does not convince me.
I should like to come to the reason for that. As I have said, the Prime Minister, the present Solicitor General and the former solicitor general, now the Minister of Consumer and Corporate Affairs, said that they did not find out anything about this break-in until 1976. If the date changes from 1972 to 1973, how significant is that change?


Walter David Baker: What is the difference?


John Edward Broadbent: It is still 2'k years ahead of the time the Prime Minister and other members of the cabinet claim they knew anything about the break-in.


An hon. Member:: So?


John Edward Broadbent: If the letter which, according to the affidavit, pertains to the break-in, and if it was written by General Dare, we know from earlier testimony that General Dare was fully cognizant of the events and fully cognizant of the break-in which took place in the fall of 1972. One would conclude that when he is writing on the subject of a break-in, he is writing to provide some information about the break-in to the Solicitor General.
On behalf of all members of the House and the people of Canada who are concerned about the integrity of the government, I should like to indicate that all I want is the informa-

tion contained in that letter. It seems to me that it is very germane and it is hardly irresponsible. In fact, I would say it is a responsible course of action.


Some hon. Members:: Hear, hear!


Francis Fox: Mr. Speaker, as 1 have stated previously in the House, all the documents in question which are indicated in the annex referred to by the leader of the New Democratic Party, will be made available to the royal commission of inquiry set up by this government last July.


Some hon. Members:: Oh, oh!


Francis Fox: For that matter, it is very difficult to conclude that there has been any effort whatsoever at a cover-up. If that matter relates to a break-in or relates to information concerning knowledge brought to the attention of the minister, it will be brought to the attention of the royal commission. I have stated that a number of time in the House.
When the hon. member raised the question for the first time yesterday, I had the opportunity of speaking with him, and he told me that it related to a document which had been produced in Montreal under document number P. 26 tabled before the royal commission of inquiry. I was advised immediately by my own attorney who had appeared before that commission that document No. P. 26 refers to a letter which was written by the executive assistant, or the special assistant, to the then solicitor general and addressed to Mr. Jacques Hebert who was associated with L'Agence de Presse Libre du Quebec. It is a public document which is presently before the commission.
Then the hon. member raised a question concerning the document dated December 19, 1972. I caused an immediate search to be made of our files, and we could not come up with a document of that date.


John Edward Broadbent: Why did you not call me back?


Francis Fox: If one wants to go through a matter carefully, it takes some time to come up with the facts. This morning I looked through the documents enclosed in an envelope. They pertained to the affidavit which 1 filed with the commission in Montreal. I discovered that there is a letter annexed to a note numbered D926-152D22. It is a letter from Mr. Dare to the present Minister of Consumer and Corporate Affairs in December of 1973, and not 1972. The matter was excluded from the examination of the commission of inquiry because it did not refer to any illegal act whatsoever committed by the RCMP.
Even given that, Mr. Speaker, I am still willing to make the matter fully available to the McDonald royal commission of inquiry in order that they may satisfy themselves that that is indeed the case.


John Edward Broadbent: Table the letter.


November 2, 1977


Mr. Speaker:: The question raised by the hon. member for Oshawa-Whitby under the heading of a question of privilege has been contributed to equally by the Solicitor General. It has reduced itself to a disagreement between the two members on the interpretation both of answers given and the documents in question. It is not a question of privilege.


MR. WOOLLIAMS-AFFIDAVIT OF SOLICITOR GENERAL
Mr. Eldon M. Woolliams (Calgary North):: Mr. Speaker, 1 rise on the same subject with reference to the affidavit sworn to on October 12, 1977, by the Solicitor General and sworn to, as commissioner of oaths, the notary public, Mr. Goyer. In the letter in question, which is dated in this document December 19, 1972, it was not made clear whether there was a mistake in the date of the letter or the date as typed in the affidavit.
Under the circumstances, having listened to the Leader of the New Democratic Party and to the Solicitor General, 1 rose several times in my place this afternoon to ask a question with reference to that matter. I think it would be fair to the House, since we referred to it-and he is prepared to produce it in other proceedings, and as this is the highest court in the land- he should come clean and table the letter in this House of Commons so we can all see it.


MRS. HOLT-INABILITY TO BE RECOGNIZED BY CHAIR
Mrs. Simma Holt (Vancouver-Kingsway):: Mr. Speaker, my question is one of personal privilege, in that 1 have been prevented from doing my job in this House on behalf of the constituents of Vancouver-Kingsway. For two weeks I have risen in my place to participate in the question period in order to ask-


Some hon. Members:: Order.


Mr. Speaker:: Order, please. The matter of recognition of any member during the question period is the responsibility entirely of the Chair and, it seems to me, in no case gives rise to a question of privilege.



ROUTINE PROCEEDINGS


Hon. E. F. Whelan (Minister of Agriculture):: Mr. Speaker, under Standing Order 42 I wish to table, in both languages, a report on the Canadian Egg Marketing Agency prepared by C. M. Ross and Partners, dated July, 1977.
Rail Service TRANSPORT STATEMENT ON RAIL SERVICE


Hon. Otto E. Lang (Minister of Transport):: Mr. Speaker, in our desire to improve rail passenger service in Canada and give VIA Rail an opportunity to do so, we have decided to arrange the purchase of ten trains for passenger service rather than a smaller number which had been considered. This new equipment, to consist of 22 locomotives and 50 coaches at a cost of about $90 million, will be purchased jointly by the federal government and VIA Rail. Negotiations are now being finalized with Bombardier-MLW for the equipment related aspects of the program and it is hoped that a contract with them will be signed shortly.
This is the first major purchase of Canadian rail passenger equipment in more than a decade. These new trains will greatly assist VIA in providing modern, attractive and economical rail passenger service throughout this country. Several of these trains will be put into service in 1980 as part of a new high-quality rail passenger service between Quebec City and Montreal. The remaining trains will be used by VIA in the introduction of conveniently scheduled, fast, intercity trains across Canada to complement an upgraded transcontinental service, and will therefore be available to VIA for western Canada and the maritimes as well.
This equipment is a result of a tender call by Transport Canada for new rail passenger equipment on July 4, 1976. On February 1, 1977, four companies submitted bids. A thorough and extensive evaluation of these bids was undertaken jointly by senior officials from CN, CP, and the government. The choice of train was not based solely on price or delivery date; we also assessed the total expected cost over the life of the equipment, its revenue-generating capability, advancements in design such as speed capability, the firm's manufacturing expertise, the possible export potential, and Canadian content of the bid. Service improvements made possible with these trains should generate savings which more than offset their cost.
The LRC-light, rapid, comfortable-trains are the result of a high degree of Canadian technology and development. Alcan Canada Products Limited and Dominion Foundries and Steel Limited, co-developers of the LRC, will be major suppliers to Bombardier-MLW. They feature tilting body coaches which permit higher operating speeds on existing track and thereby eliminate extensive track improvements. They are designed to achieve potential speeds up to 125 miles per hour on intercity service, and contain electronic sensors and hydraulic cylinders to bank the coaches on track curves.
The new equipment will feature the attractive, modern interiors commissioned by Transport Canada last year as a result of an international design competition. Jacques Guillon Designers, of Montreal, produced interiors that are both flexible to the changing needs of rail passenger transportation and include features such as facilities for handicapped travellers.
The federal government will pay $24 million, and VIA the balance, for locomotives, cars, spares, maintenance and test

November 2, 1977
Rail Service
equipment, the construction of which will create approximately 1,500 man-years of work spread out over a three-year period.


Some hon. Members:: Hear, hear!


Otto Emil Lang: Therefore, Mr. Speaker, this initiative by the federal government is not just of benefit to the future of railway passenger transportation in this country, but will have a positive effect on employment as well. This is but one of a number of steps which have been taken since the announcement in January, 1976, of our new rail passenger policy, and certainly the new equipment, efficient and attractive, will help VIA in the improvement of rail passenger service in this country. The creation of VIA itself was a major step in this regard and, of course, the final plan of the CTC which was one of the ongoing steps outlining the kinds of rail passenger service which should exist in Canada over time.
This announcement carries out the fifth recommendation of ten of the Canadian Transport Commission in their report, in that it will be providing the new equipment which will be efficient and attractive and allow for better service in this country. 1 believe the Canadian Transport Commission did a very good job in this report. With its flexibility and the scheme it has laid out, it will allow VIA to get on with the vigorous job of improving rail passenger service in this country. I very much believe, as does the government, in the future of rail passenger service and the need to attract passengers to the trains, as well as the complementary use of buses and the fact that trains must be run sensibly and efficiently and not in a way to interfere with the development of better bus service.
I am delighted that in the House today, watching these proceedings, is Mr. Frank Roberts, the new president of VIA Rail Canada. He is vigorous and enthusiastic, and 1 am sure he will lead VIA Rail in the development of a better rail passenger service in this country. I would ask that all members join me in wishing him well in this great work.


Some hon. Members:: Hear, hear!


Mr. Don Mazankowski (Vegreville):: Mr. Speaker, naturally we on this side of the House welcome the statement made by the minister this afternoon. If we are going to upgrade and rejuvenate rail passenger service in this country, we certainly require suitable and satisfactory equipment. The minister indicated this new equipment is designed to achieve potential speeds of up to 125 miles an hour. While that is not quite as fast as government jets, we hope that cabinet ministers will seize upon the opportunity to use this high-speed ground transportation when it becomes effective to replace some of the inordinate use of government jets which has plagued this country. I am sure that would meet the approval of many members of the House and, indeed, the public at large.
This is another in a series of announcements of intent by the government. We have had many. The minister seems to seize very readily upon these announcements in an attempt to achieve maximum political benefit. These many statements of intent really amount to a stalling procedure in the expeditious

development of the Windsor-Quebec corridor. When speaking of intent, we on this side of the House, and Canadians in general, are well aware of the lofty promises made in the 1974 election campaign with regard to the expenditure of vast amounts of money, particularly on the urban transportation system. I believe something in the order of $290 million was promised at that time for urban transportation.
When I speak of attempts by the minister to maximize political benefit from these announcements, I am reminded of the fact that almost every time the minister goes out west for a meeting he talks about the $100 million he has announced on a dozen occasions for the purpose of upgrading western rail services. It is not that we do not appreciate it, but there are limitations upon the number of times we should be hearing these words. I was talking about the western rail system. I realize most of the money is being spent on upgrading the transportation system for the movement of grain, but it is still all part of the western rail transportation system. It is interesting that Mr. Hall should have recommended expenditures in the order of $450 million.
We also remember the 1975 announcement, repeated and reaffirmed in 1976, which called for the expenditure of $100 million over five years to purchase rail commuter equipment. Just last week it seemed this program had been scuttled. It had never really been implemented. The minister talked about the reorganization of this program. He hijacked $130 million from the railway relocation and crossings program and another $100 million from the commuter services program, and all this has not gone down well into the provinces. The fact is that no new funds have really been made available for the program. Yet the original announcement was greeted with much fanfare, although it has turned out to be, once again, merely an announcement of intent not followed by action.
When we review the history of the commitments made in connection with the Quebec-Windsor corridor, we find that the first announcement was made back in May of 1976. At that time some $30 million was to be provided by way of a grant. By December of 1976 it was elicited, in reply to questions in the House, that construction was to begin by the spring of 1977. By that time no action had been taken.
On May 25, in response to the hon. member for Dartmouth-Halifax East, the minister stated that decisions on tenders would be taken by the end of the summer, but up to that time nothing had been done. Now comes the announcement that the government is committing $24 million toward the purchase of $90 million worth of equipment. I am not sure whether this $24 million is part of the original $30 million which was allocated, nor am I sure where the other $66 million will come from. Will VIA Canada have to generate that sum from its own resources, or will it be provided in the estimates? The minister may be able to clear up this question later.
Our party is naturally committed to supporting and improving rail passenger service in this country. It is timely to take such an approach, and there is no question there is wide public
November 2, 1977

support for expansion and improvement of service. In terms of energy conservation, the expansion and improvement of rail passenger service is not only an integral element in the fight for energy conservation, but it is vital.
At the present time, approximately 85 per cent of our intercity travel is conducted by passenger car. The passenger car provides an average of 140 passenger miles for every gallon of fuel consumed. The airplane provides some 70 passenger miles for every gallon of fuel consumed. The bus provides some 500 passenger miles, on average, for every gallon consumed. But the rail passenger train provides 1,000 passenger miles for every gallon of fuel consumed. So rail passenger service clearly rates very high from the point of view of fuel conservation and moving large numbers of people in intercity travel.
We hear a lot these days about the subsidies which are being paid out to the railways, but at the same time it should be noted that railway users cover the cost of the service very well. About 74 per cent of actual rail costs are covered by the users of the service. In the case of highway travel, 54 per cent of the cost is covered by the users. In the case of aviation, only 31 per cent of the cost is covered by users; and in the case of marine movement, only 19 per cent is covered.
So while there have been protests about the huge amounts of money paid to the railways by way of subsidies, we should bear in mind that the whole question needs to be placed in perspective. If we are providing expensive airport facilities at the cost of taxpayers, while the railways provide their own infrastructure at their own expense, there is obviously a differential involved.
1 say, once again, that we welcome this announcement. 1 might add that we would appreciate it if in future the minister, in his announcements, were a little less political and a little more forthright.


Mr. David Orlikow (Winnipeg North):: Mr. Speaker, for those of us who have watched with despair the preoccupation of the minister and his department with air travel, while almost completely ignoring the advantage of passenger-rail service in terms of comfort and pure efficiency, this announcement is a welcome one. It would, obviously, be impossible to provide fast, comfortable rail passenger service without new and modern railway engines and passenger cars.
To the extent that this announcement means we are moving to eliminate past and present inadequacies, we in our party approve. But new equipment will not, in itself, provide the kind of service which is needed and which is now available in Japan and in most of the western European countries. Before we can look forward to service of this kind, a major improvement in track and elimination of the level crossings which still exist in large numbers must take place. Otherwise, the new equipment, capable-as the minister says-of speeds up to 125 miles per hour, will only be able to operate at a fraction of its capability. Also, there is no indication from the minister that he plans to make any major improvements in the track system or to eliminate level crossings.
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In the second place, there can be no fast service for passengers if preference continues to be given by the railways to freight trains over passenger trains. Either the set of priorities which is followed at the present time must be turned around to give preference to passenger trains, or we must proceed with a large-scale program of double-tracking. There is no point having a train which can travel at 125 miles an hour if it sits for half an hour or more on a siding while a 150 car freight train is given the right of way.
Not only are the changes which I have listed required. It is really impossible to provide better service if we decide, as we have, on the recommendation of the minister, to cut the number of transcontinental trains in half. This, we believe, was a mistake. However, the mistake having been made, we hope the government will keep in mind the recommendations of the Canadian Transport Commission, that an extensive promotional and educational campaign explaining the new services will be directed to the public, and that steps will be taken to ensure that we have the equipment to meet the demand which will increase as service improves. Without the ability to meet that demand for rail service, the public will again come to believe, as they have with plenty of justification up to now, that the railway system is not equipped to meet their needs and will be looking for alternate methods of transportation, be it by bus, air or private passenger car-modes which have been increasing in recent years.
So to the extent that this is a step in the right direction, Mr. Speaker, we welcome it. But we see it as only the first step; many more steps are required.


Mr. Jones:: Mr. Speaker, I should like to comment on the announcement made by the Minister of Transport. I think we have all been waiting for this announcement for a long time.


Mr. Deputy Speaker:: Order, please. I want to remind the hon. member that I recognized him, not as leader of a recognized party authorized to comment as other representatives of parties do under our Standing Orders. I recognized him for the purpose of asking a question. He might include in his question a short comment, but it will have to be a question.


Leonard C. Jones: Mr. Speaker, I was not going to make a speech; I did not think it was necessary to do so. I should like to ask the minister whether he is going to use his good offices to make sure, firstly, that the roadbeds in the maritime region are to be brought up to proper standard to handle trains of this speed; secondly, are some of these trains going to be used in the maritimes; and thirdly, would he use his good offices to see that some of the equipment which is to be manufactured will be manufactured in the maritime provinces and thus provide jobs? There are places in the maritimes where this work can be done.


Otto Emil Lang: Mr. Speaker, so far as the actual location of the jobs is concerned, the contracts are being let with Bombardier-MLW and subcontracting and other arrangements will be in
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their hands. The Canadian content will be high; therefore, the jobs will be welcome, wherever they may be. In replying to the hon. member's other question, it will indeed be our long-run intention to improve railbeds where passenger services are to be run. These trains can run fairly effectively on many existing beds, but certainly in some regions improvements will be required to the signalling and bed systems.


Mr. McGrath:: Mr. Speaker, I have two questions for the minister. Perhaps I can pose them both at the same time in the interest of time. My first question deals with rail passenger service and the VIA Rail announcement made by the minister today, which, of course, will exclude the province of Newfoundland. We lost our rail passenger service as a result of a decision by the CTC implemented in 1969. By that same decision, CN was ordered to operate a bus service within our province. That bus service, by proclamation of the minister under the transportation act, is now under the jurisdiction of the federal government, but it does not qualify under the rail policy passenger service for subsidies to meet its deficits, as is the case with rail passenger services elsewhere in the country. In addition, the bus service is now under federal jurisdiction and is the only mode of transportation across the province which has an exclusive franchise.
My question to the minister is: What benefits is the federal government prepared to provide to the CN bus services where they replace rail passenger services, especially in cases, as in the case of the province of Newfoundland, where they have an exclusive franchise and they are the only mode?
My second question deals with the same problem, or with a consequence of the same decision. CN are now doing the same thing with freight service in the province as they did with rail passenger service; they are allowing it to be downgraded. They are not providing proper maintenance for the roadbed and they are sending more and more freight across the province along the Trans-Canada Highway in trailer trucks. The reason for this is obvious: they pay nothing toward the cost of maintenance of the Trans-Canada Highway, whereas the cost of maintenance of the roadbed and the provision of rolling stock is exclusively theirs.
This brings me to the proposal by the government of Newfoundland, now before the minister, for a 75-25 per cent cost-sharing arrangement with the federal government to upgrade the Trans-Canada Highway in Newfoundland which is well below standard and which is rapidly deteriorating because of the excessive use of freight by CN and others.


Otto Emil Lang: Mr. Speaker, as the hon. member knows, we have offered to enter into a program of 50-50 cost-sharing on road improvements in Newfoundland. This, of course, is an area which is the prime responsibility of the province, but we have recognized the desirability of improving those roads. At this point in time, of course, that offer has not been accepted.
The whole question of freight service, use of the railroad and the increasing use of roads is one of significant concern and is one of the background reasons for the federal and provincial governments jointly agreeing on the setting up of the Sullivan

commission which is now considering all the transportation questions in Newfoundland. We will certainly be looking forward to the results of that commission before too long.
As for the question of the bus system, which it is true is now fully under federal jurisdiction resulting from necessary action which had to be taken some time ago, my understanding is that the rates charged are comparable to bus rates in other parts of the country. If a subsidy is required because of a deficit on the system, because this is a Canadian National service it would be borne either by the system as a whole or by the government of Canada, in the ordinary course.
I look forward to direct federal action in attempting to improve that bus system arising out of the total transportation agreement entered into with the Atlantic provinces. I also look forward to discussing a role with VIA Rail Canada in relation to that bus service, because I think that the vigorous management approach toward passenger service which will be found to exist in VIA Rail may be very beneficial where associated bus services are required.


Mr. Gendron:: Mr. Speaker, I understand from the announcement the minister just made that an important contract is to be awarded to Bombardier in La Pocatiere.
Could the minister tell us the exact amount that would be awarded to Bombardier in La Pocatiere under that policy, and also the approximate number of jobs that would be created through that contract?


Otto Emil Lang: As I indicated, Mr. Speaker, 1,500 man-years will be involved in the development of this equipment. The figure I have used is approximately $90 million. Final negotiating is still continuing.


Mr. Towers:: Mr. Speaker, would the minister say whether or not the two main transcontinental lines to western Canada will be maintained? Would he also say what the policy is regarding bilateral runs between places like Calgary and Edmonton?


Otto Emil Lang: Mr. Speaker, the Canadian Transport Commission's final plan is now available and indicates a particular method for maintaining the two transcontinental services between Winnipeg and Vancouver and an overtime implementation of that development. The other associated services are now frequently under special consideration by the Canadian Transport Commission and special decisions will be taken from time to time in that regard.
What I look forward to is the possibility of Via Rail looking vigorously, with all the provinces, at the question of where rail service is required and desirable, and where bus service can more effectively perform the service of bringing passengers to particular points where the rail service can begin.
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Mr. Lambert (Edmonton West):: Mr. Speaker, bearing in mind the minister's personal affection for the Edmonton area, and bearing in mind the effect of the decision on VIA Rail to eliminate the direct transcontinental run from the main population area in the province of Alberta which is concentrated on the Edmonton side rather than that of Calgary, how does the minister rationalize this hope for increase in business of VIA Rail Canada and the decision that was taken by the government, through Treasury Board, the other day to eliminate or reject the proposals with regard to the necessary expansion and amelioration of the Edmonton international airport? Frankly, the airport cannot cope with the volume of traffic, yet one can foresee that as a result of this move for VIA Rail there will be an increase in demand on the airport's facilities, bearing in mind the Commonwealth Games and all the traffic which will be generated as a result.


Otto Emil Lang: No such cut in service for Edmonton is contemplated at this time. Of course, the best possible passenger service to Edmonton and to other areas will certainly be provided. I suppose that would answer the question as posed. However, 1 would like to reassure the hon. member that the unavailability of funds for the expansion of the Edmonton airport of the full type with which we wanted to go ahead at this time does not indicate a long-term situation, but only a very short-term one. We will be watching very closely the opportunity to find the money and to make it available in some fashion, so that changes in the air terminal service can go forward as quickly as possible.


An hon. Member:: Just before the next election.


Marcel Joseph Aimé Lambert: Can the minister tell us what sort of a lay-over is proposed in Winnipeg in the projected changes, the proposed plans for VIA Rail and for the modal points for persons wanting to use the service to eastern Canada, because if there is a 12-hour lay-over, or anything more than an hour or two, it becomes a grave inconvenience to people who want to use the train when they have to connect with the so called CPR route? Second, the traffic will be affected now or in the very near future, both rail and air traffic. It is not a question of 1981 or 1982 with regard to airport facilities, but 1978.
What are we going to do with those people? The immigration quarters are like cattle-pens and the modern aircraft and immigration facilities are greatly overtaxed. Also, people are paying the user tax, which is the minister's favourite.


Otto Emil Lang: On page 4 of the Canadian Transport Commission's preferred plan there is an example of a possible service which would indicate a 40-minute lay-over in Winnipeg for one of the services and a 30-minute lay-over for the other. Of course, the CTC has emphasized that VIA Rail must have flexibility, and one of the things which will concern the management of VIA Rail is the ability to maintain services which coincide effectively with the higher speeds required to make that happen. I will be expecting the management of VIA Rail to look at this matter carefully in order to seek ways of
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ensuring the best possible service, and discussing with the CTC such variations as may be required to ensure that service. But I do not see any diminution in the passenger rail service for Edmonton.


Mr. Deputy Speaker:: Order, please. I still have eight more questioners on my list. Perhaps 1 should name them in the order in which they appear on my list, to see if this satisfies the House. I might conclude, then, that this should complete the questioning and we should go on to government orders.
I have on my list the hon. member for Battle River, the hon. member for Pembina, the hon. member for Vegreville, the hon. member for Winnipeg North, the hon. member for Hastings, the hon. member for South Shore, the hon. member for Dauphin, and the hon. member for Brant.


Mr. Malone:: Mr. Speaker, all of us in the House, I am sure, applaud the intentions in the minister's statement today. One idea with which I am sure we all agree is the one to speed up passenger service. But coming down to the question of methods, one of the concerns that I have is with regard to the method of speeding up the passenger service. Will it be done by increasing the speed at which the train travels, or will there also be a designation of the towns which will be provided with passenger train service?
If that is the case, can the minister tell us at this time the formula for designating certain towns? Will only the distance between certain major centres be taken into account, or will there be a guarantee that a town with a certain size of population, irrespective of its location relative to Edmonton, Saskatoon or Winnipeg, will be provided with that service? I have a couple of other questions, but perhaps the minister could answer that one, following which I will put my other questions to him.


Otto Emil Lang: I hope that VIA Rail will look at the various means of speeding up the service. Certainly they will have to look at the question of through service, or express service, and what local services are required in preparing the final plan which CTC indicates is a major question for the northern Ontario route.
I expect VIA Rail to be in close consultation with many people, including the users and associations interested in rail passenger service, as well as the provinces and ourselves. CTC, of course, will have a role to play in ensuring that the necessary services are maintained. Beyond saying that I hope the best passenger service will be provided, I would not want to predict precisely what the solutions will be.


Arnold John Malone: 1 would ask the minister if, at an early date, he would let us know by mail what towns are scheduled for designation, because I assume from his answer that in all likelihood that will be forthcoming. The other question I have for him is whether it will not simply be a case, as I am sure the minister realizes, of improving rail equipment so as to encourage people to travel by rail, and also the improvement of the service provided in terms of station buildings, food on the trains, personnel, and so forth. What are the government's
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intentions in this regard? In view of the fact that he spoke about the VIA Rail service between Quebec City and Montreal being provided by 1980, when does he anticipate that we will have a rapid transcontinental VIA Rail service from one end of the country to the other?


Otto Emil Lang: The balance of the new equipment will be arriving in two or three years. I would not want to predict the speed at which trains will be travelling at that time. We are very conscious of the fact that all these factors lead to better rail passenger service. Of course, the improved design of the interior of trains is an example of that.
I also believe that the creation of VIA Rail and the dedication to rail passenger service will have an important impact upon the morale of those who are engaged in providing services, the men and women on the trains, because they will no longer be part of an operation which was getting little attention and looking as though it was the neglected child in the family of rail services. In this way, I believe the whole group will work together to provide better service and to make sure that the way of providing this service is best suited to the needs of travellers.


Mr. Elzinga:: Mr. Speaker, my question is supplementary to the one put to the minister by the hon. member for Edmonton West. As are all my colleagues from the Edmonton area, 1 am concerned about the facilities at the airport at Edmonton. The minister stated that it is going to be only a short-term delay. Would the minister be kind enough to give us a hopeful date as to when the upgrading of the facilities at the Edmonton international airport will take place, in view of the fact that we will be hosting the Commonwealth Games in 1978?


Otto Emil Lang: Mr. Speaker, I would not want to speculate upon a date, but I can assure the hon. member that as soon as I have a definite date, it will be given.


Donald Frank Mazankowski: Mr. Speaker, I have two brief questions for the minister. Is the $24 million, which has been announced today for the purpose of purchasing equipment, a portion of the $30 million grant which was originally announced? Can the minister explain to the House, or elaborate as to how VIA Rail will be financing the balance of $66 million? Will it be a loan obtained from the private sector, a loan from the government, or will a portion of it be generated from within?


Otto Emil Lang: I believe that when the original $30 million figure was quoted, the intention was to allocate approximately $9 million of that toward equipment, and the balance toward other improvements. Therefore, the amount which will be spent in fact will be much larger than originally comtemplat-ed, as this approximately $90 million indicates. The $24 million from the government will be going indirectly through an estimates vote. The balance and many other improvements which will go on will, indeed, be self-financing over the long term, and we will be acting to give VIA Rail Canada Limited the capability, either with CN or government guarantees, to

raise the necessary funds for capital purchases. The over-all cost of servicing that capital will, of course, be included in later votes in this House.


David Orlikow: Mr. Speaker, I should like to ask the minister if there are any early plans for upgrading the track between Ottawa and Montreal, and the elimination of the remaining level crossings. I should like to ask the same about the Toronto to Montreal line, so that people, including members of parliament and ministers, will be persuaded by the much shorter trip to take the train instead of the bus, driving in their own cars or flying, as they now do?


Otto Emil Lang: Mr. Speaker, a variety of routes will be getting attention, but I know that one in particular that is seen as deserving early attention is the Ottawa to Montreal route, because of the distance and therefore the possibility of attracting more passengers to the rail mode and away, perhaps, from their automobiles.


David Orlikow: Mr. Speaker, I wonder if the minister can tell us whether there are similar plans to upgrade the line between Regina and Saskatoon and between Calgary and Edmonton. Both trips are now being made by a large number of private passenger cars or by aircraft, and both would be much more efficient and cheaper if they were made by a rail service which had the kind of speed which these new engines and rail cars the minister announced today could maintain if they were given the tracks upon which to operate.


Otto Emil Lang: VIA Rail will be giving consideration to the question of a variety of intercity services, particularly the Bud car type of service where an individual unit provides the service. But we will have to look at this question very carefully in order to determine whether the frequency and quality of the bus services which exist in some of the intercity links are, indeed, the better way to go, and whether they can in fact fulfil the service. So the extra cost of railway upgrading may be uneconomic compared with using that money for other good transportation services.
That is the kind of question we will be looking at progressively in order to provide the best transportation services, but certainly we will be looking at all modes and, very clearly, the bus mode as well as the rail mode.


Mr. Ellis:: Mr. Speaker, 1 will try to combine my questions into one. Perhaps the minister will answer all of them at once. As the minister well knows, the city of Belleville, which 1 represent, is the Rideau area headquarters and has been the home of CN for many years. Recently, CN has obviously adopted a policy of reducing the work force in this area and the schedule of trains in and out of Belleville has been a deterrent to travellers to the point where people in the area who would normally use rail have been calling me frequently and complaining. Will the minister and his department have any input into the type of employment and the type of schedules in and out of that area?
November 2, 1977

Getting away from the specific Belleville area, 1 want to ask the minister whether any thought is being given to the upgrading of roadbeds. After all, freight trains go over them and pound them pretty hard, whereas a light passenger train could use a roadbed three, four or five times as often and not apply the same kind of beating. Is any thought being given to putting a single rail, particularly into the Quebec-Windsor corridor and perhaps electrifying that portion for particularly high speed?
I notice in the statement that the minister talks about LRCs. I understand they are diesel equipment. Is there any thought of electrification, a single rail and more use of the Rideau area headquarters in Belleville?


Otto Emil Lang: Mr. Speaker, I am sure the management of VIA Rail will have heard the question about the desirability of good passenger service in that area. CN is aware of our general concern about the movement of jobs and centralization if it leads to movement toward large cities and away from small ones. Roadbed upgrading will be an important issue in relation to passenger service. The lighter trains which are now being ordered may, in fact, accomplish much better speeds on the existing roadbeds, but obviously the matter will have to be looked at.
1 do not look toward electrification in the short term in this part of the country. Recent research which was undertaken by Transport Canada has made available the facts upon which electrification may well proceed, but very likely first in the mountain regions of the country rather than in other areas.


Mr. Crouse:: Mr. Speaker, the announcement by the minister of the purchase or construction of 22 locomotives and 50 coaches at a cost of $90 million, to be purchased by the federal government and VIA Rail from Bombardier, will of course not go unnoticed in Nova Scotia. I would like to ask the minister, who I know is aware of the ability to construct freight cars in Trenton, if in his planning he has given any thought to the high rate of unemployment in the province of Nova Scotia and to the possibility of ascertaining whether the plant at Trenton would be considered as a possible place to provide some components for this project.
Second, I noticed that by 1980 the service will be improved between Montreal and Quebec. Once again, I would like to remind the minister that Halifax, Nova Scotia, is one of the eastern terminals of the CNR. In light of the state of the track which presently exists between Quebec and Halifax, I would like to know if it is the intention of the government to examine this track in the hope of improving it, straightening it, upgrading it and providing an improved service to Atlantic Canada.
I notice in the minister's release that when this new equipment is put into service it will make available to VIA Rail, for western Canada and the maritimes some of the existing equipment. This brings to mind yet another question. When can we anticipate some of this existing equipment being put on the run between Quebec City and Halifax in order to update, upgrade and improve the service which we presently receive? It is very important to our area, and if I do say so, we feel that we are
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being let down today by the government with regard to improving our over-all transportation system, especially as it applies to the CNR.


Otto Emil Lang: Mr. Speaker, the Canadian Transport Commission is now looking at the question of the appropriate service between Montreal and the Atlantic, and I would not want to prejudge that except to underline that we indicated, as a matter of policy, the need to maintain a direct service from one end of the country to another as an irreducible minimum. Obviously, the upgrading will have to proceed from time to time. These trains will all be available by 1980 or 1981, and 1 am hoping that some of them, in the mix of old equipment and new equipment, can indeed be available for the western and Atlantic regions.
As far as Trenton is concerned, 1 will determine the likelihood of bid availability for supply there. Of course, the hon. member knows that I have had a great deal of concern for the Trenton area. At the present time, some hopper cars which are still being produced are, I think, still being manufactured there.


Mr. Ritchie:: Mr. Speaker, I should like to ask the minister, if there is a $90 million order, whether it was arrived at by tender, if other companies were invited to participate-that is, if they have the capability-and what centres will benefit from this economic activity? Will DREE or some other government agencies be involved in this order?


Otto Emil Lang: Mr. Speaker, the bid was on tender. There were four bids received and, as 1 indicated carefully, they were evaluated for all features. The supply will be spread over many different manufacturers. Perhaps the best thing would be for me to attempt to get out a more detailed statement on that than 1 have on hand at the moment, and endeavour to make that available.
The development of the LRC is, of course, something the government has had an important hand in over some time. Both through the Department of Industry, Trade and Commerce and a PAIT grant of $2.5 million, the development was assisted. Then Transport Canada spent $1.12 million assisting in the testing of the equipment through the research and development centre. It was, therefore, a very happy thing indeed that the LRC, which may well have expansion potential, is the vehicle we are looking to today.


Mr. Blackburn:: Mr. Speaker, I should like to ask the Minister of Transport this question. When VIA Rail comes on stream sometime next spring, when it becomes a separate entity, is it the intention to discontinue the passes of present employees of CN and CP and also those retired from CN and CP who have passes on those railways? Will these passes be continued once VIA Rail becomes a separate passenger service?


Otto Emil Lang: Mr. Speaker, it certainly would not be the intention to do anything of the sort, but the question of the

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Petroleum Corporations Monitoring Act
continuation of passes and the appropriate financial responsibility for them is a matter to be discussed between VIA Rail, on the one hand, and the two railways on the other. It has seemed to be logical that the passenger service, as such, ought not to bear the cost of passes for those engaged in non-passenger service on the railways. That is an internal matter and a matter of arrangement between the railways and VIA Rail. At this point, I think there should be no reason for anyone to worry about the passes changing in their nature.


Derek Nigel Ernest Blackburn: When VIA Rail becomes operational, will it also provide a pass service for employees on an ongoing basis?


Otto Emil Lang: Mr. Speaker, perhaps I should not try to prejudge that, since it will be the kind of question dealt with by management. I think the normal thing would be to begin with many of the same arrangements that are now well known. To the great satisfaction of the unions involved in the changeover from CN and CP to VIA Rail, we have introduced and developed certain regulations to make sure that the changeover is as smooth as possible. Obviously, this will be a matter of significant concern and discussion. Perhaps I should not go further than that in my comments today.

[ Translation]


WAYS AND MEANS
Hon. Jean Chretien (Minister of Finance):: Mr. Speaker, under Standing Order 60 (11) the adoption yesterday of two notices of ways and means was an order to bring in a bill based on those two notices. That bill is now ready and in the hands of the officers of the House. I would now like to move first reading of that bill.


INCOME TAX ACT
Joseph Jacques Jean Chrétien: for leave to introduce Bill C-ll, to amend the statute law relating to income tax and to provide other authority for the raising of funds.


[Stage Direction]
Motion agreed to, bill read the first time and ordered to be printed.
Mr. Deputy Speaker:: When shall this bill be read the second time? At the next sitting of the House?


Some hon. Members:: Agreed.


PETROLEUM CORPORATIONS MONITORING ACT
Hon. Alastair Gillespie (Minister of Energy, Mines and Resources) moved: for leave to introduce Bill C-12, to require

the reporting of certain financial and other statistics relating to the affairs of certain petroleum companies carrying on business in Canada.


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

Mr. Cafik:: Mr. Speaker, it is my understanding, as a result of discussion with opposition House leaders, that there would be unanimous agreement to vary the House orders to achieve an objective which seems to be commonly desired, namely, that the Minister of Veterans Affairs would be allowed to make a statement on the day preceding Armistice Day, prior to question period, and to extend the other proceedings in order to make up any lost time.
1 would, therefore, propose a House order that, notwithstanding any Standing Order, the Minister of Veterans Affairs may make a statement, and spokesmen for parties in opposition may comment thereon, immediately the House is called to order on November 10, 1977, provided that Mr. Speaker shall allow the usual amount of time for routine proceedings and oral questions before the House proceeds to orders of the day.


Mr. Paproski:: That is agreed, Mr. Speaker.


Stanley Howard Knowles: Agreed.
[ Translation]


Eudore Allard: Agreed, Mr. Speaker.


Mr. Deputy Speaker:: Is it agreed, and so ordered, that the proposal of the hon. Minister of State-


Some hon. Members:: Dispense.


Mr. Deputy Speaker:: Agreed, and so ordered.


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


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


Some hon. Members:: Agreed.
November 2, 1977


Yvon Pinard: Mr. Speaker, I ask that the notices of motions for the production of papers be allowed to stand.


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


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Tuesday, November 1, consideration of Bill C-3, respecting the reorganization of Air Canada, as reported (with amendments) from the Standing Committee on Transport and Communications; and motion No. 1 of Mr. Knowles (Winnipeg North Centre).
Sinclair McKnight Stevens: Mr. Speaker, yesterday evening 1 touched upon certain relevant points with respect to the amendment of the hon. member for Winnipeg North Centre (Mr. Knowles) which is now before us. He would like to have deleted a provision which was put into the Air Canada bill largely at the request of my colleagues in the Conservative party. That provision reads as follows:
In discharging its responsibilities under the act, the board shall have due regard to sound business principles, and in particular the contemplation of profit.
Also, I pointed out that there were two important matters before us. First, we are saying that the directors must follow sound business principles-I feel all members in this House agree with that-and second, that the directors should follow a pattern of activity in contemplation of profit. Apparently it was the suggestion of profit that caused some hysteria on the part of the socialists and the hon. member for Fort William (Mr. McRae). As a result, the hon. member for Winnipeg North Centre proposed that the entire clause be deleted, which would include the suggestion that the directors follow sound business principles.
1 speak in favour of the provision as it now stands, and against the amendment proposed by the hon. member for Winnipeg North Centre. Despite the fact that Air Canada has over 50 per cent of the total air revenue in Canada, they have experienced substantial losses over the last three years. In the aggregate, those losses were approximately $65 million. If we are going to recapitalize Air Canada and give them a potential capital of $750 million, surely it is not unreasonable to suggest that the board should follow sound business principles and carry out their activities in contemplation of profit.
Air Canada
The projections indicate that upon this bill becoming law, approximately $365 million of capital will be put into Air Canada. Therefore, their capital will rise from $5 million to $370 million. For example, if that money is put into bonds, Air Canada should receive at least 10 per cent interest on that sum. This would mean that it would be almost guaranteed $37 million, before tax profits, prior to flying the first plane.
To suggest that we are asking too much of the board of directors when we say they should run their airline in contemplation of profit is ridiculous. For too long now the socialists- and the Trudeau socialists on the other side of the House- have been telling us that Air Canada is a rather unique animal that should not earn a profit, and that somehow or other airlines just do not earn a profit. That is a misrepresentation of the facts.
In 1976, while Air Canada was losing substantial amounts of money, American Airlines made $56 million after taxes, Eastern Airlines made $46 million, Allegheni Airlines made $14 million, Braniff Airlines made $27 million, Ozark Airlines made $7 million, Pan American Airlines made $94 million, and Piedmont Airlines made $4 million. These are just a few examples of airlines in the United States which are comparable to ours, it is not true to say that historically airlines have lost money. Northwest Airlines, with which the hon. member for Crowfoot (Mr. Horner) is very familiar, has about the same amount of revenue as Air Canada-approximately $1 billion. Fast year, Northwest Airlines made approximately $100 million, while Air Canada lost some $20 million.
Because of the bureaucratic nature of a state-run airline, Air Canada has been operating at a substantial loss, while certain private-oriented airlines have made a substantial profit under the same basic conditions and during the same timeframe. It is totally wrong to suggest that Air Canada should not, and cannot, make a profit. The fact is that they can make a profit. Air Canada should not be discouraged from making a profit, because profit is a demonstration of an airline's efficiency.
It has been represented in the House and in committee that the recapitalization of Air Canada should be commenced because their debt load is no longer in ratio with their basic capital or equity. Compared to other airlines, Air Canada has an unduly high debt load. The fact which is cleverly glossed over is the reason for that heavy debt load. The short answer is that Air Canada has a heavy debt load in relation to their capital because it has not earned any money to speak of in the last 40 years.
Whereas other airlines have been able to accumulate substantial retained earnings, Air Canada's total retained earnings, after 40 years of activity, are only approximately $18 million. Delta Airlines have retained earnings of $304 million, Northwest Airlines have retained earnings of $473 million, and United Airlines have retained earnings of $306 million. Because Air Canada has not been able to pile up retained earnings comparable to other airlines, we are being asked to bail them out.

November 2, 1977
Air Canada
It is not a question of other airlines having had substantial capital at some point and Air Canada asking to be capitalized on a comparable basis. Those other airlines had relatively small capital at the beginning. They built up retained earnings, which has given them substantial capital today, whereas Air Canada has been building up very insignificant retained earnings in relation to their total size. What we are doing in the bill is, in effect, allowing Air Canada to catch up through this recapitalization as opposed to taking the route which other airlines have taken, that is, simply accumulating earnings over a period of years.
The next point is something that has often been overlooked. When we in committee asked the management of Air Canada to give us a proforma statement as to how they saw the earnings of Air Canada after capitalization, we were told that by 1981 they felt that if they were recapitalized, the total retained earnings of Air Canada would be $70 million; in other words, their retained earnings would go from about $13 million, in 1976, to $70 million.
It is rather surprising that on the second day, when we asked them to tell us what would be their retained earnings if they did not have this recapitalization, if they simply carried on with their $5 million capital and present debt structure, we were told the retained earnings on that projection would be almost identical. They said that if they carried on as they are, they would project their retained earnings to be $69 million in 1981, compared to $71 million in 1981, if they got the recapitalization. That has got to be a red flag for us. Their own internal projections show that if they are asked to carry on with the debt load they have, their retained earnings will be the same as if they were given the new recapitalization to which I referred, that is, additional capital of $365 million.
I say it is a red flag because we know that as long as they have the debt structure there is a certain obligation on them to at least pay the interest on that back to the treasury of Canada. However, once we recapitalize them and give them an additional $365 million, they have absolutely no requirement to pay dividends. They have absolutely no requirement to pay interest on that amount. They can have a free ride, if we do not make it clear in the legislation now before us that they must carry on their business in contemplation of profit.
It is important, if we are going to accommodate Air Canada as the government has asked us, that we, on behalf of the Canadian public, do not leave the public in the unfortunate position where one can have an airline with $370 million, maybe up to $750 million if the authorized capital is paid up, with no condition that they must run the airline on a profitable basis.


The Acting Speaker (Mr. Ethier):: Order, please. I have to interrupt the hon. member because the time allotted to him has expired. He may continue only with unanimous consent. Is there consent to allow the hon. member to complete his remarks?


Some hon. Members:: Agreed.


Sinclair McKnight Stevens: 1 thank hon. members for their co-operation, Mr. Speaker. I will be brief on the question of whether we approve the amendment now before us. I wish to touch on one other matter. When the minister was speaking, he made reference to the fact that we are heading toward the point where Air Canada might be sold, at least in part, to private interests. The minister stated, and I quote from page 526 of Hansard'.
I emphasize that it is a matter of this House and this government recognizing that where it is possible for a private sector-like operation to do a job effectively, that indeed is where it should be done. We are, in effect, giving the airline that kind of status while not yet having decided that, as owners of the airline, it is commercially right or the time to dispose of our investment interest in it. I see this happening with Air Canada-
This is the type of double-talk we get from the Trudeau Liberal government. They do one thing and then pretend that somehow or other they have a fundamental agreement or interest in the free enterprise system or in companies being left in the private sector. I raise this question because it is important to bear in mind that while the minister has put that on the record, if you read the bill you will find it disproves what he has said. For example, in clause 10 we find that, while the shares of Air Canada now have a par value of $100, it is proposed to raise them to a par value of $1,000. Surely that is not being done in contemplation of having private concerns buy into Air Canada. Let us not forget this fact. Not only are they proposing to raise the capital from the present $5 million to a possible $750 million, but they are also making that capital saleable only in shares of $1,000 or multiples thereof.
Second, the bill provides that the shares of the corporation are not transferable. When issued to the Minister of Finance, they will be registered in the books of the corporation in the name of the minister and held by him in trust for Her Majesty in right of Canada. There is not even a prediction that they will be transferred to the private sector. To make that abundantly clear, clause 10(4) reads:
No shares of the corporation may be issued otherwise than as expressly authorized by this act.
Let us not allow the minister to convey the impression that somehow the passage of this bill will allow Air Canada in part to be owned in future by private concerns. This is also confirmed by the fact that the bill contemplates that in over 40 different respects Air Canada will be under the direction of various orders in council. Again, that is not being done in contemplation of Air Canada shifting to the private sector. The private sector will not invest in an airline dominated by a government which can simply instruct them what to do through orders in council.
I would state that with a capital of $750 million, if that is what they eventually issue, it would be difficult to sell any shares in Air Canada. However, it will be absolutely impossible to sell shares in Air Canada if it does not make a realistic profit in relation to what other airlines are doing. That is what brings me back to this amendment. We are not doing our duty as members of parliament if we allow this amendment to pass, bearing in mind it will confirm that the directors of this airline may in future carry on their operation with no contemplation
November 2, 1977

of profit. If we have a capital of $350 million, up to $750 million, and there is not a comparable profit on that capital, there is no way that shares in Air Canada can ever be sold to the private sector. That is another reason why we need this provision in the bill.
As the Globe and Mail indicated yesterday, most airlines in Canada have turned the corner after two years of heavy losses and it is now contemplated they will be on the profitable side. That is all the more reason we should say to Air Canada, "We are giving you this relatively large amount as far as authorized capital is concerned," if that $750 million is issued, which will mean Air Canada will have the largest issued capital of any airline in the world, so surely the least we can say is, "Run your airline at a profit."


Mr. Max Saltsman (Waterloo-Cambridge):: Mr. Speaker, I wonder whether the hon. member for York-Simcoe (Mr. Stevens) would accept a question.


Sinclair McKnight Stevens: Yes, Mr. Speaker.


Max Saltsman: I was interested in what the hon. member had to say. A problem arises from his argument, at least in my mind. It is one we are trying to deal with in the amendment now before the House. There are many areas of Canada which, if they had to be served by an airline intent only on profit, would simply not be served. The rationale for Air Canada in the first place was to establish an airline, not because the government was socialist in those days but simply because the private sector was unable or unwilling to service this vast country.
The hon. member suggests we go to a profit-oriented airline. It would not be difficult for Air Canada to do that. The easiest way would be simply to lop off all those areas it serves now which do not pay. That would isolate many people in this country, or put them in the position of having to pay extraordinary rates in order to get service. I would like the hon. member for York-Simcoe to address himself to that particular problem. How would he deal with it?


The Acting Speaker (Mr. Ethier):: Order, please. Before permitting the hon. member to answer the question, I must seek the unanimous consent of the House because the hon. member for York-Simcoe previously used up his allotted time. Is there unanimous consent?


Some hon. Members:: Agreed.


Sinclair McKnight Stevens: 1 do not believe the hon. member for Waterloo-Cambridge (Mr. Saltsman) was in the House last evening when I dealt with the specific question he has raised. I pointed out that the bill before us, in clauses 8 and 9, covers the very point to which he has referred. Those clauses contemplate that there may be areas in Canada which Air Canada might feel it could not serve in a viable or profitable way, in which case the government can ask Air Canada to serve such areas. Any losses are then to be calculated and charged to the treasury.
Air Canada
This is the point I am getting at: 1 think it is important to make a clear decision between running a service because you think it is in the public interest, and asking an airline to run a good, efficient, profitable undertaking. The socialists get into trouble because they confuse those two things. We in this House have every right to decide whether we feel public money should be used to provide an air service in certain areas. That is a matter of policy. But it should be public knowledge and we should understand exactly what we are doing.
If it costs $10 million or $100 million, the public has a right to understand what is being done. The socialist says, "Gloss it over. Don't expect the company to run at a profit, because the name of the game is public service". That approach usually results in no profit being made, because it leads to the building up of a bureaucracy and commitment to all kinds of expenditures in the name of delivering a service. We ought to keep the situation crystal clear. Air Canada, given the amount of capital at its disposal, should be expected to run as profitably as any comparable airline. If it feels it has unprofitable runs, let the corporation come back to us openly and ask for a subsidy. If it is warranted, that subsidy can be granted. But keep the record straight; do not gloss it over as all socialists gloss it over, building up these bureaucracies in the guise of somehow or other serving the Canadian public.


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


Some hon. Members:: Question.


The Acting Speaker (Mr. Ethier):: Is it the pleasure of the House to adopt the motion?


Stanley Howard Knowles: Carried.


The Acting Speaker (Mr. Ethier):: All those in favour will please say yea.


Some hon. Members:: Yea.


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


Some hon. Members:: Nay.


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


The Acting Speaker (Mr. Ethier):: Pursuant to Standing Order 75(11), the recorded division on the motion stands deferred.


John Raymond Ellis: On a point of order, Mr. Speaker, I do not recall there was agreement to defer this vote. There was agreement yesterday to defer any vote until three o'clock today, but there was no agreement to defer this vote today.


An hon. Member:: It is by rule, now.
582

November 2, 1977
Air Canada


The Acting Speaker (Mr. Ethier):: As 1 said, it was in accordance with Standing Order 75(11), which reads as follows:
When a recorded division has been demanded on any amendment proposed during the report stage of a bill, Mr. Speaker may defer the calling in of the members for the purpose of recording the "Yeas" and "Nays" until any or all subsequent amendments proposed to that bill have been considered.
A recorded division or divisions may be so deferred from sitting to sitting.


John Raymond Ellis: May I ask, then, when the vote will be taken?


Stanley Howard Knowles: Look at the order paper. There are three or four amendments on it.


The Acting Speaker (Mr. Ethier):: As the hon. member has just heard from my reading of Standing Order 75(11), the vote is deferred until any or all subsequent amendments proposed to the bill have been considered. After consultation, it has been proposed that motions Nos. 2 and 5 and motions Nos. 3 and 4 be grouped for debate and voted on separately. Is that agreeable to hon. members?


Some hon. Members:: Agreed.


The Acting Speaker (Mr. Ethier):: Agreed, and so ordered.


Yvon Pinard: Yes, Mr. Speaker, 1 understand that under Standing Order 75 (11) the division on an amendment can be deferred until any or all subsequent amendments proposed have been considered. Of course I am not saying that you should state your decision immediately, but as I understand it, and you will correct me if I am wrong, you are not now necessarily deferring this vote to another sitting, but you wish to wait until 6:30 to see how the other amendments will be discussed before determining precisely when the vote can be taken. Is this correct?


The Acting Speaker (Mr. Ethier):: It is precisely as the parliamentary secretary has just said-until any or all subsequent amendments have been considered. That is left to the discretion of the Chair.
[ Translation]


Yvon Pinard: Mr. Speaker, I suppose you will tell us about your decision sometime later today?


The Acting Speaker (Mr. Ethier):: If we finish with all the amendments today, we can take the vote later this afternoon. Otherwise, it can be deferred until later still.


Yvon Pinard: Must I then take it that we shall not consider all the amendments today? Will you effectively defer the vote to another day?


The Acting Speaker (Mr. Ethier):: The hon. member will be consulted beforehand.


Sinclair McKnight Stevens: [Mr. Ellis.)
Motion No. 2-
That Bill C-3, an act respecting the reorganization of Air Canada, be amended in clause 7 by adding immediately after line 31 at page 5 the following new subclause:
''(11.1) Every material contract entered into between the corporation and
(a)	a director or officer of the corporation, or
(b)	a corporation or partnership in which a director or officer of the corporation has a material interest
is null and void."
Motion No. 5-
That Bill C-3, an act respecting the reorganization of Air Canada, be amended in clause 22
(a)	by striking out line 2 at page 12 and substituting the following therefor: "(2)(4)(ii) thereof, section 46, 111, 115,":
(b)	by striking out line 5 at page 12 and substituting the following therefor: "(10), 117(1), 118(1) to (3), 119(1),"
He said: Speaking to the two motions in my name, Nos. 2 and 5, I draw attention to the fact that these, essentially, are attempts to tighten up conditions under which the directors will be allowed to run the activities of Air Canada. If this bill is passed, we shall have established an airline which will initially have a capital of something like $370 million, and potentially a capital of $750 million. They also have assets worth something over $1 billion. In short, they are an extremely large commercial concern.
The trustees of any corporation are the directors of that corporation. On behalf of the people of Canada, the directors of Air Canada are essentially charged with the well-being of our investment in Air Canada. We have had some unhappy instances where at one board meeting the officer in charge frankly stated that he could not keep the directors awake, they kept falling asleep. At another meeting it was also said that they tried to get everything through by at least two o'clock in the afternoon because the directors would fall asleep by that time and it was very difficult to get any of the business done If that is so, Mr. Speaker, and bearing in mind that the widespread impression has been created that the directors of Air Canada are political hacks who are on the board-


Otto Emil Lang: Mr. Speaker, I rise on a point of order.


The Acting Speaker (Mr. Ethier):: Order. The Minister of Transport (Mr. Lang) seeks the floor on a point of order.


Otto Emil Lang: Would the hon. member permit a question?


Sinclair McKnight Stevens: Yes.


Otto Emil Lang: Would he cite his authority for those two references? I should certainly like to check into them, to be sure they are not simply wild speculation, rumour or imagination. If the hon. member has the source, I would be pleased to have it.


Sinclair McKnight Stevens: I am sure the minister would be most curious to have the source. I can assure him that the source is very bona fide.
November 2, 1977


Mr. LeBlanc (Westmorland-Kent):: Then put it on the record.


Sinclair McKnight Stevens: 1 suggest that in jumping up on his point of order, the minister knows 1 have hit the mark. He knows that 1 am dead right. In the more general remarks which 1 intend to make in support of my amendments, I will specifically quote what one of the officers of Air Canada had to say concerning the directors of Air Canada. Perhaps the minister will be able to check with that officer once I have quoted him.
First of all, motion No. 2 is simply an attempt to make sure that the directors or officers of Air Canada, or directors who in turn are also materially interested in a corporation or partnership or who may have some contract with Air Canada, in future should not be able to enter into such contract. In short, Mr. Speaker, what I am saying -and this came out in committee-is that not only are the directors on this board a little sleepy but, in turn, they may have contracts with the very airline of which they are acting as trustees on behalf of the people of Canada.
Granted, in committee it was stated there is great vigilance, that an attempt is always made to have them declare their interest. But we feel this is not good enough. Why should we not put into this bill which reorganizes Air Canada the flat statement that the directors may not have any dealings with Air Canada, period? Similarly, why not say the officers may not have any dealings with Air Canada, period, other than those dealings which form part of their function as directors or officers of Air Canada? Without belabouring the point, this is essentially what I am asking for in motion No. 2.
I think I have to explain motion No. 5 a little more fully. It appears rather innocuous until one reads clause 22 of the Air Canada bill. I do not think most of us realize the significance of some of the provisions in that particular clause. May I refer hon. members to the top of page 12, where reference is made to section 112 of the Canada Business Corporations Act. If allowed to stand in the bill, section 112 of the Canada Business Corporations Act will become incorporated into the charter of Air Canada.
I ask hon. members to listen to what section 112 allows the directors of Air Canada to do if it does become so incorporated. They may, by a resolution in writing signed by all the directors entitled to vote on that resolution at a meeting of directors or committee of directors, vote as if they were at the meeting, provided they simply sign that resolution. In other words, if section 112 is allowed to remain in the bill before the House, the directors may simply, in future, be able to sign whatever resolution they are asked to sign in lieu of attending a meeting. It is bad enough to have them fall asleep at meetings, but surely if they are to perform their function properly as directors of Air Canada, they should at least be expected to leave their homes and attend meetings to hear what is going on, as opposed to dutifully signing some resolution which they did not have the benefit of discussing at the meeting.
Air Canada
Again I point out that on page 12 of the bill reference is made to the inclusion of section 109(9) of the Canada Business Corporations Act. Here, again, this appears rather innocuous until one reads section 109(9), which again refers to directors and calls for participation by telephone. That section provides:
Subject to the by-laws, a director may, if all the directors of the corporation consent, participate in a meeting of directors or of a committee of directors by means of such telephone or other communications facilities as permit all persons participating in the meeting to hear each other, and a director participating in such a meeting by such means is deemed for the purposes of this Act to be present at that meeting.
In short, they are contemplating some type of conference call directors' meeting, and I think this is unforgiveable. First of all, we are proposing to recapitalize Air Canada with up to $750 million worth of capital. We are proposing that directors may deal with the company freely so far as outside contracts are concerned. In addition, they may not even have to attend directors' meetings. In short, they merely have to sign a resolution as if they had attended the meeting. Finally, they may make some kind of conference call arrangement and attend a meeting by telephone, as opposed to appearing in person. This is no way to run an airline, Mr. Speaker. As far as the members of my caucus are concerned, we believe those two provisions should be deleted, so that directors are at lea^t obligated to attend meetings; and as stated in motion No. 2, so they will not be allowed to have contracts with Air Canada.
Let us try to take a look at this matter in perspective, Mr. Speaker. If any of us owned stock in a corporation which lost some $20 million last year, and in rescuing the company we decided to relax the rules governing the board of directors, surely the least we should do is to say that the directors in future must attend meetings of the board, and that they also not be given the privilege of making contracts with the very company of which they are trustees. Although this airline, in its over 40 years of existence, has accumulated virtually no retained earnings, we find that the directors, who collectively preside over a loss of some $65 million during the past three years, will not even be requested to attend board meetings, but may simply sign a resolution or be party to the meeting through a telephone call.
That is the reason we are suggesting these motions should be supported. During the committee hearings on this bill, several members of parliament challenged the negative guidelines for the selection of Air Canada directors, bearing in mind that there are only two rules at present: Air Canada directors must be Canadian citizens, and they must be under 70 years of age. The president of Air Canada, Claude Taylor, told the committee that he would welcome, to use his language, more positive guidelines for the selection and performance of board members. He also admitted that of the board's present nine members, only one had previous experience in the airline industry- the other eight are drawn from other walks of life.
All too often the government, which appoints Air Canada's directors, packs the board with political appointees and party hacks, rather than with the many capable and available
80025-381/2

November 2, 1977
Air Canada
Canadians with knowledge and expertise in the aviation industry, By permitting absentee directors, the government is taking yet another step in reducing Air Canada's board to a rubber-stamp body with little or no say in airline management.
Rather than strengthening the board's hand in the day to day management of the airline, the provision in clause 22 would undermine the credibility of Air Canada's management at a time when it is vital that it put its own house in order. Surely the first step in putting the airline on a sound financial basis is to provide it with a committed and involved board of directors. It is concerned, capable management, not absentee directors, which brings success to any well-run business. Public corporations-certainly a Crown corporation such as Air Canada-are no exception.
For these reasons, 1 hope and trust that most members of the House will support my two motions which would delete certain provisions from the bill now before us and which would allow absentee directors to run Air Canada's affairs. If we are to rebuild Air Canada, we must first make the directors more accountable for, not more removed from, the operation of our nation's largest and oldest airline.


Otto Emil Lang: Mr. Speaker, I only want to intervene very briefly to indicate that, of course, the proposed Air Canada Act as it is contained in the bill before the House incorporates significant protection which is found in the Canadian Business Corporations Act in relation to such matters as contracts. So that when the hon. member for York-Simcoe (Mr. Stevens) asks whether the material contracts can be entered into, he may leave the impression that this is being allowed in the absence of any over-all contracts, which is certainly not the case.
The ordinary provisions of the Canadian Business Corporations Act which are seen as being appropriate for corporations in general will apply in this case also. That is also true of the provision for potential informal votes and approval by directors. It has been found necessary over the years to give businesses that prerogative so they need not summon directors for every piece of business or for the finalization of it when they have conducted the main part of the business at an earlier meeting. That provision was incorporated in the Canadian Business Corporations Act and is also included in the bill before us. The very breadth of the motion which the hon. member has proposed might make it more difficult to obtain directors with a good deal of experience who happen also to be senior persons with an interest in major corporations, so in that sense he has been arguing against himself.
1 should like to say one other word. I regret very much that the hon. member for York-Simcoe persists in what I think is an example of very bad conduct for members of the House, a degrading kind of conduct, when he refers to directors who are not present and cannot defend themselves. He said that he has reports about their falling asleep. When I asked for his source, he did not give it but snidely said that of course he thinks 1 would be interested in it.
(Mr. Stevens.]
What 1 am interested in is that members of the House do not abuse the privileges of the House by defaming in this way or being derogatory about people who are not here. 1 think it is very important that we adopt that standard of conduct and that we find ways in the House to deal with members who do not refrain from such conduct. If there is no record, if it is hearsay that is being relied upon, or evidence that is not sufficiently substantial to be brought before the House, then members should, in decency, refrain from making such references.


Some hon. Members:: Hear, hear!


Otto Emil Lang: I urge that we recognize the basic protection that exists in the law that is proposed and that, therefore, hon. members do not support the proposed amendments.


The Acting Speaker (Mr. Ethier):: Is the House ready for the question on motion No. 2?


Some hon. Members:: Question.


The Acting Speaker (Mr. Ethier):: All those in favour will please say yea.


Some hon. Members:: Yea.


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


Some hon. Members:: Nay.


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


The Acting Speaker (Mr. Ethier):: Pursuant to section 11 of Standing Order 75, the recorded division on motion No. 2 stands deferred.
The question now is on motion No. 5. All those in favour will please say yea.


Some hon. Members:: Yea.


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


Some hon. Members:: Nay.


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


The Acting Speaker (Mr. Ethier):: Pursuant to section 11 of Standing Order 75, the recorded division on motion No. 5 stands deferred.


Sinclair McKnight Stevens: Mr. Speaker, I rise on a point of order. We have no objection to there being one vote on motions Nos. 2 and 5.


The Acting Speaker (Mr. Ethier):: Is that agreed?
November 2, 1977


Some hon. Members:: Agreed.


The Acting Speaker (Mr. Ethier):: It is ordered that motions Nos. 2 and 5 be grouped for one vote. We are now on motions Nos. 3 and 4, which are grouped for debate.


Sinclair McKnight Stevens: Motion No. 3-
That Bill C-3, an act respecting the reorganization of Air Canada, be amended in clause 10 by striking out lines 25 and 26 at page 6 and substituting the following therefor:
"corporation is four hundred million dollars divided into shares of ten .
Motion No. 4-
That Bill C-3, an act respecting the reorganization of Air Canada, be amended in clause 10
(a)	by striking out lines 34 and 35 at page 6 and substituting the following therefor:
"(3) The shares of the corporation when issued to the minister";
(b)	by striking out line 42 at page 6 and substituting the following therefor: "by this act, but shares so issued are transferable in accordance with section 47 of the Canada Business Corporations Act."
He said: In speaking to motions Nos. 3 and 4, I would again like to give an explanation to the House as to why we feel these motions deserve support. Dealing, first of all, with motion No. 3, we propose that clause 10, which appears on page 6 of the bill, be amended to provide that, rather than that there should be $750 million of capital divided into shares of $1,000 each, there should be $400 million worth of capital divided into shares of $10 each.
If I may speak to that amendment first, the evidence which was given before our standing committee made it very clear that the Air Canada management does not project using more than $370 million of capital between now and 1981. As we have already stated, its present capital is only $5 million. If this bill goes through, the government proposes to increase that capital by $365 million, to $370 million.
Our feeling is that if we look down the path for as much as five years and see that Air Canada will need only $370 million in capital, why does the government propose to authorize $750 million? In truth, I think this is a way in which the government feels it can bypass parliament. Clearly, if Air Canada decides at a later date, notwithstanding its projections which make it clear that it needs only $370 million, to add another $100 million or to go right up $750 million, and if the government has this legislation in its present form, there will be no obligation to come back to parliament to ask for a new amendment to the Air Canada Act. In short, we are nervous about giving Air Canada $750 million worth of capital. That would mean that it would be the most capitalized airline in the world. It would mean that it would have capital which would impose absolutely no fetter on it.
At 10 per cent that amount of capital could produce $75 million with no difficulty at all. That is a tremendous subsidy to be given to any Crown corporation by the people of Canada. Why the government insists on this is not clear. Our sugges-
Air Canada
tion that the capital be authorized at $400 million appears to be a very common sense level at which to leave it. It allows $30 million of additional capital over the $370 million Air Canada asked for in its own projections.
Air Canada claims it can run the airline at a profit. In fact, by 1981 Air Canada says it can have the $70 million worth of retained earnings to which I referred earlier, so that leaves Air Canada with $440 million of capital and retained earnings at that point. Again 1 would like to point out that Air Canada's total assets would then be about $1.26 billion. That is what Air Canada claims. If that is so, having a capital of well over 40 per cent of its total assets is, I think, completely adequate.
The first thing we are asking for in motion No. 3 is that the government accept a lower authorized capital level of $400 million as opposed to the $750 million the government is proposing as a safeguard, and if more capital is needed for some reason in future years, let the government come back through the same route it is taking today and ask for the additional capital. In its wisdom, at that time parliament may or may not allow it; but why leave it to the government of the day to be able to hand out that additional capital with no further reference to this parliament?
We do not contemplate any gigantic dividends as far as the capital is concerned. The projections show a 4 per cent dividend running through to 1981. Now, 4 per cent with inflation running at 8 per cent is almost a laugh. It is a laugh if there is any serious intention on the part of the minister to make this stock in Air Canada saleable to private interests at some future date.
Speaking of making the stock saleable to private interests, this brings me to the second part of motion No. 3. As I indicated, we are proposing that the shares in Air Canada have a $10 par value as opposed to the $1,000 which the minister is suggesting. I do not think this is an unreasonable request, because presumably in the wisdom of C. D. Howe the present shares of Air Canada are $100. If there is any serious consideration on the part of the minister to allow Air Canada to be owned partly by private interests, why would the government raise the par value of the shares from $100 to $1,000? Our suggestion is to lower the par value to $10, and then perhaps some of the ordinary investors in this country would have an opportunity to buy some of those shares, if they are ever saleable, instead of having to put up $1,000 for just one share in the airline.
That is the thrust of motion No. 3. We are simply saying that Air Canada should be realistic with regard to its authorized capital. Four hundred million dollars is $30 million more than it is contemplated will be needed over the next five years. We say the par value of shares should be $10, so that ordinary investors will be able to buy them, if there is a serious intention to make them available, instead of selling them at $1,000.
Motion No. 4 deals essentially with the question of how realistic we are in assuming that Air Canada shares might be saleable to the private sector at some future date. As I indicated, the balance of clause 10 in Bill C-3 deals with the

November 2, 1977
Air Canada
present transferability of the shares of Air Canada. There is no doubt that the shares of Air Canada can be registered only in the name of the Minister of Finance, on behalf of Her Majesty, and from there they are non-transferable. Subclause (4) of clause 10 makes it clear that no shares of the corporation may be issued otherwise than is expressly authorized by this bill.
It is fundamental to the belief of our caucus that wherever possible Crown corporations should be put back into the private sector if that is a viable thing to do. That is why we are suggesting that in recapitalizing Air Canada we should make meaningful provisions to have that restoration built into the legislation, without having to come back to parliament to get special legislation at a future date. In that connection I would like to read subclause (4) as it would read should the amendments in motion No. 4 go through. At the present time, clause 10(4) provides:
No shares of the corporation may be issued otherwise than as expressly authorized by this act.
We propose to add these words:
-but shares so issued are transferable in accordance with section 47 of the Canada Business Corporations Act.
Section 47 of the Canada Business Corporations Act allows the transfer of shares in the general course of affairs, in short, we are saying that there should be realistic authorized capital. Let us put that authorized capital into a denomination which the average Canadian investor might buy at some future time. Finally, let us make sure, through motion No. 4, that the shares are transferable at some future date into private hands as opposed to having to stay in the hands of the Minister of Finance.
If the government persists and votes down our suggested amendment, it has no serious intention of allowing Air Canada to go back into the private sector with respect to even one share. If that is so, let us smoke the government out today. I think it is great for the Minister of Transport to give wonderful assurances about the government's thinking about the private sector and about how it might put Air Canada's share ownership back into the private sector, but if he accepts our amendment it will do very much more in a concrete way to demonstrate the earnest desire of the government than any rhetoric the minister might put into the pages of Hansard.


Otto Emil Lang: Mr. Speaker, I suppose I always have to rise to a challenge to be smoked out by the hon. member for York-Simcoe (Mr. Stevens). I should say that the authorized capital proposed in the bill is the result of very serious consideration by Air Canada and the government, particularly the Minister of Finance, as to the appropriate figure. Like a good solicitor trying to assure that a corporation has adequate power, this figure was arrived at.
On the other issue of the smaller value of shares and ability to sell them, I have indicated the possibility of this at some point. The whole direction to Air Canada is to operate in such a way that it would be in a position to appeal to the market at

some time. At that time it would be a fundamental issue and, as the hon. member for York-Simcoe may realize, it would be treated as a very fundamental issue by some of his colleagues to his left. It is probably fair to deal with the issue as a whole issue when it arises.
Many features of the Air Canada Act would have to be reconstructed for adequate transfer of those shares to the private sector. It seems desirable, therefore, to leave that issue for another day when this House can come to grips with it and decide if Air Canada has been able to operate in such a way that it is seen as a viable investment and able to offer its shares. 1 therefore recommend that hon. members not support this motion.


The Acting Speaker (Mr. Ethier):: Order, please. The question is on motion No. 3 in the name of the hon. member for York-Simcoe (Mr. Stevens). All those in favour will please say yea.


Some hon. Members:: Yea.


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


Some hon. Members:: Nay.


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


The Acting Speaker (Mr. Ethier):: Pursuant to Standing Order 75(11), the recorded division on motion No. 3 stands deferred.
Is it the pleasure of the House to adopt motion No. 4 in the name of the hon. member for York-Simcoe? All those in favour will please say yea.


Some hon. Members:: Yea.


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


Some hon. Members:: Nay.


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


Sinclair McKnight Stevens: On a point of order, Mr. Speaker, it would be agreeable to us to have the vote on motions Nos. 3 and 4 put at the same time when we take the deferred votes. In other words, one vote on those two motions.


The Acting Speaker (Mr. Ethier):: Is it agreed?


Some hon. Members:: Agreed.


The Acting Speaker (Mr. Ethier):: Motions Nos. 3 and 4 will be grouped for voting. Call in the members.
November 2, 1977

The House divided on motion No. 1 (Mr. Knowles, Winnipeg North Centre) which was negatived on the following Trudeau
... .	Trudel
division:	Turner
Watson
Air Canada
Messrs.
Wenman
Whiteway
Whittaker
Wood
Woolliams Yanakis Yewchuk Young-171.
Blackburn
Broadbent
Jones
Abbott
Alexander
Allard
Andras
(Port Arthur)
Andre
(Calgary Centre) Andres
(Lincoln)
Appolloni (Mrs.)
Baker
(Grenville-Carleton) Balfour Basford Bawden Beatty Beaudoin Beehard Blais Breau Brisco Buchanan Bussieres Caccia Cafik
Campagnolo (Mrs.) Caouette
(Villeneuve)
Caron
Clark
(Rocky Mountain) Clarke
(Vancouver Quadra) Clermont Collenette Comtois Corbin Corriveau Cote Crouse Cullen Cyr Darling Daudlin Dawson Dinsdale Dionne
(Kamouraska)
Douglas
(Bruce-Grey)
Drury
Dupras
Duquet
Ellis
Elzinga
Epp
Ethier
Faulkner
Flynn
Foster
Francis
Fraser
Friesen
(Division No. 5)
++YEAS


Mr. Speaker:: The next question is upon motions Nos. 2 and 5.


Mr. Speaker:: I declare the motions lost. The next question is upon motions Nos. 3 and 4.


Mr. Speaker:: I declare motions Nos. 3 and 4 lost.


Otto Emil Lang: that Bill C-3, respecting the reorganization of Air Canada, as reported (with amendments) from the Standing Committee on Transport and Communications, be concurred in.


Mr. Speaker:: Is it the pleasure of the House to adopt the said motion?


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.
Mr. Speaker:: When shall the bill be read a third time?


Walter David Baker: By leave, now.


Otto Emil Lang: that the bill be read the third time and do pass.


Marcel Joseph Aimé Lambert: Mr. Speaker, I do not think this bill should escape further comment on third reading, albeit it was before us in the past session and is with us again.


Mr. Speaker:: Perhaps the hon. member may be permitted a short delay in order to catch his breath while the House reorganizes itself. Hon. members who wish to leave the chamber might do so quickly and quietly in order to permit the intervention of the hon. member for Edmonton West (Mr. Lambert).


Marcel Joseph Aimé Lambert: Mr. Speaker, it is not that they are leaving; it is the fact that they leave noisily that bothers us.
There are many features of this bill which I think commend themselves to this House. The amendments upon which we voted were matters of importance; they were part of the basic
November 2, 1977

principle of the reorganization of Air Canada. But generally all of us welcome the intention of the bill and the features of the bill as they now have been passed. We cannot change it. 1 am sorry that the House could not see its way clear to accepting some of the amendments, but the decision having been made, 1 will not deal with them any further.
Having been a steady passenger on Air Canada for some 20 years now, I hope that this bill will permit Air Canada to put its operations on a more efficient administrative basis. There are areas of administration which many of us could say could be more efficiently run, but this bill should allow the administration to organize itself better, more efficiently and to be able to cope in a very competitive world.
Air Canada is our flag line, and we are competing with nationally-owned or publicly-owned airlines all over the world. On the other hand, there are some notable exceptions to that. These lines provide effective competition, and that is as it should be.
One thing, however, which 1 find very difficult to accept is that, as taxpayers, Canadians have to make up the losses in the operations of Air Canada, and they must also subsidize to a great extent the competition that exists abroad, with their domestic fare rates. I find it totally indecent, for instance, that Air Canada's fares from Ottawa to Edmonton and back, plus the charges of the Ministry of Transport, should now cost some $346 on an economy fare. On the other hand, my good friend, Max Ward, of Wardair can take people from Edmonton and Calgary to Hawaii, a far greater distance, for much less money. As a matter of fact, the fare runs anywhere from $229 to $319 return to Hawaii during the winter season.
It seems to me absolute nonsense to prohibit domestic charter fares. Air Canada has been resisting them. People in eastern Canada should recognize the fallacy of this insistence by bureaucrats of the air transport committee which implements government policy and protects both Air Canada and CP Air. It is far cheaper for Canadians to travel south to Florida in the winter and for western Canadians to ski in Colorado and Montana or to go south to Hawaii or Arizona. Is it any wonder that we have a $4 billion deficit in the tourism account? The government's policy drives Canadians out of the country. This is the most nonsensical aspect of air transport policy in Canada today.
The Minister of Industry, Trade and Commerce (Mr. Horner) decries the size of our tourism deficit, but that is not the only reason for high domestic air fares in Canada. Mr. Speaker, we have beautiful and very efficient ski resorts in Alberta and British Columbia, but it is cheaper to fly from population centres in central Canada to Europe than to Banff or Jasper and, of course, it is even more expensive to go to British Columbia ski resorts.
The parks department has a companion policy which insists that Jasper be left to the bears. This policy will not permit construction of adequate accommodation at the ski slopes. Apparently, people are not supposed to ski or enjoy themselves
Air Canada
in winter. They can go to Montana or Aspen, Colorado, but not to the Canadian mountains. In this way we pile up the deficit in the tourism account. The combination of the policy of the national parks with regard to Jasper and Banff, ski development in British Columbia, and the policy regarding domestic air fares, results in Canadians going abroad to ski. They go to Europe. I know people from Edmonton and Calgary who find it cheaper to ski in Austria or Switzerland.
We have some sort of blind spot, Mr. Speaker, and usually it is "made in Ottawa" at the bureaucratic level. The ministers do not help. The Minister of Indian Affairs and Northern Development (Mr. Faulkner), who is in charge of our national parks, says he made an inspection of an inn on the west coast of Vancouver Island, at Long Beach, and has confirmed that it shall be closed in order to become some sort of interpretive centre. That is some bureaucratic nightmare!
There we have one of the aspects with regard to Air Canada. Let us see how we can cure that. It does not have to be knocked all the time. Let us have air facilities in the country to accommodate the passengers, who are the important people because they pay the shot.
1 should like to refer to the antiquated airport here in Ottawa. When it rains or snows, we throw everyone to the elements. There has been nothing done to accommodate them. We have seen cattle, pigs and various domestic animals going through the pens at the abattoirs or feedlots. Those animals have ample room compared to what passengers are faced with at some of the Canadian terminals. What is being done about this?
The decision of the Treasury Board some weeks ago to reject alterations and expansions which have been before the department for three years is of concern to myself and other hon. members from the Edmonton area. Those alterations and expansions have been cut. That is an utterly stupid decision. The Edmonton air terminal was designed for 1.2 million people. It already carries a capacity of two million people a year. The Commonwealth Games are coming up. The lack of capacity is not the fault of the terminal designers who worked on the project back in the fifties or early sixties. No one dreamed of a 1011 or a 747 back in those days.
The Minister of Transport (Mr. Lang) should be informed of what happens when a 747 overseas charter flight arrives at the Edmonton airport. The immigration and customs facilities are a disgrace. Those facilities can handle a D-9 or a stretched DC-8. I suppose the maximum number of passengers that could be handled would be those from a 727. Those facilities are taxed to the limit and baggage handling is chaotic. The Department of Transport occupies a good portion of that building. Can we get them out of there in order for the portion of the building they occupy to be used for passenger service? The answer is no. The $28 million program was cut back to $5.6 million. That program is for some outside cosmetic work, and it is taking an eternity.

November 2, 1977
Air Canada
The Montreal Olympics were fine. We in western Canada look forward to the Commonwealth Games. We expect to attract a lot of people. We hope they will come and go, leaving us with a good taste in our mouths. The worst thing you can do to air passengers is crowd them, mishandle their baggage, slow their processing through the airport and have a long and tedious processing through customs and immigration. Do that, and you have lost them.


Mr. Munro (Esquimalt-Saanich):: That is the way to make friends!


Marcel Joseph Aimé Lambert: As the hon. member for Esquimalt-Saanich (Mr. Munro) says, that is the way to make friends! Canada needs every friend it can get from abroad. The $2 billion tourism deficiency has to be cut down, not only by Canadians travelling a bit more in Canada, which they should do, but by attracting more foreigners to this country to compensate for all the Canadians who go abroad.
Everyone possible has approached the Minister of Transport. He may be in some sympathy with this; I do not know. The Minister of Transport has never been known as Edmonton's best friend. Treasury Board cut back the program. It was interesting to read the comments in the papers the other day following a delegation of the air services committee of the Edmonton area which met with the Minister of Industry, Trade and Commerce, who feels his way around like a new boy, saying "Yes" to everybody. According to newspaper reports, he agreed with every proposition made by the air services committee. I ask that minister now, and I will do this again later, whether he agrees with the position of Treasury Board. Does he agree with the acceptance by the Minister of Transport of the decision of Treasury Board with regard to the Edmonton airport?
This afternoon the Minister of Transport indicated to me that this was a short-run decision. However, we have had short-run decisions twice before. Those facilities are now costing well over 50 per cent more than originally proposed. That, again, is false economy.
I compare that decision to cut back with the $150 million plus that was spent on Mirabel or Calgary where they are now in a position to put in pre-clearance. Pre-clearance, which has been negotiated now for the past several years, will not be instituted in Edmonton for some years to come if we follow the program of the Department of Transport with regard to that airport.
The Ministry of Transport should get off its collective duff and take a stand with regard to Treasury Board.
I hope the Minister of Transport, assisted by the Minister of Industry, Trade and Commerce, will state publicly that they will do everything they can to see that these alternations and improvements are financed. Then we will see how Air Canada will develop. On the basis of this development, getting more passenger miles and greater utilization of aircraft, we will see a more successful operation. It will help CP Air as well. That is one aspect of Canadian industry which we wish the greatest success; but it has to start with government policy. Notwithstanding the good measures contained in this bill, I regret that Treasury Board and Transport have put a wet blanket on the potential of Air Canada.
May I call it 6:30, Mr. Speaker?


BUSINESS OF THE HOUSE
Stanley Howard Knowles: Mr. Speaker, I rise on a point of order. Could the deputy House leader indicate what we will be doing tomorrow?


Norman Augustine Cafik: Yes, Mr. Speaker. If it is not possible to conclude third reading of this measure tonight, it is the intention to continue with this item tomorrow in the hope it can be given early passage. After that-this is a tentative proposal,-we would consider the Canada Labour Code. If there is any change in that arrangement, I will inform the House leaders tomorrow morning so that they can make the appropriate adjustments.
While I am on my feet, I wonder whether there would be disposition, since the hon. member has completed his speech, to deal with this measure tonight. We could then go on with other matters tomorrow.


Marcel Joseph Aimé Lambert: I have not finished.


Norman Augustine Cafik: I am sorry. I did not realize that.


Mr. Deputy Speaker:: It being 6.32 p.m., this House stands adjourned until tomorrow at 2 p.m., pursuant to Standing Order 2(1).
At 6.32 p.m. the House adjourned, without question put, pursuant to Special Order.

Thursday, November 3, 1977