1977-05-30

ROUTINE PROCEEDINGS


Mr. Elmer M. MacKay (Central Nova):: I rise on a matter of urgent and pressing necessity pursuant to the provisions of Standing Order 43, relating to the Royal Canadian Mounted Police. Since the Marin Commission Report on internal discipline and other aspects of the RCMP procedures has been in the hands of the government since January 1976, and since the need for its implementation is clearly illustrated in an incident such as L'Agence de Presse Libre burglary which involved an RCMP officer assigned to the investigation of this burglary for which he had some responsibility, as pointed out on page 15007 of Hansard last July, who was disciplined by the RCMP, then promoted by the RCMP, and finally it became necessary for him to enter a guilty plea respecting the said burglary, I move, seconded by the hon. member for Saskatoon-Biggar (Mr. Hnatyshyn):
That the Solicitor General, without any further delay, make a statement on motions outlining the government's intentions with respect to the implementation of Judge Rene Marin's report which will be to the benefit of the vast majority of the RCMP.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


REQUEST FOR PUBLIC INQUIRY INTO BREAK-IN AT L'AGENCE DE PRESSE LIBRE-MOTION UNDER S.O. 43
Mr. Ray Hnatyshyn (Saskatoon-Biggar):: Mr. Speaker, 1 rise on a matter of urgent and pressing necessity pursuant to the provisions of Standing Order 43, on the matter of the RCMP involvement in the break-in at the premises of a Quebec newspaper. Since on June 2 of last year as reported at page 14071 of Hansard, the hon. member for Central Nova (Mr. MacKay) and the hon. member for Fundy-Royal (Mr. Fairweather) respectively made a motion that information be conveyed to the House concerning this serious matter, I move,
seconded by the hon. member for Edmonton Centre (Mr. Paproski):
That the Solicitor General, prior to his promised statement to be made on June 9, indicate why it took a change of ministry and elapsed time of one year to produce even the promise of a statement and further that he direct the government to institute an inquiry under the Inquiries Act.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


Mr. Paproski:: Francis Fox said no, and Bud Drury said no.


IMMIGRATION
Mr. Arnold Malone (Battle River):: Mr. Speaker, I rise to make a motion under Standing Order 43 on a matter of urgent and pressing necessity. In view of the fact that the Minister of Manpower and Immigration (Mr. Cullen) developed a new deal respecting immigration to Canada with the province of Quebec without consultation with the other nine provinces or the parliament of Canada, I move, seconded by the hon. member for Hastings (Mr. Ellis):
That this House request the Prime Minister to make a statement on motions indicating whether such actions are acceptable to his government and outline if this is a precedent for a new trend in federal-provincial relations wherein Canadians can expect more unilateral negotiations between the federal government and one province and the deal then offered to all provinces.


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


Some hon. Members:: No.


Some hon. Members:: Agreed.
80016-42/4

May 30, 1977
Oral Questions



ORAL QUESTION PERIOD


Elmer MacIntosh MacKay: Mr. Speaker, my question is for the Solicitor General. I wish to raise a question or two concerning newspaper reports of the break-in in 1972. Since my colleagues and I have been asking questions about this matter, as the Solicitor General knows, for well over a year and only recently has anything concrete emerged despite the repeated promises of a former solicitor general who, on March 31 and June 8 last year, promised this Elouse further information, I wonder if the Solicitor General can simply and without prejudice to current legal proceedings with respect to sentencing, say precisely when the solicitor general of the day became aware of the situation. I am speaking of the solicitor genera! of the day. Was it in 1972, 1973, 1974-when was it?
[ Translation]


Hon. Francis Fox (Solicitor General):: Mr. Speaker, I must say in reply to the question of the hon. member that, as he is aware, an official inquiry was launched as soon as my predecessor was advised of the break-in or presumed break-in at the offices of the APLQ. That judicial inquiry is still under way, Mr. Speaker, and as I indicated to the House during the oral question period last Friday, as soon as sentence is passed, that is as soon as the legal process has been completed, I shall make as complete as possible a statement to the House on all circumstances surrounding the case of the APLQ.


IMPLEMENTATION OF MARIN REPORT
Elmer MacIntosh MacKay: A supplementary question, Mr. Speaker. I gladly accept the minister's answer and will not ask more about the precise date on the understanding he will cover that point in his statement on the ninth. In view of circumstances involving one of the participants in this incident, and keeping in mind that I and some of my colleagues have often raised incidents in this House concerning RCMP officers who, owing to the arbitrary disciplinary procedures to which they are subjected, find themselves in difficulty, will the minister implement some of Judge Rene Marin's recommendations in the near future in order to put right inequities which, as I think the minister will agree, have caused the force much dissatisfaction within its ranks?
[ Translation]


Francis Fox: Mr. Speaker, of course it is most unfortunate that doubtless because of his many preoccupations the hon. member was unable to attend the sitting of the Standing Committee on Justice and Legal Affairs which studied my budget last Thursday, because he could then have asked all those questions in detail. In any

event, Mr. Speaker, I can assure him that following really intensive consultations with the RCMP, consultations which ended at the end of last November with representatives of the constables and other non-commissioned officers of the RCMP, an internal committee of my department composed in part of RCMP representatives made a complete review of the recommendations of the Marin report. Since that time, several of Justice Marin's recommendations have been accepted by the RCMP; as for the others, Mr. Speaker, I am expecting a report from my department before the end of June and hope to be able to introduce appropriate legislation to the House during the next session of Parliament.


DATE MINISTER WAS INFORMED OF INVOLVEMENT OF FORCE IN BREAK-IN AT L'AGENCE DE PRESSE LIBRE
Mr. Walter Baker (Grenville-Carleton):: Mr. Speaker, my question is also addressed to the Solicitor General. I bear in mind what he said about a statement, and the hope expressed by the hon. member for Central Nova with respect to a precise date, but I still want the Solicitor General to answer a question or two. When was the Solicitor General of the day notified of the RCMP's involvement? Specifically, can the minister tell us in advance of his statement if he was first notified of the matter by the hon. member for Central Nova, or did he find out about it before my colleague, the hon. member for Central Nova, brought it to the Solicitor General's attention in the House of Commons?


Francis Fox: Mr. Speaker, I think it would be really dangerous for me to embark on making incomplete answers or to consider only parts of the whole APLQ question. For example, there is some confusion in the question asked by the hon. member about which solicitor general he is talking about. Before continuing this line of questioning, it would be wiser and more advisable to wait for the completion of legal procedures so that the accused are not prejudiced in any way in their rights.


MATTERS TO BE INCLUDED IN MINISTER'S STATEMENT
Walter David Baker: Mr. Speaker, can the Solicitor General undertake to the House that the matter raised by the hon. member for Central Nova will be included in his statement. Can he also undertake to the House that the matter raised by the hon. member for Northumberland-Dur-ham, namely the question of a letter sent by L'Agence de Presse Libre to the Solicitor General, will also be dealt with in the statement. These are two things that are very important to the investigation of this matter, both in the House of Commons and in the country.


Francis Fox: Mr. Speaker, obviously the answer to the question of the hon. member is yes.
May 30, 1977


MANPOWER
Mr. Edward Broadbent (Oshawa-Whitby):: Mr. Speaker, my question is for the Minister of Manpower and Immigration. Last Tuesday I asked the minister if he would confirm the existence of unemployment forecasts that were made by members of his department for the province of Quebec and other provinces. At that time the minister said he would look into the situation and report back. My question today is, will he now confirm that such forecasts were made by his department for the province of Quebec and other provinces? Will he table for the observation and scrutiny of members of this House the truly alarming figures that come out of those forecasts? Related to that, will he also advise if his department is planning any initiative to improve the unemployment situation in the next few years?


Hon. Bud Cullen (Minister of Manpower and Immigration):: Mr. Speaker, I can confirm that projections of various trends in the economy, including employment and unemployment, were recently published by the regional economists in Quebec. My understanding is that there was no authority to make this kind of information public. It is not our business to do that kind of forecasting. There are competent organizations, such as the Economic Council of Canada and the Conference Board of Canada, which make these projections. All of these sources are used by the department. We do not intend to make it a practice to publish these figures in the future, either for Quebec or other provinces.


REQUEST THAT COPIES OF FORECASTS OF LEVELS OF UNEMPLOYMENT IN THE PROVINCES BE APPENDED TO TODAY'S &quot;HANSARD&quot;
John Edward Broadbent: Mr. Speaker, the people of this country, particularly the provincial governments, have a real concern about these forecasts even if the minister does not. They are already available. I have copies of the figures which show that in six of the ten provinces between now and 1978-79 there are going to be alarming increases. There is a forecast increase in unemployment in Newfoundland from an average 14.4 per cent to 17.4 per cent, in Nova Scotia from 10.4 per cent to 11.3 per cent and in the province of Quebec from 9.0 per cent to 9.8 per cent. Given these truly deplorable figures in terms of their impact on the ten provinces in Canada, will the minister and the House unanimously agree to these figures being appended to Hansard so that they become part of the record? If there is agreement I would like to ask the minister if he plans to come up with any specific programs this summer, either after consultation with his colleagues or the provinces, to do something about the alarming situation his department is forecasting.


Jack Sydney George (Bud) Cullen: Mr. Speaker, the information available from our sources or
Oral Questions
others indicated the difficulty that we are in fact having, the problems in the economy. That is why the budget was introduced by my colleague the Minister of Finance. That is why Industry, Trade and Commerce has taken initiatives in this field to increase the export trade, doing what it can to enhance that particular position. That is why in my own department we are endeavouring to fund training through the bill which is presently before the committee. There are other projects to deal with the situation, in so far as the government is able to cope with that and give the kind of initiative and incentive to business which it requires.


John Edward Broadbent: Mr. Speaker, before I ask my final supplementary, I would like to ask Your Honour if there is unanimous agreement of the House to have these figures attached to today's Hansard?


Mr. Speaker:: If consent is to be sought, I think it ought to be sought at some other time.


John Edward Broadbent: I will do that on motions, Mr. Speaker. My final supplementary is to the Minister of Manpower and Immigration. The Department of Manpower and Immigration has prepared a serious forecast for an interdepartmental committee of the federal government. Is the minister saying that this should not be made available to the provinces of Canada and should not be made available to members of the House of Commons so that we can understand how serious the situation is? Is he saying the budget, which was brought down a couple of months ago-and which the Minister of Finance acknowledges primarily deals with inflation, is going to be the main instrument we will rely upon for the creation of jobs over the next couple of years?


Jack Sydney George (Bud) Cullen: Mr. Speaker, as the hon. member knows, all of this information has been published and is available to the general public. I indicated the budget in itself was one of the areas we would be pursuing to deal with the economy, as it is at the present time. I make no bones about the fact the Minister of Finance has to walk on a tough tightrope at this particular time, so as not to mushroom up inflation in the interests of creating employment, which would have a detrimental effect on the whole economy. Thus, it is a very tough role he has had to play, and I think he has done a marvellous job with the budget he introduced.


REASON CERTAIN OFFICES REFUSE TO PAY TRANSPORTATION FOR STUDENTS TO WORK ON FARMS IN ONTARIO
Mr. C. A. Gauthier (Roberval):: Mr. Speaker, my question is also directed to the Minister of Manpower and Immigration. It relates to students aged 16 or more who go to the fruit and vegetable harvest in Ontario and who can work very hard. I would like to have this matter settled once and for all, Mr. Speaker. Can the minister tell the House whether manpower offices can arrange for the payment of student transportation to the working place? If so, could he say why an office in my

May 30, 1977
Oral Questions
constituency refuses to pay for these students while another agrees to do so?


Jack Sydney George (Bud) Cullen: Mr. Speaker, the procedure followed by the individual Manpower offices is to employ, wherever possible, students who live in the particular local area, who are familiar with the particular farming conditions, the crop and the people with whom they have to work. That kind of initiative or priority is in fact given. If students cannot be found in the local area to play that particular role, then we look elsewhere. I would be happy to look into the hon. member's representations. I am not sure we are doing that, at the present time, but I will certainly look at it.
[ Translation]


Charles-Arthur Gauthier: Mr. Speaker, I should like to put a supplementary question.
For the information of the minister, I would like to say that those students are required by Ontario farmers. I would like to ask the minister to make an inquiry at those offices. There is something wrong because those students are expected there. It is a simple matter of transportation, one provides it and the other does not.


Jack Sydney George (Bud) Cullen: Mr. Speaker, the decision is not, in the first instance, left to the department; it is left to the individual Manpower office. If there are students available at the local level and on the scene, it seems appropriate that they should be given the first opportunity to work at these jobs. As I have indicated, I have heard the hon. member's representations, and I will look into the situation to see if there are any farmers who are suffering as a result of not being able to bring in students from Quebec.


ROYAL CANADIAN MOUNTED POLICE
Mr. Eldon M. Woolliams (Calgary North):: Mr. Speaker, my question is for the Solicitor General as well. It is along the same lines as the questions by the hon. member for Central Nova and our House leader today. It concerns the incidents in Montreal and Toronto, which have raised continued questions about the relationship between the Solicitor General and the RCMP. In view of the fact the RCMP in many areas of law enforcement, such as the administration of the Official Secrets Act and the Narcotics Act, depend heavily on the expertise of the Attorney General of Canada, has the Solicitor General discussed the matter with the Minister of Justice, and indeed the Prime Minister, to consider placing the RCMP administration duties under the Attorney General and the Minister of Justice of Canada, as it was in the past before this difficulty arose?


Francis Fox: I am not sure what the hon. member means when he refers to the relationship between the RCMP and the Solicitor General. As to his suggestion, I have not pursued it with the Prime Minister or with the Minister of Justice but I believe the appropriate course of action was taken by the government back in 1966 when the Department of the Solicitor General was set up. I think that, on the whole, it has proven to be a very satisfactory way of administering this function.


Eldon Mattison Woolliams: That is not what the RCMP has had to say.


An hon. Member:: Explain!


SOURCE OF INSTRUCTIONS ON BREAK-IN AT L'AGENCE DE PRESSE LIBRE
Eldon Mattison Woolliams: It is in the
newspaper, if the minister cares to read it. Perhaps I could ask this question: in the light of the fact that the Solicitor General is not able to make a statement today, and is going to wait to tell the House whether the solicitor general of the day knew of the break-in of the Quebec newspaper prior to the break-in, would he be prepared, in that statement, to tell us what the general practice is? Does the Solicitor General, the minister in charge of the RCMP, give those instructions or do those instructions come direct from the Commissioner himself?


Francis Fox: As far as the Solicitor General is concerned, and as far as the Commissioner of the RCMP is concerned, the only actions the RCMP can take are actions which are consistent with the law as enacted by this parliament. Perhaps the hon. member missed some of the answers given in the House by both the Prime Minister and myself. We have indicated quite clearly on a number of occasions that the solicitor general at the time had no prior knowledge of the break-in.


IMMIGRATION
Arnold John Malone: Mr. Speaker, I would like to direct my question to the Minister of Manpower and Immigration. Without having any prejudice as to the recent discussions the minister had with the minister in Quebec, I should like to ask him on what basis and what was the justification for making a new deal with the province of Quebec on immigration without first consulting the other nine provinces and the Parliament of Canada?


Jack Sydney George (Bud) Cullen: Mr. Speaker, let me first say there is no new deal with this particular province. We were talking about the selection of immigrants to Quebec and our discussions were based on section 95 of the British North America Act which indicates that this is an area of shared jurisdiction. It permits the

May 30, 1977

co-determination of both levels of government in the immigration selection process. When I was asked, in dealing with one province, whether this was something which was available to all other provinces, the answer was yes. At the present time we have two agreements with the province of Quebec. Similar opportunities have been made available to other provinces but they have not seen fit, for their own reasons, to take them up. The Bienvenue-Andras agreement was, as Mr. Couture indicated, a good step forward, but it seems now we can do more with respect to sharing or codetermining immigration designated for various parts of the country. We agreed to the establishment of a joint working group which will look into all the options available. This will be available not only to Quebec but to any province which wants to participate.


REQUEST FOR ASSURANCE FEDERAL CONTROL NOT RELINQUISHED TO PROVINCES
Arnold John Malone: I trust the minister will have full respect for freedom of mobility in Canada. Would he give an assurance to the House and to the Canadian people that the federal government will exercise majority influence over immigration rather than release it to provincial jurisdiction and thus threaten the opportunity for a sensible, rational immigration policy throughout Canada?


Jack Sydney George (Bud) Cullen: Both Mr. Couture and I share that concern. As a matter of fact, Mr. Couture suggested, if I may use his words, that at the federal level we ought to have a common denominator in order to preserve and protect that vital element of immigration policy in Canada, namely, a person's ability to move throughout Canada despite the fact that he might originally have been designated to go to one province. There was no suggestion of any breakdown in that regard.


Arnold John Malone: I am not sure whether the minister stated this categorically, but I just wanted him to state, in front of the House of Commons, whether the federal government got the say in more than 50 per cent of immigration policy? That is the simple question I would like the minister to answer.


Jack Sydney George (Bud) Cullen: More important than getting into semantics over percentages, what we must look at is codetermination and the determinate role. Percentages are not going to make that amount of difference in numbers. It is a question of making sure that we maintain a common denominator and do what is necessary to encourage Francophone immigration to Canada as well as ensure the ability of the immigrant to move throughout the country.


QUEBEC REQUEST FOR CONTROL OF POINTS GIVEN PROSPECTIVE IMMIGRANTS-GOVERNMENT POSITION
Mr. Lincoln M. Alexander (Hamilton West):: Let me ask
the minister a brief supplementary question. His counterpart in the province of Quebec has put forth to the minister his position in which he indicates he wants control over 55 per
Oral Questions
cent of the points given to immigrants coming to Canada. I want to know from the minister whether he said no to that request and, if he did not say no, what did he say?


Jack Sydney George (Bud) Cullen: Mr. Couture indicated he was interested in selecting the best formula that would meet both our requirements. He said he did not want to be hung up on figures or become involved in statistics. If there is a better system, even beyond the pointage system, such as a sponsorship system or some other role that province might play, he wanted to look at all the options. That is why he agreed with me to establish a working group so that we could look not only at the options suggested by him but at others that we might wish to propose.


POSSIBILITY OF DIVIDING SELECTION CRITERIA
Lincoln MacCauley Alexander: I take it from the minister's answer that his counterpart in Quebec has now abdicated with regard to that particular proposal. The minister can answer that question when I ask him my second question. I understand that in the minister's statement he advised his counterpart that the selection process can be divided into two parts, one affecting social, cultural and demographic aspects and the other concerned with economic and labour aspects as well as market conditions, the latter being the responsibility of the federal government. Was there any discussion with respect to that type of thinking on the part of the minister and, if so, what was the reply in that regard?


Jack Sydney George (Bud) Cullen: I am not certain what the hon. member means in the first part of his question about abdicating or backing off.


Lincoln MacCauley Alexander: I meant that he does not want 55 per cent control.


Jack Sydney George (Bud) Cullen: We agreed to look at that option along with others that have been suggested to him. This group was set up because the question is a little more complex and it may well be that, as is the case with shareholders in a company, a 30 per cent interest may very well be the controlling interest. We want to look at all the options and have an open and free discussion on them, and to that extent we agreed to look at it, so there was no backing off or backtracking. It was a question of examining not only that option but all other options that have been suggested.
Similarly with respect to the second part of the hon. member's question, we pointed out that in those areas at the federal level we should play a major role and in other areas the provinces could play their major role. That again is one of the several options that would be considered by the special working group.

May 30, 1977
Oral Questions


AVAILABILITY TO OTHER PROVINCES OF POWERS GRANTED QUEBEC
Hon. Marcel Lambert (Edmonton West):: Would the minister tell the House whether he has indicated to the minister from Quebec that the same considerations would be offered to the other provinces, or would there be a mix or a variant of that formula offered to each of the provinces of Canada at their option; in other words, that there would be ten bilateral negotiations between the government of Canada and the provincial governments with regard to the national immigration policy? Was that disclosed to the minister from Quebec and, if so, what were his comments?


Jack Sydney George (Bud) Cullen: He felt that he had met his responsibility as the provincial minister in a federal system to indicate to the federal Minister of Manpower and Immigration where Quebec had a role to play and that it should have a codetermining role, if you will, in selecting the flow of immigrants. When I mentioned to him that these options would of course be available to other provinces, he said that it would be up to them to take their own initiatives; he has his responsibility as the provincial minister in a federal system to do what he can to enhance the flow of immigration to Quebec. So he is certainly aware of it.


POSSIBILITY OF RESTRICTIONS ON MOBILITY OF IMMIGRANT LABOUR
Marcel Joseph Aimé Lambert: With regard to the second aspect referred to by my colleague, the hon. member for Hamilton West, would the minister indicate whether any restriction was to be imposed on the mobility of immigrant labour entering any particular geographic area of Canada and, if so, if the restrictions were breached by the immigrant, what might be the result?


Jack Sydney George (Bud) Cullen: I indicated that one of the strengths of Canada was the fact that people in Canada, both immigrants and Canadians had mobility and should be able to move from province to province and it was essential that that mobility be maintained. That was when Mr. Couture used the expression that there would of course have to be a common denominator so that an immigrant who was accepted by Quebec, for whatever reasons, would be able to move and settle in Ontario or another province if that would be his or her wish.


POSSIBILITY OF SALE OF AIRLINE
Mr. Jack Murta (Lisgar):: Mr. Speaker, my question is for the Minister of Transport. A federal official quoted in a Montreal Gazette report of last Friday said that high level discussions between the premier of Alberta and the president of CP Air Limited concerning the sale of CP Air had taken place. Can the Minister of Transport say whether that report

is correct and at what stage of negotiations the two principals find themselves?


Hon. Otto E. Lang (Minister of Transport):: Mr. Speaker, I suppose it is always difficult when the press purport to report some high level source to say whether it is true or not that the source knows anything. Let me say quite plainly that no source that I seem to know as knowing anything about it knows anything about the subject. I have now checked a number of sources both outside and in the government, and 1 believe there is nothing to it at all.


ATOMIC ENERGY OF CANADA LIMITED
Mr. T. C. Douglas (Nanaimo-Cowichan-The Islands):: Mr. Speaker, in the absence of the Minister of Energy, Mines and Resources, may I direct my question to the Acting Prime Minister because the matter I want to raise has to do with the government in general. Last Thursday in the House the Minister of Energy, Mines and Resources stated that the government had made no decision with respect to the construction of a reprocessing plant to extract plutonium from radiation waste and to use that plutonium with thorium to provide electric energy for Ontario Hydro. I want to ask the Acting Prime Minister if the government's attention has been drawn to a press conference last Friday at which officials of AECL stated that it would be inappropriate to scrap the plans for a plutonium plant even if the government is opposed. May I ask the Acting Prime Minister also if he thinks it is appropriate that officials who are hired to advise the government on the nuclear energy policy should be publicly advocating a course of action on which the government itself has allegedly not yet made a decision?


Hon. Robert K. Andras (Acting Prime Minister):: Until the hon. member raised the question, to the best of my knowledge the attention of the government had not been drawn to the press conference. That is in answer to the first part of the question. If the story, as alleged by the hon. member, is correct, I will most certainly want to see the government question the propriety of any agency making a statement indicating its opposition or contradiction to or its disagreement with what appears to be the government's stated policy. But I would like to check what the hon. member has quoted, which he probably got from the press as well.


SUGGESTED PUBLIC INQUIRY INTO USE OF NUCLEAR ENERGY
Thomas Clement (Tommy) Douglas: In
view of the fact that modern science has given us tremendous powers which can be used for the benefit of or the destruction
May 30, 1977

of mankind, and in view of the fact that the nuclear advisers to the government are engaged in the business of selling nuclear reactors and technology, I want to ask the Acting Prime Minister whether the government is now prepared to consider the fact that the time is long overdue for Canada to follow the example of other countries, such as the United Kingdom which appointed a royal commission under Sir Brian Flowers, to assess the dangers and the benefits of nuclear energy and to come up with recommendations upon which Canada could base the same nuclear policy that would be in the public interest?


Robert Knight Andras: I would point out to the hon. member my own view that the government is totally aware of the potential dangers and it has these constantly under examination. In fact it is taking measures to make sure that the proliferation and sale of reactors is carried out under a sound and sane policy, as the hon. member suggests. As to whether it would be necessary for a royal commission to be struck to do this, that is a different question indeed, and I take that as a representation which no doubt will be noted.


Thomas Clement (Tommy) Douglas: In view of the answer of the Acting Prime Minister I would like to point out that the Minister of Energy, Mines and Resources said last Thursday that he had asked the Standing Committee on National Resources and Public Works to look into this matter, but, as every hon. member in the House knows, that committee has neither the time nor the expertise to examine a problem of such magnitude. I wonder if the Acting Prime Minister would undertake to discuss with the Prime Minister and his colleagues the fact that a reprocessing plant is not immediately necessary, and in light of that whether it would be preferred- because this has not been dealt with in any of the government's guidelines regarding the export of nuclear capacity-to examine the whole question of reprocessing plants by appointing a commission consisting of qualified scientists with no commercial bias in the hope that we might be able to establish guidelines for our domestic nuclear policy before we embark upon a course of action which could have disastrous effects not only on ourselves but also on future generations.


Robert Knight Andras: Mr. Speaker, obviously the hon. member is registering his concerns, and we should be listening to him. The hon. member made a representation which I will certainly ensure is carried forward for consideration. Beyond that I cannot give the hon. member a definitive answer.


GOVERNMENT ADMINISTRATION
Mr. Don Mazankowski (Vegreville):: Mr. Speaker, my question is directed to the President of the Treasury Board. Now that the government has announced the creation of the position
Oral Questions
of comptroller general, would the minister bring the House up to date on the progress he is making in acquiring a suitable candidate to fill that very important position, and can he tell the House when we might expect that appointment to be announced in the House?


Robert Knight Andras: Mr. Speaker, the search for a qualified person to fill that position is underway with vigour. The search involves the examination of potential candidates from within the public service and from outside the public service. It is proceeding. I cannot give the hon. member any specific date by which the decision as to who will get the appointment will be made except to express my keen interest in proceeding as quickly as possible. I hope it will be before very long because there is considerable organization and reorganization which must accompany that appointment which begins with putting a competent person into the job.


POSSIBILITY OF CHANGES IN FINANCIAL ADMINISTRATION ACT AS RESULT OF APPOINTMENT OF COMPTROLLER GENERAL
Donald Frank Mazankowski: Mr. Speaker, the minister has stated today, and on previous occasions, that the creation of this position will require a major restructuring of the Treasury Board Secretariat. Will this involve amendments to the Financial Administration Act, and if so, is it the intention of the minister to introduce legislation before the summer recess to accommodate those changes in the Financial Administration Act?


Robert Knight Andras: Mr. Speaker, I am advised that the appointment of a comptroller general at the deputy minister level reporting directly to the President of the Treasury Board would probably be best carried out by a minor in terms of quantity amendment to the Financial Administration Act. I have had some discussions with representatives of the other parties to see how quickly that might be done because if we could get the time to do it quickly, my own view is that that would be desirable. However, as the hon. member knows, there are some plans for more extensive amendments to the Financial Administration Act which might not be possible to place before the House before the fall. This really is still a question of negotiation, and frankly I have not yet received an answer as a result of my discussions with hon. members opposite.


IMMIGRATION
Right Hon. J. G. Diefenbaker (Prince Albert):: Mr. Speaker, my question arises out of the initial questions to the Minister of Manpower and Immigration. If I understood him correctly, he agreed that arrangements could be made between the federal and any provincial government-and other provin-

May 30, 1977
Oral Questions
cial governments would have the same right-to determine the question of immigration into their respective provinces. That to me is a proposition which is a denial of any concept of "one Canada". Would that not lead to a situation whereby any one province could say that whatever the other provinces said, "We do not want any French people migrating into this province; we do not want any English people migrating into this province; we do not want Jews in this province"? Is this not an outrageous proposition which will balkanize Canada? I suggest to the minister that this is too serious to leave to this government to come to an arrangement with the P.Q. government in Quebec. It is a matter which should be brought before the House of Commons so that we can find out the views of Canada and Canadians as a whole. Balkanization may meet a situation which exists today, but in the future it would be a denial of any expectation of greatness in the destiny of this nation.


Jack Sydney George (Bud) Cullen: Mr. Speaker, I might agree with the right hon. gentleman if the points were being awarded on the basis of the criteria that he is suggesting. That might have the impact of balkanizing the country. I feel that we are dealing here with section 95 of the British North America Act, which makes provision for a co-determination of the landing of immigrants in this country. This has worked to the benefit of this country since it became a nation. I do not think anyone would deny that. We are attempting to live up to the spirit of the British North America Act, section 95, by saying to the provinces that it is conceivable that in the past the federal government has acted almost in a unilateral way by setting out the points system, by saying who would be allowed to come in and by letting immigrants settle wherever they please. Quebec and other provinces-


John George Diefenbaker: What other provinces?


Jack Sydney George (Bud) Cullen: Manitoba for one-have indicated that they, too, would like to have a say in either the points system or in finding some other formula whereby there could be a codetermination of the movement of immigrants into the country. I think this is something we should discuss, and we should live up to our responsibilities as a federalist state under section 95.


John George Diefenbaker: Mr. Speaker, I know the contents of section 95, but does the minister not admit that it was never contemplated that a proposition would be advanced by any government which would place the government of the provinces in the position of being able indirectly or directly to control immigration into their provinces? Consultation, yes, but not outright acceptance of the viewpoint of the provinces. The minister believes discussions should take place, but does the minister not agree that the discussions should be held here in the House of Commons so that this matter can be determined as a result of the views of Canadians as a whole rather than those of the Prime Minister of Canada and the Premier of Quebec, who in the past were as close as two peas in a pod?


Jack Sydney George (Bud) Cullen: Mr. Speaker, I think the right hon. gentleman and I share the hope of the minister of immigration for the

province of Quebec that we do in fact maintain a Francophone immigration into this country. We have come up with suggestions and ideas in the past which have been adopted, and in two agreements entered into by predecessors of mine we have in fact recognized that. The Bienvenue-Andras agreement is a good example of that. The fact that we spend money on advertising only for Francophone immigration was recognized, and in the interest of doing that which is good for Canada we are authorized under the statute to enter into individual agreements. Mr. Couture has no desire to indicate that people should flow only into Quebec. That would not be acceptable. He has used the expression "common denominator", and I think we must maintain that not only in the best interest of Quebec but also in the best interest of Canada.


Some hon. Members:: Hear, hear!


John George Diefenbaker: This is a question of more than political and partisan argument. This is a matter which affects the future of Canada. Has the government become too self-satisfied to permit it, or would the minister agree that this matter should be brought before the House to find out the views of parliament rather than the views of two who in the past have been close and who are desirous of coming to some arrangement today, regardless of any consideration?


Jack Sydney George (Bud) Cullen: Mr. Speaker, if the two leaders to whom the right hon. gentleman refers could keep Quebec in Confederation, I think it would be time well spent.


Some hon. Members:: Hear, hear!


METHOD OF AGREEING ON COMMON DENOMINATOR IN ESTABLISHING CRITERIA FOR PROSPECTIVE IMMIGRANTS
Mr. Gordon Ritchie (Dauphin):: Mr. Speaker, I have a supplementary question for the Minister of Manpower and Immigration. May I ask him if the so-called common denominator will not have to be agreed upon by all provinces, so that any immigrants acceptable to one province will also be acceptable to others? If this common denominator is agreed upon, how will it be negotiated?


Jack Sydney George (Bud) Cullen: Mr. Speaker, that is precisely why we set up this particular group, to look into the kind of situation that the hon. member envisages and also to see to it that we do not focus only on a points system but look to other avenues that might be more effective. I can see for example a dual operation and dual officers being delaying and counterproductive to what Canada wants and the best kinds of immigrants for Canada. We are going to do everything we can to see to it that we maintain that particular stance.


William Gordon Ritchie: The newspapers report that a group of officials will be negotiating this in the coming summer. May I ask if other provinces will have representatives at these meetings?
May 30, 1977


Jack Sydney George (Bud) Cullen: No, Mr. Speaker. As I indicated the provinces are showing their individual initiative as to what extent, what level and in what numbers they want to participate. We have made provision under the new immigration bill to solve the problem. We have done demographic studies on numbers and before any numbers are announced in this House, we must have more full and frank discussion with the individual provinces. This is one area where some initiative has been taken by the province of Quebec. We have had correspondence from one other province that I am aware of today.


CENTRAL MORTGAGE AND HOUSING CORPORATION
Mr. Peter Elzinga (Pembina):: Mr. Speaker, my question is for the Minister of State for Urban Affairs. Would the minister be kind enough to explain to the House on what basis the capital budget commitment for funding CMHC is disbursed to the provinces? Is this funding disbursed on a per capita basis or on the basis of expanding housing needs in the various provinces? I ask this question in light of the fact that the Minister of Housing and Public Works for Alberta has suggested that Albertans have been treated less than equitably in past funding.


Hon. Andre Ouellet (Minister of State for Urban Affairs):: Mr. Speaker, the allotment of funds is made in accordance with programs established under the National Housing Act and it is obvious that all provinces would like to obtain more. However, I think that Alberta receives its fair share in that allotment.


Peter Elzinga: A supplementary question. I find it rather hard to understand how the minister can say Alberta is getting its fair share when on a per capita basis-


Mr. Speaker:: Order, please. The hon. member has begun on a subject that is probably too wide for the question period and which really ought to be dealt with when the minister is before the standing committee with his estimates. He is now carrying on what is only the logical conclusion but which regrettably is argument rather than questioning.


ATOMIC ENERGY OF CANADA LIMITED
Ramon John Hnatyshyn: Mr. Speaker, my question is directed to the Prime Minister. It concerns the plutonium reprocessing plant and the Prime Minister's statement in the House last Thursday and also at his weekly press
Oral Questions
conference. The day after, officials from Atomic Energy of Canada Limited held a press conference at which they stated it was their opinion it was inappropriate to drop plans for this pilot plutonium plant despite the government's position. I want to know whether the officials from Atomic Energy of Canada Limited were stating government policy?


Right Hon. P. E. Trudeau (Prime Minister):: Mr. Speaker, I am not aware of the statements made by the officials. If in fact they made the statements they are quoted as having made, it does not seem to me there is a great contradiction between their position and ours. We have not drawn up any definite plans for a reprocessing plant. I reported to the House last week and in the press conference that the matter was under study and that at the summit in London we had agreed to set up a 60-day study. I indicated that this group was already planning to meet early in June or late in June and that no decision has been taken.


Ramon John Hnatyshyn: A supplementary question, Mr. Speaker. The position taken by the AECL officials was that the policy accepted by Canada at the international meeting referred to was out of kilter with the need to extend uranium resources by recycling the spent fuel through plutonium which could then be used with thorium to generate more power in existing Canadian reactors. What I want to know is whether the AECL position is that of the government, being completely contradictory to the position put forth by the Prime Minister and the Minister of Energy, Mines and Resources and who makes the policy with respect to this very important area-the AECL officials or Senator Keith Davey?


Mr. Speaker:: The hon. member for Perth-Wilmot.


NORTHERN AFFAIRS
Mr. Bill Jarvis (Perth-Wilmot):: Mr. Speaker, I wanted to put a question to the Minister of Indian Affairs and Northern Development who left the Chamber so I will therefore direct it to the Prime Minister. Some weeks ago I directed a question to the minister regarding the delay in the application of Dome Petroleum and their drilling company Canmar for their five-year drilling permit for the Beaufort Sea and the minister indicated the delay was caused by the investigation into the circumstances surrounding the oil spill in the North Sea. May I ask if the investigation into the North Sea incident has been completed and if the Prime Minister can indicate to the House when the decision will be made with respect to the drilling application for the Beaufort Sea in this season and the next four seasons?


Pierre Elliott Trudeau: Yes, Mr. Speaker, the minister has completed the review and consultation with his colleagues. I believe he will be in a position to make an announcement very soon.

May 30, 1977
Oral Questions SOCIAL SERVICES


REQUEST FOR INCREASED ALLOWANCE FOR PARAPLEGICS AND QUADRAPLEGICS
Mr. Robert Muir (Cape Breton-The Sydneys):: Mr. Speaker, my question to the Minister of National Health and Welfare relates to increased allowances for paraplegics and quadraplegics in this country. I realize the legislative aspect of the question at the moment. Can the minister inform the House if any special studies are going on at the present time in his department with regard to a special allowance for these people who are unfortunate enough to be confined to a wheelchair without the added cost of catheters and medication as well as the frustration of facing a wheelchair every day?


Hon. Marc Lalonde (Minister of National Health and Welfare):: Mr. Speaker, first of all, I am pleased to advise the hon. member that I hope to introduce in this House very shortly a new piece of legislation called the social services act which will have as one of its highest priorities the improvement of services to the handicapped in this country. That legislation, however, will provide for a cost-sharing program and the initiative, as with all other social services, will be the responsibility of individual provinces. As far as specific payments are concerned, such payments are authorized for cost-sharing under the Canada Assistance Plan but the provinces must take the initiative in deciding the level of payments with the federal government paying 50 per cent of what the program costs as determined by the provinces. Unfortunately, the government has no constitutional or legal authority to provide for direct payments to the handicapped of this country.


Robert Muir: A supplementary question. I thank the minister for his reply and I appreciate the information he has provided. As one who spent many, many months in a wheelchair and who had to learn to walk all over again, may I ask if the minister would make special representation in regard to the Canada Assistance Plan to his provincial counterparts to ascertain whether things could not be arranged on a better basis than under that particular act. As it is now, the poorer provinces cannot cope with the 50-50 arrangement.


Marc Lalonde: Mr. Speaker, this matter was investigated at great length with the provinces when we discussed the establishment of an income support and supplementation program. On the whole the provinces recognized that the system whereby the federal government finances roughly 50 per cent of the cost is still the one that is most acceptable all around.


TELEGLOBE CANADA
Mr. Lloyd R. Crouse (South Shore):: Mr. Speaker, my question is for the Minister of Communications. There is a report of tremendous growth in the bureaucracy during recent

months at Teleglobe Canada in Montreal, the company that used to be known as the Canadian Overseas Telecommunication Corporation. Would the minister inform the House of the reason for this tremendous increase in personnel and at the same time would she indicate whether it is the plan of Teleglobe to build a new satellite station north of Marion Heights near Montreal and if so, how much will be expended for this new station?


Hon. Jeanne Sauv6 (Minister of Communications):: Mr. Speaker, I am not aware of any tremendous growth in the personnel of Teleglobe Canada during recent months, but I will ask the president and be able to give the information to the hon. member.
As for the new earth station, I know it is under construction. I could give the specific reasons for it later, but for the moment I believe this is to give more services.


EXTERNAL AFFAIRS
Mr. Allan B. McKinnon (Victoria):: Mr. Speaker, in the absence of the Secretary of State for External Affairs, may I direct my question to the minister responsible for answering. A committee of the conference meeting in Geneva to update the 1949 Geneva Convention recently voted for a draft article which appears to blur completely the distinction between soldier and murderer, and to extend the rights of prisoners of war to guerrillas, terrorists, skyjackers and hostage takers. Canada, the great abstainer, abstained again on this matter. I should like the minister to explain why we abstained instead of voting against the draft article?


Mr. Fernand E. Leblanc (Parliamentary Secretary to Secretary of State for External Affairs):: Mr. Speaker, the purpose of this conference is to extend the protection afforded by the 1949 Geneva Convention to those affected by armed conflict. While Canada has actively supported the humanitarian aims of the conference, we abstained on this question, along with a number of other western delegations, since the terms of the article were highly ambiguous and could be interpreted to adversely affect the protection which is to be afforded to the civilian population during times of war.


Allan Bruce McKinnon: Mr. Speaker, I thank the parliamentary secretary for his answer. May I direct this supplementary question to him: Is he aware that this amendment would have enabled such people as the murderers of Mr. Laporte to claim legal immunity from prosecution as criminals? Is he prepared to table the draft amendment and also prepared to assure the House that, before Canada ratifies any new Geneva convention, the House will be given full opportunity to debate it?
May 30,1977

[ Translation]


Fernand-E. Leblanc: Mr. Speaker, the answer given is rather complete. However, we will consider the new items mentioned by the hon. member and give him an answer later.


PRESENCE IN GALLERY OF PRESIDENT OF MAURITANIA
Mr. Speaker:: Order please. In closing the oral question period, I will take a moment to call attention to the presence in our gallery of a very distinguished guest, His Excellency Moktar Ould Daddah, President of the Islamic Republic of Mauritania.


John Edward Broadbent: Mr. Speaker, I rise on a point of order. Last Tuesday I asked the Minister of Manpower and Immigration (Mr. Cullen) a question about certain unemployment figures his department had produced. He cast doubt on the accuracy of the question, but said he would look into it. He confirmed in the House today that such figures were produced for the province of Quebec.
I asked the Minister of Finance (Mr. Macdonald) if similar horrendous figures had been compiled for other provinces, and he, too, doubted the existence of such figures. He questioned the correctness of the allegation, then alluded to further inquiries on his part. The Minister of Manpower and Immigration admitted in the House today the existence of such figures forecasting significant unemployment increases for the next two years with respect to six of ten of Canada's provinces.
I should like to clear up any doubt about the veracity of the figures. It has been admitted that they exist. Earlier, the Minister of Finance doubted their existence. In order to clear the issue, I think it might be useful if members of the House would agree unanimously to the tabling of such figures submitted by the Department of Manpower and Immigration to a short-term task force interdepartmental committee on employment development. If there is unanimous agreement, I ask that those figures be appended to today's Hansard.


Mr. Speaker:: Order, please. It seems to me that the hon. member for Oshawa-Whitby (Mr. Broadbent) has already accomplished what he wishes by the reference to the matter during the question period and by his request now that such figures be printed in Hansard. However, he asks unanimous consent. This is required, of course, if such figures which were referred to earlier during questions are to be appended to Hansard. Is there unanimous consent to table such figures and append them to Hansardl


Some hon. Members:: Agreed.


Some hon. Members:: No.
Privilege-Mr. Paproski


Mr. Speaker:: Order, please. There is not unanimous agreement.


John Edward Broadbent: Someone on the government side said no.



ROUTINE PROCEEDINGS


André Ouellet: That, commencing May 31, 1977 and continuing to June 30, 1977, notwithstanding any Standing Order:
(1)	Any Standing Order that establishes a forty minute limit speeches shall be deemed to establish a thirty minute limit;
(2)	Except on days allotted pursuant to Standing Order 58, on Mondays, Tuesdays and Thursdays, the House shall continue to sit until 10.30 p.m.;
(3)	On Mondays, Tuesdays and Thursdays, the House shall sit from 11.00 a.m. to 1.00 p.m. to consider Government Orders other than the business of supply, provided that proceedings pursuant to Standing Order 15(2) and (3) shall be taken up at the usual time;
(4)	On Mondays, Tuesdays and Thursdays, proceedings pursuant to Standing Order 40 shall be taken up between 6.00 p.m. to 6.30 p.m.


[Stage Direction]
Motion agreed to.

Mr. Mark MacGuigan (Windsor-Walkerville) moved: that the seventh report of the Standing Committee on Justice and Legal Affairs presented to the House on Friday, May 27, 1977, be concurred in.


[Stage Direction]
Motion agreed to.

Steve Eugene Paproski: Mr. Speaker, I rise on a question of privilege concerning something I have just read in Hansard, and I raise the question at this time. I refer to page 5968 of Hansard for May 26, 1977, and to an exchange between the right hon. member for Prince Albert (Mr. Diefenbaker) and the Minister of Transport (Mr. Lang). The right hon. gentleman had been talking about a certain procedure relating to Standing Order 43, when the minister rose on a point of order. Hansard reports the appropriate passage as follows:

May 30, 1977
Privilege-Mr. Paproski
MR. LANG: Yes, Mr. Speaker, on a point of order I think the record should show that Mr. Paproski, thus named, is notorious in this House for saying someone said "No" very frequently when it is totally false to say so.
Sir, I know of no rule which does not allow me, when I see a certain hon. member on the other side of the House mouthing the word "no" after Mr. Speaker has asked if there is unanimous consent for the acceptance of a motion under Standing Order 43, to say that an hon. member is saying no. As Hansard reported on page 5968, I did say, "Ralph Goodale said no." I regret the minister raised that point of order, but it did happen. I think the minister opposite should withdraw that statement. He might as well have said I am lying.


Otto Emil Lang: Mr. Speaker, the occasions when I have seen the hon. member who just spoke allege that a certain member shouted no when it was clearly not true to say so are numerous indeed, and they have even involved me. I should like it to be known that I classify this statement, as I presume he classifies his own actions, with the nature of his humour or his sense of humour. I do not think it is an appropriate practice; indeed, I think it is a deplorable practice. In future I will try to identify occasions when he makes wrong allegations, and particularly when they are reported in Hansard, with regard to any particular member's saying no, when he has not done so.


Walter David Baker: Mr. Speaker, I rise on the same question of privilege. I suggest the minister misinformed himself. That is understandable. He does that periodically. From my experience, most of the time members behind him shout no, and unless he has eyes in the back of his head, which I doubt, he cannot tell who is saying no.


Mr. Speaker:: Order, please. There is apparently a desire on the part of those contributing to the discussion to contribute more than once. Members on both sides of the House have contributed to discussion of the point. There are, I am sure, many explanations on both sides with respect to statements which have been made. It seems to me that all made reference to situations which are somewhat inaccurately described as having occurred in the past. They will probably recur in the same way somewhat frequently in the future, which should give the parties who want to test the validity of these questions ample opportunity to do so, and it should not be necessary to go further this afternoon.


Thomas Clement (Tommy) Douglas: Mr. Speaker, it seems that the difficulty which has been encountered in this case and encountered before could be remedied by the committee studying the rules and procedures of this House if it were provided in the Standing Orders that any member who wants to say no when a motion is introduced under Standing Order 43 be required to stand up and be recognized so that he is recorded in Hansard.


Some hon. Members:: Hear, hear!


Thomas Clement (Tommy) Douglas: That is the only way we will prevent this difficulty of some relatively anonymous person with his head behind a book saying no, the record showing that the House has refused consent and nobody knowing who it is who has refused to give consent. If any member wants to refuse to give consent to the debating of a motion introduced under Standing Order 43, he or she ought to be willing to stand up and be recognized.


Mr. Speaker:: Order, please. The suggestion made by the hon. member for Nanaimo-Cowichan-The Islands (Mr. Douglas) has been made on numerous occasions in the past by other members. There are, of course, other aspects of it that ought to be considered by the Committee on Procedure. There are occasions when members, even if they support the subject matter of a motion, are reluctant to see the business of the day set aside for debate. Perhaps it might be useful to have the procedure committee consider that, if a member is to be identified as withholding his or her consent, they ought to be given the opportunity to explain their reasons. There are all kinds of considerations involved.
I think all members are aware that the Committee on Procedure has been requested a number of times by other members to examine this matter. It is hoped that if there can be improvements in the manner in which we handle these motions, the procedure committee will move to do so and examine reasonably soon to see if there are any recommendations that might meet the approval of all sides of the House.


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. Ralph E. Goodale (Parliamentary Secretary to President of the Privy Council):: Mr. Speaker, the following questions will be answered today: 1,226, 1,449 (Supplementary), 1,924, 1,957, 2,311, 2,413 and 2,457.


Mr. Knowles (Winnipeg North Centre):: Is that all?


Mr. Forrestall: 1.	With reference to the answer to Question No. 1,327 of the First Session of the 30th Parliament, has there been consultation between industry and government on the identification of a series of priorized and integrated ice excellence research and development programme requirements and, if so, what was such consultation?
2.	Did such consultation result in identifying specific programme requirements and, if not, for what reason?
3.	If the programme requirements have been identified, have they been presented to the appropriate Ministers and (a) if not, for what reason (b) if so (i) what do they require of each of the responsible Ministers (ii) what has been the response of each of the appropriate government departments or agencies?
4.	Is there a panel on Ocean Management and, if so (a) what is it (b) what are the names of the members and who does each represent (c) how often does it
May 30, 1977

meet (d) what are its responsibilities (e) what input has it made with respect to the implementation of the "New Oceans Policy"?
5.	Does the government fund or support research in oceanography and ocean engineering at Canadian universities and, if so (a) what is it (b) which universities have received such funding and how much has each received each year since 1972?
6.	Have bilateral agreements been signed between Canada and other countries in the area of Ocean Science and, if so, what are Canada's specific responsibilities under any such agreements?
7.	(a) Which departments and agencies are involved in the implementation of the "New Oceans Policy" (b) what is the responsibility and duties assigned to each?
8.	(a) Do foreign companies, operating off the Canadian East Coast obtain information relating to ice/weather conditions from the government (b) does the government know if these companies are conducting their own studies into weather and ice conditions in the area and, if so, does the government have access to any resulting information and, if not, for what reason?


Hon. James Hugh Faulkner (Minister of State for Science and Technology):: In so far as the Ministry of State for Science and Technology is concerned: 1. Consultation between industry and government on the identification of ice excellence research and development programme requirements was in the form of two workshops arranged by a consultant retained by the Ministry of State for Science and Technology. The first workshop was devoted to Arctic commercial activities, primarily in the petroleum and transportation sectors, and was attended principally by industrial representatives. The second workshop, primarily involving government participation, focussed on the fishing industry and government support services for Arctic waters operations.
2.	The workshops produced a very large number of recommendations and suggestions with respect to the development of ice covered waters capabilities. Through extensive interdepartmental consultations these recommendations were developed into a series of programme requirements with respect to: weather forecasting (Department of Fisheries and the Environment), ice forecasting (Department of Fisheries and Environment, Ministry of Transport), hydrography (Department of Fisheries and the Environment, Ministry of Transport), com-
Order Paper Questions
munications (Department of Communications, Department of Fisheries and the Environment, Ministry of Transport), navigation aids (Ministry of Transport), arctic vessel research (Ministry of Transport, National Research Council), arctic engineering research (National Research Council), icebreaking (Ministry of Transport), search and rescue (Ministry of Transport, Department of National Defence, Department of Fisheries and the Environment), and oilspill detection, containment and clean-up (Department of Fisheries and the Environment, Ministry of Transport).
3.	(b)(i) and (ii) The programme requirements developed cooperatively by the responsible departments have been presented to the appropriate Ministers. Specific plans for implementation will be formulated by departments, as noted in 2 above, in the context of their existing activities in these service areas, and in conformity with the development of new demands for the services and the availability of funds.
4.	(a) The Panel on Ocean Management is an interdepartmental committee with representation from all departments and agencies having responsibilities and interests with respect to the management of the ocean and its resources, (b), (c) and (d) Responsibility for the Panel has recently been transferred from the Ministry of State for Science and Technology to the Department of Fisheries and the Environment, which has been given lead department responsibility for ocean matters. The Panel's membership, terms and reference, and activity plans are now under review following this transfer, (e) The Panel has reviewed ocean management functions in the light of changing jurisdictional responsibilities, priorities and technologies as a basis for continuing interdepartmental consultations on ocean policy and departmental operations and plans.
5.	(a) and (b) Since 1972, grants for the support of research in oceanography and ocean engineering have gone to the following universities from the National Research Council, Department of National Defence (Defence Research Board), Department of Fisheries and the Environment, and Department of Energy, Mines and Resources:
Grants in Thousands of Dollars by Fiscal Year
Universities	1972-73	1973-74	1974-75	1975-76	1976-77	TotalAcadia	6.0	-	12.5	18.5Alberta	36.5	30.0	36.0	34.8	40.8	178.1British Columbia	602.1*	622.2	549.5	443.4	561.1	2,778.3Brock	-	-	-	4.9	11.5	16.4Calgary	19.5	32.6	31.8	34.9	27.0	145.8Carleton	7.0	5.0	11.5	7.8	8.0	39.3Concordia	-	-	-	5.9	9.0	14.9Dalhousie	240.9	526.8	498.7	623.6	534.1	2,424.1kcole Polytech Mtl	13.0	10.0	20.6	11.6	5.3	60.5Guelph	57.8	70.0	81.0	91.9	116.6	417.3Laval	45.7	54.7	163.5	186.4	146.2	596.5McGill	176.1	191.2	194.1	221.2*	215.0	997.6McMaster	19.0	39.9	40.4	32.9	39.7	171.9Memorial	392.3	404.3	392.1	439.3	373.4	2,001.4Moncton	5.0	-	-	4.0	5.0	14.0Montreal	37.0	41.6	30.0	37.1	34.0	179.7Mount Allison	-	2.5	2.5	2.9	7.9New Brunswick	31.2	28.9	23.3	35.0	33.3	151.7N.S. Tech. College	34.5	45.6	17.8	-	4.0	101.9Ottawa	9.0	9.0	-	-	20.0	38.0
May 30, 1977
Order Paper Questions
Grants in Thousands of Dollars by Fiscal Year
Universities	1972-73	1973-74	1974-75	1975-76	1976-77	TotalPrince Edward Island	2.0	5.0	5.0	5.7	-	17.7Queen's	37.9	32.2	23.9	24.3	27.5	145.8Quebec	23.0	29.8	39.0	67.9	58.5	218.2St. Francis Xavier	8.5	12.0	9.0	5.7	5.0	40.2St. Mary's	4.0	4.9	4.9	5.5	-	19.3Sherbrooke	4.0	-	20.0	10.3	10.5	44.8Simon Fraser	45.0	48.0	51.8	45.8	51.5	242.1Toronto	90.7	75.4	76.4	84.4	114.1	441.0Victoria	67.0	70.8	78.8	137.2	177.4	531.2Waterloo	23.0	61.5	2.9	4.9	6.0	98.3Western Ontario	-	-	-	-	4.0	4.0York	-	-	10.0	-	-	10.0Consortia	WCUMBS** Huntsman Marine	250.0	77.0	42.5	62.4	51.2	483.1Laboratory	70.0	60.0	45.0	51.2	52.5	278.7GIROQ***	300.0	210.0	250.0	-	-	760.0Totals	2,657.7	2,800.9	2,752.0	2,722.9	2,754.7	13,688.2
* Data incomplete
** Western Canadian Universities Marine Biological Society (Bamfield Research Station). *** Groupe interuniversitaire de recherches oceanographiques du Quebec.
6.	Canada has signed bilateral agreement for cooperation in science and technology with four countries: Belgium, the Federal Republic of Germany, France, and the USSR. In all four cases ocean science has been identified as a potentially fruitful area of cooperation. Canada's responsibilities, as outlined in the agreement, involve the exchange of relevant scientific and technical information, exchange visits by research scientists, and joint cooperation on ocean science projects.
7.	(a) The following departments and agencies are involved in the implementation of the "New Oceans Policy": Fisheries and Environment; Industry, Trade and Commerce; Energy, Mines and Resources; Transport; the Ministry of State for Science and Technology; Indian Affairs and Northern Development and the National Research Council, (b) In consultation with other interested departments and agencies, the departments in (a) have the following responsibilities: Fisheries and Environment-renewable resource management (fisheries and other renewable aquatic resources) in order to maintain the long-term viability of these resources.-protection of the marine environment including the detection, containment and clean-up of polluting substances.-improvement of capabilities for weather and ice forecasting.-participation in international meteorological and oceanographic projects. Industry, Trade and Commerce-the development and support of Canadian ocean industry. Energy, Mines and Resources, Indian Affairs and Northern Development-non renewable resource management involving the regulation, development, production and transportation of hydrocarbon and mineral resources of the seabed. Transport-the development and control of navigation including the supervision and control of vessel and other traffic on and under the ocean. Ministry of State for Science and Technology-continuing review of oceans policy, particularly its science and technology aspects. National Research Council-support of research in marine science and technology in Canadian universities.
8.	(a) Companies operating off the Canadian east coast essentially receive the same level of information relating to

ice/weather conditions from the Atmospheric Environment Service that is generally available to all individuals and companies, if they provide their own means of access to the telecommunications system. Special services can be provided on request if the company provides regular observations from the site and if the company pays the incremental cost of such special service. A special service was provided for a company during the summers of 1975 and 1976. (b) As far as is known, companies operating off the Canadian east coast are not conducting studies into weather and ice conditions.


[Stage Direction]
Question No. 1,449-Mr. Herbert: (Supplementary)
Since April 1, 1968, what are the names of all persons who have occupied the position of Deputy Minister of the Department of National Revenue and, in each case, what was the date of appointment?
Ralph Goodale: Taxation: McEntyre, J. Gear, July 6, 1954; Sheppard, David H., November 2, 1966; Cloutier, Sylvain, March 1, 1970; Armstrong, E. B., September 1, 1971; Hodgson, Dr. J. S., December 28, 1974.


Mr. Munro (Esquimalt-Saanich): Did the head office of Loto Canada, or any of the regional or branch offices, mail unsolicited order forms for lottery tickets and, if so (a) in what volume and to what extent, (b) what is the annual cost and who bears the cost, (c) on what date did such a practice begin and will it continue?


Mr. Hugh Poulin (Parliamentary Secretary to Minister of Industry, Trade and Commerce):: Loto Canada has sent out one mailing of order forms, (a) 4,850,000 in all provinces except Quebec. Marketing research determined that the market in Quebec was much closer to saturation than were the markets in the other provinces. In addition, for the other provinces as a whole, there is a higher proportion of population
May 30, 1977

in low density areas which is more difficult to reach with the normal distribution system. For these reasons, the cost-benefit ratio of a mailing to the other provinces was superior, (b) $315,432. The cost of this mailing is borne by Loto Canada, (c) Mailing took place on January 21, 1977. There are no plans at the present time for another mailing.
SALE OF MASSEY-FERGUSON TRACTORS TO RUSSIA AND/OR ARGENTINA


Mr. Halliday: Has any department or agency sold, or arranged for the sale of, Massey-Fer-guson tractors to Russia and/or Argentina and, if so (a) what are the model numbers (b) what extra equipment was on the machines (c) how many were sold (d) what was the price per unit?


Fabian Hugh Poulin: Massey-Ferguson Limited does not manufacture tractors in Canada. The Department of Industry, Trade and Commerce has no knowledge of any federal department or agency having sold or arranged for the sale of Massey-Ferguson tractors to Russia and/or Argentina.


Mr. Fortin: Has the government undertaken studies on the construction of the prototype of (a) an electrical vehicle (b) a vehicle that uses solar energy and, if so, in each case, what were they?


Otto Emil Lang: Transport Canada advises as follows: (a) Yes: Reviewed the latest technical advances in electric vehicle and battery research and development; and feasibility study of a limited range electric vehicle principally a utility delivery van and an urban passenger car. (b) No.


Mr. Howie: Is the government contemplating any action which would, either implicitly or expressly, have the effect of formally devaluating the Canadian dollar with respect to foreign currencies?


Mr. Bob Kaplan (Parliamentary Secretary to Minister of Finance):: The government is not contemplating any action which would have the effect of formally devaluing the Canadian dollar with respect to foreign currencies.


Mr. Fortin: 1.	Do benefit control officers of the Unemployment Insurance Commission in (a) Quebec, (b) each of the other regions of Canada, have a specific number of claimants and percentage of exclusion to respect and, if so, what is this quota?
2.	If control officers reach their quota sooner than expected, are they off duty for the rest of the week or month?
3.	During the training programme, are the benefit control officers taught from the beginning to consider all claimants as cheats and to do all they can to prove them such?
Small Business


Jack Sydney George (Bud) Cullen: 1.	(a) and (b) No.
2.	No.
3.	No.


Ralph Goodale: I ask, Mr. Speaker, that the remaining questions be allowed to stand.


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


Mr. Otto Jelinek (High Park-Humber Valley) moved:: That in the judgment of this House the Government has failed to respond effectively to the needs of the small business sector, has made negligible progress toward the implementation of a small business policy, has neglected to introduce a Small Business Act, and has not freed the productive potential of small business to create jobs for Canadians.
He said: Mr. Speaker, at the outset may I extend my sympathies to the Minister of State (Small Business) (Mr. Marchand) on the death in his family. We all know the sadness that is felt when losing loved ones, and we share that sadness with him today.
It has been roughly one year since the Prime Minister (Mr. Trudeau) appointed a member to his Cabinet who would be responsible for looking after the interests of the small business community. At that time a glimmer of hope arose within this vast and major sector of our economy, a hope that at long last specific action would be taken to reduce the maze of bureaucratic regulations, controls, directives, and the general paper work onslaught would be replaced with a meaningful incentive oriented program.
Unfortunately nearly a year has passed and the small businessman still must look to a government that has no small business policy whatsoever let alone a small business act. He must still look to a government lacking meaningful incentive programs, and he must look at a minister who is attempting to work in a policy vacuum without any terms of reference with which to set his sights for the future.
That reminds me of a statement made by the Minister of National Health and Welfare (Mr. Lalonde), who unfortunately is not in the Chamber today. When faced with the possibility of creating a language ministry, the minister refused such a proposal because the terms of reference were not worked out. One must wonder what the difference is between that proposed ministry and the appointment of a Minister of State responsible for small business when the terms of reference of that portfolio had not only not been worked out, but the minister has to work in a policy vacuum of sorts.

May 30, 1977
Small Business
In any event one must begin to wonder about the actual intent of the appointment. I had hoped that the government had at long last realized the necessity of dealing with small business as a separate entity, and that it was finally following in the footsteps of other industrialized nations that had been committed to the betterment of the small business community for some time. Consequently, their over-all economies are far healthier than our own.
Be that as it may, it is a fact that since the appointment of a Minister of State responsible for small business, the government's own attitude toward the small business sector has not changed. The government still does not have a small business policy. The government still does not have a small business act.
What is totally unbelievable and incredible is that the minister still does not have a definition of small business as it relates to his portfolio. How can you expect a government to deal with a specific sector of our economy when the government does not know exactly what sector it is dealing with?
There are a number of departments which deal directly or indirectly with small business. No wonder they are not helpful. No wonder they create bureaucratic paperwork and burdens, and impose all sorts of restrictions on the small business community. The departments cannot know where the line is drawn between large multinational corporations and small business. How can the government continue to pretend, and that is all it is doing, to be interested in this vital sector of our economy, small businesses, when it does not know who it is dealing with?
The minister just recently had the second reading of the Small Businesses Loans Act passed. I look forward to taking part in the committee stage debate on that bill tomorrow. However, it is nothing new. The act was implemented in 1963. This is just a continuation of that act. Hon. members know that act would have expired July 1 had amendments not been introduced.
The amendments do not go far enough. They simply keep time with inflation. Nothing has been done by the government to stimulate the small firms sector. No incentives programs have been established to extend the sector into secondary manufacturing. No effort has been apparent in utilizing this small business community for make-work programs, yet small business, which is responsible for over 50 per cent of the labour force in Canada, is the largest and least costly sector of potential employment opportunity within our economy as a whole. I want to emphasize that. Incredibly this is the one sector that the government continues to overlook when pretending to deal with unemployment.
During my recent trip to Tokyo where I held various discussions with officials of the small and medium size enterprise agencies, what hit me most vividly was the difference in priorities between the Japanese government and that of our own. In Japan, as in the United States, West Germany and elsewhere, governments have been catering to the well-being of the small business community over the past 20 years or so. As a result their economies are far more advanced than ours, especially when it comes to unemployment where, for example,

Japan has close to zero unemployment in a population of 110 million people while we have reached the frightening figure of one million unemployed in Canada. One of the main reasons for this imbalance in statistics is that we are not taking advantage of this, the best and cheapest potential job employment opportunities in a mixed economy-I keep referring to small business, of course.
Unfortunately the philosophies of the government over the past decade or so have tended toward centralization, with bigger and costlier governments, stronger and more powerful unions, and larger and fewer multinational corporations. It is my deep concern that unless this trend toward centralization does not reverse itself within the very near future, our system, the free market system upon which this country was built, will slowly but surely disappear to be replaced by what I can only describe as corporate socialism.
Let us remember that small business is the umbilical cord of free enterprise. The fact remains that our governments, despite this, continue to consult with large business and, as a result, most of the legislation is geared solely toward that sector. This forces small business to accept various laws which were not based on their problems in the first place. There is no question that the needs of the small corporation are largely different from those of the large multinational.
I turn to another subject, that of secondary manufacturing. We sometimes tend to forget that Canada is the richest nation per capita in natural resources, and even with that wealth, look at the state of our economy! One of the reasons we are doing so badly is that the government does not provide an incentive. It does not offer an incentive to industry to develop secondary manufacturing. We need the United States, as I have said in the past, to help us develop some of our natural resources.
But what concerns me, what should concern every member of the House, is that instead of continuing to sell our natural resources abroad where we help create employment, in Japan, for example, where we help the economies of foreign nations to develop on the basis of our natural resources as they develop secondary manufacturing to produce the final product, we lose that potential, that opportunity for employment in this country. Then we turn around and buy those finished products back from Japan, though very often they are made out of our own natural resources, at much higher cost. This is a situation which has to be faced by all Canadians and this trend of depending on foreign countries to develop and build their economies from our natural resources must be reversed because one of these days we are going to run out of natural resources, and then where are we going to be, with no secondary manufacturing?
If we want this trend to be reversed we must surely come up with an incentive program to assist the development of these vital secondary manufacturers, and instead of strangling the small business community with bureaucracy and all kinds of restrictions and controls it is time the government initiated forms of incentive, be they through the tax system, research
May 30, 1977

and development, or a number of other ways where incentives can be introduced. This would encourage the growth and development of small firms, thereby creating employment at the lowest possible cost. This simply is not happening.
To my mind, incentive is the key word and one which has disappeared from the political vocabulary of the government sitting across the way. Instead of incentive programs we are now in the midst of the greatest give-away era in our history. One must remember that the higher the number of direct grants or give-aways the less incentive there is for realistic productivity, just as the higher the number of unemployment benefits, the less incentive there is for long range employment.
This is not to say that less effort should be geared to the well-being of big enterprises and large multinationals. More often than not, however, these are able to fend for themselves. Indeed over the five years I have spent in Ottawa it has become obvious that the effect of a big business lobby on cabinet ministers and their departments can be compared to a tiger in a monkey cage. Whenever big business lobbies for its cause, ministers do back handsprings in an effort to be of assistance.
Unfortunately the small businessman does not have the clout or the resources to make himself heard effectively. Whatever ear-bending has been accomplished must be credited to such organizations as CFIB, the CMA and a few others. Unfortunately whatever success these groups may have had, or whatever success the opposition may have had in proposing realistic recommendations in this regard-and I say "proposing realistic recommendations" because we have done this on a regular basis ever since I have been here, especially in this field-has gone for naught. It is meaningless unless the government commits itself wholly to the betterment of the small business community.
Some of the recommendations we have made in the past were debated on March 28 of this year in connection with a private member's motion in my name. We talked about this subject at length. I shall be very brief. I shall simply call attention to the four points which were included in this motion; first, that tax credits should be allowed in respect of investment in small business. We. have been pushing for this since 1972, and not only the small business community but Canadians at large would accept it. But the government is dormant. It has a one-track mind, a preoccupation with bigness, big government, big unions, big labour. This is why unemployment is so high. This is why our economy is suffering. IThe second point was the need for assistance in the formation of small business export consortia. The third was the need for changes in government tendering practices so that small business would supply an increased proportion of government purchased goods and services. A program to this end has been most effective in the United States. The fourth point concerned the need to reduce the government paperwork burden imposed on small business.
With regard to the last point I must give credit to the Minister of State for Small Business. He has, finally, listened and taken some steps in this direction, though to date they are
Small Business
very hesitant. For example, the government has gone some way toward reducing the reporting requirements to Statistics Canada of certain firms in the construction, transportation and manufacturing industries. We look forward to further developments in this field and we look forward, as well, to the promised amendments to the Corporations and Labour Unions Returns Act which will exempt further firms having to report under that law. But this is barely scratching the surface. Each time the minister opens his mouth, on the other side he develops a bureaucratic maze with which small business must try to cope.
The government does not realize that whenever it introduces a piece of legislation dealing with business it places an unfair burden on smaller firms which very often have no relation to what is happening. I will give one example. Quotas are undoubtedly needed to assist the textile industry in Canada. But in introducing the measures it did, the government gave no thought to the little corner store which, for instance, was marketing Mexican novelty goods and was in no way trying to compete against the large textile manufacturers. Operations such as these are the ones which suffer from the kind of legislation to which I have referred. Their owners go bankrupt and employment is lost. This is happening on a daily basis. There are more bankruptcies taking place today in Canada in small business than ever before in our history. All of this indicates that the government does not care, does not understand, or does not want to care about implementing specific programs for large industry or planning specific programs for small business.
The minister himself cannot be blamed personally for attempting to deal with this issue.


Steve Eugene Paproski: Yes, he can.


Otto John Jelinek: For example, prior to the last budget he advocated the removal of capital gains tax on transfers of a business from one family member to another. He recommended that suggestion publicly and he said he would discuss it with the Minister of Finance (Mr. Macdonald) in order to have it included in the budget, but nothing materialized. The government is either not taking this cabinet minister seriously or, more probably, the government has not committed itself to dealing with the problems and the potential solutions of the small businessman by initiating and developing an over-all small business policy.


Ramon John Hnatyshyn: It is window dressing.


Otto John Jelinek: It is window dressing, because no action has occurred since the Minister of State for Small Business has taken his new position.


Steve Eugene Paproski: He took a trip to Russia.

May 30, 1977
Small Business


Otto John Jelinek: As my hon. friend says, he took a trip to Russia. Can you imagine that-the Minister of State for Small Business in a democracy where free enterprise is supposed to be alive, goes to Russia to study capitalism and to study the free market system?


Fabian Hugh Poulin: He accompanied thousands of small businessmen.


Steve Eugene Paproski: Monique and Hughie should have gone with him.


Otto John Jelinek: I would like to point out that he was not at the small business symposium in Washington, D.C. I did not see him there. All of the industrialized nations had representatives there. He was not in Tokyo where I met with the small and medium size enterprise agencies. He was not in West Germany where I met with the small business administration.


Ramon John Hnatyshyn: He was probably in East Germany.


Otto John Jelinek: The minister said that he travelled across the country and talked to small businessmen during his travels. I give him credit for that. I think he followed in my footsteps, because it was three or four months after I made my national tour that the small minister made his tour.


An hon. Member:: That is a Freudian slip.


Otto John Jelinek: One does not have to do that in Canada because the concerns, problems, and potential solutions of the small businessmen are the same in Ottawa as they are in Vancouver or Halifax.


Ramon John Hnatyshyn: Or Vegreville.


Steve Eugene Paproski: Or London, Ontario.


Otto John Jelinek: Or Edmonton Centre. That is one of the unifying forces small businessmen have. All these concerns, problems, and solutions are the same right across the country.
1 am sure I do not have to remind hon. members of the importance of small business to our economy. Without a small business policy and a government commitment, by way of a small business act, this importance is being slowly but surely eroded and is perhaps damaging the free market system for good.
I would like to take this opportunity to quote from a report by the Select Committee on Small Business in the United States Congress. I keep referring to the United States because I feel this is one area of our economy where we can learn from something which has been successful, and we can learn from something which has existed for the last 30 years. It is unfortunate, but the government does not seem to want to learn. I would like to quote from page XI of the Permanent Select Committee on Small Business of the House of Representatives of the United States, which reads as follows: Importance and Place of Small Business in U.S. Economy.
The contributions of small business to the American economy and society are many and the following points merit special attention:

1.	The existence of a large number of small, independent businesses helps to preserve competition, thus ensuring increased efficiency and high quality and reasonable prices for consumers.
2.	A large number of small independent businesses decreases the likelihood of excessive economic and political control.
3.	Small business offers an opportunity for the expression and growth of personal initiative and individual judgment.
4.	Small business is frequently the source of new products and new methods.
5.	Small business constitutes a large and diversified source of employment opportunities.
6.	Certain services essential to the economy can be performed best by small business.
I wanted to quote from this report just to emphasize the importance of small business within our economic way of life. We have been calling for a government small business policy for years. We have been calling for the government to commit itself for the betterment of the small business sector for years. We have been calling for positive and specific programs, and none have been forthcoming. We have recommended in detail, on a number of occasions, specific proposals for the betterment of the small business community. Mr. Speaker, all of this was to no avail. Instead of acting positively in this regard, the government has ignored the needs of the small business sector. It has refused to implement a small business policy, let alone consider introducing a small business act. The resulting factors can be judged by the shape of our economy as a whole, which goes hand in hand with the deplorable level of unemployment in this country.
The time has come for specific and positive action. Therefore I am calling on the government through this motion today, as emphatically as I can, to introduce a small business act which would fall within the confines of a small business secretariat responsible for initiating and consequently updating, on a regular basis, a specific small business policy dedicated to the betterment and well-being of small and medium size enterprises in Canada.
The motion today records the failure of the government to present or even consider such a small business act. Mr. Speaker, I advocate such an act. After just speaking previously of the weight of government intervention upon small business, it may now seem strange to ask for what appears to be more regulation of small business through legislation; but the two goals are not inconsistent and are not contradictory. They are complementary, because one of the major goals of a small business act would be to remove, as far as possible, the weight of government upon small business and to assist small business in coping with government. I will make some more detailed suggestions in a moment.
First and foremost there must be a definition of what a small business is. If government is to prepare and implement any coherent program for small business, then it must first know, with some exactitude, what a small business is. The government talks about small business but does not know what small business is, because it does not have any government policy with respect to a definition. That does not seem very difficult, but so far the government has not come up with a definition that makes any sense to a small businessman.
May 30, 1977

The government definition of small business is based on size, the total assets of the firm or its gross sales in a year. Conceptually this definition is inadequate because it fails to capture the most important feature of a small firm-that the owner of it is the manager and that the manager of the firm has a deep personal stake in its future. The inadequacy of the definition, in its practical application, is easy to illustrate. Let me take one definition of small business which is based on size. That is contained within the Small Businesses Loans Act as it is proposed to be amended by Bill C-48. In that legislation a small business enterprise is defined as one which has an estimated gross revenue of $1.5 million in a year. According to this legislation, a small business is a firm having less than $1.5 million in sales.
Let us apply that definition to a few firms in Canada. I am not suggesting any of these firms which I will mention have applied for a small business loan or do not fall under the definition of this act specifically. Consider a company called Nordex Explosives Ltd., based in Montreal. Their sales in 1975 were $433,000. This company is safely under the small business sales limit of $1.5 million. Is this company in fact a small business? I would argue that it is not, and I think the major shareholder of the company, which happens to be the Dow Chemical Investment and Finance Corporation of Michigan, would be rather surprised to hear that a company they control is considered to be a small business by this Liberal administration. Dow Chemical's gross revenue exceeded $5.6 billion in 1976; it is twenty-fifth on the list of the top 500 U.S. corporations compiled by Fortune magazine.
I have a great number of other such examples where the government defines a so-called Canadian company within its own definition under the Small Businesses Loans Act, a company which is in fact held by multinationals from abroad or in Canada. The list is long. It is sufficient to show that the definition of a small or medium size business based on size alone does not always describe the most important feature of a small business, namely, that it is owner-managed.
Therefore the first thing our small business act must do is to define small business as an enterprise that is owner-managed. That is the main component of the United States small business act definition, and it seems to be workable. One may then want to apply a size limit to the companies identified by the owner-managed definition so that large owner-managed operations, such as Eaton's of Canada, are excluded, or to be more flexible one may choose to qualify the owner-managed definition with the requirement that the firm not be dominant in its field of operations or its market. The degree of dominance may seem to be a vague criterion, but it is one which in effect will be used in the proposed revisions of the Combines Investigation Act, Bill C-42. The precise qualifiers used are not as important as the main feature of the definition, that the enterprise be owner-managed.
Having made the definition workable in my view, as it has certainly been workable in the United States for some time, let
Small Business
us look briefly at the proposed act. The small business act would create a small business secretariat which would function independently of its parent, the Department of Industry, Trade and Commerce. Currently the small business responsibilities of the department are treated like a blemish on its plans for large scale operations, big plants, huge capital costs, and large scale exports. The concerns of small business are both different in quality and quantity from those of big business, so different, I would argue, that a small business secretariat could never be comfortable under the suffocating umbrella of the Department of Industry, Trade and Commerce. The secretariat's job would be to help small business cope with government and compete with big business.
I am not proposing government intervention in the affairs of small business, far from it. What I am proposing is a mechanism through which the weight of big government can be removed from the shoulders of small business.
The secretariat would have an advocacy role. By this I mean the secretariat would put forward the interests of small business to other government departments and agencies. I mentioned how many departments and agencies there are that touch on small business interests, or rather I would say that do not touch on small business interests because there is no department that is reorganized-


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


Some hon. Members:: Agreed.


Otto John Jelinek: Mr. Speaker, I thank hon. members for allowing me to conclude my remarks. I shall try to be brief.
For example, when Statistics Canada is preparing yet another statistical form which requires a lawyer or an accountant to fill it out, the secretariat would try to force StatsCan to exempt small businesses from being required to complete it or, at the very least, would try to have the form simplified and streamlined. Another thing the secretariat might do is to make representations to the Department of Finance to try to prevent the implementation of budget proposals harmful to small business. This happens quite often without the knowledge of the top department that the legislation that is being proposed for the big multinational corporations is in fact harming small businessmen. I touched on that previously.
The secretariat also could make representations to the Metric Commission to ensure that conversion costs are not an undue burden on small business, or to the Export Development Corporation to ensure that small business gets a fair share of EDC financing and insurance contracts. The secretariat could make representations to any other department the actions of which affect the small firms sector. I could go on and on, but this will not work in Canada until such a policy is brought in under an act which would commit the government to deal specifically with the interests of small businesses rather than

May 30, 1977
Small Business
dealing with small businesses in a roundabout way through the various departments.
It has been proposed in Bill C-42, for example, that there be a competition advocate, so really I am not setting a precedent in recommending an advocate because the government itself has recommended an advocate under Bill C-42. The job of such a person would be to make representations to federal departments, agencies, and corporations whose actions affect competition in the market place. This is exactly what I am proposing for the benefit of the small businessman. All I am asking for is a small business advocate who may find it necessary, as part of his duties, to make representations to the competition board.
The secretariat will assist small business in forming export consortia. Such assistance will not only include the maintenance of files on businesses willing to form consortia, but will also include assistance in sales programs abroad. The secretariat will advocate, and perhaps institute in co-operation with other departments, a program whereby a certain portion of government purchased goods and services is supplied by small business-the set-aside program as it is called in the United States, to which I referred in my previous private member's motion in the House a month or two ago.
The small business act would transfer the administration of the educational function of the Federal Business Development Bank to the secretariat. The improvement of managerial skills is not something that is only needed when a small businessman needs to borrow money. It is a continuing need and should be a service available cheaply from the secretariat.
The small business act should amend other legislation. For example, it would be made perfectly clear that small business would be exempted from the sections of the new Competition Act dealing with specialization agreements, export specialization and mergers. Small business would be free from these rules and thus free from the fear of expensive and time consuming experiences before the competition board. Small business would not, of course, be exempted from the provisions dealing with misleading advertising or other unethical trade practices. In general, the small business act would exempt small business from regulatory statutes wherever consistent with other national goals. Small business has enough problems without bearing the weight of government.
Because time limitation will not permit me to deal with taxation proposals in this regard I will not speak about them at this time, but I hope that some of my colleagues will have an opportunity to touch on this subject. Let it not be said that we seldom make specific proposals and recommendations. I have been hinting at the need for a small business policy or act for some time, but the government obviously has not been interested in assisting the small business community. I had hoped that when the Minister of State for Small Business was appointed nearly a year ago, some action would be taken by the government, and some commitment made to deal with the problems of small businessmen, to come up with solutions. This has not happened.

On a number of occasions this year I put on the record some general proposals in this regard. For example, on March 28 of this year, as reported at page 4395 of Hansard, I said, and I quote:
Instead of the ad hoc, band-aid approach this government has taken in respect of small business, as indeed it has on a great number of other issues, a definite small business policy, or better still a small business act along the lines of that existing in the United States, Japan and elsewhere, must be established at the earliest possible date in order to replace the existing air of confusion, with potentially long-range programs.
I have made these recommendations on a number of other occasions both before and after March 28. Support for such action is not promoted simply by the Progressive Conservative Party. As a matter of fact I believe such action would be welcomed by a majority of Canadians. In fact the most effective voice of the small business community today, the Canadian Federation of Independent Business, utilizes the front page of its latest issue of Mandate to promote and thereby endorse our recommendation for a Canadian small business act.
I wish to quote briefly from the May issue of Mandate.


Mr. Dionne (Northumberland-Miramichi):: Do you realize that you are on overtime?


Otto John Jelinek: I will be very brief in closing, if the hon. member will bear with me. I thank him for his indulgence.


Ramon John Hnatyshyn: Otto is the mover of the motion.


Some hon. Members:: Oh, oh!


Otto John Jelinek: Mr. Speaker, I will be brief.


The Acting Speaker (Mr. Turner):: Order, please. The hon. member for High Park-Humber Valley (Mr. Jelinek) has the floor for the purpose of making his speech.


Some hon. Members:: Hear, hear!


Otto John Jelinek: Before I conclude I want to refer to another quotation to show hon. members that this proposal for a small business act is widely accepted. I am glad to see the Minister of National Health and Welfare back in the Chamber. He is the minister who at one time did not know whether a new ministry should be formed. I remember very distinctly when not too long ago the minister supported the appointment of the Minister of State (Fitness and Amateur Sport) (Mrs. Cam-pagnolo), but a year or 18 months ago when I made that recommendation he said it would be impossible, and he jokingly said there would have to be a minister of ballooning, a minister of pole vaulting, a minister of horse racing, and so forth. Yet a few months later the minister supported the appointment of the Minister of State (Fitness and Amateur Sport), so I am not quite sure what his stand is, and I am not sure he is sure of his stand as to secretariats, ministries, portfolios, and what have you on his side of the House.
May 30, 1977

The quotation to which I would like to refer came after we made these recommendations publicly in this House and outside this House. It reads as follows:
In the United States, a national small business program has existed for almost three decades. Because of the Small Business Act, one third of federal spending for goods and services goes to small business. Since the United States has a program to benefit small business, it can hardly object to a similar Canadian program. Imagine what a larger small business sector would mean to Canada: more jobs, less need to import, retention of profits in Canada, and accumulation of valuable technological know-how. There's really no question. Canada must pass legislation committing the federal government to building domestic enterprises using the same wording and definitions as the U.S. Small Business Act. It seems to us that it's time Canada adopted something from the U.S. that makes sense for a change.
It went on to say, "The point is simple. We need a small business act now". We can see that the Canadian Federation of Small Business supports our recommendation.
In closing I would like to repeat what I have said often in this Chamber, something which I believe is imperative if our democratic way of life is to survive. If we want the small business firm sector to survive within our society, as I am sure we all do, then immediate action must be taken by the federal government. The small business community is what the free enterprise system is all about. It is what this country is built on and what this country can prosper by. Other countries which presently are more fortunate than Canada with respect to unemployment, inflation, productivity, and other areas by which the standard of success is judged, have all concentrated their economic energies toward their small firms sector within their industrial way of life.
My concern is so genuine regarding the problems of small business and freedom of enterprise that I hope the seriousness of these problems can be dealt with on a non-partisan basis. We cannot wait any longer, the small business community cannot wait any longer, and Canadians cannot wait any longer for the government to move in a positive direction in this regard. I hope hon. members will realize the seriousness of the situation and consider some of the proposals which we are outlining today. Opportunities still exist in Canada, but they are diminishing very quickly. Let us not lose them completely.


Mr. Arnold Peters (Timiskaming):: Mr. Speaker, I listened with fascination to the remarks of the hon. member for High Park-Humber Valley (Mr. Jelinek) concerning small business because, in my opinion, we cannot have capitalism and free enterprise as we have it today without having monopoly corporations, chain stores, and the largeness of industry which is supported by both the Liberals in Ottawa and the Conservatives in Ontario, without the elimination of small businessmen. 1 was fascinated because in the last few months I have been listening to the representatives of the Conservative Party in Ottawa talking about the need of additional funds for business. What they are talking about is big business. They are talking about the seven sisters in the oil company field. The Conservatives want to give them more money, and say they can develop because they are the only ones which produce jobs.
It is a fact that capitalism is no longer a free, competitive enterprise in Canada. The small businessman is affected by
Small Business
monopoly capitalism. It seems to me that while smallness is not necessarily beautiful, bigness is obscene.
I agree that this country was built by small businessmen, but they were competitive. They did not believe in monopoly capitalism. In my opinion the Federation of Independent Business is totally misdirected. I would have been more sympathetic to the hon. member for High Park-Humber Valley if he had not cited the Federation of Independent Business to buttress his remarks. This federation has spoken in Mandate about every free enterprise exercise which has taken place for a long time, but in my opinion it is not in the least sympathetic to the small management operated business.
The Conservative Party here in Ottawa and in Ontario have recently been talking about the needs of the consumer and damning agriculture for its adherence to marketing legislation. Farmers are small, independent businessmen who have to get together to sell their products, but this is being attacked as being a very detrimental tool as far as the consumer is concerned.
The expression "free free enterprise" has been used. This seems to work for very large companies but never for the small ones. Let us consider an example. I am in total agreement with the remarks of the hon. member with regard to this country having been built by free enterprise. The businessman got an idea, he worked hard to sell it, he supplied a product, and in this way had people buying his "better mouse trap". That is not true anymore. Today if a businessman gets a good idea, somebody buys it and may use it to the advantage of the country or to the advantage of industry. On the other hand they may just shelve it because they already have a similar product, and so they eliminate the competition.
It is my opinion that free enterprise was intitially competitive enterprise. I should like to ask the hon. member for High Park-Humber Valley what competitive enterprise he sees in the remarks made by the Federation of Independent Business? They no longer believe in competition; what they believe in is big conglomerates, with complete control. This control filters down to the small businessman. A little grocery store may order five or six cases of coke, and because of their low overhead, be able to sell it at less than other stores. This is fine. But they will find it impossible to get a second shipment of coke. If they do not sell at the right price the first time there will be no more deliveries of coke, Kraft products, or any other major commodities. That means there really is no competition.
What happens, say, to a small trucker in Ontario who finally can afford two or three trucks? He immediately finds that he comes under the control of the provincial government which will make it very difficult for him to expand. No protection is provided to the small free enterpriser to allow him to grow. He is regulated so that the competition factor limits his ability to expand because of government intervention.


Mr. Ellis:: That is a lot of nonsense.

May 30, 1977
Small Business


William Arnold Peters: The hon. member says that is nonsense. There was a trucker in northern Ontario recently who had a small business. The government intervened and created a new class "A" licence. With the exception of the provincial government there have been no newly created class "A" PCV licences in my part of the country for the last eight or nine years. The recent one was a political move, and it may or may not be successful.
Small businessmen are the basis of our nation and they should be able to compete. In many cases they can only compete if they form a relationship with their neighbours. This is true in agriculture and in many other endeavours as well. It seems to me that governments are not very friendly to the relatively small businessman. It is much easier to deal with large gasoline companies than it is with the local service station, for instance. It is very easy to make arrangements on a provincial or federal basis with the seven sisters of the oil companies, but very difficult to make arrangements with the individual gasoline pump operator. So we see a diversity of prices across areas, that are quite often arranged prices. This happened in my area, particularly in Timmins which falls in a different zone than the rest of northern Ontario and has a different price base. It is not that the dealer has raised his price beyond what his overhead requires; it is that the price he pays for his product is different from what his neighbour pays in another zone in the same area.
The small businessman always gets it in the neck. Those who are considered small businessmen in agriculture are now faced with as much red tape as would be involved in running a major corporation. When they hire help they have unemployment insurance red tape, compensation red tape, income tax red tape and all the other forms of red tape, but there is no assistance available from the government. That is why many members of parliament get involved with the small business in their area; people are unable to cope.
In my area a number of people began to hire two or three employees but they found so much difficulty with the red tape that they got out of business. In New Liskeard two or three people got together and set up a small business-some were in the appliance business, some in television and radio-and together they hired one employee. They might as well have hired 100, Mr. Speaker. They were immediately involved with income tax, filling out forms, and shortly afterwards they dissolved the partnership because it just was not worth while. They are operating individually again, but they wanted to build a business that would have been an asset to the community and would have been advantageous to them because they had intended to share many facilities that are expensive to maintain individually.
Then there was a carpenter who decided to hire three or four people and build houses. The results were disastrous, not in terms of the buildings but because of the paperwork.
Any government that is really interested in helping small business-and I suggest the Conservatives in Ontario are not, and neither are the federal Liberals-should establish a bureau which would supply assistance in coping with red tape.
[Mr. Peters.)
As I have shown, when a small business wants to hire extra employees it would need the assistance of tax advisers and accountants.
I would say that small business should not go beyond the owner-manager category. It should be a stage between the private employer or contractor who is self-employed and the firm that goes into contracting and hires employees. Whatever bureau is established provincially or federally should be geared toward eliminating red tape. In every area of Canada it is essential to have an owner-managed grocery store or a hardware store operated by a local family. Our butchers must be allowed to run small or independent meat markets.
Our small businessmen are essential for the life of our communities. They are part of our way of life. It is no good paying lip service to small business; we must be prepared to help it. We should establish in the appropriate ministry a bureau which could help small business in exactly the same way as other government agencies help big business. If we are not willing to do it, we had better stop paying lip service to our free enterprise system.
To me, free enterprise means competitive enterprise. It means the world beating a path to the door of the man who builds a better mouse trap. I say this country's two major parties have not supported the builder of the better mouse trap for a long time. They have supported monopoly capitalism, have given concessions to large corporations, even in agriculture, where large business has secured monopoly control through vertical integration, and paid lip service only to the ability of the individual, of the small businessman, to compete effectively in the market place.
The small businessman thinks that he can compete only if he joins some larger organization which would allow him entry to the market place. With whom is the small businessman competing? A small businessman can go into the hardware business reasonably easily, but will find it difficult to stay afloat, if one of the large chain hardware stores opens business across the street. The large store can offer loss leaders, buy supplies in carload lots cheaply, and offer retail prices below those the small businessman must pay his supplier for the same goods.
I believe in the free, competitive enterprise system, but do not believe the Federation of Independent Business serves free enterprise. It serves big business or monopoly capitalism which allows no competition or squeezes or eliminates from the market any existing competition. When competition is eliminated we all become the victims. When most of us think of free enterprise, we think of competition.
I am sure most members of the House are aware of the problems besetting small business. I am sure lawyers, accountants, and others who deal with small business are aware of many problems our small businessmen must surmount in order to survive. Mr. Speaker, our small businessmen are important to our country. They are part of our way of life and we must support them. We must make sure our small businesses loans legislation works effectively.
May 30, 1977

If the newly appointed minister responsible for small business does his job properly and helps small businesses survive, perhaps small business will be given the sort of help the Department of Industry, Trade and Commerce and other agencies of government have given big business in the last few years. At present if a small businessman cannot borrow money from the bank under the small businesses loans legislation, he cannot borrow it anywhere. That is not good enough. I suggest we should involve the Federal Industrial Development Bank. At present I believe it is involved with those in medium-size enterprises.
Small businesses are labour intensive, community oriented, and make life for people in rural Canada and small communities more tolerable. Frankly I am surprised at the number of small businessmen who have joined the Canadian Federation of Independent Business, for as I see it the federation represents big business. It interests me to read reports published by the federation and compare the size of some of its member organizations. On the one hand you may have a plant employing up to 500, and on the other a small business with two or three employees. I often wonder why small businessmen think they are in the same category as the large corporation and why their sympathies are not with the independent people in their areas who support them.


Charles-Arthur Gauthier: Mr. Speaker, we are dealing today with a motion concerning assistance to small business. I am pleased that such a motion has been tabled in the House and I congratulate the Progressive Conservative Party for having instigated that debate today. Someone said a while ago that it was small business which first took part in the birth, as it were, of the regions but in my opinion, it is the middle term between the state corporation and the great monopolies which I define as state capitalism and private capitalism.
It is not enough to establish a department for trying to protect small businesses. In fact this department has been in existence for one year and we have not heard of anything yet. In the past before this department was established, we tried our luck with the Minister of Regional Economic Expansion (Mr. Lessard) who was doing his best, I want to believe, trying to offer some help to small businesses, but I think too much emphasis was laid on helping large businesses.
Specially in our region we realize millions were given to large businesses, whether for research or for launching some large industries. Well, millions were sunk in large businesses, and small businesses were completely forgotten, to such a degree that I myself often worked with some people in my riding trying to gain acceptance for small businesses which would have been very profitable in a given town or sector, but we never could meet the blessed criteria specified by technocrats. And I believe it is at this stage that it is difficult for a small business to survive among the monopolies I mentioned a while ago. Today, of course, we are living in an era of monopolies and someone who has been in business for about
Small Business
forty years as I have has to realize that approximately 80 per cent of all businesses which were very viable forty years ago have been swallowed up by big monopolies.
For instance, about fifteen bakeries were in operation in my area some thirty years ago and they were all doing good business. Today there is only one bakery which is almost a multinational so that we must drive 125 miles to get bread. This whole bakery monopoly has paid the high price to get all those local bakeries closed and, after paying this high price, everybody said that if there were a larger market the retail price would improve. But the monopoly sets retail prices so no wonder everything is increasing, no wonder we have run-away price inflation. The main reason is monopoly control which is exercised in both industrial and commercial fields, as well as in the service area. Today, we even have all kinds of monopolies. The employment monopoly will be a reality within a few years, I believe, and we shall continue to live through this war of monopolies. The government must move immediately in an attempt to revive private enterprise which acts as a kind of screen to protect the consumer against these big monopolies which can overnight indicate the price they will impose on the consumer.
I think it is the duty of governments, not only the federal government but every government, to help small business not only through the creation of a ministry but also by passing legislation that will protect and encourage the small business sector. Some time earlier we mentioned small business loans. Those loans are not interesting for small business because of their high interest rate. For instance, the Industrial Development Bank, the Federal Business Development Bank is there to help enterprise.
But I have realized that this bank was there to help small business to die. We know that this bank helps small businesses only when they have been refused a loan by all other banks, all other loan institutions. When they must go to the Federal Business Development Bank they have to pay prohibitive interest rates when this bank, if it really exists to help small business, should ask only 50 per cent of the current interest rate. We might say that it would help small business but precisely because that small business, and I might give you some concrete examples, has been refused a loan by all other banks and loan institutions its credit gets a poor rating. It is the same for a business as for an individual. Today, someone who has a bad credit rating is going to pay 2, 3 or even 4 per cent more than someone with a good credit rating. That is sheer nonsense! Because an individual has more difficulty to pay than his neighbour he will be charged double interest. He has difficulties to earn his living, he has a small salary and this is because of our legislation, Mr. Speaker. He is charged 4 or 5 per cent more than the borrower with a regular job because his credit is bad.
If we really had legislation to protect consumers, we should charge the family head, that worker with a small income, 4 or 5 per cent less than those who can pay. It would be logical.
80016 - 43

May 30, 1977
Small Business
And to show you how we can live in illogically thinking we are in the best of worlds, that is in the legislation and regulations concerning financing plans, loan institutions and banks. If is the same for small industry: because it cannot benefit from large financing programs to obtain discounts, it has to pay 2, 3 or 4 per cent more than the medium-size industry which finds it easier to face those disbursements. This is why, Mr. Speaker, I am pleased we are discussing this matter today.
Indeed, I have before me a brief submitted to the Standing Committee on Miscellaneous Estimates by the Canadian Federation of Independent Business, in which it is stated:
In submitting these representations, our aim is to refute any concept that small industries are less important or productive.
Small industry is praised for being the biggest employer, but the way things are now going, very soon it will no longer be so because it will be left to die. The brief goes on to say:
In view of the fact that small and medium factories account for 80 per cent of Canadian secondary industry, there is no doubt that this sector deserves serious consideration. In the context...
-because the brief was submitted to the committee that is scrutinizing Bill C-26 to give technical or other help to Canadian industries-
In the context of Bill C-26, the apparent theme is that universities alone are capable of creative theoretical research.
And as far as small industries are concerned, big corporations are given millions and millions of dollars for research. But often a fraction only is spent on actual research, and the government is not in a poslition to inspect those corporations' books. Small industries on the other hand would need help for research or administration or orientation, they could use a few thousand dollars to modernize, to stay afloat and face competition, but to my knowledge not a penny has been going their way in respect of research. I submit the government is at fault there for not giving small industry at least as much attention as it is giving big industry, because big industry, monopolies can look after themselves. I am still trying to figure out why the government keeps on giving grants for research or environment protection, let us say to forest industries or manufacturing industries that polluted everything. After they did the damage, the taxpayers' dollars are used to clean their mess.
If the government has millions of dollars to give large companies to repair the damage they have done to the environment, it should use this money to help our small industries and our small businesses which have a hard time surviving compared with supermarkets which can dictate their own conditions to the producers. I have often seen potato producers sell to a supermarket for 30 per cent less than the price they would have asked retailers because the supermarkets had the capital required and controlled all the local supply. They simply gave the producer the price they wanted to pay for his products.
That is what is wrong with those large monopolies. The ordinary retailer buys from the producer at the market price and, if you figure it out, he often still sells at a lower price than the supermarket because he does not have to pay all the publicity and the additional salaries that the supermarket must

pay to promote its products and pay for its packaging. Consumers should go around the small, well-organized grocery stores or well organized butcher shops. People are talking nowadays, especially in Quebec, about closing the small slaughterhouses. I for one believe that those small slaughterhouses should have a "Canada Approved" federal license and should stay open. I have been buying meat from a small slaughterhouse for 30 years. That is where you can find the meat and the quality you want, because you cannot find it in a supermarket and even less in regional slaughterhouses where you do not know what is going on or what kind of meat you are buying.
When there was all that talk about tainted meat, it was not in the small slaughterhouses that this meat was found, Mr. Speaker, but in the large ones. Today, because of the influence of these large monopoly slaughterhouses, the small slaughterhouses, that have always respected the life of the consumer, may finally disappear. Mr. Speaker, I am quite pleased that this problem should be discussed today and I hope the government will soon introduce legislation, not legislation to give strict directives to small businesses but legislation to protect them against those big monopolies, and I hope that legislation will be introduced by the next government as soon as possible.



PROCEEDINGS ON ADJOURNMENT MOTION


Mr. Deputy Speaker:: Order. Before I recognize the minister, 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 Vegreville (Mr. Mazankowski)-Airports-Mirabel and Dorval- Reason revenue was not received from Host Rent-a-Car; the hon. member for Saskatoon-Biggar (Mr. Hnatyshyn)- Atomic Energy of Canada Limited-Statement concerning establisment of plant to produce plutonium-Government action.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Jelinek:
May 30, 1977
[Stage Direction]
That in the judgment of this House the government has failed to respond effectively to the needs of the small business sector, has made negligible progress toward the implementation of a small business policy, has neglected to introduce a Small Business Act, and has not freed the productive potential of small business to create jobs for Canadians.
Hon.   Monique@: Mr. Speaker, it was with great surprise that my colleagues on this side read the motion put forward today condemning the government in relation to what is taking place in a particularly healthy sector of the Canadian economy, namely, small business.
Hon. members opposite could have chosen to debate great issues. They could have spoken about ways in which to create more employment, or addressed themselves to the question of the incentives which ought to be left in the private sector to help the unemployment situation and fight inflation. Instead, they surprisingly choose to speak about the eventual creation of a small business act which I cannot let my colleague who just spoke before me believe will take place, since it is not necessary.

My colleague the Minister of State (Small Business) (Mr. Marchand) was appointed eight months ago. He has since travelled across Canada, meeting systematically and with a great deal of seriousness and concern representatives of small and medium-size businesses of the world. 1 personally joined him on several of those meetings in Ottawa when official groups representing those businesses were down here voicing problems covering all the difficulties small and medium-size Canadian businesses can be faced with and which, surprisingly, can include matters as varied and as absent from the speeches of those who spoke before me as the problem of inequities in the tax law which for the moment does not allow partners in small unincorporated businesses-usually the wife-to receive a salary from her husband. I am making efforts with the help of my colleagues to correct that situation.
I would have liked indeed to hear the opinion of the opposition on this obvious anomaly.
A foremost concern of the government, and of my colleague, the Hon. Len Marchand, who has had a death in his family and could not be present today-


Walter David Baker: 
Otto John Jelinek: I would like to know about that.


Miss B6gin:: Your speech was particularly boring. Nobody said a word during your speech. We listened patiently for an hour. Maybe you can extend that courtesy to me.
Small Business


Otto John Jelinek: My speech was over your head.


Monique Bégin: I have explained to the hon. gentlemen and women in the House that I will do my best to be the voice of my colleague, the Minister of State for Small Business (Mr. Marchand), who is unable to be here this afternoon. Thanks to him and to groups in the country representing small business, I am becoming more and more familiar with their problems. I often consider I am the minister of paperwork. I have decided to do my utmost to cut that down.


Some hon. Members:: Hear, hear!


Monique Bégin: Maybe I should have spoken in English so that the hon. gentleman opposite would have understood better. I am committed to trying to correct the inequity of the tax act, which does not permit a partner in a small unincorporated business to receive a salary from the other partner, which usually means the wife from her husband. I would have liked to hear his views on it, if he had any. He may take another day, or even take the trouble of writing me a letter. I would really appreciate his views, if he has good views, which would mean my views.


Some hon. Members:: May 30, 1977
Small Business
realize that dream in the face of any obstacle. We honour that spirit. It is the aim of this government to see that it flourishes and prospers. The small business operator must be allowed to exercise his spirit of free enterprise to increase production and provide employment.
The government has taken some immediate steps since the Speech from the Throne to benefit the small operator. The recent budget contained a package of measures directed at encouraging small enterprise. We have begun to cut down the mass of paperwork which federal bureaucracy, in conjunction with provincial administrations, imposes on small business. Hon. members will know that there is a bill currently before the House to extend and increase the provisions of the Small Businesses Loans Act. The incentive and adjustment programs of the Department of Industry, Trade and Commerce have been amalgamated and redesigned to make them more accessible and more useful to the small business community.
The officials of the small business secretariat within the Department of Industry, Trade and Commerce have been accumulating and studying the data on the state of small business in Canada today, in preparation for the over-all policy which my colleague, the Minister of State for Small Business, will be presenting to the government in draft form this summer. It is too early to state now what the elements of that policy will be. But I would like in these remarks to outline some of the basic directions in which our research into the small business community's present status has led.
First, however, Mr. Speaker, I would like to say clearly that the facts show that small business in Canada is not in bad shape, despite what some hon. members on the other side of this House would have us believe. The entrepreneurial spirit is alive and well in Canada, and it is making strides. Anyone who says that it is not is downgrading the ability and enterprise of Canadian small operators. Canada's small businessmen and women are holding their own in comparison with their counterparts in other countries. In our large cities and in our small towns Canadian entrepreneurs are showing that, given the chance, they can make the grade. It is the government's intention to give them that chance.
Some of the past and present initiatives of the federal government have been helpful to small business. The Federal Business Development Bank has made current commitments for $1.5 billion in loans to small and medium-size firms. At an average of $46,000 per loan the FBDB has helped a lot of businesses which would not otherwise have found the financing they needed. Some, but not enough, small Canadian Manufacturers have benefited from innovation and adjustment assistance programs of the Department of Industry, Trade and Commerce. Now that we have amalgamated many of these programs into one enterprise development program, I expect that even more assistance will be available to smaller firms.
The lion's share of assistance under the "alphabet soup" programs, such as PEP, IDAP, and the like, has too often gone to big companies. To give a giant corporation a government grant of $300,000 for innovative research is not the most effective way of using that money. To a company that size,

$300,000 is just peanuts. If they contemplate a research project, that contribution from government is not going to be the deciding factor in whether they go ahead or not. From observing the city of St. Leonard in my riding, which has a huge, new industrial park, a grant of $20,000 to a small firm can be the difference between trying something new or killing the project. If we took that $300,000 and broke it up, we could give $20,000 grants to 15 small firms, which could really stimulate some development and some jobs. This is the rationale behind the new enterprise development program: to redirect the assistance to small firms and get the most value out of federal funding for the small business community and for the country as a whole.
The program is to be administered by enterprise development boards in each province. These boards will have decisionmaking power on projects of up to $200,000 in federal assistance. To make sure that the boards are responsive to local business conditions, and to give them closer ties with the business community, their membership contains strong representation from the private sector, and the chairman of each board is a businessman, not a public servant.
At this point let me just correct one of the assertions of the hon. member who spoke before me who stated that a separate department and special act are needed to protect small businessmen and to give them better representation. This is not so. That would be to ghetto-ise them, and none of us want that. Instead, at the instigation of my colleague, the Minister of State for Small Business, several of us have started to review the composition of the various advisory boards and councils attached to our respective departments, and I for one have already directed my department to include representatives of small businesses on the advisory board counselling the two wings of my own department.


Some hon. Members:: Hear, hear!


Monique Bégin: Among other recent measures beneficial to small business are those which the Minister of Finance (Mr. Macdonald) brought down in the budget of March 31. The budget contained a package of measures designed to improve the climate for small business.
We propose changing the tax laws that govern employee stock options. Under the old system the difference between the market price of shares in a company and the price that the employee paid was immediately taxable as income.
This was quite a disincentive for employees to accept stock as part and parcel of an employment agreement. But under the new system in the March 31 budget, the difference between market price and the option price will be taxed as a capital gain-and not until the employee actually sells the shares. This will allow small Firms to offer stock as an attraction to first-rate, skilled people they would like to get into their businesses. It will give the smaller firms a better competitive edge in being able to get good management and skilled help of people who might otherwise go for the larger salaries that
May 30, 1977

bigger companies and government can offer. If the employee has a direct stake in the firm he works for, he is more likely to put out his fullest effort in the interest of the company.
Another feature of the budget which will help small business has to do with the treatment of gains on certain Canadian investments under the Income Tax Act. An investor, when he puts his money into a Canadian firm, will now be able to notify my department, Revenue Canada, that he wants any return on his investment to be treated as a capital gain rather than treating it as straight income.
The investor will be able to exercise this option once in respect of all his investments in certain Canadian securities. This is a lifetime option that, once exercised, is permanent.
This will aid small business by attracting more small, ordinary taxpayers as investors. Having the return on investment taxed as a capital gain rather than as income represents a considerable tax advantage. I think it will encourage a lot of venture capital firms to get behind Canadian small business. Of course this provision is not available to banks, credit unions, dealers in securities, or similar interests.
The tax regulations are also being changed to make it easier for one company to invest in another. The aim of this move is to encourage joint ventures between small firms. They will be able to get together to tackle larger projects which they could not handle on their own.
Another item in the budget which will benefit small business is the tax deferral on the voluntary sale of a firm's assets when they are being sold as part of a relocation. If a small firm closes down its operation in order to relocate in a better area, for example, there would be a deferral of capital gains tax on the sale of the firm's assets if the proceeds were invested somewhere else, in a similar business.
I have often heard small operators complain that they would like to move closer to sources of supply or relocate to take advantage of a better market, but they are held back by the penalty of taxes. These new provisions in the budget will help.
Apart from the items in the budget directly aimed at helping small business, there are some general measures which will indirectly benefit small firms. Retailers, for example, will like the change in tax regulations regarding inventory adjustments. In calculating business income, three per cent of the opening value of qualifying inventories-which means stock on the shelves on January 1-will be an allowable deduction. This benefit is available to unincorporated as well as incorporated businesses.
As well, the 5 per cent investment tax credit is being extended, and increased in slow growth areas. Current and capital expenditures for scientific research and development will be eligible for this credit. Many small Canadian firms are now doing good work in developing new technologies, and we want to encourage them.
Many of the measures contained in the budget respond to concerns expressed by small businesses themselves. They have also expressed other concerns and problems with the federal government.
Small Business
It is often said, for example, that small business cannot get close to government. It cannot find out what programs exist to benefit the small operator, because there are too few channels of communication. We want to improve communications and get the small entrepreneur into closer touch with assistance he could be getting from the federal government. I am hopeful that the Federal Business Development Bank, which has demonstrated a great deal of flexibility and creativity in its relations with small business, will be able to assume a substantial role in achieving that goal.
A good example of the kind of useful service the FBDB can offer to small business is the CASE program. CASE stands for counselling assistance for small enterprise, and it is basically an effort to provide small business with expert management and financial consulting services at a nominal cost. Many small business operators do their planning and accounting on the back of an envelope. And they make mistakes. They over-extend themselves. Or they leave out some important factors in their calculations. By the time they come to the FBDB or some other agency for help, it is often too late.
The CASE program is aimed at preventing that kind of business tragedy. CASE has a roster of hundreds of retired business people-those who have been through the whole routine and know the ropes. For a nominal amount of $20 per day, these retired business experts will come in and look over an operation and give a full report and advice on how to deal with any problem the business is facing.
These retired business people have an enormous collective expertise and business know-how. They volunteer for CASE because they really just want to stay involved with the business world. They like to keep in touch, and they like not having their accumulated expertise and experience go to waste.
Small business needs more risk financing from the FDBD. The bank therefore has been advised to provide more money in equity and loans to firms willing to take a risk on a good idea. Innovation always entails some element of uncertainty, but that should be no penalty to the small operator who wants to create something new.
Small business people have said that they would like an expansion of the provisions of the Small Businesses Loans Act. That act was passed in 1960 as a means of providing small business with loans from the chartered banks guaranteed by the federal government. Unfortunately, although the intention was good, the program has not worked as well as small business, the banks, and the government hoped it would. Fixed interest rates, often below the bank's prime rate, did not encourage the banks to lend under the act. It was costing them just as much to service these Small Businesses Loans Act accounts, but they were not getting as much return on their money.
Many small business people have said that they were not even aware of the provisions of the Small Businesses Loans Act. Their bankers simply never mentioned the program to

May 30, 1977
Small Business
them. I do not think the banks were at fault. Rather, it was the program which was not working.
This very week the Standing Committee on Finance, Trade and Economic Affairs will consider Bill C-48, which was referred to the committee on May 6. The committee will consider this bill, which is to amend the Small Businesses Loans Act and two related statutes governing farm and fisheries guaranteed loans. The amendments reply directly to many of the concerns raised by small business people. They have asked that the eligibility limit be raised from its present ceiling of $1 million in annual sales. We are therefore proposing to raise that limit to $1.5 million.
Small business people have asked that the limit on individual loans be raised from the present $50,000. We are therefore proposing to raise that limit to $75,000. We are also increasing the pool of money available for guarantees to $600 million from $300 million, doubling it.
We want to change the interest rate so that it floats with the banks' prime rate. Interest rates for these loans will be a little higher than prime, which will encourage the banks to start using the provisions of the program. We have discussed this matter with the chartered banks, and they have assured us that once these provisions will go through they will be happy to start making money available to small business under the terms of the act.
The Canadian Federation of Independent Business, chambers of commerce and the Canadian Manufacturers Association have all supported the proposed amendments. Once these changes in the legislation are in place, I think that the financial picture for small business people looking for risk financing should be brighter.
One of the complaints frequently heard from small business people is about the sheer volume of paper work which the small operator has to contend with for the federal government. We have made progress in reducing this volume of government paper work by getting the departments to share more information among themselves and by changing the Corporations and Labour Unions Returns Act. Because of these changes we will be exempting some 350,000 firms from at least one of their present reporting requirements by the end of 1981. We still have a long way to go, but our officials have calculated that the total dollar value to small business of the time saved in filling out these forms will be more than $40 million. Cutting back on paper work in this way, as I stated rather impatiently earlier on this afternoon, is a way to save money. These obsolete forms no longer have to be handled by programmers and clerks, and they do not have to be processed through expensive computers.
These are just some of the things we are doing right away, in advance of the policy paper to be considered by the cabinet this summer.
I should like to outline roughly some of the observations the government has made in studying Canadian small business with a view to shaping a federal policy toward the small entrepreneur. A primary observation is that small business

makes an essential contribution to the social and economic health of the country and, of course, of the various regions as well. I would like to point out that 98.6 per cent of all Canadian corporations-all those with assets under $5 million-are small or medium sized businesses. In the service industry, which has been the fastest growing sector of our economy in the past 30 years, small outfits overwhelmingly predominate. In construction, 99.5 per cent of all corporations are small, and together with unincorporated firms-individuals working on their own-they account for a very large share of the profits made.
In terms of employment, 91 per cent of all Canadian firms have 100 employees or fewer. Small business people and their employees account for one half the corporate wage bill in Canada.
Another observation is that social and economic changes in our country and in the rest of the industrialized world are making smaller units of production in the manufacturing sector increasingly more attractive. This process should result in more sub-contracting from larger firms to small companies, or it could mean more decentralization of larger firms.
Earlier this afternoon I was reading a very interesting speech which was made by the Minister of State (Small Business) to the Vancouver Board of Trade on March 21 when he was touring the country and meeting with as many representatives of the small business community as he could. Lie spoke at length about the decentralization of larger firms. I think he referred to the model which we are borrowing from Japan.
When we observe how the small operator relates to government, we find that existing government efforts to assist him may not suit his style. The entrepreneurial spirit and the kinds of attitudes which predominate in the public service do not always blend together well.
Another observation is that there is room for improvement in the way programs are delivered to the business community from government. All the various programs can be confusing to the businessman, particularly to the small operator who does not have expensive consultants to sort out things for him. I hope we can develop more federal-provincial co-operation in this area.
Whatever these preliminary observations on the state of small business may lead to in terms of the policy paper which will be brought to cabinet, they do tend to show that any government programs specifically intended to assist the small business community should be very decentralized and should have a major degree of participation from the private sector.
Through the forthcoming policy on small business in Canada the government intends to meet its responsibility to the small entrepreneur so that the best of free enterprise will flourish and prosper.


Some hon. Members:: Hear, hear!


Walter David Baker: Mr. Speaker, I listened very carefully to the minister, and perhaps it might be
May 30,1977

a good idea to remind the Elouse of what is contained in the motion brought forward by the hon. member for High Park-Humber Valley (Mr. Jelinek), which I had the honour to second.
It is obvious, judging by the minister's remarks-which I suppose were prepared by the same speech writer who prepared the famous $1,900 speech of the Minister of National Health and Welfare (Mr. Lalonde), and which said just about as much-that she neglected to read the motion. It is obvious that she did not see the order paper because she did not address her remarks to the terms of the motion. At the beginning of her remarks she said she could not understand why we brought forward such a motion; I will read it so that she will understand. The first part of ministerial understanding is to understand what she is talking about.
The motion begins as follows:
That in the judgment of this House the Government has failed to respond effectively to the needs of the small business sector ...
If the minister goes out into the street and talks to business people she will learn that the government has indeed failed to respond effectively. People are not going to be satisfied with all that ministerial pap we heard just a few moments ago, which was canned somewhere deep in the bureaucracy and regurgitated here in the House of Commons.
The motion continues:
-has made negligible progress toward the implementation of a small business policy ...
That is what the Canadian Federation of Independent Business has been saying about the government for years-that its policies have not been related to small business which provides 50 per cent of the employment in this country, but have been related to the needs of the large conglomerates and others. The minister would know that if she had read anything published by that organization, because that is the message they have tried to get through to the government. The motion continues:
-has neglected to introduce a Small Business Act...
And that is true. The Canadian Federation of Independent Business made representations to the Senate Committee on Foreign Affairs on May 26. I do not think the minister can have read the minutes of that meeting before she made her speech today. They pointed out that a small business act had not been introduced by the government and that it is a very serious omission. Before the minister speaks in this House again on the subject of the needs of small business she should read the testimony of Mr. Bulloch who appeared before that committee and set forth the desires of small businessmen.
The motion ends with the words:
-and has not fed the productive potential of small business to create jobs for Canadians.
That is obvious. Surely the government owes more to parliament and the people of this country, to the one million unemployed, to the Economic Council of Canada who predicted that, to the Canadian Federation of Independent Business,
Small Business
to the Board of Trade and others to which she gave lip service, than to have the minister stand in this House and attempt with nonsense to defend the policies of this government which are indefensible.
The minister talks about the "entrepreneurial spirit" in this country. It is there, Mr. Speaker. But it is there in spite of the government and not because of it. It tends to fight against the movements of the government rather than to work with this government, and the minister knows that. If she does not know it, certainly her colleagues do. Certainly the Canadian Federation of Independent Business knows it and the small businessman knows it; the army of unemployed knows it; the army on welfare knows it and those who rely on short-term government programs for short-term employment know it. They all know that the government has neglected the problems of the nation in the fields which are the subject of the motion. The minister owes this House a lot more than to come forward with that canned pap, that bit of fluff which she tried to pass off as government policy.
Let us examine the efforts the government has made on behalf of small business. The minister mentioned the throne speech, so let us see what several of them have said. On October 8, 1970, there was nothing in the throne speech about small business. On February 17, 1972, there was nothing, but then all of a sudden the government woke up. On January 4, 1973, it said there would be aid to small business with three new initiatives to strengthen management, consulting services, and to improve access to financial facilities. Nothing came of it. On February 27, 1974, the throne speech said that measures would be proposed to aid small business both financially and by providing better consulting services through the creation of a federal business development bank.
The Federal Business Development Bank has been created and the minister gave us the statistics on it. In this House we were promised that the bank would act differently than the Industrial Development Bank but we' find it is the same bureaucratic mess. It has not acted like the ordinary banking institution that the then Minister of Industry, Trade and Commerce told the House it would.
On September 30, 1974, in the throne speech the Prime Minister (Mr. Trudeau) promised to increase economic activity and give greater financial and other support to small business. Is anybody over there proud of the economic support and the increase of economic activity in this country? They must be blind if they are, and it is about time someone told them so.
In the last throne speech on October 12, 1976, the Prime Minister said that the government was going to improve local access to financial assistance and other services provided by government departments, the Federal Business Development Bank, and federal institutions to the private sector. That promise is relatively new, but like the others it has not been fulfilled.
What are the problems of small business in Canada? Just last week in its submissions to the Senate committee the Canadian Federation of Independent Business set out its goals

May 30, 1977
Small Business
as achieving low inflation, low unemployment, more balanced geographical development, a maximum feasible standard of living, a balance between owner-managed and professionally managed enterprises, and efficient use of resources.
Is anyone opposed to that, Mr. Speaker? If they are not, then the government that has to appear to move in that direction should start supporting those goals. Perhaps the hon. member for Timiskaming (Mr. Peters), who spoke out so violently against the Canadian Federation of Independent Business, ought to consider whether he supports those aims.
The president of the Federation of Independent Business has made a study of the problems perhaps more deeply than the Minister of State (Small Business) (Mr. Marchand), who unfortunately cannot be here because of a personal tragedy in which we all sympathize. As reported in a press interview the Federation president, John F. Bulloch, said that current strategies were oriented toward large firms and that the complex of monetary and fiscal policy, economics of scale, specialization, rationalization, increased productivity, innovation and commercial policy under the existing socio-economic model, lumped small firms and professionally managed enterprises together.
That is one of the problems. Governments have given lip service to the problem just as they gave lip service to multicul-turalism in Canada. What did the government do with regard to multiculturalism in Canada? The government made the hon. member for Parkdale (Mr. Haidasz), that distinguished member of this House, minister of state for multiculturalism. The announcement was made with great fanfare. The government was to embark on a new multicultural program and pay attention to our ethnic communities the like of which they had not before experienced. Everybody said what a marvellous thing the government had done. The government accepted those plaudits; but what did it do?
When the political reason for the creation of that new ministry no longer existed, the government put the hon. member for Parkdale among its bank of rejects at the far end of the House and said multiculturalism was now to come under another department. The program was forgotten. And the extent of the government's neglect of multiculturalism was underscored by the appointment of the new Minister of State for Multiculturalism (Mr. Guay (St. Boniface)). What have you got against the multicultural movement in this country?


Monique Bégin: What are you talking about?


Walter David Baker: I suggest the Minister of National Revenue (Miss Begin) was not delivering a speech she had written. It was not her speech. She is much too sensitive, sensible, and alert politically to make that kind of speech. I am sure she was not making her own speech. She was regurgitating.


Monique Bégin: I was not regurgitating.


Walter David Baker: The minister denies she was regurgitating. Be that as it may, the Minister of State for Small Business is in danger, in exactly the same way as the hon. member for Parkdale was in danger. It is now convenient for the government to piomote a ministry of state for small business. It is convenient to send a man across the country making speeches. It is convenient for the government to have the minister make his speeches about the strides the government is supposed to be making toward the solution of small business problems. Unfortunately those problems persist. When the need for the ministry of state for small business is over, that ministry will suffer the same fate as befell multiculturalism. It will be swept under the rug, for that is how the government works.
It is important to pay more than lip service to small business. These days, when we are suffering from vicious unemployment, when a generation of Canadians is growing up to rely on welfare and become increasingly disillusioned with our institutions, the government should pay more than lip service to small business. I regret that the minister paid only lip service.
I wish the government would listen to the small businessman. He is hemmed in with forms the number of which has not been reduced significantly. We all know that. The small businessman is hemmed in with discriminatory taxes. The minister talked a few minutes ago about the new tax provision which will allow businesses to be transferred within a family. That is a great innovation, of course, but discriminatory, since it applies only to transfers of business interests in incorporated businesses. I point out that hundreds of thousands of this country's businesses are not incorporated and they, too, should get the benefit of that provision. All is not well with our small businesses.
I say-perhaps because of the nature of my background- that we must promote policies which will help the development of small business, because such policies will help not only the small businessman but the country itself. For how long are we prepared to rely on government to satisfy some of our needs for employment? For how long must we rely on short-term government programs lasting three years or five years, and so on?


Ramon John Hnatyshyn: They are but a finger in the dike.


Walter David Baker: As my colleague says, they are but a finger in the dike, and he is right. How are we to improve our economy and the position of small business unless we strengthen the productive element of the economy? In order to do this we must restrain the growth of the government. That does not mean necessarily that we must fire public servants willy-nilly. It means we must give emphasis to the private sector, must allow it to develop, and must allow it to retain a greater proportion of the gross national product. At present governments take 42 per cent of our GNP, and there is the danger that the proportion may rise to 45 per cent, even 47 per cent. Can we tolerate that, or should we not seek to reduce the percentage of GNP governments take?
May 30, 1977

We have asked the government to cut federal spending and to pass the savings on to the taxpayer through the tax system. We have asked the government time and again to give emphasis to Canadian investment, but it has only paid lip service, as was evident in the minister's speech. That is the problem. The government has not tackled that difficulty. We have asked for a sales tax cut on building materials and on machinery and equipment used by pseudo-municipal corporations to stimulate development. The government did not listen. We have asked the government to implement a tax credit or rebate scheme which would encourage Canadian industry to invest in research and development. What is happening in this country in research and development is pitiful. We borrow, borrow, borrow from every country in the world. We do not innovate ourselves, as the hon. member for Niagara Falls (Mr. Young) knows. We have asked the government to examine the possibility of introducing long-term fiscal or tax contracts for companies investing in Atlantic Canada, Quebec, or other parts of Canada.


Mr. Caccia:: Mr. Speaker, I rise on a point of order. Before the hon. member misleads the House any further, can he mention one case to support his allegation of a moment ago that the federal government is borrowing abroad?


Ramon John Hnatyshyn: That is ridiculous. Why don't you listen?


Walter David Baker: Mr. Speaker, if the hon. member had raised a relevant point of order, I would answer it. I suggest he was busy reading his mail in the House of Commons and not listening properly. If he were to listen perhaps he might learn something, or perhaps not.


Some hon. Members:: Oh, oh!


Walter David Baker: As 1 said, we asked the government to consider introducing long-term fiscal and tax contracts for companies investing in Atlantic Canada, Quebec and elsewhere. Why, Mr. Speaker? The Canadian Federation of Independent Business people asked the government time and time again to tie the development of small business to the question of regional economic expansion. There are opportunities for this government if it would only advance some ideas apart from the pap ministers mouth on opposition days. They wonder on the one hand why we moved the motion, and tell us on the other of all the problems of small business. If the government would advance some ideas, we would support it. Because it has advanced no ideas, I say it is not fit to govern. It has done little for the small business community, and that community knows it.


Mr. Lloyd Francis (Ottawa West):: Mr. Speaker, I have listened with interest to the debate this afternoon and cannot help but feel that much said was beside the point. We recognize the contribution small business makes in Canada. In the Federation of Independent Business, in particular Mr. John Bulloch, its chairman, we have an articulate spokesman for this sector of the Canadian community. I had the opportunity of listening to Mr. Bulloch at a Liberal party conference held
Small Business
in Malton not too long ago. He made a very substantial presentation which attracted the undivided attention of those present.
In many ways I can understand the reaction of the hon. member for Timiskaming (Mr. Peters). I regret that he is not in the chamber. That hon. member finds this kind of point of view very disturbing. It runs directly counter to the socialist dogma to which he is committed. From the small business community we hear this kind of talk about productivity. We hear the protest against paperwork. We hear the extreme desire of that group to get freedom to initiate, to conduct research and permit them to do a number of things to expand in a sector which we recognize as increasingly important.
The hon. member who just spoke, my good friend on the other side, thought the ministry of small business was a sham and would disappear. Nothing could be further from the truth. They tell us, depending on how the figures are compiled, that something like two thirds of employment and over half the payroll of this country come from small business, the expansion of the service sector, that part of the economy where people have to rely on their own efforts to produce, earn a living and get the satisfaction out of life for which they are looking. We are all aware of this.
This is an expanding sector. The government is increasingly aware of it. I am sure there will be a major contribution in the period ahead on behalf of small business, because we recognize that if we do not do something for small business in this area, we will go down the path of the United Kingdom economy. We will suffer from the "British disease". There will be a continual erosion of those things that contribute to the increasing standard of living we have come to expect.
Unlike the hon. member, my good friend who just resumed his seat, I noted a number of measures in the budget specifically designed as part of the policy for small business. I listened to the Minister of National Revenue (Miss Begin) outline some of them, such as the credits that are available, the Federal Business Development Bank program, the expansion of loans, the measures to permit a number of small businesses to be associated in risk ventures without suffering tax penalties.
I would like to speak about one or two other measures which are in the budget. They are of particular interest to myself and some of my friends. The measure to exempt crafts from sales tax is long overdue. I have a hobby which is a matter of a great deal of interest to me. I cut and polish semi-precious stones for my own personal satisfaction. From time to time I have been associated with a very good friend who has much more talent than I will ever possess. She is a silversmith and sculptress. Occasionally when she has a problem with a stone, she comes to me. Sometimes in the periods I have not been a member of this place it has been my pleasure to work with her, trying to choose something to suit her design, purpose and cut.
She continuously complains to me about the very deadening effect of the sales tax on the craft and creativity of a group of
6070

May 30, 1977
Small Business
people associated with her. Some years ago they prepared a brief which they presented to the then Minister of Finance. When the Hon. Walter Gordon was Minister of Finance, I went to him with this problem. He said "Lloyd, I am dealing with income tax at the moment. Sales tax is another problem. I am going to get around to that. At the moment I just physically cannot do it."
We are now looking at the administration and application of the sales tax. I was particularly pleased to see this one measure which means a great deal to a group of craftsmen and craft-swomen in this country, if I may coin a phrase-I am always a little timid about how I unconsciously use "man" in the language of today. This is one contribution which will assist a number of small merchandisers.
I was particularly happy to see the total exemption proposed for those whose sales do not exceed $10,000 a year. It may be a very small item, but it is an item which exempts craftsmen and women who contribute to our quality of life. They make something in terms of their own standard of living, not usually a very generous standard of living, but the combination of the work they like to do and sufficient reward to encourage them to do it is an object of which we all approve.
I note one other matter in the budget. I can appreciate that members in the opposition did not talk about this. It attempts to do something about inflation. Anyone who has worked in the business sector and made their living from private business knows of the problem of sitting down with the accountants and seeing a profit appear at the end of a year that is not a true profit. It is an inflated profit that comes from the fact that the inventory went up in value as the general level of prices went up.
The government proposes that something like 3 per cent of the opening inventory at the beginning of the year be deductible off the top. That is a first step in recognizing that the profits that many corporations are reporting today are inflated profits. If the hon. member for Timiskaming and any member of his party were in the House, they would be thumping their desks and saying that corporation profits are far too high. They think that profit is almost a bad thing in itself. They want to increase the tax in the way their party has continually advocated.
I submit that the hon. member's party will have to face the problem of small business just like any other party in the House of Commons. This is an area where we are getting new employment, innovation and productivity increase. These are things we should never forget.
I read this motion very carefully. It talks about the failure of the government to respond effectively. I have listened carefully to the speeches that have been made thus far. We have heard about a few things that could be done which will no doubt be considered. However, in terms of a basic policy, philosophy and outline as to what we can do to assist, I submit that the government is certainly doing as much as any other government at any level in Canada.


Some hon. Members:: Hear, hear!


Cyril Lloyd Francis: I cannot help but contrast the speeches that have come from the other side with the budget that was brought down by the same party in the province of Ontario not very long ago. Where were the bold, innovative measures? Where was the bold, new striking out on behalf of small business that hon. members say we should be making? Evolution of policy will be a consistent matter. We will listen to the articulate spokesmen which that community fortunately has at its disposal. We will have to listen and innovate. We have just started the policy. However, we have made a reasonable start, a start which I am prepared to defend.


Peter Elzinga: Mr. Speaker, I listened to this debate with a great deal of interest. I commend the hon. member for High Park-Humber Valley (Mr. Jelinek) and our House leader for introducing this motion. It shows an effort on the part of this party to attempt to further the opportunities of the small business sector in Canada.
It is interesting to note that the first debate on small business in the history of Canada took place in the House of Commons on March 28. It was initiated at that time by our critic, the hon. member for High Park-Humber Valley. I want to share with the House the motion moved at that time and what we put forward in the way of positive policy which we felt the government should implement with regard to the small business sector. Our motion, at that time, read as follows:
That in the opinion of this House the government should consider the advisability of implementing programs to assist the development of small business in this country, consisting of such positive initiatives as (a) allowing tax credits for investment in small business, (b) providing assistance in the formation of small business consortia, (c) changing government tender practices so that small business supplies a portion of government-purchased goods and services, (d) reducing the government paperwork burden imposed on small business.
These are areas in which the small business sector have been pushing for many years. It is interesting to note that when the president of the Canadian Association of Small Business appeared before the Senate Committee on Foreign Affairs he stated that Canada's economic future relies on the strength of its small businesses and it was time the government recognized this to be the case. I believe it is evident that the government has failed to do so. The federation's president, Mr. John Bulloch, told the committee that Canada has lagged one or two generations behind the rest of the world in aiding the development of small, owner-operated businesses. On May 26, according to an article in the Citizen, he further told the committee:
This country should have the largest small-firm sector in the world because of its geography yet Japan and Europe have far surpassed us. We do not even have a definition of what a small business is.
The article goes on:
Bulloch said developing a small business sector in Canada would mean more jobs, a more competitive economy and less reliance on the United States for imported manufactured goods. He said fostering local small businesses was particularly important in combatting regional disparities.
It is an obligation upon the government of the day to foster a climate which encourages small business. But the present
May 30, 1977

government has fostered a trend whereby the public sector has been playing a much greater role in our society. The Prime Minister (Mr. Trudeau) made a major mistake recently when he condemned the free enterprise system. The truth of the matter is that the government violated the principles of free enterprise and then blamed the system for its failure. At a time when restraint was required, the government printed more money. When economic restraint was required it bragged about the country's wellbeing and encouraged the good life. Recognition of the time lag between the performance of the U.S. and Canadian economies was not considered. Now we are paying the price for these mistakes and we face high unemployment thanks to the present government, not to the free enterprise system. Today, we need decision and action but we are faced, instead, with indecision and inertia. The government is hoping the American recovery will pull us out of our economic recession-hoping that some of their positive responses will spill over into Canada.
What we look for most is overall policy and economic guidance. All the government can do is talk about economic diversification, but it has no overall program by which this can be achieved. It has not stated its policies and does not know what the economic consequences of its actions may be.
One specific area of failure has to do with DREE grants and similar incentives. Government incentive programs of some kind are a necessity in this day and age but they should be the exception rather than the rule. How often has government provided enormous incentive funds to encourage industries to locate in particular areas, only to find the money wasted? Short term subsidies in many cases encourage economic inefficiency of the kind which arises, for instance, as a result of a lack of reasonable transportation facilities. These factors are not taken into consideration, causing subsidies to be retained on a more or less permanent basis to keep companies in operation. The effect of such government welfare programs is to increase the tax load borne by industries which are viable in themselves, thus further reducing our ability to compete in world markets.
I feel confident that we as Canadians would like to get back to the basics. I do not believe we expect something for nothing; indeed, our history has shown this to be true. What we do want from government is leadership and guidance.
Members over on the other side should have their record exposed every now and then. Consider what they have done. They have given us record inflation, record unemployment, record trade deficits, record budget deficits, record interest rates, record mortgage rates and record high prices. Also, they have contributed to a situation in which Canada is responsible for the highest level of foreign borrowing of any western nation.
So overall, the government has the worst track record in recent history, and all this without considering the revelations which have been made from time to time since I first came here, including the Sky Shops affair, various dredging scandals and so on. The government has driven our country so far into debt it is frightening. Deficit financing is not an acceptable
Small Business
way of stabilizing the economy. In the last nine years the administration opposite has come forward with eight deficit budgets out of nine. I do not understand how any government could feel proud of such a record.
What we are looking for on this side, as has been so well stated by our critic in this House, the hon. member for High Park-Humber Valley (Mr. Jelinek), is a balanced approach to the problems of the small business sector. We should like to hear a set of economic goals; we should like to see a balanced budget without a budget deficit together with a disciplined monetary policy. An overall economic policy is required not only by the small business sector but by all sectors.
The government should consider itself fortunate, also, that the election in Quebec on November 15 turned out the way it did, because now it has an issue which it can grasp. It hopes the national unity debate will overshadow all the other issues which face Canadians today, such as the state of the economy, unemployment, inflation and the subject we are debating today.
The sad part of today's debate is that the majority of the constructive proposals put forward by my hon. friend will once again fall upon deaf ears. The economic record of the government makes many Canadians aware that unless drastic changes take place in overall economic policy we shall not have a country worth saving. As 1 say, looking at these matters in perspective it is obvious the government have the worst track record of any in recent history. 1 would hope that this government does not play with the national unity issue to the extent they will regain power, but that they will deal constructively with areas such as small business, unemployment and regional diversity.
I conclude by paying tribute to two individuals who are sitting in the gallery. They are two constituents from Pembina, a Mrs. Vicky Wirschke from Athabasca and Mrs. Pearl Baker. They have travelled several thousands of miles.


Mark R. MacGuigan: Mr. Speaker, I am not sure 1 will have enough time to finish my remarks this afternoon, but 1 would like to at least make a beginning. I am sorry the hon. member for Grenville-Carleton (Mr. Baker) is not here because I wanted to tell him how sympathetic we on this side are to the plight in which he finds himself. In light of the small number of Conservative members present this afternoon, I know it is the duty of the House leader, when no one else is available to speak, to step into the breach himself. That was very obvious from the content of his remarks and the fact that he had to fill up his speech with excursuses on multiculturalism in Canada, even reading a rather bad lecture to the minister on the motion which is before us this afternoon. When things like that happen, it makes all of us in parliament sad. We do not like to see anyone in parliament being worked as hard as the hon. member for Grenville-Carleton obviously is, judging from his speech. It is a pity more of his colleagues are not here to shoulder the burden, which he should not have to carry entirely alone.
80016-44^2

May 30, 1977
Small Business
I would like to comment on the fact that there are two opposition parties which are non-existent here at the moment. I would like to comment also on the attitude of the New Democratic Party toward small business, which has been revealed in the last day in the Ontario election campaign. The front page of the Toronto Globe and Mail this morning indicated that the provincial party leader has promised to jump the minimum wage in Ontario from $2.65 an hour to $4 an hour over a space of several months.
This was such a startling proposition when it was first raised that Mr. Lewis himself said he thought it might be a bit much. To quote the words of Mr. Lewis, as they appeared in the newspaper article, he said: "The $4 figure might not be unreasonable." After taking counsel with the party, whose policy this is, he said: "The minimum wage is inadequate and should be $4 an hour." He was asked directly how this wage boost would affect small businesses in Ontario. He replied with an old chestnut by saying, "-the effects of increases in the past have always seemed to be dire but never turned out that way." That is only because we have never had an increase of that magnitude in such a short time as has been proposed. I do not think any responsible party should be proposing that kind of change in that short space of time. We agree the present minimum wage in Ontario is inadequate, but it is not so inadequate that it needs to be almost doubled overnight.
The provincial Liberal Party of Ontario has been following a much more enlightened role with respect to small businesses and has been making this the centrepiece of its campaign. They have undertaken to create a large number of new jobs in the economy, 100,000 in fact, in very large part through assistance to small business. I indicate this to remind the House that this party has been dedicated to the interests of small business for a long time. This is shared by our party at the provincial level as well.
I should take the time to refer to the motion which is before us, but not to read it since the hon. House leader of the opposition did. Of the various things mentioned in the motion by the hon. member for High Park-Humber Valley (Mr. Jelinek), the only clause which the government has not fulfilled is that it has not introduced a small business act. As the minister said this afternoon, the government has not reached a decision on that question. This is one of the questions still to be decided.
With respect to that clause, it can be said that the program the opposition is pushing has not been followed by the government. Having a small loans act is not the only way of dealing with the problems of small business in this country. It is a matter of interpretation as to the degree of progress which the government has made toward a small policy and toward harnessing the productive potential of small business. Those of us on this side would contend that the government has been moving very rapidly in the direction of an adequate small business policy, aided and urged on by the backbenchers on this side of the House.


Some hon. Members:: Hear, hear!


Mark R. MacGuigan: We are cognizant of the fact that small business is the backbone of our country's economy. Something like 90 per cent of the businesses in our country employ 100 people or fewer. In my own constituency, which is often thought to be more remarkable for the presence of the big three of the automotive world, who are the largest employers, there are hundreds of small businesses even in the automotive field. They contribute a great deal to the economy of my city of Windsor and the country as a whole.
I think I had better call it six o'clock, before it gets any closer to the hour, Mr. Speaker.


The Acting Speaker (Mr. Ethier):: Order, please. Is it agreed that we call it six o'clock?


Some hon. Members:: Agreed.


The Acting Speaker (Mr. Ethier):: It being six o'clock, I do now leave the chair until eight o'clock p.m.
At six o'clock the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.
Mark R. MacGuigan: Mr. Speaker, in the time that I have left I would like to deal with some of the aspects in which the government program with respect to small business appears to be succeeding and some of those in respect to which it does not appear to be succeeding or at least has not yet been sufficiently developed.
Of course, we are all aware of the accomplishments which have been mentioned by some of my hon. colleagues this afternoon: the changes in the Farm Improvement Loans Act, the Fisheries Improvement Loans Act and the Small Businesses Loans Act. Those are matters which have already occupied the House during this session of parliament.
The changes in the budget this year were of particular importance from the viewpoint of small business. It was a very major theme in the budget address, perhaps almost the major theme. It was very much welcomed by backbenchers on this side who feel they were in large part responsible for the inclusion of those measures in the budget. One of the measures in the budget proposed a change in the treatment of employee stock options for employees of Canadian privately controlled companies, and this will give small firms a better competitive edge in being able to get good management and skilled help who might otherwise go to large corporations.
The election of tax treatment on investments will encourage more investment in high-risk ventures. The change with respect to refundable tax will encourage joint ventures between small firms. The elimination of federal sales taxes in certain areas and the provision for assistance with respect to metric conversion will also be of considerable assistance to small
May 30, 1977

business, as will the deferral of tax on voluntary sales of assets, which will make it easier for a firm to move closer to sources of supply or relocate to take advantage of a better market or to expand in newer facilities. Many of the other measures in the budget, although not directly aimed at small business, will be of great assistance to small business as well, such as the extension of the investment tax credit and the increase in the dividend tax credit. All these measures are very welcome. They are an indication of the fact that the government is very well aware of the necessity of assisting small business in Canada.
Another development which is very encouraging both as a reality and as a symbol of the recognition of the role of small business is the reduction in paper work. We have made progress in getting government departments to share information among themselves, and the changes in the Corporations and Labour Unions Returns Act will exempt some 350,000 firms from at least one of their present reporting requirements by the end of 1981.
However, it has been estimated that this reduction in paper work is only about a 10 per cent reduction over-all. The change which has occurred to this point is indeed a welcome one and, indeed, in the policy paper which the minister will be presenting to the cabinet this summer, there will be further reductions planned in this area; but this is one of the places in which there is a great deal yet to be done because the burden placed on small business with respect to paper requirements is out of all proportion to the difficulty which is created for large firms. We all recognize that in order to keep adequate records of business so that the government will know where to allocate its resources it must have information, but surely there are better ways to get it than to impose many of the requirements which have been imposed upon small businesses. That, then, is one of the areas in which we would like to see further policy development.
Another area in which we would like to see further development is with respect to innovation by small corporations, and here I am indebted to the brief before a Senate committee which was presented recently by the Canadian Federation of Independent Business, which has already been referred to several times. The brief has very interesting American statistics to the effect that a very large proportion of the innovations and inventions which have occurred in this century has come from individuals or from small businesses, and that even when a similar thing could be done by a large corporation, the cost to a large corporation of making the same kind of change is much greater. A small chemical company in the study which was referred to in that brief with 50 employees was able to develop a new product for $1400. A competing firm with 20,000 employees required $11,000 to accomplish the same result. I believe this is an indication of the economic value of government assistance to small businesses which can, with much fewer resources, accomplish equal and often larger results.
Of course, we are aware as well of the necessity of the availability of financing for small businesses. This is a matter which has been before the public for quite some time, but I
Small Business
think from the experience I have in my constituency office and from dealings with my constituents, it is not one which has yet been solved by the government. As long as Canadian banks and other lenders are as cautious as they are-at least in comparison with the similar institutions in our neighbour to the south-I think we will need government assistance to make sure that risk taking continues to be carried out in Canada and that those people who have good ideas and new ideas have an opportunity to develop them.
In the time remaining I would like to concentrate on one particular kind of small business because it is one which is of peculiar importance to the constituency I represent, which is an automotive constituency. We have slashed our over-all deficit with the United States under the auto pact from almost $2 billion in 1975 to $1 billion in 1976. That is a great improvement indeed. Over-all our performance under the auto pact has been extremely good. We have 11 per cent of the employment in the automotive industry in North America, although we have only 9 per cent of the market, and that is something of which we can be rightfully proud. I think no city has benefitted more from the auto pact than Windsor, but at the same time there is a down side and I submit that that is much heavier than it need be and certainly much heavier than desirable.
The deficit in auto parts continues to increase. It increased only slightly in 1976 over 1975, but the fact that it has increased is in itself an undesirable feature. It has been going up steadily. In addition, the increase in auto parts during the years the automotive trade pact has been in existence is a very large one indeed, far too large to be acceptable as a continuing feature of the auto pact. This is very relevant in the present context because the automotive assembly side, which is the side on which we are doing so well, is the domain of the large companies, the big three and to some extent their fourth competitor as well.
However, the auto parts industry is composed of many small companies, and I submit that it is very important to the future of small business in this country in general that we assist these particular small businesses in the automotive industry. I am not satisfied that the present level of financial assistance which is available under the Enterprise Development Board is as good for the automobile industry as that which existed some years back when there was a separate administration and a separate fund which operated very actively to assist companies which were involved only in the automotive business. Given the importance of this industry on the Canadian manufacturing scene and the importance of small businesses generally, it is too bad that particular form of separate assistance to small businesses in the automotive industry was dropped.
That makes it all the more important that the enterprise development board have the mandate and budget to assist small firms in the automotive business. With the kind of competition these firms face they have to be assisted in those years in which the market is not as good as they would wish it. Moreover, quite often when the market is good the sourcing of

May 30, 1977
Small Business
auto parts, which is controlled largely by the big three in the United States; is not favourable to Canada.
Some years ago at a time when the automotive parts balance was beginning to veer toward Canada, people in my city felt that the United States government put pressure on the automotive companies in the United States-it was usually silent pressure that would be hard to establish by evidence in a court of law, but nevertheless real-to make sure that they sourced most of their products in that country. That makes it important that the Canadian government apply pressure to the automotive companies in Canada-and to the extent possible to those in the United States-to make sure that we have a fair share of the market in automotive parts. It is unfortunate that there has to be government pressure of that kind, but we cannot allow ourselves to be put in a position where pressure is being applied by only one side.
In addition, there is the necessity of a review of the auto pact. Just recently the Minister of Industry, Trade and Commerce (Mr. Chretien) said that the trade deficit on auto parts in 1976 was too big to swallow. It certainly is for my city which has suffered many of the consequences. Over all the balance is in our favour but when the balance in auto parts is against us, not only does it affect the situation of small businesses in Canada but it also affects the skilled trades, because the skilled workman plies his trade in the parts industry more than with the large companies. We are increasingly finding ourselves in the situation where, although we have large numbers of jobs, we have less and less skilled employment. That situation cannot be allowed to continue.
I would therefore strongly support the view that has been expressed in this House before that the Arthur report should be published so that all of us, especially those from automotive constituencies, can have all the latest facts with respect to the automotive trade pact, the deficit in particular. The government must adopt a vigorous position with respect to the automotive companies and the United States government in regard to the effect on small businesses in the automotive industry.
In conclusion, Mr. Speaker, I want to say that the kind of contribution small businesses make a country is impossible to measure. It is an omnipresent contribution, but it can be indicated by the fact that when people have visited an area it is not normally the large corporations they remember but the small places that have given excellent service-the kind of service that is not always found with large corporations. That kind of character of our society which has been a very important part of our development in the last two centuries is too important not to be encouraged and given every assistance by the government.
I think my colleagues on this side of the House would wish me to say that, while we welcome the progress that has been made by the government in assisting small business, there are still some steps to be taken. We would strongly urge the government to take those steps.


Mr. John Wise (Elgin):: Mr. Speaker, I welcome this opportunity to join with other hon. members in this debate on the motion before the House regarding the small business community. I want to compliment my colleague the hon. member for High Park-Humber Valley (Mr. Jelinek) not only on his motion today but also on the sincere interest he has taken in the problems of the small business community. Indeed, if it were not for members on this side of the House and for the hon. member in particular, this government would probably have forgotten altogether the small business segment of our economy. It is widely acknowledged that if it were not for members on this side continually giving attention to the problems of small businesses and pointing to the neglect of this government, a Minister of State (Small Business) would probably not have been appointed. The mere appointment of a minister is certainly not sufficient, however. What is needed and needed now are legislative measures, tax changes and incentives designed to assist this segment of our economy.
With the ever increasing rate of unemployment in this country I find it difficult to understand why this government has not recognized that the state of small businesses in Canada is an extremely vital factor in the health of our economy and of society as a whole. Nor can I understand why the government has not acknowledged the significant contribution which small businesses have made to the economy and work force of this nation.
Small business establishments are without question the very lifeline, lifeblood and backbone of our communities, our provinces and our country. They are an important segment of our economy. Small businesses, by their very nature, provide a very high degree of diversity and this diversity adds much needed stability to our communities and our country. Yet bit by bit they are slowly being phased or forced out of business.
Far too little consideration is being given to such an important group-a group which not only individually but collectively has contributed much to our economy and social well being. Small businessmen and their employees represent half the wage bill of corporations in Canada, and when you consider how many small firms are not incorporated you can see what an important segment of our economic strength we are dealing with.
I have a great deal of respect for these business people, men and women who have shown substantial managerial skills, efficiency, determination, dedication and initiative over the years that has often surpassed that shown by the leaders and management of some of our larger corporations. Many of these people who establish their own businesses over the years, unlike many larger firms today which receive billions of dollars in the form of assistance or grants from the government, received very little from their governments but built their businesses on hard work, long hours, faith in their communities, faith in themselves and faith in Canada.
Unfortunately, due to the philosophies of the present day federal government, there has been a tendency toward centralization, bigger and costlier governments, stronger and more powerful unions and larger multinational corporations. If this
May 30, 1977

trend does not reverse itself in the very near future, the free market system which built this country will continue to suffer and perhaps even eventually disappear.
Generally speaking, governments continue to consult only with large business and unions and as a result most legislation is geared to those sectors. Small businesses, which employ two-thirds of the country's work force, must thus accept laws which were not designed to deal with their problems in the first place.
No segment of society is more vulnerable to the red tape of bureaucratic power than the small and medium sized business sector. They do not have the manpower to handle the massive volume of government demands for paper work for various purposes. Too many of the small businessmen fall victim to the uncoordinated leap-frogging by government departments in their demands for more statistical information. Their productive effort is swamped by the increasing demand for completing and filling in forms and questionnaires. Laws and regulations of governments designed to regulate the activities of large corporations fail to heed small and medium sized businessmen. They often find themselves defenceless in a jungle of conflicting regulations, unless they have available the services of corporate lawyers, tax consultants and government relations men; and people of that calibre serve larger firms.
Even regulations which at first glance seem innocuous, such as the federal government's labelling act, can put many prosperous companies into financial difficulties. In this case the labelling act's requirements for products to be labelled in both official languages has led to severe problems for some small businesses, particularly importers who cannot afford to relabel many of their product lines. It is grimly ironic to these small businessmen that often as not the imported products are marketed solely in one particular linguistic region. Certainly, Mr. Speaker, the government should show a greater measure of common sense in many of these cases.
For some reason or other the government does not realize in any meaningful way that the survival of small business is inescapably linked to the survival of the mixed economy; as a result, we are now witnessing more bankruptcies in Canada than ever before. The government should be making every effort to reduce the considerable existing bureaucracy which is strangling the small business community, while at the same time providing incentive programs which by way of the tax system would be based on research and development, increased employment, productivity, export sales and expansion.
The government should also be conducting an all-out plan to reduce to the bare minimum the amount of form filling that small businesses are required to undergo. The Minister of State (Small Business) (Mr. Marchand) stated in an address in Maniwaki on May 19 that officials in his department calculated that the present move within the government to reduce the amount of form filling will save the small businesses, in dollar value, more than $40 million. If that admission on the part of the minister is not evidence in support of
Small Business
the case we, on my side of the House, are making, I do not know what is. I have seen no stronger evidence. If the government has used more insight in the first place before they initiated their complicated form filling program, the $40 million they are now going to save the small businessman could have bolstered various sectors of the business community in dire need of assistance, and prevented many a bankruptcy. This is just another example of the waste of taxpayers' money caused by our complex government bureaucracy.
Credit for small business enterprise creation and expansion, including that of an agricultural nature, is becoming increasingly difficult to obtain. There is a general lack of credit. I feel too many banks are turning away too many applicants. It is the government's duty to instil a more positive attitude in this regard and to promote and guarantee such loans more aggressively. I suggest as well that the incidence of inflation and greatly increased building and operating costs should lead the government to consider seriously increasing the ceiling of these much needed loans.
The government has contributed to the small businessman's appalling plight by being unable to manage the Post Office properly and establish good working relations with the postal unions. At present the working relationship is poor. Apparently the government and unions do not remember that small businessmen in Canada bear the financial brunt of lengthy and unnecessary strikes. Small business people in Canada are in the worst position to cope with this recurring situation. These strikes affect many small businessmen. When many of them are forced into bankruptcy, they must dismiss their employees. This throws those Canadians into the ranks of the unemployed, and unemployment is already at one of the highest levels Canada has ever experienced in her history. The financial losses of many small businesses, and consequent increased unemployment, loss of productivity, loss of sales, and so on, contribute further to depress an already sagging economy.
Judging from recent reports we fnay experience another costly postal strike in the near future. Despite these financial losses and despite some bankruptcies, the small businessmen generally supported the government's stand during the last postal strike. Surely such fine private and corporate citizens, our small businessmen, deserve a better break than they are presently receiving. Small business and agricultural interests are not identical, although basically similar. As I said, the average farmer is very much a businessman in his own right. For years members on this side of this House have asked the government to change the tax structure in order to create a more workable atmosphere for the agricultural community and small businesses and, more importantly, to preserve those segments of our economy.
My remarks refer particularly to the small family farm. Only in the recent budget did the government finally move in this general direction. The Minister of Finance (Mr. Macdonald) is to be commended for introducing measures providing for a deferral of capital gains tax arising from the voluntary sale of land, buildings and certain other productive assets, to the extent that the proceeds are reinvested in similar assets.

May 30, 1977
Small Business
Let me say again in the House that this provision should apply to all forced sales as well. This one small provision is not enough. It will not, and should not, satisfy the needs of the small business community. We still face the grossly unfair situation whereby the farm wife or family member cannot be reimbursed for labour unless the farmer incorporates his farm. The government well knows that if this is done, if the farm is passed on to the next generation, the tax free provision is lost. It is in fact a form of blackmail designed by a government obviously bent on destroying the small family farm as a viable enterprise.
As some of my colleagues on my side of the House said earlier today, this same provision applies to small business. The government's attitude seems based on the mistaken belief that the small farm or private business enterprise, if given an equal chance, is less productive than the larger enterprise. I challenge the government to prove the truth of this with facts and figures. I submit it cannot do it. Bigger does not mean better.
The wife and family of the small businessman must suffer the same fate since, basically, the same rules apply. Salaries paid to family members cannot be deducted from income tax unless the business incorporates, thereby incurring the same disadvantages. I call on the government to end this sort of discrimination.
The Canadian Federation of Independent Business suggests, accurately, that the government's apparent theory of bigger is better is wrong. Despite the current concentration of corporate power, we are experiencing high inflation and record unemployment. Government intervention so far has proved unsuccessful; obviously, more business incentives are needed.
One of the basic problems is that everyone has income but little wealth. Too many people cannot afford even their own homes. Wealth makes possible a shift in investment, not income. There is wealth in Canadian society, but much of it is concentrated in the hands of large corporations and other large enterprises, not in the hands of individuals. I refer to individuals like average Canadian men and women who provide the foundation of our Canadian society and who day after day utilize their human resources in the face of government neglect and indifference and struggle for survival in the small business community.
There is nothing wrong with big business. Nor is there anything wrong with big profit. Indeed, both are necessary and desirable. However, we need to take steps to ensure that small business and moderate profit is not completely engulfed by the corporate giants. So far the government is failing miserably in this regard.
Incentives to small business are almost non-existent and any measures that are taken are usually of an ad hoc nature, often too little and too late, rather than part of a well organized plan designed to promote prosperous growth in the small business and agricultural communities.

Clearly, a more constructive policy is required and required now. This government has failed to provide that policy and the climate and atmosphere for the small business community to exist, to grow and, particularly, to expand. The economy of Canada has therefore suffered and Canadians have suffered. I am certain that Canadians, given the opportunity, will register their full support of this very excellent and timely motion put forth on behalf of our party by the hon. member for High Park-Humber Valley (Mr. Jelinek).


Arnold John Malone: Mr. Speaker, I am pleased to have the opportunity to speak today on this very important motion put forward by the hon. member for High Park-Humber Valley (Mr. Jelinek). In view of the present economic situation in Canada, there is no matter we could speak on that would have greater importance than the small business community.
In order to have a perspective on the small business community, what it means to Canada in terms of employment and jobs and what it means in terms of adding to the economic strength in this country, it is important to point out that small business in Canada provides more than 55 per cent of all the jobs in this country. It accounts for more than 50 per cent of the dollar value of business in Canada.
Taken as an economic unit, the small business community is the single most important community in Canada. It is most important to underscore the fact that a number of nations in this world have recognized that, have yielded to the obvious and provided strata and structure in order to give incentive to small business, something Canada has not done.
Before going further, I wish to comment on some of the remarks of the hon. member for Windsor-Walkerville (Mr. MacGuigan). He stated that the most recent budget was a real thrust to small business and that the government had given an incentive to the small business community. In truth, a wide survey of small business people across this country revealed that the vast majority felt that the most recent budget did not offer small business any substantive advantage that would allow reasonable encouragement of initiative.
If we want to be very candid this evening, we have to lay out at the start that this government today has no integrated policy related to small business. There has been a ten month period absolutely void of policy since the government established a ministry in charge of small business. The Minister of State (Small Business) (Mr. Marchand) is still unable to define for the Canadian public what he means when talking about the small business community. That minister has not in any way put forward what might be called a small business policy.
We are lacking a number of things. The minister has not issued a policy. He has not even issued a definition of what he calls the small business community. That underscores why the minister's first trip abroad after being appointed minister was to the Soviet Union.
If we look at the international scene, we see that the United States, Japan and West Germany all have extensive policies
May 30, 1977

that are aimed at the small business community. Japan has recognized that it is the private small business community that relieves unemployment. It is important that we look at the community in Japan. It is a nation with some 110 million people. It has, by our standards today, zero unemployment. By contrast, Canada, a nation we like to think of as one of the greater nations in terms of human and natural resources, has one and a half million people looking for work. The reason we have such high unemployment in Canada today is that the government has been totally incapable of recognizing that unemployment by and large is solved by incentives given to the small business community.
There is a myth that Japan is a nation of big business producing products such as Toyotas, Datsuns, Kawasakis, Sonys, Elondas and many others. In truth, most of the people employed in Japan are associated with family and small business enterprises. That is why that nation has been able to achieve such a very high rate of employment or, by contrast, such a very low rate of unemployment.
In Canada, we have a ministry which has done little to alleviate the unemployment situation in Canada. After ten months of operation, we still have from that ministry no definition and no policy flow to give the kind of credibility to the small business community that this country thirsts for in a very longing way.
Governments are particularly susceptible to regulatory overkill. Michael J. Trebilcock, a University of Toronto law professor, revealed in his paper, "Winners and Losers in the Modern Regulatory State-Must the Consumer always lose?" that the federal government alone has created more than 100 regulatory agencies.
Last winter the Canadian Federation of Independent Business conducted 3,264 interviews amongst businessmen. It asked this question: "What is the single most important problem your business is facing today?" Heading the list: Government regulations and paperwork. As one businessman complained, "I am expected, inspected, disrespected, suspected, dejected, examined, re-examined, commanded and compelled until I provide an inexhaustible supply of money for every known need and desire or hope of the human race."
That underscores the plight that this highly regulatory government has imposed on the small business community. We have the situation well illustrated by the anti-inflation control program where the government focused on big business and organized labour. There has been a disrespect for, and a dissociation from, the small business community, from the entrepreneur, from the family life-style business that is so prevalent and so much the backbone of the Canadian fabric of our economy.
No segment of society is more vulnerable to the mechanics of bureaucratic power than the small and medium sized business sector. Carl Beigie, executive director of the C.D. Howe Research Institute, agrees that we have passed into the land of negative returns. In 1975 he wrote:
Small Business
-a proliferation in the government regulatory apparatus may have produced windfalls for the accounting and legal profession, but at the expense of the growth and efficiency of the overall economy.
Nothing could more underscore how government has imposed rules and regulations on the small business community so as to have a stifling and straitjacketing effect upon that very major and important sector of society. This is to say nothing about the tremendous social effect of over-regulation. There is an inverse relationship between individual liberty and government control.
I should like to take the opportunity this evening to read into the record a complaint I have just recently received from a constituent, Mr. Fossen from Killiam, Alberta who has a feed and farm supply operation. That business hires two people on a full time basis and during part of the season hires extra part-time help. It recently received from Statistics Canada a 14-page small print questionnaire with the demand that it be completed in 60 days or legal action would be taken. When you stopped to take a look at what that would require, by the owner of this company's own admission it would require that he shut down his business and work on his books for nothing short of 10 to 15 days. The form had such questions on it asking for the quantity of everything on hand-grain, concentrates, bran, oat flakes and so on. They wanted to know the amount of micro-mixes of all vitamins, the amount of macro pre-mixes for cattle and swine, the amount of all of the feeds they process-that is, all grain and how much of each individual one. They wanted a breakdown of all the concentrates, all the bags, all the electricity used, all the gas, all the office supplies, all materials used in production, equipment used by own labour force, and purchases of all goods from other sources for resale in same condition as purchased. They wanted a list of all complete foods purchased and sold, all reserves of animal and pet feeds, whether for birds, rabbits, dogs. The list goes on for 14 pages. This is an example of the way in which regulations are imposed on small business which does not have the wherewithal or the capital to be in a position to respond.
The owner of this small plant said that had the request come at a time of the year when he normally did his yearly inventory it would not have been difficult to have complied because the information had to be assembled for tax purposes anyway. But this insensitive government is now, twice a year, imposing such requirements as these on small business simply because one department or another decides it needs information. I submit that this is the kind of attitude which is endangering the small business community to the extent that it may wind up as an extinct species.
Now let me take a look at metric conversion. I am not opposed to it in principle but certainly this program has been put forward without any consultation with the farm community. Anyone who was a representative of a farm community would have known that three prairie provinces produce the bulk of the grain in this country. There is a road grid across Manitoba, Saskatchewan and Alberta one mile east to west by

May 30, 1977
Small Business
two miles north to south. The grid is divided equally, then, into acres. The hectare will simply not fit in with the units which are already there. The government has not suggested the prairies be resurveyed. Obviously the farmers were not consulted before these changes were made.
We have read in the propaganda put out by the government that 95 per cent of the world lives on the metric system. What the government does not recognize is that there is no pure metric system which exists throughout the world. There is the Japanese metric system with all its differences relevant to Japan. There is the German metric system with its own differences relevant to Germany. There are the metric systems of almost all the countries in the world with their exceptions. But somehow the government felt they needed to take it in its pure form and impose it on Canada irrespective of the damage it might do to some sections of society. If there is to be any real feeling for the Canadian people there has to be a reversal of attention in terms of how we employ the concept of the hectare and the kilometre as opposed to the acre and the mile.
I turn now to another point. I was very pleased that the hon. member for Elgin (Mr. Wise) brought it up earlier today because I think it is an important one. I refer to the way we treat the family unit in small business today. I speak particularly of the husband and wife combination. Coming, as I do, from a farming constituency, I know what an insult it is when we witness the farm wife for a very large part of a year in a good many families working like a hired man, side by side with her husband, operating farm equipment, tending the cattle and other livestock, lifting heavy loads and then in the spring of the year being written off as a tax deduction for $1,418. What an insult it must be when those are her wages-simply a tax deduction. She knows her husband cannot pay her a salary because, if he does, she is taxable on that salary too. He also knows that he cannot do it unless he incorporates as a family business.
Incorporation for many farmers is not a practical alternative. We are in a situation today when that farmer can go out and hire a hired man to help him and write the hired man's expenses off as a tax deduction. When his own wife helps him, all he can do is write her off as a tax deduction. I think that is a scandal, not only in the farming community but in any small business such as a corner grocery store when two partners work side by side. Greater attention has to be given to this kind of system so that the entrepreneur who has initiative, ambition and the inspiration to get ahead is able to have incentive provided by government.
What we are witnessing today is the focus of government on the two major forces I mentioned earlier, big business and organized labour. No attention is paid to one really important sector of our society, the small business community. It has been demonstrated around the world that countries which have been able to keep a buoyant economy have provided incentives for small family businesses.
While talking about the small business community I should like to deal for a moment or two with the subject of labelling and how the present requirements act as a disincentive to the
(Mr. Malone.]
small entrepreneur for many reasons. The labelling legislation makes a lot of sense in terms of business which is conducted nationally. But consider the fact that some of the finest western boots made in Canada are made in Quebec, or that some of the best kayak paddles obtainable in this country are made in Quebec. Here is an example of where the labelling legislation might well apply. It applies equally in other areas of production such as the canneries at Lethbridge which see their products across Canada. But it does not apply to those industries either in English Saskatchewan or in French Quebec which are totally local. In these circumstances, to have to comply with the labelling regulations means another capital investment simply to get their ideas on the market.
One of the things that should not happen in Canada is that you have to pay an extra price in order to take some initiative. If you want people to have incentive, you ought to reward people for that, rather than pile up the bureaucratic overkill of paperwork which is imposed upon small businesses by the rigid, over-regulating government which we have at the present time. There are many small businesses which would very much appreciate an opportunity to get out from underneath all of the paperwork which is presently imposed upon them. Small business has a very different set of needs from the multinational organizations. We do need tariffs for protection from the giant textile industries, but they need not apply to the small speciality shops.
In my own constituency there is a store which sells only western shirts and clothing. By the laws of Canada, that store cannot buy any tariff-free shirts except from eastern Canada; it cannot buy western shirts because they do not make them. They have to compete with their neighbours down the street who can buy the tariff-free goods. On the other hand, we find the people who are importing these shirts getting them from the western United States and from other countries who are making western clothing. They have to pay tariff on them, and that acts as a disincentive to them.
The survival of the broadbased middle class is vital to democracy. Likewise, the small business community is an integral part of the economic mix of this country. However, securing risk capital at the present rate of loan interest in Canada makes a good idea too expensive. In the final analysis, Canada as a nation has to be the loser.


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


Some hon. Members:: Agreed.


Arnold John Malone: Thank you very much, Mr. Speaker. I would also like to thank my colleagues and friends in the House for giving me an extension of time. Before concluding, I have a few more comments to make.
May 30, 1977

Even after a decade of rapid inflation, the ceiling on small business loans of $50,000 should be readjusted upwards so as to account for the inflationary trends of this past decade. If we are going to have a situation where small business entrepreneurs can establish themselves, get their feet on the ground and offer viable alternatives in Canada for employment, then we have to think of businesses capitalizing themselves somewhat in excess of a rate of $50,000. Presently the government's approach to unemployment is to give the people of Canada make work programs through such concepts as LIP, LEAP, Young Canada Works and Canada Works. If the state has no business in the nation's bedrooms, then it has no business frustrating the basement offices of its homes either.
The government is hoping that by some kind of make work programs it can solve unemployment. All that it does with its make work programs is to shift from make work during one half of the season to unemployed people during the other half of the season. In other words, in Canada today we have a coin which has on one side heads-make work-and on the other side tails-unemployment. Either way Canada is losing, because on that kind of a flip of a coin you cannot come out a winner.
If we had more incentive for the small business community, we would have ongoing employment such as would match West Germany, Japan and the United States. All three of those countries have specialized departments and incentives to give encouragement to small business groups. There should be a tax credit incentive for small businesses which would do more for free enterprise than the current focus on organized labour and the multinationals. It would do more for free enterprise than would all the make work programs this government can dream of. Make work programs are merely an extension of unemployment, except with a stop gap. It is a band-aid which does not cure the ailment but simply hides it and puts it away.
I will conclude by saying that the small and medium-sized businesses, managed by the small or medium-sized operations, hire 60 per cent of Canada's labour force. That is a fact we have to address ourselves to, and that is a fact which the Japanese, the West Germans and the Americans have addressed themselves to. Their economies reflect their governments' sensitivities to the needs of their people. I hope this government will see fit to adopt the motion being put forward here today.


Mrs. Jean E. Pigott (Ottawa-Carleton):: Mr. Speaker, I am very grateful to have an opportunity to speak today. It is only seven months ago that I left the business world, and I feel I still have a strong sense of what should happen to small business.
It was in December 1971 that F. H. McNeil, President of the Canadian Bankers' Association said:
Confidence is low among Canadian businessmen because they believe many government attitudes and policies are either irrelevant or fundamentally detrimental to Canada's interests . . . Businessmen are frustrated and disenchanted.
Small Business
The federal government, if it is interested in small business, must either play a role in providing the financial capital required for expansion or legislate changes in the Bank Act to provide the incentive to the financial community to generate a larger proportion of the monetary needs of small business.
However, there is a need for more money. Managerial talent and organizational restructuring are also very important and key to the life and survival of small business. Government could increase support to the provinces to improve the quality of education in business schools, MBA programs and the wonderful programs which are happening in community colleges.
The situation facing Canada today is critical. The problems of small businesses do not only mean an increase in bankruptcies and resulting unemployment, which is serious enough on its own, but by failing to support and basically hindering small business in Canada, the federal government is denying an important resource to our struggling economy.
The catalogue of difficulties facing small businesses in Canada is complex and lengthy. I would like to explore some of them now. One problem which many small businesses have to cope with is the enormous volume of red tape existing in Canada today. A study by the Law Reform Commission reported in 1975 that federal statutes have now created some 20,000 criminal or quasi-criminal offences. Provincial statutes account for another 20,000 such laws. This has meant an ongoing transfer of decision-making powers and economic resources from the private sector to the state. The situation led to complaints such as "governments are increasingly hostile to business" and "the bureaucracies are apparently anti-business".
I am afraid the worst problem is here in Ottawa, because it has become so remote, because it is so vague and because it appears inbred. In some of our large public service emporia they are only interested in talking to people who come from equal size broadloomed offices. Small business must have consultation with all levels of organization, especially with senior officials and ministers who are out of touch with small business.
I recommend the story of an Ontario cabinet minister who, in the last two years, has taken two Winnebagos and travelled the length and breadth of Ontario to talk to tourist industry owners right in their own homes and travel agencies. What has happened is that Ontario has begun to design the right kind of incentives and programs for the travel industry.
Another problem for small businesses is in the area of government tenders. There is a need for change in government tender practices so that small business supplies a portion of government purchased goods and services. As has been stated here earlier today, Canada lacks a small business act. Under small business legislation in the United States, however, one third of federal spending for goods and services goes to small business. Imagine a third of all purchases of our federal

May 30, 1977
Small Business
government going to the small business community. What a lift that would make!
In 1950 cash spent by governments amounted to 28 per cent of our national income; now it is 46 per cent and rising. In order to collect this money, the government has evolved an intricate tax philosophy and tax policy. The whole area of taxation is another government induced problem faced by small business. The corporate rip-off in Canada is that half of our profits are going to governments which put in little capital, man hours, or risk in order to benefit from business. It is not uncommon, for example, for governments to encourage business through tax allowances. The businessman then risks his capital, time and in many cases forgoes income for a number of years-at which time government calls the tax allowances "loopholes" and closes the tax gap. Where have we heard that before?
Any new venture requires planning, research and development, financing, staffing, the construction of production facilities and marketing. Even in a successful program, there is a long waiting period between the initial outlay and a return on capital. Any change in a tax law without notice is unfair; such changes are now being complicated by retroactive tax laws.
Taxation should be designed not to produce revenue but as a device to influence the economy. Governments frequently tax at the wrong time, at the wrong place and in order to gain immediate funds. The Canadian economy is often compared to a pie, and we argue about how the pie should be divided. Forgive me if I bring a note about the bakery industry into my speech. We argue about how the pie should be divided. Instead, we should worry about first making the pie. The major ingredient in this kind of baking is real wealth, and our taxation system should aim at increasing it.
The Canadian taxation system should work to motivate people to greater production. Our taxation system is now frequently aimed at punishment when it should encourage productivity and efficiency. Government should attempt to keep taxation simple and the cost of collection at a minimum. That Chinese expression "Do not remove a fly from your friend's head with a hatchet" is a motto which I believe our taxation department officials should have on their wall.
Decision-making in business is now being turned from factors of economic efficiency to considerations of taxation. The best efforts of many small businesses are now towards bending the best principles of sound business practice to fit an unsound taxation policy. Our incredibly intricate and therefore expensive collection system, coupled with a high rate of taxation, is producing disastrous side effects and undesirable changes in our economy for which our citizens never voted.
So that you do not think I am just being negative or critical, let me point out that our party has proposed some sound changes. One of the more recent comprehensive statements on taxation came from the hon. member for York-Simcoe (Mr. Stevens), in his reply to the March 31 budget on April 4, 1977. He proposed a tax credit for small businessmen investing in research and development. As the small business sector is already one of the most innovative groups in the Canadian

economy, these efforts to advance the technological capability of this country should be rewarded. The Progressive Conservative proposal would form an alliance between the goals of increased research and development, a reduction in regional disparities and the encouragement of small business-a fortunate coincidence of goals.
Under the proposal, a small businessman could obtain a tax credit for investment in research and development. The credit would be on a sliding scale, depending upon whether the project was taking place in an area of regional disparity. The amount of the rebate could range from a high of, say, 75 per cent in the Atlantic region and Quebec to a low of 25 per cent or less in the more prosperous areas of the country. A substantial proportion of the tax revenue lost by such a credit would be regained as a result of the new employment opportunities created. Such investments in R & D will result in increased economic growth over the long-term and a more stable basis for the Canadian economy.
Another proposal is for long-term fiscal or tax contracts for companies investing in areas of regional disparity. This proposal would be of particular benefit to the medium sized owner-managed company which would be willing to take the risk of investing in a slow growth area. The purpose of the tax contract would be to provide some degree of tax certainty for a company willing to undergo the financial uncertainty of investment in an area of regional disparity.
The sort of contract our party is thinking of would be of the following kind. A company thinking of investing in, for example, Newfoundland would sign an agreement exempting the operations of the new investment until, say, 150 per cent of the investment had been recovered or until ten years, after the plant begins production. Both of these tax proposals are designed to assist both in fostering the small business sector and reducing regional disparities. They are grouped together because the goals of a strong small business sector and of regional development are complementary-in fact, they are so complementary as to be mutually necessary.
Several unfortunate experiences in the past, such as the Shaheen Come-by-Chance Refinery, Bricklin, etc., should show us that big business may not be the answer to regional development. You cannot build an adequate, large scale industrial infrastructure from scratch. Without infrastructure, large scale industry cannot survive. Without large scale industry, there is no need for an industrial infrastructure. Further, because small business is more labour intensive than capital or energy intensive, a predominantly small business economy in areas of regional disparity will escape many of the problems associated with high energy and transportation costs. Small and medium sized firms are far more likely to make permanent contributions to regional development than are world scale plants, and that will be a benefit conferred by our proposals for small and medium sized business.
Another positive suggestion is that small business feels the weight of government regulation and paperwork far more than larger companies which can afford the armies of lawyers and accountants required for compliance. This administration has
May 30, 1977

announced its intention of reducing the burden of regulation upon business. There is even some scant evidence that an effort is being made to reduce the paperwork burden. But in the meantime, government imposes costs upon business-costs which fall most heavily upon the owner managed sector.
Our party has proposed that there be a tax rebate for small businessmen who must cope with federal government paperwork. The rebate would only be a token amount in terms of the costs imposed, but it would involve a financial recognition of the costs the public bureaucracy imposes upon small firms, and, more importantly, it would provide a financial incentive for the federal government to reduce its paperwork.
Another point is investment incentive credit. All Canadians should be encouraged to invest in small and medium sized business. Larger corporations can afford to pay interest on bonds or dividends on equity. Those who purchase these instruments can take advantage of an interest income deduction or a dividend tax credit. No such treatment is available to investors in a small business, simply because the average small business is in no position to sell stocks or issue bonds. Anyone who has seen what is required for that kind of thing knows that small business cannot handle it. A small businessman gets his money from his own resources, his friends, his neighbours, local lawyers, doctors or often from his mother-in-law, but those creditors may not get their money back for years, if at all. Why should these people who invest in Canada's future- not people who buy stocks or bonds-not get a tax break as well? Our party suggests that they should and that at the very least the investor in a small business should get the same tax break as an investor in a large corporation.
Since 1972 our party has pressed for an investment credit scheme. An investment credit should be available to any Canadian citizen who makes a direct investment in the equity of a Canadian owned, small owner-managed business. The credit, which could amount to 50 per cent of the value of a qualified investment up to a maximum of $5,000 per year, should either be offset against an individual's income tax for the year or rebated directly to him. Qualifying investments should include direct participation in proprietorship or partnership as well as investment in the new equity offerings of medium sized corporations. 1 cannot help but feel that this last proposal would have a profound effect on small businesses, especially in the outlying areas of the country.
If the small businessman had unlimited funds, there would be fewer tax problems for him to worry about. He could indulge in investment in multiple corporations, offshore vehicles, sophisticated annuities and capital reorganizations. He could set aside days to confer with tax assessors, supervisors, and valuators of Revenue Canada, locally and in Ottawa, only to find that simple solutions are no longer available.
The small businessman or woman fights survival in an age of technocracy where the majority of politicians do not comprehend the complexity of the laws they pass. Today if you enter into any unusual business deal without advice, you are
Small Business
often in very heavy tax trouble. Getting advice brings the realization that a person involved with small business must have lawyers, C.A.'s and insurance people who specialize in tax laws and that the general practitioner in these fields can no longer provide all the answers. The small businessman finds that soaring professional costs, because of the increased time which now must be spent on these things, have no return.
Above all, the small businessman finds uncertainty. He is asked to make certain decisions with regard to his future and that of his family, to reorganize, to pay out fees, and pay out thousands of dollars for insurance, valuations and trust companies, all essentially costly and nonproductive. He has no guarantee that solutions will work, that the government will agree or that laws mean what they seem to mean, let alone that laws will not radically change in future years.
It is far easier in tax planning for him to remain with as simple a structure as possible and to sacrifice tomorrow's future tax advantage for today's uncertainty. So he puts off adding that addition to the factory. He puts off buying that piece of equipment which would employ four or five more people. He decides it is just too complicated, and his business stays the size it is. A company which is not dreaming and growing begins to fall back, and hon. members know the end of that story.
In spite of the fact that a number of brilliant specialists, in government and in the professions, revel in their ability to think of long words and legalese, the majority of tax advisers as well as Revenue Canada and the Department of Finance would prefer a simpler and more comprehensible law. The entire act should be rewritten so that it can be comprehended by the taxpayer. I am afraid that the laws today are framed in ambiguity and absurdity, which will continue to confound both judges and practitioners until corrected.
From the point of view of small business the administration of tax laws has become as critical as the laws themselves. Solutions have been suggested continually by the joint Bar-CICA taxation committee and organizations of business, but there seems to be no outward indication that the problems are being dealt with. Instead of leadership, I am afraid we have musical chairs. We have had Mr. Benson, the Minister of Industry, Trade and Commerce (Mr. Chretien), Mr. Cote, the hon. member for Windsor West (Mr. Gray), the hon. member for York-Sear borough (Mr. Stanbury), the Minister of Justice (Mr. Basford), and the Minister of Manpower and Immigration (Mr. Cullen); and now, with all due respect, perhaps it will be different because we have a lady, the Minister of National Revenue (Miss Begin).
Whether the problems are philosophical or whether there are problems in communications, lack of policy is critical at this point. I only hope that the government will begin to see that two things are needed. The first is a change of attitude within the tax department, and the second is an over-all long range policy for small business.


Some hon. Members:: Hear, hear!

May 30, 1977
Small Business


Jean Elizabeth Pigott: I am going to end on a hopeful note. In April, just a month or two ago, the Minister of State (Small Business) (Mr. Marchand) spoke to the western regional newspapers' annual meeting at Banff, and in that speech he said:
I intend to do what I can to get government off the backs of small entrepreneurs, so that they can get on with running their businesses and making a profit. Profit is not a dirty word with the federal government, and small business is too important not to get a fair shake and a fair share from Ottawa.
Those are wonderful words. I urge the minister and his colleagues to make that statement a reality.


Hon. Alvin Hamilton (Qu'Appelle-Moose Mountain):: Mr. Speaker, I have listened to the debate from the very beginning today on this peculiarly opportune motion by the opposition relating to small business, and I do not think any person listening and wondering as I have been today would hesitate in saying that the latter part of the remarks of the hon. member for Ottawa-Carleton (Mrs. Pigott) put the finger on the solutions more succinctly and aptly than any other speeches made today.


Some hon. Members:: Hear, hear!


Francis Alvin George Hamilton: One of the
weakest parts of the policy making of all parties in this House for 30 years has been in the field of small business, and this motion today, which focuses on this question, does a great service. There is no question that despite the federal government and all the provincial governments this is still primarily a private enterprise country. Over 50 per cent of the labour force of this country works for incorporated small businesses, and an additional percentage-the figure we never know for sure- works for unincorporated small businesses. We have that amount of the labour force working in incorporated or unincorporated small businesses-it is well over half-and we have this combination of inflation and unemployment which the economists do not know how to resolve because, according to them, it has never happened before.
The economists know nothing about history. The only thing they ever learn is what they are told by their economics professors at university. They think all wisdom came from Adam Smith, Ricardo and perhaps Keynes and, if they are "with it", from Galbraith. The fact is that economists do not know the first thing about the problems of inflation and unemployment when they arise at the same time. These subjects are so important that we cannot leave them to these people who look at the world through a long pipe.
It is obvious that the government is willing to help small business, but it is equally obvious that the government does not know how to do it. The answer, which I think was suggested better than anybody else by the hon. member for Ottawa-Carleton, is that taxation is the key. Our taxation system is based on the philosophy that you have to be big to be good and that the only thing that works is economy of scale. That is what it says in the economics textbook.
The agricultural field is a small business field where literally 95 per cent of the operations are owner managed. The greatest growth in Canada since the war has been in the field of

agriculture. Whereas growth across the country has averaged 2'k to 3 per cent, agriculture has maintained a growth rate of over 7 per cent.
The government under Mr. Pearson collected all the brains in the economic field from government, universities and private business, and all agreed that in Canada there were three times too many farmers and that the way to get efficiency was to reduce the number to one-third. All these economists agreed there was too much land in production and that the thing to do was to reduce the productive land in the prairies, the great agricultural area of Canada, to half. That was true not only in connection with farms. They had the same attitude toward small business-that there were too many of them and that we should have big business.
Every speaker on this side of the House today has brought into his remarks the characteristic of government tax law- that everything is in favour of largeness. In the case of agriculture we have the Vulcan study in Alberta and the Ontario government's study on agriculture which demonstrate beyond any argument that productivity comes at its maximum in these owner-controlled enterprises with two pairs of hands. A man and his wife, a man and his son, a man and his daughter or a man and his hired man, give the highest level of unit productivity. Because the ownership and the management of our farms are usually under one person, we have attained a growth rate in productivity of 7 per cent per year for 30 years when all other business has only averaged 2Vi or 3 per cent. We have the studies to prove this in agriculture, but of course the government does not read such studies.
This government accepts the doctrine of the economists that business has to be big, so the tax law reveals how to get exemptions by adding to cost. The more people you employ, they say, the more you can deduct from income; the more expenses you incur, the more you deduct. As a result, as the hon. member for Ottawa-Carleton (Mrs. Pigott) pointed out the small businessman cannot compete because he cannot hire the accountants, tax advisers and all the other people to figure out ways to use the complicated tax laws to add to the expenses of the company so that it pays less tax. Therefore, the businessman, ipso facto, is discriminated against in the tax burden.
Now I want to say something on the positive side as well, Mr. Speaker. It is not only in agriculture or in the small business enterprise that you get innovation and productivity. Let us examine so-called big industry-the oil and gas industry. We have all heard of Imperial Oil; it is a little subsidiary of Exxon. It gets the credit for discovering Leduc in Alberta in 1947. It was not the big brains of Exxon or Imperial that discovered oil at Leduc. One lonely geologist for years fought the big boys at the top who all believed the same textbook and were wrong. He pleaded with them to look at the reef structures beneath the surface in Alberta. Because this was the last well of all, the companies that had been drilling unsuccessfully in Alberta for 20 years, as a kindness to one of their junior
May 30, 1977

geologists, agreed to put a pipe on the reef field. That was the beginning of the discovery of the 50 billion barrels of oil that have fuelled Canada since. That happened because of one individual, a man who could think and who had the vision you must have to make changes. I think our whole oil and gas industry should be a monument to this man. His name is not known. Even the president of Imperial Oil, Mr. Twaites, who retired two years ago did not know about it. This man's name is forgotten except by old timers in the industry.
Now let us look at farm machinery. We have big companies that produce machinery worldwide. How many of the new improvements put on the cultivators, the ploughs, the combines, the seeders come from the big companies? Almost invariably they come from a farmer who has figured out the answer to a problem. The farmer designs the hydraulic system that makes each of his cultivator teeth stay at the same depth in the soil regardless how hard it is. Individual farmers have figured out the answer to their problems. Usually a local manufacturer tries to produce the item that makes the implement work better. Only then do the big companies come in to buy up the idea and incorporate it in their machinery.
I could go through almost all the types of things used in the productive machinery of the large corporations in the resource field across this country, whether it be mining, oil and gas, farming or the forest industry. Almost invariably it is the man who has to grapple with the problem of handling the big tree on the side of the hill who figures out how to do it. They call these people "hay wire farmers" but these are the men who are giving Canada productivity in the forest industry, the agricultural industry, the mining industry and the oil and gas industry. These are the men who develop machines to crawl across the muskeg. They are not from some foreign country but are Canadians and, I might say, most are from the farm.
This is our genius-the ability to adapt; this is our genius- the ability to work out a solution, both practical and economic. We do not have to back down one step to any nation in the world in translating fundamental scientific and engineering ideas into practical, workable machinery. Our scientists and engineers have not let us down, but there is a tremendous gap between what they do and what scientists and engineers at the government level and at universities do because we have not got the means to translate that into applied operations. Usually it is a farmer or a man working close to nature in the forest or mine who finds out something about these theories-and sometimes even without finding out, produces a new idea.
I should like to wind up my remarks with a few words about opportunity, Mr. Speaker. Never has Canada had a greater opportunity in the area of small business than today. I am not talking about the merchandising field which has been well covered today; I am talking about the small entrepreneur who produces new ideas. It is obvious that over the next 30 years we have to shift from our practice of producing raw materials without consideration for recycling or using renewable forms of raw materials. It is in this field that Canada leads the world.
If we look around to see who has done most to make it possible for us to shift smoothly to cheaper ways of producing
Small Business
heat and energy, we find Canada is in the lead. We owe this to our universities, the National Research Council and the practical people in the field.
A good example is the National Research Council. In Ottawa it developed a vertical windmill that runs silently. All you have to do is put an induction motor on the bottom and plug it into any outlet which will turn those two blades. Because it is in motion, a wind at two miles an hour will reverse that induction motor into a generator. This cheap little $60 motor that you could take off the bottom of your washing machine will transform that two-mile per hour wind into one of 12 miles per hour, giving three or four times more power than your house would need. Obviously it will not work when there is no wind. It produces more power than you need when there is wind but when there is no wind it does not produce enough power.
Who would be better able to produce this than the small Canadian businessman? Yet there are only two Canadian firms producing this windmill because most are only interested in producing large windmills costing $1 million or $2 million that the government will buy. The farmer, or person living on the windy hilltop or beside the lake is interested in buying one for about $3,000 with which to produce power for his home or farm. He can sell the surplus back to Ontario Hydro, Saskatchewan Hydro, B.C. Hydro, or even the Hydro Commission in Nova Scotia. Farmers understand this, because 40 years ago they all used windmills. When hydro came along and gave the farmers an alternative to the noisy, straight line propeller-driven windmills, people in rural communities began using hydro power. On windy days farmers could sell their surplus power to hydro. If the wind dropped, hydro could turn on one of its water generating plants to provide power until such time as the wind picked up again. In this way, hydro could stand by with extra generating facilities for a calm day.
This proposal could apply to between 50 per cent and 60 per cent of all Canada. I could apply to much of Quebec, parts of Ontario, certainly those communities next to lakes and rivers, and to all of the west. In the west we have more wind then you can shake a stick at. This sort of power could be cheaper than conventionally generated power, but big business will not build the facilities. It is interested in selling the machinery it is already producing.
What programs are there in Canada for encouraging small business to become involved in this enterprise? The design work has been done and prototypes of the equipment are in place. One piece of equipment has been running for years on top of the National Research Council building. Another piece has been operating for the last two years a mile or so west of Regina. The demonstration period is over. The equipment has been brought back to Ottawa. Why can we not institute a positive policy whereby Canadian business will be encouraged to produce such equipment? It is simple to reproduce. Let us make it available to the half million, or even two million homes and farmers who could use it in this country-I am not sure

May 30, 1977
Small Business
what the number is. But you can only do it if you accept the sort of proposal the hon. member for Ottawa-Carleton (Mrs. Piggott) made, namely give to small business some of the advantages you give to big business. Let us give small business a tax write-off. Let us give them some power of leverage, which involves part of the cost of equity and part of the cost of financing. Mr. Speaker, we lend farmers hundreds of millions of dollars and lose nothing. Farm credit is amazing. No business can meet the credit rating of a farmer on repayment. The same would hold true with regard to power generating equipment.
Second, I raise another farm-related subject, methane production. People have been producing methane for lighting and heating their homes for 6,000 years. Methane is produced mainly in warm countries. Why can we not produce it in a cold country? It is produced in universities, but I have seen only one farmer using it full time. Why cannot we encourage methane production, especially on the farm? If a farmer can raise hogs or cattle and thereby make $10,000 a year, I suggest he could make $20,000 profit with the methane produced from those animals. If he removes the methane from the animal waste, he can increase the value of its fertilizer component fourfold.
Since one ordinary herd in western Canada could produce enough methane to heat four homes, I should think the government should consider giving tax advantages to encourage methane production. They can produce methane in universities, and methane is used in a project in southern Manitoba. Of course, someone has to keep track of costs. A farmer must know what it costs him to produce methane. He, himself, will need to do much of the work, because help on the farm is hard to come by. I would think it would be a good idea to give some incentive for the production of methane.
As well, we could use the protein content of waste material. I read an article the other day saying that 21 cities in the United States are using their garbage to make money. If we could only use the protein contained in animal waste on North American farms, my God, we could generate hundreds of millions of dollars of income. The figures are in the scientific records, and they show that one ton of cow manure-if I may mention it in this august place-is worth about $3 if it is just dumped on the land. If you take the methane out, you increase its value as fertilizer-and have the benefit of the use of the methane-to $30 a ton. That same ton of manure, if it is recycled by chemical means and turned into absolutely pure cattle food meeting all the standards of the FDA, the Canadian Department of Agriculture, is worth about $140 a ton. Mr. Speaker, such enterprises ought to be under way in Canada in 500 places, and all could be making a profit. All should be paying tax on that profit. And only small business can do it, because only small business people can handle, say, the 50 tons of manure a day involved in the operation.
I tell the House all this to show that private enterprise is not dead. Private enterprise has a tremendous future. If the government thinks private enterprise consists only of very large firms and tailors our tax laws to suit these enterprises, that

future cannot be ours. The men who guide the destinies of this government and believe that bigger is better on the farm, better in industry and better in merchandising are dead wrong. I believe the task force report of 1969 was dead wrong. I believe the report was monstrous and did an injustice not only to the producers of Canada but to those who want the food they produce. Yet we are ruled by a government dedicated to the proposition that we must reduce the number of farmers, and get rid of small businessmen and small farmers to boot. I say without hesitation that we are right to criticize the government for not acting as quickly as possible on the question of small business.


Hon. Marcel Lessard (Minister of Regional Economic Expansion):: Mr. Speaker, in the remaining few minutes, I would like to comment this evening on some statements that were made today. I have had of course an opportunity to look at what was said by some members here about the federal government's small business policy. Of course they enjoyed referring to what should have been done rather than what has been done. It is quite normal that the opposition criticize the government, especially of course on allotted days.
But if we examine the subject of today's debate and the wording of the non-confidence motion, I suggest we find little there of real substance. The hon. member for High Park-Humber Valley (Mr. Jelinek), who was responsible for today's debate, did not deem fit to remain very long in this House to hear what his colleagues had to say, or what other opposition members would add to his remarks. I submit, Mr. Speaker, that he did not put forward proposals that could bring any change for the small business community.
Mr. Speaker, I would like to differentiate as far as small businesses are concerned. There are two kinds of firms in my view: Those that produce goods as such, and they alone add real value. On the other hand, there are firms that deal in trade as such, and they also are headed by businessmen. The latter of course are needed, and I recognize the value of their services to the community, but there is a basic difference in that they add no value as such to the goods they handle. They add to the cost, of course, because their services in warehousing and merchandizing goods made by the other sector, the manufacturing sector, entails costs, and those costs are passed on to the consumer.
Admittedly, their services are needed. But there is a difference, Mr. Speaker, because what is adding actual value to the goods is the small processing, manufacturing industry in Canada. That is the one we must help the most. Of course, we need the one that is active in the commercial aspect of business, but it can easily take off and prosper when the market and the demand exist, when the consumers exist and they have the money to spend; but, with production, the matter is much more complex, Mr. Speaker, because it requires initiatives; the risks are greater, it takes more capital and
May 30, 1977

technological know-how. And that is not easily found everywhere.
That is why the government must, through its policy, preferably encourage those people who are in the manufacturing and processing industry. That is why we have a plethora of government measures, under the Departments of Industry, Trade and Commerce, of Finance, and ours, the Department of Regional Economic Expansion, and also the new one entrusted to the hon. member for Kamploops-Cariboo (Mr. Marchand), Minister of State for Small Business. Those are four government departments which help small businesses specially, among other responsibilities, of course.
Take the Department of Regional Economic Expansion, for instance: 80 per cent of all companies we help are small manufacturing or processing industries, which get financial assistance either through direct grants or loans, or loan guarantees to help them start out in business, to expand or even modernize their operations. The government has several programs. There is the technological research program, which provides various forms of help from the Department of Industry, Trade and Commerce. When I hear hon. members of the opposition say those are not good enough, I would appreciate their being much more specific about what new forms of assistance there could be. They talk of help through tax exemptions: we have had, for years, what is known as investment tax credit.
Small businesses, large businesses and even farms are eligible for tax exemption, assistance plan or tax credit which is available to help them in their investments. I cannot understand how members of the opposition can stand up in the House and state categorically that the federal government does not help small business. We also consult small businessmen, we have consultations and meetings with them, and they tell us what they need, what is wrong with the present system, what they would like to see changed in our laws and regulations. For instance they told us that they would like to see better consistency between the various programs of the government, a reduction in the number of forms and reports they have to fill in, and we are doing that now, because it meets their needs. We have made funds available to them.
There is the Small Businesses Loans Act, research is available to them, there is also assistance to prospection for foreign markets, one federal agency gives them credit guarantees and export credits. Here in Ottawa, we have devised a variety of schemes offered to all businesses, small, medium or large, to help them do business and I cannot see why it should be necessary to add any others as it has been suggested. Our economic system is going through a difficult time. The demand is not as strong as one would hope, because in Canada during the last few years, due to a feeling of uncertainty, people have chosen to save more, and reports that we regularly receive each month indicate that Canadian savings are highest ever.
Adjournment Debate
One can therefore predict, Mr. Speaker, that with the return of a certain degree of confidence within the public at large, purchases will increase, the general demand will grow and manufacturing businesses will regain those customers they had lost, and this will necessarily put them in a position to make greater profits.
One could elaborate on this, Mr. Speaker, but I would rather say a word about what our department has been doing lately particularly towards helping small businesses. We had been told that there were a lot of talented people in certain areas, numerous individuals with no lack of initiative who had excellent projects which they could not launch because they did not have the necessary funds with which to get those small units started. During the past few months our department started a special experimental program designed to assist the kinds of entrepreneurs who did not have the wherewithal to get their small businesses off the ground. We have offered them direct subsidies, additional financing and some technical assistance. This program seems to be making a headway and encountering a lot of success particularly in New Brunswick where it has literally been extended to all that province. Mr. Speaker, within the coming months I am definitely planning on trying this program in other parts of Canada, in other provinces, because this is a way of helping those small entrepreneurs rich in ideas and creativity who have been able to determine certain needs in the market and who have a keen feeling for innovation, mainly in order that they be able to create new products, new types of goods which will answer the needs of consumers, be they Canadian or foreign consumers likely to import their products.
I would like to conclude by saying that the government is well aware of the need of small businesses for constant support. We are ready to consider any serious and substantial suggestion likely to help small businesses, but it is certainly not during a debate of this type, it is surely not by reading the speeches made in this House that small businesses will feel reassured because even though the speeches made today contain many ideas, they contain even more contradictions. I do not think that this is the way to reassure small businesses.
Mr. Speaker, I see that your patience is at an end. I shall not abuse it any longer except to say that the opposition did not necessarily gain anything today by attacking the small businesses assistance policy of the government. I believe that results speak for themselves. The government has the support of small businesses and small businessmen and this is why it will long continue to have the confidence of Canadians.


The Acting Speaker (Mr. Ethier):: Order, please. It being ten o'clock, it is my duty to inform the House that under the provisions of Standing Order 58(11), proceedings on the motion of the hon. member for High Park-Humber Valley (Mr. Jelinek) have expired.

May 30, 1977
Adjournment Debate



PROCEEDINGS ON ADJOURNMENT MOTION

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

Donald Frank Mazankowski: Mr. Speaker, on May 24 in reply to a question I directed to the Minister of Transport (Mr. Lang) he confirmed in his own indirect way that his department was not receiving revenues on a monthly basis from Host Rent-a-Car at the Quebec City, Dorval and Mirabel airports due to the fact that Host, to quote the minister, "has not yet received a licence from the province of Quebec". That is reported at page 5880 of Hansard. The car rental concession contracts have been in effect since November 1, 1976 but in the case of Host at these airports no revenue has been coming in. To go back to this fiasco of the ministry's handling of car rental concessions at international airports, we note that included in the tender package which the departmental officials gave the applicants at the time tenders were called there was a section dealing with terms and conditions which included, under "Licences, permits, etc." the following:
The lessee shall procure and maintain at the cost and expense of the lessee such licences, permits or approvals from federal, provincial, municipal or other government authorities and such private permits as may be necessary to enable the lessee to furnish the services and to conduct the operations provided for in this agreement.
The car rental concession operators at the departments airports in Quebec must by law obtain a licence from the Quebec government in order to operate their cars outside the confines of the airports. I am informed that Host Rent-a-Car applied to the Quebec transport board for a licence in January of 1977. It is interesting to note that Host was awarded the tender in October, 1976. On June 6, I am told, there will be a hearing or a roll-call at which a date will be decided upon to hear Host's application. It has been challenged by several existing operators at the Quebec airports on the basis that the entry of Host into this limited market will increase competition unduly.
Several questions arise as a result of this particular contract. First, why did Host apply so late for the Quebec licence? Assuming the Host contract was signed and is to be valid for three years, one must ask whether the department's legal branch was aware that paragraph 13 of the agreement which I quoted earlier was not complied with. One might ask whether the legal branch was aware of all the activities in this area undertaken by the department's marketing branch.
Assuming the contract was not signed, which one would doubt, one must ask what is happening in the present situation. We know that Host, which is ranked third at all airports where it won the tender, came in first place in the domestic category
and in third place in the overall ranking. The three divisions are open, domestic and local. It now sits empty at these airports in Quebec. Tilden, which is now in fourth place, sits beside an empty counter and it is no secret than Tilden covets third place at the Quebec airports. Since the minister announced the details of the new airport car rental policy on June 13 the situation has been a total fiasco. It is certainly indicative of the incompetent and shabby manner in which the government has dealt with other issues. It has certainly not handled this policy in a competent way.
A number of questions have been raised in the House by supporters of the government as to the manner in which these particular contracts are awarded and administered. There was an appeal from the Committee for an Independent Canada, for example.


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


Mr. Maurice Dupras (Parliamentary Secretary to Minister of Energy, Mines and Resources):: Mr. Speaker, on listening to the question from my colleague, the hon. member for Vegreville (Mr. Mazankowski), I think he has answered in part his own question by explaining in detail the regulations for obtaining a licence to operate a rent-a-car business in the province of Quebec. He asked why the application to the Quebec Board was made in February and not in January. This question could be put to Host Rent-a-Car because they should have known, before submitting their application to the federal agency, that they should go to the provincial transport commission to obtain a permit from the province of Quebec. They did not do that, it seems, before February.


Donald Frank Mazankowski: Why was the contract awarded, then?


Maurice Dupras: It is up to the applicant to make sure he has such a permit.


Donald Frank Mazankowski: It is up to the Department of Transport.


Maurice Dupras: It is not up to the transport board or the department to ascertain whether an applicant has a permit or not. It is up to the applicant to make sure he has such a permit. They failed to do that before February. The hon. member has answered his question. Host Rent-a-Car have been unable to obtain a licence as yet, but nevertheless they have executed their concession agreements for these airports. As a result, they are responsible for the payment of all concession fees.


Donald Frank Mazankowski: What was the Department of Transport doing all this time?


Maurice Dupras: They are also reponsible for the rentals required by the terms of these agreements. Actions are being taken to ensure that Host Rent-a-Car complies with these agreements.


Donald Frank Mazankowski: Mr. Speaker, I rise on a point of order.
[The Acting Speaker (Mr. Ethier).]
May 30, 1977


The Acting Speaker (Mr. Ethier):: I regret to inform any hon. member that at this time no point of order can be accepted.


Donald Frank Mazankowski: I wanted to indicate to the House that I was only allowed five minutes and 48 seconds to present my
case.


The Acting Speaker (Mr. Ethier):: Order, please. The hon. member for Saskatoon-Biggar (Mr. Hnatyshyn).


ATOMIC ENERGY OF CANADA LIMITED-STATEMENT CONCERNING ESTABLISHMENT OF PLANT TO PRODUCE PLUTONIUM-GOVERNMENT ACTION
Ramon John Hnatyshyn: Mr. Speaker, in the seven minutes I have available to me-


Donald Frank Mazankowski: And not five minutes and 48 seconds.


Ramon John Hnatyshyn: -I wanted to raise a question this evening with respect to a rather strange difference of opinion, according to reports which we are receiving both in the House and outside the House, which exists between Atomic Energy of Canada, Ltd. and the government of Canada. Today I asked a question of the Prime Minister (Mr. Trudeau) with respect to statements by senior officials of AECL. Questions were raised by the hon. member for Northumberland-Durham (Mr. Lawrence) and questions were raised in the course of the press conference which the Prime Minister holds on a weekly basis. The Prime Minister in his answers appears to take the position that no commitment was made with respect to the construction of a plutonium reprocessing plant in Ontario.
I would like to refer to the debate on the question which was raised by my colleague on May 26, 1977, as reported in Hansard at page 5958, which reads:
In view of the previously expressed government policy, expressed by the Prime Minister himself in this House as late as May 17 last, relating to the undesirability of having in Canada or anywhere in the world plutonium reprocessing plants, I ask, why is the government permitting AECL, a Crown corporation, to engage in an expensive study for the building of a $1.5 billion plutonium extraction plant in Ontario?
The Prime Minister in his response indicated, in effect, that the matter was still under consideration; but he was pressed by the hon. member for Northumberland-Durham who quoted the Prime Minister as saying on May 12 last:
"Much of our safeguards position centres around the undesirability of having reprocessing plants. President Carter was stating the view we had already stated many times".
That is the Prime Minister's statement quoted by the hon. member for Northumberland-Durham. Subsequently he was asked by the same hon. member whether or not the news we hear about the plant are true, and the Prime Minister said he was going to check with the Minister of Energy, Mines and Resources (Mr. Gillespie) to determine exactly what was the situation.
Adjournment Debate
At the press conference later in the day the Prime Minister was asked the following question by one of the participants:
You seemed a bit taken aback in the Commons today when you were asked about reprocessing of nuclear wastes in Ontario. Have you now got clarificaton and can you now give a clear statement that there will not be reprocessing of nuclear material and the making of plutonium in Ontario?
The Prime Minister sloughed off that question by simply saying there was misinformation, that the question was not an accurate statement of the facts and that the matter is still under consideration.
After all this has taken place, we have the unusual prospect of senior officials of AECL coming forward at a press conference called by themselves and stating that they think it would be inappropriate to draw plans for a pilot plutonium plant despite government opposition. As quoted at this press conference the officials said:
... this policy was "out of kilter" with the need to extend uranium resources by reclycling spent fuel into plutonium, which could then be used with thorium to generate more power in existing Canadian reactors.
I go along with my colleague, the hon. member for Northumberland-Durham, that there seems to be a distinct contradiction between the position taken by AECL and taken by the government both inside and outside the House.
What I would like the parliamentary secretary to tell us tonight is precisely what is the government's policy with respect to this matter, why is there a contradiction, and what is the responsibility of the minister with respect to the position taken by AECL, a Crown corporation which has been in the news quite a bit recently with respect to unilateral decisionmaking, without cabinet or ministerial consultation.
I need only talk about the question of the payment of agent's fees in foreign countries for the sale of CANDU reactors. So far as I can make out, the cabinet was completely oblivious to what was going on, not considering it to be a type of policy worthy of cabinet consideration. That seems to be the tendency in this government. They think that by virtue of the delegation of responsibilities to Crown corporations in important policy areas they are somehow absolved of any responsibility on matters of great importance to present and future generations of Canadians.
In my view this is an untenable position for the government to take. If they are not on top of the issues, they are simply being derelict in their duties. I think the parliamentary secretary has the responsibility to tell us whether these officials in the Crown corporations consult the government on policy decisions or whether this government simply allows them to make our nuclear policy without any responsibility or accountability. We know what the examples have been when the AECL has come before the Standing Committee on Public Accounts to answer questions regarding what has happened in their foreign transactions involving CANDU reactors. They have not co-operated as they should have in a committee of the House. I think the parliamentary secretary should give us some explanation of what the relationship is between the minister and officials of AECL with respect to policy in this important area.

May 30, 1977
Adjournment Debate


Maurice Dupras: Mr. Speaker, that is exactly what I will attempt to do. I will attempt to give my hon. colleague an answer which I hope will satisfy him.
AECL held a background briefing for the press on May 27 for the purpose of releasing a document commenting on the brief presented earlier that day by the Coalition for Nuclear Responsibility to the Minister of Energy, Mines and Resources (Mr. Gillespie). At the AECL briefing questions were asked regarding news reports of the February 28 AECL seminar for federal government officials. To clarify the position, the following facts were made clear to the reporters present.
The "once through" cycle in today's CANDU reactors uses natural uranium which is not a weapons usable material. When the fuel is taken out of the reactor, it contains plutonium which is a weapons usable material, but this is widely dispersed throughout the spent fuel, and in the dilute form it presents no risk of diversion and is in any event so radioactive that theft is impossible.
It has always been recognized that uranium supplies are limited and that, if full use of the fission process is to be made, other cycles than "once through" must be employed. Most of the countries with advanced nuclear programs therefore have embarked on programs to extract the plutonium from used fuel and re-use it in a fast reactor; for example, one which burns plutonium and at the same time generates more plutonium which can be extracted and made into more fuel. The United States has now deferred further work on the commercial development of this system on the ground that the existence of weapons usable material in quantity and in numerous places could lead to misuse for weapons purposes.
Canada has no need ever to develop a plutonium fuelled fast breeder reactor, as the CANDU reactor in its present cycle	I
makes more efficient use of uranium than the other types of	I
reactors in use and also has the ability to utilize a thorium	|
cycle with a near breeder capability. Thorium is even more abundant than uranium in the earth's crust. It cannot be used directly for fuel as uranium is, but it can be made into a fuel by putting it into a reactor along with a few per cent of enriched uranium or plutonium which then energizes the thorium to make it a nuclear fuel.
There is a misconception that the U.S. government has withdrawn all support for fuel cycle development. At his press conference of April 7, 1977, President Carter laid down the following policy:
We will continue research and development, but shift away from plutonium, defer dependence on the breeder reactor for commercial use.
We will direct funding of U.S. nuclear research and development programs to accelerate our research into alternative nuclear fuel cycles which do not involve direct access to materials that can be used for nuclear weapons.
One such cycle which is attracting the attention of the U.S. is the CANDU thorium cycle. We expect to be working closely with the U.S. to examine ways of exploiting the benefits of this new resource, thorium, while minimizing the potential for diversion of weapons usable material.
I hope I have reassured the hon. member on the use of plutonium and thorium.


The Acting Speaker (Mr. Ethier):: Order, please. The motion to adjourn the House is now deemed to have been adopted. Accordingly, this House stands adjourned until tomorrow at 11 a.m.
Motion agreed to and the House adjourned at 10.20 p.m.


Ramon John Hnatyshyn: Regretfully, no.


Tuesday, May 31, 1977