1977-05-24

Mr. F. Oberle (Prince George-Peace River):: Mr. Speaker, I rise under the provisions of Standing Order 43 to raise a question of urgent and pressing necessity. Having regard to the reports over the weekend in two Toronto based newspapers alleging conspiracies to obstruct the natural course of criminal investigation and justice, and in light of the multiplicity of unanswered questions relating to the various aspects of the extra parliamentary opposition concept, I move, seconded by the hon. member for Central Nova (Mr. MacKay):
That this House require the Prime Minister forthwith to initiate a full inquiry under the Inquiries Act.
And that such an inquiry shall be conducted allowing for the fullest disclosure to the judiciary of all documents or other pertinent evidence relating to this matter including such evidence which, under the Federal Court Act, has occasionally been withheld by the government for such reasons as national unity and Privy Council secrecy.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


PROPOSAL TO PROVIDE AID TO THOSE SUFFERING DAMAGE IN COBALT-MOTION UNDER S.O. 43
Mr. Edward Broadbent (Oshawa-Whitby):: Mr. Speaker, in view of the fire which swept through the town of Cobalt yesterday and considering that hundreds of people have been left homeless and without food and other necessities of life, I move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That this House urges the government to provide immediate relief within the terms of the existing federal-provincial cost-sharing arrangements to the people of Cobalt.


Some hon. Members:: Hear, hear!


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


Some hon. Members:: Agreed.


An hon. Member:: No.


BILINGUALISM
Mr. Ren6 Matte (Champlain):: Mr. Speaker, under the provisions of Standing Order 43, I ask for the unanimous consent of the House to move a motion dealing with an important matter of pressing necessity.
Considering the alarming conditions of the French-speaking minority outside Quebec; considering the detailed report made by the association of that minority in its paper entitled: The Heirs of Lord Durham; considering that the government has remained silent following the cry of despair uttered by some 600,000 French Canadians outside Quebec who have already seen within a century 900,000 of their fellow-men irrevocably Anglicized; considering that the Prime Minister and other French-speaking ministers of Quebec ignore that small French-speaking minority to become concerned with the fate of an English-speaking minority in Quebec which is in no way threatened among 250 million English-speaking individuals, I move, seconded by the hon. member for Roberval (Mr. Gauthier):
That the government undertake a detailed study of the conditions of Frenchspeaking Canadians outside Quebec to grant them, through the various provincial governments, the same rights and privileges given pursuant to Bill 1 under consideration at the Quebec National Assembly.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.

May 24, 1977
Mounted Police


MULTICULTURALISM
Mr. Gus Mitges (Grey-Simcoe):: Mr. Speaker, I, too, rise under the provisions of Standing Order 43. In view of the fact that there is widespread interest among ethnic groups all across Canada in contributing in a more positive way to our multicultural society, 1 move, seconded by the hon. member for Edmonton Centre (Mr. Paproski):
That research studies be undertaken by a group comprised of representatives of the CBC, the CRTC, the Secretary of State and the Minister of State for Multiculturalism to determine a formula for a much greater input in third language broadcasting in Canada.


Mr. Speaker:: Order. 1 have reservations as to the urgency of this matter. However, the provisions of Standing Order 43 would, in any case, require unanimous consent before the motion could be put. Is there unanimous consent?


Some hon. Members:: No!


ROYAL CANADIAN MOUNTED POLICE
Mr. Elmer M. MacKay (Central Nova):: Mr. Speaker, I rise on a matter of urgent and pressing necessity pursuant to the provisions of Standing Order 43 arising from the current investigation into the role of the security service of the RCMP in relation to the burglary and fire on the premises of Praxis Corporation in Toronto, and, as well, the burglary of the premises of the Quebec Newspaper L'Agence de Presse Libre du Quebec in connection with which an RCMP officer has now been charged after, initially, having been put in charge of the investigation. I would therefore move, seconded by the hon. member for Prince George-Peace River (Mr. Oberle):
That the Solicitor General make a statement on motions informing the House clearly and unequivocally whether or not activities such as these were carried on with the knowledge and consent of the responsible minister at the relevant time or whether actions of this type by the RCMP security services were, and are, carried on without the knowledge, guidance and consent of the Solicitor General.
In either case, Mr. Speaker, an explanation is owed to the House.


Mr. Speaker:: In order for such a motion to be presented the unanimous consent of the House is required. Is there unanimous consent?


Some hon. Members:: No!



ORAL QUESTION PERIOD


Frank Oberle: Mr. Speaker, my question is directed to the Prime Minister. In the light of the revelation of the identity of 21 persons who were named by the former solicitor general as being subversives actively engaged in planning the overthrow of the government with the object of replacing it with an even more radical alternative, and in the light of the Prime Minister's previous statement that none of those persons has suffered from being on the EPO list, will the right hon. gentleman now set in motion a process designed to prevent further hardship and harassment, and, as well, offer these persons, now publicly exposed, some form of restitution and redress. Further, Mr. Speaker, would the Prime Minister undertake to ensure that in situations similar to that of Mr. Walter Rudnicki, immediate reinstatement into the public service is offered?


Right Hon. P. E. Trudeau (Prime Minister):: Mr. Speaker, I believe I dealt with that question in previous weeks.


Frank Oberle: The Prime Minister had not dealt with this question-


Mr. Speaker:: Order, please. My impression is that in fact the question, in almost exactly the same words, has been answered previously. However, I am prepared to listen to the supplementary question.


An hon. Member:: He did not answer; he avoided it.


Frank Oberle: I should like to ask the right hon. gentleman if he is sufficiently familiar with all the aspects of the black list, with which he was not previously familiar, and all the matters relating to the EPO scandal, and is he now prepared to place on the record of the House of Commons those names which were not part of the raw intelligence supplied to a former solicitor general but were added to the list by someone in the solicitor general's office?


An hon. Member:: That's a new one.


Pierre Elliott Trudeau: That is a new one, Mr. Speaker, and I will have to see if these facts are as fanciful as were the others.


Frank Oberle: Mr. Speaker, could I ask the Prime Minister whether he is expecting us to believe today that he has not yet been briefed about this whole matter, that he has not looked at the list of names which was exposed over the weekend in a Toronto publication, and that he has not firmed up the position of the government on how to address itself to this very grave and serious situation affecting the lives and careers of some very innocent and unsuspecting Canadians?


Some hon. Members:: Hear, hear!
May 24, 1977


ROYAL CANADIAN MOUNTED POLICE
Elmer MacIntosh MacKay: Mr. Speaker, I should also like to address a question to the right hon. gentleman and try to elicit from him whether or not he takes the position that the Solicitor General or his government should take the responsibility for the activities of the security services of the RCMP, or is it his position that this organization operates on its own, acting on its own discretion, without any obligation to the government to keep it informed of their operations?


Pierre Elliott Trudeau: Mr. Speaker, the principle of ministerial responsibility applies in this case as in all others.


Elmer MacIntosh MacKay: I am reassured by that answer, Mr. Speaker. I should like to ask the Prime Minister if he has been made aware of whether or not the then solicitor general has been briefed and was fully aware of some of the activities of the security service of the RCMP and if in fact he was, that is one thing, and if he was not, that is equally serious. Can the Prime Minister give us some more information on the knowledge of the responsible minister pursuant to the doctrine of ministerial responsibility at the time?


Pierre Elliott Trudeau: Would the hon. member care to indicate to what particular incident he is referring? I could tell him then whether the minister has been briefed.


Elmer MacIntosh MacKay: I would like to refer the right hon. gentleman to two incidents which have often been discussed in the House, the burglary into l'Agence de Presse Libre in Quebec, and as well the incident which is now under investigation in Toronto where the Metropolitan Police are reportedly on the brink of laying charges against the RCMP for their activities there?


Pierre Elliott Trudeau: In the latter case I do remember having information some weeks ago that the RCMP had received information from a newspaper editor and that they were in no way involved in the break in. I believe the Solicitor General gave that answer in the House. In the first case, if my memory serves me, the Solicitor General indicated that he had been briefed about the subject some time subsequent to its occurrence but the matter was before the courts. I do not know whether it is still there. If it is, I feel justified in not commenting on it at the time. I will see where the matter is now.
Oral Questions MANPOWER


MINISTER'S POSITION ON DEPARTMENTAL FORECAST OF LEVEL OF UNEMPLOYMENT IN QUEBEC IN 1978-FORECASTS FOR OTHER PROVINCES
John Edward Broadbent: My question is for the Minister of Manpower and Immigration and it arises from the publication called "Manpower and Immigration Review, Quebec Region" which has recently come out and in which a forecast is made for the province of Quebec that the number of new jobs for 1978 will be less than the number of people coming on the job market, and for increased unemployment at an average of 9.4 per cent for the year 1978. I should like to ask the minister, since this is the first time, to my knowledge, that his department has made a public forecast on unemployment levels for a region, whether he would confirm that he stands by this forecast of increased unemployment for the province of Quebec for 1978 and if so, what does he plan to do about it?


Hon. Bud Cullen (Minister of Manpower and Immigration):: Mr. Speaker, before I confirm or deny anything I think I should read the report to determine its authorship and its authenticity, and to determine what is the gist of the report put out by that group.


John Edward Broadbent: Mr. Speaker, I can attest to its authorship. It comes from the minister's department, but given some of the answers of the minister in the House, I am not at all sure of its authenticity. However, I would like to ask the minister most seriously to look into this and to report back to the House why forecast unemployment figures were given, to my knowledge for the first time publicly, which show an expected increase in unemployment in the province of Quebec. Related to that, if we are now going to have this information made available about one province in Canada, will the minister assure us that forecasts for other regions will be made public, and will the minister produce the figures in relation to that soon?


Jack Sydney George (Bud) Cullen: Mr. Speaker, as I indicated, I will look into the matter.


THE CANADIAN ECONOMY
John Edward Broadbent: Mr. Speaker, my final supplementary question is for the Prime Minister. Would the Prime Minister tell the House if he has responded to the telex he received from Premier Schreyer on Friday in which the premier of the province of Manitoba requested the Prime Minister to organize a meeting of the first ministers of Canada in the month of June to discuss all the problems facing the national economy, but in particular to co-ordinate efforts on job-creating programs for the coming fall and winter?

May 24, 1977
Oral Questions


Pierre Elliott Trudeau: No, Mr. Speaker.

[ Translation]


BILINGUALISM
Charles Edward Rea: Mr. Speaker, my question is directed to the Prime Minister.
Is the Prime Minister aware of a report made by the Association of Francophones outside Quebec entitled: "The Heirs of Lord Durham"; if so, what steps does he intend to take to remedy the alarming situation which is described in this report and in which this very minority finds itself?


Pierre Elliott Trudeau: Mr. Speaker, yes, I have had the opportunity to get acquainted with this document and I indicated my intention to meet this group at a time convenient to the two parties; I hope it will be before the end of June. I should add that several government members have spoken to me about this and they are very much concerned about this problem.


POSSIBILITY OF OTHER PROVINCES TREATING FRANCOPHONES SAME AS QUEBEC TREATS ANGLOPHONES
Charles Edward Rea: Mr. Speaker, would the right hon. Prime Minister be willing to press the various provincial governments to give their respective French-speaking minorities the same rights and privileges granted the English-speaking minority in Quebec by Bill 1, which is now under study at Quebec's National Assembly?


Pierre Elliott Trudeau: Mr. Speaker, I take the liberty of reminding the hon. member that a great number of initiatives have been taken by the federal government in that area. The hon. member should remember, for instance, the proposal we had submitted to all provinces in 1971, at Victoria, under which the provinces themselves would be forced by the constitution to respect the two official languages as the federal government does. The hon. member seems to be stroking his beard as if he were perplexed! If he wants, I can send him that document and he will see that the federal government had foreseen that situation as far back as 1971 and had made extremely courageous proposals, which were not accepted by the provinces, as the hon. member knows.


Mr. Matte:: Mr. Speaker, with all due respect to the right hon. Prime Minister, from time to time my beard is a source of inspiration to me; that is why I should like to put a third question to him. 1 feel he is evading the point of my question. He knows full well that the proposed Victoria charter dealt with federal administration. Now, I was asking the right hon. Prime Minister if he would be willing to exert pressures on the

provinces to bring their governments to give Francophone minorities the same rights that are being granted the Anglophone minority in Quebec by Bill 1 now before the Quebec National Assembly? It has nothing to do with federal administration but deals with a matter of provincial jurisdiction.


Pierre Elliott Trudeau: Mr. Speaker, I see the hon. member has somewhat forgotten the 1971 Victoria document which proposed specifically to the provinces that they have constitutional obligations just as the federal government wanted them for itself, through the constitution, so that all levels of government would be obliged, by the constitution, to put both languages, English and French, on an equal footing. The hon. member should study that document: he might then join us in our efforts.


INQUIRY OF THE MINISTRY
Mr. G. W. Baldwin (Peace River):: Mr. Speaker, I should like to pursue with a reluctant witness opposite the issue raised by my friends the hon. members for Prince George-Peace River and the hon. member for Central Nova. In light of the exchanges between them and the right hon. gentleman, and in light of the fact that the Prime Minister told me last February that he was not particularly interested in how the RCMP got its evidence, may I ask if he accepts the philosophy of Richard Nixon as reported in a newspaper last Saturday, that burglaries and other crimes are not illegal if approved by the administration?


ROYAL CANADIAN MOUNTED POLICE
Mr. Joe Clark (Leader of the Opposition):: Mr. Speaker, I should like to follow on the questions put to the Prime Minister. In answer to the hon. member for Central Nova the Prime Minister said that he had been briefed some weeks ago regarding documents from Praxis Corporation and he had been told that they had come into the possession of the RCMP through a newspaper editor. Yesterday in the morning newspapers, more than 30 hours ago, a very serious accusation was published to the effect that the security services of the RCMP had received original documents from a source other than that newspaper editor. Is the Prime Minister telling the House of Commons that even though this very serious accusation against the security services of the RCMP was made and published more than 30 hours ago, he has not looked into that accusation? If he has looked into the accusation, can he tell the House whether the facts as published are verified by his own investigation?
May 24, 1977


Pierre Elliott Trudeau: Mr. Speaker, I have been informed that the Solicitor General's office has looked into that allegation by the newspaper. 1 have not had a report from the Solicitor General's office but I think perhaps the Acting Solicitor General may have something to add.


Hon. Ron Basford (Acting Solicitor General):: Mr. Speaker, as Acting Solicitor General I can report that the RCMP was not engaged in the break-in or in the theft of records from that corporation and as the press reports indicated, the Metropolitan Toronto Police are investigating the matter and the RCMP is co-operating with them.


Charles Joseph Clark: Mr. Speaker, a supplementary question for the Acting Solicitor General or the Prime Minister. Did any document come into the possession of the RCMP that is related in any way to Praxis Corporation from a source other than the newspaper editor?


Stanley Ronald Basford: Yes, Mr. Speaker, but because that matter is under investigation by the Metropolitan Toronto Police 1 cannot report further.


REQUEST FOR ASSURANCE GOVERNMENT WOULD NOT CONDONE OR AUTHORIZE ILLEGAL ACTIVITY BY SECURITY SERVICE
Charles Joseph Clark: Mr. Speaker, a supplementary question for the Prime Minister. Would the Prime Minister tell the House now, unequivocally, that his administration would not condone or authorize any illegal intelligence activity by the security service of the RCMP or any other federal agency?


Pierre Elliott Trudeau: Yes, Mr. Speaker.


POST OFFICE
Hon. W. G. Dinsdale (Brandon-Souris):: Mr. Speaker, my question is directed to the Postmaster General. Now that an impasse has developed in the contract negotiations with the Canadian Union of Postal Workers when negotiations have hardly begun and it is apparent that the post office management and the CUPW are on a collision course that will lead to yet another paralyzing strike that will seriously damage an economy that is already in a fragile state, will the Postmaster General inform the House what action he is taking to diffuse the issue rather than shouting across the barricade in a continuing dialogue of the deaf?


Mr. Hees:: What are you telling them?


Hon.   J.-J. Blais@Postmaster General: Mr. Speaker, the interpretation the hon. gentleman has placed on the state of
Oral Questions
relations is inaccurate. I hope we will not have a postal strike. There is provision in the Public Service Staff Relations Act which permits a third party determination of the causes for the impasse and we are trying to accelerate that hearing so that we can resume negotiations.


Walter Gilbert Dinsdale: A supplementary question, Mr. Speaker. Will the Postmaster General consult with his colleague, the President of the Treasury Board, the minister responsible for Post Office employees, in an attempt to bring order out of the present chaos of the Post Office's industrial relations? Would he also give sober second thoughts to neutralizing the conflict, by accepting the motion proposed by the official opposition to resurrect the type of committee which dealt with the Finkel-man report on employee-employer relations in the public service; or at least will he accept the CUPW proposal to have the whole matter considered by a royal commission?


Mr. Blais:: Mr. Speaker, if the hon. gentleman had been serious about his motion, perhaps he would have attached a vote to it.


Some hon. Members:: Oh, oh!


Mr. Paproski:: Surely you can do better than that.


TRANSPORT
Right Hon. J. G. Diefenbaker (Prince Albert):: Mr. Speaker-


Some hon. Members:: Hear, hear!


John George Diefenbaker: I am glad I have the attention of the Minister of Transport, to whom I wish to direct my question. What was the basis on which he made a statement to the effect that the Hall Grain Handling and Transportation Commission, in recommending retention of the Crowsnest Pass rates as they affect producers, exceeded the terms of reference under which the commission was set up?


Hon. Otto E. Lang (Minister of Transport):: Mr. Speaker, I thank the right hon. gentleman for giving me the chance to clarify that press report, as I did not indicate that any such reference to grain rates was beyond the terms of reference of the commission. I was asked the direct question, whether I thought the commission had referred to anything which was beyond its terms of reference, and I said I found it difficult to include the Arctic railway in those narrow terms, and perhaps the people appearing before the commission might have canvassed the question of freight rates more fully if they had known the breadth with which the commission was approaching those questions. But that reference did not apply to the
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May 24, 1977
Oral Questions
grain rates themselves. I must say that on every occasion I have emphasized that nothing in comments about matters being outside the terms of reference should take away from the fact that I placed great confidence in the Hall commission on its appointment, and that the commission on the basis of many public hearings across this country has brought forward a fine report, from which we shall be able to work effectively in future.


John George Diefenbaker: A supplementary question, Mr. Speaker. 1 feel sure that the semi-judicial approbation of the minister will be widely accepted and approved. I suggest that, in the questions and answers which appeared in the press, there was no reference to the railroad running to the north. Has the minister not read the prepared statement of Mr. Justice Emmett Hall, to the effect he was surprised that the minister stated he had exceeded his jurisdiction in making recommendations about the Crowsnest rates? Does the minister now say "I did not criticize the recommendation; I was misunderstood. I did not use the proper language in referring to the northern railway and I never intended to carry on the vendetta against the Crowsnest Pass rates as I have in the past."


Mr. Hnatyshyn:: Yes or no, Otto.


Otto Emil Lang: Mr. Speaker, as I indicated in my earlier answer, there was an erroneous press report published, and I made no statement in relation to the terms of reference or the Crowsnest rates. I make that statement flatly and clearly. If Mr. Justice Hall reacted to the press report, I can understand his reasons, but I am sure he will know from the answers 1 have given today to the right hon. gentleman that there was no basis for that report.


AVAILABILITY OF SEISMIC DATA ON OIL AND GAS FIELDS OFF COAST OF LABRADOR
Mr. John C. Crosbie (St. John's West):: Mr. Speaker, I direct a question to the Minister of Energy, Mines and Resources. The magazine Canadian Petroleum in its issue of May, 1977, states that detailed seismic data which could reveal substantial oil and gas fields off the east coast of Labrador and Newfoundland is being withheld from Canadian oil companies and that this data fills a large room at the Shearwater armed forces base near Halifax. The data was allegedly obtained through the surveillance of our coast line by long-range Argus aircraft using avionics equipment of the Department of National Defence. My question is this: Can the minister state whether this report is correct and if there is such valuable data available, gathered as a result of defence patrols, why has it not been made available to the oil and gas industry and to the provinces?


Hon. Alastair Gillespie (Minister of Energy, Mines and Resources):: Mr. Speaker, I have neither seen nor heard of the

report to which the hon. gentleman refers but will be pleased to look into it.


DATE ON WHICH ARCTIC GAS MUST BE BROUGHT ON STREAM- MINISTER'S POSITION-EFFECT OF ARCTIC GAS ON PRICE OF ALBERTA GAS
Mr. Cyril Symes (Sault Ste. Marie):: Mr. Speaker, my question is for the Minister of Energy, Mines and Resources. Since the National Energy Board has not completed its report on whether Canada will need natural gas from the Arctic in the next ten years, does the minister still hold to his opinion, as expressed on the CTV network on Sunday, that Arctic gas must be brought on stream in the next decade?


Alastair William Gillespie: Mr. Speaker, if the hon. member is referring to a National Energy Board report updating the natural gas situation, he is referring to a report I have not seen.


John Edward Broadbent: Listen to the question, Alastair.


Reginald Cyril Symes: Mr. Speaker, I was referring to National Energy Board deliberations, not yet published, on different proposals for pipelines from the Arctic. 1 suggest that the minister was anticipating the report in saying that in his opinion the gas would be needed within a decade. My supplementary question is this. Since gas from the Arctic will be at least 100 per cent more expensive than existing domestic supplies and since it is unlikely that Alberta, to moderate future gas prices, will agree to blend the price of Arctic and southern gas, does the minister not agree that if Arctic gas is brought south, Canadians will in the next decade more than likely pay double the price they now pay for existing Alberta gas?


Alastair William Gillespie: Mr. Speaker, as I explained to the hon. member in the standing committee this morning, work is at present going on with respect to what options concerning a roll-in arrangement would be open to us if gas from the north were to be brought to southern markets. That work has not yet been completed. The whole question involves, I suppose, the difference between Alberta and northern gas wellhead values on the one hand, and the transportation tariff as between the north and the south on the other.


HOUSING
Mr. Adrien Lambert (Bellechasse):: Mr. Speaker, 1 wish to direct a question to the Minister of State for Urban Affairs.
In view of the fact that unemployment in the province of Quebec is rising sharply, and that the construction sector is very important this time of the year, as it generally provides a great many jobs, could the minister advise the House whether
May 24, 1977


Joseph Adrien Henri Lambert: Mr. Speaker, I would like to ask a supplementary question.
Since the minister has given a positive answer, would he tell the House whether or not the province of Quebec informed him on the number of additional municipalities which have filed requests under the program RRAP from April 1, 1977 and, if so, do these additional requests represent considerable expenditures on the part of the federal government so it has to consider them before giving its approval and would the minister recommend to his cabinet colleagues that more funds be granted in answer to those requests because it would be a tremendous step towards job creation and to satisfy housing needs in the province of Quebec?


Mr. Ouellet:: Mr. Speaker, in reply to the first question of the hon. member, I must say that I got no information from the government of Quebec to designate other municipalities in that province. In that regard, there were no additional applications from Quebec authorities. As to being prepared to urge my colleagues to increase funds for RRAP, of course I am, Mr. Speaker. However, such an application has already been made and that is why the budget allocated this year for RRAP is three times higher than last year's. Since that program is so exceptionally popular and in view of the urgent need for rehabilitating certain homes in Canada, I am confident that again next year we will be able to increase the budget to meet urgent needs in Canada.


REQUEST FOR AID TO THOSE SUFFERING DAMAGE IN COBALT-POSSIBILITY OF PROVIDING PORTABLE HOUSING UNITS
Mr. Allan Lawrence (Northumberland-Durham):: Mr. Speaker, my question is for the Prime Minister. With the possible exception of the Ontario Liberal member for Bruce-Grey, who was the only member in the House to refuse to give unanimous consent to a motion a little while ago-


Some hon. Members:: Order.
Oral Questions


Mr. Speaker:: Order, please.


Allan Frederick Lawrence: I am sure members on all sides of the House would have liked to extend a warm hand of sympathy to the people of Cobalt for the tragedy that occurred there over the weekend.


Some hon. Members:: Hear, hear!


Allan Frederick Lawrence: Can the Prime Minister indicate if, under the existing federal agreement with regard to tragedies and disasters of this scope, there was any federal initiative or leadership this morning to put into full force and effect the terms of that agreement?


Hon. Donald S. Macdonald (Minister of Finance):: Mr. Speaker, under the provisions of that arrangement, as the hon. member knows, the federal government has set the criteria under which federal payments will be made when a request has been received from the provincial government. As far as I know, there has not at the moment been a request from the government of Ontario in this regard. The point has been made to me by several members from northern Ontario. I will follow this very closely.


Allan Frederick Lawrence: Mr. Speaker, my supplementary is to the Prime Minister. Because the real human element in the Cobalt area is the loss of hundreds of homes and the subsequent homeless plight of at least one third of the population, will the Prime Minister take under consideration an immediate inventory of all of the federal departments and ministries, their agencies and the contractors for the federal government with respect to portable housing units? My understanding is that there are numbers of these in northeastern Ontario that might be available to be used for emergency housing in the area. If he has not already acted on it, will the Prime Minister take that suggestion into consideration?


Pierre Elliott Trudeau: Mr. Speaker, events like this are always brought to the attention of the cabinet by members on this side. Indeed, as with the Minister of Finance, it has been raised with me by members of the area.


Mr. Alexander:: Why did your members say no to the motion?


Pierre Elliott Trudeau: I asked that we consider every possible action. Here I must reiterate what the Minister of Finance has said. There is a formula whereby the federal government is prepared to assist provinces where this type of event occurs. It would be normal for the province of Ontario, if it is as interested as the hon. member, to make a request to the federal government for assistance in this particular case.


Allan Frederick Lawrence: I am sure, as the Prime Minister and his minister appreciates, that agreement covers only financial arrangements. We are dealing here with something more than money. They are badly in need of housing and badly in need of manpower. There are National Defence units available. My question to the Prime Minister is simply this: Will he take a
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May 24, 1977
Oral Questions
personal, close look at the whole situation to see what else the federal government can do in terms of this human tragedy in the town of Cobalt.


Pierre Elliott Trudeau: 1 already indicated, Mr. Speaker, that this is being done by the government.


MANPOWER
Lincoln MacCauley Alexander: Mr. Speaker, 1 will direct my question to the Minister of Manpower and Immigration. Possibly the minister responsible for housing would care to listen. I wish to ask either minister whether this particular matter is within their knowledge. In particular, is the Minister of Manpower and Immigration seeing to it that his whole department, together with the department of the minister responsible for housing, is involved with this extreme tragedy? Can he advise whether he is even interested in this matter. If so, what has he done about it?


Jack Sydney George (Bud) Cullen: Mr. Speaker, as one who spent considerable time in northern Ontario, and 1 am familiar with this particular community, I had a particular interest when I read the press reports. I immediately instructed my officials to look into the possibility of using the emergency fund under Canada Works. There is money that is already committed there for Canada Works projects that we may reroute under the emergency program. There is no shortage of concern on this side. The Postmaster General this morning raised once again with me, being a former native of northern Ontario, what my department is doing in this field.


HOUSING
Lincoln MacCauley Alexander: Mr. Speaker, 1 will direct my supplementary question to the minister responsible for housing. I believe he heard my question. I know he is concerned about the fact that countless hundreds of people are now without housing as a result of this tremendous tragedy. What steps has he taken in order to see that the suffering has been relieved considerably?


André Ouellet: Mr. Speaker, I can report that Central Mortgage and Housing Corporation North Bay manager has been in contact with the chairman of the local housing authority to ascertain what can be done. There is a possibility of helping with temporary housing. Our CMHC men will be on the temporary housing committee. I can assure the hon. member that everything that can be done by CMHC will gladly be done.


AIRPORTS
Mr. Don Mazankowski (Vegreville):: Mr. Speaker, I should like to direct a question to the Minister of Transport. Can the minister inform the House whether his department is receiving revenues on a monthly basis from Host Rent-a-Car at Quebec, Mirabel and Dorval airports, and if not, why not?


Otto Emil Lang: Mr. Speaker, in several cases there are problems of the holding of a licence from the provincial authorities that have not been cleared up at this point.


Donald Frank Mazankowski: In light of the minister's answer, may 1 ask whether the reason that the revenues are not being received at this particular time is the fact that this particular company failed to comply with the licencing requirements of the province of Quebec?


Otto Emil Lang: Mr. Speaker, I did not use the expression failed to comply. I would say, "has not yet received a licence".


ACTION TO EXPEDITE SECOND REPORT OF BERGER COMMISSION
Mr. Alan Martin (Scarborough West):: Mr. Speaker, my question is for the Minister of Energy, Mines and Resources. In view of the importance of having all significant evidence before the government prior to making a judgment on the northern pipeline matter, will the minister do all that he can to ensure a speedy delivery of a report on the second phase of the Berger inquiry which will deal with the conditions that should prevail in the event a pipeline is to be built down the Mackenzie Valley in the immediate years ahead?


Alastair William Gillespie: Mr. Speaker, I understand the hon. member's concern about this matter. I am not at all sure that I am in a position to in any way accelerate the work of Mr. Berger. Mr. Berger, of course, is not reporting to me. He is reporting to my colleague, the Minister of Indian Affairs and Northern Development.


REGIONAL ECONOMIC EXPANSION
Mr. Jack Marshall (Humber-St. George's-St. Barbe):: Mr. Speaker, I have a question for the Minister of Regional Economic Expansion. Last week in the House the minister indicated that he will be making a decision soon with regard to extending some services by having offices of his department
May 24, 1977

opened in other parts of the province. 1 am referring particularly to the disastrous situation which will occur as the result of the impending closure of the Labrador linerboard mill. Has the minister made that decision? Will he keep in mind the urgency of the matter and give me some information?


Hon. Marcel Lessard (Minister of Regional Economic Expansion):: Mr. Speaker, I am keeping in mind all the suggestions that 1 have been receiving from members of this House. I am aware that there should be an extension of our services in different provinces. However, I have not reached a decision.


MANPOWER
Jack Marshall: Mr. Speaker, I wish to direct my supplementary question to the Minister of Manpower and Immigration. Some time ago the minister indicated that in addition to putting into effect the emergency response part of Canada Works program that his officials would deal on an urgent basis with the situation which will occur as a result of the impending layoff of some 2,100 people. I wonder whether the minister could now report something positive in this regard.


Jack Sydney George (Bud) Cullen: Mr. Speaker, all of the facilities of both CMC and the UIC were put into operation. We have a temporary on-site CMC registration outfit which was put into place on May 16. Our mobility programs are in fact also available. Meetings are being held with company, union and provincial officials to see whether we can dovetail some operations to help individuals who have been laid off.


AIRPORTS
Mr. Heath Macquarrie (Hillsborough):: Mr. Speaker, I should like to ask the Minister of Transport whether he can advise if discussions between his department and officials of the P.E.I. government regarding the over-all plan for the Charlottetown airport have now been completed, and can he indicate the present pattern of progress on the construction of a new terminal and other essential ingredients in this important air transportation element?


Otto Emil Lang: Mr. Speaker, discussions have been going very well according to my last report. I will get an up-to-date report today to see where we stand and I will let the hon. member know.
Oral Questions


SCIENCE AND TECHNOLOGY
Mr. Donald W. Munro (Esquimalt-Saanich):: Mr. Speaker, my question is addressed, with your indulgence, to the Minister of Science and Technology or possibly to the President of the Treasury Board. I wonder whether either minister would be prepared to say if a Professor Sidney Vandenbergh has been or is about to be appointed director of the Astrophysical Observatory in Victoria and/or the Hertzberg Institute?


Hon. James Hugh Faulkner (Minister of State for Science and Technology):: Mr. Speaker, 1 would have to look into that for the hon. member.


Donald W. Munro: A supplementary question, Mr. Speaker. While the minister is looking into that matter would he inquire whether there is any possibility that Professor Vandenbergh has made it a condition of his acceptance of this appointment that he might bring with him an American astrophysicist rather than employing a Canadian one?


SACCHARIN BAN-REASON PURE SACCHARIN NOT USED IN TESTS-POSSIBILITY OF CHANGE IN BAN
Mr. Paul Yewchuk (Athabasca):: Mr. Speaker, my question is for the Minister of National Health and Welfare. A press release from the minister's department recently has thrown into question the credibility of the previous research study on saccharin which led to the banning of saccharin from the point of view that it is now not clear whether it was saccharin or impurities in the saccharin which caused cancer in the bladders of rats. Can the minister indicate to the House why it was not ensured that pure saccharin was used in the first place; and secondly, can he now clarify what the position of the saccharin ban is and what work is being done to determine whether it was indeed the saccharin or the impurities which caused the problem?


Hon. Marc Lalonde (Minister of National Health and Welfare):: Mr. Speaker, to conduct an adequate scientific study the saccharin which is presently put on the market by various manufacturers had to be used. Those tests indicated that a determining factor seemed to be the impurities in the saccharin put on the market. The hon. member knows that the elimination of impurities from a product is not. a simple and easy task. I am informed that it is undoubtedly impossible to eliminate completely such impurities and at the same time manufacture and put on the market a product which is competitive in terms of prices with other products already on the market.

May 24, 1977
Oral Questions


Paul Yewchuk: A supplementary question, Mr. Speaker. In view of the new findings, I wonder whether the minister will clarify for the House whether he intends to make any changes in the recently imposed saccharin ban?
[ Translation]


Marc Lalonde: Mr. Speaker, no new factor would justify changing the policy formulated in this regard.


ANTI-INFLATION PROGRAM EXCESSIVE SALARY INCREASES GRANTED SOME EXECUTIVES- REQUEST FOR REPORT
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, my question is for the Minister of Finance. A week ago yesterday I asked his parliamentary secretary some questions about reports to the effect that a number of top executives had had salary increases last year, some ranging from $10,000 to $22,000 a year and one as high as $60,000 a year. In my question I asked whether the government would take serious steps to see that the policy of restraint applies to those at the top the same as it does to wage earners and others in the middle and lower income brackets. I was promised a report within a few days; does the minister now have that report?


Donald Stovel Macdonald: Yes, Mr. Speaker. This matter was discussed with the Anti-Inflation Board immediately after the hon. member's question and the board pointed out that under its instructions from parliament it could not, of course, reveal the details of any particular individual but that, in general terms, it had scrutinized the increased executive compensation. The board pointed out that the executive group in a corporation is treated as a single unit and that the average is taken for the unit as a whole. Therefore, I was reminded that if a particular individual received a substantial increase, such increase would, of course, mean a much lesser increase on the part of others in the particular firm.


Stanley Howard Knowles: A supplementary question, Mr. Speaker. Would the minister ask the Anti-Inflation Board specifically whether, in a case where one executive received a $60,000 increase, all the other executives had such low increases that the average was not over $2,400?


Donald Stovel Macdonald: Mr. Speaker, I could reconfirm that but my understanding is that that would be a criterion that the Anti-Inflation Board would apply.


AIRPORTS
Mr. Robert McCleave (Halifax-East Hants):: Mr. Speaker, my question is asked in all political innocence of the Minister of Transport, and he would know what innocence is all about. With regard to airports, is there any plan within the next 10 or 15 years to bring the Ottawa international airport up to some of the standards which existed at other airports across Canada at least 10 years ago?


Otto Emil Lang: Mr. Speaker, there has been a good deal of planning done in connection with the Ottawa airport. I have been looking closely at the question, although obviously issues of fiscal restraint are present in this regard as well. At least I suppose it is some consolation to those of us who have constituents arriving here from other parts of the country that they sometimes appreciate the fact that they have better facilities at home than we have here in the national capital.


TRANSPORT
Mr. Gordon Towers (Red Deer):: Mr. Speaker, I have a question for the right hon. Prime Minister. In view of the importance of the recommendations of the Hall commission report and its significant consequences to the economic wellbeing of western Canadians, has the right hon. Prime Minister had any discussion or contact relating to the report with western premiers and, if not, is it the intention of the government to meet with them shortly?


Pierre Elliott Trudeau: Mr. Speaker, this matter has been dealt with by the Minister of Transport, and I intend to let him coniinue dealing with it in conjunction with his opposite numbers in the provinces.


ROYAL CANADIAN MOUNTED POLICE
Ramon John Hnatyshyn: Mr. Speaker, I should like to direct my question to the Minister of Justice who apparently has briefed himself with respect to the break-in in 1970 of the Praxis Corporation. In light of the minister's response to the Leader of the Opposition, namely that information was in the hands of the RCM Police who received it from a newspaper editor, may I ask the minister whether or not the informant in question who gave the information to the RCMP is concerned about his identity being revealed? Because apparently he faces the possibility of being killed if his identity is in fact publicly revealed.
May 24, 1977


Stanley Ronald Basford: Mr. Speaker, I have not been briefed on that particular point.


Ramon John Hnatyshyn: A supplementary question, Mr. Speaker, which 1 will direct to the Prime Minister, who was not originally briefed but who apparently had an interview with the Minister of Supply and Services, the former Solicitor General. In view of the fact that the Prime Minister has now spoken to the Minister of Supply and Services, does he want to change any of the answers given to questions earlier on?


Mr. Speaker:: Order, please.


CANADIAN BROADCASTING CORPORATION
Mr. Howard Johnston (Okanagan-Kootenay):: Mr. Speaker,
I should like to direct my question to the Minister of Communications. Would the minister use her good offices to expedite the processing of a formal application made by the CBC to her department to erect an antenna near Vernon, B.C., in order to bring full CBC radio programming via FM to the north Okanagan?


Hon. Jeanne Sauv6 (Minister of Communications):: Mr. Speaker, may I thank the hon. member for giving notice of his question, which I am able to answer straight away. The delay which has taken place has been caused by difficulty in finding a proper site for the antenna. I understand a proper location has now been found and we will be able to process the application very soon.


AGRICULTURE
Mr. John Wise (Elgin):: Mr. Speaker, my question is directed to the Minister of Agriculture and relates to the status of the proposed national chicken marketing board. Can the minister indicate today whether a final decision has been made, and if so, when will the announcement of this board's establishment be made?


Hon. E. F. Whelan (Minister of Agriculture):: Mr. Speaker, if I heard the question correctly, the hon. member asked whether a decision has been made about a national broiler marketing board. There has been no final decision made.


John Wise: Mr. Speaker, was this matter not to be considered today by cabinet committee?


Eugene Whelan: Soon, Mr. Speaker.
Oral Questions


Lincoln MacCauley Alexander: Mr. Speaker, I rise on a point of order. Far be it for me to single out any member from either side of the House when it comes to yeas or nays with respect to Standing Order 43. At this time my only question is that I was listening very carefully-


Eugene Whelan: You are making politics.


Lincoln MacCauley Alexander: The Minister of Agriculture said that I am making politics. He has not even heard my statement yet.


Some hon. Members:: Oh, oh!


Lincoln MacCauley Alexander: Just take it easy. I am trying to find out what the procedure is around here. Mr. Speaker, with all due respect, I was under the impression that one would have to hear either the "Yeas" or the "Nays". I did not hear a thing, so I would have to assume a person, or persons, nodded their heads in the affirmative or in the negative. In order that we on this side of the House will know what is happening in this place, would Your Honour kindly give a ruling as to whether a nod of the head in the affirmative or in the negative is the same as saying "Yea" or "Nay"? I think we must be apprised of Your Honour's ruling in this regard.


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please. The hon. member for Bruce-Grey on a point of order.


Mr. Douglas (Bruce-Grey):: Mr. Speaker, I rise on a question of privilege.


Some hon. Members:: Order!


Mr. Speaker:: Order, please. I will deal with the point of order first. The hon. member for Hamilton West has raised, by way of a point of order, whether or not the Chair ought to hear a negative voice in respect to an application pursuant to Standing Order 43. As I understand it, the application of that rule is that any person may ask the unanimous consent of the House, pursuant to the Standing Order, that the House set aside whatever other business there is and debate some other motion. The presentation of a motion for debate, pursuant to that Standing Order, requires unanimous consent. When the Chair finds the application is within the terms of the order, I put the question. If I hear-and I repeat the word "Hear"-a negative voice, then I consider unanimous consent has been withheld. I must hear a negative voice.
The hon. member for Bruce-Grey.


Crawford Douglas: Mr. Speaker, I rise on a question of privilege which pertains to the accusation made by the hon. member for Northumberlnd-Durham that I was the one who gave a negative voice. I do not believe I did. 1 was talking to-


An hon. Member:: You are not sure?


Crawford Douglas: I was talking to the parliamentary secretary to the House leader at that time. I certainly

May 24, 1977
Oral Questions
would not indicate that, because I believe the people of Cobalt should receive every possible assistance at this time.


Steve Eugene Paproski: Who was the culprit?


Crawford Douglas: It has been mentioned by the Minister of Finance that no application for assistance has been received from the provincial government, which is the proper route for such an application to take.


Mr. Goodale:: Apologize.


Steve Eugene Paproski: Never.


Allan Frederick Lawrence: Mr. Speaker, I rise on the same question of privilege. I distinctly saw the hon. member shake his head very vigorously, in a negative fashion.


Some hon. Members:: Oh, oh!


Allan Frederick Lawrence: If the hon. member for Bruce-Grey says it had nothing to do with the motion before the House, I unreservedly accept that. Out of the corner of your eye, sir, you saw, or heard, the hon. member do the same thing. Therefore, you may have been under the same misapprehension as me, that the hon. member for Bruce-Grey was putting a negative point of view to that motion.


Steve Eugene Paproski: Let us put the motion again.


Allan Frederick Lawrence: If the hon. member says that he was not objecting, and I am sure there was no one else objecting, the motion should be put again. My feeling is there was no negative objection from any member on either side of the House to the motion put.


Ramon John Hnatyshyn: I never heard a thing.


John Edward Broadbent: Mr. Speaker, I rise on the same question of privilege. I, as the mover of the motion, indeed thought the hon. member for Bruce-Grey was the person who said "No". I welcome, and entirely accept, his answer. But I should respectfully like to suggest, if there is unanimous agreement, that we revert back, and I would be delighted to move the motion again under the circumstances. I would also hope we would get unanimous agreement for this very important concern to the people of northern Ontario.


Mr. Speaker:: For the benefit of the House, I would like to clarify the fact that I did not, and I never do, accept a negative voice on a motion unless I hear it.


Lincoln MacCauley Alexander: The Liberals said "No". Let us have the motion again.


Mr. Speaker:: Order, please. On this occasion, or on any other occasion, I am not able to identify the location of a negative voice when I seek unanimous consent. Quite frankly, I am not so sure that that is not all to the good as far as the Chair is concerned. I simply put the question as to whether or not there is unanimous consent. The House knows very well there can be many reasons, having nothing to do with the

substance of the motion, why a member or members on either side of the House may not want to set aside the regular business of the day to give unanimous consent. If I hear any negative voice, I consider unanimous consent has been withheld. I must always do that, at any time. If I do not hear a negative voice, I always put the question. Today I heard a negative voice, and I cannot say where it came from. I could not identify it, but I do want the House to know that I did not act upon anything less than an audible negative voice.
Be that as it may, the nature of the motion is such that the suggestion has been made that if there was a voice which was unintentionally withholding unanimous consent, or if I may have been in error in hearing-


Lincoln MacCauley Alexander: Let us have the motion again.


Mr. Speaker:: Order, please. Bearing in mind the hon. member who raised the point initially, I wonder if I might be able to pursue it.


Some hon. Members:: Hear, hear!


Lincoln MacCauley Alexander: I am sorry.


Mr. Speaker:: It has been suggested that the House should revert to motions in order for the motion to be put again. For the House to do that would require unanimous consent to revert to that stage. Is the House agreed that we should revert to routine proceedings pursuant to Standing Order 43, to hear solely the presentation of the motion of the hon. member for Oshawa-Whitby?


Some hon. Members:: Agreed.


Mr. Speaker:: Is the House agreed?


Some hon. Members:: Agreed.



ROUTINE PROCEEDINGS


John Edward Broadbent: Mr. Speaker, I will require a five-second delay because I sent a copy of the motion up to you.


Ramon John Hnatyshyn: This is just like a by-election.


Mr. Speaker:: The hon. member for Nipissing (Mr. Blais), the acting House leader.


Jean-Jacques Blais: Mr. Speaker, on that point I would like to save the hon. gentleman the time required to get the motion back. We on this side of the House are ready to accept the motion
May 24, 1977

and to provide consent. Lack of communication was probably one of the reasons-


Some hon. Members:: Oh, oh!


Jean-Jacques Blais: Mr. Speaker, in effect, I have been personally involved in this matter as one who has been interested in the Cobalt situation for some time.


Some hon. Members:: Order.


Ramon John Hnatyshyn: No wonder we have trouble in the Post Office.


Mr. Speaker:: Order, please. The hon. member for Oshawa-Whitby (Mr. Broadbent).


John Edward Broadbent: Mr. Speaker, I move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That this House urges the government to provide immediate relief, within the terms of the existing federal-provincial cost-sharing arrangements, to the people of Cobalt.
Earlier, reference was made specifically to food and housing arrangements.


Mr. Speaker:: Order, please. Pursuant to Standing Order 43, presentation of such a motion can be done only with the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


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


Some hon. Members:: Agreed.


Mr. Baker (Grenville-Carleton):: You fellows should apologize.


Ramon John Hnatyshyn: You got caught this time.
[ Translation]


Joseph Adrien Henri Lambert: Mr. Speaker, I rise on a point of order.


Mr. Speaker:: The hon. member for Bellechasse on a point of order.


Joseph Adrien Henri Lambert: Mr. Speaker, considering that I have not had the opportunity to be heard on the question of privilege which has just been raised, and which is very interesting, I would like to draw your attention to the fact that Standing Order 28 provides that every member desiring to speak is to rise in his place and draw the Speaker's attention if only to say no. Now, I often pointed out to the Chair that when a member brings forward a motion under Standing Order 43, we would be very pleased to see the hon. member opposing the motion identify himself, not only by moving his head but also by uttering an audible no, rising in his place, so that his answer is put on the record for the following day and
Order Paper Questions
that Canadians be fully satisfied with our deliberations. I rose on a point of order for that reason, Mr. Speaker.


Mr. Speaker:: Order, please. This is a point of order which has already been raised on several occasions by the hon. member for Bellechasse (Mr. Lambert) and by some of his colleagues. According to Standing Order 28, every member desiring to speak in the House is to rise in his place. However, Standing Order 43 provides a completely different procedure since it is a matter of asking for the unanimous consent of the House. In our previous practice in this House, unanimous consent has been described and accepted as being the expression of a dissenting voice that has to be taken into account by the Chair; the "no" means opposition to unanimous consent. It is one thing to rise under Standing Order 28, but quite another to give or refuse unanimous consent.


FISHERIES AND FORESTRY
[Stage Direction]
Second report of Standing Committee on Fisheries and Forestry-Mr. Bechard.
[Editor's note: For text of above report, see today's Votes and Proceedings.]

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Ralph Goodale: Mr. Speaker, the following questions will be answered today: 1,419, 1,453 and 2,461.


Mr. McCain: 1.	Has the government made any contributions to the capital cost of any intra-provincial ferry in any province in the past ten years and, if so (a) were the contributions a direct or indirect expenditure through arrangements with provincial authorities (b) what are the ports of call for each such ferry (c) in each year, what amount was paid to each such ferry (d) what is the projected amount of capital contributions to be paid to each such ferry for each of the next ten years?
2.	Are any such capital cost contributions being considered for any intra-provincial ferry in any province for the next ten years and, if so (a) what are the ports of call for each such ferry being considered (b) in each year, what are the projected amounts of capital contributions being considered for each such ferry?


Ralph Goodale: In so far as the Department of Regional Economic Expansion is concerned: 1. DREE has made contributions to the capital cost of intra-provincial ferries in the following provinces: (i) Under the Canada-Nova-Scotia subsidiary agreement for development of the metropoli-

May 24, 1977
Order Paper Questions
tan Halifax-Dartmouth area, there is a project for design and construction of two new ferries to carry pedestrian traffic across Halifax harbour, plus design and construction of new terminals and docks, (a) Costs of this project are shared 80/20 by DREE and the province, respectively, (b) The ferries can be considered part of the urban transit system and will link downtown Halifax with downtown Dartmouth, (c) Not applicable. (d) The total cost to design and construct the new system is estimated at $5.7 million. Of this amount, the capital cost of the two ferries is estimated to be $1 million each. DREE's share of the $2 million will be $1.6 million, to be spent as follows: $800,000 in 1977/78; $800,000 in 1978/79.
(ii)	(a) DREE is also contributing in direct expenditures through the Fund for Rural Economic Development Act with the province of Quebec, (b) Matane; (c) 1975-76: $163,725; 1976-77: $75,000. (d) 1977-78: $300,000; 1978-79: $949,020.
(iii)	(a) In Saskatchewan, contribution is being made in co-operation with the province to the Wollaston Lake Fishermen's Co-operative, on basis of 50 per cent of total cost $49,240. (b) the ferry will call at the road terminal at Rabbit Lake and Wollaston Lake village, (c) in 1976-77 the DREE contribution was $7,808. (d) the projected expenditure toward capital in 1977-78 is $16,812. (iv) DREE contributions are being made to three ferries in Manitoba under the Canada-Manitoba Northlands Agreement, and are based on 60 per cent of the approved capital costs, (a) Split Lake Ferry- barge; (b) Ports of call: Split Lake Community and Odei River Landing located on road terminus 45 miles northeast of Thompson; (c) 1976-77 approved budget-$97,200 (d) 197778 approved budget-$385,200. (a) Cross Lake Ferry-barge; (b) Ports of call: Cross Lake Community and Jenpeg (c) 1976-77 approved budget-$88,200; (d) 1977-78 approved budget-$369,000. (a) Norway House Cable-ferry; (b) Ports of call: The vessel is a cable ferry across the east channel of the Nelson River and linking road portions that are to provide access to Norway House, (c) Nil. (d) 1977-78 approved budget-$162,000.
2.	No further capital expenditure is being considered.
In so far as Transport Canada is concerned: 1. Yes, the Transport Canada has made contributions, (a) They were direct contributions, (b) (i) Quebec-Lower St. Lawrence; (ii) Ontario-South Baymouth-Tobermory, (c) (i) Quebec- $3.0 million capital grant 1972/73; (ii) Ontario-$3.0 million capital grant 1972/73. (d) No amounts are projected.
2. No firm amounts are presently being considered. Discussions are underway with several governments. Buy out arrangements could result which would be much similar to the arrangements which resulted in the contributions detailed in No. 1 above in which the two provinces took over operating responsibility for a number of ferry services.


Mr. Clarke: 1. What was the total number and value of coins (a) minted (b) sold under the Olympic coin programme?

2.	Does the difference in the number indicate how many will have to be melted down and, if not, how many will be melted?
3.	(a) What is the salvage value of a melted down coin (b) what was the production cost for an Olympic coin?
4.	What was the total number and value of scupltures (a) minted (b) sold under the Olympic stamp sculpture programme?
5.	Does the difference in number indicate the number which will have to be melted down and, if not, how many will have to be melted?
6.	(a) What is the salvage value of a melted down sculpture (b) what was the production cost of an Olympic stamp sculpture?


Ralph Goodale: I am informed by the Department of Finance and the Post Office Department as follows: 1. (a)- Silvei, 31,675,128 valued at $153,765,784; Gold, 921,545 valued at $42,715,980; as at September 30, 1976. (b)-Silver, 24,583,489 sold for $274,515,794; Gold, 860,404 sold for $96,817,653; as at September 30, 1976.
2.	No. The program is not yet completed.
3.	(a) The salvage value would depend on the price received at the time of sales for the bullion recovered from the coins, (b)-Silver, $4.86; Gold, $46.35; as at September 30, 1976, and including the cost of bullion.
4.	101,251 sculptures, yielding a gross revenue of $8,849,108 were minted and sold under the Olympic metal stamp program. In addition, a nominal number of display sets for use at point of purchase in advertising, etc., and damage replacement sets, were minted.
5.	No metal stamps, except for display sets and damaged sets, were, or will be, melted down
6.	(a) The salvage value of a melted down sculpture is the value of the metal, i.e., gold, silver and bronze. This value will vary daily, depending on the daily market value of these metals, (b) The production cost of an Olympic stamp sculpture varied from series, and ranged from: $8.50 to $13.04 for sets of 3 bronze sculptures; $18.82 to $26.92 for sets of 3 silver sculptures; $404.66 to $509.18 for sets of 3 gold sculptures.


Mr. Fortin: 1.	Did the National President of the Economic Security Employees' National Association (ESENA), during the last week of March, 1977, or thereabout, meet with the Quebec officials representing the administrators in charge of the UIC-DMI merger, officials of the Unemployment Insurance Commission and of the Canada Manpower Centre and, if so, was the Quebec Union representative invited and, if not, for what reason?
2.	Was the matter of Quebec workers wanting to dissociate from the National Union and requesting separate certification from that of ESENA raised during the meeting?


Jack Sydney George (Bud) Cullen: 1. (a) No. (b) Not applicable, (c) Not applicable.
2. Not applicable.
May 24, 1977


Ralph Goodale: Mr. Speaker, if question No. 1,515 could be made an order for return, that return would be tabled immediately.


Ramon John Hnatyshyn: Mr. Speaker, perhaps the parliamentary secretary would explain why this particular response has to be made an order for return. The question has been answered on previous occasions and the answer has been published in Hansard. I am very interested in it, and 1 wish to use it for comparative purposes.


Ralph Goodale: I should have pointed out that the reason for answering the question in this way is the bulky nature of the answer. As hon. members may have observed while the return was being taken to the table, it is a thick and bulky document.


Ramon John Hnatyshyn: It was printed last time.


Mr. Speaker:: Is it the desire of the House that question 1,515 be deemed to be made an order for return?


Some hon. Members:: Agreed.


Mr. Hnatyshyn: 1.	In regard to food aid for third world and developing countries, for the year (a) 1975, (b) 1976, (i) what was Canada's contribution, (ii) to which countries did Canada contribute, (iii) in each case, what food products were contributed and at what dollar value?
2.	What was the (a) administrative cost, (b) cost of distribution (c) value of the food product?
Return tabled.


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


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


Donald Stovel Macdonald: that Bill C-18, to amend the Bretton Woods Agreements Act, be read the second time and referred to the Standing Committee on Finance, Trade and Economic Affairs.
Bretton Woods Agreements
He said: Mr. Speaker, the legislation before us today to amend the Bretton Woods Agreements Act aims to ratify the recently proposed amendments to the articles of agreement of the International Monetary Fund and to make them part of Canadian domestic law. The proposed amendments constitute the first major reform of the articles of the fund and represent a significant step in the evolution of the international monetary system. The bill also provides for acceptance of Canada's quota and subscription increases in the International Monetary Fund and the International Bank for Reconstruction and Development, or the World Bank. This is an important further step in the efforts which have been undertaken over the past six decades to try to work out in the international market an effective replacement for the role the gold standard played in monetary exchanges before the First World War.
Before that war was over, the first move in this direction was made with the publication of President Wilson's famous 14 points. At the Versailles conference which followed, an attempt was made to arrive at an international legal order which would govern economic relationships between states, but neither the treaties of Versailles nor of St. Germain-en-Laye were effective in bringing about the desired general improvement in the world monetary system. Indeed, the main feature of the interwar period with regard to international payments was, of course, the reparations question as it affected Germany, though in those decades the system was modified to some extent for instance, by the Dawes plan. With the worldwide depression in 1929, attempts to arrive at some collective world order in the economic field came virtually to an end and the period up to the beginning of the Second World War was one of economic autarchy.
After the conclusion of the Second World War there was, of course, an attempt-and a far more successful attempt-to create a number of institutions on the international scene for the purpose of establishing international economic order. There was a revival of the International Labour Organization, the only one of the League of Nations functional organizations which survived the war. Also, of course, there was the founding of the United Nations itself and the establishment of such specialist bodies as the World Health Organization and the Food and Agriculture Organization. The impetus with regard to a better world economic order was founded on the joint Anglo-American statement which emerged from the Atlantic Conference of 1941 between Prime Minister Churchill and President Roosevelt. At that time, the two leading countries on the western side in the Second World War sought to achieve a definition of multilateralism which would be useful in postwar reconstruction. The fourth and fifth paragraphs of the Atlantic Charter reflect this particular effort.
Out of that initiative, institutions such as the International Monetary Fund and the International Bank for Reconstruction and Development came into existence, as well as initiatives or the creation of the International Trade Organization, which was stillborn but which was followed by the General Agreement on Tariffs and Trade. The two prime architects of the

May 24, 1977
Bretton Woods Agreements
Bretton Woods Agreement were the famous British economist, Maynard Keynes, and his American counterpart, Harry Dexter White. Richard Gardner, one of the leading students of this period, has written that the two men joined in their aim to promote a system of multilateral payments in which external equilibrium could be maintained at levels of domestic full employment. Their purpose was to provide members with additional international liquidity which would provide a protective cushion against temporary economic disturbances and make unnecessary the resort to illiberal internal or external policies.
The fund's articles of agreement have provided a legal and financial framework, just as the architects of the system had hoped, based on fixed exchange rates or par values, and these arrangements have continued to guide the international monetary system since the agreement was signed at the Bretton Woods conference in 1944. However, in recent years, particularly since the onset of the decade of the 1960s, it has become more and more evident that the par value system, as well as some operations of the fund, were no longer in tune with present-day international economic reality and with the needs of modern states. Canada in particular experienced difficulties in adhering to the rigid and anachronistic code. These difficulties led to the floating of the Canadian dollar in the 1950s and, again, since 1970.
As these problems surfaced, it became clear that the international monetary system as constituted by the articles of agreement, as well as the financial operations of the fund provided for by these articles, would have to be reformed and brought up to date. Thus, starting in the early 1970s the fund began to take a long and hard look at how such a fundamental reform might be achieved. A ministerial committee of 20 was created to seek a global reform of the monetary system. However, rapidly changing events such as the energy crisis and worldwide inflation made it impossible to achieve that aim. Accordingly, an evolutionary and more pragmatic approach to reform was adopted through the successor of C-20, the interim committee which, through much of its early years was chaired by my predecessor, the Hon. John Turner.
A reform package was finally agreed to at the interim committee's meeting in January, 1976, in Kingston, Jamaica, and this is the reform package which is now included in these amendments. Before the amended articles of agreement can come into effect, they must be ratified by 60 per cent of the fund's member countries with 80 per cent of the voting power.
These amendments to the Bretton Woods Agreements Act will, in addition, accept the increased quota of Canada in the fund, and increase it from special drawing rights $1,100 million to SDR $1,357 million as part of a general increase of subscriptions to the fund, from SDR $29 billion to SDR $39 billion which was proposed along with the amendments of the fund's articles. They represent, as well, an increase in Canada's subscription to the other Bretton Woods organization, the World Bank from U.S. current $1,136 billion to U.S. $1,342 billion. As only 10 per cent of our subscription to the World Bank is paid in cash, this will represent an out of pocket

contribution of about $20.6 million in Canadian dollars at this time.
The highlights of the new amendments are the new provisions on exchange rates which allow members to choose the arrangements which they wish to apply, the abolition of the official status for gold and the broadening of the scope of the IMF's surveillance powers to cover all policies that affect the external sector and not just exchange rate practices. In addition, some of the amendments improve the fund's operating structure and financial viability while others simply clarify the meaning or bring the wording up to date.
According to article I of its articles of agreement, the fund is charged with facilitating the expansion and growth of world trade and payments as a means of raising world standards of living and of fostering economic development. The fund is to promote and ensure stability and order with respect to exchange rates as well as to establish mechanisms for balance of payments assistance to enable member countries to correct temporary imbalances with a minimum of disturbance to the international monetary system. Accordingly, its assets are available for short and medium term financing to members faced with temporary balance of payments difficulties.
The general objectives of the fund are unchanged in the amended articles, although the means by which the fund and its members are meant to co-operate to achieve these objectives have been changed in key areas, particularly exchange rates, the role of gold and the financial operations of the fund. The fund's ability to enforce such co-operation with an international code of behaviour is based on its power to grant short and medium term credit under appropriate policy conditions to members.
Originally, the fund's membership consisted of 45 countries, as recognized in article II, section 1 and set out in schedule A of its articles of agreement. Provision was made in article II, section 2, for other countries to join, and currently its membership is made up of 128 countries, 100 of which are classified as developing countries. With the quota increase now proposed, total subscriptions to the fund through the years will have been increased to SDR $39 billion, which is about U.S. $45 billion at current rates of exchange, from original subscriptions totalling U.S. $8.8 billion; that is to say, in 1944 dollars. The bulk of its funds are obtained through quota subscriptions, although the IMF may borrow to help finance its operations.
The system as envisioned under the old articles required a member to declare and maintain a par value for its currency in terms of gold and to convert foreign official holdings of its currency into gold or the currency of the holder at the latter's request. When payments imbalances between countries produced a supply and demand situation that was not in balance at the existing exchange rates, governments intervened in the exchange markets to defend the par value. These interventions, in effect, financed the payments deficit or surplus. Although each country holds its own official reserves of gold and foreign exchange for this purpose, the members also draw upon the pool of other countries currencies in the fund.
May 24, 1977

The fund's financing operations take the form of a transaction. A member drawing on the fund uses its own currency to purchase foreign exchange from the IMF. It can purchase an amount equal to the gold part of its quota virtually automatically, and can purchase additional amounts, known as credit tranches, under progressively stronger policy conditionality and stiffer service charges. Borrowers must repay their loans by repurchasing their currency from the fund within three to five years.
This question of conditionality has been one of the questions that has excited considerable attention and concern at meetings of the interim committee. There is concern that the IMF bureaucracy in its application of the articles of agreement may fail to take account of the social and economic pressures which are weighing on the member countries, making applications for further balance of payments assistance under the fund. I, for one, share the concern which has been expressed by a number of ministers of finance in other countries that in the administration of its new powers the fund should seek on every occasion to remain sensitive to the difficult circumstances which member countries, and particularly developing member countries, are facing at present in an era in which there has been a dramatic increase in energy prices, and at the same time for some of the same countries a drop in export earnings. On the question of exchange rates, a new provision on exchange rates creates a general obligation for members to pursue policies conducive to a stable system of exchange rates.
Members must collaborate with the fund and with other members in this regard by pursuing domestic and external policies that are internationally responsible. Members are otherwise free to choose the exchange arrangements that best suit their circumstances. The fund has been given a new legal framework for the surveillance of the variety of exchange agreements that members adopt.
The exchange rate article also provides for a possible return to a par value system. If an 85 per cent majority in the fund believes it appropriate, the fund can enact a new system of fixed, but adjustable, exchange rates. However, the provisions clearly give a country the right to continue with any other exchange arrangement or to opt out of a reinstated par value system while still fulfilling the general obligations of good conduct. It is that exception which is of particular relevance from the standpoint of Canada, for Canada, as I have already said, is a country which, under the circumstances of our economy, has preferred to follow a floating exchange rate system.
There has been, in the international community, widespread experience with floating during the oil crisis, and the ability of the financial system to operate efficiently and viably in this atmosphere has helped support confidence in the arrangement. Canada was in the vanguard of the movement to float currencies and has naturally been a strong supporter of the swing back to greater flexibility, which is indicated by these amendments.
Bretlon Woods Agreements
The provisions of the new article on exchange rate arrangements is therefore very much in line with Canadian thinking and Canadian interests. As I have said, the amendment is fully satisfactory from the Canadian point of view. It gives the fund an appropriate role in monitoring financial practices, yet allows any government to pursue a responsible exchange rate policy suitable to its own circumstances. Necessary adjustments of exchange rates now have the potential of taking place swiftly and relatively smoothly, and thereby of absorbing the impact of payments deficits without forcing governments to intervene massively.
Among the important provisions in the amendment is a provision with regard to gold. The abandonment of par values, plus the problems of reserve creation and control, pointed to the need to phase out gold progressively from the monetary system. The provisions of the comprehensive amendment and the associated agreements on gold will greatly reduce the role of gold by removing its official status and allowing it to be traded like other commodities. The new articles eliminate the function of gold as a common denominator of par values. They abolish the official price and give members the authority to buy and sell gold at market prices. They eliminate all obligations on members to make payments of subscriptions, charges or re-purchases in gold to the fund. Thus, gold will no longer have a favoured role at the heart of the international monetary system, although it will still retain a monetary role for as long as nations hold it as part of their reserves. Through the new collaboration clause, members must undertake to ensure their policies with respect to reserve assets, including gold, better to serve international liquidity objectives. Finally, by an 85 per cent majority the fund may choose to dispose of its gold holdings.
As part of the agreement on these changes, the fund is to dispose of one-third of its gold holdings, half of this 50 million ounces being returned to members at the old official price of SDR 35 per ounce and half being sold on the market for the benefit of the least developed countries. So far, starting in June, 1976, the fund has held three auctions of its gold for the latter purpose. Profits from such gold sales will be used to assist the poorest developing countries meet their balance of payments needs. The fund has been pressed by Canada to make certain that the auctions are carried out with a minimum of disturbance to the regular production and sale of gold and with a minimum disruption to the market.
The reduction of the role of gold in the international monetary system has been in line with a position which Canada has consistently advocated, and the reduction of the role of gold seems to us a necessary step toward bringing liquidity creation under international control. We are satisfied that the arrangements in the new articles will lead toward this end.
In addition to those specific measures, the amendments now before the House contain quite a number of technical amendments with regard to detailed problems of application of the articles and in particular they confer upon the fund greater responsibilities with respect to the surveillance of balance of payments and other problems. On these matters I would be

May 24, 1977
Bretton Woods Agreements
more than happy to engage in a full examination and study with the committee when the bill receives second reading.


Mr. Sinclair Stevens (York-Simcoe):: Mr. Speaker, in speaking to this bill I must say that I find it remarkable that our minister has indicated how much the government endorses the amendments which are before us today with respect to changes in International Monetary Fund activities. For example, I believe the minister stated that the amendments-he was referring specifically to certain fixed rate exchange amendments-are fully acceptable to Canada. In short, without giving very many reasons as to why we should be asked to accept these amendments today, the government is obviously satisfied in its own mind that the amendments should be rubber-stamped and expedited through this House as quickly as possible.
While many of us may be overwhelmed by the subject matter before us today which is covered by Bill C-18-that is, amendments to the Bretton Woods Agreements Act-I suggest it is imperative that all hon. members of this House participate in a meaningful debate on this matter. In this connection I think it is regrettable that not one Liberal member chose to participate in the debate which dealt with the Customs Tariff revisions which were before the House last week. Not one Liberal member-other than the minister in each case-chose to join in the debate with respect to the excise tax amendments which were before this House, and I think it will be most regrettable if not one Liberal member chooses to speak on this bill which is before us today.
Surely hon. members opposite have some views as to what is the proper international monetary stance for Canada to be encouraging at the present time. Surely, if they are completely in agreement with the minister and with the other members of the cabinet, they could at least indicate to the House the nature of their agreement and why they feel we should be asked to support the amendments before us. There is little point talking domestically about how we intend to control inflation, how we intend to lessen unemployment, how we will ensure meaningful real growth in our economy, what is the proper fiscal and monetary stance for our country, whether the AIB is really needed, what course we should be following with respect to the GATT negotiations in Geneva, whether it is right for us to be borrowing so much exernally and, finally, why we have the trade deficit we have today in end products, for example, which has widened to a startling $10 billion, without first taking a good, hard look at Bill C-18 and its effect with respect to proposed amendments to the IMF.
There is little point debating these subjects unless we first debate what type of international monetary system we live with, how it should be changed to our advantage and, specifically, how any change in the international monetary system should be made to ensure that it is in Canada's best interests. Before we ask the nation to endorse these amendments, we owe it to our constituents to have a full debate first in this House and in committee with respect to the matters before us.

In leading off on behalf of the official opposition, I suggest there are ten points that we should be considering before we report this bill back from committee. First, since the establishment of the Bretton Woods Agreements 33 years ago, our international monetary system has attempted to free itself from any form of discipline. Unfortunately, Canada, both domestically and internationally, in the last ten years has been one of the most irresponsible partners in shedding such traditional constraints. As a result of this international lack of restraint, we find that the western industrialized world is being subjected currently to the highest interest rates since the middle ages. Let me reiterate that: I believe sometimes we grow accustomed to such things as 9, 10 or even 12 per cent interest rates without realizing that the phenomenon of high interest rates is truly an abnormal phenomenon and that we have not had, in the western civilized world, such high rates for the past 600 or 700 years. That is the first point I wish to make. Historically there is very little doubt that the fall of interest rates such as occurred in the western world from the thirteenth century onward reflected a healthy growth in our civilization and denoted a real growth for all concerned. I would point out that there are a number of phases where interest rates have gone up-not to the present height, but higher than normal. This has always been associated with unstable political and economic conditions. Likewise, rises in interest rates denote a civilization in trouble as occurred in Roman times and earlier. With interest rates, particularly in Canada, at such record heights, somewhere in the 9 per cent range, I think it is important that we compare that 9 or 10 per cent range with the 4 per cent range of interest rates in the world's nine strongest nations, Canada included, over the past 200 years. I believe we should accept such high interest charges as a red flag indicating danger, certainly for this country and, secondly, for the western industrialized world.
Second, in our participation with respect to the International Monetary Fund the impression has been left that in Canada we do not have an independent mind. I believe the speech of the Minister of Finance (Mr. Macdonald) today brings this out most vividly. There is no questioning; everything is acceptable that has been put before us as far as the proposed amendments are concerned. There is no uncertainty in the minister's mind about whether the amendments before us are totally acceptable to Canada. He does not give the pros or cons. In short, it appears that we have simply followed the lead of the United States: if it is good for the United States, the assumption is that it is good for Canada. This is unfortunate, in that in dealing with this matter there is no doubt that the interest and objectives of the United States are often quite different from ours. It is true, we share this great continent together, but this does not mean that automatically what the United States wishes to change with respect to the International Monetary Fund is necessarily good for us.
We should remember, for example, that the United States is one of the most efficient producers in the world. It is, therefore, natural, being such good producers, that they want an
May 24, 1977

open world so that they can sell their produce. This, if allowed to happen, and coupled with the equal production efficiency of Japan and Germany, would devastate this country as a manufacturing nation. This trend is reflected in the economic review tabled by the Minister of Finance last week, where it is pointed out on page 60 that our trade deficit in end products rose from $3.6 billion in 1971 to over $10 billion-the figure I referred to earlier-in 1975 and 1976. In sharp contrast, the United States, Germany and Japan had surpluses in their comparable and product accounts.
Third, the government has chosen a policy of relative secrecy with respect to negotiations which have led to the amendments before us. Unfortunately, they have chosen to be secret about our GATT negotiations in Geneva as well. This shroud of secrecy surrounding government activities is contributing to the lack of business confidence so prevalent today. How can we expect labour, small businessmen and farmers to co-operate if we do not take them into our confidence with respect to the government's targets and objectives? Only last Friday we had an example of the government's tendency to be non-committal with respect to our future or the future the government hopes to chart for us. When asked during the question period if the government would follow the lead of President Carter's chief economic adviser, Mr. Charles Shultz, and announce a target date for bringing the Canadian budget into balance, the Minister of Finance only stated that he admired the courage showed by Mr. Shultz but he, himself, did not care to be so precise.
For years the Americans have published their long-term objectives with respect to inflation, unemployment, interest rates and the like, while our government officials merely dodge the issue, leaving the impression that the Americans know where they want to go and what they want to achieve, while our officials are totally bewildered.
Fourth, this government likes to cite the energy pricing crisis as being troublesome in Canada. It is true that the oil producing countries as a whole had current account surpluses of about $46 billion in 1976. But today and earlier it is interesting to note that the Minister of Finance forgot to point out that we are an energy producing nation and that every year since the so-called crisis in pricing we have produced a trade surplus in energy by selling at high prices. Last year, for example, our surplus was about half a billion dollars on energy trade alone. How strange that we are constantly told that energy pricing is creating domestic problems in Canada, when in fact we are the beneficiaries, as far as trade is concerned, in high-priced energy that is being sold throughout the world.
I suggest that energy pricing has a minimum effect as far as trade is concerned, that is, whether we are doing well or poorly in terms of world trade rather than ending up as we did in 1975 with the highest current account trade deficit of any of the seven major industrial nations; and then rationalizing the situation. It is time government supporter recognized the degree of severity of that deficit. Canada, in short, had the highest current account trade deficit of any of the seven major industrial nations, including the United States, Japan, France,
Bretton Woods Agreements
Germany, Italy, the United Kingdom and ourselves. In 1976 we were the second highest in our deficit, trailing only France.
Fifth, I would like to suggest that the world's real growth expansion in the past few hundred years has been subjected to monetary discipline. First it was gold that was the agreed standard, but as it shackled those who wished to spend, it was downgraded until now, in the amendments before us today, gold has been downgraded to virtually no role. Let us face the fact that the chief reason those who are proposing our present monetary system have discarded and downgraded gold is that they do not like to be disciplined by the effect gold has when our monetary system is related to it. I noticed that in his earlier remarks the Minister of Finance, in effect, endorsed the downgrading of gold as far as our international monetary system is concerned. As the world's third largest producer of gold, are we right in accepting this relative abandonment of a world standard that has been with us throughout history?
The more the world depends on the United States dollar and the use of the SDR, the more the world leaves itself open to the irresponsible expansion of money. The amendments to the Bretton Woods Agreements being debated today will in many ways leave the world's monetary system open to domination by the United States monetary approach. If the United States inflates, the world will tend to inflate. If the United States
restrains,	the world will tend to be restrained. In short, international monetary leaders can print money, but they have not learned how to produce gold, which is why recourse to gold is resisted.
We in Canada must ask ourselves if this system best suits our interests. Is the complete abandonment of gold in Canada's best interests? It is not that gold is so important. Its importance, rather, is that its use involves a built-in element of
restraint.	One asks, given the new, liberalized use of SDRs and other forms of international currency, what will impose a tolerable degree of restraint on governments? Given the opportunity, most governments will sidestep restraint, as our own government has. You will recall that it doubled this country's money supply in the six-year period ending last October because it found that course politically beneficial.
Sixth, while we have been referring to the structuring of the international monetary system and to the fact that world leaders appear to be seeking relative freedom to "gimmick" the monetary system at will, I suggest it is important for the government to indicate to the House how it plans to act responsibly in the midst of possible world irresponsibility. By being restrained in this country, by running our own system prudently, we can turn international irresponsibility to our advantage, as Switzerland has done, for example. Swiss currency has appreciated in relation to other major currencies, while ours has depreciated. In short, to the degree other nations choose to create inflation domestically, we in Canada can improve our position by deliberately containing inflation which, in turn, will be of benefit to us internationally.

May 24J977
Bretton Woods Agreements
It is absolutely erroneous to say that a nation must inherit inflation created outside its boundaries. The fact is that Canadian inflation was manufactured by the Bank of Canada under the instructions of the Canadian government. There is no doubt about it, although the government likes to confuse the issue. Such inflation need not be imported. Actually, it will only be imported by a government which chooses to avoid fiscal and monetary responsibility, as the minister well knows.
Let me put it this way: If the minister goes to the local pub and sees some people who have drunk too much and are, therefore, in a state of drunkenness, that does not mean that he, himself, must get drunk. But that is the idea he wants us to accept when he talks about world inflation, or inflation in other nations. When the minister speaks of inflation, which is only another form of a binge at the local world pub, the minister likes to pretend that if other countries are giddy, we, somehow, must become giddy too. That is not true. Unfortunately, the minister has not said today what steps he intends to take to make sure that despite any inflationary tendencies which may develop internationally we shall curb inflation in this country.
Seventh, not only has Canada tended to acquiesce in the world's credit explosion, but we have reached the peak in foreign borrowings. I wish to read three passages from the Economic Review to which I have referred. The parts 1 shall quote are relevant to Canada's present-day position in the international world. The first passage reads:
The substantial increase in Canada's current account deficit has been matched by an increase in net over-all capital inflows, particularly through an increase in new issues of long-term Canadian securities abroad. This resulted in a rise in the book value of Canada's balance of international indebtedness (including increases in earnings accruing to non-residents) from $29 billion at the end of 1971 to $48.5 billion at the end of 1976.
Mr. Speaker, to sum up, according to the minister's own economic review figures our total foreign debt increased by almost $20 billion between 1971 and 1976 over the previous $29 billion level. It took Canada 104 years to run up a foreign debt of $29 billion, but in five years-between 1971 and 1976-the government, through sheer irresponsibility, increased that foreign debt by $20 billion. I continue quoting the first passage:
As noted earlier.. . the increase in indebtedness has caused interest payments to non-residents to increase at a rapid-pace during the past five years, thereby making turn-around in the current account more difficult to achieve.
The second passage I wish to quote reads as follows:
The net capital inflow of $4.9 billion in 1976 was marginally higher than in the previous year, reflecting a steep rise in long-term capital inflows and an off-setting decline in the balance on short-term capital. The net long-term inflow of $7.5 billion was up $3.4 billion from the previous year-
To summarize, that passage refers to the inflow of long-term capital, capital which will not be repaid for 5, 10, 15 or more years. Such capital inflows of $7.5 billion last year increased by $3.4 billion over the level of the previous year. The final paragraph I wish to quote reads in part:
-net new issues placed abroad, including both foreign currency and Canadian dollar issues, accounted for 60 per cent of all net new marketable issues by Canadian borrowers, compared with 45 per cent in 1975.

I emphasize that these are not our own figures or the figures of some outside group. They represent the government's own admission of the extent of this country's foreign borrowings. The impact of this borrowing binge will be felt for generations in Canada. It will be felt in particular as the money has been substantially used to finance consumer purchases rather than capital projects which might have been used to improve our international trading position in years to come.
As we know from Canadian history, initially we borrowed large sums from Great Britain and certain other nations. But we did not borrow to cover current account trade deficits, which is now the case. We borrowed money to build our railways and to build power installations which in turn helped develop our country. The prosperity which resulted gave us the wherewithal to pay back the debt. That is not happening now. We are not doing this with respect to the debt we are now incurring internationally.
Eighth, the drift to non-fixed exchange rates has been encouraged or at least supported by the International Monetary Fund, as the minister said today. We in Canada have been in the vanguard in asking for free exchange rates as opposed to the traditional fixed approach. This, coupled with our tendency to borrow so extensively to cover our inadequate trade position, leads to interest rate crunches. Already we have had our first run on the Canadian dollar. Hon. members will recall last November. We were lucky. The minister covered up and we were sheltered from the true impact as to what actually occurred in November and December of last year. Here, again, the Economic Review discloses that in November of that year our United States dollar reserves fell by $758 million. That, Mr. Speaker, is a tremendous fall for our reserves in any one month, bearing in mind that our total reserves are less than $4 billion. The review points out that the rise in December was roughly comparable to the decline in November. They state at page 65:
The Canadian dollar was under heavy downward pressure in November but recovered in December.
When we get to committee, I hope we can be furnished with sufficient information so that the Canadian public will be fully apprised of exactly what happened in November and December during that mini-crisis. If we can get that information we may be better prepared for future runs on the Canadian dollar which will certainly occur if the Canadian government persists in their "Alice in Wonderland" approach to international finances. With our resources, which on a per capita basis are greater than the resources of our rival industrialized nations, it is inconceivable that we should some day have to be bailed out by the International Monetary Fund like the United Kingdom has been. However, that is certainly what will happen if we continue on our present path.
Ninth, the minister has not given us today, and certainly has not earlier given any indication whether the International Monetary Fund or any other international agency has given guidelines to this nation or any other nation which are to be
May 24, 1977

followed domestically by member countries with respect to monetary increases. In Canada the increase in our monetary aggregates went on virtually unabated in 1975 and 1976 when, we are told, we were in a period of so-called restraint.
Here are the facts: M-2, which is currency and privately-held Canadian deposits, jumped 17.5 per cent in 1975 and 17 per cent in 1976. With such expansion, and with our rapid expansion in the government sector, the Anti-Inflation Board activities have become an exercise in futility. Worse still, the AIB appears simply to be a convenient scapegoat to allow the government to pretend to the Canadian public that they are doing something meaningful about inflation.
Surely we are entitled to get from the minister some indication as to whether such monetary increases are within, or without, suggested word guidelines. Is it in the current thinking of the International Monetary Fund, for example, that a country such as Canada should expand its most basic supply of money by approximately 17 per cent in a year? Is it really being fair to the Canadian public, with such expansion, to be stating that somehow restraint is the order of the day?
The tenth point I would like to make is that while we have already cited Canada's high interest structure, perhaps the most ludicrous thing of all is that we, a high-interest rate country, is in the vanguard of making low-interest loans directly or indirectly throughout the world. In the World Bank annual report for 1976, which of course includes funds from this country, billions of dollars are listed as going out to various countries or organizations at interest rates substantially below the rates that we must pay when Canadian identities borrow abroad. In appendix H to the World Bank annual report for 1976 records are shown for hundreds of countries. The loans I would like to refer to are those listed for the International Bank for Reconstruction and Development which, of course, is a World Bank, International Monetary Fund activity. They indicate that the current rates in the year under review were 4.5 per cent to 8.85 per cent. The countries they list include, for example, Bolivia, Chile, the Congo, Fiji, Peru and Turkey. Virtually any country that you want to think of is listed as getting loans in the range of 4.5 per cent to just slightly under 9 per cent.
Perhaps the minister can explain how we have gotten into a system where such countries are entitled to credit at those rates when, at the behest of the federal government, our provinces have to borrow abroad at interest rates of 9, 10, and even 11 per cent. Perhaps the minister can also explain why, in this international context, our Export Development Corporation makes loans amounting to hundreds of millions of dollars with interest in the 8 per cent range, yet we are told there are no funds available to allow the government to meet their election promise of supplying $290 million to help urban transit in Canada. Why the double standard?
With one of the highest interest rate structures of any of the industrialized nations, why do we feel there is nothing inconsistent about giving loans with interest rates substantially below the rates we are requiring Canadians to pay domestically?
Bret ton Woods Agreements
It is perhaps axiomatic that the needs of international commerce change more rapidly than our ability to cope with them. In the past few years, for example, we have seen massive and, as I have said, disproportionate shifts of wealth away from the industrialized nations and into the coffers of the oil exporting nations. As I have already mentioned, let us not forget that we are an oil exporting nation.
It is estimated that in 1976 the OPEC countries may have sustained a combined surplus as high as $46 billion, while the OECD nations stumbled along with a current account deficit of $20 billion. May I again remind hon. members that of that $20 billion sustained by OECD countries, over 20 per cent is Canada's deficit, that being the $4.3 billion that we ran up in our current account trade deficit last year. It is within this context of a rapidly changing world order that the amendments to the Bretton Woods Agreements were drafted. It is within this context that we, in dealing with Bill C-18, must attempt to determine just where the world is heading today and where Canada will fit into any new order.
There is growing concern that our international monetary system is faltering today and that increased flexibility in exchange rates may be partly at fault. If I judged his remarks correctly, the minister almost takes credit for the relative free floating of exchange rates in the world. I would point out to him that Dr. F. Leutwiler, president of the board and general manager of the Swiss National Bank, had this to say about the current state of international monetary conditions:
The breakdown of the formerly stable monetary system was not caused by inadequate rules as may perhaps be presumed, but eventually by the inability to live up to the disciplinary constraints of the parity system . ..
It is therefore in no way surprising that the monetary reserves of the western world increased in 1974 by no less than $37 billion; at the end of 1975 they amounted to a total of $230 billion. This is roughly 2'h times as much as in 1970.
Let me repeat, that, Mr. Speaker-by 1975 international monetary reserves went up 214 times what they were in 1970. To continue with Dr. Leutwiler's quotation, he states:
Thus, apart from inflationary domestic money creation as a seemingly easy means of evading the constraints of stability policy, international money creation-no less inflationary-was also practised.
He concludes:
It is obvious that deficit financing via borrowings is not practicable over a prolonged period of time.
Theoretically, Mr. Speaker, there are many advantages to flexible exchange rates. They dispense with the necessity of keeping large exchange reserves. They allow changes to take place gradually and they make speculation more difficult. But that is theory, Mr. Speaker. In practice, many of these advantages fail to materialize. We have had rather violent changes in a number of currencies, such as the lira and the pound, and there is a danger that a growing number of weak currencies, our own potentially included, may have further crisis periods to go through.
A greater flexibility in our current system of floating exchange rates has not led to the gradual lifting of controls, as many had hoped. Rather, it may have contributed to the

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breaking up of the world into currency blocs. Economists such as France's Michel Lutfulla envision four evolving currency blocs: the United States dollar zone, the Japanese yen zone, the European snake centred around the Deutschmark, and possibly an Arab oil-producing bloc. Rather than facilitate the expansion of worldwide trade and investment, these blocs may indeed herald an age of trade within, rather than between, the major zones. The implications for Canada are surely obvious. Where will we belong? Will we be aligned to the United States currency bloc, largely as a result of our substantial trade with that country, or are we to develop the so-called third option and align ourselves to Europe and Japan?
There is also growing concern in many quarters over the ability of the International Monetary Fund to meet the tremendous demands that are made on it. The United Kingdom recently received $3.9 billion from the IMF. Mexico, too, negotiated a loan of nearly $1 billion, causing many analysts to speculate on whether the IMF has enough reserves to cover even these loans, much less meet the demands of the future. Will Canada be called upon to make increasing commitments to the fund? I suggest that this is something we must explore more fully in committee. On this point we must ask ourselves to what extent, and to what lengths, we are prepared to bail out other countries. Hon. members should bear in mind that fluctuating currencies and supernational currencies, such as SDRs, lend themselves quite handily to camouflaging the true cost of foreign assistance.
It will be especially difficult for us to determine the extent to which our so-called aid to the companion bill to Bill C-18, Bill C-5, would remove from parliamentary scrutiny the Auditor General's report on the foreign exchange account. You will recall, Mr. Speaker, that that bill that is C-5 contemplates that that report will now go to the Minister of Finance, as opposed to the parliament of Canada.
Even if we can determine the extent of our assistance, the question remains, how far should we go? Does it make any sense, for example, that we borrowed abroad, as I have indicated, in 1976 at record levels and at record interest rates, and we then turn around and lend $300 million to Peru at greatly reduced rates? The World Bank annual report to which I have referred states that in the first half of 1976 Canada borrowed abroad $5.3 billion, fully 42 per cent of that taken down by all the world industrialized nations combined. Let me re-emphasize that. According to the World Bank, in the first six months of 1976 Canada's borrowing was 42 per cent of all the world's external borrowings combined. We borrowed Vk times the amount borrowed by the second largest borrower, France, and more than Austria, Belgium, Denmark, Finland, France, Germany, Iceland, Ireland, Italy, Liechtenstein, Luxembourg, the Netherlands, Norway, Sweden, Switzerland, the United Kingdom and all the multinational corporations combined. We borrowed nearly 29 times the amount borrowed by the United States in the first half of 1976.
Those figures are to be found in the World Bank report to which I have referred. Last year, Canadians took down more than $8 billion abroad in long-term debt alone. At an average

rate of 9 per cent, we added to our national service charge more than $700 million. This is in addition to our total foreign indebtedness, which in 1975 totalled $43 billion. The service payment on this amount alone costs Canadians about $2 billion, according to recent estimates made by the C.D. Howe Institute. This is a record for Canada, and possibly even for the world, as we accounted for approximately 20 per cent of all new international bond issues in medium-term Eurocurrency credits last year. This year it is estimated that our borrowing will be down to perhaps $4.5 billion or $5 billion, but based on current increases in foreign debt costs, Canadian exporters must increase their trade surpluses by about $500 million each year just to keep our over-all current account deficits from getting worse.
Here we are caught in a vicious dilemma. We have been mortgaging our future at such an alarming rate that we are getting to the point where there is no easy way to extricate ourselves. The competitive ability of our Canadian manufacturing industries, already reeling from high labour costs, low productivity and other disadvantages, can hardly afford the added penalty of a Canadian dollar kept artificially high due to such large influxes of foreign capital. Yet if our dollar were to depreciate by any substantial amount, our soaring foreign debt costs would increase all the more, making it that much harder to reverse the large current account deficits of recent years. In fact, one official of the C.D. Howe Institute has warned that if we were to continue borrowing at recent levels we would eventually be facing such bad balance of payments problems that the IMF would have to become involved in Canada, as I have already said.
In dealing with this general subject, Mr. Speaker, I think all members would be interested in a speech given by J. Anthony Boeckh at the Financial Analysts Federation annual conference held May 1 to 4 of this year. Mr. Boeckh listed for the conference five symptoms of what he called a "secular malaise". The first was price inflation; the second, public sector deficits; the third, balance of payments deficits and weak currencies; the fourth, foreign debt; and finally, high interest rates. Those were the five headings set out by Mr. Boeckh, and I suggest that we have inherited all five problems in Canada. On the subject of price inflation, Mr. Boeckh had this to say:
It is now over three years since the big OPEC oil price rise and the peak in global money and price inflation occurred, yet only Germany, Switzerland and the U.S. have brought price-inflation down to 5 per cent or less... In countries such as Canada the inflation has been held to around 8 per cent only by wage-price controls and an overvalued currency.
On the subject of public sector deficits, Mr. Boeckh stated that public sector borrowing as a percentage of the gross national product is currently around 8 per cent in Canada, in contrast to Germany where it is about 4 per cent, and the United States and Japan where it is about 3 per cent or less. Dealing with balance of payments deficits and weak currencies, he said that a third common characteristic of those countries in the most serious trouble is massive balance of payments deficits. If the currency of a financially troubled country is supported by restrictive monetary policy and high
May 24, 1977

interest rates, as in Canada's case, unemployment must rise and the balance of payments remain huge. Dealing with foreign debt Mr. Boeckh stated that a fourth characteristic of the malaise is a progressive reliance on foreign debt to finance balance of payments deficits, and from an internal point of view, to finance excessive consumption both private and public. Mr. Boeckh also stated that Canada is, again, a classic example, having borrowed some $9 billion abroad last year to finance a $5 billion current account deficit as well as major capital outflows.
Our capacity for further borrowing is in serious question. The experience of Italy and the United Kingdom is a classic example of countries which borrow massively abroad. Such is the fate of all countries which borrow to finance excessive public and private consumption at home, as opposed to borrowing to build plant and equipment and finance other investments which produce things which can be sold and which have a rate of return sufficiently high to provide funds to eventually liquidate the foreign borrowings that originally took place. Those countries which continue to run large budget deficits, balance of payment deficits, and borrow heavily abroad to finance them, must at some point suffer a major domestic financial crisis. I emphasize that I am again quoting Mr. Boeckh.
Finally, dealing with interest rates, Mr. Boeckh stated that for a country suffering the symptoms I have mentioned, high interest rates are an inevitability: they are essential to restrain liquidity, to finance large balance of payments deficits and to prevent currency depreciation. Countries that have inflated heavily must necessarily have very low levels of liquidity and very high inflation premiums built into the level of interest rates. One can virtually rate the financial and economic health of nations by the level of their interest rates. He compared corporate bond rates in Italy, the United Kingdom, France, and Canada, with Switzerland, Germany, Japan and the United States. In truth, the discrepancy is most remarkable. Generally speaking, the intensity of the symptoms roughly corresponds to the rate of growth of the public sector relative to the private sector. As government spending, transfer payments and subsidies to the public sector and to private corporations expand, there must necessarily be a structural crowding-out of the private sector which actually produces goods and services that can be sold.
Mr. Speaker, this is the point. We are not suggesting that we should, in any way, ignore our responsibilities abroad, nor are we advocating that we shrink from our real responsibilities as good international citizens. We are merely suggesting, in order to be good world citizens, that we must first put our own financial house in order. As one British banker told the conference board recently, one would emphasize to those responsible, within their capacities as national statesmen and officials for domestic finance, that the instability in the international relationship of currencies reflects the depreciation at different rates of the internal value of those currencies.
Bretton Woods Agreements
The more they are able to do to control inflation at home, the easier it will be to devise and operate an international system not subject to periodic crises. More flexible or fluctuating rates of exchange should not, above all, be considered as a soft option to governments wishing to avoid balance of payments constraints respecting the adoption of inflationary policies. In other words, we cannot rely on the world to bail us out if we mismanage at home.
There is a growing need for the reintroduction of self-discipline in our international monetary order. As the demand for fair international liquidity has increased in the post-war period, the more inelastic features of the Bretton Woods Agreements have fallen by the wayside. Self-regulation maintained a reasonable equilibrium in the system until about 1966 when Great Britain and the United States, under the Kennedy influence, began to introduce, bit by bit, irresponsibility into the international system. Today, 10 or 11 years later, the system is so precarious that we find one central bank rationalizing for another what is, in truth, irresponsible behaviour.
We have witnessed the ludicrous spectacle of officials laying the blame for domestic ills in other more international corners than their own-and none does this more than this Trudeau government. We are now paying the bill for such short-sightedness. In the early 1970s there was an almost universal stimuation of the world economy which, together with the attempt to maintain 1971 exchange rates, led to the rapid inflation of 1972-74. On the other hand, West Germany and Switzerland resisted the global temptation, and today remain relatively sound.
History teaches us much, but it also teaches us that we cannot necessarily know what is coming in the future. The course of the International Monetary Fund is uncertain, and in the years ahead it may be even more troubling with the mounting debt of the Third World. Other colleagues of mine will be speaking about the mounting debt of the Third World. That is why we are proposing to take an overview of our economic relationship with the world. We hope, in committee, to take a good, sober look at the future.
I would like to close by simply referring to history, and in particular to a history of interest rates written in a rather monumental report by Sidney Homer in 1963. He was a New York financial house executive who had kept track of interest rates throughout the world since 2000 years before Christ. He stated that the health of a country can virtually be identified by the level of interest rates. He pointed out that a study of nine European and North American countries over the past two centuries clearly demonstrates that relationship.
Amongst those commercial nations, long-term yields have tended to be low or lowest in those countries which have been politically, commercially and financially the strongest. I would like to conclude by simply saying: Let us take heed. If we feel we have certain instability in this country at the present time, and if we feel we have certain groups who are advocating separatism, let us bear in mind the fertile ground through the insecurity of wrong financial management has been laid by

May 24, 1977
Bretton Woods Agreements
this government in Ottawa, and unfortunately we in Canada must now reap the whirlwind.


Mr. Max Saltsman (Waterloo-Cambridge):: Mr. Speaker, I have listened with great pleasure over the years to the hon. member for York-Simcoe (Mr. Stevens), and I have always known that sooner or later he would blow a fuse in the House of Commons. He managed to do that today. We have had this little light trickling down in the course of a great intervention. We have three official languages in the House of Commons. We have French and English, of course, but we have a language called "hustings". I think we were subjected to that language, on both sides, today.
I would like to start with the Minister of Finance (Mr. Macdonald) because I tend to agree and support the amendment, the concept of the International Monetary Fund and the Bretton Woods Agreements, with all the ramifications associated therewith. I think the minister does a disservice to this extent: he talks about "subscription" as though we are dealing with an ordinary bank where you make an investment and as time goes by your equity increases or you recover your investment. It would be more frank to point out that any money we put in under the Bretton Woods Agreements and into the IMF is a gift: we are never going to get it back. There is no way we can get it back with inflation going the way it is and the dire circumstances of the people who are doing most of the borrowing.
It is a gift. We'should not back off from saying that because we have a responsibility to do something to help other parts of the world. In the short run, I do not think Canada really needs to be associated with the Bretton Woods Agreements. It is of no benefit to us in the short run, because the world is not just short run. There is a much bigger picture than that. In the long run it is in Canada's interest to have a stable world economy and a stable world generally. To that extent, any of the international agreements we enter into are important and will serve us in the future.
When I say "in the short run", the one occasion I can recall on which we had to go and get assistance-I think it was during the 1962 campaign when another party formed the government-I could never understand why in the world we ever put ourselves into that kind of a position with the International Monetary Fund. To have to go on our knees, as we did at that time, to beg and plead for support, and then, as a humiliating condition of that support, to be locked into a fixed exchange rate, was the worst possible position for Canada to be placed in. Why we did not simply allow the dollar to depreciate and find its own level, without accepting that kind of external discipline, I do not know. It took us a number of years to break out of that fixed exchange rate position and finally get back to a floating exchange rate. I presume those events took place because the debate was in that third official language-"hustings"-and that people were just scared out of their wits at the idea the Canadian dollar would drop below par and slip from its high of $1.05 U.S. to around $0.92 U.S.

That was exactly the remedy which was required for the situation Canada found itself in at that particular time. So when we are talking about this "hustings" language, it is not just hon. members on my right who use that language. Hon. members opposite used it during that campaign and I think it was very unfortunate and unfair way which added nothing to the solution of Canada's problems.
It is true, as the hon. member for York-Simcoe said, that one of the effects of the amendment to the Bretton Woods Agreements will be to do away with the standard, with the discipline. But in my view it is time we did so. There is more than that involved, to this extent: what bothers me as much as anything about these international agreements is the weight we give to the form of an agreement. We think that because we have entered into an agreement of some sort, we have in fact solved a problem. That is just not true. No matter what kind of an agreement we make-and some agreement is better than no agreement-I support international agreements. But we have to be realistic. What serves the world is not agreements, but an understanding of economics and a willingness among countries to play their role in world economics.
I would just like to give one example. Probably the greatest outstanding success in terms of a country raising itself from nowhere and pulling itself up is China, which is not a signatory to any of these agreements. It does not benefit from the Bretton Woods Agreements; it does not benefit from the International Monetary Fund; it did not receive Marshall aid. No matter what you name, China did not benefit from any of it. The great success of the Chinese Republic is in its determination and its leadership which set out to do something.
What I am saying is that simply to set up these organizations and simply trying to be internationally good citizens- and I think we have to do that even at the risk of failing-does not solve anything. We should not really place too much reliance on that. What the world skirts by placing this emphasis on formal agreements is the kind of problem that the Chinese did not skirt. Just as in our own country we are not going to solve the problem of unemployment or the problem of inadequate purchasing power by passing legislation or setting up boards of one kind or another, we cannot do it internationally, either.
If we are to solve our problems here in Canada, the only way I can see at the moment of doing so is to ensure a substantial redistribution of income-and this is equally true internationally. No matter what few dollars we put in-I should not say "few dollars" because I do not want to be charged with saying $27 million or $28 million is a few dollars-but in relative terms, compared to the wealth of Canada, the amount of money we are to contribute to the IMF and to our responsibilities under Bretton Woods is not going to put a dent into the problems of the Third World or those countries which need our assistance. Unless there is redistribution of income between the rich of the world and the poor, there is no solution either in Bretton Woods Agreements or in the International Monetary Fund. However, it does give the
May 24, 1977

opportunity of freeing us from the restriction and discipline of gold.
I would like to deal with some of the ten points which the hon. member for York-Simcoe raised. In many ways I feel 1 should compliment him because, although I do not agree with him, as he would expect-he would be horrified if I did-I do want to compliment him on giving a lot of thought to explaining his position. I would also like to congratulate his ghost writer, who I am sure had a substantial role to play in preparing the extensive notes which the hon. member used in his speech. I do not say this to denigrate in any way the important and substantial contribution the hon. member has made. 1 recognize, however, that to dredge up all those Cassandra-like utterances requires more than the work of one man, no matter how energetic he may be.


Stanley Howard Knowles: That's an "out"!


Sinclair McKnight Stevens: Perhaps that was the problem-no ghost writer.


Max Saltsman: If the hon. member for York-Simcoe had his way, he would be applying the Milton Freedman theory to international economics as I think he tends to apply it to the Canadian domestic economy.


An hon. Member:: That's not a bad idea.


Max Saltsman: One hon. member says that is not a bad idea. Let us just look at that. There is a tendency for all these monetarists to say that the problem of inflation is just a mechanical one-a too large money supply. How, then, does one explain what is happening in Canada at the moment, when the Bank of Canada, even severely restricting the money supply to the natural growth, cannot give the money away? It cannot even increase the money supply to the point to which it said it wished to increase the money supply.
The reason is that the economy is so flat that there is no reason to increase the money supply, because it has nowhere to go. If, indeed, it is the increase in the money supply which causes inflation, we should surely be down to zero inflation, because if we look at the money supply it is the lowest it has ever been with the kind of inflation to which we are subject at the moment. 1 am not discounting the fact that the money supply does play a role in this. Almost everything plays a role in inflation, but it is only those who really do not want to think about the economy but who live to latch on to some particular aspect who give the money supply situation such weight. I do not really want to be like Switzerland. The hon. member for York-Simcoe was holding Switzerland out as a model. As admirable a country as it might be, and as admirable a people as the Swiss may be, I really do not fancy Canada having the kind of laws and tax havens which tend to look the other way when it comes to money or when it comes to bank accounts and say, "It is not our business what happens to them." Money has certain connotations attached to it, connotations which cannot be disregarded.
Bretton Woods Agreements
I do not really see this as a model for us. I would like to deal with some of the ten points that the hon. member for York-Simcoe put forth today. I must say, in fairness, that I did not catch all of the ten points-two of them eluded me completely. Points 1 and 5 were, I found, merely repetition. But 10 is such a goodly number, and amongst my people we place a lot of importance on 10 of anything. I presume the hon. member for York-Simcoe was trying to emulate that in some fashion, although I must say he did not emulate one thing, because it would take an awfully big rock to carve all the words that he mouthed today, and I do not know that we have quite that much marble around or that much time to put all the engraving on it.
The great point that was being made by the hon. member for York-Simcoe was that the world should subject itself to discipline. This is an argument that I have heard and perhaps one of the arguments that induced me to become a socialist and certainly to take a part in politics, that is the idea of discipline. I think discipline is important, and certainly selfdiscipline and national discipline are important, but all too often it is a euphemism that is applied to the poor when one says, "If only you were disciplined, you would be all right".
I am tempted to say that we must have some discipline in some of these poor countries, but to say that they are poor because they do not have discipline is to ignore everything else such as history, gifts of nature, and all the other things that distinguish between the rich and the poor. That somebody is born rich, better off, or clever is no example of their own self-discipline, only of their good luck and fortune-and it is the other way round as well. Who are we going to discipline by staying with the gold standard and saying that gold shall be the basis on which you get credit or you do not get credit? You will not discipline the rich, because they have gold, but the poor who do not have gold.
What we are trying to do in a small way-and I entered my reservations about the Bretton Woods Agreements and the IMF-is to move away from mercantilism, the international mercantilism of the seventeenth and eighteenth centuries where gold was thought to be the answer, where the accumulation of gold by a nation was supposed to be a measure of wealth. What Adam Smith said-and I am quoting a good conservative economist, yet one who seems to be terribly misunderstood-is that the wealth of nations does not consist of gold but of their ability to produce and to do the kinds of things that human beings are capable of doing.
Why, then, do we have to restrict the world to using gold as the criterion, to going back to a mercantilist world, a world in which the poor will never have a chance because they are not lucky enough to be born on a gold mine? We certainly do not want that. If risks attend this-and I pointed out that there are risks associated with what we are doing and that in fact we may not succeed in what we are doing, and if we do, we may not succeed in any great way-it is certainly worth trying. It is certainly better than sticking to a standard which the poor have no hope of even coming close to and which deprives them

May 24, 1977
Bretton Woods Agreements
of any hope at all. At least this way there is some kind of chance.
We should have an independent mind in this country. What is an independent mind? Is it that charity begins at home, to heck with what happens in the rest of the world, let us look after ourselves first, let us solve our own problems before we deal with somebody else's problems? Are we ever going to solve our own problems? Are we ever going to have enough for ourselves? I think the answer must be "no". We are better off now than most countries of the world, yet many of us say, "Oh, well, we are still not well off enough and we cannot help anyone else until we are better off than we are now".
We will never get to a point in human history where society has every single thing it wants. At some point, regardless of the problems that are facing society, you have to be prepared to help other people as well. In the long run-and I think history will bear this out-the poor and the rich cannot live side by side: sooner or later the pressure of the poor on the rich will destroy the rich, and the only way of averting that is to ensure that the world is not divided into those two camps and at least an attempt is made to move one closer to the other.
I do not know whether the hon. member for Edmonton-Strathcona (Mr. Roche) attends the same caucus meetings as the hon. member for York-Simcoe, whether they talk to each other, whether they have the same leader, whether they are in the same political party. One would certainly not know if they were. Everything the hon. member for Edmonton-Strathcona has ever said about foreign aid has been repudiated and denounced by the hon. member for York-Simcoe. Which is the voice of the Conservative party? Are we to collect all the words and just cut them down in the middle? Is it the voice of the hon. member for Edmonton-Strathcona, or that of the hon. member for York-Simcoe?


Stanley Howard Knowles: Is it progressive, or conservative?


Max Saltsman: The hon. member for Edmonton-Strathcona looks like a positive progressive compared with the speech we heard today from the hon. member for York-Simcoe. With all these progressives and non-progressives, we are getting mixed up. It is not surprising when we have to put both these speeches in one context. The Conservative party cannot have it both ways. It is nice to send the hon. member for Edmonton-Strathcona around the country and to have him make speeches at Third World conferences or at the Couchiching conference. One would get an impression from those speeches that they are more progressive than the most progressive party in this country. Sometimes, when I listen to the hon. member for Edmonton-Strathcona, I wonder how we missed having him in the NDP, but obviously since he is able to sit very comfortably with the hon. member for York-Simcoe he does not belong in the NDP.


Mr. Lambert (Edmonton West):: We don't all have the same uniform philosophy.


Max Saltsman: It is true, and I appreciate that. There have been occasions when I have differed slightly from my colleagues; when I have strayed from the narrow path. But the fair question is: Who speaks officially for the party? What is the position of the Conservative party in this matter? Are we going to listen to the hon. member for Edmonton-Strathcona and say what he says represents the view of the Conservative party on international affairs, how we should be treating Third World countries and how we should be handling distribution of national income?


Sinclair McKnight Stevens: There are no inconsistencies.


Max Saltsman: Even the fuse in the House of Commons could not accept that, and it blew. It was an act from above. Very seldom have I seen something like that happen. But surely it must be seen as some kind of repudiation of this position, as some kind of message.
I would like to deal with another question. Hon. friends on my right have a way of converting a program. A considerable number of the previous speaker's intervention was concerned with a recital of the balance of payments and the great gap in our manufacturing account that had to be offset by the importation of capital.
1 certainly agree with the facts. He was not incorrect as far as the facts went, and I agree that this in fact is taking place. But what I waited for during that intervention was one sentence, two words, three words or at least a bit of an analysis of who contributed to the borrowing. To listen to the previous speaker one would think only the federal government contributed to this borrowing and only the federal government went to foreign markets. A breakdown of those figures would show that the bulk of that borrowing was done by provincial governments or their agencies.


Sinclair McKnight Stevens: Because the federal government pushed them out.


Max Saltsman: The hon. member for York-Simcoe says it is because the federal government let them.


Sinclair McKnight Stevens: No-pushed them.


Max Saltsman: All right. There is no doubt about it. The federal government has a way of doing that, but I would like to ask the hon. member for York-Simcoe some questions. If he can answer them now, fine. If he chooses to answer on some other, more suitable occasion, I will wait for that, because my questions are important. If he were minister of finance-


Stanley Howard Knowles: Oh, oh!


Mr. Gilbert:: You've just made me sick.


Mr. Jarvis:: He couldn't be any worse.


Max Saltsman: The hon. member has all the necessary attributes: fine appearance, very nice voice, excellent writers.
May 24, 1977

He can put together all kinds of figures which have no meaning whatsoever, so he is highly qualified to be a minister of finance. I am sure he can wear a pair of new shoes as beautifully as our present Minister of Finance, or as the former minister of finance who graced that office and who is honouring the House today with his presence. If the hon. member for York-Simcoe were minister of finance, and if he were to see the provinces and their agencies going to the American market for borrowings, would he institute capital controls? Would he tell the provinces, "No, you cannot go"? Would he say to Hydro Quebec that it could not go to the American market? Would he say to the Manitoba government that it could not borrow for its projects? Would he say to the government of Ontario-and he might be listened to in this case-that Ontario could not borrow for hydro purposes in the American market?
Would the hon. member for York-Simcoe say to Arctic Gas Pipe Line Company that it could not borrow money in the United States to build any more pipelines in Canada? Or would he go further than that and say that no more pipelines could be built in Canada because there are not enough domestic savings? Even if we were to give everything the hon. member has suggested to the business community, we still would not have enough money to build pipelines, and we would have to import that capital.
On the other hand, does the hon. member not see that much of the foreign capital which is brought into this country is brought in because of the high value of the Canadian dollar and high interest rates? One does not offset the other. I think that because money is brought into this country our dollar tends to stay up. If the hon. member were minister of finance, would he set up a foreign exchange board, and would he say that from now on a province or provincial agency cannot borrow more than $50,000 outside the country without his approval or without the approval of a board which he would reluctantly set up because he does not like boards? Would the hon. member do that? Unless he is prepared to do so, while there may be some valid criticism directed toward the federal government, that is not the total picture of what is wrong with the economy. I do not think the hon. member's argument really adds in any substantial way, beyond its political connotations, to solving the problems of this country.
My time is drawing to a close: I have a few more minutes left and I want to deal with another question which always arises in these debates. There is no doubt that the present government has been inept. There is no doubt that this government has made all kinds of mistakes and is still making them. This government has its priorities all wrong and its social values all screwed up. But something else should be added to this debate, and that is that when something goes wrong in the country, it is not the fault of just the government. In fact, we have to look at the people who took the advice of the government and elected it, because the government certainly did not steal its way to power. It was voted in and it continues to maintain a fair amount of support. Part of the responsibility rests with the ordinary people of Canada. Problems are not created just by governments, whether they be provincial or
Adjournment Motion
federal. Problems are not created just by political parties, whether it be my party, my hon. friend's party or the government party. As a nation we are not doing well. Part of the reason is that we are badly governed, but another part of the reason is that people are not responding to the call to harder work.
We have had it pretty soft in this country, and we have been far too prone to keep blaming the other guy instead of looking at ourselves and admitting that part of the responsibility is our own. Perhaps what ultimately must be said is that this kind of malaise should never be ascribed to the people but, rather, to political parties. The government has the chief responsibility because it is the governing party and it is supposed to assume leadership. It has a responsibility to speak out and to call upon people to do the kinds of things necessary to get this country running again. The official opposition also has a responsibility to speak. It should not merely attack the government on this issue or that, or use selected facts to make it look as though nobody else is involved. I touched on that when I referred to the provinces.
My party has a responsibility which I think it is trying to live up to. That responsibility is to try to put the whole thing into some kind of perspective and to argue the morality of the situation, especially when it comes to something like the Bretton Woods Agreements, which is more than just a technical agreement or a technical document. We need to have a moral look at the world in order to understand the significance of the agreement and to argue the points involved.



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mr. Turner):: Order, please. It is my duty, pursuant to Standing Order 40, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Simcoe North (Mr. Rynard)-Health-Geriatric research-Request for support; the hon. member for Humber-St. George's-St. Barbe (Mr. Marshall)-Regional Economic Expansion-Measures to provide alternative employment for those affected by closure of Labrador linerboard mill; the hon. member for Prince George-Peace River (Mr. Oberle)-Public Service-Suggested compensation to those identified as being on blacklist-Alleged additions to the list.
It being five o'clock, the House will now proceed to the consideration of private members' business as listed on today's order paper, namely, public bills, private bills and notices of motions.

May 24, 1977
Income Tax Act


PRIVATE MEMBERS' MOTIONS
Mr. Ellis:: Mr. Speaker, I rise on a point of order. I have discussed with my hon. colleagues on all sides of the House the matter of private members' business this afternoon and we have agreed that instead of dealing with bills this afternoon, the House should deal with a motion standing in my name, motion No. 33.


The Acting Speaker (Mr. Turner):: Is it unanimously agreed that notice of motion No. 33 be discussed during the private members' hour today?


Some hon. Members:: Agreed.


INCOME TAX ACT
John Raymond Ellis: That, in the opinion of this House, the government should consider the advisability of amending the Income Tax Act to exempt the interest of municipal bonds from income tax.
He said: Mr. Speaker, first I wish to thank hon. colleagues on all sides of the House for unanimously agreeing to make the change which was made this afternoon and to allow me to present a motion standing in my name rather than the bill which has been standing in my name for some time. In fairness, I must say that I intend to leave the bill to die on the order paper since the government has undertaken, through legislation brought into this House, to cover the majority of the points I had requested. It would seem to me, therefore, that there would be no purpose in leaving it on the order paper.
[DOT] (UOO)
The motion that I propose this afternoon has just been read, but I am going to read it again. It is very brief and I think it carries a lot of weight. It reads as follows:
That, in the opinion of this House, the government should consider the advisability of amending the Income Tax Act to exempt the interest of municipal bonds from income tax.
I want to begin by quoting from remarks made by the Minister of State for Urban Affairs (Mr. Ouellet) in a speech to the Canadian Federation of Municipalities in Toronto on May 18. I am, of course, quoting out of context but I am sure the excerpts are capable of standing alone. He said:
I am deeply concerned about the high level of taxes-of all kinds-that the individual Canadian pays to school boards, municipal, provincial and federal governments. To this end, I stand prepared to press for meaningful reform of the municipal finance situation.
Later in the same speech he said:
As an immediate action, it is my intention to ensure that federal programs will be better able to respond to the needs and concerns of Canadians living in all types of municipalities, large and small, rural and urban, and that federal programs will be more flexible in taking account of the fiscal circumstances of municipalities.
[The Acting Speaker (Mr. Turner).]
Also, given the way I perceive the problem, I am prepared to consider any reasonable suggestion to bring forward a reform of the municipal Finance situation.
In a very interesting speech to an important group of municipal representatives the minister said he was "prepared to press for" in one case, and in the second case, "to bring forward a reform of the municipal finance situation." That is what my motion is about, Mr. Speaker. I suggest that taking away the federal tax on the interest on municipal bonds will make a major change in the municipal finance situation.
I have to be slightly critical of a couple of the minister's comments, however. He referred to a statement he had made in Alberta in February of this year where he raised three possible avenues of assistance to cities in order to keep pace with providing adequate municipal services. He listed these as follows:
(1)	increasing federal assistance programs for such projects as home rehabilitation, neighbourhood improvement and sewage treatment;
(2)	transferring funds to the provinces under the condition that the money be passed along to municipalities; and
(3)	establishing a direct tax rebate system to reimburse Canadians for some of the heavy tax load they now bear.
The problem is that in the first of these items the federal government would envisage taking funds they have already taken from the taxpayers and turning them back to taxpayers. Everyone is aware that the federal government takes something like 40 per cent along the way in overhead. I suggest that leaving the tax money where it is would make more sense than taking it with one hand and giving it back with the other.
The second proposition of transferring funds to the provinces with a condition that they be passed along to municipalities is very similar to a grant that municipalities used to receive from the provinces with strings attached-providing the municipalities did certain things. The government of Ontario did away with that kind of grant many years ago simply because grants with strings attached have never been very successful.
This motion is a major change and a major improvement. It is not entirely radical; the United States has been doing it for years. It is forward thinking, however, and in my opinion would be supported by all municipalities in Canada. Let me outline what I think the five aims of my motion are. First, it would reduce municipal costs; second, reduce municipal taxes; third, reduce the Canadian balance of payments; fourth, provide excellent investment for Canadians in all walks of life and, finally, increase federal taxes. I will deal with these one at a time.
The first is in regard to reducing municipal taxes. In his speech the minister referred to the debt costs of municipalities ranging from 10 to 20 per cent of their total budget. If we could cut back by removing the taxes on interest, of course, the interest would be much lower, probably ranging between 5 and 7 per cent instead of the 10 or 11 Vi per cent it has been running at. The savings compounded as the interest is compounded now would amount of half the debt service charges in time.
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The second thing is the reduction of municipal taxes. Many members of this House have been involved with municipal councils over the years. I have spent more time on municipal councils than in this House. Members know that municipal taxes are only raised to meet costs; the municipal field does not have the ability to raise taxes for such extravagant programs as Canada Works, Local Initiative Programs and such things as that. Municipalities can only raise taxes to meet their obligations and do those things which are absolutely necessary. If the cost to municipalities by way of interest on their debentures could be reduced, they would turn that money back to the taxpayers either in reduced taxes or extended services. Just recently the city of Belleville passed its annual budget, and after much discussion added an extra quarter million dollars for repair to roads because it was found they were much below the standard for the province. That quarter million dollars could be doubled or tripled if their debt service charge were cut back.
What I have said so far is primarily the concern of municipalities. I hope my motion will be considered by the federal government, and therefore I must show there is some merit in it. One of the things that I think is most important is the reduction of our balance of payments. In discussion of Bill C-18, my colleague the hon. member for York-Simcoe (Mr. Stevens) expressed serious concern about the balance of payments. I would like to repeat many of the things he said, but I do not have the time. He made the point that countries with a high inflation rate, such as Canada, face high interest rates. That has been the case with municipalities, in their recent issues of debentures.
I have found from my research that municipalities, because they face large capital requirements and high domestic interest rates, have relied increasingly on foreign capital markets to meet their financing requirements. I have also found that a substantial proportion of net new issues are met with United States dollars. At the risk of boring the House I shall mention some statistics. Their source is the Bank of Canada Review, February, 1977, table 32, page S.71. I shall begin with 1973 figures, then quote figures pertaining to the last four years.
In 1973, the total gross issue of debentures amounted to $738 million, of which only 15 per cent was to be retired in other currencies. The figure in 1974 increased to $870 million, of which 27 per cent was to be retired in a foreign currency. The figure in 1975 increased to $1,417 million, of which 38 per cent was to be retired in a foreign currency. In 1976 the figure increased to $1,568 million, of which 52.5 per cent was to be retired in a foreign currency.
If one examines the foreign currency figures, one finds that in 1973 only 7 per cent of such obligations were to be retired in the currency of the United States. The figure jumped dramatically in 1974 to 29 per cent. In 1975 it reached 43 per cent, and in 1976 it reached 59 per cent. Clearly, the interest which flows to the United States returns not one cent in taxes to the Canadian federal government. Therefore, the Canadian feder-
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al government would lose nothing if it did not collect taxes on the interest paid by municipalities.
I was speaking of gross issues just now. My figures show that in 1976, 67 per cent of all new issues, almost $478 million worth, were in United States dollars. Let me make a point to my colleagues from Quebec. Naturally I, being from Ontario and having been involved for many years in the Ontario municipal system, am familiar with that system. I point out to my colleagues from Quebec that the situation in Quebec is even worse than it is in Ontario. I refer to the table "Net new issues of municipalities by provinces" compiled from the banking and analysis section of the Bank of Canada. In 1973, of the total $398 million-odd in net new issues, only 27 per cent was for Ontario, whereas 59 per cent was for Quebec. Of that, 20 per cent was a foreign issue.
Although I do not have all the latest figures before me, I point out that this figure has increased dramatically. Quebec's share of total Canadian new issues in 1974 increased to 63 per cent, of which 45 per cent was in U.S. dollars. That proportion in 1975 increased to 67 per cent, of which 44 per cent was payable in U.S. dollars. Although the figure dropped somewhat in 1976, I point out that 34 per cent of the Quebec issue was in foreign issue. From Quebec, $195 million went to foreign sources in 1976 to cover Quebec municipal financing. The federal government received absolutely no return as tax from that distribution of funds.
I return to my five points. Many Canadians are looking for safe ways to invest their money. We talk of "Mother Bell" as issuing safe, blue chip stocks. I suggest that the municipalities of Canada are equally safe investments. If one could buy their bonds without having to pay tax on the interest one receives such investments would be most attractive to all types of people.
This brings me to my last point, that such a tax exemption would actually increase federal taxes. When the former minister of finance heard of this idea, he turned it down flat on the ground that the benefit would accrue only to the wealthy in Canada. I refute that contention. Handled properly, this kind of investment would be available to unions, retirement funds, insurance companies and private individuals, rich or poor-in other words, to a cross-section of Canadian life. Further, the money paid in interest would stay in Canada and not go to some foreign country. While no tax would be levied directly on the interest paid, the money spent in this country would indirectly generate taxes. The people who are paid interest by the municipalities would spend the money on goods and services. The federal government could levy a tax on these goods and services. If a municipal government decides to provide more services with the money it saves, it is clear that the money will be spent on labour, with respect to which the government would levy income tax and on goods and services on which the government levies a sales tax of approximately 12 per cent.
If hon. members are not yet convinced that the federal government would actually receive more money if it decided not to tax the interest on municipal bonds, I could reinforce
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my argument with many more details and figures. Unfortunately, I do not have much time remaining. In the few minutes remaining I wish to quote a passage from Douglas Fullerton's book, "Provincial and Municipal Financing". On page 293, Mr. Fullerton quotes a Mr. Calvert who, speaking of the United States, wrote:
The tax exemption for interest on municipal bonds is essential to state and local government, not only to obtain a much lower rate of interest on these bonds than would be obtained without such tax exemption, but more basically to protect their independent sovereignty under our dual state-federal system of government.
That point must be borne in mind. I also quote the words of Mr. Patrick Mahoney who, writing on the role of the Canadian government in municipal finance, said in part:
There is no easy way that the federal government can intervene directly to improve sources of municipal finance. The British North America Act gives the federal government authority to raise taxes by any means whatever. Provincial governments can levy direct taxes only and can, of course, delegate to municipal governments all or part of that right. The federal government can delegate nothing directly to municipalities.
My motion suggests a legal and attractive way for the federal government to give the municipalities a piece of the federal action. Our municipalities desperately need such relief, which would be of benefit to overburdened municipal taxpayers who pay, with residential taxes, about 45 per cent of all municipal taxes. Our municipalities desperately need the relief which the federal government could provide without interfering with the rights of the provinces. They merely have to back off of one form of interest. I suggest it would do all of those many things that I have outlined.
I want to close with a very brief comment to my colleagues on the other side. Over this past year it has been my privilege and my willingness to allow a number of private members' bills and motions to pass through this House. I have personally made sure that consent was given. I have not lobbied on this matter one bit. 1 have not asked anyone that it be given consent. However, I suggest through you, Mr. Speaker, to those who are responsible that this is the way in which the federal government can make an excellent contribution to municipalities in all of Canada. I suggest to them that they might reciprocate.


Max Saltsman: Mr. Speaker, I congratulate the hon. member for Hastings (Mr. Ellis) for raising this most important matter. If the hon. member's bill were worded in a way that asked that this matter go to committee to investigate various ways and means of assisting the municipalities, I would be very much in support of it. However, since the bill restricts itself to only one rather unhappy method, I am not in the position to support the bill, as admirable as the intention of the hon. member for Hastings may be. I will give my reasons for that.
I have been a municipal councillor. I realize that some of the things the hon. member brings to the attention of this House are so. However, as a municipal councillor it has been my experience that the greatest benefit that people receive from
[Mr. Ellis.)
their taxes is at the municipal level. I cannot think of any kind of tax that people pay for which they receive more services. I realize that taxes are quite high. However, we must realize what we get for them: education, police protection, fire protection, sanitary services, roads, welfare and social services, recreational services and housing services. I could go on. I do not know of any area of government in which the benefits are greater for the taxes paid.
There is one essential problem with municipal taxation. Of all taxes, including sales tax-because there are exemptions in sales tax-the most regressive are at the municipal level. If this measure were put into effect, would it reduce the regressiveness of the municipal taxes? It would not. It would lower the whole level of municipal taxes but the essential regressiveness would still remain. We would increase the total regressiveness of the system if taxes were not collected on municipal bonds. I will come to this matter of who collects it and the kind of revenues they get from it. I argue, in fact, that it would be transferred to the income tax. What we would be doing is taking this tax and making it a larger burden on someone else. I do not think it would be done, because the income tax is not as progressive as it should be.
The other point I would like to make is that the small bond buyer is already allowed a deduction of $1,000 a year. I do not know of very many people in the lower and middle income levels who collect more than the $1,000 in interest to which they are already exempt. The chief beneficiaries would be the very wealthy.
I am not suggesting that the hon. member for Hastings is doing it for that reason. I know him well enough to suggest that he is not. I know that his genuine concern is to find some way of helping the municipalities. However, I suggest this is the wrong and most costly way of doing it. This would help the very rich. In the United States, municipal bonds are a favourite tax haven of the rich. The suggestion made by every tax lawyer and tax accountant-


John Raymond Ellis: And the big international unions.


Max Saltsman: It may to the extent that they are rich, too. I will not quarrel with that. I merely say "the rich", without singling out whether they are an organization, individual or whatever. Nevertheless, the point is the same. It is regressive.
If we are going to help the municipalities, surely we can find a better way than bringing in a regressive measure. There are ways of helping the people in municipalities. We are not talking about some coat of arms, as lovely as that may be: we are talking about the people who live in a city. The greatest help we ever provide to people in the cities is when we encourage senior citizens's housing and public housing. You can be selective in the sense of who you want to help. Not everyone in the city finds the taxes onerous. Wealthy people in the city are quite well off compared to poor people in the city. If we are to provide assistance, we should be more selective.
In view of the arguments the hon. member's party have made over the year about selectivity and helping, I thought he would have stayed away from these broad-axe approaches.
May 24, 1977

While they would be of some benefit to people in middle income groups, they would have a tendency to transfer their liabilities. Instead of the municipality having the tax to pay, the individual would have to pay it in some other way, probably in a more heavy way.
I want to deal with the central point of the hon. member's intervention. He stated we would not deprive the federal government of any revenue because, as I understood him, the money is raised externally. That would be true if the investment supply were totally elastic; in other words, if you had an investment supply that did not have any limits. We know that the investment pool is roughly of so many dollars. To the extent that you invest here, you do not invest somewhere else; you do not increase the pool of investment funds by providing additional investment opportunities. To the extent that you encourage one kind of investment by granting tax advantages, you simply shift from other sources.
At the moment, municipalities find it more advantageous to go to the American market in order to float their bonds. If it were more advantageous for the Canadian taxpayer to buy the municipal bonds, what would they do? They would buy them. There is no doubt that if you offered this kind of an advantage, there would be a flood into municipal bonds. Where would they get the money? They would take it out of other investments, investments in industry. The money is invested, no matter where it is. Even if it goes to a bank, the bank invests it. There is really no such thing as putting money in a mattress. There is really no money there. Most money is employed in one way or another.
To the extent that you provide an attraction for one kind of investment, you take it from another investment. Does the hon. member want to take investment out of industry, and thereby have all of our industry go to the United States, giving up ownership of our industry as well? If we have to go to the United States to borrow funds, the best thing to do is borrow in debt rather than sell out our industry as equity. That would be the consequence.
The argument that the federal government would not be disadvantaged from the tax point of view is only true if there is an unlimited supply of investment funds. However, there is not an unlimited supply of investment funds. What you get is a transfer of funds from one type of investment to another, depending on where the tax benefit is the greatest.
There is something else I want to argue against. We went through, and are still in it to some extent, this business of distortions in the tax systems. There are so many distortions and loopholes which encourage the government to move from one kind of investment to another.
What the Carter commission reported essentially was that a buck is a buck; that all income should be treated the same for taxation purposes. One important argument which they used, aside from the equity argument-which is a fair argument because from the equity point of view the people who benefit are the rich, not the poor-was that economically you set up
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distortion in capital markets. We have this distortion now. Some of it is deliberate. For instance, the government creates distortion through the tax credit system to encourage Canadians to invest in Canadian equities. There is distortion in the sense that some companies are encouraged to invest in mining, such investment being written off as a result of the last budget. Our whole tax system is riddled with this kind of distortion, and all of it is bad.
This kind of distortion over the long term is bad because when you channel money into one area you tend to say, "Instead of removing this distortion we must give higher bonuses in some other area to attract more money". Who suffers as a result? The federal government is the main sufferer, but provincial income tax also suffers. To the extent this revenue is diminished we have to take one of two courses; either we increase taxes or we reduce services.
It has been argued that many services can be done away with, and usually the example of Information Canada is given. Now we have got rid of Information Canada we do not hear very much about what kind of government services we are going to eliminate. In truth the really costly government services are in the form of transfer payments to individuals, rather than bodies like Information Canada. 1 do not think any political party, regardless of what is said on the hustings, would be prepared to dismantle the social welfare system in Canada today, with our old age security, family allowances and all the rest.
Therefore it seems to me that while the intent of the bill is admirable, and I welcome it because it would instruct the committee to look at ways and means whereby municipalities could be assisted by this form of tax exemption, I think the hon. member for Hastings would create, were the bill to receive approval of the House, very serious distortions in investment patterns, great inequity in terms of who gets the benefit, and ultimately the bill would be of no help to people in municipalities in that the money saved would go to the wrong people.


Mr. Eudore Allard (Rimouski):: Mr. Speaker, it is both a duty and a pleasure for me to support the motion of the hon. member for Hastings (Mr. Ellis). I must congratulate him for having brought the attention of the House to the serious and urgent problem which most, if not all, Canadian municipalities are facing.
The hon. members for Hastings and Waterloo-Cambridge (Mr. Saltsman) have made worthy efforts without however suggesting solutions or adding anything new. They seem to be quite complacent about a dead end, or to be going in circles, or robbing Peter to pay Paul, till such time as both Peter and Paul will find themselves destitute.
Mr. Speaker, several times my party and myself have drawn the attention of the House to the troublesome financial problems of municipalities. Obviously, at the rate municipalities, governments and school boards are going deeper into debt, the day will soon come when all taxes of every kind will no longer
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suffice to pay their debts, on the municipal as well as the provincial and federal levels.
Mr. Speaker, one only has to open a paper to read that such or such a municipality is forced to cut down on its staff, dismiss its police department, delay sewer and water works, and what not. So it is absolutely necessary and urgent that the central government take the bull by the horns and twist its tail hard enough so it will charge into the sacred precincts of the Bank of Canada to make it understand that it is high time it played the real role given to it by the Parliament of Canada, namely issuing the necessary credits for the development and expansion of this country by making loans at administrative cost to all levels of government.
It is a known fact that most municipal administrations find it very difficult to pay back their debts, and they must pay interest rates varying from 13 to 14 per cent. I have here before me an article of the La voix gaspesienne of last week, and I quote:
-Reduction in projected staff by the city of Chandler to reduce its budget deficit
-Difficult situation in the city of Gaspe, forced to reduce services because of lack of special aid
Mr. Speaker, all across Quebec you have the city of Montreal, the city of Quebec, my own town, Rimouski, where a water purification system and a new water system would be needed. It is always the same thing. Borrowing powers are limited and they can no longer go to borrowing markets because taxes would have to be raised and I think that taxpayers are currently overtaxed. So what do you do?
I think, Mr. Speaker, it is the duty of a government that calls itself fair and democratic to put an immediate stop to the debt orgy and usurious interest rates to allow both municipal and other organizations to reduce their debts and meet adequately the needs of the people.
Mr. Speaker, those are the few remarks I wanted to make on motion No. 33 introduced by the hon. member for Hastings. Once again, I think that all members should come charging back more often to bring the government to take its responsibilities and, as I suggested earlier, stop the hemorrhage, because tomorrow might be too late.


Mr. Maurice Harquail (Restigouche):: Mr. Speaker, I am pleased to enter this debate on private members' motions this afternoon. May 1 first of all join the hon. members for Waterloo-Cambridge (Mr. Saltsman) and Rimouski (Mr. Allard) in congratulating the hon. member for Hastings (Mr. Ellis) on bringing forward this most interesting motion respecting tax exemption for interest on municipal bonds. I suspect my interest results from my having served for eight years in municipal government.
However, I also noted that in his opening remarks the hon. member for Hastings acknowledged that this government-in its usual dynamic way-had already implemented many of the points which he had to bring forward; that the ideas and views he had embraced in his original motion had indeed to quite a

large degree already been not only considered but acted upon by the government.


John Raymond Ellis: Mr. Speaker, just briefly on a point of order, may I point out the bill to which I referred, and upon which the government had taken action, had to do with drunk driving and not municipal financing.


Maurice James Harquail: That is an interesting point. I am glad he has clarified exactly what he meant.


Stanley Howard Knowles: They are not the
same thing.


Maurice James Harquail: Obviously not. With respect to comments made by members on the other side, I noticed this afternoon their financial critic, the hon. member for York-Simcoe (Mr. Stevens), had some disparaging remarks to attribute to members on this side of the House with respect to our not taking the opportunity to participate in debates generally in respect to fiscal matters brought before the House recently by the Minister of Finance (Mr. Macdonald). One has to consider the cancellation of the Standing Committee on Consumer and Corporate Affairs as a result of non-participation by an appropriate number of members, particularly from the opposition, and the cancellation of two finance meetings because of lack of interest and members from the official opposition not showing up.


An hon. Member:: Shame!


Maurice James Harquail: One must also consider the man in the official opposition responsible for financial matters, the hon. member for York-Simcoe. He made remarks but failed to pay attention. He did not make sure his people carried out their duties and were present at these meetings.
The exemption of interest on municipal bonds from income tax would convey benefits which would vary greatly among provinces. Once it is noted the municipal debt per capital is lowest in the Atlantic provinces and highest in Alberta and Ontario, the distribution of benefits from the exemption can be seen as a measure which would increase the level of fiscal imbalance and work in the opposite direction to the principle of equalization.
I am confident the hon. member for Hastings did not have that in mind, albeit he represents a constituency in the province of Ontario. He would not want to be one who would suggest we do anything further to cause imbalance with respect to equalization for all Canadians across this country. Because of the variety of financing arrangements for local governments within the Canadian federation and the nature of the market for municipal debentures, this exemption would benefit, in general, the governments of higher income provinces and larger urban centres, more than those of the low income provinces and small or rural communities. Neither of these results commend themselves as part of an equitable
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response to any financing problems which municipalities may have.
In addition, a significant part of the benefits would flow to higher income individuals and larger corporations in the form of reduced taxes. I certainly go along with the comments made by the hon. member for Waterloo-Cambridge when he spoke about the rich becoming richer, or of this particular measure assisting people in that way. Neither of these results would commend themselves as part of an equitable response to any financing problems which municipalities may have. The provisions of such a means of tax avoidance is clearly not a desirable addition to the Canadian tax system. Because part of the benefit would go to individuals and corporations, the revenue loss to the federal and provincial governments is significantly greater than the value of the subsidy to the municipalities. It is thus an inefficient form of financial assistance.
With these brief remarks, I would like to point out that the member who brought in this type of motion should be commended. However, I had hoped he would go a bit farther and also consider some limitations, rather than just leaving it wide open in a give-away situation to the people with higher incomes, the larger corporations and the larger municipalities. I had hoped for something similar to the Canada Savings Bonds limits up to $20,000, $30,000, $40,000 or $50,000, so that it would not be a complete runaway situation.


Mr. D. M. Collenette (York East):: Mr. Speaker, I would like to add my words to the debate on the motion of the hon. member for Hastings. It is a very worth-while motion, but one that must not be dealt with in isolation. In this sense I follow the prescription as outlined by the hon. member for Waterloo-Cambridge (Mr. Saltsman).
I will be brief because I know there is not much time left, and the Parliamentary Secretary to the Minister of Finance (Mr. Kaplan) is most interested in this subject and would like to make a comment on it. Looking at the motion in the context of federal-provincial fiscal arrangements, it is implicit in the speech of the hon. member for Hastings that since the war provincial and municipal governments have been asked to take on an ever-increasing load of responsibility. I am referring to social responsibilities, and they need the financing to discharge their responsibilities.
In the 1960's there was a movement afoot, prompted by the social revolution in Quebec, toward more decentralization of federal taxation power to the provinces. Mr. Pearson, the prime minister at the time, acquiesced in the face of very strong demands, not only from Quebec but from Ontario and other provinces, and allowed more taxation revenues to go to the provinces to pay for increased social commitments. Ten years later, in 1977, we see across this country a popular movement, which is not a movement on behalf of the general public, but one stemming from provincial politicians and provincial public servants who say, "Look, the only way to keep this country together is for us to decentralize more, for the provinces to have more taxation revenues and more powers".
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As far as I am concerned, this kind of approach and direction toward Canada's future is fraught with danger.
The hon. member for Hastings talked about municipalities having to go to New York and overseas for finances. In Ontario, his colleague, who is seeking re-election, Mr. Davis, has been to Germany and Italy to get money for the province. We have seen a trend where municipal and provincial governments have borrowed money outside of the country. I agree it is a harmful thing for the Canadian economy.
Coming back to my theme in terms of federal-provincial relations, before we agree to a motion of this kind, the federal government and the provinces have to sit down to determine if borrowing by municipal and provincial governments abroad is in the best interests of Canada, before we talk about the general expenditures themselves. In the last couple of years Canada has become the most indebted nation in the world in terms of foreign borrowing. Implicit in the motion of the hon. member for Hastings is the fact that he wants us to continue in this vein. I am saying no. Before we take a piecemeal approach, as he is indicating, we should sit down at a constitutional conference to tidy up our Constitution and to eliminate the overlapping where the federal government intrudes on provincial jurisdiction. We should cut the costs and the waste there. We should not look only at transferring money to the municipalities, but we should say to the provinces and the municipalities, "Don't you think there are some fields of social policy and governmental policy where it would be better to divest authority in the federal government?"
I would like to refer to the example of education. It is unrealistic, at this moment, to think the federal government, by agreement with the provinces, could gain a greater role in education. I am not talking about post-secondary education; I am talking about lower education. This is relative to the motion, because in the province of Ontario and throughout Canada education costs are borne by the municipal taxpayers. I suppose we should go back to 1867 and the Fathers of Confederation. They gave jurisdiction over education to the provinces. In retrospect, some of the problems in this country with respect to national unity, the lack of understanding, the continuation of the so-called two solitudes, may have arisen from that decision. Before we take a narrow view as taken by the hon. member for Hastings we should look at areas in which the federal government can assume powers, presently given to the provinces, in the national interest. Obviously, I do not want the federal government to run the education system of the country. But we must adopt a system similar to that which we developed in medicare in which the federal government sets national standards.
There is a degree of portability attached to medicare plans and we should make similar provisions in the field of education. At the present time, if parents must travel from one part of the country to another their children suffer serious dislocation because of changes in the education system from province to province. A federal presence in education would alleviate

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the extent of this dislocation. It would also help the cause of national unity.
I am afraid my remarks have been somewhat disjointed. I thank you, Mr. Speaker, for allowing me to inject some of my concern about constitutional matters in the debate on the motion put forward by the hon. member for Hastings. But I believe a case can be made out for saying that motions of this kind ought not to be discussed in isolation but in the context of federal and provincial fiscal arrangements. Notwithstanding the hon. member's intentions, and I am sure they are sincere, I believe that sending this motion to a committee or acting upon it at this time would be premature.


Mr. Bob Kaplan (Parliamentary Secretary to Minister of Finance):: Mr. Speaker, there is not much time left to me but I am glad to have an opportunity to contribute to this discussion because I wish to put some figures before the House, but before I do so I should like to extend congratulations, as others have done, to the mover of this motion. It is obviously an important subject. Many members on our side wanted to speak, and there has been participation from all parties.
The question of municipal financing is an extremely difficult one. Although we have been elected to a level of government which does not have direct control over this area, we nevertheless represent people and we come from cities, towns and municipalities: we cannot help trying to use the authority of this level of government to lessen the burden borne by the municipalities in one way or another.
The hon. member for Hastings (Mr. Ellis) referred to a speech by the Minister of State for Urban Affairs (Mr. Ouellet). I read that speech with interest and I noted that three or four suggestions were made regarding ways in which the federal fiscal power might be used to alleviate the burden on the municipalities. I must say, with respect to the minister, that I disagree with his approach. I do not think the federal government ought to alter its fiscal policies so as to support municipalities. I say this with a great deal of regret.
For the federal treasury the cities and municipalities of Canada are a great source of revenue. I have not looked at the figures but it would not surprise me to find that the bulk of the revenues of the federal government come from taxpayers, corporations and individuals, within the larger municipalities. Why is it that the federal government is able to find these corporations and individuals such a rich source of revenue while the municipalities cannot? What is it that the municipalities lack which prevents them having the same access as the federal government to the incomes and fortunes of Canadians? To ask that question is to answer it. They do not have the power to tax in the way the federal government does. Who can give them this power? Is it this parliament? It is not. It is the legislatures of the provinces which possess the authority necessary to give the municipalities the jurisdiction which would provide them with a proper tax base. But for one reason or another they have not done so. They have left their creatures, the municipalities, starved for funds.

Hon. members may ask themselves what is the reason for this inaction. I think it is because the provinces are afraid to see the municipalities possessed of an adequate tax base. That is why we in Ottawa are under such pressure to help them out. But we are in a level of government which cannot do it in any effective way. It is the provinces which can do it.
It we do allow exemptions from income tax on municipal bonds to individuals and various enterprises we shall only produce the kind of situation which has existed for many years in the United States. It certainly results in a lower interest cost to the municipalities. But what is the over-all effect? A number of hon. members have called attention to some of the results-the regional inequities inherent in such an approach, the bias in favour of individuals with high incomes, and so on.


John Raymond Ellis: On a point of order, Mr. Speaker, the parliamentary secretary is taking a very interesting approach, but he mentioned some interesting statistics he wished to put before the House. I wonder whether he would do me the courtesy of providing me with those statistics privately?


Robert Phillip Kaplan: I would be glad to do so. They come from one of the studies done for the Carter Commission. They are not very recent but I would refer to one year, the year 1968-69.


The Acting Speaker (Mr. Turner):: Order. It being six o'clock the time set aside for private members' business has now expired.
At six o'clock the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.


[Stage Direction]
The House resumed consideration of the motion of Mr. Macdonald (Rosedale) that Bill C-18, to amend the Bretton Woods Agreements Act, be read the second time and referred to the Standing Committee on Finance, Trade and Economic Affairs.
Marcel Joseph Aimé Lambert: Mr. Speaker, I now refer to the 1966 debate when we considered some major amendments to the Bretton Woods Agreements Act. I have here this evening the official report of the debates. Second reading was pro forma. The main debate on the resolution was held in April 1966. At that time, for any legislation entailing
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some expenditure by the Canadian government there was a resolution, first reading, second reading, then consideration of the bill in committee and finally third reading.

Well, Mr. Speaker, it is very interesting to see why, going back to the debate of 1966 in which I participated on second reading. That debate was very short. A good deal more was said at the resolution stage. I would like to go back to that particular era in talking about this bill because I think that, notwithstanding that there have been changes in times, certainly there have been changes in the world situation.
I know there are some who believe that the Bretton Woods Agreement was written or inspired by the devil. To me that is totally false. Those of us who had the experience of pre-World War II monetary exchanges recall the absolute chaos, the dog-eat-dog atmosphere. As a matter of fact it was symptomatic of what was to come in 1939. It was just one of the symbols of one nation doing it to another as part of the so-called economic nationalism that came out of the economic depression of the 1930's. The world suffered as a result of World War II, there is no doubt about it, but then I would say that over the years 1933 to 1938 or 1939 as much human misery was inflicted on the world populace as a result of this international monetary warfare as was inflicted by the horrible ravages of war from 1939 to 1945. That latter part was measurable. At least one could put a finger upon it and seem to identify. At least there was a scapegoat for the suffering.
In 1937 I was a high school student travelling in Europe, and it was almost a daily joke to determine the value of the franc, the mark, the pound or the dollar as each tried to out-manoeuver the other. One of the hopeful lights of 1944 was the determination of men the world over, as they established the United Nations Charter and as everybody got hold of his good resolutions and put them back on the table, to start out with the Bretton Woods Agreement. Its original concept was modest, and I do not suppose under the circumstances-it being 30 years old-that one can quarrel with the decision that the United States dollar would be the primary reserve currency and that the pound sterling would be the second reserve or joint reserve currency. It worked for some considerable time. Oh, Canadians did not like it too much because our dollar was at a considerable discount to the United States dollar for a period. Then there were subtle changes. Of course they would be subtle changes; there is no such thing as a static situation in world international trade and commodity relations. Even the monetary market experience had some influences which, I think, by and large in the whole picture were wholesome effects of the checks and counter-checks to the excesses of a too rigid system dictated by men whose motives were not altogether altruistic.
We saw some changes in the 1950's. I remember in 1958 and 1959 being a member on the government side when there were minor changes in the levels of the membership subscriptions for Canada, and then in 1966 there was a wholesale
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change. Circumstances had changed considerably. By then we had seen the emergence on an independent basis of many of what we call today the developing nations. The colonial system had started to come apart, I suppose through the impetus of the United Nations, and then because of any number of reasons. It may have been a calculated move on the part of the Soviet Union and the United States in their already apparent conflict over domination. Even today the United States attempts to impose North American style democracy on people who are not suited to it. If only they could make up their minds that what is good for Washington, Los Angeles, Chicago and New York is not necessarily good the world over!
Over the years there has been a great deal of strife. Western Europeans and North Americans have been trying to impose their brands of democracy on all the peoples of the world. Let them be a little bit humble. Let them realize that people will achieve their potential, possibly under a modified system of their own choice, but let us not have North American leaders trumpeting about the world saying that all countries must assume a North American brand of democracy, because that will only fail.
On the other side, the Soviet Union has been very eager to obtain recruits for its views in the United Nations. So therefore we had a great rush in the 1960's and early 1970's to foment independence in many countries which were not ready for independence. Their economies and the development of their peoples have actually retrogressed as a result of this too hasty run into the so-called world economic race.
I remember the Commonwealth Parliamentary Association Confederation in Wellington, New Zealand, in 1965, and subsequent conferences, and I particularly remember when the Bretton Woods Agreement was amended formally to establish special drawing rights. Special drawing rights were on the International Monetary Fund side, but the mechanism for loans at low rates of interest to developing countries-in other words, that effort by developed countries to assist those who, in many instances, were pitchforked into the post-mid-twentieth century-was the World Bank.
However, immediately many of these countries looked upon special drawing rights as the teats on a prolific sow, another source from which to draw. Never mind that this in itself was doing damage to some of the countries concerned and that the funds that they might thereby draw would not be destined for the general improvement of their people, the Bretton Woods Agreement established one base reserve currency. Incidentally, there is not one comma, not one dot on an i nor one bar on a t which this parliament can change with respect to that agreement as presented in this bill. There are changes to the limits of Canada's qualifications, and this time there is formal inclusion in a bill rather than using a one dollar item as was done in 1970, and again in 1972, with regard to special drawing rights. There is an increase or change in the level of Canada's subscription, and also the determination of the value of the U. S. dollar as of July 1, 1944. These things are all now being crystalized and formalized in this particular bill.

May 24, 1977
Bretton Woods Agreements
We see the extent of Canada's commitment in the amendments to proposed new section 5 of the act. In proposed new section 6 there is a method whereby at a particular date Canada's commitment to the International Monetary Fund, its subscription, the value of its special drawing rights and any other commitments it may have-I can spell them out, for instance from the specification to the $1 item in the Appropriation Act No. 1, 1970, Vote L37b. This item reads as follows:
To authorize the Minister of Finance to provide for payment out of the Consolidated Revenue Fund to the International Monetary Fund in the current and subsequent Fiscal years, in addition to the amounts authorized by the Bretton Woods Agreements Act, a sum of money equivalent to the increase in Canada's quota of $360,000,000 (U.S.) of which $90,000,000 (U.S.) shall be in gold, $3,600,000 (U.S.) in Canadian currency and $266,400,000 (U.S.) in non-interest bearing non-negotiable demand notes in Canadian currency, in such form as may be determined by the Minister of Finance, and to authorize the Minister of Finance to provide for payment out of the Consolidated Revenue Fund in the current and subsequent fiscal years, in addition to the amounts authorized by the Bretton Woods Agreements Act, a sum of money equivalent to $149,800,000 (U.S.) for the purchase of 1,498 shares of stock of the International Bank for Reconstruction and Development, being in addition to Canada's subscription as a member thereof, of which a portion may be paid in cash, a portion in gold, and, pending cash requirements by the Bank, a portion in non-interest bearing non-negotiable demand notes, in such form as may be determined by the Minister of Finance.
Incidentally, Mr. Speaker, the International Bank for Reconstruction and Development referred to was the precursor of the World Bank.
That excerpt refers in part to what we are ratifying tonight.
The minister indicated in his remarks this afternoon that more and more there is a non-reliance on gold. Since 1966 when I participated in the committee hearings and in the debates at all stages of Bill C-144, which Bill C-18 purports to amend, there have been some changes. First of all, 1 think there was a fudamental change in the Bretton Woods Agreement in the effectiveness of the U.S. dollar as the base currency reserve because of the problems of 1970-71 in the United States. At that time the United States government was faced with the dilemma of unemployment and a run on its dollar. In order to stimulate its dollar the United States economy would have had to lower the interest rates. There were hundreds of millions, if not billions, of Euro-dollars chasing around Europe and elsewhere, arising out of Marshall aid and the continuation of the United States generosity in the rebuilding of Europe and Japan. This money, which had been invested in the United States at the then higher interest rates, of course took flight when interest rates were lowered to stimulate the domestic economy and was chasing higher interest in other parts of the world.
The picture repeats itself here in Canada. It repeated itself in Australia. It is such a familiar picture to those who understand a little bit about international monetary relations that it has become somewhat dreary-not only dreary but distressing to see the same mistakes repeated time and time again.
We saw the United States abandon the fixed price of $35 per ounce for gold. As a result of certain pressures from South Africa, the Soviet Union, France and others, the price of gold

went crazy. It went to $170 per ounce and possibly higher. Some people paid $200 per ounce. That bubble burst, although the price is still well in excess of $35 per ounce, but then so it should be considering all the factors. It is much closer to reality than it was two years ago, however.
We have the unsolved problem of Euro-dollars chasing Euro-dollars and ending up in the pockets of a number of OPEC countries.
This whole situation has been turned around. The agreement to which reference is made in Bill C-18 does not in any way represent the situation today. The agreement was arrived at after a great deal of patient work and concessions. It had to apply all over the world and some people had to have their arms twisted behind their backs-there is no doubt about it. Cognizance had to be taken of countries, like Canada, which wanted to belong to the club, signed the request for membership, and then stepped outside. Since 1970, instead of being a regulated current account, we have applied ourselves to maintaining a fixed relationship with a base currency. For the second time Canada has said, "This does not apply to us. We belong to the IMF, but do not think we are going to be caught as we were in 1962, trying to maintain a fixed relationship."
Of course we have gone through crises. In 1962 there was a crisis. The Canadian dollar had been away over-priced and the world suddenly came up with the definitive answer, abetted by the then Minister of Finance who knew that our trade could only recover if our dollar came down. Certain aspects of that, I found, related to the economic nationalism of 1935 and the years before that.
In 1968 we had an even worse crisis, if the truth be known. It is only apologists for the then Liberal administration in the media who have failed to tell the people of Canada this true state of affairs with regard to that financial crisis of 1968. There was a deliberate suppression of information. It was available to the then Leader of the Opposition who, like the statesman he was, refused to engage in certain tactics which, while they might have been of some advantage politically to him and those of us who were his supporters, would have meant but a pyrrhic victory in so far as the Canadian economic system was concerned. It would have gone flat broke.
During the last year we saw a drive against the Canadian dollar, undertaken for certain reasons. Incidentally, I am not a great lover, a great admirer, of the Bretton Woods Agreements. I think it is too rigid. I think a creeping average was called for, an average outside the limits where it would have been possible to make money from arbitrage. At present such fixed limits for people involved in arbitrage are merely a licence to print money. We are on a so-called float right now, but few people in the world can afford to go back to the jungle of the 1930's.
Flow many people can adjust to measures for preserving order? When you introduce such measures some immediately say, "We are not going to abide by the rules." We have seen some highly questionable devaluations motivated purely by
May 24, 1977

economic advantage and the thought of doing your neighbour "in the eye." To me that is distressing, far more distressing than some of the regulations it has been necessary to impose on some developing countries which think capital and revenue are merged in one and can be eaten at the same meal.
When this bill is before the Standing Committee on Finance, Trade and Economic Affairs I hope we shall be able to have the kind of discussion we had in March and April, 1966, with Department of Finance specialists in international relations. Let them explain to us the exact meaning of some of the terms we are discussing, because I do not think any member of this House is expert enough to say exactly what is meant by the term "International Monetary Fund," or by "the Bretton Woods Agreements," or to explain the terribly complicated system of international exchange, the workings of commodity accounts, or how exchange funds are manipulated for the purposes of earning an income.
How can one explain Canada's present shortage of development capital when Canadians and Canadian companies are investing $5 billion in the United States? Because of this government's restrictive measures, Canadians are investing in other countries. Their investments are welcome in the United States. You can see Canadians investing in New York skyscrapers, in buildings in Dallas, Fort Worth, Denver, Minneapolis-you name the place and you will find Canadian investment there. Our people are not only investing in property; they are investing in the production of goods. Why? The reason is obvious.
We, in Canada, have indulged in self-delusion on an enormous scale for the past couple of decades. We have built up huge social programs, inflated wages, shortened hours, and indulged in plain dodging at all levels of industry, from management to the floor sweeper. Apparently some have not learned that you cannot take more out of the economy than you put into it. Consequently, what do we have in Canada: excessively high unit costs of production, low returns, and Canadian individuals and corporations seeking to invest in the United States. Why are they investing in that country? They do not have to face the hassle of government there as we do here. There the government is not hell bent on hassling business and individuals to provide the economic base with which government can take care of the less fortunate.
Somehow or other, anyone who does something constructive in Canada is immediately fingered as a victim, as one who must be cut back to the level of the lowest common denominator, to the level of sheer mediocrity. That is what we have in Canada. Does that thinking extend to our international relations? It is one of the problems underlying our concept of the International Monetary Fund. These things must be examined in greater detail in committee.
I have nearly used up my time. I do not think I have changed my views greatly in the last ten years about the Bretton Woods Agreement. By and large it has worked well. It was never designed for the protection or enhancement of any one currency or group of currencies. It was designed for the well-being of the currencies of the world. There are pluses and
Bretton Woods Agreements
minuses to the agreement, or, as some would say, to the agreement there is an upside and a downside. I hope the committee will find the time to consider this legislation, althought it has a surplus of other legislation it must consider.
I hope officials will explain to us the workings of the international monetary system because, really, no individual member is qualified to add one cubit, one inch or one centimetre, to use modern parlance, to this bill.
In conclusion, I raise a point on which my party will insist. Bill C-18 is related to Bill C-5, and Bill C-5 is to be considered at the report stage. I have set down an amendment to Bill C-5, and I and my colleagues are adamant. There is no way the Minister of Finance (Mr. Macdonald) is going to receive reports from the Auditor General of Canada, to deal with as he sees fit. Those reports are going to be made to parliament, and on that point the Minister of Finance will find us absolutely insistent.


Eudore Allard: Thank you, Mr. Speaker, for this opportunity to say a few words on Bill C-18.
Canada is about to make an important amendment to the Bretton Woods Agreements so that the contribution of our country could reach 1.357 billion dollars in special drawing rights. That initiative, Mr. Speaker, is certainly commendable because it shows unquestionable concern on the part of this country for the fight against poverty in the world.
Indeed, that amendment will allow an increase in Canada's subscription to the International Monetary Fund and to the International Bank for Reconstruction and Development. However, that is not the purpose of my intervention tonight but rather the merits of the Bretton Woods Agreements. It will be remembered that that international agreement was initially intended to provide for the establishment of privileged trade relations designed to put the economies of war-tried countries back on their feet. That was in 1944. Two drafts were submitted at the Bretton Woods conference at that time, one called the Keynes draft prepared by the world renowned economist, John Maynard Keynes, and the other one by Harry Dexter White, special adviser on monetary issues to the Secretary of the U.S. Treasury. The conference passed, after discussion, the White draft. However, the author of the White draft cast a shadow over the Bretton Woods Agreements because he was later identified as a Soviet agent. So now we have to deplore the fact that the agreements did not bring the results hoped for.
Indeed, they had more of an accounting effect in the international play of the balance of payments than of fulfilling the hopes of socio-economic development they had given rise to at the outset. It is being realized today, Mr. Speaker, that the agreements allowed rather the richer countries to increase their wealth and the poorer countries to increase their poverty. There was a desire to protect European countries from the communist threat. However, we see that several Common Market countries must now face a stronger threat that could reduce the influence of those belonging to the free world.
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Bretton Woods Agreements
That brings me to say that the Bretton Woods Agreements should perhaps be rethought after 20 years to allow, among other things, a real fight against inflation in all countries. All countries of the free world are complaining about inflation today. And, on the other hand, we see third world countries reducing considerably their borrowing or purchasing power. Money costs more and products have risen in price, so Third World countries are not advantaged.
In fact, we might say that the Bretton Woods Agreements have been more benefit to highly industrialized countries reducing more and more their geographic number while reducing also the number of the beneficiaries of those agreements. Of course, the states benefit from it as their balance of payments becomes positive but their enterprises do too. So, indirectly, multinational corporations are the most privileged.
Mr. Speaker, the danger is that so-called free countries lose some of their freedom because such agreements create the feeling that the freedom, the independence and the power of countries are too intensively related to the survival of their multinational corporations. It is dangerous to think that the failure of an enterprise might someday reduce the value of the national currency at the international level.
If South American countries got together tomorrow and nationalized American companies without any compensation, it would significantly reduce the value of the American dollar. It would be so if some countries refused to supply some American and Canadian processing industries.
The Bretton Woods Agreements did not deal with that issue and only provided for the creation of a monetary fund ensuring the stability of currencies and they also help countries with economic problems. However, we might wonder if those agreements with their lists and their statutes, are not killing very slowly our democratic system by encouraging development through big corporations. The communist countries have always followed the philosophy of Karl Marx who said that in its logic, the capitalist system was going to destroy itself. If you consider the inflationary spiral which benefits of course those who are rich and are not prepared to accept a reduction of their income, and if you consider that richer countries increase their wealth and that poorer countries are unable to recover, we seriously doubt the spirit of those agreements. According to the logic of the capitalist system it might have been better if those agreements had a social dimension paralleled with an economic or monetary dimension. It might have given less importance to the notion of profit and balance of payments which, I think, would have been more advisable.
It should be recalled, however, that our capitalist system is certainly the only one that allows the individual to express his creativeness and organization spirit. But such systems should not be allowed to promote the rising up of state movements in various countries, if there is no other way than state interference to cope with foreign business takeover. We must find a way in which countries will not have to become entirely dependent upon foreign businesses to restore their economy,

thus depriving themselves in a non-independent or sovereign manner from their natural resources. The North-South Conference which is to start new sessions in Paris should bring about new hopes. This co-operative spirit between rich and poor countries did not exist in the original Bretton Woods Agreements. We hear a lot about a new economic order which will finally bring about peace among the people of the world.
I hope we shall be wiser this time and rather than moving in a direction which means 30 extra years of broken promises and expectations, we shall opt for an approach that will enable people to enjoy the benefits derived from our resources without being continuously threatened. The Bretton Woods Agreements have done nothing to solve major economic problems; they were simply the product of professionals and experts who are more interested in balancing international accounts than feeding the world populations. I wish to repeat, Mr. Speaker, that the willingness of this government to increase its contribution is not wrong in itself but the organization referred to should reflect for a while upon its true role and its importance to the promotion of a democratic living system. I suggest that the Bretton Woods Agreements have had more impact on accounting procedures than on social considerations. That was not their purpose but if the agreements had had a social impact, they would not have been too bad after all. Our democratic life style at the international level will probably be improved.


Mr. Douglas Roche (Edmonton-Strathcona):: Mr. Speaker, I want to begin by complimenting the minister on bringing forward Bill C-18 at this time in view of its important subject matter. We know that the intent of the bill is to ratify the IMF amendment to provide for an increased Canadian quota for the IMF and the International Bank for Reconstruction and Development. The purpose of my intervention is to make some comments concerning a passage in the minister's speech this afternoon in which he suggested that all of us ought to remain sensitive to the difficult circumstances developing countries face through higher energy prices and a drop in export earnings.
I want to make some comments of a constructive nature about the ramifications of the Bretton Woods Agreement and the revision of the IMF which has now come about and has led to Bill C-18, but before doing so I have to deal with the comments of the hon. member for Waterloo-Cambridge (Mr. Saltsman). This afternoon he made some comments which I thought displayed a somewhat myopic view. He spent considerable time responding on behalf of the NDP and trying to drive a wedge between myself and the hon. member for York-Simcoe (Mr. Stevens) who had replied to the minister on behalf of our party.
The hon. member for Waterloo-Cambridge made what I consider to be a rather silly attack when he offered, first of all, a premature judgment on the alleged differences between the hon. member for York-Simcoe and myself. I say that because I
May 2V1977

had not yet spoken when the hon. member attempted to drive his wedge between us. I suppose he did so on the rather spurious ground that the hon. member for York-Simcoe was taking a domestic view of Bill C-18 whereas I would be looking at its international implications.
I suggest to the hon. member for Waterloo-Cambridge that when the hon. member for York-Simcoe and I are talking about a stronger Canada being necessary in order to fulfil international responsibilities, we are talking about the same thing. The hon. member for York-Simcoe made a very strong attack on the economic performance of the government, an attack which I share. The hon. member was warning against high interest rates, trade imbalances and secrecy of negotiations, and he concluded his speech by saying that he does not want Canada to be bailed out by the IMF in the same way the U.K. has been bailed out.
When I look at the performance of the government, and particularly at the way we signed our name to the London communique which issued from the Downing Street summit a couple of weeks ago, it is a matter of great concern to me that when we espouse rather high flowing concepts about how aid to developing nations ought to be improved through international conferences, we do so without at the same time recognizing that we have been unable to solve unemployment in our own country. That is the point that the hon. member for York-Simcoe was making and the nuances of the point seem to have been missed by the hon. member for Waterloo-Cambridge.
I find the hon. member's attack rather silly, as mine would be were I to attack the hon. member for Waterloo-Cambridge for a point that he made toward the conclusion of his speech. He made the rather interesting point that part of the reason why we are not doing well in this country is that people are not responding to the call for harder work. His own leader travels around the country making telling points about how hard it is to get work in this country, and I wonder whether his own leader would agree with that kind of comment. However, I am not going to attack the hon. member for Waterloo-Cambridge since I recognize that he brings a perspective to Bill C-18 which might be different from that of his own leader and the two of them can work out their own approach. I say only that I think it is very unfortunate that the hon. member for Waterloo-Cambridge attempts to imply that the Progressive Conservative party is talking out of both sides of its mouth in regard to improved relations with developing countries.
If the hon. member wants to know what our policy is, I can tell him what it is, in a nutshell. Our policy, which is the basis for my remarks tonight and I know is fully shared by the hon. member for York-Simcoe, is that international co-operation is now a prerequisite for peace and stability. The primary purpose of economic growth should be to ensure improvement of conditions for all so as to allow every individual on earth to fulfil the basic right that he has to food, shelter, health care, education and employment. These are the things for which we stand. We believe that it is high time we should stop talking negatively about the problem of the rich-poor gap in the world
Bretton Woods Agreements
and should start talking positively about the structural changes which are coming into play and which will lead to an improvement, in human dignity right around the world.
We share the view offered by the Secretary General of the Commonwealth, Mr. Shridath Ramphal, who pointed out to the sub-committee on international development meeting here in parliament a few weeks ago that the improvement in the living standards of developing countries is not only consistent with, but necessary for, the preservation of high standards of living and continued improvement in the quality of life in the "have" nations. In other words, improving the purchasing power of people in the developing regions will lead to increased markets for goods from the developed countries.
Unlike the NDP, we are not advocating merely redistribution of a static world income; what we are advocating is that the higher incomes sought by the poor through commodity arrangements and better access to rich country markets will signal the potential for significant growth in world economic activity. That is the basis for the realistic policy which our party offers on international development.
It is against that background that I now consider Bill C-18 and return to the comments made by the minister in connection with his deepening sensitivity, and those of other members through ministerial representations at the IMF, about the deep problems of the developing nations which now constitute the great majority of the membership of the IMF. The IMF now has 128 members, of whom more than 100 are classified as developing nations.
In considering Canada's role in the revised IMF agreement, I think Canada has a new opportunity to direct our international efforts toward accelerating the process of what I call structural transformation in developing nations. The need for this structural transformation has been made very clear by the final report of the Commonwealth experts group entitled "Towards a New International Economic Order", which was issued on March 14, 1977. As the House knows, the Commonwealth experts group, including the distinguished Canadian, Mr. L. A. H. Smith, Canadian High Commissioner to Barbados, has been meeting now for two years and has published the third and most definitive of its reports on what needs to be done in order to make some structural progress in improving the self-reliance of developing nations. We must remember the Commonwealth experts' report is of particular significance to this House because of our own role in the Commonwealth and also because the Commonwealth contains 80 per cent of the one billion people who live in the Fourth World, that is, one quarter of humanity-people who live with incomes under $200 a year. The ten Commonwealth experts have emphasized that if present trends continue the balance of payments situation of developing countries will become progressively unmanageable. Even under optimistic assumptions prevailing growth rates will not result in any reduction in the income gap between the developed and the developing countries by the end of this century.
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Bretton Woods Agreements
I would like to interject here by pointing out the seriousness of the growing gap between the rich and the poor, despite 25 years of foreign aid which is now outmoded in its concept completely. The significance is revealed in the report of the subcommittee on international development. That is the report which was tabled in this Elouse last Thursday. It makes the very telling point that the debt of the developing nations has now increased to $165 billion. That is the total debt of developing nations toward the developed nations. Over a ten year period that is an increase from $35 billion. The situation is getting worse as a result of the increased debt which the developing nations are accumulating. I will speak about the causes of that in a moment.
Structural transformation requires many changes in the relationship of developing and developed countries concerning commodity agreements, transfer of technology, and renewed access to capital, which is the most important, by the developing countries. Structural transformation requires a policy framework within developing countries which encourages high levels of productivity and innovation. It is not enough to talk about the responsibilities of the developed nations to move toward better international arrangements. That would only be a rhetorical exercise, unless those changes are accompanied by internal efforts within the developing nations. These efforts should lead to a widespread commitment to the development effort aimed at the whole of society rather than the privileged few. It is a two-pronged attack on closing the gap that is at the heart of the United Nations' message to the whole international community through the series of forums which are going on presently.
The international community has a primary responsibility to find ways and means of ensuring developing countries get the necessary resources they need from outside for their development. These structural changes will require modifications to existing international arrangements. That is what we have before us tonight. Only in this way can minimum levels be reached in all countries. As the Commonwealth experts insist, this represents a precondition for the achievement of greater stability within the international community and of world peace.
We need to adopt more pragmatic approaches in assessing the developing needs of individual countries. One of the tasks to which industrialized countries have addressed themselves is the alleviation of the foreign exchange constraint in developing countries. I have spoken of the immensity of the problem the developing countries are facing with their international debt now up to $165 billion. We ought to view these problems in positive terms, rather than just negative terms.
We must remember what Mr. Ramphal said to the subcommittee on international development. It is essential for developed countries to take part in improving self-reliance within the developing countries in order to expand the buying power within those countries, thereby providing very large and new markets for the people in the developed countries. Thus, it is very much a self-interest argument we are advancing. We

know a number of steps have already been taken in international forums such as UNCTAD IV and now SEAT, which is coming to a conclusion in a week or so.
Without going through the wide spectrum of measures which are before international forums now, such as commodity agreements and the transfer of technology, I want to concentrate on the field of finance, which is proper under the terms of this bill. Commonwealth experts have said that decisions were taken by the interim committee in Jamaica, the International Monetary Fund and the World Bank, which sought to reconcile the positions of the developed countries on financial questions.
Given a very brief review of what has gone on in the past year or two, it is important for the members of the House to consider Bill C-18. We will note that floating exchange rates have been legitimized, and countries have been given the option to adopt any exchange system they wish. The official price of gold was abolished and the principle of making SDRs the principle reserve asset was accepted. The conditions of access to the IMF compensatory financing facility were liberalized, and the oil facility was discontinued. The trust fund, which is funded from the profits of the sale of one sixth of the Fund's gold and from voluntary subscriptions, is expected to accumulate $1.5 billion over four years and will be used to provide balance of payments support to the poorest countries. That action probably led to the minister's use of the word "sensitivity" in his address this afternoon. Moreover, the quotas in the International Monetary Fund were increased by approximately one third, and marginal changes were agreed to in the voting pattern of the Fund to give a greater voice to oil producing and exporting countries.
The capital of the World Bank was increased by $8.3 billion, and the decision was taken to freeze the bank's growth lending at $5.8 billion and to increase the cost of loans made by the bank. Agreement was reached on the Fifth replenishment of IDA of $7.6 billion which would just maintain the real value of IDA lending over the next three years.
However, there are many areas where decisions and action are still required. One of those areas is the decision which still remains to be taken on the proposal to liberalize the IMF compensatory financing facility in a way which would stabilize, around a growing trend, the real export earnings of developing countries from commodities. That is the heart of my message to the minister tonight. I would ask him to consider the improvements which need to be made in the way the Commonwealth experts have suggested. The existing scheme still restricts drawings under the facility, both in respect of annual amounts as well as in the aggregate, to percentages of a country's quota in the fund.
The international community has not yet addressed itself to the problem of how to deal with the change in the balance of payments needs of developing countries in the new circumstances which the non-oil developing countries face. Moreover, attention has not yet been given to increasing the supply of development finance to these countries on the scale required
May 24, 1977

by the capital investment which they must undertake if they are to satisfy their basic needs in an acceptable period of time.
The Commonwealth experts are critical of the fact that internationalization of control over liquidity creation has not been advanced. I will quote a sentence from their report to indicate the way in which they would like it to move forward. It reads as follows:
Measures to increase the access of the developing countries to the credit facilities of the IMF on a scale, and under conditions which would have regard to their balance of payments needs, and the establishment of a link mechanism between SDRs and development Finance, remain in abeyance.
In other words, consideration is asked for linking SDRs and aid. For a long time we have played around with that concept. As one who studies the developing field, I cannot understand why progress has not been made on the linkage between SDRs and aid. The movement of the IMF in the agreement before us is a step in the right direction. We need the support of industrialized countries to take another step forward.
On the question of debt, decisions still remain to be taken on the adoption of guidelines for a generalized solution to the problem of alleviating the debt burden of the non-oil developing countries.
I would therefore ask the government to give serious consideration to implementing the financial recommendations made by the Commonwealth experts, and particularly to consider the principle of building up the SDRs as the principal reserve asset and one which can be a new instrument in the structural transformation of developing countries. SDR allocations on a link basis rather than the IMF quota basis would require smaller aggregate allocations, since countries with adequate reserves would not need to be provided with additional SDRs. In this way the application of SDRs to developing countries could be enhanced. Improved access to existing fund facilities is only part of the larger package of measures needed for dealing with the problems of disequilibrium in the developing countries. Other measures in that package, the Commonwealth experts note, would include traditional capital flows such as development assistance and private investment, all being required to finance the establishment and fuller utilization of the needed production and infrastructure facilities.
We have had a lot of experience in ways of trying to help developing countries, and when the Commonwealth experts offer us some of the lessons of that experience we ought to listen. The first of these lessons is that as long as developing countries depend predominantly on primary commodity exports the gains from resource transfers will be substantially offset by falling and unstable earnings from commodity exports. Arrangements for the stabilization of primary commodity markets are therefore a necessary condition for realizing the fullest advantage from resource transfers. It is in this spirit the suggestion is made for increasing capitalization flows in the developing countries so as to help them become self-reliant and halt the apparently never-ending cycle of increasing aid which, in the end, only makes the problem worse since
Bretton Woods Agreements
most of the aid which must come from other countries includes a servicing factor which compounds the debt.
I believe we ought to increase the momentum of development beyond the merely holding operation so far achieved. For example, the Commonwealth experts look to structural transformation to finance works on a scale which some find it difficult even to envisage at present. For example, programs to arrest the southward movement of the Sahara Desert in the Sahial area, flood control and protection against typhoons in Bangladesh, rural electrification and the provision of pure water supplies in many areas of the world. The experts believe that this would require both a substantial stepping up of bilateral efforts and further strengthening of multilateral and regional institutions. Of course this means maintaining ODA for the time being and recognizing that, instead of going ahead, the industrialized countries are falling behind in commitments. Developing countries not only need an increase transfer of resources but the assurance of a continuing adequate flow in automatic ways.
I want, for a few moments now, to complement the Findings of the Commonwealth experts by drawing attention to the report of the sub-committee on international development which has now produced its second report-the first was issued last year. This report, which was tabled in the House last Thursday, deals with the debt problem. The debt problem might not sound very interesting, but as we get into it we realize that the debt I spoke about a few minutes ago is a manifestation of the need for structural changes to be put into effect, changes which were never anticipated when Bretton Woods was set up following the Second World War, for one reason because most of the nations which were members of the IMF were not even in existence at that time.
As we consider what the sub-committee has reported-I might add that this report carried the unanimous support of all parties which participated in its preparation-I might say that the debt picture is complicated to the extent that most of the debt is owed by countries which are in the middle to upper range of the Third World, that is, countries which have a growing capacity to repay their debt. The debt is not held in large measure by the least developed countries, the reason being that they do not have credit or reputation to justify creditors extending large amounts of funds to them, certainly not in commercial or private terms.
The debt which the least privileged countries have accumulated comes in large measure from international development assistance. It is certainly no concern of mine that the developing nations have difficulty in paying that debt. 1 think they will repay it eventually though I believe some rescheduling arrangement will have to be made. It is in the interest of the private institutions which hold this debt in the developing world to put pressure on the industrialized countries, probably at CIEC as well as in other international forums, to reschedule the repayment provisions, possibly on a case by case basis so that there will be no defaulting. But, as I say, that is not my principal concern.

May 24, 1977
Bretton Woods Agreements
I am concerned about the way in which the nations of the developing world are piling up debt because they cannot find ways to industrialize their structure or to acquire capital in the manner in which the Bretton Woods Agreement was originally meant to make possible in the case of countries which are very much in the driver's seat in the world. The developing nations need access to capital if they are to achieve any form of self-reliance. There arises, then, a debate between the developed and the developing countries. It began in terms of polarization with demands of a somewhat impossible nature being put forward by the group of 77-it now numbers more than 100 nations. For example, they wanted the cancellation of the whole of the ODA-related debt or its total rescheduling. These were steps which it was totally impossible for the developed nations to accept. The developed nations, for the most part, turned an unsympathetic ear to the message which was coming through, namely, that there would have to be changes which would go far beyond aid.
I believe Canada has shown its good faith by writing off the debt owed by Bangladesh, a country which is perhaps at the lower end of the Fourth World scale. But perhaps we have not felt, because we are not contributing to the horrendous figures of international debt, that it is our responsibility to take any leadership role in finding a solution, it is there that I find government action or, to be more correct, inaction at fault. First of all, it is in Canada's interest to note that, of the total debt picture, $9.8 billion is owed to Canada through commitments made through the Canadian International Development Agency, the Export Development Corporation, as well as private banks, and therefore Canada's involvement in the solution to the debt problem indicates that we ought to be more aggressive. That of course was the finding of the subcommittee on international development. The subcommittee report states:
The government does not look favourably on debt relief in the form of a cancellation of debt, conversion of loans to grants, or waivers of payments.
That may be all very well, but I think it would be better if we, as the subcommittee has noted, supported and promoted the creation of multilateral mechanisms designed wholly or in part to provide balance of payments support for the developing countries, notably those mechanisms connected with IMF.
This brings us to the obligation to take initiatives. I will indicate one or two initiatives which the subcommittee thought it would be useful for the government to take. I think, now that we have Bill C-18 before us, it is certainly the moment to give consideration to these views. The first is as follows:
Canada should press for the establishment of a mechanism and procedures for the multilateral renegotiation of debt which will ensure balanced representation of the legitimate interests and needs of both debtors and creditors.
Canada should advocate an international agreement on a set of flexible guidelines concerning how the mechanism would be activated, the factors which would be investigated and taken into consideration and the broad types of policy measures which might be proposed for the debtors and the creditors.
In other words, this is a specific way in which Canada would press an international forum for a mechanism that would, first
[Mr. Roche.)
of all, deal with debt as it is now constructed and, secondly, lead to a way in which there would be a better allocation of existing capital in the world in the manner that the IMF is beginning to talk about. This will, of course, mean our involvement with an increasing number of multilateral, development oriented institutions, such as the World Bank. As we do that, I hope we will press for an international agreement on a set of flexible guidelines concerning how such mechanisms would be activated and the factors that would be investigated and taken into consideration in each case.
In summary, what we see now-and certainly the subcommittee made this point clearly-is a need for improved and expanded multilateral balance of payments support, specifically in the IMF. While the IMF was not originally concerned with developing countries, as was noted by the subcommittee, access to its facilities was roughly proportionate to the national wealth. Now we know it is changing. In recent years it has paid them increasing attention, for example, through the establishment of the compensatory financing facility and the oil facility, and in discussions of the proposal for an SDR link. What is more, through the route of the subcommittee on international development we came to the same conclusion that the Commonwealth group of experts arrived at, namely, that the time has come to advance the idea of an SDR aid link. The subcommittee said it welcomes these developments and urges the further expansion and liberalization of such facilities.
Before I put the report of the subcommittee aside I must note one of its recommendations because it is of such importance as the House begins to consider not only Bill C-18 but the work of the north-south conference that is bringing together such an array of complex instruments which will have to be brought into play to close the rich-poor gap, instruments such as commodity agreements, trade liberalization, transport technology, and improvements in the IMF.
What the subcommittee states is that there is a very urgent need for some central body to gather and report information on all important aspects of Canada's economic relations with developing countries. Such information would include debt, both public and private, as well as aid, trade, and other relevant statistics.
I find a great amount of difficulty-the minister may not because he has a lot more help than I do-as I try to bring together in my mind the various ways in which our government is responding to the whole development question in the developing world, as we try to reconcile the various policies of the government implemented by aid through CIDA and the spending of $1.1 billion, and the problems it has with trade liberalization and industrial adjustment programs that we are beginning to talk more and more about, and international financing agreements. I think it is in the interests of the government to reconcile those policies, not only with an interdepartmental committee that may be meeting on an ad hoc basis, but in some formal instrument.
That is why I think the time has come for the appointment of an advisory committee on international development to be
May 24, 1977

made up of representatives not only of the House but representatives of business, labour, the academic community, churches, those main bodies in our country, particularly NGOs who have a constructive interest in bringing together the policies of the government, so that if we are at least going to take a pragmatic view, and if we are going to spend $1.1 billion just on CIDA, we should try to have all our policies harmonized so that we could get better value for the money we are giving. Only in this way can parliament and the general public begin to understand the interrelationship of issues, problems, and performance of Canada's response to the UN's call for a new economic order. That is the thrust of the subcommittee's report.
I conclude on that note and ask the minister, when he closes the debate, to give me a response as to whether or not the SDR aid link is a realistic policy which should be given serious consideration at this time inasmuch as serious bodies are bringing it before us. The ultimate goal should be the evolution of IMF into institutions performing functions in the international sphere similar to those of a central bank in a national economy. That is the way the world is going and 1 think it is in Canada's interest to advance in that way.
We need to stress a more balanced participation in the decision making process of the Fund by all groups of countries, including the developing countries. The present serious imbalance between the developing countries in the control and management of international financial institutions is a consequence of transplanting to the sphere of these institutions the principle of voting rights being proportional to financial contribution. I am quoting from the Commonwealth experts' report which states that this principle, which may be appropriate in the corporate sector in an industrial society, is not necessarily valid in relation to the purposes of international institutions. For this reason, the capital structure and voting rights in the regional development banks which were established later are different. We could learn from the original Bretton Woods Agreements. A similar approach needs to be adopted in the case of IBRD and IMF.
That is my approach to Bill C-18. I hope that when we get to committee, some of the details of the bill can be worked out, but I want to rest my case finally as I restate it again, because I want to make clear the thrust of my view that we should consider developing countries should have a priority call on SDRs through some form of linked mechanism. We can see that there are no insurmountable technical difficulties to the establishment of such a link, and its inauguration need not await the completion of a comprehensive package of further reforms in the international monetary system.


Howard Earl Johnston: Mr. Speaker, it is a pleasure to take part in this complex debate this evening on the very esoteric subject of international Finance. I have an historical interest in the debate. In my First term in parliament I resolved at one point never to let an opportunity to debate the
Bretton Woods Agreements
subject of the International Monetary Fund and the World Bank to go by without saying something.
I have been moved to study Hansard for December, 1945. That is when the original debate on the Bretton Woods Agreement took place, and I found it very interesting to read some of the speeches which were delivered at that time. There is one conclusion which can be drawn from reading those speeches, and that is that anybody who said anything derogatory about the Bretton Woods Agreement, whether living or dead, has become a minor prophet, because all of the predictions have come true.
Whether there is a direct casual relationship between the predictions and the Bretton Woods Agreement is hard to say, but I can give examples. "In the end it will mean the dissolution of the British Empire." That was said by a former member of parliament for Broadview, not the present member for Broadview by any means, as the hon. member would be quick to point out. Those words were spoken by a Mr. Church. Certainly the British Empire has dissolved, and the prophecy has come true.
Mr. Church said later in that same address that, and I quote, "It will cause dearer money". There is just no doubt about that, as anybody who has tried to borrow from any lending institution lately knows. It was described as "a scheme to put United States gold to work." We can recall that at the end of the Second World War there was great concern about the amount of gold amassed by the United States over the years. That prediction was made by a former member for Lethbridge, Mr. Blackmore, and of course it also came true. What he did not predict at the time was that we would see the United States transferring a great deal of its gold to France, for example, but it certainly has been put to work since the original agreements. Mr. Blackmore also said that the agreement was "a mechanism for binding the moneys of all the nations to the United States dollar," and that certainly came true.
The hon. member for Edmonton West (Mr. Lambert) has spoken at length about the Euro-dollar and the role it played in the years between then and now. He too was a prophet in his time.
Another speaker in that debate, a Mr. Quelch from Acadia, said, "Nations will be forced further and further into a state of unpayable debt". The hon. member for Edmonton-Strathcona (Mr. Roche), who preceded me, reminded us of that prediction and how terribly true it was.
Mr. Quelch also said the agreement was "an act of treachery against the British Commonwealth of Nations", which echoed the original statement by Mr. Church. Again one suspects that the Commonwealth of Nations is not now in the shape it was at the time of the original debate.
Forecasts were gloomy, and the results have not in many ways been good, save in allowing a large part of the world to trade more freely and for the standard of living of a great part of the world to rise. One suspects that the stabilization of currencies had something to do with freeing trade, but again

May 24, 1977
Bretton Woods Agreements
we have reached something of a crisis point. I have a feeling that anyone in this debate who is prepared to make a gloomy prophecy could probably find, given 30 years' time, that he would turn out to have been rather prophetic as well.
The setting up of the International Monetary Fund and the World Bank was fought by the then Social Credit members in the House. In fact they launched something of a filibuster while denying all the time that that was what they were about, and they held up the passage of the original bill. I was a little disappointed this evening when I was listening to the Social Credit member who preceded me in this debate because the old fire did not seem to be there.
In the statement which was read to us there were actually words of praise for the International Monetary Fund and for its role in present trade. There were some rather optimistic forecasts as well. I should think that if some of the people who spoke in that debate in 1945, wherever they are, were to get word of this, they might be readjusting themselves slightly in their graves.
However, one thing they would all recognize is that in addition to the International Monetary Fund there is now a Special Drawing Right. That was just being considered during my first term in parliament, and in reading the material which was being made available at that time describing the Special Drawing Right I recognized pure Social Credit, and one can find confirmation of that in articles written much later. The Economist of July 6, 1974, for example, talking about the re-evaluation of the Special Drawing Rights, said, and I quote:
When SDRs were first created in January, 1970, as reserve assets, literally out of thin air, a unit of SDRs was given the weight of gold equivalent, at the then official price, to one dollar.
The reference to thin air is true because here we have for the first time money which is created and value which is created out of nothing. The same article from which I quoted goes on to illustrate dramatically the basket in which the value of SDRs is set now. It is made up of U.S. dollars, 40 cents; the South African rand, 0.8 cents; the Austrian schilling, 22 groschen; the Spanish peseta, 1.1 pesetas, the Norwegian krone, 9.9 oere; the Danish krone, 11 oere; the Australian dollar, 1.2 cents; sterling, 4.5 pence; the French franc, 44 centimes; the yen, 26 yen; the Canadian dollar, 7.1 cents is our proportional share; and a few other currencies are listed as well. I always look a little suspiciously at graphs like that. It is described as a basket.
The hon. member for Edmonton-Strathcona knows how, when one comes into international terminology, whether it be with regard to aid, to the international fund or whatever, people love to use the word "basket". I always find it amusing and wonder why it is used. I presume it has to do with Little Red Riding Hood and the basket she carried to her granny, because there was an air of innocence about all that and perhaps a bit of solidity too. I suspect that part of the reason for shaping up the SDR with all these currencies involved is to suggest to the public that it is not really made out of literally nothing but is solidly based, which is, I suspect one of the

reasons why it has not been terribly useful in solving the problems of the Third World.
It is still a rather difficult concept to grasp, and various speakers in the debate have mentioned how difficult it is to wrap one's mind around this whole monetary business. I do not claim to be an expert on it. One goes along rather intuitively, guessing and grasping at it and trying to bring it within some kind of scope of reason, but it is not easy.
Writing about the Special Drawing Rights in The Conference Board Record, John Hein puts this proposition:
Suppose someone offered to give you, for free, ten blue $10 bills to put in your savings account alongside your "regular" money ("greenbacks"), provided you agreed to abide by some rules. First, your "bluebacks" could only be used to buy "greenbacks", and then, only when you needed to balance an overdrawn checking account; second, you must be willing to exchange your "greenbacks" for the "bluebacks" of the overdrawn person when you have a surplus in your checking account. Would you take the deal? You would probably answer, "Yes"-if you thought everyone would work together and no one would abuse his privileges.
It seemed to me that might be a sort of handy guide, but even so I agree with the article in the publication World Financial Markets for August, 1975, which states, on page 11:
The IMF SDR is still surrounded by too much mystery and obscurity to gain quick acceptance as an international currency and standard of value.
That is part of the problem that we wrestle with in this debate this evening.
Another area that we have to be concerned about is the Third World debt reaching $165 billion. Six per cent of that is owing to Canada, according to the report already mentioned of the subcommittee on external aid of the Standing Committee on External Affairs. It is a rather disheartening account when we realize that such a vast sum of money is debt owed by the Third World and that a greatly increased proportion of that is owed to private banking interests-51 per cent in 1976 compared to 31 per cent in 1967. This would strongly suggest that the Special Drawing Right has not really been serving its role as fully as it might.
The business section of almost any newspaper reports on the problems that some nations have. The "Report on Business" section of the Globe and Mail of a couple of days ago referred to the staggering oil import bill of Greece which topped $1 billion for the first time last year. Greece is a rather small country which has almost reached its take-off point industrially but has not quite got there yet.
Another newspaper report talked about Egypt's problems and the fact that the International Monetary Fund was pressuring that country to make some basic reforms in the way it spends its money, a good part of which comes from the Arab world.
I find it rather interesting that in that basket I mentioned earlier there is no country from the Arab oil exporting world, and no currency from the communist bloc is there either. As long as there is trade between the communist bloc and the free world it seems to me that the whole business of international trade and aid will continue to be complex.
May 24, 1977

The Egyptians are constantly in trouble because they spend $1 billion on food subsidies. I spent six days in Egypt quite a few years ago and I can well understand why a food subsidy would cost that much now.
One wishes that the International Monetary Fund might move toward easing the tensions in the Middle East whereby a nation like Egypt could spend a little less on defence and a little more on its people. I think this is one avenue that needs to be explored by the International Monetary Fund.
We find the same problems in Nigeria where planning estimates for the next year total $15 billion and the current projected revenue is slightly more than $8 billion. There is going to be an enormous deficit and the situation is not going to improve.
I should like to make a reference to an extraordinary article in The Economist for May. It is entitled "Two Billion People. A Survey of Asia", and comments on what is needed in a good many of the countries of Asia. The author is Norman Macrae, Deputy Editor of The Economist, who visited the area and put together a rather unconventional report, and dared to take some rather unconventional approaches. Some of his words will be startling to a few hon. members. I know the hon. member for Edmonton-Strathcona would not agree with everything in the article, until we come to the end. If I have time to get around to that he might find we are not that far apart.
I am sorry the hon. member for Waterloo-Cambridge (Mr. Saltsman) is not here this evening. I listened to him this afternoon with some interest when he spent a great deal of time inquiring about speech writers for the hon. member for York-Simcoe (Mr. Stevens). I found that a little strange because as I listened to him there was no doubt about who his speech writer was. It was the hon. member for York-Simcoe because his entire address was given over to taking apart what had been said. The thoughtful discussion and discourse of the hon. member for York-Simcoe supplied all the substance of the somewhat distorted argument of the hon. member for Waterloo-Cambridge. I found that a little disappointing because one would have expected some original thought and preparation on such an important subject as this. I hope before this debate ends we will have at least one more spokesman from the New Democratic Party because someone must fill the gap and provide some constructive contribution to the debate. There is no point in moralizing endlessly if no thinking has been done on the topic.
The article I referred to is lengthy so I shall only read excerpts. On page 8 the article states the intention of the survey as follows:
It will argue that government-to-government aid from rich to poor countries (which all worthy people in rich countries most especially want to increase, because it makes them feel worthier) should probably be abruptly reduced, because it now sets both politics and investment into tragically the wrong directions.
I realize those are rather strong words, but the more I think about it the more I feel he has a point. He claims that the survey will delineate some of the things that are necessary in order for successful development and industrialization of
Bretton Woods Agreements
undeveloped countries. First of all, he says, establish a rural total employment, then have the introduction of cost-conscious technology, and finally find some way of making big business beloved and getting small government out of its way. Those are ideas that we might all consider as we look at this bill that deals with some hope for the Third World.
At page 17 of the article he offers four steps to take as follows:
Go for total employment in the countryside, at just the moment when unsuccessful poor countries are usually industrialising.
There is sense in that. Next:
Put a lot of money into the hands of rural landlords, at just the moment when "progressive" poor countries are usually expropriating them.
There is no comfort for the socialists in those words, and yet there is some wisdom there. He continues:
Then go through a period of exploiting urban workers (i.e., paying them wages below their marginal productivity), in order to increase industrial profits.
That is heresy for most people these days, but he has a point. Next:
Then, but generally at this late stage only, with annual GNP over about S300 a head, tactfully overthrow the rural squires, by a land reform that transfers agricultural production to entrepreneurial small farmers, but without causing class bitterness.
And then there are two other essential steps to development:
... introduce cost-conscious technology, and make big business beloved and get government out of its way.
The article goes on to elaborate. I commend its reading to hon. members of the House. The author examines several countries in some detail and says that important lessons are to be learned from the Japanese. The Japanese have much to teach the developing world. They can show Third World countries that development in a non-European type of society is possible and that such a society can produce a modern nation. It is clear that Japan has retained its own culture, which is not a copy of the western world. Anyone who thinks it is is making a grave mistake.
The author quotes the directive given by the United States government to General MacArthur, who was put in charge of Japan after the war. The plight of post-war Japan was as desperate as that of any undeveloped nation. The country had been absolutely flattened. The directive issued to General MacArthur said:
You will not assume any responsibility for the economic rehabilitation of Japan or the strengthening of the Japanese economy. You will make clear to the Japanese people that: (a) You will assume no obligations to maintain, or have maintained any particular standard of living in Japan.
The author of the article goes on to say:
This unlovely doctrine of malevolent non-interference helped to spark the fastest advance of any industrial economy in history.
It seems to me there is a lesson to be learned. The author congratulates the Japanese for concentrating on the right approach. They concentrated first on the health of all their people and, second, on their education. We, in this country and the rest of North America, have fallen down sadly in recent

May 24, 1977
Bretton Woods Agreements
years in the way we educate our people. Whereas other countries have maintained an educational system of rigour and vigour, we, following the lead of Dewey and other United States philosophers, softened our education along with that of the United States. That is why we have encouraged so many problems in this nation.
Japan's was probably the first industrial revolution during which, despite large migration to the cities, crime rates went down. We waste much of our natural resources in fighting crime.
The author of the article has some advice for China, as well. He says big enterprises in China should compete with each other. Much of the article will give small comfort to socialists. The author says that it would probably be sensible for Chinese industry, including the towns, but especially industries outside them, to run the sort of welfare services the big Japanese companies run. That would accord with the spirit of the communes. It should be the responsibility of big enterprises to take care of people. I realize that in North America such an attitude would be called paternalism of the worst kind, but it has its merits.
The author considers Korea as well. All these points relate to the bill, to the Bretton Woods Agreements and to the Special Drawing Rights. He says in the article:
The coming economic growth in east Asia, including China's, will not be as export-led as Korea's has been. This will create some balance of payments problems, including for China. I do not think these should be met by govern-ment-to-government aid, which has had all the wrong economic effects (encouraging cost-unconscious technology), the wrong anti-freedom effects (because it increases the power of governments against their people in Third World countries, in each of which it is much more desirable to increase the power of the people against their governments instead), and which would fortunately be regarded as insulting by countries like communist China anyway.
Instead, there should be a return to the original ideas behind SDRs and other devices of the International Monetary Fund. When a country is developing at a good annual rate of growth without excess inflation, then its growth should not be stunted by balance of payments problems. A sufficient number of SDRs should be created-
Note the word "created". I continue:
-to tide it over such deficits. It is unlikely that the excess creation of SDRs would have to be over $30 billion a year. This would add only a fraction of one per cent to the world's internal money supplies and would not be excessively inflationary.
I doubt if that advice will be followed because the Third World owes $165 billion. The money has been lent for a long term, some of it at good, high rates of interest. Lenders will want to collect their interest, and there is the suspicion that there will never be a default. I suspect that we, in this country, and the people of other developing countries will pay the debt in full, if there is not a total collapse. We run the risk of a collapse. If it does come, we will wind up paying for a portion of that $165 billion of debt.
If we continue to run the sorts of deficits which Liberal ministers of finance of the last several administrations have shamelessly run up, we shall find ourselves in a situation where it will be difficult for us to meet the requirements of the bill we are considering. We should know that the difficulties are there to confront us. Let us take note of the sums involved, and

realize that they are separate and apart from the $1 billion which we will spend in direct aid through CIDA. We should study the article alluded to and ask ourselves if we should not separate these funds. If we are contributing funds to the International Bank for Reconstruction and Development, we should ask ourselves if that contribution should not be our commitment. In exchange should we not demand that the International Monetary Fund or the World Bank assume responsibility for those things which Special Drawing Rights were designed to handle? I am thinking of the financing of development in countries which cannot possibly repay money lent under the present system.


Mr. Ritchie:: Mr. Speaker, may I call it ten o'clock, in order to permit me to continue when this bill is again brought forward?


Mr. Deputy Speaker:: Is that agreed?


Some hon. Members:: Agreed.


Alan Gray Martin: Mr. Speaker, I rise on a point of order at this time, bearing in mind certain important events which have today taken place in the country. I wish to mention for the record that in today's by-elections there were five Liberal victories and one Creditiste victory.


Some hon. Members:: Hear, hear!


Ralph Goodale: The Tories are leaving.


Steve Eugene Paproski: We have just begun to fight.



PROCEEDINGS ON ADJOURNMENT MOTION

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

Mr. P. B. Rynard (Simcoe North):: Mr. Speaker, on March 8 I drew to the attention of the Minister of National Health and Welfare (Mr. Lalonde) the growing aging population of this country and certain research findings which suggest that keeping people working beyond age 65 would be a partial answer to the problem. The minister promised to consider my representations, but I have heard nothing from him.
The number of senior citizens in this country is increasing, and our low birth rate means that this country's work force will be smaller in the years ahead. If present trends continue, in the next 20 years an ever larger proportion of our population will consist of senior citizens. Let me cite the experience of England. It is estimated that 21 per cent of the English
May 24, 1977

population will soon be 75 years old or older. By 1995, 25 per cent of the population will be 85 years old or over. Canada runs about two decades behind the U.K.
In the last century there has been a 30-year increase in lifespan, and the number of retired persons has increased greatly. I point out that the number of people alive today at the age of 65 years represents in total one third of all those who in the past 2,000 years reached that age. This is a great tribute and compliment to science and the medical field.
Today there are almost two and a half million people in England over 75, and in that country's universities there are ten geriatric chairs. Do you know how many there are in the whole of Canada? We have one whole geriatric chair at the University of Western Ontario, from where Your Honour comes. And we had to go to England to get that fellow. We did not have any of our own trained.
More than half the hospital beds today are occupied by old people. This is a great problem. We must do more research to prevent disease so that it will be possible through this research to keep these people in their own homes. There must be geriatric chairs in all universities across Canada, with proper training for those who can be oriented into this field.
Home care should be fully developed to treat these patients adequately and in many cases as well or better as in a hospital bed costing $150 a day. Sometimes people are better off in their own homes.
There should be early diagnosis and care, keeping the patient out of hospital with all its expenses and strange surroundings. This means that the federal government must spend more on preventive medicine which often gets the mouse's share, while spectacular proceedings, surgery and the like, grab the limelight and the money. This is the problem now, getting the money into the field of preventive medicine.
We must remember that the rate of learning varies little with age, as long as you have kept at it. Grandpa may be more keen mentally than you are, even though you may jump higher.
Work hurts nobody. Some people thrive on stress. Churchill, Bernard Shaw, De Gaulle and Ford were at their best and thrived on stress. They lived on it, the stress of accomplishment. People must live. They must have objectives. They must have purpose. They must be useful in this world.
I met a lady in church the other day. She is 101 years old. She went to church in the morning and to church in the afternoon, which is probably more than you and I did. It was a hot day. Afterward I saw her sitting out. She was a real inspiration to everyone; 101 looking hale and hearty. That is the kind of thing we must have, not poor people lingering in their beds in hospital, uncomfortable, suffering over the years, with few people caring or looking after them.
This is why I went after the minister for more care. He said he was going to do something about it. I hope he will because Dennis Timbrell, Minister of Health of the provincial govern-
Adjournment Debate
ment in Toronto took the lead, saying he will have more home care. Therefore, there can be no excuse from the federal government for not going ahead and doing something now.


Mr. Ross Milne (Parliamentary Secretary to Minister of Communications):: Mr. Speaker, I am pleased that the hon. member for Simcoe North (Mr. Rynard), has spoken further to his concern. It gives me an opportunity to hear the discussion and to reply on a subject in which I am also quite interested. I do so in the absence of the Parliamentary Secretary to the Minister of National Health and Welfare (Mr. McRae).


An hon. Member:: Where is he?


William Ross Milne: As a matter of fact he is not far away. I think he is participating in a pretty exciting event.
The number of people 65 and over will increase significantly. The present absolute number is not expected to double until the first decade of the twenty-first century. The "aged dependency ratio", expressed as the number of people 65 and over per 1,000 people 20 to 64, is expected to increase from 155 to about 190 by the year 2000. In the same period the number of people under 20 per thousand people 20 to 64 is expected to decrease from 665 to about 420. Combining these two figures gives a net decrease in the over-all dependency ratio of from 820 to about 610. Therefore-I think this is a key point-the percentage of people in the working and taxpaying age groups will rise somewhat over the next 25 years rather than fall, as is the popularly held belief.
I want to assure the hon. member that the department is engaged in continuous demographic analysis, including the analysis of future labour force participation of the population 55 years of age and over. There is no doubt that pressures toward general earlier retirement could quite substantially increase the dependency ratios I mentioned earlier, both for the reasons the hon. member for Simcoe North spoke about and also from the point of view of this whole question of retirement pensions. On the other hand, greater flexibility in respect to the present almost mandatory retirement age of 65 could prove to be a very strong counterbalancing force, considering the proven interest of people over 65 to continue part time or full time employment, and considering the likely trend toward tighter labour markets in the future.
I see my time is rapidly drawing to a conclusion, but I want to tell the hon. member that the department is continuing its ongoing study into this matter. I think that on one of the days when we are debating health matters it would be well for either the minister or for his parliamentary secretary to speak on this subject at length, since there is a great deal of material which has been prepared by the department in which I think the hon. member would be very interested.

May 24, 1977
Adjournment Debate


REGIONAL ECONOMIC EXPANSION-MEASURES TO PROVIDE ALTERNATIVE EMPLOYMENT FOR THOSE AFFECTED BY CLOSURE OF LABRADOR LINERBOARD MILL
Jack Marshall: Mr. Speaker, I am sure hon. members will not be too surprised at the topic that I am going to raise tonight, not the least of whom will be the Parliamentary Secretary to the Minister of Regional Economic Expansion (Mr. Lumley). I should like to inform the minister, through him, that this is not the last time I am going to raise the matter either. I am going to continue to bring it up until 1 get some realization of the disastrous situation which exists in the western part of Newfoundland, and hopefully I can bring forward a couple of points tonight in addition to those I have previously brought forward.
The minister realizes, as does the House, that some 2,100 jobs are affected, either directly or indirectly, by the proposed closure of the Labrador Linerboard Mill, which is one of the most efficient and modern in existence, built at a cost of $200 million, but which is now going down the drain because of passive interest by levels of government.
I was looking at some statistics, Mr. Speaker, and discovered that besides the 2,100 jobs that are threatened, if we use the multiplier effect referred to by Statistics Canada, there is an effective ratio of three to one. In other words, rather than 2,100 jobs being affected, the true total is over 6,000. If you extend this to the payroll at the Labrador Linerboard Mill, which amounts to $24 million a year, this multiplier effect means that some $70 million is being lost to one part of Canada which cannot afford such a loss, since this is the second disaster which has occurred in the province.
I realize full well, Mr. Speaker, that responsibility for the operation of the mill lies with the provincial government of Newfoundland. But I have to say to the parliamentary secretary, for the attention of his minister, that if this closure becomes a reality in four to six months, the cost to both levels of government in terms of UIC benefits, severance pay and welfare, will be enormous and at least as much as, if not more than, they are going to lose by meeting the losses which occur.
I would also point out that the minister has a responsibility from the point of view of the infrastructure support provided by the Department of Regional Economic Expansion, particularly under the special areas agreements with the province of Newfoundland in the Stephenville special area. I mention a few of these which justify in great part the work done under these agreements, and the programs completed under the agreements, due to the infrastructure support for the establishment of this particular mill.
I will refer to the 1971 figures when the mill was about to begin. There was a loan of $2.2 million by the department to the municipality for water supply. They spent another $213,000 on reconstruction and paving of highways and roads because of the need to provide access from the wood resource. There was the construction of two very large bridges, again to provide access to the wood resource, amounting to $1.2 milfMr. Milne.]
lion. For the influx of population, the students and the children, they built a DREE access school amounting to $1.7 million. That is a total of $5 million under the first agreement. I have no fear in saying that since then another $5 million was spent on harbour facilities and more schools by the Department of Regional Economic Expansion to support the creation of that mill.
The minister must consider the cultural and social effects, as well as the economic impact. I would like to list at random some of those: the relocation of workers and families which will occur; the relocation of businesses, started as a secondary industry as a result of the establishment of the mill; the creation of new businesses, including a massive shopping centre, hotels and apartment complexes with CMHC and other federal funding; the federal government's establishment of an adult training centre; the establishment of four high schools by local entrepreneurship's, provincial government help or by local school boards and local population; the massive undertakings in federal funding of housing programs; the investment in real estate, both private and public; and the commitments made by local municipalities in loans which have to be honoured and will not be honoured because of the economic destruction which will occur.
All this massive funding to support the mill will go down the drain because everybody is only given "pass the buck" interest and passive interest by saying it is not their responsibility. When the axe falls in four to six months, the minister must remember it will be his responsibility, along with the responsibility of the Minister of Manpower and Immigration (Mr. Cullen), to provide the funding and the administration to help revitalize and rehabilitate that part of Canada.
I can only ask the parliamentary secretary to pass these items along to the minister. Originally back six or seven months ago when I saw the threat, while others did not, that was the time to plan through all the expertise available in the federal government-through the Canada Development Corporation, the Export Development Corporation, the Canadian Commercial Corporation, the Enterprise Development Corporation and CIDA-to find markets, with the aid of the Department of Transport, to support the needs of a four year old mill. This is a brand new mill which is not being given a chance to operate because of bad management and the lack of realization and common sense at the time the political decision was made to put the mill where it is located now. With the expertise available here in Ottawa, the mill can still pay. I hope the minister will take a more active interest in it for the benefit of some people in Canada, thus preventing them from losing faith in what government means.


Mr.   Ed. Lumley@Parliamentary Secretary to Minister of Regional Economic Expansion: Mr. Speaker, in response to the hon. member's series of questions on the pending closure of Labrador Linerboard's operations in Stephenville, I would like to place again the role of our department, in so far as the disposition of this matter is concerned, in perspective for this House.
May 24, 1977

The announcement by the government of Newfoundland of its decision to close the operation of the provincial Crown corporation, Labrador Linerboard Limited in Stephenville, is understandably viewed with great disappointment by the people of Stephenville and of Newfoundland generally. That decision was clearly based on the information provided to that government from its experts, including an independent advisory board established in November of 1976 to investigate the viability of the mill. Our department has no reason to question the integrity of that difficult decision. All of the evidence at hand indicates that continuing the mill operation would only increase the level of operating subsidy required, without any real expectation of a turn around in the profitability of the company.
We very much sympathize with the position of the Newfoundland government, which would be faced with substantial continuing deficits if the mill were to continue operations. However, we must emphasize that the mill is owned and operated by a provincial Crown corporation, and it is the prime responsibility of the provincial government. The unavoidable human problems of unemployment and loss of personal income resulting from that decision by the province will, in the short run, be addressed by the application of the full range of manpower and unemployment assistance programs available through the Department of Manpower and Immigration. A joint consultative committee has been established by the province and the Department of Manpower and Immigration to identify alternative employment opportunities and other assistance measures needed for workers displaced by the mill closure. Representatives of the union involved and the community are members of the joint consultative committee.
1 understand that the government of Newfoundland and Labrador is continuing to investigate any realistic alternatives which can be identified to secure the continued operation of the mill on a viable economic basis. 1 can assure the people of Newfoundland that if a means can be found to secure the reasonable likelihood of viability for the mill, in contrast to the very substantial level of operating subsidy presently contributed by the province, we will seek to have all relevant programs of this government immediately directed to the support of the provincial government.
I would like to remind the hon. member for Humber-St. George's-St. Barbe (Mr. Marshall) that the mandate of our department is specifically for the reduction of regional economic disparities through actions to develop the natural opportunities and to build the inherent strengths of each province. We are working toward structural improvements based on the comparative advantage of each region's economy. In the case of Newfoundland, our national programs have been tailored to lead to the greater utilization of that province's resources and the further processing of resource products, diversification of manufacturing and processing activities, and improvements in the efficiency of the business sector. One instrument which the department has adopted to pursue these objectives in Newfoundland is the Canada-Newfoundland General Development Agreement signed in 1974. Since then a total of 13 agreements
Adjournment Debate
have been negotiated with the province under the GDA. I can assure the hon. member-


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


PUBLIC SERVICE-SUGGESTED COMPENSATION TO THOSE IDENTIFIED AS BEING ON BLACKLIST-ALLEGED ADDITIONS TO THE LIST
Frank Oberle: Mr. Speaker, on October 13, 1976, during the question period, the term "extra-parliamentary opposition" was first introduced into the records of the House. The then minister of state for urban affairs was questioned about the existence of a blacklist connected with this term. He asserted that the blacklist charge was very serious. Fortunately though, he added, it was without foundation.
On January 24, 1977, I questioned the Prime Minister (Mr. Trudeau) about the list. He responded by saying, "I have not the slightest idea what the hon. member is talking about." The very next day the Minister of Transport (Mr. Lang) said he had never heard or seen such a list. The President of the Privy Council (Mr. MacEachen) also pleaded total ignorance. On January 26 the Solicitor General (Mr. Fox) said no such thing existed, nor did it ever exist.
On that day I arranged a meeting in the Opposition Lobby beween the Solicitor General, the hon. member for Central Nova (Mr. MacKay), and myself. I produced for the Solicitor General's inspection the letter and the list which I had in my possession. I asked the Solicitor General to give me and my colleague an indication within 24 hours, or by noon of the following day, of the way in which the government proposed to deal with the matter. I told him I would prefer to keep the matter confidential in order to protect the mostly unsuspecting and innocent persons named from further harassment. The Solicitor General informed me through his secretary at noon the following day that he would only answer questions which might be raised in the House. That, Mr. Speaker, was the day on which I read the letter into the record , omitting the names from the letter and the list.
Why was I so concerned about this matter? In order to understand this, one must understand the seriousness of the allegations which are contained in the letter identifying 21 persons, as well as an additional three whose names were included in the text of the letter as being members of the New Left.
May I quote a short paragraph from the letter?
The EPO concept, in the context of the New Left, does not mean legitimate pressure group activity but rather the creation of counter or parallel institutions within society but opposed to it and to the electoral process. Through such institutions the New Left seeks to organize and radicalize the "under classes" of society and mold them into a revolutionary force capable of overthrowing the present socio-political system.

May 24, 1977
Adjournment Debate
I quote further:
The radical EPO program of the Left is, in short, a movement strategy predicated on a total and unequivocal rejection of representative democracy, its destruction and the creation of radical alternatives.
Several of the people named in the letter had their public careers rudely interrupted. In the case of Mr. Walter Rudnick-i, dismissal did not take place until several years later. Some people on the list have clearly suffered as a result of being labelled subversives and revolutionaries. One of the more notable examples is Rudnicki who was dismissed from CMHC on what has been demonstrated to be a drummed-up charge. Rudnicki has also documentation to prove that the blacklisting had the effect of cutting him off from access to cabinet documents which he needed to do his work as an executive director of policy planning in CMHC; denying him access to French language training in Quebec City which, after 18 years of public service, he had earned and for which he was eligible; denying him promotion in the new urban ministry, in which he played a leading role in conceptualizing and getting established; prejudicing his relationship with senior staff in the system and with ministers for whom he worked. Most other cases are similar.
My concern tonight is over the fact that the Prime Minister and several of his colleagues still refused today to offer any comfort to any persons on the list which has now been published in several major newspapers in the country. We are asking for the setting up of a tribunal through which these people, if they so desire, could clear their names and lay claim to redress. I consider it incredible that the government should again today stonewall any attempt to gain information with respect to the inquiry which led to the compilation of the list in the first place. Again the government is suppressing the truth. It has been accused of deliberately misleading the House previously, and the charges which are laid here in the House were never answered. The House and Canadians in general deserve a public inquiry now. The sooner the government complies with this request, the less embarrassing it will be for the Prime Minister and his colleagues.
In 1939, Joseph Stalin had something which was called an EPO list, which was the enemy of the people list. In 1970 the
Prime Minister conceived an EPO list, which is the extra-parliamentary opposition. I ask, opposition to what? What is parliament in opposition to? Is it in opposition to the social political system of our country, or is it an opposition to the Trudeau super group that sits across from us? The Canadian people and this House deserve and need some answers.


Mr. Art Lee (Parliamentary Secretary to Solicitor General):: Mr. Speaker, the hon. member for Prince George-Peace River (Mr. Oberle) has made reference to a letter written almost six years ago by the then solicitor general to certain of his cabinet colleagues which expressed concern that some government employees might deliberately release classified government information without authorization:
The letter read into the record, on January 26, by the hon. member suggested that steps be taken to ensure that these government employees be fully advised and briefed as to their responsibilities for ensuring the security of classified government information.
As the current Solicitor General (Mr. Fox) has stated on more than one occasion, the letter of his predecessor and the names that were appended did not constitute a black list, and the term black list did not originate on this side of the House. Names of the individuals concerned were given to the ministers responsible for the departments and agencies concerned. The letter was written in confidence and was transmitted with the utmost discretion.
Although great care and discretion were exercised in the transmission of the letter to ministers in order that it would not be harmful to the reputations of the individuals involved, not everyone shares the government's concern for the right to privacy of individuals.
The letter was written almost six years ago. Since that time, some of those mentioned have left the government service, others have stayed, indeed have been promoted. Circumstances change, and while there may have been cause for concern in 1971, at the present time the RCMP security service has no interest in any of the persons or organizations mentioned in the letter written by the then solicitor general of the attachment, and this has been so for some years now.


The Acting Speaker (Mr. Turner):: The motion to adjourn the House is now deemed to have been adopted. Accordingly this House stands adjourned until tomorrow at 2 p.m.
Motion agreed to and the House adjourned at 10.26 p.m.


Wednesday, May 25, 1977