1977-11-09

ROUTINE PROCEEDINGS

[Stage Direction]
[English}

Mr. Bill Jarvis (Perth-Wilmot):: Mr. Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. Having regard to the serious doubts now raised publicly about the integrity, or lack thereof, in the Solicitor General's annual report to parliament dated February 11, 1977 wherein it was asserted that only one warrant authorizing postal communication interception was issued in 1976, which warrant allegedly could not be executed, and since it is now alleged in media reports that mail interception with or without warrant may have been, and may be, a common occurrence, I ask leave to move, seconded by the hon. member for Brandon-Souris (Mr. Dinsdale):
That a reference be made to the standing committee on Justice and Legal Affairs to permit that committee to investigate in its entirety the matter of illegal and unauthorized interceptions of mail.


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


Some hon. Members:: No!


SUGGESTED DELAY OF TARIFF REDUCTIONS PENDING
Mr. Edward Broadbent (Oshawa-Whitby):: Mr. Speaker, considering that the Economic Council has pointed out that the government has no plan to deal with the problems which will arise from its announcement and studied intention to reduce tariffs and considering that the results of such reductions could be disastrous for Canadian workers in textiles, plastics, shoes and electronics, as well as in other sectors, 1 would move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That this House instructs the government not to proceed with such tariff reductions until it presents to the House an industrial strategy designed to ensure continuing employment in these crucial sectors.


Mr. Speaker:: The motion is presented under the terms of Standing Order 43 and consequently unanimous consent is required before it can be put to the House. Is there such consent?


Some hon. Members:: No!


FINANCE
Mr. Sinclair Stevens (York-Simcoe):: Mr. Speaker, under the provisions of Standing Order 43 I rise on a matter of urgent and pressing necessity. As the dollar continues to be under pressure having broken the 90 cent level once again today, and as there has been a further $100 million dollar drain on our U.S. dollar reserves so far this month with $50 million dollars going out this morning, I ask leave to move, seconded by the hon. member for Oxford (Mr. Halliday):
That there be an immediate reference to the appropriate standing committee of this House with respect to our foreign exchange position and the government's handling of the matter.


Mr. Speaker:: Under the provisions of Standing Order 43 unanimous consent is required before the motion can be put. Is there such consent?


Some hon. Members:: No!


TOURISM
Mr. David Orlikow (Winnipeg North):: Mr. Speaker, I should like to move a motion under Standing Order 43 concerning a matter of urgent and pressing necessity. Having regard to the growing Canadian travel and tourist deficit, which now stands at $1.7 billion and in view of the serious consequences of this huge deficit for the Canadian balance of payments position and much needed jobs in the Canadian tourist industry, I would move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That this House agrees with the recent statements of the Minister of Finance that Canadians should holiday at home to remedy the country's travel deficit
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November 9, 1977

and furthermore urges all members, particularly the Prime Minister, to vacation right here in our beautiful country.


Some hon. Members:: Oh!


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


Some hon. Members:: No!


MANPOWER
Mr. Gordon Towers (Red Deer):: Mr. Speaker, under the provisions of Standing Order 43 I rise on a matter of urgent and pressing necessity. In view of reports about the low unemployment rate in Alberta and in view of the continuing influx of unemployed to that province, many of whom arrive without funds, without a job, and without technical training to fit into the labour force or return tickets to their places of origin, thus creating discomfiture and social problems associated with a higher cost of accommodation and food, I move, seconded by the hon. member for Medicine Hat (Mr. Hargrave):
That the Minister of Employment and Immigration publicize through Manpower offices throughout Canada that such persons would be well advised not to travel to Alberta in the expectation of finding work unless they have confirmation of a job.


Mr. Speaker:: The motion can be put forward for discussion under the provisions of Standing Order 43 only by unanimous consent. Is there such consent?


Some hon. Members:: No!


CANADIAN NATIONAL RAILWAYS
Mr. Robert Muir (Cape Breton-The Sydneys):: Mr. Speaker, pursuant to Standing Order 43, I rise to put forward a motion of urgent and pressing necessity. The callous attitude of the Canadian National toward employment and service in Nova Scotia is causing severe hardship and increased unemployment. CN Express offices have been closed across the province and the latest target is the CN Express operation at Sydney. Because we cannot tolerate any further loss of employment or reduction in service, I would move, seconded by the hon. member for Cumberland-Colchester North (Mr. Coates):
That the Minister of Transport take immediate action on the request of the national president of the CBR of T and GW for a special commission of inquiry to halt the rash of cutbacks, lay-offs, transfers and reductions by the CN in Quebec and the Atlantic region and that CN be instructed to concentrate on

more employment and better service rather than on profit-making just for the sake of profit.


Some hon. Members:: Hear, hear!


Mr. Speaker:: The motion, having been proposed under the terms of Standing Order 43, can be presented only by unanimous consent. Is there unanimous consent?


Some hon. Members:: No.


PROPOSED EARLY ACTION TO BROADCAST COMMITTEE PROCEEDINGS-MOTION UNDER S.O. 43
Mr. Jim Balfour (Regina East):: Mr. Speaker, I rise on a matter of urgent and pressing necessity pursuant to the provisions of Standing Order 43. In view of the success of the broadcasting of the proceedings of this chamber and in view of the importance of committees in the work of this House, I ask to move, seconded by the hon. member for Esquimalt-Saanich (Mr. Munro):
That this House urges the Special Committee on Television and Radio Broadcasting to make a report on the means by which broadcasting, by private or in-House facilities, could commence from the committees of this House as soon as possible.


Mr. Speaker:: Order, please. I think hon. members on both sides of the House will agree that the committee already has this question under active consideration.


PRIVILEGE
[Stage Direction]
MISS BfiGIN-REFERENCE TO ALLEGED TAPE PLAYED ON CBC NEWS-MOTION UNDER S.O. 43
Mr. Stuart Leggatt (New Westminster):: Mr. Speaker, I rise under the provisions of the same standing order. In view of the statement by the Minister of National Health and Welfare (Miss Begin) yesterday as reported in Hansard on page 692, that "The leader of the New Democratic Party should have had the decency of checking with me about the unfounded serious allegations he has just made.", and in view of the telegram which the minister says she is sending to the Toronto Sun and the Charlatan newspaper, I move, seconded by the hon. member for Nickel Belt (Mr. Rodriguez):
That the minister table the telegram that she proposes to send, and that she be given a chance at the first opportunity to advise this House if it was her voice that was taped at eight o'clock on the CBC news this morning which repeated these alleged unfounded allegations.


Mr. Speaker:: Order, please. Before presenting the motion for the consideration of the House in terms of unanimous consent, I should indicate that the minister who is the subject of the motion has given the Chair notice of a question of privilege with respect to the matter and sought leave of the
November 9, 1977

House to proceed before 2.15. I have indicated that it should be done at three o'clock. The introduction of the motion requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


RESOURCES
Mr. John Rodriguez (Nickel Belt):: Mr. Speaker, I rise under the provisions of Standing Order 43 to ask the unanimous consent of the House to deal with a matter of urgent and pressing necessity. In view of the fact that there have recently been close to 4,000 lay-offs in the mining sector and mining officials are predicting there may be as many as another 3,000 over the next six months, and in view of the fact that many of these lay-offs are attributable to poor planning in the mining sector, I move, seconded by the hon. member for Sault Ste. Marie (Mr. Symes):
That this House call on the government to immediately establish a parliamentary commission of inquiry into the mining sector of the economy with a view to development of an industrial strategy to ensure that Canadians receive the maximum possible benefit from the exploitation of their resources.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


VACANCY
Mr. Speaker:: Order. I have the honour to inform the House that I have received a communication notifying me that a vacancy has occurred in the representation, namely Robert Stanbury, Esq., the member for the electoral district of York-Scarborough, by resignation. Accordingly, I have addressed my warrant to the Chief Electoral Officer for the issue of a new writ of election for the said electoral district.
Oral Questions



ORAL QUESTION PERIOD


Mr. Joe Clark (Leader of the Opposition):: Mr. Speaker, in the inexcusable absence of the Prime Minister-


Some hon. Members:: Hear, hear!


Charles Joseph Clark: -and in face of two major questions concerning the unity and the competence of his cabinet, I should like to direct a question either to the Postmaster General or to the Acting Prime Minister, whoever that is today. My question is this: Have security officials been intercepting, opening, inspecting or copying mail of private Canadian citizens in any circumstances other than undeliverable mail or customs inquiries?


Hon. John C. Munro (Acting Prime Minister):: Mr. Speaker, I should like to draw the attention of the House to a letter the Prime Minister wrote to the Leader of the Opposition this morning stating in some considerable detail the justifiable reasons for his absence. I quote:
The Prime Minister has asked me to inform you that he feels that he must proceed to the Maritimes to keep his previous commitments to hold important discussions with Premier Regan and Premier Hatfield.


Some hon. Members:: Hear, hear!


John Carr Munro: These are in line with meetings already arranged by the Prime Minister with Premiers Lougheed and Bennett in western Canada some time ago to discuss the very questions that members of the opposition claim are of such importance to Canada, namely the questions of the economy and national unity.


Charles Joseph Clark: Mr. Speaker, I continue to be amazed by the tactics used by this government to avoid answering questions. This House and the country know that the Prime Minister had Monday in the Bahamas and is on a Jetstar today-


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please. I should like to ask hon. members on both sides of the House to permit, if possible, those putting questions and those answering, some quiet in which we can hear them.


Charles Joseph Clark: Mr. Speaker, in his defence of the indefensible the minister debated-


Some hon. Members:: Question, question.


Mr. Speaker:: Order, please.


Charles Joseph Clark: Mr. Speaker, might I ask the Acting Prime Minister for an answer to my question?
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November 9, 1977
Oral Questions


John Carr Munro: Yes, Mr. Speaker, I think my colleagues the Postmaster General and the Solicitor General are well able to answer any questions of the Leader of the Official Opposition.


Hon.   J.-J. Blais@Postmaster General: Mr. Speaker, in answer to the hon. gentleman's question, if not his comment, I might indicate that following the program last evening, and, like the gentleman, I followed it with a great deal of interest, 1 obtained a report from my security and investigation officials. I have been advised that there is no change and has not been any in the policy of the Post Office. I refer to the policy that was made in this House by Bryce Mackasey two years ago, and the one I adopted and have enforced, namely, that there is not to be any intervention in respect of first class mail or, indeed, in respect of any regular mail unless it is authorized by the Post Office Act. This means there is no interference and no removal of the mail, save and except in certain instances where co-operation is sought by the RCMP. There is co-operation provided by the Post Office relating to the covers and the information contained on said covers. At no time is the mail taken from the custody of the Post Office or diverted from the ordinary mail channels.


Charles Joseph Clark: Mr. Speaker, the minister has told us what is the policy of the government. Can he tell us as a result of his inquiry what the practice has been, whether in fact there has been any departure from the policy, and whether in fact there has been any kind of interception of or dealing with mail by security officers in violation of the Post Office Act, which I remind the minister allows intervention only in two cases; one, where the mail is undeliverable, and the other relating to customs questions? Can he give us the unequivocal assurance now that there have been no instances of intervention with the mail of a private citizen in any way other than that authorized by law?


Mr. Blais:: Mr. Speaker, following the investigation 1 have conducted with my own security investigation personnel 1 stand by my statement. There was one instance I was made aware of last year in late October or early November in respect of which I caused an investigation to be conducted. It came to my attention that, indeed, the policy had been somewhat stretched. 1 directed my security investigation personnel to direct all field officers to abide by the policy I have described, and I am advised that is being done. I have no information from my security and investigation people to date that would indicate anything to the contrary has taken place.


GUIDELINES FOR INTERCEPTION OF MAIL BY SECURITY SERVICE
Charles Joseph Clark: Mr. Speaker, if 1 understood what the Postmaster General said earlier, he indicated to us there were exceptions and those exceptions had to do with requests by security services to look at mail. Will he tell us what guidelines exist, and would he care to table those guidelines regarding the conditions under which security ser-

vices of the government of Canada, under whatever heading, have the right to look at the mail or deal with the mail of a private citizen?


Hon.   J.-J. Blais@Postmaster General: Mr. Speaker, there are no specific guidelines. What takes place is that the RCMP makes a request of the field officers of security and investigation. That request is then channeled to my head of security and investigation in Ottawa. He studies the particular request and authorizes co-operation between the RCMP and postal officials. That co-operation relates to investigations being carried on by the RCMP. Again I suggest to the hon. gentleman, the fact is that the investigation is conducted at the Post Office premises and it is only with reference to the cover information on the envelope.


MINISTERIAL RESPONSIBILITY FOR SECURITY SERVICE
Miss Flora MacDonald (Kingston and the Islands):: Mr. Speaker, I have a further question for the Acting Prime Minister on this fundamental issue of ministerial responsibility in the field of national security. I should like to refer to a statement by the Minister of National Health and Welfare yesterday when she referred to unfounded serious allegations. She was describing statements attributed to her in the Charlatan newspaper at Carleton University. I should like to ask the Acting Prime Minister with regard to this part of the transcript, "there is no way somebody is going to tell me that as a Quebecer there was a state of national emergency somewhere in Quebec and some threats to God knows what"-


Mr. Speaker:: Order, please. In fairness, it would take a great stretch of the rules of the House to see that as a supplementary. I will see the hon. member for Kingston and the Islands in one moment.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


Mr. Speaker:: The hon. member for Saskatoon-Biggar on a point of order.


Mr. Hnatyshyn:: Mr. Speaker, I rise on a point of order. The fact of the matter is that it is clear the questions posed by the hon. Leader of the Opposition at the outset and those following by the hon. member for Kingston and the Islands, dealt specifically with the role of security services under the government, the position the cabinet takes with respect to same, and the question by the Leader of the Opposition dealt with the mechanisms used in surveillance. There was an answer with respect to that particular aspect. It seems to me that the question of ministerial responsibility has been brought into focus by the hon. Leader of the Opposition, and it is only appropriate that we are able to carry on at this juncture with questions with respect to that.


Some hon. Members:: Hear, hear!
November 9, 1977


Mr. Speaker:: Order, please. In every case on every day I have recognized that the hon. Leader of the Opposition ought to be followed by one of his own members in respect of a supplementary, and very rarely have I interfered. However, today the hon. Leader of the Opposition exposed a subject which relates to interference by the RCMP or others with the mail. The hon. member for Kingston and the Islands raised a subject which relates to statements made yesterday by a minister in a question of privilege, which have to do with an apprehended situation some time ago in the province of Quebec. With due respect, I indicated that I would see the hon. member for Kingston and the Islands shortly to expose that subject; but the subject is in no way directly connected as a supplementary.


Some hon. Members:: Hear, hear!


POSSIBILITY FOUR MORE CASES OF ILLEGAL ACTIVITY
John Edward Broadbent: Mr. Speaker, I have a question for the Solicitor General. Would the Solicitor General confirm that either he, officials in his department or members of the RCMP have referred four additional allegations of RCMP wrongdoings. These would be in addition to the APLQ break-in, the barn burning, the dynamite stealing and the breaking into the office of a legal political party. Has he, his officials or the RCMP referred four more allegations of criminal wrongdoings involving the RCMP to the federal royal commission?


Hon. Francis Fox (Solicitor General):: Mr. Speaker, I do not know where the number four comes from. I have given very explicit directions that any complaint or any allegation coming in concerning any possible impropriety by the RCMP, be referred directly to the royal commission of inquiry into the practices and the procedures of the RCMP.


Some hon. Members:: Hear, hear!


John Edward Broadbent: Mr. Speaker, I will put the question in a different way. Can he tell us how many further allegations he or his officials have referred to the royal commission? Or is he saying that he left instructions with his department to go ahead and do this on its own, and that he does not want to be informed about what is going on? Is he aware of the number that have been referred in addition to those which have already been referred? At the same time, can he tell us if the provincial authorities in the appropriate provinces who are responsible for prosecuting under the Criminal Code have been informed of all such cases?


Francis Fox: Mr. Speaker, any complaints which have been brought to my attention have been referred in part to the force. They can have a look at them. They have also been referred to the McDonald inquiry. They have not at the same time been automatically referred to the provincial attorneys
Oral Questions
general where the alleged events may have occurred. There have been a number of allegations.
Hon. members will recall that a whole series of complaints were made during the months of June and July. We set up the commission of inquiry so that we could have an independent, impartial, outside body examining witnesses under oath and coming to conclusions as to whether evidence should be referred subsequently to attorneys general. I have consulted the law officers of the Crown, and they tell me that the proper course to follow at the moment is to refer such allegations to the royal commission set up by the government last July.


John Edward Broadbent: With respect, Mr. Speaker, the minister cannot have it both ways. In the speech he made in this House on a nice, quiet Friday afternoon in which he announced that a break-in had taken place involving a legally constituted political party, the Solicitor General at least in that instance saw it as his obligation to inform hon. members of this House about some of these activities. In light of his own precedent in this regard, is the minister now saying that any other allegations made involving criminal wrongdoing by the RCMP will not be brought before members of this House but simply referred to the royal commission in the normal course of business as he sees it?


Francis Fox: For an hon. member who is alleged to be leading a party which is very concerned about civil liberties of Canadians I find it amazing that he believes that every time a complaint comes forward-


John Edward Broadbent: No one is saying that.


Francis Fox: -I should immediately bring to the floor of this House the nature of the complaint, the names of the people involved and the names of those against whom the complaint is directed. A number of questions have been raised in the course of former royal commissions of inquiry. Facts have been brought to the attention of those federal royal commissions, and those commissions have made suggestions and recommendations that the evidence be brought to the attorneys general of the provinces in which events occurred, and that is the procedure we intend to follow.


STATEMENT BY MINISTER OF NATIONAL HEALTH AND WELFARE CONCERNING ACTIVITIES IN QUEBEC-GOVERNMENT POLICY
Flora Isabel MacDonald: Mr. Speaker, my question is to the Acting Prime Minister, and it has to do with the subject raised initially by the Leader of the Opposition about the very fundamental issue of ministerial responsibility in the field of national security. I would like to refer to the statement yesterday by the Minister of National Health and Welfare. She said that unfounded serious allegations-


Miss Begin:: Where did I say that?

November 9, 1977
Oral Questions


Flora Isabel MacDonald: It is recorded at page 692 of Hansard, and it was in reference to excerpts from the Charlatan newspaper. In a transcript of her remarks the minister is recorded as saying, "There is no way somebody is going to tell me that as a Quebecer there was a state of national emergency somewhere in Quebec and some threats to God knows what". I would like to ask the Acting Prime Minister whether the Minister of National Health and Welfare was stating government policy when she made that statement?


Monique Bégin: 1 never said that.


John Carr Munro: Mr. Speaker, I would have assumed that an hon. member who usually behaves fairly in this House would have noticed that Your Honour mentioned that the Minister of National Health and Welfare had a question of privilege to raise with respect to this matter. That was her notice to indicate to the House that she has-


Charles Joseph Clark: Another evasion.


Sinclair McKnight Stevens: Answer the question.


John Carr Munro: Let me finish, if you don't mind. That was her notice to indicate to the House that she has a question of privilege. The rules, which have been agreed to by all parties in this House, say that a question of privilege of this nature is usually to be taken up at three o'clock. At that time the minister will have an opportunity to explain her grievance, which is legitimate in my opinion. The hon. member who has just risen will have ample opportunity to comment on that question of privilege at that time. Those are the dictates of fairness as I perceive them.


Flora Isabel MacDonald: Mr. Speaker, my question was to the Acting Prime Minister. I was not asking him what the Minister of National Health and Welfare said but whether it was- and I ask him this in his position of Acting Prime Minister- whether or not it was government policy which she stated. That is the question I wanted him to answer. Will he answer that question?


John Carr Munro: Mr. Speaker, the hon. member is drawing conclusions based on content which my colleague the hon. Minister of National Health and Welfare questions through a question of privilege. I think before drawing her unjustifiable conclusions she should at least hear what the hon. minister has to say.


Charles Joseph Clark: Cover-up.


Flora Isabel MacDonald: A final supplementary question, Mr. Speaker. Could I ask the Acting Prime Minister if he would look at that statement and then tell the House how he would reconcile it with this statement by the Solicitor General with reference to the seizure of lists of the Parti Quebecois:

It was authorized and carried out in the absolute conviction that its sole object was to promote the security of Canada given the political and social climate prevailing in 1973.


John Carr Munro: Mr. Speaker, since the hon. member seems to be ready to draw conclusions before she has even heard from the hon. minister I will draw my own. I have a very high regard for the Minister of National Health and Welfare.


Some hon. Members:: Hear, hear!


John Carr Munro: I do not believe she has breached the tenets of ministerial responsibility.


Charles Joseph Clark: You don't know what they are.


POST OFFICE
Hon. W. G. Dinsdale (Brandon-Souris):: Mr. Speaker, my question follows the question that was opened up by the Leader of Her Majesty's Loyal Opposition and is directed to the Postmaster General. In view of the fact that Section 48(3) of the Post Office Act gives the Postmaster General the authority to appoint officers employed in the post office to conduct an inquiry similar to one conducted under the Inquiries Act into the violations of the post office under Section 48, could the Postmaster General inform the House if he has authorized such personnel in his office to carry out this responsibility, if they are having liaison with the security forces and whether they report regularly to the hon. gentleman?


Hon.   J.-J. Blais@Postmaster General: Mr. Speaker, I have not yet acted under Section 48(3). There is not as yet any evidence upon which I could do so.


Walter Gilbert Dinsdale: A supplementary question, Mr. Speaker. In light of complaints that come from members of parliament, and I am sure these will be specifically mentioned here from time to time, and in view of the vital importance of the privacy of the mails with respect to civil liberties and the Postmaster General's exclusive privilege under Section 8 of the Post Office Act for "collecting, conveying and delivering letters in Canada," can the hon. gentleman inform the House how the mail could be "liable to demand seizure or detention" in the words of Section 43 of the act without his knowledge, particularly when questions of security are involved?


Jean-Jacques Blais: Mr. Speaker, if the hon. gentleman had listened to my first reply he would have noted that I indicated my own security and investigation services have reported to me this morning that they have not participated as has been alleged in yesterday's program.
November 9, 1977


ROYAL CANADIAN MOUNTED POLICE
Mr. Roch La Salle (Joliette):: Mr. Speaker, my question is directed to the Minister of National Health and Welfare.
I am not referring to the question of privilege, but in fact to the statement she is reported to have made before students. My question is quite clear. Could the minister advise the House whether she has actually said that the security services had acted stupidly in connection with the stolen list, unrealistically in connection with the fire, adding that these services are so powerful that they can do as they please at any time?


Monique Bégin: As I have indicated, Mr. Speaker, I intend to deal more specifically with this matter when I rise on a question of privilege at three o'clock. The hon. member is inquiring about a discussion which took place during a lunch break at Carleton University some eight days ago, which lasted for an hour and a half, and of which the recorded tape I do not have. I shall deal more fully and completely with this issue in a little while.


POST OFFICE
Mr. Lloyd R. Crouse (South Shore):: Mr. Speaker, I wish to direct a question to the Postmaster General. In view of his replies to the Leader of Her Majesty's Loyal Opposition and to the hon. member for Brandon-Souris I should like to ask one simple question. Why is he permitting the security service to tamper with my mail?


Hon.   J.-J. Blais@Postmaster General: Mr. Speaker, with reference to the hon. gentleman, I understand that he was in communication with the press this morning and he gave some background details of that particular intervention. As I understand it his letter was addressed to-or a letter was addressed to the hon. gentleman at his House of Commons address. Unfortunately, through some error-undoubtedly not an error in the post office-it was misdirected to Government House. At that point, as I understand it, the hon. gentleman has said it was opened at Government House. This is my understanding, Mr. Speaker, but if that is not the case I stand to be corrected. In any event, it is a particular instance. 1 would need, evidently, some additional information from the hon. member if he is to expect an adequate reply.


Lloyd Roseville Crouse: Mr. Speaker, a supplementary question. At no time did I indicate the letter was opened at Government House. For the information of this House the letter was clearly addressed to me as a member of parliament and stamped by Government House as well as by the technical unit of the RCMP. I should like to ask the Postmaster General, in view of
Oral Questions
the fact that under the Post Office Act every person is guilty of an indictable offence who unlawfully opens letters or articles of mail, why was a letter, if the first answer was correct that it was done in error-why was a letter containing a simple request opened and inspected as stamped August 9, 1977 and August 10, 1977, a process which, I am told, is in effect since 1972? Why was this course followed?


Jean-Jacques Blais: Mr. Speaker, again it is a specific instance-


Some hon. Members:: Oh, oh!


Jean-Jacques Blais: Surely the hon. members cannot expect me to provide them with a reply on something that it has taken him two shots at posing a question to me.


Some hon. Members:: Oh, oh!


Jean-Jacques Blais: There are things 1 cannot be expected to know. Evidently the question asked indicates there are details that need further investigation. I undertook to the hon. gentleman to provide that additional investigation and provide him as well as other members with a complete explanation of the incident.


ALLEGATION BY MEMBER OF TAMPERING WITH HIS MAIL
Mr. Steven E. Paproski (Edmonton Centre):: Mr. Speaker, I, too, rise on a question to the Postmaster General. They may think this very amusing on the other side, but I, too, have a letter that was addressed to my office and was inspected by the RCMP on August 18, 1977. I want to know why my mail was tampered with?


Mr. Speaker:: Order, please. I think there is a temptation here to relate specific incidents. I have given some latitude to raising these in the general context. However, we have to carefully avoid the use of the question period to explore specific questions of this sort particularly if they have been outstanding for sometime as they appear to be.


An hon. Member:: He is a slow reader.


SOCIAL SECURITY
Mr. Eudore Allard (Rimouski):: Mr. Speaker, I should like to put a question to the President of the Treasury Board.
Yesterday I asked him, as reported in Hansard on page 632, if the minister could enlarge on the statement he made in September 1977 to the effect that he was going to decrease family allowances but he replied that he had made no such statement.

November 9, 1977
Oral Questions
Now, Mr. Speaker, in the daily La Presse of September 22, 1977, the following is clearly stated and 1 quote:
Treasury Board President Robert Andras has suggested that family allowances might be reduced next year.
Now, Mr. Speaker, could the minister give a few details on the matter?


Hon. Robert K. Andras (President of the Treasury Board):: Mr. Speaker, the hon. member's question as translated to me the day before yesterday appeared to indicate he was asking me if I was relating some hypothetical action with regard to family allowances to the servicing of the public debt. I made no such statement. I am not quite sure what variation on that question the hon. member is implying now.


Eudore Allard: Mr. Speaker, I will merely say to the minister that if he would like me to do so, 1 could send him a copy of that article published in La Presse concerning his statement.


ROYAL CANADIAN MOUNTED POLICE
Mr. Elmer M. MacKay (Central Nova):: Mr. Speaker, I have a question for the Solicitor General. It is further to one I asked of him on October 31 when I inquired about the possible means of surveillance, including mail interception, with respect to the Laycraft commission of inquiry. I think the Solicitor General will remember this. With reference to the latest number of reports that have been dealt with, has he anything further to add to his answer or has he made any further inquiries?


Francis Fox: Mr. Speaker, I am not quite sure what the hon. member referred to in the question he previously asked me concerning the Laycraft inquiry. Perhaps he could refresh my memory.


Elmer MacIntosh MacKay: Yes, Mr. Speaker, I will be glad to do that. It was on October 31, page 424 of Hansard. It was further to a question raised by the hon. member for New Westminster. I asked the Solicitor General at that time whether he could give us an unequivocal assurance that among any other possible methods of surveillance of the Laycraft commission that mail interception was not used. At that time he gave me a very substantial answer to the effect that to the best of his knowledge this was not the case. I was wondering now in view of some of the other matters that have been raised if he could expand his answer and give us the same kind of assurance, particularly to the rest of Canadians, and not restrict it only to the members of the Laycraft commission of inquiry. Has he asked about this?


Francis Fox: Mr. Speaker, on the question of the Laycraft inquiry, I do not recall the hon. member's reference to the mail being intercepted in connection with the attorney general, the solicitor general of Alberta or the Laycraft inquiry itself. In that regard, my answer would remain the same. However, on the more general question, I assume he is referring to the CBC news report last night concerning possible interception of the mail by the RCMP security service, I understand under the code name 'cathedral". I had the opportunity of checking into the matter with senior officers of the force this morning and asked questions concerning the code name "cathedral". The code name cathedral" goes back to 1954. In some instances, after my examination of the files with senior officers of the Crown, it clearly happened that the mail has actually been opened by the RCMP security service. Because of that, 1 referred the whole matter to the Attorney General of Canada and also to the McDonald royal commission of inquiry.


Some hon. Members:: Hear, hear!


POSSIBILITY NDP WAS OBJECT OF SECURITY CHECK
Elmer MacIntosh MacKay: Mr. Speaker, I thank the minister for his answer and assure him that if he checks in Hansard, my question indeed was specific on mail surveillance. I want to ask a related question on the matter of surveillance in general. Further to reports that Daniel Celo-vosky was perhaps the victim of security considerations when he was discharged from a militia unit and further to current reports in the Globe and Mail that this may have been as a result of the surveillance that was alleged on behalf of or toward the NDP, the federal members and staff, of which one was his father, can the Solicitor General give us any assurance, or if not will he look into this case to make certain that the NDP was not targeted by the RCMP or the security service in any way that would smack of interference with a legitimate political party.


Francis Fox: Mr. Speaker, as far as the question of security clearance of an individual is concerned, if he was dismissed from a militia unit, I assume that the proper person to ask a question of would be the Minister of National Defence. We have always stated in connection with the surveillance of political parties the security service does not have a mandate to systematically survey any legitimate political party.


MINISTER'S KNOWLEDGE OF PRACTICE OF INTERCEPTING MAIL
William Herbert Jarvis: Mr. Speaker, I have a question for the Solicitor General. It is with reference to the answer he gave my colleague, the hon. member for Central Nova. I believe the Solicitor General said the matter of postal mail interception has been referred to the royal commission. In all the briefings he has bragged about so eloquently, did he never know that the RCMP may have infiltrated the post office? If that is not the case, did he never ask the security officers briefing him, are you or are you not contrary to the
November 9, 1977

law intercepting and reading mail? Did it never occur to him to ask that question?


Francis Fox: Yes, Mr. Speaker, I repeatedly asked the RCMP, particularly during the course of the preparation of my statement concerning the APLQ break-in, whether there were any other illegal incidents that ought to be brought to my attention and the answer was no.


William Herbert Jarvis: Will the minister please answer the question. Did he ever ask specifically whether security officers were intercepting mail? That is not a general question.


Francis Fox: Mr. Speaker, during the course of my mandate, 1 gave specific instructions to the RCMP when I came across the APLQ file. As far as I am concerned, all operations of the force were to be carried out within the framework of the law.


RESOURCES
John R. Rodriguez: Mr. Speaker, keeping in mind that recent lay-offs at 1NCO, Noranda, Alcan, Falcon-bridge and so on indicate a total lack by those elected to govern this country of any kind of planning and developing the non-renewable mineral resources in Canada, and in view of the fact that weaker nickel markets, investment abroad and a lack of planning of the mining companies and the government have resulted in some 3,000 to 4,000 people being laid off with another 3,000 in six months time, can the Acting Prime Minister advise if this government is now prepared to order a parliamentary investigation into the mineral resource sector of this country with a view to developing an industrial strategy so that Canadians can be assured that their resources will develop with their interest uppermost?


John Carr Munro: Mr. Speaker, with reference to the preamble of the hon. member's question, he should be aware that the government is endeavouring to stimulate the economy so that situations such as INCO will not repeat themselves. I remind hon. members of tax reductions costing in the area of $500 million to $700 million. Add to that in the full year next year about $1,200 million. Add the $450 million now in direct job creation plus another $150 million, plus $100 million going to an employment incentives scheme of the Minister of Finance. This will have considerable impact in stimulating consumer purchasing which will help avoid some of the situations the hon. member is referring to and I believe exaggerating.


Some hon. Members:: Hear, hear!


SUGGESTED WITHDRAWAL OF TAX CONCESSIONS FROM NICKEL AND COPPER MINING INDUSTRIES-GOVERNMENT POSITION
John R. Rodriguez: On October 24, page 1 57 of Hansard the Acting Prime Minister, the Minister of
Oral Questions
Labour, told this House that the Canadian government would not agree to stockpiling nickel because, and I quote:
Increased expenditures or incentives to further increase those stockpiles seem to be putting off the day when we can get this industry back into a healthy condition to guarantee jobs for people who are unemployed.
In view of the Acting Prime Minister's comments that any such assistance would be of no value, can he now tell this House if he would be prepared to withdraw all federal tax concessions from the nickel and copper mining industries, including the $10 million in the most recent budget? Is he prepared to withdraw all those tax concessions at this point?


Mr. Speaker:: Order, please. The representation is clearly that, not a question. In any case, the answer I am sure will be the usual one related to budgetary disclosures.


NATIONAL SECURITY
Mr. Heward Grafftey (Brome-Missisquoi):: Mr. Speaker, my question is directed to the Minister of Justice. Considering action by both the United States Congress and administration to bring United States security surveillance under proper-I underline the word proper-civilian control, considering the open forthrightness displayed by these two wings of government south of the border in relation to the problem, can the minister explain his government's reluctance at the present time, in view of what is going on, to be equally as forthright with the Canadian people and to give the whole problem similar leadership.


Hon. Ron Basford (Minister of Justice):: It seems to me that that is precisely what the inquiry under the chairmanship of Judge McDonald is all about. Apart from having the power to inquire into specific instances of acts committed by officers in the course of investigations which are contrary to the law, the commission is specifically authorized to recommend policies and procedures which should govern the operation of the security services. It would seem to me that the RCMP and its officers are entitled to have that kind of impartial and judicious hearing which will be a matter of public record and which will result in recommendation to the government and to parliament as to what the policy and the law should be.


William Heward Grafftey: My supplementary is this: How many times must the civil liberties of individual Canadians be put down, so to speak, before the government gets a lever on this thing by taking action comparable to what is going on under the United States committee system or with what is being done by the administration and by Congress? Does the minister not agree that what is going on under the government in terms of getting a lever on this situation is too little and too late-that it will be too long before action will be forthcoming?
742

November 9, 1977
Oral Questions


Mr. Speaker:: The hon. member for Northumberland-Dur-ham.


ROYAL CANADIAN MOUNTED POLICE
Mr. Allan Lawrence (Northumberland-Durham):: Mr. Speaker, my question is to the Solicitor General. I am addressing it to him in order to give him an opportunity to clarify what he said a little while ago. Regardless of what he has referred to the McDonald Commission, or when he referred to the McDonald Commission, both of which questions are very vague, in view of the serious allegations, allegations which if true are intolerable in this nation, made last night on national television and again this morning in the national media, can the minister please tell me whether he asked his officials this morning whether they knew of any circumstances whatever involving tampering with Her Majesty's mails in Canada.


Francis Fox: Yes, Mr. Speaker.


Allan Frederick Lawrence: My supplementary, in the light of that very full answer, is this: Just what was the reply the Solicitor General received from his officials when I suspect he knows and certainly his officials know, that there have been previous instances brought to the floor of this House by members at which time his predecessors simply evaded the same type of question as he is answering here today.


Francis Fox: I find it difficult to accept the hon. member's conclusion that I evaded the question put to me by the hon. member for Central Nova. I indicated clearly that 1 sat down with senior officials of the force this morning, asked them to produce their files, asked them a number of questions on procedural operations and it became very clear to me during the course of that meeting that there had been indeed a number of instances in which the security service of the RCMP in particular areas of counterespionage, terrorism and countersubversion opened a number of pieces of mail. I also told the hon. member that as far as the RCMP files show, this type of procedure goes back to 1954.


Allan Frederick Lawrence: Bearing in mind that the RCMP themselves have publicly admitted that they have absolutely no authority to do that at all, is the minister telling us now that as the minister responsible he is assuring the House that this has only been done in cases of alleged terrorism or alleged bombing or counterespionage. Is he saying that these four types of cases are the only ones which have been reported to him.


Francis Fox: As the hon. member knows, this matter came to light only last night. I do not think our examination of the whole matter is complete. The initial response I have had from the force, the initial breakdown of the cases which have occurred, is to the effect that they all come under the classification of counterespionage, countersubversion and terrorism.

As far as the government is concerned, no matter what heading it comes under it is not authorized either by the Official Secrets Act or the Post Office Act and in these circumstances we feel the matter has to be referred to the commission of inquiry set up by the federal government in view of the fact that mail has been opened and we wish to apprise the royal commission of the circumstances in which the mail was opened. Hopefully, the royal commission will have some suggestions to make as a result of that very serious presentation.


An hon. Member:: Another illegality.


EXTERNAL AFFAIRS
Mr. Robert McCleave (Halifax-East Hants):: Mr. Speaker, my question is directed to the Secretary of State for External Affairs. What steps if any, other than prayer, has the government taken to help Canadians serving abroad in the employment of Canada who are affected by the changes in the fortunes of the Canadian dollar.


Hon. Donald C. Jamieson (Secretary of State for External Affairs):: Mr. Speaker, I would be the last to question the efficacy of prayer, but apart from that we are examining each individual case; we do have certain formulas in place on a continuing basis to deal with fluctuations in currency values. Just last week, for instance, there were quite substantial changes in Israel. We look at these cases individually as they come along and do our best to accommodate our people to them. 1 should point out that they also, on occasion, benefit when currency values move in the opposite direction.


Robert Jardine McCleave: I think I shall have to make a late show appointment. I really have in mind the situation in Washington.


MANPOWER
Mr. Irenee Pelletier (Sherbrooke):: Mr. Speaker, 1 would like to direct a question to the Minister of Employment and Immigration. Since most Canada Works projects in provinces other than Quebec have already been accepted in more than 85 per cent of cases, could the minister tell the House why such a long delay is required this year to consider projects submitted to the Quebec government?


Hon. Bud Cullen (Minister of Employment and Immigration):: Mr. Speaker, last week several members asked me the reason for this situation and I decided that the approval


November 9, 1977

procedure had to be hastened. I think that 80 to 90 per cent of the projects have already been accepted.


POSSIBILITY OF INCREASE IN PRICE OF WHEAT SOLD FOR DOMESTIC CONSUMPTION
Mr. Lome Nystrom (Yorkton-Melville):: Mr. Speaker, my question, if 1 can wake him up, is for the Minister of Agriculture.


An hon. Member:: Cheap!


Lorne Edmund Nystrom: It goes to him in the absence of his friend, the Minister in charge of the Canadian Wheat Board. It is now four years since the minimum price for wheat sold for domestic consumption was set at $3.25 a bushel and it is several months since his friend the Minister in charge of the Canadian Wheat Board said this price was being reviewed by the cabinet with a view to its upward adjustment. Can the hon. gentleman now assure us that the hard-pressed farmers will receive an increase in the price of the wheat they sell for domestic consumption?


Hon. E. F. Whelan (Minister of Agriculture):: 1 am not in a
position to give the hon. member the assurance he seeks because no decision has yet been taken. I want to assure him however, that even asleep I am as bright as he is, wide awake.


Some hon. Members:: Oh, oh!


Lorne Edmund Nystrom: Can the minister assure that any increase in the price of wheat in this country will reflect at least the cost of production which the farmers have encountered in the last four years? Further, can he tell us when an announcement will be forthcoming?


Eugene Whelan: With the Western Grain Stabilization Act, crop insurance and so on, the grain producers of western Canada are better taken care of than any group of cereal producers I know of anywhere. I work very closely with the Minister in charge of the Canadian Wheat Board and I know he is as concerned as we are to look after the interests of western Canadian farmers as well as of Canadian consumers.


POST OFFICE
Ramon John Hnatyshyn: Mr. Speaker, my question is for the Postmaster General who in response earlier to questions by the Leader of the Opposition and by my hon. friend from Brandon-Souris left the distinct impression that there had been no interference, legal or otherwise, with the
Oral Questions
mail except in one particular case which had been disclosed. We look to the minister for very little, but we do look to him to protect the mail and I ask him whether he will check to satisfy himself that there has been no interference by any security service, including his own staff. We have all these revelations by the Solicitor General that there has been illegal interference. I ask the minister to satisfy himself and report to the House so that we may know in this country that there is not going to be government surveillance of the mail.


Hon.   J.-J. Blais@Postmaster General: I hasten to give the hon. gentleman that assurance. I take my responsibilities very seriously and section 43 of the Post Office Act is very clear. The information the hon. gentleman brought to my attention through his leader arose out of a program which was broadcast last night. 1 have conducted an investigation with my head of security and investigation at this time, and 1 have received the reply that there has been no departure from the policy I have described. 1 am not responsible for the RCMP.


Some hon. Members:: Oh, oh!


Jean-Jacques Blais: I have said quite clearly that I have conducted an investigation in my department with my officials, and 1 have been advised as I stated earlier in the House.


Ramon John Hnatyshyn: A supplementary question, Mr. Speaker. It is an incredible proposition that the Postmaster General puts before us today. Is he telling the House that the Solicitor General did not have the courtesy to tell him about the illegal interceptions of mail on the part of the RCM Police; and is he also saying that he has no responsibility to deal with other security services as the protector of the public mails? Is he saying that he has no responsibility in this regard?


Jean-Jacques Blais: I have the responsibility, Mr. Speaker, of making sure that the provisions of the Post Office Act are honoured. I am taking that responsibility. I have indicated to the hon. gentleman that I have conducted a preliminary investigation with the head of my security and investigation department this morning. I have also undertaken to the hon. gentleman to pursue these investigations and to provide to the House any information that might come to my attention in the normal course.


Ramon John Hnatyshyn: A final supplementary question, Mr. Speaker. I put a very simple question to the Postmaster General. I want to know whether he will first undertake to speak to his cabinet colleagues to ensure that there is no unlawful interference with the mails; and will he not now undertake to make a statement on motions at the earliest possible date on his findings in regard to interference with the mails of this country?


Jean-Jacques Blais: Mr. Speaker, I have indicated to the hon. gentleman that I will be pursuing the matter, that indeed I have had a preliminary investigation conducted by the head of security. I have told him that there is no information other than what I
80025 -48l/2

November 9, 1977
Privilege-Miss Begin
have provided to the House at this time. I have also indicated to the hon. gentleman that I will be pursuing the investigations and that I am conscious of my responsibilities under the Post Office Act. Now, Mr. Speaker, there is no doubt in my mind-and the hon. gentleman has stated this quite clearly- that in my investigations there will, of course, have to be a great deal of interplay as between the Solicitor General and myself. This is exactly the course of action which I propose to pursue.


Mr. Speaker:: Order, please. Yesterday on a point of order respecting the tabling of documents we dealt with a point concerning a document which was referred to by the right hon. Prime Minister (Mr. Trudeau) during an intervention a few days ago. He indicated that he had quoted from a document which, in his view, was a public document and that he was prepared to table it if the chair saw no objection. I have, on reflection, concluded that ought not to be an impediment to tabling a public document in the House. I see no impediment, and if the Prime Minister is prepared to table it, the tabling will take place at the earliest possible opportunity.


PRIVILEGE
[Stage Direction]
MISS BfiGIN-REMARKS MADE AT CARLETON UNIVERSITY
Monique Bégin: Mr. Speaker, in view of the comments I made in this House yesterday on a question of privilege, and reports in the media of remarks I made at a luncheon discussion with students at Carleton University last Wednesday, November 2,
I should like to clarify my position in the debate which has occupied the attention of members.

I was the guest of Carleton University students at the Roosters, at lunch time on Wednesday last, November 2. Two months ago, I had accepted this invitation to talk about national unity and discuss this subject with the students.
The first questions asked were about the RCMP. I answered them as honestly as possible, as indeed I did all other questions.

In particular today I should like to take the strongest exception to remarks made by the Leader of the New Democratic Party (Mr. Broadbent) yesterday, as reported at page 692 of Hansard. I regret just having received a note from him, to my extreme surprise since he does not usually consult or inform me, saying that he had to leave to catch a flight. He had this to say:
We on this side of the House could document the allegation of a cover-up, and apart from points we on this side of the House would make, the Minister of National Health and Welfare has provided the best possible argument by saying, as a member of the cabinet, that she thinks they were ignoring their responsibility. I would say that she thinks they were involved in a cover-up in burying their own essential role in this whole mess.

First of all, I wish to restate with as much emphasis as I command that I fully support the action of the Solicitor General (Mr. Fox) and the Prime Minister (Mr. Trudeau) in dealing with allegations of illegal activities by some members of the RCMP. They have clearly stated that this government does not condone illegal acts on the part of citizens or the police. When such acts came to light, not only were they reported to this House by the Solicitor General, but the cases were referred to the proper provincial authorities, and also to the royal commission which was appointed for the purpose of such investigations.
Some of the university students themselves have suggested on the radio this morning that the comments made by myself, which have appeared in the media, have been taken out of the context of the meeting and have become, in their words, a tempest in a teapot. Indeed, the organizers of the meeting have dissociated themselves from the report which appeared in the university newspaper, The Charlatan, and have sent me a telegram to that effect.
The occasion was a very informal exchange of views, and there was certainly no question of my "lashing out" at either the Solicitor General or the Prime Minister. Indeed, the very comment I made concerning illegal acts is one that has been made repeatedly in recent days by the Solicitor General, and I support him.

On the other hand, to abstain from criticizing a fellow-member of the cabinet is so elementary one need not dwell on the point.
I therefore want to repeat, Mr. Speaker, that I support wholeheartedly the work and the stands of the Solicitor General (Mr. Fox) whose competence, everyone knows, is undeniable.

In trying to put questions in my own personal perspective during the Carleton luncheon, I turned my mind back to the context of 1973 as I saw it when I was a private member. Perhaps such recollections are denied cabinet minister. If I have overstepped practices either for a cabinet member or for this House, I of course do not hesitate to express my regrets. I have no intention of misleading the House, but rather wished to place the correct interpretation on the thoughts I expressed at Carleton a week ago and in press interviews yesterday. I was speaking from recollection of an informal meeting of some length. Unfortunately, I was not allowed by a commentator of Carleton Radio-News to confirm my recollection with a tape of my remarks. The tape, I understand, has been made available to the media.
Since a member opposite asked me a few minutes ago a question based on the supposed transcript of my remarks, which the hon. member for Calgary Centre (Mr. Andre) has just given me, a short text which I have seen for the first time, an unidentified object consisting of five pages even though I talked for an hour and a half, I should like to put the record straight.
November 9, 1977

[ Translation]
As soon as 1 learned last Monday that what I had said was controversial, my office phoned the students at Carleton for a copy of the tapes made in front of me. The students informed us that one of those tapes had been erased and that, in the case of the other, the recorder had not worked. 1 therefore pursued the matter as best I could remember until I learned late yesterday that the commentator in question had tapes which he had given the media. We then asked the commentator if he would agree to letting me hear copy of the tape, which he refused to do.
I should add that this morning, following the many statements made by Carleton students over the station Radio-Carleton, the commentator called my office offering the tape which he said was not complete. It reached us barely a few hours ago and I have yet to hear it.

Further, Mr. Speaker, it is rather surprising that the tape, made eight days ago, would be used only now for three quotes out of context heavily biased by commentary, and reproduced for the first time, I think, by the CBC with only one excerpt. It is easy to see how such techniques make a mouse look like an elephant, and no professional journalist would do that.
This whole operation tended to discredit the judgment of the students present at the Roosters discussions who did not interpret my opinions and my remarks in any such distorted way.

The shame of the matter, Mr. Speaker, if I may say so, is that none of the participants in that operation dealt with the problem I was discussing, namely the relations that must exist between the government and the police in charge of national security in democratic countries. Instead, the leader of the New Democratic Party (Mr. Broadbent) tried to stir up trouble between friends and colleagues of the cabinet. He should know that this old trick does not work.
There was a time when many of us who do not share the philosophy of the New Democratic Party still recognized that the leaders of that party-the hon. member for Nanaimo-Cowichan-The Islands (Mr. Douglas) or their former leader, Mr. Lewis-had accustomed this House and this country to a standard of honesty which won them votes if not personal admiration. If this feeling remains true for some hon. members, unfortunately I cannot say so for their present leader.


Charles Joseph Clark: Mr. Speaker, I do not intend to take a great deal of time intervening in this debate on the question of privilege raised by the minister. 1 must say that I very much regret having to be involved in the debate at all, but I think there have been some statements by the minister which raise very real questions about the policy of the Government of Canada, who speaks for the government, and what is the precise attitude of the government.
Privilege-Miss Begin
It would be perhaps helpful, sir, to read into the record briefly some of the things in the transcript of the recording of the Minister of National Health and Welfare (Miss Begin). She said at one point, referring to the Solicitor General (Mr. Fox):
-I think Francis Fox should clearly state-give the message-that he disagrees with what the police did. More than defending them or explaining that they might have had good reason.
Sir, I leave it to readers of the records as to whether or not-


Some hon. Members:: Oh, oh!


Charles Joseph Clark: Mr. Speaker, I am asked by one of the defenders on the other side whether I can prove that this is precisely what the minister said. If the minister believes it is not what she said, then of course it is within her rights to stand up and let that be known. Until the minister does take that position we must assume that the words are her words.


An hon. Member:: You should have listened to her.


Some hon. Members:: Oh, oh!


Charles Joseph Clark: I would like to leave to the readers of the record the final conclusion, Sir, as to whether these statements by the Minister of National Health and Welfare, indicating that the Solicitor General should follow a course other than the course he followed, constitutes a disagreement that is serious between ministers.
Perhaps of greater consequence to me are other aspects in the statements by the minister, a member of the cabinet. One of these relates to the RCMP and the relation of that force to the Government of Canada, and the other relates to a question of the climate that prevailed in Canada at the time of certain acts which we now know to be illegal.
Let me deal first with the question relating to the relationship of the RCMP to the government. Perhaps the best way I can deal with this, and it raises the question I tried to put to the Acting Prime Minister (Mr. Munro) earlier, as to whether he was speaking on behalf of the government, as did my colleague, the hon. member for Kingston and the Islands (Miss MacDonald), is to quote the minister.
In relation to the RCMP the minister said, and I will read the entirety of the quotation, and perhaps 1 should say it will be clear from the quotation that the minister was speaking without notes and was not reading from a direct text:
-they have gadgets of national security, of surveillance, so big that they, if you, the government, start trying to control them or master what goes on or look into the files-you know, say you, the Minister sets a meeting of the directors and wants to see files and all that he doesn't know-and none of us know-what's the next step because they can be using-that's my feeling-they can be using gadgets the way they want.
At this point I would emphasize that the word "they" refers to the RCMP. The minister said:
-that's my feeling-they can be using gadgets the way they want. They can be bugging you.

November 9, 1977
Privilege-Miss Begin
In other words, the minister is accusing the RCMP of potentially bugging ministers of the Crown. She continued:
First thing you know, there's a leak, in newspapers, and then its members of parliament on both sides of the House whose private lives are going to be questioned. That approach I don't think is the job of the RCMP, or of any police. Eh, bon. That's all for the RCMP.
The matter we want to know about, Mr. Speaker, and I think this is a legitimate question for this House of Commons, is whether, when expressing such opinions about the RCMP, saying they can be using gadgets where they want and can be bugging you, the Minister of National Health and Welfare, as a member of the cabinet of the Government of Canada, was expressing the view of the government as to the power of the RCMP and the degree to which the RCMP operates free from control by the Government of Canada. This is a very important matter to the House, particularly in relation to the debate which has been occupying this place for the last several days.
The other matter which is of very real concern to us, and has reference also to the question of the policy of the government and what has lead the government to take positions it has taken, and 1 would quote again from the minister who says-


An hon. Member:: From what are you quoting?


Charles Joseph Clark: I quote again from the transcript of the recording of a speech the minister made to the students at Carleton University.


An hon. Member:: That's not true. It is a phony one.


Charles Joseph Clark: As I have said, if the minister believes that these statements do not correctly reflect her words, she has the right to get up-


An hon. Member:: She has already done so.


Charles Joseph Clark: She has the right to get up and say it is wrong.


Mr. Ouellet:: You should just listen.


Charles Joseph Clark: Mr. Speaker, we hear a great deal from the Minister of State for Urban Affairs (Mr. Ouellet) who usually communicates by telephone, but who is instead now heckling from across the Boor of the House.
Let me just read this portion of what was said by a minister of the Crown for Canada, involving a matter which raises a question regarding the policy of the government, and I put it in context with something said by her on the subject. The minister said:
Of course, as a Quebecer, 1 must say as a lay person-
She made that distinction. She said:
I must say as a lay person 1 was not a member of the cabinet at that time- that when they did that-these various actions in early 1975-there is no way somebody is going to tell me that as a Quebecer there was a state of national emergency somewhere in Quebec and some threats to God-knows-what. I never perceived anything like that.
[Mr. Clark.)
My colleagues suggest I should carry on. It continues:
If that was the threats, the mentality of the beginning of 1973, what they would have done since the 15th of November last year, they might have bugged the complete province of Quebec. So that's all for the RCMP.
What is important is that we have the words of one minister of the Crown regarding the climate at the time of the illegal acts. We have also the careful, deliberate, prepared statement by the Solicitor General in this House of Commons on the afternoon of October 28, 1977. On that occasion the Solicitor General said that the illegal activities were carried out in the absolute conviction that its sole object was to promote the security of Canada, given the political and social climate prevailing in 1973.
On the one hand we have the Solicitor General saying that the political and social climate prevailing in 1973 was of a nature which would cause illegal acts to be performed. On the other hand, within a matter of two weeks, we have another minister, the Solicitor General's seatmate, saying that as far as she is concerned, as a member of the cabinet and as a member of the House of Commons who presumably knew what her colleague said on behalf of the government when he made his speech on October 28, she disagrees completely with the question as to the climate in Quebec at that time.
This is important because it has to do with the atmosphere within which members of the security service would have interpreted and acted upon directions from the Government of Canada that led to the accomplishment of illegal acts. That is particularly important because one of the matters we want to determine in this House is just what the roles of the ministers were, and the degree of direction which was given by ministers of the Crown that caused members of the security service to commit illegal acts.
Frequently the Prime Minister (Mr. Trudeau) has intervened in this matter. We have the Solicitor General and the Prime Minister saying that these illegal acts occurred because there was an unusual climate in Quebec during that period, and we have another minister saying that there was no such unusual climate in Quebec during that period.


Some hon. Members:: Hear, hear!


Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, on behalf of the hon. member for Oshawa-Whitby (Mr. Broadbent), 1 extend to the House his apologies. He had an engagement outside of the House which made it necessary for him to leave about 2.30 p.m. However, since the Minister of National Health and Welfare (Miss Begin) has based her question of privilege on remarks made yesterday by the hon. member for Oshawa-Whitby, I think I should say at least a few words in reply.
The minister's complaint against the hon. member for Oshawa-Whitby yesterday was that his allegations were without any foundation. May I point out that, when my leader raised the matter yesterday, he had before him a copy of an article which appeared in The Charlatan, the newspaper of the
November 9, 1977

students of Carleton University, and his remarks were based on what appeared in that article.
In addition to that, we now have the tapes which were played on the CBC this morning, and we have a transcript of those remarks. I have a transcript in my hand, as did the Leader of the Opposition (Mr. Clark). 1 think one or two of the sentences he referred to can be quoted again, just to support the position taken yesterday by the hon. member for Oshawa-Whitby that the Minister of National Health and Welfare had demonstrated a difference of opinion between herself and the Solicitor General on the issues that are at stake.
For example, according to the transcript of her words that we heard on the radio this morning, she said:
... 1 think Francis Fox should clearly state-give the message-that he disagrees with what the police did, more than defending them or explaining that they might have had good reason.
Sir, if that is not differing with the Solicitor General, I do not know what the word "difference" means. At the conclusion of the comments by the Leader of the Opposition, he referred to the mentality or the state of opinion in Quebec in 1973. We were asked by the Solicitor General to be generous and forgiving to the RCMP because of the state which existed at that time. The Minister of National Health and Welfare, in her remarks at Carleton University, indicated that as a Quebecer she disagrees with what was said to be the state at that time, and if they had carried that on, "they might have bugged the complete province of Quebec".
I should like to return to the earlier remarks of the minister in the transcript of what was given over the radio this morning. The minister said this:
I think it is absolutely stupid that they would go and steal lists of memberships of political parties, in this case the Parti Quebecois. And I find unreal that they would put fire to a barn.
Surely that is an opinion totally different than that expressed by the Solicitor General, who has argued that we should understand the situation-


Some hon. Members:: Oh, oh!


Stanley Howard Knowles: Just a minute! The Solicitor General said that we should realize that the things done by the RCMP special unit were done from the highest of motives because of the situation. But the Minister of National Health and Welfare said the following:
This being said, they have gadgets of national security, of surveillance, so big that they, if you, the government, start trying to control them or master what goes on or look into the files-you know, say you, the Minister sets a meeting of the directors and wants to see files and all that he doesn't know-and none of us know-what's the next step because they can be using-that's my feeling-they can be using gadgets the way they want.
We happen to agree with the sentiments expressed by the Minister of National Health and Welfare.


Some hon. Members:: Hear, hear!


Stanley Howard Knowles: My point in rising-and I think it is my duty, as well as my right to do so-is
Privilege-Miss Begin
to say that it is unfair to charge the hon. member for Oshawa-Whitby in his remarks yesterday of making statements for which there was no foundation.
Yesterday my hon. friend said that the logic of all this was that there was a cover-up-he did not accuse the hon. minister of alleging that there was a cover-up-but, I submit that the very sentences 1 have read from the transcript of what we heard over the radio this morning suggest that the minister felt, when she was making these remarks, that the Solicitor General was not really doing his job; he was just being a messenger boy; and instead of defending the police, and instead of saying what they had done had good reason and good purpose, he should have told them that it was stupid and that it was wrong.
I feel my leader was quite justified in the remarks he made yesterday and that the minister's charge against him is unwarranted. In conclusion, I should like to refer to the last words in the transcript which I have, where the minister said, "Eh, bon. That's all for the RCMP."
I am sure Your Honour noted, because Your Honour always does when a member raises a question of privilege, that the hon. minister offered no motion. If she has a question of privilege, she should be prepared to carry it through. If she is prepared to ask leave to present a motion to refer this matter to the Standing Committee on Privileges and Elections, so that the tapes can be produced and the entire matter can be gone into, we in this party would be happy to agree to such a motion.


Some hon. Members:: Hear, hear!


Mr. Speaker:: Order, please. The hon. Minister of National Health and Welfare (Miss Begin) was quoted by the hon. member for Oshawa-Whitby (Mr. Broadbent). The argument which was established yesterday by the hon. member for Oshawa-Whitby was itself incidental to an argument which many members claimed in the first instance was an incidental argument by the Prime Minister (Mr. Trudeau).
When the Prime Minister was replying to a question of privilege, he in turn expressed an opinion in the House which was similar to other opinions expressed by other hon. members. That was referred to by many and described as an argument which was really incidental to the main question of privilege. In turn the hon. member for Oshawa-Whitby said that those opinions were not being expressed by the opposition solely on the basis of their own views, but in fact on the basis of some views expressed by the Minister of National Health and Welfare (Miss Begin). Therefore the question was twice removed from the main question of privilege under argument yesterday.
In this case, because of that, the Minister of National Health and Welfare was given the floor today on a question of privilege, as is always the case when remarks made by a minister or by a member of the House have been quoted in the press and misinterpreted. The minister or the member is

November 9, 1977
Privilege-Mr. W. Baker
always given the opportunity to make an application to make the difference of opinion or difference of interpretation involved, known. When that is put forward it seems only just that equal contributions ought to be made from the other side. That has been done.
It is not essentially a question of privilege; it is a question of disagreement and interpretation. Furthermore, it has been contributed to by two members of the opposition at considerable length, and it seems to me that the matter, which does not in the first instance constitute a question of privilege, ought to close.


MR. BAKER (GRENVILLE-CARLETON)-TAPE RECORDINGS OF MINISTER'S REMARKS
Mr. Walter Baker (Grenville-Carleton):: Mr. Speaker, I am rising, then, on what I must say is a new question of privilege. 1 attempted to get to my feet just as Your Honour rose, and I did not want to interrupt you. Your Honour has now dealt with the matter in such a way that it has been passed off as a matter of dispute and difference between both sides. I cannot question Your Honour's ruling but, with respect, I think it goes much further than that. Therefore I rise on a new question of privilege with respect to what the minister said.
Your Honour has heard quoted-and I am going to quote again-what has been recorded in a transcript of a recording of the minister's speech which was obtained. The tapes are available. The minister has the transcript, and it is clear. 1 am sure the tapes will substantiate that the minister stated a certain opinion that has been laid before this House clearly by the Leader of the Opposition (Mr. Clark) and by the hon. member for Winnipeg North Centre (Mr. Knowles). However, the opposite is true in terms of her statement yesterday. I think we have to put this in the context of her statements here in the House as a member of parliament who, incidentally, is a minister of the Crown.
The minister yesterday stated the following:
... I need only add that I have always supported the work and actions- particularly with regard to the current parliamentary crisist...
How can that possibly be squared with what the minister said at Carleton University? It is on the record. Then the minister said:
... and, naturally, the right hon. Prime Minister of Canada (Mr. Trudeau). Even now, in my office, I am in the process of writing a telegram to the newspapers the Toronto Sun and The Charlatan setting the record straight.
That is what the minister said she was in the process of doing. If Your Honour wishes, I can read the whole statement.
I do not think 1 have to, but there is an absolute difference between the position the minister took at Carleton University, which has been recorded, and the position she took yesterday in the House of Commons.


Mr. Speaker:: Order, please. I will let the hon. member for Grenville-Carleton (Mr. Baker) go on in a minute. There are others who wish to contribute to the point. I will hear the acting Prime Minister, who is prepared to make a contribution as well. However, the hon. member for Grenville-Carleton

must be able to persuade me that a prima facie question of privilege exists. What he has just said may be true, upon which 1 would be prepared to hear argument; but supposing there is a direct contradiction between what the minister said at Carleton University and what she said in the House does that constitute a question of privilege?


Walter David Baker: I appreciate your intervention, Mr. Speaker, but what the minister said of the Leader of the New Democratic Party (Mr. Broadbent) had to do with what he said regarding her statement at Carleton University. She said that the hon. member had made unfounded serious allegations. That is in the paragraph preceding what I have already read. I was just coming to that before Your Honour rose. It is at page 692 of Hansard. I do not know how that can be squared with what the minister said at Carleton University.
I do not think this can be brushed off gently as an issue simply to be contributed to by both sides.


Some hon. Members:: Oh, oh!


An hon. Member:: This is an abuse of the House.


Walter David Baker: 1 am sorry, Mr. Speaker, but I cannot talk over the din from the other side.
I think this matter is important on another ground. The minister is a member of this parliament. If the minister has been wronged by The Charlatan at Carleton, which she claims she has been, then she and other members of parliament have the right to have the matter cleared. If the transcript of the statement, alleged to have been made from the taping of the voice of a minister of the Crown, is not a true record of what the minister said, or if the voice on the tape is not that of the minister, who is a member of this House, then that member ought to be given the benefit of the doubt and every opportunity to clear herself.
Therefore, in view of the failure of the minister to move a motion, I move, seconded by the hon. member for Saskatoon-Biggar (Mr. Hnatyshyn):
That the question of privilege raised by the Minister of National Health and Welfare be referred to the Standing Committee on Privileges and Elections.
I do this so that the matter can be aired completely.


Mr. Speaker:: At the outset I must indicate that I have made an adjudication on the merits of the question raised by the minister. 1 have previously indicated-and 1 will draw the precedents before finalizing-that it is not in keeping with the precedents of our House that one member can raise a question of privilege to be sent to a committee regarding the grievance of another member. That has never been done. In any case, I will reserve on the matter, examine the precedents, and rule on the present argument by the hon. member for Grenville-Carleton.


John Carr Munro: Mr. Speaker, I should like to comment on this spurious question of privilege raised by the hon. member for Grenville-Carleton (Mr. Baker). Even if there was a contradiction between what
November 9, 1977

the Minister of National Health and Welfare (Miss Begin) said at Carleton University and what she said yesterday, which we do not acknowledge at all, that does not constitute a question of privilege. I would be prepared to elaborate at great length.
The Leader of the Opposition (Mr. Clark) made no point at all. 1 thought the original point was that somehow there was a derogation of ministerial responsibility. He did not come to that conclusion even in the factual situation he laid before us, nor was that the conclusion of his remarks.
Your Honour indicated to the House leader of the Conservative party, who is supposed to have some experience with regard to the rules, that there was no question of privilege, but then the hon. member rose on another question of privilege, acknowledged the justification of Your Honour's ruling, and then proceeded to base the entire justification for his next question of privilege on the question of an alleged contradiction which was already ruled to be not a justification for a question of privilege at all.
The attempts of the hon. member for Grenville-Carleton under the guise of a question of privilege have no justification whatsoever. He read from a transcript of tapes which he knows the Minister of National Health and Welfare has not had the opportunity to hear or to test their validity. He did that to dump it all on to the record under the guise of a question of privilege for which he knows there is no justification at all.


Some hon. Members:: Shame!


John Carr Munro: How the hon. member can consider behaviour of that kind proper parliamentary conduct is frankly beyond me.


Mr. Speaker:: With respect to the matter raised by the Minister of National Health and Welfare (Miss Begin) I think it ought to be brought to a conclusion. I have made an adjudication on the question raised by the minister.
The hon. member for Grenville-Carleton (Mr. Baker) raised a second question of privilege which, in a preliminary way, I have indicated is always proper. 1 have indicated that 1 felt initially that, even if the contradiction he refers to is in fact established-and it is in dispute-it does not constitute privilege. However, the hon. member raised an argument which I said I would examine.
It seems to me that it is not in keeping with our practices that a grievance raised by one member can become the subject of a motion of privilege by another, and I know there is a recent precedent which deals with that. 1 have indicated that I will reserve on the matter, bring that precedent into the House tomorrow, and finalize the matter with a ruling at that time.
Parliamentary Security


INTERIM REPORT ON MATTERS OF SECURITY
Mr. Speaker:: Order, please, I should like to indicate to the House at this time a further interim report on the matters of security that have been raised in the House in the recent past.
As I indicated to the House yesterday in respect of the matter involving the hon. member for Central Nova (Mr. MacKay), 1 had communicated to that member the contents of our preliminary investigation and asked for his response to it. This morning the hon. member for Central Nova and I met. It was his desire that the matter be pursued further. He informed me of the contents of his own examination of the circumstances and indicated his desire that the matter be carried further. He felt that the choice of an investigative force, because I had indicated that if it is to be carried further some investigative force other than our own security staff of the House of Commons would have to be used, should be left to me.
I have pursued the matter in a preliminary way with the Ottawa Police investigative force and asked for their co-operation and assistance in carrying this forward. I shall keep the House informed of the progress of that investigation.
In respect of the matter involving the office of the Leader of the Opposition (Mr. Clark), the meeting that I reported to the House yesterday did in fact take place yesterday afternoon, and at the present time, as a result of the meetings that have taken place between our officials and officials of the office of the Leader of the Opposition and their advisers, the telephone has been taken to the Bell Telephone laboratory where tests will be conducted. I expect those reports by late tomorrow, but in any case I ought to be in a position to give the House a full report on those investigations when the House resumes on Monday, bearing in mind that the House is not sitting on Friday.


Roch La Salle: Mr. Speaker, during the oral question period, I willingly sat down after having asked a question to the Minister of National Health and Welfare (Miss Begin). You will find that the question I wanted to ask is quite justified, Mr. Speaker. I simply wanted to know if in her statement the Minister of National Health and Welfare really said that the security service had become so strong that it could investigate in just about any field without government knowledge. If the statement was made in public, the Minister of National Health and Welfare, a cabinet minister, has shown that the government has lost control over its security service. In these circumstances and in view of the concern this will create among all Canadians, a member of cabinet is involved. If the minister did not say this, it is important for her to stand up and say so in the House, and if she said this to make the students happy, this shows a serious lack of responsibility. I therefore think that the

November 9, 1977
Parliamentary Security
question I wanted to ask is important in view of the fact-my colleagues opposite may laugh, but 1 know that government members are not interested in this type of question. 1 believe that the minister is serious and honest enough-this is a question of privilege and I have the right to express my opinion-to tell the Elouse whether she told the students that the government had lost control over its security service in view of the great means that they now have at their disposal to investigate nearly everything. If she made such a statement, we on this side of the Elouse are perfectly entitled to be concerned and to ask, as did my colleague, that this matter be referred to the Committee on Privileges and Elections.


Mr. Speaker:: Order, please. This is another contribution to the general question of privilege raised by the hon. Minister of National Health and Welfare (Miss Begin) and the hon. member for Grenville-Carleton (Mr. Baker). For the moment, I am reserving my judgment.


Stanley Ronald Basford: Mr. Speaker, I thought it might be helpful to Your Honour, relative to Your Honour's interim report that you just gave on the matters relating to the hon. member for Central Nova (Mr. MacKay) and the Leader of the Opposition (Mr. Clark), to say that, as your Honour knows, the Acting Prime Minister called upon you and asked you to investigate these matters a week ago Monday, and last Thursday I pointed out the seriousness of what may be going on in these buildings. Therefore, in so far as Your Honour wants any indication from the government as to your position, it is certainly agreeable to us, and we urge that in all the circumstances the Ottawa City Police are the proper group to be called in, and we would hope that they would be.


Hon. Norman A. Cafik (Minister of State (Multiculturalism)):: Mr. Speaker, this is what I think is a question of privilege arising from the comments you have made in respect of the two alleged buggings here in the House of Commons, and more particularly relating to the alleged bugging device found in the offices of the Leader of the Opposition (Mr. Clark). 1 want to raise one point that 1 think is quite substantive. At page 695 of Hansard yesterday Your Honour is reported as stating:
I should advise the House it is our understanding that Bell Canada will be provided with this piece of equipment to examine in their laboratories.
Yesterday I was left with the impression that they were still in the hands of some other group, whether it be the opposition, or left in the office still intact, I do not know. I think the point is very important in this sense, that if that alleged bugging device, which Bell Telephone at one time indicated was a piece of standard equipment, if in fact that diode or whatever it is technically called, has been removed from that telephone at the present time and is in the hands of someone other than the security forces of the House of Commons, it seems to me that is a very serious problem.


Mr. Speaker:: Order, please. The matter is under my responsibility for investigation. There may be questions that might arise when the investigation is completed. The question which the hon. member raises at the present time may be very valid. 1 think it would be very dangerous, however, if on a day-to-day basis we attempt to deal with interim questions.
I have attempted to make the interim reports very brief. 1 could expand on them, but until the investigation is completed and I am making a final report to the House, it seems to me that we have to let the matter take its course. If I were to entertain different questions of interpretation along the way, it seems to me it would simply get too complicated to handle. I really think the right course is to follow it through. 1 know of a number of concerns by hon. members. I am attempting to take those into account and manage them as best 1 can. I really do not think, however, that we have to get into interim comments.
If, after the investigation is concluded and a report has to be made to the House, and some suggested action has to be taken, it seems to me that all phases of the investigation would then be open to comment in some way at that time. I really think it would be most complicated to attempt to open it for comment as we go along in each step. I would prefer to hold off any comments of privilege or order or anything else in that regard, until we finalize the investigation.


Norman Augustine Cafik: Mr. Speaker, 1 would just say I agree with that procedure. I wanted to enter a reservation of a concern that has only come to my attention from reading Hansard, so that 1 would not be prohibited from raising that question at the appropriate time following the tabling of your report on this matter.


Mr. Speaker:: The hon. member for Ottawa Centre (Mr. Poulin) on a point of order.


Mr. Poulin:: Mr. Speaker, reluctantly it is on the matter you have just addressed yourself to, a matter which 1, following the Attorney General (Mr. Basford), addressed to you last week. 1 felt at that time that at the soonest possible moment proper professional police authorities should be brought in to investigate this matter. I mentioned the Ottawa City Police at that time, also the Ontario Provincial Police, as well as possibly the RCMP.
Your Honour has conducted this matter in a most appropriate way, for which 1 for one commend you, in a most difficult situation. Mr. Speaker, I do not believe, however, that the rights and immunities and privileges of members of this House of Commons, on whatever side they sit, extend to a breach of the Criminal Code, by the commission of an offence under the Criminal Code, an indictable offence, of which a member has knowledge.
1 would point out that it was ten days ago, on October 31, that this alleged breach of the criminal law was brought to the attention of this House in a very dramatic way-and 1 noted Your Honour's words that after discussing it with the hon. member for Central Nova (Mr. MacKay) today, it was his desire expressed to you today, not earlier, that it be-
November 9, 1977


Mr. Speaker:: Order. Once again the hon. member seems to be attempting to make a comment during the course of the investigation. In any case, as I indicated to the House earlier, I have had the matter referred to me by the House. 1 took steps immediately following the disclosure by the hon. member for Central Nova (Mr. MacKay). After the completion of the parliamentary investigation under my authority, that is to say, by the security forces here in the House, I communicated those results to the hon. member for Central Nova. It seems to me he would not reasonably have been in a position to reply to that any earlier than yesterday. In fact, he replied to me this morning.
In any case it should be clear we are getting into very dangerous ground if we attempt to make comment during the course of the investigation. I prefer to conclude that investigation before entertaining any further comment.



ROUTINE PROCEEDINGS


[Stage Direction]
A message from His Excellency the Governor General transmitting Supplementary Estimates (A) with regard to the sums required for the public service of Canada for the financial year ending March 31, 1978 was presented by Hon. Robert K. Andras (President of the Treasury Board) and read by Mr. Speaker to the House.

Norman Augustine Cafik: Mr. Speaker, 1 wish to move a motion, pusuant to Standing Orders 58(15) and 59(1), referring the Supplementary Estimates A, tabled this day, to the Standing Committees of the House.
This is a rather lengthy document which would take a few minutes to read. It has been distributed to the House leaders on the other side. I believe there is consent, in order to distribute consideration of these estimates to the appropriate committees of the House of Commons, that it be taken as read, and adopted.
[Editor's Note: The motion referred to above is as follows:]
Mr. Cafik, seconded by Mr. Andras, moved:
That the Supplementary Estimates (A), 1977-1978, tabled this day, be referred to the several Standing Committees of the House as follows:
To the Standing Committee on Agriculture:
Agriculture Vote 20a
Supplementary Estimates
To the Standing Committee on Broadcasting, Films and Assistance to the Arts: Communications Votes la, L6a, L7a and 10a
Secretary of State Votes la, 10a, 15a, 20a, L21a, 25a, 35a, 40a, 45a, 70a, 75a, 90a and 100a
To the Standing Committee on External Affairs and National Defence:
External Affairs Votes 10a, LI5a, LI7a, 20a, 25a, and 30a National Defence Vote la
To the Standing Committee on Finance, Trade and Economic Affairs:
Finance Votes la, LI la, 20a and 21a
Industry, Trade and Commerce Votes la, 5a, 6a, 10a, 15a, 40a and 46a To the Standing Committee on Fisheries and Forestry:
Environment Votes 5a, 10a, 15a, LI7a, 20a, 25a and 30a To the Standing Committee on Health, Welfare and Social Affairs:
National Health and Welfare Votes 10a, 15a, 30a, 50a and 65a Urban Affairs Votes la, 5a and 1 la
To the Standing Committee on Indian Affairs and Northern Development:
Indian Affairs and Northern Development Votes 5a, 10a, L20a, L21a, 25a, 35a, L50a, 60a and 65a
To the Standing Committee on Justice and Legal Affairs:
Solicitor General Votes la, 5a, 15a and 20a To the Standing Committee on Labour, Manpower and Immigration:
Labour Vote la
Manpower and Immigration Votes 5a and 10a To the Standing Committee on Management and Members Services:
Parliament Vote 5a
To the Standing Committee on Miscellaneous Estimates:
Finance Vote 30a Privy Council Votes la and 15a Science and Technology Vote 10a Secretary of State Vote 105a Supply and Services Votes 5a and LlOa Treasury Board Votes 17a, 20a and 30a To the Standing Committee on National Resources and Public Works:
Energy, Mines and Resources Votes 5a, 6a, 15a, L25a, 40a, L51a, L52a, and 75a
Public Works Votes 20a, 25a and 40a To the Standing Committee on Regional Development:
Regional Economic Expansion Votes la, 5a, 25a and 31a.
To the Standing Committee on Transport and Communications:
Post Office Vote la
Transport Votes 46a, 50a, L56a, 66a, 85a, 95a, 97a and LI06a To the Standing Committee on Veterans Affairs:
Veterans Affairs Vote 20a


Walter David Baker: Mr. Speaker, I have had occasion to review the references mentioned by my friend. They are in order, and we are prepared to do that.


Stanley Howard Knowles: Agreed.


Mr. Laprise:: Agreed.


Mr. Speaker:: It is agreed that the order of reference of Supplementary Estimates (A), tabled moments ago by the President of the Treasury Board (Mr. Andras), be now referred to the standing committees in accordance with past practice, and particularly in accordance with the list that has been distributed by the Deputy Government House Leader to

November 9, 1977
Order Paper Questions
other House leaders, and which will be printed in Hansard as if it had been read. Is that agreed?


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

Mr. John M. Reid (Kenora-Rainy River):: Mr. Speaker, I have given notice to members of other parties that I intended to move this motion and, with unanimous consent, to have it put to the House. Therefore, I move:
That, pursuant to Standing Order 99, the Standing Committee on Miscellaneous Private Bills and Standing Orders be authorized to consider and make recommendations upon the fees paid by IAC Limited in relation to an act to incorporate Continental Bank of Canada.


Walter David Baker: Agreed, Mr. Speaker.


Stanley Howard Knowles: Agreed.


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


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. Yvon Pinard (Parliamentary Secretary to President of the Privy Council):: Mr. Speaker, questions Nos. 116 and 388 will be answered today.
1 ask, Mr. Speaker, that the other questions be allowed to stand.


Mr. Herbert: 1.	Docs the government publication Small Business In Canada: Perspectives intend to imply on page 2 that a manufacturing business employing fewer than 100 workers has probably not developed a mature management structure?
2.	Is it believed that a company must have grown out of the category of a small business, as defined in the publication, before its management structure can have matured?


Hon. A. C. Abbott (Minister of State (Small Business)):: 1.
In the sense in which mature is employed in "Small Business in Canada: Perspectives", the statement on page two to which the hon. member refers does indicate that it is probable that a firm employing fewer than 100 workers will not have devel-

oped a management structure of the kind characteristic of large enterprises. A mature management structure, in this statement, implies a high division of tasks among personnel, and the use of fairly sophisticated control and communication methods. Typically, the retention of a significant number of staff personnel, devoted to such matters as financial accounting, public relations, research, etc., is another indicator of large-firm size. Small firms on the other hand simply do not have the resources and, indeed, often not the need for a complex management structure. Typically, in the small firm, the owner/manager is in frequent and direct contact with most of his staff and he finds this a most effective way to control his enterprise and to communicate with personnel. We have found that-while there is no hard and fast rule about it-there was correlation between the number of employees and the style of management structure in a firm, and that the so-called mature characteristics were prevalent in firms above 100 employees, in the case of manufacturing enterprises.
2. No. As noted in the previous reply, there can indeed be firms employing fewer than 100 employees which do have a so-called mature management structure, although these are not considered to be the majority situation.


Mr. McKenzie: 1.	What is the total number of persons under contract to the Environmental Assessment Panel 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?


Mr. Mike Landers (Parliamentary Secretary to Minister of State (Environment)):: 1. There are three persons under contract to the Environmental Assessment Panel. None of these are retired public servants.
2. Total amount paid to those under contract in (a) 1975: 0; (b) 1976: $25,000, all of which was to a retired public servant.


Yvon Pinard: Mr. Speaker, notice of motion for the production of papers No. 6 is acceptable to the government.


Mr. Speaker:: Is it the pleasure of the House that notice of motion for papers No. 6 be deemed accepted?


Some hon. Members:: Agreed.



REQUEST FOR TABLING OF CORRESPONDENCE BETWEEN JUDGE


[Stage Direction]
Motion No. 6-Mr. Stevens:
That an Order of the House do issue for a copy of the telegram to Judge Daniel Snyder of the U.S. District Court for the Western District of Pennsyl-
[Stage Direction]

November 9, 1977
[Stage Direction]
vania sitting in Pittsburg in connection with Westinghouse subpoena directed to Gulf Oil Corporation and received by the Judge, Tuesday, August 2, 1977 at 10.00 o'clock a.m. and referred to in the open hearings on Friday, August 5, 1977.
Motion agreed to.
Yvon Pinard: I ask, Mr. Speaker, that all the remaining notices of motions be allowed to stand.


Mr. Speaker:: Does the House agree?


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Tuesday, November 8, consideration of the motion of Mr. Chretien that Bill C-l 1, to amend the statute law relating to income tax and to provide other authority for the raising of funds, be read the second time and referred to committee of the whole.
Mr. Jake Epp (Provencher):: Mr. Speaker, I want to continue this afternoon the remarks I began last night. Frankly, it is with a heavy heart that I rise to speak at this time. The reason is because we are dealing with a bill that includes some measures which, it is to be hoped, will ease the economic malaise in which Canadians find themselves. However, after only an hour and a half in this House we find that we, not only the opposition but the people of Canada, are faced with a government that has lost the will to govern.
There has to be a relationship between the people and those who govern. That relationship and that trust have been destroyed by the government. That is part of the malaise, namely, that this government cannot be trusted. That is borne out day after day in this House during question period. If one looks at the economic situation that Canada faces, it is borne out there in very grim terms.
It is not my words that are important on this subject. Let us look at what the Economic Council of Canada said in its fourteenth annual report entitled "Into the 1980's". I quote from page 75 of that report:
-there is little hope of achieving simultaneously a low unemployment rate, a low inflation rate, and sound equilibrium of the current account balance over the next Five years.
That means at the present time young Canadians under the age of 25 have already doubled the unemployment rate of the working public. It means that young Canadians coming into the labour force for the next five years will be faced by the same considerations of high inflation, and lack of opportunity which is surely the responsibility of Canada to give to its young people.
Income Tax
While I concede that one cannot put the entire blame on any one government-federal, provincial or municipal-the fact is that this country has been governed by the Liberal party since 1963.


Mr. Lumley:: Hear, hear!


Arthur Jacob (Jake) Epp: While the Parliamentary Secretary to the Minister of Finance (Mr. Lumley) says "hear, hear!" 1 believe that, as an honourable gentleman, he will admit that the record today is dismal and we can take no pride in the economic leadership of this government.


Edward C. Lumley: Never!


Arthur Jacob (Jake) Epp: If he cannot accept that, then he is probably the only such Canadian.
I have a further article entitled "A Walk Through the Wonderland of Deductions". Referring to inflation and the economy generally, it reads:
The key problem however, is that many of the big spending decisions of the past decade were made with little consideration of the longer range demands these programs would make on government revenues. Governments introduced a series of programs that are individually desirable, and that have clearly enriched the lives of many Canadians. But the result is that, as the federal government admitted in 1975, it has lost control of 80 per cent of its expenditures and has been unable to adapt its spending to the changing circumstances of Canadian economic growth.
In conclusion, it reads:
It is, after all, still our money which provides governments with their income. Many Canadians have reached the conclusion that the whole country would be better off if the individuals who make the money have a greater opportunity to say how it should be spent. It may be too much to hope for our deductions to go down. But it will be a major accomplishment if we can prevent them from going up.
Reference has already been made to the unemployment rate. Despite controls, inflation has risen to levels higher than government targets. Whether the government admits it or not, it is locked in to a great extent because of increases in energy costs and the fall in value of the Canadian dollar. There are factors in the inflation picture which the government cannot control. Trade imbalance and the flight of capital have also been referred to, and I do not intend to deal with those subjects at the moment.
Going directly to Bill C-l 1, I call the attention of the House to the fact that today, again, supplementary estimates were tabled. I do not know how much more expenditure we are contemplating now because I have not yet seen those estimates. But we are already facing a deficit of $9.2 billion in one year. As the minister knows, deficits will not occur only as a result of excessive spending. They also occur when there is a fall in the amount of revenue expected, and revenues are down tremendously because Canadians lack confidence in the economy and in the leadership of the government.
It is one thing for this generation to have to foot the bill for our spending. What concerns me a great deal more is that we are asking future generations of Canadians to bear the consequences of the lack of leadership shown by the government.

November 9, 1977
Income Tax
We are asking them to service these debts and to repay them. How can we rise in our places with a good conscience and say to young Canadians that we are asking them to meet the expenditures we intend to make? The ghost of this legislation will come back to haunt us. It is with us right now. I want to speak for those who will sit in this House in the years to come. They are the ones who will be penalized as a result of this government's actions.
Consider the effect of the decline in the value of the dollar. Bill C-l 1 provides for a further line of credit in the amount of $1.5 billion to shore up the Canadian dollar. The Minister of Finance (Mr. Chretien) indicated he would need an additional $8.8 billion, which included some $323 million, according to his calculation, which would be needed in the present fiscal year in connection with foreign exchange transactions. The harsh reality is this: in the last month our foreign exchange reserves have been depleted by $605 million, and over the year as a whole they have been depleted by $1.67 billion. In fact we have already spent double the estimated figure in shoring up our dollar during the past month than the minister had forecast for the whole year. If that does not amount to an economic mess, the government is able to explain the inexplicable.
What will be the cost of this line of credit? Our dollar has sunk roughly 13 cents against the American dollar. To what level has it sunk as against the German mark or the Japanese yen? It is a minimum of 20 per cent and it is as high as 30 per cent. That is the legacy of the government, not for today alone but for the future. That is the outlook which tomorrow's Canadians will have to face, in addition to the bleak economic outlook foreshadowed by the Economic Council.
There are provisions in Bill C-l 1 which I commend. First, there is the general tax cut of $100 for every taxpayer. I am pleased that the government should at last have followed the advice put forward by the official opposition in this regard. The Minister of Industry, Trade and Commerce (Mr. Horner) chuckles when I say that. But I well remember spokesmen for this side advising the government constantly to that effect.
In its second recommendation, on page 87, the Economic Council said:
We recommend that over the next two fiscal years the federal and provincial governments implement permanent personal income tax cuts which would increase the annual disposable incomes of consumers by a total of $2 billion in addition to reductions resulting from indexation.
The council goes on to say that this would result in a reduction of approximately 8 to 10 per cent in personal income tax. Mr. Speaker, we cannot think of tax cuts in isolation. We must also think in terms of reducing expenditure. When I took part in the debate on the address I drew the attention of the government to a number of areas in which I believed significant savings could be achieved. I pointed out at that time that the government's advertising budget, telling Canadians about all the good things it was doing, might well be trimmed considerably. Today, the government is the largest single spender of advertising dollars in Canada.
[Mr. Epp.J
If the government and, indeed, the opposition are serious about the need for savings, let us organize a write-in campaign inviting Canadians to get in touch with the government and suggest areas in which expenditure can be reduced. They could draw attention to evidence of waste in the public sector and we could ask the government to follow up their suggestions. As I travel to and from my riding-I am sure other members have the same experience-members of the public constantly call my attention to examples of waste and needless expenditure. They ask, "Why can't you people cut this out?" I have no doubt a great many helpful suggestions would be made if we were to introduce a program of the kind I have mentioned, suggestions which would lead to the elimination of a great deal of the waste which is now taking place on a daily basis. I think we would be surprised at the amount of saving which could be produced. I have only one misgiving: it is the fear that the government would create yet another bureaucracy to administer such a scheme and succeed in spending more money than was saved!
As I say, the tax cuts are commendable. As to the tax cuts proposed for the corporate sector, no matter how we cut economic pie permanent productive jobs are created by the private sector, not by the government. No doubt many of the jobs in the government sector are necessary, but they take from the public rather than produce. So the tax cuts for the corporate sector which the bill proposes should remain.
There has been a lot of argument about the capital gains tax, both in favour and against. The government went half way in the assessment of capital gains and a rollover can now occur in a family farm or small business. The principal owner or owners can sell the farm or small business and buy a larger unit without its being assessed as a capital gain. In other words, it is a deferred capital gain.
In view of the situation existing in farming areas, where the average age of Canadian farmers is between 58 and 60 years of age, and since sons or daughters or known kin have difficulty in taking over a farm, I suggest that the government should give a farmer, or for that matter the owner of a small business, the right to transfer once during his lifetime the assets of a farm or corporation to close family members. I believe that in that way we can keep small businesses in the hands of families and keep farms in the hands of young farmers who want to continue to farm. 1 think those of us who come from farming areas have met young farmers who would like to see this happen.
Because of the government's voracious appetite in the past for money to meet its expenditures, it has now gone beyond the point of fair taxation to the level of confiscation. The government is now confiscating what is rightfully the property of private Canadian citizens. This confiscation takes place at the farm, it takes place in business, and especially in small business with the plethora of regulations which have to be followed. But I believe confiscation also takes place among people
November 9, 1977

of minimum income, and I should like to state a case to prove this point.
Canadians serving abroad for service organizations who do not receive an income from those service organizations but only an allowance-I am glad to see the Minister of National Revenue (Mr. Guay) in the House because this pertains to his department-are assessed 25 per cent of all income received from Canadian sources. I have before me the tax file of a certain person who served abroad for two years. He was a Canadian who received an allowance for living expenses and shelter, but very little beyond that. He had a little money in a bank in Canada, and his earnings were under $1,000. Guess what the government took out of that $1,000, Mr. Speaker? It deducted 25 per cent, almost $250, of his earnings for the year.
I know what the government's reaction to that will be. It will simply say that beyond a certain level there are people trying to get tax shelters, hence the 25 per cent. I understand that, but surely there is a limit, especially when Canadians are working abroad and, I suggest, contributing to our foreign aid commitment to the developing world. I submit this section of the Income Tax Act should be re-examined and amended. The fact of the matter is that there is no way any member of the House can justify confiscation of this kind.


Mr. Guay (St. Boniface):: He was earning a salary over there, was he not?


Arthur Jacob (Jake) Epp: The Minister of National Revenue says, "He was earning a salary over there, was he not?" The fact is that he was not. It is because these people are not earning a salary that the 25 per cent is deducted. If they were earning a salary, then the deduction would be based on the salary they received.


Joseph-Phillippe Guay: I just wanted to clarify that.


M. Epp:: Since the government is so keen to generate new enterprise in the economy, I hope the Minister of Industry, Trade and Commerce, who is in the House, will take note of a suggestion I wish to make, and that before too long we will see some positive results. I believe there is a tremendous future in a specific industry in this country. I refer to the mining in Canada of cesium, lithium and tantalum.
Tantalum Mining, which is owned by Chemalloy of Toronto, has laid claim to cesium deposits in northeastern Manitoba. It is generally recognized that in that part of Manitoba, which is in my riding in the area of Lac du Bonnet and Lake Bernic, approximately two thirds of the world's known cesium deposits are located. Roughly 30 per cent are located in Rhodesia, and in view of what is happening in that country I think we can say that that supply of cesium is at best doubtful at this moment. The remaining portion is located in other countries, but roughly two thirds lies in northeast Manitoba.
About the only country which has been buying cesium has been the Union of Soviet Socialist Republics. This government placed cesium on the export control list and it is not being exported any more. Now, Mr. Speaker, I am not questioning
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the rightness or wrongness of that decision, but I would point out that this has been a body blow to this mining operation in my riding and to any attempt to create jobs, especially in the base metal industry.
Why I say to the government that I am not questioning the decision to place cesium on the export control list is that it is believed that the Soviet Union is using it for aerospace propulsion purposes. I do not argue that point. What I am arguing is this, that cesium is known to have qualities that make it suitable for use in high technology industries, and frankly we have not researched this area at all. I would ask the Minister of Industry, Trade and Commerce to take a look at the situation because I believe that this is an area where Canadians could become leaders, particularly since we have the advantage of substantial cesium deposits.
I am not an expert on cesium and I doubt whether any member of the House is, but experts tell me that potential uses of cesium lie in the fields of electronics, ceramics, aerospace propulsion, as I have already mentioned, and power generation. Further, it can be used in the manufacture of photomultiplier tubes, vacuum tubes, scintillation counters, magnetometers, infra-red lamps, and pharmaceutical goods.
The point I want to make is that a lot of research is needed in this area. But instead of putting research money into this industry, what we have done is simply to clamp export controls on the product. One hon. member made the point the other night that there is a greater potential for job creation not in the development of resource metals but rather in high technology fields. Here, Mr. Speaker, is an opportunity. But I offer one caution which is based on long experience of disappointment as a western Canadian. Although we want to see research and development in this area, I would tell the Minister of Industry, Trade and Commerce, who comes from the same general area of the country as I, that we would like to see jobs created in this particular industry in our area. If there is a manufacturing opportunity here, we would like to see it encouraged in our area.
I am not being selfish, Mr. Speaker. I base my argument on the fact that although in western Canada we have agricultural commodities and natural resource based industries, we must now move toward a more mature secondary economy. There is a possibility right here which I hope the Minister of Industry, Trade and Commerce will investigate. Certainly I would be willing to co-operate with him in any way I can.
In this day and age of shortages of energy, the Union of Soviet Socialist Republics is at the present time developing a pilot plant using cesium which, as I understand it, produces greater efficiency in the burning of coal. Statistics indicate they have gone from a 40 per cent efficiency rate to a 60 per cent efficiency rate, and this is still in the format stage. I suggest to the government that if it is necessary to put this under export controls or on the controls list, and the reasons are valid, I accept that. On the other hand, let us move forward and be the leaders in this area.

November 9, 1977
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There is one other matter I want to mention regarding Bill C-l 1 which concerns itself primarily with Section 143, identified with communal organizations. For some time in this House there has been a debate raging back and forth regarding how best and how fairly we should tax a communal organization, and I have especially in mind the Hutterites of Canada.
Having spoken to them I simply want to state they generally find Section 143 acceptable and fair. They have questions specifically regarding the age of 18 being used for calculating the time an individual enters the work force. The Income Tax Act in respect of all other Canadians relates to the time they actually enter the work force rather than a chronological age. However, I believe that matter is of relatively insignificant importance.
The other matter the Minister of Finance should look at in some detail in the future is that of distribution of wages and whether or not these communal people should be allowed, as are other farmers, to stipulate a certain amount of wages as having been paid to family members. As 1 understand the situation, that is not possible under Section 143.
In conclusion 1 want to say that this country has great potential, and 1 have mentioned one in my own area, but two things must happen. We must have economic leadership and a total turn-around of the kind of spending the government has been doing. That is the first thing that must happen. We must leave more money in the pockets of Canadian taxpayers, whether they be the wage earners or those in corporations, in order to generate enthusiasm and confidence in our economy. Frankly, the government is not able to do that. This government has frittered away the potential of Canadians and, particularly, the future of our young people. The potential is there and hope can be restored. But the government is bereft of hope and has shown a complete lack of leadership. For that reason it should be condemned, and condemned also for its economic policies.


Some hon. Members:: Hear, hear!
Hon. Jack H. Horner (Minister of Industry, Trade and
Commerce): Mr. Speaker, I rise to support the Minister of Finance (Mr. Chretien) in the presentation of tax bill C-ll because of its many good qualities. I suggest it will help the people on low incomes and will encourage further development on the part of the resource industries. It will help people in regard to life insurance, foreign investment, and capital gains.
1 have listened with great interest and have read a number of the speeches by my former colleagues in the House during this debate, and I can say that some were good and some were bad. Those that were good were more concerned about the country, while the bad ones were more concerned about the political fate of the members making them.
It was interesting to note that at the very recent convention in Quebec City members opposite were so afraid in respect of leadership that they were not allowed to discuss anything but
[Mr. Epp.)
support for their leader. No policy discussions took place or were voted upon. It was a unique experience, I am sure, for the Conservative party. I am certain that I was missed only by a number of members of the press, but my attendance at that kind of a convention would have been completely out of place because my concern has always rested with the country.


An hon. Member:: They never asked for you once, Jack.


Mr. Horner:: I appreciate that, but I want to make it abundantly clear that my concerns have always been directed in respect of the good of the country and not the question of whether the leadership was strong enough to withstand some diversity of opinion.


Some hon. Members:: Hear, hear!


John (Jack) Henry Horner: I was rather shocked during the debate this afternoon on the question of privilege that arose, as I have been shocked by the debate that has taken place in the House of Commons this week and last. The only conclusion I can draw is that in the absence of that right hon. gentleman, the hon. member for Prince Albert (Mr. Diefenbaker), the Conservative party has attempted to ride to power on the backs of the Mounties.


Some hon. Members:: Hear, hear!


Steve Eugene Paproski: That is shameful.


John (Jack) Henry Horner: I would point out particularly that they have been doing this when that right hon. gentleman, who has always been a great defender of the RCMP, was absent from the House. He would not condone that sort of action.


Steve Eugene Paproski: Mr. Speaker, I rise on a question of privilege.
I should just like to bring to the attention of the House that the right hon. gentleman has not been feeling well, with the result he has not been in the House for the last two or three days. Otherwise he would have been here.


John (Jack) Henry Horner: I never implied for a moment that the right hon. gentleman was absent because he was asked to stay away by the whip of that party or anyone else. I just said that had he been here hon. members over there would have been given better advice. They would not have been attacking the RCMP and we would not have heard members from that side hollering, "Lay charges against the RCMP".


Some hon. Members:: Oh, oh!


Stanley Howard Knowles: Mr. Speaker, I rise on a point of order. I should like you to have the Minister of Industry, Trade and Commerce (Mr. Horner) tell us the clause of Bill C-ll to which he is addressing his remarks.


John (Jack) Henry Horner: Mr. Speaker, the hon. member for Provencher (Mr. Epp) commenced his remarks with his thoughts about the question of order raised after the question period. I felt that I should enjoy the same privilege, and it is in that vein I made my comments.
November 9, 1977

I should also like to say, in equating the good with the bad, that 1 could not help but note hon. members' love affair with Rene Levesque as displayed at the convention in Quebec City. I for one do not think this will gain them much support in the province of Quebec. I would suggest again that, if the right hon. gentleman had been at that convention, hon. members opposite would have received better advice on that occasion too.


Some hon. Members:: Elear, hear!


John (Jack) Henry Horner: I was also interested in the remarks regarding our competitive position in the world. There is no question about the fact that Canada faces some severe economic problems. We are having difficult economic times, there is no doubt about that. We are having these problems partially as a result of the maturing of Third World countries. Many of them have more money today than ever before. They are purchasing the results of many technological advances in the developed countries. They are putting those technological advances to work in such a way-


Some hon. Members:: Order, order!


The Acting Speaker (Mr. Turner):: Order, please. The minister has the floor and we are here to listen.


Some hon. Members:: Hear, hear!


John (Jack) Henry Horner: As a result of these advances by Third World countries severe pressure has been placed on the mineral industries of the North American continent. This has also placed severe pressure in respect of commodities which can be manufactured in low wage countries, and I am thinking particularly of the textile industry. This new-found wealth of the Third World countries is coming to the fore and we are entering a period of new maturity in the world.
This can be coupled with severe pressure in Canada and the United States resulting from the high inflationary period we have just experienced. This high inflationary period was certainly not the fault of this government or the result of its policies.
The question of the OPEC nations and their ganging together to bring about higher world energy costs is a problem which is giving Canada some difficulty in its ability to compete abroad.
The hon. member for Provencher referred to the fact that somehow or another he wanted further tax cuts. When reading a column from Dian Cohen, he acknowledged that something like 80 per cent of the federal government's revenue was already allocated, and that something like a little over 70 per cent is already allocated to paying for the debt and that portion which has been divided up and sent out to provinces as statutory payments of one form or another for commitments to which this country and this government have been long pledged. The 80 per cent figure is quite right. The hon. member deplored the national debt. He did not offer any real
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solution, but he suggested that the over expenditures of the government have placed Canadian individuals in a pretty severe position.
I should like to refer to some OECD figures from 1968 to 1976. Personal consumption expenditures have increased by 56 per cent. In other words, Canadian taxpayers or wage earners have 56 per cent more to spend today than they had in 1968. That might be considered as their disposable income-


Mr. Douglas (Nanaimo-Cowichan-The Islands):: Is that constant dollars?


John (Jack) Henry Horner: Yes, it is 1971 constant dollars. Referring to the same set of figures for the same period, government expenditures for goods and services have risen 41 per cent. So, personal income has actually risen higher than government expenditures.


Mr. Clarke:: Do you like it over there now?


John (Jack) Henry Horner: Well, I certainly do. Thank you for asking the question.


Some hon. Members:: Hear, hear!


John (Jack) Henry Horner: I will tell you why.
I listened to the hon. member for Provencher talk about our poor competitive position. He referred to all of the wasteful things the government has done over the past years to put us in that poor competitive position. Let me list a few of them.


Some hon. Members:: Oh, oh!


John (Jack) Henry Horner: I should like to start off with the item allowing public servants the right to strike. The hon. member for Grenville-Carleton (Mr. Baker) spoke in this debate, and he suggested that some new method must be found to take away the right to strike. When I was on the other side of the House, I spoke on that and I said it was wrong. But I could not convince the members of the Conservative party that it was a wrong way to be going in 1967. The hon. member for Provencher and this party supported that idea. That put us in a difficult competitive position with the United States.


Arthur Jacob (Jake) Epp: Who proposed it?


John (Jack) Henry Horner: Let me talk about the guaranteed annual income.


Arthur Jacob (Jake) Epp: Who proposed that?


John (Jack) Henry Horner: The hon. member for Provencher has had his say. It is my turn now. In 1969 I fought the guaranteed annual income, when the now leader was a speech writer for the former leader. At that time they both advocated it was absolutely necessary for Canada. They were big promoters of the idea.
Take a look at unemployment insurance in 1971 when the government of the day brought it in. it felt that it was necessary to bring it in for those people who could not find

November 9, 1977
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work. I urged the then Conservative party to vote against it. They did not have the guts to stand up and vote against it in 1971.


Some hon. Members:: Hear, hear!


John (Jack) Henry Horner: I am perfectly happy to have left such a party. In 1972 the Conservative party campaigned across the country, but that party did not have the guts to assess anything. It was the same situation when the Conservative convention was held in Quebec City. The Conservatives did not have the guts to assess anything that was real.


Some hon. Members:: Hear, hear!


John (Jack) Henry Horner: The hon. member talked about indexing pensions and salaries. That puts us in a difficult competitive position with the United States. What party advocated it to begin with?


Mr. Kempling:: Who indexed them? You indexed them.


John (Jack) Henry Horner: That party over there.


Stanley Howard Knowles: This party.


John (Jack) Henry Horner: Let us talk about the capital gains tax. I spoke out against indexing, against the increase in unemployment-


William James Kempling: Who did in the Liberal government?


John (Jack) Henry Horner: Was that great leadership on your side when your party did not have the brains to advise the government that it was wrong?


Some hon. Members:: Hear, hear!


John (Jack) Henry Horner: The hon. member for Provencher spoke out against capital gains tax. What party did not have the guts to speak out about capital gains tax at that time? His party.


Arthur Jacob (Jake) Epp: Are you going to oppose it now?


John (Jack) Henry Horner: I spoke out against it. I spoke out against capital gains tax. I said it was wrong.


The Acting Speaker (Mr. Turner):: Order, please. It appears as if this is going to be a long debate. We will all have our turn. The hon. Minister of Industry, Trade and Commerce has the floor.


Steve Eugene Paproski: Keep your cool, Jack.


John (Jack) Henry Horner: Hon. members opposite talk about the excessive wage increases which have been made. I remember one in particular which occurred a few years ago in regard to the grain handlers and the grain companies of western Canada. It was indicated that they were going to receive a 60 per cent wage increase, and the grain handlers indicated that it was 49 per cent, or something like that. I nearly begged the Conservative party to bring in an amendment-


William Hillary (Bill) Clarke: We can hear the tears flowing now.


Steve Eugene Paproski: Calm down.


John (Jack) Henry Horner: Hon. members opposite asked me why I am happy over here. I have decided to tell them why. I begged that party to stand up and move an amendment, but they did not have the guts. When one looks at their convention in Quebec City, it is evident that they have not acquired the guts since.


William Hillary (Bill) Clarke: They didn't ask for you once, Jack.


John (Jack) Henry Horner: At no time did Conservative members advocate that any of the social benefits, which the government brought in and which increased the costs, should be curtailed. In one speech an hon. member mentioned the minimum wage and how high it was in comparison to the United States. When I was in the Conservative party, I spoke in the House of Commons and asked the government not to raise the minimum wage.


Steve Eugene Paproski: What did they do?


John (Jack) Henry Horner: They followed the advice of the gutless Conservative party which moved amendments to raise the tariff.


Some hon. Members:: Oh, oh!


An hon. Member:: A gutless government.


John (Jack) Henry Horner: Well, the government did not take all the advice of the Conservative party at that time. They did not accept your amendments.


William James Kempling: You have crossed the floor, Jack. Don't make any more excuses.


John (Jack) Henry Horner: I am not making excuses. I want to state the facts correctly and not leave false impressions.


William James Kempling: Tell us about the dollar.


John (Jack) Henry Horner: Hon. members opposite are asking me to tell them about the dollar. The hon. member for Provencher referred to the dollar in his speech.


William James Kempling: What about the balance of trade?


William Hillary (Bill) Clarke: What about the deficit?


John (Jack) Henry Horner: There are Canadian citizens on the other side of the House betting that the Canadian dollar will go down more. They are buying American dollars, Canadians sitting on the other side of the House.


William James Kempling: Name them. Jack.


William Hillary (Bill) Clarke: Name them!


John (Jack) Henry Horner: Yes, I can name some.


Steve Eugene Paproski: Then, name them.
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John (Jack) Henry Horner: Naturally the government has to act in defence of that.


Mr. Blackburn:: Mr. Speaker, I rise on a point of order. The hon. minister has made a sweeping generalization. If I heard him correctly, he said that there are members on this side of the Elouse who are making money on the falling Canadian dollar.


William Hillary (Bill) Clarke: That is what he said.


Derek Nigel Ernest Blackburn: Unless he names those hon. members, of whom I am not one, then he is impugning my privilege and honesty in this House. I think the hon. minister should either retract that statement or name the hon. members to whom he is referring.


John (Jack) Henry Horner: Mr. Speaker, I will do neither because that is not impugning. Everyone in this House can rise and speak on this debate.


Derek Nigel Ernest Blackburn: I have.


John (Jack) Henry Horner: Good. Everyone can rise and say that they are not buying any American dollars. That is fine with me.


Some hon. Members:: Hear, hear!


John (Jack) Henry Horner: But many financiers are, and some of the hon. members on that side of the House are.


An hon. Member:: How many on the government side are?


Steve Eugene Paproski: Name them.


John (Jack) Henry Horner: 1 do not have to.


An hon. Member:: How long will you be in your seat?


John (Jack) Henry Horner: I should like to make a correction in regard to something said by the hon. member for Grenville-Carleton. It is not only the hon. Leader of the New Democratic Party (Mr. Broadbent) who is purporting to use figures accurately. As reported at page 721 of Hansard of November 8, 1977, the hon. member for Grenville-Carleton said the following:
In the United States there is less unemployment, less inflation, and twice the real growth rate of Canada. There is a trade surplus on current account in the United States compared to a trade deficit on current account in Canada.
1 am sure hon. members from this side of the House cannot run after Conservative members all the time in order to correct what they have said. In reading over the debate, I felt I should make that correction.
We have a commodity trade surplus in Canada in 1977, which will be in the neighbourhood of $2.6 billion.


William James Kempling: You said "current account".


John (Jack) Henry Horner: Yes. We have a current account deficit of between $4 billion and $5 billion.


William James Kempling: It is $6 billion.
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John (Jack) Henry Horner: I should like to give the hon. member the facts about the American current account deficit. In 1976 they had a $14 billion current account deficit. In the first half of this year they had an $8 billion current account deficit. That is current account. Their commodity trade account is much worse than that. They do have some money coming in from various countries in the world.


David Orlikow: Some?


John (Jack) Henry Horner: Some, yes.


David Orlikow: A great deal.


John (Jack) Henry Horner: A great deal; well, I am not going to get into the relativity of a great deal and some. It is true that they have more than Canada has, but they have a great deal worse commodity trade than we have. We have a trade surplus. They have minus something in the neighbourhood of over $20 billion for the full year of 1976, and their current account deficit, including revenue coming in from servicing of loans abroad, is over $8 billion for this year alone. Where the hon. member for Grenville-Carleton got his figures or that idea in his head is beyond my imagination.
The hon. member for Provencher wanted to hold out a little bit of hope after squandering all his with his party. Let me hold out a little hope.


Arthur Jacob (Jake) Epp: You squandered it for me.


John (Jack) Henry Horner: We are major exporters of energy. We have a great capability of becoming energy self-sufficient.


Thomas Clement (Tommy) Douglas: We are net
importers of energy.


John (Jack) Henry Horner: That is what we are now. I said we have a great capability of becoming energy sufficient. I am glad I cleared that up in the hon. member's mind. We have a far greater capability of becoming self-sufficient in energy than the United States has. That should give any Canadian a great deal of hope and confidence. We are slow in developing some of our coal mines. That is one aspect which could be improved.


Derek Nigel Ernest Blackburn: Especially in Cape Breton.


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


Derek Nigel Ernest Blackburn: What's that?


John (Jack) Henry Horner: Read it in Hansard.
The coal mining industry has suffered severely in Cape Breton. It has not suffered quite as badly as the fluorospar industry in the southern part of Newfoundland. However, we can expand our coal markets considerably.

November 9, 1977
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I note that the hon. member from Elamilton has left, but he has been deeply concerned about STELCO's ability to bid on the pipeline. STELCO uses about 9 million tons of coal a year. We would like to see it moved from western Canada if necessary, or from the maritimes, if possible. Ontario Hydro uses about 10 million tons of coal. We would like to see that coming from either western sources or maritime sources. Nine million tons plus ten million tons make 19 million tons. About 28 million tons are mined today, so that gives us some appreciation of the hope for growth in the mining industry and the coal mining industry in Canada if we could service our own markets.
I readily admit that we are too dependent upon the Japanese market with regard to coal. The Japanese can turn our coal mines on or off at will, depending upon their steel industry and their supply. We are going to meet severe competition from Australia as well. In 1976 we exported to Japan $624 million worth of coal, more coal than grain in dollar value. Not many Canadians are aware of that. So we are not without hope with regard to the mining industry and the coal mining industry.
We have the capability to export some uranium. We have the capability to build a huge pipeline over the next few years, and I disagree with the Economic Council's report at page 75. I do not think the Council knew of all the projects which are on the books to go ahead within the next four or five years. That $10 billion pipeline project will create over 125,000 man-year jobs in Canada alone. Naturally 1 would like to see much of the steel developed here in Canada. Naturally I would like to see many of the turbines used to move the gas through that pipeline developed and built here in Canada. We have that capability, and my department will certainly be making every effort to make sure that there is a huge Canadian content. However, let us not fool ourselves. We must remain competitive, because it is to our advantage to keep the overruns below 135 per cent.
There is a major dam going ahead in British Columbia. Within the next five years it is going to cost in the neighbourhood of $1.2 billion. These are tremendous projects. Personally, I think the Alberta government should go ahead with some major dams in that province. There is the capability to do so, and there is a need for water. 1 often say that in Canada we have one third of the fresh water supply in the world. I have often said that; I hope we have.
However, when I consider that the United States has 48 million acres under irrigation and we have less than one million acres under irrigation, I cannot say to myself that we are using our water wisely. It comes under the jurisdiction of provincial governments, not that of the federal government, to initiate dam construction. However, that contributes considerably to the hope all Canadians can have.
There is a $600 million Husky heavy oil production plant on the drawing boards, and we hope the difficulties can be ironed out. This plant is to be located near Lloydminster, if the two provinces can get together.
A $600 million heavy oil plant is to be built by Pacific Petroleum near Hardisty. A third tar sands plant is to go

ahead as soon as the necessary deals can be drawn up. 1 will be surprised if it costs less than the one just completed. The one just completed is on schedule and within budget, but its estimated cost is $2 billion. Tremendous expenditures are going to be made in the near future. Added to that the James Bay project is to be completed. We have a 200-mile fishing limit which gives to-


Mr. McKinnon:: Mr. Speaker, would the minister entertain a question?


John (Jack) Henry Horner: I would rather do so after I am through, but if the hon. member wants to, he can go ahead.


Allan Bruce McKinnon: Do I take it from the minister's remarks that he has moved away from the position he adumbrated two years ago, that our problems with the OPEC countries would be over if we withdrew our support from Israel?


John (Jack) Henry Horner: If we withdrew our support from Israel our problems would be over? Is the hon. member suggesting that I advocated that two years ago?


Allan Bruce McKinnon: I am saying that.


John (Jack) Henry Horner: Is that what he is saying?


Mr. Martin:: Yes.


John (Jack) Henry Horner: That is news to me and to many other people, but if the hon. member can come up with a bug which was on my telephone or on his, or if he can find that information from a tape recording or from Hansard, I would be glad to look at the authenticity of his remarks.
To get back to where I was, we have just acquired rights to a 200-mile fishing limit on the east and west coasts. The harvesting of that 200-mile fishing limit will be a tremendous challenge to our shipbuiding resources and our processing industry.
I would like to see that challenge met as soon as possible. We have the capability to harvest that tremendous yield. This has great potential and raises great hope in the maritimes and on the west coast. There will no doubt be difficulties, but Canada is becoming the world's largest exporter of fish. With that 200-mile fishing limit we can hold that position and better it substantially.
There are great challenges for Canadians in the pulp and paper industry. If we are to hold our present percentage of world production of pulp and paper, we will have to spend $15 billion in the next 20 years. There is tremendous growth potential in that industry, and to take advantage of that potential we will have to spend a lot of money. I like to think that we could facilitate further growth of that industry on both coasts and in the north.
I look at the petrochemical development in Alberta, in Sarnia and Montreal, and I see a great potential for industrial growth in Alberta in by products arising out of the petro-
November 9, 1977

chemical industry. 1 am fully confident that markets can be found for the growth in the petrochemical industry.
I think too of the tremendous potential in South America, of Canaven, the railroad for which Canada and Spain are forming a consortium. It is a tremendous venture which will create many manufacturing jobs in Canada. There are requirements for Canadian steel which can only lend hope to the Canadian steel industry and the manufacturing industries.
I look upon the potential, great hydro projects in Brazil on which Canadian companies are bidding. These are the largest projects in the world outside the Soviet Union. Four gigantic hydro electric projects are on the drafting boards and Canadian engineering technique is in the bidding.


Steve Eugene Paproski: Oh, oh!


John (Jack) Henry Horner: Mr. Speaker, the hon. member may not know that Canada has four of the largest multinational companies in Brazil today. In fact, we are big in Brazil-bigger than the hon. member is in Edmonton.


Steve Eugene Paproski: What is the price of coffee in Brazil?


John (Jack) Henry Horner: I think of the potential at Canada's door today in world trade. In Algeria, a small country which is coming into wealth because of oil and gas, we have just signed an agreement to export $400 million worth of credit-to export Canadian goods to Algeria, a $400 million revolving fund over three years. What I am saying is that $1.2 billion over the next three years of commodities to Algeria is tremendous growth. That alone will create 50,000 man-year jobs in Canada through our commitment to supply that one country in the Middle East.


An hon. Member:: It is all hypothetical.


John (Jack) Henry Horner: We have just signed the agreement. It is not hypothetical. It may be hypothetical in the hon. member's mind, but maybe in a couple of months we will send him over there to see it. Then he will believe it.
Canada has great potential indeed. We have been discouraged by Canadian businessmen-


An hon. Member:: Yes.


John (Jack) Henry Horner: The hon. member says yes, and laughs. 1 do not think it is anything to laugh about.


Steve Eugene Paproski: There is no incentive to be successful in Canada and you know that.


John (Jack) Henry Horner: I do not know that. There is no incentive to be successful in Canada? There is no incentive to be successful in Canada because many, many things are not in tune. Would hon. members like-


The Acting Speaker (Mr. Turner):: Order, please. I suggest we look at Standing Order 12(3) which reads as follows:
When a Member is speaking, no Member shall pass between him and the Chair, nor interrupt him, except to raise a point of order.
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I suggest we observe the rule.


John (Jack) Henry Horner: Mr. Speaker, these people are not particularly bothering me. I want to put the figures for real investment in Canada on the record. In 1976 it was minus 3.2 per cent in relation to 1975. This year we are regaining what we lost in 1976 and increasing it. It will be over 4 per cent real investment in Canada this year. That is coupled with some pretty difficult situations. I am referring here to the question of national unity. Mr. Speaker, I have spoken for something like 40 minutes about the economy, and I hope that hon. members opposite will let me speak for a few minutes on national unity and the part it plays in our economy.
Yesterday morning in the Chateau Laurier I spoke to a group of international businessmen. I was quite interested in their remarks. They asked me a number of questions and gave me the rare privilege of asking them a couple of questions. I asked them if they really think that Canada's political instability has any effect on their desire to invest in Canada. Some said it did and some said it did not. The chairman of the meeting, an American, asked for a show of hands on that question.


William Hillary (Bill) Clarke: So you showed him yours.


John (Jack) Henry Horner: The hon. member is getting smarter.


William Hillary (Bill) Clarke: Why don't you?


John (Jack) Henry Horner: There is hope for him, even in Vancouver, and I hope he returns there soon. If he wants a ride I am going there on the 18th.
The chairman then asked for a show of hands of people who believed that the insecurity or instability due to Canada's political problems today does not threaten their desire to invest here. Five companies held up their hands. I recognized two of them but I did not see all five. I do not think it is fair to name the two I recognized, but they are big international companies. Then the chairman asked how many people in the room believed that Canada's political difficulties today, brought about by the desire of the government of one province to separate, affects their desire to invest in Canada. Mr Speaker, 120 or 130 international businessmen, everybody in that room, held up their hands. I then thanked the five businessmen who had confidence in their product and their ability to market it, for expressing their confidence, and said I recognized the problem of national unity affects our economy.
Some people parade around this country talking about decentralization in order to satisfy some who think it should be decentralized yet do not know how they want it done.


An hon. Member:: Send it to P.E.I.


John (Jack) Henry Horner: They do not know how they want it to be decentralized and so are not very helpful.
I know that my former colleagues on the other side of the House have probably read a lot of my speeches, and I am not afraid if they have. Never in this House of Commons have I

November 9, 1977
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made a speech that did not offer hope or did not offer some corrective advice to the government. In this case, Mr. Speaker, I think I should apologize because I offered more corrective advice to the official opposition than I did to the government. I offered a lot of hope, however. To my mind Canada is still the best country in which to invest. Canadians have to take more pride in their country. Canadian businessmen have to take more pride in their country.


Some hon. Members:: Hear, hear!


John (Jack) Henry Horner: Foreign investors have shown considerable pride in this country. I believe our current account deficit can be turned around. I believe we can turn around the net deficit on tourism alone within a year. In that instance I believe the 90-cent dollar helps. I believe in the manufacturing world the 90-cent dollar helps. I believe that in the export of much of our produce, whether it be coal, oil, lumber, fish, wheat or anything else, the 90-cent dollar helps. If it helps in manufacturing, it helps in jobs.


Thomas Clement (Tommy) Douglas: No, you
have been exporting jobs.


John (Jack) Henry Horner: No, I have not.


Thomas Clement (Tommy) Douglas: One of our
biggest exports is jobs.


John (Jack) Henry Horner: Mr. Speaker, I was going to end my remarks, but I still have some time so I will deal with that question. Let me talk about the auto pact and about the mines INCO is starting in Guatemala and Indonesia.
First, we have not been exporting nearly the number of jobs which the leader of the New Democratic Party suggests. We have a net surplus of end products of $1.5 billion.


Thomas Clement (Tommy) Douglas: And a deficit on parts.


John (Jack) Henry Horner: That is right, but a lot more jobs are involved in putting the car together than in making the parts. We in fact have a balance on jobs in the automotive industry but a loss on revenue. Let there be no doubt about it. If anything, we have a balance on jobs in the automotive industry. One machine can stamp out a million parts in five days. However, those parts have to be assembled.
While we have a surplus of $1.5 billion in assembled automobiles, our deficit in parts is $2.6 billion. I am not denying that. I have stated it in the House. However, on the job factor, we are not a loser in the automotive industry.
There is a possibility of gaining in the neighbourhood of 5,000 additional jobs in parts manufacturing without losing in the end product. We are trying to gain those jobs. If we were, as the leader of the NDP says, to equalize the parts, we might lose the surplus in end products. In that event, we would not
[Mr. Horner.)
gain anything in jobs. That is one area in which there has been a misunderstanding. Let me now talk about the other one.


Derek Nigel Ernest Blackburn: What about research and development?


John (Jack) Henry Horner: Research and development is a very important part of Canadian manufacturing life. While it is not as great as it should be, that is because the size of our market is not as much as it should be. We have only 23 million in relation to 230 million people.
Let me get to INCO and the nickel industry. It has been alleged that the Export Development Corporation exported jobs because it loaned money to INCO to build a nickel mine in Guatemala. Recalling from memory, 1 believe the total expenditure involved in opening that mine was $224 million. EDC loaned $20 million for the purchase of equipment in Canada, less than 10 per cent of the total expenditure of opening that mine. It would have been opened had we loaned the money or not. That $20 million loan created 1,200 man-year jobs, 90 per cent of them in Ontario.
The building of the mine in Indonesia was an attempt by INCO to get into the Japanese Market, something they have not been able to do. The total expenditure in Indonesia was over $800 million. EDC and my department loaned $57 million for the procurement of equipment in Canada, again less than 10 per cent. That mine would have gone ahead whether EDC got into it or not. The loan of $57 million created 3,400 man-year jobs in Canada, mainly in Ontario.
My friend opposite suggests we are exporting jobs when in fact we are creating jobs by the purchase of equipment in Canada and establishing confidence that the buyer will be able to pay for that equipment.


An hon. Member:: Tell that to the unemployed.


John (Jack) Henry Horner: I will tell it to the employed and the unemployed.


The Acting Speaker (Mr. Turner):: Order, please. I regret to interrupt the hon. minister, but his allotted time has expired. He may continue only with unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


John (Jack) Henry Horner: Mr. Speaker, I just want to say I will tell it to the employed and the unemployed, and I know the hon. member will be joining the ranks of the unemployed very soon.


Mr. Dan McKenzie (Winnipeg South Centre):: Mr. Speaker,
I had intended to devote my time to the bill; however, the Minister of Industry, Trade and Commerce (Mr. Horner) has raised several issues. He referred to wiretapping and interference with the RCMP. If the right hon. member for Prince Albert (Mr. Diefenbaker) were here, he would have a different approach. He would have plenty to say about wiretapping and interference with the mail. Contrary to what the minister said, our attack has been mostly on the government security group, not the RCMP.
November 9, 1977

The minister also talked about the right to strike. I hope this government will bring in-


John (Jack) Henry Horner: You would not be brave enough to support it.


A. Daniel McKenzie: Every time we speak, he clears out. I hope he reads Hansard tomorrow. The minister referred to indexing of pensions. That was not meant as a permanent cure-all for all of Canada's problems. We recommended indexing of income tax because the Liberal government is taking far too much money from the Canadian people. That is something that has to be reviewed. Once again the minister was misleading the House.
The minister made a strong point about the fact he could not always get his way in the Conservative caucus. Nobody gets their way all the time in any caucus.


Some hon. Members:: Hear, hear!


John (Jack) Henry Horner: 1 said I was glad I left.


A. Daniel McKenzie: I will say what 1 have to say whether you are here or not. The minister got across a lot of his issues when he was here. We supported him on many of them. However, he certainly did not convince the Liberals to implement any of his recommendations. I never saw him voting with the Liberals at any time while he was on this side. I hope he can convince them now on some of these issues.
The minister does not have to give us a lecture on how great this country is. We know how great it is. It is this government that is bad. I challenge him to produce any newspaper, report or document that supports this government. I have not found a single one.
I understand that at the business conference the minister attended in Toronto, he asked a group of businessmen for a show of hands on whether they had faith in this country or would move out of the country. Very few businessmen or investment people will advertise they are leaving. They just go away quietly. You only find out later.
When you read some of the minister's comments, you find that he does not have too much credibility. One comment in particular was made on January 8, 1976, referring to the Prime Minister (Mr. Trudeau), and I quote:
Stopping him is the duty of every Conservative in Canada. It is the task of every Canadian who cares about the freedom and prosperity of our land.
In another comment on March 10, 1977, he said:
Do you really think I should lower myself to be in the same party as Transport Minister Otto Lang, who has ruined not only the nation's transport system but its grain industry too?
There are many other comments. I will get to them at another time. In every newspaper and business report across the country, the heading of a story starts off with such headlines as "The economy: a mess". I quote from one article:
The Canadian economy is in very poor condition. If it continues to function along the same lines it will be in even worse condition in five years.
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That is the gloomy finding of the Economic Council of Canada in its fourteenth annual review. It goes on to list all the failings of the government.
This afternoon I received a news release from the Information Division, Department of Finance. It was issued November 7, but just reached my office this afternoon. Apparently the Minister of Finance (Mr. Chretien) is concerned about this bill. He says that it is a complex bill and he wants us to pass it with despatch, having regard to its importance. There is one sentence here I do not understand. The minister stated:
To a considerable extent, the economy depends on business confidence.
We are not concerned about business confidence in the country but confidence in this government. That is our problem. The business community and Canadians in general do not have any confidence in this government. I intend to go into that in detail.
We fully support the personal income tax provision in this bill. We have been calling for that for many years. As usual, it takes the Liberal government five to ten years to start taking action on most issues.
The minister, in his release, also referred to investment incentives. I can tell you, Mr. Speaker, that these incentives no longer mean anything in this country. Businessmen do not trust the government and are not taking advantage of the incentives-I shall refer to that subject in some detail in a few moments.
There is one paragraph I should like to read from the latest report of the Economic Council. It is in section 4 with reference to savings, investment and capital flows. It states:
The main source of economic expansion, employment growth, and improvement in the quality of life is investment, not only in the manufacturing sector, but also in such areas as education and training, health, protection of the environment, and basic research. Investment also promotes technological advances without which expectations of an ever-rising standard of living would falter. Traditionally, Canadian industry has counted heavily on infusions of new capital to enlarge its productive capacity and to create the potential for a greater supply of output.
Unfortunately, Canadians have now become the largest investors in the United States and investment in Canada has been falling off by the hundreds of millions of dollars, a clear indication that both Canadians and foreigners have no faith in this country or in this government. There is evidence to support that statement fully.
On page 79 of the report in a section headed "Structural Problems", there is a sentence which reads: "The Department of Industry, Trade and Commerce has for some years been working on an over-all industrial and investment strategy for Canada but this plan has not been fully articulated."
I wish the minister were here now to explain the delay in implementing this plan. There will not be anything left to implement in this country if he does not get busy and start talking to the business community and the investors in order to find out what needs to be done to keep them in this country. Maybe the minister is not aware of this plan. I do not know. He and the Prime Minister have informed the House that they

November 9, 1977
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are free enterprisers and will not be standing in the way of business and investment money leaving Canada. It is little consolation for the taxpayers who must suffer the consequences of this readiness to allow the flow to continue, this disposition to do nothing about it. I want to ask the minister when he proposes to begin having regular meetings with people in the business and investment community to get to the root of this problem.
Today I cannot pick up a newspaper without finding in it a devastating attack upon the government. Here is one example: "Canadian investment in the U.S. Up Again-Trend May be Irreversible". I hope the Minister of Industry, Trade and Commerce gets busy with this great plan of his. He should see what he can do to keep this investment money in Canada.
As for the Minister for DREE (Mr. Lessard) and the Minister of Employment (Mr. Cullen), who is becoming better known as the minister of unemployment, their hands are tied. How can they cope with unemployment and get businesses developed in various parts of Canada while this massive outflow of enterprise and investment continues? There is no way in which job creation programs or short term make-work programs can take up the slack in the face of this massive exodus of business and investment money. I certainly hope that the two ministers I have mentioned will speak out in cabinet in an effort to get the Minister of Industry, Trade and Commerce off his butt and taking constructive action with regard to this serious problem.
Here is another news story which came to my attention. The headline reads: "Failing Canada in Economy Was Once an Object of Envy". In this article, provided by the New York Times service, we read:
The Canadian economy was once envied for its glowing health. No longer. Nearly a million Canadians are out of jobs and those who are working find their pay cheques buying less and less. Even Canadian industrialists, let alone foreign investors, are finding this country an unattractive place to keep their money. A leading Japanese businessman relates that when he suggested a joint venture here his prospective Canadian partner proposed they locate the enterprise in the United States instead.
We in this country are the largest boosters of the United States economy. To show the seriousness of this flight of investment money may I go into a little more detail? It is very difficult to track it down. We hear about some of these businesses which are leaving, but we do not hear about all of them.
I should like to refer to an article which appeared in the Winnipeg Free Press on Monday, October 3. It is prepared by a financial expert in Winnipeg who took the time to compile detailed information on the businesses he was assisting to leave the country. Imagine the picture which would result, Mr. Speaker, if we consulted half a dozen investment counsellors in each province to get detailed information about the number of businesses contemplating leaving for the United States. This article drew attention to the fact that 19 of his clients intended to invest about $40 million outside Manitoba over the next five years and that the loss of this investment would cost the province about 4,000 jobs. Mr. Speaker, there is no way in which the minister will be able to stop this trend.

The financial expert who compiled these figures points out that even if these clients received tax deductions and the like, they still would not remain in this country because they did not trust the government and did not like the political climate. For these reasons they would not make any long term investments here. This is why it is of great importance that the Minister of Industry, Trade and Commerce get on with his plan before it is too late.
The name of the financial expert to whom I have referred is Peter Jerch of Peter Henry Jerch and Associates. He says the trend has been going on for some time. Mr. Speaker it is not possible to stop such a trend overnight. Mr. Jerch says that countries, or, for that matter, provinces which have nationalistic, leftist, or extremely strong bureaucratic tendencies make striving and successful entrepreneurs feel uncomfortable. Well, they feel very uncomfortable in Canada today and that is why so many of them are leaving for the United States. Even the tax incentives which we will be asked to approve in the bill before us will have very little effect.
Mr. Jerch goes on to say that Canadians are amongst the most aggressive foreigners in the U.S. acquisitions market. In fact Canada rated as the most active foreigner investor last year. He also points out that the vast majority of such investments or acquisitions are never reported officially. They do not put advertisements in the papers when they close down their businesses and move out. The ordinary successful businessman is shy of publicity and does not wish to disclose his business affairs prematurely.
He goes on to say:
The best climate for orderly and normal business growth is economic and social stability-
Something which is completely lacking in Canada today. He goes on-
That, together with revolutionary musings of what is to come, new regulatory boards and agencies with arbitrary powers all over the place and inability of governments to cope with the management of the economy as a whole is producing too much uncertainty about the future-and there is very little that investment money is more afraid of than uncertainty.
Canada is certainly noted for its uncertainty today. Think of the Quebec issue and separation. This is why we as a party were concerned and wanted the government to challenge the different bills being introduced by the Levesque government, and to challenge them immediately before it was too late. But nothing has been done. All the Prime Minister talks about is a referendum, a referendum which will do absolutely nothing except chase more businesses and investment out of the country.
This financial expert goes on to say this:
To those people, government make-work projects and free-lunch programs reduce motivation and destroy the work ethic, and are a definite factor leading, among other things, to lower productivity. Investments by Canadian citizens or Canadian-owned companies into Canadian-owned active manufacturing or service companies located in Canada, if such investment is tax deductible, would, according to the smaller business, eliminate unnecessary unemployment, create a healthy economy, and lead to elimination of the dreaded four-letter government monsters (FIRA, DREE, etc.), which tend to increase inflation and create a
November 9, 1977

drag on the economy through their sheer size, power, and obligatory paper work created (three letter monsters are equally at fault-AIB and GAI, to name just two).
And so on it goes in great detail, Mr. Speaker. Mr. Peter Jerch has prepared a second report which has been forwarded to me. It is based on a factual survey of 42 Canadian small and medium-sized active manufacturing and service enterprises which he has researched. Only 12 of these are looking for acquisitions in Canada only. Fifteen thought they would consider a further acquisition or investment in Canada as a second alternative, which suggests that reason tells them to go elsewhere.
Without going into all the gory details, it is hard to find the exact number of jobs this situation will cost, but the number lies between 4,300 and 13,000. So the House can see the impossible task that the minister of unemployment, or I should say employment, has, as well as the minister in charge of DREE, in trying to cope with this mass exodus of business and investment money.
In the eastern United States business complexes are being built to assist businessmen to move across the line. In the Grand Forks area of North Dakota the economic situation in Canada is being taken advantage of by making it more and more attractive for Canadians to go across the line to do their shopping. The latest press release that I have received has this to say. A $20 million shopping centre is to be built in Grand Forks and they are plotting to tap the flow of Canadian cash. This report is datelined Grand Forks, and reads:
There's a river flowing southward from Manitoba along U.S. Interstate Highway 29 that isn't controlled by the provisions of the Boundary Waters Treaty. It's a river of money.
Canadian dollars, devalued and weaker than a year ago, are still flowing south, where goods and services can be had at prices far lower than any the domestic market can offer.
People in British Columbia are also flowing across the border to do their grocery shopping. So you can see, Mr. Speaker, how bad is the situation in Canada.
The Minister of Industry, Trade and Commerce had something to say about tourism. He feels it can be revived. I do not know how it can be revived. He was very critical recently of the hotel industry and he put all the blame for the falling off of tourism on the hotel industry. I have written to the people involved in the hotel and tourism industry asking for information as to whether they agree with everything the minister from Crowfoot said, and I would certainly challenge his statement. There is a little tourism in Winnipeg because we have a racetrack there. People come from Minnesota and North Dakota to visit the racetrack. If the states of Minnesota and North Dakota ever went into pari-mutuel betting, Winnipeg and Manitoba would find their tourism industry in serious difficulty. There are at least two hotels I know of in the area which would have to close down.
The government is still having difficulty controlling its own expenditure. This was highlighted at one of the committee meetings held this week. Another devastating headline in a newspaper reads "Ottawa Drags Feet on Correcting Examples of Financial Mismanagement". This is what the Secretary of
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State's department was accused of by a committee of MP's yesterday.
What amazes me, Mr. Speaker, is that some backbenchers in the Liberal party are asking us what we would cut. I wish they would start putting a little pressure on their own cabinet in caucus for proper accountability on the part of each government department. They could do a real job there because they are on the inside. There is no way that I can march into the Department of Supply and Services and start conducting an investigation, but members of the government party can. That would be a real challenge for them, so let them get busy and start questioning deputy ministers and see whether they can reduce their budgets by 5 per cent this year and 5 per cent next year. They would then be doing something useful instead of yelling over at us and asking us what we would cut. You cannot cut what you cannot see. I have looked at a lot of estimates of different departments and they list a lot of items under "others" and "miscellaneous". If I were asked what I would cut, Mr. Speaker, I would cut out "others" and "miscellaneous" if I were a member of the government.
It was also pointed out in committee this week that the recommendations made by the Auditor General in 1975 to improve the financial accountability of departments have not been acted upon. The members of the Public Accounts Committee complained about this, and the hon. member for North-umberland-Durham (Mr. Lawrence), a former committee chairman, accused department officials of trying to pull the wool over our eyes by pretending to have improved financial reporting procedures.
This question was debated at great length in the House in 1975 and 1976, and we heard glowing statements from the President of the Treasury Board (Mr. Andras) and the then minister of finance that departments would have proper accounting procedures. 1 do not believe one word they say, Mr. Speaker.
According to the report I have, a senior official in the Auditor General's office responsible for monitoring the Secretary of State's department said it appears the department gave an inadequate sense of importance to its financial accountability. I would ask some of the Liberal backbenchers opposite to check that one out. This would be a good point to raise in caucus next Wednesday, and then they can tell the government what to cut.
The Economic Council has recommended a $2 billion tax break, and I am sure that if we started to have proper accounting and started to trim off the fat this recommendation could be implemented. The Economic Council also pointed out that it costs so much to produce goods in Canada that most of our industries cannot compete in world markets. Our foreign debts have grown so astronomically in recent years that foreign investors are beginning to feel uneasy about investing here. We know all about that, Mr. Speaker. Unemployment is concentrated disproportionately among Canada's young people; and the Economic Council concludes that Canada is one of the most wasteful energy consuming nations in the world.
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November 9, 1977
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When 1 hear Liberal backbenchers standing up and praising the Minister of Finance with a record like this, I know they are certainly trying to pull the wool over our eyes. The government has been in office since 1963. If hon. members opposite are so brilliant, so much on the ball, how did we ever end up in a mess like this, Mr. Speaker? The Prime Minister has a great habit now of blaming the people. The people are not the government. The people are not running these departments.
Let me refer to another newspaper article, although I get sick looking at them, Mr. Speaker. This one is headlined "Layoffs an Epidemic in the Land". We find press statements from all across the country about this government and its record. These are endless, Mr. Speaker.
I do not wish to take up any more time as I know there are others who wish to speak on this before we close at six, but I would put a challenge to the Minister of Industry, Trade and Commerce (Mr. Horner) once again. He should start immediately holding seminars and meetings with the business community. He must conduct some research and do some very detailed work in order to find out what has to be done to keep this investment in the country. Perhaps he can find out from investment counsellors. Maybe they can provide the minister with detailed information regarding investment money leaving the country. Once this trend starts there is no stopping it. My prediction is that within four years we will have between 2.5 million and 3 million unemployed in Canada.
I have put this challenge to the minister on two other occasions. He has given me no information and no answer. 1 hope he will take up this third challenge and will take some action which will encourage this investment money to remain in Canada.


Derek Nigel Ernest Blackburn: Mr. Speaker, in the government's 1974 budget, then finance minister John Turner promised the people of Canada that tax concessions for corporations would work to solve the country's economic problems, as well as unemployment. Canadians were told that corporations would invest these windfalls to create jobs and stimulate a recession-ridden economy.
Three years and three finance ministers later, we are faced with a staggering 8.2 per cent unemployment rate and a steady decrease in the growth of our gross national product. Economic forecasters predict that Canadians are in for the longest and coldest winter since the great depression.
Yet despite overwhelming evidence that corporate tax concessions have provided neither the jobs nor the much needed stimulus our economy lacks, the government refuses to seek a new remedy for our economic woes. Surely, Mr. Speaker, the government is aware that even though the largest tax incentives have gone to manufacturing firms, manufacturing jobs have actually decreased. In the first nine months of last year manufacturers employed an average of 1,945,000 workers. This year that figure has dropped to 1,915,000. That is an actual loss of 30,000 jobs; a poor testimony to the effectiveness

of tax concessions. Yet the government persists in re-introducing a bill from last March's budget that will grant the corporate sector another $1.2 billion in tax cuts, and continue to do so for another three years.
Tax concessions to large corporations have failed, and the reasons are obvious. Our economy is operating at slightly above 80 per cent of its capacity. It is only common sense to realize that corporations are not going to invest in expansion when their existing plants are already operating at 20 per cent below capacity.
Indeed there is very little guarantee that corporations will invest their tax breaks in the manner the government intends at all. In fact the evidence would suggest just the opposite. It would appear many of the beneficiaries of the government's generosity are more interested in profits than in good corporate citizenship.
I have before me, Mr. Speaker, a page from the August shareholders' report of Northern Telecom, a subsidiary of Bell Canada. It thanks the March tax incentives for "reducing our effective income tax rate to 40.6 per cent for the period in 1977 from 42.8 per cent for the first half of 1976". This company thanked its employees, whose tax dollars have contributed to their employer's profit margins, by announcing the layoff of over 1,000 workers in plants throughout Ontario and Quebec. Northern Telecom will receive over $3 million this year from the finance minister's scheme to promote job creation. I just cannot understand the logic behind this kind of financial manoeuvring.
Perhaps the most familiar example of the abysmal failure of tax concessions to provide jobs is that of INCO. INCO will have an estimated profit this year of $100 million. It will receive a tax concession amounting to $10 million, and also has deferred taxes of $378 million. These deferred taxes are, in effect, interest free loans. In addition, the Export and Development Corporation has loaned INCO $70 million at discounted interest rates to develop mines in Indonesia and Guatemala. The government expected INCO to express its gratitude by expanding its Canadian operations and hiring more Canadian workers. What INCO has done is lay off close to 4,000 workers in Thompson, Manitoba, Sudbury, and Port Colborne. The EDC loan, which has in fact aided the exportation of jobs, only adds insult to injury. Clearly, the government's policy of corporate tax concessions is not producing the desired results.
ALCAN recently laid off 400 workers in their fluorspar mining operation in St. Lawrence, Newfoundland. Company executives admitted the corporation was not losing money, it just was not making enough. This act of corporate social irresponsibility issued from a firm which stands to receive an estimated $11 million in tax concessions this year, and which has already been granted deferred taxes amounting to $180 million. ALCAN profits this year, bolstered by government tax concessions, will likely be $138.8 million. That profit is up 560 per cent from last year's $21 million.
The list of corporate abuses of tax concessions is endless, but perhaps one more example will suffice to make my point. Noranda more than doubled its assets of $871 million in 1970
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to $2,093 billion in 1976. It has already received $86 million in deferred income taxes, and banked an additional gift of $5 million, courtesy of the finance minister and his predecessor's so-called job creation policies. Shortly after the tax break was announced last March, Noranda laid off 500 workers. Now it is threatening to lay off another 1,700 employees in the Gaspe.
It is clear that the government's prescription is not curing unemployment. Tax concessions are only making a bad situation worse. The government has admitted its policies are not working. As my colleague and leader of my party has noted, last summer the Prime Minister (Mr. Trudeau) was reported to have muttered that the private sector "has not taken up the slack which was provided for it in the budget". Yet, the government does not move to expand the public sector. Instead, it doggedly intends to channel $1.2 billion into a program of tax concessions that have proven completely unproductive over the past several years.
The government seems to have great difficulty pinpointing the cause of Canada's economic malaise. Perhaps that is because it has insisted on looking beyond its own doorstep, and beyond that of the multinationals like INCO, ALCAN, Noranda and Northern Telecom. Casting about for a scapegoat, it has settled on the Canadian worker. The Prime Minister has in all seriousness suggested that the problem with the Canadian economy is the lack of productivity of the Canadian people. He says that we are outpricing ourselves on world markets.
Two weeks ago in the House the Prime Minister quoted statistics designed to show that wage rates in Canada have outrun productivity, that Canada cannot compete with its main competitor, the United States. He said that Canadian workers are only 80 per cent as productive as their American counterparts in manufacturing. He also said the Canadian wage rate is 7 per cent higher than the American wage rate.
Don McGillivray pointed out in an article in the Financial Times that those statistics are seriously out of date. Statistics issued by the United States and Canadian governments in 1976 make it possible to calculate that output per employee in Canada last year was 87 per cent of the United States output, a figure which is significantly higher than the Prime Minister's 80 per cent. These figures were available to the Prime Minister, but in his eagerness to indict the Canadian workers, it would appear he has overlooked them.
On the question of wage rates the gap is even less apparent than the Prime Minister would have us believe. In May of this year the average American worker was earning $5.57 an hour in U.S. funds. The average Canadian hourly wage was $6.42 in Canadian funds. While workers are paid in Canadian dollars, exports are sold to the U.S. for U.S. dollars. So, to make a fair comparison of U.S. and Canadian wage rates, the decline in the value of the Canadian dollar must be taken into account. In comparing the Canadian wage to the U.S. dollar, the Canadian wage is reduced to $5.78 an hour. That makes
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the wage rate gap 3.8 per cent, and not the 7 per cent quoted by our very academic Prime Minister.
Wage rates alone are not completely indicative of an employee's cost to a manufacturer. The cost of compensation, including fringe benefits, must also be considered. In 1976 the National City Bank of New York calculated that compensation per employee costs manufacturers $7.91 an hour in the United States and $7.05 in Canada. Both of those figures are in United States funds. That puts the Canadian worker 12.2 per cent behind in compensation. When we consider the 12 per cent drop in the Canadian dollar since that time, we discover that Canadian workers are costing their employers 25 per cent less than American workers. As the McGillivray article points out, this is more than enough to counterbalance the fact that the average Canadian worker is producing about 13 per cent less than his American counterpart.
The Prime Minister made a lot of noise about the fact that we are outpricing raises and demanding higher wages, and, because wages are going up, we are not able to be competitive in foreign markets. I think the article and the statistics I have referred to will set the record straight. The Prime Minister could have used those up-to-date figures, but obviously he chose for political purposes not to use them.
The government can no longer hide behind the excuse that wage rates and low productivity are responsible for the Canadian failure to sell competitively in the United States. It must accept the failure of its economic policies, and particularly the failure of tax concessions to stimulate the economy and provide jobs.
in my home riding of Brant we have an 11 per cent unemployment rate. Last month Abex Inc. closed and Spalding announced its intention to do the same. As a result, over 500 of my constituents are now looking for jobs. I would suggest, as the New Democratic Party suggests, that the government use the $1.2 billion it presently intends to throw away on corporate tax concessions to provide jobs for these men and women. A direct job creation program could provide work and wages for thousands of the unemployed across this country.
It would be more useful if a portion of the $1.2 billion the government has earmarked for corporate coffers could be directed to socially useful capital works projects. Admittedly, such projects provide only temporary work and are not the answer to our long term needs for job creation, but with over 800,000 Canadians officially unemployed, and more than a million actually out of work, our situation is critical. Some form of positive action must be taken immediately. Job creation programs could put money in the hands of those who need it and, just as important, in the hands of those who will spend it and not save it.
Increased consumer spending is one of the keys to putting the country's economy back on its feet. The Minister of Finance recognized this in his mini-budget when he provided the average Canadian taxpayer with a $100 tax cut for 1978. But surely the Minister of Finance cannot believe that an increase in consumer purchasing power, which amounts to
80025-491/2

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slightly over $2 per week per taxpayer, is adequate to provide the stimulus our business community so badly needs.
If the corporate tax concession were removed from Bill C-l 1, it would mean an added $1.2 billion could be channelled into a more extensive, more equitable scheme of tax cuts for the middle and low income earner. The government should note that there are four million Canadians who live below the poverty line. These people have little or no taxable income, so they are unable to benefit from the present proposals for tax cuts. Yet these are the people who most need the goods and services our business community is so anxious to supply, and who would be most likely to spend the added income they receive. For that reason, tax cuts must be made in the form of tax credits, payable whether or not a Canadian has a taxable income.
By directing most of the tax cut to those at the lower end of the income scale, the government would not only be compensating those families most affected by continuing increases in the cost of food, clothing and fuel, it would also be ensuring that the value of the tax cut would be transferred directly into the economy through increased consumer spending.
The Economic Council of Canada, in its annual report tabled this week, proposed that the government implement a more extensive program of tax cuts to stimulate consumer spending and economic growth without incurring inflation. This is the same suggestion the New Democratic Party has been making for months. The Council, which is a federally established advisory agency, made their unprecedented recommendation after predicting another five years of high unemployment, persistent inflation, large trade deficits and slow economic growth. It said that personal income tax cuts contained in the minister's mini-budget were not enough, and the situation called for an added $2 billion cut at the provincial and federal level. Yet yesterday in the House the Minister of Finance dismissed this report, a report from the government's own advisory agency, as "not responsible".
I would submit that it is the government that is not responsible. It is not responsible in continuing a $1.2 billion program of tax concessions to corporations, which is an admitted failure to begin with. It is particularly not responsible in failing to provide the kind of economic leadership this country requires, if the prediction of the Economic Council of Canada is not to become a reality.
The government must act to implement a positive recovery program in the private industrial sector. It must correct trade inequities which have been allowed to develop unchecked for far too long. Too often Canadian industries have been shortchanged in terms of distribution of jobs, investment and research and development expenditures. Only after the government acts to protect Canadian jobs can there be any assurance of a permanent increase in the manufacturing sectors, which have been hardest hit by our prolonged economic slumps. I am thinking specifically of the auto industry, but action is also

needed in our long-suffering shipbuilding, textile, electrical and footwear industries.
In the auto industry alone this year Canada faces a $3 billion deficit in its parts trade. Because of inequities in the trading relationship between Canada and the United States, Canadian parts manufacturers are producing only half as many parts as there are consumed in the manufacturing of vehicles in Canada. If this situation were remedied and Canada were to obtain its fair share of North American parts production, over 20,000 new jobs could be created for Canadians.
Disappointingly, the government has failed to take any initiatives in the sectors where it is needed most. Instead, it prefers to subsidize corporations to the tune of $1.2 billion, corporations which express their gratitude by laying off thousands of Canadian workers. Failing that the government has preferred to do nothing at all. It stands idly by as thousands of auto workers, shipbuilders and textile workers lose their jobs, and then it scratches its head and wonders why.
We know why more Canadians have lost or are in danger of losing their jobs than at any other time since the great depression. It is because the government stubbornly insists on pursuing its misguided programs and rejects out of hand the alternatives which could restore the country's economic vitality.
What I have been addressing myself to in the last 20 minutes or so relates really to the same old Liberal government approach to hard times. We have been talking a lot in the past few years about injecting cash flow into the economy, and we have been suggesting that we should not put the money in at the top in an economic crisis-and, indeed, we are in a very serious economic crisis-because it does not trickle down or, if it does, it trickles down very slowly.
What we have always suggested is that the money should be injected at the bottom where it is most needed. It should be given to the 25 per cent or 20 per cent of the people of Canada, 4 million Canadians, who are below the poverty line. These people will spend the money. This will generate demand and put people back to work. Indeed, as my friends to my right argued earlier this afternoon, it will also stimulate investment. However, we cannot argue that we should stimulate investment by giving corporations huge amounts of tax concessions which in turn they use for the purpose of saving, and not re-investing to expand their facilities.
The Hon. John Turner sent out a questionnaire a couple of years ago to industries which had received tax concessions and rapid write-offs. The replies he received must have been embarrassing and disconcerting to Mr. Turner, because in fact most of the industries, or certainly a majority of them, stated that those tax concessions did not at that time result in the creation of more jobs. When plants operate at 80 per cent of 83 per cent capacity, they are not going to use that money to expand unless there is demand. That demand must come from the consumers, and if the consumers do not have sufficient cash with which to purchase goods, obviously there is not going
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to be demand, and there is not going to be the creation of new jobs or the putting back to work of those who are unemployed.
1 do not know how much simpler it can be stated. I do not know how we can get this across to the cabinet and to the new Minister of Finance. He has inherited a mess, yet he seems also to have inherited some, if not all, of those archaic philosophies of a rather tired and worn out administration. I am not opposed, for example, to the Registered Home Ownership Plan, the Registered Retirement Savings Plan and so forth. These are plans in which people can invest money for tax deferment purposes, but who invests in those plans? They are the people making $15,000, $16,000, $18,000, $20,000, $30,000 or $40,000 a year. They are not the people whose total family incomes are $6,000 $7,000 or $8,000 a year. Those people cannot afford to take advantage of those plans. In that kind of situation we are not really helping the economy with the programs we are using.
As the hon. member for Waterloo-Cambridge (Mr. Salts-man) said last evening, these plans are in effect aiding and abetting some Canadians to "save this country into a recession". Those who can afford to save are putting their money away for some rainy day. It is not going to circulate at the consumer level, at the manufacturing level or at the retail level. As much as I supported those two programs originally, 1 think they are coming back to haunt us now and to haunt the government, because they are drying up money. They are not putting money into the community.
My time is nearly up. I simply wish to reiterate that as far as I am concerned personally-and I am sure 1 speak for my party-the tax proposal to extend concessions to industry to the tune of $1.2 billion will not create the jobs we will need this winter. It is going to be a cold and gloomy winter. 1 do not have to say it; the economic experts have already said it.
I know that government policy as introduced in the minibudget or the economic statement of the Minister of Finance a couple of weeks ago is not going to alleviate the major problem in this country today. That major problem is unemployment, and if it were not for unemployment insurance we would be in a revolution at this time. That is how serious is the situation.


Mr. Ralph E. Goodale (Assiniboia):: Mr. Speaker, I am anxious to say a few words in this debate this afternoon to underscore the remarks made at the outset on Monday of this week, November 7, by the Minister of Finance (Mr. Chretien) when he opened the second reading debate on Bill C-ll and made a strong plea for the prompt attention of this House to that bill and for its expeditious passage.
Contrary to a good deal of the rhetoric we have heard from across the way today and on other days in this debate, this legislation is important to Canadians, and particularly to farmers, small businessmen, and others in the constituency of Assiniboia. Indeed many have been in touch with me in recent days to inquiry about the progress of this bill and to urge this House to deal with it as quickly as possible.
Earlier this year, after the presentation of the budget in March, I had the opportunity to conduct a series of public
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meetings across a rather broad stretch of southern Saskatchewan and to talk with people in communities in very many places in southern Saskatchewan about provisions in the federal budget which specifically related to them, and about their views on the economic conditions in the country as they saw them. Those meetings were held in 11 different places at Oungre, Creelman, Estevan, Lewvan, Odessa, Avonlea, Yellow Grass, Mazenod, Crane Valley, Meyronne and Minton. They were well attended, by and large, and people were anxious to hear what the fiscal policy of the government was after the budget speech of last March.
As 1 explained to the House a moment ago, I took the time to outline the specific provisions of the budget that related to people living in those areas in southern Saskatchewan. The reception for the provisions in the budget was, by and large, very positive. During the spring, summer and fall I received inquiries about where those specific provisions stood as people were anxious to see them passed into law. They were disappointed that the House was not able to deal with the previous budget bills before the adjournment of the last session of parliament and they were anxious to have the assurance that the provisions detailed in March would be coming back in legislative form as quickly as the House could get to them, and would likely receive the expeditious attention of parliament.
I am anxious to see this bill dealt with as quickly as possible in the House, go through committee and be passed into law. A great many people in Assiniboia are anxious to have the tax changes proposed in the legislation put on the statute books so that they can take advantage of them.
Bill C-ll is a complicated measure, as most fiscal laws are. The essential details have been adequately outlined to the House by the Minister of Finance, the Minister of State (Small Business) (Mr. Abbott), the Minister of Industry, Trade and Commerce (Mr. Horner), and others. 1 am not going to take the time of the House to go into the details, but there are a number of specifics which particularly related to my part of the country and 1 should like to highlight those.
First are the measures relating to small business. Small and independent business entrepreneurs are crucial in an area like Assiniboia. In that part of the country we have none of the great industrial giants or multinationals but we have a great many small independent businessmen who form, with farmers, the economic lifeblood of the villages, towns, cities and rural communities of Assiniboia and a great portion of the prairie west.
That is why I am glad to see this bill put forward a series of tax changes in at least ten different areas which will be of direct benefit to small business operators. It is not a complete package. It will have to be complemented by such measures as the CALURA amendments to ease the paper work for small businessmen and a variety of measures which the government has outlined not only in this debate but on past occasions. This legislation will require a good deal of complementary legislation.

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But this bill will materially assist small businesses in the constituency of Assiniboia by improving the fundamental financial environment in which they operate. It represents a very sound and good beginning on a variety of changes with respect to small business. As the work follows this beginning, as it must and will, I expect businessmen in my constituency will have a great deal of good advice to offer on where the small business policy for Canada should lead us. In that connection I think there are a number of ways in which they can offer advice and have input into the policy formulation process.
The establishment of a special ministry with responsibility for small business is a great development, but there are two other ways in which small business operators in my part of the country will have the opportunity to present ideas and opinions and have an influence on the direction of Canadian small business policy.
The first way they will have that input is through the Canadian Federation of Independent Business. A great many business entrepreneurs in Assiniboia are members of that organization. I believe that it is largely a representative group. It is the first nationally organized voice of small and independent business operators in this country. They have done a great deal of work to prepare themselves and prepare the cases they want to make to government as a group of businessmen with particular problems and particular opportunities. I believe, by and large, they have approached their task in a constructive and positive way. That organization has a great role to play in the future in helping government develop the appropriate kinds of rules and policies with regard to small business operations.
In this regard, I was attracted the other day by a comment on a news broadcast by the president of the Canadian Federation of Independent Business, Mr. John Bulloch. He was commenting shortly after the speech delivered in this House on October 20 by the Minister of Finance on the economy which, of course, is embodied to a certain extent in the legislation before us.
Probably more important than the opposition's rather political commentaries on the economy are the reactions of those Canadians who actually have to make the economy go. In this connection a significant statement was made just a few days ago by Mr. Bulloch.
In reacting to the Finance Minister's October 20 statement, Mr. Bulloch had a rather extensive comment to make. He talked about the statement in the House of Commons on October 20 as being a realistic statement. He called it an honest statement. He talked about the will of Canadians to tighten their belts and get back to work. He predicted confidently in the course of the coming year that economic conditions in this country, as a result of this economic statement and other measures, are likely to show considerable improvement. In contrast to what we hear from the opposition, Mr. Bulloch's comments were sound, practical and constructive. They will do

a lot more to help than the kind of ranting we hear from across the way.
Second, in addition to their involvement in organizations such as the Canadian Federation of Independent Business, which is a very useful and constructive group, for the business operators of Assiniboia constituency, I have another method in which businessmen in that part of Canada will have a direct way to have an input into the development of government policy in so far as it relates to small business.
Over the course of this past summer and fall I have been exploring the idea of developing within the constituency a working committee of businessmen who would be in a position to review in an ongoing way the laws, rules, and regulations which relate to their operations. In a practical and specific way they could point out to me, and through me to the government, the ways in which they think those laws and rules and regulations could or should be changed in order to meet more practicably the particular needs of their small business enterprises.
I think, with a working group of businessmen operating in such a specific and constructive way, passing their views along to the government, we will have a very basic expression of opinion about what our policy ought to be. Such an exercise would have a rather significant impact on helping to direct government policy in that direction. I have had the opportunity to discuss that idea with both the present and the previous minister responsible for small business in the government. I believe both ministers are prepared and are indeed anxious to co-operate in an effort of that kind. When circumstances present themselves in this regard, the Minister will hear in a first-hand manner their ideas and suggestions for government policy.
As far as the present bill is concerned, there are two specific elements relating to small business, and as well to farmers, which I want to highlight in particular. First, there is the extension and the expansion of the investment tax credit. We saw in the March budget, and it is repeated in the legislation before us, the extension of that tax credit on investment provision for another three years. We have seen an increase from 5 per cent to I'/i per cent on investments in my part of the country. We have seen the percentage adjusted to take into account the regional sensitivities of the country. It is an example of how federal policy takes regional disparities into account so the available tax credit can be at different percentages in different parts of the country, depending upon the regional developmental opportunities and challenges which exist.
This example of tailoring or finetuning this legislation to take into account the differences between different regions is a very useful and positive development. It is one which I hope will be repeated in a whole variety of federal programs which require sensitivity to differences between one region and the next.
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We saw another example of this not long ago in the unemployment insurance legislation which was before the House earlier this year. A number of changes were made in the unemployment insurance program, one of which was to fine-tune the national program to correspond to regional variations across the country. That was a positive thing to do in terms of making the unemployment insurance program more sensitive to regional differences, and in that sense a program with more practical effect.
We have seen as well, in the course of the last few months, a substantial upgrading of the unemployment insurance program in administrative terms. We have seen the law itself strengthened. The program has been tied more closely to a person's work record, and the whole impact of this kind of development has saved hundreds of millions of dollars for taxpayers across the country. The regional sensitivity of the program, or the effort in law to make it more sensitive was a part of that whole approach.
Bearing in mind the importance of the regionally sensitive tax credit, which is contained in this legislation, 1 think the House would be well advised to deal with it quickly. I say this because the legislation is of importance to a great many Canadians who want to see it on the books as quickly as possible. I, for one, have received many calls and inquiries about it from people who urge the House of Commons, through me, to get on with the bill. 1 applaud that measure, as do my constituents. We want to see it passed as quickly as possible.
From a personal point of view I would like to see the investment tax credits go further than is proposed in the legislation. This is an idea I should like the Minister of Finance to consider. I should like him to extend the coverage of the investment tax credits beyond the purchase of new productive facilities so as to apply not just to new investment but also to investment in such items as used farm machinery. 1 realize this would broaden the principle, but 1 believe it would constitute a worth-while change to make at this time. It would be especially timely in light of the western Canadian farm situations, because farm costs are particularly high at present and they continue to rise. Used equipment is now more attractive than it has been in the last two or three years. Moreover, many farm machinery dealers have growing inventories of used farm machinery on hand and they see the provision of an investment tax credit on used equipment, as well as on new equipment, as a means of balancing their inventories and enabling them to take greater advantage of the business opportunities presented to them.
In this regard there is a parallel if not identical precedent in the United States which we might consider following. In that country a provision of the kind I have suggested does apply to purchases of used machinery and equipment, as well as to new purchases. This is an extension of the principle which 1 believe we could usefully apply to Canadian law.
The second item before us in this bill which I should like to stress as being of key importance to small businessmen and
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farmers is the provision relating to capital gains tax. Up to the present the law has tended to stymie business or farm consolidation or reorganization. Take the case of a farmer who has all his land holdings in one particular area, except perhaps a quarter section which is located some distance from his main operation. If he were to want to sell that far quarter in order to reinvest in a quarter of land closer to his main operation he would find difficulty in doing so because on selling the far quarter the money from that sale would become subject to capital gains tax and he might not then have the cash necessary to invest in the land he wanted to buy nearer to his operation. Therefore that kind of consolidation of farm holdings was made very difficult. The same principle would apply to a small businessman who wanted to reorganize or consolidate some of his business holdings.
The provision contained in the March budget and repeated in the bill now before us takes that situation very clearly into account. It allows a farmer or small businessman to avoid payment of tax on the first sale, so long as the proceeds of the sale, to use my example of the quarter of land, are reinvested in the farming or business enterprise. That seems to be a very useful development so far as our capital gains tax law is concerned. The principles apply equally to small business. 1 think it represents an important improvement in the way our capital gains tax law has impacted unfavourably upon people who are engaged in this kind of enterprise.
It seems to me we have made progress in recent years in modifying the impact of capital gains tax law in certain specific cases. We have the rollover provision to protect against capital gains tax on family farms, which is certainly a desirable provision in our law. We now also have the provision I have just described, the proposed change to ease the burden on farm and small business reorganization and consolidation.
There are three other ideas into which I will not go into detail at this stage for lack of time but which I should like to mention briefly. They are ideas which I hope the government will consider as it gives continuing attention to the impact of our capital gains tax law in Canada. Again they have particular reference to small business operations and farming operations, and 1 hope they will be rather carefully analysed.
The first proposal that might be considered to ease the burden of capital gains tax on these two groups of Canadians is the possibility of indexing the valuation day value in cases where the capital asset involved on valuation day, which was seven or eight years ago, was at an artificially depressed value. Certainly that is the case with farmland in western Canada and with a great many of the small businesses in western Canada which rely very much on the farm economy to determine the health of their own enterprise. If the farm economy is depressed, it is likely that values and the business strength of small business operators are likely to be depressed at the same time.
Therefore I think you can make the argument that at the time of valuation day seven or eight years ago the capital

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assets of small businessmen and farmers in Canada could have been at an artificially depressed level. I think there is some argument to be made for indexing that value so as to bring it up to a more realistic level, thereby reducing the capital gains tax liability of farmers and small businessmen.
The second idea I have would be the possibility, which has been discussed in this House on other occasions, of a once-in-a-lifetime transfer free of capital gains tax, or at least with a reduced capital gains tax, for farmers and small businessmen. I think their enterprises are sufficiently unique and different from other enterprises in this country-certainly they are sufficiently important-to warrant the serious consideration by the government of a proposal of this kind. It would not encourage speculation or any of the other evils which the capital gains tax law is attempting to deal with if such a tax free once-in-a-lifetime provision were made. I hope that this is an idea that will receive careful consideration.
My third idea is the possibility of treating the capital investments of farmers and small businessmen just like investments which individuals can now make in such things as registered retirement savings plans. There is a serious argument to be made for the proposition that farmers or small businessmen who invest in their farm or business are making an essential capital investment, and therefore they do not have the same liquid cash to consider investing for their retirement years. Bearing in mind the unique positions of farmers and small businessmen, their investment in capital assets to make their farming enterprise or small business succeed should be treated in a similar way as investments in registered retirement savings plans are treated, and thereby, to some extent, they would be able to avoid the impact of capital gains tax.
These ideas obviously require greater elaboration and discussion. I present them as suggestions which I hope will receive careful attention. They are justifiable cases which can be made with respect to farmers and small businessmen. I hope the government will give them careful attention in the future.
The thrust of this bill is positive and constructive. It will assist Canadian economic performances in relation to small businesses, farms, and a variety of other areas about which I do not have the time to go into in detail at the moment. The examples I have cited in detail are adequate to justify the expeditious passage of this legislation through the House of Commons.
I should like to conclude with a word or two on government spending restraint and federal government spending priorities. All of us in the House support the principle of restraint in federal government spending. It is an easy principle to espouse, but it is a far more difficult principle to implement. It is a very crucial principle, and I believe the federal government will continue to make substantial progress in the implementation of it. The federal commitment to spending restraint is real and it is working. There are examples which could be cited for hours on end. The supplementary estimates tabled in the House of

Commons today corroborate that the federal effort in spending restraint is a real effort and is working.
When a commitment is made to spending restraint, there has to be a selection of priorities as to where the limited number of federal dollars will be spent. That makes the selection of priorities a very tough and delicate job. I am pleased to see numbered among the highest of our priorities in this government some crucial western projects. The list is a rather extensive one, and at this stage I should like to refer to four of them. The ones I will refer to have a direct impact upon the constituency of Assiniboia. In the context of spending restraint at the federal level, they represent a continuing and important commitment to the economic interests of the western part of this country.
I am thinking, first of all, of the purchase of grain hopper cars. That was completed just this fall, to the tune of some $255 million. It was a very major undertaking by the government and a substantial investment in that type of activity, namely, the movement of prairie grain, which is fundamental to the west. That commitment has been made by the federal treasury in the context of the restraint program.
Second, I should like to mention the maintenance of the Canadian Wheat Board's initial payments on grain at largely the same levels as those existing in the last crop year. It was done despite this year's somewhat uncertain market circumstances, when some were arguing that the initial payments ought to have been lower. The government did not agree to those suggestions, and the initial payments for the current year were maintained at the previous levels. This is an important commitment of federal dollars to support grain incomes in western Canada.
The third measure 1 should like to mention, which runs parallel to the issue about initial payments, is the fundamental western commitment by this government in the form of the western grain stabilization plan. This plan is an enormous cash undertaking to farmers as individuals, and also to the over-all western economy. It has been said many times that a pay-out is a distinct probability for the current calendar year of 1977. A pay-out in this particular calendar year and in future calendar years in very major proportions at just those moments in time when the western grains economy needs that kind of cash injection, is a very significant kind of financial and fiscal commitment the Government of Canada has made with respect to western Canada. It has made it even in the context of an over-all restraint program, and that makes the commitment much more significant.
Finally, I would like to mention a program which began just this fall in western Canada, but it will accelerate more and more next year as we see it going forward. I am particularly referring to the major federal program of rail rehabilitation all across western Canada. There is not a more fundamental aspect to the economic welfare of the west than the issue of transport, and the question of grain transport in particular. In the past we have had a very difficult grain transportation
November 9, 1977

situation as rail equipment and roadbeds themselves were deteriorating year after year.
The Government of Canada has recognized a very fundamental commitment to inject federal dollars in investments to upgrade the rail system across the prairie west. In the first 18 months or so, beginning a couple of months ago, and continuing until the beginning of 1979, the federal treasury, again in the context of the restraint program, will contribute something in the order of $100 million to that rail rehabilitation program in order to develop our transportation spines into first class condition all across the prairies. That, of course, is coupled with the ongoing operating subsidies which the federal treasury has paid in the past and will continue to pay into the future.
When we consider the total cost of specific rail rehabilitation and development on the one side, plus the operating subsidies on the other, during this period of restraint, there is a federal commitment to rail rehabilitation and operation in western Canada of something well over $200 million. This is a very important commitment to be made to a fundamental part of our economic well-being in the western part of Canada.
Income Tax
Those are four priorities which I am glad to see high on the federal government's priority list in terms of the spending initiatives we will have to take. In the context of restraint the selection of priorities is a very tough, delicate and difficult job, and in that context particularly I am pleased to see those kinds of important western projects going forward, to the advantage of the grains industry and the entire economy of western Canada.
Those are some thoughts and ideas I as a western representative have had about the thrust of government financial policy generally and with relation to this bill specifically. I simply repeat once again what I said at the outset: it is important to Canadians that this legislation be passed as early as possible.


Mr. Howard Johnston (Okanagan-Kootenay):: Mr. Speaker, may I call it 6.30?


Mr. Deputy Speaker:: It being 6.30 p.m., this House stands adjourned until two o'clock tomorrow afternoon, pursuant to Standing Order 2(1).
At 6.30 p.m. the House adjourned, without question put, pursuant to special order.

Thursday, November 10, 1977