1977-02-03

USE OF MACE CRAFTED AFTER FIRE OF 1916

['Agreed.']
Mr. Speaker:: With appropriate safeguards of the time set aside for proceedings pursuant to Standing Order 43 and following that for Oral Questions, I would like to indicate to the House two things.
Hon. members will notice at once that the mace in use today is not the mace which ordinarily rests on the table. The reason for that is a decision I made today to resume a tradition which was adhered to, if not initiated, by my very distinguished predecessor, Mr. Speaker Michener. The mace which is now on the table was crafted very quickly after the fire of 1916 so that parliament could continue to sit, the mace as well as the chamber having been destroyed in the fire 61 years ago today.
This mace was crafted so that the Parliament of Canada could sit elsewhere while this chamber was being restored, and that took some four years. During the tenure of Mr. Speaker Michener, this mace was used on the anniversary of that fire. It seemed to me to be a good idea to return to that practice, and so once a year it is hoped that the mace which was crafted for that purpose will be used and accepted by all hon. members on the anniversary of that fire as the symbol of authority, as it was used during those years when parliament had to sit off these premises.



Mr. Speaker:: I understand that there is a disposition, because of the great significance of the 6th day of this month, being the twenty-fifth anniversary of Her Majesty's succession to the throne, to proceed immediately with the motion standing under government notices of motions in the name of the right hon. Prime Minister (Mr. Trudeau) and that motion reads as follows:
Right Hon. P. E. Trudeau (Prime Minister), seconded by the Leader of the Opposition (Mr. Clark) moves:
That an humble Address be presented to Her Majesty the Queen in the following words:
To the Queen's most Excellent Majesty:
Most Gracious Sovereign:
We, Your Majesty's loyal and dutiful subjects, the House of Commons of Canada in Parliament assembled, beg to offer our sincere congratulations on the happy completion of the twenty-fifth year of Your reign.
The People of Canada have often been honoured to welcome Your Majesty and other members of the Royal Family to our land during Your reign and have witnessed directly Your inspiring example of devotion to duty and unselfish labour on behalf of the welfare of Your People in this country and in the other nations of the Commonwealth.
We trust that Your gracious and peaceful reign many continue for many years and that Divine Providence will preserve Your Majesty in health, in happiness and in the affectionate loyalty of Your People.
That the said Address be engrossed; and
That a Message be sent to the Senate informing their Honours that this House has adopted the said Address and requesting their Honours to unite with this House in the said Address by filling up the blanks with the words, "the Senate and".
Is it the pleasure of the House to adopt the said motion?


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.
[Editor's Note: Whereupon Members of the House rose and sang "God Save the Queen" and "O'Canada".]


Mr. Jack Marshall (Humber-St. George's-St. Barbe):: Mr. Speaker, I wish to move a motion under Standing Order 43 on a matter of urgent and pressing necessity. The high unemployment in the province of Newfoundland is threatened even further by operational difficulties being experienced at the Labrador linerboard mill at Stephenville, which threatens direct and indirect employment and lay-offs of some 2,000 citizens. The urgent nature of the problem calls for federal government assistance with marketing, and help with rehabilitation of the operation.
I therefore move, seconded by the hon. member for St. John's West (Mr. Crosbie):
That this House orders that this serious problem be considered as urgent and that consultation be arranged between the federal and provincial departments
80008 - 31/4

February 3, 1977
Public Service
concerned to prevent hardships that are already evident by consistent downtime from becoming worse in the very near future.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


NATIONAL HOLIDAYS
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, under the provisions of Standing Order 43 I move, seconded by the hon. member for Nanaimo-Cowichan-The Islands (Mr. Douglas):
That this House proceed, on the calling of the Orders of the Day tomorrow, to the second reading of Bill C-30, so that the said bill can be passed in time to provide for the observance of National Heritage Day on Monday, the twenty-first day of this month.


Mr. Speaker:: Such a motion can be presented to the House only with its unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


PUBLIC SERVICE
Mr. Walter Baker (Grenville-Carleton):: Mr. Speaker, I rise on a point of urgent and pressing necessity. Given reports that at least three of the people named on the government's so-called enemies list have apparently had their careers seriously jeopardized, and since they have never been given an opportunity to defend themselves in accordance with the Pearson guidelines, I move, seconded by the hon. member for St. John's East (Mr. McGrath):
That this House advise the Prime Minister of his responsibility to protect basic civil liberties, and that it direct him to contact those named on the list and provide to them evidence for their inclusion on the list and an opportunity to defend themselves.


Mr. Speaker:: Presentation of such motion requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: No.
(Mr. Marshall.]


REQUEST FOR TABLING OF MATERIAL USED IN BLACKLISTING EMPLOYEES-MOTION UNDER S O. 43
Mr. F. Oberle (Prince George-Peace River):: I rise on a matter of urgent and pressing necessity pursuant to the provisions of Standing Order 43. Given the fact that government security forces may have obtained some of the so-called enemies list information illegally, that the list was widely circulated to a number of ministers and an unknown number of senior civil servants, and that the existence of such a list and its circulation represents a form of McCarthyism abhorrent to Canadian democracy. I therefore move, seconded by the hon. member for Central Nova (Mr. MacKay):
That the Solicitor General lay before this House, or any committee thereof, any data or material which was used to back up the charges of subversion against 24 Canadians, and evidence that led to arbitrary inclusion or grouping of these people on the EPO list.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


COMBINES
Mr. Cyril Symes (Sault Ste. Marie):: Mr. Speaker, I rise under the provisions of Standing Order 43. In view of the likelihood that telephone subscribers have been forced to pay telephone rates that are too high because of transfer pricing between Bell Canada and Northern Telecom which resulted in Northern Telecom having an after tax return on net investment of 59 per cent in 1975, which was not taken into account in assessing Bell's financial situation when Bell applied for rate increases, and in view of the announcement today that the Restrictive Trade Practices Commission has called into question Bell's relationship with Northern Telecom, I move, seconded by the hon. member for Cape Breton-East Richmond (Mr. Hogan):
That the Commission hold public hearings on this matter and that Bell's rate increase application be suspended until these hearings are completed.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.
February 3, 1977


CANADIAN PACIFIC RAILWAY
Mr. Hal Herbert (Vaudreuil):: Mr. Speaker, under Standing Order 43 I will propose a motion of obvious urgency. In view of CPR's intention to drastically reduce the frequency of service along its commuter line in the Montreal area, and of the very real need of commuters in the Vaudreuil-Rigaud area; in view of the government of Quebec study on the province's involvement in urban transportation and of CNR's decision to postpone its projected reduction of services, pending the Quebec study up to July 1; and in view of this government's own recognition of the need for improved urban transportation in this country, 1 move, seconded by the member for Lachine-Lakeshore (Mr. Blaker):
That the Minister of Transport personally intervene on behalf of all the commuters in the Montreal area and solicit from CPR a postponement of its intention to reduce the frequency of service until the province of Quebec indicates its policy on or before July 1.


Mr. Speaker:: Order, please. The presentation of such motion pursuant to Standing Order 43 requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


An hon. Member:: The Tories said no.


Walter David Baker: You people on the Liberal side said no.


Mr. Paproski:: Mr. Speaker, I rise on a point of order. I do not think anybody said no.


Mr. Speaker:: Order, please. I distinctly heard a "no" coming from the general region on my left.


Some hon. Members:: Oh, oh!


MANPOWER
Mr. Howard Johnston (Okanagan-Kootenay):: Mr. Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity having to do with the allocation of funds under the new Canada Works program in the province of British Columbia. Of the nine allocations exceeding $300,000 seven have gone to constituencies currently represented by members on the government side. As I know the minister responsible for this program would not want it assumed that the election of Liberals had a debilitating effect on their constituencies, I move, seconded by the hon. member for Vancouver Quadra (Mr. Clarke):
Offshore Resources
That this House urge the Minister of Manpower and Immigration to reconsider the formula that has produced this astonishing result.


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


Some hon. Members:: Agreed.
Some hon.Members: No.


RESOURCES
Mr. John C. Crosbie (St. John's West):: Mr. Speaker, pursuant to the provisions of Standing Order 43 I request the unanimous consent of the House to move a motion on a matter of urgent and pressing necessity.
In view of the statements of the Minister of Energy, Mines and Resources (Mr. Gillespie) that EastCan Exploration Limited of Calgary is not prepared to go ahead with an exploration program in the waters off the Labrador coast this year because of the present dispute between Canada and Newfoundland over ownership and jurisdiction over offshore mineral resources, despite this area being the current hot-spot for exploration off the east coast, and since the minister states that EastCan is in dispute with the government of Newfoundland over proposed regulations by Newfoundland for the offshore area and that the minister intends to intervene to attempt to settle the alleged dispute, I move, seconded by the hon. member for Humber-St. George's-St. Barbe (Mr. Marshall) the following motion:
That this House direct the Minister of Energy, Mines and Resources to cease intervening in the internal affairs of the government of the province of Newfoundland, cease and desist from breaching confidentiality of information given him by oil and gas companies and ensure that exploration continue in the Labrador offshore area by withdrawing claim by the government of Canada to ownership and control over the mineral resources of the Continental Shelf lying off the coast of Newfoundland and Labrador, confirming the province's ownership and thus removing any obstacles to exploration in that area during 1977.


Mr. Speaker:: Such a motion can be presented for debate only with the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


Mr. Speaker:: Order, please. The question period will conclude at eight minutes past three.

February 3, 1977
Oral Questions



ORAL QUESTION PERIOD


Frank Oberle: Mr. Speaker, my question is for the Solicitor General. Can he tell the House whether his view of the matter relating to the extra parliamentary opposition list coincides with that of the Prime Minister when he said to the House yesterday that the evidence that was before the solicitor general at the time was obtained through the normal operation of the security services of the RCMP and, further, can the Solicitor General cause an inquiry into the allegations which have been made that such evidence may have been obtained illegally?


Hon. Francis Fox (Solicitor General):: Mr. Speaker, in reply to the first part of the question, I think that in the House yesterday the Prime Minister answered the questions which had then been asked. As for the second part of the question, if the hon. member has some evidence that there was some illegal action in Canada, it is surely his duty to bring the matter to the attention of the authorities. It goes without saying also that he does not have to lay irresponsible charges against the RCMP which has so well served the Canadian people throughout the years. I do not think that his disparagement campaign against the RCMP is in the best interests of the country.


Frank Oberle: Mr. Speaker, I would of course expect the House to recognize that I am making no accusation-


Some hon. Members:: Oh, oh!


Frank Oberle: -but merely seeking information-


Some hon. Members:: Hear, hear!


Frank Oberle: -which so far has not been forthcoming from any source on the other side. I further ask the minister whether he will give the House an indication, assuming it was the RCMP which assembled the evidence used by the then solicitor general-


Some hon. Members:: Oh, oh!


Frank Oberle: -whether the RCMP acted on their own initiative or whether the initiative came from some department of government, in particular that of the solicitor general?


Francis Fox: Mr. Speaker, the hon. member just said that he is making no accusation but he is prepared to resort to insidious references as he has done with regard to the RCMP. The RCMP did not take any part in any illegal entry, as the hon. member for the Toronto area suggested. The report involved has been prepared by the RCMP. Further, it is not govern-

ment policy to intervene in RCMP affairs and give them instructions in the preparation of this kind of report.


REQUEST FOR TABLING OF MATERIAL USED IN BLACKLISTING EMPLOYEES
Frank Oberle: Mr. Speaker, I may of course have made the mistake of considering that the Solicitor General had the kind of authority-


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please. If the hon. member has a supplementary question, will he put it forthwith.


Frank Oberle: Will the Solicitor General undertake to lay before the House or a committee of the House any evidence or material which led to the compilation and circulation of the EPO list. Can he, furthermore, undertake to make a statement to the House in response to widespread reports that extra-legal methods may have been used to assemble the evidence and information which led to the compilation of the EPO list?


Francis Fox: Mr. Speaker, as far as I know the fishing season is not yet opened. Again, perhaps the hon. member will allow me to answer the question. In any event, if I understand correctly, they are not particularly interested in the answers I can give. Perhaps I should have my answers photocopied, put them in a Manila envelope and send them out to the hon. member; he might read them. Mr. Speaker I have nothing to add to the answer I have already given to the hon. member.


PUBLIC SERVICE
Mr.   Elmer. M. MacKay@Central Nova: A supplementary question for the hon. gentleman. Is he in agreement with his colleague, the Minister of Justice, who stated that any investigation into the circumstances affecting those involved in the EPO list is his responsibility, that is, the responsibility of the Solicitor General, and if so has he begun such an investigation to back up assertions by the government that the list has not impugned the reputation or work relationships of any of those on it?


Francis Fox: It has been clearly established on a number of occasions that responsibility for acting on information provided by the then solicitor general rested in the hands of the departments in question.
February 3, 1977


ROYAL CANADIAN MOUNTED POLICE
Mr. Elmer M. MacKay (Central Nova):: I thank the minister for his answer. One further supplementary. Does he have, to date, a scintilla of evidence to indicate that there was any justification for the list? I also want to ask him this: In view of certain unfortunate incidents which have led to a public inquiry in Nova Scotia into RCMP methods in gathering information and also the unfortunate example in Quebec involving the Agence de Presse Libre, is he certain that there were no unusual methods used by the RCMP with respect to this case?


Francis Fox: I am informed that no methods of the type referred to were used in the case. The actions to which the hon. member refers indicate clearly that the mandate of the security service is to act within the limit of the law. Should any case be brought to the attention of the government in which it is shown the law was not adhered to, action would be taken.


THE CANADIAN ECONOMY
Mr. Edward Broadbent (Oshawa-Whitby):: Mr. Speaker, I have a question for the Minister of Finance. Given the persistence of unemployment-the figure is presently in the neighbourhood of 800,000-will the minister give all members an assurance that in the areas both of housing and of municipal capital works the government will soon announce new federal spending programs to stimulate job creation throughout the country?


Hon. Donald S. Macdonald (Minister of Finance):: We have committed ourselves to holding a tight line on additional federal spending. I regret, therefore, that I cannot give the hon. member the assurance he seeks at this time.


John Edward Broadbent: A supplementary to the Prime Minister. Given the attitude of the Minister of Finance, which can best be described as one of benign indifference to the unemployed, and bearing in mind that the Minister of Finance said the other day we might not have a budget until June, and, further, the indication by the Minister of Manpower and Immigration that no further full-employment-oriented programs will be forthcoming from his department, is it the official view of the government that nothing more will be done about unemployment before the next budget?


Right Hon. P. E. Trudeau (Prime Minister):: I find it preposterous that the hon. member should suggest that the attitude of the minister toward unemployment is one of benign indifference. This government has been doing everything it
Oral Questions
possibly can to improve the unemployment situation. But I do not think it will be an exaggeration to say that the hon. member and his party have taken an attitude of open hostility toward the government's fight against inflation.


Some hon. Members:: Hear, hear!


John Edward Broadbent: The Prime Minister failed to tell us about any new programs, so I assume we cannot expect anything before June. Does he believe that with real unemployment running at 25 per cent in Newfoundland and 30 per cent in Cape Breton, and with the prospect of an unemployment rate of more than 10 per cent in Quebec, these people will remain idly by while the government does nothing about this serious problem in the first quarter of the current year?


Mr. Speaker:: Order, please. The question, needless to say, is somewhat argumentative.


UNEMPLOYMENT INSURANCE
[Stage Direction]
Mr. Andr£ Fortin (Lotbiniere): Mr. Speaker, I have a question for the Minister of Manpower and Immigration.
I wrote to him on November 24, 1976.1 wrote to him again on December 10, 1976. On January 24, 1977, I asked him a question on this matter and today I would like to know whether the minister is in a position to give a decision on the case of the 50,000 Quebec workers who so far have been victims of the application of the Unemployment Insurance Act. As a matter of fact, according to the UIC, these people were related to the widespread dispute in the construction industry. Can the minister inform the House on the decisions taken by the UIC in this regard?
Hon. Jack Cullen (Minister of Manpower and Immigration):: Mr. Speaker, the appeal procedures are available to those who feel that the decision taken was incorrect. I would hope that if they feel as strongly as the hon. member seems to indicate, they will follow these appeal procedures, which I think are most informal, very, very fair and easy to come by.


Mr. Fortin:: Mr. Speaker, may I ask a supplementary?
I am very glad to hear the minister say that these workers are in a very comfortable situation but he does not answer my question. I want to know the following: Are there still litigious cases? If I refer to Hansard of the House of Commons, page 2269, the minister himself recognized that several other cases had not been settled by the commission at that time. Is the minister responsible for this commission in a position to tell the House that a decision has been taken on these 325 cases?

February 3, 1977
Oral Questions


Jack Sydney George (Bud) Cullen: The latest information 1 have, Mr. Speaker, is that the backlog of inquiries concerning the dispute was finalized on January 28, 1977 and out of the thousands of cases which were involved there were 325 appeals to the board of referees which have been received and which are currently being processed for presentation.


PUBLIC SERVICE
Walter David Baker: Mr. Speaker, my question is for the Prime Minister. Yesterday the Prime Minister stated, as reported at page 2634 of Hansard:
Mr. Pearson's guidelines, my own and those of this government, stated that if security information collected by police agencies in some way adversely affects the career of any person, that person should be entitled to refute the information, discuss it, contradict it and so on. I repeat that this circumstance did not arise.
The Prime Minister's opinion as to whether or not the circumstance arose at all in this case is not agreed to or not shared by a number of persons on the so-called list that we have been discussing in the House. Consequently, I should like to ask the Prime Minister whether a case by case review has been conducted into the career paths of those persons listed to determine whether they were in fact adversely affected in some way by the circulation of the list.


Pierre Elliott Trudeau: Mr. Speaker, if the hon. member checks my entire answer he will see that I was so informed that persons who were on that list were not adversely affected. By this I meant that a search had been made of the relevant records and that there was no notation against these people that indeed they had been prevented from advancing in any way or been fired. So in that sense my assertion stands; but because of the hon. member's question I will go back and make sure that indeed every record was checked. This is the information that I received.


Walter David Baker: Mr. Speaker, I appreciate the undertaking given by the Prime Minister, but would he take the second step that seems to be necessary in these circumstances? I put it to him that surely the people on this list ought not to have to rely upon a representation made in this House and ought to be able to examine the list for themselves to determine for themselves, in the circumstances, whether or not their careers have been adversely affected. Is the Prime Minister adverse to allowing those people that right, whether or not in his opinion their careers have been adversely affected?


Pierre Elliott Trudeau: Mr. Speaker, I cannot accept the argument of the hon. member. I said yesterday, and I repeat today, that there must be thousands, if not millions, of files with the RCMP concerning many people in Canada and other countries. Until those files become activated in some way and
[Mr. Fortin.)
negatively affect the career of a person, I do not think it is a reasonable or acceptable suggestion to make that everyone check with the RCMP to see whether they have a file on them and, if they do, check what is on the file.


POSSIBILITY OF BREACH OF PEARSON GUIDELINES IN CONNECTION WITH THOSE ON BLACKLIST-REQUEST FOR REPORT
Walter David Baker: A final supplementary question, Mr. Speaker. May I suggest by way of preamble that that seems to offend at least the spirit of the human rights legislation of this government. In any event, may I direct my final question to the President of the Treasury Board. As reported at page 2529 of Hansard the minister gave the House an undertaking to report to us with regard to whether or not he had made inquiries through the Department of Justice to determine whether a breach of the Pearson guidelines occurred with respect to any public servant listed on that list. Is he prepared to indicate to the House whether he has in fact made that investigation?


Hon. Robert K. Andras (President of the Treasury Board):: Mr. Speaker, as I indicated privately to the hon. member the other day, I have taken a preliminary look at the situation. The guidelines were, and quite properly so, issued by the Privy Council office in 1963. There is no mandate for Treasury Board to follow through, even though it is quite obvious that we do have a general, over-all personnel-administrative policy responsibility, but that precise area of potential security is not included therein. Nevertheless, having said that, I have already indicated to the hon. member that some discussions are going on.


BLACKLIST OF EMPLOYEES-REQUEST FOR CLARIFICATION OF PHRASE &quot;SPLIT LOYALTIES&quot;
Mr. Janies A. McGrath (St. John's East):: Mr. Speaker, my question is for the Solicitor General. As reported at page 2435 of Hansard the minister stated that the recommendations of the then solicitor general "were to ensure that the people understood that they could not be in the government of Canada and have split loyalties at the time". Further the minister said, in reply to a question in the House, that differing philosophic orientations or value systems would not constitute the basis upon which the listing occurred. May I ask the minister to explain to the House what he means by "split loyalties?"


Francis Fox: I repeat that what I meant, Mr. Speaker, is that when a civil servant or any other public service employee takes the oath of office, he promises never to divulge the gist of documents. Of course he must realize what he was doing when he took his oath of office. It is as simple as that, Mr. Speaker.
February 3, 1977


ROYAL CANADIAN MOUNTED POLICE
James Aloysius McGrath: A supplementary question, Mr. Speaker. The minister implied in the House that the RCMP had compiled the list on the basis of vital information regarding the release of documents without government authorization. Would the minister explain to the House why the RCMP did not proceed under the Official Secrets Act, rather than electing to choose the McCarthy route?


Francis Fox: Mr. Speaker, hon. members would certainly be well advised to read again the letter which was divulged and made public by their own colleague. This letter did not accuse anybody of anything. Whoever will read it again will realize that, as far as government employees are concerned, the one and only recommendation is that, should there be any doubt about their loyalty, the people in charge should meet them and remind them of their oath of office. Needless to say, people who have taken an oath of office should behave accordingly, even if some of them appear to be sending copies of these documents to members of the opposition who, in turn, do not seem to have any difficulty using them or find anything wrong with receiving them from these people.


James Aloysius McGrath: A final supplementary question, Mr. Speaker. May I ask the minister whether, since he stated in the House at page 2396 of Hansard that the RCMP did proceed on the basis of information which had come into their possession regarding the unauthorized release of documents, he would on his own authority proceed under the Official Secrets Act so that these people on the list would at least have a chance to have their day in court to defend themselves?


Francis Fox: Mr. Speaker, it is once again obvious that the only course which had been recommended by the then solicitor general, who had carried out his duty, that is bring to the attention of his colleagues some doubts in order that the necessary steps might be taken if indicated, was the one and only course open in this case. As a matter of fact, if the hon. member is referring to the RCMP, I must say, as it has already been said in the House, that the solicitor general had then acted on the basis of a report which had been prepared for him by the RCMP and brought to his attention in order that he might take the necessary steps.
Oral Questions


PUBLIC SERVICE
Mr. Ray Hnatyshyn (Saskatoon-Biggar):: Mr. Speaker, my question is directed to the Minister of State for Urban Affairs. I believe he is behind the curtain, so in his absence I should like to direct it to the Secretary of State whose department is one of the departments involved. On January 26 of this year, and again today, the Solicitor General has indicated that the responsibility with respect to the enemies of the government list was that of each government department to use according to their judgment. I ask the Secretary of State to tell the House, as the minister responsible for one of the departments, if he had communicated with the then solicitor general and if he could let us know whether the employees of his department were apprised of the fact that they might be considered security risks? Has the minister informed himself as to just what action was taken at the time, and could he let us in on exactly what was the procedure adopted with those named on the list?


Hon. John Roberts (Secretary of State):: Mr. Speaker, I have no personal knowledge of any such list or of anything that can be remotely described by any reasonable person as such a list. An inquiry has been made within the Department of Secretary of State, but we have been unable to Find any information about anything which the hon. member would refer to as the list.


Ramon John Hnatyshyn: The Acting Prime Minister has acknowledged the existence of a list in his answers, so I do not think it is fitting for the minister to deny the existence of the list.


Some hon. Members:: Oh, oh!


ACTION TAKEN BY MINISTER OF MANPOWER AND IMMIGRATION ON BLACKLIST OF EMPLOYEES
Ramon John Hnatyshyn: I should like to address my question to the Minister of Manpower and Immigration and ask him whether or not he has informed himself with respect to the existence of this list, and if he could tell the House and the people of Canada exactly what procedure was used with respect to departmental officials, whether they were informed with respect to the identity of the people on the list or whether the people on the list were informed of the fact that they were on the security list.


Jack Sydney George (Bud) Cullen: Mr. Speaker, in view of the importance of this matter I did ask my officials to determine if in fact there was any letter or any indication of this nature that had come to the department. I have asked them to check all the files, both departmental and ministerial, and to date I have not been made aware of any such content.
2672

Oral Questions


KNOWLEDGE OF MINISTER OF LABOUR OF BLACKLIST OF EMPLOYEES-POSSIBLE DISCUSSION WITH FORMER SOLICITOR GENERAL
Mr. G. W. Baldwin (Peace River):: Mr. Speaker, I have a question for the Minister of Labour. The Minister of Transport said in answer to an earlier question in the House that he does not recall having received a copy of the letter and the list which has been referred to hand-delivered by the former solicitor general. I would like to ask the Minister of Labour, whose reputation up to the time he was giving this answer was for a memory that is not quite as selective as that of the Minister of Transport so far, whether or not he recalls having received this letter and the hand-delivered list from the then solicitor general and whether he had any discussions-I am not asking for the contents of the discussions-with the solicitor general at the time.


Hon. John C. Munro (Minister of Labour):: Mr. Speaker, quite frankly I have thought about the situation and I have absolutely no recall of it. This is not to say that it did not happen-


Some hon. Members:: Oh, oh!


John Carr Munro: I do not recall having received such a letter nor have I any recall of any conversations involving it. As the hon. member knows, it was some time ago.


Gerald William Baldwin: I was going to ask the President of the Treasury Board a similar question, but he is not here. This situation will wait.


CANADIAN BROADCASTING CORPORATION
Hon. Mitchell Sharp (Eglinton):: Mr. Speaker, I should like to address a question to the Secretary of State concerning the CBC.


Some hon. Members:: Oh, oh!


Mitchell William Sharp: Canadians have been-


Some hon. Members:: Ask it in caucus.


Mr. Speaker:: Order, please. I wonder if I might be permitted to hear the question.


Mitchell William Sharp: Canadians have had reason to be proud of CBC radio, both AM and FM, and recent programming changes have, in my opinion, greatly reduced its reputation which I would like to see restored.


Some hon. Members:: Question.


Mitchell William Sharp: I would, therefore, like to ask the Secretary of State if he would transmit these complaints to the CBC and report to the House on the reaction.


Some hon. Members:: Hear, hear!


John (Moody) Roberts: Yes, Mr. Speaker. I have received a large number of complaints from citizens across Canada. As the hon. member knows, I do not give direction to the CBC in relation to programming, but I have been disturbed by the number and obvious weight of these various complaints. Now that I have the representation of the hon. member, I shall add my own concern and make sure these are brought to the attention of the CBC, and will reply to the hon. member directly.


MANPOWER
Mr. John Rodriguez (Nickel Belt):: Mr. Speaker, in view of the fact that the most serious problem facing the Canadian people at this point is unemployment and the fact that there are over 750,000 Canadians unemployed-


Some hon. Members:: Question.


John R. Rodriguez: -and in view of the fact that there were some 600 to 900 work permits issued in the Sarnia district to citizens of the United States to work on construction projects in the last little while for such jobs as pipefitters, welders, electricians and carpenters, can the minister tell the House why these work permits were issued when there are so many skilled Canadians unemployed in this country?


Jack Sydney George (Bud) Cullen: Mr. Speaker, I think I will have to speak to the hon. member as a guru and tell him that he failed his transcendental meditation course. He is a little loud here today. What we did in that particular area is that these jobs were made available. We advertised across Canada to see if we could get skilled workers to come in. They would not move from areas as near as Toronto, and because this project was creating jobs for thousands of other Canadians it seemed appropriate to get that construction going.


John R. Rodriguez: Can the minister inform the House why his department did not use its relocation grants and its mobility grants in offering jobs to Canadian workers in an effort to get them to relocate to this district for these positions?


Jack Sydney George (Bud) Cullen: Once again, Mr. Speaker, the hon. member has to check his facts. Mobility grants are available, but the individuals indicated they did not wish to move because of the cost of room and board in that area. They felt they could probably do better waiting for another job that would come up which might be further away but which would have a longer work attachment.
February 3, 1977


ALLEGED FAILURE TO ADVERTISE JOBS ON SARNIA PROJECT IN SUDBURY
John R. Rodriguez: In view of the fact that I checked with the local manpower office for the district of Sudbury and was told that these positions were not telexed to the Sudbury Manpower Office and that there is an abundance of carpenters in the Sudbury area, I ask the minister whether he is prepared to investigate the fact that these jobs were not telexed across the country and offered to unemployed Canadians?


Jack Sydney George (Bud) Cullen: When you are looking for pipefitters, you do not advertise for carpenters.


Some hon. Members:: Hear, hear!


EXTERNAL AFFAIRS
Steve Eugene Paproski: Mr. Speaker, my question is for the Prime Minister. The Prime Minister promised to give information and details regarding the loan of DC-8s to Cuba. Is he now prepared to do this?


Pierre Elliott Trudeau: I have answered this question a few times, Mr. Speaker.


Steve Eugene Paproski: Is the Prime Minister prepared to give details of the arrangements by which Canadian DC-8s were used by Cuba, and will he assure the House that the DC-8s were not used to transport troops or military equipment to Angola?


Pierre Elliott Trudeau: When this question was first asked several months ago, I gave the extent of my knowledge at the time. If the hon. member is really interested in the answer, he should put the question on the order paper. We can then transfer it to the Crown corporation and get an answer easily.


Steve Eugene Paproski: Ten o'clock, Mr. Speaker.


MANPOWER
Mr. Robert Muir (Cape Breton-The Sydneys):: Mr. Speaker, my question is for the Minister of Manpower and Immigration. In light of the information relayed to me in a letter dated January 11 in reply to questions I posed to the minister in a standing committee of this House-and I am thankful for the minister's courtesy and co-operation in providing this information- that $340,000 had been provided for training for trades at the request of the province of Nova Scotia plus $200,000 for
Oral Questions
living allowances for trainees, and in view of the statement by the minister of labour of the province that this is only part of the funds requested, can the minister advise how soon more funds will be made available to the province so that more people can be placed in training?


Jack Sydney George (Bud) Cullen: Mr. Speaker, I would have to check the data on that, and if the hon. member would write me a letter, I will try to be just as courteous and give him a reply as good as the one I gave to him in the first instance.


Robert Muir: Considering the fact that the minister of labour of the province of Nova Scotia, when announcing this program, said it would involve 2,000 people and $2 million, and in light of the fact that the last time the minister and I discussed this in the House prior to the Christmas recess the minister of labour of the province said that neither Cullen nor Muir knew what the hell they were talking about, would the minister be good enough to reply to the request of the minister of labour to me, which reads: "I would ask that you use your good offices to press for the approval of more funds for this project"?


Jack Sydney George (Bud) Cullen: It is nice to see that we have a good Grit behind a Tory to get him to work.


NATIONAL DEFENCE
Mr. Donald W. Munro (Esquimalt-Saanich):: Mr. Speaker, my question is for the Minister of National Defence. I would like to ask the minister if he is prepared to reveal to the House the policy of his department with respect to uniforms for cadets, particularly air and sea cadets.


Mr. Speaker:: Order, please. The answer to that question ought to be sought in another way.


AIR TRANSPORT
Mr. Maurice Harquail (Restigouche):: Mr. Speaker, my question is for the Minister of Transport. In view of the negative decision handed down recently by the chairman of the air transport committee of the Canadian Transport Commission respecting applications for class II licences for air passenger service in Atlantic Canada, can the minister inform the House what initiatives he will be taking to develop a policy which will bring air passenger service to Atlantic Canada, and further, can he advise if he will be discussing this very important question at the upcoming meeting he is to have with the council of maritime premiers.
2674

February 3, 1977
Oral Questions


Hon. Otto E. Lang (Minister of Transport):: Mr. Speaker, the question of routes, of course, goes primarily to the Canadian Transport Commission, which determines public convenience and necessity, and I think that is an appropriate way to move. I will be taking a special interest in the whole question of regional carrier service and third level service in upcoming discussions with the various carriers, and I will be especially interested in seeing whether eventually service could be provided to cities which do not now have it.
The meetings I have with the Atlantic premiers will deal with a wide ranging selection of transport subjects, although rail and road are the key subjects rather than air.


DATE OF ANNOUNCEMENT OF SERVICE TO WINNIPEG, BRANDON, YORKTON AND SASKATOON-DURATION OF SUBSIDY PAYMENTS TO CARRIER
Mr. S. J. Korchinski (Mackenzie):: Mr. Speaker, I also have a question for the Minister of Transport, and it has to do with carrier service between Winnipeg, Brandon, Yorkton and Saskatoon. In view of the fact that many expected that an announcement would have been made as to the air carrier which will be servicing this area, and in view of the fact that it appears that the minister is still taking applications, what target date has he set for the announcement as to when the carrier service might be provided in that area?


Otto Emil Lang: Mr. Speaker, following the receipt of proposals from various carriers and the examination of those proposals by the Canadian Transport Commission, I was able to determine the amount of assistance which would be required over a two year period in order to assure five years of service on a variety of routes and combinations of service. I have now made this known to the most relevant carriers and also through public notice to all other interested ones. I have asked them to put in applications during the month of February for licences which, of course, is a ncessary procedure and which had not been a part of the original flow of information. I anticipate that carriers will put in their applications within that period. I anticipate that the Canadian Transport Commission will move expeditiously because of the work which has already been done, and therefore I hope that there may be a decision by, perhaps, summer.


Stanley James Korchinski: As a result of the decision, will the subsidy be in effect for five years rather than the two years the carriers previously expected it would be?


Otto Emil Lang: No, Mr. Speaker, that is not accurate. 1 think there may have been a press report which carried that implication, but in fact the subsidy payment is a payment to be made over a two year period. However, it is our intention to get a commitment from the carriers to provide service for five years so that they will be eligible for those payments.


FISHERIES
Mr. Lloyd R. Crouse (South Shore):: Mr. Speaker, I have a question for the Minister of Fisheries. In view of the closure of a fish processing plant in Newfoundland and the curtailment in January of fishing operations at Canso for a period of time due to questionable total allowable catches as allocated by the minister and his officials, what progress is being made in determining those factors which affect changes in abundance as well as in obtaining an accurate fish stock assessment within our declared 200-mile zone? Obviously, these facts must be known before we can declare any stocks surplus to Canadian needs.


Hon. Rom6o LeBlanc (Minister of Fisheries and the Environment):: Mr. Speaker, I certainly do not agree with the reflection on the reliability of the scientists. It is because we know that some of these stocks are badly depleted that we are trying to effect conservation measures. We have set low allowable catches, which obviously are having some impact, albeit a negative impact.
In the matter of the Cape Breton industry some slight adjustments have been made which will allow some vessels which have absolutely no alternative to do some fishing. In fact, they have already gone back.
In the case of the plant referred to by the hon. member, the specific industry has not availed itself of what it has, which is a quota of one trip per month. We hope that that will be done soon, and we are considering adjustments. In fact, I hope to meet with some officials who are returning from Newfoundland later this afternoon.


IMMIGRATION
Mr. Benno Friesen (Surrey-White Rock):: Mr. Speaker, my question is for the Minister of Manpower and Immigration, and it is supplementary to the questions asked by the hon. member for Nickel Belt and by the hon. member for Cape Breton-The Sydneys. I received a copy of an advertisement placed in the Daily Mirror of London, England calling for maintenance workers, fitters and a project engineer for Nova Scotia. I would like to ask the minister if it is the policy of his department to grant work permits so that European workers can come and work in areas where there is 15 per cent unemployment.


Robert Muir: We've got over 30 per cent.


Jack Sydney George (Bud) Cullen: No, Mr. Speaker.


Mr. Hees:: Why did you do it then, Bud?
February 3, 1977


Benno Friesen: I wonder if the minister would make sure that workers across Canada are aware of this opportunity, and would he also provide the same benefits this employer is obviously providing, that is, permanent employment and relocation benefits?


Mr. Speaker:: Order, please. The hon. member for Pembina.


MANPOWER
Mr. Peter Elzinga (Pembina):: Mr. Speaker, my question is also for the Minister of Manpower and Immigration. In view of the fact that on a Canada wide basis Liberal ridings receive in excess of $50,000 more per riding compared with Conservative ridings under the Canada Works Program-


Some hon. Members:: Oh, oh!


An hon. Member:: The old pork barrel.


George Harris Hees: Dirty politics.


Peter Elzinga: With these figures in mind, can the minister give this Elouse the assurance that no pork-barrelling was involved in a decision which produced the formula-


Mr. Speaker:: Order, please. The hon. member for Vancouver South.


ENVIRONMENTAL AFFAIRS
Mr. John A. Fraser (Vancouver South):: Mr. Speaker, my question is for the Minister of the Environment. It involves the application for an oil pipeline terminal at Kitimat on British Columbia's west coast. Can the minister tell the House why this application and the maritime approach routes are not subject to the ordinary environmental assessment review procedures as laid down by the government?


Fabien Roy: Mr. Speaker, I do not understand clearly the hon. member's position. The on-land pipeline is a matter upon which the Energy Board must rule. We have said clearly that we would make available and we have offered the Energy Board all the environmental information we have.
As to the matter of the tanker approach, my colleague, the Minister of Transport and myself have been having some discussions. We favour public hearings and full discussion of this item. I do not understand why the hon. member is complaining.
Oral Questions


John Allen Fraser: A supplementary question, Mr. Speaker. It is my understanding that there are environmental assessment review procedures laid down by his department. It is also my understanding that this particular pipeline does not come under that set of guidelines. Can the minister explain to the House why there is a different procedure involved in this case from those cases which would be subject to the environmental review assessment procedure?


Mr. LeBlanc (Westmorland-Kent):: Mr. Speaker, I can certainly check the technical details of why this would not be included under what is called the EARP process, the environmental assessment review process. It is because of our feeling that this would not enter the guidelines of the EARP process that we will be moving forward with a proposal to have full public hearings.


INDUSTRY
Mr. Gus Mitges (Grey-Simcoe):: Mr. Speaker, my question is for the Minister of Industry, Trade and Commerce. Despite the fact that the 13 per cent construction subsidy available under the shipbuilding industry assistance program has now been extended to cover conversion of existing ships as well as new ship construction and this assistance, valuable as it is, will only be of limited value to the shipbuilding industry as a whole, what other assistance does the minister contemplate in order that this valuable industry may maintain the 13,000 jobs which are in danger of being reduced by half because of the lack of work orders?


Hon. Jean Chretien (Minister of Industry, Trade and Commerce):: Mr. Speaker, I am aware of this problem. Of course I am grateful to the hon. member for recognizing that we took action with a view to improving the situation, but more needs to be done. We are now considering this problem. I must say to the hon. member that this is an extremely difficult problem because of the world situation in shipbuilding, and also of the low demand; consequently, I am not sure that, for the time being, a change in the rules could improve the international situation.


Constantine George (Gus) Mitges: A supplementary question, Mr. Speaker. I wonder if the minister would give even more consideration to the many worth-while suggestions made by the Shipbuilding and Repairing Association, proposals which if implemented would go a long way toward keeping this important industry viable and help it compete with heavily government-subsidized shipbuilding industries of foreign countries?

February 3, 1977
Oral Questions


Joseph Jacques Jean Chrétien: Mr. Speaker, I had the opportunity to meet once or twice with officials from the Canadian Shipbuilding and Ship Repairing Association and particularly some members of this association. We are now considering their suggestions and if this leads us to a new policy, I will announce it in the House as soon as possible.


UNEMPLOYMENT INSURANCE
Mr. C. A. Gauthier (Roberval):: 
IMMIGRATION
Mr. Andy Hogan (Cape Breton-East Richmond):: Mr. Speaker, my question is for the Minister of Manpower and Immigration and my office gave him notice of it a few days ago. Would the minister at this time give the House an explanation for his department's actions in denying Professor Gunder-Frank entry into Canada to give the keynote address for the Queen's University symposium on "Canada and the Third World"?


Jack Sydney George (Bud) Cullen: Mr. Speaker, I thank the hon. member for giving me advance notice of this particular question. The information I have received is confidential, unfortunately, so I cannot reveal the details. However, I have gone to the appropriate officials and have checked the reports over carefully. In the final analysis, I regretfully had to say no.


Andrew Hogan: Mr. Speaker, I should like to put a supplementary question to the Solicitor General. Since Canada is a signatory to the Helsinki accord and part of that accord was that this exchange of lecturers would be increased among all signing countries, and since Canada and West Germany are two of the signing countries and Professor Gunder-Frank comes from West Germany and also since Dr. Sinclair of Queen's University has in effect called this an interference by the Department of Manpower and Immigration in academic

freedom at Canadian universities, can the minister offer an explanation?


Francis Fox: Mr. Speaker, I am somewhat at a loss to understand why the question is addressed to me. The question of admitting people to this country, no matter what the purpose, relates entirely to the responsibilities given by this House and parliament to the Minister of Manpower and Immigration.


NATIONAL DEFENCE
Mr. Allan B. McKinnon (Victoria):: Mr. Speaker, a question for the Minister of National Defence. At the Conference of Defence Associations the minister promised to try to get authority from cabinet for an increase of 4,000 or 5,000 in the authorized strength of the forces. Can he advise the House if he has yet made his presentation to cabinet and if so, what the result was? If not, can he inform the House when he intends to fulfil his commitment to the conference?


Hon. Barney Danson (Minister of National Defence):: Mr. Speaker, it is not the policy of any member of cabinet to indicate when a certain matter is going before cabinet or when it is not. I am doing the job to the best of my ability, and I intend to continue doing that.


Allan Bruce McKinnon: A supplementary question, Mr. Speaker. There are persistent rumours that the minister is attempting to get approval to set up a national youth group sometimes referred to as "Barney's Brownies", a kind of sanitized and militarized version of the Company of Young Canadians. Could the minister inform the House if this is so and could he also tell the House the projected cost of the organization and which minister is to be responsible for the program?


Barnett Jerome Danson: Mr. Speaker, when I am in a position to make an announcement I shall make an announcement.


CANADA LABOUR CODE
Mr. Paul Dick (Lanark-Renfrew-Carleton):: Mr. Speaker, may I put a question to the Minister of Labour? In view of the fact that the Canada Labour Code does not cover all forms of discrimination, and in view of the fact that in the last month there has been some evidence of discrimination by industries falling under federal jurisdiction, will the minister be introducing amendments to the Labour Code to rule out the discrimination against people with controlled illnesses?
February 3, 1977


John Carr Munro: Mr. Speaker, I am aware of the matter the hon. member is talking about. We are investigating this in terms of the package of amendments we have, as to whether we should provide prohibition against discrimination in matters of certain illnesses and I hope to do this very shortly. I believe the hon. member is referring to diabetes.


Paul Wyatt Dick: Yes.


John Carr Munro: Mr. Speaker, I would also indicate that I saw a press release issued by the hon. member to the effect that we were insensitive to this concern and we were not doing much. That is contrary to what I have advised the hon. member. We are very concerned about the matter and hope to do something about it.


HUMAN RIGHTS
Paul Wyatt Dick: Mr. Speaker, I should like to address a supplementary question to the Minister of Justice who has indicated to me that the topic would be covered in the proposed human rights legislation. According to clause 20, however, the definition of physical infirmity would not include a controlled illness. I wonder if the minister would introduce an amendment when the bill is brought forward?


Hon. Ron Basford (Minister of Justice):: Mr. Speaker, I really did not hear the hon. member's previous question but obviously the clause relating to the handicapped was designed to go as far as we felt we legislatively could by way of definition. I will be happy to listen to the hon. member's remarks during second reading debate and when the bill is in committee.


DATE WHEN PROPOSED LEGISLATION WILL BE DEBATED
Paul Wyatt Dick: Mr. Speaker, could I address a supplementary question to the President of the Privy Council? In view of the fact that the human rights legislation has been languishing on the order paper since July, 1975, could the minister indicate when the bill is to be called?


Hon. Allan J. MacEachen (President of the Privy Council):: Mr. Speaker, I hope to call it next week.


BUSINESS OF THE HOUSE
Walter David Baker: Mr. Speaker, could I ask the government House leader to confirm that the business for today will be a continuation of committee of the whole pro-
Business of the House
ceedings on Bill C-22? Could I also ask him what he plans for tomorrow and to give an indication of the work for next week, and whether he is prepared to designate any opposition days?


Allan Joseph MacEachen: Mr. Speaker, we will continue discussion of the Income Tax Act today in committee of the whole, and tomorrow if necessary. The item to be called after the income tax bill will be the Old Age Security Act amendments, then the human rights, immigration and Auditor General bills. Thursday next, February 10, I wish to designate as an opposition or allotted day. The hon. member has made a number of proposals with respect to allotted days and I might indicate to the House that he has proposed Tuesday, February 15, and Wednesday, February 23, as well as other dates in March. They certainly will be considered. At present I should like to designate only next Thursday as an allotted day. Later designations will be made known.


Stanley Howard Knowles: Mr. Speaker, I rise on the same point of order. The government House leader will not be surprised if I ask him again when he is going to call Bill C-30 which includes, among other things, a provision for National Heritage Day. I realize that he keeps saying he does not think the bill will get through, but unless he is prepared to call it and find out if there is opposition to it we can only assume that the government is not interested in the bill. Seeing that it is a government bill, will he call it soon?


Allan Joseph MacEachen: Mr. Speaker, if I could have the assurance that the bill the hon. member asks me to call soon would pass in a day or so, I would be glad to call it.


Stanley Ronald Basford: Let's have some human rights legislation.


Allan Joseph MacEachen: But there is every indication that it would not pass in that time and I do not give it the same priority which I give the bills I have already mentioned.


Stanley Howard Knowles: Mr. Speaker, since the government House leader has our assurance that we would let Bill C-30 pass quickly, from whom has he had word that it would not pass?


Charles-Arthur Gauthier: On a point of order, Mr. Speaker. Concerning the question asked earlier, it looks as if the interpretation did not reach the minister ...


Mr. Speaker:: Order. The hon. member for Humber-St. George's-St. Barbe is recognized.


Jack Marshall: Mr. Speaker, I wonder if the President of the Privy Council could indicate if consideration has been given recently-this matter has been under consideration for the past few years-to bringing forward amendments to the Pension Act in order to help the widows of veterans who are receiving pensions of less than 48 per cent.


Stanley Ronald Basford: Let's have some human rights legislation.

February 3, 1977
Business of the House


Allan Joseph MacEachen: No, Mr. Speaker, no pension legislation is proposed except, as I understand, the amendment to the Pension Act which is already on the order paper.


Stanley Howard Knowles: The hon. member was talking about war pensions.


Mr. Douglas (Nanaimo-Cowichan-The Islands):: Mr. Speaker, I rise on the same point of order. There was some disposition on the part of the Standing Committee on National Resources and Public Works to have a reference to it in order to review the general energy situation. I believe the Minister of Energy, Mines and Resources was agreeable to that proposition. Can the President of the Privy Council say if such a reference is likely to be made in the near future?


Allan Joseph MacEachen: Yes, Mr. Speaker, such a reference will be made. The hon. member is joining in representations which have been made vigorously by the chairman of the committee, and I intend to have the reference made soon.


Frank Oberle: Mr. Speaker, with your permission I should like, as a point of order, to make a correction to Hansard.


Mr. Speaker:: Order, please. Hon. members will realize that the point of order raised by the hon. member for Grenville-Carleton is one that is raised every Thursday at the conclusion of the question period and has to do with the business of the House for the forthcoming week. I would prefer to be sure that we have laid that point of order to rest before considering other points of order. The hon. member for Prince George-Peace River will be recognized on motions.


Charles-Arthur Gauthier: Mr. Speaker, I should like to point out that when I put my question, the Minister of Manpower and Immigration (Mr. Cullen) did not have time to get the interpretation. I do not want to blame you, but I do think the minister heard the interpretation too late and was getting ready to answer when you gave the floor to another hon. member. I would appreciate it if the minister could give me an answer today with regard to that advertising folder.


Jack Sydney George (Bud) Cullen: No, Mr. Speaker. I understood the hon. member, as I always do. I understand him either with or without translation, but I did not have the answer at the time and I thought I would let the matter go.



ROUTINE PROCEEDINGS


[Stage Direction]
Second report of Standing Joint Committee on Regulations and other Statutory Instruments-Mr. McCleave.

Donald Stovel Macdonald: Mr. Speaker, I should like to table references under the Anti-Inflation Act to the administrator with regard to the city of Medicine Hat, Perth Public Utilities Commission and Direct Film Incorporated.


UNEMPLOYMENT INSURANCE
Jack Sydney George (Bud) Cullen: Mr. Speaker, under the provisions of Standing Order 41(2) I wish to table in the House of Commons today the report on the comprehensive review of the Unemployment Insurance Program in Canada, in the two official languages.


CRIMINAL CODE
Mr. Fernand E. Leblanc (Parliamentary Secretary to Secretary for External Affairs) moved: for leave to introduce Bill C-391, to amend the Criminal Code (off-track betting).
Mr. Speaker, first of all I must make one correction: the seconder of the motion is Mr. Serge Joyal, the hon. member for Maisonneuve-Rosemont.
Mr. Speaker, in 1967 I had the honour of introducing for the first time a bill to legalize off-track betting. Consequently, the year 1977 is this bill's tenth anniversary. Through the years I introduced a series of identical bills and a notice of motion to that effect.
The main objectives of this bill, both short and long-term, are as follows:
First, to give the province of Quebec an additional source of revenue to pay off the Olympic Games debt, as a counterpart to the income provided by the federal institution Loto Canada.
February 3, 1977

Second, to create a new source of income for all provinces. Third, to increase federal involvement in improving horse stock. Fourth, to create employment.


Mr. Speaker:: This is time merely to explain the purpose of the bill and not go into debate.


[Stage Direction]
Motion agreed to, bill read the first time and ordered to be printed.

Otto Emil Lang: for leave to introduce Bill C-36, to amend the Motor Vehicle Safety Act.


[Stage Direction]
Motion agreed to, bill read the first time and ordered to be printed.

Mr. Speaker:: I have the honour to inform the House that a message has been received from the Senate to acquaint this House that the Senate do agree to the address to Her Most Excellent Majesty the Queen, offering congratulations on the happy completion of the twenty-fifth year of Her reign, and have inserted in the blank spaces therein the words "the Senate and." The message is as follows:
Resolved-That the following Address be engrossed and presented to His Excellency the Governor General, namely:
To His Excellency the Right Honourable Jules Leger, Chancellor and Principal Companion of the Order of Canada, Chancellor and Commander of the Order of Military Merit, upon whom has been conferred the Canadian Forces' Decoration, Governor General and Commander-in-Chief of Canada.
MAY IT PLEASE YOUR EXCELLENCY;
The Senate of Canada, in Parliament assembled, have agreed to an Address to Her Most Excellent Majesty the Queen, offering to Her Majesty our sincere congratulations on the happy completion of the twenty-fifth year of Her reign, in the manner set forth in our Joint Address hereto attached, and respectfully request that Your Excellency will be pleased to transmit the said Address to Her Majesty the Queen.
ORDERED-That the Clerk go down to the House of Commons and acquaint that House that the Senate have passed an Address to His Excellency the Governor General respectfully requesting that His Excellency may be pleased to transmit our Joint Address to Her Most Excellent Majesty the Queen offering to Her Majesty our sincere congratulations on the happy completion of the twenty-fifth year of Her reign, and more particularly set forth in the said Joint Address, and request the House of Commons to unite with this House in the Address to His Excellency the Governor General by inserting the words "and Commons".
Hon. Donald S. Macdonald (Minister of Finance), seconded by Mr. Joe Clark (Leader of the Opposition), moved:
That this House do concur in the address of the Senate to His Excellency the Governor General.


[Stage Direction]
Motion agreed to.
Income Tax Act

Mr. Ralph E. Goodale (Parliamentary Secretary to President of the Privy Council):: Mr. Speaker, I would ask that all questions be allowed to stand today.


Mr. Speaker:: Is this agreed?


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed from Monday, January 31, consideration in committee of Bill C-22, to amend the statute law relating to income tax-Mr. Macdonald (Rosedale)-Mr. Laniel in the chair.
The Chairman:: Order, please. The House again in committee of the whole on Bill C-22, an act to amend the statute law relating to income tax. When the committee rose at the last sitting, clause 21 was under consideration.
On clause 21.


Mr. Saltsman:: Mr. Chairman, at the last sitting I raised a question with the minister which is recorded at page 2571 of Hansard for January 31. I asked whether he had some information. The exact quote is as follows:
It is therefore important to know to what families this benefit is going according to size of family income. Does the minister have this kind of information for us?
I also entered a reservation; I pointed something out to the minister which all of us know, namely, that a lot of second income, especially in the middle and upper income groups, is earned on a part-time basis. Therefore, it is important to note the number of hours worked for the income in order to relate it to the sort of general family income, or know it by family income rather than by individual income. The minister invited me to look at the volume on taxation statistics, 1976 edition, which because of compilation relates to 1974, table 2. I took up the minister's invitation, as I always do. I always welcome the minister's advice on matters of this kind. As I anticipated, it is not possible to come up with an answer on child care expenses because it does not relate to family income. In addition, there are so many part-time incomes involved that it would not prove a point one way or another to use the statistics.
Looking at the table and making some comparisons, it is interesting how graphically it demonstrates the kind of argument we have been trying to make about the different kinds of tax benefits and who benefits from these taxation measures. There is the one that I described under child care expenses, where it is impossible to come to any firm conclusion on the

February 3, 1977
Income Tax A cl
basis of the evidence, the way that it is collected and compiled. In other areas it is possible to come to some conclusion. There are areas where it is quite obvious that the income tax system works with considerable fairness. They are not any of the measures presently before us.
I wish to illustrate the difference between how these measures are grossly unfair in comparison to other income tax deductions which have an element of fairness and relate to actual incomes and percentages that are going to people in various income categories. The one that jumps out is not really a deduction although it is called a deduction. It is a kind of tax credit because everyone gets it; it is a standard deduction. If we look at the table for the standard deduction, we find that the class of people with incomes to $5,000 who reported losses amounts to 38.4 per cent of the taxpayers in that group. Under the standard deduction that group receives 40.8 per cent of the benefits, which is quite fair.
In the $5,000 to $10,000 income class, which comprises 31.5 per cent of taxpayers, under standard deductions that group gets 32 per cent from the benefits. Again, that is fair in its relationship to the group of taxpayers. In the $10,000 to $15,000 income bracket, which comprises 18.7 per cent of the taxpayers, that group gets 18 per cent. In other words, the first three groups are virtually bang on. In the $15,000 to $20,000 of income class, which comprises 6.8 per cent of the taxpayers, that group receives 6 per cent of the benefits; again, a fair relationship to the size of the group and to the actual benefits they receive. In the $20,000 to $25,000 income class, which comprises 2.2 per cent of taxpayers, that group gets 1.7 per cent of the benefits, something less than the actual size of the group. In the $25,000 to $50,000 income class, which comprises 1.9 per cent of the taxpayers, they get 1.25 per cent of the benefits, somewhat less than the size of the group. In the $50,000 and over class, which comprises 0.4 per cent of taxpayers in Canada, under standard deductions they get 0.2 per cent of the benefits.
That is an example of a benefit in the income tax system which is roughly equivalent and fair virtually all the way through, give or take one or two percentage points on each side. This is really a kind of tax credit. I wish to compare that to something which is gross beyond belief when it comes to fairness. I am looking at the retirement savings plan premiums. With your permission, Mr. Chairman, I would like to hand one of these sheets to the minister who will be here all afternoon. He may want to make a quick study of these figures to check their accuracy and make some comment on them. I have given the example of the standard deduction, stating that it is fair all the way through as it relates to the percentage of benefit going to a group, and the actual percentage as a group of taxpayers. We now look at the retirement savings plan premiums. Under the column of loss to $5,000, which represents 38.4 per cent of the taxpayers in Canada, the amount of the benefit this group gets is less than 1 per cent: the exact figure is 0.92 per cent.

This is exactly what we have been trying to say throughout the debate. This kind of benefit does not help people in the lower income categories because they have no income to offset RRSPs or else their incomes are so low that savings are minimal. They represent 38.4 per cent of the taxpayers and they get only 0.92 per cent of the benefits. In the income class from $5,000 to $10,000, representing 31.5 per cent of taxpayers, benefits received amount to 10.18 per cent. In the $10,000 to $15,000 income class, which represent 18.7 per cent, this group of taxpayers gets 20 per cent of the benefits, roughly equivalent to the size of the group.
It is interesting to find, as one looks through these examples, that this is the one group which is roughly in balance. This is true of the standard deduction, certainly, because everyone is in balance there. But with regard to virtually every program this group receives its percentage of the benefits. But the groups below get less and the groups above get far more. If we turn to the $15,000 to $20,000 income class, which represents 6.8 per cent of the taxpayers, we find they get 20.6 per cent of the benefits, three times as much as those in the $10,000 to $15,000 class, and an incalculable percentage as compared with those whose incomes are less than $5,000. Turning to the group getting between $25,000 and $50,000, representing 1.9 per cent of taxpayers, we find that this 1.9 per cent is getting 24.5 per cent of the total benefit. When we come to the income class receiving $50,000 and more, a class which represents 0.4 per cent of taxpayers, we see that this group gets 8.6 per cent of benefits, roughly 16 times what one would consider to be a fair percentage.
In our argument up to the present we have used tables to show that people at certain income levels get $200 in benefit, say, and that people at higher income levels get twice as much, and so on. But I do not believe anything shows the inequities so graphically as these tables. Some programs under the Income Tax Act are reasonably fair, but others are grossly unfair. The significant thing is this: the programs which are really out of proportion are the ones for which the minister is pushing hardest. Indeed, he has to bring in closure to ensure that they will take effect.
I should now like to give the committee some further examples. The interest income deduction provision tends to be reasonably fair and progressive. People with less than $5,000, representing 38.4 per cent of the taxpayers, receive 27.67 per cent of the benefits. That is not quite in line with their numbers in percentage terms, but it is much better than the 0.9 per cent they get under the retirement savings plan. Turn, now, to the group getting between $5,000 and $10,000. In interest income deductions they get 29.3 per cent, again roughly in line with their percentage as a group. If we go to the $10,000 to $15,000 income class we find they receive roughly 30 per cent of the benefits, which again is roughly in line. But even when we are talking about a reasonably progressive program, the moment we move to the group getting between $15,000 and $20,000 the figures begin to spread apart, because this group, representing 6.8 per cent, winds up with
February 3, 1977

10.4 per cent of the total benefit. The 2.2 per cent of taxpayers in the $20,000 to $25,000 group wind up with as much as 4.7 per cent, and in the $25,000 to $50,000 group, 1.9 per cent wind up with 5.5 per cent of the benefits. This is twice as much as its numerical percentage should entitle it to.
As for those with $50,000 or more, even under the terms of this interest income deduction which was brought in essentially to compensate for RRSPs, benefits from dividends, and so on, which the low income earners were not supposed to get, the 0.4 per cent of taxpayers receiving this high level of income still get 1.6 per cent of the benefits, four times as much as their numerical percentage would indicate they were entitled to, in our view. So even with respect to provisions which are supposed to redress the balance and make up for the benefits the rich are getting in other ways, the rich do not fare badly.
Let us turn, now, to consider the item "Other expenses of employment". This is an interesting example to take. I have given the figures with regard to the general expenses allowance which is $150 for everyone. But looking at the other items one finds the same "askewness" in terms of the number of taxpayers in certain groups and the benefits they receive. But those in the income class getting less than $5,000, representing 38.4 per cent, receive 1.93 per cent of the benefits from "Other expenses of employment".
I assure hon. members that if they go through these figures, they will find they are running roughly true at every level because this group is consistently getting the least benefit in relation to its percentage of the population. But as we move into the higher income ranges we find the picture changing. Those in the $20,000 to $25,000 class, which represents 2.2 per cent of the taxpayers, are getting 12 per cent of the benefits here. They are getting extra benefits because they are able to make deductions which the ordinary worker is unable to make.
If we go to those receiving between $25,000 and $50,000, representing 1.9 per cent of taxpayers, we find they are getting 19 per cent of the total benefits under this provision for other expenses of employment, while those receiving $50,000 and over, representing 0.4 per cent, are getting 6 per cent of all the benefits, some 15 times more than their percentage as taxpayers would seem to justify.
Even when it comes to medical claims it is still the rich who benefit most. One might ask why. Are the rich less healthy than the poor? One would think the opposite was the case. Do the rich suffer from some special, esoteric forms of sickness to which the poor are not subject, and do they, as a result, spend more on medical treatment? This does not appear likely to me, and I do not think experience would suggest it. Yet when we look at the medical claims we find that the group receiving less than $5,000, and representing 38.4 per cent of taxpayers, gets only 17.25 per cent of the benefit package. From $5,000 to $10,000 it is roughly equal. The position is the same from $10,000 to $15,000, but when we go from $15,000 to $20,000 the pattern emerges as before. While this category represents only 6.8 per cent of the taxpayers, these taxpayers are getting 10.7 pier cent of the benefits. Then when we move to the $20,000 to $25,000 income group, representing 2.2 per cent of
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taxpayers, they receive 5.9 per cent of the benefits, I suggest double the benefits that their position in the tax structure indicates is fair. Those in the $25,000 to $50,000 category, representing 1.9 per cent of taxpayers, are receiving 8.1 per cent of the benefits in terms of medical claims that are deducted. The $50,000 and over group, representing 0.4 per cent of taxpayers, receive 4.5 per cent of the benefits, which is 20 times as much as the benefits that go to people in the lowest income category. That is the effect of these kinds of deductions.
The minister may say-I hope he will reply-that this is a characteristic of the progressive income tax system; that the more money you make, the more benefits you should receive. If that were so, the percentages should remain constant. It seems grossly unfair that one group of people should be collecting infinitely more by way of benefits under our tax system than any other group; really these kinds of deductions are subverting the progressiveness of the income tax system.
When you have made all these deductions, Mr. Chairman, and put in all these claims, the income tax system does not look all that steep anymore. I think this is a very graphic way of demonstrating the point that we are trying to make in this debate, which is that the government's approach to the problem is wrong. There are, in fact, ways to do this properly. I have already pointed out that allowances like the general expense allowance offer equal opportunity to people in all income groups, and this seems to me to be fair.


An hon. Member:: Why do you say that?


Max Saltsman: Because I think society is far better when that kind of fairness is perceived to exist in the taxation system.


Mr. Lambert (Edmonton West):: That is egalitarianism. It is not worth the paper it is written on.


Max Saltsman: That is right, it is egalitarianism. I know that my hon. friend from Edmonton West does share my philosophy, but what I do not understand is how my distinguished friend can sit there listening to what I am saying and not take public exception to it by standing up and making a speech.


Marcel Joseph Aimé Lambert: I intend to. I am just waiting for you to sit down.


Max Saltsman: Then I welcome that. That is what this place is all about.


Gérald Laniel: Order, please.


Max Saltsman: I always like interventions from my hon. friend.


Gérald Laniel: Order, please. I regret to interrupt the hon. member, but his time has expired.


Donald Stovel Macdonald: Mr. Chairman, I am obliged to the hon. member for Waterloo-Cambridge for having sent over

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his table of figures. I think the interesting thing is that the table, far from proving his argument or stating the reason that he and his colleagues have for making the point they have for the last four or five hours, proves the very opposite. I do not want to distort the hon. gentleman's argument, but I will state it as I see it, and I am sure that if he feels that he should respond he may find time to do so.
The first thing that is rather interesting about this table is that while he has put in a series of comparative figures he has left out one very important series, very important in terms of retirement income. He has retirement savings plans premiums in the table, but not registered pension plan premiums. Who are we talking about when we speak of registered pension plan premiums? We are talking about the union worker, the blue collar or white collar worker, the man on the assembly line, the municipal clerk, the clerk in the federal public service, the school teacher, and so on.
The interesting thing about this-and these figures are on record in the earlier debate-is that with regard to retirement incomes the weight is heavily balanced in favour of those with incomes less than $15,000. Just as a quick estimate, something over 60 per cent of those with incomes of less than $15,000 make up this particular group. These figures have been left off this particular list, and if we are talking about registered retirement savings plans I think we should also take account of registered pension plans.
Let me take a look at the basis for his argument, Mr. Chairman. The hon. member says that he finds treatment of standard deductions equitable and fair and he has no quarrel with it. Let us compare it with child care expenses which he finds to be perverse in this respect.


Max Saltsman: So much of this results from part-time employment.


Donald Stovel Macdonald: I suppose that if there is so much part-time employment one can argue that from both ends, the lower and the upper end of the income scale. However, for those who do report it, 25.7 per cent are claiming child care expenses among the income group up to $5,000; the standard deduction is claimed by 40.8 per cent of this group.
50	clearly in that first category of taxpayers there are more people taking advantage of the standard deduction in the lower income group than is the case with regard to child care expenses.
However, the situation is quite dramatic if you include those in the group earning up to $10,000 as well, which includes those with very marginal low incomes right up to those who are not really very well paid in the public service or in many private firms, particularly in small firms. You then find that
51	per cent of a group which comprises 31.5 per cent of taxpayers take advantage of the deduction for child care expenses.
Therefore, Mr. Chairman, when you aggregate the two groups claiming child care expenses you see immediately that

77 per cent of a group representing about 70 per cent of taxpayers take advantage of this deduction. However, with regard to standard deductions, which the hon. gentleman found admirable, only 72 per cent of the same group were treated that way. So that on the basis of the figures presented by the hon. gentleman, if standard deductions are a fair and reasonable way of treating people, at least in those two lowest groups, then those drawing child care expenses are treated even more reasonably.
If we go to the other end of the spectrum, the hon. gentleman and his colleagues have been arguing that those at the upper end of the income scale have been getting a greater benefit, per group, than those at the lower end. With regard to child care expenses, for example, those earning between $20,000 and $25,000 a year, who represent 2.2 per cent of taxpayers, are getting 0.9 per cent of the benefit, and those earning between $25,000 and $50,000, representing 1.9 per cent of taxpayers, also get 0.9 per cent. Those earning $50,000 and over, representing 0.4 per cent of the taxpayers, account for 0.17 per cent of the total amount of deductions for child care expenses.
I am obliged to the hon. gentleman for his figures, but it seems to me that they show that the system, at least in regard to child care expenses, is not weighted in favour of the upper income scale earners, as is alleged by the hon. gentleman, but rather is most heavily weighted in favour of those at the lower end of the income scale, and more heavily weighted than standard deductions which the hon. member has just said are a reasonable way to deal with this particular situation.
The hon. gentleman obviously thinks that the taxation system is the principal method of providing income support. In this respect, of course, the government has proceeded to use other vehicles, such as the transfer payments under the family allowance program. In addition there is the guaranteed income supplement and old age security, and transfer payments through the Canada Assistance Plan in conjunction with the provinces. We have thus operated programs which make actual cash transfer payments to people at the lower end of the income scale.
With respect to the family allowance, it seems to me that the arguments being put forward in this debate contradict the ones we heard in the debate in 1972 and 1973, at which time the government put forward a measure which did weight that particular transfer payment in favour of those at the lower end of the income scale. As I recall it, the hon. member and his colleagues took the position that it should be across the board: whether your income is $5,000 or $50,000, you should be entitled to the same gross family allowance payment, although that payment would be subject to reduction for taxation reasons. At the time when we were a minority government this measure did not go through in the form we proposed, which would have favoured the lower income group more particularly, but as a government we favoured the transfer payments for those at the lower income level. Another good example is

AHOP, the mortgage interest assistance and other housing measures where literally hundreds of millions of dollars have gone into low income housing.
I may make one further comment. The hon. gentlemen thinks that this should be handled through the taxation system. The only extent to which I would agree with that is through the taxation system as an administrative vehicle for delivering the basic transfer payments referred to that we have put on the statute books and that Canadians are now receiving. It is really to determined whether the use of the taxation system as a transfer vehicle or an administrative vehicle for making those payments is feasible that we have that question currently under examination together with the Department of National Health and Welfare and other departments.
Going back to my first point, it is interesting range of figures which the hon. gentleman has given the House. It seems to me that they sustain rather forcefully the argument that child care expense reductions with which we are dealing here have favoured those at the lower end of the income scale rather than those at the upper end.


Max Saltsman: Mr. Chairman, I am very pleased that what is happening here today might well turn out to be a debate. I want to deal with some of the issues the minister has raised, and I am pleased he has raised them. One of the reasons I sent him the sheet was so he would not think 1 was pulling those figures out of the air, and I am quite happy to see him extrapolate some of the figures if he thinks they are to his advantage. However, I am sorry he overlooks the very important rider that I indicated about child care allowances, and neglects the other argument that makes the better case.
I was saying that we cannot really demonstrate anything from these figures about child care, but we can certainly demonstrate that the minister does not deny that, but I am rather surprised to hear the kind of argument he used on this occasion-because of the way the tax system is balanced, the deduction means far more to somebody with a higher income than to those on lower income. So there is no quarrel here and I want to leave it.
I want to say something else about family allowances. We have argued for a standard deduction. The hon. member for Winnipeg North Centre throughout the many brillant years he has graced this House, has argued for universality. I can remember how impressed I was when I was a little younger than I am now and I heard him speak on old age pensions. Someone asked him, "You mean, when we have a standard old age pension you will give it to E.P. Taylor as well?" The reply was, "Yes, the old age pension is a matter of right and it goes to everyone, to the poor and to E.P. Taylor. This is not a charitable act".
We have argued the same thing with regard to family allowances. We did not say, "Take it away from the rich." The rich have children, too, and they are entitled to some consideration. What we are saying is that they are not entitled to more consideration than the poor. We think E. P. Taylor is entitled to his old age pension so long as he hangs around Canada, and
Income Tax Act
if he has any children of eligible age, he is entitled to family allowance. We do not think people with higher incomes are entitled to more than the poor, because that is perverse and the kind of tax system we have is a very perverse system.
I hope the Minister of Finance clearly sees our point. We were not being unprogressive by voting against that measure and insisting that family allowances be equal for everyone. We were being consistent with the policy of this party over the years, that all people should be treated alike, especially under universal programs. Progressivity comes from having the income tax recoup whether it is the old age pension or the family allowance. That is what we are arguing about.
Let me deal with one other matter, since this is becoming a debate of sorts. The Minister of Finance said the income tax system is not the only way of distributing income. I agree with him that it is not the only way. One deals with every issue as it comes before the House, and one does not pretend it is the only way. There is a lot more that is wrong with the minister's party and his government than what appears in the income tax system. But today we are dealing with that system and we do not want to go over all these things.
The income tax system is a very useful way of redressing imbalances in other parts of the system, and I will give you the committee an example of this. When the Minister of Finance brought in the wage and price control policy with some reluctance, he did not use the words "rough justice"; they were used by the hon. member for Halifax. But I listened to the Minister of Finance on radio and television and found he had in fact picked up this phrase and called it "rough justice". It is at best rough justice. You cannot have an income policy that does anything more than control wages. The minister is beginning to realize that. Even when you want to control profits, there is an inherent difficulty in trying to do it in the kind of system under which we live. You cannot control dividends or prices effectively, but one thing the minister has been able to control-and this is one of the reasons the policy is so grossly unfair-is wages.
How do you get people to live with rough justice? The way to do is to say, "All right; we admit we have not been able to control much more than wages, but we will do something to the income tax system. We will see that some of the surplus income at least is siphoned off through the income tax system." But when the income tax system cannot do everything, as the minister says, it moves in a regressive direction and compounds the inequality of the wage and profit controls system. Then you have really accomplished the ultimate in injustice. This is why we have argued in favour of redressing the balance in the income tax system and at least making it progressive.
In the future we must have some kind of income policy, not the kind the government has now. The government will not be able to make it work through direct controls, because those controls only work very imperfectly and in some circumstances they cause a lot of problems. Therefore, you will have to use the income tax system to make up for the rough justice that occurs with direct controls. On that basis the minister should

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recognize that while the income tax system cannot do everything, it should not at least make the situation worse in the way his proposals in Bill C-22 will do.


Donald Stovel Macdonald: Mr. Chairman, I am glad to rejoin the debate on the issue with the hon. gentleman, particularly on the question of transfer payments to individuals. He says that his party's dogma as stated by their high priest, the hon. member for Winnipeg North Centre, is that there have to be across the board universal programs. I was going to say it in the absence of the hon. gentleman, but I see him appearing spectre-like from behind the curtains. I would disagree categorically with the dogma of the party of the hon. gentleman regarding family allowance payments.
I was a supporter of the family income security program because when public resources of that kind are available, just like public resources in the housing program, the great weight of those public resources should be used to support those who have the least in our community and I think we should not have these across the board payments. Indeed, that has been the consistent policy in the case of retired people with the guaranteed income supplement program. I would not support a payment to E. P. Taylor, if he happened to be in this country, or to his sidekick, McDougald. I do not know whether he is here now.


An hon. Member:: Pay the old age pension.


Donald Stovel Macdonald: Pay the old age pension: that is right, and this is the way it has evolved. As far as I am concerned, the weight of the pension system and the weight of the family allowance system should go to those who are least able to protect themselves in the economy. With the public resources which are available, that is the group which I, and I think many others in my party, would favour in dealing with these particular problems.
We are not really talking about the controls program but I will say just a couple of words with regard to the point the hon. member raised. Dividends have been controlled and profits have also been controlled. There have been rollbacks of profits in situations where they have amounted to excess revenue. One of the other factors-and this is observable from the aggregates of the economy-is that the profit level in Canadian firms has been below the trend level of the economy, and certainly below the level one would expect at this time. It seems to me we are almost getting to the ideal NDP state where nobody makes any money at all. Profit levels have been down. It is quite true that the controls on profits have not been as numerous as they have been with regard to incomes, principally because profit levels generally have been down.
The hon. gentleman was talking about this year of injustice to the wage earner. He talked about the difficulties wage earners had during 1976 because of the controls but, curiously, the working man has experienced a 4 per cent real increase in income through this period, principally as a result of the reduction in prices which was brought about by the controls

program. The controls have put more real income into the pockets of wage earners of this country and have had the very opposite effect to what the hon. member has suggested.


Gérald Laniel: Perhaps we could come back to clause 21, and I will recognize the hon. member for Edmonton West.


Marcel Joseph Aimé Lambert: Mr. Chairman, the hon. member for Waterloo-Cambridge has been talking about rough justice. I wish he would at least be roughly relevant to clause 21. It seems that on any clause one can raise any subject which is within the four corners of the Income Tax Act, and it does not matter; but those who want to make a relevant contribution-and there are many in this House- find that with a limited time debate they are cut short. All I want to say about the comments with regard to the increase in child care expenses and the statistics we have heard ad nauseam is that the hon. member made one great oversimplification. He failed to point out the number of taxpayers who are spouses and therefore file separate income tax returns. I am sure the hon. member's observations would have been far different if he had considered family income.
It is all right to say a man earns $25,000 a year, but what if his wife is not working? The hon. member made some observations about the extraordinary, outrageous and disporportionate benefits a man earning $25,000 or $30,000 a year gets. However, if his wife is not working, he is the family breadwinner. Let us consider the man who makes $15,000 and whose wife works and makes $10,000. They are two separate taxpayers, albeit at lower levels. For a family earning $25,000, in which the wife is not working, there is no child care expense allowance. Where the husband earns $15,000 and the wife earns $10,000, there is a child care allowance.
I suggest that the table put forward by the hon. member fails to recognize one fundamental feature. As a matter of fact, even the minister in his observations on this fails to see that today there are hundreds of thousands of taxpayers who are married women and have to be classified as single taxpayers. They may claim the allowance for some of the children in the family. This varies. Each spouse picks the best advantage he or she may have under the Income Tax Act. It is a matter of sorting out the children and deciding who should claim the allowances.
The hon. member, however, lumps everybody into the same bag as though each taxpayer is the sole earner in the family group. It is the family group that we have to consider. Do not tell me that there is injustice to somebody earning $16,000 or $18,000 a year as a teacher who has a wife working part time either in an office, as a secretary in a school board office, in a school office, or in a supermarket, whatever the job may be, who earns, say, $6,000 a year. The hon. member has failed to take into account that there are two taxpayers in that family. I have a son who goes to university. He works part time during the summer. He is classified a taxpayer even though he may earn only between $4,000 and $5,000 a year. Therefore, all these suggestions with regard to the benefit of child care to taxpayers in this particular class are very misleading and
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constitute an oversimplification. I find it extraordinary that the hon. member should have fallen into that trap. Frankly, it is an unconscious-I do not think he has done it consciously- misleading of the House for him to cite statistics such as those.
If the hon. member had been talking about 20 or 25 years ago when relatively few married women were working, perhaps his conclusions would have been more apposite, but today that is not the case and I hope that somewhere along the line in considering income tax we will get to the situation where joint income tax returns can be filed by a family group, husband and wife. It would be much more fair.


Some hon. Members:: Hear, hear!


Marcel Joseph Aimé Lambert: Then the hon. member could start making complaints with regard to the benefits of increasing the child care allowance from $2,000 to $4,000 as a maximum. Frankly, I was surprised. I think he has been misled by some of his research staff in arriving at his conclusion. He should study table 17 as it appears on page 160 of "Taxation Statistics 1975" which is headed "Returns with child care expense claims". He would find that the maximum number who claimed for the taxation year 1974 were in the $5,000 to $6,000 taxable group. I will put it on the record. For working mothers in the income bracket less than $2,800 there were 9,606 claimants; $2,800 to $3,000, 4,107; $3,000 to $4,000, 21,130; $4,000 to $5,000, 26,461; $5,000 to $6,000, 29,683; $6,000 to $7,000, 22,589; $7,000 to $8,000, 16,953; $8,000 to $9,000, 12,688; $9,000 to $10,000, 6,908; $10,000 to $11,000, 3,373; $11,000 to $12,000, 2,625; $12,000 to $15,000, 3,592; $15,000 to $20,000, 1,564; $20,000 to $25,000, 427; and, over $25,000, 412 claimants.
If the hon. member looks further at table 17, he will see the number of claims by working mothers and the number by fathers. A study of the statistics indicates that the tabulations and computations he made in assessing what class of taxpayer was receiving the benefit of child care expenses and registered retirement savings plans are totally wrong. He failed to look at the joint family income, which is where the real benefit lies. In the $20,000 taxable income class, which means a salary of about $25,000 with the normal number of exemptions, the chances are that the wife would not be working. As the income scale goes up, usually the wife does not work. Today the working spouse is a social phenomenon more than an economic necessity.


John R. Rodriguez: Oh, oh!


Marcel Joseph Aimé Lambert: There are a number of cases where the wife does have to work to help maintain the home, but there are far more cases where couples have bought a house at $18,000 or $20,000 more than they would if she were not working, or bought a second car or wanted to do extra things. In such cases, the spouse works in order to justify a higher standard of living, not from economic necessity. There is no criticism of that; it is a social phenomenon of
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today. Husbands and wives have decided to work in part in order to raise their standard of living, not to subsist.


John R. Rodriguez: Go down to Newfoundland. Tell that to your colleagues from Newfoundland.


Marcel Joseph Aimé Lambert: In this city of Ottawa, in this very building, in Sudbury, in Sault Ste. Marie among the steel and nickel plants, there are many men earning very good salaries.


John R. Rodriguez: Come off it.


Marcel Joseph Aimé Lambert: There are women who are also working in order to increase their standard of living.


John R. Rodriguez: They are all lawyers.


Marcel Joseph Aimé Lambert: The hon. member should get his head out of that bag of doctrinaire prejudice he has because he is a member of that party.


Some hon. Members:: Hear, hear!


John R. Rodriguez: On a point of order, Mr. Chairman, is the hon. member for Edmonton West suggesting he is against those families in the Sudbury basin who are trying to exist and subsist within a regressive income tax structure by the wives having to go out to work? I want to know that.


Gérald Laniel: Order, please. This, surely, is not a point of order. The hon. member is making an argument. If he wants to ask a question, he should ask the permission of the hon. member.


Marcel Joseph Aimé Lambert: If the hon. member is trying to suggest that people in Sudbury are generally in that category, then he is full of tripe.


John R. Rodriguez: Except the lawyers.


Marcel Joseph Aimé Lambert: I will come back and look at the average income reported by taxpayers by district, and we will see where Sudbury is. It is certainly in the lower part of the table.
Mr. Chairman, I have here a letter from a man who says he is a teacher and whose wife is not working. He wonders about the increase in the child care benefits to $4,000 a year. I do not declare this a correct argument, but it is a point of view held by a number of people. It may be that hon. members will want to correct this, but at least we will discuss it. He writes:
There are many people who utilize the daycare-babysitting-deductions so that both parents can work, not in order to survive, but rather only to have a higher standard of living. Should parents whose combined incomes are in the $15,000 and sometimes much above brackets, i.e. $30,000 plus, be able to take advantage of tax deductions which were really aimed at the lower income sections of the community?
I am sure the hon. member for Nickel Belt would say that above a certain income there should be absolutely no allowance for child care. The writer makes this point:

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Income Tax Act
Daycare expenses should be available only for those who are (a) single parents with pre-schoolers, or (b) parents whose combined incomes are below a certain level.
The writer feels that more women should stay at home and look after the children, because as a teacher he sees children who have been brought up by day care centres, not through necessity as in the case of the single parent of whom there are a great number. He feels that more children should be looked after at home by the mother, because as a teacher he sees what he considers to be almost social monsters as a result of lack of parental care. They are pushed out in the morning or dropped off at school or picked up by the bus, they lunch at school, drop in on a neighbour after school, and return home about the same time as the parents. That is the extent of their upbringing.
I want to put it on record to indicate that not everyone is in favour of, shall we say, this unrestricted subsidy to child care centres, for that is what it is. Personally, I feel that there is a need for child care centres to serve, particularly, single parents. Indeed, I would much rather the state provided that service for those people. It could be provided through provincial governments or municipal administration and for those whose incomes fall below a certain level there would be no charge. But beyond that fees ought to be charged and such centres ought to be considered as private schools and the double family income ought to bear the brunt of that charge. It ought not to qualify for the allowance.
Since the government has allowed inflation to go along unchecked for a number of years, certainly since the induction some years ago of the child care expense allowance, the ceiling certainly should be raised to the extent envisaged in the bill at this time.


Charles-Arthur Gauthier: Mr. Chairman, it is the first time I have the opportunity to rise on this issue and I would be happy if the minister could go back to his seat, because I would like to ask him a single question. After all I have heard since the beginning of the discussion, and I did not miss much, the longer the discussion of clause 21 goes on the less we understand. Every spokesman for the New Democratic Party tried to give evidence that clause 21 was for people with high income at the expense of those at the lower end of the income scale, whereas the minister is trying to explain that it is not true.
Yet, a while ago, listening to the hon. member for Edmonton West (Mr. Lambert) reading his letter, I was thinking that this letter says a lot. We were wondering what low income people could get from that, compared to people with high income. I think light always comes from the working classes, it is quite clear now.
I will ask the minister, who is getting advice from experts, whether he can tell the House what a couple, whether both are working outside or not, will get in terms of family income. From what the hon. member for Edmonton-Centre has just

told us, it is unfair that a spouse who works to raise a family and earns $25,000 and whose child is placed in a day care center should be disadvantaged in comparison with another couple in the same conditions but with an annual income of $50,000. I would like to know what each of these two couples is getting? If the minister is prepared to answer now, I will have only one other point to deal with.


Donald Stovel Macdonald: That may be rather difficult to answer without knowing what tax rate applies or what deductions the individual is entitled to. But perhaps we can try to figure it out quickly.


Charles-Arthur Gauthier: Both are in the same economic situation.


Donald Stovel Macdonald: You spoke of a couple earning $25,000, and another earning $50,000.


Charles-Arthur Gauthier: Yes, both are in similar economic circumstances, benefitting from the same exemptions, to which the same tax rate applies.


Donald Stovel Macdonald: Their economic situation is not the same. One gets twice as much as the other. They may be subject to the same maximun deductions according to the bill, but the effect on their income tax will in fact be different. The percentage may be the same, but there will be a higher absolute amount where the income is greater.


Charles-Arthur Gauthier: Thank you, Mr. Chairman. That is precisely what I wanted to hear the minister say. That is precisely because the error lies in the rate. A deduction is made in terms of the percentage of the tax paid. I can understand the hon. members of the NDP who fight for that principle, because I feel that if we want to be fair to those who have to entrust a child to someone's care, we should fix a set amount. For instance, we should say that $40 or $45 a week will be allowed, which amount could decrease as salaries go up, because whoever earns $25,000 cannot afford to pay as much as the person who earns $50,000. As a result, those who earn $50,000, under the system I am advocating, would not be entitled to deductions for child care while those who earn $25,000 or $15,000 would be allowed more deductions. That is what we should do if we want to help the couples earning whereas the minister indicates vaguely that he wants to give more help to the couple whose income is highest. In this case, the NDP are right.


Marcel Joseph Aimé Lambert: No.


Charles-Arthur Gauthier: The hon. member for Edmonton West (Mr. Lambert) says no. Of course, because the minister has already said that whoever pays more income tax should have higher deductions. That goes without saying. If you stick to the deduction by the percentage, it is obvious he will get more. But you must not forget that the one earning $50,000 who places his child in a day care centre will not pay more than the one with a $15,000 income. You have to be fair. Will the day care centre charge $150 a week to the one earning
February 3, 1977

$50,000 and $25 to the other earning $25,000? Come on, this is done only in senior citizens homes in the province of Quebec. In these homes, one person with a little more money will be charged more, but we must not get in the same mess. I may be wrong but if we want to give direct assistance to minimum income couples, I think the percentage ought to be forgotten. I would like the minister to say what he thinks about it.


Donald Stovel Macdonald: Truthfully, to answer the hon. member's previous question, the taxpayer earning $25,000 will have a marginal tax rate of 39 per cent, and if he deducts the $4,000 maximum indicated on the bill, he would then get $1,560. However on a taxable income of $50,000 the marginal rate will be 43 per cent and the tax saving will amount to $1,720. But I must point out that the total federal tax for the taxpayer will be $7,250 if he earns $25,000, while it will reach $17,440 for the one who earns $50,000 and in that sense the tax paid by the latter is quite higher than that paid by the first taxpayer.


Charles-Arthur Gauthier: I realize once again that it is quite fine. I am told that the taxpayer who earns $25,000 will have a reduction of $1,560 in comparison with $1,720. Still the higher wage earner will receive $160 more than the lower wage earner.


An hon. Member:: He pays more.


Charles-Arthur Gauthier: Well, he paid more because he had more money, but if we consider the needs of the couple we must take an entirely new position. Let us consider the one who paid and not the needy. In that case it is somewhat like the case of pension plans, we agree on that point. A man needs an adequate income if he is to invest. The investor must be rewarded, because investments are needed. Such is the line of reasoning.
But with regard to child care expenses, it is very difficult to take. The hon. member for Winnipeg can say no all he likes, it is very difficult to take when one wants to plead for the family...


Marcel Joseph Aimé Lambert: Mr. Speaker, on a point of order.


The Assistant Deputy Chairman:: The hon. member for Edmonton West (Mr. Lambert) on a point of order.


Marcel Joseph Aimé Lambert: I hope the hon. member for Roberval (Mr. Gauthier) will admit that Winnipeg is not Edmonton. I come from Edmonton! I want to make a slight correction. Edmonton is not in greater Winnipeg, it is further west. Edmonton is a lot more important than Winnipeg!


Charles Robert Turner: The hon. member's point is well taken.
Income Tax Act


Donald Stovel Macdonald: A few more figures. Calculations are continuing. I provided the tax figures on an income of $25,000, which is $7,250, representing 21 per cent. But for a couple with an income of $50,000 the amount would be $17,440 and this deduction represents 9.8 per cent of their income tax.


Charles-Arthur Gauthier: Mr. Chairman, I understand very well what you have just told the House but I maintain my position because it so happens that the tax deduction applies to the amount of tax paid; this is all very well, but I recognize that we had better do it otherwise if we really wanted to help directly the needy family.


Reginald Cyril Symes: Mr. Chairman, the debate this afternoon has been an interesting one, with interventions from the minister and my friend from Edmonton West. We have been talking about clause 21 of Bill C-22, the child care deduction allowance. Throughout the discussion we have been ranging over the concept of whether this is a deduction that benefits upper income Canadians more than lower income Canadians.
The Minister of Finance has been trotting out the income tax rate and how the rate increases as we go up the income ladder. He has been making the argument that indeed we have a progressive income tax system, that upper income Canadians pay more in taxes, and therefore the kind of complaints being made by the NDP about these deductions really do not hold much water. He states that upper income Canadians pay more income taxes, and therefore they should be entitled to the benefits of these deductions. I wish to address myself to that point and to the whole concept of what makes an income tax system fair. To make an income tax system fair, we have to base it on the principle of the ability to pay, namely, that the more one earns, the more one is able to afford to pay higher taxes. The fact that with our income tax system the percentage tax rate is lower for people at the low income level, and higher for higher income people, indicates that the government believes in the concept of progressivity: the more one makes, the more one is able to pay.
What we have been complaining about with regard to Bill C-22 is that that principle is undermined by virtue of deductions that are in the bill. What these various deductions do is reduce the taxable income of a person, and hence the rate at which that tax will come into effect. I would like to show how this happens by zeroing in on the clause before us, the child care deduction. The bill will double the deduction from $500 per child to $1,000 and bring the family maximum up from $2,000 to $4,000. In 1974, the last year for which we have up to date statistics, the child care provision under the old rate cost the government over $29 million in taxes that would otherwise have been collected if that deduction had not been available. It is interesting to note that this was only $3 million less than was spent by all levels of government in directly subsidized day care programs.

February 3, 1977
Income Tax Act
I hope it will be seen by the conclusion of my speech that there are better ways of spending this money than by the present deduction system. We in the New Democratic Party do not object to the idea of a child care deduction. We know that it is becoming more and more expensive to raise a family in this day and age of increasing costs, and that the burden falls harder on low income Canadians. We agree there should be some compensation for raising children, in terms of the income tax system. However, we ask the government and the public to examine how this present deduction system works and whether it is a fair way of providing support for families who are raising children. In other words, who does it help the most: the lower income families who obviously need aid, or upper income Canadians who are better able to meet ever-increasing costs?
We contend that it is the well-off who benefit most from these deductions. The Minister of Finance and spokesmen for the Conservative party say this may be true, but since we have a progressive tax system the well-off pay more tax anyway and for this reason the programs are not unfair. In response to that argument I should like to quote from a current study which was undertaken recently by a government-funded agency, the National Council of Welfare. I quote from page 20 of a council report entitled "The Hidden Welfare System." The authors considered the child care deduction system and say:
When the child care deduction, or, for that matter, any deduction or exemption, is examined in the light of the progressive tax rates, it become obvious that it stands the ability to pay principle precisely on its head. A deduction always gives a greater benefit to persons with a higher income and a lesser benefit to persons with low incomes. This is because deductions always take money out of a person's highest tax bracket-the bracket which is taxed at the highest rate applicable to his income.
We are not, of course, against child care allowance. But the system should be structured in such a way that deductions in respect to it do not subvert the concept of progessivity and ability to pay. Let us see how the present system works and how the bill before us will work when passed. Take the example of two women, one a minimum wage-earner earning $6,000 a year. Consulting the 1976 tax schedule, we find that if she were allowed no child care deduction, federal and provincial tax upon that $6,000 would amount to $518. But if she is allowed the child care deduction in respect of one child, her taxable income is reduced by $1,000. Therefore, federal and provincial tax would be reduced to $261 and the child care deduction would provide a tax saving of $257.
Now take the case of a woman earning $20,000. Her taxes on this amount, before the child care deduction, total $4,972. If she takes advantage of the child care deduction, her taxable income is reduced by $1,000, which in turn reduces her tax bill to $4,592. Her tax saving amounts to $380. In other words, each woman gets the same basic deduction of $1,000, but the tax saving in dollar terms is quite different. The low-income person saves $257, but the upper-income person saves $380. So what we must concentrate upon is the dollar effect of the reductions built into the tax system.

What the income tax system should be doing is narrowing the gap between the rich and the poor to provide relief for those living below the poverty line. It is shocking to note that in this wealthy country there are five million Canadians living below the poverty line. The Prime Minister himself stated that it was a goal of his government to narrow the gap between the rich and the poor. I note that the Prime Minister said in 1971:
The whole idea of redistributing wealth so that there might be a greater opportunity for all has been a national goal of this government.
That was in 1971. But what has happened since is that successive budgets by various finance ministers have failed to achieve this goal. Wealth has not been redistributed and the gap between the rich and the poor has not been narrowed. I should like to give some figures to indicate how the tax system has become perverse. In 1951, the bottom 20 per cent of income earners got 4.4 per cent of the total national income. Twenty years later, in 1971, the same bottom 20 per cent found their percentage of the national income reduced; they received only 3.6 per cent. In 1975 they registered a fractional increase which brought them up to 3.9 per cent.
Consider what has been happening to the top 20 per cent of income earners. Their share of the income pie has grown. In 1951 they got 42.8 per cent of the total national income. In 1971, the year in which the Prime Minister disclosed his goal and spoke about narrowing the gap, the same 20 per cent increased its share of the total national income and got 43.3 per cent. In 1975 that figure was reduced only marginally to 42.4 per cent. So through two decades each group finds itself in relatively the same position. There have been marginal movements but the gap was just as wide as it was. This is what we object to so strongly in the bill before us. The deductions here will perpetuate the inequity in the economic system as it pertains to low income earners. Moreover, the national government is losing billions of dollars of potential tax revenue, revenue which might be used to introduce income support programs in favour of lower income Canadians.


Marcel Joseph Aimé Lambert: That would sure create a lot of jobs, too.


Reginald Cyril Symes: The National Council of Welfare estimates that all these various provisions cost the treasury $4.6 billion in lost tax revenues in 1974, and goes on to say that if the government were to eliminate or revise only half of these provisions, the tax revenue available to the federal treasury could be used to eliminate poverty for the five million Canadians living below the poverty line.
What we would like to see, instead of the present provision in clause 21 of a standard $1,000 deduction applied to both low income earners and upper income earners, is a new system of tax credits which would provide some kind of relief to families who are raising children. It would be arranged in such a way as not to benefit upper income Canadians more than lower income Canadians. Again I quote from the National Council of Welfare report at page 21. This is their finding:
February 3, 1977

The way to eliminate this inequity is to replace the child care deduction with a child care credit. (A tax credit is just what its name would imply: a credit of a fixed amount which each taxpayer could apply against his/her tax bill-or, in other words, a fixed amount of tax which he/she does not have to pay.)
In the example above, suppose the child care deduction were eliminated and replaced by a tax credit of $350 per child. The two women-
They are the two women I mentioned earlier in my speech.
-Would both then be eligible for the same $350 credit. For the woman whose earned income was $6,000, this would mean a $93 reduction in her tax bill. (Instead of the $257 tax saving she now receives from the deduction, she would have her taxed reduced by $350, a difference of $93.) The $20,000 a year woman would have her tax bill increase by $30 (since the present tax deduction gives her a saving of $380, but the credit would only give her a saving of $350).
So 1 submit that there is a way through the tax system to help families that are rearing children. The way to help them is not, as this bill proposes, by means of a standard deduction but, rather, a tax credit. Then those who need help the most- that is to say, those at the lower end of the income scale- would receive the maximum benefit, rather than, as the system is now, those at the upper end of the income scale who do not need the kind of tax saving offered as much as those at the lower end of the income scale getting the unfair advantage which is inherent in this provision of the bill.
As a Canadian, Mr. Chairman, I am concerned about fairness in our tax system, and the more I look at the tax system that is designed by the Liberal government, supported by their Conservative friends, the more I see how it discriminates against those who are least able to fight back in terms of their income and their political strength. That is why we say the bill is unfair, that there are better ways to provide assistance to families. The better way is the tax credit, not the regressive kind of deduction that the government is proposing in this bill.


Donald Stovel Macdonald: Mr. Chairman, may I just add a postscript to that. According to the figures presented by the hon. member for Waterloo-Cambridge, 77 per cent of the benefits from child care expenses go to those with incomes of $10,000 or less.


Reginald Cyril Symes: Mr. Chairman, the Minister of Finance loves to point out in percentage form who receives the benefits. I do not quarrel with the concept that lower and middle income Canadians should receive benefits from the child care deduction system. But what I do quarrel about is the fact that upper income Canadians, who really do not need the kinds of deductions that we have here, are benefiting in dollar terms more than lower income Canadians. Therefore, if the minister is concerned about fairness and not with just quoting percentages showing who gets what, he will remove this provision from the bill and replace it with a tax credit system.


Donald Stovel Macdonald: Just to respond to the hon. gentleman, he was making the argument that it was politically expedient for us, for some reason, to put in a measure favouring those in the upper income group. In fact, it favours the lower income group, so it seems to me that the hon. member's argument does not follow.
Income Tax Act


Reginald Cyril Symes: Mr. Chairman, when you look at the total number of provisions in our income tax system of which the minister is so proud, since the minister is so fond of talking about averages, if we add up all the exemptions and deductions permitted in the income tax system we find that taxpayers earning $5,000 average a tax saving of $244, whereas taxpayers earning over $50,000 save about $4,000. I would ask the minister, what is fair about a tax system which permits 27 per cent of all tax savings to go to the top 5 per cent of tax filers, while only 33 per cent is distributed among the 70 per cent or more of lower or middle income? I say that is not fair.


Donald Stovel Macdonald: With a progressive income tax system, Mr. Chairman, people at the upper end of the income scale pay a much higher dollar amount, if the hon. member wants to talk in terms of dollar amounts. What I am pointing out is that from the figures that his colleague tendered to the House it appears that the vast majority of taxpayers in this country who take advantage of child care expenses, which is the clause we are dealing with at the moment, earn incomes under $10,000. So it is scarcely a measure that is weighted in favour of the upper income group.


John R. Rodriguez: Mr. Chairman, I never cease to be amazed to find, when we are discussing bills having to do with income tax, a close liaison existing between the Liberal and Conservative parties. They certainly form a coallition to support this kind of maldistribution of income tax. The point that my colleague for Sault Ste. Marie was making seems to me a very legitimate one.


Mr. Woolliams:: He never made one, though he tried to.


John R. Rodriguez: We are not objecting to child care expenses being increased. What we are saying, in effect, is that because it is a progressive tax system this is another distortion in the system. As we go through the bill we see other give-aways and exemptions are permitted only for people who are earning large amounts of money, and therefore it becomes a distortion when it is superimposed upon-


Eldon Mattison Woolliams: What is your salary?


John R. Rodriguez: Well, you do the same job as I do, so you know my salary.


Eldon Mattison Woolliams: If I did my job like he does his, I would not want it.


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

February 3, 1977
Private Members' Motions



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mr. Turner):: 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 Saskatoon-Biggar (Mr. Hnatyshyn)- Government Administration-Possibility of existence of guidelines governing acceptance by departments of free advertising; the hon. member for Moose Jaw (Mr. Neil)-Grain-Use of. elevator space for Durum or red spring wheat; the hon. member for Humber-St. George's-St. Barbe (Mr. Marshall)- Regional Economic Expansion-Newfoundland-Government action in view of closing of linerboard mill.
It being five o'clock p.m., the House will now proceed to the consideration of private members' business as listed on today's order paper, namely, notices of motions (papers), private bills, public bills.


PRIVATE MEMBERS' MOTIONS FOR PAPERS
The Acting Speaker (Mr. Turner):: Notice of motion (papers) No. 1, the hon. member for Humber-St. George's-St. Barbe (Mr. Marshall): shall the order stand?


Some hon. Members:: Stand.


The Acting Speaker (Mr. Turner):: Stand at the request of the government. Notice of motion (papers) No. 11, the hon. member for Humber-St. George's-St. Barbe (Mr. Marshall): shall the order stand?


Some hon. Members:: Stand.


The Acting Speaker (Mr. Turner):: Stand at the request of the government. Notice of motion (papers) No. 14, the hon. member for Humber-St. George's-St. Barbe (Mr. Marshall): shall the order stand?


Some hon. Members:: Stand.


The Acting Speaker (Mr. Turner):: Stand at the request of the government. Notice of motion (papers) No. 15, the hon. member for Yorkton-Melville (Mr. Nystrom): shall the motion stand?


Some hon. Members:: Stand.


The Acting Speaker (Mr. Turner):: Stand at the request of the government. Notice of motion (papers) No. 35, the hon.
[The Deputy Chairman.]
member for Humber-St. George's-St. Barbe (Mr. Marshall): shall the motion stand?


Some hon. Members:: Stand.


The Acting Speaker (Mr. Turner):: Stand at the request of the government. Notice of motion (papers) No. 8, resuming debate on the motion of the hon. member for Humber-St. George's-St. Barbe (Mr. Marshall): shall the motion stand?


Some hon. Members:: Stand.


The Acting Speaker (Mr. Turner):: Stand at the request of the government. Notice of motion (papers) No. 23, the hon. member for Selkirk (Mr. Whiteway): shall the motion stand?


Some hon. Members:: Stand.


The Acting Speaker (Mr. Turner):: Stand at the request of the government.



PRIVATE BILLS


[Stage Direction]
The House resumed, from Thursday, November 25, 1976, consideration of the motion of Mr. Reid that Bill C-1001, to incorporate Continental Bank of Canada, be read the second time and referred to the Standing Committee on Finance, Trade and Economic Affairs.
Mr. Charles-Eugene Dionne (Kamouraska):: Mr. Speaker, during the debate on Bill C-1001, an act to incorporate Continental Bank of Canada, on November 25, 1976,1 started quoting an article published in the Quebec City newspaper Le Soleil on March 25, 1976, which article was written by a citizen of the Sherbrooke area, Mr. Gaston Begin; he described the disadvantages in the fluctuations in the cost of interest which he described as being a parasite. That article is so well written that I feel it is well worth quoting:
"Those financiers are represented by the chartered banks and ably camouflaged by the Bank of Canada which makes only pocket money at the rate of 8 per cent a year on the monetary mass of the country while the others make the rest, namely 92 per cent. With their multipliers, with a stroke of the pen, they cash in on the wealth of the nation and collect unfair interest on it. They take over our wealth and become our masters; they are the tyrants from whom we must ask permission to breathe.
A country must not buy money, it must create it itself, and without being forced to do so. That is the supreme right of the state; otherwise a country cannot be administered. Its economy becomes distorted, turned upside down, damaged, even tainted, as ours is today.
February 3, 1977

Nothing will change if we do not have the courage to force our governments' hand so that they revamp this impostor of a monetary system which directly causes miseries, perpetual indebtedness, inflation, high cost of living and laxity."
I think it is quite in order to deal with the whole flaws of the present banking system, since the object of Bill C-1001 is to create a bank. This is clearly indicated in clause 1, and 1 quote:
1. There is hereby incorporated a corporation under the name Continental Bank of Canada, in English, and the name Banque Continentale du Canada, in French, hereinafter called the "Bank", consisting of such persons as are from time to time shareholders of the Bank.
In short, just another bank.
For all those who seem sceptical when we refer to the role of banks in the creation of money, here is a quotation from a book by Paul Samuelson, winner of the Economics Award of the Royal Bank of Sweden. I have this book here, if anyone has doubt, a book published in memory of Alfred Nobel.
This new edition of the translation is based on the fifth edition of the book reviewed and supplemented by the author, third printing, 1966. On pages 277-278 under the title: Can banks create money? the author has the following to say to explain the basic banking system:
The banking system as a whole can act as no single bank: it can develop its investments and loans to the extent where they reach a multiple of the total resources orginally available to the system. However each small bank in doing so lends only a part of its deposits.
We therefore reply in the affirmative to the question asked at the beginning of this section. Yes, the banking system and the American public jointly create about $5 in bank deposits for each dollar withdrawn from circulation and delivered to the banks.
Is this clear enough? Yet that book can be found in nearly all universities and all collections of the work of Samuelson. I had the opportunity to meet students at the La Pocatiere community college and they told me that they had those books, but that they had not noted the important points that we can discover when we read the books.
Samuelson then explains in three tables how deposits are created.
Table 26 A: Initial situation of the mother bank;
Table 26 B: Untenable situation for a small isolated bank;
Table 26 C: Final situation of the mother bank.
On page 284, the same author says the following:
Through these same processes, the banking system finally creates desposits for a total amount equal to five times that of the additional initial coverage.
This is what we, Social Crediters, talk about regularly and what we try to force government representatives to admit, that we cannot continue to live in a system of perpetual debt when we have federal-provincial conferences to try to discover who will have the right to collect the most taxes from the taxpayer. There must be an end to this. This is a cause of dispute.
Samuelson also explains in Table 26 H the multiple expansion of deposits throughout the banking system. He adds at the end of the table:
... in each generation, each small bank has "created" new currency so that terminal banking deposits are five times higher than the coverage finally collected from the rest of the economy.
Continental Bank of Canada
The same author also says-and I have taken notes to be quite sure that what I am quoting can be checked anytime by anyone so inclined:
We can obtain the same answer two other ways-by using common sense or elementary algebra.
On the following page, page 285, he adds this:
We can now observe that banks as a whole can achieve a credit expansion which a single bank could not achieve.
In Table 26 I, he gives a synthesis of the final position of all banks together. In the field of banking legislation, we have a number of freshmen who show good dispositions, but in an era of electronics and automation they go on using old rusty machines whose gears do not work any more. That is why our financing machine is falling apart. Those in charge of its operation do not even think of putting some oil where it is needed to prevent the bankruptcy which every unbiased observer says will hit us sooner or later.
We are worried by the list of fraudulent bankruptcies and we do not dare take the necessary measures to put an end to that state of affairs because we are afraid of disturbing the big shots who keep on taking advantage of the system.
Usually, at least, the essential product always comes when you can pay for it. Various organizations have studied the matter of housing, so what are the results? We ask from the government a working man's credit, namely loans for those families who want to buy a house. What does that mean? We have enough room, wood, stones, manpower and technicians to build houses. We lack money. Let us make loans and we will see houses being built. Let us do the same in other fields. Let us give money to the father of a family and we will see that he will find something better than rags or second-hand clothes for his children.
Of course, we will not give heaps of money for products that do not exist, but we simply want to give enough money so that a citizen can buy the goods that will help him meet his needs.
Bankers and politicians now say that there is too much cash in circulation. However very few people say that they have more money than what is necessary for them to meet their needs. This is what we can see everywhere.
So we fail to understand why governments take one portion of the worker's pay because the workers' families really need the whole pay of the father to meet their ordinary needs. If there is too much cash in circulation, the government should take it where it is most abundant, but never where it is lacking. Money is a creation of man! But as soon as a problem concerns money, we are stuck, we bow as before to what is inescapable, just as if it was a question of weather. Nothing can be done against the sun nor the rain. Nevertheless some so-called cultured minds take for granted that nothing can be done against lack of money and inability to pay.
However, money is not a creation of God, but an invention of man. Money was not created at the beginning of the world in a limited and immutable amount, by God's decree or by the forces of nature. Nothing such. Whether money be of metal,

February 3, 1977
Continental Bank of Canada
paper or whether it be only credit transfers in bank books, it exists because it was made somewhere by man.


Mr. Reid:: Mr. Speaker, I rise on a point of order. On the last day this bill was debated the hon. member who has the floor asked for a few moments to conclude his remarks. Since that time the hon. member has spoken for 1216 minutes. I realize that he has important things to say on this bill, but there is a tradition in the House of Commons that a few moments are given to hon. members to conclude their remarks. I invite the hon. gentleman to conclude within a reasonable length of time so that other hon. members might have an opportunity to participate.


Max Saltsman: Mr. Speaker, on the same point of order, we in this party would be very happy to forgo the time for our fourth speaker, whom we have here this afternoon, in order to permit the hon. member to proceed.


The Acting Speaker (Mr. Turner):: Order, please. On page 1392 of Hansard for November 25 the following is reported:


Mr. Deputy Speaker:: Order, please. I regret to interrupt the hon. member but his time has now expired.


Charles-Eugène Dionne: Mr. Speaker, I have just a few words to add-


Mr. Deputy Speaker:: Is the House ready to give unanimous consent to allow the hon. member to continue his remarks?


Some hon. Members:: Agreed.
So I ask the hon. member whether he is drawing to a close shortly; if so, we will let him carry on.


Charles-Eugène Dionne: Mr. Speaker, I thank you and also my colleagues. However I would tell you as well as to the hon. member who rose on a point of order that I am now well rested and fit. The other day I was about to conclude my speech, but today I can go on again. Mr. Speaker, I hope you will allow me a few more minutes to end my remarks.
In any case the hon. gentleman who rose on a point of order even said it was interesting. So I go on. When the money supply in a country goes up or down, it is because somebody makes or withdraws some money. Money is coming from people who have the power to make it. That is the first thing we must have in mind if we are to overcome the financial obstacles placed between goods and needs, between the wheat in the field and the table around which hungry people sit.
The second thing we have to learn is that money is the only thing in the world that can be made in required quantity. When Canada declared war in September 1939, the whole country had been short of money for a decade. But overnight there was plenty of money until the end of the war. Money came by millions and billions, as much as was needed. That was so in every country at war. How was that money begotten? Certainly not by opening new gold mines; workers were led to the forces and war equipment plants rather than gold

mines. The money came by a stroke of the pen. It was simply decided it should be there.
Food, clothing, shelter require work. Goods are the result of work. But not money. Money is the result of a mere decision by those who have the right or privilege to so decide. This is a point on which I would like hon. members to think, to try and understand all the difficulties in our system. This system could be amended anyway. When this is realized, one can no longer accept that there be no money when the lack of it is the only reason why goods in stores cannot be had by consumers. When this happens lack of money is a criminal mistake fraught with consequences. Name one government that would decide in wartime to send its soldiers home or shut down its war equipment plants for lack of money. This we did not see in Canada. How come then that the same successive governments accepted to leave hundreds of thousands of individuals and families suffer hunger and illness, lose their houses and farms because they had no money? I for one was a victim of the depression. At the age where everyone looks ahead with some confidence, we were living in a crazy system where we were earning 50 cents a day. Because I could never forgive the system for supporting that, I welcome this opportunity to express my views on the current situation.
A country should not buy money, it should create it. Such is the sovereign right of a government, without it no country can be governed, and the economy becomes thwarted, upside-down and weakened as we see it today. We therefore urge the government to use their right to create all the money needed for trade in an active and prosperous country, or to create credit instead of money. But let that be to society's benefit, let us have social credit instead of bank credit where interest is personal and trade like rather than social. It is simply that, but all that.


Marcel Joseph Aimé Lambert: Mr. Speaker, the debate at this stage of this particular bill may have a rather dreary resemblance to the debate when a former bill, S-30, came back at the report stage. It is true that Bill S-30, accepted by the other place last session, was modified extensively in committee and met the objections of the majority of the members at the time, and it was only by some belated intervention at the report stage that some assiduous but misguided research assistants prepared a number of amendments merely to engage in a doctrinaire blockade of a bill which had satisfied the members of the House after extensive examination in committee. None of the objections which were made at the report stage had been raised at the committee stage. As a matter of fact, it seemed to be an almost total abdication of any examination on the basis that had been suggested. Of course, this is merely a tactical blockade, and this House should be more than conscious of the effect of such a blockade. The blockade may amuse some people, edify others and satisfy some doctrinaire quirks, but the point is that there are some 12,000 people who own a portion of I AC, many of them-


John R. Rodriguez: Poor Canadians.
February 3, 1977


Marcel Joseph Aimé Lambert: That is true of the great majority of them. There may be a few wealthy people among them, but it is strange to inquire about the portfolios of 12,000 shareholders of a company like IAC, which is a large, allCanadian company. Some people who care little have a total disregard for how they trample on other people's property, how they may kick them in the teeth and how they may cause them loss without right of repartition. They are quite prepared to act as long as they see fit, but should they feel hurt themselves you would hear them bleat. If those who want to intercede at this time cite one or two names-as was done in debate this afternoon-of people who have worked and risked a lot, it is primarily because of jealousy because these people are smarter or a little more astute.
The hon. gentleman suggests there might be a character in the shape of a dog's hind leg. Unless one is able to put forward proof of misfeasance or improper practices, I think he should not cast aspersions on others. I would like to see the proceedings of this House broadcast when such statements are made. We would see how fast a libel suit would be slapped on. It is easy to make statements in the confines of this Chamber where there is absolute privilege, but they would not dare to make those statements outside. I find it rather difficult to accept observations like that.
This House has to act responsibly. If there are proper objections to a bill and we have heard them, the bill goes to committee and it is examined as to misfeasance, instead of wild allegations being made which have no substance. We should not be caught up in causing potential damage or financial loss to people who have no recourse. Some members dismiss the fact that they can cause economic loss to others by playing games, but if anyone were to start stepping on their toes we would hear them scream.
I put a lot of blame on the government for the fact that certain objections are being raised to this particular bill at this time. A white paper on banking revisions should have been prepared for reference to the standing committee on finance immediately after the conclusion of the throne speech debate. But we are not going to get a white paper, we are going to get a bill and the second reading debate will be extensive because the government will be committed to a particular course of action. After that there will be reference to the committee, and then public hearings. I forecast that the only amendments to the Bank Act in 1977 will be a one-line amending bill about May or June extending the life of the act for another year.
What about this bill to incorporate the Continental Bank of Canada? Does it face another year of total opposition, and is that opposition justified simply on the doctrinaire grounds that banks should be nationalized? There is no other reason for the opposition to this bill.
This is a Canadian operation and it is going to start with some money. I suppose to members of the New Democratic Party, the fact that it makes money makes it a reprehensible operation. To them the only things that are good are loser,
Continental Bank of Canada
state-operated ventures. They all become losers unless they have an absolute monopoly. I think members of that party should examine their stand and the interests that other people legitimately have. It is totally wrong to blockade this bill all through this session. Undoubtedly, if this practice continues it will take another year before the bill can go through. The Bank Act is not going to come forward, and there will be no opportunity to incorporate a bank by letters patent which would eliminate the private bill.
This House has to be responsible to the public interest, Mr. Speaker. Over the years I have seen some shocking examples of abuse of parliamentary privilege and parliamentary practice. People who have absolutely no right of redress have suffered grievous loss. I think those losses should lie in the souls and minds of the people who caused the excessive delays. The case can be argued, and it is then up to us to incorporate the body. We do not guarantee it will operate at a profit.
I dare say members of the New Democratic Party were quite happy to see the Unity Bank go through. It has had some difficulty in its operations, but others have gone through recently that seem to be operating very well and which are likely to be successful. They are like any new business except that the stakes are higher. At the present time, foreign financial interests can operate freely in this country-the suitcase bankers. Foreign banking interests are allowed to incorporate subsidiary institutions, not called banks but carrying out many banking functions, without supervision. This is because there are people who think that some Canadian operations are too big. By trying to get a squirrel with an elephant gun they miss the squirrel but get the much bigger game. I urge hon. members to let this bill go forward to the next stage. Surely the people who are putting forward this proposal are entitled to justice and fair play from this House. That is all I ask.
I urge hon. members not to delay unduly passage of this bill. Some may have legitimate remarks to make. I made plenty of suggestions with regard to the bill last year and was able to obtain many changes, as I saw fit, on behalf of my party, and those changes were accepted by the committee. None of the amendments was opposed by members of the New Democratic Party, who also found the amendments satisfactory.
We are considering a large Canadian company. Incidentally, IAC is the largest Canadian-owned auto-leasing company, but its share of the Canadian market is much smaller than that of a subsidiary of a New York company which can operate with greater freedom than IAC. If the House allows the Continental Bank bill to pass, the operations of the Canadian-owned company will be strengthened and the company will obtain a bigger share of the Canadian market.
The position of the NDP on this matter is remarkable. They cannot have it both ways. They are strong economic nationalists, but not, apparently, in the case of banks, because they want all banking to come under one big, massive, national bank. The result of their proposal would be foreign-owned interests coming in and taking an ever bigger share of our

February 3, 1977
Continental Bank of Canada
business. Really, they are adopting two positions which I find totally unreconcilable.
I hope that this bill can go forward. I do not think that passage of this bill should await passage of a new bank act which will become effective only in 1978. I think the people promoting the bank and the shareholders of IAC deserve more honest and fair treatment from this House.


Mr. John Gilbert (Broadview):: Mr. Speaker, I appreciate the remarks of the hon. member for Edmonton West (Mr. Lambert). He has long been a member of this House. I recall, when I was first elected to this House in 1965, that he was the chief financial critic of the Conservative party, and in 1967 he played an active role in the finance committee in discussing amendments to the Bank Act. I listened carefully to his remarks this afternoon. It would be only fair to add that in 1967 when we sat in committee he was the corporate apologist. Two members of my party, the late Colin Cameron and I, attempted to carry the flag for most Canadian people in the discussion of those amendments.


Marcel Joseph Aimé Lambert: Hah!


John Gilbert: If you remember, Mr. Speaker, back in 1967 a Bank Act amendment lifting the 6 per cent ceiling was being considered. I remember witnessing a motion, proposed by a Conservative member and seconded by a Liberal, for lifting that ceiling. It was accepted, despite the opposition of a strong contingent of young Liberals led by Walter Gordon. The corporate boys won the day and the 6 per cent interest ceiling was lifted. The hon member for Nickel Belt (Mr. Rodriguez) pointed out the results of the acceptance of that motion brought forward in 1967.
We, of the New Democratic Party, feel that it is our duty to review Bill C-1001, the bill to incorporate Continental Bank of Canada. We want to consider how such a bank would fit into the general banking picture in Canada. I enjoyed listening to the hon. member for Edmonton West. He partly blamed the government for not bringing forward a white paper for discussion both in the House and in committee, a white paper which would have enabled us to consider amendments to the Bank Act. Actually, one of his main arguments was similar to the NDP argument with regard to the incorporation of IAC as Continental Bank of Canada. We say that IAC should not be incorporated as a bank until the Bank Act has been amended. The principle is important and there is a good deal of support in the financial community for that position.


Marcel Joseph Aimé Lambert: Tell us about it.


John Gilbert: Mr. Speaker, may I refer the hon. member for Edmonton West to an article in the Financial Post of April 3, 1976?


Marcel Joseph Aimé Lambert: Written by whom?


John Gilbert: It was written by Beatrice Riddell and Stephen Duncan. The headline reads, "Stall of IAC Conversion to a Bank Raises Larger Issues ." The article reads in part:

Barring an unexpected change of heart by the 16-member NDP caucus, the IAC Ltd. proposal to convert to a chartered bank appears stopped in its tracks- for the time being at least.
I shall quote what I consider as the main parts of the article. I hope the hon. member for Edmonton West is listening. The paragraph I am about to quote is headed, "Conversion vs Creation." It reads:
Clearly, the IAC-Continental stall raises some serious questions for the financial system as a whole-questions that will certainly get important billing during the forthcoming Bank Act debate.
As that paragraph suggests, the issue is one of conversion as opposed to the creation of another bank. The next paragraph of the article reads as follows:
At issue: is it in the public interest for a large, efficient financial organization to convert to a chartered bank? If so, what special arrangements should be permitted to allow for an orderly transition, and what time limit should be set?
The issue, as I said, is one of conversion as opposed to the creation. That question can only be debated fully by members of this House, and of the finance committee, when they see the proposed Bank Act amendments. That, I suggest, is what the two learned authors of the article say.


Marcel Joseph Aimé Lambert: Who are they, and what are their interests?


John Gilbert: They are Beatrice Riddell and Stephen Duncan, writers for the Financial Post. I do not know them but have read what they have written in the Financial Post. I am sure that they have both knowledge and experience of this matter.
The article goes on to say:
Ever since the Porter royal commission on finance reported in 1964, it has generally been considered acceptable, and even desirable, for existing near-banks to become banks if they want to do so. But, in fact, this is the first such request.
I am sure the hon. member for Edmonton West remembers the Porter commission report of 1964, and the questions which were raised at that time concerning the conversion of nearbanks to banks. Well, here is a large institution attempting to convert itself into a bank. We say, properly, I think, that before this conversion takes place we should see the new bank act and the standards which are to apply under that new act.
The authors of the article go on to say this:
Obviously, a bank sponsored by an organization of IAC's size, reputation and financial expertise provides much greater potential competition for the existing big banks than one starting from scratch.
"If anyone is entitled to a new banking charter, IAC with its proven management and strong Canadian flavor (96 per cent owned by 13,000 Canadian shareholders) certainly is," a senior Canadian banker says.
Before the Finance Committee on Bill S-30 there appeared the Inspector General of Banks, C. L. Read. He set forth a principle which we should look at very closely. He said that in order to put the banks in a proper perspective we should have more competition. That is the thrust of his statement. That is what C. L, Read, the Inspector General of Banks, told the Senate Banking Committee when it convened in November to hear an application from IAC of Toronto to form the Conti-
February 3, 1977

nental Bank of Canada. He said government policy favours the chartering of new banks to provide competition for the 11 existing banks. If I thought there was real competition among the 11 existing banks with regard to interest rates, I would more than welcome the instrusion by IAC into the banking field. However, one need only look at the interest rates with regard to personal loans, mortgage interest, and rates to companies to realize that there is no competition whatsoever. There may be a little bit of competition with regard to acquiring business and services, but one could not for a moment say that there is any competition with regard to interest rates.
An article in the December issue of Maclean's is entitled "Let There Be Banks-A Little Something For The Rich". After setting forth the principle by C. L. Read, the Inspector General, the writer, Terrence Belford, sets forth the background of the persons who conduct the IAC operation. He says, and I quote:
Take IAC's Continental Bank. Among its 16-man board of directors, thirteen sit on the boards of other banks or trust companies. They are: J. S. Land, Royal Trust Co.; Ronald Cliff, National Trust Co.; Frank Covert, Royal Bank; John Dewar, Toronto-Dominion Bank; Conrad Harrington, Royal Trust Co.; David Kinnear, Bank of Montreal; Louis Lapointe, Toronto-Dominion Bank; Keith MacDonald, Canada Permanent Trust Co.; Paul Pare, Royal Bank; Charles Rathgeb, Royal Bank; Renault St.-Laurent, Banque Canadienne Nationale; James Thackray, Bank of Montreal; and Dennis Yorath, Montreal Trust Co.
With an array of directors like that who sit on the IAC and also on other banks, one draws the immediate inference that competition would remain the same as it is today among the other 11 chartered banks. I would think the hon. member for Parkdale (Mr. Haidasz) would see that that is a reasonable inference on the basis of the facts that have been presented by this writer and myself. If you have the IAC with 13 directors who have interlocking directorships with other banks, you cannot reasonably expect competition in the banking field.
Terrence Belford in the article in Maclean's goes on to say, and I quote:
IAC's major shareholder, with a 19 per cent interest, is Carena-Bancorp Inc., controlled by Peter and Edward Bronfman, who incidentally are also principal shareholders in the company sponsoring the Commercial and Industrial Bank. Their partner in Carena-Bancorp, which owns the Montreal Forum and Canadi-ens hockey team, is Jacque Courtois, a vice-president of the Bank of Nova Scotia. The Bank of Nova Scotia itself also participates in Carena through its holdings in Placements Rondelles Inc. Yet another IAC shareholder is Royal Trust. Both the Bronfmans and the trust company will transfer their shareholdings to the new bank.
On the evidence of the article by Terrence Belford, we come back to the original proposition by the Inspector General that the incorporation of new banks will be for the purpose of providing more competition. We find that the directors of IAC have interlocking directorships with other banks. We also find that IAC's major shareholder has many other corporations which are directly related to banks. Therefore the inference is reasonable that there will be little or no competition.
Mr. Belford goes on to say:
This galaxy of corporate talent has managed to convince the Senate banking committee to exempt the IAC bank from many regulations governing similar ventures. For example, the Senate says the Bronfmans can keep their 19 per cent
Continental Bank of Canada
shareholding for two years in spite of the fact all other bank shareholders are limited to a maximum 10 per cent interest.
That is a concession which is worthy of note and worthy of examination. The hon. member for Parkdale said that appears to be discrimination. I quite agree with him.
Mr. Belford went on to say:
The IAC bank bill will allow the company to keep its two insurance subsidiaries for at least two years:-
Again the inference can be drawn that this is a discrimination in favour of IAC against other banks.
-other banks are specifically banned from the insurance business. The bank will also be allowed to keep its current board of directors for ten years even though the Bank Act says directors cannot sit on both bank and trust company boards. IAC has Five such directors including its president, J. S. Land.
On the basis of the evidence by Terrence Belford, we should examine thoroughly and exhaustively the reasons why IAC want to incorporate under Bill C-1001. The reasons are quite obvious. They want to continue their operation with exemptions and preferences that other banks do not now enjoy.
The hon. member for Edmonton West says that there are 12,000 or 13,000 shareholders who may be suffering certain losses as a result of the holding up of this bill. There are 23 million people in Canada. Their interests far exceed the 13,000 shareholders represented by IAC. They do so in light of the favours that IAC would obtain by its conversion from a finance company to a bank.
This is the first attempt by any finance company or near bank to move to a bank. All other applications have been started from scratch. Therefore it behooves all of us to study in depth this problem of conversion versus creation.
When I consider the array of directors, when I consider the type of shareholder, when I read about the exemptions which would need to be made with regard to the finance act, I come to the conclusion that in fairness to all Canadians, not merely to 13,000 shareholders, there is a duty incumbent upon all members of parliament to delay this bill until a new Bank Act has been presented. When we know what the amendments are to be, and when these matters have been fully debated in the House and in the Finance Committee, we shall be in a position to deal with applications from insurance companies and nearbanks in a spirit of fairness, knowing what is contained in the new legislation.
This, in summary, is why we in the NDP oppose Bill C-1001. We have no axe to grind with the hon. member for Rainy River (Mr. Reid) who brought this measure forward as a private member's bill. I am sure he does not rank with members of the other place who have corporate holdings and deep financial interests in many of the major corporations across the country. I think he is a poor country boy who represents the people of Rainy River. He represents them under different banners. At times I do not know whether he is representing them as a Liberal, as Labour, or as Liberal-Labour. Now he really has me confused. He advises us he represents them as Liberal-Labour. If he does, I think he will
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February 3, 1977
Continental Bank of Canada
recognize the fairness of the argument put forward by members of the New Democratic Party, particularly by the hon. member for Waterloo-Cambridge (Mr. Saltsman) and by the hon. member for Nickel Belt (Mr. Rodriguez) who have studied this subject closely and concluded that in no way should the bill be approved until the new bank act is passed.
I happen to be a poor city boy with much the same background as the hon. member for Rainy River. I did have a certain amount of university education, but I am just a humble lawyer attempting to look after the needs of my constituents. Many of my constituents come to me and complain about the exorbitant interest rates they pay on their mortgages and personal loans. It makes me-


The Acting Speaker (Mr. Turner):: I regret to inform the hon. member his allotted time has expired. He may continue if there is unanimous consent. Is there unanimous consent?


Some hon. Members:: No.


Charles-Arthur Gauthier: Mr. Speaker, I would like for the First time to make a few comments about this private bill which, like all other private bills, will keep coming back before the House until we get so tired of it that it will eventually pass.
This bill provides for the organization of Continental Bank of Canada as a wholly-owned subsidiary corporation of IAC Limited. The bank and IAC Ltd. would be almagamated within ten years, with shareholders of IAC Ltd. becoming shareholders of the bank. The bill contains a number of provisions to ensure that the business and capital structure of IAC Ltd. will be brought into conformity with the Bank Act during the period prior to amalgamation.
This is precisely why we cannot pass this bill for the time being. First of all, to organize this bank, they failed to comply with the Bank Act and are in complete contravention of that legislation, and it is mere patronage. A moment ago, I was looking at the hon. member who put this bill forward. I understand he did it because he had to and I wonder-one always wonders about things-how much financiers have paid the Liberal party to convince them. One is always entitled to ask questions and that is what the Canadian people are doing.
All we ask for at present is to wait until consideration of the new bank legislation is completed. Then we will deal with this matter. But the Liberal party seems in such a hurry, they look as if they were spurred on by some outside force to give speedy passage to this bill, which every week is coming back before the House. They seem to say it is urgent but IAC Ltd. will surely not go bankrupt, Mr. Speaker, because we will not agree to this bill immediately. That is impossible. I have known IAC Ltd. since I was a child. They make so much business and lend money at such prohibitive interest rates that we should not feel sorry for them at all. Of course, when one gets lots of money, one always want to get more.
And the existing finance company, in spite of its extraordinary interest rates, wants to get even more. This is why they

want to convert into a bank in order to be allowed as well to loan $100 for an asset of only $6, and get 10.5 per cent interest. That is quite all right, I am not giving them orders, in their place I would do the same, but we members should . . .


An hon. Member:: Six o'clock!


The Acting Speaker (Mr. Turner):: Order. Perhaps the House would permit us to go back into Committee of the Whole before I call it six o'clock?


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration in committee of Bill C-22, to amend the statute law relating to income tax-Mr. Macdonald (Rosedale)-Mr. Turner in the chair.
At six o'clock the committee took recess.

AFTER RECESS

The committee resumed at 8 p.m.
Gérald Laniel: When the committee rose at six o'clock, clause 21 was being considered. The hon. member for Nickel Belt had the floor.
On clause 21.


John R. Rodriguez: Mr. Chairman, when we broke off at five o'clock for private members' hour I think I was commenting on the great coalition which seems to take place between the two old line parties in this House when we come to deal with such things as changes to the Income Tax Act. I am always very impressed by the way in which the official opposition stops opposing and suddenly becomes supportive of the government when it comes to income tax changes affecting those in the upper income brackets.
As my colleague from Sault Ste. Marie has quite correctly pointed out, we have no quarrel in principle with this particular clause which seeks to increase child care deductions.


Max Saltsman: We all have families.


John R. Rodriguez: Yes, we all have families and know what it costs to raise children in this country today. I myself have five and can attest to what it costs to raise children. So as I say, we have no quarrel with this clause in principle. But we submit
February 3, 1977

the government must be prepared to make some meaningful changes in the structure of the income tax system so it becomes a tool for redistributing wealth. The government is superimposing the kind of change outlined in this clause upon a structure which is badly distorted and as a result, people who earn a lot of money can take advantage of such changes to get richer, while the spread between the incomes of those at the top end of the scale and those at the bottom becomes greater.
The minister has made all sorts of points about the number of people who have taken advantage of child care deductions and so on. But this is not the point that we have been trying to make, Mr. Chairman. The question is: how much is that in actual cash to a family? The National Council of Welfare- one has to assume this council knows something about low income families and income distribution, and one has to assume it has expertise in this field for which, I think, members of the House will be prepared to give it the benefit of the doubt-has shown how the tax saving from the deduction is substantially more beneficial to the wealthy than to the low income groups. The National Welfare Council has pointed out that at the $10,000 level such a $1,000 deduction would be worth $210, while at the $50,000 and plus income level it is worth $410. Here is the kind of distortion we were talking about, that the increase in child care deductions for the upper income bracket would be worth to them twice the amount that a person making $10,000 would have.
Last Monday the Minister of Finance claimed that the quarter of a million Canadians who claim the child care allowance stand to benefit from the increase, but he failed to say that some benefit more than others, and the ones who tend to benefit more are the ones who are already enjoying a greater benefit from society in terms of wages. I think the minister misses the point we have made that in effect this kind of amendment maintains the constant inequality and keeps the spread, and even widens the spread between the upper income groups and the lower income groups.
Not only does this bill deliberately improve the tax position of the middle and upper income earners, it does absolutely nothing to plug the existing loopholes which really turn the ability-to-pay principle upside down. This is a period of time when even societies like ours are concerned about plugging loopholes or at least narrowing the gap between the top and the bottom income levels.
What are all these amendments doing? They are doing nothing to change the fact that in 1974 deletions from the accounts of the income tax revenue that could not be collected because the taxpayers were no longer resident in Canada amounted to $850,000, owed by 161 taxpayers. What attempts has the government made to collect those taxes? In this situation the tax dollars have gone down the drain and the rest of us will have to pick up the slack in that area.
Does the bill do anything to change the fact that in 1974 252 persons who made over $50,000 that year paid no tax at all, and that 17 of them had incomes of over $200,000? Does it
Income Tax Act
do anything to collect these taxes? I want to know that because it is rather important.
Another question that one should ask oneself is whether this bill does anything to change the fact that professionals who want to avoid taxes set up dummy companies, since small businesses pay taxes at a lower rate when compared with marginal rates in the personal income tax system. What are we doing to plug that loophole to make sure that that segment of society pays its fair share of the taxes? These are the kinds of questions that we would like to ask. Do we not see some of those changes being brought here as well as an increase in child care allowances? Does the bill do anything to change the fact that interest costs on money borrowed for the purpose of investing in something that may ultimately earn income for the taxpayer is deductible in the year in which the interest expense is incurred? Does it do anything to plug that loophole?
We are prepared to say that if you are plugging those loopholes with amendments in the bill, then of course what you are doing with respect to increased child care expenses has relevance. Indeed, when the hon. member for Sault Ste. Marie repeated what the Prime Minister had promised in 1971 in respect of closing the gap between those who have and those who have not, we realize that that philosophy seems to have changed because as recently as January 26 the Prime Minister said the following at a Press conference:
It is not part of the Liberal philosophy to equalize everybody towards the middle; to make sure that the top quintile and the lower quintile are equal, or even, for that matter, very close. It is part of the Liberal philosophy to make sure that the poor in this society get richer. If the rich get richer too, we really do not take offence to that.
I do not mind if the rich get richer, but surely they should not be getting richer with the connivance of the income tax structure which permits all sorts of loopholes. Surely that is not fair. Surely any person who has a sense of justice would never subscribe to that theory. Suddenly it is 1977 and the Prime Minister has changed his tune.
Some of the rather interesting distortions in the income tax structure are rather disturbing. It should be very disturbing to members on the government side to realize that the just society has been in effect for eight years. Certainly we cannot see any justice with respect to the way the changes to the Income Tax Act have come to the House during that time.
I want to point out that we on this side of the House do not oppose the whole concept of increased child care cost exemptions. However, in this debate we want to focus attention on the distortions in the income tax structure. It seems to me that the Income Tax Act certainly provides loopholes which not only benefit the rich but are a deliberate tax policy of the Liberal government. This helps to explain the fact that in 1971 taxpayers in the $25,000 and over income group, where ownership of stocks, bonds, mortgages and business interests are concentrated, paid only 13 per cent of the federal personal income tax, while those taxpayers earning less than $10,000 paid 51 per cent. To know that it is a premeditated, deliberate attempt on the part of the government to help the rich get richer we only have to look at the remark which I mentioned
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Income Tax Act
earlier made by the Prime Minister at his press conference on January 26.
But we have seen other amendments go through the House. We have seen changes with respect to the surtax. That occurred when the anti-inflation program was established. They were supposed to go in tandem. Here we see one coming off and the other staying in. I suppose this is what the minister would term the way ahead.
There is no question that when we look at the bill and we see the elimination of the surtax, we see changes with respect to the registered retirement savings plan, and when we see the write-off on personal income tax of moneys put into exploration, we become very concerned about these kinds of proposals with respect to child care expenses moving up because in effect they will not really help the lower income persons in terms of cash. We have no hesitation at this particular point in saying that this clause is going to be inequitable when taken together with the other changes which are envisaged in this bill.


Mr. Orlikow:: Mr. Chairman, I rise in this debate because at an earlier stage last week when we used some figures to suggest that the overwhelming percentage of the savings made by these various income tax provisions which the minister is proposing would go to people in the upper income bracket, the minister argued against the points put forward by the hon. member for Waterloo-Cambridge, by myself and others, using figures with regard to registered retirement savings plans. He was supported by the hon. member for Edmonton West. They argued that a very large majority of the people taking advantage of these plans were people in the lower income brackets, people earning up to $15,000 a year.


Marcel Joseph Aimé Lambert: Ten thousand.


David Orlikow: The hon. member for Edmonton West interjects that they are people earning under $10,000.


Marcel Joseph Aimé Lambert: Taxable income.


David Orlikow: Taxable income, and technically he is correct, but we have had some calculations made from the information provided by the Department of National Revenue and Statistics Canada, and while the hon. member is technically correct, if we look at where the savings actually go, it becomes very obvious that the real savings go to the people who earn over $10,000, and particularly to those who earn over $15,000.
I think it would be useful to put the precise facts on the record. The argument advanced by the minister and by the hon. member for Edmonton West is the usual argument we hear, not just from politicians from the Liberal and Conservative parties but also from people who write financial columns in newspapers, business editors and so forth. We have a typical example of this in an article which appeared in the Globe and Mail of April 20, 1976 written by Ronald Anderson, and which reads as follows in part:
... the retirement savings plans encourage people to save for their retirement, the home ownership assistance plan helps and encourages people to provide their

own living accommodation, and the interest and dividend exemption encourages Canadians to build a modest investment portfolio.
As I say, this is the typical view of middle and upper income people because they look upon themselves as being typical of all Canadians, and of course nothing could be further from the truth. These plans encourage thrift, supposedly, on the part of those who can afford to save, and in these days that is not very many people. These gimmicks are supposed to foster savings, but they only foster savings if people have extra money to save. In 1974 there was a total tax benefit of $513 million from the registered retirement savings plan, and the figures show that most of that went to the affluent. Last week the minister argued that RRSP's were not benefiting the wealthy at the expense of everyone else because in 1974, the last year for which we have figures, nearly 940,000 people had RRSP deductions. What the minister did not tell us was where the benefits accruing from these deductions went.
We have had an opportunity to look at statistics which show that just under 5 per cent of the people in the $20,000 and over category got over 57 per cent of the tax savings in 1974 from RRSP deductions. I will put the figures on the record, and I would be happy if the minister could show us that we are wrong. People with a taxable income of under $5,000, 38.4 percent of all the people who took advantage of this provision in the income tax law, had an average saving in taxes of $1.02 for the year. The people who had taxable incomes of between $5,000 and $10,000 per year-and they made up 31.5 per cent of the people who took advantage of this provision-had an average saving for the year of $9.81. The people who earned between $10,000 and $15,000 taxable income-they made up 18.7 per cent of those who took advantage of this provision- saved an average of $38.43.
Now we come to the big winners, those people who had taxable incomes of between $15,000 and $20,000 a year. They made up only 6.8 per cent of all the people who took advantage of this provision, and they saved an average of $125.01. People with taxable incomes of over $20,000 made up 4.6 per cent of those who filed under this plan, and they saved $551.88. That is the kind of rough justice the Minister of Finance believes in, $1.02 saving for those who have taxable incomes of under $5,000, and $551.88 for those who had taxable incomes of over $20,000. That is the just society of the Trudeau Liberal government.
Let us look at the registered pension plan, which the minister said was a better illustration of equity than any other. Registered pension plans were supposed to benefit the ordinary working person as opposed to those more affluent. The savings are divided up in the same way, although the result is not quite so extreme.
Of those who took advantage of this plan 38.4 per cent had taxable incomes of under $5,000 a year. Their average saving was $1.85. Of those who took advantage of registered pension plans 31.5 per cent had incomes of between $5,000 and $10,000, and their average saving was $21.29. Of the people who took advantage of the registered pension plan 18.7 per cent had incomes of between $10,000 and $15,000, and their
February 3, 1977

average saving was $73.26. However, when we come to those people earning between $15,000 and $20,000 taxable income, they made up only 6.8 per cent of those filing under the registered pension plan, and they saved $135.76. Those people who earned $20,000 taxable income, and who took advantage of this plan had an average saving of $225.50, and they made up 4.6 per cent of those filing. In other words, under this plan those who were able to make use of it and who earned under $5,000 saved $1.85. People earning $20,000 taxable income saved $225.50. That is another example of what the minister considers just.
If you combine these two sets of figures and look at the total retirement picture you find that those with low income and no other resources get virtually no help. They get the old age pension, but then so do the wealthy. Supposedly income tax takes away from the wealthy-except that the minister permits them all kinds of exemptions.
The affluent and powerful who have other sources of income, and who do not need to worry about retirement, receive generous benefits from the government. We have calculated this as follows. The group with under $5,000 taxable income per year have an average saving of $2.88; between $5,000 and $10,000, $31.10; $10,000 to $15,000, $11.68; $15,000 to $20,000, $260.77; and over $20,000, $777.38. The same applies to the Registered Home Ownership Plan about which the minister spoke so proudly this afternoon.


Donald Stovel Macdonald: I did not mention it this afternoon.


David Orlikow: If the minister did not mention it this afternoon then I will not deal with it. There is one other thing which distorts the whole tax structure and which again is a bonanza to those in the upper income brackets, and that is the indexing of income tax. We consider this to be the biggest boondoggle of all. It is an idea that the Liberal government stole from the official opposition several years ago. It has been touted as a plan which benefits everyone because all save the same as a result of inflation, and therefore if income tax is indexed everyone receives equal benefit. If you look at the actual figures, however, you see that as usual under a Liberal government those at the top benefit much more than those at the bottom.
The tax rate at the bottom is much higher than it needs to be. If you give money away to everybody, particularly to the wealthy, then you have to find the money to meet expenses. To pay for the services you have to take the money back from everybody, and take more from those at the bottom.
Using figures supplied by the Department of Finance we looked at the savings for a taxpayer with two children under 16 for the years 1976 and 1977. The group with a taxable income of $5,000 a year will pay $46 less tax; $10,000, $284 less; $15,000, $413 less; $20,000, $621 less; $30,000, $884 less; and $50,000, $1,259 less.
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These savings are for what the Department of Finance called a typical taxpayer at various income levels. In fact even these figures do not tell the whole story because people in the upper income bracket do not make all their money from wages and salaries. They often have income from capital gains which escape taxation and are not taken into account. No account is taken of other potential deductions that I spoke of earlier such as child care, RRSP, RHOP, interest income deduction, and so on.
I think we have demonstrated quite conclusively from the statistics issued by the government that our system of taxation is geared to give the greatest benefit to those who already have. This is why we have the situation which some of us have spoken about for a number of years where, despite all the plans for social security, despite the fact that we now have hospitalization insurance, medical insurance, family allowances, despite all these federal and provincial programs, rather than the gap between rich and poor being narrowed, in the last 25 years it has widened.
One of my colleagues quoted figures on this earlier today, and I want to close by putting them on the record myself. In 1951 the bottom 20 per cent of income earners, as a percentage of the total income, received 4.4 per cent of the gross national product. The figures we have show that in 1975 this had dropped to 3.9 per cent. On the other hand, the percentage of the total income received by the top one fifth of the income earners in 1951 was 42.8 per cent of the GNP; in 1975 this group received 42.4 per cent. We believe it should be the objective of a modern industrialized society to ensure that no one lives in real need. The gap between those at the bottom of the income scale and those at the top should be narrowed. This government has not done that and this bill will not do it. It is for that reason that we oppose the bill, Mr. Chairman.


Eldon Mattison Woolliams: Mr. Chairman, we listened this afternoon to arguments that were supposed to pertain to clause 21 of the bill which deals with deductions for child care, but although I listened carefully they seemed to relate to other matters. I suppose there is not a clause in the bill which does not relate to the Income Tax Act and I think the New Democratic Party have at least grasped that fact. I should like to answer some of their arguments.
The new act passed in 1971 was piloted through this House by one who now sits in the Federal Court. Taxing laws are complicated, and certainly not all accountants or lawyers understand them. Mr. Chairman, I have just returned from the Canadian Bar Association's mid-winter meeting, and it is the opinion of the association that no act is as difficult to understand as that act to which I just referred, which was passed by parliament. In saying this I am not criticizing the government, because no matter which party is in power, Liberal, Conservative, or even NDP, the drafting of tax laws is an expert's job. And, Mr. Chairman, hon. members listened this afternoon and for three quarters of an hour this evening to the biggest drivel you ever heard. I ask you, Mr. Chairman, would you trust any

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one of those people to my left-and I say this to the press as well, even though only one press man out of 70 is in the gallery-would you trust any one of them to do your tax return? Those people are terribly ignorant about tax matters.


John R. Rodriguez: I suppose you are an expert?


Max Saltsman: Mr. Chairman, I rise on a point of order.


Eldon Mattison Woolliams: There is ignorance personified.


Some hon. Members:: Oh, oh!


Max Saltsman: Mr. Chairman, considering from where that remark has come, I will not even ask for withdrawal. The hon. member in his rhetorical question asked if any people would trust us to do their income tax. The answer, of course, is that it depends on whether you are rich or poor.


Gérald Laniel: Order, please. The hon. member is entering the debate. He and other members of his party have had a chance to speak without interruption; I think he ought to let the hon. member for Calgary North continue.


Eldon Mattison Woolliams: Mr. Chairman, I appreciate that interruption. When talking about child care deductions hon. members on my left covered the whole scope of income tax. Mr. Chairman, every day I sit close to the leader of the NDP; although I am not in my seat at present, this debate being in committee of the whole. Mr. Chairman, every day the leader of the NDP rises to criticize the government with regard to unemployment. Really, what the hon. member's party says- and I should like the Liberals to listen-is this: if a person makes a profit or earns a high salary, unless you tax him right down to the poverty level there is something wrong with the country.
I say people must have the right to a profit, since profits lead to investment. You should be able to make a little money, because then you can invest in the industrial development of the nation. But the NDP wants to bring us all down to one level. Really, when they talk about 30 per cent unemployment here, 20 per cent there, and 10 per cent in Quebec, the NDP are saying this: tax everybody to death; give the money to various organizations or spend it on phony programs, and then blame the government for unemployment.


Some hon. Members:: Hear, hear!


Eldon Mattison Woolliams: Really, that is what we are talking about. Mr. Chairman, I have been here for a long time. We have witnessed an NDP filibuster. But then, they are merely trying to maintain their votes, the votes of people with a certain level of income. They are trying to show that they have done their job on behalf of those people.


Some hon. Members:: Oh, oh!


Eldon Mattison Woolliams: I am glad you are yelling and shouting. That party is trying to hang on to its votes, trying to show that

it is doing its job. Let me deal with what they talked about earlier.


John R. Rodriguez: How do you know what we said? You were not here this afternoon.


Mr. Epp:: We told him.


Eldon Mattison Woolliams: Those hon. members discussed the child care expenses, and in so doing covered the whole field of income tax. That brings me to my point concerning the Income Tax Appeal Board. When you, as a taxpayer, raise a matter coming under section 21, or any other section before the appeal board, if you win your appeal the Crown will not disclose what cards it has up its sleeve. When I speak of the Crown I am not speaking of the minister; my remarks in this regard are not meant to criticize the government.


Some hon. Members:: Hear, hear!


John R. Rodriguez: The same old gang.


Eldon Mattison Woolliams: Hon. members on my left should consider what is happening in Manitoba and Saskatchewan; they can laugh if they like, but we are not talking specifically about governments; I am talking about the tax act. If the taxpayer wins his appeal before the appeal board, the Crown will not disclose its cards. If it does not like the board's decision, it can take the matter to the Federal Court. Mr. Chairman, in Federal Court you are not allowed to say that you won your case before the Income Tax Appeal Board. You start from scratch. Therefore, you might as well scratch out the Income Tax Appeal Board, because it does not work to the advantage of the taxpayer. No matter whether he has raised any question coming under section 21, 22 or 23. I hope the minister and his officials will take my remarks into consideration. I say, if you are going to have an Income Tax Appeal Board, give that board some powers.
This afternoon the NDP tried to make representations on behalf of the little taxpayer.


John R. Rodriguez: I suppose you are one.


Eldon Mattison Woolliams: Hon. members on my left can laugh and shout, but they are not really concerned about the rich or the poor. They are concerned about the fact that they now have the best jobs they will ever have in their lives.


Some hon. Members:: Oh, oh!


Eldon Mattison Woolliams: I raise the point concerning the Tax Appeal Board because I happen to know something about it. I know that if you take your case to the Income Tax Appeal Board and win it, you might as well forget it, and I will tell you why. The Crown is not worried if you are rich or poor, but it is worried in case the appeal board decision sets a precedent which could affect many people, be it one million, 100,000, 10,000, or any number you can think of. The fact that you have won your case before the appeal board has no weight at all at the Federal Court level. I therefore say to the minister, if
February 3, 1977

there is to be an Income Tax Appeal Board which is empowered to render decisions, surely one should be able to appeal the board's decisions to the Federal Court in the same way as one can appeal in the appellate court of a province a decision handed down in the superior court.
I did not realize the situation was quite as bad as I have painted it until I listened last week to a Canada Bar Association lecture. As things now stand, the appeal board is a nullity because it does not matter if you win or lose your case. If the Crown thinks you have a good case, it will not disclose its cards before the appeal board, but will wait for the case to be heard in Federal Court. I ask the minister to look into this question. Perhaps some of the problems which even NDP members raised in committee might be solved more cheaply at the lower level, because if you must go to the Federal Court, you have to hire lawyers, and the whole process is much more expensive. Who can afford to go there? These are important matters.
I now want to move on to something else. We have been talking about the whole realm of income tax. This is an important clause to many people, but there is something even more important. All across this country people are struggling to get a house. Some may have a little savings that they can put into a second house, a small farm on the prairies or small piece of land in Ontario or Quebec. One of the most destructive things with regard to investment has been the capital gains tax. I will state why.
A person may have invested his savings in a small piece of property. At age 65 he will be going on pension and may want to sell that property. The valuation was set on January 1, 1972. I am not talking about rich people. I am talking about those to my left who preach their drivel. They are the ones who wanted the capital gains tax for every farmer in Saskatchewan, Manitoba and Alberta.


Some hon. Members:: Flear, hear!


Eldon Mattison Woolliams: I will bet that when my friends to my left go to Saskatchewan they do not tell the public they were the ones who were in favour of it.


Some hon. Members:: Hear, hear!


Max Saltsman: Mr. Chairman, I rise on a point of order. I realize it poses quite a difficulty for Your Honour to hear me over the noise that is going on. Nevertheless, I believe I have a legitimate point of order. As much as I admire and respect the hon. member for Calgary North I am sure he would not want to leave a misleading impression in this House. If he will go back to the debates on capital gains to which he referred, erroneously I am afraid but I am sure it was unintentional, he will find that while we were in favour of full taxation of capital gains, we made it very clear during the entire time that the family farm was to be exempt. We are for motherhood just as he is.


Gérald Laniel: Let us say that was a point of clarification.
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Eldon Mattison Woolliams: It is time we had a debate like this. The only reason they get up is because I am telling them the truth. They cannot stand to hear the truth.


Some hon. Members:: Hear, hear!


Eldon Mattison Woolliams: The fact is that if you go through the committee records and the records of this House you will see that the NDP were for capital gains taxes. If it had not been for this party, we would not have had the amendments to protect the average man and the family farm.
Let me get back to what I was talking about, the little person. Whenever I do that, the NDP members get irritated. They try to leave the impression that they are like God and the angels, the only people to look after little people.
The average income earner may buy a small house or little piece of property. Immediately he sells it he must prove the evaluation to the department. These people who are elected to the NDP like bureaucracy. Therefore you have to hire an appraiser and an accountant and get other expertise to prove the valuation, or else the tax department will gouge you. That is where the NDP should be directing their attention, instead of peddling that drivel they have peddled all night. Socialism led to unemployment and the destruction of the United Kingdom. It would destroy Canada if this government ever followed their example.


Some hon. Members:: Hear, hear!


John R. Rodriguez: Conservatism destroyed it.


Eldon Mattison Woolliams: I can answer that very easily. The hon. member says conservatism destroyed Canada. We have not been in power that much in Canada since John A. Macdonald left the scene, to destroy anything.


Some hon. Members:: Hear, hear!


Eldon Mattison Woolliams: However, that party was in power in Manitoba, Saskatchewan and British Columbia and we know of the destruction there. It is very difficult with a debate which I hope I am leading tonight-


Some hon. Members:: Hear, hear!


Eldon Mattison Woolliams: Maybe this is the only night I will lead the Tories. At least I am bringing some life into the Chamber. It has been dead all day. The NDP filibustered all afternoon on clause 21.


An hon. Member:: What are you doing?


Eldon Mattison Woolliams: This is the first time I have spoken on this bill, but it won't be the last.


Some hon. Members:: Hear, hear!


Eldon Mattison Woolliams: Under the general administration of the Income Tax Act, you can have an assessment in 1972, one in 1974, one in 1975 and one in 1976. It can all be approved by the department. All of a sudden, the person who wants to sell

February 3, 1977
Income Tax Act
comes to my office to his member of parliament and says that the bureaucracy wants to reassess him because they do not agree with clause 21, even though that person has had approval for four years. I want to make a very serious suggestion either with regard to this clause or the next. We need a group of men and women in the department who will meet with the ordinary taxpayer and say to him, "If you have done A, B and C, that will be it and it will not change in three or four years."
The ordinary taxpayer does not have the accountants of the CPR, Canada Permanent or the Royal Bank. He has to rely on himself or possibly one accountant. What we need in the department is a small group to sit down with the taxpayers and tell them, "If you make this move, this will be your tax position, this is the amount of tax you will pay and it will not be changed in three or four years because of someone reinterpreting the act."
I have had a lot of experience with the department in Calgary. I have worked with top accountants in reference to these matters. There is the finest group of men and women in the public service. Unfortunately, many times a problem affects many taxpayers. Therefore it cannot be settled in Calgary, or even in Regina, or Winnipeg. It must be done in the east. Instructions come from the east because if a precedent is established with regard to one taxpayer, it could change the whole tax picture and, of course, the flow of revenue.
I will be open with the minister. I think he has looked at the picture in a tougher and more realistic way than his predecessor. He has been, in the circumstances, with inflation and unemployment, a pretty able and reasonable Minister of Finance.


Some hon. Members:: Hear, hear!


John Gilbert: You are preaching for a call. Next week you will be supporting John Turner.


Eldon Mattison Woolliams: That's fine. You can yell or shout. You can do that from the stomach or from other parts of your anatomy but not your mouth, if you have a brain. What I would like to say is this: please get together a group from every part of the Department of National Revenue, whether it is Calgary, Vancouver, or right across the board, and have a group the average taxpayer can go to and say, "If I make this move will it be accepted today or four years from today?" That will win the NDP a few votes which have faded ever since I have been here. That is a recommendation which I make tonight-and I know something about tax law. I have listened to members of the NDP-


John R. Rodriguez: You were not here!


Eldon Mattison Woolliams: Yes, I was here. I have listened to you people. I will back my attendance against you, you little-you know what I mean-any time. But take these three recommendations I have made. It doesn't matter what is put into the act, because if it is interpreted in a certain way by the department the taxpayer doesn't stand a chance.

I ask the minister to take a look at what the capital gains tax is doing to the little person. Let us have some way of assessing the effect of the capital gains tax without needing to consult a lawyer, an accountant, and an appraiser. Arrange things in such a way that if a taxpayer has a problem he can go to the department and get a decision made, a decision which will not be reversed in four years time, upsetting his whole economic applecart. That is what I am asking, and these are the problems the taxpayer is worried about more than the nonsense I have listened to today. Those people-and I will say this about the NDP-want to take all the money away from anybody who makes more than $10,000, except themselves.


An hon. Member:: We don't!


Eldon Mattison Woolliams: Oh yes, parliamentarians do. It is the best job you will ever have, young man.


John R. Rodriguez: You devil!


Eldon Mattison Woolliams: I am a devil because I am telling you the truth. The devil has to tell the truth sometimes.


John R. Rodriguez: I got elected.


Eldon Mattison Woolliams: I know. That was an accident and it will never happen again. Those people over there preach these things. They want to take all the money from all the little people, from business, from the corporations so that there is no investment, and when people are out of work they will say to the taxpayers I have mentioned, "Aren't you terrible? You have caused unemployment." But that party's economic principles are such as to ensure built-in unemployment.


Some hon. Members:: Hear, hear!


John Carnell Crosbie: Mr. Chairman, first of all, I want to congratulate the hon. gentleman who has just resumed his seat. He made what was certainly the most sensible speech we have heard this evening. It is indeed good to hear a man who doesn't hesitate to express his mind.
I do not have a long contribution to make to this debate because I was not aware what it was about until I heard the speech made by my hon. friend from Calgary North. But since this seems to be a wide-ranging debate and since it does not seem altogether necessary to keep to the point, I should like to put one or two questions to the minister.
My hon. friend was most eloquent when he spoke about the need for the bureaucrats and the rest to look after the small taxpayer. I have a question about a large taxpayer. I think the way in which his case is being treated is a public disgrace and I want to know when it will be proceeded with and when justice will be done. I refer to the case of John C. Doyle, the owner of Canadian Javelin Limited and the man who controls it or who owns 18.2 per cent of the shares.


Some hon. Members:: Order!
February 3, 1977


John Carnell Crosbie: Mr. Chairman, if we had the TV cameras here tonight there would be no fear of the NDP ever getting into power.


Some hon. Members:: Hear, hear!


John Carnell Crosbie: Their strong point is pretending that only they have decent perceptions-that they are the only decent people in Canada, the only ones who care. We are sick and tired of their hypocrisy. They pretend, the NDP, the party of newly decent perceptions, that they and they only have the welfare of the public at heart. That is the line they hand out all across Canada. Well, it doesn't fool me. There is not a member of the NDP who has the public interest more at heart than I do, and their blatherskiting about how they are for the small man, the little man, is enough to make anyone throw up.


Some hon. Members:: Hear, hear!


John Carnell Crosbie: We have had to sit here listening to their blather hour after hour, and now they will have to sit and listen to ours.
The point I am making has nothing to do with the small taxpayer. It has to do with a large taxpayer, a fugitive from justice, the man who has had control over Canadian Javelin Limited for the last 20 years and who has taken money from that company in every way, shape and form, and who has diddled the shareholders of that company year after year, and the law is apparently powerless to do anything about it.
There are 18,000 unregistered and some 12,000 registered shareholders of Canadian Javelin Limited. The company's shares are no longer listed in most of the registries and do not trade. The gentleman in question now resides in Costa Rica and Panama, because if he comes to Canada he faces 406 charges under certain sections of the Criminal Code, and two for criminal fraud in Newfoundland. But he still has control of the company. And he still owes the Canadian government in excess of $4 million under a judgment delivered in the Exchequer Court five years ago by Mr. Justice Hugh Gibson. That judgment was appealed by Mr. Doyle. Five years later, Mr. Chairman, the appeal has still not been heard and the amount is still outstanding.
I would like the Minister of Finance or the Minister of National Revenue to tell me what is being done about the large taxpayer-


Some hon. Members:: Order!


John Carnell Crosbie: -and why this matter has not been brought before the appeal court long hence. Will it, in fact, be brought before the appeal court?


An hon. Member:: Order!


John Carnell Crosbie: What do you mean, "Order"? There has been no order in these matters. I should like the minister to tell us what has happened in this case.


An hon. Member:: Order!
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John Carnell Crosbie: If somebody has a point of order to raise, I am willing to sit down and listen. This is not order, it is disorder when a situation of this kind confronts us in the courts and nothing is being done about it. I want that matter attended to and I shall be asking other questions about it.
While we are considering the Income Tax Act I should like the minister to get me some information as to the effect on provincial revenue of his arbitrary and unilateral amendment to the act several years ago when he indexed income taxes.
The minister opposite in the government of Canada collects income tax not only for the government of Canada. He also collects the federal corporation tax for at least eight provinces, perhaps nine. He also collects the provincial corporation tax. In his budget of two years ago, I think it was-I do not have all my notes here tonight so some inexactitude might be forgiven me-he indexed income tax without consultation with the provinces, without asking the provinces what they thought about that. He brought down his budget and in his budget indexed personal income tax.
Well, Mr. Chairman, that is all well and good. If the federal government can afford to index personal income tax-and heaven knows, they can do so because they have all of the tax sources in Canada, direct and indirect-then that is fine. But there are provinces which cannot afford any loss of revenue. Because it is a more efficient system and it suits the Government of Canada better to have certain provincial taxes collected by the federal government, the federal government collects personal income tax and corporation tax for seven or eight provinces. To do so these taxes must be uniform in their application or the minister cannot very well collect taxes for the provinces.
The hon. gentleman therefore made a change which applied not only to federal personal income tax but to provincial tax as well. I should like to know, as a result of this arbitrary action taken without consultation, what it costs the various provinces of Canada to have the income tax collected. I understand that it is costing the provincial government of Newfoundland this year some $30 million when you take into consideration not just the tax collected directly but its effect on tax equalization. The province of Newfoundland alone has lost $30 million of its revenue. This is money that the Minister of Finance took away from the province without so much as a by your leave, and without ever offering to replace the revenue he took away from those provinces whose income tax he collected.
That is one reason-there are many others-why we have the present state of federal-provincial relations in Canada today. It is the reason why the provinces are calling out for more decentralization and for a change in the distribution of powers. It is not the constitution which is all that much out but the way that it is administered. Nothing is more irritating and aggravating to provincial governments than to have the federal government make a change like this without even consulting them and agreeing to compensate them for such a change, so I would be interested to see those figures if the hon. gentleman
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would get them. He may not be able to get the figures showing what the loss of tax equalization might be, but if he can tell me what it costs the various provinces, including the province of Newfoundland, by way of lost tax revenue from the change that he made, I would appreciate it.
I believe these are the only two points that I want to put forward tonight, unless some hon. gentleman down in the corner says something that might irritate or aggravate me, in which case I will be on my feet again. We are not worrying about the NDP up here in this corner because we know they are nothing to worry about. They are a necessary irritant, like a burr under the saddle. It does us some good to have them around, because when there are a few of them around you realize what you would suffer if they ever formed the government. As I have said, and NPD government would comprise a cabinet of about 30 incipient Otto Langs; at least that is the way I look at it. They know what is good for us, and by golly we do what is good for us or they would know the reason why. It would be user-pay multiplied about 100,000 times if those gentlemen ever got into power.


Donald Stovel Macdonald: Mr. Chairman, I think hon. members would want me to irritate the hon. member for St. John's West just a little bit to have him keep going. I have known him in some different capacities over the years and I never cease to find him an entertaining man when he is on his feet.
With regard to his two points concerning Mr. Doyle, very happily the Minister of Finance does not have custody of tax administration; my colleague, the Minister of National Revenue, has that. Indeed, if the matter has gone to litigation and is before, I guess, the Federal Court of Appeal at this point, it would be a responsibility shared with my colleague, the Minister of Justice. I cannot, therefore, answer this evening the status of that particular suit, but I would be quite prepared to make inquiries and if this is not a matter of confidence on behalf of the taxpayer-and if it has come to the point of litigation-then I would be glad to let him know.
On the question of indexing, it is quite true that both federal and provincial revenues have been affected by the decision of this government several years ago to introduce indexing of personal income tax. We calculate that as of January 1, 1977, with the indexing which occurred then, on an annual basis for 1977 about $1,250 million of federal and provincial income tax will be left in the hands of individual taxpayers which, but for the indexing, would have been collected under our taxation system.


Eldon Mattison Woolliams: That was Stanfield's policy.


Donald Stovel Macdonald: As the hon. member for Calgary North points out, that was the policy of the member of parliament for Halifax. Indeed, we have been castigated over the years by the hon. gentleman's colleagues for having adopted that particular policy. As I say, Mr. Chairman, he is always a refreshing speaker, but not the least when he is doing things,

as Frank Sinatra would say, his way, rather than the way of his party generally.
It is true that revenue has passed out of the government's hands and back to the taxpayer. If you talk about decentralization, that is almost the best kind of decentralization to have if you can possibly have it-leave the money in the hands of the people and not take it away by tax.
If the provincial governments, like the federal government, needed additional revenue they are not powerless in this regard; they could have changed the rate and recovered it. But the fact of the matter is that, despite all the protestations at federal-provincial meetings, there has been pretty general acceptance of that and of the decision that was made.


Max Saltsman: Mr. Chairman, during the remarks of the hon. member for Calgary North and the hon. member for St. John's West, I felt very strongly that I really had to rise on point of order after point of order, but I restrained myself knowing that the Chair would at some point recognize me. I think it is important, particularly to the hon. member for St. John's West who seems to be very concerned about whether we in the NDP think he is decent, that he should know that I have spoken to every single one of my colleagues here and we all agree that he is decent. We all agree that all the Conservatives are decent. As a matter of fact, we never listen to what the Liberals say to us about the Conservatives. So we say he is decent and he is not to worry about it. We think you are all decent fellows.
We have been speaking for quite a long time on this clause in the bill, and I have to tell you frankly, Mr. Chairman, that we were getting to the point where we were having a little difficulty. After all, our voices were starting to give out, and so we appreciate the kind of assistance that we have been getting. We have been sitting here day after day arguing this bill, trying to get the Conservatives to state a position. While I do not like closure and we have all spoken against closure, the fact that closure has been brought in has seemed to prompt some members to rise and speak.
I want to say a couple of other things, particularly to the hon. member for Calgary North. I want him to know that I am not against rich people-some of my best friends are rich people. We are for everybody. I do not talk about it too often in public but I must admit that we do not have anything against rich people; the only thing we are concerned about is that the rich people do not get any richer than they are-that is all. I also want to say that it was not very nice of the hon. member to have made the remarks he made about the election of my colleague, the hon. member for Nickel Belt, having been an accident.


Eldon Mattison Woolliams: He said himself he got lucky.


Max Saltsman: The first time he was elected it might have been an accident-these things can happen to anybody-but the second time it was wilful mischief on the part of the people of Nickel Belt. They elected him deliberately and they sent
February 3, 1977

him here so that you could take the measure of this man. You must admit that you know he is around. Whether you may agree or disagree with some of the remarks that my friend may sometimes bring to the attention of the House, I am sure nobody would say that he hides his light under a bushel. He makes sure that the brilliant light that emanates from him is distributed evenly toward everyone.
I think there is something else that should be said. In putting forward the arguments we have on behalf of people in Canada who are not quite as rich as other people, we may not have been as successful as we had hoped in moving the hard heart of the Minister of Finance. After all, one of the qualifications for being Minister of Finance, even if you have a nice, soft heart, the way the minister used to have before he became Minister of Finance, is to be like that. Once you become Minister of Finance, there is a kind of needle that they have in that department which they jab into you which hardens the arteries, the heart, and occasionally the head. But I am grateful for one thing.
Perhaps we have not moved the Minister of Finance, but as people who believe in making love, not war, we are just delighted to see the Liberals and the Conservatives falling in love with each other all over again. It is really very touching to see this kind of affection taking place. During the day we hear them calling each other names, but we know it is a lovers' spat, we know it is not for real. They are calling the other side all kinds of terrible things. They are saying the Liberals are guilty of all kinds of scandals and that they are depriving people of civil liberties, but this is just like a family. You know deep down that when it is something important such as taxes which affect the rich man's pocket book, they are in love again.


Some hon. Members:: Hear, hear!


Max Saltsman: These are lovers' spats; they are for the neighbours.


Steve Eugene Paproski: You should know, Maxi.


Max Saltsman: The hon. member for Calgary North said that this is the best job we will ever have in our lives. He may be right. I bet some of us have had pretty rotten jobs in our lives. I do not know what jobs he has had in his life, but most of our guys have had pretty rotten jobs, just like the people in Canada have. That silver spoon was not placed in our mouths at birth. There may be better jobs than this, and I am sure there are worse jobs. I do not crab about the job. The food is not bad and the pay is not bad but, as my mother-in-law says, it is not a very steady job.


Eldon Mattison Woolliams: You yourselves voted against an increase in pay. That has always amazed me.


Max Saltsman: You amaze very easily.
My friend, the hon. member for Calgary North, spoke about the accident of the election of the hon. member for Nickel Belt. I can assure him that it is not as easy even for New Democrats to be elected in Ontario as it is for a Tory to be
Income Tax Act
elected in Alberta. You do not even have to show up to be elected in Alberta.


Steve Eugene Paproski: You try it, Maxi.


Max Saltsman: If I were a Tory I would be a shoo-in in Alberta, but not being a Tory-


Eldon Mattison Woolliams: I would not want the hon. member to be historically wrong. When I first ran, there was one member from Alberta who was a Conservative-the rest were all wise men; they were the Social Crediters. I must tell you that I was the first member ever to be elected from Bow River. I would also remind the hon. member-and the former premier of Saskatchewan would know that-that I left home with a grade eight education and took all my high school grades by correspondence. If that is a silver spoon, I can tell him I do not understand silver, but I did find out one thing, that once they had a CCF government in Saskatchewan, they found out what silver was like.


Charles Robert Turner: Order, please. I suggest the hon. member get back to the debate on clause 21 of the bill.


Max Saltsman: Thank you, Mr. Chairman. Now we can head back to a somewhat more serious discussion.


An hon. Member:: How did you like that commercial?


An hon. Member:: I wish we had television in the House.


Max Saltsman: I am glad to learn that the hon. member for Calgary North was not born with a silver spoon in his mouth- it might have been a brass spoon, but not a silver one. Nevertheless, I want to say one thing to him. The remarks we are making are not of a personal nature. We know he is a fine, upstanding Conservative. As to how the Conservatives replaced the Social Crediters, the thing happened so that almost nobody noticed. They went out, changed their hats, and came back and said, "Yesterday I was a Social Crediter and today I am a Conservative".


Charles Robert Turner: Order, please. The Chair would once again remind the hon. member that we are on clause 21 of the bill. I would appreciate it if he would revert to speaking on that clause.


Max Saltsman: You will have to excuse me, Mr. Chairman. I know you are a very tolerant and distinguished gentleman and certainly one of my colleagues in the House, but let me point out that we in this party have been trying to maintain the rule of relevancy until we got the lecture on relevancy from my friend, the hon. member for Calgary North. If I recall correctly, he accused us of going all over the subject matter of income tax since we were on the clause dealing with child care, and after lecturing us in the NDP about the rule of relevancy, he then proceeded to talk about the appeals court, capital gains, the family farm, the general administration of the Income Tax Act, and the Federal Court. So I am afraid that the rule of
80008-34%

February 3, 1977
Income Tax Act
relevancy has been stretched tonight, and I regret it because I think it is important to stick to the point.
It is to the point to see the way this debate is developing. It is very funny to take off on each other, although it is a shame in a way, but I think one thing is quite clear, that is, where the Conservatives and Liberals stand. We do not accuse people in other parties of not being decent, of not being honourable, of not caring, but they have a different perspective, a different view. Their idea of what the little man or the common man is, is a lot different from our concept of him.


Eldon Mattison Woolliams: The little man knows this too.


Max Saltsman: When we come to the House of Commons and are asked to bleed for John Doyle in talking about the little man, we say that John Doyle may be worthy of that, but he is certainly not a little man. This is the kind of confusion which always exists in these debates.
I am glad that this intervention, as goofy as it may have been, has taken place because people have taken part in the debate. There is a kind of anger that erupts. What are they worried about? There are 16 of us sitting here. You would think we were the government of this country. In some ways we are the government of this country. Certainly when it comes to standing up for ideas, and to standing up for people for whom nobody else will stand up, we are the government of this country and in that sense we represent that constituency. I take pride in the fact that we are attacked from that side and from the other side. As a matter of fact, sometimes you do not know how well you are doing from what your friends are telling you, but you certainly know you are doing well when you take a look at your political enemies.


Mr. Brisco:: Mr. Chairman, for some days now I have been hoping against hope that the members of the NDP would have the common sense to realize that they have long since run out of arguments with reference to clause 21 and that they have wasted the time of this House.


Some hon. Members:: Hear, hear!


Robert Hylton Brisco: They openly declare that they are the favourite sons of John Q. Public and the upholders of liberty, righteousness, and justice. They say they are for the little man and for the poor, downtrodden masses. They say that they can tell a Liberal or a Conservative by looking at him. Well, I want the House to know that I can tell members of the NDP by looking at them because they have three qualities. Most of them have that whining voice of complaint, and all of them have hemorrhoids to give them that look of concern.


Some hon. Members:: Hear, hear!


Reginald Cyril Symes: And the hon. member has diarrhea of the mouth.


Robert Hylton Brisco: I question the veracity and the integrity of a group which would delay the passage of this bill and which

says it is the upholder of John Q. Public and the downtrodden masses, and yet its members are not prepared to address themselves to the problems dealt with in this bill dealing with the blind, the chronically ill, or to the problems regarding farms transferred from fathers to sons. None of these issues which are important to John Q. Public has been mentioned by the members of the NDP. They are stuck on clause 21, and they do not give a damn about invalids in wheelchairs for the rest of their lives, or about people who are chronically blind. If they did, they would find those parts of the bill and deal with them. I think their conduct is reprehensible.


Some hon. Members:: Hear, hear!


Arthur Jacob (Jake) Epp: Parliament lives.


John R. Rodriguez: Mr. Chairman, it is because we are very concerned about the low income earners of this country that we are concerned about the way the income tax structure is designed. It does not ensure that there is a redistribution of wealth in this country.
We certainly have no quarrel with the proposal in clause 21. All we are saying is that the income tax structure of this country should be examined.


Eldon Mattison Woolliams: You are enlarging your lectern.


John R. Rodriguez: We know where the hon. member for Calgary North stands. He stands foursquare with his buddies across the way. I am never more conscious of the club atmosphere ir. this House-


Eldon Mattison Woolliams: What about the adultery between Lewis and Trudeau? Have you ever thought about that?


John R. Rodriguez: -than when we get talking about changes in the income tax structure. This party tries to hold the government liable for the promises it made with respect to changing the income tax structure and making it more equitable with regard to redistributing the wealth of the country. Can the minister tell me why one man in this country can earn $375,000 because he is the president of a corporation, and another man who works in a car wash-


Arthur Jacob (Jake) Epp: What about your union bosses?


John R. Rodriguez: -in Toronto can make $8,600 a year? What is there in this system which allows one man to earn so much more every year?


Mr. Neil:: Should they all be paid the same amount?


Eldon Mattison Woolliams: Mr. Chairman, I would like to ask a question which I am sure the hon. member will understand. Why is it that some union members make $100,000, some make $50,000, and some make $8,000? What determines that discrimination?


Some hon. Members:: Hear, hear!
February 3, 1977


John R. Rodriguez: At least we know that the union members bargain for that.


Some hon. Members:: Oh, oh!


Mr. Peters:: That is the free enterprise system.


John R. Rodriguez: That is the free enterprise system. That is the system in which inequities like that exist. I would like to know what the yardstick is for that. If we have these income disparities, surely it is the job of the government, through the income tax structure, to take from that person who is getting so much out of the economy and to redistribute it to those who are at the bottom end. Surely such things as registered retirement savings plans, which allow a man to borrow money and write off the interest on his income tax, and then turn around and write off the amount he has put into the retirement savings plan, should not be superimposed on our tax structure. Surely it does not help the income tax structure and the redistribution of wealth to let a person claim $ 1,000 more for his wife per year and $1,000 for himself, and then to allow them to split it up when they come to the age of 71.
Is the minister telling us that plans like the registered retirement savings plan are supposed to gouge the income tax system? I thought it was supposed to be used to save for retirement years. All the advertisements of banks, finance companies and insurance companies are saying: "Come in, and we will show you how to get around the income tax structure". Is that what the system is all about?


Eldon Mattison Woolliams: That is what Canada is all about.


John R. Rodriguez: It is not about that. Surely Canada is not about making the rich richer.


Some hon. Members:: Oh, oh!


Charles Robert Turner: Order, please. The Chair has difficulty hearing the hon. member for Nickel Belt. He was recognized a while ago. Would hon. members please grant him-


Some hon. Members:: Oh, oh!


John R. Rodriguez: I am sure the hon. member for Calgary North will agree that Canada is not a cow for certain elements to milk for their benefit.


Eldon Mattison Woolliams: Mr. Chairman, I rise on a point of order. At one time in my life I milked cows. I used to milk them, but I have never before listened to a stripper.


Some hon. Members:: Hear, hear!


John R. Rodriguez: The hon. member for Calgary North may have milked cows, but now he milks the people of Canada. Canada is not a cow which a few milk for condensed milk, and the rest get skim milk.


Douglas Charles Neil: You have never been on a farm, that's for sure.


Some hon. Members:: Oh, oh!
Income Tax Act


John R. Rodriguez: Surely that is not what Canada was designed for.


Eldon Mattison Woolliams: What about clause 21?


John R. Rodriguez: When we come to clause 21, we find that it is superimposed on a structure which has all the distortions which we have tried to stress. It is very poignant to note that the Tories were prepared to pack this in a long time ago and get into bed with their buddies across the way with that in mind. It seems to me we have used this time fruitfully in an effort to bring up relevant questions about the way the income tax structure has been developed in this country.


Gérald Laniel: Shall clause 21 carry?


Some hon. Members:: Agreed.


[Stage Direction]
Clause agreed to.
Clause 22 agreed to on division.
Clause 23 agreed to.
On clause 24.
Reginald Cyril Symes: Mr. Chairman, this clause, I understand, will eliminate the principal business test for a 100 per cent writeoff of Canadian exploration expenses for taxation purposes. I understand that previously someone in business could write off 100 per cent while investors whose principal business was not natural resource oriented could only write off about 30 per cent. As well, government incentives such as drilling incentives or provincial aids to encourage increased exploration, are not required to be handed out with the exploration expenses before calculating exploration development deductions.
I should like to try to put this clause into the context of what has been happening in the resource industry in order to try to assess whether the amendment before us will have the desired effect of spurring exploration for oil and energy. I therefore look at the largest oil company in Canada and its record of exploration, and I have some serious reservations about the effect of the clause.
Through advertisements on television we find that Canada's largest oil company, Imperial Oil, needs more revenue to explore for new oil. According to the oil industry we are rapidly running short of this precious resource. But is that really true? Does the oil industry need more incentives through the tax system to encourage it to explore? I should like to look at the history of Imperial to argue just the opposite.
In 1972, the last year before the international oil price increase, and in 1975, we find the production levels of this company were virtually identical. There was a dramatic change in the earnings of the company between 1972 and 1975 and we should try to find out how this affected exploration. In 1975 their revenue was $4,047 million, an increase of 98 per cent over the 1972 revenue of $2,104 million. In 1975, the profit after taxes was $250 million, an increase of 65.6 per cent over 1972. A very important category if we are talking

February 3, 1977
Income Tax Act
about exploration budgets is the cash flow which was $464 million in 1975, an increase of 53.6 per cent over 1972.
What happened to the company's oil exploration budget when it earned this record income in 1975? Remember, Imperial has been advertising about the big, tough, expensive job of exploring for oil, and telling how it needs more revenue and less taxes if new energy sources are to be found. What was the exploration expenditures in 1975 after these record earnings? It was $74 million, the exact same amount as it spent in 1972. It has been making the argument on television and in other media that it needs more money through price increases to the consumer for oil and gas. That does not hold water- should I say oil?


John Gilbert: Gas.


Reginald Cyril Symes: In the light of the record of earnings of this company and its exploration budget, what has it been doing with the profits? Certainly it has not been putting them into exploring for new oil. It has been diverting money into the Syncrude project in Alberta because of the tax incentives built in through special legislation passed in this House a few years ago. That legislation exempts Imperial from federal corporation tax on its provincial royalty payments, and under the system the company can write off $4 for every $3 invested in Syncrude.
In light of that kind of record of financing of exploration, and in light of the other tax incentives in existing legislation which urge Imperial to divert funds from exploration into projects like Syncrude, I wonder what this amendment will do to enhance exploration in this country. It is an attempt to get further funds from other investors put into energy exploration, but when the companies themselves have other priorities that the income tax system seems to dictate to them, I do not think this clause will have the desired effect.
In light of past experience what guarantee is there that this tax amendment will promote energy exploration? 1 think Canadians will seriously ask this question. Companies claim they do not have enough incentive to explore from the recent increases in the price of the wellhead barrel of oil but companies again have produced record profits for 1976. If we break down the wellhead price of a barrel of crude oil as of January 1, 1977, $9.75, we find that the cost of producing that barrel of crude oil is 68 cents; provincial royalties in Alberta, for example, account for $3.90; federal income tax, $1.54, but the profit on that barrel of oil is $3.63, or 40 per cent of the total price. I submit that there are enough existing revenues to promote exploration for oil for the benefit of Canadian consumers.
The multinational oil companies which control 90 per cent of this country's oil industry at the moment are not serious about developing new energy reserves. They are playing the scarcity game, predicting shortages so that consumers and the government will be panicked into accepting ever higher prices. One should consider the situation in the United States today.

There natural gas is in short supply, mainly because of a poorly designed distribution system, and because, as some think, there has been collusion on the part of energy companies to keep energy supplies at low levels. This has been done because the companies want to press for changes to oil and gas legislation now before the Congress of the United States.
One must ask, considering recent events in Canada, can the oil and gas companies be trusted? Only a few years ago they were predicting that we had enough oil available to last us for many decades. Of course it was in their interest to say that because they wanted to export 50 per cent of Canada's oil production. When the world price of oil went up and the Canadian price remained comparatively low, it was to the advantage of oil companies to change their song, to change their predictions. Suddenly we learned that estimates of reserves had been revised downward. The many billions of barrels of oil which we were previously told we possessed suddenly disappeared, and the oil companies said that unless they could charge the world price for oil in Canada they would not be able to explore for new oil reserves.
I have tried to show what has happened in the case of Canada's largest oil company, Imperial Oil. Although that company has made record profits and enjoyed a tremendous increase in cash flow, it has not carried out exploration, exploration which would reassure Canadians that more oil will be available. I therefore submit that clause 24 of Bill C-22 will probably be ineffective in the long run, and that the government in the past was manipulated by the oil industry. Having examined clause 24, it appears to me that once more the government is bowing to demands of the industry and has designed tax legislation which will unduly benefit the oil industry.
For those reasons I submit that we ought to look carefully at clause 24 and ask the minister and his officials to tell us what the effects of this clause will be. If the minister could guarantee that if we were to pass the bill, including clause 24, we should see an increased exploration for oil, and that we shall establish an ongoing monitoring agency to ensure that exploration will take place, I might be persuaded that clause 24 is of value. But, Mr. Chairman, when I consider the record of the oil industry, I have some reservations. I think of the Syncrude deal the minister was blackmailed into signing that fateful day in Winnipeg when he was accompanied by the then president of the treasury board and the Minister of Supply and Services. I just shudder at the thought that the present Minister of Finance, who was then the minister of energy, mines and resources, has proposed legislation of this sort.
Canadians have given far too great a tax advantage to multinational oil companies. The government is providing further tax incentives, and not only to energy companies which have enjoyed the advantage of a 100 per cent write-off. Any business, energy-related or not, will now be able to qualify for this 100 per cent write-off.


John R. Rodriguez: No wonder the Tories like the Liberals.
February 3, 1977


Reginald Cyril Symes: Mr. Chairman, that makes one wonder about the government's priorities. Members of my party have examined various other clauses of this bill which are designed to give a greater dollar advantage in terms of income tax to upper income Canadians. It is obvious that clause 24 is designed to fit into that pattern as well.
Our income tax system is supposedly progressive. The percentage of income payable as tax ranges from a low level for low income earners to a somewhat higher level for high income Canadians. However, as I said this afternoon, and as other colleagues said this evening, the concept of progressivity based on ability to pay is subverted by the kinds of deductions for which the bill provides, because the percentage of income payable in tax at upper income levels is reduced.
I doubt if the exploration expense write-off provided in clause 24 will have the desired effect. I say this, bearing the history of the oil industry in mind, and because this tax law has been designed in the context of unfairness and inequity.
Progress reported.



PROCEEDINGS ON ADJOURNMENT MOTION

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

Ramon John Hnatyshyn: Mr. Speaker, my intervention this evening arises as a result of the question 1 raised on December 15, 1976, with respect to a matter which had originally been addressed by the hon. member for Hamilton Mountain (Mr. MacFarlane) to the Postmaster General (Mr. Blais). The hon. member for Hamilton Mountain, I may add, was subsequently elevated to the great office of Whip on the government side.
The hon. member for Hamilton Mountain had asked the Postmaster General if the Post Office had accepted a freebee from Time magazine, a freebee with respect to Post Office advertising in that particular publication. When answering, the Prime Minister (Mr. Trudeau) said he did not understand my question, that he did not know what a freebee was. I found this difficult to understand because in a number of instances during the past few years the term "freebee" has been used in the course of debate in the House of Commons. The Prime Minister, much to my amazement, was not able to understand in a very simple question asked of him during the course of the question period what a freebee was in terms of political activity. The Parliamentary Secretary to the President of the Privy Council (Mr. Goodale) appears to be very agitated and
Adjournment Debate
excited when I mention these things. I simply want to say that it is a term that is not in the Oxford dictionary, but indeed is in the dictionary of the cathetral of here and now in which we address ourselves in the House of Commons.
I say to the parliamentary secretary, who apparently is here tonight to answer this question, that a freebee can be defined on a number of occasions by actual performance of members of the Treasury Bench. Freebe is a very understandable term. Quite frankly, it involves a situation where the government and members of the government accept, without payment, a kind of reward that might in fact influence the activities or decisions of government. I do not suggest for a moment that is the case. However, we who are involved in the governmental process should be very concerned that we do not do anything that might in fact be interpreted by the public as being something that might influence governmental decisions.
When we talk about freebees, we may be concerning ourselves with the perception that people have of what government is doing and what government might in fact be inclined to do in the area of discretionary decision.
My question to the Prime Minister at the time simply asked whether there was anything in the government guidelines that might determine not only whether it would be appropriate but proper from the point of view of acceptance on the part of government of free advertising in the communications and publications industry. The time that I raised my question was after a question raised by the hon. member for Hamilton Mountain with regard to an answer by the Postmaster General (Mr. Blais) to the effect that the Post Office had accepted a freebee or overt gesture by Time magazine to try to improve the service of the Post Office by means of an advertisement placed in that magazine.
Although the question of influence peddling may not be legally provable in this case, certainly the practice of accepting free advertising from companies whose activities are directly affected by government legislation, such as in the case of Time magazine, is questionable. It suggests a serious lack of judgment on the part of the department and the government. It also bears a direct relationship to the use by ministers and members of parliament of aircraft owned and offered by private companies or foreign countries.
I mentioned at that time, when the Prime Minister evinced some surprise at the term freebees, a few examples he might consider, for instance, the use of private jets belonging to liquor companies, the use of jets belonging to a particular lobby group, the Canadian Bankers' Association, by the minister of consumer affairs at a time when the question of consumers affairs legislation was before the House. That association is involved in making representations to the government regarding amendments to the Bank Act, and other important legislation-


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

February 3, 1977
Adjournment Debate


Ramon John Hnatyshyn: I simply want to end by asking the parliamentary secretary to tell me whether there are any guidelines, and whether he can explain to the House whether the Prime Minister has now discovered what "freebees" are.


Mr.   Jacques-L. Trudel@Parliamentary Secretary to President of Treasury Board: Mr. Speaker, 1 believe the hon. member exceeded his time because he became involved in an explanation of freebees. I shall not attempt to follow his dissertation as to the description of freebees, but he was quite correct in saying that the question was first raised in the House by the hon. member for Hamilton Mountain (Mr. MacFarlane). I should like to draw his attention to the answer as reported in Hansard for December 10, 1976, at page 1868. The hon. member did refer to it, but 1 should like him to review that question together with the reply from the Postmaster General (Mr. Blais).
I cannot accept the suggestion by the hon. member for Saskatoon-Biggar (Mr. Hnatyshyn) that this subject was dealt with by the Postmaster General in a facile manner. In fact he stated that the Post Office had not requested Time magazine to insert the advertisement in question, and that the Post Office was not charged for it; the advertisement was a gesture by the magazine, and he, the Postmaster General, considered that overt gestures of this nature were acceptable and consistent with efforts to improve services in the Post Office.
I understand-and this will answer one of the hon. member's questions-that the government has not issued guidelines regulating the acceptance of free advertising, nor is it evident that there would be a need for such a policy. However, if a need is demonstrated, further consideration would be given to the matter, and I am sure the remarks of the hon. member will be looked at carefully in that connection.


GRAIN-USE OF ELEVATOR SPACE FOR DURUM OR RED SPRING WHEAT
Douglas Charles Neil: Mr. Speaker, on December 13, 1976, as reported at page 1919 of Hansard, I asked the minister in charge of the Wheat Board the following question:
In view of the storage space available in Canadian government elevators in western Canada, for example, some four to five million bushels in Moose Jaw, and in view of the fact that utilization of this space for Durum or Red Spring wheat would inject some needed funds into the western economy, would the minister undertake to instruct the Wheat Board to take immediate steps to utilize this space to the advantage of the producers and businessmen in the communities?
To which the minister replied:
No, Mr. Speaker. I would not give that instruction to the Wheat Board. The Wheat Board is fully aware of the existence of that space and also of the extra cost involved in using it and the advantage of using it. I am sure they weigh these factors and come to conclusions which are in the best interests of farmers.
The Minister of Agriculture (Mr. Whelan), to whom I put a supplementary question, had this to say:
I am sure the hon. member knows that these elevators cannot be used to the extent we would like them to be used unless the Canadian Wheat Board instructs that the grain be delivered there. Full utilization has to be with the full co-operation of the Wheat Board and the trade in general.
[The Acting Speaker (Mr. Ethier).]
In western Canada there are five government elevators. They are located at Moose Jaw, Saskatoon, Calgary, Edmonton and Lethbridge. These elevators have a total capacity of some 17,100,000 bushels. According to Grain Statistics Weekly, which is a weekly publication of the Canada Grain Commission, for the week ending January 19, 1977, there are presently some 6,634,000 bushels of grain in storage in those government elevators. If you deduct that figure from the
17.100.000	bushel capacity, there is storage space for roughly
10.500.000	bushels in these five elevators. Of that 10,500,000 bushels of available storage space, approximately one half, or
5.300.000	bushels, is available in the terminal elevator at Moose Jaw.
Now, Mr. Speaker, there is no quota, for example, on Durum except for those chosen few who were fortunate enough to receive a special quota for the two types of Durum, Macoun and Wakooma. I am concerned as to why the Wheat Board cannot set up a special permit to allow the other people who have Durum in storage to deliver and utilize those
10.500.000	bushels of available space in these elevators, or, on the other hand, to use the space to store Red Spring wheat and thus put additional money into the hands of the producer and into the economy of western Canada.
There has been a suggestion that it is too costly to utilize these government elevators, but it seems to me that it is costly to allow these elevators to lie idle or at least not to use them to maximum capacity. It is also costly to have boats sitting in Vancouver harbour for several weeks on end waiting for grain to be loaded. Over the year end, I understand there were some seven to eight boats in the harbour at Vancouver, and while I was unable to get the figures for demurrage, a Canadian Press report indicated that a Chinese boat in the harbour was costing the western farmer some $10,000 a day in demurrage. If my math is correct, that $10,000 would pay for the storage of one million bushels of grain for one month in one of these government elevators.
The Moose Jaw terminal has a capacity of 5,500,000 bushels and has a throughput of anywhere from 25 million to 30 million bushels a year. Yet according to the annual report of the Canada Grain Commission for 1975-75, there were only 34 million bushels put through the five government elevators in western Canada, and the historical average is only 20 million bushels.
The Moose Jaw elevator can dry, clean and place the grain to export standards, and it can load a hopper train of 100 cars a day. Those 100 cars will carry 330,000 bushels of grain- approximately a third of a million bushels, and the average ship carries a million bushels. So in three days the elevator at Moose Jaw-that is one of five-could send out sufficient grain to fill one boat and the railway can carry that from Edmonton, Moose Jaw, or Calgary to the west coast in two days, so there would be no need to have these vessels sitting in the harbour at Vancouver where we are paying demurrage. If anyone cares to look at Hansard of January 24 at page 2284,

in response to written question No. 687 by the hon. member for Saskatoon-Biggar (Mr. Hnatyshyn), they will find that in the period of one year from October, 1975 to October, 1976, the prairie farmer paid over $4 million in demurrage charges on the west coast at Vancouver, and approximately $1 million at east coast ports.


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


Ralph Goodale: Mr. Speaker, the government elevators to which my friend, the hon. member for Moose Jaw (Mr. Neil), has referred in his question this evening follow an established policy to work closely with producers, with grain companies and, of course, with the Canadian Wheat Board to make these very important facilities in western Canada available in a manner that will maximize Canada's grain movement both for export and for domestic purposes.
In day to day operations, space is made available in each of the elevators to accommodate Canadian Wheat Board requirements as they arise. This has its greatest application particularly for high moisture grain. Other such applications relate to special accumulations and storage of specific grades of grain, especially during periods of unprecedented demand when bunching of vessels occurs in Vancouver.
As well, currently about half the space at Lethbridge is leased out to local feeders and processors, thereby fulfilling a useful purpose in this heavy feeding area.
As my friend pointed out this evening, Canadian government elevators do not buy grain themselves. That is, of course, the responsibility of the Canadian Wheat Board and the grain trade.
In deciding whether or not to utilize Canadian government elevators at any given time, the Canadian Wheat Board has to evaluate a number of factors including the cost of assembling grain in the terminals by producers using their own trucks, by custom trucking or by rail movement; as well as the over-all space available in the primary elevator system and the advantages to the rail shipment program which the Wheat Board has established at any moment in time.
Until this week no Durum quota had been established by the Canadian Wheat Board in the current crop year. However, there has been a heavy Durum movement since December through Vancouver and it is anticipated that this will continue at least until the end of March. This has allowed the Canadian Wheat Board to establish effective February 1, a Durum quota of 4.46 bushels per acre, or, as some would want to know, 300 kilograms per hectare. This will enable producers to deliver into the licensed elevator system and provide an injection of funds into the western economy.
There is currently under way a heavy shipping program for Red Spring wheat through the west coast which will continue at least until the end of May. This will be augmented by an eastern movement through Thunder Bay upon opening of Seaway navigation.
Adjournment Debate
In view of this, Mr. Speaker, the Wheat Board at this stage of the crop year does not see the need to utilize the government interior terminal elevators. Of course, as circumstances change later on in the year, the situation could be reviewed.


The Acting Speaker (Mr. Ethier):: Order, please. I have to interupt the hon. member because the time allotted to him has expired.


REGIONAL ECONOMIC EXPANSION-NEWFOUNDLAND- GOVERNMENT ACTION IN VIEW OF CLOSING OF LINERBOARD MILL
Jack Marshall: Mr. Speaker, on November 17 last I asked the Minister of Regional Economic Expansion (Mr. Lessard) whether he had been contacted by the provincial government of Newfoundland for assistance because of the worsening situation at Labrador linerboard mill in my district at Stephenville, Newfoundland. The continuing deterioration of the mill was the result of the fact that the bulk of the resource had to be transported from Labrador, a distance of 600 miles. It must be realized that the resulting cost of producing a ton of linerboard is seriously affected by the transportation cost. Added to this handicap, the distance of the mill from the off-shore market further exacerbates the problem when the mill has to face competition from similar operations closer to the market. This doubles the problem which is difficult to overcome.
Furthermore, adding to the problem is the fact that this mill came onstream at an inopportune time when demand for the product was at a low ebb. Efforts by the sales forces to break into the market left much to be desired. Third, to inflict a further scar on the disease, the wood source near the mill is not available to the mill in enough quantity to relieve the cost of producing a ton of linerboard.
The continuing failure to overcome these problems has resulted in the provincial government of Newfoundland, which owns the mill, having to subsidize the operation at an annual expenditure of some $25 million to protect, in its own interest, and the many hundreds of jobs directly and indirectly related.
It has now reached the point where new management has been brought in, and an advisory board with economic expertise has been appointed to determine the future viability of the operation, subject to the consideration of various options, and it is my opinion that with federal government assistance the mill and its operation can be rehabilitated, to the benefit of a depressed community suffering from the continuing downturn of economic events.
Having reviewed the problem with the assistance of officials in the federal departments concerned, and after making my own assessment, I came to some conclusions, and they are best expressed in a letter I wrote to the Secretary of State for External Affairs (Mr. Jamieson). He indicated his concern through his own portfolio and when he was minister of industry, trade and commerce. In my letter of November 8, 1976,1

February 3, 1977
Adjournment Debate
expressed the problems as I saw them and as they relate to the mill, and other factors, and I recommended the following:
1) That the federal government initiate a co-ordinated effort with the provincial government under and including the Department of Industry, Trade and Commerce, the Department of Regional Economic Expansion, the Department of Manpower, along with probably Cl DA and the Export Development Corporation directed towards the following objectives:
a)	to review studies carried out on the operation of the mill;
b)	to examine ways and means of rationalizing the cost of the resource in line with availability;
c)	to examine the possibility and the need for support funding to streamline the operation in order to compete with offshore capacity;
d)	to determine the need for assistance in shipping cost to and from the mill as a result of distance from the resource as well as the distance from offshore markets;
e)	to consider in the determination of assistance to underdeveloped countries to whom Canada provides interest free loans to establish mills, the feasibility of promoting the purchase of linerboard on the same basis (ClDA);
0 in the continuing efforts to establish trade with other countries that the sale of linerboard be given high priority;
g)	to examine the possibility of finding firms that use linerboard extensively to invest in Labrador Linerboard in order to ensure capacity where those firms would provide a steady market, or alternatively to consider through Export Development Corporation, the possibility of investing in firms that use an abundance of linerboard to ensure sales, or to invest in the mill itself;
h)	to consult with all firms producing linerboard, that may have plans for expansion in line with expanding markets to invest or purchase the Labrador Linerboard Mill;
i)	that Manpower extend efforts to examine the results of high unemployment that is occurring and to examine and implement re-training and other programs, to prepare for the impending need for mobility transfers and alternative job opportunities;
j)	that the facilities at the Harmon Base be examined to recognize the possibility of considering that base in the government's decentralization objectives, e.g. Taxation Data Centre, Canadian Coast Guard (Search and Rescue) fisheries, etc.;
k)	to investigate the physical inventory of valuable property left as a result of the phase out of the American SEAC Base and to determine its use as a result of decentralization planning.
In recent days I have discussed with the mill management the present status of the mill, and I have confirmed that immediate co-operative action by all concerned is necessary. I am convinced that with the evident upturn in the whole pulp and paper industry, the operation can succeed. I am confident that the present management is capable of revitalizing the mill. It has a new dedication and determination, not just with regard to the mill itself but with regard to saving the economy of an important sector of the province.
I can only appeal to the Minister of Regional Economic Expansion to make a determined effort to co-ordinate federal support with his colleagues concerned to form a team and to meet with mill management and Newfoundland provincial officials with a realistic and positive approach to ensure the success of the operation, and with a flexible approach to ensure the protection of an economic base for one sector of our nation.


Mr. Ed Lumley (Parliamentary Secretary to Minister of Regional Economic Expansion):: Mr. Speaker, I should like to expand on the response which the Minister of Regional Economic Expansion (Mr. Lessard) gave on November 17, 1976, to the question from the hon. member for Humber-St.
George's-St. Barbe (Mr. Marshall) concerning Labrador Linerboard Limited.
DREE is aware of the difficulties which the provincial government is facing in respect of that provincial Crown corporation. However, the minister has not been approached by the province in respect of the recently reported closure of the linerboard mill at Stephenville.
The provincial government recently announced the establishment of a study committee and a reorganization of the corporation's management with the objective of examining and recommending an alternative course of action.
As the hon. member should be well aware, our department is primarily concerned with effecting improvements to the basic economic structures of areas such as the Atlantic region and identifying and pursuing development opportunities of a long range nature. There are other mechanisms designed to alleviate the economic and social hardships which arise from the short term unemployment resulting from difficulties experienced by a particular company. I must say that it is my understanding that the Labrador Linerboard Mill at Stephenville was closed recently for an indefinite period, due to high production and raw material costs, as well as poor world market conditions for linerboard. I have also seen reports that mills producing linerboard in western Canada have closed recently for the same reason.
DREE has played an active role jointly with the provincial government in Newfoundland in attempting to develop the province's forest industry. In April, 1974, we signed the Forestry Subsidiary Agreement with the objective of expanding and diversifying the forest industry in Newfoundland and Labrador through a series of projects on forest management, access road construction, harvesting and utilization, and other forest improvements. That agreement initially provided for an expenditure of $34 million on such activities. It was amended in January of 1975 to provide an additional $17.7 million, so that federal participation in that agreement represents a financial commitment of almost $48 million. The amendment, incidentally, was intended to increase further the sustainable level of utilization of forest resources on the island of Newfoundland through the use of mechanized logging equipment, the establishment of logging camps, and the construction of an additional 400 miles of forest access roads.
The amendment to the agreement also made provision for joint initiative with the provincial department of forestry and agriculture to improve the efficiency of the wood harvesting operations of Labrador Linerboard Limited.
Needless to say, we very much sympathize with the position of the Newfoundland government which is faced with continuing deficits in the operation of the mill. However, I must emphasize that the operation of the Crown corporation is the responsibility of the provincial government and does not directly involve our department.


The Acting Speaker (Mr. Ethier):: Order, please. A 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 10.30 p.m.

Friday, February 4, 1977