1977-11-17

ROUTINE PROCEEDINGS


Mr. Tom Cossitt (Leeds):: Mr. Speaker, I apologize to the House because I have a slight case of laryngitis, I hope my voice can be heard. I rise on a matter of urgent and pressing necessity pertaining to operation "Featherbed" and to reports that a copy of the file is for sale at up to $200,000 and that espionage and investigation of high ranking members of the public service are involved. I move, seconded by the hon. member for York-Simcoe (Mr. Stevens):
That the Solicitor General make an immediate statement as to whether the Prime Minister at any time attempted to have the file destroyed or the investigation which the Solicitor General yesterday termed as a legitimate activity stopped, whether the file indicates involvement of a foreign power in the security service of this country and that he explain the discrepancy between the Prime Minister's Tuesday statement that he had never heard of the file and his own admission yesterday that it does indeed exist.


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.


CONFLICTING STATEMENTS ON FILES INCINERATED-MOTION UNDER S.O. 43
Mr. Edward Broadbent (Oshawa-Whitby):: Mr. Speaker, I, too, rise under the provisions of Standing Order 43. The Solicitor General (Mr. Fox) said in the House on June 21 of this year that "no material pertaining to any inquiry presently under way in the province of Quebec was destroyed" in the incineration of RCMP documents which took place in Montreal on June 3. He also said of the same material that it "had no value". Considering that Chief Superintendent Guy Mar-coux, head of the criminal investigation branch of the RCMP in Montreal said yesterday about this same material that he "could not be sure that some of the documents burned did not refer to alleged activity of the RCMP", I move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That this House instructs the Solicitor General to make a statement on motions today explaining the serious contradiction which exists between his description of what was burned on June 3 and the statement made by Chief Superintendent Guy Marcoux yesterday and also to explain the circumstances which led to the report making the recommendation for the burning of these documents being prepared on May 23 of this year which was the Monday of a long holiday weekend.
Mr. Speaker. The presentation of such a motion pursuant to Standing Order 43 requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


HOUSING
Mr. Adrien Lambert (Bellechasse):: Mr. Speaker, under the provisions of Standing Order 43, I ask for the unanimous consent of the House to introduce a motion dealing with an important matter of pressing necessity.
Considering that insulation is one of the best means to save fuel; considering that the insulation program launched by the Canadian government is likely to encourage Canadians to insulate some types of dwellings; considering that it would be advisable to include other types of dwellings and that the implementation of the program requires the agreement of the provinces, 1 move, seconded by the hon. member for Richmond (Mr. Beaudoin):
That the House urge the Minister of State for Urban Affairs to intensify negotiations with provincial authorities so that some agreements be concluded immediately to allow Canadian taxpayers to take advantage of that program and that the amount of the subsidy be also increased.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.

November 17, 1977

Income Tax EXTERNAL AFFAIRS


SUGGESTED REFERENCE TO COMMITTEE OF INTERNATIONAL JOINT COMMISSION REPORT ON GARRISON DIVERSION-MOTION UNDER S O. 43
Mr. Dean Whiteway (Selkirk):: Mr. Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. In view of the fact that the final recommendations of the International Joint Commission are now in the hands of the government, I move, seconded by the hon. member for Winnipeg South Centre (Mr. McKenzie):
That the subject matter of the International Joint Commission's recommendation regarding the Garrison diversion project be referred to the Standing Committee on Fisheries and Forestry in order that all members of this House have a meaningful input into the final position taken by the government of Canada.


ROYAL CANADIAN MOUNTED POLICE
Mr. Stuart Leggatt (New Westminster):: Mr. Speaker, I rise under the provisions of the same rule. In view of the report in the Wednesday, November 16 Globe and Mail that physical and electronic surveillance was placed by the RCMP on Mr. Clayton Ruby, a prominent Toronto civil rights lawyer and bencher of the Law Society of Upper Canada, for a period of two years and in view of the need to retain some vestige of solicitor-client privilege and the rule of law, I move, seconded by the hon. member for Sault Ste. Marie (Mr. Symes):
That this House requests the Solicitor General to conduct an immediate inquiry into these allegations and, if found to be correct, that appropriate charges be laid with regard to any wiretap violations or Criminal Code offences committed.


Mr. Speaker:: The presentation of such a motion pursuant to
the standing order requires unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


INCOME TAX
Mr. Perrin Beatty (Wellington-Grey-Dufferin-Waterloo):: Mr. Speaker, I rise on a matter of urgent and pressing necessity under the terms of Standing Order 43. My motion arises from the disclosures today by Toronto broadcasters Charles Templeton and Pierre Berton that unauthorized individuals have been able to get their hands on confidential income tax returns of individuals. I move, seconded by the hon. member for Saskatoon-Biggar (Mr. Hnatyshyn):
That this House expresses its concern about the apparent ease with which confidential tax information on individuals can be obtained by unauthorized people and requests the Minister of National Revenue to make a statement in the House at the earliest opportunity today explaining how such a breach of confidentiality could have taken place and what steps will be taken by the government to protect the privacy of individuals.


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


Some hon. Members:: Agreed.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


INDUSTRY
Mr. Leonel Beaudoin (Richmond):: Mr. Speaker, I rise under the provisions of Standing Order 43 on a matter of pressing and urgent necessity.
In view of the tremendous difficulties experienced by Canadian shoe manufacturers and following numerous representations made by spokesmen for the Canadian Manufacturers Association who, once more, spoke to me about massive footwear imports in Canada, I move, seconded by the hon. member for Bellechasse (Mr. Lambert):
That this House urge the government to take immediate action to protect Canadian manufacturers against surplus footwear imports on the Canadian market.


Mr. Speaker:: Order. The House has heard the hon. member's motion. According to Standing Order 43, such a motion requires the unanimous consent of the House. Is there such consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


Some hon. Members:: No,

November 17, 1977


INSISTENCE ON USE OF CANADIAN PIPE IN CONSTRUCTION OF NORTHERN GAS PIPELINE-MOTION UNDER S.O. 43
Mr. T. C. Douglas (Nanaimo-Cowichan-The Islands):: Mr. Speaker, I rise under the provisions of Standing Order 43 to present a motion on a matter of urgent and pressing necessity, namely the Prime Minister's statement in Hamilton yesterday to the effect that "the Canadian Steel Industry will have to be competitive if it expects its steel pipe to be used on the Canadian portion of the Alaska-Yukon natural gas pipeline."
In view of the fact that Canada has provided the United States with a land bridge to bring United States gas from Alaska to that country thereby saving it $6 billion compared to the only other route under consideration, and in view of the fact that one of the few benefits accruing to Canada from this project is the commitment of Foothills (Yukon) Ltd. that all pipe will be purchased in Canada, I move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That this House calls upon the federal government to make it clear that it intends to hold Foothills (Yukon) Ltd. to its commitment and that it will insist that all the steel pipe used in the Canadian portion of the proposed pipeline will be produced in Canada in order to provide employment for Canadian workers.


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


Some hon. Members:: No!



ORAL QUESTION PERIOD


Mr. Joe Clark (Leader of the Opposition):: Mr. Speaker, my question is addressed to the Acting Prime Minister. Could he tell the House whether the Minister of Consumer and Corporate Affairs was stating the position of the government when he accused the Royal Canadian Mounted Police of deliberately withholding information from that minister and other Solicitors General?


Hon. Jean Chretien (Acting Prime Minister):: Mr. Speaker, when the Minister of Consumer and Corporate Affairs talked to the press yesterday I think he talked about one situation that was completely public at the time he made a statement in the House, and later he had to say he had not received complete information. I think we always said we have a very good force in the RCM Police in Canada and I am delighted that the opposition is coming to realize all the damage they have caused the RCMP.
Oral Questions


Charles Joseph Clark: A supplementary question, Mr. Speaker. I realize that this government is going to do everything it can to prevent the minister from speaking for himself. So that we might be clear on the revised version of what the Minister of Consumer and Corporate Affairs said, is it now the position of the government that he was accusing the RCMP of deliberately withholding information from him only in one case and that he did not say that "it seems that they did withhold information from me and other solicitors general?"


Joseph Jacques Jean Chrétien: Mr. Speaker, I think the Minister of Consumer and Corporate Affairs has said he has every intention of appearing before the McDonald Commission to discuss all the problems. I do not believe we would gain anything at this time by creating a controversy that will be investigated by the McDonald Commission in the very near future. We should leave it as it is to make sure that the commission can provide the House of Commons and the people with an interim report as quickly as possible in the new year.


Charles Joseph Clark: Mr. Speaker, what the situation is now is that the Minister of Consumer and Corporate Affairs has made accusations outside the House which have the effect of smearing the reputation of the RCMP. The RCMP cannot defend itself in this chamber.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


Charles Joseph Clark: Mr. Speaker, government members joke about this.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: My question to the Acting Prime Minister or the Solicitor General is: will the government now specify the names of those individual officers of the security services or the Royal Canadian Mounted Police whom the Minister of Consumer and Corporate Affairs said deliberately withheld information, so that the accusation will be specific to a few officers and not be a smear against the entire RCMP?


Some hon. Members:: Hear, hear!


Joseph Jacques Jean Chrétien: Mr. Speaker, in no way did the minister say yesterday that the RCMP had deliberately misled him.


An hon. Member:: Read what he said.


Joseph Jacques Jean Chrétien: I had a discussion with the minister about it, and he has given me his word that he did not say that. He is more than willing and eager to appear in front of the royal commission to debate those things.


An hon. Member:: Next year or the year after?


Joseph Jacques Jean Chrétien: I am very pleased to see that the hon. Leader of the Opposition is changing his position and now wants to
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November 17, 1977
Oral Questions
protect the RCMP. He would have been well advised to start that two weeks ago.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


SUGGESTION OFFICERS ACCUSED OF WITHHOLDING INFORMATION APPEAR BEFORE COMMITTEE
Charles Joseph Clark: Mr. Speaker, the Acting Prime Minister's third answer is not consistent with his first answer. Would he be prepared to give us a guarantee now that those members of the RCMP, who have been accused by the Minister of Consumer and Corporate Affairs of withholding information from him, and to quote him, "other solicitors general", will be allowed to come before either a special committee of this House or the Standing Committee on Miscellaneous Estimates in order for them to defend themselves before parliament regarding the accusations made against them by a minister of the Crown?


Some hon. Members:: Hear, hear!


Joseph Jacques Jean Chrétien: Mr. Speaker, it was at the request of the opposition that the government decided in the summer to have an inquiry into the matter, and we have established the McDonald Commission. The former solicitor general will be there-


Mr. Baker (Grenville-Carleton):: Shame!


Joseph Jacques Jean Chrétien: Mr. Justice McDonald and members of the commission will have an opportunity to question the former solicitor general and everyone involved in it. 1 do not think the national security of the nation will gain anything by debating that in a committee of the House.


CONTRADICTORY REMARKS CONCERNING INCINERATING OF FILES-REQUEST FOR EXPLANATION
Mr. Allan Lawrence (Northumberland-Durham):: Mr. Speaker, my question is supplementary to the question of what is said inside and outside the House about the security service. Last June the Solicitor General was very definite in some remarks he made in the House concerning the burning of some security files. Last night he was quoted in the media as saying something quite different, as I understood it. I wonder if he could explain this contradiction to the House now?


Hon. Francis Fox (Solicitor General):: Mr. Speaker, I would be delighted to have the hon. member say where I was quoted in the media as saying something different from what I said in the House.


An hon. Member:: The CBC.


Allan Frederick Lawrence: Mr. Speaker, my understanding of quotations last night on the CBC indicated that certain files, which should be available to the McDonald Commission and should

be available also to the special committee of this House investigating this matter, if one is called, have been destroyed, irretrievably lost. This was the import of the media report last night on television and also in the daily press. This is quite contradictory of the statement by the minister on June 21, 1977, which reads in part as follows:
... the files were incinerated in accordance with the normal policy of the force ... these files dated back to the year 1966. However, I am informed that any information that was pertinent was transferred to the National Criminal Investigations Unit of the RCMP.
That certainly sounded like a direct contradiction. If I am wrong, I am certainly very pleased to have the minister correct it.


Francis Fox: Mr. Speaker, as far as I am concerned, I had not been interviewed by the CBC National News last night. Perhaps the hon. member is referring to another statement that may have come out of Montreal which 1 believe the leader of the New Democratic Party attributed to an officer of the force in Montreal. As far as I am concerned, the statement 1 made in the House in response to the question on June 21 was as a result of inquiries I made with the force at that time. I have not been advised of any changes made with regard to what I indicated at that time.


NAME OF OFFICER INFORMING MINISTER OF INCINERATION OF FILES
John Edward Broadbent: Mr. Speaker, the minister referred to some things I used earlier in today's proceedings. I have had that checked out. I am informed that the head of the criminal investigation branch of the RCMP in Montreal, a man by the name of Marcoux, said the following: He could not be sure some of the documents burned on June 3 did not refer to alleged illegal activity of the RCMP. On June 21 the minister assured the House none of the documents burned on that day, not the previous day, pertained in any way to the inquiry. The minister also said the documents burned had no value. You could not have a more flagrant contradiction.
This is an extremely serious matter which affects the federal inquiry as well as the provincial inquiry. I am sure the minister did not deliberately misinform the House last year. The other implication is that someone in his department, presumably at a very high level, misinformed the minister. Can he now inform the House who told him last June the information that he conveyed? Did he check it out this morning in light of this very serious contradictory statement made by a senior RCMP official in Montreal?


Francis Fox: Mr. Speaker, I am not completely convinced that a contradictory statement has been made by a senior police officer in Montreal. The hon. member has drawn my attention to a statement allegedly made by Mr. Marcoux in Montreal yesterday. I will be pleased to check it out. As far as I am concerned, information I gave to
November 17, 1977

the House at that time was information provided by the RCMP. Once again, I have no indication that that information was not correct.
Also, in the course of my reply in the House, I believe 1 indicated that no material was destroyed which was in the possession of the security service and no material pertaining to any inquiry underway in the province of Quebec was destroyed during the course of that consideration. 1 also wish to bring back to the memory of hon. members that following that consideration, the (cCt that it was brought to the attention of the House, a very strict directive was issued by the Commissioner of the force indicating that no further destruction of files of any kind was to take place during the period of time the inquiries were under way. I will of course get back to the police officer who made that statement in Montreal to see whether he may have information which was not available to us at that time.


DATE OF FILES INCINERATED
John Edward Broadbent: The minister at the same time last June left the clear impression with the House that all the documents that were destroyed dated back to a time well in advance of the 1972 break-in in Montreal. It was alleged last night by the same officer that the documents that were destroyed on June 3 were as recent as documents up to 1974, which included all the crucial documents that the federal inquiry would need and that the provincial inquiry would need. If they have been destroyed, I think the minister will agree that could make a complete farce of the inquiry. Will he then check with his officials to find out why he told the House the documents that were destroyed were in fact documents pertaining to a much earlier period?


Francis Fox: Mr. Speaker, as far as documents being destroyed are concerned, any documents relating to allegations or accusations made against the force have been made fully available. The instances that have been related to the House over the past few days were related in good part insofar as the illegal operation was concerned to the Keable commission in Montreal and also to the McDonald royal commission in Ottawa. The same, of course, pertains to the allegation of break-in into the building which housed the computer tapes of the Parti Quebecois.
As far as the dates of the documents are concerned, the CBC report in that regard is quite correct. I indicated in the House last summer that they dated back to 1966 in the sense that the oldest document destroyed dated back to 1966. I understand that the documents do go up to the period 1972-1973-I would have to check as to the exact date. I remind the House once again that there is a whole series of documents within the force, as in any other government department, with respect to which a normal policy of destruction is followed. 1 indicated at that time that the destruction which took place in Montreal had been carried out further to an audit which had
Oral Questions
been done in Montreal following a report given to the commanding officer of C Division, Montreal, indicating it was time that certain documents should be disposed of in accordance with normal force procedures.


John Edward Broadbent: In his answer in the House, the minister said the material dated back to 1966. But I would remind him he was responding to a question which specifically asked him whether there was any more recent material relating to 1971, 1972 or 1974. His reply clearly implied there was not-that, for example, there was no material relevant to the inquiry which had been set up a few weeks previously in Quebec. The hon. gentleman cannot have it both ways.
There seems to be a clear contradiction between what is now being said in Montreal and what the minister said in reply to the question put to him. I would like him to look into that.
My final question is this: would he inquire into the immediate steps which led to the order for the destruction of these documents being given on May 23. May 23, as the minister may now know, was the Monday of a long weekend. It would seem unusual to many Canadians that an order for the burning of the documents would be made on that particular day. Would the minister inquire on whose authority that order was given and why it was given on that particular day?


Francis Fox: I remember seeing the report of the auditor which I asked to see at that time and it is my understanding that it was indeed dated May 23. I would have to check to see whether the officer in question worked on May 23; there are some police officers in the country who do work on May 23.


John Edward Broadbent: Burning documents?


INDUSTRY
Léonel Beaudoin: Mr. Speaker, my question is directed to the Minister of Industry, Trade and Commerce. In a telegram addressed to the government on July 29, 1977, the Shoe Manufacturers' Association of Canada asked the government to impose severe quotas on footwear imports, particularly imports of shoes for ladies and little girls.


Mr. Speaker:: Order, please. This question is directed to the hon. Minister of Industry, Trade and Commerce.


Léonel Beaudoin: In a letter dated November 15, 1977, the association reminds me of its dissatisfaction with the measures taken by the government and by the former Minister of Industry, Trade and Commerce. Therefore, I should like to ask the hon. minister whether he is aware of this telegram and whether he intends to go much further to save this industry and the thousands of workers whose jobs are in jeopardy?
80025-62%

November 17, 1977
Oral Questions


Hon. Jack H. Horner (Minister of Industry, Trade and Commerce):: Mr. Speaker, I am aware of the telegram and the department has attempted to reach bilateral agreements with Taiwan, South Korea, Brazil, Spain and the European Common Market, particularly Italy, with regard to their exports of footwear to this country. I can inform the hon. member we have not been entirely successful in that approach. I have placed a document on footwear before the cabinet and hope to have a decision very soon.
[ Translation]


FOOTWEAR-REQUEST FOR MEASURES TO PREVENT DUMPING
Léonel Beaudoin: Mr. Speaker, I have a supplementary. Considering that the bilateral discussions with the underdeveloped countries where wages are low did not produce the results expected by the government of Canada and particularly by the Department of Industry, Trade and Commerce, can the minister tell the House whether the government intends to take extremely severe measures against the import or near dumping of footwear which hurts the Canadian markets, and particularly whether the government will take measures to inform the public that shoes imported from these countries are similar to those which are made in Canada but that the quality is different?


John (Jack) Henry Horner: We can, indeed, take action under Article 19 of GATT but the hon. member must realize that if we do so we might well have to pay for it. In paying for it, part of the footwear industry of Canada, and that is in Ontario and the province of Quebec, will have to pay through loss of exports. Therefore, the good part of the industry might have to pay for the bad, and that is the difficult position in which we find ourselves.


INCOME TAX
Henry Perrin Beatty: Mr. Speaker, my question is for the Minister of National Revenue. In view of the very startling revelations made today by Toronto broadcasters Charles Templeton and Pierre Berton that it is possible for unauthorized individuals to get their hands on the confidential tax returns of virtually any Canadian; information which is given to the Department of National Revenue on the basis that it is to be kept confidential and secret, would the minister explain why there is such laxity in his department's security regulations that this could take place, and explain what actions are being taken by his department to ensure that information which is given to the govern-

ment on a confidential basis is kept confidential and not available to unauthorized individuals?


Hon. Joseph-Philippe Guay (Minister of National Revenue):: Mr. Speaker, I learned of this very serious offence this morning through a radio broadcast in Toronto. I am extremely concerned, as I am sure are all Canadians.


Some hon. Members:: Oh, oh!


An hon. Member:: You had it prepared.


Joseph-Phillippe Guay: I should like to repeat, this is a very serious offence against the Income Tax Act. My cabinet colleagues have met this morning, and the RCMP has been asked to launch an immediate investigation.


An hon. Member:: Here we go again.


Some hon. Members:: Oh, oh!


Joseph-Phillippe Guay: It is hoped that this investigation will be complete, swift and as soon as possible, and that the person or persons involved will be subject to the prosecution which is provided under the Income Tax Act.
I have also ordered an immediate increase in security procedures in revenue offices across the country, and have ordered the 20 directors in the various offices to take steps to review and tighten security.


Some hon. Members:: Hear, hear!


Henry Perrin Beatty: Mr. Speaker, I find it hard to take the hon. member seriously. Could he tell the House whether he has asked his officials how it is possible for an individual who is not authorized, but as a private citizen, to simply call up a telephone number and ask to have the private and confidential information on the tax returns of individuals, information given to the government on a confidential basis? Would he indicate how extensive this sort of violation of individual confidentiality has been in the past, and what specifically is being done by the minister today to eliminate this particular breach of security?


An hon. Member:: He has told you.


Joseph-Phillippe Guay: Mr. Speaker, I hope I will not have to repeat what I have already said.


An hon. Member:: You are not alone.


An hon. Member:: Hear, hear!


An hon. Member:: Do it again, Joe, in French.


Joseph-Phillippe Guay: Mr. Speaker, if the hon. member has all the information he pretends to have, I think he should have got in touch with me because I was in the House all day since very early this morning and no information has been brought to my attention or to the attention of my officials.
In answer to his question-
November 17, 1977



Apart from the anxiety this has caused Canadians generally, it also is of great concern to the thousands of loyal employees of the revenue department who traditionally protect the confidentiality of tax information. I should like to express, Mr. Speaker-


Mr. Speaker:: Order, please.


Henry Perrin Beatty: Mr. Speaker, this is painful.


Some hon. Members:: Hear, hear!


Henry Perrin Beatty: What is surprising is not how much I know as an individual, but how little the minister knows as the minister.


Some hon. Members:: Hear, hear!


Henry Perrin Beatty: Mr. Speaker, I would ask the minister this one simple question which I think he can answer with a yes or no. When he was made aware of that this morning, and Mr. Templeton and Mr. Berton have indicated they contacted the Prime Minister's office to alert him of the fact that they were going to be making this revelation, did the minister not today contact his officials to find out how it is possible that an individual could simply call up a number of a government office, request information and have it handed over to him? That does not require an investigation by the Mounties. Can he not answer that?


Joseph-Phillippe Guay: Mr. Speaker, 1 should like to say that the hon. member has the ability to repeat the same question three times. I would like to assure you, Mr. Speaker, that I have been in good discussion with officials of my department, and in good discussion with my cabinet colleagues, including the Acting Prime Minister, and you can rest assured that the situation is in good hands and is being investigated by the RCMP, as I mentioned a while ago.


THE MINISTRY
Hon. George Hees (Prince Edward-Hastings):: Mr. Speaker, 1 have a question for the Acting Prime Minister. In view of the extraordinary statement made by the Minister of Consumer and Corporate Affairs last night in Montreal, dealing with matters that came within his jurisdiction when he was solicitor general, is it a principle accepted by the members of this present government, as it has been accepted by members of every other government that ever served this country, that a minister accept the full responsibility for the actions of those who work for him in his department and in affiliated agencies, and does not whine publicly about his ignorance of matters with which, if he had been doing his job properly, he would have been thoroughly familiar?
Oral Questions


Joseph Jacques Jean Chrétien: Mr. Speaker, the rules of ministerial responsibility are quite clear and, as I said earlier, the matter which the Minister of Consumer and Corporate Affairs has been referring to is only an incident which took place here when he answered a question and subsequently had to rectify his answer because he had not been made aware of all the information regarding this case. This kind of thing happens from time to time when we are not fully aware of a case or when the information does not concord.
After all, what matters is that, in all circumstances, the minister and the government took their responsibilities. That is why, if there were some mistakes in the past, we sincerely hope that the McDonald Commission will help us find a better way to ensure our national security objectives and place the RCMP in a position where it can always serve the best interests of all Canadians.


George Harris Hees: Mr. Speaker, 1 would ask the Acting Prime Minister to clarify this whole matter for the House and the country and not wait for what may be months before the McDonald commission gets around to this matter. Will he have his colleague, the Minister of Consumer and Corporate Affairs, take the first opportunity, preferably today, of making a forthright statement to the House as to exactly what he did say? If this government does accept a principle like that accepted by all governments in respect of ministerial responsibility, will the Acting Prime Minister have his colleagues in the present government start acting like men instead of weasels which hide behind the coattails of responsible civil servants?


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please.


FISHERIES
Mr. Albert Bechard (Bonaventure-Iles-de-la-Madeleine):: Mr. Speaker, my question is directed to the Minister of Fisheries and the Environment. In answer to the request of fishermen from eastern Quebec and much of the Maritimes, does the minister intend in 1978 to re-establish salmon fishing which was abolished some seven years ago and, if so, could he outline briefly the conditions by which the fishermen who are interested in that kind of fishing will have to abide?


Hon. Romeo LeBlanc (Minister of Fisheries and the Environment):: Mr. Speaker, as I said previously in answer to a question from the hon. member for Northumberland-Mirami-chi, we intend to open the salmon fishing season in the Atlantic for a short period of time, surely shorter than before prohibition six years ago. Details on that are being discussed

November 17, 1977
Oral Questions
with representatives of fishermen's associations, and I will be pleased to convey information to the House when we have come to a common position.


INCOME TAX
Right Hon. J. G. Diefenbaker (Prince Albert):: Mr. Speaker, I wish to return to the question asked earlier in connection with the revelations made in the city of Toronto by two most responsible and reputable individuals.


Some hon. Members:: Oh, oh!


John George Diefenbaker: I would like to ask the Acting Prime Minister-I will wait until he finishes his consultations. I suggest that if he is getting legal advice from the Minister of Justice, he should go elsewhere.


Some hon. Members:: Hear, hear!


John George Diefenbaker: I would ask him to realize that it is 60 years ago this month that the Income Tax Act was placed on the statute books of this country and in all these years there has not been a more shocking revelation than the one that is now being looked at. I ask him this-


Some hon. Members:: Oh, oh!


John George Diefenbaker: Mr. Speaker, I find that these gentlemen over there, unidentified and unidentifiable, have a way of trying to howl down the opposition.


Some hon. Members:: Hear, hear!


John George Diefenbaker: I ask him this: Will he now say something regarding this matter? Apparently he has been in consultation with the Minister of National Revenue. What is the present position? Is there any suggestion whatever-and I do not think there can be-that the revelations are not correct? What are you going to do about it instead of postponing action? What are you going to do today so that Canadians will not regard it as being an open season on their income tax returns? The Minister of State for Federal-Provincial Relations smirks!


Some hon. Members:: 
Some hon. Members:: Oh, oh!


Joseph Jacques Jean Chrétien: The Department of National Revenue has always served the interests of this nation very well in keeping all the information extremely confidential. I hope that the RCMP will be able to find the individual who has committed the crime of revealing this information and, as the Minister of National Revenue has said, that the individual or individuals involved will be prosecuted very severely because we cannot allow anyone to tamper with the tax returns of Canadian citizens.


John George Diefenbaker: The minister suggests that a department of the government is under attack. It is the maladministration of this government that is under attack.


Some hon. Members:: Hear, hear!


John George Diefenbaker: I ask him, has he been in touch with these two reputable persons in Toronto to ascertain from them the basis for the copyright article which they have put before the public? It cannot be brushed aside and it requires immediate action. Has he been in touch or has anyone from among his officials or those of the Department of National Revenue been in touch with the two persons? This is a damnable situation which has been revealed and it cannot be laughed off or brushed aside.


Joseph Jacques Jean Chrétien: I share the concern of the right hon. member and I have asked people who are probably the best equipped to deal with criminal offences, namely, the RCMP, to look into the matter right away. This is a group of law enforcement officers in Canada in which I have complete confidence, and I think it is the best door on which I could knock at this moment. Of course, if I have to speak to Mr. Templeton and Mr. Berton, I would be willing to do that, but I hope that those individuals and other people who have known about this for more than 24 hours will collaborate to the maximum-


John Edward Broadbent: Including the Prime Minister.


Joseph Jacques Jean Chrétien: -with the law officers of the Crown, the RCMP, in order to make sure that everyone who is guilty of anything is prosecuted as quickly as possible. One thing that is perhaps a little bit suprising-


Some hon. Members:: Order.


Joseph Jacques Jean Chrétien: This thing has been in the mill since Sunday and I have asked the RCMP if they knew anything about it. They have told us that they did not know anything until the program came on the air this morning. Perhaps some individu-
November 17, 1977

als would have been well advised when they heard about this in the first instance to communicate with the RCMP.


Some hon. Members:: Hear, hear!


USE OF CANADIAN PIPE IN CONSTRUCTION OF NORTHERN GAS PIPELINE-POSSIBILITY OF CHANGE IN POLICY
Thomas Clement (Tommy) Douglas: Mr. Speaker, my question is for the Acting Prime Minister and it arises out of a statement attributed to the Prime Minister made yesterday in Hamilton that:
The Canadian steel industry will have to be competitive if it expects any of its steel pipe to be used on the Canadian portion of the Alaska-Yukon natural gas pipeline.
In view of the fact that Foothills (Yukon) has repeatedly committed itself to purchasing all its steel pipe from Canadian steel producers, who changed this policy of securing all the pipe for the Canadian portion of the pipeline from Canadian steel mills? I want to ask him whether this reversal of policy has come about as a result of pressure from the U.S. government, and did the Canadian negotiators enter-


Mr. Speaker:: Order, please. The hon. member is now on his third question already. I think two at the most should be taken at a time.


Joseph Jacques Jean Chrétien: 1 have not read the statement of the Prime Minister. Perhaps 1 can ask the Minister of Labour who was there to answer that question, but the way I understand the question, there was no change in the policy of the government that led the Prime Minister to make that statement. Perhaps the Minister of Labour can answer that question.


Hon. John C. Munro (Minister of Labour):: Well, Mr. Speaker, I think the hon. member is, unintentionally of course, misinterpreting the Prime Minister's remarks. I was there. He said that of course there is a preference for Canadian steel. I was very glad to hear that, as I am sure the whole House is, in terms of employment for Canadians. But the firms have to be competitive. Obviously, it is not at any cost, and the Canadian steel industry knows this. They are very proud of the fact that they are competitive and they will be competitive.


Some hon. Members:: Hear, hear!


Thomas Clement (Tommy) Douglas: The statement of the Minister of Labour simply confirms what the Prime Minister said yesterday, that is:
... the federal government will not make consumers pay more for their natural gas by using Canadian steel if it is priced higher than steel from other countries.
In view of the fact that the primary purpose of this pipeline is to take Prudhoe Bay gas from Alaska to gas consumers in the United States-not to Canadian consumers but to U.S.
Oral Questions
consumers-does this mean that the government is more concerned about protecting the interests of American gas consumers than they are about protecting the jobs of Canadian workers?


Some hon. Members:: Hear, hear!


John Carr Munro: The answer is unequivocally no.


PROTECTION FOR CANADIAN COMPANIES FROM SUBSIDIZED BIDS ON PIPE FOR NORTHERN GAS PIPELINE
Thomas Clement (Tommy) Douglas: Mr. Speaker, the Minister of Labour has just given an answer that Canadians are to receive preferential treatment. The fact is that before the National Energy Board and in all other statements made by Foothills, Canadian companies were to get all the steel business. I want to ask the Acting Prime Minister, in view of the fact that U.S. Steel Company has just got an order for 80,000 tons of steel for a pipeline to Mexico at knock-down prices which Canadian steel companies say are 20 per cent below the going price, assisted undoubtedly by the DISC program in the United States which subsidizes these companies in order to get into foreign markets, what protection will there be for the Canadian steel producers in this country if these bids are open to competition from the United States and Japan?


Joseph Jacques Jean Chrétien: Mr. Speaker,
I am informed there is a provision to the effect there will be no dumping in those circumstances and that we are well protected against the danger to which the hon. member refers.


TARIFFS
Mr. Fred McCain (Carleton-Charlotte):: Mr. Speaker, I would like to direct my question to the Minister of Finance. In 1973 the Tariff Board of Canada was asked to look into the requirement of duty for horticultural products and horticultur-ally-processed products in the field of agriculture. After four years we have only a summary of the recommendations of that board. Would the minister arrange a reference to a committee of the House so that the horticultural industry might present its claims with respect to the deficiencies of the recommendations of the Tariff Board? There is no time for any means whereby their requirements might be made public.


Joseph Jacques Jean Chrétien: Mr. Speaker, I will be pleased to consider this possibility and if it is the best way to solve the problem we might accept the suggestion of the hon. member.

November 17, 1977
Oral Questions


Fred Alward McCain: Mr. Speaker, I appreciate the minister's answer, but in view of the fact that some of the positions which we have taken are to be tabled and revealed to those with whom we will negotiate in the very near future, would the minister try to give this House an answer not later than tomorrow about the committee to be set up, how many negotiators can be present and how many agricultural interests he will allow to be represented?


Joseph Jacques Jean Chrétien: Mr. Speaker, I undertake to give an answer to the hon. member tomorrow.


TOURISM
Mr. Dan McKenzie (Winnipeg South Centre):: Mr. Speaker, my question is for the Minister of Industry, Trade and Commerce who is also responsible for tourism. At a recent meeting in Toronto the minister spoke to the tourism industry and was very critical of the industry. He blamed the declining tourism in Canada on the industry itself, which is a complete contradiction of a series of resolutions the travel industry passed at a convention in Edmonton last May where, among other things, the federal government was asked-


Mr. Speaker:: Order, please.


A. Daniel McKenzie: I would like to ask the minister-


Some hon. Members:: Order.


A. Daniel McKenzie: What is the problem?


Mr. Speaker:: Order, please. The hon. member for Fort William.


TRANSPORT
Mr. Paul E. McRae (Fort William):: Mr. Speaker, I have a question for the Minister of Transport. Considering the strong opposition to the doubling of seaway tolls and the inequity that exists between Canadian and American users in that the latter group have public hearings and the Canadian users do not-as a matter of fact, Canadian users have to appear before the American tribunal to have their views aired-is the minister considering a referral of the matter of toll increases to the Standing Committee on Transport and Communications or some impartial body? If not, what is he considering in terms of allowing Canadian users to have open hearings so that their views can be heard in an open environment?


Hon. Otto E. Lang (Minister of Transport):: Mr. Speaker, the users interested in putting views forward had the very fullest of hearings before the seaway officials and also in many cases through representations to me directly so that all their views could be taken into account.
As I have said before in the House, it is recognized that those who have to pay a freight rate or a toll are always happier if that toll or rate is low, and that is not surprising. We are in the final stages of discussing with the United States the appropriate course to attempt to put this great waterway on an appropriate basis for its financial viability, and I hope that we will be reaching a conclusion about that in the very near future.


ROYAL CANADIAN MOUNTED POLICE
Walter David Baker: Mr. Speaker, my question is for the Minister of Consumer and Corporate Affairs. It arises out of an answer given by the Minister of Finance a few moments ago in which he referred to an incident. This question is to the minister in his capacity as a minister of the Crown. The Minister of Finance indicated that the incident referred to in the minister's statement last night was one incident, whereas in the quotation of the minister the minister has said that "it seems that they," referring to the RCMP, "did withhold information from me and from other solicitors general," indicating that this was a course of conduct, which is quite an accusation against the RCMP if it is true.
In his capacity as a minister of the Crown and knowing that all of us in this House are interested in hearing from him, would the minister undertake to make a statement on motions today to indicate to the House what he was referring to, the number of incidents he was referring to and what officers of the RCMP he was referring to so that they can clear themselves? Would he take the opportunity?


Mr. Speaker:: Order, please. Even if the present Minister of Consumer and Corporate Affairs were to attempt to answer that question, I would rule that he could not. I think questions of that sort can be properly put only to the Prime Minister, the Acting Prime Minister or the present Solicitor General. In fact, questions of that sort have been put already. If the hon. member has a supplementary to those questions-


Walter David Baker: I have a supplementary, and I do not want to offend the rules, Sir. It is a difficult thing, but let us assume the accusation is true. Will the Acting Prime Minister-because there is time now-consult with his colleague the Minister of Consumer and Corporate Affairs to see whether he will make a statement on motions this afternoon- which is coming up in just a few moments-as to what he meant by the allegations which are attributed to him by
November 17, 1977

responsible journalists and responsible newspapers as to his relationship with the RCMP?
As part of that question, does the Acting Prime Minister, as the acting leader of the government today, feel that his colleague is discharging his duty as a minister by failing to take an opportunity to make a statement on motions as opposed to some other course of action? In other words, does the Acting Prime Minister not feel that it would be appropriate in these circumstances for this matter to be cleared up as soon as possible?


Joseph Jacques Jean Chrétien: Mr. Speaker, I said many times earlier in the question period that the minister is more than willing to testify before the McDonald Commission.


George Harris Hees: Several months from now.


Joseph Jacques Jean Chrétien: I do not think that the security of the state or the police would gain anything by having these questions debated in the House. 1 think there has been enough of that kind of questioning and that it would be in the best interests of the nation to ask the McDonald Commission to look into this as quickly as possible and to report very soon to the House of Commons.


An hon. Member:: In three years?


Joseph Jacques Jean Chrétien: We think this kind of thing hurts a very good body of the Canadian public service, the RCMP, too much.


THE MINISTRY
Mr. G. W. Baldwin (Peace River):: Mr. Speaker, is it, then, the view of the Acting Prime Minister on behalf of this government that the doctrine of ministerial responsibility, which many of us think is in tatters, can be discharged by a minister going to a body outside this House of Commons and there answering allegations against himself? Is it the view of this government that that is the way to discharge ministerial responsibility?


Joseph Jacques Jean Chrétien: Mr. Speaker, all questions with regard to these matters can be asked of the Solicitor General. I talked with the Minister of Consumer and Corporate Affairs at noon, and he referred to one incident which was debated publicly in this House.


An hon. Member:: Let him speak.


Joseph Jacques Jean Chrétien: I think the fact that the matter comes up two or three years later does not change the substance of what happened, so I have nothing else to add at this time.
Oral Questions


POSSIBILITY OF FORMER SOLICITOR GENERAL APPEARING BEFORE COMMITTEE
Mr. James A. McGrath (St. John's East):: Mr. Speaker, I would like to direct a supplementary question to the Minister of Consumer and Corporate Affairs. Would the minister be prepared to clear up this very serious matter-very serious charges have been made by the minister-by appearing before the Standing Committee on Miscellaneous Estimates when that committee has before it a supplementary estimate dealing with the Department of the Solicitor General so that this matter can be clarified by the House?


Mr. Speaker:: Order, please. That is a matter which can be taken up when the committee is in session, and I do not think it is a question which can be put to this minister in his current capacity.


INCOME TAX
Mr. Eldon M. Woolliams (Calgary North):: Mr. Speaker, I would like to ask a question arising from the question put by the right hon. member for Prince Albert. The Minister of National Revenue seemed to treat this matter very lightly. 1 would like to know to what office Pierre Berton and Charles Templeton were referring and whether that office is under some degree of surveillance. What is being done to protect confidentiality?


Joseph-Phillippe Guay: Mr. Speaker, I did refer to security in my previous answer. With regard to the comments made by the right hon. gentleman concerning two well-known and good Canadians, Charles Templeton and Pierre Berton, I hope they will fully co-operate with the investigation taking place so that we can get to the bottom of this very serious matter. I should like also to say I am rather puzzled and surprised that the Leader of the Opposition did not contact the RCMP. Why did he not contact my department or myself to see what we could do? I want also to request his co-operation as well as that of members of his party who know something about it so that we can get to the bottom of it?


Eldon Mattison Woolliams: Mr. Speaker, I have never heard such verbicide. I asked a simple question and I will put it very simply again. What office disclosed that information? Surely that question can be answered yes or no without the minister reading from a memorandum from his department.


Joseph-Phillippe Guay: When I know that, Mr. Speaker, I will let you know and also the hon. member.

November 17, 1977
Privilege-Mr. Clark


ACTION TO PREVENT FURTHER BREACHES OF CONFIDENTIALITY OF TAX RETURNS
Mr. Ray Hnatyshyn (Saskatoon-Biggar):: A supplementary question, Mr, Speaker. In view of the very serious suggestion that has been made that credit bureaus and others who want it can get tax information, can the minister assure the House that he has taken action now to adjust the existing procedure so that there will be no further incidents such as have been reported by Messrs. Templeton and Berton? Can the minister tell the House that he has taken action to prevent any further disclosures of the type indicated by this broadcast?


Joseph-Phillippe Guay: Mr. Speaker, I should like to repeat that we have tightened the security and are trying to find out where that particular problem is. When I do, Mr. Speaker, I shall let you know.


INQUIRY WHETHER PRIME MINISTER INFORMED MINISTER OF BREACHES OF CONFIDENTIALITY OF TAX RETURNS
Ramon John Hnatyshyn: A final supplementary question, Mr. Speaker. Will the minister indicate to the House whether the Prime Minister, who was contacted before the broadcast, has informed him of the communication from Messrs. Templeton and Berton that was also conveyed to the Leader of the New Democratic Party before the broadcast, so that they on that side of the House may co-operate with the authorities to get to the bottom of this matter?


Joseph-Phillippe Guay: As I said before, Mr. Speaker, 1 was only alerted to this this morning. We are acting accordingly and as quickly as we possibly can. If the hon. Leader of the Opposition had known about it before why did he not bring it to my attention? By now I would have had an answer for him.


PRIVILEGE
Charles Joseph Clark: Mr. Speaker, I rise on a brief question of privilege relating to some of the recent statements of the Minister of National Revenue who has tried to excuse his conduct of the affairs of his department.
I should simply like to put on the record of the House a certain chronology of events.
I am sure the minister, being the competent minister he is known to be across the country, will already have read the transcript of the remarks of Mr. Berton and Mr. Templeton. He will know that the contact with me was made before there was verification of the contents of the particular file relating to me. I became aware of the verification this morning at roughly 11.15, an hour and ten minutes after the matter was broadcast.
I am told that the Prime Minister's office was advised well before that time.
If the Minister of National Revenue wants to inquire why members of parliament who became aware of this matter did not bring it directly to the attention of the government itself, perhaps he should deal directly with the office of his leader to find out why they did not advise him before the matter was broadcast.


Joseph Jacques Jean Chrétien: Mr. Speaker, I was Acting Prime Minister this morning, and nobody informed me of anything until the Minister of National Revenue-


Some hon. Members:: Oh, oh!


Joseph Jacques Jean Chrétien: They do not want to know the truth. The Minister of National Revenue informed me of the problem. I had a meeting with him and his officials in the cabinet room, and I have given all the facts to this House. What is extremely important is for everyone involved in a situation like this to act immediately. No one can reproach the Minister of National Revenue, the deputy minister or other officials who did not know anything about it. I asked the RCMP if anyone had informed them, and I am informed they knew nothing about it. If the hon. mumber learned anything about it before this morning, I should like to know. If not, I am happy it is not as some people have said, that perhaps he knew about it before. I accept his word that he did not know anything about it before this morning. I am very satisfied, but that is not what somebody has led me to believe.


Charles Joseph Clark: You accept my word?


MR. BALDWIN-MINISTERIAL RESPONSIBILITY
Gerald William Baldwin: Mr. Speaker, I should like to raise a very important question of privilege inherent in the answer given by the Acting Prime Minister to the hon. member for Grenville-Carleton. I shall be very brief, but that does not mean it is not a very important question.
The question of ministerial responsibility is one which this government has sought to bring forward to defend its actions over the last tumultuous two weeks. As I interpreted the answer of the Minister of Finance, as leader of the government in this House today, he is saying it is adequate, to meet the charge of ministerial responsibility, for a minister to appear before a body outside this House, a body appointed by the government and with terms of reference established by the government. He says it is adequate for a minister to meet the question of ministerial responsibility by answering to that body.
I suggest to Your Honour that the powers and privileges of this House have been sadly reduced over the last eight or ten years by this government. One of the few left should surely be the right to demand that this House, on behalf of the people of Canada, may hold a minister accountable on the basis of ministerial responsibility.
If what the Acting Prime Minister has said is to be taken at its face value-it was a direct answer to a direct question- that has gone by the board. If that is the case, then I suggest

November 17, 1977

we in this House are entitled to know it. I would think that the Acting Prime Minister must be prepared-if not now, certainly within the next day or so-to let this House know if that is the way the government views the question of responsibility. If, in their view, it is sufficient that a minister can go to some outside body and in secret, if necessary, give testimony and meet the question of ministerial responsibility, then this House might as well pack up and go home.


An hon. Member:: Right on.


Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, I have been endeavouring to get the floor on what I was going to call a point of order. It is closely related to the issue raised by the hon. member for Peace River, however, so perhaps I could endeavour to make now the point of order I have in mind.
Several times during the question period interest and concern were expressed in the statements made outside the House by the Minister of Consumer and Corporate Affairs regarding matters that related to his former responsibility as a solicitor general. Members have tried to avoid offending the rule that says we cannot ask ministers questions relating to something for which they are not now responsible, and yet parliament seems to have been put in this position-supreme though we are, as we tried to say yesterday in another connection-that we cannot do on the floor of the House what a reporter can do outside the House.
It seems to me that somehow or other a way ought to be found for the Minister of Consumer and Corporate Affairs to make a statement to this House concerning the matters that were within his knowledge when he was solicitor general, particularly in view of his statements outside the House. I am fully aware of the rule, and Your Honour has to guard it very carefully, but I would point out that upon occasion, usually after consultation with the House leaders of all parties, variations in the procedures have been made to meet a particular situation. One that came to mind when I was thinking about this matter, and which I looked up, occurred during the course of what was called the judges' affair. On two occasions during those days, once on March 12, 1976, and again on March 16, 1976, after consulting with the House leaders Your Honour varied the rule respecting motions made under Standing Order 43. [DOT]
I am not trying to say that Your Honour varied the rule about questioning ministers on things which were their former responsibility, but Your Honour did vary another rule because the House was particularly concerned about the matters then being discussed.
On March 12, instead of waiting until three o'clock Your Honour permitted the hon. member for Westmount, the Minister of State for Federal-Provincial Relations and the Minister of Finance to make statements which had no relation to matters which were then part of their responsibilities. The
Privilege-Mr. Baldwin
House was concerned. Then statements were made by hon. members on this side of the House.
On March 16, 1976, when the Minister of State for Urban Affairs had resigned that morning from his position as minister of consumer and corporate affairs, he was permitted not only to make a statement but he was permitted to make it at a time reserved for motions under Standing Order 43. It was at the end of that statement that he told us his resignation had been submitted that morning. We agreed to that, and comments were made afterwards. My point is: the rules, practices and procedures of the House were varied, by consent, because the House had a particular interest in the matters then being discussed.
There is no doubt of the interest of the House these past few weeks with respect to matters related to the RCMP and to the relationship between that body and the Solicitor General. Now we have a minister of the Crown making statements outside the House that are extremely relevant to the whole situation, and yet somehow or another our rules seem to prevent us from asking him questions or getting any information out of him. To say he will appear before the McDonald commission of inquiry is not very satisfactory. It is not recognizing the supremacy and the importance of this House. We have not even had the assurance that he will appear before a committee. Even that would not meet the immediate interest of the House of Commons.
My point of order is that surely common sense calls for us to have at least the rights in this House which reporters have outside. I would ask Your Honour to consult the House leaders of the various parties to see if an arrangement can be made for this interest of the House to be met in order for the Minister of Consumer and Corporate Affairs either to make a statement and be questioned after it, or be questioned with respect to matters within his knowledge because of the responsibility that he held for them.
I am happy to raise this point of order in association with the question of privilege raised by the hon. member for Peace River, because I think his concern regarding what has happened to ministerial responsibility is very serious and very important. I think we should do something about it and not let our procedures stymie us completely.


Some hon. Members:: Hear, hear!


Walter David Baker: Mr. Speaker, I am very happy to be able to make a submission with respect to this matter. As I tried to say in the submission I made in the question and the preamble to the question, earlier in the question period the Minister of Finance, when talking about the incident referred to by the Solicitor General in his statement outside the House, inferred in his answer that it was one isolated matter of an accusation made by the former solicitor general against the RCMP, that they had in fact lied to him on one occasion. That was the inference.
In any event, it is very clear from the newspaper clippings and from what I saw on CTV last night that it was more than one incident. I attempted to quote what the Solicitor General

November 17, 1977
Privilege-Mr. Baldwin
said about what the RCMP had either said or failed to say to him, which was a pretty strong accusation against the police. He said, "It seems to me that they did withhold information from me and from other solicitors general". Because there seemed to be some discrepancy concerning what was being said by a minister who did not make a statement outside the House with respect to a statement made outside the House, or purported to have been made outside the House, I asked him not to comment on his answer as to the truth or not of the statements attributed to him, but whether, as a member of the ministry, he would take advantage of the opportunity provided him by the rules of this House to come to the House and make a statement. If he came to the House and made a statement, there would be opportunity to question him specifically with respect to that which was contained in the statement. That was the purport of the question.
I realize Your Honour has to make instant judgments, but you did rise in your place and that question was not answered. Therefore, at this moment we do not know whether a minister of the Crown is prepared to come forward and give us the details surrounding those statements made by him outside the House about which there has been some confusion today on the floor of the House of Commons.
Perhaps I put it to Your Honour inarticulately, but I attempted to indicate that I was asking the minister a question in his capacity as a member of the government. During the judges' affair the hon. member for Westmount was questioned, as a member of the government, with respect to incidents which did not fall under his then ministerial responsibility. Yesterday in the House of Commons the hon. member for Oshawa-Whitby asked a question of the Secretary of State for External Affairs. It concerned a matter which the Secretary of State for External Affairs indicated that it would be drawing rather a long bow to have the answer to the question in his ministerial capacity. It is on that basis-


Mr. Speaker:: Order, please. The hon. member for Grenville-Carleton is dealing with a point which concerned me, as well, yesterday. Perhaps I should clarify that for the House. As the hon. member has said, I am required to make instant judgments, but yesterday the preamble to the quesion began with some reference to negotiations by the hon. Secretary of State for External Affairs over the weekend. I have not verified the record, but that was the beginning of the question.
With that in mind, of course I had no way of knowing whether the negotiations referred to were domestic negotiations concerning the minister's political area of activity, or whether they were in fact ministerial in nature. Until the minister rose in an attempt to answer, I was not sure. Therefore, I could not tell from the question what area of responsibility was involved.


Walter David Baker: Mr. Speaker, in order for the House to understand the situation, the hon. member for Oshawa-Whitby is reported in Hansard as saying the following:

As the minister knows, the House is currently debating a bill which gives about $1 billion in tax concessions to corporations ostensibly to create jobs.
That was the preamble to the hon. member's question which was directed to the Secretary of State for External Affairs. My point is that that question was allowed.


An hon. Member:: Right on.


Walter David Baker: It was allowed in the same way, and for the same reasons, as the questions were allowed a year or so ago to the hon. member for Westmount when he was involved in the judges' affair which ultimately, and unfortunately, led to his resignation from the ministry.
It is within my capacity as a member of this House to ask a minister of the Crown whether or not he is prepared to make a statement. I am not asking him to make a statement in answer to my question. I consider a ruling on that to be extremely important, because I want to pose that question once again to the Minister of Consumer and Corporate Affairs, if I can, and perhaps to the Minister of Supply and Services because he is the other solicitor general referred to.
I would like to know whether or not they are willing to make statements in the House with respect to the allegations which have been made against the RCMP concerning the way the RCMP conducted itself in relation to members of the ministry. If the statement of the minister outside the House is true, then some heads should roll in the RCMP. However, if that statement is not true, the minister has a course of action open to him. He will have carried out, albeit outside the House, an action which would indicate that his statements are not in accordance with the facts. This House has to know the facts before the McDonald commission knows them.
I believe it is important that I be allowed to put the question. As a result of it, I hope the minister will make a statement so he can be questioned with regard to that statement. So that Your Honour will be forewarned, I would like to put the same question to the Minister of Supply and Services. If there is one place where we ought to be able to question ministers, it is here. If there are to be restrictions on the right of members to question ministers-and I am prepared to admit there should be from time to time-we ought to lean against that to the greatest extent possible.
The whole purpose of this parliament is to be able to ask ministers questions directly as events occur. If we are to wait for the royal commission, the RCMP and the officers who are not now named by the Minister of Supply and Services will remain under a cloud. That is a fact, a fact that this House ought not to allow to exist in terms of any public servant of the government.


Joseph Jacques Jean Chrétien: Mr. Speaker,
I would like to make a few comments on this question of privilege. I am pleased that the hon. member is afraid that someone can cast doubt on a civil servant. I wish he had
November 17, 1977

developed that philosophy two weeks ago when they started making accusations.


Some hon. Members:: Oh, oh!


Joseph Jacques Jean Chrétien: Under the circcumstances, I think the rule is clear. When a question concerning a particular department is asked, it is the responsible minister who must reply to that question in the House. The Solicitor General was willing to answer questions, and in fact has done so. In my capacity as Acting Prime Minister today, I spoke with the Minister of Consumer and Corporate Affairs in my office. We discussed the matter and I asked whether he made those accusations. He told me that he referred to an incident that was debated in the House. He gave it as an example. He did not intend to make any accusations against the RCMP.
I have followed the rules of this House. Perhaps members opposite find these rules somewhat restraining. However, we have to abide by the rules and practices of this House. Sometimes they are also restraining for members on this side. It is often difficult for a parliamentary secretary to get the floor to ask questions because he has accepted some responsibility. For the past 10'/2 years that I have been a minister I have had to forgo my right to ask questions on behalf of my constituents who elected me. However, that is one of the rules we have to live with.
This morning we did exactly what has been done under similar circumstances over the years, that is ask the minister what comments he made. I reported to the House what the minister said to me. I said that if there are other questions related to this matter, they can be asked of the Solicitor General. I can appreciate the frustrations of the Minister of Consumer and Corporate Affairs, but that is the price one must pay when serving another department. He can no longer answer for the previous department for which he had responsibility. If a member wishes to ask some questions about a minister's former responsibility, he must do that through the Prime Minister or the Acting Prime Minister. That is the rule, and we are obliged to abide by it.


Joseph Adrien Henri Lambert: Mr. Speaker, I should like to give quite briefly my opinion on this issue which is, I feel, very serious indeed. In view of the fact that this report was seen by millions of Canadian taxpayers who submit every year their income tax returns, with the assurance that the information they provide is treated as extremely confidential-


Mr. Speaker:: The hon. member for Bellechasse is dealing with an entirely different subject, for the House is now considering the possibility of a statement the hon. Minister of Consumer and Corporate Affairs (Mr. Allmand) might make concerning a question and answer exchange which took place in Montreal last night. That is one thing. The second concerns income tax returns and their confidential nature: that is something completely separate.
Privilege-Mr. Baldwin


Joseph Adrien Henri Lambert: I wish to thank you for your decision, Mr. Speaker. That was my preamble. What I mean to say is this: the hon. member for Winnipeg North Centre (Mr. Knowles) came up with a wise suggestion a while ago, a suggestion with which I fully agree, and I feel that the minister should be given the opportunity to provide the House with full explanations, even if he should require a whole hour to do so, in such a way that this institution may be truly recognized by the public as really responsible.
As far as House leaders are concerned, I feel that we should meet and discharge very wisely our responsibilities. If the minister wants to explain his conduct to the House, he ought to be given the time he needs, which would clarify the situation and rekindle the faith the Canadian people have always had in the Parliament of Canada.
[English)


James Aloysius McGrath: Mr. Speaker, I would like to speak briefly to this very important question now before the House. I listened, as the House did, with great interest to the Acting Prime Minister. I say to him, through you, sir, with respect that 1 do not think he understands the gravity or the seriousness of the question before the House. If the good name of the RCMP which has been dragged down in the mud by his colleague, the Minister of Consumer and Corporate Affairs, is to be cleared of this unprecedented smear by a minister, what better place to do that than here in the House?


Some hon. Members:: Hear, hear!


James Aloysius McGrath: It could be done in the House on a statement on motions or on a question of privilege by the Minister of Consumer and Corporate Affairs. That is precisely what the House leader of the official opposition was asking, and the point the House leader for the New Democratic Party was getting at. The central question here, and I say this with great respect, is that of the collective responsibility of ministers of the Crown. Last evening the Minister of Consumer and Corporate Affairs, as reported over national television, referred to several instances when he was solicitor general and, indeed, referred as well to his predecessor and where he had been given misinformation or information had been withheld from him by the RCMP.
The only way the House has to get at this matter today, according to the ruling of Your Honour, which I respect, is by way of questions to the Acting Prime Minister. The Acting Prime Minister then told the House that on the basis of a conversation he had with the Minister of Consumer and Corporate Affairs it is an entirely different situation and there is only one particular instance that was referred to. We have two stories. One was given to the press and reported over national television by the Minister of Consumer and Corporate Affairs, who has not been given an opportunity by Your Honour to report to the House, and the other story was given today by the Acting Prime Minister on behalf of his colleague, the Minister of Consumer and Corporate Affairs.

November 17, 1977
Privilege-Mr. Baldwin
I realize Your Honour has to make instant judgments from day to day. This is a very serious question. It has seized the attention of the House for the last number of weeks. What we are getting at here is the question of collective responsibility of ministers of the Crown in dealing with a question before the House which has to do with, not one but three ministers still in the cabinet who were responsible for this very question, namely, the question of their dealings with the RCMP on matters of national security.
We are not trying to get at former ministers of the Crown. We are not trying to deal with a minister of the Crown on the basis of his constituency responsibilities, as was the case yesterday in the question put to the Secretary of State for External Affairs by the hon. member for Oshawa-Whitby. If you examine the record, you will find it dealt purely and simply with a matter within the jurisdiction of the minister by virtue of his position in this House as the hon. member for Burin-Burgeo. There is no way in which the question could have been permitted except on that basis. But we are not getting at that.
I can understand that Your Honour would perhaps wish to reflect further on that question by the hon. member for Oshawa-Whitby so that a dangerous precedent might not be set. But the precedent is well established that ministers of the Crown are collectively responsible and accountable to the House for their actions. However, serious charges have been made, in the presence of the press, by the Minister of Consumer and Corporate Affairs, the former solicitor general- charges which, if substantiated, would result in severe disciplinary action being taken against members of the RCMP; and if they cannot be substantiated, the minister would have only one honourable course to follow, which is to resign.
So there is also the question of the serious charges which have been made by a minister outside this House against the RCMP whose name has been smeared without any substantiation, and I submit that the House should be given an opportunity to hear from the Minister of Consumer and Corporate Affairs either by way of a statement on motions or by way of a question of privilege, so that the good name of the RCMP can be cleared in this House by a minister who has smeared it outside the House.


Mr. Benno Friesen (Surrey-White Rock):: Mr. Speaker, there is one aspect of this matter which has not so far been covered. The Minister of Consumer and Corporate Affairs, speaking in Montreal, used the words "solicitors general" in the plural form. I take it he was not referring only to his immediate predecessor but to his successor, the present Solicitor General. Is he implying that the present Solicitor General is being misled by his officials?
We want to have confidence in the statements the present Solicitor General makes in the House, and this is hardly possible if there are suspicions that he is being misled by his officials. If the Acting Prime Minister refers this matter to the commission, it will take months before anything is done. What

will we do in the meantime while this lack of confidence exists, and what will the RCMP do in the meantime? They can put up no defence for themselves.
We wish to continue to place confidence in the statements made by the Solicitor General. Are we to live under this shadow in the months ahead while statements made by the Solicitor General are under a cloud, as well as the RCMP? I would, therefore, ask Your Honour to rule in favour of the submission made by my leader and by my hon. friend for Grenville-Carleton.


Otto Emil Lang: Mr. Speaker, it seems to me that, as so frequently happens, the opposition is basing even the preliminaries of its case upon a report of something which was said outside the House. I would point out that one of the ordinary functions of hon. members opposite is to deal with questions asked directly of ministers in relation to matters which are within their responsibility. Many of us acting in political capacities speak on subjects of many kinds across the country, and it would be quite impossible to deal with those matters in this House.
The issue is this: can questions be put here in relation to matters about which the opposition wishes to ascertain facts? Clearly, they can. The minister can be asked whether there are any new accusations against the Mounted Police: that question could have been directed to the Solicitor General. If the opposition is making an allegation of conduct unbecoming a minister, that is a matter which obviously goes to the Prime Minister or to the Acting Prime Minister. In that case, though, it would as well if they had the full facts, rather than simply basing their position on a press report. I think this is part of our difficulty, this practice of basing questions on what is reported in the press instead of asking questions directly in order to seek information or to determine responsibility.


Ramon John Hnatyshyn: With all due respect to the Minister of Transport, Mr. Speaker, I think he has missed the point altogether. The question of privilege is not one which deals specifically with press reports. What the hon. member for Peace River and others were dealing with was an answer given by the Acting Prime Minister in which he contended that a former minister can avoid questions in the House of Commons and still give evidence before a royal commission related to matters which had come before him during his tenure of office as solicitor general. He can give evidence before the commission, but we are to be denied the opportunity of hearing him in the House of Commons which, after all, is the supreme commission and the highest court in this country.
The point is whether or not, now that we have made provision in our rules for a minister or for an ex-minister to stand in his place and make a statement related to circumstances which occurred during his tenure of office, we are to be prevented from asking questions even if he is prepared or has the courage to face his peers in this chamber and face the Canadian people. Alternatively, is parliament to have no ability to deal with this issue? Is it one which can be circumvented
November 17, 1977

by the Prime Minister shifting his cabinet around every few months so that no one is accountable for any significant period of time? That is the crux of the situation. We must have the opportunity of addressing ourselves to the issue before the House. The issue of ministerial responsibility involved here is one which transcends the limitations of cabinet portfolios held at a particular time; it is one which does not merely concern one particular portfolio or another.
I grant that the Prime Minister has an overriding capacity in this regard, but when it comes down to the question of ministerial responsibility, to accusations made by a former minister against the public servants under his guidance over a period of time, we ought to have the right to ask that minister to clarify his position or, if he does not, to resign.


Mr. Yvon Pinard (Parliamentary Secretary to President of the Privy Council):: Mr. Speaker, on this, a point of order rather than a question of privilege in my view, I would simply like to say a few words to stress what has been recognized by the other side, namely that we have a rule under which a minister does not have to answer questions relating to matters of administration for which he was formerly responsible. Such is the rule, and we must abide by it.
And since the Royal Commission of Inquiry has apparently been taken to task for holding certain privileges, I would like through you, Sir, to remind the House that in the preamble to Privy Council's decision dated July 6, 1977 establishing that Royal Commission, it was provided that the commissioners were appointed under part I of the Inquiries Act. Sections 4 and 5 of that act specifically give commissioners the power of summoning before them any witnesses, and this includes ministers of the Crown. Therefore, in view especially of the last point the last speaker tried to make, I see no reason why the Royal Commission of Inquiry should be taken to task for having that privilege of calling witnesses, because here in this House the minister cannot be questioned on matters of administration for which he is not now responsible. The rules are there. While they may not be perfect, I submit we should not try to change them one by one, as and when we find this advisable from a partisan standpoint.
There is room in this House, as has been advocated for a long time, for in-depth reform. I feel that such changes should be considered in a perfectly objective way, in a totally non-partisan context. Once more, I respectfully submit that what opposition parties have today is a point of order rather a question of privilege. Our rules are clear. A minister does not have to make a statement on matters of his former responsibility. If opposition parties feel they should complain about rules, we on this side are prepared to consider changes of a general nature in various other areas, such as reducing the length of speeches, shortening the parliamentary week schedule from five to four days in order that members may have more time to look after constituency matters. All such changes should in my view be considered in a completely non-partisan context.
To conclude, Mr. Speaker, I would simply note that the opposition feel it is in their interest to rescind the rule prevent-
Privilege-Mr. Baldwin
ing a minister from answering questions that pertain to matters of his former responsibility. They would welcome that, because they believe this could be profitable from a partisan point of view. I doubt this would be the case. If, however, changes are desired, we are prepared to discuss them, not in a piece-meal, unruly way, but in good faith and in a totally non-partisan context.


Mr. Speaker:: The hon. member for Peace River has raised, by way of a question of privilege, a difficulty that has faced us on occasion before. I would like to consider the arguments which have been put forward. I think hon. members will realize, however, that there is a fundamental difficulty for the Chair, in the circumstances, and that is that there is no relief which can be ordered by the Chair. Previous occasions have been cited and there have been applications from both sides to attempt to vary the rules in order to accomplish a certain purpose. In the face of those applications, there are certain things that can be done.
There are other circumstances with which I have been faced: motions attempting to deal with a certain circumstance in a given way. However, at the moment I have no application for specific relief, and it is very difficult for the Chair to invent actions which can be taken and which might attempt to provide relief in certain circumstances. I do confess to some difficulty, as hon. members have expressed today-and this is one of the things I will want to consider-that in the circumstances members of the House are confined in their questions to the current and present ministerial responsibility of each incumbent of a ministerial portfolio. That is clearly understood and no one will put that at issue today. That doctrine is strained greatly when a minister takes advantage outside this House to make statements-


Some hon. Members:: Hear, hear!


Mr. Speaker:: -about previous ministerial responsibilities. It seems to me that if that doctrine is to prevail, then those responsibilities, if anything is going to be said about them, ought to be said by the present incumbent of that portfolio in order that it can be reported to the House. But, in any case, that is a rather gratuitous observation which I hope is germane to some of the arguments which were presented today. I will want to reserve on this, but I thought before doing so, I might expose to the House some of the difficulties that I face. I will try to be of as much assistance to the House in this matter as I can and rule on the matter in a more definitive way tomorrow.


A. Daniel McKenzie: Mr. Speaker, I would like to ask a question on behalf of the tourist industry in Canada, which is experiencing serious economic difficulties. I had a short preamble to explain my question, and then the next thing I knew, you rose to cut me off when I started my question, without any explanation. You recognized another

November 17, 1977
Privilege-Mr. Hogan
member across the way. If my preamble was too long, sir, 1 would certainly like it explained. I have watched this matter very closely and I have read questions in Hansard with regard to the length of preamble that certain members are allowed, especially the hon. member for Nanaimo-Cowichan-The Islands. I have watched with great interest over the past few months the length of time that he has been allowed to ask questions and make a preamble.
I have not abused the question period since the House resumed on October 18. This is only my second question, and I have had only one motion under Standing Order 43. If certain members are to have special privileges regarding the length of their preambles or the length of their questions, then I think we are entitled to an explanation, sir. I am going to rise tomorrow, and I am asking you now to recognize me tomorrow and allow me to ask my question. When you cut me off, you are cutting off the constituents of Winnipeg South Centre, the Canadian people and the travel industry.


Mr. Speaker:: I must apply the same rule to all other members of the House in the situation to which the hon. member referred. He was given the floor, began his question, was permitted a preamble, and then proposed, it seemed to me, to read from a set of documents a resolution by an association. At that point I rose specifically to ask the member to put his question. The member continued, without reference to the fact I was on my feet.
In any case, as he was then moving to put his question, I sat down to permit him to do so. Instead of doing that, he turned around and faced the Chair with the words, "What's the problem?" That, it seems to me, was a somewhat disrespectful way to address the Chair in any circumstances. At that point I recognized another member, and not previously. I had no intention of stopping the member putting his question until he did that.



ROUTINE PROCEEDINGS


[Stage Direction]
First Report of Standing Committee on Regulations and Other Statutory Instruments-Mr. McCleave.
{Editor's Note: For text of above report, see today's Votes and Proceedings.)

Mr. Andy Hogan (Cape Breton-East Richmond):: Mr. Speaker, I rise on a question of privilege. I notified you previously that I wished to raise this matter when the Minister of Industry, Trade and Commerce was in the House. With your permission, I would like to do so now. In order to lay the basis for my question of privilege, Mr. Speaker, and in order to guide you in deciding whether I really have a question of privilege in fact, I have to quote briefly from Hansard of November 9, 1977, page 759.
We are slow in developing some of our coal mines. That is one aspect which could be improved.


Mr. Blackburn:: Especially in Cape Breton.


John (Jack) Henry Horner: Especially in Cape Breton because of the costs, and I think I should say perhaps because of the 'inappreciability' of the Cape Bretoner for the retention of his job. That is a serious accusation.


Derek Nigel Ernest Blackburn: What's that?


John (Jack) Henry Horner: Read it in Hansard.
Mr. Speaker, I want to distinguish between two things that the minister said about Cape Breton as far as the opening of the coal industry is concerned. If he had remained with a question of fact that because of high costs-as he implied in the past-it is very difficult to open new coal mines, then he is obviously correct and is correct up to this day. The federal government has, since 1927, because of high costs in connection with Cape Breton coal mines, given subventions to the private owners who own the coal industry. That was done until the federal government took over the industry under Devco in 1967. But I remind the hon. minister that costs are relative, and the minister in charge of DREE said in Edmonton two or three weeks ago, at a national coal conference, that he expected that by the end of this decade the coal mines in Cape Breton would be a viable economic operation.
I go further and suggest that if what the Minister of Energy, Mines and Resources and the head of the petroleum institute of Venezuela have been telling us is true, that we are possibly going to pay $20 a barrel for crude oil by 1987, then the price of Cape Breton coal will be low in comparison and the government will be making all kinds of money on the Cape Breton coal mines. That is not the question of privilege, but I wanted to make the distinction because of what the minister introduced as a question of fact.
My question of privilege, Mr. Speaker, is that the Minister of Industry, Trade and Commerce said that the inappreciability of Cape Bretoners for the retention of their jobs is one of the causes for not opening new coal mines. He said that in the House. This is a serious accusation. As is usual in this House, when the minister speaks, unless he is reading from a speech prepared by civil servants he gives no factual evidence for his straight from the lip, wild generalizations and accusations.
In fairness to the many Cape Bretoners who are unemployed, to the people of an historic area of Canada who have

fought a hard fight for economic security all through this century, with thousands of them having been killed or maimed for life in these coal mines, the minister owes this House, the citizens of Canada and the people of Cape Breton an explanation of his evidence for the statement "the 'inappreciability' of the Cape Bretoner for the retention of his job" as one of the reasons the government is slow in developing coal mines, especially in Cape Breton.
The minister should know there has been no major strike in the Cape Breton coalfields since 1947. The minister is a lover of free enterprise, and he should know that the days lost through illegal walk-outs at the Appalatian coalfields in the United States, which are privately owned, have been about 500 per cent higher, on a per capita basis, over the last five years than in the Cape Breton coalfields. I therefore challenge the Minister of Industry, Trade and Commerce to back up his accusations with solid, factual evidence. I personally, am getting a little sick and tired of hearing him in this House acting-


Mr. Speaker:: Order, please. I believe the hon. member for Cape Breton-East Richmond has been given a pretty good opportunity to make his point, and it seems to have been well made. I wonder if the minister should now be allowed to reply.


John (Jack) Henry Horner: Mr. Speaker, I would be glad to clear up the uncertainty and concern I caused the hon. member and the many friends I have on Cape Breton Island.


An hon. Member:: You don't have many now.


John (Jack) Henry Horner: 1 have. I was down yesterday-


An hon. Member:: Dalhousie gave you a rousing boo.


John (Jack) Henry Horner: I was speaking at length about the whole question of energy. I did mention we were slow in developing some of our coal mines and that is one aspect that has to be improved. I have long been a believer that more coal mines could be opened and developed in Cape Breton, particularly now that coal has to compete with highcost oil, not the 80-cent a barrel oil it was competing with a number of years ago. The hon. member was reading a statement and someone interrupted by saying "Especially in Cape Breton", and I agreed, especially in Cape Breton. I went on to refer to the extremely high cost in respect of some of the old underground mines. I should say, perhaps, that I spoke of the "inappreciability" of the Cape Bretoner. I want to point out to the hon. member that I did not say the "Cape Breton miner"; 1 said the Cape Bretoner generally.


An hon. Member:: And what does that mean?


John (Jack) Henry Horner: The hon. member now wants to know what I meant. I will tell him. I did not say the "inappreciability" of the Cape Breton miner; 1 said "the 'inappreciability' of the Cape Bretoner for the retention of his job"-"as a coal miner," I probably should have added. I was referring to jobs
Privilege-Mr. Hogan
as coal miners. Coal mining is a little bit like farming; some people look upon it as being the last job on earth that they would take. It is down at the bottom of the scale. The coal miner is often regarded as some kind of a serf in our society. I have never believed that. That is what I was referring to. The coal miner today should have a very noble place, particularly in coal mining areas such as Cape Breton. Nova Scotia now does not have as high a utilization of coal for the generation of electricity as it should. It does not have as high a utilization of coal for this purpose as does even the province of Alberta.
I was pleased to be down in Nova Scotia yesterday when the Premier of that province announced the opening of a new strip mine in that area which will take out an estimated one million tons of coal a year. I want particularly to bring that to the attention of hon. members. That will do much for the coal mining industry and the coal miner. In addition, on the mainland of Nova Scotia, the Wimpey Coal Company Limited, which is under contract to do strip mining of some coal there-and this government has encouraged both projects- will take out some thing like 400,000 tons of coal.
I should go on to say, in addition, Mr. Speaker, that this government has paid for drilling exploration off the coast of Nova Scotia and Cape Breton to find more, as well the depth and quantity of coal deposits in Cape Breton. Approximately three-quarters of the cost of that exploration has been paid for by this government, and the exploration results are very encouraging. It is my belief that more underground coal mines can be opened up which will be far more efficient than some of the old ones now in production.
Having said that, I hope I have cleared up any misunderstanding that might have been left by that remark in reference to "inappreciability". I was not referring to the coal miner but to the Cape Breton and Nova Scotia people, because to me it has been an appalling situation-


Some hon. Members:: Oh, oh!


John (Jack) Henry Horner: It is an appalling situation to me that the province of Nova Scotia generates 65 per cent to 85 per cent of its electricity through the use of imported, high-cost oil. More of the electricity should be developed through the use of coal, and I am pleased to see that the province is moving in that direction by opening up these two strip mines from which will be taken out a total of 1.4 million tons of coal per year for the development of electricity.


Mr. Speaker:: Order, please. I presume that the hon. member for Cape Breton-The Sydneys wanted to support the original point. I did fail to recognize him when I gave the floor to the minister, but the hon. member may want to make his intervention now.


Mr. Muir:: Thank you, Mr. Speaker. 1 did try to catch your eye at the time, but you allowed the minister to speak. I want to join wholeheartedly the hon. member for Cape Breton-East Richmond, who I think did a very good job. The minister, during his reply, squirmed, wiggled, twisted and turned all over the damned place and never did get around to explaining what he meant by "the inappreciability of the Cape Bretoner

November 17, 1977
Privilege-Mr. Hogan
for the retention of his job". He said he was not referring to the miner; he was referring to all Cape Bretoners. Then just before he concluded his remarks he said it was all Nova Scotians.
I proposed a motion under Standing Order 43 yesterday. I waited through Monday and Tuesday and the minister was not here. Some days back I raised the same question. He was very kind. I reminded him of having been my former seatmate, and told him of the problems of Cape Breton. I tried to tutor him on the problems of that area. He agreed that we have problems. He was very kind, yes. He said at that time he was aware of the problems of deep mines in Nova Scotia, as well as the strip mining, and said he would encourage the development of both, etc.
He said, in reply to another question, "My long association with the hon. member has made me very, very aware of the problems of Cape Breton. He can rest assured that the representation will be noted and remembered". Then he changed, on November 8, as the hon. gentleman from Cape Breton-East Richmond said-it is right in Hansard-and admitted this when he said, "That is a serious accusation". Well, if you are going to put your tongue in high gear when what little brain you have is still in park, you can expect statements like this.
Indeed, in addition to that I asked yesterday in my proposed motion whether the minister would make a public apology to the people of Cape Breton. My good friend who sits over there now should know what problems we have in Cape Breton. As one who has gone through a mine explosion, has been carried out of the mines twice and had his spine fractured in half a dozen places, I know what these men have gone through, as referred to by the hon. member for Cape Breton-East Richmond. There are miners suffering from pneumonomelanosis, silicosis, who have had arms and legs amputated, yet here we have a minister of the Crown who has the gall to make a statement such as he has made. He intimated that Cape Bretoners are lazy. Then he said it was not the Cape Breton
miner,	just Cape Bretoners; and he went on to say it was Nova Scotians. What can we take from that?
To conclude, Mr. Speaker, according to today's press, the minister was in a bearpit session last night at Dalhousie University where he reiterated, according to the press, his statement about the inappreciability of the Cape Breton coal miner for the retention of his job. In addition, the minister said that Cape Bretoners have an aversion to working in the coal
mines.	Is the hon. gentleman aware that the latest information from the personnel office of the Cape Breton Development Corporation shows there are between 3,000 and 4,000 applications for employment in the coal mines of Cape Breton, whether they are strip mines, deep mines or anything else? Is he not aware of that? If there is an aversion to working in the coal mines and guys do not want to work there, why would they be applying for jobs in the coal mines?
The hon. member for Cape Breton-East Richmond and myself receive telephone calls, letters and other communications day after day from these people asking us to please find

them jobs in the coal mines. I want to know what this hon. gentleman is going to do with his great, strong, loud voice, shouting from the lip rather than the hip, to get us some more money so the Cape Breton Development Corporation can open up more mines. He talks about drilling. We know about that. We need more mines operating. We know about the strip mining, and that is okay as long as they replace the overburden; but there is no work on deck.
The minister certainly owes Cape Bretoners an apology. He talks about his dear friends in Cape Breton. From the reports I have been getting on the telephone, by radio and television, he has no friends in Cape Breton and will not unless he straightens out this matter. We are just a bunch of idiots down there, as far as he is concerned. We are lazy, and nobody will work. If this government will provide the work, there are plenty of people down there who will work.


An hon. Member:: Withdraw, Jack.


John (Jack) Henry Horner: What the hon. member has just said is completely false. Never at any time have I said that they were lazy and would not work. In the same speech I referred to the difficulty that Cape Breton miners have, and how much better off they were than the workers in the fluorspar industry in southern Newfoundland because the aluminum company wants to close it down. It is the only one in existence in Canada. I see tremendous potential for the development of the coal industry in Cape Breton.
I just want to add on thing to enlighten members of the House about the seriousness of the situation. When I looked at Canada's coal figures and saw that western coal was moved through the Panama Canal to Nova Scotia this past year, I was both alarmed and concerned. That is a serious situation. Certainly, I am pleased to see the opening up of the strip mine and pleased to see the results of some of the exploration and testing which has been done off the coast. I believe that an underground mine can be opened up which would be far more efficient than the mines that are now operating there.


Robert Muir: That's right; they sure can be opened up.


Some hon. Members:: Oh, oh!


BUSINESS OF THE HOUSE
Walter David Baker: While it may have escaped everyone's attention, today is Thursday although it seems like Friday. I wonder, therefore, if I could ask my friend, the Parliamentary Secretary to the President of the Privy Council, what we will be doing today, tomorrow and next week. Could he give us some indication of what will happen in terms of government business when Bill C-l 1 is given second reading?
November 17, 1977


Yvon Pinard: Mr. Speaker, we will continue today, and tomorrow if necessary, with the second reading of Bill C-ll, the income tax bill. If the second reading debate should end quickly, there has been agreement, after the usual consultations with our hon. friends opposite, to defer any votes on second reading of Bill C-ll until Monday of next week. If the second reading debate on Bill C-l 1 does end before any votes can be taken, we will proceed to the bill on CALURA, Bill C-l, the bill on the comptroller general of Canada, Bill C-10, and the bill concerning petroleum corporations, Bill C-l2-but not necessarily in that order. I would like to tell the House that next Wednesday, November 23, will be the second allotted day for this supply period.


Walter David Baker: I was somewhat concerned when the parliamentary secretary said the bills would be called, but not necessarily in the order in which he presented them. Do I have his undertaking that he will at least consult us with respect to the order of business? Is he saying to us that we will not be going into committee of the whole stage, clause by clause consideration, of Bill C-ll when we give the bill second reading?


Stanley Howard Knowles: That depends on whether or not there is a vote.
[ Translation]


Yvon Pinard: Mr. Speaker, obviously, if we are to study Bills C-l, C-10 or C-l2, before choosing one, we will consult the hon. House leaders of the various opposition parties.
As for deciding whether we shall proceed with the study of those bills immediately upon completion of second reading of Bill C-ll, before going into committee of the whole, it is much too early to say. I have indicated that if we reach second reading of Bill C-ll today or tomorrow, the vote will be deferred till Monday next. But I cannot say now what will follow its second reading, that is whether the House will go into committee of the whole or whether we will take up another bill. It is too early to say.


Mr. Kempling:: Mr. Speaker, I rise on a point of order on the matter of the business of the House. Yesterday, in Montreal, when the Minister of Consumer and Corporate Affairs was speaking to an assembled group on the matter of the conduct of the business of the House and future business of the House, the minister, in answer to a question put to him as to when phase two of the competition bill would be introduced, stated that there was an all-party agreement that there would be no hearings on phase two of the competition legislation when it was reintroduced to the House, which he anticipated would be next week.
We have made no such commitment to the minister, and I conveyed this fact to him yesterday. His reply was that he consulted the deputy House leader immediately prior to going to the meeting in Montreal and had been told that this was the case. When that bill was put before the House prior to the House rising for the summer recess, the matter was discussed
Order Paper Questions
briefly in committee and we informed the chairman of the committee, who is now Minister of State for Multiculturalism and deputy House leader, that under no circumstances would we forgo public hearings on a bill of this nature. I just want to put it officially on the record that we have made no such commitment at any time. In fact, we indicated very strongly to the contrary, that we would not proceed in this manner.


Yvon Pinard: Mr. Speaker, I should like to claim the right for the minister to make himself acquainted with the observations of the hon. member and answer them if he so wishes, upon his return to the House.


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Yvon Pinard: Mr. Speaker, the following questions will be answered today: 169, 397 and 398.
I ask, Mr. Speaker, that the remaining questions be allowed to stand.


Mr. Speaker:: Does the House agree?


Some hon. Members:: Agreed.


Mr. McKenzie: 1.	What is the total number of persons under contract to the Canada Council and how many are retired public servants?
2.	What was the total amount in (a) 1975 (b) 1976 paid to those under contract and how much of this was to retired public servants?


Hon. John Roberts (Secretary of State):: I am informed by the Canada Council as follows: 1. Two persons are employed under contract by the Canada Council; neither is a retired public servant.
2. (a) $11,330, to 3 persons employed under contract; (b) $36,950, to 6 persons employed under contract; none of this was to retired public servants.


Mr. McKenzie: 1.	What is the total number of persons under contract to the Northwest Territories Water Board and how many are retired public servants?
2.	What was the total amount in (a) 1975 (b) 1976 paid to those under contract and how much of this was to retired public servants?


Hon. James Hugh Faulkner (Minister of Indian Affairs and Northern Development):: 1. Four. None are retired public servants.
2. (a) 1975: $1,550.15; (b) 1976: $6,537.63; N/A.

November 17, 1977
Income Tax
Note: Non-government members of the Water Board are paid an honorarium for the time they spend on Board business. These people are engaged under a contractual agreement.


Mr. McKenzie: 1.	What is the total number of persons under contract to the Yukon Territory Water Board and how many are retired public servants?
2.	What was the total amount in (a) 1975 (b) 1976 paid to those under contract and how much of this was to retired public servants?


James Hugh Faulkner: 1. Five. None are retired public servants.
2. (a) 1975: $8,597.40; (b) 1976: $15,655.88; not applicable.
Note: Non-government members of the Yukon Territory Water Board are paid an honorarium for the time they spend on Board business. These people are engaged under a contractual agreement.



PROCEEDINGS ON ADJOURNMENT MOTION


Mr. Speaker:: It is my duty, pursuant to Standing Order 40, to inform the House that the questions to be raised on the adjournment motion at 6 p.m. are as follows: the hon. member for Humber-St. George's-St. Barbe (Mr. Marshall)-Energy-Home insulation program-Possibility of increasing funding; the hon. member for Halifax-East Hants (Mr. McCleave)-National Harbours Board-Suggestion government acting in anticipation of passage of Bill C-6; the hon. member for Palliser (Mr. Schumacher)-External Affairs- Applicability of guidelines to awarding of medal to Premier Levesque by France.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Wednesday, November 16, consideration of the motion of Mr. Chretien that Bill C-ll, to

amend to statute law relating to income tax and to provide other authority for the raising of funds, be read the second time and referred to committee of the whole.
Mr. Donald W. Munro (Esquimalt-Saanich):: Mr. Speaker, I was beginning to wonder whether I would manage to get the floor this afternoon, because I have a plane to catch in 40 minutes. But I still feel that I have something to contribute to this debate. When I called it six o'clock last evening, aside from the fact that it was 6.30 p.m., I was speaking about the size and depth of the borrowing authority which is being sought in this bill. I understand, although I am not a legislative lawyer, that there could be some question about trying to insert borrowing authority into a bill of this sort. I think that matter might be raised in the House by other members, or in committee of the whole.
The point I was making last night was that some $9 billion was being sought under this authority, and I offered to describe to hon. members just how much $9 billion was. I am not sure that we are all aware of how much it is; therefore, 1 made a few inquiries. According to my information, which is derived from the Bank of Canada, our bills are printed on paper which is three and three-quarter thousandths of an inch thick; that is, by my interpretation, .00375 of an inch. So I said to myself, suppose I had one $1,000 bill printed on the same kind of paper. I do not know how many people in the House have ever seen a $1,000 bill. I do not know that I have ever seen one. I see there are some members who have seen them: they are all on the other side. In any event, whether or not they have seen them, these bills are .00375 of an inch thick. If we were to put a thousand of these bills together into a pile amounting to $1 million, the pile would be 3.75 inches high.
That is not very much, but what about $1 billion? We would have to pile a thousand of those $1 million piles on top of each other, and if we were standing on the balcony around the Peace Tower and reached into the pile, we would be reaching into it at about two-thirds of the way up, but we could do so only if the pile did not tip over. We should not try to tip it over, because it would make a mess on the street below. Normally we consult Beauchesne with regard to our rules, but the same Arthur Beauchesne also wrote about Canada's Parliament Buildings and he described the Peace Tower in this way:
At approximately the two hundred foot level and opening of the clock chamber are four balconies-
I said that each $1,000 pile would be 3.75 inches high. If we multiply that by one thousand, we get 3,750 inches. If we divide that by 12, we get something in the order of 312 feet of $1,000 bills. At the 200-foot level of the Peace Tower we would be only two-thirds of the way up that pile. We are not talking today, however, about $1 billion; we are talking about the authority to borrow $9 billion, so we have to multiply by nine. How much is that? Instead of piling those bills up that way-because we could never keep the pile balanced-we

November 17, 1977

would have to lay it on its side, putting the packages on their edges and stretch it out that way. Those packages of $1,000 bills would stretch over half a mile across the countryside.
1 mentioned last evening that $9 billion was approximately the budget when this government came to power in 1968. Now it is asking for authority to borrow $9 billion because its indebtedness this year is going to be a little more than $9 billion. After ten years, this government is seeking to borrow an amount equal to $1 million packets stretched half a mile, standing on edge. That is a lot of money. On page 84 of the latest public accounts we can find the size of the national debt. We are going to add $9 billion to the national debt if this bill passes.
In 1968, when this government came to power, the national debt stood at $32 billion. In 1976, the last year for which figures are available, the national debt was $71.7 billion. When we reduce these figures to the per capita debt of each one of our constituents-not just the taxpaying constituents but even the small ones who do not yet have the right to vote- we find that the per capita debt in 1968 stood at over $1,500. Today, it stands at over $3,000. These figures are absolutely staggering; therefore, we must look very carefully at this provision. This is a request for borrowing authority to be found at page 210 of Bill C-ll. We must look at it very carefully before approving it, because the government is asking for what can only be described as phenomenal borrowing powers.


Mr. A. D. Alkenbrack (Frontenac-Lennox and Addington):: Mr. Speaker, as I rise to contribute to this debate, in keeping with the recent ruling handed down by that eminent jurist, Mr. Justice Evans, I ask Your Honour to keep strict and assiduous control of the television switches in this House. In case I make any culpable statements, privileged here but not beyond, i hope Your Honour will turn off that media so that the CBC or the CTV will not be sued in our courts of law for the illegal dissemination of my remarks.
For my opening remarks on this bill, I will go straight to the opening statement of the new Minister of Finance (Mr. Chretien) when he spoke on the bill last Monday, the seventh day of this month. As recorded at page 644 of Hansard for that date, the minister said:
Mr. Speaker, Bill C-ll is now before the House for second reading. Its purpose is twofold: first, to implement amendments to the Income Tax Act as announced by myself on October 20 and as put forward by my predecessor, the hon. member for Rosedale (Mr. Macdonald), in his March 31 budget; second, to increase government borrowing authority.
To deal first with the second part of the minister's statement, I do not think anyone in this House can seriously consider extending this government's authority to borrow. This government has overborrowed. It has abused the use of taxpayers' money. It has overspent. The last thing we should be considering at this time, and the last thing which I, in all conscience, could agree to at this time would be to give this government carte blanche to push us further into debt. Any wage earner in Canada who manages his or her finances as poorly as this government does, or who has as much difficulty meeting payments on debts, would be the poorest risk for
Income Tax
making further loans. Such a person would have to be either a fool or a dreamer to think that any lending institution would advance more money-in effect, to throw still more money after bad.
This government should not be coming to this House for an extension of borrowing power, especially at this time when the state of our economy is sick. This government is already spending money we do not have, money that is not earned and in some cases money which has not yet been accounted for. Nowhere in the opening remarks of the Minister of Finance can I find one shred of justification for allowing the government to borrow more money. The minister brought his colleague, the former minister of finance, into his opening remarks, perhaps hoping that we had forgotten that the previous minister virtually wrecked the Canadian economy. He at least put the finishing touches to a national economy which has been going downhill steadily for the past seven or eight years. For this minister to suggest that he needs more borrowing power to finance programs initiated by the previous minister of finance is less than credible.
The minister really should have started from scratch unless, of course, he needs someone with whom to share his blame. When one observes the game of musical chairs the cabinet has been playing over the years, it seems that every minister of the Crown is constantly seeking someone with whom to share blame for this thing or that. If the cloud hanging over a minister gets too big or too heavy, the Prime Minister (Mr. Trudeau) simply shifts him sideways out of the portfolio and slides someone else in. One thing which can be said of the previous minister of finance is that he was so sure he was heading in the right direction that he just went on and on with his vehicle stuck in reverse until the Prime Minister finally steered him to the side of the road and got him out of the driver's seat. However, I might add that happened four or five years too late.
The Minister of Finance said in his speech that Bill C-ll is designed to increase government borrowing authority by $9 billion in new money-I repeat, $9 billion in new money. He was quick to add that this was in addition to the authority presently vested in the government to borrow to repay maturing debt. So all we are doing is trying to raise money to pay the interest on interest. That is very poor economics.
I wish the minister had taken the opportunity to bring us up to date on the present state of the gross national debt. That is something this House does not talk about enough, the state of our gross national debt. That is the load our children, our grandchildren and our great grandchildren will have to bear. Perhaps the minister will take this as notice and provide that information to the House in the course of the debate of Bill C-ll. I propose to speak of it later in my remarks. I know that the level of the national debt is shocking.
The minister stated that the government has relented in part and will not ask the tax collector to the graveside to collect proceeds of life insurance policies from survivors. The govern-

November 17, 1977
Income Tax
ment was fully prepared to do just that in the original draft of this legislation, as hon. members will recall. The government backed down to some degree following a barrage of protest from the official opposition and people all across the country. The efforts of the official opposition were largely responsible for the government backing down on the proposal to tax proceeds from life insurance policy death benefits. However, the government saw too much of a good thing, an easy grab, in the proceeds from life insurance policies to back off completely. While it has retreated from its previous ghoulish position at the graveside, it has not retreated from the field. It is still in the cemetery. I should like to return to this item later.
I should like to address myself again to the minister's opening statement and lay to rest the fiction that he is not planning to table a new budget. In response to repeated requests from the official opposition for a budget that would come to grips with unemployment and inflation, the tumbling Canadian dollar and a multitude of other economic woes, the Minister of Finance insists that a new budget is not needed at this time and is not forthcoming. What are we debating today, then? Is it a near budget, a mini-budget or pseudo budget? Call it what you will, it is a budget.
The Minister of Finance ties this bill directly to the budget tabled by the previous minister in March, 1977, according to his opening statement on November 7. I prefer to entitle this a pseudo budget, using the definition of the word contained in Webster's Seventh Collegiate Dictionary. The word "pseudo" is defined as "sham". It is a sham budget. The most we can expect is the government's own expectation of a $9 billion borrowing authority if this bill is passed-$9 billion further into debt. Yet the government denies that this is a budget. Perhaps the reason the minister will not call it a budget is that a budget is expected to contain provisions to improve the state of the economy and improve the lot of the average Canadian, usually coming at intervals of one parliament at a time. That is not the case here. Another reason is that a budget debate would open up new areas of discussion that the government would like to avoid. The fact remains that this is nothing but a sham budget.
To get back to the question of taxing the benefits of life insurance policies, life insurance in our society has always been the last refuge of the lower and middle income earners, in more ways than one. I am one of those, so I speak from experience. Life insurance is the best way for a poor person to save money. It always has been, and I hope it always will be, available to the Canadian people, untramelled and untouched by the long fingers of government. There is the all-important aspect of the death benefits which help the survivors to recover from the shock of losing a breadwinner as well as a loved one. This refuge is slowly being eroded by a government that is totally unfeeling and completely avaricious. The name of the game, where this government is concerned, is to reach out and grab, no matter what the consequences to the individual.
Another way in which life insurance has been a boon to the lowly paid wage earner has been the provision whereby a portion of the cash value of a policy that has been in effect for

a number of years can be borrowed, using the policy as security. Tens of thousands of policyholders through the years have used this provision to obtain money to ease them through a financial crisis.
Always on the lookout for a quick buck, the mandarins in the tax bureau have alerted the government to a so-called loophole which they say will yield so many million dollars in taxes if it is closed off. I refer to the alleged "gain" provision in the insurance policy loan provision, whereby the difference between the cash surrender value of a policy and the premiums paid is construed as income for tax purposes.
That is utter nonsense and does not stand up even under cursory examination. A loan is a loan, whatever the manner in which it is made, and it has to be repaid. If it is only for the amount of premiums paid, plus accrued interest, or if it is for an amount that is greater than the amount of premiums paid, it must be repaid at one time or another. The ultimate value of a life insurance policy is the amount of the death benefit paid on the death of the insured. Any outstanding loan on a policy, no matter how it has been described or computed, is deducted from the benefits payable to the survivor and so, Mr. Speaker, at some time along the way the loans are repaid.
All of us here know that the minister did not prepare this bill, or budget, whichever it is. It was prepared by high-priced mandarins in the Department of Finance. I do not expect a $50,000 or $60,000 a year mandarin to have any feelings for the plight of the lowly wage earner. The value and worth of those mandarins to the government is to find new sources of revenue for the hungry boss. When they come up with a new gimmick, they get a pat on the head and a longer lease on their cushy jobs. The Minister of Finance, on the other hand, is- like myself-an elected representative of the people. The minister's riding is very much like my own, comprised largely of wage earners and farmers, and it is a long way from being a Rosedale or a Mount Royal. The minister must surely have more feeling for the little man than a mandarin, insulated as he is from the realities of earning a meagre wage or salary.
The minister should never have approved any part of this bill dealing with the taxation of life insurance policies. I know that part of the bill evolved before he was moved to his new portfolio, but all the same he should have deleted this section from the bill presently before us. This whole section dealing with the taxation of insurance policy benefits is shifty, devious and totally unwarranted, and it should be struck from the bill.
I make my recommendation as a result of over 100 letters that I have received from constituents.
I should like to turn to the provisions for tax rebates outlined in this bill. Here, again, there is an obvious effort on the part of the government to deceive. There is no clearcut policy in this section that spells out the manner in which the rebate will be effected. The minister proposes to put the onus on employers to give the rebate to employees. It is not a directive, but is more in the way of a request. It is rather like saying to the employer that it would be very nice if some way
November 17, 1977

could be found to give each employee the $100 rebate, which amounts to less than $2 per week and which is not very much.
Without specific direction on the manner in which the rebate will be made, it could, and probably will, be paid in dribs and drabs-not in a lump sum which would have the most desirable effect on our public economy and the economy of the recipient. The only way such a rebate would have a stimulating effect on the economy, especially such a small amount as $100, would be for taxpayers to receive the money in a lump sum. It is very likely that having an extra $100 which is not committed to a specific purpose, such as paying the rent or making a car payment, would encourage people to make purchases that have been delayed. 1 am thinking of hard goods such as refrigerators, stoves and other appliances of the larger and more expensive type.
This would help to wipe out the inventories of appliances that exist throughout the country, and stimulate new production. I do not believe spending by individuals of $100 or $200 on necessities, or even luxuries, would have very much effect on the level of inflation. I cannot accept the proposal of the Minister of Finance to defer the tax rebate until next year. If we approve the rebate, let us make it effective with the 1977 taxation year and let us decide ourselves how it will be accomplished. Leaving it to employers would result in the money being dribbled out piecemeal in scores of different ways, and it would be highly improper.
It is not the proper function of the private sector to engage in the distribution, allocation or in any other type of management of tax moneys. The only way in which the private sector can engage in the management of taxes is to collect taxes in the name of the Crown. It is for ourselves, the elected representatives of the people, to decide how tax moneys are to be distributed and allocated.
Another section of this bill which troubles me is the one dealing with changes in the rules affecting the operation of the registered home ownership saving plans. The government has resorted to overkill in an attempt to close off a few loopholes in the original program. Tens of thousands of Canadians have invested in the registered home ownership savings plan since 1974 in the honest belief that it would be an ongoing program. There is no reason why it should not continue to be an ongoing program with firm rules and guidelines.
In the two-year period of 1974-1975, 597,000 Canadians invested a total of $564 million in the home ownership savings plan. Seventy-four per cent of those people had annual incomes of less than $15,000. They invested in registered home ownership savings plans under a set of rules that had been established and approved by the federal government. Granted, we in the official opposition warned in 1974, and on subsequent occasions, that there were loopholes in that legislation and that the way had been left open for certain types of abuses. But our warnings and advice were ignored. The government mandarins have discovered a way to put the tax bite on all holders of registered home ownership savings plans, simply by changing the rules. These are drastic changes, and
Income Tax
thousands of innocent and honest Canadians are liable to be caught in the squeeze.
This is criminally deceptive, and I would venture to guess that the Department of Finance mandarins have already computed to the dollar how much additional tax revenue the government will be able to squeeze out of these unsuspecting investors. There is no doubt in my mind that this is a budget we are debating. All it needs is for the Minister of Finance to admit he wanted to table a budget, but wanted at the same time to avoid the responsibility of bringing in a budget with some meaning.
There are no real cures in this budget for any of the pressing economic problems we are facing today. Most of the provisions in this bill are mere window-dressing for the central purpose of the document, and that is, to extend the government's risky, flimsy line of credit. I hope it will not be necessary for the government to call the International Monetary Fund into our financial problem before the spring, but it could happen. I am not fooled by it; I am appalled and disgusted.
I should like to make a few remarks on the procedure introduced by the government to increase its borrowing authority, the main purpose of which is purported to be to amend the Income Tax Act. On page 646 of Hansard for November 7, 1977, the Minister of Finance is reported as saying:
The government intends to introduce a bill soon providing a new procedure which will give ample opportunity for normal debate. In the meantime, there is need for an increase in the borrowing authority.
The minister was referring to his earlier remarks recorded on the same page when he stated that the Financial Administration Act provides that no money shall be borrowed or security issued by or on behalf of Her Majesty without the authority of parliament. That is pretty straightforward. I do not think there has ever been any doubt on the part of members of this House as to what that means. The minister's alleged concern that this House should have ample opportunity to debate a government request for borrowing authority is specious. We are debating such a request at the present time although it is neither the proper time nor the proper vehicle for such a debate. More than one hon. member of this House has brought this point to Your Honour's attention prior to my doing so. We are debating a bill that seeks to accomplish a matter that should properly be debated as a separate issue, not in the context of amending the Income Tax Act.
We are, in effect, telling the Minister of Finance and the government that they are off base. I have to wonder if the minister hoped we would overlook the fact that he had slipped the request for a $9 billion extension of the government's line of credit into this bill, or if he expected us to just treat it as casually as he seems to treat it.
I would like to throw in an aside at this point, Mr. Speaker, based on a press release circulated a couple of days ago by the Canadian International Development Agency. That agency has just granted long-term loans, no doubt at a very low rate of interest, totalling $20 million to the African country of Zaire.

November 17, 1977
Income Tax
In addition, CIDA is throwing in an outright gift to that country of $7 Vi million. This money is intended to assist Zaire to develop its forest industry. The press release noted that Zaire is one of the Francophone countries.
The Canadian forest industry is one of the largest employers in some of our provinces, notably British Columbia, and that industry is in serious difficulty. The Canadian forest industry is presently laying off workers and the immediate and future prospects of that industry are anything but bright. This loan and grant to Zaire reminds me of the CIDA loan to Cuba a few years ago, a matter that 1 brought to the attention of this House. Originally, CIDA had offered Cuba an interest-free loan of $10 million in addition to some millions in outright grants. I objected to this practice and the very modest interest rate of 3 per cent which was applied to the Cuban loan.
The then minister of finance, Mr. Turner, was questioned in the House more than once on this matter. I questioned him. He managed to put on a ridiculously low interest rate of 3 per cent. That is what the government is doing with our money. As the hon. member said, it was done so that Cuba could send troops to Angola. That is what this government does with the taxpayers' money. That is why it is in the worst financial position of any government since the first one in 1867.
We are debating the question of raising more taxes and giving the government authority to borrow an additional $9 billion. I insist that that money should be spent on programs and projects that will further the interests of Canadians first, the lumber industry in British Columbia for example, and if there is any left we can then decide who else in the world is entitled to the money raised by taxing Canadian citizens.
Canada is in a bad position. Yesterday I noted an article by the eminent writer and publisher, Richard S. Malone, in the Globe and Mail. I quote from that article:
Scandals, kickbacks, wiretaps-Almost since its inception the Trudeau government has been guilty of shabby behaviour.
Each week in Ottawa as more charges are made of waste, scandal and cover-ups, the conviction grows that our nation despite all its advantages of wealth and social advancement has lost direction and is sick with an ancient disease. The symptoms are inflation, unemployment, disunity, a falling dollar, enormous debts and public apathy.
Other countries throughout history have suffered from a similar sickness.
Some have never recovered. Malone goes on to state the serious symptoms of this dilemma which faces us. I quote:
We are still in the grip of serious inflation. We spend recklessly and borrow mindlessly committing our children to a debt for years to come.
That is timely. Here the government is asking for $9 billion to pay interest on interest.
We price ourselves out of world markets and pay the penalty of high unemployment, again at the expense of our youth.
We buy the dream of having the highest wage rates in the world by printing more dollars, issuing more bonds and borrowing more money abroad.
We crowd to our airports complaining of hard times as we make our way to Hawaii or California, piling up a tourist deficit of more than a billion dollars and promising to double it next time around.
We accept a budget deficit this year that will be greater than our entire budget was less than ten years ago.
We countenance rates of crime, drug addiction, child abuse, violence and sexual perversion that soar to staggering levels.
We endure scandals in public affairs that make headlines every week.
That is all I want to quote from Mr. Malone. I am sure all members will agree with that article, regardless of their political leanings. I add to that one short sentence: a scandal a day is the Liberal way. There is one more point I would like to make before I conclude. I draw the attention of the House to still another breach of faith on the part of this government. Earlier this year the government sought the help of Canadians to reduce the waste of energy, specifically to insulate their homes and thereby reduce the consumption of home heating oil. The government offered grants of up to $350 toward the cost of insulation. I compliment them on that policy. I agree with it. Many of my constituents have taken advantage of it. Some failed to do so after receiving the particulars. After the program was well under way we found that the grants have to be added to a person's income for tax purposes. It is just a little thing, perhaps, but it does add another straw to the camel's back. I do not think those grants should be taxable.
I wish to conclude my remarks by saying a few words about the national or public debt. I asked the Minister of Finance to enlighten us on that score, but so far I have not heard from the minister or his parliamentary secretary. I received some information since then which I will relate to the House. As of March 31 this year, the gross national debt stood at $67,075 million. Inasmuch as the present request for $9 billion in additional borrowing authority is in addition to the new tax revenue sought in this same bill, we can assume that the gross national debt for the coming year will reach or even exceed $75 billion. Interest paid this year on the national debt was $5,350 million, or 13 per cent of our total national budget. As of March 31 of this year, Canada's net recorded assets totalled $37.5 billion. This means we have a net national debt of $29.5 billion. To sum it up, we owe $29.5 billion more than we are worth. Mr. Speaker, no business of any kind could survive under those conditions.
When the Prime Minister came to power nine years ago, the gross national debt amounted to $39.2 billion, part of which was due to the financing of two world wars and two lesser wars. In just nine years of Trudeaucracy, as someone termed it, the spending policies of the government have increased the national debt more than 100 per cent. Added to this is the fact that we now have a 90-cent dollar. We are in a hole there, too. For every cent by which the Canadian dollar is depressed, the country loses $60 million a year on the basis of our present adverse trade balance. Thus, if our trade balance position does not improve-and there is not much encouragement to believe it will-it is going to cost us $600 million a year to keep this country solvent. That is the result of nine years of Trudeaucracy under this Socialist-Liberal government which the Canadian people have had to endure.
Mr. Speaker, I cannot, in all conscience, support any part of the bill before us. I would support the tax cuts to our citizens if they were meaningful and if I knew how the tax cuts and

November 17, 1977

rebates were going to be accomplished. But I cannot support the government's request for an increase of $9 billion in borrowing authority. I strongly urge that the provision to this effect be removed from the bill, after which the minister might bring it before us again in a proper manner so that the elected representatives of the people could deal with it.
Mir. Cyril Symes (Sault Ste. Marie): Mr. Speaker, we have before us a bill which is of extreme importance to the Canadian people. It is important for what it does to them as well as for them. I should like, in the course of my remarks, to draw attention to areas in which I think the budget bill is inadequate, and to propose some alternative ideas for the consideration of the Minister of Finance (Mr. Chretien) in the hope that when we get to committee of the whole we might prevail upon the government to bring forth some meaningful amendments.
When the opposition comments on bills brought before the House, we often hear from the Liberal benches that we are negative, that we are preaching gloom and doom and that everything, really, is pretty good in the context of the world situation. We are told that Canadian problems are not of our own making, but that somehow they are the result of world economic conditions which we are unable to change. I do not accept that kind of philosophy because, surely, a government, by virtue of its economic, taxation, employment and trade policies, plays a highly significant part in determining a nation's affairs. It is precisely because I am concerned about the sad state of our economy that I wish to criticize the measures we see before us in this bill and other measures put forward by the government.
I do not accept the argument that Canada is doing well by comparison with other countries, when I find that other industrialized nations, during the period in which the Prime Minister has been in office, have held their unemployment rates to a figure consistently below one-half of Canada's, and when I see that our inflation rate, despite controls, is higher than that of the United States without a control program. But I am most deeply disturbed by the lack of attention on the part of the Minister of Finance to the high degree of unemployment facing the nation. Unemployment is the number one problem, yet somehow I do not think the message has come through to the policymakers on the other side.
Over the past few years we have witnessed a preoccupation with inflation and with policies to control it. Unfortunately, those policies have failed. Inflation is still running at 9 per cent, well above the government's target. At the same time, the anti-inflation program has destroyed our economy to the extent that there is tremendously high unemployment-presently more than one million Canadians, taking into account the hidden unemployment figures. I shall attempt to show that the policies placed before us will not reduce unemployment, as the government says, but will only mean further hardship for millions of Canadians-the unemployed and their families- over the winter months. I want to outline some of my reasons for believing this policy will not work, and propose alternative plans.
Bell Canada
I see by the clock that it is now time to move on to other business temporarily, so I will call it five o'clock and resume later this evening.


Mr. Deputy Speaker:: It being five o'clock, the House will now proceed to private members' business as listed on today's order paper. As there are no notices of motions (papers) listed, the House will proceed to private bills and resume debate on Bill C-1001.


PRIVATE BILLS
[Stage Direction]
The House resumed, from Thursday, November 10, consideration of the motion of Mr. O'Connell that Bill C-1001, respecting Bell Canada, be read the second time and referred to the Standing Committee on Transport and Communications.
Mr. Deputy Speaker:: Order, please. When the House was last considering this bill, the hon. member for Winnipeg North (Mr. Orlikow) had the floor at six o'clock. I want to let him know he has about two minutes of his time left.


Mr. David Orlikow (Winnipeg North):: Mr. Speaker, I think I have more than two minutes left. I looked up the Hansard for that day, and it was pretty obvious to me that I had not spoken for 18 minutes. I said when I last spoke that we were opposing this bill because what is being suggested here would give a tremendous amount of power to the company to do things it has not been able to do until now. I said that while I thought the company was very good at protecting its officers and its shareholders, it was not very concerned about protecting the users of the telephone service in Ontario and Quebec. I should like to quote from an article reporting a statement by the president of the Public Service Alliance, Mr. Andy Stewart. I quote again, Mr. Speaker, because I want to correct an impression I left. I quote the article as follows:
When the chief executive officer of Bell Canada retired, Stewart said, he received a lump sum payment of $575,000, was made a member of the board of directors at $201,000 a year and was guaranteed a $ 100,000-a-year pension when he fully retired.
Mr. Speaker, I was able to get access, and I am not suggesting for a moment that it is difficult to get access, to a page from the annual report of Bell Canada for 1976. This page deals with remuneration, direct remuneration and the estimated annual benefits upon retirement of senior Bell Canada officials. I would like to quote from a page of the annual report of Bell Canada for 1976. I wish, Mr. Speaker, that we had the right they have in the United States Congress to put something on the record, because this page is really a table which is much clearer when looked at than when read as Hansard will report it. The page has three columns, with three
990

November 17, 1977
Bell Canada
titles at the top: first, name and capacities in which direct remuneration was received; second, aggregate direct remuneration; third, estimated annual benefits upon retirement. Then it lists a number of people, begining with R. C. Scrivener, and then there is an explanation:
(January 1 to April 30) chairman of the board and chief executive officer of Bell Canada: director of NTL. (May 2 to December 31) chairman of the board and chief executive officer of NTL: director of Bell Canada, Nedco, NTL.
Aggregate direct remuneration was $201,000. Then there is a footnote, and I will read it in full:
Includes Bell Canada's contributions under the employees' savings plan (1970). In addition to such remuneration, eligible officers who are enrolled in Bell Canada's employees' savings plan, as in effect from July I. 1966, to June 30, 1970, are entitled to-


The Acting Speaker (Mr. Turner):: Order, please. 1 regret to inform the hon. member that his allotted time has expired.


An hon. Member:: Too bad.


Mr. Arnold Peters (Timiskaming):: Mr. Speaker, I would have thought the House would have wanted to hear the remainder of that very interesting argument by the hon. member for Winnipeg North (Mr. Orlikow).


An hon. Member:: I think we are going to.


William Arnold Peters: I am interested, Mr. Speaker, in the application that Bell Canada has under Bill C-1001 for a change in their financing structure. I am actually more interested in the reasons they are before us today. Everyone, I am sure, is in agreement that Bell is a multinational corporation, probably controlled by Bell of the United States and probably has more than a working agreement with IT and T, the largest multinational corporation in the world. They work very closely with each other in the manufacturing of goods in their subsidiary companies, and their purchasing structures, and in fact are probably the largest public monopoly in the world-their public monopoly, not in ownership but in the service that they are supposed to, and anticipate they do, render.
Bell Canada and, in fact, any public utility of that nature is very important to the nation. They are so important that when we set up our structure in Canada it was mandatory that agencies such as public utilities, whether they were privately owned or publicly owned, would have to come before parliament for changes in their financial structure, and this applied to only a limited number of things. It applied to railways, it applied to gas and oil pipelines, it applied to insurance companies, trust companies, finance companies, banks and other closely related public agencies. Why were they brought before parliament for changes in their financial structure? One of the reasons is that the public obviously has to be protected against a monopoly. When you grant a monopoly, whether it is for a sewage system, for lights, for streets or for anything that is universally supplied on a monopoly basis, there must be some way of controlling the cost of that service.
In most cases we control these services by having people elected who report to the public and are responsible to the public, both for their election and for their remuneration. In

this case, where we are dealing with a private monopoly corporation in a public utility field, it was always agreed they would have to come to the public before they could change their financial operation and before they were allowed to make expenditures in a totally different field. Over the years some changes have been made. We have now reached the stage where many of these public agencies that were considered of such importance to the public have had to come before parliament to change their certification. They have had to come to change their financial structure. They have had to come to make major changes in the role they are playing in the field in which the federal government has a great deal of interest.
Over the years we have established, by letters patent, changes which have allowed insurance companies to be certified, to make changes in their financial structure, to amalgamate, to join with other companies, to do a number of things. We retained something for ourselves, something that was really no control at all, which was the right to demand in this House that before an order in council was granted allowing the acceptance of those letters patent, we as members of parliament would be able to question the decision the minister was making by order in council.
This type of operation has not worked. For a long time the government has depended on its members to vote for the government, whether or not they knew anything about the subject, whether they were concerned about the subject or, in fact, without any knowledge of the subject at all. So that after the debate was over they could always count on the order in council being approved, because if the members did not approve it there would probably be an election, and most of them were not too interested in having an election over something they did not understand in the first place.
There really has not been any control. Most people do not care if one insurance company has an arrangement or develops an arrangement with another insurance company. So we gave up our rights with the insurance companies. It got to the stage where nobody was too sure what was happening with the pipelines, so we gave that up. We have given up most of the powers for the establishment of public corporations. We have over the last four or five years made changes to the Bank Act which allow us to get rid of the power of parliament, to decide on the extension, capitalization and methods of operation of our national banks. We have really made a lot of concessions in this House, in the interest, I suppose, of getting things done. It seems to me that the public is very interested in some of the agencies over which we no longer have any control.
I am sure that if we were to give passage to Bill C-1001, we would be accomplishing what Bell wants, but we certainly would not be doing very much for the Canadian public. Because it is in a monopoly position in respect of a public utility, Bell really has a licence to print money. This company has a number of ways of raising money. During a previous debate an hon. member was talking about the national debt being something like $67 billion.
November 17, 1977


An hon. Member:: No, $71 billion.


William Arnold Peters: 1 think he said $67 billion, but we could bring it up to that level easily by adding Bell's debt which 1 understand is about $2.5 billion. It really would not make much difference. I am sure the hon. member who indicated it was $71 billion would not really care if we added Bell's debt to the national debt. I would be willing to do that by nationalizing Bell and taking over the $2.5 billion. I am sure we would be able to whittle that amount of debt down, even though we may not be able to do very much about the other.
What does Bell really want? It wants to expand into international markets and into other fields than the telephone business, and it wants to do this without any control. It is true that the company has to go before the CTC. Is it the CTC now, or has that been changed?


An hon. Member:: It's the CRTC.


William Arnold Peters: I guess they got tired of the CTC. They kicked them pretty hard for some time until Bell became experts in dealing with them, so the government changed it to the CRTC and it is now trying to develop experts to handle this monster. Bell is probably doing a little better with the CRTC than it did with the CTC. I am not prepared to let the cabinet deal with this matter. That would really be giving up the right of hon. members to protect the public from this utility. There is absolutely no legitimate reason for a public utility in a monopoly position being privately owned. There is no logical or justifiable reason for that. I can think of no case at all where there has been a public utility owned by the people, turned over to the private sector after being operated as a public utility.
Perhaps 1 should say that I can think of one instance. I know of a number of corporations which got rid of their garbage collection systems and turned them over to private enterprise. In most cases the cost went up and up to the point that the municipalities or corporations had to take the operations back and run the garbage collection system again. I do not know of any municipalities which have turned their lighting companies over to private enterprise, and I do not know of any that have turned sidewalk construction or road building and maintenance over to private enterprise. I can remember they started out that way in Montreal and one had to pay to cross the bridge until everybody, even those in the province of Quebec, decided they had paid for the bridge time and time again and they wanted to own the bloody thing, so they gave it back to the people.
Generally speaking, I do not think that once a public utility has been owned and operated by the people it is ever transferred the other way. I do not think that even in British Columbia, where all the parties got together under the banner of free enterprise, they turned the hydro company or the roads or other public utilities over to private enterprise. Public utilities enjoy a monopoly position, and they must be in that position, but they certainly should not be in that position for
Bell Canada
the purpose of printing money. That is really the privilege that Bell Telephone is seeking.
I am amazed at the concessions that Bell Canada has been granted. When a hydro company puts power into your house, you get a bunch of connections on the wall. Hydro approves them, and that is the end of it. If you want to put a Westing-house stove in and connect it to hydro, that is fine. If you want to put a Frigidaire in, that is fine. I am sure that General Electric has some equipment in almost every home. The telephone company, on the other hand, says it wants to put in not only the service or the facility, in a monopoly position, but it wants to sell all the parts or appliances to be used on that system: you cannot put in any other make.
The government has got a facility in my house. I hope someone makes up his mind pretty soon whether it is to be changed, because I am sure this company is not going to charge me for it. I am quite prepared to pay the telephone company to come into my house with the service, but that is the end of it. If I want to buy my telephones from Radio Shack, I will do so, and if the company wants to take me to court, that's fine. If I want to rent a telephone from them, that is fine; but if I want to buy one from somebody else, 1 intend to use that one too. As long as it has an acceptable standard stamp on it, then as far as I am concerned it is none of the company's business what I do in my house.
We have given all these concessions to Bell Canada. It now wants the right to increase capitalization without supervision by parliament. This company really does not want to increase its capitalization. What it wants is to be able to do anything it wishes, including increasing capitalization. If the company had just wanted to increase its capitalization, it would have brought a bill before us that said so. I can remember the company coming here when it wanted to increase its board of directors. Did it really make a huge difference to Bell whether it had 15 or 20 directors? It sure made a lot of difference to them when we included an amendment which said that one of those directors had to be appointed by parliament or the government to represent the public, without involving share capital. We were not going to buy the position; we were just going to control one directorship. Let me tell you that they put up a battle for a couple of years over that.
I had very interesting conversations every Friday afternoon with the president of Bell Canada who came to tell us why they could not accept that one directorship. His argument was that we did not need a director on the board to look after subscribers' problems, because he handled all the complaints as president of Bell Telephone.


An hon. Member:: And he got $201,000 a year for that.


William Arnold Peters: He was certainly well paid-$201,000, plus a free telephone for life, plus, I suppose, he could stay at Place Bell Canada when he came to Ottawa and fly in their jets. He probably even gets a telephone from the Maberly telephone exchange which is now fairly prestigious. It was only 121 customers, as I understand it. They will always enjoy their present basic rate, because the company owns buildings in
8002S-63>/2

November 17, 1977
Bell Canada
downtown Ottawa, a fleet of trawlers and a fleet of aircraft. This just goes to show how much money a telephone exchange is worth. That one little telephone exchange with 121 customers owns, in addition to Place Bell Canada in downtown Ottawa, a fleet of jets and a fleet of trawlers plying the seven seas. It is a pretty rich little exchange which has not had an increase in rates since Bell bought it.


An hon. Member:: When, in 1860?


William Arnold Peters: No, it was not that long ago. However, you raise a very interesting point. It has only been a few years since Bell bought that small telephone business and already it owns a fleet of jets, a fleet of trawlers and this building, yet it has been producing for Bell for a very short period of time. I suggest these 121 subscribers are not really paying for these things. I am sure the company will never go to the commission asking for a rate increase, because it would then have to open its books. I am sure this will never happen until all these people die off. 1 am sure it is hard to get another telephone, but as long as those people are there, I am sure they will pay the same rate.
Bell Telephone has an excellent telephone system, and no one is complaining about the system as such. Sure, one can complain about the fact that they have not provided a rural telephone service, but I think on the whole it compares with other telephone systems throughout the country and throughout the world, so there is nothing particularly bad about the Bell Telephone company. If Bell Telephone were to ask us to provide money so they could put in telephones in Searchmont, if they were to tell us they would put in telephones throughout the rural areas of Ontario-


Mr. Foster:: We have been trying to get them out there for a long time.


William Arnold Peters: I know, of course. Let me tell you, my friend, that if you help to pass this bill, it will not speed up the provision of a telephone service in your area one iota. If you raised their money by $10 million they would still not put in telephones in your area any faster. So if you vote for this bill so as to get telephones in Algoma, forget it, because it will not happen. Neither will it happen in my area, or in other areas in Ontario, if we increase the capitalization of this company.
If it were an honest financial transaction because they needed to go to the market to raise money to modernize rural telephone systems, then we would say, fine, go ahead. There is not a member of my party who has not some area in his constituency which is in difficulty for lack of telephones. I could tell my colleague, the hon. member for Algoma (Mr. Foster), of very interesting machinations by the telephone company-in fact not only one of them, but three of them, because CNR also has provided a telephone system in a little place called Shining Tree, a place which he probably knows quite well. For all the fuss that was made there, it is no wonder they finally got telephones in that area. But if we had

increased this amount by $10 million, it would still not put them in a better position to provide telephones in Shining Tree faster.
Most hon. members who have considered this realize, as has the Canadian Transport Commission for a number of years, that in the rate increases for which they ask they are not really asking for money to operate telephone exchanges or money to pay higher wages to their employees; what they are asking for is money to buy into other corporations. If we were to give them the right to raise whatever money they wanted, they would buy Telecom, they would buy all the other telephone companies in Canada, and they would develop a monopoly from one coast to the other. With the exception of the Maberly exchange, I am sure they would make an effort to take over every telephone company in Canada. I would go even further and say that if we were to allow them to raise money as they wish to do, they would not only stay in Canada, they would go into a number of other businesses throughout the world, because they have already done so. The Maberly exchange, with 121 subscribers, only a few miles from Ottawa-


The Acting Speaker (Mr. Turner):: Order, please. I regret to inform the hon. member that the time allotted to him has expired.


William Arnold Peters: Mr. Speaker, I ask you to ask the House for unanimous consent to allow me to continue.


Some hon. Members:: No.


The Acting Speaker (Mr. Turner):: There is not unanimous consent.


Stuart Malcolm Leggatt: Mr. Speaker, I must say I come to this debate rather late, and I apologize to you and to the House if there are any points that I misunderstand. I am pleased to see that my honourable and intelligent colleague, the hon. member for Scarborough East (Mr. O'Connell), has introduced the bill. I know he would be anxious to correct any misunderstanding that one might have, although I must say I am a bit surprised that the hon. member is piloting the bill through the House. I am beginning to think he is serving some kind of a penance on that side of the House. Surely hon. members on that side of the House have to draw straws in order to pilot such a bill through the House.
1 remember the hon. member for Kenora-Rainy River (Mr. Reid) attempting to pilot the IAC bill through the House. I must congratulate members on the other side of the House who draw those short straws and have to go through the exercise of allowing major monopoly corporations to avoid the proper regulatory function. The initial point I would like to make about the bill is that this is the place where monopoly operations such as this must have the ultimate regulation. There is, of course, a rule for the CRTC, but to produce legislation and avoid, in effect, a reasonable and full debate about this legislation is a very serious avoidance of the parliamentary process.
November 17, 1977

So no matter what we may think are the merits of the bill-
I do not happen to think the bill has much merit-surely, as members of parliament, we could agree on one principle, namely, that when bills come in front of the House which mean that the House does not have to review them or look at them any more, whether or not we agree with the principle of the bill as designed, we can surely agree on the principle that this is the place to review bills for capitalization change in major corporations.
As I see the bill, it attempts to do a number of things. First, it is a revision of the act of incorporation relating to the company's ability and methodology, including the removal of the scrutiny of the appropriate government regulatory body. It grants Bell, if passed, the power to borrow, issue stock, bonds, debentures or other securities the company deems necessary, plus it would give Bell the right to fix whatever price on the sales that it wished. Subsequent sections would provide Bell with the authority to establish voting rights, by-laws, procedures and alterations to issue shares as Bell may deem necessary. The present authorized capital is $1,750 million. The bill proposes a capitalization capacity of some $5 billion. I would like some guidance from the hon. member who has introduced the bill. I see he is not in the House.


An hon. Member:: He will be right back.


Stuart Malcolm Leggatt: I will leave this point until later, because 1 am quite serious about it. Let me just say, for the record, that I want to know whether an increase in the capitalization will mean that the return on the investment on which the regulatory agency has to pass judgment will have to be increased when you increase the capital structure of the company. 1 would like to have the question clarified as to whether you can increase the invested capital of your company through changing the capital structure under the bill, thereby increasing the rate of return, which is not related to the service that is being provided to the public. In any event, if I am wrong, I would be happy to be corrected on that point, but it seems to me to be a real risk.
In essence, the major criticism continues to be that this bill will have the effect of avoiding the consequences of a parliamentary debate and of avoiding the consequences of MPs scrutinizing that company. In effect, it will take away from us, as members of parliament, our sworn duty to look after our constituents with regard to these matters. We have heard some public criticism of most telephone companies, some of it by the CRTC. For example, the B.C. Telephone Company has used many beautiful devices for avoiding real regulation. I am relating this matter to the bill because exactly the same principle applies to Bell Canada.
As soon as a telephone monopoly finds any profitability in the company-and I defy anyone to dispute this after examining the record-the first thing that is done is that the profitable section is spun off to make sure that when the regulations come down they regulate only the low profit section, and the
Bell Canada
high profit sections go off into self-owned or partially controlled or owned companies.


Benno Friesen: Can you give an example?


Stuart Malcolm Leggatt: The hon. member for Surrey-White Rock (Mr. Friesen) asks for an example. I think probably the best example in B.C. is what happened to certain services provided by B.C. Telephone. Those services used to be under the ambit of B.C. Telephone, and therefore had to be included in terms of the profitability of the company. For years the Canadian Transport Commission regulated the profits of B.C. Telephone and included the most profitable section of the operation, which was its yellow pages and directory service. I do not think it took too long for the company's solicitors and accountants to have a look at this and hive off that profitable operation into a private, self-owned and controlled entity. That profitable operation would therefore no longer be controlled by the regulatory body. Therefore, what the public looks at is the bare bones of the telephone system.
The public gets to look at only the worst example, the operations which do not make a lot of money and which have to return on investments about 6 per cent. I believe that is what they are now allowed on invested capital. When profitable sections of companies are hived off-for example, the purchase of telephone services from wholly owned subsidiaries-we are not dealing at arm's length and we are not dealing with the market price.
The hon. member for Timiskaming (Mr. Peters) talked about rental arrangements. It is almost impossible to buy a telephone. Everything is rented. 1 remember having a little buzzer put into my law office. I think I was charged 50 cents per month for that buzzer. The buzzer was paid for after the first two months. It has now been there about 15 or 16 years, and I feel I own part of the company now. There is a reason why these services are not sold to us. The reason is that in the world of real competition the company would be out of business.
That is the whole basis for our philosophy that a private monopoly does not compete in the free market. Its charges do not compete in the free market, its products do not compete in the free market, and therefore it is an appropriate vehicle for public ownership.


Benno Friesen: Mr. Speaker, would the hon. member permit a question?


Stuart Malcolm Leggatt: By all means.


Benno Friesen: A few minutes ago the hon. member for Timiskaming (Mr. Peters) was saying he wished he could buy his telephone from Radio Shack-


William Arnold Peters: I already have one.


Benno Friesen: -because it is cheaper to buy one from Radio Shack.


William Arnold Peters: No, it isn't. It doesn't save money. I just own it.

November 17, 1977
Bell Canada


Benno Friesen: The hon. member for New Westminster (Mr. Leggatt) agrees that is is cheaper to buy one, but obviously there is some advantage. The telephone company in B.C. to which the hon. member is referring is in some conflict with members of the union there over the right to buy equipment where the company wants to buy it. Would the hon. member agree that that is a principle which ought to apply to B.C. Telephone? He says he has paid for his buzzer over and over again by making rental payments. Does he not agree that B.C. Telephone has the right to buy equipment wherever it wants in order to stay profitable?


Stuart Malcolm Leggatt: Mr. Speaker, I am not able to supply my hon. friend with an answer because I am not familiar with the background of that part of that dispute. The hon. member is alleging that at the moment the union is trying to tell the company that it cannot buy from certain companies. I was not aware that it was possible, in view of restraint of trade legislation, but nevertheless I do not know the answer to that in the context of that particular dispute. I think in principle the question is a good one. I think that the free flow of products for telephone service should be there, but nevertheless the key point is that a privately owned monopoly in many, many case does not deal in the free market with regard to its own services.
I would be interested in knowing what the relationship is between Northern Electric and the B.C. Telephone Company. I do not know whether there is some interlocking arrangement, and it may be that the union is seeking to support some brother union members in another firm. That is entirely possible. I do not know. I do not like to see that kind of lock-up in terms of the free flow of products, but we are still not coming to grips with the essential question which is: is it appropriate in terms of our needs in telecommunication that large private monopolies should continue to provide these kinds of services? We hear much about how inefficient public corporations are. It is the conventional wisdom now that anything publicly owned cannot be effencient. But in fact public telephone companies have been kicking the stuffing out of private telephone companies in Canada regarding price and service for a very long time. I wonder if there is anyone who lives in Manitoba who would like to see a private telephone monopoly.


A. Daniel McKenzie: On a point of order, Mr. Speaker-


Stuart Malcolm Leggatt: There is a fellow who wants to see a private monopoly.


A. Daniel McKenzie: The hon. member just asked a question, and I would be only too happy to answer. I have heard this repeated reference to telephone rates, and I wonder if-


The Acting Speaker (Mr. Turner):: I would like to say to the hon. member that that is not a point of order but a point of debate.


A. Daniel McKenzie: Would the hon. member entertain a question?


The Acting Speaker (Mr. Turner):: The hon. member for Winnipeg South Centre (Mr. McKenzie) rose on a point of order. He said nothing about a question. Would the hon. member for New Westminster (Mr. Leggatt) accept a question? He has roughly five minutes.


Stuart Malcolm Leggatt: Mr. Speaker, I have only five minutes left, so I would be happy to discuss this after I have finished my remarks.


A. Daniel McKenzie: You are misinforming the House.


Mr. Symes:: The rates are lower.


Stuart Malcolm Leggatt: 1 will give the rates. Then we can study them.


A. Daniel McKenzie: I know the rates. I was in the business 30 years.


Stuart Malcolm Leggatt: In the city of Winnipeg the private rate is $4.90. These are 1976 figures. The business rate is $11.65, this with a public telephone company. In Toronto the business rate is $22.10, and the private rate is $7.45. In Vancouver where there is a private monopoly telephone company the private rate is $8.05, and the business rate is $24.20. In Edmonton there is a very sensible Conservative government, and there is a public telephone system. The private telephone rate there is $5.80.
I have not heard my friend, Premier Lougheed, lobbying to bring private telephone companies into Alberta, and there is not much of a move in that direction in my hon. friend's home province either. The plain fact is that a public monopoly in this field operates more efficiently than a private monopoly, and there is a good reason for that. The private monopoly uses its mandate to increase the profitability of its subsidiary companies.
People sometimes accuse us of being against business. I can go through the rates in Canada again, and we will find that the only friend the small businessman has, as far as telephone rates are concerned, is this party, because public telephone rates for business are consistently lower all across the country. If we want to reduce the cost of business, let us bring in public telephone companies. Clearly, that would save money.
I did want to spend a moment or two on a subject which is directly related to the question of the change in telephone company capitalization. It deals with a very abrasive strike in the province of B.C. which has been going on for some time between B.C. Telephone and its workers. The workers in that company have been kicked around in the press. They have had rotating strikes and they have blocked traffic. Mr. Speaker, people are tired of strikes. They see the disruption, but they do not see what is behind the dispute.
Let me tell what happened in the B.C. Telephone Company dispute. A conciliation commission recommended settlement within the AIB guidelines. In other words, the recommendation to the union was to settle below the AIB guidelines, and the union accepted that recommendation. The company, how-

November 17, 1977

ever, has rejected the conciliation report and has attempted to remove the job security clause that the union has had two years. That is what is at the heart of the dispute.
Why is there a dispute? Bell Canada, because of an AIB rollback, had a windfall profit of some $13 million, and I believe B.C. Telephone was looking for exactly the same result in this dispute with its employees. When it did not get it, it found it could carry the stress anyway. If you examine the merits of that dispute objectively you will find that the workers in the union are on the right side of the issue.
That particular dispute could be settled tomorrow, but one of the reasons it is not settled is that this private monopoly does not have to withstand the market forces where people are in competition. A strike or a labour dispute is usually an economic war-how long can the workers hold out, how long can the company hold out? A private monopoly can hold out forever because, at the end of the road, all it has to do is go to the regulatory body and say, "Those are our costs, that is our capitalization, such and such is the rate of return we must have on our investment." That is one of the reasons we will have increasing labour trouble in Canada-private monopoly telephone companies.
I now move, seconded by the hon. member for Winnipeg North Centre:
That the motion be amended by deleting all the words after the word "That" and substituting the following therefor:
"Bill C-1001, an Act respecting Bell Canada, be not now read a second time but that it be read a second time this day six months hence."
One of the other matters about regulations that we constantly ignore in this House is that because of the technology in the telephone business it should be one of the most efficient. New technology over the last 20 years can reduce the cost of communications very substantially. Yet we find that these big, fat, lazy, private monopolies have not taken advantage of that technology and have continued to pass on their costs to the consumer. They have not practised the kind of efficiency we should expect from them.
I have every sympathy for the hon. member for Scarborough East, who has been saddled with this awesome and distasteful task-


The Acting Speaker (Mr. Turner):: Order, please. I regret to interrupt the hon. member but his time has expired.


A. Daniel McKenzie: Mr. Speaker, I welcome the opportunity to speak in this argument we have been hearing from the New Democratic Party on telephone rates. There are a few things with which they are not acquainted. There are no low telephone rates in large cities like New York, Los Angeles, Toronto or Montreal. Hon. members of that party might be under the impression that volume leads to low rates. Large cities do not have low telephone rates however, because it is very costly for the telephone company to provide trunking facilities, exchange facilities and so on.
Members of the New Democratic Party have mentioned the efficiency of provincial telephone companies which are Crown
Bell Canada
corporations. I worked for one of them for 30 years, Mr. Speaker, and I know that today they are run on advice and specifications provided by Bell Telephone. They are called Bell specifications. The telephone companies of Alberta, Manitoba, and Saskatchewan get these specifications from Bell and Northern on how to run the commercial department, the plant department, and the engineering department. These are provinces with small populations, and low rates can be provided in cities like Winnipeg, Brandon, Saskatoon, Regina, and even Edmonton.
In large centres, especially Ontario, it is very costly to provide exchange and trunking facilities. In areas like Mississauga it costs hundreds of millions of dollars to provide telephone service. Everytime a new centre is built with a population of 100,000 or so, it must have access to all other parts of greater Toronto and Ontario. This is very costly and it is why the rates are high. That is the difference between the Crown corporations in the small provinces and Bell. I must emphasize again that they get all their information on how to operate from Bell and Northern.
I hope I have made that clear to the hon. member for New Westminster (Mr. Leggatt) and the hon. member for Winnipeg North (Mr. Orlikow). I did not have a chance to speak on that point the other day.


Mr. John Rodriguez (Nickel Belt):: Mr. Speaker, I welcome the opportunity to speak on the amendment of the hon. member for New Westminster (Mr. Leggatt) because I think it is extremely wise to cool off for six months and take a good, hard look at this bill.
I have not made it a secret in this House that I am absolutely opposed to this bill. I have said it would be a dereliction of my duty as a representative of my constituents who, by and large, depend on non-urban telephone service, if I were to let this bill go through. The bill would allow Bell to escape forever the scrutiny and examination of members of parliament. My constituents are not in Mississauga or Toronto, they are in small communities, and the Bell Telephone Company tells them it would cost $20,000 to instal a telephone.


An hon. Member:: One telephone?


John R. Rodriguez: One telephone, something which is not a luxury any more. The hon. member for Timiskaming (Mr. Peters) may go to Radio Shack-I recognize there is some conflict there because his son has the franchise and he can buy all the exotic equipment and buttons he wants. We are not interested in that. We are looking for the basic telephone service.
I want to read into the record part of a letter dated January 28, 1977, from a constituent. It reads as follows:
Dear Sir
I am hoping you can help myself and four other families with our problem with Bell Tel. The phone comes to within one mile of us. I've been trying to get the phone for three years. There are five families-ourselves, pensioners, Mr. and Mrs. Frank Carriere, pensioners, also Mr. Carriere's health is not good, Mr. and Mrs. Ed. Blomme, Mr. and Mrs. Dorrice Carriere-when Dorrice is in the

November 17, 1977
Bell Canada
bush cutting pulp his wife is alone with two young children and Mr. and Mrs. Laurence Carriere who also have young babies. The Beil told my husband this morning they would require $108 from each of us toward the line, eleven dollars installation and a reasonable monthly rate. It's the $108 that is really beyond Dorrice and his family and it would be a hardship for the older Carrieres and ourselves. Could you please find out if this is really needful?
I wrote to Bell Canada and I received the same bubble-up I always get: that it will cost to instal the telephone; that they are not providing welfare to people; and that those people should move into the city to live.


An hon. Member:: Shame!


John R. Rodriguez: We have to try to touch the hearts of those apologists for the large corporations with a little bit of sympathy, concerning problems communicated to us through the pens of the poor folk.
1 should like to refer to another letter dated March 20, 1977, which I received from Mrs. Elma Hutchins of Markstay, Ontario, it reads as follows:
Dear Sir:
Thank you very much for your efforts on our behalf concerning Bell Telephone. I made a last trip to my different neighbours. The Blommes and ourselves would have paid the $108 but the Carrieres refused to. If the line comes in they would take it but won't pay toward the line. It was a large sum for us also but in case of fire or accident the $108 would seem a small sum. I don't know if I had told you but my son was in a bad accident on February 3. He was hurt at 8.30 in the morning and had been in hospital ten hours before I knew about it. Thank you again.
Largely because of the fact that this bill is before the House,
I am sure Bell Canada decided not to ruffle up this guy Rodriguez, to pacify the New Democratic Party, and to give us some things. Finally we received some action, and the telephones were installed.
I should like to refer to the last letter which I received from Mrs. Elma Hutchins dated October 25, 1977, which reads as follows:
Dear Sir:
My late thanks for your help with the phone. I had hoped to see you on your visit to Markstay but 1 had just had a nasty fall and broken bones in my foot. This was my second fall this summer-both my own fault. In the first I had broken ribs. I watch the polls and hope to see Mr. Trudeau start to slide soon. His ideas on our economy are dreadful. I have three grandsons who will be caught in the possible lay-offs at INCO. Two more who work for other companies who will probably lay off also. Mr. Broadbent seems a much more sensible person seen on TV than Mr. Trudeau and I think this is what we need right now. Thanks again for your help.
I was glad we were able to assist these people in getting their telephones. As I said before, we were able to squeeze this kind of service out of the hard hearts of those Bell Canada people, because of the fact that they knew this bill was before the House and they knew we would filibuster the bill. They were right. That is what we will do.
Members of my party have been arguing consistently that we need to develop northern Ontario with small entrepreneurs. Our party has never opposed small entrepreneurships. As a matter of fact the best friend of the small entrepreneur is the New Democratic Party, and certainly not the Liberals and the

Conservatives who are for big business. We hope we represent the interests of small business.
I should like to refer to a letter I received from a small business entrepreneur in Gogama, which is north of my riding. He does not live in my constituency, but he decided to write to me. He wanted to instal a public telephone at his place of business to serve the public. He had written letters to Bell Canada, the Minister of Communications (Mrs. Sauve), the Postmaster General (Mr. Blais), the hon. member for Timis-kaming, the hon. member for Sudbury (Mr. Jerome), and myself. The problem was that Bell Canada wanted to charge him $20,000 to instal a telephone. The letter I received from him is dated August 15, 1977, and it reads as follows:
Dear Mr. Rodriguez:
Thank you for your letters of July 5 and 28 re Bell Canada. I agree with you that we seem to have come to a dead end on this matter, but due to Vagabond's responsibility to provide road service to the travelling public, which includes emergency service, Vagabond will make sure that the public it serves is fully aware that Bell Canada, the monopoly in this public utility, has completely abdicated its responsibility and has refused to instal a pay telephone.
This will be done by the posting of a sign and handing out printed notices to our customers, which would read as follows:
"Dear Customer:
Bell Canada has refused to instal a public pay phone at its own expense, on these premises. The nearest public pay phone is two miles away in Gogama. If, under emergency situation, this lack of public pay telephone service has caused you harm in any way, we will assist you in laying criminal charges against the federal minister, the federal public service administrator and the Bell Canada administrator responsible and accountable for this lack of service."
Again, Mr. Rodriguez, I must say thank you for your concern, and especially for the ardent desire you have displayed in this matter. I just wish we had more of your kind in Ottawa, who are genuinely concerned with the availability of services to the people who help develop the north.
Yours very truly,
B. Petitclerc,
President,
Vagabond Ltd.


Ramon John Hnatyshyn: Mr. Speaker, I rise on a point of order. I think the hon. member for Nickel Belt (Mr. Rodriguez) has breached the parliamentary tradition of remaining modest, and he has demonstrated immodesty by reading praises of his own work.


John R. Rodriguez: Mr. Speaker, I have read the words of my constituents into the record, because of the fact we have this bill before us. May I call it six o'clock?



PROCEEDINGS ON ADJOURNMENT MOTION

[Stage Direction]
A motion to adjourn the House under Standing Order 40 deemed to have been moved.
November 17, 1977

Mr. Jack Marshall (Humber-St. George's-St. Barbe):: Mr. Speaker, in this adjournment debate I should like to refer to my question to the Minister of Energy, Mines and Resources (Mr. Gillespie) on November 14 in which I tried to explain the weaknesses which exist in the Canadian home insulation program. The program denies the persons in Canada who need it most the advantage of the grants which are paid.
As I have pointed out before, there has been a program in existence which provides what is needed for those people on fixed and low incomes, who cannot afford the increases in fuel oil or in hydro power, in order for them to cope with the cost of living which exists today. On a number of occasions I have brought this to the attention of the Minister of State for Urban Affairs (Mr. Ouellet). It is one of the best programs ever produced by the government. I refer to the Residential Rehabilitation Assistance Program. It provides everything that a person on low income needs, but cannot afford, in order to have that insulation.
There are many homeowners in Newfoundland with fixed or low incomes in the $6,000 or lower category. Their homes are deteriorating because they cannot afford to maintain them with the present cost of building materials. How can they take advantage of this $350 grant when they do not have a porch, verandah, walls or windows that keep out the cold; storm windows, proper plumbing, basement, a proper heating system or proper electric wiring? That program, which has been in existence for four years, provides grants of up to $3,750 to allow them to do that. It provides grants of up to $750 for those in the $10,000 bracket.
Granted, the home insulation program will fill a need for some people. However, it eliminates those who need to save fuel the most because they cannot afford it.
Every time I have questioned this in the past two or three years, I have been told there is not enough money available. However, the government now comes out with a massive $1.4 billion program, the Canadian Home Insulation Program. This is contradictory to its other programs and is directed to only a few people.
I do not know how these programs are devised. It is so ridiculous it is not even funny. What they do is set up a new bureaucracy. I can see their hands moving now. With the $1.4 billion, they can build a new bureaucracy and promote some people.
One office was set up in Montreal to handle the 1.2 million people who will qualify in the first year. There is only one number that these people can call. The people in my district cannot get through to Montreal. They cannot even get through to me because of lack of telephone service. What about those in the Yukon or Northwest Territories?
The government has come out with this $1.4 billion program. However, in the first year it is providing only $45
Adjournment Debate
million to satisfy 133,000 units. The minister stated that there have been 60,000 applications. That was in only two months since the program started September 1. If every application were approved, it would take $30 million. Therefore, how are they providing any help?
There is something else I cannot understand. Through this program members of the government are creating discrimination and destroying national unity. The country has been divided into different regions under this program. In Nova Scotia and Prince Edward Island the citizens there receive $350 for $350 spent. God bless them, they need it. However, in other provinces you must spend $500 to receive $350. I do not see the reasoning.
This country has also been separated because in New Brunswick, Quebec, Ontario, Manitoba, and Saskatchewan, only homes built prior to 1921 can qualify. Dwellings in Newfoundland, Alberta, British Columbia and the Territories qualify if they were built prior to 1941. It amazes me how they can keep confusing the people.


The Acting Speaker (Mr. Turner):: Order, please. I regret to interrupt the hon. member but his allotted time has expired.


Mr. J.-Gilles Lamontagne (Parliamentary Secretary to Minister of Energy, Mines and Resources):: Mr. Speaker, I am glad to clarify a few points for the hon. member for Humber-St. George's-St. Barbe (Mr. Marshall) concerning the Canadian home insulation program.
The Residential Rehabilitation Assistance Program, or RRAP, now includes insulation, but this is not the main purpose of this program. One of the restrictions of the program is that it applies only to very specific areas of the country. If the problems mentioned by the hon. member occur, we shall probably have to consider a more general approach to the problem than amending RRAP.
In so far as the problem mentioned concerns insulation needs rather than more general housing problems, the solution must be identical to the other changes we intend to make to the Canadian home insulation program. It is too soon to evaluate the reactions to the program since insulation materials must be bought and installed before people can apply for a grant. Consequently, even though only 2,900 application forms have been received, about 32,000 have been sent each month in September and October. Many people have probably received the forms and are now insulating their homes, but they have not yet asked for a grant.
If this rate of response is maintained throughout the year and if all those who request an application form obtain a grant, 360,000 houses will have been insulated in the next 12 months. Moreover, if Alberta and Quebec homeowners become eligible and take advantage of the program to the same extent, the number of insulated homes will increase by 120,000. This total of 480,000 homes corresponds closely to the maximum estimated number of existing houses which could be insulated according to the insulation industry. In Nova Scotia and Prince Edward Island, where about 50 per
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November 17, 1977
Adjournment Debate
cent of owner-occupied homes will have been insulated under a similar home insulation program during the first year of application of the program, experience suggests that the response to the Canadian home insulation program will be considerable.

Mr. Speaker, the program can't be poor and at the same time be responsible for the shortage of insulation materials, for which it is being blamed. Nevertheless, as with any new undertaking, there are some start-up problems with the program. We are hopeful that, as the process evolves, the application procedure will be simplified.
In addition it is clear that, at least in Ontario, there is considerable confusion as to whether or not the program has been cancelled. This is, no doubt, caused by the recent cancellation of the proposed Ontario loan program. Undoubtedly we will have to direct a major effort to overcome this confusion and to ensure that the public is aware that the federal CHIP program is still available.


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


NATIONAL HARBOURS BOARD-SUGGESTION GOVERNMENT ACTING IN ANTICIPATION OF PASSAGE OF BILL C-6
Mr. Robert McCleave (Halifax-East Hants):: Mr. Speaker, in this session of parliament we should be hearing a great deal about ports, more especially when Bill C-6 comes up for debate and when the hon. member for Halifax (Mr. Stanfield), the hon. member for Dartmouth-Halifax East (Mr. Forrestall) and I try to unravel the somewhat curious hesitancy of the Ministry of Transport in trying to question whether there should be an increase in containerization in Halifax, though certainly there has been rather indecent haste about providing for Montreal although, as far as I can see, the needs of both are about equal. But my main purpose this evening is to concentrate on Bill C-6 and, if I can, obtain some reassurance from the ministry about the future of the 150 or so people who work for the National Harbours Board and for the ports and harbours division of the Ministry of Transport. These people are very much affected by Bill C-6 which would replace much of the existing administration of our harbours across Canada with arrangements which are very, very new.
My understanding is that the Minister of Transport (Mr. Lang) is legally quite entitled to go ahead and have the officials in his department prepare for the day when the provisions of Bill C-6 become law, so that the administrative structure would be in readiness. But that is as far as it goes. Until the bill becomes the law of the land he may not start that administrative apparatus going. This is as it should be, after all.
The Department of Transport, at least the chairman and others of the National Harbours Board, and I have the Chair-

man's memorandum here before me, Mr. Pierre A. H. Fran-che, have acted with some dispatch in this matter but not exactly to the liking of a large number of employees who are now, frankly, I think scared to death, it may be that the minister's representative when he speaks will be able to quieten their fears, but their fears are in two particular areas. First, they were promised that any hiring in the future ports structure would have equal representation from both the Department of Transport and the National Harbours Board. We are told that this is not so, that it is only the Board which will have the say in the hiring, and the people in the Department of Transport-that is the section of that ministry I have referred to-are pretty uptight, and I would hope that the minister's representative would be able to set their fears at rest on this matter.
Secondly, those who are passing through the screening process were assured that the process of bilingualism would not substantially change the numbers now involved in the operations of Canadian ports. Our understanding, and again the minister's representative might be able to set the record very precisely on this point, is that of the 150 jobs in the new port set-up, 135 are to be classified as bilingual. This raises the very substantial question: by what criteria has the figure of 135 been reached, and why is it substantially in excess of the numbers who are now classified as bilingual?
I do not quarrel with the principle of bilingualism as such, but when you look at the numbers of ports across Canada, one would have to think of places such as Vancouver, and to a lesser extent Halifax, Saint John, St. John's, Newfoundland, Hamilton, and all of the other ports within the jurisdiction of the former or outgoing National Harbours Board, now to be within this new empire, and wonder whether as high as 135 of 150 is a necessary Figure. Perhaps we can have an answer to that.
Again, I admit there is a justification for government, for this particular department and the minister to start reorganization now, but there comes a point at which they must take into account the House of Commons, the other place, and the Governor General who all have their say in this whole process, that is, there has to be a parliamentary enactment giving a blessing to this change that will be brought about by Bill C-6.
Mr. Franche in his letter to employees had this to say, and I will quote one paragraph from it. The letter is available to anyone who may wish to see it.
Since the Minister of Transport has tasked-
That is a bureaucratic word "tasked".
-the Commissioner-Designate with the responsibility of having an operational organization in place when the Canada Ports Act is promulgated, we must begin now to co-ordinate all the activities concerned with ports administration in Canada.


The Acting Speaker (Mr. Turner):: Order. 1 regret to interrupt the hon. member but his time has expired.


Mr. Charles Lapointe (Parliamentary Secretary to Minister of Transport):: deal of interest to the remarks made by the hon. member on this very important issue of the creation of a Canadian port commission. However, I must say that, in my opinion, the answer given to the House by the hon. minister on November 14 should dispel all fears that present employees of the National Harbours Board and all persons now working in the head office may have. I think the minister gave a clear denial to the allegations that the federal government is trying to fill positions within the Canadian port commission before Parliament has even promulgated the act which will create that commission. Last July, Mr. Speaker, the Minister of Transport (Mr. Lang) made a statement, and I quote:
We have asked the employees of the head office of the National Harbours Board and the personnel of the harbours and piers division of Transport Canada to apply for these positions within the newly created commission so that we may be able to confirm their assignment by the time this act is passed.
So, Mr. Speaker, I think that this quotation illustrates quite well the fact that the new positions created when the Canadian port commission comes into existence will not be opened only to National Harbours Board employees but also to the employees of the head office, that is to say the employees of the department in Ottawa. As for the government, it is trying to ensure a continuity in the harbours administration during the transition from the National Harbours Board and the harbours commissions to the Canadian port commission, while at the same time offering the employees of the board and of the head office the possibility of making a career within the Canadian port commission. It is quite clear that the government has an obligation towards its employees and those of the board and of the head office who contributed so much to the present administration of these harbours and are therefore likely to transfer the benefit of their experience to the new organization. It is only justice that any uncertainty as to their future be removed and that they be given the opportunity before anyone else to apply for positions which will be created when this bill is approved by Parliament. The harbours policy review commission instituted by the cabinet in the fall of 1975 recommended that this Canadian port commission be set up before the passing of this new act so that it might become operational at the earliest. As for the government, it has met with the union representatives in Ottawa to show them the program governing the personnel under which their members will be placed following their reassignment to the new central organization.
Competitions for the senior positions started in July. Any proposed appointments, however, cannot be confirmed until the legislation is approved by parliament.
By this means, qualified employees of the National Harbours Board and ports and harbour headquarters groups will know in advance to which jobs they will move when legislation is passed. It is the best way to ensure continuous management of our ports, which is so essential to shipping and transportation in this country.
Adjournment Debate


EXTERNAL AFFAIRS-APPLICABILITY OF GUIDELINES TO AWARDING OF MEDAL TO PREMIER LEVESQUE BY FRANCE
Mr. Stan Schumacher (Palliser):: Mr. Speaker, I participate in this debate this evening as a result of a question asked by my friend and colleague, the hon. member for Dauphin (Mr. Ritchie), and also of my own question of yesterday addressed to the Secretary of State for External Affairs (Mr. Jamieson), which was as follows:
Mr. Speaker, my question is for the Secretary of State for External Affairs. Car the minister tell the House if the medal awarded to Premier Levesque by the Government of France, which I understand is the second highest award that can be given by the French government, fell within the 1968 guidelines issued by the Government of Canada governing the receipt of medals and honours by Canadian nationals?
The minister, in effect, refused to answer my question when he said in reply that, first of all, the guidelines had no legal effect and were in no way binding upon anybody. I think that is a terrible admission to be made by a minister of a government which has issued some rather strict sounding guidelines.
Secondly, he said that the medal was widely distributed and therefore did not carry much distinction, so he did not even consider it necessary to check those guidelines. I think it is interesting to check the facts in this regard. This is a very old award in the history of France.
As I understand it, the Legion of Honour was established by Emperor Napoleon in 1807 or thereabouts. It is instructive to note that the first recipient of this honour was Czar Alexander of Russia. Some five years later Russia was invaded by the French. I do not know if that has any bearing on whether Mr. Levesque feels any insecurity as a result of the medal being awarded to him recently. However, the guidelines are clear that approval is not given to accept an order or decoration which is in relation to events more than five years prior to the proposal for the award.
I do not know whether Mr. Levesque received this award for services as a war correspondent during the Second World War. That was not stated. Being employed by the U.S. government, I suppose he did not feel it necessary to help Canada in that war effort.
The award is not approved for anyone who receives it on the basis of something which is at variance with considerations of general policy or public interest. I do not know what Mr. Levesque has done lately in this country which is good for the general policy or public interest of Canadians who wish to maintain our federation.
Section 3 of the guidelines says the following:
Approval is, otherwise, contemplated in the case of any Canadian citizen ... to whom an honour or decoration is offered on one of the following grounds:
(a) for an extraordinary service to mankind;
I will be happy to hear from the parliamentary secretary whether Mr. Levesque has performed an extraordinary service to mankind or, as set out in subsection (b), has shown conspicuous bravery in saving or attempting to save life. Subsection (c) refers to important and personal services rendered to the
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Adjournment Debate
reigning sovereign or to other members of the Royal Family. I do not suppose the government is too concerned about that. Subsection (d) refers to services rendered while in the salaried employment of the donor country. That may be interesting. Approval is also contemplated when there is recognition of an exceptional achievement or service.
The minister said that this is a widely distributed medal. It is interesting to note that only one other Canadian prior to Mr. Levesque received this award. That was Ambassador Roy, who was Canadian ambassador to France for more than 25 years. That is a significant achievement, but that shows the importance the French place on distributing this award. I suppose "widely distributed" means that if it is awarded once it has wide distribution. It is interesting to note the effect of distribution on these guidelines. However, I wonder into what category Mr. Levesque falls.
An editorial in the Toronto Sun of November 15 asked the same question, as follows:
In which category has Levesque shone so brilliantly that the French government, always a stuffy, pretentious government, chooses to abandon normal protocol and make the award without informing Ottawa?
The French link with Quebec that Levesque is trying to restore is tenuous and ironic.
De Gaulle, who started it all, despised Quebec as a place and Quebecers as a people. He has been quoted as viewing them as "Petainists"-followers of Marshall Petain who co-operated with Hitler: Cowards and quislings who wouldn't come to the defence of France in World War II.
Unfair perhaps, but de Gaulle had a long memory stretching back to Quebec's voting non in the conscription plebiscite of the early '40s.
A gallantry award to Levesque merely debases the Legion of Honour and shows him up as a man of little class. Style, maybe, but no class.
That Quebecers should feel allegiance to France is mysterious and ill-conceived. For centuries French-Canadians were abandoned by their home country. In fact the very existence of their language, culture, rights today are due primarily to the generosity of their British victors. Tough to swallow-but true.
I wonder what category the parliamentary secretary will put this in, and I hope-


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


Mr. Maurice Dupras (Parliamentary Secretary to Secretary of State for External Affairs):: Mr. Speaker, I know my distinguished colleague is not hung up on that subject and neither am I; nevertheless, I listened with great attention to his very interesting observations on the question of the Premier of Quebec receiving a decoration from the French government.
[ Translation]
The Canadian government was in fact advised of the possibility that Mr. Levesque might be awarded a medal but the French government did not ask for an authorization.
When advised of the French government's intention, the Canadian government, through the usual diplomatic channel-its embassy in Paris-reminded the French government there was a regulation governing Canadians accepting and wearing insignias, orders, decorations or medals given by Commonwealth countries and foreign governments. This regulation, as mentioned by my hon. colleague, was issued by the
IMr. Schumacher.]
Secretary of State in 1968 and stipulates that acceptance by Canadian citizens of distinctions, decorations or medals, whatever their class or order, is in every case subject to preliminary agreement by the government of Canada and preliminary publication in the Canada Gazette.
The Canadian government also reminded the French government there is an international normal practice according to which the government of the honoured recipient is normally informed of the intention of the foreign government and its authorization is requested.
In this case, the usual protocol has not been respected. However, as was indicated yesterday in the House of Commons by the Secretary of State for External Affairs (Mr. Jamieson), the Canadian government has no real intention to take further action on this issue.


The Acting Speaker (Mr. Turner):: The motion to adjourn the House is now deemed to have been withdrawn. I do now leave the chair until eight o'clock tonight.
Motion withdrawn.
At 6.30 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.


[Stage Direction]
The House resumed consideration of the motion of Mr. Chretien that Bill C-l 1, to amend the statute law relating to income tax and to provide other authority for the raising of funds, be read the second time and referred to committee of the whole.
Reginald Cyril Symes: Mr. Speaker, before the debate on this budget bill was interrupted for private members' hour, I was outlining my concerns about the inadequacies of the budget introduced last March and subsequently reaffirmed a couple of weeks ago by the present Minister of Finance (Mr. Chretien).
Canada's number one problem is unemployment, but I do not see that recognition in the budget before us. On other occasions I have gone into the reasons why we have high unemployment in this country: the dependence on resource based industries, the lack of manufacturing, and the lack of research and development to stimulate our manufacturing industry. I will not belabour that point at the moment.
November 17, 1977

As all members are aware, the unemployed and their families are the first to experience the pain and dislocation which come with not having a job. I wonder how many working Canadians understand what they themselves pay in terms of this high unemployment? We are experiencing the effects of approximately one million jobless Canadians. We all have to recognize what is happening to our unemployment insurance program.
For the first half of 1977 payouts in the unemployment insurance program totalled $2.1 billion; but the projections are that by the end of this winter the total cost of this program will have doubled to $4 billion in order to keep people off the welfare rolls. The fund does not have enough money to make that kind of payout, and therefore working Canadians have to pay for this high unemployment through their tax dollars in supplementing the unemployment insurance fund.
Also because of high unemployment, we suffer from the loss of billions of dollars in tax revenue. The government does not get tax revenue from Canadians who are unemployed. That means there is less room to manoeuvre to maintain programs such as the old age pension. I wonder if every working Canadian realizes that last year every man, woman, and child lost approximately $520 in goods and services not produced because of high unemployment. Family problems, alcoholism, marital break-up, and increased crime are caused partially by the high unemployment we are experiencing today.
One of the saddest repercussions is the disillusionment which this causes to young people, whether they be university, community college, or high school graduates out on the labour market for the first time. We have told our young people to get an education and the world would be theirs. Unfortunately today we find 46 per cent of the unemployed in this country are under 35 years of age. Even after having high hopes and training, the young people are the first not to find a job. I worry about what is happening to the future generation of workers whom we are going to depend on when they experience this kind of disillusionment because the country has not organized its economy in such a way to give them that all-important job. I think of the most disillusioning experience I saw first-hand.
I travelled with the leader of our party a few months ago to Newfoundland. We looked at the state of the unemployed there. That is not unemployment that is seasonal, but unemployment that has affected adults and young people year after year. No matter how hard they try, the job vacancies are not there.
A kind of dependent psychology is beginning to take hold in areas of Atlantic Canada where there is no hope of ever finding a permanent job. This was vividly demonstrated to me in a little slip of the phrase, I suppose, when we were interviewing some unemployed people. We were talking about unemployment insurance payouts. They never referred to it as we do, as an insurance program. They called it "the pension . Unemployment had become a way of life, and unemployment
Income Tax
insurance had become their only means of livelihood. Therefore they looked upon it as a pension. They were dependent on it. The whole idea of the work ethic had been eroded through no fault of their own, but through the fault of the Canadian and provincial governments which had so organized the economy that these people could not find work.
I am also concerned about the government's analysis of those who are unemployed. The Minister of Employment and Immigration (Mr. Cullen) has often said that unemployment is not all that serious because so many of the unemployed are women and young people. They are looked upon as secondary earners, people who are really not that serious about seeking a job or for whom having a job is not as important as the so-called breadwinner, the adult male of the family.
Let us look at that argument and the statistics we have for last year on the unemployed. They are the latest available. I am indebted to H. L. Robinson, an economist, who has written in the September issue of Canadian Forum a brilliant analysis of this problem.
When we look at this 1.1 million unemployed Canadians, how does it break down? We find that unemployed men represent about 8.9 per cent of the labour force. Breaking that sector down into age groups, those 15 to 24 years old represent 17.7 per cent of the labour force, and those over 25 years old, 6.1 per cent.
When we look at the women who are unemployed, we find that they represent not 8.9 per cent but 14.5 per cent of the unemployed. With the age groups, those 15 to 24 years old represent 18.1 per cent, and those over 25, 12.8 per cent. In other words, the majority of the unemployed in this country today are young people or women. The majority of these unemployed belong to families in which at least one other person is working.
Given those statistics, the Minister of Employment and Immigration advances the argument that somehow unemployment among this group of women and young people really is not that serious. Because they are not adult males, the breadwinner of the family, their unemployment is only secondary.
Aside from the male chauvinism in that argument, the minister and his colleagues ignore a very important fact, the fact that so many wives and young men and women work for the following reasons. First, they have to work in order to supplement the family income so that they can make ends meet. With the kind of inflation that we have, one income is simply not enough to maintain or improve the standard of living in relation to the inflation of the past few years. What do I have to back up that contention?
Using figures from 1975, the latest available, we find that the average annual wage earnings in Canada were $10,574. That is what the average person earned in 1975. The average family income in the same year was $13,805. If you look at the breakdown of those earnings, you find that 60 per cent of all wage earners had incomes below the average of $10,574.
According to Statistics Canada, any family with an income in an urban centre of $8,422 or below was classified at the

November 17, 1977
Income Tax
poverty level. When 60 per cent of the workers are earning less than the average wage and the poverty line is only about $2,000 below the average wage, you begin to appreciate why so many wives and young people have to work to supplement the family income.
Is it any wonder that family members other than the adult male, the traditional breadwinner, have to find jobs to help pay the bills? Women and young people are in the labour force out of economic necessity. They are not "secondary" workers in terms of the needs of the majority of Canadian families today.
I also want to say to the Minister of Employment and his officials that the women and young people are not secondary in the work force today because the nature of the jobs in our work force has changed. The service sector of our economy has grown tremendously. Nursing, social services, hotels, restaurants, secretarial, clerking, teaching and other such services have grown. In 1956 only 48.5 per cent of jobs in Canada were in the service industry. In 1976 that had increased to 65.5 per cent.
If you claim that these people are only secondary and not serious income earners or serious to the work force, I shudder to think what would happen to our economy and the businesses that employ them if they were removed from the work force. I dare say that members of parliament would not be able to function since their staffs are primarily made up of women and young adults.
Women and young people are essential in our economy on both the supply and demand side. Their unemployment is no less tragic than the unemployment of the traditional unemployed male. These people are not secondary in importance. The Prime Minister (Mr. Trudeau) says that unemployment is a serious problem, but it is blown all out of proportion. That is a falsehood. We know from his own government department, Statistics Canada, that for every 100 unemployed in Canada today, there are only four vacant full-time jobs.
The unemployed are not lazy. They are not avoiding work. I dare the Prime Minister to go to Sudbury and say that there are jobs just begging for people to take in light of the recent INCO lay-offs. Therefore job creation must be of primary importance in the budget before us. I do not see that.
The government is bringing forward tax policies that I consider to be the wrong ones at the wrong time. It has brought forward a $1.2 billion corporate tax concession. I know my Liberal friends will immediately say we are opposed to any kind of corporate tax concession. That is not true. I want to argue that the kind of tax concessions they are bringing forward at this time are wrong in light of what is happening in our economy.
The other element of the job creation program in the budget is $150 million to supplement existing programs. We say that is not going to work. I will explain that later. We need an emergency job creation program at this time.
The New Democratic Party has outlined how we can create from 250,000 to 300,000 jobs during the winter months. We would give a billion and a half dollars tax cut to low and

middle income taxpayers to stimulate buying power, decrease the present level of unused capacity in the economy, and create an estimated 100,000 to 150,000 jobs. We find support for this suggestion from no less a prestigious group than the Economic Council of Canada composed of businessmen, economists, and others from all walks of life, who also called for a tax cut of more than $2 billion to stimulate employment.
We would not want to cut back on family allowances and old age pensions, as the government has hinted it might do, nor would we want to see continued the plight in which the veterans have been placed because of the government's refusal to increase their pensions to a reasonable level-I am thinking particularly of veterans' disability pensions.
We would also favour the introduction of a $400 million federal-provincial-municipal capital works program, similar to the 1971 job creation program, which would create around 60,000 new jobs. We want to see a $500 million housing and urban transit program capable of creating 70,000 jobs, particularly in the construction industry. We also want to see a $50 million program of assistance to small businesses, currently so hard-pressed, which would assist them in hiring approximately 20,000 new employees, especially young people. These are some of the proposals which we put forward as leading to the creation of jobs on an emergency basis.
There is no need to resort to further deficit financing in order to finance the program I have just outlined. What we would do is this: we would redirect some of the tax policies the government has proposed in the budget. For example, we would end the $1.2 billion in tax concessions to large corporations announced last March and reintroduced by the Minister of Finance, and redirect it to personal income tax cuts. This is not because we say, as if in blinkers, that all corporate tax incentives are wrong. But these concessions are designed to encourage corporations to invest and expand their plants. We say it is a ridiculous policy at the present time because industry is only operating at about 80 per cent of its capacity. What businessman in his right mind would use these tax concessions to expand, when he cannot use his existing production line to full advantage?
Could there be any more ridiculous example of the failure of this policy than the realization that INCO, for example, will have received $10 million as a result of these measures, and has recently announced its intention to lay off 3,500 workers?
Alcan, which has profited from these measures to the extent of $11 million, has laid off 400 workers, and Noranda, to whom the concessions have meant $5 million, has already laid off 500 workers, and there are threats that another 1,200 will be laid off in the Gaspe region. This certainly flies in the face of all the assertions that these concessions generate employment. The fact is, and I use the government's own statistics, that since these budget tax concession measures were introduced last March we have seen lay-offs of more than 34,000 workers in the manufacturing industry. The minister is simply misleading the public when he says these concessions are
November 17, 1977

needed to create jobs. They are the wrong concessions at the wrong time.
In today's Globe and Mail we find a survey made by the Department of Industry, Trade and Commerce which shows that Canada's 300 largest companies do not expect to increase on average their capital spending in real terms in 1978. In other words, the budget measures are a failure. They are not creating the jobs the minister promised they would.
We could also finance the program I have outlined from savings through keeping people off unemployment insurance and keeping them paying income tax as employed persons. The saving in unemployment insurance claims would amount to about $1 billion, and the increased tax revenue from the newly employed would come to around $250 million. Thus, for our emergency job creation program, we could use the same funds as the government has laid out in the present budget, only they would be redirected.
As Eric Kierans, a former Liberal cabinet mihister has noted on many occasions, the government has treated the 1,000 major corporations in this country in a most: generous way. It has probably treated them better than any in the world. The profits of these corporations increased from $7.7 billion in 1970 to $17.8 billion in 1975, an increase of 131 per cent. At the same time, corporate tax rates declined from 29.6 per cent during that period of record profit increase to 26.6 per cent. The government has always favoured big business as opposed to small, and has allowed the corporate sector to defer payment of income tax to the tune of $10 billion. The 1,000 largest corporations owe the government $9 billion of this $10 billion deferment of taxes.
What we need is some attention paid not only to big business, as has always been the case in the past, but to small business which employs 60 per cent of the working people of this country. I am really angry that the government continues to ignore this major sector of our economy.
I have talked to small businessmen on many occasions. I find that their difficulty lies in raising working capital. The banks laugh off the government's small business loans program; they are not interested in it. The Federal Business Development Bank often applies criteria as strict as or even stricter than those imposed on borrowers by private banks. These sources are of no help to small businessmen who have the enterprise or the know-how, but who cannot find the capital to expand or put their projects into operation.
Businessmen also complain to me, time and time again, about the difficulty of obtaining information and management expertise under the programs the government offers. These programs are more often exercises in public relations than anything of substance. Businessmen need assistance, but I am afraid the government programs put roadblocks in their way rather than help them. There is too much government regulation, as they keep pointing out. They are not able to hire expensive accountants and lawyers to give them advice in these areas. The effects of taxation policies, the problems of cash flow, are very onerous.
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If the Minister of Finance were really interested in job creation he would turn more of his attention to the small business sector in terms of tax concessions and the advice he could make available to them. I lament the state of small business. Bankrupticies are up 30 per cent and almost half these business failures involve small businesses in the retail sector. One of the key factors is reduced demand caused by high unemployment and the government's failure to stimulate demand by introducing tax cuts. We want to get the economy healthy again. We have to get Canadians back to work so that they are purchasing goods which the small businessman can supply.
I know the Minister of Finance and the Prime Minister keep bringing forward the argument that the problem with business in Canada is that we are pricing ourselves out of world markets. We are told that we are no longer competitive. The Minister of Finance points to our trade deficit as proof of this, but I would like to remind him that the trade deficit includes goods and service transactions. It includes interest and dividends and profit outflows. We have had an over-all deficit for 13 out of the last 16 years. We should know that that deficit is as a result of service transactions by Canadians purchasing imported foreign goods.
In the merchandise trade sector where Canadian workers are involved, there has been a surplus in 15 of the 16 years, and the reason we have had a decline is that the volume of our sales has dropped because the countries which are our customers have been in a recession. I think it should be remembered the end products trade group, that is, the manufactured goods where we have a high labour component, in that group these exports have continued to grow. In fact last year our manufactured exports increased 15 per cent, and they are continuing to increase this year. So I ask the Minister of Finance, if we are pricing ourselves, our manufactured goods, out of the world market, why is it that the volume of our exports is continuing to grow?
I know that the minister is also putting forward a related argument to the phony one of our non-competitiveness, that wage settlements in Canada are higher than those in the United States, and that this justifies holding Canadian wages down to a 6 per cent increase under the AIB over the next year. That wage comparison, I am afraid, is also a myth. What we are trying to do is compare American wages to Canadian wages, but not taking into account the different variables.
First of all are Canadian wages, as the Prime Minister tries to argue, 7 per cent higher than in the United States? Well, the point is that he fails to recognize the Canadian dollar is worth less than the American dollar, so to make that kind of dollar for dollar wage comparison without taking that into account is misleading when our dollar is worth only 90 cents. The Canadian figures also include public service settlements, whereas the United States figures do not. Canadian figures are calculated on base rates, and the U.S. is on average hourly earnings. About 60 per cent of American workers have cost of

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living adjustments, but only 30 per cent of Canadians do. You have to take all those factors into consideration when making comparisons. When you do, as the National City Bank of New York has done, you get some pretty interesting revelations.
In 1976, before the 90 cent dollar, making the comparison for wage compensation, taking into account fringe benefits and everything else, the United States worker was paid $7.91 an hour while his Canadian counterpart was paid only $7.05 an hour, or 12 per cent less than his American counterpart-not 7 per cent more as the Minister of Finance and the Prime Minister want us to believe. If you take the 90 cent dollar into consideration, the United States worker today is 25 per cent ahead of his Canadian worker in terms of wage settlements.
As well, the Minister of Finance knows Canadian workers have to pay more in interest rates, energy costs, housing, food, and most consumer goods than does his American counterpart.
I am sad that the Prime Minister still makes the workers of Canada the scapegoats for his government's mismanagement. The Liberals continue to hold wage increases below the cost of living increase, because we know the CPI is almost 9 per cent, but the majority of workers will be held to the 6 per cent increase under the guidelines of the anti-inflation program. I ask you, what justice is there in that?


John R. Rodriguez: None.


Reginald Cyril Symes: In the budget before us the minister likes to boast about the individual tax relief that is there. He points out quite correctly that an average family of four people with an income of $15,000, for the tax year 1978 will save $100 by the tax credit method, and another $140 through indexing; a $240 tax saving.
Inflation is running at 9 per cent, and this projection will go on for 1978. It is well above the government's guideline of 4 per cent promised under the anti-inflation program. In addition to that, the AIB controls will be in effect for most working Canadians well into 1978. But the government, of course, in the budget announcement has changed the rules. It says that wage increases will be held to 6 per cent even if inflation is at 9 per cent or more. Therefore what happens to the average family which the minister says is going to get such a tax saving? If the income for that family is $15,000, as I have mentioned, they will see their income decline by $450 over the next year despite the tax relief of $240 in the budget. Because of wage controls that family will end up losing $210 in income next year. Where is the fairness in that kind of budgetary measure?
The NDP, supported by the Economic Council of Canada, has argued that what we need to stimulate the economy and to protect the average Canadian from the effects of inflation is a major personal income tax cut. That will stimulate consumer demand. That will create more jobs in the manufacturing industry which is so desperately in trouble at this time. I say to the minister, his budget contains the wrong kind of tax concessions at the wrong time of our economic history. What we need is some protection for the average worker and his family against inflation, which the government has failed to control.
What we need more is a stimulus to consumer demand, as the Economic Council has recommended, so that we can get Canadians back to work again. Unless the government realizes our major problem is unemployment, which has to be tackled by meaningful budgetary measures, I am afraid that we are in for a very, very hard winter indeed, Mr. Speaker, and that things can only get worse.
I say to my colleagues on the Liberal side of the House that what I have tried to do is present an analysis of the problem, and recommend some concrete alternatives to the present policy. I do so in the spirit of trying to work out the best plan for the unemployed in this country. I think the minister has to recognize, as have so many economists, that his present policies are inadequate to deal with this crucial and pressing problem of unemployment.
I hope that when we move back into committee he will be sympathetic to some of our amendments so we can get Canadians back to work, and get consumers and taxpayers protected against the ravages of inflation and unemployment.


Hon. Alvin Hamilton (Qu'Appelle-Moose Mountain):: Mr. Speaker, I must say at the outset I am very pleased to see that the Minister of Finance (Mr. Chretien) is present, and I thank his colleagues from the Privy Council who are here with him too.
The subjects I intend to speak about tonight are not earthshaking, but are important. They are two in number. The first one is SIN, and the second one is potential. To the uninitiated SIN simply means social insurance number. My memory goes back, as the Minister of Finance's memory goes back, to the year 1964 when the Prime Minister of this country gave a solemn promise on the floor of this House that the social insurance number could not be used for anything beyond social services programs, such as unemployment insurance and the Canada Pension Plan. The Prime Minister of that time was well aware of the fact that the great majority of the Canadian people, and in fact the great majority of all free people, do not like to see this gradual closing in of unneeded controls and regulations on the individual.
Parliament reluctantly accepted the social insurance number system in 1964 on the argument that it would make it possible to operate the Canada Pension Plan and unemployment insurance better. The hon. member for Edmonton West (Mr. Lambert) brought this up in this debate and quoted the passage out of Hansard in which this pledge was made in 1964. The background was simple. The House leader then, who is not present here tonight, was the hon. member for Cape Breton. The leader of the opposition was pressing him on whether they were going to extend this SIN to other uses. What was concerning the leader of the opposition, the right hon. member for Prince Albert (Mr. Diefenbaker), in particular was the fact that the National Revenue people would seize this device as another weapon in their arsenal to control every drop of water, every drop of blood in this country.

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In response to this type of questioning by the right hon. member for Prince Albert the then Prime Minister said that certainly SIN would not be imposed for the use of the income tax collectors. That was a pledge made in good faith, and 1 am positive it was the viewpoint of every sitting member of parliament, regardless of whether he was a Liberal, a Conservative, a member of the NDP or a Creditiste, because the great majority-in fact all the members of the House-do not like to see the continual erosion of our civil liberties, step by step, at the increasing pace at which they are being eroded today.
The bill that brought about this unhappy change, this breach of a Prime Minister's word to the people of Canada, was brought forward last February. Under a similar type of bill as we are discussing here today, the government was trying to get through the budget resolutions of the 1976 budget. It was a long bill, and way down at the end of the bill was clause 75, an innocuous clause written in legalistic language designed not to attract the attention of members of parliament on any side. It was sneaked into the bill. It had nothing to do with the budget resolutions.
Where were the members of the legislative committee of the cabinet? How did they let that clause slip into the legislation before the House? 1 do not know how. It must have been in their complete absence of mind or exhaustion, because theirs was the ultimate responsibility to keep their eye on those nitwits in the Department of National Revenue who are always trying to extend their power over the people of this country.


Some hon. Members:: Hear, hear!


Francis Alvin George Hamilton: I do not
want to mention the RCMP, but they even have the RCMP under agreement, to have them carry out their dirty work. I am positive here tonight that there is not a single member on the government benches or on the opposition benches who would not support a removal of this iniquitous provision in clause 75 of Bill C-22 of last year. Every one of us in the House is guilty, with the exception of the hon. member for Edmonton West who did notice it and cried out during the voting "on division". Many of you will remember the occasion. The hon. member for Nickel Belt (Mr. Rodriguez) was waging a one man filibuster.


John R. Rodriguez: I needed help.


Francis Alvin George Hamilton: The government became angry and imposed closure on us eventually. After clause 62 was reached, closure came into effect, and clause by clause was passed one after another. That is the only excuse we, as members of parliament, have that we let that clause go through. But everyone of us, having let it go through, should be ashamed, and we in the opposition have to accept that responsibility as well as members of the government.
My remarks to the Minister of Finance are simple. My memory goes back a number of years during the regimes of the last nine finance ministers when I have seen every one of them,
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without exception, destroyed, and rarely any one of them was responsible for his own destruction. In each case, with the tremendous responsibility that each one of them had looking after the finances of Canada, the same group which controls the decision-making in that department and in related departments had the minister of finance do things for which he ultimately had to take the responsibility. I have seen them go down since the days of Walter Harris, one after another.
If there is any crusade that I lead in this House, it is not only to protect ministers of finance from the awful fate that lies in wait for them but to protect this House and this parliament in general. So what I say to the minister now is that we in the opposition cannot make an amendment to a bill unless there is a clause in it which would allow us to amend it. The minister cannot do so now either. When we go into committee of the whole I think he would be speaking for every single member on the government side if he put in a simple clause deleting clause 5 regarding SIN in Bill C-22 amending the Income Tax Act. Why do I say that?
When we put through clause 75 under closure it simply said that if any person went into a bank and presented a bond with coupons on it and they did not have with them their SIN, 25 per cent of the value of their coupons would have to be retained by the bank and submitted to the Department of National Revenue, and of course it would be entered as part of the prepayment of their income tax.
Who were the people the Department of National Revenue were after? They were after all the young children who do not have SIN and whose parents bought them $50 or $100 bonds instead of Christmas or birthday presents as savings for the time when they would move into their teens. This also applies to the older people, but above all it applies to the married women who do not have an income of their own, who are not in the work force, and who occasionally get their husbands to buy them a bond. That coupon clipping that they do once a year is equivalent to what we used to have on the farm years ago when the farmer allowed the wife to take the money she got from selling eggs-the egg money, they called it. They used to collect enough money that way to buy Christmas presents for their family.
Here you have these minute searches after minute drops of water and drops of blood. Sneaking through past the politician into the statute books of this country was a clause last February causing a situation we now have to clean up.
There are other points that I could raise, such as the attempt to force the banks to do the dirty work of National Revenue. This did not pass unnoticed, and I have a letter dated October 6, 1977, from the Canadian Bankers' Association, to which I rarely have access. It states simply:
It is unfair that banks should bear the brunt of reaction of the public against intrusions into their financial affairs.
We can all weep for the banks; they are in the firing line. Later on from another gentleman in this same organization I

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received a copy of a press release sent out by the banks on this same matter. Incidentally, this is from a Toronto bank. It says:
SIN pays. Or at least, it may be inconvenient if you don't have it.
In this case, SIN refers to a Social Insurance number. Starting soon, you'll need one to get the full amount due when you collect certain bond interest payments from banks and other financial institutions.
The Canadian Bankers Association (CBA) issued this caution today, following confirmation that regulations embodied in amendments to the federal Income Tax Act will be effective from July 1.
The CBA said customers who hold corporate, federal, provincial and municipal bonds and who don't have a Social Insurance number, would be wise to apply for one now to avoid future inconvenience. It normally takes at least two weeks to get a number.
The regulations specify that banks and other cashing agents must withhold one quarter of the interest payment if the customer doesn't provide a Social Insurance number. This is remitted to the government and is credited to the taxpayer.
"We want to make it clear that in this matter the banks are acting to comply with the law", the CBA said. "We have no choice but to withhold the 25 per cent if a Social Insurance number is not provided".
I could go on and read letter after letter from individuals, and I may read one or two of them, but I am more interested in the battle that went on in the press as to who was going to take the blame for this.
I will quote now from a full page ad in the Montreal Gazette dated September 21 under the subject "Important News about Canada Savings Bonds". Who do you suppose put this ad out? It was the Department of Finance. Who do you suppose got the blame? The Minister of Finance. He did not even know it went out. The government wants us to buy bonds. We are in a deficit position. Let me put this on the record, loudly and clearly. In big letters its says:
Your social insurance number is important. This year, your social insurance number will be requested when you purchase Canada Savings Bonds. This number will provide accurate identification of your Canada Savings Bond account and will be a single lifetime account number for you no matter how many bonds you buy or when you buy them. It will thus enable the Bank of Canada to provide you with better and faster service in the event that you write to inquire about the status of your bonds.
The people who drafted these ads were telling the people that, according to the statute, they have to have their social insurance numbers when they go to collect on coupons. They went even further and said that people have to have their social insurance numbers to purchase the bonds. What a bunch of sniping and looking into people's affairs that is! Well, time goes on and the criticism increases.
Just a few days ago, November 14, the Bank of Canada replied. It knew the Department of Finance was catching all the blame, so it came out with a story which it fed to the press through one of its pigeons. According to this paper here are some of the statements it made:
"The social insurance number is a positive and unique identification. No matter how many John Smiths there are, only one of them has that particular number."
The official said the Bank of Canada is adopting a new, highly-computerized system so each person's CSB-holdings can be listed under his or her account number.
You don't have to supply your social insurance number when you buy bonds, "but you have everything to gain and nothing to lose by doing so," the official said ...

That completely contradicts what the Department of Finance was saying. The Department was saying that you have to have them. I suggest that the Bank of Canada rushed into the breach trying to find some rationalization as to why the numbers were needed. The bank gave the examples of all the John Smiths in every telephone book, and of the fellow who lost his bonds in the refrigerator and they went out with the garbage. The only real reason for this new change in our statute law on taxation is that the Department of National Revenue wants to catch that unique person who makes less than $10 on coupon cashing per year, because if your coupons amount to $10 or more the bank always reports that to the department.
The department is after that person who has the colossal gall to put his savings into bonds which yield less than $10 per year, and that person must not be forgotten. If 25 per cent is taken off, that person usually has no income tax papers to make out. Invariably that means that an older person will not get that 25 per cent. The department wants everybody to make out an income tax form. I suggest to the minister that it would not cause any fuss amongst his supporters in the House of Commons on the government side, and all the people on this side will support him, if he stands up in the committee of the whole and says he is prepared to allow a very simple amendment. He would not need any lawyer to draft it. The amendment would simply be that subclause (5) of clause 234 of the Income Tax Act is deleted.


Joseph Jacques Jean Chrétien: If we ever get to the committee of the whole.


Francis Alvin George Hamilton: That amendment would get rid of another encroachment on our civil liberties. I have some editorials I was going to read, but I think I will leave that for another occasion because there is another subject to which I would like to bring attention.
I put these ideas forward, hopefully in a constructive manner, because I know that any person holding the job of Minister of Finance must be seriously concerned about the mess our economic situation seems to be in. The Minister of Finance knows that we have a very strong and healthy country, so why does it just go along level as it has been for the two years since we established the so-called anti-inflation controls? The minister must be spending some time thinking about that. He knows that the great majority of people believe that the government is spending too much money. He has done a yeoman-type job over the past years trying to control the spenders in the cabinet, and we have noticed that. However, here we have a situation about which the minister must be aware, and we are all worried about it.
We have today a large number of unemployed. Whether the number is 800,000 or one million is not the point. It is a large number. At the same time we have our plant capacity lying 20 per cent unused all across Canada. This situation is not new or unique. It happens every time we go into a prolonged recession, and it takes a tremendous momentum or a change in momentum to get the situation reversed. Therefore the minister must be worrying about this. He knows that if he does not
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have some ideas on how to change that, he is going to go the way of every previous minister of finance-out. It is not any matter of satisfaction to me to see some very able people going into that portfolio and getting chewed up, one after the other.
The proposal 1 am putting forward is not original with me or with this country. There is a precedent which has been used, to my knowledge, only in a western country, and only in one. When I read the history of how that was done, I find that it was very unique.
It so happened at that particular time in United States history that President Kennedy was very anxious to be in the forefront of new ideas, and this applied to the financing of the country's affairs. He had working for him in the Economic Council a man by the name of Heller. They, too, had a huge unused labour supply ready and willing to work. They, too, had unused plant capacity, and the federal Government of the United States was operating as the present minister is operating, under a tremendous deficit.
The natural tradition of all the orthodox economists, therefore, who try to keep their two-bits worth before the president and away from Congress, was to get back to the old fashioned way of doing things-simply raise taxes to get more money, or reduce expenditures to balance the budget. One man, Heller, gets the credit for proposing that the best way to balance the budget was not to retrench, go into seclusion and wait for time and events to balance it-as this government has been doing for three years, waiting for the United States economy to recover. He proposed that this unused labour supply, this unused plant capacity, were a great opportunity for a young, virile president to try the idea. His proposition was that with substantial tax reductions in those areas where you could immediately start tremendous activity in the work force and in the plant, you would create enough new wealth and reduce costs to the point where you would get your money back. This is a layman's description of what we call potential budgeting. There was a potential there.
1 will not go through all the activities of the 1962-63 period. In the year 1964, however, President Kennedy allowed himself to be persuaded by his Economic Council even though the federal budget was operating at a great deficit, to reduce taxes in the United States by $10 billion in one year. That would be the equivalent of seven or eight times as much today. When you are already in the hole, $10 billion would seem crazy to the orthodox person who does not want to accept new ideas.
Heller put forth the doctrine that the best, quickest, and most humane way to balance the budget was to get the tax level down on those items that would create an immediate desire to go to work. They did reduce the budget by decreasing taxes in 1964 by $10 billion. The president was assassinated that year and it fell to the lot of President Johnson to receive the great flood of revenue that poured in. The $10 billion in tax reductions was not money that was spent; it was simply money they were not going to take in during the next year. It brought increased revenue because of the number of people
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who went to work and the plant capacity that started up again. In that one year it produced revenue of $19 billion.
Instead of ending up in the hole by another $10 billion, because of that imaginative and at that time innovative program, the United States came out with a surplus. As President Johnson said, it was able to pay not only for the great society he talked about but also for the Vietnam war. It turned out that he was wrong. Even the United States could not support both for long. I point that out to the minister because the condition in Canada today is very similar.
The only argument against what I have said is that in Johnson's day and in Kennedy's day there was no indexing of taxes or pensions. You can argue that today these things would reduce the amount that would come in as increased revenue from all these people working. Let me deal with that for a moment.
The type of thing that I would like to see, if this approach were to be followed, is tax reductions for those things that the country needs and wants. I will give examples in a minute. New types of production would be brought into play. It is pretty hard to prove, with people running on margin as they are today, that encouraging them to go out and spend will create jobs because plants are already working under capacity.
If you could find a number of things that this country has to do and wants to do and direct our efforts that way, in every case I think this would not be expenditure of money by the federal treasury but simply the statement that you are not going to take taxes if certain things are done. If this new labour force goes to work and the new plant capacity goes to work, and wages and salaries are going to people who before were drawing unemployment insurance and social welfare, you reduce those costs, and with all those people working and paying income tax, and all the money going through the system with a multiplier effect of two and a half or three, a billion dollars of new industry would generate $2.5 billion to $3 billion of new wealth. The $3 billion of new wealth, with the governments getting 40 per cent of it, would bring in more than the new program.
I know that new wealth is divided among the governments, roughly 40 per cent to the federal government, 40 per cent to the provincial governments and 20 per cent to the smaller governments. The fact remains that if the tax reductions were put on the right items, within one or two years the budget would be balanced. We could then begin to do things to encourage people to spend, and we could put out dividends for the extra amounts of money for payment to provinces or in social services.
I am sure this concept is not new to the minister. 1 am simply reminding him that at this time all the conditions that make potential budgeting work, are present. It will not work if this technique is tried where there is no big labour supply and no extra plant capacity. This is the time to move. This opportunity has been present for the last two or three years, but perhaps this winter is the last chance.

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I would now like to suggest to the minister, if he accepts this premise, some things on which taxes could be reduced that would give fast results. I am sure the minister is aware, as are most members, that these days we are moving very quickly toward changing our energy utilization. Documents which project utilization of solar hardware indicate that there is a market right now of $1 billion or $2 billion per year for devices to be used in private homes and office buildings. There is a score of examples.
By the end of this decade I believe that almost every home in Canada will have a heat pump. The cost will be $1,000 to $3,000 for the ordinary home. A heat pump acts as an air conditioner in summer, and pumps heat into the house in winter. They can be manufactured in Canada, and indeed they have been on the market for 50 years. A warehouse in Ottawa is full of heat pumps, all unavailable to people here because it is an American firm waiting for the right time to move into the market in this area.
All through the southern areas of Canada-that covers about 90 per cent of the population-a heat pump would be a good investment. In addition to the hardware, which costs $1,000 to $3,000, there are devices that go along with it for use with solar heat. At the present time the idea of direct solar energy, coming through plates is not too economic. But solar assisted techniques are currently in use by big companies. Governments do not use these techniques because they tend to look at bigger things which cost $200,000 or $300,000.
Referring to little individuals across Canada, some are spending $1,000, $2,000 or $3,000 of their money to take water out of their wells and put it in heat pumps to raise the temperature of the water in order to heat their houses. The water is returned to the well, and is warmed up again. The only cost to those individuals is the capital cost of the heat pumps, and the cost of the electricity to run those pumps, which amounts to approximately $100 a year. This is not something in the dream world five years or ten years away from now. This is being done currently.
Some people use the water from a river or a stream which runs by their houses. Other people use water storage. There is a score of techniques which require a certain amount of hardware in order to change it from one type of heat to another. These are not unproven devices. We have the capacity in our plants now to produce these things in the thousands. The government should distribute that information to Canadians.
The Minister of Finance will have a simple role to play. Since very few people have these heat pumps in Canada, and since only businesses are allowed to buy them today, under the direction of the big companies which produce them, if they are told by the minister that they will be entitled to a 100 per cent write-off for a heat pump against their taxes, within three years every householder in Canada will be struggling to get a heat pump. That indicates how big the market could be. All

these people will not be able to get the pumps, because that many could not be manufactured quickly enough.
A lot of this information is available in Ottawa. Canada leads the world in this type of information. A lot of it is still in the experimental stage. The scientists and engineers have accomplished well, but the hardware has not reached the production stage. The National Research Council has developed a silent vertical windmill which spins around on the top of its building. Several prototypes have been distributed across the country. All of them work, except for the one in Saskatchewan. Approximately $50,000 has been spent in an attempt to make that one work, and it produced only $2 worth of electricity.


Mr. Paproski:: It was manufactured by the NDP.


Francis Alvin George Hamilton: The Minister of Finance must stimulate the economy by telling people that these productive investments can be written off. This is a type of hard goods for the consumer, which is not being bought now. There would be no loss of revenue, but it would encourage people to buy the correct things and save money in the long run.
If the minister put through a 150 per cent write-off on experimental things such as the vertical axle windmill which runs silently, every farmer, or any person with flat land around his house, would have one of these windmills to get rid of that $100 which it costs to run the heat pump. This type of 150 per cent write-off was done by parliament in 1959.
As one goes down the list of things that can be done, one realizes that, without any expenditure by the government, Canada would benefit by the activity in the employment field, the extra wages and salaries. The government could recover some of its money from income taxes which rates hopefully could be reduced in a couple of years.
Because we are in a mess today and everything seems hopeless, the Minister of Finance has nowhere to hide. The finger will be pointed at him. He will have to indicate that he is not going to be under the thumb of the high mandarins in his department and related departments. These mandarins were taught a doctrine 40 years ago in school and they feel it must be carried out by the Minister of Finance.
Potential budgeting was tried by Presidents Kennedy and Johnson who found out it was the best way to balance a budget. Admittedly it would not work if times were good. It only works when times are bad and you want to restore the confidence of the people. If the minister wants to save himself from the fate which awaits him, he cannot sit and come out with a neutral budget like the last two ministers produced. That is no way to die. He must pick up his sword and go out and swish it around a bit. The hon. minister must remember he comes from Shawinigan. He is not a Montreal or Toronto boy.


Steve Eugene Paproski: Use that hockey stick!


Francis Alvin George Hamilton: The minister has hair on his chest. He should not let a bunch of well
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trained, gobbledygook artists in his department run him any longer. He must get on with it. His next budget should take into consideration all the things that can be done which do not cost. These things encourage people to do other things, and the government receives money in the long run. If the minister does these things, he will discover that public servants will like him.
Public servants have a great weakness: they are always proud of ministers if they do the right thing. If the right thing is done, public servants will brag about it. Public servants are human beings who are proud of their departments, but they are so used to pushing ministers around that many of them think it is a God-given right.


Steve Eugene Paproski: If they are Liberals.


Francis Alvin George Hamilton: The leaks which have been coming out of the Public Service in the last few years have been caused by the frustration of public servants. The Liberal government has been in power so much in the last 50 years that it is used to taking orders from public servants. Surely the people from Shawinigan have not sunk that low. Stand up, Shawinigan! The country is in a mess. The minister must restore its confidence.
As the hon. member for Sault Ste. Marie (Mr. Symes) said, we are dealing with a budget. In regard to the income tax changes, the majority of Canadians agree with the minister. They are small little items that do not do too much. The minister requires imagination and a little of the spirit of Shawinigan in order to do things differently, to direct these fellows for a change, and to take over. The minister was forced to put down the last little report of the Economic Council of Canada. These timid souls are only there for one purpose, and that is to give the Minister of Finance advice which is different from what he receives from his department. But they are so timid that they come out with gentle little statements. This is the second time they have done so. They have put forth the theory of potential budgeting, and they should not be put down entirely.


The Acting Speaker (Mr. Ethier):: Order, please. I regret to interrupt the hon. member but his allotted time has expired. Nevertheless, he may continue if he has unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


Francis Alvin George Hamilton: Thank you, Mr. Speaker. I suppose I sound like a school teacher, but I am sure the minister is aware that I am sincere when I say that these ideas will point the way. Our country is a good country. These people are not all bad. If the minister thinks of the various ways in which things can be accomplished between now and the next budget that do not require the spending of money, but in fact make money, he could come out of this situation as the first minister of finance in ten years who has stood on his feet and spoken for the Canadian people. I would like to see that, regardless of what party is in power.
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James Aloysius McGrath: They would be proud of him in Shawinigan.


Francis Alvin George Hamilton: Thank you.


Some hon. Members:: Hear, hear!


Joseph Adrien Henri Lambert: Mr. Speaker, I would like to support the comments which have just been made by the hon. member who spoke before me about the hopes he has put in the new Minister of Finance (Mr. Chretien). This is the first time I have had the opportunity to take part in a debate on a subsidy motion since he has this portfolio. Therefore, 1 understand that he made considerable efforts to sponsor Bill C-ll which contains some provisions amending the Income Tax Act with the purpose of giving certain tax advantages to revive the economy.
I think that all hon. members in the House agree that this revival is very urgent. I think however that the proposed measures are not sufficient and that the economy will continue to deteriorate in several areas of the country. Mr. Speaker, I shall particularly dwell upon the main points of this bill which will have some impact on the people and on the industries in my area, and on Canadian agriculture. The real per capita income has constantly decreased in the last few years and the individuals are more and more indebted, which puts a very large number of taxpayers in the income-cost of living vice which becomes increasingly tight. These are at least the comments which have been made to us every day by people of the working classes.
A few days ago, the Minister of Finance said he was disappointed to see that the cost of living went up again by 1 per cent. Mr. Speaker, each time the cost of living rises, low-income people have less purchasing power when they should actually have more. However, we see the contrary. I think the price and wage control program is a failure when it comes to prices and profits. On the other hand, wage controls were rather successful, which leaves most wage earners in quite a difficult situation.
If we consider the record of our banking institutions, we realize that they have made more profits than any other industry in the economic field. The right hon. Prime Minister (Mr. Trudeau) himself has admitted that fact. I have already quoted him in the House on this matter. I hope you will forgive me for bringing up that subject again, but this time without quoting. If these institutions have managed to increase their profits it is because the control regulations did not have authority over them and because the ceiling for interest rates has been abolished in 1967, and God knows how the profits of these insitutions have gone up during the last ten years. I think this is one of the reasons which has put Canada in such an inflationary economic situation.
Those excessively high rates of interest are responsible for the inflation in the prices of goods and services. Rising prices put Canadian industries in an unfavourable position against competing foreign product imports. Finally, the Canadian

November 17, 1977
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Manufacturers Association is aware of this situation. This morning, my colleagues met members of that association who apprised us of their worries about the future, the survival of private enterprise, of small and medium-sized businesses which, as the Minister of Industry, Trade and Commerce (Mr. Horner) has stated in this House, are those that provide Canada with 60 per cent of its jobs. Is it any wonder that the rate of unemployment goes up progressively as those businesses have problems and have to lay off employees? If solutions are not found for the short term, while planning over the long term, I am very much afraid the future of a very large number of those small and average businesses is very bleak indeed.
However, we often hear well intentioned people, I hope, claim that inflation is caused mainly by unduly high salaries. That may be true of some categories of workers and professionals who do not hesitate to ask fairly high fees when Canadians turn to them for their services. But I do not agree with blaming price inflation solely on wage earners. A huge number of non-unionized workers now earn less than the minimum wage.
Speaking of the minimum salary, we are told that it is higher here in Canada than in the United States and that this causes problems for the Canadian industries as compared with American firms. That is true, but the fact remains that today a couple with two or three children cannot be asked to work 40 hours a week for $3 an hour. That is $120 gross, and considering the costs those people have to pay just like everyone else- public services, electricity, telephone, heating oil, in short all the basic needs-it cannot be said that those workers are the cause of inflation, of higher prices. Let us be reasonable. It behoves the state, in difficult situations, to introduce measures to straighten out matters in that sector. I understand that it is normal, when a business is expanding, when it wants to create employment, that it deserves to be given every possible chance of doing so.
But if we really are to give them a chance to expand and survive, we must look at the budgetary operations of these companies which must pay very high interest rates, thus increasing their operating costs and becoming less competitive.
I said earlier that the control program had not been a complete success. We are not overly optimistic about the outcome of the recovery program introduced by the Minister of Finance. I understand it has been prepared in a hurry and that the government will perhaps announce more worthwhile measures in the real budget. Life is made of hope. Until then, the new Minister of Finance will certainly have the opportunity to get to the root of the matter and, as the previous speaker said, to twist the arms of those whom may wish to maintain old formulas and to keep on administering in 1977 as we did 25 or 30 years ago. In the Speech from the Throne, we are told this was a failure and that we should use more modern processes. I hope that in the new budget we shall have up-dated and more modern formulas which will enable us to hope for an improved situation.

The thousands of unemployed who are now hoping are quite prepared to work, thus contributing to the recovery of our economy. We should at least give them the chance to do it. Before I came to the House tonight, the mayor of a municipality spoke to me on the phone for some 20 minutes, and he insisted so that the very well prepared and organized project that he put forward under the program Canada at Work be accepted and implemented in order to give work to the unemployed of his community as early as possible. Of course, I have also commended this project because I think it is worthwhile. Those people are making fantastic efforts, they do practical things, but when there are $3.5 million worth of projects for a budget of only $1,159,000, some of them of course have to be shelved.
This is why I am asking and suggesting to the Minister of Finance, along with the President of the Treasury Board (Mr. Andras) and the Minister of Employment and Immigration (Mr. Cullen), that more funds be made available to the Department of Employment so that it can sponsor a larger number of worthwhile projects. I am not dealing with meaningless projects; I am speaking only of good projects which do something useful, those projects which please the whole community and from which everybody can benefit.
Mr. Speaker, the tax concessions provided in this bill are there to allow companies to invest more money in Canada and create new jobs. I fully agree with that but I think we will have to exert some surveillance over these companies. I fear that more money will just disappear in the long run, that it will take some other direction. The recent behaviour of INCO and Noranda Mines Limited, to talk only about those two, clearly demonstrates that these large corporations do not give a heck about reinvesting in the country. They prefer to reinvest their money in other countries, looking down their nose at Canadians. This is where the government's authority intervenes. The government must take radical steps, if necessary, to force the companies that have been allowed to make profits here to reinvest these profits in Canada in order to help with more development and enable us to keep up with competition. I have a suggestion to make to the Minister of Finance: I think that rebates made on real investments in Canada might be much more indicated. Of course, these partial rebates could be calculated according to the number of jobs created.
There would then be a reaction between capital and manpower resources. In this optic, I believe that the amendments aimed at increasing tax credits for investment are a step in the right direction. The higher credit percentages for the designated areas should stimulate investments in these areas and contribute to reduce regional disparities. There is no doubt that the Maritimes and the Gaspe peninsula need these special stimulants.
If I may, Mr. Speaker, I would like to draw the attention of the minister to the region which neighbours on the Maritime provinces and the Gaspe peninsula, that is the south shore and east shore of Quebec. The economic situation in the Bellechasse and Kamouraska ridings is far from favourable. Among the many characteristics that these areas have in common,
November 17, 1977

there is unfortunately a very high rate of unemployment. This is why I invite the Minister of Finance to reconsider clause 127(10) of the bill so that the definition of areas eligible for the 10 per cent tax credit for investment be extended to include, in addition to the Maritime provinces, the south shore east of Highway 23 which links Levis to the state of Maine. Indeed, this is the area covered by the Atlantic Region Freight Assistance Act. Therefore, such an amendment would simply correspond to existing legislation.
For this region to survive and to develop normally, it must be provided with economic advantages by the federal and provincial governments. Why not grant tax rebates on fuel used by businesses which operate on diesel engines?
Mr. Speaker, I have a letter sent to me by a medium size business which echoes its concerns about the rising costs of transportation. I wish to quote from it as I consider this letter very timely and it demonstrates that it is only after consultation with those businesses that I make those comments. So I am told, and I quote:
I respectfully draw your attention on some data concerning the trucking business. We employ between 35 and 50 employees annually, all depending on the transportation industry. We are a medium size enterprise but, nevertheless, hundreds of farm producers of the southern Quebec area depend on us as to transport cattle to the slaughter-houses.
And the operations of those slaughter houses depend on the quantity of animals we deliver to them and so they directly depend on transportation. It means that our service can be considered as vital for the society and the economy of the area. The taxes we pay and the share paid by other transportation firms contribute to a large extent to the construction and use of highways in our area and the province.
As a result, transportation firms are paying more than their share of registration costs but the government would like to increase that share ...
I understand that this part of the letter concerns the provincial government.
... believing that it is insufficient. Is it its intention to reduce the number of trucks on highways or their economic contribution to each area of the province?
The important point is this:
If transportation firms must reduce their number of trucks due to the excessive cost of...
-everything they must use in their operations-
... it will eliminate many jobs and in some cases those employment losses will affect the economy of a town, of an area depending almost exclusively on that industry.
Mr. Speaker, it is not for nothing that earlier I asked that the possibility of lowering the tax on the fuel used in diesel engines be considered again, be it in the case of industries using stationary engines or in the case of big trucking firms.
I also wish to ask the government to show greater understanding towards depressed areas. It is not our fault if Canada is big and not very populated. This means that all across this country there are Canadians who live and have the right to like their regions but who would rather enjoy former living standards. This is why we have a government, namely to make it easier for all Canadians to enjoy a decent standard of living geared to the economic potential of Canada. Who else than the
Income Tax
government can do better to try and establish equity between all regions of the country? These regions, such as the south shore, are not progressing at the same pace as Montreal for example. Yet, we have a human capital quite capable of achieving more than it is presently doing. The number of unemployed is quite high and it is sad to witness such a waste of human energy. There is talk about increasing productivity in Canada. These are the kind of energies that could contribute to higher productivity but no steps are taken to use them efficiently.
At this point, Mr. Speaker, I will act as a member from the opposition who is not obsessed only with showing his opposition. When something good is done, I do not mind saying so. I would therefore like to take the opportunity to thank the Minister of Transport (Mr. Lang) whom I scolded a good many times in the past, and whom I want to thank tonight as well as his colleague from Public Works (Mr. Buchanan) for the restoration of the Montmagny wharf. 1 had so often talked about it in this House that it had become a rather embarrassing subject to raise. But, in any event, the matter has been given consideration, the works are in progress and the population is generally satisfied as I am happy to report. I would also like to thank the Minister of Fisheries and the Environment (Mr. LeBlanc) for what is now taking place on Berthier's wharf. A long boat slip is being installed and will be used not only for the benefit of the people of Berthier but by any member of this House who will decide to visit my riding, as I invite them to do. Berthier's wharf is beautiful and now with this long boat slip things will be just fine.
Again I am pressing the Minister of Regional Economic Expansion (Mr. Lessard). And I do not intend to give up-


An hon. Member:: You cannot have everything!


An hon. Member:: Leave something for us.


Joseph Adrien Henri Lambert: We are talking about Quebec. We are told that we do not have our share. When we do I like to say so. When we do not I like to say so as well.
I am asking the Minister of Regional Economic Expansion to prepare a specific project for the south shore, within the framework of the Ottawa-Quebec agreements. This region would be recognized as a special area within which we would promote the development of existing industries and the establishment of new plants to absorb a large pool of skilled local labour. I am sorry when I see that the only thing available for those big healthy boys who have been studying or who have a trade is social welfare, not even unemployment insurance, because never having had the opportunity to work they cannot even draw unemployment benefits.
The situation is really serious and if we are not dealing with it now I think we will regret it. This is true not only for the south shore region but for other regions as well. I would like to deal with another aspect of the question, the "employment

November 17, 1977
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expenses deduction" which used to be $150 and is now to be raised to $250.
This is a very good start, but in fact it is much below the real costs. Travel expenses alone top the new amount, especially in rural or semi-rural areas where people are often faced with a 40-, 50- or 60-mile commuting distance. The worker who has to commute over those 40 miles has to spend more than $450 a year. In my view, the maximum deduction should be increased by at least $200. Unemployment is severe enough already without penalizing those who are working. They also deserve attention.
And while on the subject of penalties, I would like to stress how ridiculous clause 6(5) is, subjecting the $350 home insulation grant to income tax. A number of members in this House already felt such an initiative was absurd. As far as I am concerned I feel it is very worthwhile, provided taxpayers can take advantage of it. But in the province of Quebec we cannot, and I once more urge the Minister of State for Urban Affairs (Mr. Ouellet) to press for and accelerate negotiations between officials from both levels of government, so we can one day give an answer to those who would like to take advantage of the program, telling them, yes everything is settled, they can file their applications, have the work done and get paid. I feel I am being very positive and I would like officials to take note of our remarks. We are not fighting them, all we ask is that they find ways, formulas so that Quebecers like all other Canadians may take advantage of that initiative.
Mr. Speaker, there is one way to promote consumer spending, because it has been said, and rightly so, that in some areas consumer spending is too low. We came forward not so long ago with a proposal for a retail discount. I shall amplify that next week if the bill I introduced in this House is called for debate in the course of next week.
Finally, I would call the minister's attention to the possible adverse impact of capital gains tax and I ask once more that the Minister of Finance review that policy. In recent years, acting on an idea by the Minister of Agriculture (Mr. Whelan), a number of family farms were incorporated. It is true that advantages outweigh disadvantages, but the forecasts for capital gains tax will likely put an end to these advantages by unjustly penalizing the father who sells his farm to his son. Even if these farms have been given a corporate status, we should not forget that they nevertheless remain family farms. That is why I would ask the minister to reconsider these measures so that family farms are not subjected to such disadvantages.
In conclusion, I would like to emphasize the urgency of adopting truly stimulating measures for the economy. It is not only in the interest of our own welfare but for the welfare of the young generations. They should not have to pay for our failures and those of our present leaders. If this government cannot solve the serious problems facing it, how will we be able tomorrow to condemn their apathy, even their cynicism towards our institutions.
I urge all members and ministers to see to the implementation of that part of the throne speech which was read by Her

Majesty the Queen on October 18 last and who said that it was absolutely necessary if we wanted to emerge from chaos to resort to new formulas. The cabinet which is responsible should seriously listen to the suggestions of hon. members, whatever the side from which they originate. I think we are all seriously working together to improve the economy to the country, to settle the problems which are disrupting harmony in Canada.
At times we refer to national unity, at others, to national harmony; I feel it is nicer to speak about harmony. It means a little more love for one another and I think it is the only way to ensure the survival of our country, of Canada as we know it. We need formulas to promote that harmony and if we take care we will attain that aim and the future generations will be happy and pleased with us.


Mr. Bert Hargrave (Medicine Hat):: Mr. Speaker, I think it is appropriate that I begin my remarks in this debate by saying that surely it must be considered as a dual capacity type of debate because it not only deals with actual income tax amendments but it also serves as a budget debate. That was not possible after the minister's mini-budget speech during the throne debate.
I find it indeed strange that our Minister of Finance (Mr. Chretien) should have sent out a news release the day after the debate began-I believe it was November 8-urging all members to avoid unnecessary delay in proceeding with it, after the same kind of bill in the last session, Bill C-56, for the budget of last spring, was given first reading only last June 15 and then was never called for second reading debate during the last session. So this new bill, Bill C-11, which we are debating all of this week, is indeed more than doubly important to all Canadians. My remarks tonight will relate primarily to those aspects of the bill pertaining to small businesses, including agriculture, with special reference to the Canadian cattle industry.
Almost three years ago I took part in the same kind of debate, both on second reading and in committee of the whole. That was on February 4 and February 18, 1975. At that time my remarks concentrated on the impact of the capital gains tax on incorporated family farms and farm partnerships. You will remember that the new approach to our tax structure involving capital gains had started on January 1, 1972.
During that earlier debate, the minister of the day-of course it was Mr. Turner-denied any possibility of roll-over tax provisions that were permitted for individual farm operators for intergenerational transfers of ownership in incorporated family farms and partnerships. I want to take another look at this issue today, almost three years later, and I suggest this is certainly the time for another look at this very important aspect of present-day agriculture under existing tax laws.
Incorporated family farms account for a disproportionately large share of Canadian farm production. Seven per cent of
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our Canadian farms are incorporated, but they account for 28 per cent of total farm production, and this does not include partnerships. Why did they incorporate in the first place, particularly 15, 20 and 25 years ago? The fundamental reason was to enhance and preserve the family farm as a continuing and meaningful farm unit. Now the exact opposite is taking place, that is, the breaking up of family farm units due to the inescapable requirements of the capital gains provisions for corporate and partnership farms.
In those earlier days governments, both provincial and federal, actively promoted farm incorporations. Then you will recall the Carter Tax Commission. It recommended incorporation for certain size farms, usually the larger size. Perhaps the most immediate reason that appealed to farmers themselves was that wives and family members could be legally involved and paid for their services on the family farm. Our Income Tax Act, as amended back in 1975, as I said, and again now as proposed in this bill, is still not adequate with respect to capital gains tax provisions for incorporated family farms, small businesses, and partnerships.
I want to begin by presenting three specific case histories of actual family farm corporations. All of these have very serious problems involved in a proposed intergenerational transfer because of the inadequacies of our federal tax laws. While these case histories deal with farms and ranches that are larger than average, I suggest the same problems exist for much smaller incorporated family businesses and partnerships.
The first case history is a fairly large cattle ranch in western Canada. It is operated by the third and fourth generation in the same family on the same cattle ranch, and there is a fifth generation well on the way. This cattle ranch has been placed on the market. It was advertised for sale quite recently. It has a value of somewhere between $3 million and $3.5 million. The ranch was incorporated in 1957, that is, 20 years ago. In that interval land values in the area have increased from four to four and a half times. The fourth generation would have a tax liability of three quarters of a million dollars, and the yearly interest on that tax alone is some $75,000. So far there has been very little interest in the advertisements of the sale of this ranch, especially from Canada or the United States. However, there are some prospects from European sources.
This particular family, composed of very studious and capable people I can assure you, reasons that they have no other choice except to sell out. The debt load for the fourth generation is impossible to work out, even over a generation, and particularly after the last three disastrous cattle market years. So we have the incredible prospect of a fourth and fifth generation Canadian farmer being displaced by foreign owners and operators with foreign capital.
The second case history involves another unit in western Canada. This one is a mixed grain and cattle operation that operates on both irrigated and dry land in the western prairies. Two family units are involved in this one operation. It is incorporated, of course, and it contains approximately 9,000 acres. Its assets today total approximately $2.5 million, and the total tax liability, if it is offered for sale or if the capital
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gains tax comes into play, will be again three quarters of a million dollars.
This family unit that is incorporated wishes to move to two separate family farm corporations. To do so they require a form of reverse amalgamation to roll out the assets of the parent company to the new family units. Again, as in case one, they are faced with the almost impossible debt load which will result from the capital gains tax.
This family unit began with two succeeding and different partnerships which operated from 1945 to 1952, and this was followed by a single limited company which was set up in 1961. Now they find there is no room for members of the next generation, which happens to be the third generation to farm under this corporate structure. The problem in this one is not a transfer of assets from one generation to the next but a roll out of existing assets of a single company to two new companies involving the present family shareholders. To do so, the decision to divide in 1975, and that is when they made this decision, requires the process that I mentioned which might be called reverse amalgamation, with provision in the Income Tax Act to permit such a division. Of course, that does not exist now.
The third case history is a ! ,000 acre beef farm in the province of Ontario. It involves two family units, each with a son ready to take over what they hope will be a new family corporate set-up, changing from a single incorporated farm unit to two separate incorporated family units. The single unit was incorporated in 1962. Land values in this case have increased considerably since valuation day, but not as dramatically as the two previous examples from western Canada which I gave. In spite of a half million dollar operating loss due to the disastrous cattle price year of 1976, capital gains tax in this case for only a half share in this family unit is well in excess of $100,000, but the total amount is not yet finalized.
In all three case histories I have reflected on certain severe inadequacies of the income tax which have become quite apparent. Our income tax laws in Canada are responsible in their application for these severe limitations.
Two of the three cases involve intergenerational roll-overs to the next generation, and one requires a division of the existing family corporate structure into two or possibly more family corporations in anticipation of an intergenerational transfer later on. In all three cases none of the families wanted to stop farming or sell out completely. All wished to continue in the same family line. All were incorporated before the start of the new tax policy involving capital gains, which started back on January 1, 1972.
All three cases are in severe difficulties because of the dramatic increase in agricultural land values which has occurred since 1971. Why this great increase in land values? That is at the root of this, plus the interpretation of our tax laws. There are a number of reasons. One is the real increase in farmland values resulting mainly from the re-investment of profits to improve productivity. Another one is the increasing scarcity of farmland, especially in Ontario, British Columbia

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and, I presume, in Manitoba. However, even now on the prairies this is becoming more and more a factor. Finally, there is the insidious impact of inflation, the most important reason, and this includes the substantial amount of nonagricultural financing invested in our farmlands as a hedge against inflation. I think this is by far the most important reason why we have seen land values increase so dramatically. A combination of these three major factors has caused farmland values to increase anywhere from two to four and a half times, going back seven years, or since the advent of the capital gains tax.
In all three case histories the best available accountants, tax experts, and estate planners were employed for their expert advice by the respective families. The transfer of shares in a family farm company to a son in the event of a death of course results in an immediate realization of capital gains. Tax payments can be spread over several years, but the tax cannot be avoided; hence the increasing number of forced sales, such as that first case history to which I referred, to satisfy the capital gains tax.
While these remarks have all related to incorporated family farm situations, the same can be said for incorporated small family businesses of a non-farm nature. However, we should keep in mind that the capital needs in agriculture as a ratio of gross and net income are much higher than in other small business pursuits, indicating a disproportionate need for a tax roll-over provision for the corporate family farm. This is fully documented in a report of the Food Prices Review Board of March, 1975. This particular report shows that the investment ratio to gross domestic product in agriculture is well over twice as large as the same ratio in manufacturing. The report also finds that investment in land and buildings of Canadian farmers constitutes 70 per cent of the total capital value per farm.
I want now to go back to that earlier reference to the debate on the income tax amendments almost three years ago during Mr. Turner's period as Minister of Finance. I refer to Hansard of February 18, 1975, and also to the proceedings of the committee of the whole. In response to my arguments favouring roll-over provisions for incorporated family farms and partnerships, Mr. Turner had this to say as reported at page 3331:
We were concerned about persuading more people to stay on the land and produce food. We recognized the difficulty in respect of a family farm in the current economic structure, and we eliminated the capital gains tax on the transformation of a family farm from one generation to another as long as the land remains in agricultural use. The difficulty is that since the land is so illiquid, the payment of capital gains tax on the value of the land is very difficult, particularly in those areas of the country where there might be an artificial effect as a result of suburban sprawl. In this event the land is drawn out of agricultural production because the children cannot raise the money to pay the tax on the death of the father or mother, and it is the land, that is liquidated.
In the case of an incorporated farm there is not that type of liquidity because the shares, by reason of estate planning, can be transmitted over a period of time within the lifetime of the father and mother, and the same problem of liquidity does not arise.

A little later he said:
On the question raised by the hon. member for Medicine Hat, there is very little logic in segregating the incorporated family farm as a business from any other incorporated business in the country-of which there are hundreds of thousands-so that in fairness, if one were to allow capital gains, free transmission from one generation to another in an incorporated family farm, there would be little argument for resisting that transmission on a tax free basis from one generation to another in any incorporated family business.
With respect to Mr. Turner's last point about the inclusion of any-that means all-incorporated family business for the roll-over provision, I say most emphatically, why not? If ever there was a time in our history when small family style businesses of all kinds needed a shot in the arm it is certainly now when there is such widespread concern over the state of our economy. There is no question we are in a prolonged recession; it is just a matter of definition as to how serious it is. Small family businesses are the backbone of our Canadian way of life. If Britain's strength during the war was part and parcel of being a nation of shopkeepers, then Canada's strength and future relate directly to our private enterprise system and incentive for the small family business. They must have a sure future, including a reasonable process to continue that business, especially as an incorporated family business.
Mr. Turner's comments suggest that a liquidity problem would not exist with estate planning, that is, for incorporated family farms. This is simply not so, and I have already advanced some solid reasons for that. While it is possible for some kinds of estate freezing plans to defer taxes on capital gains until the death of the father, absolute avoidance is, of course, impossible, particularly where the rate of appreciation in value is considerable, which is certainly so now under our continued severe inflation.
Mr. Turner was concerned also about adequately defining a family farm corporation. There are a variety of definitions readily available. I should like to remind the House of three such sources: first, the federal government's Farm Credit Act which defines a family corporation; second, the Ontario government's gift tax act and succession duty act; and third, the British Columbia succession duty act. It should be noted the two Ontario definitions make no distinction between farming corporations and other small business corporations, and further, Ontario recognizes as an adequate definition of a small business the definition provided in section 125 of the Income Tax Act.
To conclude these remarks about capital gains and intergenerational roll-over for incorporated family businesses and partnerships, surely it is obvious some of our tax laws must be modified or changed. Seven years after valuation day and the Carter Commission, surely it is time to recognize what disasters are built into our tax structure and are only now becoming obvious because of the ravages of inflation.
Let us take a look at what can be done in this regard. First,
I suggest the easiest, most important and basic solution is to allow the same roll-over provisions for incorporated family farms and partnerships as for the individual units now pro-
November 17, 1977

vided for by statute. Second, let us recognize that some incorporated family arrangements, which were established before valuation day, must now be entitled to a reverse amalgamation process. I have referred to that in the second case history which I cited. Third, why not give serious consideration to a new valuation day which would be much closer to present-day circumstances? Fourth, we could always examine the experiences and tax provisions in the United States where the intergenerational transfer principle has been available for some time now, provided the new generation stays in the business for a reasonable time frame. This is the principle of capital gains forgiveness, as distinct from the roll-over principle.
This principle is recognized already in Ontario and British Columbia succession duty legislation. A condition for such existing legislation is that the new generation continue to operate the farm for at least a ten year period, which is a sensible and reasonable provision. If a specific time frame presents administrative problems, perhaps a more general once-in-a-lifetime roll-over provision could be permitted.
Before leaving this subject, I want to remind the House, during this important debate, that the recent Commission of Inquiry into the Marketing of Beef and Veal received widespread input comment on this subject during their nation-wide hearings. As a result, their recommendation No. 14 reads as follows:
The deferral of capital gains tax, as it now applies to the family farm should be extended to cover family farming corporations.
It did not mention partnerships, but 1 am sure that the commission would want to include partnerships in that recommendation.
On a philosophical note, 1 would remind all parties concerned over this tax item that farmers, especially western farmers, have traditionally reinvested their profits, at least most of them, back into their farms and ranches for many generations. This no doubt developed as an aftermath of western pioneer days and, more particularly, as a result of ten years of drought and depression in the thirties.
That was followed by at least another ten years of adjusting to an agricultural economy when farmers had to learn all over again how to use financing and how to use cash money. An entire generation of farmers were affected in this way. It was as a consequence of this phase of western farm history that the observation has often been made that farmers, especially cattlemen, are broke most of the time without knowing it, but very often end up the richest men in the graveyard. There is a very obvious update to that quote today. Capital gains taxation has brought about an abrupt end to that continuing possibility.
I would like to make some appropriate remarks about another aspect of western agriculture that has a direct relationship with the income tax amendment. I am referring to the matter of the continuing and worsening drought across southern Alberta and southwestern Saskatchewan. This House has heard me comment on this subject over the past year on a
Income Tax
number of occasions. I suppose it is a sort of labour of love, if one can really love a disaster. After all, the recent news stories of excessive rain in western Canada and the serious threat to our grain harvest, which is now over, most people, especially here in central Canada, assumed that the western drought was over. I must say that over much of the straight grain producing areas it is over, but all across southern Alberta, except, our irrigation areas, and the entire southwest part of Saskatchewan, the serious drought continues and worsens.
We have now had in this area three winter droughts and two summer droughts. In severity, they are at least the equivalent of the three worst years of the thirties, at least as I remember them. That was 1931, 1932 and 1937. That is with respect to soil moisture or more properly, the lack of soil moisture. However, the surface water situation that is needed for stock watering is much worse, the worst I have ever seen.
The cabinet committee of eight ministers that was formed early this year, with the Minister of Agriculture (Mr. Whelan), as chairman, was established last spring as a direct consequence of this widespread and serious western drought.
At various times I was concerned enough to make specific recommendations to this committee and its Regina task force. My personal letters of May 10, June 28, August 11 and, more recently, November 3 are a matter of record. The last one dated November 3 went to the Minister of Finance. I am genuinely pleased to report that a number of my suggestions have been acted upon. But perhaps my most important suggestion, a tax deferral provision, has not been accepted and it would appear it has been rejected.
A fundamental fact of farm life we learned during the drought of the 1930's was that the prudent course to follow was to reduce the number of our cattle, mostly cows, to a level which could be supported on our depleted winter ranges, augmented by local feed supplies, and then to buy back in, or, more often, to grow back in by natural increase after the period of drought was over. This might take years, but in 1977 it is still the prudent thing to do.
Starting a year ago now, cattle have been reduced in number to a considerable extent, and many more will have to move in the course of the next two months in numbers well above normal fall culling. There is no panic selling. After three or four years of disastrous cattle prices the market upturn is now well established. All categories of cattle are selling approximately $10 a hundredweight above levels of a year ago.
There is a very significant difference between this drought and the drought of the thirties. There was no income tax then. Cattle producers had no need to concern themselves about excessively high taxable incomes due to much larger cattle sales. They do now, of course. It just does not make sense to feed hay at $75 to $80 a ton to a $200 cow for five or six months. It will be a long, hard winter, regardless of how mild temperatures may be, because of severely depleted winter grass and feed reserves. Twice the value of a cow could easily

November 17, 1977
Income Tax
be fed during the feeding period this winter. Drastic reduction of cattle numbers is the right course to follow. Cattlemen know this, but they are very concerned about the tax position which would obviously result from much higher taxable incomes, in some cases as much as 50 per cent to 100 per cent higher than in more normal years.
A major incentive for cattlemen to do what they know is right, that is, to reduce the numbers of their herds, would be the introduction of a tax deferral plan along lines which have been well documented and presented to the cabinet drought committee and the tax policy branch of the Department of Finance. Such a plan would have to continue, not only until the drought was over but until grass and feed supplies return to normal. That may take years. Remember the lesson of the thirties.
This tax deferral plan has been fully supported by the governments of Alberta and Saskatchewan and I have reason to believe that the tax policy branch of the Department of Finance itself has given it some support. Unfortunately, it would seem that it is the Minister of Agriculture who has rejected the proposal. He has suggested that cattle herds are being reduced only to normal levels and that this is the conclusion reached by a drought task force survey last summer. Believe me, Mr. Speaker, this is not so. 1 say this most emphatically. Further, 1 would call attention to the response given to me by the Minister of Agriculture that there is "a rational culling of breeding herds which will serve to bring herd sizes more in line with normal range-carrying capacity."
Mr. Speaker, we simply do not have normal range-carrying capacity at the present time. Our carrying capacity in the drought area is the worst since 1937, which is 40 years ago, and I have been involved in the cattle industry in the heart of that drought area for every one of those 40 years, excepting the war years. In many cases cattle numbers have already been reduced by one half-in my own case it is by one third-and further reductions over the entire drought area will be necessary during the next two months.
I ask the special cabinet drought committee of eight, including the Minister of Finance, with the Minister of Agriculture
as chairman, to reconsider the advisability of this tax deferral proposal. It is reasonable and practical; it has very wide support and it could serve as a last resort which would allow cattle producers to survive in a critical drought area. I am sure the Minister of Industry, Trade and Commerce (Mr. Horner), and the Minister of State for the Environment (Mr. Mar-chand) are fully conversant with both the subjects of which I speak tonight.
In conclusion, Mr. Speaker, I just want to make a very brief comment on the cancellation of the plans to tax life insurance policies in the hands of the recipient. I do so because of the heavy mail I have received, and I am sure every member in this House has received somewhat similar mail. This is the main reason the minister, in his good judgment, withdrew the major portions of that bill. I also think we should seriously consider doing away with the other two aspects proposed in that bill, the one on the alleged investment element at the time of a policy loan and the other one, of course, which disallows deduction of interest paid on policy loans.
I am looking forward to the committee stage when Bill C-l 1 comes before us for discussion in detail, and I hope to participate at that time on the matters which I have raised.
Finally, the father in one of those case histories which I referred to, when I was discussing the details over the telephone, after I am sure a very difficult day at home on his ranch, had this to say after discussing his critical farm situation, "We can handle the cattle physically; we can live with the weather under all circumstances, but when the bureaucrats and politicians move in after four years of depressed markets, what chance have we got?"


William James Kempling: Mr. Speaker, may I call it 10.30?


Some hon. Members:: Agreed.


The Acting Speaker (Mr. Turner):: Order, please. It being 10.30 p.m., this House stands adjourned until tomorrow morning at eleven o'clock.
At 10.28 p.m. the House adjourned, without question put, pursuant to special order.

Friday, November 18, 1977