1978-11-24

ROUTINE PROCEEDINGS


Mr. G. W. Baldwin (Peace River):: Mr. Speaker, I have a motion to put forward under Standing Order 43 which should appeal to all members of the House. It being quite plain from the 100th report of the Auditor General, outlining details of government spending, that the government and its bureaucracy continues to bilk Canadian taxpayers, in disregard of reports of auditors general over the last ten years or so and will continue to do so until parliament, collectively and individually, gets off the sidelines and reasserts its authority to detect, prevent and punish such action, I move:
That a parliamentary committee or committees be directed to propose ways and means of achieving the objective of coping with this massive misappropriation of public funds, and that the prime minister assign to a sympathetic minister responsibility for collaborating with such committees in bringing about parliamentary reform along these lines.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


OLD AGE SECURITY
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, under the provisions of Standing Order 43, and seconded by the hon. member for Greenwood (Mr. Brewin), I move:
That this House notes that the consumer price index issued today is based on a basket of goods and services in which the importance of food has been downplayed, which works against senior citizens, and this House therefore calls on the government to establish a special index for senior citizens, based on the goods and services they have to buy, so that the indexing of their pensions will more accurately meet their situation.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


CONSUMER AFFAIRS
Mr. Jack Murta (Lisgar):: Mr. Speaker, I rise, under Standing Order 43, on a matter of urgent and pressing necessity, namely, the statement attributed to the Minister of Consumer and Corporate Affairs to the effect that he favours higher import quotas on lower grade beef, and some form of maximum-minimum price for beef products.
I move, seconded by the hon. member for Moose Jaw (Mr. Neil):
That the Minister of Consumer and Corporate Affairs appear before the Standing Committee on Agriculture so that he may be fully briefed on the cattle industry in this country, because if his ideas were implemented they would certainly cause a Canadian beef shortage in Canada.


Mr. Speaker:: Such a motion can be introduced for debate at this time only with unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


REQUEST WHEAT BOARD OFFICIALS APPEAR BEFORE COMMITTEE TO EXPLAIN POLICY RESPECTING PURCHASE OF HOPPER CARS-MOTION UNDER S.O. 43
Mr. Doug Neil (Moose Jaw):: Mr. Speaker, I rise, under the provisions of Standing Order 43, on a matter of urgent and pressing necessity.
In view of the announcement by the Canadian Wheat Board that it intends to purchase from 500 to 2,000 hopper cars, apparently out of producers' funds, and in view of the fact that the board was set up to ensure the orderly marketing of grain, and by no stretch of the imagination on the part of the producers and responsible politicians, was the board to involve itself in the movement of grain by using producers' money to

November 24, 1978
Oral Questions
purchase hopper cars or any type of rolling-stock, I move, seconded by the hon. member for Swift Current-Maple Creek (Mr. Hamilton):
That the minister in charge of the Canadian Wheat Board and officials of the Canadian Wheat Board appear before the Standing Committee on Agriculture to explain their action, and that the standing committee be authorized to carry out a study to determine the reason for the deferral and loss of sales which has cost the producer and the economy of Canada countless millions of dollars.


Mr. Speaker:: Such a motion can be introduced for debate at this time only with unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


CANADIAN WHEAT BOARD
Mr. Frank Hamilton (Swift Current-Maple Creek):: Mr. Speaker, I rise, under the provisions of Standing Order 43, on a matter of urgent and pressing necessity.
As high-handed and sloppy transportation programming by the Canadian Wheat Board is largely responsible for the billion dollar loss sustained by western grain producers so far this year through lost and deferred sales, interest and demurrage, etc., and the Canadian Wheat Board's move to purchase up to $100 million worth of additional grain cars with producers' money is an abuse of their authority under the act, I move, seconded by the hon. member for Moose Jaw (Mr. Neil):
That the government immediately refer the Canadian Wheat Board accounts to the Auditor General for study and comment.


Mr. Speaker:: Presentation of such a motion for debate at this time can be done only with unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.



ORAL QUESTION PERIOD


Mr. Allan Lawrence (Northumberland-Durham):: Mr. Speaker, my question is to the Prime Minister, whose last
(Mr. Neil.]
words in this House yesterday afternoon had to do with Mickey Mouse.


Some hon. Members:: Oh, oh!


Allan Frederick Lawrence: While the Prime Minister is in this inwardlooking mood, I would like to ask him, in relation to the very gross overruns and runaways as far as capital expenditure projects are concerned, if he has an explanation to give to the Canadian people and to the House today in relation to these expenditures-on capital works programs, for instance.
In addition, what explanation does he have for the "R" class icebreakers costing six times what they were expected to cost and what the contracts called for when they were originally let? What explanation does the Prime Minister have for a runaway cost like that?


Right Hon. P. E. Trudeau (Prime Minister):: Mr. Speaker, the House will realize that I have not verified all the statements by the Auditor General, but each minister has been informed of them and is studying the report. They will be prepared to deal with each particular case that the hon. member or other hon. members opposite might want to concern themselves about. This particular one would come under the Minister of Transport, and I can undertake to ensure that he will be informed of the hon. member's concern.


Allan Frederick Lawrence: Mr. Speaker, I am one, and I am sure there are countless thousands across the country, who believes that the Prime Minister, being in charge of this government, simply cannot ignore the problem any longer, having a merry-go-round like the one we have seen this morning. For instance, the gentleman who was in charge of Public Works was promoted this morning. Can the Prime Minister indicate how in the world, presumably under Public Works, the Malton, Toronto, airport additions would increase almost three times over what they were expected to cost? This is not something he has to confirm: it is there; it is a fact. What is the Prime Minister's explanation? Don't shuck if off on somebody else.


Some hon. Members:: Oh, oh!


Pierre Elliott Trudeau: Mr. Speaker, I must confess, in all humility, that I do not know the detail of every item of expenditure by the government. That is why we have ministers with different departments. The ministers will gladly give the answers and explanations for the cases which interest the hon. member. I do not think it is too much to suggest to the hon. member that it is not possible for the Prime Minister to verify, personally, every expenditure by every minister in every department. That is indeed, why we have an Auditor General, so that he can make this kind of report. It is the duty and the role of the opposition to ask questions on it either in the House or in committee when the estimates of the particular minister are before the committee.


Allan Frederick Lawrence: Mr. Speaker, I would have expected that since the Prime Minister and his ministers have had notice of these items for many weeks, it is also the duty of the Prime
November 24, 1978

Minister to be informed especially of major capital projects such as this and the obvious ball-up in his own government respecting them. In any event, that is past history.
What guarantee can the Prime Minister give to the people of this country, today, that this type of exorbitant overrun in respect of capital projects will not be repeated? We have a $10 billion program this year. Can the Prime Minister give his guarantee that this will not happen again?


Pierre Elliott Trudeau: Mr. Speaker, when the budget of the government is in the order of some $40 billion-


Mr. Stevens:: Fifty billion.


Pierre Elliott Trudeau: -it is not surprising that there shall be some instances of regrettable financial accounting or expenditure control. This would exist, and indeed it does exist, in any large corporation. The difference with the Government of Canada is that we have an Auditor General who pinpoints these publicly. He is an Auditor General who is chosen by parliament to do this very job.
The hon. member wants to know what guarantees there will be in the future. I could say there has been no time in the past one hundred years since we have had auditors general that he did not, in every government, of whatever stripe, find some instances of neglect.


Mr. Diefenbaker:: Not of this kind.


Pierre Elliott Trudeau: If the right hon. member for Prince Albert wants to get into the act, I welcome him, because I see that his successor is not in his seat. I am sure that, in his absence, he would welcome the right hon. member for Prince Albert.


John George Diefenbaker: Don't be childish all the time.


Pierre Elliott Trudeau: I am very willing to answer questions, but out of deference I am asking the right hon. member to say that the auditor general never found any concern over spending during the time he was in office.


AUDITOR GENERAL'S REPORT CONCERNING DEPARTMENT OF TRANSPORT
Mr. John C. Crosbie (St. John's West):: Mr. Speaker, my question is to the Prime Minister. 1 do not want to disturb his serenity: he just had a cabinet shuffle of the lost souls. It is a question of the quick leading the dead.
I would like to ask the Prime Minister this: very serious charges have been made by officials of the Department of Transport against ministers. I refer the Prime Minister to page 539 of the Auditor General's report, where officials of the Department of Transport state that recognition of the political process is not evident in the reports on the choice of sites for the training institute and the motor vehicle test centre, or Toronto or Calgary airports. I quote:
Oral Questions
The early commitments made by ministers based on circumstances extraneous to the department were particularly significant in the decisions on the timing, location, size and scope of these projects. The strength of these early commitments made it difficult to contain projects at later stages.
In view of these serious charges, is the Prime Minister going to ask for the resignation of his ministers of transport since 1972? Or if he will not do that, will he at least have a public inquiry into these charges by officials of the Department of Transport against their ministers over the past six years?


Pierre Elliott Trudeau: Mr. Speaker, the Auditor General's report has been referred, as the hon. member perhaps noticed yesterday, to the public accounts committee. The hon. member can use his rapier wit at that particular committee to show how bright he is at reading texts from the Auditor General's report.


John Carnell Crosbie: It is not rapier, Mr. Speaker; it is rape of the political process.


Some hon. Members:: Oh, oh!


John Carnell Crosbie: It is not a matter of the public accounts committee; it is a charge of political interference which caused the waste of hundreds of millions of taxpayers' dollars. In those circumstances, does the Prime Minister agree that the matter to which I referred, and the charges made by these officials of the Department of Transport, reproduced by the Auditor General, as their explanation of these increases, warrants more than a public accounts committee but, in fact, a public inquiry with proper powers of subpoena and complete independence from the government? Will the Prime Minister not realize the seriousness of this?


Pierre Elliott Trudeau: Mr. Speaker, I do not share the hon. member's contempt for the public accounts committee. I think they do a good job.


John Carnell Crosbie: Mr. Speaker, because of the dance of the macabre this morning, the Prime Minister will not take this matter seriously. The public accounts committee does not have power: it is in the hands of the majority; it is controlled by the Liberal majority.


An hon. Member:: It has your chairman.


John Carnell Crosbie: The chairman is independent, but he is one of a minority. The Prime Minister and his ministers have referred to the Auditor General in glowing terms. Will the Prime Minister investigate this serious matter, or try to forget it as he is trying to do? This is a most serious charge. I do not think a previous auditor general's report ever had a department make this kind of statement about its minister and the political interference it suffered. Will the Prime Minister take this seriously and quit joking about the public accounts committee?

November 24, 1978
Oral Questions


HEALTH AND WELFARE
Stanley Howard Knowles: Mr. Speaker, I have a question for the Minister of National Health and Welfare. Some of us are pleased that she has not been shuffled.


Some hon. Members:: Hear, hear!


Stanley Howard Knowles: In the light of her tentative statement the other night on a CBC television program that she was hoping to get an assurance from the provinces that they would not take any steps to cut back the increases Canadians will get by way of old age security payments or family allowances, is she in a position to tell the House that she has received such assurances from the provinces?


Hon. Monique Begin (Minister of National Health and Welfare):: The only response I have from the provinces is that Ontario, British Columbia and Alberta are going to pass on the increases to the recipients of the provincial supplement such as GAINS in Ontario. Newfoundland and other provinces are recommending it to their cabinets now. As to the child tax credit for children which we want to be fully passed on to mothers on mothers allowance and other welfare payments I am unfortunately still not in a position to give assurance to Canadians and I would like to give a last chance for provinces to go to their cabinets.


Stanley Howard Knowles: May I express the hope that the minister will have this assurance from all the provinces before we get back to the discussion of Bill C-10 some day next week?


VETERANS AFFAIRS
Stanley Howard Knowles: On the
same subject, may I put a question to the Minister of Veterans Affairs? It arises from his tentative assurance that an effort is being made to make sure that recipients of the war veterans allowance will not have their allowances cut back because of the increase in the guaranteed income supplement. Is he yet able to give the House and the veterans that assurance?


Hon. Daniel J. MacDonald (Minister of Veterans Affairs):: This is in the normal process of discussion. The assurance which the hon. member is seeking is not possible to give today. As he knows, the act pertaining to this supplement sponsored by the Minister of National Health and Welfare, has received royal assent, so I expect to have some information for the hon. member shortly.


AGRICULTURE
Mr. Adrien Lambert (Bellechasse):: Mr. Speaker, my question is directed to the Minister of Agriculture.
Yesterday I called the attention of his parliamentary secretary to a question of paramount importance, namely the establishment of a national marketing board for poultry. The parliamentary secretary replied that this question is very seriously under review and that a decision is forthcoming. Then I directed a question to the right hon. Prime Minister, and I understand better this morning the reply he gave me yesterday when he said that he could not always look after everything himself and that is why he has ministers. I accept his reply.
Therefore, I should now like to ask the Minister of Agriculture whether poultry producers may expect in the very near future the establishment of a national marketing board to protect the interests not only of producers, but of consumers as well, as Bill C-76 would have it?


Hon. E. F. Whelan (Minister of Agriculture):: My parliamentary secretary answered that question correctly yesterday, Mr. Speaker.


ALLEGED PRICE-FIXING RESPECTING TURKEYS
Joseph Adrien Henri Lambert: Mr. Speaker, I should like to put a supplementary question to the minister.
It will soon be Christmas and it is customary for families to buy a turkey for the supper after the midnight mass. According to reports this morning, some combines have taken steps to make believe that there will be a shortage of turkeys in Canada thus inordinately increasing prices. I would like to ask the Minister of Agriculture whether he is aware of that situation and if he is not whether he would be prepared to inquire so that the marketing of that important meat will not be left in the hands of combines for Christmas.


Eugene Whelan: Mr. Speaker, I have heard about the situation. We have done some checking with the National Farm Products Marketing Council, which has been in touch with the Canadian Turkey Marketing Agency. I think it should be remembered that that agency does not have the same control as the Canadian Egg Marketing Agency. There has been hardly any increase in the price of eggs for over two years because the pricing formula is such that the agency controls the price producers receive, as well as the distribution of eggs, which is not the case with turkeys.
November 24, 1978

There are statistics which show that there should be a surplus of 17 million pounds of turkeys for Christmas. There will be no shortage at all and there should be a substantial carry-over into the new year. Projected production for the first quarter of the new year is substantially increased, so as far as we are concerned there is no shortage of turkeys. There may be a shortage of marketing turkeys. There are over 50 million pounds of turkey in storage. There will be over 50 million pounds of fresh turkey before Christmas, so there should be a surplus of turkeys when imports are included. There should be a substantial surplus, at least half the surplus we had last year, so there should be no shortage of turkeys whatsoever. Also, turkeys should be at reasonable prices because producers have received an increase of only about 41/2 cents a pound for the total year, so as far as we are concerned there should not be a further increase in price.


ADMINISTRATION OF JUSTICE
John George Diefenbaker: Mr. Speaker, in the absence of the new Minister of Justice and also of other ministers involved in this matter, I will ask the Solicitor General whether there is any communication between the Department of Justice, the Department of the Solicitor General and the Department of Employment and Immigration. When the two former departments I have mentioned have complete information concerning criminal records of individuals who come into Canada, I want to know what communication there is. I am referring to the matter of Mr. Keith Richards who has a record as long as your arm and who was admitted here. I want to find out what communication there is among departments.


Hon.   J.-J. Blais@Solicitor General: Mr. Speaker, in view of the vague nature of the question which the right hon. gentleman has asked regarding a very specific instance, I will take notice of the question and report subsequently.


John George Diefenbaker: Mr. Speaker, I am glad the minister is anxious to get information. I will give him the record of Keith Richards. He was convicted in 1973, in the United Kingdom, for offences relating to dope, arms and ammunition. One of the charges was possession of Chinese heroin. In 1973, in France, there were convictions for using, supplying and trafficking in hashish and heroin. There was a fine of 5,000 pounds. The minister wants information, and I always provide it. In 1977, one week before Mr. Richards came to Canada, he was convicted in the United Kingdom for having dope. What communication is there, and why are individuals like this allowed into Canada?


Mr. Blais:: Mr. Speaker, the right hon. gentleman is free to provide information, and I take note of it. It is unfortunate
Oral Questions
that the right hon. gentleman did not make that information available to me previously.


Some hon. Members:: Oh, oh!


Jean-Jacques Blais: In a situation such as this one, I find it odd that the right hon. gentleman did not give some indication prior to the question period in order to give me notice so that I could ascertain the information he has solicited. It is odd, in view of the sensitive nature of the information he has advanced.


GOVERNMENT EXPENDITURES
Mr. Perrin Beatty (Wellington-Grey-Dufferin-Waterloo):: Mr. Speaker, I would like to ask the Prime Minister a question about the Auditor General's report. As the Prime Minister will be aware, the Auditor General states in his report that throughout the government, contracts of great value are given out without calling for competitive tenders. For example, the Auditor General points out that the Department of Supply and Services alone signed about 90,000 contracts, totalling over $1,800 million, without calling for competitive tenders.
Would the Prime Minister tell the House how he justifies this action by his government, particularly in view of the fact that such action appears to fly in the face of the government's own regulations?


Pierre Elliott Trudeau: Mr. Speaker, this question was asked in detail of the minister of supply and services at the time concerning the different contracts, and in each case he gave an explanation. The general explanation is that it allows the minister, as he is so authorized under the law, to use his discretion to help certain parts of the country where we want to assist in regional development.
This answer was given in the House by the minister at the time. If the hon. member has any other questions on any particular case, I am sure we will be very anxious to give answers.


Henry Perrin Beatty: Mr. Speaker, the Auditor General is fully aware of answers which have been given previously by the Department of Supply and Services. However, the Auditor General thought the matter was of sufficient importance to include it in his annual report. His officials stated yesterday, before the public accounts committee, that they were dissatisfied with the procedures followed by the government and that they found the explanations given totally inadequate.
I ask the Prime Minister about another government activity covered by the Auditor General. As reported, he states that the government often signed open-ended contracts based on fixedtime rates and cost-plus pricing methods which actually give incentives for time-wasting on construction being carried out

November 24, 1978
Oral Questions
and for cost overruns. When will the Prime Minister accept his responsibility as Prime Minister and ensure that future contracts do not provide incentives to waste the taxpayers' money?


Pierre Elliott Trudeau: Mr. Speaker, there is never any incentive to waste the taxpayers' money. The government follows procedures which are common in the private sector and which happen at all levels of government.


Some hon. Members:: Oh, oh!


Pierre Elliott Trudeau: I understand that some hon. members over there want to enter the fray. 1 can only attempt to answer questions as they are asked of me. If hecklers want to get into the act, very well.


Henry Perrin Beatty: Mr. Speaker, how does the Prime Minister justify the statement he just made with the statement on page 178 of the Auditor General's report which reads:
With fixed-time rate and cost-plus pricing methods, there is often no incentive for the contractor to control his costs; indeed, there may be a positive incentive for him to maximize hours spent or costs incurred.


Pierre Elliott Trudeau: Mr. Speaker, all I said was that in the private sector, as well as at all levels of the public sector-federal, provincial and municipal-there are cases where cost-plus contracts are entered into. It depends on the particular circumstances. That is why I invited the hon. member to not make general statements but to raise any particular contract he is concerned about. The minister, if he is given notice, will be happy to answer either in the House or before the public accounts committee.


THE CANADIAN ECONOMY
Sinclair McKnight Stevens: Mr. Speaker, my question is to the Minister of Finance. In view of the figures released this morning, which are being described by market analysts as atrocious-inflation up 1 per cent in the month, the trade surplus down dramatically from last month, the dollar, before the Bank of Canada intervened substantially, caving in by almost half a cent from its close yesterday-would the Minister of Finance tell the House whether he now intends to at least speak to the chartered banks in the hope that they will not increase the prime rate still further, bearing in mind that the prime rate in the United States this morning went up a further half point?


Hon. Jean Chretien (Minister of Finance):: Mr. Speaker, as is usual, I do not speculate in the House on the movement of interest rates. These problems are discussed by myself with the governor of the Bank of Canada when there are circumstances which call for it.
With regard to the figures which came out this morning, I said in my budget speech last week that I expected to see price indexing increase for the month of October because of the

return of the provincial sales tax. Another factor is that in the month of October we always include the CPI increases in taxes levied by the municipalities. I said that it was a phenomenon that would happen in October, but that the trend of the decline of the CPI as predicted would carry over. In the last three months, the increase in the CPI has been the lowest for any three-month period in years.


THE MINISTRY
Sinclair McKnight Stevens: Mr. Speaker, before putting my next question to the Prime Minister I would point out that the Minister of Finance obviously still does not understand his portfolio. I was referring to the prime rate, not the bank rate. The prime rate has nothing to do with the governor of the Bank of Canada.
My question to the Prime Minister centres around his escapades this morning referred to as a cabinet shuffle. In view of the fact that he has bypassed the Minister of Finance, has demoted the Minister of Industry, Trade and Commerce and has even shorn that minister of his deputy minister, would the Prime Minister confirm to the House that this move-appointing a nanny, if you like, over various other ministers-is a clear indication of his lack of confidence in the Minister of Finance and the Minister of Industry, Trade and Commerce, but that he did not want to hurt their egos?


Pierre Elliott Trudeau: Mr. Speaker, I am not quite sure if the question is of urgent and pressing necessity, as called for under the rules.


Mr. Paproski:: It is an oral question, not an S.O. 43.


Pierre Elliott Trudeau: It is a question about nannies. I think that is of more interest to the other side than it is to this side.


EXTERNAL AFFAIRS
Mr. F. A. Philbrook (Halton):: Mr. Speaker, my question is to the Secretary of State for External Affairs. Considering that the problem of world population is still very serious, in spite of encouraging reports recently, and that there is now an international group of parliamentarians working on population and development which is, in fact, headed by a Canadian MP, would the minister consider setting up a specific population desk either in his department or perhaps in CIDA or IDRC?
November 24, 1978


Hon. Donald C. Jamieson (Secretary of State for External Affairs):: Mr. Speaker, I am aware of the hon. member's interest, as well as that of other hon. members of the House, in this subject. I am not exactly sure what the formulation ought to be or what technique ought to be employed, but certainly 1 will look into it and see if there is merit in having a special centre either in CIDA or in External Affairs in order to co-ordinate these kinds of activities on a world scale.


CONSUMER AFFAIRS
Mr. James A. McGrath (St. John's East):: Mr. Speaker, 1 have a question for the Minister of Consumer and Corporate Affairs. Earlier this week, the minister was advised of charges made by the chairman of the Canadian Turkey Marketing Agency that turkeys were being stockpiled and, hence, withheld from the market in order to drive up prices. The Minister of Agriculture said in the House this morning, "increases should not be there as far as we are concerned."
In view of the fact that the price of turkeys is already 25 per cent more than it was this time last year, and the information already given to the House by the Minister of Agriculture, what has the minister learned from his inquiries with respect to this obvious profiteering at a time when more and more Canadians are depending on turkey as a cheap source of protein?


Hon. Warren Allmand (Minister of Consumer and Corporate Affairs):: Mr. Speaker, we did find that the wholesalers had held back approximately one-third of their produce but that that was not irregular in terms of what is usually done. It is usually found that producers sell about one-third of their production each year during the Christmas holiday season. What is being held back this year is pretty much in line with what was held back in other years. In fact, what is being held back has already been sold to different retailers.
On the other hand, I was disappointed by the fact that as of November 1 the stocks on hand were only 50 million pounds, whereas last year they were 72 million pounds. We believe that there should have been an increase in production this year because of the increase in the price of beef and a tendency by consumers to move to alternative sources of protein. Therefore, we would have liked to see greater production this year, but that has not been done.


James Aloysius McGrath: Mr. Speaker, this is a very serious matter, especially in light of the consumer price index today which is showing a substantial increase in food prices, even with the new weighting scale that is now in the CPI which places less emphasis on food.
Has the minister examined the cause for price increases, in light of what the Minister of Agriculture said? For example,
Oral Questions
he said that there are adequate supplies. Now we know that the price increases are not going to producers; someone is ripping off consumers. Clearly, it is the minister's responsibility to find out who, and to take the necessary steps. Is he doing that?


William Warren Allmand: Mr. Speaker, we have looked into it and we are continuing to look into it. We have not had any evidence that anyone is ripping off the consumer. We have found that supply has decreased and demand has increased, and that as a result of those market conditions prices have gone up. If one compares the production of last year-72 million pounds in stock as of November 1-last year there was more on hand than this year, with a lower demand. The demand has gone up sharply this year because of the increased price of beef, and the supply has not been there. That is the reason for increased prices, not any ripping off.


IMMIGRATION
Mr. Andrew Brewin (Greenwood):: Mr. Speaker, I had hoped to address my question to the Minister of Employment and Immigration, but I will direct it to his parliamentary secretary, the hon. member for Wellington.
On May 16, 1978, the minister announced with some fanfare that he was setting up a special program to admit up to 100 Argentinian political prisoners and their families as refugees. He described the situation of these political prisoners as extremely desperate. On October 30, the hon. member for Egmont, the hon. member for Montmorency, and myself, wrote to the minister giving him the information that the military authorities in Argentina had refused permission for the Canadian government to visit all but two persons with a view to carrying out this promise. In fact, no one has been admitted under this program. So far, apart from-


Some hon. Members:: Order.


Mr. Speaker:: Order, please. I must ask the hon. member to put his question.


Francis Andrew Brewin: Mr. Speaker, the minister has barely acknowledged the question. Will the parliamentary secretary tell the House whether the Canadian government has forcefully called the attention of the Argentinian government to its failure to co-operate in the case of these persons who, to use the minister's words, are extremely desperate and are presently imprisoned as political prisoners?


Mr. Frank Maine (Parliamentary Secretary to Minister of Employment and Immigration):: Mr. Speaker, I will take notice of the question and get back to the hon. member.


Some hon. Members:: Oh, oh!
80067 - 2 I

November 24, 1978
Oral Questions


Francis Andrew Brewin: Mr. Speaker, I hope the parliamentary secretary will impress upon the minister the urgency of answering this question. I put the question to the Secretary of State for External Affairs.


Donald Campbell Jamieson: I am sorry?


Francis Andrew Brewin: 1 do not know whether he heard the question I put.


Some hon. Members:: Oh, oh!


Francis Andrew Brewin: I do not intend to repeat it.


Some hon. Members:: Hear, hear!


Francis Andrew Brewin: However, I intend to put the question, if I may.


Some hon. Members:: Hear, hear!


Francis Andrew Brewin: Has the Secretary of State for External Affairs communicated with the government of Argentina because of its refusal to allow Canadian immigration authorities to visit political prisoners whom we have promised to admit to this country as refugees?


Donald Campbell Jamieson: Mr. Speaker, 1 would have to take notice of the question.


Some hon. Members:: Oh, oh!


Donald Campbell Jamieson: First of all, let me apologize for not having heard the preamble to the question. I will take notice of it so that I can give the hon. member and the House a precise answer.
In a general way, we have made a number of representations to the government of Argentina. We have been seeking, in every way we can, to facilitate the exit of those people who have had our authorization and encouragement to come to Canada; but whether we have made a specific kind of representation of the type asked for by the hon. member, I do not know. If we have not, certainly I do not see any reason why we should not and I will so instruct my officials.


LABOUR CONDITIONS
Mr. Walter Baker (Grenville-Carleton):: Mr. Speaker, I have a question for the new Minister of Labour.


Some hon. Members:: Hear, hear!


Walter David Baker: In the cabinet which has been described as a recirculation of tired blood, his entry is the only case of the infusion of old blood.


Some hon. Members:: Shame.


Mr. Andras:: That is not befitting you, my friend.


Walter David Baker: Among his responsibilities as Minister of Labour, has responsibility been given for him to represent the interests of eastern Ontario which once again has been neglected respecting the infusion into cabinet?


Some hon. Members:: Question.


Walter David Baker: Does he have specific responsibilities respecting eastern Ontario?


Mr. Speaker:: Order, please. I regret very much that clear precedent prevents the hon. minister answering the question. If he had responsibilities of that sort, they would be political and geographic in nature, rather than administrative. There is a clear precedent that questions must be confined to administrative responsibilities.


INDIAN AFFAIRS
Douglas Charles Neil: Mr. Speaker, my question is directed to the Minister of Indian Affairs and Northern Development. In view of the report of the Auditor General regarding inadequate accounting and control procedures for the Indian Economic Development Fund involving many millions of dollars, and the fact that the minister and his officials have been aware of this problem for some two, three or four years, can the minister advise why he did not take steps to clean up this mess when he first learned of it, rather than let it continue?


Hon. James Hugh Faulkner (Minister of Indian Affairs and Northern Development):: Mr. Speaker, I do not think the hon. member has put the question very accurately. The fact is that there has been a serious clean-up of the program and it has led to a new set of problems. With the available funds we have stabilized some of the previous projects. That was agreed to by the committee. I do not think it can be argued by the Auditor General unless one argues that the only type of operation we get into in the Indian Affairs program is one which meets absolutely all the criteria of the Woods, Gordon report.
The hon. member knows perfectly well that when we are dealing with economic development on or adjacent to reserves, there are certain risks involved. If the Tories are not prepared to take those risks, let them say so clearly. In my view, unless we are prepared to take some of those risks there will be no development at all on the reserves.


Douglas Charles Neil: Mr. Speaker, if the Tories take a risk, certainly they examine the situation beforehand to see whether the risk is worth taking.


Some hon. Members:: Hear, hear!
November 24, 1978


Douglas Charles Neil: If the minister refers to page 557 of the Auditor General's report, he will find that the computer system which was set up is not adequate as far as the fund is concerned.
I have a supplementary question for the minister. In view of the report of the Auditor General respecting the lack of authority for compensation payments under the James Bay Agreement, has the minister taken or does he intend to take any disciplinary action respecting the officials who were involved?


James Hugh Faulkner: Mr. Speaker, certainly I will look into that matter. I will be pleased to answer the question in committee. I think I meet with the parliamentary committee next week. Of course, the hon. member avoided dealing with the other recommendation or area brought out in the Auditor General's report, namely, the arts and crafts fund. He studiously avoided that because, in fact, we took action. Where we take action does not seem to be the subject of any comment in the question period.


FISHERIES
Mr. Maurice A. Dionne (Northumberland-Miramichi):: 
GOVERNMENT EXPENDITURES
Mr. Jake Epp (Provencher):: Mr. Speaker, my question is directed to the right hon. Prime Minister: it refers to the report of the Auditor General.
Studies now indicate that the federal government is the largest single advertiser in Canada, exceeding any of the large companies. At page 307 of his report, the Auditor General
Oral Questions
indicates that one company, namely, Vickers & Benson, was given advertising accounts by the Employment and Immigration Commission without tender. In fact, 80 per cent of that commission's total advertising went to Vickers & Benson.
In view of the statement of the deputy minister to the committee yesterday that it is the minister who decides who will get the advertising budget, may I ask the right hon. Prime Minister on what basis the government decides who will get its advertising contracts?


Pierre Elliott Trudeau: Mr. Speaker, regarding the size of the advertising budget, I should like to point out to the hon. member that the government considers that it is its duty to ensure that Canadians are informed of the programs and policies which are of interest to them, so that they can benefit from whatever government policies exist. I would wager that if you total the ten provincial budgets for advertising, they would probably be higher than that of the federal government. That is the way federalism operates, Mr. Speaker: each level of government must inform its citizens of the programs which affect them.
With regard to the choice of advertisers, we look for competence, imagination and economy.


Arthur Jacob (Jake) Epp: A supplementary question, Mr. Speaker. The Prime Minister has indicated that there are certain criteria, but when one looks at the Auditor General's report and at the answers of the deputy minister, political patronage seems to be very much a factor as to how the minister will decide who will get the advertising. At page 307 of his report, paragraph 14.172, the Auditor General recommends that tendering procedures be used in advertising, and in fact the commission has said that they will follow those guidelines if treasury so dictates. Therefore, I would like to ask the Prime Minister whether it will now be the policy of Treasury Board that these advertising contracts be awarded under the competitive tendering system.


Pierre Elliott Trudeau: Mr. Speaker, in a matter as abstract as judging the quality and efficiency of one type of advertising as against another, somebody has to make a decision. We think it is better that the elected representatives of the people make the decision, rather than the bureaucracy, and I would be surprised if the hon. member disagree with that.


NORTHERN AFFAIRS
Mr. Erik Nielsen (Yukon):: Mr. Speaker, I have a question for the Prime Minister. As he knows, the provisions of the Yukon Act require the governor in council to appoint a commissioner of the Yukon Territory. In view of the fact that there now exists, as of the last election in that territory, a clear and decisive majority, having been exposed to the party system, will the Prime Minister assure me and the people of
80067-21%

November 24, 1978
Oral Questions
the Yukon that the appointment of the next commissioner of the Yukon will be made by, and with the advice and consent of, that elected majority?


Pierre Elliott Trudeau: Mr. Speaker, I am sure that we will be looking for the best possible commissioner, and in that we will be influenced and advised by the people of the Yukon who are the ultimate sovereigns in that part of the jurisdiction.


Erik Nielsen: A supplementary question, Mr. Speaker. The Prime Minister kindly answered the first part of my question but refrained from answering the second part, which was: will the appointment be made with the consent of that elected majority?


Pierre Elliott Trudeau: Mr. Speaker, because they are a reasonable group of men and women, I am sure they will consent to anything reasonable that is done by the government.


LABOUR RELATIONS
Mr. John A. Fraser (Vancouver South):: Mr. Speaker, my question is directed to the Minister of Labour. It was, and continued to be for some time, the first plank in the former minister of labour's policy to establish a multipartite national forum which would include labour, business and other community groups. May I ask the minister whether this is still the policy of the government and, if it is, what progress has been made recently toward this objective?


Some hon. Members:: Hear, hear!


Hon. Martin O'Connell (Minister of Labour):: Mr. Speaker, I would first like to thank the House for this very warm welcome and expression of good wishes; I do appreciate it.
So far as the question goes, Mr. Speaker, first I would like to say that a good deal of progress has already been made toward consultation. It began less in the form of a large forum, but it is growing in the form of consultation, working its way up through the 23 sector task forces into the second tier committee. Both business and labour have made very excellent proposals for policy development to the two levels of government. Therefore, we are working at this coming up, rather than starting with a large new structure. We are working toward it, and I think all would recognize that very significant progress is being made and I would seek to continue that.


John Allen Fraser: A supplementary question, Mr. Speaker. I take it from what the minister says that the policy remains an objective; the procedure in obtaining it has been somewhat changed. May I ask the minister this: recently the acting minister of labour said in the other place that the Woods royal commission report advocating the establishment of a public interest disputes commission was under active study by the

government. A few days later the right hon. Prime Minister seemed to indicate that that was not so.
In view of the fact that I am sure all hon. members would not want this place to become a constant labour court, can the minister advise whether the acting minister, who said that the Woods royal commission public interest disputes commission proposal was under study, is correct and, if so, is the minister prepared to make a statement in the House in order to indicate what structure the government may be prepared to establish at least to diminish the number of strikes that this House has to settle?


Mr. O'Connell:: Of course, Mr. Speaker, the question of bringing about labour peace and stability will be one of the first questions to which I would wish to address myself.
So far as the specific question of the study goes, 1 personally have studied the Woods task force proposal with respect to the public service public interest disputes commission. I would have to say that, whereas we do need to look further at that issue, it is not the answer because that commission would, after it had done what is suggested of it, in effect dump the question back into this parliament. So we would not be relieving ourselves of activities in settling disputes simply by going to some new kind of commission.
1 personally will be reviewing that, as I have done recently. I would like to discuss the matter with the critic from the opposite side because I think we on all sides of the House would be deceiving ourselves if we thought some new commission which nobody takes the trouble to really examine would resolve these issues for us: they would come back here, Mr. Speaker.


FORESTRY
Mr. Donald W. Munro (Esquimalt-Saanich):: Mr. Speaker, against the great losses to the Canadian treasury that have been revealed in the report of the Auditor General, and against the news last night that his department is losing some very highly trained and well motivated public servants, I wonder whether the minister is now prepared to admit that he is presiding over the demise of the Canadian Forestry Service.


Hon. Len Marchand (Minister of State (Environment)):: That is ridiculous, Mr. Speaker.


Some hon. Members:: Oh, oh!


Len Marchand: The Canadian Forestry Service is a very important part of my department.


John Allen Fraser: What about the forestry labs, especially the Vancouver one?


Len Marchand: The forestry labs are, also. The privatization of those labs will be one of the most forward steps taken
November 24, 1978

recently in connection with the cuts which have been made by the government.


John Allen Fraser: The whole thing has already been agreed to.


Len Marchand: I think the hon. member talks a lot of "bull" on this question. There is some difficulty with the Ottawa lab, but as far as the Vancouver lab is concerned it has been accepted very warmly by the officials in the lab, by the universities, by the provincial government and by the industry.


Donald W. Munro: Mr. Speaker, it is quite obvious from the reply just given by the Minister of State (Environment) that there is a contradiction in the information he is receiving from I know not where and the information that is public and is reaching everyone else in this country, namely, the forestry lab in Vancouver is also at the point of disintegration: he is going to lose more people.
I still want to know whether the minister can reveal, and if he is prepared to reveal right now, those parts of private industry which have demonstrated some interest in maintaining this forestry establishment. The information we are receiving is that there is no interest in private industry to assume this responsibility.


Len Marchand: Mr. Speaker, I have had conversations with private industry-a group that 1 met a few weeks ago in Ottawa. I met recently with the Canadian Forestry Advisory Council which, as I said in the House previously, is chaired by the chief executive officer of Crown Zellerbach, Mr. Rogers. He received that very warmly. Dr. Solandt reported verbally to me. He found the same thing, a very high degree of acceptance in industry and a lot of enthusiasm in industry, the universities and some provincial governments for the privatization of those two forest products laboratories.


POINT OF ORDER
Stanley Howard Knowles: Mr. Speaker, I rise briefly on a point of order. I am sorry that the Prime Minister has left, but perhaps the Deputy Prime Minister (Mr. MacEachen) will pay attention to the point I wish to raise and speak to the Prime Minister (Mr. Trudeau) about it.
It used to be the practice in the House of Commons-and it is dealt with in citation 89, at pages 82 and 83 of Beauchesne's fourth edition-that whenever a major change in cabinet positions is made a statement is given to the House.


Mr. Gillies:: But there was nothing major.


Stanley Howard Knowles: I point out, Mr. Speaker, that the citation makes it quite clear that if there is no change of policy, this obligation does not rest on the Prime
Point of Order-Mr. S. Knowles
Minister. If there are changes in policy, however, such a statement should be made. I would point out that although the information we have thus far is not complete, it seems to me it is quite a change in policy to drop a ministry such as that of urban affairs, and also that it is a significant change to set up a board of economic development headed by one minister under whom a number of other ministers serve.
As I say, in the citation to which I refer it is clear that such a statement does not have to be made immediately, but it is also clear that the opposition has the right to ask for more than a general exposition of the main principles on which a government is formed.
I would hope that the Deputy Prime Minister would bring this to the attention of the Prime Minister. It seems to me that there is more than a shuffle; there is this new board and the dropping of a department, and a statement ought to be made about that matter. I hope any such statement might also communicate to us what minister is now responsible for the status of women.


Hon. Allan J. MacEachen (Deputy Prime Minister and President of Privy Council):: Mr. Speaker, I will draw the remarks of the hon. member for Winnipeg North Centre (Mr. Knowles) to the attention of the Prime Minister (Mr. Trudeau). I would provide the information at once that the Minister of Justice and the Attorney General of Canada (Mr. Lalonde) will continue his current responsibilities for the status of women.


Stanley Howard Knowles: I was afraid of that.


Mr. MacDonald (Egmont):: That is a disappointment.


Allan Joseph MacEachen: I believe the women of the country will not share the view expressed by the hon. member for Winnipeg North Centre, because they have had a very good and satisfactory relationship in the advancement of the cause of women in Canada.


Stanley Howard Knowles: That is not the way
I hear it.


Allan Joseph MacEachen: With respect to providing an opportunity to the House to comment on what the hon. member regards as a major change, in that view I believe he is correct. Later on there will be an opportunity for the House to comment upon the creation of the new portfolio of President of the Board of Economic Development. In that respect, the requirements set forth by the hon. member will be fully met and the House will have an opportunity, as I understand it, not only to comment but to judge and decide whether it wishes to accept or reject the creation of this board.


Stanley Howard Knowles: What about the dropping of the Department of Urban Affairs?


Walter David Baker: Mr. Speaker, the Deputy Prime Minister and government House leader has indicated that he will speak to the Prime Minister (Mr. COMMONS DEBATES
November 24, 1978
Privilege-Mr. Fraser
Trudeau) about this matter. I presume he will be speaking to the Prime Minister about making a statement on motions-I hope he will speak to him in that light-which can be examined in detail following our procedure of questions relating to the formation of the ministry.
In the course of that conversation, I wonder if he could speak to the Prime Minister about explaining the fact that a couple of very important ministries, in terms of the future of the country and the policy of the government, are joined. I note that the Department of Science and Technology, for instance, is still joined with another ministry, now the Department of Energy, Mines and Resources. That, coupled with the fact that National Revenue and Taxation is now joined with Small Business may indicate a bit of downgrading of those very important functions. I hope this will be dispelled in the statement of the Prime Minister.
I hope the Deputy Prime Minister will draw these matters to the attention of the Prime Minister, and I hope the Prime Minister will deal with them if he makes a statement on motions. I hope he will also deal with the very unfortunate question of what is going to happen to Central Mortgage and Housing, the National Capital Commission and a host of other commissions, and to whom they will be reporting. It was in that light that I directed a question today to the Minister of Labour (Mr. O'Connell). He is the closest to the national capital area. I do not know whether it is the intention of the government, but at the moment the national capital area and eastern Ontario have no minister in the House, and there has not been one for some time. Perhaps the Prime Minister will be able to justify this in his statement. This area, which has been represented since confederation, is not now represented in cabinet and has not been for some time.


PRIVILEGE
John Allen Fraser: Mr. Speaker, I rise on the question of privilege which relates to comments made by the Minister of State (Environment) (Mr. Marchand) in an exchange that took place a few minutes ago.
In response to a question from my colleague, the hon. member for Esquimalt-Saanich (Mr. Munro) the minister said that the proposition being put to him, that there was no agreement by industry in British Columbia to privatize the forest laboratory in Vancouver, was a lot of "bull".
The question is of very grave importance to British Columbia. It is my contention that it is appropriate, when a question of that importance is asked, when it has been well established and it is common knowledge to the public that privatization is not going ahead and the industry has not agreed to pick up this laboratory, that this House and hon.

members ought not to be told by a minister of the government that it is just a lot of bull.
I would say that that is a point of privilege. If you hear me out, Mr. Speaker, I think that, through you, the minister, under the circumstances, is required not only to withdraw his remark but to explain in proper detail exactly what the situation is. What the minister said today in this House was that the information that is public is not correct and it is absolutely misleading, and I am sure the minister would not want deliberately to mislead this House.


Donald W. Munro: Mr. Speaker, I was rising on a point of order to comment on this matter, but there is a question of privilege. I think it is quite improper language to use in the House of Commons; only the Prime Minister (Mr. Trudeau) is permitted to use language like that.


An hon. Member:: You use language like that.


Mr. Speaker:: Order, please. I have the role of determining the question of whether or not improper language was used. The terms used by the minister this afternoon may be slang in their nature, but there is nothing improper in the language used by him. I think we can quickly set that aside. If the minister wants to make that comment on suggestions that have been made, it is his right to do so as long as he does it in parliamentary language.
As to whether the minister disagrees with the position taken, of course, that is a fundamental disagreement and not a matter of privilege. I would need to know that there was something to this question of privilege which relates to more than a disagreement between members.


Donald W. Munro: Mr. Speaker, I was setting out the question of language. The question of privilege concerns the use by the Minister of State (Environment) (Mr. Marchand) of assertions to the effect that he has assurances from private industry that they are prepared to take over that lab and also the centre in Ottawa. Those assurances must be borne out by documentary evidence.
I suggest that since the minister has suggested that he has been in correspondence-he has suggested, but he has not stated explicitly that he has been in correspondence-with these people, if there is correspondence to prove his point then it should be laid before the House.


Mr. Speaker:: That may well be a very worth-while suggestion, but there is surely no procedural compulsion on the minister to do so and no vehicle by means of which the Chair could compel the minister, or any other minister, who had made that kind of reference and follow the matter with the tabling of any documents. I have not found any procedural significance in the statements made by the minister during this afternoon's question period. I have not found anything in the nature of a question of privilege. If the member feels that he has some new point to raise, I will hear him.
November 24, 1978


Mr. F. Oberle (Prince George-Peace River):: Mr. Speaker, I am glad to be able to contribute to this suggestion. The point of privilege certainly must be that the minister misled the House today.


An hon. Member:: Right.


Frank Oberle: He said that he has evidence with regard to the private sector and the province of British Columbia. Let us not belittle this question; it is a crucial question because 60 per cent of the economy of British Columbia depends on the forest industry. The minister said he has evidence that the private sector is prepared to assume the responsibility and the financing of the B.C. forest products lab. I suggest, Mr. Speaker, that the minister has evidence that the private sector is not prepared to assume responsibility. I have the evidence.


John Allen Fraser: So do I.


Frank Oberle: And so does the minister. He has clear evidence, in writing, that the private sector is not prepared, for obvious reasons, to assume this responsibility. I say the minister has misled the House by implying that he has-


Mr. Speaker:: Order, please. I think we can see the difficulty that we get into when we embark on procedural grounds that are not well founded. As we enter into these discussions, the more permissive the Chair becomes in allowing discussion of points that are not well founded in procedure, the more likely we are to get into further and new questions of procedure. We are certainly very close to raising new questions when these kinds of accusations are made.
Essentially, the minister has stated his position. Members on the opposition side have stated that they disagree with the interpretation given by the minister today. That remains a disagreement and there is not, procedurally, either a point of order or a question of privilege.


John Allen Fraser: Mr. Speaker, I rise on a point of order.


Mr. Speaker:: Order, please.



ROUTINE PROCEEDINGS


Allan Joseph MacEachen: that Bill S-4 (from the Senate), an act respecting Canada non-profit organizations, be read the first time.
Motion agreed to and bill read the first time.
Canada Non-Profit Corporations Act


Mr. Speaker:: When shall the bill be read the second time? Next sitting of the House?


Some hon. Members:: Agreed.


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. Yvon Pinard (Parliamentary Secretary to President of Privy Council):: Mr. Speaker, the following questions will be answered today: Nos. 261, 295 and 289.
I ask, Mr. Speaker, that the remaining questions be allowed to stand.


Mr. Epp: From June 1, 1974 to date, what lawyers in the Constituency of Provencher were given work by the Department of National Revenue and what amount was each paid per year?


Mr.   Claude-Andr@: In so far as the legal agents of the Minister of Justice are concerned: None.


Mr. Caouette (Villeneuve): 1.	On what date was the Enterprise Development Commission of the Department of Industry, Trade and Commerce created and who are its members?
2.	Between April 1, 1977 and April 1, 1978, did any enterprises facing problems in Canada receive grants from the Commission and, if so (a) how many (b) which ones (c) what was the amount of such grants?
3.	Did the Commission guarantee any loans to companies and, if so (a) in what amount (b) which companies were involved?


Mr. Bernard Loiselle (Parliamentary Secretary to Minister of Industry, Trade and Commerce):: In so far as the Department of Industry, Trade and Commerce is concerned: The Enterprise Development Board was created April 1, 1977.
1.	Following is a list of the members of the Enterprise Development Board along with the date of their appointment: Chairman-Mr. D. N. Kendall-appointed May 11, 1977; Vice Chairman-Mr. Andre Charron-appointed May 11, 1977; Members: Mr. Michael M. Koerner-appointed May 11, 1977; Mr. W. M. Murray Auld-May 11, 1977; Mr. Pierre Demers-May 11, 1977; Mr. Francis Murphy-July 28, 1977; Mr. John G. McD. Brown-December 6, 1977 and Mrs. Esther S. Ondrack-April 21, 1978. The central board members are joined by an equal number of individuals from senior levels of the public service.
2.	Between April 1, 1977 and March 31, 1978 the Enterprise Development Board approved 195 contributions totalling $19,036,098. The majority of these contributions were for

November 24, 1978
Business of the House
innovation projects. The names of the recipients are confidential until such time as expenditures are made under the contributions, at which time the expenditures are listed in the Public Accounts of Canada by company name.
3.	The Enterprise Development Board approved loan insurance totalling $100,772,600 representing 67 projects, in the fiscal year ending March 31, 1978. The names of the recipients are confidential and cannot be released without the permission of the company.


Mr. McKinnon: What were the names and addresses of all lawyers and law firms in the Constituency of Victoria who performed services for the Export Development Corporation during 1977 and, in each case, what was the total amount paid?


Bernard Pierre Loiselle: In so far as Export Development Corporation is concerned: By tradition and as a matter of commercial principle Crown corporations have not been required by parliament to answer detailed questions on their administration and operation, and in the case of Export Development Corporation, the Export Development Act places the responsibility for such matters on its board of directors.


Mr. Speaker:: The questions enumerated by the parliamentary secretary have been answered. Shall the remaining questions be allowed to stand?


Some hon. Members:: Agreed.


BUSINESS OF THE HOUSE
Steve Eugene Paproski: I rise on a point of order. Before we begin the budget debate, I believe there is agreement in the House to carry on right through the lunch hour on this particular debate, in order to allow the participation of more speakers this afternoon. 1 would like that to be put on the record at this time so that we will not interfere with the budget debate.


Stanley Howard Knowles: Yes, Mr. Speaker, the statement made by the whip of the official opposition is correct. However, I should like to add one comment to it. The purpose of this is to get in as many speakers as possible. I think it is generally understood that no one is going to force a recorded vote on the main motion.


Allan Joseph MacEachen: Yes.


Stanley Howard Knowles: If that is the case, why cannot debate continue right up until five o'clock? In effect, it would get one more speaker in. I do not know whom I am speaking for, but that is one more speaker.

[ Translation]


Joseph Adrien Henri Lambert: Mr. Speaker, I must say that I did not hear about the proposal which has been made and on which all parties seem to have agreed.
In any case, I am not opposed to it. I think it is quite logical that such proposals be made occasionally because, as I see it, it aims at saving time in order to allow more hon. members to participate in the debate. I therefore say that we are completely willing to support that decision.


Steve Eugene Paproski: Mr. Speaker, I appreciate what the hon. member for Bellechasse is saying, but we are doing it to facilitate the maiden speech of the new member of the Social Credit party.


Mr. Speaker:: The House seems to have consensus on some subject, but I am not sure what it is.


Alan Gray Martin: Mr. Speaker, the point we were discussing is an agreement that was reached during the course of last evening to enable more members to participate in the budget debate. The idea was that by continuing through the lunch hour and lessening the time for speeches after the first three speakers, it would give an opportunity for more members to participate in this debate before 5 p.m.


Mr. Speaker:: I have no difficulty with it, but I would simply like to know the details of what we are talking about. If the House wants me to make an order, I will be glad to do so. For the House to sit through the lunch hour, we must have an order of the House. Also, if there is agreement to shorten the speeches after the first three speakers, I will have to know by how much they are to be shortened.


Walter David Baker: Mr. Speaker, I think it is clear that we wish to proceed through the lunch hour. Perhaps you would make that order now. I believe there is agreement on that. Perhaps we could discuss, through the usual channels, the other matter so it can be equally clear.


Mr. Speaker:: Is it agreed to at this time, that in order to assist the introduction of more speakers, the House proceedings will continue through the usual luncheon adjournment between one and two o'clock, and during that time there will be an effort to reach agreement as to the length of speeches after the first three?


Steve Eugene Paproski: That is agreed, Mr. Speaker.


Stanley Howard Knowles: Mr. Speaker, I think there is also general consent to my proposition that the motion not be called until five o'clock.


Walter David Baker: Agreed.


Mr. Speaker:: Those two elements can be introduced by way of an order at this time. Is it agreed the House will continue to
November 24, 1978

sit during the usual adjournment between one and two, it being understood that no recorded division will be compelled, and that the House will continue to sit until five o'clock to continue the debate until that time? Is that agreed?


Some hon. Members:: Agreed.


Mr. Speaker:: It is agreed, and so ordered.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Thursday, November 23, consideration of the motion of Mr. Chretien that this House approves in general the budgetary policy of the government.
Mr. Richard Janelle (Lotbiniere):: Mr. Speaker, in the past four years I listened to the budget speeches from the gallery here in the House and unfortunately, on November 16, I realized that nothing much was new. This year, I sit in the House as member for the riding of Lotbiniere, a riding which had been represented for nine years by Mr. Andre Fortin. Mr. Fortin had won the respect of all his colleagues and was well regarded by the people of his riding because he worked for them. Today I succeed him in this place and since Andre often said "Hang in there, boys!", I intend to pursue his work in that frame of mind and really protect the interests of the people of Lotbiniere against the whole present administration and bureaucracy.
Last Thursday's budget contained very few good news for the average worker. The minister was forecasting a decrease in the number of new jobs for 1979, down from 362,000 in 1978 to 250,000 in 1979. The only income tax concession was doubling the amount the taxpayer may deduct as job related expenses. Thanks to that measure, 6.2 million taxpayers will be able to share $270 million, and this for next year only. Thus the government resolves to repay every Canadian an average of $43.55 more in 1980. Talk about a fortune. As for the growth rate, it is set at about 4 per cent for 1978 and 4.5 per cent for next year according to the latest forecast by the Department of Finance. Some extremely difficult times are therefore expected in 1978 and 1979 for Canadian workers. Indeed, since there is general agreement to fix at 5 per cent the growth rate necessary to absorb the number of newcomers into the labour market, a substantial increase in unemployment should be in the wind.
Will the new eligibility criteria for unemployment insurance allow young people to draw benefits? Will they depend only on
The Budget-Mr. Janelle
their scarce resources to find a job or will they have to rely on public assistance to subsist? In his financial statement the minister also forgot to mention the percentage of unemployment insurance beneficiaries and of people who cannot get a job. Was this omission due to accident or to pre-electoral rhetoric? Let me refresh his memory. In October 1978, 910,000 men, women and young people were collecting unemployment insurance benefits. It means that 8.2 per cent of the Canadian population was unemployed. These persons will certainly not be able to benefit from the tax credits provided by the minister in his budget. Recently the minister blamed the Leader of the Opposition in the House under the pretence that his housing policy was discriminatory in the sense that it favoured the more well-to-do families, and yet he is just as unfair in his treatment of low-wage workers.
Now what about write-offs for development expenditures granted to mining and oil industries? According to the minister those write-offs to industries will create employment through the acceleration of their performance and development in a climate which is more favourable to production and growth. However, the minister forgets two things. It looks as though the first one will spring surprises. Most new production techniques will accelerate the marketing of products while creating very few jobs. In light of that argument, does the government still maintain that they will be able to create new jobs in the mining and oil industries through a tax incentives policy since the oil industry is now in full development and includes the most prosperous companies in the world? The natural development of that industry would probably have been sufficient to produce the jobs the government wanted so much without having to give tax incentives. Furthermore the government intends to bring Canadian oil prices gradually up to the international level. This policy alone should stimulate the oil industry.
In the special edition of the Financial Post published July 1, 1978 we can see a survey on the largest companies operating in Canada this year. According to that survey, 12 of the 40 main industries in Canada are found in the mining and oil group. The textile sector-which is represented by many plants in my riding-does not show up a single time. We therefore conclude that those industrial sectors, mining and oil, are less affected by the stagnation than the others. Still, they seem to benefit to a greater extent from the government's largess.
The November 16 budget only confirms that tendency. Statistics Canada reveals that in October 1978 there were, in agriculture, 17,000 unemployed; in forestry, 13,000 unemployed; note this, in the mines, quarried and oil wells, 8,000 unemployed, and in the manufacturing industry, 149,000 unemployed. Therefore, why does our Minister of Finance (Mr. Chretien) intend to promote employment in an industrial sector which already benefits from considerable tax advantages, and in which the rate of unemployment is relatively low,
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November 24, 1978
The Budget-Mr. Janelle
when there are 149,000 unemployed in the manufacturing sector which has the highest rate of all sectors of the Canadian industry?
Research and development in Canada have recently become the victims of political game of the federal government. Indeed, the Minister of State for Science and Technology (Mr. Buchanan) and his colleague, the Minister of Finance, seem to act in diametrical opposition to each other in that field. On the one hand, they insist on the vital importance to our economic base of a policy, for the medium term, that stimulates research and development, while, on the other hand, the government tries to camouflage the budgetary cuts reducing their funding of R and D. So, while the April budget and last week's budget provide about $100 million to finance research and development in industry, that investment is made at the expense of far greater cuts in government funding to the universities and government laboratories in the next two years.
The Minister of the Environment (Mr. LeBlanc) promised to increase the proportion of the gross national allotted to scientific research and development by .6 per cent from now till 1983, that is from .9 per cent to 1.5 per cent. Unfortunately, attaining that objective now seems very doubtful, especially since last August when the Prime Minister (Mr. Trudeau) announced that a revision of the budgetary priorities was being undertaken.
The Canadian Federation of Biological Societies and the Canadian Association of University Teachers have sent us a working paper which illustrates the scope of budgetary cuts in research and development in Canada. A research recently done by the Toronto Star showed the low involvement of multinationals in Canadian research and development. The Federation of Canadian Biologists asserts that the apathy of those companies stems more from negligence and lack of interest on their part toward Canadian industry in general than from a lack of fiscal encouragement. This position seems valid to us because experience shows that the developing countries have been facing this kind of problem for many years. Moreover, these countries are unable to create local infrastructure favourable to research, which gives birth to insuperable trade balance problems. Is Canada secure from international technological domination? Can Canada afford to let its trade balance deficit grow? I do not believe so.
According to important national bodies, including the Science Council of Canada, the Canadian Association of University Teachers and the Federation of Biologists, we must protect ourselves against technological domination by foreign countries. We must make an absolute commitment to encourage research and development in our universities, in government laboratories and industries in order to prevent economic stagnation. Indeed, without technological stimulation, we will find ourselves in front of an aging, inadequate and non competitive industry.

If we persist in basing our economic development exclusively on a capital intensive machinery, on a resource industry and foreign technology, it will quickly give rise to an unbalanced commercial situation in industrial and manufacturing fields. If such is the case, we must expect a considerable increase in unemployment rates from now till the beginning of the eighties.
The federal procurement policy should be structured to capitalize as quickly as possible on inventions made in our universities. University researchers are not acquainted with marketing procedures for products. They cannot either personally bear the costs related with copyright of inventions. Those circumstances thus compel the scientist to seek the support of an organization having the assets and sufficient business experience to complete the implementation of new technologies. Therefore the government must promote constant contacts between industrialists and researchers and then facilitate the marketing of new inventions. For that purpose the Canadian government should base its promotion project for research and development on the American experience. Let us follow proven experiences.
Mr. Chretien's budget tries to give us a good over-all picture, but it has no definite features. Although neither the Progressive Conservative nor the New Democratic Party, to say nothing of the Liberals, seem to be concerned, the Social Credit Party of Canada thinks that a high national debt is not the sort of factor that will stimulate the economy. When one considers that in 1978 the interest on that debt was equivalent to the total budget for 1962, the magnitude of the problem becomes obvious. Taxes used to pay this interest are funds lost forever for public administration.
As for the decrease from 12 per cent to 9 per cent of the federal sales tax, the Social Credit Party of Canada thinks that Canadian consumers will be the last to benefit from it. Why did the Minister of Finance not distribute this 3 per cent directly to consumers by way of a discount on the purchase of Canadian made goods? The small taxpayer has therefore nothing to gain from this budget. On the other hand, big business, principally the mining sector, received a large piece of the pie as the rate of write-off of its expenses was tripled. Help is given to big business but what about the workers of those large companies? The Anti-Inflation Board recently rejected an 8 per cent salary increase for Thetford Mines miners, saying that it was too steep. That is a double standard policy. Also, if the government really wants to improve the job situation in the country, why were these tax favours not granted to small and medium-size business? Considering that in October 1978 the manufacturing sector had 149,000 unemployed, compared to 8,000 for the mining sector, why were the manufacturing industries not granted a 100 per cent write-off of their expenses, since this sector generates three times more jobs than the other sectors of activity? I have another example that shows how this budget was ad-libbed. I have here a

telegram from the Association provinciale de l'industrie du bois ouvre du Quebec Inc. which represents the interests of 450 door and window manufacturers in Quebec. They are dissatisfied. This is what the telegram has to say:
We strongly object to the 5 per cent tax imposed on materials exempted since 1975. As there was no prior consultation and as no valid reason was given for this modification, we condemn this action and want to see this discriminatory measure withdrawn. The immediate implementation of this 5 per cent tax has had serious consequences for all the people involved. At least a month's notice could have been given and many problems would thus have been avoided. Since your government wants to improve the situation of the Canadian construction industry, we cannot understand this action which will cause perturbations on a market already much affected by the slowdown in the construction industry, and we deplore the fact that all will have to pay for this decision, including manufacturers, builders and consumers.
This is signed by the general director of the association.
I believe that this telegram is quite explicit.
As concerns research and development, the government has once again failed to do anything positive. In September the government announced cutbacks of $20.5 million in 1978-79 and $55.1 million in 1979-80 for research and development alone. How can we imagine that the 10 per cent tax credit for investment will do anything useful for research in small and medium businesses when the government hacks away at the budget of university and government laboratories? At this rate our industrial research will be at a complete standstill within two years if the government does not do something soon to rectify the situation in the field of basic research. The Social Credit Party of Canada believes that we need a valid policy of research and development with a budget representing 2.5 per cent of the gross national product before 1985, of which 50 per cent should be paid by the public sector and 50 per cent by the private sector.
Moreover, in his budget the Minister of Finance has forgotten a vital and important sector of our economy. Among all the government proposals, no mention was made by him of the agricultural sector. Does this mean that agriculture has so little importance for this government that it prefers to forget it? For instance, in 1975 the Minister of Agriculture made a commitment to index the price of industrial milk, but the government has come back on this promise once again this year. Indeed the minister confirmed this in the House when replying to a question asked by my colleague for Bellechasse (Mr. Lambert). This seems to have become a habit since the same thing has been done in the industrial sector as concerns the contract about the Laprade plant which was signed with the Quebec government. They had made a commitment toward the province of Quebec relating to the Laprade plant, but they failed to respect that contract and thousands of jobs disappeared. In the industrial field, they have created unemployment; in the case of milk producers, they are making them starve to death, little by little.
In order to improve the economic situation, the Social Credit Party of Canada believes that the Government of Canada should increase the purchasing power of Canadians in
The Budget-Mr. MacEachen
the same proportion than as the increase in our gross national product. How? Through a 25 per cent discount on the purchase of any Canadian made product, through a national dividend and by lowering interest rates on loans. Interest rates were at 6 per cent in 1967, and they should come back at that level. We must keep in mind that when we say 1967, it means before the disastrous Trudeau government. The total exemption on personal income tax should be raised to $5,000 per person and to $1,000 per dependent child. Finally, as was proposed by the former Social Credit member for Portneuf, Mr. Godin, in January, 1973: "The government should give an income tax credit equivalent to the amount of mortgage interests paid on a family home and to the amount of municipal taxes up to an overall annual maximum of $1,000." Those are all measures which would certainly have been more profitable to the Canadian people than that parodical budget which was brought in by the Minister of Finance last October 16.


Allan Joseph MacEachen: Mr. Speaker, I would like to congratulate the Minister of Finance (Mr. Chretien) for bringing forward a budget which has addressed in a responsible way the main problems facing the country. I also congratulate the new hon. member for Lotbiniere (Mr. Janelle) for delivering his maiden speech. While I disagree with most of what he has said, I think his first effort was very creditable and certainly characteristic of the calibre of service we learned to expect from his predecessor with whom we had worked in the House of Commons for a number of years.


Some hon. Members:: Hear, hear!


Allan Joseph MacEachen: In participating in this debate I would like to address myself to four main subjects. The first is the northern gas pipeline, for which I have responsibility in the government.
The second is the multilateral trade negotiations, for which I have a co-ordinating responsibility in the government and about which a number of questions have been asked by hon. members opposite. I undertook for the hon. member for St. John's West (Mr. Crosbie) to make a statement, or that another minister would make a statement on the current situation with regard to these negotiations.
Third, I would like to make some comments about the irresponsible criticism we have been receiving from the official opposition regarding the acquisition by Petro-Canada of Pacific Petroleums Limited and, in particular, the unfortunate and regrettable reflections which have been cast upon the Deputy Minister of Finance in his role as director of Petro-Canada. Comments which have been made earlier in the debate with respect to the conduct of the Deputy Minister of Finance should be answered.
Finally, I would like to return to a subject which was raised by the Leader of the Opposition (Mr. Clark) in his speech on
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November 24, 1978
The Budget-Mr. MacEachen
November 20 when he talked about the power to control government spending. I would like to put on the record some history which would indicate that what the Leader of the Opposition said on that occasion was quite wrong and quite false.
In connection with the northern gas pipeline I would like to say that since the approval by this House last April of the legislation establishing the agency to supervise and monitor the construction of the pipeline, the next most important development was the approval by the United States Congress, following many months of debate and study, of the energy bill which, among other things, establishes a system which will govern the price of gas at the wellhead and the price at which shippers sell it to consumers in the lower 48 states.
As hon. members will realize, the determination of this pricing regime was absolutely essential to the negotiation of contracts between the producers and shippers of gas and between the shippers and pipeline companies. Such contracts are in turn a prerequisite for arranging for the commitment of the vast amount of funds required to finance the building of the system.
Just this week, on the occasion of the visit to Ottawa of the Secretary of State of the United States, it was possible for both governments to emphasize once again the high priority which is attached to the completion of this project. Certainly the Government of Canada has a very deep commitment to the completion of the project, and this commitment is shared by the Government of the United States. Both governments are committed to expediting the building of this system because of the substantial contribution it can make to energy needs, industrial development, and the creation of output and employment in both countries. Indeed, by all accounts these considerations were also an important factor in persuading the Congress of the United States of the necessity for moving forward with the energy legislation and the gas pricing regime embodied in the legislation, which is so essential to the outcome of this project.
Despite the short-term changes in the demand and supply picture there is every evidence that gas from Alaska will be required to meet a pressing United States energy need by the time it is available for delivery to southern markets in the early 1980s. For that reason we remain convinced that the project is economic and that it can be undertaken by private enterprise.
It is our expectation that negotiations for contracts between gas suppliers and gas distribution companies will now proceed, so that the basis can be laid for the financing of this great project. I wish to assure those who are involved, or who may be involved in these negotiations, that the Canadian government believes it to be in the national interest that the construction of the Alaska Highway pipeline should proceed as expeditiously as possible. Our policies and future decisions which may affect the project will continue to be directed to that objective and so, I am informed, will the policies and decisions of the United States administration. As I said, that joint commitment to the success of the project was restated once again this week by

both governments in discussions with the Secretary of State of the United States, Mr. Vance.
Turning to the multilateral trade negotiations, I need hardly remind hon. members of the significance of trade to this country and the significance of a satisfactory world trading environment. This is why Canada has attached such importance to the successful outcome of the multilateral trade negotiations which are now approaching their final stage in Geneva. Our objectives in these negotiations must be considered an important element in our efforts to promote the efficient development of Canadian industry and to gain broader export opportunities for our manufacturers, our primary producers, our farmers and our fishermen. I shall deal by way of report to hon. members on each of these sectors.
On the industrial side, improved access abroad should allow us not only to increase exports and export earnings but to achieve the longer production runs and increased productivity that are needed in many cases for Canadians to compete more effectively both in world markets and in our own. The greater liberation of trade in a number of resource-based sectors should provide similar support to the government's policy of encouraging the further processing of our raw materials prior to export. We have a major interest in broadening our markets for agricultural and fisheries products, particularly, in Japan and the European community.
On the import side, while lower tariffs will obviously involve greater competition from abroad for Canadian producers, they should also, by reducing the costs of imported raw materials and other production inputs, strengthen the competitive position of our own manufacturers as well as bring lower prices or costs to consumers. Quite apart from the changes that will be made in tariffs, I think it should be borne in mind that the new trading rules which are being drawn up in the course of these negotiations will establish the framework for international trade for the next 15 or 20 years.
As a major trading country it has been essential for Canada to take part in this process and to ensure that Canadian interests are taken fully into account. As hon. members know, these negotiations are much more complex than any previous set of negotiations. The earlier negotiations to which we have become accustomed dealt primarily with tariff questions. This particular round of negotiations is attempting to deal as well with broader trade problems, including the reduction or elimination of a wide variety among tariff barriers, and the drafting of international codes of conduct in a number of specific areas.
Attention is also being given to the improvement of certain existing provisions in the General Agreement on Tariffs and Trade to make them more responsibe to changing world economic conditions. In this regard considerable emphasis is being placed on the special problems and needs of the developing countries. At the same time efforts are being made to make the more advanced of the developing countries, a number of which are strong competitors for certain manufac-
November 24, 1978

tured goods, more fully accountable within the framework of GATT rights and obligations.
I should say, Mr. Speaker, that we have made very extensive preparations for these negotiations. We have undertaken extensive consultations with all the sectors of the Canadian economy and with provincial governments which obviously have a very crucial interest in these negotiations. These consultations will continue, and at each state, as is required, the negotiators will be holding consultations with industry, labour, and the provincial governments.
On the negotiations themselves, I think that we can report a certain amount of progress in our negotiations with the United States. In so far as the reduction of industrial tariffs is concerned, one of the important elements in this area is the prospect of a substantial agreement with the United States. Both sides are still pressing for certain improvements in each other's offer, and complete agreement has not yet been reached. The outlook, however, is promising, but the final shape of the Canadian industrial tariff offer and, indeed, of the U.S. offer as well, will also depend on what other countries, particularly Japan and the European Community, are prepared to do. As matters stand now, further improvement is needed in both cases from the Canadian point of view, and we are pressing for additional changes which would go further to meet our special concerns. In the case of the European Community this is made more complicated by the fact that last summer the Community diminished its original tariff offers on a variety of items of interest to Canada, particularly in the area of non-ferrous metals and forest products.
Agriculture remains an important and sensitive area of the negotiations. Canada has continually stressed the importance of an acceptable settlement on agricultural products. This would involve improved access to markets, particularly those of the Community and Japan, and a greater degree of control over agricultural export subsidies. Special arrangements for dairy products and bovine meats are also being pursued. As a separate matter efforts are being made to reach new understandings on trade in wheat and course grains.
Broad success in the agricultural negotiations will not be easy. In so far as negotiations between Canada and the United States are concerned, each side is still seeking further concessions from the other, but there are prospects for a mutually advantageous agreement, one that would reflect the basic interests of the two countries in their future trade and that would promise a greater degree of harmonization of North American agricultural tariffs.
As the House will be aware from the statement made by the Minister of Finance, we are negotiating with the United States and other countries separately from the MTN with respect to changes in the Canadian tariff for fresh and processed fruits and vegetables, arising from the recommendations of the Tariff Board. Finally, on a more general plain, the Community and the United States proposed an approach designed to provide a new framework within GATT for looking at ongoing problems of agricultural trade.
The Budget-Mr. MacEachen
On the very important question of fisheries there appears to be prospects for meaningful access to the United States market, although certain improvements in its offer to Canada are still being sought. The offers so far put forward by Japan and the European Economic Community are less satisfactory, and both are being urged to put greater concessions on the table. I can assure hon. members that in these areas in the negotiations, as in all others, the priority interests of various regions of Canada are being vigorously pursued. In so far as the fisheries are concerned the reduction of trade barriers is indeed important if we are to take advantage of the potential for greater exports of both traditional and underutilized varieties arising from the extension of our fishing zones.
I come now to a very important and technical subject, namely, the international codes of conduct. In this context work has been going forward on codes which deal respectively with technical barriers to trade, government procurement subsidies and countervail, and customs valuation. In these areas not only have we been concerned with the liberalization of trade but with its fairness and certainty from the import and export points of view. In broad terms, the principal objective is to attempt to bring a greater degree of international discipline to bear on certain measures which, whether deliberately or not, can have a serious effect on the flow of trade.
I draw to the attention of hon. members situation report No. 4 which was published on October 30. The report deals with international codes of conduct, and it describes the situation as of that date. That would be a more efficient way for hon. members to bring themselves up to date on the question of the codes which are being negotiated at the present time.
Earlier in my remarks I referred to the work which is being done to improve and clarify certain provisions of the general agreement, to make them more responsive to changing world economic conditions. One of the most important provisions under discussion is that relating to the use of safeguards, that is to say, measures by which imports that cause or threaten to cause serious injury to domestic producers temporarily can be restrictive.
At a time when efforts are being made to reduce tariffs and further liberalize world trade, it is important to ensure an effective mechanism is in place to protect ourselves against disruptive import competition. What we and other participating countries now are looking toward in Geneva are improvements in the current rule which will accomplish two things. One is to provide more effective, efficient and more certain procedures to deal expeditiously with whatever injurious situations may arise. The other is to make sure that such procedures are not used irresponsibly. Once again we have interests both as an importer and an exporter. These negotiations are of tremendous importance to Canada. In developing our position at Geneva we have tried to provide benefits for all sections of Canada and in all sectors of the economy. As we draw to the final days of these negotiations, that will be our continued objective.

November 24, 1978
The Budget-Mr. MacEachen
Obviously changes will take place in the Canadian economy. Some of these changes will occur regardless of the conclusion of the multilateral trade negotiations. They have taken place already, but whether changes occur for reasons apart from trade negotiations, or whether they occur because of trade negotiations, it will be necessary in consultation with industry and in collaboration with the provinces for the government to provide adjustment assistance. Already arrangements are being made to phase in tariff changes over a period of years, perhaps a fairly lengthy period of eight years. In addition to that, the Minister of Industry, Trade and Commerce (Mr. Horner) indicated that a range of measures designed to assist individual workers and firms will be put in place. It is designed to assist them in adjusting to both the opportunities and challenges which the economic environment of the 1980s will bring, including those which will flow from trade negotiations.
In conclusion, the timetable established at the Bonn Summit last summer is still in effect. Last weekend the Canadian trade negotiator, Mr. Warren, was in Geneva. At that high level meeting, once again it was undertaken that a continuing effort would be made to conclude firm understandings by the middle of December. These firm understandings would provide the general framework for future tariff changes.
There were certain dangers concerning the inability of the United States Congress to continue the waiver provision on the countervail. That difficulty has been ironed out, and now it is possible and probable that all major participants will be able to maintain a schedule and reach certain firm understandings by the middle of December. These will not take the form of tariff changes until perhaps March. All these understandings will not be put into the form of agreements until March. At that time we anticipate taking legislative action to implement tariff and other changes which have been undertaken at these important negotiations.
I should like to turn to the question of the acquisition by Petro-Canada of shares in Pacific Petroleums Ltd. The House and the country have witnessed concerted attacks by the official opposition in recent days concerning this acquisition. So, I thought it was important to put the government's point of view regarding this very important transaction on the record. While the official opposition professes to be in search of the truth of the matter, it has done everything possible to confuse the issue. Because of the confusion which has been scattered so generously by spokesmen of the official opposition, a statement of a few simple facts are in order.
The acquisition of Pacific Petroleums furthers the objects of Petro-Canada laid down in an act of parliament. Parliament enacted a law which laid down the main purposes of Petro-Canada, namely, to help ensure adequate supplies of energy for Canadians at a reasonable price, and to establish a considerable Canadian presence in the energy industry. I do not think anyone will contest the fact that the acquisition of Pacific Petroleums will assist Petro-Canada in meeting its goals. Through Pacific Petroleums, Petro-Canada will be in a position to explore aggressively for and develop natural gas finds in the high Arctic, heavy oil in Alberta, and oil and gas

off the east coast of Canada, in a manner which takes particular account of Canadian needs.
An important point is that the cash flow from the activities of Pacific Petroleums will enable Petro-Canada to reduce considerably its dependence on funds from the consolidated revenue fund, and to pursue innovative technology for use in the frontier areas of energy exploration and development. Finally, the transaction aims to patriate a corporation with major energy interests in Canada.


Some hon. Members:: Hear, hear!


Allan Joseph MacEachen: The transaction has been carried out on a commercial basis, without the use of government funds, but the government approved the necessary supplementary capital budget of the corporation to allow the offer, precisely because the investment furthers the aims of the corporation and is in the interests of the Canadian public generally.
So why does the official opposition constantly talk about the use of government funds? Why does the hon. member for Qu'Appelle-Moose Mountain (Mr. Hamilton) talk about a massive rip-off of the public treasury when he ought to know, as every other reasonable person knows, that no government funds have been used in this transaction?


James McPhail Gillies: There is a contingent liability. You are misleading the people again.


Allan Joseph MacEachen: Much has been made of the allegation that this transaction involves the nationalization of industry in the private sector.


James McPhail Gillies: Certainly.


Allan Joseph MacEachen: The hon. member for Don Valley (Mr. Gillies) says "certainly, there has been nationalization." It is not nationalization.


James McPhail Gillies: What is it then?


Allan Joseph MacEachen: The concept of nationalization is quite different from this particular transaction, which is a straight commercial transaction in which the shareholders have been free to make their own decisions as to whether or not they wish to sell. That is quite different from nationalization, Mr. Speaker, which is a coercive act by the state against the wishes of shareholders. In this particular case the shareholders are free to sell or not sell.


James McPhail Gillies: You are confusing again.


Allan Joseph MacEachen: The transaction will also extend the reach of the federal agency in the energy industry, but in doing so will provide Canada with a highly efficient corporation with major interests in this country acting to serve the Canadian public interest in the supply of energy.


James McPhail Gillies: You have misled the House again.
November 24, 1978


Allan Joseph MacEachen: The first question asked by the hon. member-I wish the hon. member for Don Valley would-


The Acting Speaker (Mr. Turner):: Order, please. I regret to inform the hon. Deputy Prime Minister that his allotted time has expired. He may continue with unanimous consent. Has the hon. minister unanimous consent to continue?


Some hon. Members:: Agreed.


Some hon. Members:: No.


The Acting Speaker (Mr. Turner):: The hon. member for Egmont (Mr. MacDonald).


Mr. Lefebvre:: Why don't you stand up and say no?


James McPhail Gillies: I said no because he is misleading the people of Canada.


The Acting Speaker (Mr. Turner):: Order, please. The hon. member for Egmont has the floor.


Alan Gray Martin: On a point of order, Mr. Speaker-


The Acting Speaker (Mr. Turner):: Order, please. The parliamentary secretary is rising on a point of order.


Alan Gray Martin: Mr. Speaker, before the hon. member for Egmont takes the floor, I wonder whether we could clarify the situation regarding time for speakers subsequent to the hon. member for Egmont. I think there has been general agreement that speeches be limited to 20 minutes, with two exceptions. I think the one exception on our side would be the fourth member who may speak this afternoon from here on in, and I believe the House leader on the other side would like to comment.


Walter David Baker: Mr. Speaker, the parliamentary secretary is correct. There is agreement to the extent he said. I believe he would also agree that it should be extended to include the hon. member for Fundy-Royal, who will be making his maiden speech later on today.


The Acting Speaker (Mr. Turner):: Is it agreed?


Some hon. Members:: Agreed.


The Acting Speaker (Mr. Turner):: Agreed and so ordered. The hon. member for Egmont.


David Samuel Horne MacDonald: Mr. Speaker, it was a most fascinating exercise on the part of the Deputy Prime Minister (Mr. MacEachen). I think hon. members of the House would be interested to hear the minister's views on some of what I thought were the current topics of this week, including the budget debate which we are concluding today, the report of the Auditor General of yesterday, or perhaps more interesting than anything, the proposed new Board of Economic Development Ministers, which certainly raises more questions than it answers.
The Budget-Mr. D. MacDonald
It is passing strange that the government has seen no reason today to come and explain or to give an indication to the House of exactly what are its plans in this regard. Presumably it knows, and presumably we will find out. Again, the Deputy Prime Minister has been engaged in a kind of explanation of the inexplicable, and that would cover the context of his speech today, whether in dealing with GATT or his views and thoughts on Petro-Can.
I want to do something a little unusual, Mr. Speaker. I want to speak about the budget. I am delighted to have the opportunity to do so because I want to focus upon budgetary matters from what may in the minds of most hon. members appear to be a rather unique perspective. I want in fact to focus on budgetary measures that have to do with artistic and cultural industries in this country.
Quite frankly, Mr. Speaker, the proposals in the budget before us are a short sighted and limited response to the major challenges and opportunities of the Canadian nation. Never has the need been more obvious for a new government with a fresh and imaginative approach to economic planning. There is in this budget an almost complete lack of recognition of our potential in just about every field of endeavour. In particular, the opportunity and growth potential within our major cultural industries have been entirely overlooked.
Indeed, Mr. Speaker, this budget makes a negative contribution, if any, to cultural expression in Canada. The initiative taken by the Minister of Finance (Mr. Chretien) in ending the lower tax rate for personal service corporations, which perhaps is justifiable in the broad view, will have a specific impact on the arts in Canada by driving out of this country some of our most talented and successful artists and performers whose commitment to Canada has until now enabled them to resist the strong financial lure to the south.
Earlier this week my leader presented in Toronto a totally different approach in the type of positive initiatives that we would bring to government to challenge and encourage Canadians to realize our remarkable potential, initiatives which would, if anything, attract back to this country the talented people we have lost and not drive them away. He promised, and I quote:
-measures to encourage Canadian culture as an industry which can bring both income and identity to this nation.
I can assure my colleagues and all Canadians that this is no empty promise. As I said a moment ago, Mr. Speaker, it is my intention this afternoon to present six fiscal measures to stimulate the arts and cultural industries of Canada. Had this been a Progressive Conservative budget, these measures would even now be under consideration by this House.
I believe, Mr. Speaker, the cultural community of Canada is crying out for a renewed and imaginative federal presence. Yet what do we have? We have the Secretary of State (Mr. Roberts) responding by playing numbers games to explain away this government's budgetary cuts to the arts. The fact is that support available to the cultural community primarily through the Canada Council has dropped in constant dollars in recent years in terms of real value to our creative people. I find

November 24, 1978
The Budget-Mr. D. MacDonald it incredible that a Secretary of State would devote so much energy to muddying the waters on an issue so transparent to anyone involved with the arts in this country.
Today there is an increasingly crowded list of priorities for federal action in the field of culture which the present Secretary of State, in his two years in office, has been either unable to recognize or unsuccessful in convincing his cabinet colleagues of their urgency. This government has consistently ignored a fundamental aspect of the confederation debate- the need for Canadians to overcome the barriers of mutual ignorance and misunderstanding that separate us. We believe that a vigorous cultural life in a nation as diverse as ours should be the focus for communication for Canadians-not a target for government cutbacks-at a time when it is most needed.
The Canadian Broadcasting Corporation, for instance, is in urgent need of reform and revitalization. The CBC ought to be the centrepiece of Canadian culture, a living challenge to Canadians to share and appreciate our creative diversity. And yet increasing government opposition and insensitivity to the social, creative, and technological demands of public broadcasting have allowed the CBC almost to fade from the Canadian awareness and consciousness.
The Copyright Act is long past due for revision. Our composers are in fact locked into royalty rates unchanged since the act was brought in during the 1920s, which means, in effect, roughly two cents per playing surface to those who perform services as composers under the Copyright Act. Photocopying, cablecasting, video cassettes, even the long playing record album were unheard of in the 1920s. But it will be years before this government is prepared to give our creative talent even basic protection against a half century of technological development and exploitation of their work.
Abroad, Canada's cultural image is a shadow of its full potential. At home, our institutions of culture are starved for funding and our media of mass culture are foreign dominated almost to the exclusion at times of a Canadian presence. Such neglect of our culture, we believe, can only seriously jeopardize the well-being of this nation. We must bring a new vigour to federal responsibility.
The measures I am about to propose this afternoon are but a first step on our part toward confronting the serious problems in one particularly important part of our cultural life. Here I make it very clear that I am speaking primarily and most directly about the industries of mass culture in our country. 1 believe the federal government continues to overlook the oppostunities of culture as an industry in its own right. In just three areas of mass culture, books, films, and records' retail sales in Canada alone amounted to $1.2 billion last year. Of that, Canadian works represented only 8 per cent. Culturally, we are strangers in our own land, and economically we have been deprived of a whole market within our own borders. Yet the characteristics of the culture industry stongly suggest that a federal program of incentives would be a worth-while eco-

nomic investment. For one thing, these industries are highly labour-intensive; they are overwhelmingly within the small and medium-sized business sector; they are directly linked to the rapid increase in leisure time, to entertainment spending, and have a high export potential. They could be considered a natural specialization for a country committed to diversity of culture.
There is probably greater unused capacity in our cultural sector than in any other industry across Canada. In short, Mr. Speaker, our cultural industries are ripe for the type of economic stimulus which only the federal government can offer.
We have been holding a number of hearings and consultations with hundreds of people directly involved in the cultural industry over the last few months. I am pleased that yesterday in the Standing Committee on Broadcasting, Films and Assistance to the Arts, the Secretary of State recognized in a positive way this particular initiative that our caucus has taken. We will continue actively to seek advice from the cultural community to this end. The measures we are proposing are, in our opinion, the minimum stimulus needed for these industries to develop their virtually unlimited potential.
The first measure would improve the present untenable positions of our artists under the Income Tax Act. Canadian performers and, to some extent, visual artists, can have sizeable expenses related to their work for which they are not compensated in their employment contracts. If they were self-employed, this would pose little problem, but for a variety of reasons they cannot claim self-employed status with the Department of National Revenue. If they had large incomes, this would not be a pressing concern, but the incomes received by our artists, with very few exceptions, are shamefully low. A fulltime professional actor, to give one example, earns in a year around $7,000, or just half the average industrial wage in Canada, despite years of difficult training and experience. There is, therefore, a serious inequity in our tax laws when these artists cannot deduct legitimate business expenses from their taxable income.
Even salesmen or railway employees have their special situation with regard to high work-related expenses recognized under the Income Tax Act. The United States gives to all of its artists the right to deduct such expenses, without distinction as to their status of employment. Yet in Canada the artist, one of the most precious resources of any civilized society, is seriously disadvantaged and even discouraged by our federal laws.
The Disney report, properly entitled "Federal Tax Issues of Concern to the Arts Community in Canada", devoted considerable attention to the problem. One of the key recommendations of this report, commissioned by the Secretary of State, was to eliminate the distinction, for the purpose of claiming business expenses, between self-employed and employed artists. Surely this is the very least we should expect from government-to alleviate the low incomes of our creative people, incomes which too often either force our artists to head south, or to work only part time at their craft.
On October 26, when I asked the minister what action he was taking on the Disney report, I was surprised to find that
November 24, 1978

after so many months it is still only a matter of study and continuing discussion with his colleagues. 1 am really surprised and quite disappointed that the Secretary of State so far has been unable to convince the Minister of Finance of the obvious and clearcut need for such a measure. A Progressive Conservative budget would remove this inequity from our tax laws.
The second measure we would introduce concerns the definition of Canadian films eligible for investment incentives. I suppose the single most important reason for the present miniboom in our feature film industry is the 100 per cent capital cost allowance on film investments introduced in 1976. This measure enabled Canadians to deduct from their taxable income the full amount of their investment in film making. Unfortunately, this measure has allowed tax advantages for investments of dubious lasting value to the Canadian film industry. Some fly-by-night operators have moved in and out quickly to exploit and celluloid tax shelters. More seriously, the administration of the film investment allowance has undermined the independence of our fledgling, indigenous film industry. There exists a serious danger this infant industry will become a ward of the Hollywood majors, thus defeating the purpose of creating a genuine Canadian industry.
It seems to us that the heart of the problem lies in the definition of a film eligible for the investment allowance contained within the income tax regulations. We believe it is axiomatic that any fiscal measure in support of the cultural sector must encourage both the creative and the financial control of Canadians. By that basic yardstick, the present definition simply does not measure up. This is not news to the present Secretary of State, who, I am sure, has received representations from many sectors of the film industry to this effect since he assumed office, and I am disappointed that in this budget, as in his partial film policy of last spring, no action was taken.
We believe it is important to strengthen the definition of films eligible for the investment write-off. As a minimum, we would add three requirements: the film's director, production company, and distribution company with domestic rights, must be Canadian, which we would define as a citizen or landed immigrant with one year's continuous residence, or a company that is majority Canadian-owned. We believe that these three straightforward amendments to the tax regulations would significantly enhance the creative autonomy of our film industry and the financial return available to Canadian companies for re-investment. We would also, at the same time, ensure that this strengthened definition included the production of video cassettes, and we would move to ensure that there is significantly more benefit for Canada from film co-production agreements with other countries. By this recommended change you will recognize, Mr. Speaker, we could open up a new and enticing loophole through the co-production agreements.
The third measure would apply the highly successful principle of the capital cost allowance, to which I have just referred to investments in book and sound recording ventures. The major obstacle to the commercial exploitation of Canadian musical and literary talent in Canada, since I believe other countries seem to have no difficulty making money off our
The Budget-Mr. D. MacDonald artists, is the lack of venture capital. Canadian firms in this sector are too small to generate internally the investment capital needed. Much of the present financing of Canadian books, for example, comes from either our publishers' profits as the agents for foreign firms, or from the Canada Council's block grant program. This is a highly dependent and sometimes subjective relationship. In a high risk business, outside capital will not become available without some form of sizeable incentive.
Within the film sector, production has been encouraged by not only the capital cost allowance, but also by a range of Crown agencies-the CBC, Canada Council, National Film Board, and Canadian Film Development Corporation, to mention just the most basic ones. The complexitv and cost of film-making, in our opinion, does justify special assistance to this sector, but not to the virtual exclusion of such influential cultural media as books and records. A Progressive Conservative budget would, therefore, have recognized the urgent need for venture capital in our publishing and recording industries by allowing investments in most Canadian books and records to be eligible for the 100 per cent capital cost allowance.
As with film, we would establish eligibility criteria that ensure creative and financial control remain Canadian. Frankly, we have no interest in allowing tax deductions for investments that are of no value to Canadian firms or artists. Books eligible for the investment allowance would have a Canadian author, a majority Canadian-owned publisher, and a Canadian printer. Eligible sound recordings would have a majority Canadian-owned production company and domestic distributor, Canadian principal performer or performers, and depending on the type of music, a percentage of Canadian-authored music or lyrics.
Although Canada possesses a wealth of musical and literary talent, we have seldom been able to invest the large amounts needed for our artists to compete commercially either at home or abroad. Many Canadian recordings are produced for as little as $5,000, and $50,000 is the absolute limit that any Canadian company can put into an album. Compare this to the $150,000 routinely invested by an American company in the first album of a Canadian performer, plus another $200,000 on promotion, and one begins to realize why Canadian talent represents only 7 per cent of the record sales in Canada. The lack of capital forces our first-rate creative talent to accept second-rate technical quality. We would give this incentive to our recording and publishing industries because we believe Canadian talent deserves better than that.
The fourth measure would provide federal guarantees on loans to Canadian firms producing or distributing Canadian films, recordings, books or magazines. Venture capital, as provided through the 100 per cent cost allowance, is by itself not enough to enable firms in the cultural sector to produce and market Canadian talent at their full potential. They have almost no access to credit through our regular lending institutions, although they face unusually heavy cash demands for

November 24, 1978
The Budget-Mr. D. MacDonald sophisticated equipment, advance payments, and promotion campaigns, long before they can expect a return on their investments. The foreign takeover of Canadian firms, such as publishing houses, or more frequently their failure to expand with new market opportunities, can be largely attributed to this lack of operating capital.
A Progressive Conservative budget would make special provision within existing federal programs, such as the Federal Business Development Bank or the Small Business Loans Act, for those firms which are producing or distributing Canadian cultural product. We would provide federal government guarantees on loans from the financial institutions based on three criteria: the firm must be majority Canadian-owned, the firm must have a record of commercial viability, and the firm must have shown a commitment to the development of Canadian cultural material.
The fifth and sixth measures are somewhat different from the first four I have outlined because they would deal directly with the provision of incentives to the cultural market place for Canadian products. In the areas of film, books, magazines and recordings the same problem confronts Canadian works throughout the cultural market place. The distribution systems are so dominated by foreign corporations committed to the tradition of marketing foreign material that only a fraction of Canada's potential for creative output ever reaches the Canadian public. In our domestic market only 7 per cent of records sold, 5 per cent of movies seen, 3 per cent of newsstand magazine sales, and 9 per cent of book sales are Canadian. Unfortunately, we are unique in the industrialized world in the extent to which our mass media of culture, which is the lifeblood of a nation's identity, is controlled from outside our borders. I believe we would undoubtedly lose in comparison to a good many developing nations as well.
Quite obviously, it would be foolish to attempt to close our borders to the output of foreign cultures, as they are themselves part of the excitement and diversity of our own culture. But surely there must also be a reasonable level of communication among Canadians if we are ever to share, appreciate, and even make sense of this tremendous diversity we cherish. By no imaginable standard could we conclude that Canadians today do possess that reasonable level of access to our cultural media needed to communicate among ourselves. The reason is not that we have nothing to say, not that we lack the ability for creative expression. If anything, it has been proven in the last ten to 20 years that we have had a literal explosion of creative activity from one end of the country to the other. But we lack the economic leverage which, for better or for worse, is what gets the cultural product into the mass market in our system.
It will not be enough, as we are quickly finding out, simply to produce creative works of international quality, although there is no doubt in our minds that Canada's cultural community can do so capably. We must equally find ways to gain fair access for these works to the Canadian market.
Here I want to talk briefly about quotas because this seems to have been the primary solution the federal government has
advanced over the last few years. Quotas, both voluntary and mandatory, have proven at best a limited success with television, radio, and the movie chains. Where the quota is not flaunted outright, its spirit is often seriously violated. We can well imagine the difficulties of applying or extending the principle of quotas on a broader scale to book and record stores, for example.
There are other ways, so far untried by this government, but which we believe have the potential to succeed. A Progressive Conservative budget would have included incentives to the market place itself to provide fair access for our own cultural works. What this approach would do, in effect, is create a demand or a pull for Canadian books, films, records and magazines, rather than pushing them onto an unreceptive market. There are two likely routes we could follow here, either separately or in conjunction with one another. I want to deal briefly with two market initiatives which I think are quite significant.
Our first option would be to initiate a nation-wide scheme modelled on Ontario's "Halfback" program which was so successful earlier this year. Ontario's experiment was successful because it allowed the holders of losing Wintario tickets to redeem them at half value or 50 cents each, up to a maximum of $2 on the purchase of a Canadian book or magazine subscription. A national scheme based on losing Loto Canada tickets would apply equally to Canadian films and recordings, as well as books and magazines, and joint participation from provincial lotteries would also be welcomed. While it is unlikely such a scheme would be very useful if extended indefinitely, it would in a given period encourage hundreds of thousands of Canadians to try a taste of their own culture, perhaps for the first time.
The second option involves a novel use of the tax system to give an incentive to firms in the cultural market place to promote and sell Canadian. Essentially we would exempt from corporate tax the net profits realized by retail stores on their sale of Canadian books and records, or in the case of movie houses from their exhibition of Canadian films. In the so-called mass market or rack sale of paperbacks, magazines and records, we would apply this incentive to firms at the distribution or wholesale level.
I recognize that a new approach as this will naturally encounter a number of administrative difficulties. On the question of eligible items we would use the same definition of what is Canadian as for the capital cost allowance. We would probably look to the distributors of the product, who will certainly be prime beneficiaries of this incentive, to implement the necessary bookkeeping procedures. We would have to devise an efficient formula for determining the proportion of the firm's expenses used to calculate the net profit figure which is tax exempt. But I am confident that any of these difficulties or technicalities can be resolved in consultation with the firms affected. The potential in this approach certainly makes it well worth the effort. It would not force anyone to "Buy Canadian". It would not subsidize mediocrity. It does give Canadian small businesses a significant incentive to pro-

November 24, 1978

mote and make available creative Canadian works on a more equal basis than is now the case. It goes to the root of our philosophy as a party that workable incentives are a more efficient and acceptable alternative than state compulsion.
These then are the six fiscal measures a Progressive Conservative budget would have introduced to stimulate the Canadian arts and cultural industries, rather than the pale and, in one instance, negative document that we are considering today. I submit to you that they would have a significant, if not a profound, impact on our creative and cultural life.
What about the cost? Our estimates, and I admit they are rough, indicate a rise in the Canadian share of our cultural market from the present 8 per cent to at least 20 per cent. In retail sales, this is a gain of $188 million. In terms of employment there is potential for the creation of at least 5,000 new full-time jobs. From economies of scale we anticipate a reduction in the unit cost of Canadian products of at least 5 per cent or perhaps even 10 per cent.
In terms of exports, once we have a firm foothold in our domestic market, the sky is the limit with our ready access to the multi-billion dollar mass markets of the English and French-speaking world. As my leader stated Tuesday night in Toronto, "We don't need to defend ourselves against the world, but to express ourselves to the world". I think we have to get beyond the stockade mentality with respect to our cultural industry. Instead of simply resisting what has always come at us from the outside, we may have things of international quality in two official languages that others want to share with us from one end of the world to the other. That is the kind of optimism and activity a budget should have entailed with regard to the cultural industries. [DOT]
Our estimates indicate that the combined cost to the federal treasury of these six measures would be in the neighbourhood of $5 million. That is just a bit more than the Secretary of State paid for our national birthday party, or half the cost to the government of the National Discovery Train. In fact these measures would stimulate economic activity to the extent that they would soon realize a net gain for the federal treasury. The $5 million spent on these six measures could well prove the most cost-effective investment the government could make in any field.
This is the type of investment in our future which a truly concerned government would not hesitate to implement, not simply because it makes economic sense but because, again in the words of our leader, speaking in the city of Toronto, and I quote:
Because countries are more than economies and constitutions. When we satisfy the last lawyer, and create the last job, we will still face the question: what kind of country are we?-
That is the fundamental question being asked of those of us who live outside Quebec by those Quebecois who want to stay Canadians. And the answer is here-in the turbulent diversity of this city-in the potters and the weavers and the craftsmen starting business across the land-in our 7,000 Canadian authors-and our legions of local historians-and our millions with memories of what this nation means to them.
The Budget-Mr. Cyr
At the present time we have a burgeoning potential for cultural expression. We celebrate a diversity of interests and activities which are the essence of our country. Yet Canadian culture today is a state-subsidized activity on the margins of economic enterprise. Canadian culture tomorrow could be the growth industry of the decade. And by making it possible for Canadians to express and to share our diversity through our own cultural media, we may in fact contribute something of inestimable value to the spirit of Confederation itself.


Some hon. Members:: Hear, hear!


Mr. Alexandre Cyr (Gasp6):: Mr. Speaker, first I would like to congratulate the new cabinet members, the members for Matane (Mr. De Bane), Kenora-Rainy River (Mr. Reid) and Scarborough East (Mr. O'Connell) and to wish them all the success they deserve in their new duties.
Mr. Speaker, I would like to dwell on a few points of the budget speech delivered by the Minister of Finance (Mr. Chretien). Allow me to point out that the moderate growth of the Canadian economy in 1978 is mainly the result of low consumer expenditures. I therefore want to congratulate the minister for reducing the federal sales tax from 12 per cent to 9 per cent which will promote, I hope, increased consumer expenditure while containing inflation at a time when the Canadian economy is no longer subject to price control.
The control of inflation has always been and will remain the concern of the Liberal government's economic policy. And it is precisely the widespread inflation experienced from the beginning of this decade which has been one of the main factors responsible for the decreased competitiveness of Canadian products on international markets. It cannot be denied that this is the main source of our balance of payment difficulties which have brought about the Canadian dollar devaluation over the past two years. The significance of this devaluation should not be exaggerated however as it is one of the factors which are now contributing to the economic recovery of Canada as a whole and of Quebec in particular. As a matter of fact, this factor will doubtless contribute to the rising growth rate of the Canadian economy forecast for next year.
Mr. Speaker, the Gaspe peninsula has traditionally been recognized as an area of slow growth, in spite of the sustained efforts and repeated interventions of the government which sought to favour the development of this area through its regional expansion policy. This policy is now in full swing, thanks to the special fiscal incentives the Minister of Finance has reserved for the Gaspe peninsula and the Atlantic provinces in his budget speech. On behalf of all Gaspesians, I want to thank the Minister of Finance for the special attention he has paid to the slow economic growth of their region, and I am sure that a few hours from now, the hon. member for Gloucester (Mr. Breau) will do the same on behalf of his constituents.

November 24, 1978
The Budget-Mr. Cyr
As a matter of fact, Mr. Speaker, the investment tax credit program which was to expire on June 30, 1980, has been extended for an indefinite period, and the basic rate has been increased from 10 per cent to 20 per cent. This is a change which I had sort of suggested myself last year. I certainly hope that these sectoral incentives will stop some of our young graduates from leaving, for lack of adequate employment opportunities in the area. Another fiscal policy which should hopefully improve the economic outlook of the Gaspe peninsula concerns the write-off for mining development expenditures which is being raised from 30 per cent to 100 per cent, as well as the fact that townsites and social assets required for new mines will qualify to earn depletion.
Mr. Speaker, the mining industry in the Gaspe peninsula is mainly based on the production of copper in the region of Murdochville. Despite the continuous problems that this industry was faced with in recent years, I do hope that these tax reductions together with the improvement of the competitive level of the mining production as a result of the drop of the Canadian dollar, will contribute to assist the mining industry in the Gaspe peninsula. These fiscal benefits are a new factor which could lead to the opening of the Madeleine mines, in Saint-Anne-des-Monts which have been closed down for two years now. I think we will come to a similar situation in the forest industry, especially in the pulp and paper sector. Mr. Speaker, the financial critic of the official opposition, the hon. member for York-Simcoe-who fortunately does not have to worry about a high unemployment level and about the insecurity in the activity of the two industries of wich I just talked-seems to be totally unaware at these facts.
Another measure announced in the budget speech by the Minister of Finance has to do with increasing the air transportation tax to improve government revenues necessary to finance airport services and investments. I do hope this measure will generate enough additional revenue to allow the Minister of Transport to carry out as soon as possible the commitment made by his predecessor in 1973 and reiterated by himself since he took over his portfolio to give the Gaspe area and the Iles-de-la-Madeleine a decent air transportation service. That, Mr. Speaker, is something I have been fighting for vigourously for over ten years. That lack of air service has been and will continue to be a major obstacle to the economic development of the Gaspe area wich could reduce the impact of the particular tax incentives the Gaspe area was given in the form of investment tax credits which I referred to earlier.
One last budget measure I would like to deal with has to do with the extension of the tax incentive for residential buildings. That, Mr. Speaker, is a measure which the financial critic of the opposition omitted to mention for very obvious reasons. Although those tax incentives are mainly for Canada's urban ridings, the people in the Gaspe area were able to benefit under several programs recently introduced by the Minister of
State in charge of Urban Affairs, and let me name a few: Under its Residential Rehabilitation Assistance Program, the Central Mortgage and Housing Corporation is offering federal funds to repair and improve single-family houses. Furthermore, the National Housing Act provides for various forms of assistance to private non-profit housing corporations trying to arrange for low rental housing for families, old people or groups like the handicapped. Under that same act, the Central Mortgage and Housing Corporation also offers various forms of assistance whose primary objective is to provide adequate low rental housing, which can be personal residences, homes for the elderly or collective residences.
Mr. Speaker, since 1971, the Central Mortgage and Housing Corporation has contributed to the construction of 525 low rental housing units in the riding of Gaspe. CMHC loans total $9.4 million. The Central Mortgage and Housing Corporation also contributed to the construction of two homes for the elderly and loans stand at about $2 million.
For three years, people in the Gaspe area have been able to take advantage of the Residential Rehabilitation Assistance Program. This new Central Mortgage and Housing Corporation program, which is called RRAP for short, will provide loans totalling $1.5 million and grants totalling $700,000 and will enable more than 200 homeowners to repair and improve their homes. Under the three programs for non-profit housing and for the rehabilitation of owner-occupied dwellings, the constituency of Gaspe has received subsidies totalling $14 million.
However, in 1976, the Quebec government, through the Central Mortgage and Housing Corporation, authorized the construction of low-rental housing in three different municipalities of my constituency, that is Gaspe, Grande-Riviere and Ste-Anne-des-Monts. The Levesque government has not followed up on the projects for non-profit municipal associations. Moreover, a letter addressed to the hon. Andre Ouellet and dated January 18, 1977, says the following:
The Gaspe, Grande-Riviere and Ste.-Anne-des-Monts projects are expected to be dealt with within the 1977 programs of the Quebec Housing Corporation and to be the subject of a subsequent agreement. Our Quebec regional office, which is responsible for this file, will therefore know the details of this project only when the Quebec Housing Corporation submits its assistance requests following the signature of a new agreement.
We are now near the end of November 1978 and nothing has been done yet. This situation has gone on long enough and there is an urgent need for the Quebec government to accept the millions of dollars that the Ottawa government has placed at its disposal to provide residents of the Gaspe area with low-cost housing for low-wage earners and senior citizens. I submit that the Quebec government has deprived the constituency of Gaspe of 200 housing units and of an investment of nearly $5 million in the last two years.
Another program of the Central Mortgage and Housing Corporation which is very popular in the Gaspe peninsula is the one which aims at providing low-cost housing to individu-

November 24, 1978

als, families, elderly people or special groups such as the handicapped. Forty-eight housing units at a value of $1.2 million are now under construction at Chandler. Several nonprofit agencies are participating in this program at Ste-Anne-des-Monts, Gaspe, Grande-Riviere and Chandler. Our forecast, Mr. Speaker, is that within two years the riding of Gaspe, thanks to this new program, will have 300 additional housing units if the government of Quebec decides once and for all to authorize the building of new low-price housing in those localities as indicated in the January, 1978 letter of the minister. In two year's time the riding of Gaspe will have 500 more housing units.
Mr. Speaker, before concluding my remarks, 1 would like to speak a few minutes about the fishing industry in Canada. I would feel guilty if I were not to mention the improvements which have taken place in the Atlantic fisheries since the hon. member for Westmorland-Kent (Mr. LeBlanc) took over the fisheries department. In a speech which he delivered in Moncton last November 10, on the occasion of the meeting of fisheries ministers for the Atlantic region, he said and I quote:
Our policy was based, secondly, on our wish to control fisheries for the good of the people. Although we are entertaining hopes of expansion for our fleet, too many extravagant projects have fallen through. We did not want, at any cost, to be fooled by the extension of our fishing zone to 200 miles. We wanted to use our resources, first of all, to improve the lot of the fishermen, who very often are at a disadvantage, and make them feel they were the main beneficiaries of that common property.
To stabilize fisheries and give control back to the fishermen, we needed sound foundations such as quotas, restricted access and the fishery plan which every year from now on coordinates the development of ground fish. We have emphasized the quality aspect of the products and the importance of orderly industrial operations.
Our efforts have worked. It is no longer a time for laments or blackmail. Never has the fishing industry been so well.
I agree with the Minister of Fisheries and the Environment (Mr. LeBlanc) when he says that the fishing industry is better off than ever before. However, in Quebec and particularly in Gaspe we have serious problems of supply, especially as far as herring is concerned. There is a lack of co-operation between the provinces, fishermen and producers to give Quebeckers access to the herring stocks. As fish go beyond limits without being aware of it, Quebeckers should be able to take advantage of the herring fishing industry just like maritime fishermen and producers. Herring stocks are limited and the question is who owns that herring?
It is unfair to let maritime fishermen catch all the herring; Quebec fishermen should also have access to those resources since herring is fished a few kilometers off the Gaspe coasts. The fishing fleet of Quebec cannot be equipped for purse seine fishing since the Government of Canada has not issued any licence since 1970. Fishermen and producers of New Brunswick have 27 licences for purse net herring fishing and those of Newfoundland have 32 licences. Not a single licence was issued in Quebec.
The Budget-Mr. Gillies
The herring plants of the Gaspe peninsula and the Magdalen Islands operated only for a few weeks in 1978. The fishermen of New Brunswick were supposed to deliver part of their catches to the plants in Quebec but the agreement was not respected. Gill net fishermen cannot supply the plants because their catches are too small. The Minister of Fisheries and the Environment was made aware of the situation in Quebec by hon. members of the Gaspe peninsula, as were also his civil servants and those of Quebec fisheries.
Mr. Speaker, on behalf of the fishermen, of the workers in the processing plants and the producers, I appeal to the minister and ask him to take steps-the matter is urgent-to ensure that Gaspesians and "Madelinots" can be equipped and get licences like their neighbours in New Brunswick, Nova Scotia and Newfoundland, that they can get their share of the herring quotas in the Gulf of St. Lawrence and Chaleur Bay. Unless a favourable decision is soon reached with regard to issuing licences to the seine fishermen, the herring processing plants which operated only briefly in 1978 will have to shut down, and that, forever. The jobs in the plants which process the larger herring and the value of their production have both increased by about 500 per cent in the maritime provinces in the last few years. Mr. Speaker, the situation is not the same in Quebec. We must find the remedial correctives that are required. The fate of the herring processing plants in Quebec is therefore in the hands of the Minister of Fisheries and the Environment of Canada.


James McPhail Gillies: Mr. Speaker, it is a great pleasure to participate in this budget debate. I am particularly pleased to follow the Deputy Prime Minister (Mr. Mac-Eachen), who talked about a great number of things and concluded his speech-I do not have the "blues" before me- with the implication that members of my party and my leader have been spreading across this country a great deal of information with respect to the acquisition by Petro-Canada of Pacific Petroleums which is not correct. I listened with interest to what the Deputy Prime Minister had to say about this, and it seems to me that if anyone is spreading false information or alluding to aspects of this acquisition which need interpretation, it is the government.
Let me review what the Deputy Prime Minister said. By implication he said that by taking over Pacific Petroleums, Petro-Canada was increasing the supply of energy for Canadians. At this stage that is patently unprovable. The reality is that Pacific Petroleums is a well operated company. It is operating in Canada and finding reserves. By any measure it is managed well. By the measure of profit Pacific Petroleums is being managed much better than Petro-Can. But no one in this House can say that an increased or assured energy supply will be the result of the acquisition by Petro-Canada of Pacific Petroleums. One has to be somewhat skeptical.

November 24, 1978
The Budget-Mr. Gillies
We do not know whether the management of Pacific Petroleums will remain with Petro-Canada. We do not know whether the management of Petro-Canada, a nationalized company, will be as efficient as the management of a private company. If we look at other nationalized organizations in this country such as the Post Office, and if we look at the scandalous management of Atomic Energy of Canada Limited a few years ago, how can we be sanguine about the prospect that the management of Petro-Canada will be any better? We certainly do not know. Therefore the first statement made by the Deputy Prime Minister this afternoon was certainly open to question.
The Deputy Prime Minister dealt with security of supply for Canadians, as if the National Energy Board does not exist. Surely the Deputy Prime Minister knows that there is no export of energy from this country without permission from the National Energy Board. Has he no confidence in that agency, which his government had a great deal to do with setting up?
I do not have the words of the Deputy Prime Minister in front of me, but his words with respect to security of supply are clearly open to challenge. When he says that there has not been a nationalization because the government has not expropriated, that seems to be a very peculiar understanding of what nationalization is all about. To anyone who understands these things at all, government ownership is nationalization. It is national ownership. Just because there is no expropriation does not mean there is not nationalization. The confusion of the Deputy Prime Minister about this matter gives me a great deal of concern. If a senior spokesman of this government thinks something is not nationalized because it is not expropriated, we are going to have very serious problems.
If the government moved in and took over the department stores of Canada but did not expropriate them, I suppose the government would not consider those department stores nationalized. Of course they would be. Why is the government pretending that the Petro-Canada acquisition of Pacific Petroleums is something other than what it is?
I was in the committee when Petro-Canada was established. As a member of that committee I asked the then minister of energy, mines and resources whether the position of the Government of Canada was that the private sector could not develop our resources effectively. The answer of the minister at that time was that that was basically the position. The government is nationalizing, and pretending it is doing something else.
The most important issue, the one which brings me into this debate, is that every time members of the government talk about this acquisition they say it is a perfectly private transaction and that the money is being borrowed from banks. We are told that the assets of Pacific Petroleums are being pledged for security for those loans and that the Government of Canada is not involved. Well, that is not true. The fact is that under the Petro-Canada Act and under the Financial Administration Act there is a contingent liability on the people of Canada in relation to this transaction. Perhaps it is the position of the

government that contingent liabilities do not matter, but that is dangerous thinking. It is the kind of thinking in which this government has indulged for a number of years.
The government thinks there is no need to be responsible about spending, about accounts, or about liabilities of any kind. I am sure the government does not know whether the people of Canada would be much better served if those contingent liabilities, which are not endless, were used to back loans for housing or to back loans in other areas. Who knows? But when we are talking about this transaction and about borrowing and then not making a final statement, or following the transaction to its conclusion and pointing out that Petro-Canada as an agency of the government, either under its act or under the Financial Administration Act, has a liability and is creating a liability for the people of Canada, that seems to me to be something less than open.
If the government wants to argue that these liabilities do not mean anything, that is all right, but today the Deputy Prime Minister said that the Conservative party is misinforming the Canadian people. He did not follow the transaction through to its conclusion and point out that a liability is being created for the people of Canada. That seems to me to be less than open. It is the government that is misinforming the people of Canada.
In terms of financial obligations, financial accounting, and recognizing liabilities of one kind or another, there is a difference between the party of which I am a member and the government. The position of the government is that these things do not matter, and the government does not talk about them. It was this very type of thinking, as the Auditor General pointed out-that taxpayers' money is a bottomless pit-which has placed us into this trouble that we are in today in the operation of our economy.
It is interesting to participate in the budget debate on its last day. The economic indicators in the country show that the cost of the living is up a full point, the Canadian dollar has declined again, unemployment is still high, and our trade balance is down. These are all negative factors in the operation of our economy. Why do we not, in a rich and prosperous country like Canada, have an economic performance which is more tolerable than we have been getting? No longer can Canadians believe that it is because of what is happening in the rest of the world. Surely Canadians realize now that we are in the economic difficulty we are in because of the total mismanagement on the part of the government.
What is a budget about, Mr. Speaker? Up until the middle 1930s, indeed up until World War II, it had a very simple purpose, to raise the money necessary to finance expenditures which are in the estimates. It seems really naive to think that way today. Nobody today thinks that the purposes of the budget is to raise money to finance the expenditures of the Government of Canada. If the people on the government benches would realize that the things they are promoting have
November 24, 1978

to be paid for and had the courage to tax for them, then I think we would have some restraint.
After the 1940s, budget-making changed, and the purpose of the budget was more or less to set an economic policy for the nation. The goals of that economic policy-making are reasonably well known-to have relatively full employment and relative price stability. If the government is not going to use the budget to raise money to pay for its expenditures, I suppose it could always cop out and say, "We are going to use the budget to direct the economic performance of the nation in the course of the next year or two to get reasonably full employment and relative price stability."
The Minister of Finance (Mr. Chretien) has brought down a budget which increases the deficit, so out the window goes any idea that the budget is used to raise finances for expenditures. The minister predicts that the unemployment rate will rise and that we will end up with an inflation rate of around 6 per cent. A year ago he said the inflation rate would be around 4 per cent. This budget does nothing for our economic policy and nothing to raise the revenues that we need for expenditures about to be undertaken by this nation. This budget simply deals with the mechanics of the operation of the government cash balances and cash needs.
Some people have said that we have a very responsible Minister of Finance because he did not bring down a political budget. In fact, it is one of the most political budgets that has ever been brought down, because what has to be the bottom line for this budget is that this government is not prepared, under any circumstances, to see the value of the Canadian dollar drop below 84-85 cents on the foreign exchanges. Indeed, in the budget address the Minister of Finance said that it is the position of the government that the value of the Canadian dollar should remain around 85 cents as compared to the U.S. dollar. What he is really saying is that the Liberals have to get ready for an election and that they cannot afford for the Canadian people to see the economic failure of this government dramatised by a falling dollar.
This government does not care about the millions of Canadians who are out of work or about inflation. It wants to keep the dollar at around 85 cents so that Canadians will not have a clear and simple indicator of how great the mismanagement of this nation has been under the administration of this government. Politically, it is unacceptable for the dollar to fall below 85 cents. I do not see how anyone can make the interpretation that this is a responsible budget and a responsible minister when the budget does nothing to meet the needs of the people of Canada, but merely attempts to ensure the political survival of a party.
If we ever needed in this country a budget with imagination that would do something for our problems, it is now. Yet the Minister of Finance did nothing, clinging to the hope that somehow he would manage to get along, fooling the Canadian people for another few months that the economy is not in as bad shape as it truly is.
The announcement by the Prime Minister (Mr. Trudeau) today of his cabinet shuffle is another disappointment. The
The Budget-Mr. Gillies
Minister of Finance, who has presided over an increasing deficit, increasing unemployment and increasing inflation, is left in his portfolio. The Minister of Industry, Trade and Commerce (Mr. Horner), who has been something less than a world leader in his department, is left in his portfolio. Canadians who are really concerned about their country must be wondering what is happening. We get something called a board of economic development that leaves the Minister of Finance in an ex officio position. What kind of Minister of Finance would stand for the establishment of such a board without a major role being played by the minister himself? As for the Minister of Industry, Trade and Commerce, they even took his deputy minister away for this new board. Another bureaucratic structure is created when what is really needed is strong competent ministers who understand the problems and have the courage to bring in the solutions that are necessary to get this country moving forward again.
We need reform of economic policy-making in this country. It has been spelled out many times by members of my party. We need reform in the operations of the finance committee. We need to have hearings, before the budget is brought down, with competent people around the country, and we need to have some control over expenditures in this House of Commons. Every member of parliament knows that when he or she is elected, his or her constituents think he or she is going to do something about controlling expenditures, and every member here knows, if he is honest with himself, that this government has no control over the expenditures in the way they are set up at the present time.
Instead of moving where we need to move to strengthen our key portfolios, we find today that the Prime Minister has done nothing and has allowed to remain in these key positions ministers with proven records that they cannot handle their job.
I would like to put on record that I believe, and the members of my party believe, that Canada can enter, and is about to enter, one of the most prosperous periods in its history. I am very bullish on the next decade for Canada. There is so much to do in terms of pipeline, energy development, steel construction, light manufacturing and so on. The most prosperous nation in the world, bar none, in the 1980s can be and probably will be Canada. In that prognostication 1 am not speaking as a member of parliament. I am speaking as an economist. The strength of Canada is ahead of us.
This rightful prosperity will happen, however, only if we have the benefit of a government which knows how to manage the economy. What we have had for the last ten years will not do. We require a government which understands that the private sector uses resources efficiently. We require a government which has confidence in individuals and believes in rewarding initiatives. We require a government which will turn the strengths of the nation loose. We were built as a nation of entrepreneurs and individuals who had enormous confidence that they could operate within the framework of a government

November 24, 1978
The Budget-Mr. Penner
which understood its responsibility and left individuals alone to work and prosper.
I do not think there is any question that after the next election there will be a new government in the country. The speech of the Minister of Finance on budget night and the speech of the President of Privy Council today indicate the need for a new government, not more of the same.
Canadians have a clear-cut choice in the next election. Do they want a government which believes in government involvement in large segments of the economy, government regulations in large segments of the economy, and more and more nationalization? Do they want a government that believes the state operates things more efficiently than the private sector? I don't think so. What Canadians want is a government which will provide a framework in which they may work, prosper, and be rewarded. They want a government which believes in them as people and in enterprise as a system. My party will give Canadians such a government, a government which will turn the country around, so we may move into the last 20 years of this century and become, without question, one of the most prosperous nations on the face of the earth.


Some hon. Members:: Hear, hear!


Mr. B. Keith Penner (Thunder Bay):: Mr. Speaker, on budget night it was most heartening to hear the Minister of Finance (Mr. Chretien) say, "Let me turn now to the resource industries, and mining in particular". It was heartening because of the important role the mining sector plays in the economy of the country.
Since 1950 mineral production in Canada has contributed directly approximately 4.5 per cent to our gross national product. Minerals, excluding fossil fuels, account for 10 per cent of the value of Canada's exports, and fabricated mineral products account for another 10 per cent. Last year nearly $3 billion in wages were paid to workers engaged in mining industry activities. Mining continues to be an important influence in the frontier development of the country. With that background, it was heartening to hear the Minister of Finance turn his attention to this sector.
Despite what mining has contributed to Canada, the Canadian mineral industry continues to be under-developed compared to that of the United States and New Zealand. Studies have shown that higher exploration costs, falling returns, and increased risks have had a negative impact upon mineral enterprises in Canada. In April of this year the Department of Energy, Mines and Resources published a survey entitled; "Known Mineral Deposits in Canada that are not Being Mined". This rather substantial document presents a compilation of known Canadian mineral deposits which, while neither in production now nor announced for production, are either economically exploitable today or are within the reach of becoming so during the next 25 years, as a result of foreseeable economic and technological changes.
The authors of this survey have attempted to identify certain bottlenecks which have hindered primarily mineral resource development. Of course they mentioned national economic

conditions, the international market situation, and metal prices. All of these play a large role in development decisions. One obstacle which stands out in the report is that of the unpredictability of trends in real costs of financing, development, and mining. The Minister of Finance helped in a significant way to offset this uncertainty by announcing that the current write-off for development expenditures in mining is to be raised from 30 per cent to 100 per cent.
In his budget address the minister noted that federal and provincial resource ministers have done an in-depth review of the tax situation in mining. This analysis was badly needed because of the uncertainty created for the mining industry by changing provincial taxation and the federal-provincial dispute on mineral taxation. During the 1970s increased taxation levels resulted in lower mineral production expenditures. The sector task force on the Canadian non-ferrous metals industry concluded the following:
The taxation of mining income across Canada is chaotic and perverse. It has resulted in a situation in which development of all but the richest discoveries would be uneconomic even when demand and prices improve. As a result, exploration activity in this sector is far below the levels needed to sustain present production, let alone provide for growth.
To establish a level of confidence which will ensure future growth and stability, the mining industry has recommended that federal and provincial governments agree upon a uniform definition of taxable mining income, and a combined federal and provincial tax rate or rates not exceeding 45 per cent net of resource allowance.
By means of taxation, governments should be encouraging the growth and expansion of mining. The industry should be helped to become more competitive on an international scale. I know that not everyone agrees with this position. There are those who argue strongly against any tax preferences for the resource sector. In their minds, these preferences discriminate against investment in the manufacturing and service industries. I should like to challenge that thesis.
[DOT] (M32)
First, I would point out that mining, at best, is a high-risk enterprise. There is a high degree of risk involved in mineral exploration. For every mine eventually brought into production, there are hundreds of uneconomic "prospects" which have been evaluated at great expense of time and money.
Secondly, it seems to me that if we discourage the investment of capital for mineral exploration and development in Canada, it does not then follow that this capital will automatically flow into manufacturing or into the service sector. Instead, what is likely to happen is that we will choke off the inflow of foreign capital, and this capital that would have come into Canada, plus Canadian capital that would be designated for resource development, will simply go somewhere else in the world. It will go where the investment climate is more favourable than it is here. So there is no way in which, if we discourage mineral exploration and development, we are going to help any other sector in the country. In the long run we will simply be hurting ourselves.
November 24, 1978

Thirdly, Mr. Speaker, mining, rather than detracting from the manufacturing and service sectors, provides some very definite benefits. Canada is a world leader in the production of mining equipment and machinery. We have an enviable international reputation for the expertise of our professionals in the fields of mining and exploration.
There is a research paper, with which members may be familiar, produced by the Library of Parliament, on the subject of mining in Canada. This paper speaks of the changing image of our mining companies from that of hardy pioneers to one of profit-hungry plunderers of our irreplaceable natural resources. The paper makes it clear, as I want to do, that both these images are, of course, extreme. The mining industry, like any other business enterprise seeks to earn a reasonable return and it wants to operate under a set of rational rules which will not be subject to change at a whim. Our tax structure ought to promote the healthy, long-term growth of the mineral sector, while at the same time providing fair returns to the provincial and federal governments.
Any discussion about mining, Mr. Speaker, is bound to centre on such topics as investment, exploration, development, taxation, international markets and prices. But as well there is a very human side to be considered. Mining means jobs, and mining development involves the building or the expansion of communities. When an ore body becomes depleted, or when a mine cuts back because markets are soft and prices are too low, then we witness a community in crisis.
Atikokan, Ontario, which is in my constituency, is today facing the grim reality of a rapidly depleting ore body. Atikokan has a highly developed townsite, an existing pellet plant and other infrastructure necessary for a mining operation. What it needs now is another source of ore. It so happens that there is nearby, at Bending Lake, an iron ore deposit which is close enough to Atikokan that the townsite could continue to be used and the concentrates could be transported via slurry pipeline to the pellet plant in the town. Unfortunately, because of the over-supply of iron ore pellets in the Great Lakes region, it has been announced that at this time it is not possible to proceed with the development of the Bending Lake project.
Such a notice in the business section of the Globe and Mail probably gets no more than a passing glance from most readers, but in Atikokan the repercussions of this decision are deeply felt. The Bending Lake project would have provided almost full employment for the 600 employees now working for Steep Rock in Atikokan and who will, within the next year or so, be laid off.
The Royal Commission on Corporate Concentration did a study or a background report which was entitled "The Social Characteristics of One-Industry Towns in Canada." Many mining communities fit into this category. In summary, the report referred to the precariousness of such communities, and how uncertainty about the future encourages residents to perceive that they share a common fate. The report goes on to mention feelings of dependency, powerlessness, resignation, and fatalism which prevail. I refer to this social phenomenon, sir, because it is so easy to consider the mining industry only in
The Budget-Mr. Penner
statistical terms, and to fail to appreciate that there is a human dimension as well. Government programs and policies must more and more address themselves to this reality.
The royal commission background report to which I have referred uses a 1971 study by Rex Lucas entitled "Minetown, Milltown, Railtown: Life in Canadian Communities of Single Industry." Lucas has identified four stages in the development of single-industry communities, and those of us who represent resource regions know these stages all too well.
The first stage is that of construction, where the community attracts a highly mobile population willing to make many short-term sacrifices in exchange for some quick money.
With the construction stage under way, the second stage of recruitment begins. Here, the company seeks out professionals and labourers as company employees. For these people, resettlement from somewhere else is often difficult. The townsite itself, or the expansion of an existing one, is under construction. The emphasis of those who come is upon occupational opportunities. Population turnover nevertheless remains very high. Many young couples, for example, leave shortly after arriving, and they leave because there are few job opportunities in such circumstances for women, and there is a lack of physical amenities in the town. There is also an absence of recreational and entertainment facilities.
It is at this stage that governments could be of greatest assistance with various forms of financial support for infrastructure development. In his budget the Minister of Finance has proposed that for new mines the costs of associated townsites and social assets should earn depletion. This is a step forward and should ease some of the problems associated with the development of new mines. As housing and community facilities improve, the rate of population turnover slows and there is a reduction in various types of social problems.
Stage three is that of transition, during which control in the town passes from company or provincial administration to the citizens themselves. During this stage we see the genesis of a stable community, a substantial reduction in population turnover, and an upturn in and positive emphasis upon more community participation.
After a number of years the community may reach the stage of maturity. At this stage there is very little mobility in the adult work force. Retired workers remain in the community. Some of the young people become employed in the local industry. Workers build up seniority and benefits. Money is invested in homes. Nevertheless, people in these communities remain in a state of dependency, because they are aware that the industry could shut down due to factors completely beyond anyone's control. So feelings of insecurity and pessimism are common. As one researcher put it, "Only with a diversified economic base can a community achieve full maturity."
In mining, the productivity of labour and capital has been declining since 1960. The Science Council of Canada suggests that the origin of this problem lies in labour shortages and turnover, in the low level of technological innovation because of low return on investment, and in the low yield of ores that

November 24, 1978
The Budget-Mr. Corbett
[DOT] are being extracted. All of these, of course, are in addition to what I mentioned earlier, the high rate of taxation.
The Royal Commission on Corporate Concentration background study to which I referred earlier, suggests that to Lucas' four stages we might add a fifth, that of decline. Here, the industry does close down and the town goes on the skids. Those who cannot find work elsewhere are left with virtually nothing. There is little market value for the houses. Bitterness and desperation set in among those who have invested their lives in a community which is now dying.
I have taken a little time to describe this Pilgrim's Progress into the "Slough of Despond" so that other Canadians from settled urban areas may know a little of life in the developing resource regions of Canada. For those who live and work in those regions, I would suggest, as I have on other occasions, that there ought to be some special tax benefits. To reduce the turnover rate, and to attract employees from urban areas where unemployment is high into regions where jobs go begging, we should offer some form of personal income tax relief, at least for those employees who remain on the job for a minimum of two years.
The Sector Task Force on the Canadian Non-Ferrous Metal Industry recommends a graduated scale of income tax remission varying with the degree of isolation and latitude. Another suggestion was that the incentive scale be graduated on the basis of temperature, by isotherms rather than geographic parallels.
Canada's economic identity has largely been based on a long tradition of growth in resource-based exports. The probability of this pattern continuing for much longer is very low, even though much of this country's huge area has only recently been the subject of intense mineral exploration. It is not, therefore, that we are running out of these resources, but that increasingly other countries are emerging as competitors and cutting into Canada's traditional share of international sales and laying first claim to any market growth. The U.S.S.R., for example, is only now beginning significant entry into the world mineral markets, and it has a vast resource base with much capability to exploit it.
Canada is vulnerable to these changes. We must continue to be supportive of our resource industries by means of public policy-including a fair tax system, incentives for exploration and development, and built-in economic advantages for those who invest their working lives in mining communities. The regional increases in the investment tax credit can be of some value to the mining sector. Above all, strong domestic growth is urgently required. This is a time for more stimulus in the economy. Contrary to what the previous speaker said, I believe that the budget now before us moves cautiously and quite responsibly in that direction.


Some hon. Members:: Hear, hear!


Mr. Bob Corbett (Fundy-Royal):: Mr. Speaker, it is a privilege and an honour to have been given the opportunity to
speak in this House. My compliments to you, Mr. Speaker, for the admirable fashion in which you conduct the business of this House under what certainly has to be described as adverse conditions on occasions. Please convey my best wishes to the representative of the Crown and the personal emissary of Her Majesty the Queen in this country, His Excellency, the Right Hon. Jules Leger, Governor General of Canada, and his lovely wife, Madame Leger.
My congratulations to the other fourteen successful by-election candidates recently elected. Some have had the opportunity of presenting themselves to the House during this debate or in other fashions, ahead of me. They certainly have done so in a most admirable fashion.
As you know, Mr. Speaker, Fundy-Royal which was so respectfully and admirably represented in this House by the former Progressive Conservative member, Gordon Fairweath-er, is a diverse constituency, nestled in Her Majesty's picture province of New Brunswick, extending from, and including, a portion of the eastern section of the city of Saint John, to the borders of the city of Moncton, on the east. It runs from the west, from more or less the boundaries of the beautiful Saint John River valley, which is known among geographers as "The Rhine of North America", up to and including a portion of Sunbury county, which lies in proximity to the capital of New Brunswick, Fredericton.
It then extends along a northern boundary which includes the principal coal mining regions of New Brunswick, the towns of Minto and Chipman. In the heart of Fundy-Royal is Sussex, the dairy centre of Canada.
There are many areas I could speak of in relation to economic development-or perhaps I should say the lack of it-in the constituency of Fundy-Royal, including agriculture, coal mining, the forest industries, potash development in the Sussex region, the Fundy trail which this government and the provincial government of New Brunswick have been talking about for so long without seeming to get any closer to agreement, but, unfortunately, time does not permit me to do so. I will have to deal with these subjects at a later time.
1 should like to discuss, however, the business of unemployment in Fundy-Royal. It is certainly an area that is neglected and one where we feel there is great room for improvement and changes.
The Atlantic region, as perhaps you know, Mr. Speaker, is handled by Statistics Canada on a seasonally adjusted basis. This is extremely misleading. There is a very high seasonal component to unemployment in the Atlantic region, and in Fundy-Royal it renders the figures provided by Statistics Canada meaningless on most occasions.
The proposed changes under consideration by this House to the Unemployment Insurance Act are very critical to New Brunswick. Under present circumstances, if the bill passes the way it was presented, it is estimated there will be an additional 10 per cent load on the social services budget of the province. At a recent meeting of the federal and provincial ministers of social services it was suggested that the government consider a

November 24, 1978

two tier rate structure. I put this to the House and to the government for consideration. Very simply, it is based on a 50 per cent maximum insurable earnings structure without dependants, whereas clients who have families or dependants would remain at the 66% per cent level or possibly be reduced to the suggested level of 60 per cent.
The saving in New Brunswick alone is estimated at something in the vicinity of $26 million for this year, which is worthy of note. Of course the saving across the nation would be much greater.
I was pleased to hear that the Standing Committee on Labour, Manpower and Immigration has apparently agreed to allow provincial ministers to participate. I am sure they will benefit from the experience and knowledge of those ladies and gentlemen who will be contributing to the proceedings.
The lower regions of the riding encompass the bedroom communities of New Brunswick's largest city, Saint John, and includes Kennebecasis Park, Renforth, Riverside, Kinghurst, Rothesay, Fairvale, Gondola Point, Quispamsis and Hampton, on the Kennebecasis River, and Grand Bay and Westfield on the Saint John River.
Mr. Speaker, Fundy-Royal is, as I have outlined, a diversified constituency which depends, to a great extent, economically, on the intuition and ingenuity of the people who make up the population. There is within its borders a goodly number of small business people, including a high portion of the productive farmers of New Brunswick. There are fishermen along the Fundy coast who depend on the seas for a living. There are small manufacturers, not so small manufacturers, service industries, and household managers, commonly known as housewives. All of these people have to try to make it in an economic environment which, thanks to the present government, is totally incompatible with the aspirations, hopes, and ambitions of an ambitious, conscientious and arduous population.
From the standpoint of the household manager, what has been offered in this budget for her? A paltry one dollar per week maybe! As for the rest of the small business community, nothing. There is absolutely nothing except a promise to professions, such as medical doctors and lawyers, that if they previously used a vehicle developed by the government to their advantage, which is what any prudent business person would do, be it someone running a multi-national company, or a small country doctor, then they were labelled as bad scamps, unfair, cheaters of the government, and they must be stopped.
Let us deal with a typical rural doctor. First of all he is regulated in most provinces across this nation by a medicare program, which regulates and dictates his schedule of fees, whether it be for the administration of a common laxative, or the delivery of a baby in a hospital 30 or 60 miles away from his office. He is, in most cases, on call 24 hours a day and tends patients in a hospital most every day miles from his office.
The Budget-Mr. Corbett
He maintains a telephone system, which is sophisticated enough to transmit and respond pertinent information to him when he is away from home. He inserts ads in local newspapers when he will be away from his office for more than a few hours. He maintains an office which is completely equipped with enough medical paraphernalia that would make most small hospitals of a decade ago look antiquated. He maintains a staff of at least two, that is, if he wants to clean up the office himself. He maintains records that are suspiciously similar to most legitimate businesses including accounts receivable and accounts payable. He attends seminars and continuing education programs to ensure that he is kept up to date with the latest technology. He often is a dispensing physician, which means that he must maintain an inventory of drugs and medications accounting for same, just as a druggist would. His salary, after expenses, is probably $30,000 to $40,000 per year, much less than that of many of the bureaucrats gracing this hill.
This is the villain, Mr. Speaker, that this government says is no different managerially speaking than the guy who goes to work at 9 a.m. in the morning and returns at 5 p.m. at night, and who collects his pay cheque every week. This is the villain, Mr. Speaker, that this government probably considers as another enemy. If it is the government's intention to discourage, and scourge society of this particular rascal, the family doctor, it is doing a particularly efficient job of it. Before the present measures that effectively ensure that a legitimate businessman is eliminated from taking his rightful place in the business community, the situation for MDs surgeons and others in their related fields, was unpalatable enough. This government knows they have been leaving the country in droves for greener pastures in the United States. It will be interesting, and I predict tragic, for this country to witness what the present measures brought in by this government will do to aggravate further an already serious situation.
But this is the attitude that this government has toward small business. They are to be used and intimidated. Not destroyed, yet, because they are the largest group of taxpayers, producers, and employers in the country. But they are certainly to be intimidated.
The Department of Justice keeps on staff a "stable of legal beagles" paid for in the most part by the labour of small business, whose sole purpose it is to prosecute, persecute, and short of execute whoever the Department of Justice can get their clutches on, as long as the villain is from the private sector.
Woe befall "chump citizen, small businessman", if he does not have resources equal to the Bank of Canada to take on this battery of would-be deputy ministers. Although admittedly that is not as ridiculous a thought today as it might have been in better times. No, I suspect the facts will bear me out that the majority of Goliath and Tom Thumb legal engagements end up with a hasty capitulation by Tom, not because he knows he is wrong, but because of the sheer financial terror with which he is not so gently faced.

November 24, 1978
The Budget-Mr. Corbett
Fundy-Royal is a constituency steeped in tradition, Mr. Speaker. It is a portion of the country that believes in the basic principle of freedom. Its people recognize the sacrifices that Canadians have in the past made for their country materially, psychologically, and physically. We honour and revere the symbol of the sacrifices our forefathers, sisters, brothers and cousins have made on our behalf to preserve the freedom of our nation.
The Crown is a symbol of these sacrifices. The Crown is the symbol of freedom. The Crown was the source, the blood, the cause that inspired free men to lay down their lives so that we may be free. I am reminded, Mr. Speaker, of that old verse, time worn but as meaningful now as it was then:
"It is only an old piece of bunting.
It is only an old piece of rag,
But millions have fought for its honour,
And thousands have died for the flag."
I know that those of us in Fundy-Royal, as well as by far the majority of Canadians, do not want any lessening of the role of the symbol of democratic freedom that has made this country great. Fundy-Royal will not tolerate any infringement upon the sanctity of the role which the Crown and monarchy have in this country. Canadians will not tolerate any infringement upon the role which the Crown and monarchy have in this country.
I see the present government's move in this direction as being most sinister indeed. In the process of the establishment of a totalitarian, one-party government system, the one measure universal and peculiar to all who seek to establish themselves in this fashion is to seek out and destroy the people's rallying point, their inspiration, the symbol of their freedom, the symbol of their future. They strive to seek out and destroy the institution, the heritage, the spirit, and the truth of the people. This is socialist ideology, Mr. Speaker. My socialist neighbours refer to the private sector as some sort of bogeyman. I would remind them that it is due to the perseverance of this group of ambitious and far-sighted individuals in the private sector that the country has given them the opportunity to espouse their rhetorical nonsense. They should be reminded that the public sector and the private sector in this country are comprised first and foremost, of human beings who all breathe and bleed, and who in most cases are Canadian.
The squacks and bleats so often heard from my immediate left are indicative of the disdain, disregard, and contempt in which most of them hold the House in our system of democracy. That, of course, is not surprising, as democracy is hardly their bag or game unless taken in the context of sport, in which case it is fair game, and they would destroy the animal. Any jackass can kick a barn down, but it takes a damn good carpenter to build one. The only time that these dreamers are quiet or still is when one of their own gaggle is spewing some of their ideological twaddle.
It is distressing that frequently the House has difficulty distinguishing between the party presently in power and these social whiners to my left. Although the direction that the government has taken recently with reference to its budget has

not been inclined away from a more realistic attitude toward a reasonable and sane direction in political philosophy, this is not to be interpreted by the Canadian people as any great permanent change in political direction by the leader of this government whose socialist background-and I am being kind,-is well known to many Canadians, but it is rather a matter of political expediency.
It is obvious that the people of this nation agree that we, as a nation of Canadians, are psychologically and mentally sophisticated enough to cope with and thrive on the free market system and that we do not need, nor indeed want, Big Brother orchestrating and directing our affairs.
I am distressed and concerned, along with my neighbours and constituents in Fundy-Royal, and thousands of my fellow Canadians, when the Prime Minister of this country publicly states, as was reported on the front pages of the Toronto Star on November 18, that the media and the opposition are the enemies of the government. This attitude by the Prime Minister is indeed dangerous, and one to which 1 know the people of the country take great exception. What he has done is attack two foundation stones of our basic freedoms, one being the freedom of the press, and the other being the function, purpose and right of not only Her Majesty's Official Opposition, but indeed the freedom of expression of all citizens of this country.
We know that this is the same Prime Minister who instigated the War Measures Act in 1971. We know that this same Prime Minister has said that the free enterprise system no longer works. We know this same Prime Minister has developed friendly rapport with countries such as Algeria, Red China, and Poland, and we know as well his great love affair with Cuba and its dictator, the notorious communist, Fidel Castro. We know that this same Prime Minister allowed millions of Canadian dollars to be spent in Cuba during 1976-77 when that country was waging a bitter and bloody war in Angola, Africa.
This all points to an extremely ominous direction for this country, and one which 1 urge the people of this nation to recognize. Too often lethargic peoples awake to the fact that it no longer matters that yesterday they were lethargic. We, as Canadians, are not lethargic, and we must take care and pay particular attention to ensure that we do not awake one morning to find that yesterday we were that way.
The Prime Minister of Canada has conveyed the message to me and all other members on this side of the House that he considers me an enemy. The Prime Minister of Canada holds the most powerful position in the land. This is the Prime Minister who leads the government that has thrown this country of ours into the greatest economic calamity since the great depression, that has nurtured and fostered unemployment to an unprecedented one million work-seekers, that has throttled the dollar to a miserable 85 cents of its counterpart, the United States dollar.
And now, the same Prime Minister, leader of the Liberal party, leader of the country, the head of this government, is
November 24, 1978

telling the people of this nation that he has had nothing to do with the plight of Canadians, that unemployment and economic stagnation are none of his doing. No, even the people of Fundy-Royal must have been somewhat taken aback to hear the Prime Minister tell the world that I, as a member of the opposition, in the short period of time that I have been in this House, a matter of days, that 1 am really responsible for the whole mess, that I am the enemy.
In view of the Prime Minister's statement 1 do not think that I could be accused of being paranoid when 1 say that I do not trust the Prime Minister of Canada, I do not trust the party that he leads, and I do not trust the government that he heads. Further, I submit that the people of Canada do not trust this government, that the people of Canada do not trust their leader, and they will convey this message loudly and clearly when given the opportunity.
In summation, the problems that beset the people of this country prior to the budget, still beset and will continue to beset the nation. The budget is about as much use to Canadians as a hairnet is to Yul Brynner.
This party and its members have and will continue to act in an accountable manner as the official opposition in this House. It is our duty to criticize, and with the present government our task is not difficult. We will continue to be constructive, we will continue to be responsible, and I suppose in the eyes of the Prime Minister and his followers, we will continue to be the enemy. But let me assure you, Mr. Speaker, that we will persevere, we will not be deterred, we will not be intimidated, nor will we falter, nor will we fail.


Some hon. Members:: Hear, hear!


Francis Andrew Brewin: Mr. Speaker, I rise on a point of order. I did not want to interrupt the hon. member who has just spoken because I understood it was his maiden speech. Therefore, I did not think he should be interrupted. However, he did make some comments about the fact that members of the party I belong to did not believe in democracy. Let me assure him, in case he is worried about it, that there are no more stout defenders of parliament and democracy than the members of this party.


Some hon. Members:: Hear, hear!


The Acting Speaker (Mr. Turner):: Order, please. I suggest to the hon. member for Greenwood (Mr. Brewin) that that is not a point of order but a point of debate.


Stanley Howard Knowles: It is a point of fact.


Francis Andrew Brewin: Mr. Speaker, I have not come to my point of order yet. I am not asking the hon. member to withdraw, or raising a question of privilege. I am merely asking him to consult his predecessor, the generous and fair-minded former member for Fundy-Royal, to ask of him the facts.


Some hon. Members:: Hear, hear!


Mr. Herb Breau (Gloucester):: Mr. Speaker, I am very happy to take part in this most important budget debate. As I
The Budget-Mr. Breau
represent a constituency in the province of New Brunswick, I believe it is fitting for me to congratulate the hon. member for Fundy-Royal (Mr. Corbett). It is an honour for a member to arrive at this House of Commons, as I did some ten years ago with you, Mr. Speaker. I am sure the hon. member will do a good job of representing the constituents of Fundy-Royal.
It is not customary that we criticize or respond too harshly when a member speaks for the first time. The fact that we respectfully listened to the speech of the hon. member for Fundy-Royal does not mean that we cannot respond to it. However, we will wait until he has made a few more speeches, listen to them carefully, and note what he says. Being a fellow New Brunswick member, I again congratulate him on the presentation of his maiden speech in the House today.
It is important in this budget debate to situate the perspective or economic context in which the government had to present its budget. In my view the Minister of Finance (Mr. Chretien) has presented a very responsible budget. The economy of the western world is recovering from and adjusting to the very severe economic dislocations created by the energy crisis of 1973-74.
If one looked at the economy of Canada today, he would realize that over two-thirds of what we produce in this country is exported, mainly to the United States. One cannot talk about the economy of Canada and, therefore, the policy of this government, without situating that policy in this kind of context.

Therefore it is important in my view to realize the Canadian government's objective is, first to influence the domestic economy, and second to help those who are in greatest need of help to adjust to economic conditions, and help mitigate the negative effects of these conditions on Canadians with the lowest salaries and those who live on pensions and cannot by themselves adjust to the new economic situation.
I submit this is a responsible budget, sir, because it aims at influencing the Canadian economy, to the extent the government can do so. Reference is made of course to economic stimulation. Hon. members opposite, especially Conservative members, suggest we should use the fiscal system to stimulate the economy. But, Mr. Speaker, how could we stimulate the economy and in addition have a budget deficit topping $12 billion? Some 25 per cent, or rather 30 per cent of the total Canadian government budget is made up of government deficit. Such being the case, I do not feel it would have been possible for the government to provide much more stimulus than they did. My opinion is we did so, as far as the domestic economy is concerned, by indexing income tax at 9 per cent for this year, which means more than $1 million when the reduction in unemployment insurance premiums is added. And with the reduction from 12 per cent to 9 per cent of the federal sales tax, this means more than $1 billion will be left in the hands of Canadians, not to mention the effects of the tax changes on Canadian firms which are difficult to estimate accurately.

The Budget-Mr. Breau
However I am firmly convinced these changes will bring at least three-quarters of a billion's worth of stimulus to Canadian firms and Canadian entrepreneurs.
I would like to stress that, as far as the Atlantic provinces are concerned, the government operated along the policy established in the last budget-I mean the one before that of November 16, namely to use the fiscal system to help regional development.
Mr. Speaker, the 10 per cent investment tax credit will be increased to 20 per cent when investments will be made in the Gaspe area and in the Atlantic provinces. In my view, I think it ought to be pointed out. As a representative of the Atlantic provinces, the northwestern part of New Brunswick, I want to thank the government and congratulate it for its initiative because indeed the incentives granted by the Department of Regional Economic Expansion to industries are most important for us.
However, it must be stressed that such incentives apply only when a new enterprise is operated, a manufacturing enterprise modernized or in order to enlarge or develop the handling or manufacturing industry or any other secondary industry. But by using the tax system through investment tax credit as the Minister of Finance (Mr. Chretien) did in his budget of November 16, one helps all Atlantic manufacturing industries which would like to invest either simply to increase their efficiency or for purposes of modernizing or enlarging. These measures also have a positive impact on those who wish to invest in their industries and increase their production capacity.
I think, Mr. Speaker, that this is not a reason to drop the industrial incentive program of the Department of Regional Economic Expansion. I think that both policies are compatible and this is something I wish to emphasize as it demonstrates this government's determination to encourage regional development and particularly to help the Atlantic provinces, the Gaspe area and other areas which in the past did not benefit from the same level of industrial development as other regions of the country.
I also wish to stress that this budget should be considered not only from the standpoint of the economic situation in the occidental world but also that budgetary measures should be closely related to other programs, other decisions, other policies of the government aimed at helping Canadians. As some members said this afternoon that the budget does not do enough for low wage earners, I wish to point out that the government has tabled a bill, and I think it has priority as concerns parliamentary business, that will bring a significant change to the family allowance program so that these funds, or a good part of them, will be used to give a $200 tax credit for every child of families with a net income of $18,000 or less according to their income tax return. Mr. Speaker, for those who earn more than $18,000 this tax credit will be progressively reduced up to a net family income of about $30,000.
(Mr. Breau.]
Mr. Speaker, this is just an example which shows what the government can do to influence the Canadian economy. Families receiving every year the $200 tax credit for every child will use that money to buy things for themselves. It will help our economy but it will also help Canadians, low wage earners, people with a lower income to adjust to changing economic situations.
[DOT]	(1512)

Members of the New Democratic Party have been telling us in this House for the last weeks that inequalities are not being reduced. Indeed, they argue that the gap in incomes as between the rich and the poor is widening. In the course of a debate which took place here not long ago I challenged the position taken by the leader of the New Democratic Party, the hon. member for Oshawa-Whitby (Mr. Broadbent) who asserted, during the debate on the Speech from the Throne, that inequalities have not been reduced in the last ten years. I say that such a statement is false. It is not in accordance with the facts at all and the hon. member, by repeating it, does not make his assertion more true. He is not looking at the facts at all.
Before I begin using figures, I should like to make it clear that when we are talking about the equalization of opportunity, about means of fighting poverty and helping people who cannot help themselves, it is, in my view, a mistake to reduce the argument strictly to figures; one cannot measure the welfare of human beings on such a basis. Thus, even though I use figures today, I do not wish to be taken as meaning we ought to be satisfied or that we have done enough to eliminate poverty and bring about greater equalization of opportunity. Nevertheless, I believe that figures, if used accurately, can show a tendency. Look at some recent statistics, for example. In 1968, salaries and benefits to workers in Canada accounted for 54.2 per cent of the gross national product.
[DOT]	(1522)
In other words, workers were taking 54.2 per cent of the gross national product. In 1976, 57.4 per cent of the gross national product was going to workers in salaries, wages and fringe benefits. That does not mean that there is not still a gap, and it does not mean that we should be satisfied, but when the hon. member for Oshawa-Whitby (Mr. Broadbent) pretends to speak in this House for workers and says we have not done anything to reduce inequities in this country, he is just not looking at the facts, or he cannot recognize them when he sees them. We have increased the share of workers in relation to the gross national product by some 3.2 per cent in only ten years.
I want again to refer to some Figures, not because I choose to, but because, of all people, the hon. member for Winnipeg North Centre (Mr. Knowles), when speaking about the child tax credit bill in this House some time ago, referred to figures to help him make the argument that we have not reduced inequities and that we have not helped in closing the gaps.
November 24, 1978

The hon. member for Winnipeg North Centre said that in 1951 Canadians in the lowest 20 per cent of the income group were earning about 4 per cent of the total national income. He said that in 1975 the figures had not changed much. I have the figures the hon. member used here today. I regret that the hon. member for Winnipeg North Centre was misled regarding these figures. The figures he used were for all units, that is, unattached individuals and family units. He said that in 1951 they were receiving 4.4 per cent of total income in Canada, that in 1965 they were getting 4.6 per cent, and that in 1975 they were getting about 4.1 per cent. I say that the hon. member was misled. I know he is in the House most of the time, he works hard, but I think a New Democratic Party researcher handed those figures to him, and he thought that they would be an accurate reflection of the facts. Those figures came from a Statistics Canada study on total national income before taxes, but they do not represent a true measure of the extent to which we have helped people. They represent merely a measure of the capacity of Canadians to earn income. They include interest income, dividend income and even some business income which is earned by individuals as opposed to corporations.
The hon. member for Winnipeg North Centre could have used another Statistics Canada study which showed income distribution by size after taxes in Canada. The New Democratic Party researcher to whom I referred could have provided that study to the hon. member for Winnipeg North Centre, but he chose a study which would help with the political argument of the New Democratic Party. The study which was chosen just happened to be very bad because the figures used were for total income. They had nothing to do with income after taxes. They were for the years 1951 to 1975. I have found a report for 1976, so I can update the figures. The figures used by the New Democratic Party do not reflect what is referred to as transfers in kind; in other words, what governments have been doing since the 1950s to redistribute income through hospitalization, health care and education programs. Not only did the hon. member for Winnipeg North Centre not use a figure for income after taxes, but he also did not take into account that federal and provincial governments in this country have done much to redistribute income in order to reduce the expenditures of poor people on medical treatment, hospitalization and the education of their children.
I know that the hon. member for Winnipeg North Centre always wants to be honest, so I suggest that next time New Democratic Party researchers give him figures he should ask from where the figures came and make sure that his political arguments are based on true facts. He always makes good political arguments, and I just point these things out because I want to help the hon. member continue to make his political arguments.


Stanley Howard Knowles: Were the facts not true?


Herb Breau: Of course the facts were true, but New Democratic Party researchers advised the hon. member for Win-
The Budget-Mr. Crouse
nipeg North Centre that the study they were giving to him was good, and there was an error made because that study dealt with total income, which has nothing really to do with the benefits governments have tried to redistribute to Canadians. That study did not deal with income after taxes, health care, hospitalization and education which have been provided to Canadians by federal, provincial and, in some cases, municipal governments. Those governments have taken in taxes and spent them to benefit all Canadians.
Perhaps the hon. member for Winnipeg North Centre would like to refer to Statistics Canada catalogue number 13-210, "Income after tax, distributions by size in Canada, 1975." Perhaps the hon. member would like to write that down. The figures contained in that report are the latest available. According to that report, all units, including unattached individuals and families, which represent the 20 per cent of the population which has the lowest income earned 4 per cent of total earnings in 1975. But what is the figure for income after tax? It is 4.6 per cent. It is true that in 1975 the 20 per cent of the population which had the highest income earned 42.6 per cent of the total income, but what did those people get by way of income after tax? The figure went down to 40.6 per cent. If the hon. member for Winnipeg North Centre wants to use figures, he should look at what the figures say. If we look at after tax figures, the reverse of the hon. member's conclusion is the case. The 20 per cent at the bottom are getting more, and the 20 per cent at the top are getting less.


Stanley Howard Knowles: How much more?


Herb Breau: Not enough.


The Acting Speaker (Mr. Turner):: Order, please. I regret to inform the hon. member that his allotted time has expired.


Mr. Lloyd R. Crouse (South Shore):: Mr. Speaker, I welcome this opportunity to participate in the budget debate. During my 22 years as a member of the House of Commons I have been privileged to listen to many budget speeches. Many of them have been long on rhetoric and short on performance. This has been especially true during the past decade. I have always been intrigued by the little booklets which are prepared by ministers of finance and delivered to us as member of the House of Commons on budget nights. Their size and format have varied little over the years, and although the words are somewhat different the end result is always the same, namely, the taxpayer has to run a little faster, like the squirrel on his treadmill, just to stay in the same position. For example, when John Turner introduced his budget on November 18, 1974, for 1975 he stated, and I quote from his booklet:
We in this country are confronted by two major economic challenges-dealing with persistent, deep-seated inflation and at the same time maintaining a good level of production and employment. This will require us to steer a narrow course if we are to avoid more inflation on the one hand, and the risk of a recession on the other. And in doing so we must also do everything we reasonably can to protect Canadians who are less able to protect themselves from the ravages of both. That is what this budget is all about.
Then Mr. Turner went on to introduce a budget which increased expenditures by 28.3 per cent, which followed an

November 24, 1978
The Budget-Mr. Crouse
increase in expenditures for the previous year of 22.7 per cent and which plunged the nation into a predicted deficit position of $3 billion which ended up at something like $5 billion.
At that time the present Minister of Finance (Mr. Chretien) was president of the Treasury Board and he boldly applauded these moves. On Thursday, November 16, the present Minister of Finance prefaced his comments in his little paper, which I doubt will ever become a best seller, with these words:
1 believe that this budget will make a significant contribution to the containment of our domestic costs in the post-control era. This will enable us to take full advantage of the improvement of our competitive position that we have achieved.
My budget measures will, of course, provide a more direct stimulus to growth. Investment will be stimulated by the enriched investment tax credit. Consumption will benefit from the increase in the real spending power of Canadians as a result of the income and sales tax cuts.
There is a similarity in the words. Having said this, the Minister of Finance went on to say at page 13:
Total financial requirements of the government in fiscal 1979-80, exclusive of foreign exchange transactions, are forecast at $10,750 million. This would be down from the expected $12,100 million this year.
If you read these figures quickly, Mr. Speaker, you would almost think that next year the country would only require $10,750 million to look after the needs of our nation. You would ask, "Why not, it took a lot less than that to look after our needs only ten years ago." However, when we read the next paragraph we see the words:
Budgetary and non-budgetary outlays in 1979-80 are forecast at $52.6 billion, an increase of 8.9 per cent which would be well below the expected growth of GNP Budgetary revenues are forecast at $38.1 billion with a further $3.7 billion available from non-budgetary transactions.
Adding these two figures together amounts to $41.8 billion, and if subtracted from the forecasted spending of $52.6 billion, we arrive at a deficit of $10.8 billion. The figures do not balance, and this simple example is indicative of the problem that the present administration faces.
The truth of the matter is, no one trusts this government, and their past record is valid reason for this mistrust. When you look at the words of the Hon. Walter Gordon, Edgar Benson, John Turner, Donald Macdonald and the present finance minister and compare their words with their performance, you readily see why Canadians no longer have any trust in a Liberal administration. For example, on page 7 of the minister's little booklet he states:
Budget proposals will cut income and sales taxes to increase the real spending power of Canadians, reduce pressures on prices and income demands, and stimulate investment.
What does the bottom line tell us? It tells us that actual expenditures, as listed by the President of the Treasury Board (Mr. Andras) in "How your tax dollars are spent for 197879", will be $48,800 million. When that figure is subtracted from the finance minister's predicted $52.6 billion, the over-all increase in taxation for next year is $3,800 million, even if the estimated expenditures are achieved.
These are not Conservative figures, but the figures made available to Canadians by either the Minister of Finance or the
[Mr. Crouse.J
President of the Treasury Board. However, when we quote those facts, supporters of this government say we are not telling it like it is. They accuse us of misleading the House and the country. I say that if these facts are incorrect, then "physician heal thyself' for these are the facts, the fiscal policy and the economic outlook for the Canadian economy based on this government's own figures. Nothing demonstrates more tragically the total over-all mismanagement of Canada's economy than what has occurred during the ten years under the present Prime Minister (Mr. Trudeau) and his colleagues.
Because we dared to repeat the figures which outline this government's record in "blunderland", the Prime Minister has attacked my leader and my party-and by so doing he is attacking me-charging that we are dividing Canada because we have publicly stated that we would be willing to negotiate provincial problems with provincial premiers. In his efforts to lay the blame for his abominable record everywhere but where it belongs he calls us the enemy. In my 22 years here, that is the first time anyone has ever accused me of being an enemy of Canada. 1 resent that allegation very deeply, as, I am sure, do my colleagues. He also accuses the premiers of the provinces of trying to weaken Canada. He is never specific, or will he make a charge, but everybody is against him, including the media. If only the fourth estate would praise his efforts, everything would be all right.
The Prime Minister claims that the country needs the Liberal party now because they are the only party to lead the country and provide it with a strong Canada and there is no alternative. When that nonsense hit the street, the average Canadian simply asked, "An alternative to what?" In the last ten years, almost without fail, annually we have had record high unemployment, record inflation, record debasement of the purchasing power of our currency and a flight of capital from this country. If there is no alternative to the present administration, this average Canadian says, "heaven help us". The Prime Minister seems to forget that in 1974, the then president of the Treasury Board, C. M. Drury, in his book, "How Your Tax Dollars are Spent" showed a total expenditure of $9,872 million to look after the needs of 20 million Canadians.
In the last ten years our population has increased from 20 million to 23 million people. The predicted expenditures, however, have increased to $52.6 billion. Even if the government stays within this estimate, which I doubt, we will be spending as a government more than $1 billion a week. The finance minister predicts for this year a deficit of $12.1 billion. This is a debt of more than $1 billion a month which we must try to borrow at interest rates that are at a record post-war level.
Some will ask where the money was spent. Obviously some of it ended up in the construction of an airport for which nobody asked and which very few people use, namely Mirabel. It was constructed at a cost of $482 million, at least $100 million over budget. It was officially opened in October, 1975. It was supposed to handle six million passengers per year, with a potential for expansion to handle 50 million by the year 2025. It has turned out to be a colossal white elephant,
November 24, 1978

handling little more than one million passengers in 1977, less than 19 per cent of its capacity. The Auditor General, in his report tabled yesterday, says that Mirabel has lost $119.7 million since it opened, which amounts to approximately $1 million a week. He tells us that this year the airport will lose $52.5 million. How much has the government budgeted to complete this white elephant? I would like to know what has gone wrong. I submit that this is one of the major problems that we face as elected representatives. When an expenditure is made, my constituents look to me and say, "You are our representative; why did you go along with it?" As I read the Auditor General's report, it seems to me that neither members of the Treasury Board nor bureaucrats have a clue as to what is going on. They seem to go along with one hand not knowing what the other hand is doing, making expenditures over which we have no say. My party and my leader, when we form the next government, will restore parliament to the people.
The industrial park established at Mirabel has been totally unsuccessful. MIRCA, the managing authority, has spent $5,440,000 on roads, water facilities, site preparation and marketing studies. But to this date there is not a single tenant in that industrial park. After ten years of planning and nearly $1 billion in public expenditures, Mirabel remains an airport operating at less than 20 per cent capacity with an empty industrial park. Did anyone on the Treasury benches or any of the government's experts realize at the time the tremendous mess they were creating, or the tremendous tax burden they were placing unnecessarily on the backs of all Canadians? They further compounded their mistakes when they bought or leased building space for offices in Ottawa and Hull. They took on long-term obligations for space, without proper planning, resulting in wasteful expenditures which will be a burden on our children's children.
In his 1975 report, the Auditor General stressed the need to establish tighter controls on government expenditures through the centralization of some financial management control procedures. Obviously it was not done, for in his 1978 report, at page 44, there is a list of 12 capital projects which were approved in 1973, 1974, 1975 and 1976 at a cost of $281.6 million. The final cost amounted to $699.7 million, or an increase over estimates of $418 million. This is why there is no money for improved forestry research. This is why the fisheries lab in Halifax faces closure, at a time when its output basically is very important to the fishing industry. This is why funds are limited for grain storage depots in Atlantic Canada.


Herb Breau: Oh, oh!


Lloyd Roseville Crouse: I listened to the hon. member without interrupting him. I would ask him to do the same for me. This is why there is no money for dredging which is urgently needed in my constituency, if not in his. This is why there are no funds for repairs to wharves, breakwaters and skidways. When we ask the minister responsible for small craft harbours development, this is why his plea is that there is no money. The government has blundered, misspent and misappropriated
The Budget-Mr. Crouse
funds until the country faced financial disaster. This is the problem we face today.
As a result of these facts, the Prime Minister and his party are no longer credible in Canada. They try to lay the blame for our economic mess on anyone but themselves. The words of a modern song apply to our Prime Minister. They are as follows:
How many times can a man break faith
And pretend that he just doesn't see?
The answer, my friends, is blowin' in the wind,
The answer is blowin' in the wind.
I believe the future of this government may well be "blowin' in the wind", especially since the Prime Minister expressed the view that a new constitution is needed to restore Canada's national pride, economic stability and unity. He warned provincial leaders that unless they get their heads together and write a new constitution, others will write a uniquely Canadian constitution. Who the others are is left unsaid. However, having messed up everything else in the country during its ten years in office, what guarantees do the premiers and Canadians have that the Prime Minister's constitutional proposals will not lead to still further chaos? The real problem of the Prime Minister and his government is the credibility of the right hon. member who heads the Libera! party and the government today. Stripped of all political bafflegab and nonsense, there is nothing inherently wrong with our existing constitution. What is wrong is that it has been abused by the powers that be, since special emergency steps were taken for prosecuting World War II. Following the end of the wartime emergency, Ottawa retained the powers and proceeded on a course of centralization and bureaucracy building, while acting like "Big Daddy-O" to the provinces.


Jean-Jacques Blais: Mr. Speaker, I rise on a point of order. While engaging in a flight of oratory, the hon. member used the word "misappropriated" in terms of the way in which funds had been handled by the government. I am sure the hon. member did not wish to give it the literary meaning. I ask him to reflect upon his use of that word and perhaps use a more appropriate term.


Lloyd Roseville Crouse: I could use the term "lack of control".


Jean-Jacques Blais: Very well.


Lloyd Roseville Crouse: Obviously that has happened time and time again during the past ten years. As the Auditor General pointed out, today there is no control. I was speaking about the proposals the Prime Minister and his party are trying to foist upon Canadians to rewrite the constitution. Stripped of all political nonsense, there is nothing inherently wrong with our present constitution. Following the end of the wartime emergency, Ottawa retained too many powers and proceeded on a course of centralization and bureaucracy building, while attempting to act like a father to the provinces.
As I understand it, the province of Quebec resisted this power grab. Unfortunately, the other provinces did not cover themselves with glory when they permitted the central government to usurp their powers and authority. The solution to this
1492

November 24, 1978
The Budget-Mr. Faulkner
dilemma, though it will not meet with the approval of the Prime Minister and his colleagues, is a relatively simple one. We should insist that the original constitution be followed, that Ottawa and the provinces assume their designated responsibilities and jurisdictions, or in short, reinstate that which was functioning very well and very smoothly in 1939. It is not often by turning back the clock to 1939 that we can go forward in 1978. In fact, if we followed this course, the separatists would have no planks in their platform, and the crippling and inept Ottawa bureaucracy could be dismantled gradually for the enduring good of all Canada.
The Minister of Finance said that he cannot be held responsible for providing employment. I ask him why not, since he and his colleagues are responsible for creating unemployment. The direct result of the government's mismanagement of the economy is higher interest rates, and higher interest rates are the basic cause of inflation or the increase in prices of everything we use. Higher interest rates automatically destroy the profit system, private ownership and private enterprise. The course followed by the present administration for the last ten years rapidly increased our federal debt. In fact, it costs more than $8 billion a year just to pay the interest charges on our national debt.


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


James Hugh Faulkner: Mr. Speaker, I will attempt to approach this matter in a non-partisan way and resist the temptation to comment on the frightful speech of the hon. member for Fundy-Royal (Mr. Corbett). I will resist the temptation to say how much I regret that there has been a change in the member representing that constituency. The previous member who represented Fundy-Royal was a man who added a great deal of distinction to the House. I will resist that temptation and simply deal with a part of the budget which is of great interest to an area of the country for which I have some responsibility.
A week ago when the Minister of Finance (Mr. Chretien) spoke in this House about the economic outlook, his analysis necessarily dealt with the general indicators and the country's performance in the broadest context. My purpose today is to describe the promise that the budget holds for one region of Canada, the northern territories, and, more important, the tenacious people who find their livelihood there.
My colleague, the Minister of Finance, spoke of the renewed faith that Canada can launch itself on a new phase of sustained expansion, more investment and new opportunities. My purpose today is to show how this budget in fact answers some of the very important questions about expansion and development in the north and reinforces other initiatives that have been taken by myself and other members of this government who have a concern about the future of the north. The budget announced by my colleague last week recognizes the impor-

tance of northern development to northerners and to southerners as they consider what the north means to them.
Since I became minister of northern affairs a little over a year ago, I have travelled extensively, as have my two very distinguished parliamentary secretaries, one of whom is here today, and listened to the people's concerns. In the early months I became increasingly aware of the apprehension and uncertainty they were feeling about the pace and direction of development. Decisions surrounding a northern gas pipeline intensified those concerns both in areas which will share directly in construction of such a pipeline and in areas which will not.
The decision to build a pipeline through the Yukon left in the minds of many people in the Mackenzie valley an evaporating sense of expectation. For the Yukon, the decision meant an immediate acceleration of planning and preparation for the economic opportunities and social complications that will be superimposed on that territory when construction begins.
Last January I spoke to the opening session of the Northwest Territories Council about the policy framework in which decisions must be made to govern these and other activities in the years ahead. In my view, development must be for the north and not of the north. We must distinguish between economic growth and development. Any activity which gets its labour, capital and materials mainly from the south contributes to growth, but not necessarily to development. This is even more true when the product goes south, leaving a residue of social dislocation with nothing to compensate for it. Priority must go to those activities which are, by their very nature, capable of making direct and ongoing contributions to northern residents.
We must always strive in the north to achieve balance- balance between renewable and non-renewable resource development, between conventional wage employment and activities which support the traditional native economy, between externally generated development and that which comes from within. There must be balance in meeting the need for native people to protect their future and their past, balance between using the land and resources and conserving them, balance between protecting the environment and developing the available natural resources.
We must seek to provide every northerner with the opportunity to apply his skills in meaningful areas that use the resources available to him and allow him to make a contribution to the common well-being. Freedom is choice, and choice demands both opportunity and capability. Northerners have a contribution to make not only to the future of the north, but to the health and vitality of Canada. In this regard native people must be equipped to make a viable choice between following their traditional way of life, entering the mainstream of Canadian society, or a compromise involving the best features of both. To reach this objective, we will have to encourage meaningful development in every economic sector.
I have established a set of criteria consistent with those objectives to guide us. First, economic development must take the needs of northerners fully into account. It must be attuned
November 24, 1978

to a young and in many areas a majority native population living mainly in small, isolated communities. It must be designed to promote the continued economic and social viability of these communities.
Second, jobs must be created not only for young people now entering the labour force, but, even more important, for the existing labour force, and tailored to their desire for continuing participation in traditional pursuits. The choice should not be either/or-modern or traditional.
Third, economic development must be diversified and dispersed. A better balance of economic activities will reduce the current dependency on major projects and on one or two economic sectors.
Fourth, northern based private enterprise-not just large companies, but small business and co-operatives as well as the hunters, trappers and fishermen-must be promoted and strengthened.
Fifth, the environment must be preserved and protected by the encouragement of advanced conservation practices. The north should take the lead in developing mechanisms to use local resources to the greatest extent possible.
Once again, I stress that every economic sector requires careful consideration in the balanced socio-economic mix of the north. The budget addresses this principle in the way it deals with various aspects of the economy. As the Minister of Finance emphasized, it is essential to maintain our competitive position, and we must strengthen our efforts to encourage investment and growth in all the regions of Canada.
Two highly important measures that will stimulate basic northern economic sectors are the changes in the investment tax credit and changes in the treatment of eligible deductions for mines. The investment tax credit is being raised indefinitely from 7.5 per cent to 10 per cent for investments in the Yukon and Northwest Territories. In addition, a basic 7 per cent credit will now be available for investments in rail, water, air and long-haul road transportation. The current write-off for development expenditures in mining is to be raised from 30 per cent to 100 per cent. Earned depletion allowances for new mines will include townsites and social assets; and the fast write-off for pollution control equipment will be extended indefinitely.
It has been said more than once that as the mining industry goes, so goes the north. That concept is too simplistic by itself, but embraces some truths that recognize the very real significance of mining in the economic and social fabric of the north. These measures will assist the mineral and transportation sectors. It is estimated that the changes will provide several million dollars of additional tax savings for new northern mines.
This budget applies quite specifically to northern needs. Prehistoric forces of nature deposited their resources with little regard to the convenience of modern man. To put it another way, mines are built where the minerals are, and if that happens to coincide with our limited settlement of the north it is purely by accident. What could be more practical in north-
The Budget-Mr. Faulkner
ern terms than the increased depletion allowance for townsites to complement new mining ventures?
The northern economy is certainly fragile. Thirty per cent of all private sector employment is in mining-a situation which dictates that we must be sensitive to the needs of that industry, while keeping an eye on the requirements for diversity. To this end, the 7 per cent investment tax credit for transportation equipment could have implications on several aspects of northern transportation. The White Pass and Yukon Corporation, where a number of capital improvements to its railway are required, could use it to advantage. For example, on a $6 million capital investment, the corporation stands to gain a $420,000 tax credit. Some northern aviation companies may require new or more efficient equipment. The tax credit should encourage these firms to purchase such aircraft, resulting in improvements to this service so vital to communities separated by such vast distances.
The value of continued incentives for frontier oil and gas exploration is recognized in the extension of the drilling fund incentives until December 31, 1981. This extension will provide Canadians with a continued opportunity to participate in the exploration programs and provide northern explorers with valuable alternative sources of domestic capital. This is particularly important as exploration progresses in the offshore areas, such as the Beaufort Sea and the Sverdrup Basin, where each well may cost $40 million or more.
In addition, it should not be forgotten that if natural gas in the Arctic Islands is developed using LNG tankers, the investment tax credit will be both an incentive to develop the gas deposits earlier and a further incentive to build the ships in Canada.
Mr. Speaker, it should be recognized by now that the government's continued attention, through this budget and other measures, encourages renewed confidence among northerners and others with an interest in the north. As I said earlier, the budget addresses the basic needs and complements government initiatives which are already in play.
I think it is fair to say that my relations with the mining industry earlier this year were much less settled than they are today. This is a moment of modesty in the speech. The budget has had a substantial influence on that upturn.


Some hon. Members:: Oh, oh!


James Hugh Faulkner: Mr. Speaker, I am glad to see that the opposition is still awake. It is unusual to see them still alive and well on a Friday afternoon.


Stanley Howard Knowles: It is nice to have you here.


James Hugh Faulkner: I might add that maintaining a consistent equilibrium between the social and economic forces at work in the north requires constant adjustments: sometimes the scales tip in favour of one or the other before the balance is restored.
80067-23y2

November 24, 1978
The Budget-Mr. Faulkner
The northern mining industry and my department are just now going through a distinct phase in this ongoing process. A few months ago, industry representatives were clearly anxious about one or two of the courses we were following. We recognized they had legitimate concerns, so last month I met with mining industry officials in Yellowknife and invited them into the process of planning a comprehensive mineral strategy for the north. At the time, we agreed to assemble a joint industry-government consultative committee to develop that strategy. Its first meeting took place in Edmonton this week. I have also appointed a special adviser, nominated by the industry, to keep me abreast of its requirements and to support the consultation process.
I understand that both my own and the government's initiatives in the budget are receiving an encouraging response from people who are affected by them. After our meeting in Yellowknife, the president of the Yukon Chamber of Mines acknowledged that together we had made more "substantial progress". He further declared-and I am using these quotes very carefully and not taking them out of context-that:
We recognize that this direct participation of the industry ... in the development of major government policy as an unusual and innovative step.
I understand that even the hon. member for the Yukon (Mr. Nielsen), in what must have been something of a lapse for him, said the budget was very good news.
The hon. member for Peace River (Mr. Baldwin) mentions the vote. The vote went like this, Mr. Speaker: 37 per cent for the Conservatives, all the rest against. The majority were against-something like 68 per cent. The trouble with the vote is that those who were against were somewhat divided amongst themselves. Next time there may be a greater degree of cohesion.
Mr. Speaker, if I may continue to inform the House about the development in the north-I know the Conservatives are not particularly interested in the north but we on this side have a great interest, seeing it as the frontier of Canada, and we are attempting to address some of these issues this afternoon.
If I may, without further interruption from my friends opposite, I should like to take a moment to outline to the House a couple of other steps the government has taken in recent months that have encouraged confidence among people who depend on a healthy northern economy. Last May I convened a conference on economic prospects in Hay River which brought together for the first time, people from all walks of life and divergent interests throughout the Northwest Territories. Delegates at that conference developed a framework for working towards a balanced economy. By and large they were talking about general principles, but since then we have been tackling the specifics.
Among the most visible evidence of economic progress has been the numerous offers of financial assistance to small industry in the north. From May to mid-October, about $600,000 was committed to a wide variety of local and community enterprises. Earlier this month an agreement between the government and the Yukon was announced which proposes to spend up to $ 11 million over three years for special econom-

ic stimulation and job-creation. Officials in my department have been working with the government of the Northwest Territories and other federal departments on several new initiatives which arose out of the Hay River conference. These programs are still in the formative stages, but I can tell the House what a few of them involve.
First are the measures to promote tourism. The Northwest Territories government is establishing a tourism division. My department, together with the Canadian government office of tourism, the territorial government and the travel industry association of the Northwest Territories will be undertaking a $100,000 study to develop an integrated tourism strategy.
Second, through the special ARDA program, capital assistance is being made available to increase the amount of intersettlement trade in such things as country foods. Training and managerial assistance will also be provided.
Third, assistance to improve the harvesting, processing and marketing of products from both the sea and the land is another area of activity at which we are looking. For example, Inuit harvesting of seals in the Northwest Territories provides an important source of food for local consumption, and the sale of sealskins is a major income factor.
An August conference in Yellowknife brought together all of the participants in sealskin harvesting, followed by a review of the market's quality requirements. Sealskin prices, which were depressed in 1977-78, have more than doubled since January, and with a new insight into market needs the industry will be better able to profit from this upturn.
Mr. Speaker, these are just a handful of the deliberate measures which are being taken to break the spell of postpipeline depression in the Northwest Territories, particularly the Mackenzie Valley. The government is also ready to meet unique circumstances when they arise-such as in the case of the recent setback in Frobisher Bay when weather conditions prevented a supply ship from unloading its cargo. The consequences could obviously have been dire for the people in Frobisher, but we gave the authority to go ahead and fly the materials in. Those flights are now en route.
Before I conclude, I would like to turn my attention to the role that land claims play in the northern economy. The House is well aware of the effects of culture clash that native people have suffered since this country was traversed by early explorers and traders. The legacy of anguish for native people that lay in the path of those early adventurers and the settlers who followed them is still straining our ingenuity. It is still draining the energies of natives and non-natives generations later. In a few relatively short decades, settlement and development have already had a dramatic impact on the north. We are on the threshold now of breaching workable accord with northern native people so that development can proceed with minimal injury to their traditional way of life and livelihood. But it would be negligent, Mr. Speaker, to say there will be no more development until we settle land claims. That would be unreas-listic and unworkable.
November 24, 1978

Furthermore, I am convinced that the best way to achieve the objectives I outlined earlier is through settlement of comprehensive native claims. That is the way to secure their traditional economic base: that is the way northern native people will become equipped to make the choice between their traditions and the mainstream of Canadian society. Land claims agreements are the best method available for them to strike their own balance between these alternatives. I can assure this House that the priorities in this matter will not be neglected by this government.
Hon. members opposite may find that amusing. I must express my concern at this point that the matter of land claims is not a subject that has ever been addressed by the party opposite. I think it would be interesting for us to know what their position would be in terms of a comprehensive land claim settlement.
We are attempting to resolve land claims wherever there is a demonstrated willingness on the part of native people to negotiate. Mr. Speaker, it takes courage to make these kinds of choices and I want to tell you about some people who have that kind of fortitude. Only a few weeks ago, an agreement in principle was signed in Sachs Harbour with the committee for original peoples' entitlement covering the Inuit of the western Arctic. That agreement, which forms the basis for a final settlement, protects the traditional economic base of the Inuvialuit. Other measures are designed to encourage the Inuvialuit to diversify their traditional economy and to participate on their own terms with development interests.
It has not been easy for the Inuit of the western Arctic, and particularly their leaders on whose shoulders rests the responsibility for generations to come. Changes of this magnitude and the options they present are profound: but the Inuvialuit have recognized the necessity to make those choices now and have had the moral conviction to follow through.
With their inspiration to guide us, I am confident that there are ways to achieve the balanced economic opportunity necessary to protect native and non-native interests. The consequences of imbalance are awesome, but there is reason for us to be optimistic. The kind of co-operation that has been demonstrated since the Hay River conference, the complementary measures in this budget and the example of the Inuvialuit lead me to believe that the solutions are at hand-they rest with the goodwill and resourcefulness of dedicated people, and I have enough faith to believe it can be done.


Walter David Baker: Mr. Speaker, would the minister permit a question?


James Hugh Faulkner: Yes.


Walter David Baker: Mr. Speaker, could the minister tell us at what stage in the amending and consideration process of the cabinet are the amendments to the Northwest Territories Act requested by the legislature of the Northwest Territories in a letter written by their speaker, Mr. David Searle, to the Commissioner, Mr. Drury?
The Budget-Mr. Siddon


James Hugh Faulkner: Mr. Speaker, yes, I am pleased to respond to that question. The amendments are now through cabinet. They are out of the Department of Justice. They are about to go to the legislation and House Planning Committee and I would expect, with the co-operation of all parties of this house, that we would have this bill in this House before Christmas.
May I just take advantage of the opportunity afforded to me by the question, to express appreciation to the hon. member and his party for their support in giving us all three readings, it is understood, with one speech per party. I understand that we may have the same agreement with the other parties, but discussions are still going on. If we have that, i think we could get the bill through the House quickly.


Walter David Baker: Mr. Speaker, I want to take the opportunity to assure the minister that there have been appropriate discussions. On behalf of the Progressive Conservative party, I can say to him that we are prepared to do that.


Stanley Howard Knowles: Mr. Speaker, I rise on the same point of order. May I just say the matter is under consideration.


Mr. Thomas Siddon (Burnaby-Richmond-Delta):: Mr. Speaker, it gives me great pleasure to appear before this House to offer some observations on the budget which was introduced last Thursday by the Minister of Finance (Mr. Chretien), to speak both as a candidate in the recent by-elections and as a representative of the people in Burnaby-Rich-mond-Delta.
I am not usually known to express gratitude in a profuse fashion. However, I would like to begin by complimenting the Minister of Finance for some of the economic initiatives undertaken by this budget. Many of them look surprisingly familiar to me. Having been a candidate for some months and having studied the policy documents of my party, I found a remarkable similarity in some of the short-term initiatives which the Minister of Finance announced in his budget.
I would like to back away from the question of specific initiatives announced in the budget and talk for a few moments about the question of budgeting from a more general point of view. In my mind-and the minds of many constituents from western Canada-the trend of the current government is to lead this country into an unprecedented economic crisis. This has been ably described by my colleague, the hon. member for York-Simcoe (Mr. Stevens). We have a situation in 1978 where government spending, which is at a level of $50 billion, is arcing up in an ever increasing curve because of the complications of high interest rates, devaluation of the Canadian dollar relative to its American counterpart, indexing of expenditures in the forms of salaries and other costs to government, and, in general, inflation.
Similarly, we have a situation where revenues of government-$35 billion for the fiscal year-are not growing nearly as rapidly. They are in fact arcing on a downward curve. That results from the tremendous increase of disincentive in our society. The consequence has been higher and higher rates of

November 24, 1978
The Budget-Mr. Siddon
unemployment. And now the tax rollbacks, which are necessary to get this economy working again, will further hamper the growth of revenues needed to offset spending. I do not advocate increases in taxation as a means of disposing of this problem. The big problem is the question of waste, the question of the ever growing margin of difference between the spending of government on the one hand and the revenues received on the other.
Canadians, and this includes members opposite are facing a devastating crisis. It is somewhat like approaching the edge of a cliff which is crumbling away and dumping load after load of rock and rubble over the edge to enable one to walk farther and farther out over the precipice. Mr. Speaker, the almighty collapse is soon to come if we do not take strong measures to implement means of restraint and to eliminate waste. This country is in for some devastating times in the decade ahead. In other words, a budget should offer more than a recitation of mere platitudes and half measures to stimulate. It should be more than a bump here and a bump there. A budget should deal positively with the question of restraint. It should deal with new initiatives to control the growth of government.
Indeed, given the present circumstances, it should stop the growth of government. A budget must provide all the information necessary, not only part of it, to restore the confidence of Canadians in the government which is managing their resources.
I suppose I entered political life at the federal level primarily because of the concerns I felt over some of the things our Prime Minister (Mr. Trudeau) was saying some ten years ago, of which Canadians did not take note. At one point, around 1969 I believe, he made the following statement which I quote:
I suppose one has to be in the wheelhouse to see what shifts are taking place. I know that we have spun the wheel, and I know that the rudder is beginning to press against the waves and the sea . . . but perhaps the observer who is on deck and smoking his pipe or drinking his tea ... doesn't realize it; perhaps he will find himself disembarking at a different island than the one he thought he was sailing for.
I submit today, hon. members, that indeed the Prime Minister has been leading this nation on a voyage-a long voyage to fantasy island-an island as fantastic as the one depicted in the television series of the same name. In those days the Prime Minister also suggested that the Liberal party may turn out to be somewhat different than what we had traditionally come to regard as the Liberal party, a party which developed with some degree of respectability over the past century.
I submit to hon. members opposite that if they looked back over the last ten years they would see that the Liberal party has changed tremendously in terms of its approach to economic matters, under the leadership of the present Prime Minister.
The first thing we must do in dealing with the budgetary question is to predict the anticipated spending for the next year. Then we estimate the revenue available. Finally, we find ways to balance the budget. I know that the concept of balancing budgets sounds strange in a modern industrial world so dependent on investment; investment in our future. By failing to distinguish between capital spending, that is five-

year long-term budgeting, and an annual operating budget, this government has allowed the country to run uncontrolled for far too long. The people of Canada do not know what portion of the accumulated debt is purchasing real equity investment in the future of this country and what portion is being wasted through the many extravagant forms of abuse of access to the taxpayers resource.
I am disappointed that the budget introduced by the Minister of Finance does not come to grips in any way, shape or form with the question of controlling the rate of growth of government spending and eliminating the tremendously wasteful habits of the present government. These are ably documented in the one hundredth annual report-a condemnation of this government-which was filed yesterday by the Auditor General. The government cannot run the Post Office without incurring millions of dollars of debt. The government cannot run an airline without refinancing it from time to time with millions of dollars. These are either deficit dollars or taxpayers' dollars. How can this government propose to run a large corporation, such as Petro-Canada in an economically or fiscally responsible way?
The system of tax credits, the half measures, the gimmick-ery we are all talking about these days to get our economy moving forward again; the rebates, the filing of documentation back and forth with Ottawa to get a little off that tax penalty we are paying to the federal government, these are mere symptoms of the real problem in this country.
The real problem faced by the people of Canada is that taxes are too high in the first instance. I submit to this House that this introduces the concept of the tax revolt which was demonstrated in California in recent months. I submit that next June there will be a tax revolt in this country. The tax revolt will lead to the putting in place of a new government with new ideas to set the economy of this country straight.
This government is not totally honest. Perhaps that is a poor choice of words. This government is not telling Canadians the whole story when it files a statement such as the glossy budget of the Minister of Finance the other evening.
I wish to refer to some figures which the hon. member for Fort William (Mr. McRae) introduced into this House. He is not in the chamber this afternoon, but one evening last week he talked about the percentage of gross national product which rests in the form of debt. He pointed out that in 1952 we had
51.7	per cent of GNP residing in the form of debt, but that the percentage of debt, most of it having been accumulated through the war years, dropped to 18.7 per cent in 1978.
The hon. member for Fort William neglected to include figures for the years 1974 to 1978 which show that we went through, a minimum in those years in terms of percentage of gross national product, in the form of debt. The debt is beginning to take off again, not through the tremendous devastation and the costly burden of war, but because it is finally beginning to catch up and intrude upon the gross national product of this country in an ever increasing proportion.
November 24, 1978

I wish to produce some figures of my own. These are from Statistics Canada. In the fiscal year 1967-68, personal and corporate income taxes as a percentage of GNP were 6 per cent. In 1978, personal and corporate income taxes are 12 per cent of the GNP of this country, the GNP has grown, of course, but personal and corporate income taxes have doubled.
The tax bite this government is imposing upon the earners, profit seekers and risk takers of this country has doubled. Government spending has increased from 13.6 per cent of GNP in 1967-68 to 26.8 per cent of GNP ten years later. That is preposterous and unacceptable. Although the significance may seem lesser, it is significant that the percentage of gross government revenue, which is raised in the form of personal and corporate taxes, has increased from 50 per cent to 59 per cent in the past ten years. The burden of taxation on Canadians increased far in excess of reasonable proportion.
This takes us to a question of political philosophy. A government is elected to provide the basic essential services of government, and that is all, if we believe in the principles of free democracy. A government which does not put any burden on society-one which one might call a very extreme form of right wing government-is non-government; it is chaos. On the other hand, a government which wants to take all of the earned income of Canadians and put it into the funding of government, is an extreme left wing form of government. It is worse than democratic socialism.
There is an optimum level of taxation as a percentage of GNP. That optimum level was certainly less than 6 per cent for decades in this country. In the past decade, it has doubled to the point where it is 12 per cent. The people of Canada will not stand for it any longer.
I indicated that the government is not telling the whole story in submitting a budget and sending press releases to the media. When the government sends out information on the splitting up of the pie, it sends out circular disks to show what proportion goes to what. It should be straightforward and fair in reporting that information.
In the Canadian Press last week, I noted such a sketch which showed the expenditure dollar and the revenue dollar. Unfortunately they were both shown the same size. In fact, in the coming year this government will spend $1.35 for every one dollar it receives as revenue. I believe the people of Canada should be told of that fact. The Mint will have to begin stamping out rubber dollars.
On the expenditure dollar, as reported to the press last week, there is a 14 per cent pie shaped wedge called debt. That is not the debt. That is the debt charge of the interest on the debt. It leaves the impression that our debt is 14 per cent of the government budget for the coming year. It is not. It is 35 per cent, plus the interest on that debt, which in the coming year will be in excess of $8.5 billion.
The government must level with the people of Canada. It must tell the people of Canada what the elements of the gross public debt are, a public debt now in excess of $70 billion,
The Budget-Mr. Siddon
more than half of it having been accumulated in the past ten years since this government has been in office.
How much is held outside Canada? How much is caused by waste, as reported by the Auditor General? How much is internal debt held in the form of Canadian notes, Canada Savings Bonds and term deposits in bank accounts? The people of Canada should know to what extent we are beholden to economic powers external to our nation. The government should tell the people of Canada what would happen if public confidence in Canada Saving Bonds was suddenly shattered.
What would happen to the economy of our country? Can we continue to rely on Canada Savings Bonds to bail out a government whose costs are offset by debt? There is no speculative capital in Canada; it is all in the form of bonds and term deposits. Therefore we must continue to encourage foreign investment in this country. As long a we have little old ladies in Connecticut and financiers in West Germany who are prepared to take a risk when Canadians are not, we must continue to welcome their investment in this country because investment produces jobs.
If the profit elects to go elsewhere, so be it until Canadians take hold of their own country. Why should we be debtors in a world where there are creditors? Why should we be debtors in a world when we have such tremendous natural resources to put at the disposal of our fellow Canadians, and indeed people in the rest of the world?
Let us get back to basic economics. Let us talk about balanced budgets. Let us not say it is a pipedream. If we do not believe in the ideal that we can balance the annual operating budget of this country, then let us forget about democracy because it just does not work when you start putting up borders and, borrowing money from other nations. You become beholden to them in order to keep your head above water.
My time is coming to an end, I believe, or do I have more time?


Steve Eugene Paproski: Go ahead.


Thomas Edward Siddon: I recited some statistics which showed that the tax bite imposed on ordinary Canadians has doubled in the past ten years. As the tax bite on the individual wage-earner and investors in our society increases, what happens to efficiency? Efficiency decreases because governments become irresponsible in the manner in which they dispose of the assets of the hard-working people who earn them.
What happens to waste as the tax bite increases? It is easy to get money if you take it out of the pockets of the Canadian wage earner or borrow it from West Germany, or wherever. The government has become wasteful. When governments become inefficient and wasteful, they become secretive. The hon. member for Peace River (Mr. Baldwin) has had much to say about the question of government secrecy and restriction from this parliament of the decisions on which government spending is based.

November 24, 1978
The Budget-Mr. Marchand
As the percentage bite of taxation on individual earners in this nation increases, it destroys incentive, then the only way to even come close to balancing the budget is to incur more debt.
Getting back to the question of foreign investment for a moment, there are certain political philosophies in this country which regard profit as a dirty word, whether it is earned in Canada or anywhere else, because somebody is getting that profit. I would rather have Canadians attaining a profit so that we can have productive industries in this country than have foreign lenders charging us enormous, staggering levels of debt interest. They help us maintain a false sense of security and a false sense of well-being based entirely on debt dollars. That attitude which allows an increasing imposition on the ordinary wage-earners of this country is tied in essentially to the whole concept of Keynesian economics-that we can continue to borrow more and more and continue to print paper dollars. But sooner or later someone else is going to keep the profit. We will become so far in debt that we will have to put up walls, ever-increasing levels of tariff protection, to pay the high wages and accept the low productivity which comes from an inefficient society, a society where it does not matter if you work or not. What do we then become? Look at the example of the countries which belong to the Soviet bloc. I submit that if we value our freedom we cannot afford to build these walls around Canada. We have to trade competitively in an international world. Our labour has to work for competitive rates of compensation and our tax system has to be competitive with that of our immediate neighbour, the United States.
I have not talked much about specifics, but I should like to-


Mr. Deputy Speaker:: 1 am afraid the hon. member will not have time. His time has expired.


Thomas Edward Siddon: I should like to have a closing word, Mr. Speaker.


Mr. Deputy Speaker:: The only way to do that is by unanimous consent. Is there consent to allow the hon. member a closing word?


Some hon. Members:: Agreed.


Thomas Edward Siddon: I do not believe we want a dual monetary system that keeps people locked in this country. I think we should listen to the things our Prime Minister has been saying. He says we must accept more authority in our lives, one party democracy-that seems to be a concept of his-and we should consider that we might be going in a different direction than the one in which we thought we were setting out. I ask hon. members to consider these facts and to consider that this budget is far less than adequate in coming to grips with the problems which confront our economy.


Len Marchand: Thank you, Mr. Speaker. I have been losing my voice today so I am not sure how long I shall be able to carry on, but I will do

my best. First, I should like to congratulate the hon. member for Burnaby-Richmond-Delta (Mr. Siddon) who has just resumed his seat. I understand this was his maiden speech.


An hon. Member:: No.


Len Marchand: Maiden speeches in the House of Commons are all special occasions for hon. members. I cannot be so generous as to say I agree with everything he said. He was preceded in this chamber by two distinguished members from Burnaby-Richmond-Delta, Tom Goode, whom I knew very well, and John Reynolds, whom I also knew very well. They were both distinguished members who always addressed themselves to this chamber in a very good manner. I expect the hon. member will want to carry on the high tradition of his predecessors and, of course, the high tradition of this House.
Before I get into some of the notes I have here, I want to say in a general way that as a British Columbian I welcome a number of portions of the budget. One portion of the budget I particularly welcome is that which refers to the mining community. If anything needed a shot in the arm in British Columbia, it was the mining sector. It is a very important sector of the country and a very good sector of the economy of British Columbia. Coming closer to home, it makes a very important contribution to the economic life of Kamloops-Cariboo.
There are some on the other side who have said that the budget presented by the Minister of Finance (Mr. Chretien) was cautious and unimaginative. Of course, there are always those on the other side who will say he has not gone far enough with respect to whatever happens to be their favourite target. If it is a cautious budget, I will not fault my colleague for that, given the delicate balance which has to be maintained, with respect to inflation, unemployment, economic development and the health of the Canadian dollar abroad. We certainly do not need any of the imaginative flights of fancy suggested by some hon. members opposite for the financial management of the country.
One of the areas in which the Minister of Finance and the President of the Treasury Board (Mr. Andras) have quite rightly insisted on caution and restraint is in the field of total government expenditure. We have reduced planned expenditures for 1979-80 by $2.5 billion as a painful though necessary part of bringing government expenditures into better balance.
My department, the Department of the Environment, has, of course, made its contribution, and a significant one, to this necessary restraint program. Next year we shall be reducing planned expenditures by more than $40 million, and if anyone thinks this is a fictitious reduction, I shall be glad to demonstrate in some detail that it is very real. It is never an easy matter to cut one's budget, but we in the Department of Environment realize that cutbacks have to be made and rather than suffer because of this, we have honed our operation down to essential programs and activities. Where possible, as in the case of the Petawawa Forestry Experimental Station, we have combined rather than terminated programs. Certainly, the cutbacks were hard to make, but while accepting the necessity
November 24, 1978

of these reductions, we did not resign ourselves to the idea of a poorer operation. On the contrary, we were guided by one principle, that of getting more for less from our department. Because of this commitment, we have produced a leaner and more efficient operation. We have, in short, produced a richer though less expensive Department of the Environment. We remain as strongly committed as ever to preserving and, indeed, to enhancing the quality of the Canadian environment, not just for those of us who want to enjoy it now but for future generations. The environmental decisions we make today will determine to a large extent the quality of the environment we pass on to future generations, and it is by the quality and wisdom of these critical decisions that we shall be judged.
I have said we are determined to maintain the most important work of this department even in times of needed budgetary restraint. Perhaps by way of illustration I should give the House a few examples of what the department actually delivers. Two days ago my colleague, the Secretary of State for External Affairs (Mr. Jamieson) signed with the United States Secretary of State a new Great Lakes water quality agreement to replace and extend the one originally signed in 1972. That first agreement undertook to reduce levels of pollution in the largest body of fresh water in the world. In successfully doing so, we set an example of international co-operation which has been remarked upon throughout the world. Great progress has been made in overcoming the sources of pollution of the Great Lakes, and with the signing of this new agreement we have committed ourselves to completing the revitalization of the lakes. Strict deadlines have been set for both municipal and industrial pollution control programs. Measures will be taken to largely eliminate the discharge of toxic substances into the lakes. New water quality objectives have been set and renewed attention will be given to the reduction of pollution from land use activities and from airborne pollutants. This major project, which brings together the governments of Canada, Ontario and the United States, continues as a high priority for my department because we can already see tangible results.
Another example: I mentioned the Petawawa Forest Experiment Station earlier. The preservation of that station in the face of our heavy budget reductions was one of the toughest chores the Department of the Environment faced. The goal of achieving more for less will, in this case, be accomplished by consolidating the work of the Forest Fires Research Institute and the Forest Management Institute with that of the Petawawa station. Because of this consolidation, which preserves and integrates the most vital elements of the station and the two institutes, we will have one of the most valuable forestry research resources in the world.
Forestry remains of primary importance to me and to the federal government. Even with the cutbacks, federal funding of forest management programs will actually increase through the use of DREE and Canada Public Works dollars with the provinces.
The Budget-Mr. Marchand
There is a growing recognition of the overwhelming importance of a strong forestry sector to Canada's economy, especially to our balance of payments and employment picture. In addition, it is increasingly understood that Canada's economy could be dealt a severe blow without measures to keep the cost of timber low, to keep the Canadian industry technically competitive and to stimulate the use of forests for new products, such as energy, chemicals and foods.
These facts are well known by members of the forestry fraternity, but only lately have they been gaining wide enough acceptance to be discussed by first ministers and to result in new federal programs in the coming year which will channel an estimated $49 million in federal funds to the provinces for reforestation, timber salvage and intensive forest management. The recognition of the importance of forests in meeting energy needs is reflected in two recently announced federal programs. These are the $143 million program known as FIRE to help the forest industry use wood wastes rather than oil and gas as a fuel source, and the $35 million ENFOR program for research and development on the use of biomass as a source of energy. In both these cases, the Canadian forestry service of my department has played a key role in providing technical input to the programs.
All of this indicates that a national forestry service remains vital to Canada. However, important shifts in program emphasis and new arrangements with the industry and the provinces are needed.
The Canadian Forestry Service will move toward a direct role with the research to support it, specifically in four areas. First, CFS will continue to play the leading role in federal forestry matters. This leadership will be based on the sound scientific knowledge which comes from a research program directed toward economic, physical and biological problems of federal interest. Second, CFS will bring a knowledge of the forest and vegetative environment to departmental decisions and policies on environmental management and protection. Third, CFS will work with the provinces to provide knowledge needed in direct forest management and protection. Fourth, CFS will work with industry to ensure provision of knowledge required for new product development and maintenance of the vitality of the forest industry.
For the First of these, federal policies and actions in taxation, transportation, trade, international relations and other fields can profoundly affect forests and the forest industry. International movement of damaging forest insects and diseases must be better controlled. Research and information programs in a number of areas, including national forest management and energy from forest biomass, are all of high priority if we are to provide the expertise needed to ensure that federal programs and actions are scientifically sound. To be effective, the Canadian Foresty Service will have stronger supporting mechanisms to ensure that all federal departments and all provincial governments are able to take full advantage of the available economic and biological knowledge.
As for the second responsibility, the CFS must conduct research and collect data on the impact of pollution on trees
1500

November 24, 1978
The Budget-Mr. Marchand
and other vegetation. The evironmental effects of forest management and exploitation practice must also be examined.
In working with the provinces it must be recognized that some of the research needed for federal purposes is also required by the provinces for the discharge of their management responsibilities.
In such cases provinces should assist in funding research needed to meet their needs. The CFS will negotiate this point with the provinces on the basis of research support, especially at the regional forest research centers.
A similar approach is required where forestry research and data collection in any way benefits industry. Like the provinces, industry should assist in the funding of such work. Federal contributions to forest products, forest engineering and pulp and paper research should cover research needs for policy input to federal agencies, support research needed where there is a large number of small companies unable to support their own research needs individually and ensure that nationally and internationally accepted codes and standards apply to Canadian forest products.
In short, to meet the needs of the next decade, the Canadian Forestry Service will, first, increase studies of economic and institutional aspects of forestry in Canada. Second, it will establish mechanisms at headquarters and in the regions to combine these studies with information in the natural forest science to improve federal actions and policy making affecting forestry and the forest industry. Third, the CFS will negotiate with the provinces a more realistic sharing of costs of research and data collection done in part, or largely, to meet provincial needs.
Fourth, the CFS will develop co-operative arrangements with industry to ensure direct financial contribution and management by industry of forest products and related research, while retaining federal financial and other involvement required for policy making to support small, scattered industrial enterprises and to establish and maintain suitable codes and standards for forest products.
When such changes are implemented, the Canadian Forestry Service will be able to play an enhanced role in forestry in Canada. Over the next decade and through the authority of its information base the service will assume increasing leadership of federal forestry activities.
Given the importance of forestry in Canada's economy, the enormous potential for growth and diversification of the forest based industry and the central place of forests in Canada's environment, the revitalization of the Canadian Forestry Service is one of the most compelling priority projects of the Department of the Environment.
The many different forms of life contained in our forests somehow manage to co-exist and to thrive. A natural system of management prevails which, though not completely understood by man, provides a benchmark by which all of our organizational efforts should be measured. We must try to integrate ourselves with this system if we are to prosper not only in our forests but also in our entire physical environment.

To this end every major federal project involving use of federal lands or federal funds is subject to the federal environmental assessment and review process. Agreed to by cabinet in 1973, the process was revised and given new strength in 1977.
Any projects likely to have significant environmental effects are subject to a study by an environmental assessment panel on the basis of an environmental impact statement submitted by the proponent. Panel reports have already been submitted to me with respect to matters as varied as the proposed construction of a uranium refinery near Port Hope, a highway in the far north of Canada and proposed drilling in the South Davis Strait.
Other panels are looking at proposed port expansion at Roberts Bank, a proposed port near Quebec city, three alternative sites for a uranium refinery, and the environmental terms and conditions which should apply to the Alaska gas pipeline. In all, there are over 20 major federal projects of this sort which are being subjected to environmental scrutiny by a variety of experts, an essential part of whose work is to hold public hearings so that we may hear what the affected public thinks of them. These panels, which report directly to me, are a major means of ensuring that the federal government in its activities acts in an environmentally responsible fashion.
I do not have enough time, Mr. Speaker, to detail all the work my department is doing and will continue to do in its regulatory activities for the protection of the Canadian environment. In this regard, it acts under the authority of important pieces of federal legislation-the Fisheries Act, the Clean Air Act, the Environmental Contaminants Act, and the Ocean Dumping Control Act.
In this important part of its activities my department is fully aware of the economic implications of our regulatory work, as well as the need to work as closely as possible with the provinces, in a way which recognizes the need to take into account the often conflicting uses of the physical environment. Our regulations and our guidelines will increasingly be developed in collaboration with our provincial counterparts and with those knowledgeable about the precise impact in both physical and financial terms of the regulations on the industry which will be affected.
In these days of growing concern about the total impact of the regulatory activities of governments on the economy, my department is working actively to implement the policy of this government which requires that each new major regulation in the field of safety, health and fairness be accompanied by a justification. The justification must take into account not only the costs, but the benefits to be derived from it. We must be willing and able to demonstrate that the costs we are placing on the Canadian economy are justifiable ones. Not only the immediate short-term impact on the affected industry must be considered, but any long run implications to the physical environment as well.
It is this balance of all our attempts to live as well as possible within our environment and our attempt to let our
November 24, 1978

environment live as well as possible around us, that concerns the Department of the Environment. We can change our surroundings for our betterment, only if we accept and understand that we are dealing with an ecosystem of which we are a part. Our environment measures our actions carefully and responds accordingly. We will continue to be graciously accommodated by our surroundings only if we reciprocate. Knowing how to do this-divining a sort of environmental protocol-is the goal of my department.


Mr. Parker:: Mr. Speaker-


Mr. Matte:: Mr. Speaker, I rise on a point of order. Having tested my patience to the limit, I should like to request the unanimous consent of the House to participate as well in the budget debate.


Mr. Deputy Speaker:: I have already recognized the hon. member for Eglinton (Mr. Parker). The decision is no longer in the hands of the House; it depends entirely on the hon. member for Eglinton. If he wishes to yield, he may do so, but as far as I am concerned, I have already recognized the hon. member for Eglinton.


Rob Parker: I will try to leave a minute or two for the hon. member, Mr. Speaker. That is about all that it will take to demolish this budget.
In rising to speak on the budget, it occurs to me that there are a great many similarities between this document and the cabinet shuffle that we had this morning. Both contained some minor measures, in one case, the movement of some minor people; in both cases, striking up the bland. There is nothing important in either document. I will give the government some credit though because there are some examples of Conservative policy in the budget. There is a sales tax cut, an income tax reduction, improved procedures for research and development, and all of these are Conservative policy.
This morning when the Prime Minister (Mr. Trudeau) shuffled his cabinet, he eliminated the Department of Urban Affairs, and that too is Conservative policy. In fact, when you see all these things happening, Mr. Speaker, when you listen to that kind of hooraw-coming from the other side-it is a wonderful example of the awful things that can happen when cousins marry.
If you examine what the government has done, you might be led to conclude that the Minister of Finance (Mr. Chretien) or even the Prime Minister are trying for a seat on the benches over here. I have talked to my leader, and I know there is a seat waiting for them in the row immediately behind me.


Some hon. Members:: Oh, oh!


Mr. Deputy Speaker:: Order. I hope that hon. members will understand that the hon. member has only five minutes, and
The Budget-Mr. Parker
that it is his maiden intervention. I think hon. members should be fair to him.


Rob Parker: There is a difference between a non virgin and a prostitute, and undoubtedly the minister understands very well.
In the couple of minutes that remain, I would like to point out some of the ways in which the government has distorted figures used in the budget and in some of its accompanying documents. We are used to the idea that the government distorts figures to try to justify its miserable record of accomplishment. We have the CPI-2, which now leaves out the prices of food. The Prime Minister, in his speech to the Economic Club in New York said that, food excluded, the inflation rate is coming down. Presumably that means we will be all right if we do not eat.
In this budget the Minister of Finance noted that the indexing figure would be 9 per cent and indicated that for a family of four, that would increase the personal exemptions by S490. What he did not refer to was the fact that indexing has been part of the Income Tax Act for some time, and if he had not put it in at 9 per cent now, it would have been indexed by 8.6 per cent in any event, and that the net effect of his 9 per cent indexing is about $10 increase in exemptions. That is not all a tax saving, it is simply a reduction in taxable income. At an income tax rate of 35 per cent, it means that that individual wage earner would save about $3.50 which in many cities in Canada is enough to take him to a movie.


Mr. Deputy Speaker:: It being five o'clock p.m. it is my duty to interrupt the proceedings and put forward the question necessary to dispose of the question now before the House.

Mr. Chretien moves that this House approves in general the budgetary policy of the government. Is it the pleasure of the House to adopt the said motion?


Some hon. Members:: Agreed.


Some hon. Members:: On division.


Steve Eugene Paproski: On division.


Stanley Howard Knowles: On division.


Mr. Deputy Speaker:: Carried on division.


[Stage Direction]
Motion agreed to.
[ Translation]
It being five o'clock, the House stands adjourned until Monday at 2 p.m.
At five o'clock the House adjourned, without question put, pursuant to Standing Order.
80067-24'/2
[Stage Direction]
Monday, November 27, 1978