1977-11-28

ROUTINE PROCEEDINGS


Mr. Jack Murta (Lisgar):: Mr. Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. In light of this morning's report on the study compiled by MOT into the violations of aviation rules in Canada, and in particular northwestern Ontario; and in light of the statements made by the minister that after conducting an internal inquiry into flying procedures in northern Ontario he would launch a public inquiry, if warranted, I move, seconded by the hon. member for Vegreville (Mr. Mazankow-ski):
That this House urge the Minister of Transport to honour his commitment and immediately call a public inquiry into the conditions under which aircraft operate in Canada in general and in northwestern Ontario in particular.


Mr. Speaker:: Presentation of such a motion for debate requires unanimous consent of the House pursuant to Standing Order 43. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


ROYAL CANADIAN MOUNTED POLICE
Mr. Bill Jarvis (Perth-Wilmot):: Mr. Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. Last week the Solicitor General announced a number of administrative changes within the upper echelons of the security service force to ensure greater control over security activities. This new administrative structure is seriously deficient, however, in that it makes no specific provision for the Solicitor General to provide policy direction or input into the operational policy committee. Therefore, I move, seconded by the hon. member for Northumberland-Durham (Mr. Lawrence):
That this House requests that the Solicitor General consider revising or enlarging the structure of the operational policy committee to provide direct consultation between the committee and the Solicitor General; and that this House further directs that this committee hold frequent and meaningful meetings so that the Solicitor General is made both responsible and accountable for the operating policy of the security service.


Mr. Speaker:: Presentation of such a motion pursuant to Standing Order 43 can be done only with unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


AIR TRANSPORT
Mr. Arnold Peters (Timiskaming):: Mr. Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. Given the allegations made by two investigators for the Department of Transport that aviation safety across Canada, and particularly in northwestern Ontario, is being jeopardized by the department's failure to adequately enforce air regulations and take action against companies and individuals routinely engaged in illegal and dangerous air practice, I move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles);
That this House urges the Minister of Transport to immediately stop the situation in which senior officials of his department are effectively stopping attempts of regional safety officers from applying disciplinary action in order to enforce safety regulations; and furthermore, urges the minister to stop the current practice in which aviation firms and individuals in the north break the law and endanger the lives of employees and passengers.


Mr. Speaker:: Pursuant to Standing Order 43, presentation of such a motion requires unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


INCOME TAX
Mr. John C. Crosbie (St. John's West):: Mr. Speaker, I rise on a matter of urgent and pressing necessity pursuant to the

November 28, 1977
Transport
provisions of Standing Order 43. In light of the fact that one John Christopher Doyle, a fugitive from justice in the United States of America and in Canada, who lately became a citizen of Panama, was reassessed for large amounts of income tax relating to the 1950 and 1954 taxation years, owing the government as at December 31, 1976, $3,483,412; and in view of the fact that he was not obliged by the government to pay the tax and interest before launching appeals to the Income Tax Appeal Board, the federal court of Canada and the Supreme Court of Canada, or even required to provide bank guarantees, bonds or proper security to cover the amounts claimed, while ordinary honest Canadians must pay up before they can even enter appeals, I move, seconded by the hon. member for Selkirk (Mr. Whiteway):
That the Minister of National Revenue make a statement on motions detailing the reasons for the tender tax treatment and lax Liberal treatment given John Christopher Doyle from 1950 to the present date, as compared to the hard treatment given the ordinary honest Canadian taxpayer, and explain the reason for failure to act against John Christopher Doyle while he was a resident of Canada from 1950 to 1974.


Some hon. Members:: Hear, hear!


Mr. Speaker:: Presentation of such a motion for discussion at this time pursuant to Standing Order 43 requires unanimous consent of the House. Is there such consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


TRANSPORT
Mr. Jack Marshall (Humber-St. George's-St. Barbe):: Mr. Speaker, I, too, have a motion under the provisions of Standing Order 43. The persistent perennial ice conditions will again face Newfoundland fishermen and shipping to northern Newfoundland in the months from December to March, and past experience shows clearly that icebreaker vessels in Halifax are too distant to provide the service required, causing hindrance and loss of income to fishermen. I therefore move, seconded by the hon. member for South Shore (Mr. Crouse):
That the government give immediate consideration to the deployment of icebreaking vessels to Newfoundland during the months indicated, and further, that any new vessels in work be designated for that province.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


CONGRATULATIONS TO TWO GREY CUP TEAMS-MOTION UNDER S O. 43
Mr. Irenee Pelletier (Sherbrooke):: Mr. Speaker, under the provisions of Standing Order 43, I ask the unanimous consent of the House to move a motion dealing with an important question of pressing necessity. I move, seconded by the hon. member for Vaudreuil (Mr. Herbert):
That this House congratulate the two Grey Cup finalists for the exceptional entertainment they provided yesterday at the Olympic Stadium, especially the Montreal Alouettes who have shown without the shadow of a doubt that the Canadian metropolis has the best football team in the country.


CANADIAN NATIONAL RAILWAYS
Mr. David Orlikow (Winnipeg North):: Mr. Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. Whereas it is the intention of the CNR to gradually eliminate its express service as demonstrated by the lay-off of 360 employees in that department in the next few weeks, and the probable lay-off of hundreds more in the next couple of years, and whereas this decision will mean not only unemployment but that the goods which until now had been moved by the fuel efficient railways, will in the future be moved by air or truck which will use substantially more of our scarce oil and gas I therefore move:
That this House urges the CNR to stop its planned elimination of its express department.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


URBAN AFFAIRS
Mr. Dean Whiteway (Selkirk):: Mr. Speaker, I wish to move a motion under Standing Order 43 on a matter of urgent and pressing necessity. In view of recent changes which have occurred within the Ministry of State for Urban Affairs, changes carried out without any reference to parliament, and in light of uncertainties which still exist after questioning of the minister on November 25, I move, seconded by the hon. member for Parry Sound-Muskoka (Mr. Darling):
That the Minister of State for Urban Affairs make an immediate statement on motions to confirm whether there is a branch called the directorate-general of
November 28, 1977

Special Urban Projects, and whether that specific directorate has a budget of $29 million, and what the specific responsibilities of that directorate are.


Mr. Speaker:: Standing Order 43 requires unanimous consent for the presentation of such a motion. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.



ORAL QUESTION PERIOD


Right Hon. J. G. Diefenbaker (Prince Albert):: Mr. Speaker, I do not suppose it was the game yesterday that prevented the Solicitor General from being here today, but in his absence I would like to direct a question to the Acting Solicitor General, namely, the Minister of Consumer and Corporate Affairs, and ask him a question concerning the judgment handed down a couple of days ago by the Associate Chief Justice of the province of Quebec which indicates that truth cannot be kept in cold storage for long. Among other things, it states:
In a democratic society, public interest demands that the citizen be informed of activities and functions of his government. Only serious reasons can justify an exception to this rule; the security of the state can be one but the law must be respected.
Then it goes on to say:


Some hon. Members:: Order.


John George Diefenbaker: Mr. Speaker, I realize that these gentlemen have not read the judgment, or they may have read it and are afraid of what is coming. It goes on to say:
... I am not disposed to paralyze, even temporarily, the functioning of a commission of inquiry whose object is to enlighten the public.


Mr. Speaker:: Order, please. I think there is a limit to how much of the judgment the right hon. member can read. I would suggest he put his question.


John George Diefenbaker: Mr. Speaker, do you feel it has been identified sufficiently for hon. members opposite. Now that the court has decided that security is not in issue, and in view of the fact that two officers who allegedly committed offences, namely McCleary and Brunet, are about to give evidence today before the commission, as acting minister will the minister raise any objection to the giving of evidence, however embarrassing it might be to the government?
Oral Questions


Hon. Ron Basford (Minister of Justice):: Mr. Speaker, it is up to the commission to determine who it calls as witnesses. It is not up to the government to determine that. If called, these officers will answer questions, subject to their own inclinations as to oaths or any applications or actions the Solicitor General may take before the commission or before the courts.


POSSIBILITY OF OBJECTION TO FORMER SOLICITOR GENERAL GIVING EVIDENCE TO KEABLE COMMISSION
John George Diefenbaker: Mr. Speaker, the Minister of Justice was one of the two applicants, along with the Solicitor General, who did everything he could to prevent the Keable Commission from hearing witnesses for a period of ten days. Under all the circumstances, and he being the custodian of the Queen's conscience, if the Solicitor General, the former Solicitor General who is now the Minister of Consumer and Corporate Affairs and the further penultimate one, the Minister of Supply and Services, are called to give evidence before that commission, will they give evidence, or will they endeavour to hide the truth by not saying anything?
Hon Ron Basford (Minister of Justice): Mr. Speaker, neither of them has been called as witnesses as far as I know, so that is a hypothetical question. As to the latter part of the question, of course that is not the intention of the government or any of the ministers in it.


John George Diefenbaker: Mr. Speaker, as the government seems to regard truth in this connection as unfit for human consumption, I am just wondering whether the government or the Minister of Justice is going to take a decision, or has, that these witnesses shall not give evidence. Further, I would like to ask the minister whether in launching these proceedings before the Associate Chief Justice of the province of Quebec it was done because of the fact that these two witnesses whose names I have already mentioned would be giving evidence today or tomorrow. Was it to keep their mouths shut that the motion in question was made?


Stanley Ronald Basford: No, Mr. Speaker. The writ of revocation makes it clear that it relates to a number of subpoenas that were issued by the commission relating to a number of documents which in our view do not relate to criminal activities in the province of Quebec but to the operation of a federal institution within the province and sometimes without the provinces.


John George Diefenbaker: So the witnesses will give evidence.


KEABLE COMMISSION-POSSIBILITY OF FURTHER ACTION TO PREVENT HEARINGS
William Herbert Jarvis: Mr. Speaker, my supplementary question is to the acting minister who, according to

November 28, 1977
Oral Questions
the Journals branch, is the Minister of Consumer and Corporate Affairs. However, I suppose pro tem it is the Minister of Justice. Is it the intention of the government to appeal the decision of Mr. Justice Hugessen, or in the alternative is the government contemplating any further action, be it legal or political, in an attempt to inhibit the operation of the Keable Inquiry and, if so, what is the nature of that contemplated action?


Stanley Ronald Basford: Mr. Speaker, I am unable to answer that at the moment because we are consulting with counsel.


OPERATIONAL POLICY COMMITTEE-REASON FOR LACK OF DIRECTION BY MINISTER
William Herbert Jarvis: Mr. Speaker, I will move on to something with which perhaps the minister is more familiar. In a statement last week the Solicitor General indicated what he considered to be some very important operational changes within the security service, one of which was called, I believe, a policy advisory committee to be chaired by the commissioner and to be composed of the commissioner, deputy commissioners and the director general of the security service. Can the acting minister explain why in creating this new policy structure there appears to be no input whatsoever from the Solicitor General? Is it the position of the Solicitor General that that committee should operate in a vacuum without direct input from his office?


Stanley Ronald Basford: No, Mr. Speaker. It has been made clear by the statement of the Solicitor General, and in the evidence placed before the Standing Committee on Justice and Legal Affairs, that such a committee is to assist the commissioner in exercising his functions under the Royal Canadian Mounted Police Act. Obviously, as has also been made clear by the Solicitor General and the Prime Minister, from time to time policy directions and mandates are issued by the government to the commissioner of the RCMP but the changes announced by the Solicitor General last week relate to administrative changes within the RCMP to assist the commissioner in carrying out his functions.


Mr. Hnatyshyn:: Mr. Speaker, a point of order with respect to question period.


Mr. Speaker:: Order, please. I will hear the hon. member at three o'clock.


Ramon John Hnatyshyn: Mr. Speaker-


Mr. Speaker:: Order, please. Is the hon. member rising on a question that he feels I must deal with now?


Ramon John Hnatyshyn: Yes, Mr. Speaker, and I will not take up too much of the time of the House. I raise it now because the government has designated acting ministers to answer on

behalf of ministers who are not present in the House. The names have been tabled with the Journals branch of the House of Commons, they have been approved by Cabinet and designated as such. The designated acting minister, in the absence of the Solicitor General, is the Minister of Consumer and Corporate Affairs. From what has happened today we may take it that anyone in the Cabinet can answer questions and the Minister of Consumer and Corporate Affairs can avoid his responsibility to answer questions with respect to matters within the purview of the Solicitor General. I will be glad to present this matter to Your Honour for consideration. The fact is, however, that the Minister of Consumer and Corporate Affairs who is acting Solicitor General sits mute and refuses to answer questions that we want to put to him as Acting Solicitor General.
I think this is a valid point of order. If the minister has something to hide I should like to know what it is.


Mr. Speaker:: Order, please. I can perhaps give this matter consideration at another time. I am not aware of a rigid requirement that a list be published designating acting ministers.


An hon. Member:: It has been, for years.


Mr. Speaker:: In the first place the practice involved in designating an acting minister is one that might change from day to day and is probably one which may in any event be beyond the purview of pure procedure and be one of Cabinet.
In any case, the hon. member for Saskatoon-Biggar has raised the point and I shall extend the question period by the two or three minutes he took then I can deal-


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please. I think that if the hon. member for Saskatoon-Biggar had a serious point of order to argue it was proper that he raise it before questions were put to the minister involved. I do not think there is aything untoward in the hon. member raising the point at this time. If it has any validity it should be dealt with before further questions are put. On the face of it, however, I do not think the matter has sufficient validity for me to rule on it at the present time. I shall be glad to look at the list, examine the practices, and see if there are any guidelines I can set down for future practice.


AIR TRANSPORT
William Arnold Peters: Mr. Speaker, my question is for the Minister of Transport. The study of aircraft safety in northwestern Ontario as reported in today's Globe and Mail appears to warrant a royal commission to study aviation safety in all areas outside the metropolitan area, and in particular northwestern Ontario. In light of the fact that of
November 28, 1977

33 per cent of commercial aircraft accidents in Ontario, 20 per cent of the total occur in northwestern Ontario which contains less than 10 per cent of the aircraft in the province and only 3 per cent of the population, is it the minister's intention to establish a royal commission without delay?


Hon. Otto E. Lang (Minister of Transport):: Mr. Speaker, I intend to look at the report very carefully to see which areas require further action. Some action has already been taken regarding the enforcement of regulations but it may well be that broader questions arise which should be pursued and I will be trying to reach a decision on that as soon as possible.


REQUEST FOR TABLING OF REPORT ON SAFETY OF OPERATION AND CRASH OF DC-3 AT PICKEL CROW
William Arnold Peters: As a result of the report by William Slaughter and Andrew Carswell indicating that the policing of air regulations was so inadequate that numerous illegal and dangerous practices are common enough to be accepted as normal by pilots and company managers, is the minister now prepared to release the findings of a departmental inquiry into the death last May of a pilot whose DC-3 crashed on takeoff at Pickel Crow and precipitated this general investigation of air safety in northwestern Ontario?


Otto Emil Lang: Mr. Speaker, those are two quite separate questions. It had already been apparent to us that additional inspection officers are indeed required in this area and in other parts of the country. We will be taking steps to acquire those officers, in that way meeting some of the allegations in the most recent report that we are unable at the present time to enforce adequately. We will clearly want to respond to that in the most effective way, that is by obtaining additional staff and enforcing the regulations.


INQUIRY WHETHER MINISTER CURTAILED INVESTIGATION INTO SAFETY OF OPERATIONS
William Arnold Peters: Was it at the minister's direction that H. R. Finlay, the Acting Deputy Director General of Civil Aviation, instructed the two investigators to maintain an open and visible profile and to curtail the investigation by 30 days, an investigation brought about by James Snow, the Ontario minister of transport, who believed that air safety was being totally neglected by the departmental officials in that area?


Otto Emil Lang: No, Mr. Speaker. It was not my instruction. I should make clear to the hon. member that the request for an inquiry came from many quarters in the north, including members of parliament on this side of the House from that area. I responded to them by asking for this investigation which has obviously brought a lot of facts forward.
Oral Questions


REASON FOR FAILURE TO HOLD PUBLIC INQUIRY INTO SAFETY OF OPERATIONS
Jack Burnett Murta: Mr. Speaker, I wish to direct my question to the Minister of Transport. On July 20, page 7825 of Hansard, in response to a question about the investigation we are talking about, the minister replied:
I am willing to say that if that investigation reveals the need for a more formal inquiry, I will be happy to see that that is undertaken as well.
We on this side would like to see a public inquiry into this matter. What are the reasons the minister is giving for not holding an inquiry?


Otto Emil Lang: Mr. Speaker, I am not giving any reasons for not holding the inquiry. I said to the hon. member for Timiskaming that the obvious course for me to follow is to read the report, which I have not done, and then form a judgment on the matters that may require further inquiry.


REQUEST FOR TABLING OF REPORT ON SAFETY OF OPERATIONS
Jack Burnett Murta: Given the event that there may be a public inquiry, and hopefully there will be, will the minister after reading the investigator's report table it in the House of Commons so that all parties may be privy to the information?


Otto Emil Lang: Mr. Speaker, I will certainly see how I can make as much information as possible available to hon. members. I am sure hon. members appreciate that there may be certain allegations in the report referring to individuals which may not be adequately based in a way which protects the rights of those individuals, but that will indeed be my main consideration in determining what should be made public.

[ Translation]


MEASURES TO PROTECT QUEBEC PRODUCERS FROM EFFECTS OF REMOVAL OF FEED GRAIN SUBSIDY
Mr. Adrien Lambert (Bellechasse):: Mr. Speaker, I should like to address my question to the Minister of Agriculture. Subsequent to the removal of the grain transport subsidy in Quebec, the federal government will be saving a total of $30 million. Could the minister tell the House whether any other measures favourable to farm producers will be taken so that they will not be penalized by the removal of that transport subsidy?


Hon. E. F. Whelan (Minister of Agriculture):: Mr. Speaker, we are studying ways and means of making the payments direct to the producers and users of feed grains who are concerned.

November 28, 1977
Oral Questions


Joseph Adrien Henri Lambert: A supplementary question, Mr. Speaker. Could the minister tell the House whether he has been in touch with his Quebec counterpart to see if it would be possible to adopt replacement measures following a federal-provincial agreement? In the affirmative, did Quebec refuse any agreement or did the federal government find the proposal unsuitable?


Eugene Whelan: We made a similar proposal to the one we made to the Province of Ontario which has been in effect for several months. The administration is mostly looked after by the province of Ontario. We submit the cheques to the farmers who are participating in the program. We have made practically the same proposition to Quebec but they have refused to accept it.


Joseph Adrien Henri Lambert: Mr. Speaker, in view of the importance of this matter, could the minister say exactly to whom these proposals have been made in Quebec? Did he receive an answer? Will eastern Quebec producers receive in the near future at least the equivalent of transportation subsidies they used to get?


Eugene Whelan: The earlier discussions were held between the minister of agriculture from Quebec and myself at the provincial minister's meetings which took place in Victoria in July. Since that time proposals have been made at the deputy ministers level in Ottawa and in Quebec. For the life of me, I cannot understand why they will not accept a program which is practically the same as the one accepted by Ontario which is working very well. If our efforts continue to meet with no success, we intend to proceed with this program, as I said, by dealing directly with the farmers in some way.


UNEMPLOYMENT INSURANCE
Mr. Dan McKenzie (Winnipeg South Centre):: Mr. Speaker, my question is for the Minister of Employment and Immigration. It concerns the closing down of the special unemployment insurance commission fraud squad, an organization which under a personal mandate from the Prime Minister had by 1975 achieved an excellent record of discovering UIC rip-offs resulting from a wide range of criminal behaviour. Will the minister tell us exactly why his predecessor, now President of the Treasury Board, closed down this program, particularly in the light of the strong support it had from the Solicitor General of the day and from the RCMP?


Hon. Bud Cullen (Minister of Employment and Immigration):: Mr. Speaker, I am not familiar with this area of the operation. I will look into the matter and get an answer for the hon. member. I would say we have been very effective in this particular area. Perhaps it was a question of administering this operation from a central point with the idea of doing a more effective job than we have been doing. I might add that the amount of fraud in connection with that fund is negligible.


A. Daniel McKenzie: Would the minister care to refute charges made to me by officials that the program was shut down because it was becoming a political embarrassment to the government and, in particular, to the minister responsible? Would he also tell the House whether he plans to reinstate the program, especially having regard to evidence by the Auditor General that $158 million of the $4 billion the taxpayer spends on UIC is being chiselled by those who have no right to the money?


Jack Sydney George (Bud) Cullen: First of all, as to that being the reason, it is absolute claptrap and there is no truth in it at all. As to the second part of the question, I think the hon. member does a disservice to those collecting unemployment insurance. In point of fact, the Auditor General did not say what the hon. member has attributed to him. He indicated that the figure was somewhere around $95 million-he thought it was possible that such a figure might be involved. We have worked very closely with the Auditor General. He has done an absolutely first class job; he intends to monitor the improvements we have made in developing an even more effective administrative force, and to see that not only do we get the funds out to those who are entitled to them but that we check off those who are receiving money when they should not be. Again, I believe the hon. member does a disservice to those who are receiving unemployment insurance by suggesting there is a massive rip-off when there is not.


A. Daniel McKenzie: Inasmuch as the fraud squad did an excellent job by exposing the UIC gouging and criminal activity, which the Auditor General noted nearly two years after the squad had been disbanded, will the minister, if he wants to be of real service, now reinstate the special investigation division immediately?


THE CANADIAN ECONOMY
Mr. Sinclair Stevens (York-Simcoe):: Mr. Speaker, my question is directed to the Minister of Finance. It follows the line of questioning we were putting to him last Friday concerning the unfortunate level of unemployment we have been experiencing lately, certainly in particular regions of Canada. My question today has to do with unemployment in the construction industry which, nationally, is 18 per cent at the present time, ranging as high as 30 per cent in provinces such as New Brunswick and Newfoundland. Is the minister aware
November 28, 1977

Oral Questions LABOUR CONDITIONS
of the plight of the construction industry and does he have in mind any specific measures to help the construction industry out of the difficulties in which it finds itself?


Hon. Jean Chretien (Minister of Finance):: Mr. Speaker, I am aware of the situation which is rather difficult not only in that area but also in other realms of the Canadian economy. Of course, one month ago we made in the House of Commons an economic statement establishing economic policies for Canada, and we have no change to bring to this policy at the present time.


MINISTER'S VIEW OF PROGRESS NEXT YEAR
Sinclair McKnight Stevens: The minister has referred to his economic statement of October 20. At that time he indicated he was counting on a real growth in the value of exports and a real business investment growth in order to give us better results in 1978. As current figures released today show, there has been a decline in each of these fields, that there is less economic growth in both exports and business investment than in the first quarter of 1976, would the minister tell us whether now, a month later, he is still confident about economic progress next year?


Joseph Jacques Jean Chrétien: Mr. Speaker, there are positive factors in the economy. For example, this year we shall have a considerable trade surplus of $2.5 billion in our balance of payments, which is an improvement over the level of $1 billion we had last year. In the third quarter of this year we had an increase in the gross national income, which we did not see in the second quarter. I think we are on the way to an economic recovery which will come later, and that of course is the lot of several world economies at this time.


Sinclair McKnight Stevens: Mr. Speaker, only the present Minister of Finance could take any comfort out of a figure of 2.5 per cent real growth on an annual basis. Is the minister aware of the survey done this fall by the Department of Industry, Trade and Commerce which indicates there will be less business investment next year than this year and, if so, why does his department continue its optimistic tone?


Joseph Jacques Jean Chrétien: I think the increase in investment would be greater if we could pass Bill C-l 1 which would give incentives to the private sector of the economy and which is stalled by the opposition.


Some hon. Members:: Hear, hear!


PROPOSAL FOR MORE CONSULTATION PRIOR TO MASSIVE LAY-OFFS BY INDUSTRY
Mr. Maurice Foster (Algoma East):: Mr. Speaker, may I direct a question to the Minister of Labour? In view of the announcement this fall by INCO and other large companies of massive lay-offs without prior consultation with the unions or the governments concerned, does the hon. gentleman plan to require companies to furnish more adequate notification and carry out consultation with the unions and governments involved before decisions on mass lay-offs are taken?


Hon. John C. Munro (Minister of Labour):: Yes, Mr. Speaker. Under the Labour Code there are ways in which we can examine with business and labour what is needed in the way of information and we are looking into this to see whether this type of situation could be alleviated and could be prevented from recurring to the extent it did in connection with INCO.


SOCIAL SECURITY
Mr. Stanley Knowles (Winnipeg North Centre):: 
Stanley Howard Knowles: Mr. Speaker, I would point out to the minister that I did not ask for universal benefits between ages 60 and 65, but simply for those who need it regardless of their marital status. In view of the fact

November 28, 1977
Oral Questions
that she is talking about a guaranteed income arrangement for persons between ages 50 and 65, and in view of the fact it will take some time before she gets around to implementing that, could she not now make a beginning by providing such benefits for persons between 60 and 65, as I say, regardless of marital status?


Miss Begin:: I beg the hon. member to forgive my error of interpretation, and I thank him for his clarification. In the studies which we have already made public, we have identified three groups which are particularly vulnerable to economic conditions, and one of them is the age group of people between ages 55 and 64. We have not yet completed the studies concerning the priorities which exist amongst those people, such as the people between ages 60 and 65 mentioned by the hon. member who are not entitled to the allowance for a spouse which Parliament has adopted, as well as, for instance, single parent families or workers who draw the minimum income.


Stanley Howard Knowles: Please do something soon.


DENIAL OF PENSIONS TO WIDOWS UNDER AGE 65-GOVERNMENT ACTION
Jack Marshall: Mr. Speaker, in view of the fact that spouses of old age pensioners between ages 60 and 65 are being discriminated against when the husband dies at over age 65, is it the minister's intention now to overcome that inequity which exists, and what action is she going to take to overcome this situation?


Hon.   Monique@: Mr. Speaker, when I was first appointed to the department, I was briefed on that question of a retired person's spouse, aged between 60 and 64, which originates from an improvement which the whole House, after lengthy debates, passed in favour of a retired person's spouse who has reached retirement age when the spouse is between the ages of 60 and 64. No doubt an injustice is being done to single persons or persons living alone or those who are widowers or widows between ages 60 to 64. But we have set priorities on the various social expenses throughout the country. I am working on this question of this at least practical problem which exists when a person having received pension benefits for at least one or two years loses his or her companion. We are considering the first results which have come out after two or three years of application of that legislation. I cannot answer the question for the time being.


CANADA PENSION PLAN
Mr. James A. McGrath (St. John's East):: Mr. Speaker, given the commendable objectives of the minister, is she now prepared to take this discriminatory provision out of the Canada Pension Plan; that is the discrimination against housewives and those who stay at home to look after families? Is she now prepared to give them equal rights under the Canada Pension Plan.


Hon.   Monique@: Mr. Speaker, the hon. member must have been absent from this House a few months ago when this parliament passed the Canada Pension Plan provisions eliminating discrimination of housewives while raising children.


FEDERAL PROVINCIAL RELATIONS
Miss Flora MacDonald (Kingston and the Islands):: Mr. Speaker, I would like to direct my question to either the acting Prime Minister or the Minister of State for Federal-Provincial Relations. Given the worsening economic situation in the country which is highlighted by cruel unemployment figures, and given the fact that this government on its own has done little to alleviate the situation, how quickly does the government intend to convene a federal-provincial economic summit to which the Prime Minister referred on Friday? Will it take place before the end of this current calendar year or in the first few weeks of 1978?
[ Translation]


Hon. Marc Lalonde (Minister of State for Federal-Provincial Relations):: Mr. Speaker, the right hon. Prime Minister has already indicated that such a conference was being considered. I would like to point out to the hon. member that she must have been absent from the House on many occasions in recent months because she would know that we have proposed a number of economic measures to assist the unemployed and stimulate our economy.
As to the meeting, it will not likely be held before Christmas because the Prime Minister must complete his consultations with his provincial counterparts early in December, but it will probably take place during the first months of 1978.


Flora Isabel MacDonald: Mr. Speaker, perhaps the minister could be a little more specific as to dates, because surely the government must know at this point whether such a conference is to take place within the next two months, or is it really the government's intention to postpone any such action until late spring or early summer when the brutal unemployment picture of the present winter is fully upon us?
November 28, 1977

Oral Questions AGRICULTURE


Marc Lalonde: Mr. Speaker, I do not know why the hon. member is so concerned about the late spring or early summer.


Flora Isabel MacDonald: Because we have a winter to go through.


Marc Lalonde: I would like to tell her that consultations are taking place at the present time between the Prime Minister and the premiers of the various provinces. In addition, there likely will be additional consultations required among other ministers, such as the ministers of finance, before such meetings can take place.


Flora Isabel MacDonald: It sounds like next summer.


Marc Lalonde: We are planning these meetings in a very serious way, and if they are to be productive, we want them to take place in a productive atmosphere. In this way we hope to make sure they produce results and not just play up to the gallery, as the hon. member would like to do.


Some hon. Members:: Oh, oh!


MULTICULTURALISM
Mr. Gus Mitges (Grey-Simcoe):: Mr. Speaker, my question is for the Minister of State (Multiculturalism). In view of the fact there have been drastic cuts in grants and contributions to multicultural groups, from a sum of $8.02 million in 1975-76 to $3.94 million in 1976-77, with an anticipated further reduction for this fiscal year, can the minister tell the House whether his government is really sincere in carrying on a program of multiculturalism, or has the government somehow bowed to pressure to curtail and finally phase out the multiculturalism program?


Hon. Norman A. Cafik (Minister of State (Multiculturalism)):: Mr. Speaker, there is no doubt at all as to the government's firm commitment to the policy of multiculturalism in Canada. Secondly, the figures the hon. member uses in terms of alleged decline in funding, in my view, do not reflect the facts. In addition, there is a great deal more to be done for multicultural communities in this country than simply the spending of money. We have a need for a tremendous impact right across this nation of an over-all government policy, and that is equally important as funding, per se.


Constantine George (Gus) Mitges: Mr. Speaker, in view of the minister's reply, that the government is supposedly still sincere about a multicultural policy and its importance, could he explain why the minister is not devoting his full time to the portfolio instead of serving as well as deputy house leader?


POTATOES-REPRESENTATIONS FROM PRODUCERS CONCERNING PRICE
Mr. Eymard Corbin (Madawaska-Victoria):: Mr. Speaker, will the Minister of Agriculture inform this House whether he has received representations from either the provinces of New Brunswick and Prince Edward Island or the potato producers in respect of federal support for that industry in view of the very low price producers are now receiving for their potatoes?


Eugene Whelan: Mr. Speaker, I am not sure whether I have or have not received such representation. I can inform the hon. member that the stabilization board has been keeping an accurate account of the prices received by the potato producers in the Maritimes as well as in the rest of Canada. We are very much concerned that they receive at least the cost of production, and we know that in some instances they are not. It appears that the stabilization board will have to adopt some formula for government assistance to meet this obligation to the producers.


FINANCE
Hon. George Hees (Prince Edward-Hastings):: Mr. Speaker, my question is directed to the Minister of Finance. This country has now become the world's largest per capita importer of manufactured products, the ones that produce jobs. It is obvious there must be a great deal more industrial research in this country if we are to make our products more competitive in price, quality and design, and if we are to be capable of selling in larger quantities and producing the needed jobs. I should like to ask the minister if he will give serious consideration to allowing companies to write off 200 per cent of all current and capital expenditures made in excess of those of the previous year, as a means of inducing the additional industrial research which this country so badly needs?


Joseph Jacques Jean Chrétien: Mr. Speaker, I take notice of the hon. member's representation. Of course, the budget which has been brought before the House, that is Bill C-ll, contains incentives for research and development which it would be useful to adopt without delay.

November 28, 1977
Oral Questions


UNEMPLOYMENT INSURANCE
Mr. Gilles Caouette (Temiscamingue):: Mr. Speaker, I would like to direct a question to the Minister of Employment and Immigration.
Considering that for some months now unemployed people have been satisfactorily completing their cards, specially in northeastern Quebec where the unemployment rate is as high as 14.5 per cent, and since those cards are directed towards the Montreal data center which rejects satisfactorily completed cards, thus causing a two or three month delay before payment, is the minister aware of that and is he contemplating taking a corrective measure, and when?


Jack Sydney George (Bud) Cullen: Mr. Speaker, I want to thank the hon. member for his suggestion. We have to examine the situation and if it is necessary to improve the situation, we will act accordingly.


Gilles Caouette: Mr. Speaker, could the minister tell us when he will be ready to consider this problem and try to solve it? As I mentioned earlier, some people have been waiting for two or three months; the officials of the Unemployment Insurance Commission tell them that their forms were indeed filled in properly, yet nothing happens. Will the minister also take two or three months to look into and rectify the situation or is he willing to do so this week?


Jack Sydney George (Bud) Cullen: Yes, Mr. Speaker.


ADMINISTRATION OF JUSTICE
Mr. Eldon M. Woolliams (Calgary North):: Mr. Speaker, I should like to ask a question of the Minister of Justice to whom I gave notice. It concerns the Canadian Industrial Gas and Oil Company and the government of Saskatchewan, a case which is in the Supreme Court of Canada. In view of the fact that it has great ramifications affecting interprovincial trade and the golden thread of unity in the country, I wonder if the Minister of Justice would be prepared to bring together the attorneys general of the various provinces, particularly when the case held "it is contended that both the mineral income tax and the royalty surcharge constitute indirect tax," and therefore falls within the jurisdiction of the federal government and not the provinces? I ask this question in light of the anxiety in provinces like Alberta with its oil and gas; the British Columbia mines; Ontario and its nickel; and whatever province one wants to mention. It is a great concern in reference to provincial relations.


Stanley Ronald Basford: Mr. Speaker, perhaps it is somewhat premature for me to initiate such

meetings at the present time. The government of Saskatchewan obviously is considering this case and the ramifications of it very carefully, and I take it from press reports, it will make a decision very shortly.
The Prime Minister will meet with the premier of Saskatchewan next week, and undoubtedly this will be a matter of discussion. Some time ago I met with the attorney general of Saskatchewan relative to this case; but at that point there was no decision and, therefore, we were unable to resolve what should be done.
As I said, it would be premature at this time, until the government of Saskatchewan has determined its position. However, I want to emphasize, while the case and the decision is a very important one, it deals essentially with the question and difference between direct and indirect taxation. In my view it does not affect the provincial ownership or management of resources. Those parts of the decision upholding conservation measures which Saskatchewan implemented clearly indicate that.


Eldon Mattison Woolliams: Mr. Speaker, this decision affects legislation relating to regulations in interprovincial trade. The minister said that any discussion may be premature at this time, but trade is still going on between the provinces. Therefore, I put this question very seriously to the Minister of Justice. This is one of the problems in reference to holding this country together. In light of the anxiety in provinces like British Columbia, Alberta, Ontario and Quebec, will he now bring together the attorneys general of the various provinces and discuss this case in light of its ramifications affecting confederation?


Stanley Ronald Basford: Mr. Speaker, again I think that would be premature, until the government of Saskatchewan has first had an opportunity to consider the judgment and to consider its position in determining what action it is going to take.
The hon. member referred to anxiety in other provinces. In the last week I have not heard from one provincial attorney general on this decision. Currently, the Prime Minister is meeting with provincial premiers and will meet with the premier of Saskatchewan, as I have indicated, next week and the discussions will include this subject.


POSSIBILITY OF APPEALING DECISION IN CASE OF PATRICK HAUSER AND TERRY STEINKE
Mr. Elmer M. MacKay (Central Nova):: Mr. Speaker, I have a question for the Minister of Justice which concerns the legal and constitutional conflicts in the administration of justice. Can he indicate whether his department has decided to appeal the case of Patrick Hauser and Terry Steinke that was dealt with by the Alberta court of appeal last month, which had as its main ratio that the Attorney General of Canada cannot embark on prosecutions or preferred indictments in a province without the written consent of the provincial attorney general? I wonder if his department will appeal this very important judgment?
November 28, 1977


Stanley Ronald Basford: Mr. Speaker, yes, we are. It is an important judgment. However, it appears to us that it varies with similar judgments such as Regina and Pelletier in the Ontario court of appeal. Therefore, we will be appealing it. In the meantime, we have made interim arrangements with the attorney general of Alberta to initiate prosecutions under the Narcotics Control Act.


Elmer MacIntosh MacKay: Mr. Speaker, I wonder if the minister would indicate whether he sees any jurisdictional problems with regard to this precedent, assuming the appeal is upheld? With regard to the Official Secrets Act, does he see any jurisdictional problems based upon this precedent?


Stanley Ronald Basford: Mr. Speaker, not at the moment.


WHEAT-POSSIBILITY OF FINAL PAYMENT IN JANUARY- EFFECT OF DEPRECIATION OF DOLLAR ON PAYMENTS
Mr. Gordon Ritchie (Dauphin):: Mr. Speaker, I have a question for the minister in charge of the Wheat Board. In view of the statement of Mr. Demers of the Wheat Board, as reported in the press, that all the wheat Canada has available has been sold at approximately $2.20 a bushel, a price that was below the cost of production, can the minister indicate if there is any possibility of a final payment this January? More importantly, will there be anything available in January of 1979 for this present crop year?


Otto Emil Lang: Mr. Speaker, it is too early to talk about a final payment for a crop year a year away. That quoted statement has no real bearing in relation to the facts. On the other hand, in regard to this crop year, while we expect to announce the actual figures within the next few weeks, there will be definitely a final payment for CW spring wheats as well as for Durum wheat.


William Gordon Ritchie: Mr. Speaker, in view of the depreciation of the Canadian dollar against foreign currencies such as the yen at 33 per cent and the mark at something the same, will producers benefit for wheat already contracted for in this present crop year; or will they not receive the benefit of this depreciation?


Otto Emil Lang: Mr. Speaker, many of our sales are made in terms of United States dollars. The depreciation of the American dollar compared to our dollar obviously increases the number of Canadian dollars being received for that wheat. Each case depends upon the contractual situation. However, in the course of the last five or six months the price of wheat has risen from its low point at $2.86 to the present level of around $3.70.
Ministerial Responsibility


C1502) WHEAT-DATE OF DECISION ON INCREASE IN DOMESTIC PRICE
Mr. Don Mazankowski (Vegreville):: Mr. Speaker, my question is for the same minister. It arises out of the government position with respect to a decision it is taking with respect to the increase in the level of prices under the provisions of the two-price wheat act. Having regard to the fact that on July 14 the minister, in response to a question which I posed to him in the House, indicated that extensive discussions had been taking place with the Canadian Federation of Agriculture and other producer groups about the proposals to increase the price of wheat for domestic consumption, and in light of the fact that input costs have risen between 30 per cent and 35 per cent, which is provided for under the two-price legislation, can the minister tell the House when the government intends to make a decision with respect to an increase in the two-price wheat system and, if so, how great will that increase be?


Otto Emil Lang: Following discussions with producer organizations, the matter has been before the government for a considerable length of time. I am now hoping we can bring our analysis to a conclusion and then make an announcement which would include details as to amount.


Donald Frank Mazankowski: Can the minister indicate whether that decision will be taken before the end of this year?


Otto Emil Lang: Yes, Mr. Speaker, that should happen.


PRIVILEGE
Mr. Speaker:: The hon. member for Saskatoon-Biggar wishes to raise a point of order, and I have notice of a question of privilege from the hon. member for Grenville-Carleton on the same subject.


Ramon John Hnatyshyn: Mr. Speaker, I simply want to reiterate the point I made during the question period. I think it is a matter of some importance and urgency on which a decision should be made. The fact is that we have a situation where the Solicitor General is not present in the chamber today. He is in Ottawa. I telephoned his office and spoke to his executive assistant three times to tell him that we had questions to put to the Solicitor General which were of substantial importance. I also said that since the minister was in Ottawa, it seemed to me he could well take a few minutes of his time to come to the House. After all, this is one of his primary responsibilities during the course of the parliamentary session. I was met with a negative response, and as a result I checked with the Journals branch and found, to my surprise, that the acting minister designated by order in council is the Minister of Consumer and Corporate Affairs.
1296

November 28, 1977
Ministerial Responsibility
It seems to me that when questioners on our side of the House want to put questions within the ambit of departmental responsibility, clearly, by your ruling, we must direct our questions to the minister in charge of the department. But certainly when that minister is absent for whatever reason he deems appropriate, we have the right to expect and demand that the acting minister as shown in the order in council be in his place to answer questions with respect to departmental responsibility. The reason this becomes even more of a pressing issue in this case is that the acting minister designated by order in council has been going around, outside the House of Commons, making statements which have the effect of smearing the RCMP and every officer and constable in that force.


Some hon. Members:: Oh, oh!


Ramon John Hnatyshyn: He is not merely a member of the cabinet; he is the Acting Solicitor General who makes such statements, and when the opportunity arises for us to ask him questions with respect to his statements outside the House which create damage to the force and to which we take particular exception, he refuses to answer. And now he is walking out of the House when we are raising this matter.


An hon. Member:: Arrogance.


Some hon. Members:: Shame.


Mr. Speaker:: I have heard the hon. member for Saskatoon-Biggar, and I will now hear the hon. member for Grenville-Carleton on whether there is any obligation attached to the arrangement respecting acting ministers. That is the point at issue. In any event, we may as well disabuse ourselves of one argument. If the acting minister today, or on any day, had been a former minister in the same department, that would not alter the requirement that questions should be confined to the minister's present capacity, which in that instance would be his acting capacity only. But that is not the argument at issue.


Mr. Walter Baker (Grenville-Carleton):: Mr. Speaker, particularly with respect to that last point, I would ask you to reflect on it.


Some hon. Members:: Oh, oh!


Walter David Baker: The reason I ask you to reflect on it is that I do not believe it was intended as a ruling, and if it was-I say this with respect-then it was a regrettable ruling.


Some hon. Members:: Oh, oh!


Walter David Baker: But I do not think it was a ruling. On November 18 you determined, again, that we cannot ask ministers questions on matters which are not within their present responsibilities. In the same decision you indicated, in answer to the specific point I had raised, that not only were we bound by the first statement that I have repeated, but we could not even ask a minister whether or not he would be

prepared to answer questions with respect to a certain matter unless it was within his present responsibilities.
Now, sir, the questions today were put to the Acting Solicitor General within his existing responsibilities as Acting Solicitor General-not to any other member on the front bench designated by any whim or last-minute decision, but in accordance with order in council No. 1977-2865 passed on October 6, 1977. Just so you will understand the situation, Mr. Speaker- I do not know whether you have had a chance to see it-let me say that under the section dealing with the Solicitor General we see that the minister is shown as being Francis Fox, and the acting minister is shown as being Warren Allmand. The second acting minister, I presume to act in the absence of the first acting minister, is shown as being Stanley Ronald Basford.
What happened in the House of Commons today was that questions were put by two members of the House, the right hon. member for Prince Albert and the hon. member for Perth-Wilmot, to the Acting Solicitor General. In his present capacity, under the order in council of Acting Solicitor General, the Minister of Consumer and Corporate Affairs-without looking up-made a gesture, pointing to the Minister of Justice. I do not care what he does with his finger, Mr. Speaker, but it is quite important what happens in terms of the responsibility of ministers of the Crown to answer questions. The fact is that the designation of the minister on any day is not whimsical; there has been a studied effort by the government to designate acting ministers to be accountable, to use your words, Mr. Speaker, for their present capacity.
By that order in council, the present capacity of the Minister of Consumer and Corporate Affairs is with respect to the work of his particular department and also with respect to the functions of the Solicitor General in the absence of the Solicitor General. So we put questions to the Acting Solicitor General in his capacity as Acting Solicitor General. Quite frankly, I think that if the question period is to mean anything, we cannot be prevented from asking the Acting Solicitor General questions relating to his capacity as Acting Solicitor General-and if we are, this would be the third line drawn on our privileges. That point seems to be important.


Mr. Speaker:: The hon. member is misstating what I said. The hon. member for Saskatoon-Biggar indicated that had the questions been answered today, or had the Minister of Consumer and Corporate Affairs answered questions in his capacity as Acting Solicitor General today, he could have been asked questions about his capacity as a former solicitor general. That is the distinction I make.
When he rises to answer in his capacity as Acting Solicitor General he is responsible, equally with the present Solicitor General, for actions in that department for all time, and questions which would have been proper to ask the present Solicitor General about events under previous solicitors general would have been quite proper, but they would have been faced with precisely the same conditions and limitations. None
November 28, 1977

differ. Any minister in an acting minister's capacity represents that minister as fully as he possibly can in the circumstances. There is no distinction there. But the hon. member for Sas-katoon-Biggar was attempting, it seems to me, to indicate that he might have been able to ask questions which were otherwise prohibited, and I think that would not be the case.


Walter David Baker: Mr. Speaker, I gather the situation is that, even though a minister of the Crown who just happened to be solicitor general at one point and who is now filling in for the Solicitor General could answer all kinds of questions about a prior solicitor general, the person who is the Acting Solicitor General today is limited with respect to his powers and the responsibility he has in an acting capacity, and therefore is not bound to answer. Just so that we understand completely what Your Honour is saying, by juggling acting ministers the ministry has effectively limited the right of the opposition to ask questions about the capacity of a minister who was a full minister in a former capacity and who is now only an acting minister in that capacity.


Mr. Speaker:: Let me put it in a positive way so that the record will be clear. Questions which are proper to be put to a minister are the same questions which are proper to be put under all the same conditions to a minister who is acting in that person's stead. It is as simple as that. There is no problem with that. The hon. member for Saskatoon-Biggar put forward a proposition that questions which would have been improper on a previous occasion might have been proper. In any case, whether that was his argument or not, he raised questions about that matter.
To clarify that aspect, questions which would be proper to the present Solicitor General would be proper to another minister acting in his stead. What I am not persuaded of is the basis of the point of order and the question of privilege, which is that there is some binding validity, in a procedural sense, on the Chair with respect to the designation of acting ministers. It is a new point: I have never heard it argued before, and I am prepared to examine the precedents and hear arguments from both sides on it. But that is the basis of the point of order and the question of privilege as I understand it.


Hon. Allan J. MacEachen (Deputy Prime Minister):: Mr. Speaker, I have a very brief comment to make on the very narrow point of order which has been raised. Hon. members are acting under the assumption that the Minister of Justice answered those questions in the capacity of Acting Solicitor General. It is my view that the minister answered those questions pertaining to a lawsuit to which he is a party, in his capacity as Minister of Justice, and he is fully entitled to do so. Therefore, the point of order at this point is without foundation.


Some hon. Members:: Hear, hear!


Eldon Mattison Woolliams: Mr. Speaker, I am still a little confused on one point. If I had put the question to the present Solicitor General, "Will you get the consent of the two former solicitors general to come before the Standing
Ministerial Responsibility
Committee on Justice and Legal Affairs?", surely that would have been a proper question. If I had put a question to the Acting Solicitor General, he would have been in a dual capacity but he would have been acting as the Solicitor General. It is true he would have had knowledge of the past, but as I could ask questions about the past of the Solicitor General, I do not think we should be denied the right to ask the Acting Solicitor General. That is the point I am making. Surely, if the Solicitor General was asked a simple question-


Mr. Speaker:: Order, please. The hon. member for Calgary North is pursuing an argument which has been raised by two other members previously. I also participated. However, let us bear in mind that I have attempted to put it as clearly as I possibly can. The conditions under which questions can be put to ministers are precisely the same conditions under which questions can be put to their acting ministers. I do not think I can make it any clearer than that.
Besides that, any argument about what questions could or could not be put to an acting minister are academic to the point raised, because they were never put. The point raised today is whether there is a requirement upon the ministry to put forward the acting minister who is designated by some order as the person to answer questions if a question is directed to the Acting Solicitor General, as was the case today. That is the point at issue. That is the point on which there has been argument from the government side, that questions were not answered in that capacity. More central to the argument, it seems to me, is that if there is no obligation on a minister to answer a question at any time, how can there be an obligation on an acting minister? It seems to me that that is the point I have to sort out: that is the point which is basic.
The other argument is one in which we were involved. Perhaps the hon. member for Saskatoon-Biggar and I were talking at cross-purposes, but it remains an academic problem because it did not take place.


Eldon Mattison Woolliams: Mr. Speaker, I wonder if I could make one other point. When the Deputy Prime Minister said that the questions were asked of the Minister of Justice in his capacity as Minister of Justice, it is true he was involved in that lawsuit; it is true he was involved in the motion. But the questions were put by distinguished and honourable members to the Acting Solicitor General. That was the minister we wanted to ask, that is the minister we wanted to answer, and the argument put forward by the Deputy Prime Minister was another red herring to hide the truth.


Mr. Speaker:: I say, again, that the point has two fundamental aspects. First, is there, by virtue of an order designating acting ministers, an obligation which binds us, in the sense of our procedures, to carry that through the question period in the sense which was argued today? Second, if there cannot be an obligation upon a minister to answer a question during the question period, can I Find one on an acting minister? I do not know. I have to examine those aspects to see whether I can give any validity to the arguments put forward.
80027-13V4

November 28, 1977
Ministerial Responsibility


Stanley Howard Knowles: Mr. Speaker, may I say a word further on the narrow point of order as you have so described it? I do so to express the hope that Your Honour will come back with a ruling. If a minister is in the House, none of us would be permitted to ask the acting minister a question; we would be told that the minister is here. I think that, by the same token, if the first acting minister is here and the minister is not, it should not be possible to jump down to the second acting minister. The ex post facto explanation the President of the Privy Council has given us is a very interesting one which is worth studying, but I think on the main point raised there should be a ruling that if a minister is present, he is asked the questions-


Marc Lalonde: What about his parliamentary secretary?


Stanley Howard Knowles: -but if the first acting minister is here, he should be asked the questions, not the second acting minister.


Allan Joseph MacEachen: Mr. Speaker, if I may, occasionally through inadvertence members misdirect questions and the minister who exercises responsibility for the subject matter rises even though the questions are addressed to another minister. That happens occasionally.


Walter David Baker: That is not the case here.


Allan Joseph MacEachen: However, in this case it seems to me that the onus is on the other side. Perhaps hon. members opposite think they ought to decide who should answer for the government in every particular case, regardless of responsibility; but the fact of the matter is that in reply to the question put by the right hon. gentleman, the Minister of Justice answered, in my view, within his capacity as Minister of Justice-


Stanley Howard Knowles: Why didn't you say so at the time?


Allan Joseph MacEachen: -because both ministers are parties to the lawsuit. And who is to say-unless it be by some fiat from the hon. member for Grenville-Carleton-that it must be the Solicitor General? Or does he argue that there ought to be a duet and both ought to answer simultaneously? Unless he argues that, either minister is free to answer. I argue that the point of order is really quite theological and more appropriate for theologians than politicians.


Mr. Speaker:: Order, please. I always knew that the hon. Deputy Prime Minister brought great dignity to our proceedings, but dignity beyond ours is new. I will recognize the hon. member for Saskatoon-Biggar as I allowed the Deputy Prime Minister a second intervention.


Ramon John Hnatyshyn: Mr. Speaker, I want to address myself briefly to two points. The Deputy Prime Minister entered this debate and indicated that the questions were directed to the government and could be answered by the Minister of Justice.
I think Your Honour should bear in mind that there is a real

problem to face here. The questions put by the hon. member for Perth-Wilmot dealt with the structure of the overview committee on security services, and I would be very surprised if the Minister of Justice could weasle his way into that answer. It was, clearly, a question specifically about the structure announced by the Solicitor General and had nothing to do with the Minister of Justice, even in the broadest theological debate that I could think of.
After dismissing that specious argument on the part of the Deputy Minister, I want to make it abundantly clear-and we may have been at cross-purposes here-that it was not my intention to suggest that a question that otherwise might have been improper could have been asked of an acting minister. I am sorry if I was not as clear as I should have been. The point I was making was that when we have an acting minister, he is the person from whom we ought to hear on questions dealing with departmental responsibility, particularly when they deal with events which happened in that department while he was minister.
When he subsequently appears outside the House and smears the RCMP by suggesting that they have been misleading him, or were coming forward with false information or withholding information, then it becomes particularly important for us to deal with the acting minister, because he not only has the responsibility by order in council but has particular and peculiar knowledge which would enlighten the people of Canada on his reasons for taking the rather unfortunate step of smearing the RCMP.


Marc Lalonde: Mr. Speaker, on this point of order, the people of this country know who has been smearing the RCMP over the last few weeks. It has been members on the other side of this House.


Mr. Speaker:: Order, please. The right hon. member for Prince Albert.


John George Diefenbaker: Mr. Speaker, the frivolous observation of the hon. gentleman who just sat down was made without regard to the facts and is quite in keeping with his usual course of inventing situations and then pretending they are facts. With respect to the argument of the Deputy Prime Minister, I have been here a long while and that is the first time I ever heard a Deputy Prime Minister enunciating theological things,
The devil sick; The devil a saint would be. The devil well: The devil a saint was he.


James Aloysius McGrath: Mr. Speaker, I rise on a point of order. I am sorry the Minister of National Health and Welfare is not in the House. She, either deliberately or unwittingly-and I suspect the latter-misled the House today in reply to a supplementary question which I directed to her. During the course of my question I commended what I call, and I support, the commendable objectives of the minister in broadening the scope of a floor income for Canadians by having a limited
November 28, 1977

sector of those who are drawing certain benefits rationalized into some form of guaranteed annual income.
In the course of the question I asked the minister if she was now prepared to eliminate the discriminatory provisions of the Canada Pension Plan which discriminate against housewives or those who stay at home to look after families. They do not enjoy equal rights under the Canada Pension Plan, which does not recognize the occupation of homemaker for contributions or benefits. In her reply, the minister tried to convey to the House the view that this matter had been dealt with by legislation during the latter part of the last session. It is a fact that some amendments to the Canada Pension Plan were brought in during the latter part of the last session, but this was not one of them. They did not deal with this discriminatory provision of the Canada Pension Plan, and I believe the minister should correct that misleading statement at the first opportunity.


Marc Lalonde: Mr. Speaker, as Acting Minister of National Health and Welfare, may I point out to the hon. member that there is no discrimination in those provisions. What the law provides for at the present time is that every citizen is in the same situation before the Canada Pension Plan-exactly the same.


An hon. Member:: That is not true.


Marc Lalonde: You have to earn a salary, wages or income in order to be eligible to pay contributions to the Canada Pension Plan. As a matter of fact, it is not an option; you are obliged to contribute. Whether it is a housewife who stays at home, or someone who is not earning wages or a salary, such people are not recipients of Canada Pension Plan benefits. Regarding my hon. colleague's answer to the hon. member, she pointed out that some amendments were made least year to provide for the splitting of credit between spouses at the time of divorce or marriage breakdown. I am sure that is what she meant when she referred to this particular situation.


Mr. Speaker:: Order, please. I am sure the hon. minister did not intentionally mislead the House. There seems to be a variety of interpretations of what she said or intended to say, and I am sure the minister will take the first opportunity to clarify what she said.


Allan Joseph MacEachen: Mr. Speaker, on the same point of order- or perhaps it is a question of privilege-I should like to draw to your attention that as I heard the comments of the hon. member for St. John's East, he stated that the minister had either deliberately misled the House or unwittingly misled the House. I do not believe it is possible for any of us to suggest of another hon. member, even as an alternative, that we deliberately mislead the House. I just want to draw that to the hon. member's attention, because I know that was not his purpose.


Flora Isabel MacDonald: On the same point of order, Mr. Speaker. While the Minister of National Health and Welfare may be able to set the record straight on her own part, the Minister of State for Federal-Provincial Relations has compounded the
Order Paper Questions
situation by stating that the terms of the Canada Pension Plan are not discriminatory; but to many people across this country who contribute to the gross national product-namely, those who work in the home-they are indeed discriminatory- because these people do not have the opportunity to pay into the plan.


Mr. Speaker:: Order, please. I am sure no hon. member wants to precipitate an argument on the merits of the Canada Pension Plan. On the point of order now raised, I am sure the minister will take the first opportunity to clarify the confusion that may have arisen from her reply.



ROUTINE PROCEEDINGS


Mr.   Ed. Lumley@Parliamentary Secretary to Minister of Finance: Mr. Speaker, pursuant to subsection 17(2) of the Anti-Inflation Act, I wish to table, in both official languages, copies of reports sent to the administrator of the Anti-Inflation Board.

[ Translation]


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. Yvon Pinard (Parliamentary Secretary to President of the Privy Council):: Mr. Speaker, the following questions will be be answered today: Nos. 138, 227, 262, 265, 348, 364 and 556.
I ask, Mr. Speaker, that all remaining questions be allowed to stand.


Mr. McKinnon: 1.	Was Lockheed Aircraft Corporation paid the progress payment on the LRPA contract of (a) $5,154,000 due on April 30, 1977 (b) $5,585,000 due on May 31, 1977 (c) $5,841,000 due on June 30, 1977 (d) $4,047,000 due on July 31, 1977 (e) $3,907,000 due on August 31, 1977 (0 $7,258,000 due on September 30, 1977?
2.	Was Lockheed paid under the contract the (a) third Accomplishment Milestone Payment of $1,487,000 (b) fourth Accomplishment Milestone Payment of $1,274,000?
3.	Were any adjustments made to the LRPA contract price at the end of the first, second or third quarters of 1977 in accordance with the formula and conditions set out in Articles 8.1, 8.2, 8.3 and 8.4 of the contract and, if so, what were they?

November 28, 1977
Order Paper Questions
4.	Have the specifications and capabilities of the Comox Data Interpretation and Analysis Centre set out in Article 1.1(1) of the contract been defined and, if so, what is its estimated cost (a) in dollars (b) as a percentage of the cost of the DIAC at Greenwood?
5.	Have any modifications been made to the contract, including Progress and Accomplishment Milestone Payments schedules, to accommodate the purchase of the Comox DIAC and, if so, in what manner?
6.	Is the purchase of the DIAC being handled separately and, if so, in what manner?
7.	Did the contracting authority make changes in the work and specifications, or in the place or time of delivery, of the LRPA System under Article 37 of the contract and, if so, what are they?
8.	Did the contractor submit engineering change proposals in accordance with Article 37.2 and, if so, were adjustments made to the contract price in accordance with Article 37.3 and, if so, what were they?
9.	Did the Minister arrange with the U.S. Government to make a payment to the U.S. Government for the recovery of non-recurring costs on the P-3C or S-3A and, if so, in what amount?
10.	What will be the increase in Canadian dollars required to fulfill Canada's obligations under the terms of the contract at the present Canadian dollar rate of 90 cents US?


Hon. Jean-Pierre Goyer (Minister of Supply and Services):: 1. (a) Yes; (b) yes; (c) yes; (d) yes; (e) $4,247,000 paid on August 31, 1977; (f) $7,730,000 paid on September 30, 1977 the payments for August and September reflect increases for changes in the time of delivery of certain work.
2.	(a) Yes; (b) yes.
3.	Economic price adjustments as follows: (a) third quarter 1976, $70,075 U.S. reduction; (b) fourth quarter 1976, $273,985 U.S. reduction; (c) first quarter 1977, $323,719 U.S. reduction; (d) second quarter 1977, $422,666 U.S. reduction; labour and material indices are not yet available to determine adjustment applicable for third quarter 1977.
4.	Yes. (a) To be determined; (b) to be determined.
5.	No.
6.	To be determined.
7.	Yes. Pursuant to Article 37.1 the time of delivery of certain work has been advanced, the Government Supplied Material list has been updated, the Data and Interpretation and Analysis Centre for Greenwood has been re-configured.
8.	Yes. Pursuant to Article 37.2 the Contractor has submitted 46 engineering change proposals of which five have been rejected and 33 authorized by the Contracting Authority. Thirty-two of the changes were minor modifications to the specifications causing no increase or decrease in the cost of the work or the time required for its performance. The one remaining authorized change requires an adjustment to the contract price to be determined in accordance with Article 37.3.
9.	Yes. $400,000 U.S. per aircraft.
10.	Estimated at $71 million.


Mr. McKenzie: 1.	What is the total number of persons under contract to the Metric Commission 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. A. C. Abbott (Minister of State (Small Business)):: 1.
Two persons under contract, no retired public servants under contract.
2. (a) 1975 total amount paid $13,200. (b) 1976 total amount paid $28,781. Nothing paid to retired public servants.


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


Jean-Pierre Goyer: 1. (a) No. (b) Yes, (vi) Quebec: one.
2.	Main estimates.
3.	(i) Not applicable, (ii) (a) $6.40 an hour, (b) Not available, (c) $2,219.19.


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


Mr.   Ed. Lumley@Parliamentary Secretary to Minister of Finance: In so far as the Department of Finance is concerned: 1. (a) (i) nil; (ii) nil; (iii) nil; (iv) nil; (iv) nil; (v) 1975: average four to five employees per month. 1976: average three to four employees per month, (vi) nil; (vii) nil; (viii) nil; (ix) nil; (x) nil; (b) (i) nil; (ii) nil; (iii) nil; (iv) nil; (v) nil; (vi) nil; (vii) nil; (viii) nil; (ix) nil; (x) nil.
2.	Main estimates.
3.	(a) (i) nil; (ii) nil; (iii) nil; (iv) nil; (v) 1975: $7 per hour. 1976: $7 per hour, (vi) nil; (vii) nil; (viii) nil; (ix) nil; (x) nil.
*
November 28, 1977

(b) Information not available, (c) (i) 1975: $47,267. (ii) 1976: $15,665.


Mr. Caouette (Temiscamingue): 1.	What are the top ten institutions to which interest on the national debt is paid and, in each case, what is the amount?
2.	Has interest on the national debt increased since January 1, 1976 and, if so
(a)	by what amount (b) how much of the increase has gone to the top ten institutions holding Canadian securities?


Mr.   Ed. Lumley@Parliamentary Secretary to Minister of Finance: 1. Records of interest payments to particular individuals or individual institutions are not maintained. Furthermore, many investors hold their bonds in bearer form. These bonds carry interest coupons which can be clipped and redeemed by the holder on due dates and at any time thereafter. Another factor making the keeping of records of interest payments impractical is that interest is normally due semiannually while Government of Canada bonds trade continually. When a trade is made the purchaser must pay the vendor the price of the bond plus accrued interest. The following table shows the distribution of holdings of Government of Canada securities as at the end of 1976. The percentage distribution gives a general indication of the share of interest payments received by the various sectors at that time.
Government of Canada Direct and Guaranteed Securities: Distribution of Holdings As at the End of 197*
	Amount	%
Bank of Canada	8,452	20.1Chartered Banks	8,643	20.5Government Accounts Other Canadian Residents	852	2.0Holdings of Market Issues	5,414	12.8Canada Savings Bonds	16,590	39.4Non-Residents	2,201	5.2TOTAL	42,152	100.0
2. (a) On an accrual basis, interest charges on the public debt from January 1, 1976 to September 30, 1977 have amounted to $8,416,165,000. Interest charged on outstanding public debt for the month of December 1975 was $315,383,000 and for the month of September 1977 was $436,069,000. (b) As explained in the answer to question 1, such information is not available.


Mr. Dinsdale: 1.	Do foreign dealers receive commission rates for selling Canadian stamps and, if so (a) what are they (b) on what date were they effective (c) is there a sliding scale based on volume?
2.	For each fiscal year since the policy was started, how much money has the Post Office Department (a) received from (b) paid in commission to such dealers?
Order Paper Questions
3.	Has the Department taken any measures to monitor such sales to ensure that stamps sold to foreign dealers do not re-enter Canada at less than face value and, if so, what are they?
4.	Are there any customs regulations which would prevent their re-entry?
5.	(a) For the November 19, 1976 ship stamp issue, how many were sold to foreign dealers (b) taking into account the commissions paid, at how much below face value were the stamps sold?


Hon.   J.-J. Blais@Postmaster General: 1. Selected foreign distributors receive a commission on the sale of Canadian stamps to foreign dealers and collectors, (a) The commissions range from 10 per cent to 35 per cent, (b) These commissions became effective when the related agreements were first signed in December, 1974. (c) The commissions are paid on a sliding scale based on volume of sales in each fiscal year.
2.	(a) and (b)
Fiscal Year	Received	Paid1974- 75	$ 45,480.99	$ 4,548.101975- 76	462,771.29	68,972.013.	Yes, independent audits are performed of the sales records of foreign distributors.4.	No.5.	(a) For the November 19, 1976 Ships stamp issue, 211,700 stamps were shipped to our foreign distributors, (b) Stamps are not sold below face value. Moreover, since commissions are based on sales of all postage stamps in a fiscal year, commissions were not, and will not be, payable on the sale of the Ships stamp issue as such.


Mr. McKinnon: 1.	Is the Leopard I Tank which Canada has ordered from Germany known as the A3 or A4 model or is it some other model?
2.	How many of the Tanks will be equipped with Low Light Television (LLLTV)?
3.	What is the horsepower rating of the (a) Leopard I Tank which was ordered
(b)	Leopard II prototype (c) American AMXI prototype gas turbine motor?


Jean-Pierre Goyer: 1. The model is a modified A-3 Model, termed Leopard Tank Canadian 1, abbreviated to Leopard C-l.
2.	Ninety-three.
3.	(a) 830 horsepower, (b) 1,500 horsepower, (c) 1,500 horsepower.


Sinclair McKnight Stevens: I rise on a point of order, Mr. Speaker. I am not sure whether this is the appropriate time to raise this question, but I would like to ask when certain notices of motions for production of papers will be dealt with. I realize it is not a written question I am referring to, and perhaps you could indicate to me when I can make reference to this matter.

November 28, 1977
Income Tax


Mr. Speaker:: When notices of motions for production of papers are called at this time on Wednesday afternoon, it would be the appropriate time to hear the hon. member.
Shall the remaining questions be allowed to stand?


Some hon. Members:: Agreed.



PROCEEDINGS ON ADJOURNMENT MOTION


Mr. Speaker:: Perhaps before going into committee of the whole for further deliberation on Bill C-ll, I should inform the House at this time that the questions to be raised on the adjournment motion at 6 p.m. are as follows: the hon. member for Egmont (Mr. MacDonald)-Publishing-Protection of Canadian authors from reproductions of their works imported from United States; the hon. member for Brandon-Souris (Mr. Dinsdale)-Social Services-Consultation with provinces on funding-Possibility of legislation this session; the hon. member for St. John's West (Mr. Crosbie)-Energy-Newfoundland's offshore oil and gas regulation-Possibility of agreement on question to be put to Supreme Court.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Friday, November 25, consideration in committee of Bill C-ll, to amend the statute law relating to income tax and to provide other authority for the raising of funds-Mr. Chretien-Mr. Turner in the chair.
The Deputy Chairman:: House again in committee of the whole on Bill C-l 1, an act to amend the statute law relating to income tax and to provide other authority for the raising of funds. When the committee rose on Friday last, clause 1 of the bill was under consideration.
On clause 1.


Joseph Jacques Jean Chrétien: I ask the consent of the House to introduce a series of amendments to Bill C-ll. These are amendments of a purely technical nature related to some misprints, translation errors and in some cases to marginal technical errors. I would like to table them immediately to allow hon. members to take

notice of these changes before we consider each clause of the bill.


Charles Robert Turner: Order. We will take those amendments as notice, and as the clause comes up, we will introduce the motion. Is that agreed?


Stanley Howard Knowles: I do not object to it being done the way it is suggested, that it be taken as notice. But if that is the case, if it is not printed in Hansard could a complete set of them all be supplied to all members? The simpler way would be to put them in Hansard at this point?


Joseph Jacques Jean Chrétien: I have absolutely no objection. It is probably the fastest way, and the most appropriate, to have the amendments in the hands of members of the House.


Walter David Baker: Agreed.


Charles Robert Turner: Agreed, and so ordered.
[Editor's note: The amendments referred to are as follows:]
Subclause 6(9) Page 8
That subclause 6(9) of the French version of Bill C-ll be amended by striking out lines 31 and 32 on page 8 thereof and substituting the following:
"sommes que le contribuable a deduites et avait le droit de deduire au titre des biens de cette"
Subclause 14(2) Page 22
That Bill C-ll be amended by striking out line 21 on page 22 thereof and substituting the following:
"March 31, 1977.
(2.2) For the purposes of paragraphs (l)(c) and (d) "a life insurance policy" does not include a policy referred to in paragraph 148 (l)(b)."
Subclause 30(6) Page 51
That subclause 30(6) of Bill C-l 1 be amended by striking out line 12 on page 51 thereof and substituting the following:
"(6) Subsections (1) and (4) are appli-"
Subclause 30(7) Page 51
That subclause 30(7) of Bill C-ll be amended by striking out line 15 on page 51 thereof and substituting the following:
"(7) Subsection (2) is applicable to taxation years ending after May 25, 1976. (8) Subsections (3) and (5) are applicable"
Subclause 35(1) Pages 56 and 57
That subclause 35(1) of Bill C-ll be amended as follows:
(a)	by striking out line 46 of the French version on page 56 thereof and substituting the following:
"annuel present sur le total des montants";
(b)	by striking out lines 24 to 26 on page 57 thereof and substituting the following:
"(i) the portion of any loan described in paragraph (l)(a) made to an officer or employee of a corporation to enable or assist him";
(c)	by striking out lines 39 and 40 on page 57 thereof and substituting the following:
"any loan, described in paragraph (l)(a), made to an officer or employee of an"; and
(d)	by striking out line 46 on page 57 thereof and substituting the following:
November 28, 1977

"from a location in Canada after 1971 and incurred moving expenses)".
Subclause 40(5) Page 70
That subclause 40(5) of Bill C-l 1 be amended by striking out lines 19 to 21 on page 70 thereof and substituting the following:
"(5) Subsection (2) is applicable to elections required by subsection 85(6) of the said Act to be made after May 6, 1974."
Subclause 49(2) Page 94
That subclause 49(2) of the English version of Bill C-l 1 be amended by striking out line 45 on page 94 thereof and substituting the following:
"the taxation year to a beneficiary"
Subclause 54(4) Page 103
That subclause 54(4) of Bill C-l 1 be amended by striking out lines 20 to 27 on page 103 thereof and substituting the following:
"(7.2) Notwithstanding paragraph lll(l)(a), in the case of a life insurer the amount deductible in computing its taxable income for its 1978 and subsequent taxation years,
(a)	in respect of its non-capital loss for each taxation year ending before 1977 shall be deemed to be nil, and
(b)	in respect of its non-capital loss for its 1977 taxation year shall be deemed to be the amount, if any, by which
(i)	the amount referred to in subparagraph 138(4.2)(a)(iii) exceeds the aggregate of
(ii)	the amount of the reserve determined for purposes of subparagraph 138(4.2)(a)(i), and
(iii)	in any case where subparagraph 138(4.2)(a)(ii) applies, the aggregate of amounts referred to therein."
Subclause 74(4) Pages 161 and 162
That subclause 74(4) of Bill C-l 1 be amended as follows:
(a)	by striking out line 44 on page 161 thereof and substituting the following: "year, subsection (1), section 16 or para-" ;and
(b)	by striking out lines 9 to 12 on page 162 thereof and substituting the following:
"as it would have read on that date if subsection (8) had not been applicable) of his interest in the policy on that date".
Subclause 74(7) Page 164
That subclause 74(7) of Bill C-l 1 be amended by striking out line 34 on page 164 thereof and substituting the following:
"a reference to an annuitant under such a life"
Subclause 74(8) Page 164
That subclause 74(8) of Bill C-l 1 be amended by striking out line 36 on page
164	thereof and substituting the following:
"(8) Subsections (1) and (2) are appli-"
Subclause 74(10) Page 165
That subclause 74(10) of Bill C-l 1 be amended by striking out line 1 on page
165	thereof and substituting the following:
"(10) Subsections (4), (5) and (6) and subsec-"
Clause 76
page 166
That the French version of clause 76 of Bill C-ll be amended by striking out lines 6 to 20 on page 166 thereof and substituting the following:
"(1.1) Lorsque le Ministre decide que le montant de la perte autre qu'une perte en capital, de la perte en capital nette ou de la perte agricole restreinte d'un contribuable pour une annee d'imposition est different du montant que le contribuable a declare dans sa declaration d'impot pour cette annee, le
Income Tax
Ministre doit, si le contribuable en fait la demande, determiner avec diligence le montant de la perte autre qu'une perte en capital, d'une perte en capital nette ou de la perte agricole restreinte, selon le cas, du contribuable et doit envoyer a la personne qui a produit la declaration un avis de la determination."
Subclause 77(1) Pages 167 and 168
That subclause 77(1) of Bill C-l 1 be amended as follows:
(a)	by striking out lines 40 to 44 on page 167 and lines 1 to 18 on page 168 thereof and substituting the following:
"(a) the amount, if any, by which
(i)	the aggregate of amounts that were not reported by him in his return and that were required to be included in computing his income for the year
exceeds
(ii)	the aggregate of the amounts deductible by him for the purpose of computing his income for the year under the provisions of this Act that were wholly applicable to the amounts referred to in subparagraph (i) and were not deducted by him in computing his income for the year reported by him in his return,"; and
(b)	by striking out line 26 on page 168 thereof and substituting the following: "ed by him in his return in computing his income"
Subclause 85(2) Page 175
That the English version of subclause 85(2) of Bill C-ll be amended by striking out line 18 on page 175 thereof and substituting the following:
"tion year (in this subsection referred to as"
Subclause 99(1) Page 191
That subclause 99(1) of Bill C-ll be amended by striking out line 35 on page 191 thereof and substituting the following:
"(ii) was an executor, administrator or trustee of an estate who"
Subclause 110(1) Page 209
That subclause 110(1) of Bill C-l 1 be amended by striking out lines 6 to 14 on page 209 thereof and substituting the following:
Application rule
"(8) For the purposes of paragraphs (l)(d) and (2)(a) there may be deducted from the aggregate referred to in those paragraphs, 9% of the portion of that aggregate that is attributable to the 1974, 1975 or 1976 taxation year."


Charles Robert Turner: The hon. member for York-Simcoe, on a point of order.


Sinclair McKnight Stevens: Mr. Chairman, when we were dealing with clause 1 on Friday I raised the question of what, in fact, was the relative increase with and without indexing in income tax in relation to the general increase of income itself. At that time the minister stated, as reported at page 1257 of Hansard:
-this is a highly technical question, and I am not in a position to answer it right now. I will get the information and forward it to the hon. member later today.
Subsequently, the minister indicated that he would put on the record of this House exactly what is that relative ratio between income tax and the general increase of personal income both before and after indexing. 1 was just wondering if the Minister of Finance could be given a chance now to put it on the record.


Joseph Jacques Jean Chrétien: Mr. Chairman, I have here a technical answer to a technical problem, so perhaps I could try to read it. However, it is not in the form of a reply and I will have to
1304

November 28, 1977
Income Tax
adjust accordingly. I am advised by my officials that the same question has been put to my predecessor, as well, on numerous occasions. The hon. member for York-Simcoe has been made aware on these occasions that it is difficult to summarize the responsiveness of federal revenues in terms of one single number, sometimes called "elasticity". For his benefit, let me explain the technical aspects of this concept one more time.
The total growth in income in any given year is composed of three components. These are the growth in the number of taxpayers, the growth in productivity or real per capita income, and the growth in prices. The response of revenues to each of these factors is different. The growth in the number of tax filers has approximately proportional effect on revenues. A 1 per cent growth in real per capita income increases revenues by approximately 1.7 per cent to 1.8 per cent. In the absence of indexing, a 1 per cent growth in prices has the same effect as a 1 per cent growth in real income. However, indexing ensures that the inflation-related growth in income has a proportional effect on revenues. In other words, with indexing, if prices increase by 1 per cent, nominal revenues also increase by the same 1 per cent, thereby leaving the real value of taxes unchanged.
The over-all response of the personal income tax revenues to growth in income is a weighted average of the three factors I have just identified. I indicated in my fiscal statement of October 20 that in a typical year, with 2 per cent growth in productivity, the over-all elasticity of revenues would be about 1.3. This is, of course, variable over time and sensitive to the cyclical state of the economy. Moreover, this elasticity is affected by any new tax changes proposed in a given year.


Sinclair McKnight Stevens: On a point of clarification, Mr. Chairman, the minister has indicated, or at least created the impression, that this point has been raised several times and he will answer it once again-or has been given a written statement from his officials with a view to answering it. Is it not true that this is the first time this question has ever been asked? Any other time it has been raised, it has not been raised in this House but in an in camera session.


Joseph Jacques Jean Chrétien: I am not in a position to give any more explanation. I was not the minister at that time. The hon. member said this question was debated before. I do not know whether it was here, or elsewhere, in camera. With the new minister, he is right in the open.


John Carnell Crosbie: Mr. Chairman, in connection with this bill which is now in committee, it is, of course, to collect income tax from the long-suffering taxpayers of Canada. I believe, if my figures are correct, that in 1975 there were 12,200,000 returns filed of personal income tax, of which 8.5 million were taxable returns, and that the amount collected in income tax excluded Canada pension and unemployment insurance; premium payments that year were $15.69 billion. I might be out a billion or two, but what is a billion or two to the Minister of Finance? He would not even miss a billion. Mr. Howe said, "What's a million?" and this Minister of Finance will say, "What's a billion?". But I will let him speak for himself.
[Mr. Chr6ticn.l


Charles Robert Turner: Order. The Minister of Finance on a point of order.


Joseph Jacques Jean Chrétien: Mr. Chairman, I rise on a point of order. I object to the remarks of the hon. member. I never said: What's a billion! He is the one who said that and it is obviously a very arrogant attitude from a former finance minister of Newfoundland who did not have very often the opportunity of seeing $1 billion during the time he was in office.


John Carnell Crosbie: Mr. Chairman, the Minister of Finance is becoming very sensitive. I can understand why. He has already made thousands of mistakes in his short tenure as Minister of Finance. He cannot make too many more that will not be recognized. I agree he did not say, "What's a billion". He positively did not. In 1976, the figures would be roughly the same. There were 8.8 million taxable returns filed, and $17'/2 billion collected in personal income tax. Therefore, we are dealing with serious business.
I suggest to this committee that this bill should not pass until the Canadian public is assured on three matters. The first deals with the matter of the confidentiality of income tax returns that are filed. That is a matter that came up in the House about a week ago. We still do not have any report from the Minister of National Revenue or the Minister of Finance as to whether income tax returns are privileged and confidential information, or whether we can phone the Ministry of National Revenue and get the information. As far as we know now, income tax returns are not confidential. Anyone with an inquiring mind who wants to know what our returns are can telephone the department and get the information or press a computer button to get it. In any event, they get the information.
There has been no statement since this information came out a week ago. The Minister of National Revenue should be here before the committee ready to answer for his responsibility to the 8.8 million taxpayers of Canada as to whether that information is available to the public, or not, or what he is doing to prevent that situation. That is one area, Mr. Chairman.


Joseph Jacques Jean Chrétien: At this time I have to report that the matter is under investigation by the RCMP. Apparently, there was one individual who had a way of obtaining information he should not have had. As soon as the inquiry is completed, he will be penalized according to the laws of the land, because the taxpayers of Canada are to be protected in the confidentiality of their returns.


Charles Robert Turner: Order, please. I suggest that the hon. member for St. John's West keep his remarks quite general. As these clauses come up, he can put his arguments.


John Carnell Crosbie: Mr. Chairman, I submit that was not a point of order. The time should not come out of the time that I have before the committee. This clause deals with collecting tax from the people of Canada. I am speaking on behalf of the taxpayers of Canada who are going to suffer or gain under this clause. Their suffering or gain may become public knowledge if the Minister of National Revenue and the Minister of Finance do not take the steps necessary to stop the leaking of confidential information to anyone who might want it. That must be clarified before the bill leaves the committee.
The second point that must also be made clear relates as well, to income tax. That is the reports of violations of the law in connection with income tax collection, secret tax information given by National Revenue to the RCMP and municipal police forces across Canada, as reported in the press in recent weeks. In fact, employees of the Department of National Revenue who collected the income tax we are dealing with now have perjured themselves before the courts in that connection.
I refer in particular to the matter that came before the Laycraft inquiry and the listening devices, interception of telephone messages, wiretaps and the like. That kind of procedure has been used to gather information on income tax. It is forbidden to be done in that manner by collusion and co-operation between the RCMP and the Department of National Revenue. Before this committee authorizes the government to collect any income tax under the provisions of this bill, that situation should be clarified. It is the Income Tax Act that we are now amending.
Is it correct, as Mr. Morris Bradshaw told the Laycraft inquiry, that the practice of releasing tax information on certain Canadians preceded the 1972 agreement between the Department of the MNR and the RCMP which formalized that procedure, and that confidential tax information is released to police departments across Canada on anyone the Department of National Revenue wants investigated. That is the evidence that has been given to the Laycraft inquiry by officials of the Department of National Revenue. Is it correct? The agreement of 1972 was only supposed to relate to information dealing with organized crime. However, this MNR official said that this kind of information goes to police departments all across Canada whenever the Department of National Revenue wants to let it out. It is given out routinely.
If the members of this committee are to take their duty seriously, we have to get some explanation as to whether this is so, or not, as reported in the daily press. It has been made
Income Tax
quite clear that the Department of National Revenue and the municipal police forces-and I am referring to the Globe and Mail who quoted Mr. Bradshaw and his evidence at the inquiry-worked outside the agreement. Mr. Bradshaw was asked, "It has nothing to do with organized crime?" He answered, "Correct".
The RCMP have already given evidence that they are co-operating with National Revenue, that they use wiretap devices under the procedure of subterfuge, and that they exchange information gathered by wiretap with the Department of National Revenue although it is illegal to use wiretaps during an investigation into tax violations. An official of the minister's department, one Edmund Swartzack, was given transcripts of conversations by the RCMP. This was admitted. Inspector Graham George said that when the RCMP know they cannot wiretap under the Income Tax Act, they look for a Criminal Code violation and the information gathered is used for income tax purposes. That is complete and utter disregard for the laws of this country.
Are we supposed to sit in this committee and pass a bill which gives the crowd opposite the power to borrow $9 billion to continue to allow illegal activity in the collection of income tax across Canada? I say "no". Before the committee passes this bill there should be some satisfactory reply by ministers to these statements, and sworn evidence before inquiries.
Apparently, Mr. Edmund Swartzack-I do not know the gentleman-testified before the Federal Court and denied that the RCMP and the Department of National Revenue were working together in the summer of 1975 investigating the Royal American Shows. He told the court under oath that they were not working together. He denied the RCMP had given him information to help him in his investigation into income tax offences. He denied that before the end of May, 1975, he met RCMP officers engaged in investigating the company. In September he told the Laycraft inquiry that those answers had been untrue. He said he had not properly understood the question put to him and that his memory had failed him. Imagine an official saying that, when he was asked those simple questions, he had not understood them! Therefore, he admitted that he gave false testimony before the Federal Court in that area.
When are we going to get an explanation from the Minister of National Revenue as to what is going on in his department? Are his officials allowed to give evidence before the Federal Court in one direction, and before a royal commission to the contrary with such a weak and feeble excuse? Are the RCMP and his department working together contrary to the statutes of this country in these matters? That is the second area where I submit we need to have a full explanation and full disclosure by the government before we pass this bill.
The third area is whether the Income Tax Act is being administered impartially or whether certain taxpayers, one in particular, have been favoured ahead of all other taxpayers in this country. This is a question which should be answered. I am about to suggest that we need an immediate royal commission of inquiry into the favourable tax treatment accorded to a
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November 28, 1977
Income Tax
certain individual whom I shall be mentioning in a few moments.
If more than eight million Canadians are obliged by law to pay income tax, if they are obliged to pay it on time, and if, should they dispute the amount of this tax, they are required to pay the amount of the tax first or else put up security in the form of bank guarantees and bonds-in most cases securities are not accepted; they have to pay up-why should the law be different in the case of one of them? This is something I want to have cleared up before this legislation leaves the committee.
I am referring to the case of one, John Christopher Doyle. If I was dealing with the case of a loyal Canadian, a man we could all admire and seek to emulate, I would concede there might be some reason to overlook the situation. But when one realizes that a certain Canadian taxpayer has been allowed to owe the government millions of dollars since 1950, that he still has not paid one cent of the money he owes, and that he has received preferential treatment beyond the belief of anybody in this chamber, it is an entirely different matter and one which demands explanation.
On June 11, 1959, John Christopher Doyle, the man who has been in control of Canadian Javelin Limited since its inception, was reassessed for income tax owing for 1950 and 1954. The reassessment involved a total of something like $900,000 for those two years, and was dated June 11, 1959. The gentleman in question appealed to the Income Tax Appeal Board. Here is the first area which demands explanation. The appeal was not heard until eight years later. Remember, the gentleman in question was not forced to pay his income tax. He was not forced to pay interest. As far as I can learn, he was not forced to put up any security. It was not until 1967 that the Income Tax Appeal Board heard his appeal. The board heard his appeal in each case, dismissed them and confirmed that he had been properly reassessed, with small adjustments, in relation to those two tax years 1950 and 1954.
Surely, the normal amount of time which elapses between an assessment and the hearing of appeal is not eight years. That is one matter which calls for investigation. Following that, the decision of the Income Tax Appeal Board was taken before the Exchequer Court of Canada. It took three years for that case to be heard. Because of the way in which the courts are run, perhaps three years' delay is not unknown. Anyway, in 1970 the case was heard before Mr. Justice Gibson in the Exchequer Court and he gave a judgment in June, 1970, reconfirming the reassessments for the tax years 1950 and 1954. That was in 1970, 20 years after the first tax year in question; that is, 1950, and 16 years after the second. So it is obvious the Crown was not pushing this matter forward; it was not doing everything possible to get the issue settled. One might have thought that 20 years after the reassessment the Crown would have said, "By gosh, it is time we got our hands on these millions which are owed to us by this taxpayer- particularly in view of the fact that he is a character who is not desirable in any event."

Notice of appeal to the Supreme Court of Canada was entered by Mr. Doyle in October, 1970. Was the case heard in 1971? It was not. Was the case heard in 1972? It was not. Was the case heard in 1973? No. Was the case heard in 1974? No. Was the case heard in 1975? No. Was the case heard in 1976? No. Finally, one of the appeals was heard in October, 1977, and then only because I had raised the matter in the House on two or three occasions and complained-and I intend to bring it up on every occasion I can until the whole thing has been settled or some satisfactory explanation is given.
Seven years after those judgments were handed down by the Exchequer Court of Canada, one of the cases came before the Supreme Court-the case relating to the year 1950. The court dismissed the appeal from the bench; the judges did not even reserve judgment so that they could hand it down in writing. It was clear that the taxpayer had no case. Yet it took the Canadian government 27 years to get the matter before the Supreme Court. What does this mean? What is the explanation? I shall come to the explanation a little later in my remarks. It is a tawdry one, a political one, a scandalous one. I might add that the other case, the case involving 1954, has not yet been heard by the Supreme Court, but the Minister of Justice has assured me it will be heard this winter. The present Minister of Justice has been pushing this matter since I got on his tail, and he has promised me he will expedite it; it is getting some attention now. Anyway, it has taken 27 years to get the matter to its present stage.
If the taxpayer had been obliged to pay his tax, with interest-as is the normal course of events- it might be easier to look upon this 27-year process with a kinder eye. But he has not been required to pay the tax, and in the meantime he has become a fugitive from Justice in Canada. He has not lived here since the beginning of 1974, though he lived here from 1950 until that year. He became a fugitive from justice in the United States in 1965. He left that country because he had been sentenced in connection with a mail fraud-sending stock certificates through the mail-and he was ordered to serve three months of a three-year sentence. In addition, a fine was imposed. He left the United States and did not go back. He has been a fugitive from justice down there since 1965. The government knew this, yet it persisted in its negligence.
In December of 1973 he was charged in Canada with acts of criminal fraud and breach of trust in Newfoundland. Since then, 406 counts have been brought against him involving wash-trading. And where is he? He is down in Panama, Mr. Speaker. He got out on bail in December of 1973 and disappeared to Panama where he is now living very happily, continuing his operations, taking all the revenue out of Canadian Javelin Limited, a Canadian company incorporated under the federal Canada Corporations Act, so that the shareholders in that company are receiving nothing-nil, zero, zilch! Not a cent! They get no dividends. Nothing! It all goes out in various ways to Mr. John C. Doyle and his companions.
That is the kind of gentleman who was given this tender treatment, Mr. Speaker. What is the explanation? I put a
November 28, 1977

question on the order paper, and the answer I received reveals massive negligence on the part of the government of Canada, malfeasance, non-feasance-is that the right term to describe the process of deliberately doing nothing? There is non-feasance as well as malfeasance, procrastination and political pollution involved in this situation.


An hon. Member:: How about Pickersgill?


John Carnell Crosbie: In answer to my question No. 1749 of last year, the government admitted it had received no moneys from Mr. John C. Doyle as a result of these judgments related to his appeals from assessment. However, the Crown states that it did take action to secure its claim. Then the answer goes on to say, and I quote:
It should be noted that as a result of a decline in the market value of the security held, the Crown's claim is now only partly secured.
The Crown has a lien on shares owned by John C. Doyle in Canadian Javelin Limited. As far as I know, they do not have the shares. They claim they have 125,000 of them, but they have a lien. If the shares are ever transferred, presumably the transfer agent has to deliver the shares to the Crown.


Charles Robert Turner: Order, please. I regret to inform the hon. member that his allotted time has expired, and I allowed a couple of extra minutes because of the intervention by the Minister of Finance.


John Carnell Crosbie: I will come back to this, Mr. Chairman.


William Gordon Ritchie: Mr. Chairman, I should like to say a few words on this matter. I would agree with the increase from $1,000 to $2,000, but this really is only recognition of the fact that inflation is a serious problem which we are not taking into account when we are putting together our accounting figures. This will not be too onerous for the government, and it is not going to lose too much money. It is almost impossible for it to lose money now on the capital account, with the inflation we are experiencing. In effect, it is giving something that is not going to cost anything, or very little. I would ask the minister, when he has the opportunity to reply, why there will be no deductions if the taxpayer is a corporation. It seems to me that for small corporations such as a family farm or similar corporation there is situation here that is being overlooked. I would like to know whether, when the taxpayer is a corporation, small or large, he is entitled to make a deduction for capital loss.
In our accounting and tax practices we are not taking into account the enormous inflationary times we are experiencing. Profit and loss calculated according to accepted accounting principles are now so inaccurate as to be misleading. The present rules are hopelessly obsolete. This is very important because business in Canada, knowing that real profit is too low, slows down investment and thus employment. Labour, on the other hand, seeing reported profit as being too high, demands non-competitive wages, and consumers, believing profit to be the main factor in price rises, demand arbitrary controls imposed by politicians seeking re-election. All I am
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saying is that profit is often badly overstated and the true corporate income tax rate is far higher than the stated rate, as well as corporate losses. This creates in the tax structure an imbalance we are only now recognizing.
It is interesting to note that the Ontario government created a committee to study and report on inflation accounting. It reported something quite interesting in that net return on investment in 1975 was 8.5 per cent, whereas in 1971 it was 5.75 per cent. When adjustment was made for inflation, the net return on investment was 2 per cent for 1975 and 2.5 per cent for 1971. So, in fact, while there was more profit in dollars in 1975 than in 1971, when the adjustment for inflation is made there is actually less return on investment. In fact, financial statements on certified professional accountants as presenting a true and accurate review of financial results are often so inaccurate as to be totally misleading. The importance of this is that our economic decisions have to be based on true competitive values exchanged or expected to be exchanged. It is of crucial importance, if financial data is to be used in investment, wages, buying or taxing decisions, that it be expressed in terms of real values.
The increase from $1,000 to $2,000 is, I suppose, a very crude way of assessing inflation, but it really does not get at the problem in relation to true inflation accounting. This presents a difficulty. But if we do not adjust financial data to reflect the real effect of inflation, all sectors will inevitably make wrong economic decisions. It is this situation that has forced Canada into the impending economic crisis.
I support this clause, but I might add that it is not going to cost the government very much. It is very difficult to have capital losses, given the inflation rate that is on paper. I believe this is only a beginning of what we have to study much more carefully in order to bring something to the tax system that recognizes the difficulty, and I have in mind inflation accounting.


Charles Robert Turner: Shall clause 1 carry?


Some hon. Members:: Carried.


Charles Robert Turner: Shall clause 1 carry?


Some hon. Members:: Carried.
Clause 1 agreed to.


Charles Robert Turner: On clause 2, the hon. member for Churchill.
On clause 2-Amount in respect of interest on employee, etc. loans.


Mr. Smith (Churchill):: Thank you, Mr. Chairman. In rising to speak on clause 2, I am concerned about one aspect in particular, and that is dealing with housing loans. Of course, coming from an area of Canada that is fairly-


John Carnell Crosbie: On a point of order, Mr. Chairman, what clause are we on now?


An hon. Member:: Clause 2.

November 28, 1977
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John Carnell Crosbie: Clause 1, is it?


Charles Robert Turner: We are on clause 2.


John Carnell Crosbie: 1 haven't finished on clause 1, Mr. Chairman.


An hon. Member:: You are a bit late.


Charles Robert Turner: Order, please. When I called for clause 1, it was carried and we are now on clause 2.


John Carnell Crosbie: With all due deference, Mr. Chairman, I certainly didn't hear it carried and I heard you recognize the hon. member for Churchill.


Charles Robert Turner: Order, please. The hon. member for St. John's West will be recognized when other clauses come along.


Mr. Alexander:: On a point of order, Mr. Chairman, I have not heard the "yeas" or "nays" for a few days around here. There is no doubt that something must have happened. Perhaps I was asleep at the switch.


An hon. Member:: Sure you were.


Charles Robert Turner: I would like to suggest to the hon. member for Hamilton West that I called clause 1 two of three times and nobody got up, so I went to clause 2.


Some hon. Members:: Hear, hear!


Lincoln MacCauley Alexander: With all due respect, sir, I know that hon. members on the other side like to hear the statement you just made, but when the member rose for this party he was speaking in respect of clause 1. This is the misunderstanding. Therefore, with all due respect, sir, Mr. Smith was speaking on clause 2.


Some hon. Members:: Oh, oh!


Lincoln MacCauley Alexander: Mr. Chairman, I do not know why government members continue to get so exercised simply because we are trying to bring to your attention an inequity or an injustice that has happened. I am not blaming you, sir; I am just saying that when the hon. member stood,-


Marc Lalonde: Is that a reflection on the Chair?


Lincoln MacCauley Alexander: I never reflect on the Chair, as the hon. minister does continually. What I am stating is that when the hon. member for this party stood, he was under the impression-and is still under the impression-that he was directing his remarks to clause 1.


An hon. Member:: He said clause 2, and I heard him.


Lincoln MacCauley Alexander: I just want to register our objection. Knowing the Chair is always fair and always ready to see that an inequity is corrected, or a problem which ensues is remedied in terms of a solution, I would respectfully ask that you accept the argument I present; that is, that the hon. member who was

speaking on behalf of our party stood and directed his remarks to clause 1.


Mr. Lumley:: Mr. Chairman, if members of the official opposition fell asleep on clause 1, it is not the fault of the Chairman. It was very distinct, and we heard clause 1 carried by hon. members on both sides of this House.


An hon. Member:: It wasn't carried.


Edward C. Lumley: As a matter of fact, Mr. Chairman, you delayed calling clause 2 a little longer, to ensure that the hon. member for Churchill came in to speak on clause 2. He distinctly said, "On clause 2", so it is obvious that this was passed by both sides of the House.


Ramon John Hnatyshyn: Mr. Chairman, I appreciate the dilemma Your Honour has on different occasions in being able to focus on people coming into the chamber, rising and attempting to be recognized, especially at the committee stage because the normal seating and other arrangements are not as they are in the normal course of debate. The reason I convey this to Your Honour is so you may judge whether this is an appropriate time to carry on with clause 1. I had my back turned, and when the hon. member for St. John's West realized the committee was going to deal with clause 2, he entered the chamber and attempted to get Your Honour's attention in order to deal with this. Your Honour recognized the hon. member for Churchill who wanted to direct his remarks to another clause, apparently.
The fact of the matter is that the hon. member for St. John's West was entering the chamber at that time with the express purpose he was indicating when Your Honour informed him that his time had expired. In no uncertain terms, the hon. member indicated that he would return to this point at the next opportunity he had to address himself to clause 1. I realize Your Honour would not want to deprive the hon. member for St. John's West. He feels very strongly about some of the things which can be done and wants to put forward suggestions for the government to take into consideration with respect to clause 1. I am sure Your Honour would not want to deprive the hon. member for St. John's West from carrying on his very excellent address.


Mr. Kempiing:: Mr. Chairman, with all due respect, I was waiting for the Minister of Finance to return to the chamber because I had a question for him on clause 1. As a matter of fact, Your Honour's call was so fast that I just had time to-


Some hon. Members:: Oh, oh!


Charles Robert Turner: Order, please. I should like to suggest to the hon. member that I called clause 1 two or three times. Then I called clause 2, and I believe the hon. member for Churchill stood up and said, "Clause 2".


Some hon. Members:: Hear, hear!
November 28, 1977


Charles Robert Turner: If that is not correct, I would be willing to move back to clause 1 on behalf of the hon. member for Churchill; but he distinctly said, "Clause 2". Is it the understanding of the hon. member for Churchill that we are on clause 2?


Cecil Morris Smith: Mr. Chairman, I was behind the curtain; I was making an important telephone call concerning clause 1. When I returned to the chamber, someone was calling clause 1 and I heard clause 2 called at approximately the same time. I stood and said, "Is this on clause 2?", and Your Honour indicated that it was on clause 2.


Marc Lalonde: That is right.


Mr. Beatty:: Mr. Chairman, my position is similar to that of the hon. member for Halton-Wentworth. We on this side are at a disadvantage. I have questions I should like to pose to the Minister of Finance. Unfortunately, the minister does not consider the discussion of clause 1 to be of sufficient importance for him to be present.


Marc Lalonde: He was here.


Henry Perrin Beatty: The minister was not here when Your Honour moved on to clause 2. I cannot pose my question to other members, even though the hon. Minister of State for Federal-Provincial Relations would like to get involved.


Marc Lalonde: The minister has a first rate parliamentary secretary.


Henry Perrin Beatty: I cannot fully deal with clause 1 if the minister is not present. Surely the minister should be here for this.


Edward C. Lumley: Mr. Chairman, I should like to remind hon. members opposite that we have dealt with clause 1 for almost four hours. The hon. minister was here for almost those four hours. There was ample opportunity on Friday afternoon for the hon. member to ask questions of the minister; in fact, he was present at the start of the debate this afternoon. When the hon. member for St. John's West rose to speak, he did not confine his remarks to clause 1. He was dealing with everything but clause 1, and there was no reason for the hon. minister to remain and listen to the hon. member's rhetoric.


Charles Robert Turner: The argument is whether clause 1 carried. Definitely, 1 called clause 1 twice. It was carried, and we then moved on to clause 2.


Some hon. Members:: Hear, hear!


John Carnell Crosbie: Mr. Chairman, I did not realize we were participating in some kind of a game. I thought we were here to consider seriously some amendments to the Income Tax Act.


Some hon. Members:: Shame.


John Carnell Crosbie: I am going to be heard. You jackals can howl all you like. I was outside the curtains, and I heard Your
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Honour attempting to call clause 1. I came rushing in, at which time Your Honour recognized the hon. member for Churchill, or I would have risen on a point of order. When I spoke a few minutes ago, I indicated that I would return to this because I had used up my 20 minutes. This is just a patent device to stop me from continuing on this subject.


Some hon. Members:: Oh, oh!


John Carnell Crosbie: Therefore, I ask the committee to revert to clause 1 in order for me to continue with that subject.


Charles Robert Turner: I should like to indicate to the hon. member for St. John's West that when this House goes into committee of the whole all members are supposed to be in the chamber because there could be votes at any time and the bell does not ring. Definitely, I called clause 1 twice and it was carried. Therefore, we are now on clause 2.


Ramon John Hnatyshyn: Mr. Chairman, as all members are aware, the House of Commons is a forum where members on this side attempt as much as possible to operate on a co-operative and consultative basis. We want to deal with these matters in an expeditious manner.


Marc Lalonde: Don't smile.


Ramon John Hnatyshyn: The hon. Minister of State for Federal-Provincial Relations can smirk and smile at the House of Commons, but some of us take things seriously. The fact of the matter is that we believe a certain amount of co-operation is necessary. If the government side thinks it is smart to stand on a technicality because Your Honour may or may not have seen something, and if they think that is the way to deal with this type of legislation, this will not get them any further ahead. If government members want to approach this matter with a certain spirit of co-operation to allow members on this side to be heard on legitimate matters, then matters can be dealt with expeditiously. Opposition members will not sit in this House worrying about whether a person is inadvertently not recognized and then have the door slammed on us.
Clause 1 is an important matter, notwithstanding what the parliamentary secretary may think. It is an opportunity to look at the principles behind the various clauses of the bill. It is the broadest possible interpretation of the approach we take to this legislation. Already government members have imposed closure on this legislation. If they persist in this attitude, they will not continue to receive the co-operation we are so famous for on this side of the House.


Some hon. Members:: Oh, oh!


Edward C. Lumley: Mr. Chairman, perhaps we can receive agreement from members opposite to have an extra five minutes on clause 1. If there is the unanimous consent of the House, we on this side have no disagreement with that.


Henry Perrin Beatty: Not just five minutes; we want the minister as well.

November 28, 1977
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Mr. Harquail:: Mr. Chairman, I do not feel it is necessary for Your Honour to take the abuse which is being put forth this afternoon.


Some hon. Members:: Hear, hear!


Maurice James Harquail: The opposition refers to its co-operation. The delaying tactics which are being used on this particular point are very clear. Hansard will clearly indicate that Your Honour called twice regarding whether we were ready for the vote on clause 1. We had the vote and then went on to clause 2, at which point the hon. member for Churchill stood up and definitely indicated that he was speaking on clause 2. That is where we are right now, on clause 2.


An hon. Member:: Right on.


Sinclair McKnight Stevens: Mr. Chairman, I am sorry there is some confusion with respect to the passage of clause 1. Certainly, my position is that I spoke to the minister concerning clause 1. I have certain questions I want to put to the minister on clause 1. Of course, he has been out of the House and in all fairness I felt if others wished to speak in a general sense on clause 1 there was no point pressing for the minister to return to the House.
Various amendments were tabled by the minister with respect to this bill. Frankly, I took those amendments and gave them to one of our research assistants in order for him to commence working on where those amendments actually fit into the bill and what the repercussions are, if any, with respect to the bill. To come back and find that someone, in a rather devious way-


Some hon. Members:: Oh, oh!


Edward C. Lumley: That is a reflection on the Chair.


Sinclair McKnight Stevens: Mr. Chairman, is it not strange that government members feel there is absolutely nothing wrong with the passage of clause 1, in spite of the fact the Minister of Finance is not in his seat to indicate that he is ready to have that clause passed?


An hon. Member:: Already we have had four hours on clause
1.


Sinclair McKnight Stevens: When we are dealing with a bill which touches on Canadians paying $15 billion to $16 billion in income tax, there should not be the slightest suggestion that a member of this House is being stifled in consideration of this bill. I feel something must be put on the record, and the best time to do so is during my point of order. The government is constantly trying to create the impression that this bill is being held up. This is totally incorrect.


Some hon. Members:: Oh, oh!
(1622)


Sinclair McKnight Stevens: As we know, and certainly as you yourself know, Mr. Chairman, the March 31 budget resulted in a bill
[Mr. Beatty.l
which is substantially the one now before us, somewhat amended. The income tax bill which arose out of the March 31 budget was given first reading in the House, but then was not seen again until November of this year. Literally, from April to November the government allowed the bill to simply lie there without bringing it before the House, in spite of the fact that members on this side often implored the government to bring it in and to let us deal with it.
Once it suits the government's purpose to bring in the bill, for it to suggest now that it should be passed quickly without due consideration is an affront to the people of Canada, and 1 think it is time we started to call it the way it is. This government has lost control of public spending in Canada and now, when we try to have a meaningful examination of it or of the ways that they intend to bring in their revenue, we are prevented from having a meaningful debate in the House.


Charles Robert Turner: Order.


Some hon. Members:: Order.


Sinclair McKnight Stevens: Mr. Chairman, I hope you will revert to clause
1.


Charles Robert Turner: Order, please. I would like to suggest to the hon. member that I definitely called clause 1 twice and nobody stood up in the House to continue the debate. Therefore, we went on to clause 2. The Chair is in the hands of members of the committee, and if they wish to change the rules they can argue the point right now. I am prepared to hear them.


John Carnell Crosbie: Mr. Chairman, I was a member of the Newfoundland House of Assembly and I can go back ten years in time, and never once have I seen such a scurvy piece of work in the Newfoundland House of Assembly as I see in this committee of the whole. If a member wishes to revert to a clause, he is automatically allowed to do so. Members of this committee knew that I had not finished my comments and that I had more to say on the point which I first brought up. The Chairman saw me rushing in as he called clause 1, yet I was not allowed to revert to it. I say, sir, this is a scurvy piece of work unworthy of this parliament.


Norman Augustine Cafik: Mr. Chairman, I rise with a brief intervention. One point that is clear in the House orders, namely, in Standing Order 55(4), is that the Chairman of the Committee of the Whole shall maintain order in the committee. The order goes on to say that no debate shall be permitted on any decision. I think it is totally unfair for hon. members to involve the Chairman of the Committee of the Whole in this debate.


Some hon. Members:: Hear, hear!


Norman Augustine Cafik: There may well be a disposition on one side to move more quickly, and on the other side not to do so; but the fact is that we, as members on either side of the House, are under the disposition of the Chairman, and the Chairman has indicated that we have moved on to clause 2. I think all hon. members realize that under clause 2 and under every subse-

quent clause in the bill they are entitled to debate each one of those clauses. Surely they can organize their minds and their interventions in such a way as to participate meaningfully on each clause.


William James Kempling: As usual, the Minister of State for Multicul-turalism speaks with many tongues, most of them forked. The point I was trying to make earlier, before you allowed someone else to interject, Mr. Chairman, was that we had questions we wanted to put to the Minister of Finance. He was not in his place, for reasons of his own: he left the chamber and I do not dispute his right to do so. Our questions were not put because he was not here. Secondly, the minister has tabled several amendments to this bill of which we do not have the text and we do not know what clauses they amend. Therefore, I think it is only proper that we should revert to clause 1.


Charles Robert Turner: With regard to the complaints which are made about the Chair, I would like to suggest to the hon. member that the texts of the amendments were issued and that members should have made their complaints at the time the clause was called, not after it was carried.


Cecil Morris Smith: Mr. Chairman, I rise on a point of order. Last Friday I sat in the House the entire day because I wished to speak on clause 2. The Chairman was present at that time, and today I inquired of him as to the approximate time when clause 2 might be reached. The Chairman told me that several members of my party were to speak on clause 1, but that I should be available, in the event clause 2 was called, before eight o'clock tonight. That is the reason 1 was not in the House and that when you called clause 1 I did not say I was in favour of it being carried, because I was standing right here behind the curtain.
I did not speak up, because at that time I was not in my place. But had I been, I would have said "No", for the simple reason I knew some of my colleagues wished to speak on clause 1. Therefore, I feel that now that the minister is back in the House, you should call clause 1 so as to let my colleagues ask questions of the minister which they wish to ask.


Charles Robert Turner: I suggest to the hon. member that when I called clause 1, nobody stood up in the House. Therefore, we went on to clause 2. I called clause 1 twice before it was carried.


Stanley Howard Knowles: Mr. Chairman, I wonder if I might say a quiet word at this point. It is pretty obvious that we cannot reach agreement on this matter by arguing the point of order. I fully agree with the record of what was done as you have indicated it. I was here and I heard you call clause 1 twice, but to my surprise no one stood up. Then you said "Carried". It is equally obvious that there were members who wanted to speak but who were taken by surprise. So we are in this difficult situation, and we will not solve it by arguing back and forth. I wonder if we cannot have agreement to do one of two things, either to agree by unanimous consent to revert to clause 1 or, if that is not acceptable, to agree that on clause 2 the minister will accept the questions that were put
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to him on clause 1 and give his answers to them. Is there not some way that we can reach a modus vivendi and carry on?


Charles Robert Turner: Does the committee agree with the suggestions of the hon. member for Winnipeg North Centre?


Lincoln MacCauley Alexander: I think the Minister of State for Multicul-turalism, who is the deputy House leader, has approached the chairman of the Standing Committee on Finance, Trade and Economic Affairs with the suggestion for a solution and is now exploring it. If I am interpreting correctly the concern registered on the face of the parliamentary secretary as well as that of the Minister of Finance, it is acceptable. All we are trying to say is that we have one or two speakers who wish to speak on clause 1.
It has been suggested by the deputy House leader that he would be prepared to go to the Minister of Finance and propose that another half-hour on clause 1 would be acceptable. That is the position he brought here, unless I misunderstood him. I hope that suggestion, which we on this side accept, is now acceptable to the government which, in my view, has always been fair and compassionate and prepared to bring about a solution to a very sticky situation. I know that my friend, the hon. member for Winnipeg North Centre, would go along with the suggestion which was brought to this side of the House by the deputy House leader. It is now up to the government to show there is justice in the House, a fact which sometimes escapes me.


Joseph Jacques Jean Chrétien: The hon. member for Hamilton West makes me cry. I accept the compromise with great pleasure because, after all, we have been in the House for only four weeks and we have not yet passed clause 1, so another half-hour will not make that much difference.


Charles Robert Turner: I suggest to the hon. member for Hamilton West that the Chair is not supposed to read minds, and that if members wish to be on the other side of the curtain there is no way I can know when they want to speak on a clause. If one wants to speak on this clause, he should be in the House at all times.


Some hon. Members:: Hear, hear!


Charles Robert Turner: Is there unanimous consent that we adopt the idea of the hon. member for Winnipeg North Centre and revert to clause 1 for 30 minutes?


Some hon. Members:: Agreed.


Lincoln MacCauley Alexander: Mr. Chairman, the suggestions which were made by the hon. member for Winnipeg North Centre were made without notice. What I brought to the attention of the Chair and to hon. members was a suggestion which was made by the deputy government House leader. He approached this side of the House. The Minister of Finance states that we are unduly holding up his bill. I resent that. All I am stating is that we have one or two more speakers. The deputy House

November 28, 1977
Income Tax
leader is prepared to allow another half-hour. Therefore, let us deal with the suggestion I brought forward, which is only the suggestion the deputy House leader brought to the Minister of Finance and the parliamentary secretary. I thought it was acceptable.


Norman Augustine Cafik: Mr. Chairman, it may be a little unfortunate- but certainly not deliberate-that my approach to hon. members opposite was on a "one to one" basis. It was not an official approach, and although I totally understand the anxiety of the hon. member with regard to embodying that in a motion of this House, I felt it was inappropriate for it to be brought forward until something had been worked out. However, hon. members on this side agree to doing that, so let us proceed.


Lincoln MacCauley Alexander: I am very sorry that I have touched a sensitive nerve of the Minister of State for Multiculturalism, and I extend to him my deepest apologies.


Norman Augustine Cafik: Accepted.


Mr. Nystrom:: Mr. Chairman, I gather we are on clause 2 now.


An hon. Member:: No, clause 1.


Lincoln MacCauley Alexander: Clause 1.


Lorne Edmund Nystrom: It does not matter to me. What I want to say can apply either to clause 1 or to clause 2. I would like to speak for about half an hour, but I gather I am limited to 20 minutes. What I want to talk about is an issue that the Conservative party-


Sinclair McKnight Stevens: Mr. Chairman, I rise on a point of order. The hon. member for Yorkton-Melville has indicated that his remarks would be equally suitable to be made on clause 1 or clause 2. In view of the restricted time of 30 minutes which we have for clause 1, and the fact that we have two or three who are wanting to speak on clause 1, 1 wonder if the hon. member would hold back and make his remarks on clause 2?


Charles Robert Turner: Will the hon. member for Yorkton-Melville withhold his remarks for 30 minutes?


Lorne Edmund Nystrom: Yes, Mr. Chairman.


Henry Perrin Beatty: Mr. Chairman, it would be hard to believe, after all that build-up, but I actually have only two very short questions for the minister relating to clause 1 which is the general clause of the bill. I hope to be able to ask those questions before the minister leaves the House. They relate to the use by the government of social insurance numbers. There is growing resentment in the country about the fact that the directive coming from the Department of Finance requires that Canadians cashing in Canada Savings Bonds coupons take out social insurance numbers if they are to collect their coupon payments without having to forfeit 25 per cent.
I would like to ask the minister, in view of the fact that this particular problem results in many Canadians, some of them

senior citizens over the age of 80 or 90, and some parents having to take out social insurance numbers for young children three and four years old who have Canada Savings Bonds in their names, is the minister prepared to consider withdrawing that directive requiring the use of social insurance numbers for cashing Canada Savings Bonds interest coupons?


Joseph Jacques Jean Chrétien: Mr. Chairman, the government has no such intention to withdraw this requirement which was imposed by legislation last year.


Henry Perrin Beatty: Mr. Chairman, I wonder if I might ask one further question. There is growing concern in the country because of the threat of misuse of social insurance numbers. In 1972, the government's very excellent study on privacy and computers recommended that the social insurance number not be used either in a legislative sense or in a de facto sense as a single identification number for citizens, but the increasing use of the social insurance number in various government programs as an identification number and as a computing coding number causes considerable problems.
This causes problems not just from a psychological point of view but also from the point of view of privacy, because if it is possible to get one's hands on a person's social insurance number that increases the possibility of getting access to information held in government files about that person. I refer the minister particularly to incidents which took place a couple of weeks ago when the disclosure was made that it was possible to get from the tax department information about the confidential and personal tax returns of individual Canadians.
I am wondering whether the minister would be prepared to consider amending Bill C-11 at the present time or to bring in amendments at another time which would disallow the use of social insurance numbers on tax forms. As the minister knows, it is possible to file an income tax form using either a tax filing number or a social insurance number, and I wonder whether to confine the use of the social insurance number strictly to the purpose for which it was designed the minister would be prepared to amend the act to remove the use of it on income tax forms?


Joseph Jacques Jean Chrétien: Mr. Chairman, this is a controversy which is taking place at this time. I am informed that since 1966 taxpayers have been asked to put their social insurance number on their income tax returns, and that producing a social insurance number when cashing coupons is a new requirement brought about last summer after introduction by my predecessor, the hon. member for Rosedale. This is not the first time.
I was quite taken by the argument made by the hon. member for Qu'Appelle-Moose Mountain and the hon. member for Edmonton West who said there was a commitment that social insurance numbers would never be used for this purpose. In checking the records, I found that since 1966 the tax returns of citizens have required social insurance numbers. If the requirement has been there since 1966, this is nothing new. However, the requirement to produce a social
November 28, 1977

security number when cashing coupons is new. I have much sympathy for older and younger people, but according to the studies of my department there is a certain number of people cashing coupons. The system was a bit slack and my department found that some people were cheating-I do not know if that is the proper term-the tax collector that way. This is why we ask for this requirement. 1 was quite sensitive to the argument made previously, but when I learned that social insurance numbers were being required on income tax returns since 1966, I felt I was being asked to do a little more than should be expected.


Henry Perrin Beatty: Mr. Chairman, I would like to return to this for one moment. The concern I have is twofold. I am concerned about the decision to require the use of social insurance numbers when cashing interest coupons. I wonder whether the minister can indicate whether he is actively making inquiries at the present time as to whether there are other alternatives available which can prevent tax cheats wanting to circumvent paying taxes which they should be paying, and whether there would be some better way of doing this other than requiring the use of social insurance numbers. I understand that the government has a backlog of social insurance number applications because of the flood of applications from thousands of Canadians who have never have to have them before.


Joseph Jacques Jean Chrétien: Mr. Chairman, could 1 reply to the first concern? Another method is being contemplated in the United States, but I do not think it will be satisfactory to everybody. It is that when cashing coupons in any institution, the tax will be collected there and then. In this country we only impose this obligation on people who do not have a social insurance number. People who have a number do not pay the tax then, and the problem of collecting and repaying the tax is avoided. I am preoccupied with the problem of people who do not have a social insurance number, and am looking for alternatives. I would like to explore any suggestions that hon. members may make.


Henry Perrin Beatty: Mr. Chairman, the minister should also be aware that there are some religious groups in the country whose convictions forbid them taking out social insurance numbers. Parliament has passed legislation amending the Canada Pension Plan Act exempting certain religious groups from having to take social insurance numbers for conscientious reasons. My other point is to stress to the minister that while I recognize the social insurance number has been used on income tax files since 1966, it is being used more widely so that almost from the day a citizen is born until the day he dies various programs require the social insurance number and it is becoming de facto an identification number. This poses very serious problems in protecting the privacy of citizens, and this parliament enacted legislation on the subject in the last session.
More and more government programs use the social insurance number as a coding number for filing information about individuals, and once it is possible to obtain that social insur-
Income Tax
ance number it is easy to violate privacy and the security surrounding confidential personal information held in government data banks. Despite the fact that the social insurance number has been used by the government for some years, I wouls ask the minister if he would consider withdrawing its use on income tax forms in order to restrict the threat posed to personal privacy?


Joseph Jacques Jean Chrétien: Mr. Chairman, I should like to reply to the two questions, first to the problem of the religious groups who refuse to have a social insurance number. There is no penalty. They pay the tax when they cash the coupons, and they will get this money back. It is not a penalty. The money is taken as a guarantee that the tax will be paid, and is returned when the tax return is filed. There is no injustice in this.
Like other hon. members, I am concerned because of the incident that came to light on a Toronto radio program where someone found a way to get four different tax returns from different parts of the country. I have had discussions with the Minister of National Revenue and his deputy minister about this. Apparently, the police think they have found the method used in doing this and instructions have been given to correct the weakness in the system. I do not want to jeopardize the inquiry, but apparently someone used the name and code of another person in order to get the information. This cannot always be prevented. There is a dilemma because very often taxpayers communicate with the department and ask for fast information before making a transaction, and it is possible for them, through the deputy minister perhaps, to get quick information. If we impose an even tighter system, the penalty will be a less responsive system when inquiries are being made.
In light of that, I was extremely preoccupied and impressed by the arguments made by hon. members who have raised this in the House. I realize it has been used since 1966, but I am still willing to see if the question of the danger created by using those numbers too often and the problem created by this can be resolved. I have asked my officials to look into it, and if some change has to be brought about it can be done at a later date, but in the short time at my disposition-I have been in the House these last three weeks and I do not have much time in the department to look into administrative problems-


John Carnell Crosbie: Mr. Chairman, we are under a time limitation. I will not forget this piece of business, and I will not be caught again by hon. gentlemen opposite in this matter. I bring before this committee a matter of the utmost seriousness.


Marc Lalonde: Mr. Chairman, on a point of order, the hon. member says he has been caught by hon. members opposite. I would remind the hon. member that he has been reflecting on the Chair. There were plenty of his colleagues in the House, and the decision to call Clause 1 was made by the Chair and supported by members on both sides of the House. His allegation is without foundation, and he should not be allowed to make such statements unchallenged.


Charles Robert Turner: Order, please. I should like to say that argument is now over and the problem-

November 28, 1977
Income Tax


Some hon. Members:: Hear, hear!


John Carnell Crosbie: Mr. Chairman, the Minister of State for Federal-Provincial Relations is not going to tell me what to think or what to say. It was a scurrilous piece of business, and that is my opinion.
Mr. Chairman, I raise a matter of considerable seriousness. It shows 27 years of negligence on the part of hon. members opposite, particularly for the last 14 years. I have asked many questions in the last year, none of which has been answered so I ask these questions again. The government admits that John C. Doyle owes it $3,483,412 as of December 31, 1976, on the two judgments I mentioned earlier. It has taken no steps to collect the money. The interest for a further year should be added to that in order to see what is really owed.
Why does the government not have adequate security for this amount and why has it not collected the money, the tax or the interest. The government issued a writ of extent against Canadian Javelin Limited in 1963, and a writ of attachment in 1965. The company was directed not to pay moneys to John C. Dolye but to hold the moneys, in the event the government is successful in the tax actions, for payment to the government. Since 1965, the government has allowed Canadian Javelin Limited to pay $1 million to John C. Doyle without taking any action to enforce the writ of attachment placed on the company. Every aspect of this affair that I mention today should be investigated by a royal commission. This committee should be delighted to examine this matter in detail. It is not fair that one taxpayer should be treated this way. In a report I have here, Canadian Javelin has admitted paying in excess of $1 million to John C. Doyle, in defiance of a writ of attachment placed on the company in 1965. In a letter to me about a week ago, the Minister of Justice said that he is taking action in the Federal Court-after 12 years of defiance. Only after I repeatedly brought this matter to the attention of the government is he taking action.
This government has permitted John C. Doyle and Canadian Javelin Limited to set up a tax avoidance scheme. Because of this writ of attachment, John C. Doyle set up a company in the Bahamas known as Javelin Export Limited. He owns and controls it. Javelin Export Limited entered into a contract with Canadian Javelin Limited for a ten-year period under which Doyle is to be paid $100,000 per year, tax-free, in the Bahamas. Canadian Javelin Limited is incorporated under federal law, so over $100,000 per year goes to Javelin Export in the Bahamas which pays it over to John C. Doyle who does not pay any Canadian income tax on it. This is open defiance of the laws of Canada, yet the government has done nothing about it.
It is tax avoidance in two ways. He is not paying a cent of tax now, nor in recent years, on the income he receives from Canadian Javelin Limited. It is in defiance, it is an indirect way of getting around this writ of attachment that the government placed with the company in 1965.
[The Deputy Chairma.l
Why has this been allowed to happen? This is what I ask the minister. In fact, this Minister of Finance was minister of national revenue from January, 1968, to July, 1968. He did not do a thing about this for six months. There have been ten ministers of national revenue who have done nothing about this situation. Since 1963 there have been the following: Mr. Garland, Mr. Benson, the present Minister of Finance, Mr. Cote, the hon. member for Windsor West, Mr. Stanbury, the Minister of Justice, the Minister of Employment and Immigration, and the Minister of National Health and Welfare- and now we have the present minister. We can only hope that the Minister of National Revenue now, the member from Manitoba, will take some action. Ten ministers of national revenue have stood by and done nothing-


An hon. Member:: Sponged.


John Carnell Crosbie: -during those years. We have had seven ministers of finance, Walter Gordon, the hon. member for Eglinton, Mr. Benson, Mr. Turner-the sound of their names is enough to turn your stomach-the hon. member for West-mount, the hon. member for Rosedale, and now we have the present Minister of Finance. They have done nothing. They are responsible to the 8,800,000 taxpayers, and they have done nothing. You people opposite don't care. All you want to do is cover it up.


Charles Robert Turner: Order. The Minister of State for Federal-Provincial Relations on a point of order.


Marc Lalonde: The hon. member should name the ministers of finance and ministers of national revenue between 1956 and 1963.


John Carnell Crosbie: During the period the hon. member mentions, the Progressive Conservative administration of Canada brought this to the Income Tax Appeal Board and made some progress.


Some hon. Members:: Hear, hear!


John Carnell Crosbie: And if that government had been re-elected in 1963, this would have been finished by 1965. Here is a gentleman who is going to give you the answer as to why you have been so negligent all those years-it is because of the Liberal politics in Quebec. The minister of federal and provincial affairs should know that. It is because of the Liberal politics in Quebec that this situation has been allowed to occur, Mr. Chairman.
We have also had ministers of justice-Mr. Chevrier, Mr. Favreau, Mr. Mcllraith, Mr. Cardin, and the Prime Minister himself was minister of justice from 1967 to 1968 and he did nothing. He allowed this to continue. He is culpable. He is involved in this negligence, this malfeasance and malfeasance of office-Mr. Turner, the Minister of Transport and the present Minister of Justice who is now taking some action after I have written to him and brought this up in the House on four or five occasions. This is a scandal, Mr. Chairman.

This is a worse scandal than anything that has been suggested with respect to the RCMP or security services. It is far worse. The people of this country have the right to expect that every taxpayer will be treated in a similar manner. But one taxpayer, and a most unsavoury one-just because of his Liberal connections-has been allowed to get away with this for all these years.


Some hon. Members:: Shame.


John Carnell Crosbie: A typical Grit trick. What is the connection? We get the answer as to why Mr. Doyle is being treated in this singularly favourable manner, this lax manner, this scandalous manner, in the right hon. member for Prince Albert's book, his latest volume, "The Tumultuous Years 1962 to 1967", volume III, at page 192:
Pierre Sevigny has stated that he was approached by John Doyle on election night (Sevigny had been defeated as an Independent in his Montreal riding)-
By the way, it is stated in the book that Mr. Sevigny had received a healthy campaign contribution from John Doyle to run as an independent.
-for the names of any Conservative members who, for an appropriate consideration, might switch to the Liberals. Sevigny, to his credit, refused to be a party to this plan. Thus, Doyle and his associates turned elsewhere.
The facts did not become public until the middle of the 1965 election campaign. On 13 October, 1965, at a press conference in Quebec City, Dr. Guy Marcoux, Social Credit member for Quebec-Montmorency in the last parliament, said that Liberal front-bencher J. W. Pickersgill and mining promoter John Doyle took part in negotiations which led six Social Credit members of Parliament to pledge their support to the Liberal party after the 1963 federal election. He had released that day a 24-page pamphlet entitled "Dans le Meme Sac," in which he described "the affair of the six" as the shadiest usurpation of political power in Canada's history.
Mr. Chairman, this gives us a little hint as to the reason for the tender treatment of Mr. John C. Doyle, because he has been on the grimier fringes of Quebec Liberal politics for many years. In 1963 he took part in convincing six Social Credit MPs in declaring they were not going to support the government, that they would support the Liberal party, so there was a change in government in 1963. That is the suggestion in volume III of "The Tumultuous Years".
There has to be some reason why year after year since 1963, which is 14 years, all this time has passed before these matters were ever brought up and brought to a conclusion in the Supreme Court of Canada. In fact, one of these cases still waits to be heard before the Supreme Court of Canada. Why is it that men of the calibre of the names I have given here today, a lot of able men among them, various ministers of justice, various ministers of national revenue and the various ministers of finance, have allowed that situation to go on since 1963? Surely we cannot assume that the civil servants in the Department of National Revenue and the Department of Justice are that negligent and that slothful. We know that if they have the necessary instructions they will act. They will not be waiting 24 or 27 years to collect income tax owed by anyone. Surely we should have a royal commission to call these ministers and the civil servants before it to find out why, in this case, Mr. John C. Doyle, now a fugitive from justice, now a Panamanian citizen, is allowed to owe this government in
Income Tax
excess of $3.5 million in taxes-and God knows how much more he owes for other tax years.
Why has he never been forced to pay up? Why has he had treatment that no other Canadian taxpayer in the history of Canada has ever had? There should be a royal commission to look into that, and to ask the civil servants which minister instructed them to leave those files alone. Which minister instructed them to allow an appeal to lie dormant before the Supreme Court of Canada for seven years without ever moving it forward. Was it their fault, or did some minister tell them to leave it alone, because ministers had to tell them?
In the normal course of events, these things would have gone on, been heard and disposed of 10 to 15 years ago. Who told them not to get bank guarantees, bonds, sureties or their cash and interest, as everybody else has to do? When the income tax people come slithering in to me, Mr. Chairman, and say that I have to pay up something, you can bet your life I am going to tell them where to go until they show me why they have treated John Christopher Doyle in this manner. There are 8,800,000 Canadian taxpayers out there who are going to get the message: Don't bother paying your taxes, gentlemen. Put in an appeal.


Charles Robert Turner: It being five o'clock, it is my duty to rise, report progress and request leave to sit again later this day.
Progress reported.


Mr. Speaker:: The parliamentary secretary on a point of order.


Yvon Pinard: Late this afternoon I was told by our Deputy Speaker, who was supposed to be in the chair at five o'clock for private members' hour, that he would not be here because of a snowstorm in Montreal. He was supposed to be in the chair during private members' hour, concerning a debate on a point of order raised by the hon. member for Vaudreuil (Mr. Herbert). I have talked to the House leaders of the various parties, and I ask for the unanimous consent of the House in order that government business may go on until six o'clock. Resuming the debate on Bill C-ll until six o'clock, private members' hour could be held tonight from 9.30 till 10.30 o'clock. I ask this because the Deputy Speaker is very much interested in the debate on procedure which was to be held at five o'clock this afternoon.


Walter David Baker: Mr. Speaker, the parliamentary secretary was kind enough to speak to us, and we are agreeable.


Stanley Howard Knowles: Same here, Mr. Speaker.


Joseph Adrien Henri Lambert: We are in agreement, Mr. Speaker. This is better than wasting a whole hour.

November 28, 1977
Income Tax


Mr. Speaker:: Order, please. I am pleased that the House has been able to arrive at this arrangement, because I know that the hon. Deputy Speaker was making every effort to be here at five o'clock. He has been seized of this argument and is the one who ought to hear it and proceed with it. Therefore, it is agreed and ordered that government business will continue until the six o'clock adjournment, and then from 8 o'clock until 9.30 this evening. At 9.30 this evening, private members' hour that would ordinarily have been proceeded with now will be taken for the balance of the sitting day. Is this agreed?


Some hon. Members:: Agreed.


Mr. Speaker:: It is so ordered. I therefore leave the chair for the House to return to committee of the whole on Bill C-11.


Charles Robert Turner: House again in committee of the whole on Bill C-l 1, an act to amend the statute law relating to income tax and to provide other authority for the raising of funds.


Joseph Jacques Jean Chrétien: Mr. Chairman, we have been extremely patient with the hon. member for St. John's West. His speech has absolutely no relevance to the bill. He has been dealing with all sorts of problems with John Doyle and his former politics in Newfoundland. He made a lot of remarks concerning a file on one citizen and the Minister of National Revenue. He is doing this at the same time as members opposite are complaining that these matters must be as confidential as possible.


Some hon. Members:: Hear, hear!


Joseph Jacques Jean Chrétien: If he has a grievance against John Doyle, we should not have to suffer for the-I will not use the word because I am not sure that it is parliamentary. There was a big argument. Some questions were to be asked of me for half an hour on clause 1. We have listened to a speech that has absolutely no relevance to the debate we are now having.


Some hon. Members:: Hear, hear!


Joseph Jacques Jean Chrétien: It is an abuse of the good faith of this House of Commons. He has sucked into that position a member of his party who seems to be extremely avaricious. You, Mr. Chairman, have called for a decision, gracefully, after a very sincere plea by the hon. member for Hamilton West, that I be permitted to answer some questions. The half-hour has been lost on something completely irrelevant to what we have been debating in the House at this time.


Mr. Laprise:: Mr. Chairman, I rise on a point of order. A few minutes before this short adjournment, the hon. member for St. John's West (Mr. Crosbie) levelled serious accusations against a number of people, accusations which he had apparently found in a book. He reiterated accusations which Dr. Guy Marcoux had made and later included in a book to the effect that at some time six Social Credit members had had

acquaintances with members of the Liberal party. It may be true, Mr. Chairman, that Dr. Guy Marcoux has written a book, but what he says in his book has never been demonstrated and it is as far from the truth as what the hon. member for St. John's West has just quoted. Without knowing whether the hon. member indicated the origin of the book he quoted from a while ago, I want to give this clarification so that whoever reads the official report for today may not believe what the hon. member for St. John's West has just said.


Charles Robert Turner: Order, please. I wish to point out to the hon. member that there are six minutes remaining on clause 1.


John Carnell Crosbie: Mr. Chairman, with regard to the remarks made by the hon. member, I quoted from the book, the third volume of "One Canada", by the right hon. member for Prince Albert. I know there is little time left. There should be a lot of time. Certain manoeuvres have resulted in little time being left.
I am asking the Minister of Finance questions on a very serious matter which he just wants to brush aside. He got up on a spurious point of order, stating that this was not relevant to Income Tax amendments before us. What could be more relevant to the Income Tax Act than the impartial, just administration of the income tax law, a law that takes from Canadians every year something like $17'/2 million? What could be more serious than my accusations and the facts I have put on record as to this treatment of a certain person? He has been given favourable treatment, while eight million other Canadians have not received this treatment.
Is there anything that should more occupy the time of this House than this kind of scandalous situation and the unequal and partial administration of the laws of Canada? Is that not what this parliament should be concerned about? If the members of this House are not concerned about this kind of malfeasance or non-feasance, if we are not to be concerned with the equal treatment of all Canadian citizens in the payment of their income tax, then I am wrong and apologize to the members of this House. However, I do not think I am wrong. I do not think there is anything more serious than this.
I do not apologize for taking the time of the House on this matter-not for one minute.
I have a report here from Canadian Javelin Limited, 1977, which bears out what I have said. It points out that Mr. Doyle was credited with $125,000 a year from Javelin Export Limited under a ten-year contract with the company, and also noting the writ of attachments that I mentioned. It points out that he has received something over $1 million. The company said:
On or about July 22, 1965, the Department of National Revenue of Canada served a demand on Canadian Javelin Limited requiring it to pay to the Receiver General of Canada any moneys due or to become due to Mr. John C. Doyle pending adjudication as to whether or not taxes are properly due by Mr. Doyle ... During the past 11-year period, the company and/or Javelin Export Limited, have paid non-business related expenses and/or reimbursed Mr. Doyle for such expenses in the aggregate amount of approximately $1,000,000 which


November 28, 1977

amount offset amounts payable to Mr. Doyle. As a result the company may be contingently liable for an aggregate of approximately $1,000,000, and may become contingently liable for any additional amounts paid.
In other words, this company, in defiance of a writ issued by the government of Canada, and to the detriment of its shareholders, by its board of directors-controlled by Mr. John C. Doyle-paid out $1 million in defiance of the writs of the minister and the government. The minister tells me this is not a matter that should be considered by this committee. He does not want to be bothered by such foolish little things as this. He is only concerned with the great big things-the big, billion dollar things. That is what is wrong with this government. They do not care what you bring to their attention with regard to negligence or corruption. They ignore it all. They are not concerned. They drive the little people out of the country, if they try to get something off their income tax, into a tax haven in the Bahamas.
John C. Doyle can do what he likes. He can defy writs of extent, writs of attachment, defy the laws of Canada in every manner, shape or form. We are only touching the surface. We know about the 1950 and 1954 fiscal years. What about the other 25 fiscal years that that gentleman has been diddling around with the government of Canada, and the tender tax treatment, the lax Liberal treatment of Liberal friends of the government and Liberal friends of the former premier of Newfoundland? I make no apologies for raising this matter. I tell hon. members in advance that I will bring it up at every opportunity I have until this government gives an adequate explanation as to why this has been allowed to happen, or until there is an impartial royal commission. I suggest the McDonald commission should be asked to investigate this case.
I remind the committee that the crime commission in Quebec had a lot to say about Mr. Doyle. They suggested that the government of Canada extradite him, bringing him back from Panama. However, he has now become a Panamanian citizen, so the government cannot do that. Any respectable government would resign. There are not enough cabinet ministers here to have a good resignation. The Minister of Finance should resign in disgust and disgrace as a result of what is being put before us.
With regard to the little hassle we had, Mr. Chairman, I have every confidence in you. If you say it was carried, it was carried. I am just sorry it happened so quickly. I will be more alert in the future-you can depend upon it. I have every confidence in you, Mr. Chairman. I just wanted to lay this before the committee.


Joseph Jacques Jean Chrétien: Mr. Chairman, the Minister of National Revenue and the Minister of Justice are in the House every day. There have been all sorts of accusations with regard to a precise file. It is absolutely ludicrous to suggest that I should know what is in every file from 1953 and 1954. The hon. member has just wasted half an hour. If he were fair, he would have debated this matter in another forum, rather than taking the time of the committee when dealing with clause 1 of this bill. If he wants to make accusations, there are other means of doing that. To say that I should resign, I can only say that his
Income Tax
act has been one of the funniest acts I have seen in the House of Commons for some time.


The Chairman:: Order. The period of 30 minutes provided for the debate-with extra time on clause 1-has expired. The clause is now carried, and we shall move on to clause 2.
On clause 2-Amount in respect of interest on employee, etc., loans.


Cecil Morris Smith: Mr. Chairman, I should like to comment on clause 2 which concerns housing, especially in the more remote regions of Canada. In many areas of the north, corporations and mining companies in particular provide mortgage-free loans to enable their employees to acquire houses. I notice that the intent of certain clauses in the bill is to impose a tax burden on employees who receive interest-free loans from their companies. The bill would authorize the imputation of a prescribed interest rate in the case of an employee who pays less than the prescribed rate of interest on a loan from his company and the difference, less $500, will become taxable to the employee concerned. I should like to call attention to the difficulty which this would create in some of our northern mining communities where it is far from easy to retain personnel-


Joseph Jacques Jean Chrétien: Might I point out to the hon. member that in a mining community such as the hon. member has mentioned it is permitted to make such loans up to $50,000 without incurring a tax penalty? Below $50,000 there is no problem; it is only on amounts higher than $50,000 that income would be imputed for tax purposes. Clause 2 should perhaps be dealt with in relation to clause 35, but I have no objection to debating the matter now because both clauses are of substantially the same nature.


Cecil Morris Smith: I thank the minister for his intervention. I should like to continue, however, because there is one aspect with which the hon. gentleman has failed to deal. I realize that an exemption for housing loans is provided up to $50,000, but the term "housing loan" is very restrictive in its meaning since it covers only such situations as are set out in another clause which prescribes that to qualify for this exemption an employee must move more than 25 miles to the place of business. At a certain point, many of these mining communities experience a period of expansion and it has been the practice of a great many companies to provide mortgage-free loans to their employees to enable them to buy homes. It appears that to take advantage of this assistance, employees must move 25 miles, a proviso which discriminates against people who are already living in the community perhaps in rented accommodation or in some other form of dwelling.
This 25 mile proviso might be applicable in an urban area, but not in a remote community. Why is it not possible to make special arrangements to suit the needs of these isolated communities whose nearest urban neighbour might well be 200 miles away? This is an issue which closely affects a lot of people. The present system encourages workers to buy homes

November 28, 1977
Income Tax
in the community. It is really of no benefit to the companies directly except as it enables them to retain employees in the north.


Joseph Jacques Jean Chrétien: This matter has been discussed thoroughly with the mining companies. It is one which closely involves the mobility of manpower, and the companies have agreed that this is a satisfactory compromise. We are satisfied it would lead to abuse if we were, say, to permit someone to sell a house he owned and get a loan from his company at an advantageous interest rate in order to buy another house down the street, or perhaps a bigger one. The program is not designed to do that; it is intended to encourage mobility.


Cecil Morris Smith: I understand what the minister is saying. But again I call attention to the fact that under this proposal an individual already living in a mining town, perhaps in rented quarters or in an apartment block owned by the company, would not be entitled to take advantage of an opportunity to purchase a house under this arrangement. On the other hand, a person who moved into the town from goodness knows where could immediately qualify for this benefit. This is an argument which will be forthcoming again and again from individuals concerned, especially in light of the expansion which is presently taking place around some of our mining communities.


Joseph Jacques Jean Chrétien: I can certainly look into that aspect. I know an argument can be put up in specific cases but, generally speaking, it was felt that extreme care was necessary in order to avoid abuses. But we shall be looking into the point raised by the hon. member.


Cecil Morris Smith: I feel that the 25-mile limit might, in itself, be a cause of concern to people who live, say, on the fringe-those who would be a mile or two short of the qualifying distance. I wonder whether the legislation would be sufficiently flexible to accommodate people in that position.
When the legislation was drawn up, I do not think remote areas of the country were given serious consideration. We have to depend to a great extent on the remote sections of Canada, because they are the real producer areas. Every consideration must be given in respect of housing for those people in the resource, mining and other industries in the north. After all, we have to look at the north as the breadbasket of Canada because of the existence there of untapped natural resources. Naturally, we want to retain in the north the people who will harvest those resources for us. We must retain those who have the knowledge to do so.
Perhaps the minister would consider that the definition of a "housing loan" should be broadened to cover any loan to an employee to enable him, or assist him, to acquire a dwelling-house for his own occupation. I am referring in particular to remote areas. Housing has always represented a problem in remote areas, and I would like some consideration given to a change in order that the clause would refer to a loan to enable

an employee or to assist an employee to acquire a dwelling-house for his own occupation. Have you any comment on that whatsoever?


Joseph Jacques Jean Chrétien: Mr. Chairman, I think I explained to the hon. member some of the problems. I cannot backtrack, because if we are to go too far in the direction the hon. member is suggesting, we might discredit this scheme which is, in fact, designed to induce people to move in some areas. If it looks as though it will create abuses throughout the land, the program will lose its credibility and might backfire rather than being helpful.
As far as the 25-mile limit is concerned, it was taken from the Income Tax Act in relation to deductions for moving expenses. This figure is already accepted as part of the system, and I do not see why I should confuse the tax laws even more by having different types of deductions for one thing and another. I think these figures are always arbitrary. We had to go with the 25-mile figure as it was judged by one of my predecessors as being a fair distance for that kind of deduction or expense.


Cecil Morris Smith: Mr. Chairman, I was not aware of where the 25-mile figure came from, and that was to be the subject of my next question. When you suggest you cannot have special circumstances, let me remind you that there are special circumstances in existence for federal government people who live in the north. Government employees in the north received special northern allowances. A number of mining companies regard interest-free mortgage loans on houses as special northern allowances for their employees. That is how they look at these and, as I mentioned before, if you take away that particular aspect you will create difficulty in keeping these people in the industry. Governments recognize that there are extra costs associated with working and living in the north. For instance, you must heat your home for ten months a year, and your hydro bill is much higher because of shorter days. Transportation out of the area is very expensive. For this reason, the companies provide interest-free mortgages to their employees. I suppose they could be paying a northern allowance of some sort, but the concern here is in respect of an individual being able to own a dwelling and realizing a tax break in that regard. This is not a break for the company, it is for the employee of a particular company. The mining industry, for example, is in tough shape at this time and we should encourage these companies to be optimistic and continue developing the north.
Let me refer to the minister another concern I have. This has regard to the possibility of increasing the amount to $50,000. I suppose that $50,000 could be considered as a reasonable exemption, under the circumstances in the north, because that amount would cover the cost of most residences in northern areas. It would be insufficient in one of the larger urban centres. Let us use Toronto as an example, where a decent, three-bedroom house would run in the neighbourhood of $80,000. I am wondering if there is any resistance to
November 28, 1977

increasing this limit. I feel a good case can be made on that basis for making it higher than $50,000.


Joseph Jacques Jean Chrétien: Mr. Chairman, we discussed this matter with the mining industry because we knew it would be affected by this legislation. It was agreed that the $50,000 limit was pretty generous in terms of the problems they are having. The hon. member is asking me why we should not increase the amount. When you are dealing with tax breaks for a certain class of citizens, you always experience difficulty, mostly because it is never enough. I do not blame the hon. member for defending forcefully the interests of the northern part of Canada, with which I have been associated for quite some time as the minister of Indian affairs; however, $50,000 is considered by the industry and by the government as fair.


Cecil Morris Smith: Mr. Chairman, let me give the minister an example of what is going to happen in one of the mining communities of the north, and this will affect several employees of this particular community. The company will very shortly be offering for sale houses that were built this year, at a price of $45,000. The terms of sale will be 10 per cent down, with the balance payable without interest over a 15-year period. The effect of the amendment to the act as it is presently worded will mean that if an employee who has been living in another home or apartment building, as I stipulated, decides to buy one of the homes in this community, he will be deemed to have received in the years following 1978 a taxable benefit equal to the interest calculated at a rate determined by the government on a mortgage balance at the rate of approximately $40,000. If we assume that the prescribed rate is 8 per cent, the taxable benefit to the individual in this particular community is $2,700, being $3,200 at the prescribed rate of interest less the $500 exclusion. The $2,700 will be taxable at the same rate and as if it were wages.
However, if the bill were changed to exempt all housing loans-I would like the minister to pay particular attention to this-then because of the $50,000 exemption there would be no taxable benefit. Does the minister have any comment on that particular aspect?


Joseph Jacques Jean Chrétien: Mr. Chairman, this move was made because there were a lot of abuses of that scheme before the Department of National Revenue passed regulations which eliminated them. I am establishing a system which will permit the using of the interest free loan system in order to assist the mobility of manpower in some areas. Law officials were advising National Revenue on the previous system as it has developed. In fact we plugged a loophole. We saw some of the consequences of the move, and I am changing the law in order to permit the mobility of people. If we have to permit interest free loans for people anywhere in Canada for the purchase of a new house, people would create corporations and allow themselves loans. There were a lot of abuses. That is why the Department of National Revenue had to move in; we are just trying to establish a fair system. The hon. member can indi-
Income Tax
cate that it should be even more generous, but I do not think it would be advisable.


Charles Robert Turner: Order, please. I should like to point out to the hon. member for Churchill that he has time for one short question.


Cecil Morris Smith: Would the minister say there is no difference between the remote areas of northern Canada and the eastern and southern parts of the country? Would no consideration be given to any special status for people within that 25-mile limit? There has been no consideration given to a tax break for these people.


Joseph Jacques Jean Chrétien: I can appreciate the preoccupation and the representation of the hon. member. So far we have avoided two different tax systems in Canada: one for Canadians in the southern parts of Canada, and one for the others. It would be difficult to determine which municipalities should be included and which should be excluded. This is not the first time the idea has been put to me. When I was travelling in northern Manitoba, northern Saskatchewan, northern Manitoba and the Northwest Territories, this idea was put forward quite frequently but was not entertained by the government.


Cecil Morris Smith: Mr. Chairman, may I be permitted to ask one short question?


Charles Robert Turner: This is the last one.


Cecil Morris Smith: Seeing that I was involved in the clause 1 and clause 2 confusion, I should like to ask the minister one short question. In his earlier remarks the minister indicated that some thought should be given to a clarification concerning my earlier remarks. Will he give me an undertaking that some consideration will be given to the possibility of changing the 25 mile limit?


Joseph Jacques Jean Chrétien: Mr. Chairman, earlier I said that the representation of the hon. member will be looked into by my officials and myself. I have listened carefully to the hon. member, but I am not in a position to give him any specific answer. His remarks and representations will be studied carefully.


Lorne Edmund Nystrom: Mr. Chairman, clause 2 which is before us is one of the many clauses of the bill in which the corporate sector receives the bigger break.


Sinclair McKnight Stevens: We are not on clause 2.


Joseph Jacques Jean Chrétien: The blue collar workers who move to the north.


Lorne Edmund Nystrom: Perhaps I should defer my comments to later. My understanding was that clause 2, along with clauses 35 and 16, would give a better break to corporations under such items as employee loans, stock options, capital gains and so on.


Joseph Jacques Jean Chrétien: Go ahead.


Edward C. Lumley: You are right.

November 28, 1977
Income Tax


Lorne Edmund Nystrom: Because of what has been referred to in clauses 2, 16 and 35, $120 million per annum would be the amount of the benefit to people.
We in the New Democratic Party believe that too much money is being given to the corporate sector and to those who are very wealthy. In this bill alone $1,245 million is being given to the corporate sector. This is not the way to stimulate the economy. There has been a lot of evidence in the last few years which indicates that providing money to corporations does not stimulate the economy. Most of the plants in this country are operating at approximately an 80 per cent capacity, and yet there are huge handouts to these corporations in order for them to speed up their capacity. That does not make sense.
My party is arguing for the $1.2 billion to be given to low and middle income people in order for their demand to be increased. They will purchase goods, and the goods will be produced. The problem is how to get our plants up to 90 per cent or 100 per cent capacity. The best way to do that is to stimulate demand. That can be done by giving ordinary people more purchasing power. I should like to have the comments of the Minister of Finance on those specific items some time in the future.
When the minister gave his mini-budget in the House a few weeks ago, it was ironic that INCO received grants from the federal government and it was in the process of laying off workers.One of the initial arguments of the Liberal party was: if a gift were given to a company, it would expand and hire more people.


Joseph Jacques Jean Chrétien: Mr. Chairman, perhaps the hon. member will permit an explanation. According to the tax incentive program in front of the House, if there is no new investment there is no tax break. I read the letter sent by Northern Telecom to the CBC and the hon. member's colleague on that issue. The position taken by the New Democratic Party is extremely misleading, because if there is no new investment there is no tax break.
There is only one item which could be considered a tax break. I am referring to the three person inventory break, if I can use that expression. This is for people who have inventory because the cost of inventory is high. The fact that this exists permitted INCO to stockpile their production for seven months. Thus, that is a tax break which allowed INCO to keep their strength. In fact it was a tax break which helped employees to keep their jobs. If that tax break was not existent, perhaps some employees would have lost their jobs before today.


Some hon. Members:: Hear, hear!


Lorne Edmund Nystrom: Over the years, the federal government has given a lot of money to INCO. Despite that, it is still laying off workers. INCO owes approximately $378 million in deferred taxes. Why does the government not start collecting some of the deferred taxes? Those deferred taxes are nothing but interest free loans. It does not seem right for that much money

to be owed by corporations, when ordinary people could use it to purchase things. One could give many, many examples of corporations owing a lot of money in deferred taxes. The economy would be in better shape if the government started to collect those moneys.
I have a fundamental disagreement with the minister that the so-called triple down theory will work. In my speech on second reading I mentioned various examples where money was given to corporations to create jobs. Those jobs have not been created. In fact there are fewer jobs. Many corporations in the resource sector have received handouts over the past few years, and jobs are not being created. Many more jobs will be lost between now and next spring. It seems to me we are doing the wrong thing. What we should be doing is making sure that the resources that are being mined in Canada are processed and refined in this country. In accordance with the economic policy of C. D. Howe of some 20 or 30 years ago, however, we have been processing fewer and fewer of our raw materials. We should be going in the other direction.
Those were some of the comments that I wanted to make at this stage and I will be making several more on the corporate sector as we reach other clauses of the bill.


Sinclair McKnight Stevens: Mr. Chairman, my questions are for the minister. I take it, he will be back shortly. I see he is back. I wonder if he could quantify for us what we are talking about in clause 2. How much in revenue, does he feel, might be yielded to the federal Treasury if this new approach to tax the so called deemed interest is brought into effect?


Joseph Jacques Jean Chrétien: We do not know, and it seems that it is not possible to guess. This is a loophole we are plugging and it is difficult to know how many cases there were. We realized there were some abuses, so we installed a new system on the report from National Revenue.


Sinclair McKnight Stevens: It amazes me constantly that bureaucracy may deem something to be a loophole and, with no concrete evidence of how big the loophole is in the sense of how much revenue was being lost, they have no hesitation in bringing before us today clause 2 which, I suggest, will have a very serious repercussion on employees, especially employees who are being relocated in an area such as Thompson to which my colleague, the hon. member for Churchill has just referred, and other employees who might be required to shift from, say, Calgary to some other city. It amazes me how bureaucracy can say arbitrarily, "We deem that you should not have this privilege and we will tax you". I think the time has come when we in the House should tell the Minister of Finance, who is displaying such arrogance, that if he does not know how much money he is talking about, how big the loophole is, he should go back to the drafting board and bring back this clause, if he thinks it is necessary, and then tell us a few of the facts that I think we in House are entitled to know.
I have a second question for the minister. How many people does he believe will be caught in this new provision that he is
November 28, 1977

so dutifully trying to make us accept on behalf of his bureaucracy?


Joseph Jacques Jean Chrétien: It is not on behalf of the bureaucracy. The Department of National Revenue has informed the Minister of Finance of the nature of the loophole. Some people were collecting up to $150,000 in interest free loans to buy a house. When we saw there were abuses, we decided to plug the loophole because we tried to establish a tax system which applies as equitably as possible to all the citizens of this land.


Some hon. Members:: Hear, hear!


Joseph Jacques Jean Chrétien: It is impossible to have all the figures. We have 8,800,000 tax forms which have to be analysed. We saw a loophole which was detrimental to the interests of the average citizen. I did not ask my officials how many there were because, if there is only one too many, it is too much.


Sinclair McKnight Stevens: Mr. Chairman, later this evening I will take the minister through other so-called inequitable situations which this government is condoning, and if they wish to have this ultimate inequity I will be very interested to find out why they are turning a blind eye on some other inequities and some other loopholes which, presumably, could be plugged if the government followed the philosophy of its bureaucrats.


An hon. Member:: John Doyle, for instance.


Sinclair McKnight Stevens: Yes, John Doyle. I noticed that the minister was very embarrassed when my colleague pointed out the fact that there are over $3.5 million-


Joseph Jacques Jean Chrétien: It was you who were embarrassed, not me.


Sinclair McKnight Stevens: -of unrecovered tax revenue from one former Liberal alone. You will notice that the minister did not attempt to quantify either the amount we are talking about or the numbers, so let me put it a little more simply for the minister. After all, he has two officials sitting in front of him. Presumably they have these figures at their fingertips. Can the minister give us a rough estimate of how many employees he thinks he will catch with clause 2?


Joseph Jacques Jean Chrétien: I will not venture to shoot from the hip on that. Abuses have been reported to us by the Department of National Revenue. We realized some people were abusing the system, so we decided to plug the loophole. I do not know whether the numbers amount to dozens or tens of thousands. I say it is not fair and it must be changed. That is all.


Sinclair McKnight Stevens: The minister said they had been notified by the Department of National Revenue of these recorded abuses. How many have they notified you of?


Joseph Jacques Jean Chrétien: I do not have the figures but there was a sufficient number to cause us to change the law.


Sinclair McKnight Stevens: I think it is very important that we get a little more detail before we start passing new clauses because some bureaucrat thinks it is a good idea. If the minister does not
Income Tax
have the figures, after having told us that he is acting on this clause on the advice of National Revenue, and he does not know how many reported instances there have been that have led the department to feel that this clause is necessary, would the minister at least give us a ballpark figure?. Is it 1, is it 10, or is it 1,000 that he feels will be caught?


Joseph Jacques Jean Chrétien: I think that if I were to go along with the idea of the hon. member, his friend who was arguing that it is a good program would be completely embarrassed. The Department of National Revenue notified us that something illegal was going on and they wanted to close it off completely. If we were not to pass the clause, it would mean that no one would have any breaks, whether they were moving in northern Manitoba or anywhere else. The hon. member would be well advised to look at what he is talking about before making such a silly proposal.


Sinclair McKnight Stevens: I have asked four questions and I have not made any proposal to the minister as yet. I have simply been trying to get some information from him.


Joseph Jacques Jean Chrétien: Louder.


Sinclair McKnight Stevens: I will put my question again. Presumably, if he has been so dependent on the Department of National Revenue he can answer this question easily. How many reported cases have they drawn to his attention that have caused his bureaucracy to say that obviously clause 2 is necessary?


Joseph Jacques Jean Chrétien: The answer is, enough.


Some hon. Members:: Oh, oh!


Ramon John Hnatyshyn: That is ridiculous.


Sinclair McKnight Stevens: Is it reasonable for any minister to come to the House on an important subject such as this and simply tell us out of hand that, in his opinion, there have been enough so called abuses of so-called tax loopholes to justify the clause that is now before us? Let us bear in mind the concerns people across this country have with respect to this type of thing, and the concerns outlined by the hon. member for Churchill. After discussing my earlier question with his officials, perhaps the minister could shed a little more light on what we are talking about.


Joseph Jacques Jean Chrétien: Mr. Chairman, I said, and I want to repeat, it was becoming more and more part of executive compensation the way that this scheme was used to give an interest free loan to build a house, and it had become a tax shelter for many people. National Revenue ruled that it was a tax shelter and that it was unfair, and it made recommendations to us. We have looked into the problem. We have recognized that there were some abuses. I do not want to quantify them. I know they existed, and the fact that they did was enough to convince me. This is not the result of a bureaucratic conviction. As a responsible minister I accepted it. I know of some cases in which people were receiving loans of $150,000 and $200,000

November 28, 1977
Income Tax
without any interest at all. It was part of a scheme for some executives to avoid taxes.
I felt that, executives or not, they have to pay their taxes, and we decided to have a new scheme to help those who are moving from one mining town to another-or whatever it is- to help them because of this necessary mobility, but it was certainly not to give a tax break to people who were abusing the system. Through a ruling National Revenue decided that this was unfair, and we come up with a proposition at this time which is more just and which takes into account some of the needs without having to cope with abuses.


Sinclair McKnight Stevens: I would like to take the minister up on what he has just said. Did the minister first go to the bureaucracy and say, "I would like clause 2"-or something along that line- "because I am really disturbed by what I understand is a real abuse", or did the bureaucracy come to him? Whose idea was it initially?


Joseph Jacques Jean Chrétien: Mr. Chairman, the hon. member's questioning is amazing. It is very evident that he wants to waste time. Has the hon. member heard a minister of finance anywhere in the world saying, "Will you please let me have clause 92, 93 or 94" and so forth?
We have very good civil servants who are experts and who make recommendations. It is up to the minister to decide. I think this was proposed by my predecessor, the hon. member for Rosedale. I was not even the minister when the proposal was put on the table, so it is absolutely crazy for the hon. member to ask how I decided on a proposal which was made by my predecessor. I do not want to waste much time on that.
I just said there were some abuses. The Department of National Revenue brought it to the attention of my department, and I am bringing in a sensible proposition which will help to cope with some of the problems raised by the hon. member for Churchill. The hon. member raised some very valid questions.
I am satisfied there was a loophole. It is our duty as guardians of a fair tax system to plug that loophole. If others make suggestions which make sense, we will make amendments in the next budget.


Sinclair McKnight Stevens: I hope it is well established that this obviously originated with the bureaucracy and was presented to the minister's predecessor and then to him. They both bit on it, and I think the record should be clear. It is a bureaucratic idea. The bureaucracy feels there is a loophole, and for reasons I am going to bring out after eight o'clock I think it is very pertinent that we identify exactly who has said that this clause should be brought into our tax system.
I would like to go to this specific phrase in the clause: "interest for the year computed that a prescribed rate on loans". I wonder if the minister can indicate how it is proposed to set this prescribed rate. How often is it going to be set? What will be taken into account with regard to the prescribed rate? Is it going to be a national rate or a regional rate? Exactly what does the department have in mind for the prescribed rate?


Joseph Jacques Jean Chrétien: It is related to the prime rate.


Sinclair McKnight Stevens: I wonder if the minister could be a little more precise. In what way is it related to the prime rate? Is it going to be changed every time the prime rate is changed?


Joseph Jacques Jean Chrétien: It is calculated once a year based on the prime rate at the end of the summer, to be used for the next year.


Sinclair McKnight Stevens: Mr. Chairman, let us get that correctly. In bureaucratic jargon what is the end of the summer?


Joseph Jacques Jean Chrétien: Before the fall.


Sinclair McKnight Stevens: The minister does not seem to get clear instructions from his own officials. I wonder if he would go back to them and find out what date they have in mind which is between the end of summer and before the fall. What do bureaucrats consider that date to be?


Joseph Jacques Jean Chrétien: The average of June, July and August; before the fall.


Sinclair McKnight Stevens: I presume they are thinking of August 31.


Joseph Jacques Jean Chrétien: It is the average of three months, June, July and August.


William James Kempling: Why didn't you say so?


Joseph Jacques Jean Chrétien: That is what I said before.


Sinclair McKnight Stevens: If the minister had known that, he could have said that at the beginning. It has been established how the prime rate will be identified for the year following. What will be done with the prime rate? Is the prescribed rate referred to in clause 2 to be one point above that rate, two points or five points? Exactly what will be done with the prime rate, now that we have identified how the bureaucrats intend to find it?


Joseph Jacques Jean Chrétien: It is the prime rate rounded according to the formula I just gave to the hon. member.


Sinclair McKnight Stevens: It is going to be rounded to the prime rate.


Joseph Jacques Jean Chrétien: Let us call it six o'clock.


Sinclair McKnight Stevens: Don't worry about the clock.


Joseph Jacques Jean Chrétien: You are wasting time anyway.


Sinclair McKnight Stevens: Is there going to be any particular ratio given on a regional basis, bearing in mind that mortgages in this country have fairly different interest rates?
[Translation\


Joseph Jacques Jean Chrétien: Mr. Chairman, there is one single rate for all taxpayers throughout Canada.


Mr. Deputy Speaker:: Order, please. It being six o'clock it is my duty to rise, report progress, and request leave to consider the bill again later this day. Is that agreed?


Some hon. Members:: Agreed.
Progress reported.



PROCEEDINGS ON ADJOURNMENT MOTION

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

Mr. David MacDonald (Egmont):: Mr. Speaker, I want to return today to a question I raised on November 18 with respect to a recent meeting between the Writers' Union of Canada with the Secretary of State (Mr. Roberts) and the Minister of Consumer and Corporate Affairs (Mr. Allmand) on November 15. This concerns the very serious matter, as they said in their brief, of the possible collapse of the Canadian publishing industry, indicative of the very heavy loss of income both to Canadian writers and publishers that has occurred in recent years because of the selling at below-cost prices of the works of Canadian authors by American publishers and remaindered or wholesaled in Canada.
The meeting that took place a few days ago was the third that has occurred between the Writers' Union of Canada and the government since 1975. The core of the problem is that American publishers who have printed far too many copies of Canadian authors sell these leftover or remaindered copies to middlemen or book jobbers at dirt cheap prices. In recent years these middlemen have been selling specifically to three Canadian book chains which make up a large part of the Canadian market. I refer to Coles, W. H. Smith, and Classic. Coles was the first to sell remainders on a widespread basis. The three chains have been able to sell at one half the price of the Canadian edition. As a result, the Canadian edition immediately stops being printed. Canadian authors receive no royalties on the remaindered copies. In 1975 only Coles was doing this, but by 1977 the three major book chains are participating.
This at present affects some 26 major Canadian authors, but time does not permit me to run down the list. As far back as 1975 it was suggested that action should be taken to provide that well-known publications by Canadian authors being pub-
Adjournment Debate
lished in the United States should be put on a prohibited list. The problem is that the prohibited list has not been satisfactory because at the moment it takes about six months to become operative. I understand a meeting has taken place in the last few days which hopes to reduce the time from six months to one month. This would be a step in the right direction but would not come close to meeting the type of commitment to the Canadian publishing industry and the Writers' Union that they have requested of the government.
It seems to me that at the very least there should be some kind of top-level co-ordination between the departments basically concerned with this problem. I think of the Department of the Secretary of State, the Department of Consumer and Corporate Affairs, the Department of Justice, and the Department of National Revenue as being able to take some effective action.
I think it is the traditional Canadian dilemma, and something striking and unique, that this is the only English-speaking nation I am aware of that does not have strong protection for its writers and its publishing industry. The United States and Great Britain for sometime have had clear laws which prohibit the sale in those countries of the works of their authors published abroad, particularly at prices that would totally undermine the payment of royalties to the authors or publishers.
The most recent change of copyright law in the United States which is about to go into effect states that when foreign publishers of American authors wish to bring remaindered copies into the United States, the United States publisher must be notified in advance of this potential competition and has veto power over the importation.
The Department of Consumer and Corporate Affairs has been considering revisions to the Copyright Act for over a year, but the earliest that legislation might be forthcoming is 1980, and more likely it will be later.
What the Writers' Union has asked for is two possible courses of action. They seek amendment to the Copyright Act to forbid not just the importation but also the sale of remaindered copies. That would concern Sections 27 and 28 of the Copyright Act, and especially the elimination of Section 28(3).
The second route that could be taken, and should be taken, is that the Crown undertake costs of prosecution in test cases. Present serious ambiguities in the act have meant that previous challenges have faced legal setbacks, indicating that any court case will drag on for a long time and obviously involve higher courts.
What have we heard from the Minister of Consumer and Corporate Affairs and from the Secretary of State? They promised to examine the Copyright Act again, but there has been no promise of an interdepartmental committee from the Department of Justice and the Department of National Revenue. They have promised to meet with bookstore owners to use moral suasion and not to carry remaindered editions. I say to that "fat chance!". We know how far moral suasion goes in the world of business, particularly the very competitive world of

November 28, 1977
Adjournment Debate
book sales. Further they have asked for a meeting which has now taken place. As I said a few moments ago they shortened up the time but it certainly will not achieve the effect desired. It seems to me, Mr. Speaker, that for the past two years, as I said on the day I originally put the question, it is a sort of constant fobbing off of Canadian authors and publishers.
I would hope, that while the Secretary of State himself is not with us this evening, his parliamentary secretary will give us a much more clear cut answer in terms of action that will be taken to make an effective attack on this very serious problem. I believe both the authors and publishers when they state that we are involved in a crisis situation. What has developed very rapidly in the last two years, if it will last for another year or two means a considerable collapse and certainly a very great loss to Canada in both revenue as well as to the authors and publishers themselves, who will obviously resort to foreign publication. It will certainly be a greater hole in our own situation with respect to an effective Canadian industry in the publishing Field.
Mr. Robert Daudlin (Parliamentary Secretary to Secretary
of State): Mr. Speaker, the problem of the importation and the sale of foreign editions of works by Canadian authors in Canada, for which there exists a Canadian edition, is a very serious question and one to which the minister attaches extreme importance. Above all, it is a question of principle: can we accept that a right, which has been clearly set out and recognized by parliament through the Copyright Act, rest ineffective and inoperative? The question has another side as well, one based on the realities, with strong implications for the freedom of our writers to pursue creative activity and further for the survival and development of the Canadian book publishing industry.
I can appreciate the hon. member wishing some clarity could be shed on the actions about to be, or indeed will be at some future date, taken by the government. I can only suggest to the hon. member that the meeting he suggests would be an alternative answer to the publishers and authors. And although he would seek the kind of formality of interdepartmental committees, those committees or a committee of that type has not been set up. However, it may be small solace to him to know that indeed there is actively being pursued at this time by the various ministries which he has recited, Revenue, Consumer and Corporate Affairs and Secretary of State that meetings are taking place between the officials and various ministries with a view to examining solutions, such as that put by the authors and publishers.
Might I point out to the hon. member, and for the record indicate, that when he was suggesting that the royal commission on book publishing had indicated the criticism, that in fact he did not quite complete the citation, and perhaps I could indicate that the citation should read:
The procedure under section 27 (of the Copyright Act)... has been applied in a way that makes it unworkable in practice, and we think that this should be revised and clarified.

These procedures were revised and clarified in 1975 and new discussions are now under way between authors and publishers on one hand and officials from National Revenue on the other, in order to eliminate the final obstacles for the most efficient implementation of "List C" of the tariff and customs law. I might indicate to the hon. member that in addition to the various solutions that might be sought and expected in this instance the one solution of examination mentioned by the hon. member, is being held at this very time as to whether or not action should be supported.


SOCIAL SERVICES-CONSULTATION WITH PROVINCES ON FUNDING-POSSIBILITY OF LEGISLATION THIS SESSION
Hon. W. G. Dinsdale (Brandon-Souris):: Mr. Speaker, last Wednesday a series of questions was directed to the Minister of National Health and Welfare (Miss Begin) with respect to the long anticipated legislation on social services. The reply of the minister indicated that she was not really in touch with the recent developments. This is the reason, why, again this afternoon I have chosen to bring the subject to the attention of the House and to the hon. lady, and I suppose in this case it will be the parliamentary secretary.
I know the problem is the rotation of ministers, which is one of the regular features of the present government. Ministers are changed so rapidly and so frequently that it is hard to know who has the responsibility for what. Therefore I cannot really fault the hon. lady who has the portfolio at the present time for not being aware of the situation.
The dialogue in connection with the new social services legislation has been going on for some four years, ever since the last minister tabled the orange paper. The main problem, of course, in areas of joint jurisdiction and joint responsibility such as health and welfare, is getting a consensus from the provincial governments. This was achieved last June and the bill went on the order paper with the assurance that there would be debate on it at the earliest possible moment. Unfortunately, last September 16, just before parliament resumed, the former minister as one of his last acts issued a press release which said as follows:
Health and Welfare Minister Marc Lalonde today announced that he has proposed a major change in the federal financing of social services.
In letters sent yesterday to provincial welfare ministers and to territorial commissioners, Mr. Lalonde called for a switch to block financing from the current cost-sharing approach.
This simply means that the whole matter was scuttled because the consensus that had been so carefully achieved over a long period of negotiations went down the drain.
As anticipated, there was an immediate response from the provincial ministers who met a short time later in the city of Edmonton. A Canadian Press despatch at that time indicated the point of view of the provincial ministers. I quote:
Provincial social services ministers are united against a federal social services funding proposal after a two-day meeting.
November 28, 1977

They reject "tactics used by the former federal minister of health and welfare (Marc Lalonde) in making a unilateral proposal regarding funding arrangements for social services in Canada without consultation with the provinces," conference chairman Helen Hunley said yesterday.
The minister should have known the results of his arbitrary actions because he has now gone to new responsibilities with regard to federal-provincial relationships. I am sure that the confrontation tactics such as I have indicated are not going to help him very well in his new ministerial responsibilities.
Unfortunately, in the question period the other day, the new minister indicated that she is not aware of the problem she is facing. In response to questions she stated the provinces said in a press release that they did not appreciate the way the counterproposal had been made. She said they did not reject the proposal but the way the offer had been made. I have quoted their release to indicate that that is not so. They reject the whole new idea of block funding to replace the proposed cost sharing which had been agreed after long consultation and deliberation.
More important in this regard is the attitude of the voluntary associations which have been anticipating a major breakthrough in social services legislation, particularly for the most needy groups, the handicapped, the chronically ill, and the geriatric population of Canada. Some of the speeches made by the former minister have given them reason to hope for immediate action. I quote:
The handicapped have the right to be as independent as possible, the right to live like everyone in the community, and the services they need to bring this about should be provided.
The minister referred to the "removal of legislative disincentives" and "acceptance of the handicapped within the community". Here is another quotation:
In every area, the message was clear. They "wanted in"-into employment, into community living, into maximum participation in community life, into the planning of systems and services designed to help them. At the same time, they "wanted out"-out of institutions, out of dead-end sheltered workshops, out of welfare, out of being pitied, out of being thrust on to the sidelines with a pension and a shrug.
There has been, I am sure, a strong wave of criticism reaching the minister from voluntary agencies, particularly from the Canadian Paraplegic Association. This is understandable having regard to the failure to live up to promises of immediate action which have been repeated, now, for four years, especially as the legislation is not even reappearing on the order paper at the present time.
It has been suggested that delay has been caused as a result of the change of government in Manitoba. I assured the hon. lady last Wednesday, and I assure her today, that Manitoba is one of the most enthusiastic provinces. We shall be hosts to the International Rehabilitation Congress in 1980 and it is essential we have this legislation, much in its original state, if that Congress is to be a success.
I come back, finally, to my main point: will the minister at the earliest moment bring the provincial ministers together so that we can get on with this urgently-needed legislation?
Adjournment Debate


Mr. Frank Maine (Parliamentary Secretary to the Minister of Public Works and Minister of State for Science and Technology):: Mr. Speaker, the minister dealt with this subject fully on November 23 and I have very little to add to her reply. I would refer hon. members to pages 1160-1167 of Hansard for that date. The minister made it abundantly clear that it is the intention of the federal government to consult with the provinces once it has been ascertained that there is general agreement on the principle of block financing of the social services. I believe it is the intention of the minister to communicate officially with her provincial colleagues on this important subject within the next two weeks.


ENERGY-NEWFOUNDLAND'S OFFSHORE OIL AND GAS REGULATION-POSSIBILITY OF AGREEMENT ON QUESTION TO BE PUT TO SUPREME COURT
John Carnell Crosbie: Mr. Speaker, I rise in connection with an unsatisfactory reply I received to a question I directed to the Minister of Energy, Mines and Resources (Mr. Gillespie) on November 21. As is usually the case he showed he did not know what the subject was about. He was not briefed. In short, the reply was most unsatisfactory.
There was a dispute between Newfoundland and the Government of Canada as to the ownership of the oil, gas and minerals that lie under the sea on the continental shelf off Newfoundland and Labrador. Newfoundland will not surrender its claims to the ownership of these resources to the Government of Canada.
The Government of Canada is basing its position on a decision of the Supreme Court of Canada in a British Columbia case. But the Newfoundland case is entirely different. Mr. Speaker, every member will be getting a copy of this document, "Heritage of the Sea," and every member of every legislative assembly in Canada will also be getting a copy of the document. And every branch of the media will be getting copies of this document which sets out Newfoundland's case and the importance of that case.
Since 1967, 54 wells have been drilled off the coast, eight of them in the east Newfoundland basin, and 12 off Labrador. Of the 12 off Labrador, three have resulted in significant gas discoveries, so we know there is tremendous potential there.
The position of Newfoundland is not similar to that of British Columbia. We came into Confederation in 1949. Minerals rights in each province were determined by the rights each held before coming into Confederation. When Newfoundland entered Confederation our rights to offshore oil and gas were not the same as those of British Columbia in 1871 when it was a colony. The rights of Newfoundland are based on the rights of a twentieth Century self-governing British dominion, and we do not intend to relinquish our claim. But because they are centralists, the Government of Canada and its political supporters claim they own these resources and wish to exercise full control over them, leaving to Newfoundland a few crumbs from the table that they might deign to give.

November 28, 1977
Adjournment Debate
The Progressive Conservative policy is to recognize the provinces as being the owners of those resources. We will recognize Newfoundland, Prince Edward Island, Nova Scotia, New Brunswick, Quebec and British Columbia as provinces owning the resources off their shores when the Conservative party takes office in 1978.
This is the biggest land grab since the Yukon gold rush. It is a frenzied example of Kung Fu federalism: the great government in Ottawa must have all the control and all the power. It is greedy-guts centralization of all the power and revenue. Those who have the most will have even more. It is an example of creeping colonialism because the federal land grabbers, epitomized by the present Minister of Energy, Mines and Resources, treat us as a colony. I am glad to see that minister is going to be bounced by the Prime Minister (Mr. Trudeau), according to the Ottawa Journal of November 23. That is because of his unwillingness to make firm decisions about anything and because of his refusal to be brief by indicating that he does not know the answer to the question posed.
The Minister of Energy, Mines and Resources is firm about one thing: that Newfoundland will be crushed and its offshore resources will be taken by Ottawa. In the unlikely event that the Liberal government stays in power after the next election, then this is a matter which will have to go to the Supreme Court of Canada. Newfoundland will not surrender. The Liberal government wants to take it all.
Newfoundland will go to the Supreme Court of Canada on two conditions: first, that this government permit the 30-year rule to be set aside in order for Newfoundland to have access to all the documents surrounding the 1949 period. If we go back 30 years from 1977, we arrive at 1947; and if we go back from 1978, we will arrive at 1948. Newfoundland must have access to those documents in order to support its case. The 30-year rule has to be set aside to permit that. Second, the government must agree that Newfoundland and Ottawa agree on the questions which go to the Supreme Court of Canada. There can be no loaded question set up by Ottawa to favour Ottawa. That is what happened in the case of British Columbia. That was one of the reasons for the court deciding in favour of British Columbia in the 1967 reference: Canada unilaterally decided the form and the wording of the question. Newfoundland will not accept that. No unilaterally decided question will go to the Supreme Court of Canada as far as that province is concerned. If necessary, other methods can be taken.
I ask the minister: does Canada agree that Newfoundland will have access to all the documents, despite the 30-year rule?
I am referring to documents in Canada, the United Kingdom and the United States. These documents will prove what the law was on March 31, 1949, that Newfoundland came into Confederation owning its resources, and therefore under the British North America Act still owns them. Does Ottawa agree that the questions are to be decided by both sides? Does Ottawa agree that it will be a bilateral reference and both will

agree on the exact wording of the question on which the court will be asked to adjudicate?
The minister's answer shows that he must be removed by the Prime Minister. He said, "As far as I know, there was a favourable decision taken in principle on these matters some months ago". That is not correct. Also he said, "I do not understand why the Newfoundland government has not been able to move more expeditiously." That is nonsense. It has nothing to do with Newfoundland moving more expeditiously. For five years Newfoundland has prepared its case. If the Conservative party does not win the election next year, Newfoundland wants the assurance that the Liberal government will agree to waive the 30 year rule and will agree to a joint wording of the questions on which the Supreme Court of Canada will be asked to rule. The simple answer is either yes or no.
At the present time there are two sets of regulations: there are the oil and gas regulations of Newfoundland, which Newfoundland indicates are valid; and there are the oil and gas regulations of Canada, which Canada indicates are valid. Newfoundland wants exploration to continue in these areas while this dispute is being settled. The minister from Newfoundland, Mr. Brian Peckford, has suggested an interim offshore management committee in order for the two governments to have a forum to deal with the oil companies jointly while this matter is sub judice. They should receive some reassurance that they will go on exploring in that area while this matter goes to court. The minister said it was an interesting and constructive suggestion, and I hope that when he meets the Newfoundland minister in December this can be agreed to so that exploration may continue next year.


Mr. Ross Milne (Parliamentary Secretary to Minister of Indian Affairs and Northern Development):: Mr. Speaker, I am pleased, on behalf of the Minister of Energy, Mines and Resources (Mr. Gillespie), to reply to the statement made by the hon. member for St. John's West (Mr. Crosbie).
With respect to the Newfoundland situation, discussions are continuing between the Department of Justice and Newfoundland officials respecting the agreed upon reference to the Supreme Court on mineral resource ownership and jurisdiction in areas offshore that province.
There was a meeting of federal and Newfoundland officials on March 16 of this year to discuss the memorandum of understanding signed by the Prime Minister (Mr. Trudeau) and the premiers of Nova Scotia, New Brunswick and Prince Edward Island on February 1, to explore the possibilities for a similar political settlement of the offshore Newfoundland situation. As a follow-up to this meeting, the Newfoundland minister of mines and energy sent up a list of questions, some 58 in all, ostensibly relating to a possible federal-Newfound-land arrangement along the lines of the proposed federal-Maritime provinces arrangement. A comprehensive reply to this Newfoundland questionnaire was sent on June 21, but no response has been made by Newfoundland authorities.
November 28, 1977

Until recently the only information that we had received at the federal level as regards a possible Newfoundland initiative on administrative arrangements has been by way of newspaper articles and the questions posed by the hon. member for St. John's West. No submission had been received by Department of Energy, Mines and Resources from any Newfoundland authority to the effect:
that the two governments set up an interim offshore management committee so that there will be a forum for discussion and co-ordination and so that the industry will know where to go to get answers in this matter of disputed jurisdiction.
In conclusion, it was not until November 21 that we received a letter, dated November 3, from the minister of mines and energy for Newfoundland enclosing a copy of the Newfoundland offshore regulations and requesting that officials meet at an early date to discuss the mandate, membership, and operational procedures of an interim committee. The envelope in which this letter was received was post marked St. John's, Newfoundland, November 16. Officials of the Department of Energy, Mines and Resources have been instructed to follow up this request.
In view of the unwillingness of Newfoundland to consult meaningfully with us in the past, we welcome this new initiative and hope that it will improve the situation.


Mr. Deputy Speaker:: The motion to adjourn the House is now deemed to have been withdrawn. I do now leave the chair for the House to go into committee of the whole to consider Bill C-ll.
Motion withdrawn.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration in committee of Bill C-ll, to amend the statute law relating to income tax and to provide other authority for the raising of funds-Mr. Chretien-Mr. Laniel in the chair.
Gérald Laniel: It being 6.30 p.m., I do now leave the chair until 8 p.m.


[Stage Direction]
AFTER RECESS

The committee resumed at 8 p.m.
Charles Robert Turner: When the committee took recess clause 2 of the bill was under consideration.
Income Tax


Sinclair McKnight Stevens: Mr. Chairman, now that the minister has had a chance to have his dinner and to consult, presumably, with some of his officials, I wonder if he can give us any better estimates as to what we are talking about in clause 2. What is the nature of the so-called loophole we are trying to fill? How many people are involved? How much money is involved?


Joseph Jacques Jean Chrétien: Mr. Chairman, I have nothing else to add.


Sinclair McKnight Stevens: I believe the minister said he has no further information to give us on that.


Lincoln MacCauley Alexander: What is he doing over there?


Sinclair McKnight Stevens: The minister said he has said what he has to say. Let me put another question to him. I really find it surprising that a minister would bring a bill to us and have the gall to suggest that it is not passing fast enough, yet when we get to clause 2 the minister does not even know what clause 2 is all about.


Edward C. Lumley: He has already explained it.


Sinclair McKnight Stevens: If the minister wants speedy passage of the bill it is certainly not our intention to delay it, but on behalf of the Canadian public we think it is our responsibility to ask a few pertinent questions as to why the government wants some of these amendments and why the minister thinks it is necessary to make the changes he has in mind. In short, I would think a minister of finance would almost welcome being able to explain exactly why he feels members of this House should support him on various aspects of a bill.
I have a copy of a letter which was sent to the minister's predecessor by a chap from Winnipeg. I would like to get the minister's reaction to what this man is pointing out. He says he lived in Calgary and his company required him to move to Edmonton. As an inducement the company agreed to give him what would now be looked upon by the minister-or at least by his staff-as a relatively low interest loan. The reason the company agreed to give him a low interest loan was that the mortgage he had in Calgary was at 5% per cent. My question to the minister on behalf of this chap from Winnipeg is: how is he going to handle a situation where someone has the benefit of a 5% per cent mortgage and his company wants him to move to another city? When a company realizes an employee has favoured financing on the home he is leaving and gives him comparable financing for the home to which he is moving, how is the minister going to handle that situation?
In his letter this man points out that there is going to be a deemed income, deemed by the National Revenue people, if this clause passes, to the extent of whatever the difference is between, for example, a 5 per cent rate on the mortgage he has compared with what will be looked upon as the prescribed rate, to use the minister's terminology, if this clause should go through. Clearly this chap is going to be penalized as a result of his move, notwithstanding the fact that all his employer is attempting to do is put him back in the same relatively favourable position he was in when he had a mortgage in Calgary.
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November 28, 1977
Income Tax


Joseph Jacques Jean Chrétien: Mr. Chairman, he will be entitled to a maximum loan of $50,000 without interest. If the company accepts an interest of 516 per cent, he could probably borrow up to about $120,000 at that rate without having to pay the difference between the prescribed rate and the rate paid on income tax.


Sinclair McKnight Stevens: Mr. Chairman, I did not get all of that, but as I understand it the minister is saying that once you subtract the $500 from the deemed difference, the man who has a new mortgage at the 5 per cent rate will not be taxed provided his mortgage is not greater than $120,000. Was that what the minister was saying?


Joseph Jacques Jean Chrétien: Mr. Chairman, I just said he could obtain a maximum of $50,000 if he moved and for more than $25,000 without interest. It means that he could have a $50,000 loan without interest. If the interest rate is 516 per cent and the rate agreed for the current year was say 8 per cent, he could then have more than double at 516 per cent, which means that he could secure more than $100,000, maybe $120,000 because the preferential rate he would obtain would be 516 per cent. It is quite simple to calculate: he is entitled to the equivalent to a $50,000 loan without interest if it is a loan of $100,000 at half the current interest. It is the same thing as a $50,000 loan without interest.


Sinclair McKnight Stevens: In order to allow someone to do this, is the minister indicating there would have to be two mortages, or can this be wrapped up in the one mortgage document? Does there have to be a $50,000 mortgage with zero interest, and some other interest rate for the balance?


Joseph Jacques Jean Chrétien: Mr. Chairman, he can take the total benefit regardless of the kind of mortgage he has.


Sinclair McKnight Stevens: Mr. Chairman, if I could come back to the other point, based on what the minister has indicated this man who writes to us from Winnipeg will still be caught with a tax.


Joseph Jacques Jean Chrétien: I never said that. Mr. Chairman, may I explain that he is entitled to the equivalent of a $50,000 loan without interest. If the interest rate is 8 per cent and he gets a loan at 4 per cent, he can have up to $100,000. And on the benefit of 4 per cent on $100,000, be would not have to pay income tax. Beyond that, he would have to pay income tax. I think it is quite simple. I have been explaining it for one hour now, Mr. Chairman.


Sinclair McKnight Stevens: I realize the minister must be getting quite tired, Mr. Chairman, but surely I do not have to remind him that we started questioning on the broad point with which I am now dealing, about seven minutes ago. It may seem like an hour to him, but I wish he would quit misrepresenting the facts.
I should like to go to the next question raised by this correspondent, which I thought was interesting. If it is true that there are loopholes, that there are somehow inequities in our tax system, I wonder why the minister feels it necessary to plug those so-called loopholes but presumably leaves others wide open. What about the free travel passes for Air Canada employees? Should they not be deemed some type of advantage to those employees and be added to their incomes? We understand it is government policy that they are not so deemed.
[ Translation]


Joseph Jacques Jean Chrétien: Mr. Chairman, this is something which has nothing to do with clause 2 and which concerns all sorts of services. People may obtain them from the corporations they are working for. Of course, some are CNR, CPR or Air Canada employees. Others may travel on buses free of charge, for instance transport commission employees in either Winnipeg or Toronto. There are people who can use their bosses' cars once in a while without paying. This raises, of course, the problem of this type of benefits, but we feel at this time that the costs of administering and monitoring these benefits would considerably exceed the money taxpayers would get by depriving these people of these benefits. The list of these benefits is quite extensive. As a matter of fact, if I could use a few minutes of the hon. member's time, I could name quite a few others which I know, but I feel under these circumstances that we must demonstrate judgment. Maybe in the next budget we could amend a number of provisions, but I do not intend to do so while we are debating this bill.


Sinclair McKnight Stevens: I take it from the minister's answer that he feels the people he deems to be using this loophole of so-called relatively low interest loans so far as their company is concerned, are like sitting ducks. From an administrative standpoint it is easy to nail them with this deemed income in clause 2. There are some others, such as subsidization of civil servants who might have free travel on Air Canada but it is tougher to police them, although I would have thought with civil servants being paid out of the treasury, they would have been one of the easiest to police regarding deemed income. I should like to ask the minister what yardstick is used. As I understand it, a subsidy is paid to help people move from one town to another if they happen to be in public employment, yet there is not suggestion of deemed income in such a case. I wonder why that is distinguished from the other situation where an employee who works for a private company is moved and is given a relatively low interest loan. If we pass clause 2, that is going to be partly deemed to be income.
November 28, 1977


Joseph Jacques Jean Chrétien: Mr. Chairman, I have just stated in an elaborate fashion that there are many of these benefits. I could mention others. For instance, a number of corporations allow their employees to buy consumer goods. The people who are working for Simpsons-Sears can buy goods at prices which are cheaper that those paid by other consumers. We should normally step in, and there are all sorts of situations. The hon. member has asked on what basis we decide. The basis we are using is something which is called "judgment".


Sinclair McKnight Stevens: Mr. Chairman, perhaps the minister has now come to the letter I am referring to because the example he gave is exactly another example that this taxpayer gives. He says that if he worked for Simpsons-Sears or Eaton's he would get 15 or 20 per cent discount on his purchases. Is the government suggesting that this is going to be deemed income in future in order to remove whatever inequity it thinks exists in that situation?
[ Translation]


Joseph Jacques Jean Chrétien: Mr. Chairman, the federal government does not intend to introduce such a measure.


Lincoln MacCauley Alexander: Mr. Chairman, I have one short question. I should like to refer the minister to the explanatory notes. On deemed income there is an explanation which includes the following words:
... the Act be amended to require an employee, shareholder ...
These are the words I am concerned about, where it says:
... or related person to include in his income the amount by which
(a) interest for the year computed at a prescribed rate on loans from an
employer or a corporation ...
The governing words in the initial paragraph "or related person" are left out in the explanatory note where it speaks of "interest for the year computed".
Does the minister understand my point, which I think is very significant?


Joseph Jacques Jean Chrétien: Mr. Chairman, the substance of that measure is in the clause. If the clause were read by the hon. member he would see the problem does not exist in the actual reading of the act.


Lincoln MacCauley Alexander: Mr. Chairman, I have read the act and I am reading the explanatory notes. I can only gather information from what is given by the minister by way of explanatory notes. In one instance it talks about "employee, shareholder or related person" and then refers to the "interest for the year computed at a prescribed rate on loans from an employer or a corporation" but leaves out the phrase "or related person." I want to know why that is left out. I have read the act and I did not find the answer. Perhaps the minister could give an explanation.
Income Tax


Joseph Jacques Jean Chrétien: If the hon. member would look at Clause 35.(1) where it refers to 80.4 of the act he would find the explanation. Clause 2 and clause 35 are related.


William James Kempling: Following along with these questions on clause 2, I wonder if the minister would clarify several points with respect to expenses involved in moving, and whether or not these items are covered. As you know, mobility of people is very important to industry today. We are transferring people around particularly in industry perhaps in difficulty and placing management people in there. Aside from the allowances made on houses, what about moving expenses generally? Is moving expense going to be considered a deemed income?


Joseph Jacques Jean Chrétien: There is an amendment later regarding moving allowances, I will give you the number in the bill.


William James Kempling: Will it cover also such things as broadloom allowance, drapery allowance, underwriting a loss on real estate, differential of upgrading of residence, bonus for moving, education allowance-are all those things covered in that section?


Joseph Jacques Jean Chrétien: The moving allowances are found in clause 27 in this present bill. We are amending those regulations in clause 27. With respect to education, it is not included.


William James Kempling: Did you say that education is not included in here?


Joseph Jacques Jean Chrétien: The tuition problem which the hon. member is referring to is not a moving expense.


William James Kempling: That is a matter of interpretation. What about the other items I have mentioned? In corporations where an executive is moved around and they move into a new home, there are decorating, broadloom and drapery allowances given and that sort of thing. Is that considered deemed income?


Joseph Jacques Jean Chrétien: Mr. Chairman, clause 27 includes a definition of what is allowable as moving expenses, namely draperies and things like that, a certain number of items which have long been defined as moving expenses and are included in the Income Tax Act to be amended under clause 27.
Obviously, Mr. Chairman, it must be understood that I cannot act as the lawyer of the department and give every definition of each thing which can be included. We are now considering the amendments to the bill and when it is passed, the taxpayers will know what to expect. In this case, there is a series of moving expenses allowable under the Income Tax Act.


Lincoln MacCauley Alexander: I have now found section 35 and I would like some information. I would like to know how close this relationship must be between the individual getting the loan and his relationship to the officer and employee. Is there a
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November 28, 1977
Income Tax
definition of the word "relationship" within the act now so we will know how far removed a person can be before the provision of this particular section can apply, and if so where is it?


Joseph Jacques Jean Chrétien: Yes, there is such a definition in the act.


Cecil Morris Smith: I have one or two further questions concerning housing referred to in clause 2. I have heard here in the House the government accuse the mining industry of not creating enough jobs and not doing enough for their employees. In the case of a person who moves to an isolated community, or moves to a community and qualifies for the allowance, how long is he allowed to reside in that community prior to his purchasing a house? Would he qualify for the refund or qualify for the rebate on his tax if he purchased a house, providing he moved further than 25 miles-could he live in that community for five years, or three months prior to meeting this criteria, or does he have to meet that as soon as he moves to that community.


Joseph Jacques Jean Chrétien: There is no time limit to that provision, Mr. Chairman.


Cecil Morris Smith: In other words, the person that now lives in that particular community, does not qualify because he is not under the 25 mile restriction. You are discriminating against the person who lives in the community at the particular time because he does not come under the 25 mile restriction-that he must move from further than 25 miles; is that right?


Joseph Jacques Jean Chrétien: That is an allocation relating to mobility. If he is a resident, this provision does not apply.


Cecil Morris Smith: I say you are definitely discriminating against the person who lives in that particular community, and that is just what I have referred to. You are talking about mining companies not providing or doing enough for their employees. Here is a case where the mining industry is wanting to do something for their employees, the employees right on site. In order to qualify for this, could I in fact quit the company, move out of the community, and move back in and qualify?


Joseph Jacques Jean Chrétien: According to the provisions of the act, yes.


Cecil Morris Smith: Could I apply for a relocation grant to the government to do that?


Joseph Jacques Jean Chrétien: We don't have a relocation grant under the Income Tax Act.


Cecil Morris Smith: The minister talked about the reason this clause 2 was put in there, he talked about people ripping the government off to the tune of $150,000. Does the minister have any idea whatsoever, or any of his officials as to the number that would be involved here, say, under $50,000?


Joseph Jacques Jean Chrétien: Mr. Chairman, such figures are not available.


Cecil Morris Smith: In other words, Mr. Chairman, this clause may affect only a very small number of people in the isolated parts of the country especially-the problem that the mining companies have trying to encourage people to come into that part of the country and of trying to keep the personnel they have now. I just want to be very clear that if someone left one of those communities, quit his job, went out and was rehired, then he could come back to the community, qualify in buying a home and then qualify under this amendment, could he then qualify for the income tax rebate?


Joseph Jacques Jean Chrétien: With respect to the particular problem raised by the hon. member, perhaps technically he can claim that he is entitled to this interest free loan, but then he will obviously be acting against the spirit of the law. I do not know how the lawyers will interpret that, but of course, just a move of say 24 hours and coming back, will just be a technique that normally will not be acceptable because it will be evident that he is trying to circumvent the act as it is written.


Cecil Morris Smith: I am still not perfectly clear on the one aspect of this. Where the minister said that there was no time limit on a person going into a particular community, and I am talking about isolated communities in this case, that he can live there for five years and could still apply for a housing loan-can he still qualify for the exemption under the income tax even if he was there for five or ten years?


Joseph Jacques Jean Chrétien: Mr. Chairman, it is in relation to a move by an employee from one community to another. The employee has to be involved in a move of a distance of 25 miles. We do not make any distinction between an isolated area or a move from Montreal to Toronto. The same benefit applies to a person who is moving from Winnipeg to Churchill. There is no distinction between isolated and not isolated, mining and not mining. It is an interest free loan a company can make to an employee if he is forced to move to another city in the execution of his duties.


Cecil Morris Smith: Mr. Chairman, I cannot agree that you can have just one set of rules for isolated and non isolated areas in the country. The government recognizes that it is more costly to live in isolated areas. Civil servants who live in those areas are paid a northern allowance to live there because the cost of living is higher.
Here is industry giving an interest free mortgage to its employees, a benefit to the employees, and still this is not recognized by this government. I do not see any difference between this and the situation that was raised by my colleague. He stated that Air Canada employees receive travel allowances and so on. What is the difference between that situation and a mining company putting up a tax free mortgage for its employees to encourage them to stay in that part of the country in the mining industry to take advantage of harvesting resources rather than having to beg people to come into the north? It is the same as Air Canada allowing its employees to
November 28, 1977

travel free of charge. I do not see any difference. I cannot understand why an employee who now lives in that particular community in rented quarters could not qualify for this tax exemption if he purchased a house.


Joseph Jacques Jean Chrétien: Mr. Chairman, if we were not to introduce this legislation as it is, nobody would be entitled to any sort of interest free loan from his employer. What we are doing now is making it possible to give an interest free loan. The interest will not be taxable as long as the loan is not more than $50,000 to someone who is moving. For other reasons we do not want to give such a benefit. It is for people who are forced to move. We do not intend to give the same benefit to someone residing in that locality, whether it is in the north or anywhere else in Canada.


Cecil Morris Smith: Mr. Chairman, does it apply also to the person newly hired by a company, or does it just concern the person moving from one employ to another?


Joseph Jacques Jean Chrétien: If it is a new employee and he moves, but if it is a new employee who is not moving, he is not entitled to it.


Cecil Morris Smith: I am talking about a new employee who is hired outside of that community, more than 25 miles away.


Joseph Jacques Jean Chrétien: It applies to a new employee moving more than 25 miles in order to get established in a new community. This benefit will apply to that person.


Cecil Morris Smith: I finally have it clear. It applies to the new employee who has no stake in the community whatsoever. He can come into that community, stay there for five years and qualify to make application for housing. That person can get that tax exemption, even if he has been there for five years.


Joseph Jacques Jean Chrétien: It has to be in relation to a move. If five years later he makes application, he would not qualify. It is in relation to moving from one city to another. If an employee does not get that kind of loan from his employer when he arrives and his employer decides to give it five years later, obviously that would not be because of a move. It would be for another reason the employer is giving the employee this benefit.


Cecil Morris Smith: Referring to the minister's remarks earlier this day, he said that they were not concerned about people from the south or people from the north and that it had to be the same for everyone. I say that if it has to be the same for everyone, the person who lives in that particular community should qualify because he has spent his life in the north. He is there because there is a bit of an incentive. However, now that person will not be able to qualify. He will be penalized for staying in the north. The new person who comes in can qualify for the exemption. I just cannot buy that thinking.
Unless I am not interpreting this properly, the person who now lives in the north is being discriminated against and
Income Tax
everything is being done for the new employee who moves in. Perhaps that new employee arrives there because he is on a relocation grant at the same time.


Joseph Jacques Jean Chrétien: Mr. Chairman, we are not discriminating against anybody. There is no such provision now. Revenue Canada has ruled that these interest free loans that are given by a corporation for all sorts of reasons are a loophole that has to be plugged. We looked at the problem and, in our judgment, we feel it is a legitimate reason when it involves the movement of an employee from one town to another. We are saying in this case the corporation can make a $50,000 loan without interest. The fact that the employee does not pay interest will not be considered as a benefit.
If we were not to pass this, there would not be any discrimination because an interest free loan by an employer to an employee is not taxable at this time. Revenue Canada realized that a lot of people used this as a way to get some benefit from their employer that was not taxable. That is why we were forced to move. If we had not discovered there were some abuses, the idea for what we are proposing today would be good. In some instances an employee was offered a job and the employer would say he would give him so much money, plus an interest free loan of $150,000. The employee would not be taxed on the benefit received from not paying the interest. We felt that was a loophole that had to be plugged.


Charles Robert Turner: Shall clause 2 carry?


Sinclair McKnight Stevens: Mr. Chairman, there are more questions on clause 2. The Parliamentary Secretary to the Minister of Finance referred to certain questions that my colleague from Ottawa-Carleton raised concerning clause 2. I would like on her behalf, and on behalf of other members, to raise some of these questions.
The hon. member is very concerned about the impact the passage of clause 2 and the related clauses in this bill may have on small business. She makes the point that many small businesses are finding it difficult to woo executives to get them to agree to come to their companies. One of the tools that has been used to try to woo executives, especially from the bigger concerns, is this type of loan facility. They offer a relatively favoured interest rate on a mortgage that the person might have if he comes to work for the small company. To reverse it, in order to try to keep an employee, the first company may make this offer so that the employee will not be wooed away by somebody else. Has the minister given any consideration to this point, the effect that the passage of these provisions might have on small businessmen in relation to their relatively senior executives?


Joseph Jacques Jean Chrétien: If a business concern is trying to attract an executive from another city, it can make that $50,000 interest free loan to a new employee. The hon. member will realize that there is a break for the person who has been attracted by a Canadian company. Stock options will be taxed at a different level than they are right now, as long as it is a Canadian

November 28, 1977
Income Tax
private company and not a public company. To keep it with no limit was felt to be exceedingly generous.


Sinclair McKnight Stevens: What happens to the person who is not being relocated? 1 am referring to a person who lives within that 25 miles. I take it from this section that he will not be exempt?


Joseph Jacques Jean Chrétien: Not for buying a new house with an interest free loan of $50,000.


Sinclair McKnight Stevens: Does the minister not feel that this may be a problem which smaller businessmen will have to live with, in that with the resources of large corporations they can very quickly woo away employees from smaller concerns? Let us assume there is an employee who has a relatively low interest rate loan at the present time, which is one of the advantages he has with his small business employer. Does the minister now intend to have that man taxed on the deemed benefit which will come if this clause and the other relevant clauses in Bill C-l 1 are passed?


Joseph Jacques Jean Chrétien: If he is in the same city, he cannot benefit from this allocation in terms of interest free loans for a house. It would not apply to him. There are other provisions which would help in this bill. If small or medium sized corporations want to attract an employee, they could provide incentive in terms of employee stock options.


Sinclair McKnight Stevens: This clause will mean people who have been working with smaller companies, who are not being relocated and who have had the advantage of low interest loans, will now lose that advantage. Bearing that in mind, has the minister given any thought to what the salary implication will be if the employer attempts somehow to compensate the employee for the fact that he will have to pay tax on what has been determined by the minister to be income, in the sense that he will have to make up whatever that deemed amount is by a multiple of the tax he will have to pay to the federal treasury? Has the minister given any thought as to what the impact of this will be?


Joseph Jacques Jean Chrétien: This is not starting before 1979. If some people receive interest free loans after 1979, they will be required to pay tax on the benefit they are deriving from those loans. That was a benefit which was not taxable, and it should be considered as income, just like an increase in pay. Of course employers will have to give pay increases. If employees receive pay increases, they will be required to pay taxes accordingly. It was a mechanism many people used to avoid paying taxes, and it was not fair for other taxpayers in the land. I have no difficulty in living with that change. It has developed as a loophole which has to be closed.


Sinclair McKnight Stevens: I have no doubt the minister will have no difficulty living with this change. In this House we are concerned about hundreds and perhaps thousands of Canadians who will find it considerably difficult to live with the proposed change.

Bearing in mind that the $50,000 exemption would be open to employees working for smaller companies, if it was not for the words "on the relocation of an employee", would the minister indicate why it is so essential that this $50,000 be only an exemption on relocation, as opposed to those who would be otherwise entitled to such a lower interest loan?


Joseph Jacques Jean Chrétien: We have decided to make it in terms of relocation because of a decision by the Department of National Revenue indicating that a lot of people were abusing that loophole which existed. Any sum of money could have been lent by a corporation to an employee and the benefit from the interest free loan was not taxable. Certainly there were abuses there. When National Revenue discovered that practice and judged that it was not acceptable, we received a lot of representations by corporations on the ground that it would affect mostly people who were forced to move. The determination of the $50,000 was discussed with the mining industry. That industry felt it was a reasonable level. Interest free loans by corporations under certain circumstances will be acceptable under clause 35. It is up to a real benefit of $500 in terms of not having to pay interest.


Sinclair McKnight Stevens: Since the last time I had an opportunity to question the minister, I have gone through the figures he provided with respect to calculating the interest a man may be deemed to have earned as a result of this low interest loan. I have read clause 35 as it relates to clause 2. I am not sure whether I understood the minister accurately. Do I understand him to say that notwithstanding how many loans an individual may receive from his employer, he may take the $50,000 and get a zero rate of interest on that, and on another $50,000 get a 10 per cent rate of interest? The average rate would be 5 per cent, and if the prime rate is maintained at around 9 per cent, no tax would be payable.


Joseph Jacques Jean Chrétien: That is exactly what could happen, yes. If the calculations and the figures of the hon. member are used, that will be the situation. Other than that $50,000 interest free, he could have $100,000 at 4.5 per cent if the prime rate is 9 per cent.


Sinclair McKnight Stevens: In order to keep my figures as simple as possible, assuming the prime rate is 9 per cent and assuming a man receives two loans, the first one at zero per cent for $50,000 and the second $50,000 at 10 per cent, giving him an over-all 5 per cent rate, do I understand the minister correctly that in spite of the fact the prime rate may be 9 per cent, which would appear to be a 4 per cent deemed difference, there would still be no tax payable?


Joseph Jacques Jean Chrétien: He would have to pay tax on 1 per cent of the totality of the interest because it is 9 per cent and 10 per cent. He can have a $50,000 interest free loan. He can have the double of that amount at half the rate. If the rate is 9 per cent, it will be 4.5 per cent. If he has anything above that, he will have to pay tax on that benefit.
November 28, 1977


Sinclair McKnight Stevens: I am wondering if the minister has an opinion from the Department of Justice that clause 35, along with clause 2, in fact will be interpreted that way?


Joseph Jacques Jean Chrétien: The legislation as introduced and now under study in the House has been approved by the Department of Justice.


Cecil Morris Smith: I have a further question for the minister. If a person qualifies for a tax-free loan of $50,000 to purchase a house, how long does he have to retain that capital before he can dispose of it?


Joseph Jacques Jean Chrétien: There is no time limit.


Sinclair McKnight Stevens: Perhaps the minister misunderstood my question. I do not doubt there has been some cursory examination by the Department of Justice of the bill as to form, but I was wondering whether the minister ever put the matter to the Department of Justice and whether he received an opinion as to the impact of clause 35 as far as dollar amounts are concerned.


Joseph Jacques Jean Chrétien: I did not need to ask the Department of Justice for a legal opinion about that. They drafted that clause themselves. They say you can get the benefit equivalent of a $50,000 loan interest free. So if it is half the rate, evidently you are entitled to double that amount of money.
I am surprised the hon. member did not understand that. I got it right away and I have never been closely associated with the banking system.


Sinclair McKnight Stevens: Well, Mr. Chairman, I hope those who get rudely shocked in 1979 or thereafter will be able to get back to the Minister of Finance-


An hon. Member:: He won't be here!


Sinclair McKnight Stevens: -and ask him to produce an opinion he seems so casually to offer us tonight as though it were written in stone.
Dealing with this question of mortgage interest rates, can the minister tell us whether any consideration has been given to allowing mortgage interest rates on personal residences to be offset at least partially against income before taxation?


Joseph Jacques Jean Chrétien: Mr. Chairman, the government does not intend to introduce such a measure at this time.


Charles Robert Turner: Shall the clause carry?


Sinclair McKnight Stevens: No!


Charles Robert Turner: All those in favour please say yea.


Some hon. Members:: Yea.
Income Tax


Charles Robert Turner: All those opposed will please say nay.


Some hon. Members:: Nay.


Joseph Jacques Jean Chrétien: Aren't the NDP going to vote for this?


Charles Robert Turner: In my opinion the nays have it.


Sinclair McKnight Stevens: No, no! Come!


Lincoln MacCauley Alexander: I think the NDP are abstaining.
Clause 2 agreed to: Yeas, 32; nays, 16.
On clause 3.


Sinclair McKnight Stevens: Before we proceed further, would the minister tell the House the main reason for which he presents clause 3?


Joseph Jacques Jean Chrétien: Mr. Chairman, these special rules apply only to an employee who holds shares for a minimum of two years. Without such a minimum and reasonable period, there could be an important tax benefit, because instead of paying a salary a company could choose to issue preferred shares which would immediately be bought back. We have included this clause so as to enable small Canadian businesses to give inducements to their employees to stay on or to make it possible for some businesses to enter into competition with other companies to obtain competent personnel.


Sinclair McKnight Stevens: Can the minister go further and indicate the magnitude of what he is doing here? Does the department expect that many small businesses would use this clause if we pass it? Or is it something he feels would be rarely used?


Joseph Jacques Jean Chrétien: Mr. Chairman, we have received many representations concerning this proposal from small and medium businesses, and we believe that they will help those businesses obtain the administrative support that they need to develop. We also believe that this option that the employees will have to own shares will be favourably received by small and medium businesses. We have received many representations on this subject, and we believe that this will be well received by small and medium businesses.


Sinclair McKnight Stevens: Why does the minister feel it necessary that the shares be owned for at least two years? What is the magic about two years?
[ Translation]


Joseph Jacques Jean Chrétien: I said this briefly in French earlier, but I can repeat it now, Mr. Chairman. These special rules apply only to cases where the employee has owned shares for a minimum of two years. Without such a minimum and reasonable period, this could constitute an important tax loophole since instead of paying wages a company could decide to issue preferred shares which it would immediately buy back, and we believe that we

November 28, 1977
Income Tax
must give a certain stability to this system so that there will not be any abuses on the part of certain companies to prevent the employees concerned from paying the taxes that they would normally pay.


Sinclair McKnight Stevens: I guess the minister did not understand the whole purport of my question. I heard what he said about the two years but I am asking why the period of two years should have been chosen. No one is suggesting they should cash them in the day after, but why two years? Why not three, for instance? Have there been any studies which suggest that two years is the appropriate period?
[ Translation]


Joseph Jacques Jean Chrétien: In this case like in others, we had to use our judgment. We decided that a period of two years was reasonable. This was the judgment of officials in my department and it was accepted by my predecessor and myself.


Sinclair McKnight Stevens: What happens, then, when we face a situation of two years less one day? Suppose an employee gets turfed out, or for some other reason is not in the service of an employer on the date of the expiry of the two-year period?


Joseph Jacques Jean Chrétien: He would not qualify for the benefit.


Sinclair McKnight Stevens: That is what I presumed. Would the minister tell us why, in the judgment of the civil service, it was not considered desirable to work on a pro rata system whereby, in the case I have mentioned, an employee would get virtually 100 per cent of his benefit-if he were to leave after a year and a half he would receive a corresponding amount, and so on? Can the minister give us the reason for that two year provision without any type of give on a pro rata basis?


Joseph Jacques Jean Chrétien: Mr. Chairman, we believe it would make the legislation much too complex if we were to apply this benefit on a pro rata basis. We believe that the best way to do this is to proceed clearly and specifically. The employee and the employer will know the conditions applicable to this benefit and will know how to exercise this option of owning shares in the company, that is that an employee must have worked for this company for two years. Why did we make it two years? Because we did not make it three, that is all.


Mr. Hamilton (Qu'Appelle-Moose Mountain):: Mr. Chairman, my question is on the wording of the clause. It refers to a Canadian controlled private corporation. What would be the objection to applying the same privilege to, say, a foreign privately controlled corporation?
[ Translation]


Joseph Jacques Jean Chrétien: Mr. Chairman, we decided to give this benefit to Canadian business because we think that this problem is
[Mr. Chrftien.J
generally not encountered among foreign companies which come to Canada. We believe that in general, because of their nature, foreign companies do not need this benefit and we want to give it to Canadian businesses.


Lorne Edmund Nystrom: I would like to ask the minister whether or not a limit will be put on this, or is it an open ended proposition where someone who has a lot of money can take advantage of the provision and it becomes a loophole for wealthy people since only one half of the share income is counted as income?


Joseph Jacques Jean Chrétien: It is applied only to employees, not to anybody who controls the company. We think that is the way to limit possible abuse, because if one person controls the company that person cannot do so in terms of stock options. This provision applies to employees and we think that in view of the nature of corporations which will benefit from it there would be no problem with cutting off the quantitative benefit, if I may use that expression.


Lorne Edmund Nystrom: I wonder if the minister can clarify that a little more. Who is excluded, just the directors of the corporation or the president? Can the management personnel purchase the share or who does the minister really mean when he speaks of employees?


Joseph Jacques Jean Chrétien: The provision does not apply either to a controlling shareholder or to a member of the group that controls the company. It has to be at arm's length.


Mr. Alkenbrack:: I would like to get the definition of the last words which the minister just used. It is found quite frequently in the bill. What is the meaning of this financial legaleese jargon "at arm's length"?


Joseph Jacques Jean Chrétien: Mr. Chairman, section 251 of the Income Tax Act gives a very detailed definition of this expression "at arm's length" from the legal jargon.


Sinclair McKnight Stevens: If that is true, and bearing in mind that the minister stated that what was hoped to be achieved was that there be some kind of an inducement to help people whom companies are willing to help, would the minister say why there is no provision for at least some indexing, bearing in mind that since valuation day on December 31, 1971, there has been a 61.4 per cent inflation in this country? If that type of inflation keeps up-and if this government were to stay in power, it would undoubtedly keep up-surely the government would be doing nothing for this person if it deems him to have made a gain on which it is going to tax him 50 per cent if the government does not give him at least an indexing provision to offset the loss of benefit through rising prices which has occurred from the time the option was granted to the time he sells his shares.
November 28, 1977


Joseph Jacques Jean Chrétien: Mr. Chairman, we had a lengthy discussion on the possibility of indexing capital gains tax in a previous debate in the House, and I explained to the hon. member why we did not want this indexing. I would refer him to my explanation which applies to the present situation. I think this would be a far too complicated system which could not be administered in a fair way in the present situation. Inflation is part of our modern economy, and we have to live with it. When I explained earlier in the debate the matter of the $2,000 exemption instead of $1,000, I discussed this problem at length.


Sinclair McKnight Stevens: I think that what 1 am getting at would perhaps be clearer if we go through the effect of clause 3. As I read clause 2, a man might be given an option and the minister is saying that he will deem it as if it were a capital gain if, after he exercises the opition, he holds the shares for a minimum of two years. Let us assume the man holds them for five years, roughly the time since the last valuation day, and, as I have said, there is a 61 per cent inflation in the country since that time. If the man has taken his $10,000 investment- let us assume he made that investment-he needs $16,100 to break even in buying power five years later.
All the government is saying to the employee is that if he qualifies, he only has to take $3,050 in his income which will be taxed, which means that he will end up losing about $1,000 of his buying power based on the $10,000 cost of living figures.
My question has nothing to do with the earlier discussion which was a broader discussion as to why there was no indexing with regard to all capital gains. Here we are narrowed down to a very precise case. The man has bought his shares, the value can be established, he has to hold them for at least two years, so we are talking of a relatively long term. All I am asking is why can indexing not be taken into account to ensure that the federal government's greed for tax revenue will not result in that employee taking a loss in his capital buying power as opposed to an increase.


Joseph Jacques Jean Chrétien: I would like to say to the hon. member that, according to the law as it stood before, the man was paying a full tax on the gain on the stock option. He would pay only half of it with this new scheme. We have gone a long way, but it is very difficult to satisfy the hon. member completely.


Sinclair McKnight Stevens: Before we pass clause 3 would the minister give us an indication as to whether he will at least consider in his next budget, which hopefully will be very soon, giving some attention to capital gains with respect to these very specific things? He is trying to create the impression that he is improving the situation when in fact there is little improvement.


Joseph Jacques Jean Chrétien: Mr. Chairman, the matter of indexing is constantly under review by the government.
Income Tax


William Gordon Ritchie: Mr. Chairman, many income tax ideas which may seem good turn out not to be very good because the gain is assumed to come in one year only. By the time people pay their income tax, particularly in a period of inflation, as suggested by the hon. member for York-Simcoe, the situation is worse than if they did not get the money in the first place. When shares are sold can they be put into five-year annuities? Are there provisions for some spinning out of the tax?


Joseph Jacques Jean Chrétien: Mr. Chairman, a person can buy income averaging annuities in order to spread out his income tax payable as a result of a gain.


William Gordon Ritchie: It can be done?


Joseph Jacques Jean Chrétien: Yes.


Sinclair McKnight Stevens: Mr. Chairman, can the minister give us an indication of what he feels the passage of this clause will mean in terms of lost federal revenue? How much are we talking about here?


Joseph Jacques Jean Chrétien: Mr. Chairman, we will be in a position to tell the hon. member when we know how many small and medium sized corporations take advantage of this measure. We do not have any specific forecast.


Sinclair McKnight Stevens: I am not necessarily looking for a specific forecast, but I presume in the great in-depth studies which go on in the Department of Finance in preparation for the 1979 fiscal year budget and in the intensive study there is for the next five years there must be some estimate as to what will be the impact of this amendment and other amendments we are going to deal with in this bill. The minister cannot tell me he is proposing these amendments totally in the dark.


Joseph Jacques Jean Chrétien: We have estimates on many measures, but I am informed that on this one we do not have an estimate because we do not think this measure will have a big impact on the revenue of the government.


Sinclair McKnight Stevens: There has been a lot of rhetoric tonight from the minister about how desirable this clause is, but in actual fact it is not going to mean much to most Canadians.


Joseph Jacques Jean Chrétien: It will mean a lot to small businesses, but in terms of the totality of the revenue of the federal government it will not mean much. I am not giving rhetoric; it is information I am very dutifully giving to the House of Commons.
Clause 3 agreed to.
On Clause 4.


Mr. Clermont:: Mr. Chairman, the amount is increased in clause 4. Here is the amendment as described in clause 4:
"(3) That for the 1977 and subsequent taxation years, the employment expense deduction be raised to a maximum amount of $250."
Mr. Chairman, I am surprised that the same percentage increase was not used for employment expenses as was used for losses on capital gains. For capital gains the deduction is
1336

November 28, 1977
Income Tax
increased from $1,000 to $2,000, 100 per cent, but for employment expenses the increase is only 66 per cent. As you know, Mr. Speaker, people have been able to claim a maximum of $150 since the taxation year of 1972. Starting with 1977, it will be $250. As I suggested to the former Minister of Finance when I rose in the budget debate I would have thought that the deduction might be higher than $250 because since 1972, Mr. Chairman, for a person using public transport fares went up a few times and for a person using his car to go to work, the cost of registration as well as car insurance, fuel and repairs have gone up. For tradesmen, the purchase of tools costs a lot more in 1977 then it did in 1972. The same goes for the purchase of books for professionals employed by the federal government, the provinces or municipalities or in the private sector. These cost more. But for the businessman, for the self-employed professional, if I may put it that way, he may claim those amounts at present cost. So my recommendation to the minister is as follows: I hope if the minister cannot increase the deduction immediately, when he introduces his next budget he will use a heavier pencil and the amount of $250 will be increased.
For instance, Mr. Chairman, any Quebecer may get up to $500. I hope the Minister of Finance will consider my remarks when preparing his next budget.


Joseph Jacques Jean Chrétien: Mr. Chairman, I certainly will consider as always the remarks made by my good friend the hon. member for Gatineau, who has been serving us with such loyalty, and for such a number of years on the Committee on Finance, Trade and Economic Affairs. I would simply point out to the hon. member that this item will cost the treasury an extra $115 million for this year alone, and that in addition, employees have been granted by the spring budget and in the mini budget of this fall an extra $50 for each child; we also established automatic indexing of income tax, with exemptions being automatically increased 7.2 per cent. For the months of January and February next, we will be giving small and medium income earners an extra $100 tax reduction. I appreciate my hon. friend's generosity, but the treasury has its limitations.


Gaston Clermont: Mr. Chairman, this has nothing to do with generosity. It is only a matter of fairness, not only to small and medium income earners, but also to all wage and salary earners. So to me it is a question of being fair rather than generous.


Joseph Jacques Jean Chrétien: Mr. Chairman, when preparing a budget we attempt to remember the kinds of measures to be used, and I know that the hon. member in his assessment keeps in mind the other tax exemption proposals made in other areas in the spring budget and the mini budget of this fall. Moreover, I would point out that this increase from $150 to $250 exceeds the inflation growth for the period referred to by the hon. member. This is costing $115 million.


Gaston Clermont: If this is the case, Mr. Chairman, the same percentage should have been used for capital losses. Instead of 100 per cent, you should have proposed 66 per cent.


Mr. Epp:: Mr. Chairman, I would like to address my remarks and questions to the Minister of Finance. My questions are in a similar vein to those asked by the hon. member for Gatineau.
I want to relate a specific incident which I have mentioned to the minister's predecessor as well as to former ministers of national revenue. I do not believe the $250 is adequate as an employment expense deduction. For example, there are people working on the TransCanada Pipeline where it goes through a provincial park in which a pumping station is located, but because of the regulation that employees cannot reside in the provincial park they are forced to commute to work from outside. With increasing transportation costs I feel the $250 is not adequate, and I have written to the minister to this effect.
I know this is a specific case, but I should like to know if there is any inclination on the part of the minister or the department to consider that where a pump station is located in a provincial park, employees should be allowed for the increased expense of commuting to the job. I believe, at best, the situation is unfair and, at worst, it militates against people taking such employment.


Joseph Jacques Jean Chrétien: Mr. Chairman, I am sympathetic to the hon. member's request, but I think if we go into special personal problems like that under the Income Tax Act we will become involved in very complicated control problems. Many of those expenses are controlled by the individual, but we decided on a blanket exemption. Of course some people benefit more than others, but it would be an administrative nightmare to become involved in specific cases. As hon. members know, we deal with more than 10 million individual taxpayers so it would be extremely difficult to control. I am aware of this kind of problem in other circumstances but I do not think we can give more accommodation than in the present format.


Arthur Jacob (Jake) Epp: 
Lorne Edmund Nystrom: Mr. Chairman, on that point I might say I believe there is a separate program. As I recall it came up
November 28, 1977

when we were discussing it as it referred to farmers and people on the prairies.
I want to raise two questions that concern me about clause 4. First, why did the minister not consider a tax credit instead of just increasing the exemption? I think he understands the tax credit very well. To increase the exemption from $150 to $250 obviously means more for people on high income, but the tax credit would mean more for people on low income. The government has already introduced a tax credit under the Election Expenses Act. If anybody contributes $100, regardless of income, $75 is refunded. That seems to me a much more equitable system. If I, as a member of parliament, or if the minister contributed $100 to a political party we would receive $75 back. If a person who only earns $4,000 contributed $100 he would also receive $75 back. That is a much more fair system and should be extended throughout the tax system.
Under this clause, for example, a worker in a 30 per cent tax bracket would only save an additional $30 per year, so I should like to ask the minister why he does not go to a tax credit system.


Joseph Jacques Jean Chrétien: Mr. Chairman, we are dealing with an expense allowance. The hon. member's proposition is interesting but would involve a fundamental change to the Income Tax Act from tax exemption to tax credit. I do not say I am not in favour of that, and I find it interesting as a concept. I am looking at it, but it would mean a complete overhaul of the tax system to go from a tax exemption to a tax credit. I will take the usual representations on that subject by the hon. member and his friend in front of him, who is a friend of mine as well.


Lorne Edmund Nystrom: Mr. Chairman, the most significant words the minister uttered were to the effect that this would be a fundamental change. That is the reason we are argue for it.
I will give one or two examples of a tax credit. Take a tax credit of $400. A family of four making under $2,000 would get back the full $400. A family earning between $10,000 and $12,000 would get back $200 instead of $400, while a family earning between $17,000 and $20,000 would get only $50 back instead of $400. Under a tax credit system the more money one makes the less one gets back. It seems to me that increases equity in the country. Later I want to put on record some statistics that show that even though we have tax reform in this country the gap between the rich and the poor in terms of taxes is widening rather than narrowing.
The second point I want to ask the minister-
[ Translation]


Mr.   Chairman@: Order, please. It being 9:30 p.m., according to the order adopted earlier today, it is my duty to rise, report progress, and request leave to consider the bill again later today, or at the next sitting of the House.
Progress reported.
Private Members' Business


Mr. Deputy Speaker:: Order, please. The House will now proceed to the consideration of private member's business according to an earlier decision made today.



PRIVATE MEMBERS' BUSINESS


Mr. Deputy Speaker:: Hon. members have received advance notice that we will take the present hour to debate a point of order that was raised on November 7 by the hon. member for Vaudreuil (Mr. Herbert) concerning the programming of private members' business.
For the benefit of hon. members, maybe I should put the point of order in perspective and try to give direction to the procedural debate in such a way that it will benefit not only the Chair and hon. members, and it might help us to come to a constructive conclusion. I feel precedents of the past would have a tendency to be more restrictive than positive, and I am not sure that this is the wish of the House. This is the reason why I did give advance notice, particularly to the Parliamentary Secretary to the President of the Privy Council (Mr. Pinard) and House leaders of the different parties, along with the hon. member for Vaudreuil, in the hope that they would do enough research to bring along constructive suggestions.
Previously on November 7 at the call of private members' business the hon. member for Vaudreuil raised a point of order, as he has been doing on different occasions in the past, and when he did raise a point of order the Chair had a feeling it could make a decision quickly on the question raised by the hon. member. But, upon a specific request from the member who expressed a wish that the Chair would look at the matter and make a decision the next time on private members' hour where motions would be called, I did then postpone any definite decision until November 4.
When we came to private members' business on November 14 I had to notify the House that the hon. member for Vaudreuil had gone beyond the point of order of November 7. He had written a letter to the Speaker in which he had specifically raised different points that went beyond the point of order which he had previously put to the Chair, thus making the scope very much wider and a little difficult for the Chair to at least prevent full consideration of the different points raised by the hon. member, which would result in the House coming to a positive decision, if not a ruling that would more or less regulate the operations of the private members' hour.
Before I do invite hon. members to participate in what I consider a very important procedural debate on private members' business, I might try to sum up the different main points on which, in my opinion, the intervention of hon. members
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November 28, 1977
Private Members' Business should be directed. 1 believe the main question raised by the hon. member for Vaudreuil was: does the government have a right to select business for private members' hour as it has done in recent times? Also, does Standing Order 19(1) give an outright privilege to the government to stand any question or order without the consent of the House?
Hon. members know, on every day, Mr. Speaker at the call of written questions, after those questions are enumerated, he seems in the practice in the wording of the question, to ask permission of the House to stand the other questions. Is this something that has been developed inadvertently, or is it something that indicates a procedure that has to be followed when the government requests? Does this represent a request from the government to stand the questions that are not enumerated? If it does, how much application does it have to Standing Order 19(1)? Also, in the wording of Standing Order 19(1) is there a difference between an order called and an order called from the Chair, as mentioned in Standing Order 49(1)? Also what is the calling of an order? Is it when it is read by the Clerk or when it is put by the Chair?
Does the wording "twice called from the Chair" mean that the order is not, or irrespective of not, having been stood by the government, is it only considered as being called twice from the Chair if there have been no requests from the government to stand the order?
I must say that, looking at the precedents, they have not been very helpful, although they might support a more restrictive practice toward the number of times a motion could be stood by the government. But is it the hon. member's wish, or is it the practice that we should apply strictly? The hon. member will find in Beauchesne's citation 88 an indication that the government has a responsibility toward the programming of the business of the House, but it is very general and it is not clear if it was meant to apply to all procedure in the House.
In Standing Order 18(1) we can read:
All items standing on the Orders of the Day, except Government Orders, shall be taken up according to the precedence assigned to each on the Order Paper.
But, when we read Standing Order 18(2), we see:
Government Orders shall be called and considered in such sequence as the government determines.
So, if 18(2) specifies the power of the government to determine the order of business for government business, does this mean it does not have the same power for the programming or consideration of private members' business? These are the two questions I have on my mind and these are the questions that I want to put before the hon. members.
Of course we have supplemented our recent practices with the request, on some occasions, for the protection of hon. members that were absent or have not been witnesses to these arguments, we had at the beginning of different private members' hours the unanimous consent procedure, but I think as we went along this has developed into a confused practice. I feel as witness to the proceedings of private members' hour that this new followed practice of advance notice of private

members' hour, has made it easier for the workings of the House and I think it has brought about better preparation in presentations made by hon. members. If any hon. member can prove to the Chair that it is the wrong practice, that the Standing Orders do not authorize such practice, we have two courses to follow-either the course of applying strictly in any order and the course of modifying them or looking some alternate solution until we do modify them.
I invite hon. members to comment on the points I have raised. I will first call upon the hon. member for Vaudreuil, then the Parliamentary Secretary to the President of the Privy Council, the hon. member for Grenville-Carleton (Mr. Baker), the hon. member for-


Stanley Howard Knowles: Timiskaming. He is our expert tonight.


Mr. Deputy Speaker:: -Timiskaming (Mr. Peters), and any other hon. members interested in the question. I will not render a decision tonight. I will listen to the remarks of hon. members. I will then reserve judgment. I might make some further comment after I hear the various interventions.


Mr. Hal Herbert (Vaudreuil):: Mr. Speaker, I think your remarks have been of assistance to us in setting the record straight. May I just mention that the dispute does not arise from the selection of the business which is going to be debated during private members' hour, but with the disposition of the items which precede the matter to be discussed in that hour.
Your Honour raised the matter of Standing Order 18.May I just re-emphasize that when members decide to propose motions or submit bills, they are presumably governed by Standing Order 18, recognizing that these orders shall be taken up according to the precedence assigned to them on the Order Paper. Presumably when an hon. member puts a motion on the Order Paper, he is aware of that particular Standing Order. To assist the House, agreement is reached at the start of the session that there shall be a draw and the order shall be established by that draw.
We must assume, if we are looking at the business which is to be called, that we are going to be following the order of the listing. If a member, for good reason, is not able to proceed, he may be sick or called away for other reasons, and we have been advised of that-as we used to do for quite a few years- we would almost automatically give unanimous consent to allow that member's motion to remain on that Order Paper until he returns to the House.
When I raised this point before, I was objecting to the fact that many of these motions and many of these bills were remaining on the Order Paper for many, many months. They were being called, and the member was either not ready or not willing to proceed. I suggest that under those circumstances the item should be dropped.
Quite recently we changed our procedure and called upon the government to make the request, which Your Honour
November 28, 1977

referred to in Standing Order 19(1). May I underline two or three words which I think are of consequence. It says:
Questions put by Members and notices of motions, not taken up when called may... be allowed to stand and retain their precedence; otherwise they will disappear from the Order Paper. They may, however, be renewed.
In other words, there is an option. The option, in brackets, is "upon the request of the government". At that point it is assumed that if there is good reason, and sometimes a member might be difficult and we do not get the required unanimous consent, we have a tool in Standing Order 19(1) for the government to make this request for the benefit of the member who might be absent for quite legitimate reasons.
Hon. members are aware of Standing Order 49(1) which reads:
When a Private Member's Notice of Motion shall have been twice called from the Chair and not proceeded with, it shall be dropped, provided that it may be placed at the foot of the list on the Order Paper upon motion made after due notice.
Paragraph 2 reads:
If the notice of motion thus restored is again called from the Chair and not proceeded with, it shall be withdrawn from the Order Paper.
There is no option there. Surely under those circumstances there is no question that it may, upon the request of the government, be allowed to stand.
What concerns me at this stage with respect to private members' business is that if we could interpret Standing Order 19(1) as giving the government the power to retain items on the order paper, we also give the government the power to make the selection of what item is to be called and debated in private members' hour. I believe that use of the words "request of the government" does not give it the right to control what goes on in private members' hour.
The government may make the request and, if it conforms to Standing Order 49(1) and has not been called twice, presumably at that time we do not need to have unanimous consent. However, if the order has been called two or three times and at that point, even with the request of the government, unanimous consent from the House is not forthcoming, I suggest the item should then be dropped from the order paper. Obviously it could be resurrected by the hon. member and placed on the order paper if he so wished. The point is not to interfere with the items that are going to be discussed. There is usually agreement. It is working out very well except in unusual circumstances.
May I point out an unusual circumstance a short time ago at the end of the last session when, unfortunately, a member was not ready to proceed? We had to go to the next motion on the order paper, which happened to be one of mine. The government did not want it discussed so the House was adjourned. There was a call for the bells and the adjournment motion carried. Once again the government was deciding what items were going to be discussed in private members' hour. I suggest that was not the intention of the Standing Orders.
Although I am happy that agreement is made on the items that are to be discussed, I do not think there is anything in the Standing Orders that requires us, the members, to accept that
Private Members' Business
items may remain on the order paper for more than the two times they are called, unless we, the members, give unanimous consent for those items to remain. That is the basis of my argument, Mr. Speaker.


Yvon Pinard: Mr. Speaker, I was happy to hear the hon. member for Vaudreuil (Mr. Herbert) say at the beginning of his intervention that in his opinion the problem did not lie in the choice of discussion matters, but I am somewhat confused by his ulterior observations because he used the word "control" in describing the part played by the government in choosing discussion subjects.
I would like to tell the House that the practice these last few years shows no evidence of government control in the choice of bills to be studied, far from it. The government simply helps the members of parliament to act in a rational manner during the private members' hour. This is also helpful to the members because the government has the administrative facilities to help them, through simple courtesy and also to conform to the provisions of Standing Order 18 which states that each item will be taken up according to its precedence on the order paper. This practice is well known and I do not want to go over it agarn. At this stage of my argument, Mr. Speaker, I shall simply refer to comments made by one of my predecessors in the position of parliamentary secretary to the President of the Privy Council on May 11, 1976. These comments are reported on page 13410 of Hansard as follows:
All I want to indicate, Mr. Speaker, is that we attempt to provide to hon. members as soon as practicable those items which will be dealt with in the next session, first contacting the individual members who have priority in order to determine whether they will be available and whether they wish to proceed with a particular item of business. Having ensured that a member will be here to debate the item of business, we communicate with the interested parties, including the government. Then we set the matter down and advise all hon. members of the matter that is going to be debated on a given day.
Mr. Speaker, I submit that the answer to the interesting problem raised by the hon. member for Vaudreuil resides in an intelligent reading of relevant Standing Orders of the House, and not only in a reading of these Standing Orders, but also in an examination of the moment when those rules were passed and the reasons behind them. The relevant rules are Standing Orders Nos. 18, 19 and 49. Now, Standing Order 18 establishes the generai rule, and I quote:
(1)	All items standing on the Orders of the Day, except Government Orders, shall be taken up according to the precedence assigned to each on the Order Paper.
Then, this is the general principle which covers the matters relating to private members' business. This relates to notices of motions as well as to orders or bills. We then come to Standing Order 19 which is relevant. Now, Standing Order 19 was amended in 1906 as appears in Beauchesne's Parliamentary Rules and Forms to read as it reads today. Therefore, the present provisions of Standing Order 19 are similar to those which existed in 1906. This appears obviously on page 74 of Beauchesne where we find Standing Order 19 as amended on

November 28, 1977
Private Members' Business
July 10, 1906. I quote the important parts of this standing order for discussion. Standing Order 19(1) reads as follows, and I quote:
19. (1) Questions put by Members and notices of motions, not taken up when called may (upon the request of the government) be allowed to stand and retain their precedence; otherwise they will disappear from the Order Paper. They may, however, be renewed.
And subsection (2) says and I quote:
(2)	Orders not proceeded with when called, upon the like request, may be allowed to stand retaining their precedence; otherwise they shall be dropped and be placed on the Order Paper for the next sitting after those of the same class at a similar stage.
Mr. Speaker, what strikes me on reading Standing Order 19 as modified in 1906 is that subsection (1) concerns questions on the order paper and notices of motions while subsection (2) concerns orders and this is not very clear to me as orders may also mean public bills from private members. At this stage it is obvious that Standing Orders makes a distinction: subsection
(1)	concerns notices of motions and questions while subsection
(2)	concerns orders. It seems to me quite important to point out this distinction because further on, Standing Order (49) only refers to notices of motions, and does not mention at all private members' questions nor does it mention orders or bills. Section 49 is very restrictive. It is worthy of vote that when Standing Order 19 existed under the form which I just mentioned, back in 1906, Standing Order 49 did not exist as we know it today. Standing Order 49 was then very short and contained none of the present sections. In those days, Standing Order 49 read as it appears on page 166 of the manual of parliamentary procedure by Beauchesne which reads as follows:
49. A member who has made a motion may withdraw the same only by the unanimous consent of the House.
That is all Standing Order 49 said in 1906, while Standing Order 19 existed in its present form. I think that we will find the answer to our problem by asking ourselves why has Standing Order 49 been modified so as to become what it is today? When was it modified and why?
Then, Mr. Speaker, I did some research and found out that Standing Order 49 was modified during the 1926-27 session so as to read the way it appears today in the standing orders. This shows in the journals of the House of Commons of Canada for the 1926-27 session, more precisely on page 340 and 341 of the issue of Tuesday the 22nd of March. On page 340 we find a draft of the new section 49 as we know it today and which reads as follows:
(1)	When a Private Member's Notice of Motion shall have been twice called from the chair and not proceeded with, it shall be dropped, provided that it may be placed at the foot of the list on the Order Paper upon motion made after due notice.
(2)	If the Notice of Motion thus restored is again called from the chair and not proceeded with, it shall be withdrawn from the Order Paper.
(3)	No member shall have more than one Notice of Motion at a time on the Order Paper.
(4)	This Rule shall not apply to Notices of Motions for the Production of Papers.
(Mr. Pinard.l
This is what we have today, the same provision as Standing Order 49 we have today. So that new Standing Order was inserted in 1926-27, that is 20 years after Standing Order 19. It is interesting to read on page 341 of the Journals of the House of Commons, the rationale for the amendment to Standing Order 49. In order that my colleagues may also take part in the debate, I will abstain from quoting the relevant part where the reasons for the amendment are given in detail. I will simply summarize it having given the reference so Mr. Speaker can check for himself.
At that time, only 11 days were provided for private members' business. It was felt there were abuses, hon. members should have no more than one notice of motion. Some hon. members had up to four or five notices of motions, as is indicated here. There is no reference to orders or legislation, but to notices of motions only, and Standing Order 49 refers to notices of motions only. Because at that time, that is 1926-27, it was felt that with 11 days provided for private members there were abuses in allowing members to have more than one notice of motion, it was decided to allow for one notice only, and opportunity was taken to insert Standing Order 49(1) providing as follows: When a private member's notice of motion shall have been twice called from the Chair and not proceeded with implying there had been a call from the government side it shall be dropped.
This very brief summary of the history of the pertinent standing orders, the insertion of the now Standing Order 49 as opposed to Standing Order 19 as we know it, brings me to the following suggestion, resulting as I said from an intelligent reading in context of the standing orders referred to, keeping in mind the times of their passing and the reasons for doing so. I would suggest, first that a distinction must be made between orders, legislation and notices of motions. I respectfully submit that, in respect of questions on the order paper, orders or bills, Standing Order 19 alone applies, keeping in mind at all times the principle stated in Standing Order 18. In my opinion, Standing Orders 19 and 49 are exceptions to the principle governing Standing Order 18. Now Standing Order 10 alone affects questions appearing on the order paper, orders and bills, without consideration for Standing Order 49 which deals only with notices of motions. On the other hand, as far as notices of motions are concerned, the new Standing Order 49 dating from 1926-27 is applied in correlation with Standing Order 19 and this is where I partly agree with the argumentation of the hon. member for Vaudreuil (Mr. Herbert). I am inclined to agree with him only as far as notices of motions are concerned. In other words, when notices of motions are called twice and reserved at the request of the government under Standing Order 19(1), Standing Order 49 which is more recent than Standing Order 19 takes effect and clearly states that they must be withdrawn. Now if we refer to Standing Order 18, Mr. Speaker, paragraph (1) states the following:
Questions put by Members and notices of motions not taken up when called may (upon the request of the government) be allowed to stand and retain their precedence...

This means that when a notice of motion is called on a given day and the government asks that this notice of motion be allowed to retain its precedence, the government's right pursuant to Standing Order 19 is limited by Standing Order 49 to make this request only on two occasions. On the third, Standing Order 49 is automatically applied and the notice of motion cannot be called a third time, even upon the request of the government. Such notice is dropped pursuant to Standing Order 49 (1). But, once more, I want to be clear on that for my argument, this rule applies only to notices of motions and not to bills introduced by hon. members, which are governed by Standing Order 19, because Standing Order 49 does not provide anything for orders, bills and so on. Standing Order 49 is very restrictive. It came twenty years after Standing Order 19. Standing Order 49 does not provide anything for bills, orders or questions on the Order Paper. It deals only with notices of motions. Therefore, it is very important, I think, Mr. Speaker, to make this distinction.
Now, it is well and good to say it is procedure, it is a matter of principles. It is easy to say just read clauses in an intelligent way, concentrate on the wordings and look at the context in which they have been brought about and passed and you will come to some practical conclusion but that does not resolve the problem. That is procedural matter.
Since the private members' hour is designed to deal with matters concerning members, I suggest that if they want it to operate rationally, because all this goes back quite far, they will have to help the government help them. In other words, the unanimous consent of the House will be required for notices of motions to be called more than twice. There is no problem with bills. I said so on several occasions already. The government will probably intervene and ask that they stand. And I forgot to mention that the reason for government's intervention is simply that it is its responsibility to determine the order of the business of the House.
Mr. Chairman, I listened closely to your remarks and I was amazed when you referred to Beauchesne's comments No. 88 on the bottom of page 88, if I understood you well. I quote:
The Government being largely interested in the progress of the business of the House is responsible for allowing a question or motion to stand, if the member is absent or does not proceed when it is called.
It seems to me very clear, Mr. Speaker, that that citation in Beauchesne is directly related to the content of Standing Order 19. It is so true that that citation is found at page 81 among the citations discussing a dozen of the standing orders, i.e. Standing Orders 15 to 27. We all know how Beauchesne's work is divided. He refers to some standing orders, then sets forth citations, and then proceeds to another series of standing orders followed by citations. Now, that citation I just read is not found after Standing Order 90, but follows a dozen of standing orders, including Standing Order 19. Therefore there is a clear relation between that reference by Beauchesne to the government's responsibility to ensure orderly progress of the business of the House and Standing Order 19. And this explains why Standing Order 19 says that: upon the request of the government, notices of motions, questions on the Order
Private Members' Business
Paper and also orders of the government and bills can be allowed to stand. As I have said earlier, Standing Order 49 simply limits notices of motions to two calls by the Chair.
The reason for the government's intervention is to ensure that the proceedings of the House will take place in the proper manner. Therefore, Mr. Speaker, until these Standing Orders are changed, I think we will have to rely upon the courtesy and sincerity of all members of parliament. Without the unanimous consent of the members of the House, notices of motion will never be called more than twice, from now on, in spite of the government's request, or may be withdrawn from the Order Paper. On the other hand, bills will be allowed to stand at our request. This is all respectfully submitted.


Mr. Deputy Speaker:: I would like to ask the hon. parliamentary secretary a question. When he referred to Standing Order 49(1), he said, if I understood him correctly, that once a notice of motion has been called twice, it shall be dropped from the Order Paper, but in his remarks he said more than twice.
I should like him to tell me how he interprets Standing Order 49(1) which, at least to the Chair, seems to mean that the notice of motion should be dropped from the order paper the second time, even when it is called. This matter is of great concern to the Chair, because even if the hon. parliamentary secretary has seemed to agree with the hon. member for Vaudreuil (Mr. Herbert) on this point, he adds in his interpretation of Standing Order 49(1) a second time, which is not what, in my opinion, Standing Order 49(1) means.


Yvon Pinard: I am grateful to the Chair for asking me this question, which will permit me to provide the necessary clarification. In my opinion, the Chair is absolutely right. This, however, does not change anything at all to the basis of my point, whether the notice of motion should be dropped after it has been called once or twice, Standing Order 49 dealing only with notices of motions, and not with orders, contrary to what you have just stated. But I agree with you that, as provided by Standing Order 49, when a notice of motion has been called twice from the Chair and not proceeded with, it shall be dropped. This means that it may be called once and that if the second time it is not proceeded with, it should be dropped. Therefore, if I said the contrary a moment ago, and I think I said it could be called twice with the consent of the government and that it was only on the third call that it was to be dropped, I withdraw what I said on this point. I think a close study of Standing Order 49 shows that there should not be a third time; the notice of motion is called twice and if it is not proceeded with on the second call, from a logical point of view, it should be dropped. But once again this applies only to notices of motions. Thank you, Mr. Speaker, for having brought my attention to this point.


Walter David Baker: Mr. Speaker, I listened with great interest to the hon. member for Vaudreuil

November 28, 1977
Private Members' Business
(Mr. Herbert) and to the parliamentary secretary, and I think I followed the argument of the parliamentary secretary to the point where he began to deal specifically with Standing Order 49 which has caused me some concern. As the hon. member has indicated, that Standing Order deals with a situation where a private member's notice of motion has been called twice from the Chair and not proceeded with, in which event it should be dropped. The parliamentary secretary is indicating that, in his judgment, that is the definitive word. I would have to agree with him, except that Standing Order 19(1) states:
Questions put by members and notices of motions, not taken up when called may (upon the request of the government) be allowed to stand ...
I think there is a conflict there. In one case there is a direction in Standing Order 49 which is made less powerful by an exception in Standing Order 19(1). It seems to me that it may be academically historic, but it could very well be that in the course of the changes that were being made, changes were made in one section without considering that they might have had an effect on another one. So I must say that I disagree in that respect with the parliamentary secretary.
If Your Honour agrees with me that there is some doubt cast as a result of the differences, I think you will have to consider what course we ought to follow, and in that event if we were to go in any direction we ought to go in the direction of preserving to the greatest possible degree the rights of private members with respect to notices of motions and matters of private members' business.
I do not want it ever to be held that I am arguing that the provisions of our Standing Orders, rules and customs are perfect with respect to private members' business, and I say that for the benefit of the parliamentary secretary. There are some changes we have advocated from time to time, but having regard to the system in operation at the moment it seems to me that if this House operates at all, it operates on the basis of some reasonable consultation, and the consultation which has existed between the government House leader and the opposition with respect to private members' business has been reasonably sound.
While it may be that the unvarnished meaning of the words "upon the request of the government" in terms of allowing matters to stand should be interpreted as giving the government power and control over these matters, I think our experience in the House, at least thus far, indicates that the government has interpreted this as a vehicle for maintaining rather than abusing private members' interests. Having regard to the nature of the consultation which has gone on, I think it would be very unfortunate if we suddenly began to apply what some might call the strict letter of the law.
We do have certain customs, and one of those customs is consultation in order to facilitate the work of members who may have something standing in their names but who, because of sickness or a snowstorm-as you yourself experienced today, Mr. Speaker-may find some difficulty in coming to Ottawa at the particular time when their particular items of
business are being called. They would otherwise lose their right to advance something about which they felt strongly enough to go to the trouble of consulting the parliamentary counsel in preparing a bill or a motion to deal with a particular matter.
I think that by strictly interpreting the rules we would not be contending with the realities of this country. The business of members takes them across the country from time to time, and certainly to their own constituencies. There is much more to Canada than just the National Capital area. The business of members also includes international meetings and conferences. I think we would be taking far too rigid a stance if we adopted even the parliamentary secretary's interpretation of Standing Order 49, which I think is far too strict, having regard to the exception which would appear to apply in Standing Order 19(1).
Mr. Speaker has dealt with this in the past. Dealing with a matter of custom he said, as reported at page 5421 of Hansard for May 2, 1975:
... the procedures which have been adopted are matters of convenience. They are a departure from the strict interpretation of the rules which would require calling, seriatim, at every private members' hour, all such items on the order paper. Initially, the very filing of private members' bills and their selection for consideration is a departure from the strict interpretation of the rules.
We do that now as a matter of custom.
Those departures are a matter of custom and are for the convenience of members so that we can operate with reasonable smoothness and not waste too much time on a number of technical interpretations of the rules.
If there were doubt in my mind with respect to the interpretation placed on Standing Order 49 I hope it would be resolved in favour of the continuation of the use of that phrase which has proved so useful in this House and which appears in Standing Order 19, "upon the request of the government." If the government acted with respect to private members' hour in a way that was restrictive of members' rights, it would soon become apparent to all. If there has been difficulty with a particular matter, whether it occurred because of the inability of a spokesman or a member of the government to answer- the hon. member for Assiniboia (Mr. Goodale) and I have had such negotiations from time to time-or because of the position of a member of the opposition who brought a matter forward and was inconvenienced, we were always able to come to some reasonable agreement. I do not recall anything coming out of those negotiations other than an attempt to assist the member who found himself caught short, because he was away, or because a proper answer could not be made.
I think it essential that private members' hour be considered a very important part of the parliamentary day. There are few opportunities for members in their personal capacity to advance points of view or matters of particular concern, and we ought to preserve that right to the greatest extent. I think the only way we can preserve it reasonably and honestly is by not adopting an inflexible attitude but rather by continuing in the direction we are headed.
[Mr. Baker (Grenville-Carleton).l
November 28, 1977

Lawyers could argue over the Standing Orders endlessly. What we are trying to preserve is the opportunity for members to prepare to make the best case they can on a matter that means enough to them that they have put down a motion or a bill with respect to it, and on the other hand to allow the government time to prepare for the necessary argument.
I am amongst those who wish more private members' bills could be referred to committees, but even though that does not happen it does not mean there is not proper consultation regarding the advancement of business. Thus far the House of Commons is the better for that element of interpretation and consultation. I hope, in considering the point made by the hon. member for Vaudreuil, Your Honour will interpret on the side of generosity rather than on restriction.


William Arnold Peters: Mr. Speaker, I have always been interested in private members' hour, and I probably use and abuse it more than any other member. We have been able to use the rules on occasion to do that, but I think the previous speaker is right in his indication of the desire to maintain private members' hour. It serves a number of functions, one of which is to give a member the opportunity to make a case for something that he feels strongly is in the interest of the constituents he represents. In my opinion this has worked very well.
If you go back over the private members' hour during the past 20 years you will find very few pieces of legislation, particularly in the social fields, that have not been pioneered in the private members' hour. I have been surprised at the government recently trying to take control of the operation of the private members' hour.
It was not very long ago, certainly since my time, or the private members' hour, particularly in the section under Public Bills that there were eight or 10, not more than 12 when I came here, and every one who placed one of those bills on the order paper knew exactly why they put them there and they were very interested at the drop of a hat to discuss them. The government, on the other hand, was very often just about as interested to see that they did not get any further than the discussion position, and when they went to the bottom, that was an accomplishment. The same was true with notices of motion, Mr. Speaker, when they were put down, they were put down because they were sincerely believed in, they were interested in putting them down, and it worked on a different basis than it does now.
The old timers, like the hon. member for Winnipeg North Centre (Mr. Knowles) who has been around for some time, had those bills prepared probably before the election took place. Thy were all ready and as soon as the election took place, at the earliest possible moment, they were filed. They were all listed on the basis of which one was received at one o'clock, two o'clock or whenever it was received. That is how the decision was made.
Private Members' Business
During my period, Mr. Speaker, and my interest in the private members' hour, we were able to help increase the number of private bills from roughly 10 or 12 to where they are now, 205. As a matter of fact in about two years we raised it from 10 or 12 to over 100, and it is now 205. I venture to guess there are some people that have not decided why they put those bills in in the first place, and secondly, they really did not decide whether they were going to be discussed or not. That is decided now because of the number by a lottery. You may have a bill at the top which you did not want and you may have a bill on the order paper you wanted very badly. For a little while we were allowed to switch them. If you had one on the top, you were allowed to decide which one went to the top.
I think it is done more fairly now, if it is drawn, it is at the top.
What is happening is that the government is making the decision that they do not want to talk in these private members' hours on a specified subject. They are laid out very carefully, it is not like government business. On certain days, certain items are called and it must be that item, or by consent you can go on to something else. For a long time, Mr. Speaker, if a member was sick someone in his party speaking on his behalf, and he had to say at the time "with the permission of the hon. member I request of the House Bill so and so stand."
I remember one case where it was requested, and because of the difficulties that member had, it was dropped. With one exception, I cannot remember any time when there was not an agreement when someone said-on the request of the member-the bill stood.
Then we got parliamentary secretaries and they really did not have very much to do. They started puttering around in the private members' hour. They did it conscientiously and with good intent. They did it not to stand at the request of the government but to find out whether there was going to be any requests to stand, and what bill was going to be taken. They were able to ascertain that, and they were able then to say that we understand there is an agreement, and we should proceed to bill so and so or motion so and so. However, it was by agreement.
All of a sudden the rules were changed. I sat in on some of the meetings which discussed rule changes. I do not remember agreeing to anything about "upon the request of the government." Maybe that is why it is in brackets. Maybe no one agreed to it.
Hon. members will recall that when we changed the rules, the fight was over Standing Order 75. The Standing Orders were temporary for some time. It worked very well.
If the government is going to control this hour, it will be able to stand the first ten bills because it wants to get to a particular one further on. As I understand it, that request cannot be refused. I agree the government does not request a member to do that if he is ready to proceed with his bill. To date it has not made such a request. However, there is no reason why it cannot make that request if it does not want to

November 28, 1977
Private Members' Business
take the bill that is at the top of the list. It can just request that it be stood.
The other day the parliamentary secretary said the government was not ready to proceed with the particular bill that was called. What is the reason for putting a bill on the order paper? It is to discuss it. The government decided it would be better not to discuss that bill at that time. I do not think that was the intention of the changes that were made to private members' hour.
I suggest when we left in that motions would only be allowed to stand twice, that was for the purpose of not allowing the government or anyone else to stand motions. If they were there, they were to be taken without delay. If not, they would be taken off the order paper.
There can be a number of abuses if the government decides it is going to organize private members' hour. We have been lax for some time in not demanding that all orders be called. It is sometimes agreed that we will not take the motions on the order paper for this week or the Notices of Motions for the Production of Papers or Public Bills, but go on to something else. If someone interjects, we must go through the whole list calling every item. We go to each succeeding one as the Standing Orders provide, and call them all individually. That has not been done all the time simply because it would be foolish. Unless you have an interest in something that is somewhere in the middle, you would not request that. I have done it a number of times, but for a different purpose. It was not for the purpose of having them all called. However, it does protect those who have an interest somewhere in the list.
If the government is going to have the power to stand them, a government member will be able to exert considerable pressure.


Mr. Deputy Speaker:: Order, please. Will hon. members agree that I do not see the clock?


Some hon. Members:: Agreed.


William Arnold Peters: It is not impossible for the government to put pressure on members on the other side of the House. It can do that fairly easily by saying it needs some time to look at an item or to check all the ramifications of it. It may say it will agree to send either the bill or its subject matter to committee or, in the alternative, make it a government bill.
There are many ways in which the government can influence private members' hour. It can restrict the right of the individual to make his point. Often a member puts down an item only to get a subject discussed, not necessarily to have a bill passed.
I strongly urge that Your Honour give very serious consideration to this question of allowing matters to stand at the request of the government. If a matter is to stand, it should be at the request of the member who placed it on the order paper, not at the request of the government. It will not then be quite as neat and orderly. The government will not be able to tell a member beforehand that it is all arranged. It will keep the spirit of the private members' hour, which is to allow backbenchers to put forth ideas.


Yvon Pinard: Would the hon. member permit a question? He said a few moments ago that a parliamentary secretary had told him the government was not ready for a private members' bill. It was not I. I should like the hon. member to be more precise and tell us what bill was involved when that happened, and what parliamentary secretary said such a thing.


William Arnold Peters: It has happened many times. I am sure it happens often in the course of the negotiations which take place. I understood the hon. gentleman to say the other day, when discussing the orders of the day, that there were a number of members on his side who were interested in speaking on a certain matter but who were not ready. That is fairly honest. There is nothing wrong about it. But I think the person who should make such a decision is the person in whose name the bill stands.


Yvon Pinard: I just want to say for the record that I have never talked with the hon. member about private members' business except this afternoon when I asked that the hour be postponed until tonight.


Joseph Adrien Henri Lambert: Mr. Speaker, with your permission, are we going to continue or do we adjourn the debate?


Mr. Deputy Speaker:: I think it was quite difficult to put aside the hour tonight and that all hon. members know that I have asked leave of the House not to see the clock for a while.


Joseph Adrien Henri Lambert: Mr. Speaker, this is a very important question. Many times I have wondered about the way we dispose of certain motions. Of course, we always agree, we always succeed in agreeing. That was not always all right with the hon. member who was frustrated in his hopes to comment on a motion. However, Mr. Speaker, I think that Standing Orders 19 and 49 are there to protect hon. members' rights, especially those who sit to your left because on the other side they have a majority and they can arrive at decisions whatever we are prepared to accept, because the majority always win in the end. I think it will be a good thing to keep those standing orders however difficult they are to interpret. Every hon. member reads them as he sees them, everybody thinks in his way. But Standing Order 19 has been read many times tonight and I think it should be considered very carefully. It reads as follows:
... notices of motions, not taken up when called may (upon the request of the government) be allowed to stand and retain their precedence;...
The government decides. Does the government leave the decision entirely up to the parliamentary secretary, or does it decide after consultation with the hon. member concerned? If it is after consultation, then that automatically becomes something quite normal because for reasons that were mentioned tonight and do not need repeating sometimes a member, as has happened in my own case in the past, will not be present at the time a motion is called.
November 28, 1977

But then it says further on that if the motion is not called by the government it may, however, be renewed, but renewed, as I understand it, losing its rank, renewed but dropping to the bottom of the list. So, of course, the hon. member may have it renewed but he cannot hope to have it discussed because the standing orders say that private members' business will be taken up between 5:00 p.m. and 6:00 p.m. on Mondays, Tuesdays and Thursdays, and 4:00 p.m. and 5:00 p.m. on Fridays. The consideration of private members' business is suspended on Tuesdays and Mondays when it has reached a total of 40 times in a session. This means that if the list contains more than 40 items then there are many motions on the order paper which do not have any chance of being discussed. This is limited by a standing order.
Mr. Speaker, the interpretation of Standing Order 18 that you quoted earlier is something extremely important. The meaning of that Standing Order 18 must be looked into. All items standing on the orders of the day, except government orders, shall be taken up according to the precedence assigned to each on the order paper. Government orders shall be called and considered in such a sequence as the government determines. When the government stands a motion does it become a government order afterwards which could be called at its will? It is a matter of interpretation. I would surely like to be enlightened on that. If the government then has the privilege to call this motion as if it were a government motion, any protection that we have comes too late because it is certain that the government will eventually want to dispose of the motion.
In any case, to summarize, I consider that this matter should be examined more closely. We have a Committee on Procedure and Organization. It should be asked to deal with those matters instead of waiting for two or three years before presenting its report. We should go really to the bottom of things so that, when we have a sensitive situation like the one we had last week, we should truly know where to go. There are quite enough unclear issues for us to at least put things in perspective when we can do so.
Indeed, Mr. Speaker, if you had really wanted to apply our standing orders to the letter last week, there would have been some embarrassment because the parliamentary secretary had not made the reservation on behalf of the government in time. Such a distraction can happen to anyone. I do not want to single out the parliamentary secretary who is now sitting in his place. This is not at all what I want to do, but I want to say that our procedure should be more specific. This is why I suggest that the Committee on Procedure and Organization be asked to consider this matter carefully so as to protect the rights of members of parliament because this is why we are elected, to represent the people. Many motions and private bills have been put on the order paper at the request of the voters, of the people.
Private Members' Business
As a matter of fact, in my mail this afternoon I had a long letter from a Quebec City resident who asked me to make arrangements to have a motion for setting a specific date for elections discussed in the House. In his opinion, this can be done any time without any problem. But we who sit in this House know that it is not so easy to have the House of Commons discuss such a question. However he is right to say that this is a very important matter. Quite recently the hon. member for Winnipeg North Centre (Mr. Knowles) proposed a very important motion about which questions are asked nearly every day. It concerns pensions at the age of 60. The people are concerned about it.
And if hon. members were not allowed to deal with these motions, the people who have elected us to represent them would not be satisfied with us and could certainly wonder what we are doing in the House. So, Mr. Speaker, I suggest that since our debates are being televised, maybe the law clerk could explain to the viewers some of the finer points of our procedure. That is something which was asked of me last weekend. People wonder why this, why that, why such and such adjournment motion. People are asking us a great many questions. Therefore, if we want to keep the Canadian public interested, we shall have to shed light on these matters, make sure that they understand better and, what is more, co-operate more effectively in the administration of our country.
Having enunciated my suggestion, I need not repeat it, but I feel that in the meantime, we should as well keep our old rule book.


Mr. Deputy Speaker:: Order, please. I thank all hon. members for their constructive remarks. If I begin by the last remark by the hon. member for Bellechasse (Mr. Lambert), I think that indeed the matter will have to be deferred, at some time or other, to the Committee on Procedure and Organization possibly to come to a review of the standing orders, and perhaps to some clarification. But before arriving at this point and perhaps before correcting the few contradictions which are to be read in the present standing orders, we should perhaps know what hon. members want.

The hon. member for Timiskaming (Mr. Peters) has questioned, I think, the intervention of the government in the standing of business, and he went as far as to suggest giving some right to the individual hon. member concerned for him alone to make a request to have his order stood. I do not think this is covered by the rule as it is now, but I think, if I understand the hon. member well, his concern is that when the government-and I suppose the same thing applies to the remarks of the hon. member for Bellechasse-makes a request to stand a motion, no hon. member has a guarantee that the member presenting the motion, or in whose name it stands, has been consulted or has given his authorization. This is one of the considerations.

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Private Members' Business
When the hon. member for Vaudreuil (Mr. Herbert) first raised his point of order, his main concern was the fact that, on the other hand, some hon. members were abusing the possibility of having their orders stood. We have two extremes in this case, and I suppose the solution must be somewhere in between.
I think the point raised by the hon. member for Grenville-Carleton (Mr. Baker) is very valid, in the sense that what has developed over recent years has been for the convenience of members, and it would be regrettable if we were to apply the Standing Orders strictly, although there seems to be some contradiction between Standing Order 49(1) and Standing Order 19(1). I am not sure that the remarks of hon. members have brought a clear perspective to the Chair.
I am still very concerned about Standing Order 19(1) and its possible limitation. I am still asking myself about the phrase "at the request of the government". Is it a request to the House by the government, or is it a right of the government to stand any kind of order, or even a motion?
I am concerned about these questions. I will do some reading. I might have to invite the House leaders of the parties into my office, where we might have a further discussion on this question before I make a decision.
I have some alternatives in mind which could be considered. Is the fact that the government has been co-ordinating this recent procedure which has developed, bringing about some suspicion? Would there be a valid objective in suggesting that such programming of private members' business ought to come under the Deputy Speakership or the Chair in general? Should there be some kind of co-ordination by the Chair or Deputy Speaker who officiates at the drawing of the order of business for private members at the beginning of the session? I shall keep all these concerns in mind, and I am sure that tonight's discussion will help all of us find a long-term solution to the problem.
In the meantime I shall look at the Standing Orders and precedents, and may arrive at a ruling that would not limit the operation of private members' hour and would satisfy hon. members in giving some interpretation of these contradictions, if I can use these words.
I thank hon. members, and I feel that by this time the hour appointed for the consideration of private members' hour has expired. This House stands adjourned until two o'clock tomorrow.
At 10.49 p.m. the House adjourned, without question put, pursuant to special order.

Tuesday, November 29, 1977