1978-11-16

ROUTINE PROCEEDINGS


Mr. John Wise (Elgin):: Mr. Speaker, I rise, under the provisions of Standing Order 43, on an urgent matter of national importance.
In view of statements made by the hon. William Newman, Ontario minister of agriculture and food, to the Ontario Dairy Council's annual convention to the effect that a shortage of industrial milk produced in Ontario is causing severe losses in terms of jobs, farm income and secondary economic growth, as well as a loss of export sales, particularly of Cheddar cheese, I would move, seconded by the hon. member for Oxford (Mr. Halliday):
That the Minister of Agriculture accept his responsibilities and convene a meeting immediately with the provincial ministers, the National Milk Supply Management Committee and officials of the CDC for the express purpose of amending the present rigid quota policy so as to take into account changing production and market demand within the provinces.


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.


TOURISM
Mr. Jack Murta (Lisgar):: Mr. Speaker, I rise, under the provisions of Standing Order 43, on a matter of urgent and pressing necessity, that being the proposed increases in the cost of air travel in Canada.
Domestic air fares may go up by an average of 5 per cent, airport taxes may be increased from $8 to $13, and landing fees may also be increased. Because of the negative effect this would have on the tourist industry in Canada, I ask leave to
move, seconded by the hon. member for Vegreville (Mr. Mazankowski):
That the government use its powers to stop these discriminatory and damaging increases which would deal a further blow to our tourist industry.


Mr. Speaker:: Presentation of such a motion, under Standing Order 43, can be done only with unanimous consent. Is there such consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


POST OFFICE
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, under the provisions of Standing Order 43, and seconded by the hon. member for Winnipeg North (Mr. Orlikow), I ask leave to move:
That this House calls on the Postmaster General to drop the idea of a further increase in the first-class postage rate, it being the view of the House that enough is enough.


Some hon. Members:: Hear, hear!


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


Some hon. Members:: Agreed.


Some hon. Members:: No.



Mr. Gferard Laprise (Abitibi):: Mr. Speaker, under the provisions of Standing Order 43, I ask for the unanimous consent of the House to move a motion dealing with an urgent matter of pressing necessity.
Considering that an international congress of the Lion's Club will be held in Montreal during the week of June 17, 1979, considering that the congress will be attended by more

November 16, 1978
than 40,000 delegates from 150 countries and principalities throughout the world, I move, seconded by the hon. member for Lotbiniere (Mr. Janelle):
That the House ask the Postmaster General to issue a commemorative stamp for that important event.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


HARBOURS
Mr. Fred McCain (Carleton-Charlotte):: Mr. Speaker, I rise, under the provisions of Standing Order 43, on a matter of urgent and pressing necessity.
In light of the fact that the National Harbours Board is considering establishing a terminal operator in the Navy Island forest products terminal at the port of Saint John, and in view of the fact that it is considering awarding that title of operator to a Montreal consortium of stevedoring firms, while rejecting a consortium of New Brunswick forest products producers, I would move, seconded by the hon. member for York-Sunbury (Mr. Howie):
That the Minister of Transport personally investigate this matter to ensure that no change in terminal operations is considered until full consultation has taken place with the New Brunswick forest products industry so that the industry will be a part of the decision-making process.


Mr. Speaker:: Presentation of such a motion, under Standing Order 43, can be made only with unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


CONSERVATION
Mr.   Chas. L. Caccia@Davenport: Mr. Speaker, I have a motion under Standing Order 43 with respect to which there seems to be a consensus in this House.
In view of the importance we attach today to conserving our forest and energy resources, given the cords and cords of wood consumed by hon. members in the form of paper subsequently

discarded, and in view of the opportunities for recycling waste paper in the Ottawa-Hull region, I ask leave to move, seconded by the hon. member for Victoria (Mr. McKinnon):
That this House set an example to the country and instruct the Sergeant-at-Arms to take prompt action and make the necessary arrangements to have the paper discarded on Parliament Hill recycled by the industry.


Mr. Speaker:: Presentation of this motion, under Standing Order 43, can be made only with unanimous consent. Is there such consent?


Some hon. Members:: Agreed.


Mr. Speaker:: The House has heard the terms of the motion put forward in the name of the hon. member for Davenport (Mr. Caccia), seconded by the hon. member for Victoria (Mr. McKinnon). Is it the pleasure of the House to adopt the said motion?


[Stage Direction]
Motion agreed to.

Mr. Fonse Faour (Humber-St. George's-St. Barbe):: Mr. Speaker, under the provisions of Standing Order 43, I move, seconded by the hon. member for Broadview (Mr. Rae):
That this House direct the government to discontinue its plans for the termination of the community employment strategy program in the western part of Newfoundland and, in particular, the Labrador Straits community employment strategy association and the Port au Port community employment strategy association, it being the view of this House that to discontinue these programs at this point, when local associations have strategies in place, without adequate provisions for implementation will tend only to undermine local community efforts to foster local development.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


CANADIAN WHEAT BOARD
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 U.S. Secretary of Agriculture that China plans to increase its purchase of American grain, in view of the fact that so far this year China has purchased 4.35 million tonnes of American wheat and
November 16, 1978

corn, of which 3.3 tonnes was wheat, and in view of the fact that traditionally the Chinese market has been a Canadian one, I move, seconded by the hon. member for Lisgar (Mr. Murta):
That the minister in charge of the Canadian Wheat Board take immediate steps to arrange for the appearance of Wheat Board officials before the Standing Committee on Agriculture to explain the reason for the loss of the Chinese market and other problems in the movement and sale of grain.


Mr. Speaker:: Such a motion can be introduced for debate at this time, pursuant to Standing Order 43, only with the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


LABOUR RELATIONS
Mr. John Rodriguez (Nickel Belt):: Mr. Speaker, I rise, under the provisions of Standing Order 43, on a matter of urgent and pressing necessity to seek the unanimous consent of this House.
In view of the fact that local 6500 of the United Steel Workers of America has been on strike against the International Nickel Company of Canada for over eight weeks, that Inco has always forced its workers into strikes, even when nickel markets were good, and that this government stood by and was powerless to act when Inco laid off about 2,600 workers last fall, I move, seconded by the hon. member for Sault Ste. Marie (Mr. Symes):
That this House instruct Inco to get itself back to the bargaining table and to offer its employees a better package than it has offered to date.


Mr. Speaker:: As a result of recent discussions, I think hon. members will recognize that a minimum precaution which I ought to exercise, even with regard to Standing Order 43, is that motions have to be within the administrative capacity of the government, which this one does not seem to be.



ORAL QUESTION PERIOD


Mr. Bill Kempling (Halton-Wentworth):: Mr. Speaker, my question is for the Minister of Industry, Trade and Commerce. An analysis of imports and exports of high technology end products indicates that our position deteriorated in the first
Oral Questions
two quarters of this year. We showed a deficit of $4.7 billion for six months.
Can the minister de-bag these facts as produced by Statistics Canada, and is this the rosy trade picture about which the minister talks?


Hon. Jack H. Horner (Minister of Industry, Trade and Commerce):: Mr. Speaker, I am not aware of the analysis to which the hon. member refers. I will look into it. But I am quite confident that we have made gigantic strides forward in the export of end products from our country this year.


William James Kempling: Mr. Speaker, this statistic was produced by Statistics Canada and it is available to the minister. Can the minister explain why, after the government accommodated the formation of CAMCO an attempt to rationalize the white goods and appliance industry, we are importing more than $863 million worth of domestic and commercial heating, refrigeration and air-conditioning appliances? That is a very significant market. What efforts is the minister taking, or is he going to take, to see that some of these products are produced in Canada?


John (Jack) Henry Horner: Mr. Speaker, we are making great efforts to encourage Canadian production. We recognize that we must rationalize manufacturing for many of our requirements in order to meet competition. I believe that over the last six years we have lent about $600,000 to the company to which the hon. member referred. However, I would like to check the facts. We have certainly attempted to keep manufacturers in business so that they can sell to the Canadian market.


William James Kempling: Mr. Speaker, I have a supplementary question for the minister. The Canadian machinery industry experienced a net deficit of more than $7 billion in the first six months of this year. Would the minister advise us whether he considers a $7 billion domestic market to be a significant market, and can he explain why reports out of Geneva suggest that the Canadian machinery industry will not survive the GATT negotiations?
Put another way, does the minister support the sell-out of the very significant market in Canada for the machinery industry?


John (Jack) Henry Horner: Mr. Speaker, $7 billion, in relation to $11 billion, is less. I think the hon. member is reaching conclusions which are not at all well-founded. 1 believe very strongly that there is a growing market for the Canadian machinery industry in Canada, and we will do everything we can to make certain that that industry reaches its goals.


DEFICIT UNDER CANADA-U.S. AUTO PACT-REQUEST FOR REGULAR CANADIAN REPORT
Mr. Allan Lawrence (Northumberland-Durham):: My question is for the Minister of Industry, Trade and Commerce. Why does Canada have to continue to rely on reports from the
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November 16, 1978
Oral Questions
United States Secretary of Commerce to indicate how large our deficit is growing under the auto pact? When will the minister produce a Canadian auto industry report on a regular basis?


John (Jack) Henry Horner: I intend to release, I think on November 23, the Reisman report with regard to the auto industry. As I said about a week ago in the House, this year our deficit in trade in automobiles and auto parts between Canada and the United States is half of what it was a year ago, a reduction of something like $600 million, which is quite a substantial reduction as I am sure even the hon. member would agree.


Allan Frederick Lawrence: It is still a $10.3 billion deficit accumulation, Mr. Speaker. For some time conditions looked very favourable for a new, multimillion dollar aluminum engine block foundry and plant to be located in the province of Quebec: it looked favourable until the Minister of Industry, Trade and Commerce got into the act. It is now apparent that General Motors will not proceed with it. Can the minister indicate what he did that turned them off?


Mr. Jamieson:: Whatever turns you on.


John (Jack) Henry Horner: I and my officials have had discussions with General Motors. They have not informed me that they are turned off at all, Mr. Speaker. In fact, this is only one of a number of plants which General Motors intends to build in Canada.


Mr. Broadbent:: Some time before the end of the century.


PUBLIC SERVICE
John Edward Broadbent: Mr. Speaker, I have a question for the President of the Treasury Board. The Minister of State for Urban Affairs spoke very eloquently yesterday about the government's commitment to civil liberties.
Considering that section 32 of the Public Service Employment Act permits public employees to obtain leave of absence to run for public office, and considering that the Liberal candidate in Winnipeg North is a civil servant who has been given leave, could the minister tell the House why Mr. Garth Brewer, a federal employee in New Brunswick, was not only denied leave of absence to become a candidate for the NDP in a recent provincial election, but has subsequently been fired for doing so?


Hon. John Roberts (Secretary of State):: Mr. Speaker, this matter was brought to my attention only ten minutes ago. It is the responsibility of the Public Service Commission, and I will inform them of the concern expressed by the leader of the NDP and reply to him as soon as possible.


John Edward Broadbent: Mr. Speaker, I regret that the minister has just learned of it; I informed the office of the President of the Treasury Board of it over an hour ago.


Some hon. Members:: Oh, oh!


John Edward Broadbent: Even a Liberal cabinet minister should be able to find out something in an hour. I should like to ask the minister, in all seriousness, who is dealing with the matter.
As a supplementary question, may I point out that subsection 3 of the act asserts that the only reason for denying a public employee the right to run as a candidate is his or her usefulness to the public possibly being impaired. Can the minister tell us, after he looks into this case, how that could conceivably apply to Mr. Brewer's situation, who was employed as a customs and excise official?


John (Moody) Roberts: Mr. Speaker, the hon. member complains about the length of time in bringing it to my attention. I would have thought that he has been a member of the House long enough to know that the Public Service Commission reports to parliament through the Secretary of State. As I have already said to the hon. member, I will pass along his inquiries to the appropriate body, the Public Service Commission, and transmit its reply to him.


John Edward Broadbent: Mr. Speaker, quite apart from passing on information, and since a Liberal candidate has been given leave to run in the forthcoming federal election in Winnipeg- which makes a lot of sense, and we support it 100 per cent- will the government take steps to ensure that this man who sought, and ran for, public office recently in the province of New Brunswick will have his job restored to him?


Some hon. Members:: Hear, hear!


John (Moody) Roberts: Mr. Speaker, if the hon. member is asking me to intervene for a specific purpose in relation to the Public Service Commission, it seems to me that is not entirely an appropriate suggestion. As I repeat for the third time, I will communicate his concerns and come back to him.


POST OFFICE
Gérard Laprise: Mr. Speaker, my question is for the Postmaster General.
In view of the fact that the international congress of the Lion's Club will be held in Montreal this year and that it takes some time to issue a new stamp, I would like to ask the Postmaster General if he has received representations with a
November 16, 1978

view to issuing a commemorative stamp on this occasion, and if in fact he intends to do so?


Hon. J. Gilles Lamontagne (Postmaster General):: Mr. Speaker, I must say that many representations have been made to me to that effect. I had some from both government and opposition members as well as from the general public. The matter has been referred to our philately experts and an answer will be forthcoming shortly on the opportunity to issue a stamp for the Lion's Club thereby setting a precedent in relation to that category of association.
Oral Questions


Some hon. Members:: Oh, oh!


John (Jack) Henry Horner: I reiterate that most of the tourists coming into Canada come from the United States, and by far and large most of them come by automobile, not by aeroplane.


Some hon. Members:: Hear, hear!


AIR TRANSPORT
[Stage Direction]
* *
*

Jack Burnett Murta: Mr. Speaker, I should like to direct a question to the Minister of Industry, Trade and Commerce. In terms of our lagging tourist industry, how can the minister justify a proposed increase of 5 per cent on domestic air fares, an increase in landing fees and an increase in airport taxes which, combined, will make Canada a very, very expensive place in which to travel? How can this be justified at a time when our tourist deficit for the first two quarters of 1978 is in the neighbourhood of $1.35 billion, and if projected to the end of 1978, the deficit will be over $2 billion?


John (Jack) Henry Horner: Mr. Speaker, I am not as pessimistic as the hon. member. I have looked at the third quarter figures and there is substantial improvement in our deficit in tourism.
Leaving that aside, I also think it is true that we have taken great strides to make more charter flights available to Canadians travelling within Canada, which automatically lowers the cost to Canadian tourists travelling within Canada. Also, I should add that I well recognize the fact that most tourists coming into Canada come from the United States and most of these American tourists come by way of an automobile, not an aeroplane.


Jack Burnett Murta: Mr. Speaker, in conversations with travel industry executives, they state that the implementation of the proposed new airport tax alone will hurt seriously our tourism industry in Canada. Is the minister in favour of the proposed increases that the Minister of Transport seems bound and determined to implement?


John (Jack) Henry Horner: Mr. Speaker, I am not necessarily in favour of all costs. I do not like to pay any more than the next person for a service which I require or want the government to provide for me. I am not going out and asking the government to provide a bunch of costs for me to pay as a tourist. But I recognize that I, as a tourist, can afford to pay the costs which 1 incur as a traveller.


Mr. Don Mazankowski (Vegreville):: My supplementary question is to the Minister of Transport. Canada's airport tax of $8 per person is already one of the highest in the world. The sector task force report on tourism stated:
The airport user-pay policy makes air transportation in Canada non-competitive with that of the United States, and is detrimental to Canadian tourism development.
Would the Minister of Transport indicate to the House, if he is in a position to do so, whether the airport head tax will be increased to $13 as part of the generation of the additional $72 million included in the government's restraint program?


Hon. Otto E. Lang (Minister of Transport and Minister of Justice):: Mr. Speaker, at this point I cannot add anything to the comments which have been made previously in the House on the subject. As far as the question of costs is concerned, particularly those being borne by travellers rather than by taxpayers not travelling, I think that the hon. Minister of Industry, Trade and Commerce put the matter very well.


Donald Frank Mazankowski: Mr. Speaker, it is the intention of the government to increase airport landing fees by some 30 per cent to 40 per cent over an eight-year period. This would result in these fees being increased by six times their present level, which would raise the cost of landing a 747 up to $1,800, compared to roughly $400 for an airport such as the one in Chicago in the United States.
Would the minister explain to the House the differential between these two costs, and is he not concerned about the negative impact this will have upon domestic air travel and, indeed, the tourist industry? Or is this simply the price the air traveller must pay for the ministers grandiose schemes in terms of the Taj Mahals that have been erected in this country in place of airports?


Otto Emil Lang: Mr. Speaker, first of all, the United States is also reviewing its policy of subsidizing air travellers by not charging fully the costs of the system. We are awaiting their judgments in that regard.
I can assure the hon. member that, although there may be increases in charges over the year, at no time will the charges be higher than the actual costs of providing the facilities and conveniences to the traveller. Not only that, I can assure the hon. member that this very system of making realistic the fact
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November 16, 1978
Oral Questions
that facilities being provided have to be part of the cost of flying has led to a full discussion with the carriers of all the issues-


Donald Frank Mazankowski: That is not true.


Otto Emil Lang: -about what kind of facilities should be put in place. Whereas, until we were charging some of these costs through, the carriers always found it very attractive to ask for as much as possible in the way of facilities. Now that they know there is a charge to be borne, they are being very realistic indeed about what they ask for in the way of facilities, and that is a very good result for the taxpayer and the traveller.


NATIONAL SECURITY
Right Hon. J. G. Diefenbaker (Prince Albert):: Mr. Speaker, I would like to direct a question to the Prime Minister: it has to do with national security.
As the Prime Minister knows, under the law, secret documents are kept in custody for 30 years. Recently, it has become known that in so far as the revelations of Igor Gouzenko are concerned, they are not going to be made available at this time. Would the Prime Minister tell the House why such an alteration has been made in the general policy, and when does he expect that these revelations, which were so beneficial to our country and would no longer be detrimental by revelation, will be revealed to Canadians as a whole?


Right Hon. P. E. Trudeau (Prime Minister):: Mr. Speaker, the former prime minister will recall that I took the initiative a few years ago, myself, to reduce the 50-year rule to a 30-year rule, at which time I consulted with the right hon. gentleman and obtained his agreement.
It is a matter of policy to shorten the time interval as this government has done. If there is some exception, I am not aware of it; but I will take note of the question and find out why there has been an exception.


John George Diefenbaker: Mr. Speaker, I realize what the Prime Minister has done: I thought it was worth-while and I approved of it. However, there has been an exception made in Gouzenko's case and some people in this country are very frightened at the revelations which might be made, for they were not proceeded against as others were who were no more guilty than these people. Therefore, it is necessary that at the earliest date this information be made available.


Pierre Elliott Trudeau: Mr. Speaker, I believe that the hon. gentleman has repeated his previous question and I can only give the same answer, that I will inquire if an exception has been made and, if so, why. Presumably, if it has been made, it would have been in the interests of national security.


John George Diefenbaker: There is no national security in that.


Pierre Elliott Trudeau: The hon. gentleman knows that there is no national security involved. I wonder how he knows that. The files were not accessible to him at that time.


NATIONAL DEFENCE
Mr. Allan B. McKinnon (Victoria):: Mr. Speaker, my question is for the Prime Minister. On Tuesday, he told his press conference that the government was adhering to its commitment to increase the capital budget of the Department of National Defence by 12 per cent per year, in real terms, and its operating budget to keep pace with inflation.
Can the Prime Minister clarify those remarks, as senior DND officials, particularly the associate deputy minister of finance in the department, acknowledged at the Standing Committee on External Affairs and National Defence on March 21 that the real increase in the capital budget for this fiscal year is only 2.8 per cent?


Pierre Elliott Trudeau: Mr. Speaker, I would have to refer to that testimony and see in what context it was made. Probably it was talking about a particular point in time, but the commitment on the forward budgeting over the period, I believe, until 1981 has been for a 12 per cent increase per year in capital budgets and in real terms.
It is possible that in expending the money the department will want to spend more than 12 per cent in one year and a little less in the next. Certainly, the commitment still stands and I would be very surprised if the hon. member could find any evidence to the contrary.


Allan Bruce McKinnon: Mr. Speaker, I would like to turn to the Minister of National Defence for my supplementary question.
On Tuesday, he too referred to a theoretical capital envelope. Is this not really a subterfuge that means the government has taken some of the department's money out of this year's budget and is replacing it with an IOU possibly payable in some not yet specified year? Does the minister agree that the so-called financial envelope is a euphemism meaning, "Sorry, DND: we are breaking our financial promises this year, but we will give you a similar promise for some other year"?


Hon. Barney Danson (Minister of National Defence):: Mr. Speaker, maybe it is unparliamentary, but that is absolute nonsense. The hon. member asks this sort of question in committee and in the House all the time. He knows the answer to it. The Prime Minister just gave the answer to it.
The capital envelope is not a fictitious thing; it is a very tough constraint in my department, as it is in all departments, but it is very real. Nevertheless, those expenditures are committed by the government, or will be if some are not already, and that equipment will be purchased. I think the hon.
November 16, 1978

member must realize it is there for a real purpose and not just to spend. If we do not spend it on the equipment we intend to one year, we do it the following year. We are not going to disrupt those major capital equipment projects for the Canadian armed forces.

[Translation)


FEDERAL-PROVINCIAL RELATIONS QUEBEC INDEPENDENCE PROJECT-GOVERNMENT POSITION
Mr. Herb Breau (Gloucester):: Mr. Speaker, my question is for the right hon. Prime Minister.
In view of the comments made by the Prime Minister at his press conference the day before yesterday to the effect that Quebec Premier Levesque has managed to lull Canadians to sleep concerning his real intentions, could the Prime Minister tell the House whether the government of Quebec is still pursuing its project for independence in the context of its relations with the federal government? Furthermore, what is the position of the federal government in view of the threat made by the Quebec government to hold a referendum to get a mandate to negotiate the province's withdrawal from confederation?


Pierre Elliott Trudeau: Mr. Speaker, this question could lead to a lengthy answer. I think it would be summarized by saying that no one is being misled on the intention of the PQ government which is to lead Quebec to independence. No one on this side of the House, anyway. It is true that the statements of the PQ premier in Regina last summer seem to have slightly lulled the other provincial premiers to sleep but I do not think that any Quebecker entertains any doubts whatsoever as to the real intention of the PQ which is to try to make an independent country out of Quebec.


HEALTH AND WELFARE
Mr. Lome Nystrom (Yorkton-Melville):: Mr. Speaker, I have a question for the Minister of National Health and Welfare. As the minister knows, the federal government is now planning the transfer of Indian health care to the provinces. She knows that the Indian people are very concerned about this and have been to Ottawa to see us, as well as sending telegrams to the minister.
I should like to ask the minister whether she will consider suspending that action and restating a commitment to Indian health because of the great concern Indians have about Indian
Oral Questions
health being guaranteed under their treaty rights with the government?


Hon. Monique Begin (Minister of National Health and Welfare):: Mr. Speaker, there has never been such a plan: I want to make that extremely clear. I do not know what the hon. member has in mind. There is no need to say it is very easy for me to reaffirm, as he has asked, a firm commitment to better health for all Indians of Canada.


Lorne Edmund Nystrom: Mr. Speaker, that is rather strange. Representatives of the Saskatchewan Indian Brotherhood, the National Indian Brotherhood, the Manitoba and Yukon Indians have been down here to see members of various parties. They sent a very lengthy telegram to the minister. She replied to the effect that the government is still very committed to transferring Indian health from the federal government to the provinces. That telegram is dated October 18.
Today, the minister reversed her position and I want to be clear about this: is she saying now to the Indian people that Indian health care is going to rest with the federal Department of National Health and Welfare, and not transferred, as her telegram indicates, to the provinces and to the territorial governments?


Monique Bégin: Mr. Speaker, the telegram was probably too long for the hon. member to read. If he had taken the time to read it and study it, he would have seen that the National Indian Brotherhood delegates, who came for a very good meeting in Ottawa this week, asked me questions and made very good representations to me concerning what we call, in the jargon of the health delivery system, the uninsured items or expenditures. That has nothing to do with health care per se. Health care remains exactly as it is, and we are following completely the historical relationship by which we are in it. That means eyeglasses-and I told them there would not be several pairs per year, per person-it means dental equipment or expenditures, it means transportation costs and drugs.
This question is very serious, and if the hon. member is honest, he will listen. There is no point giving to any segment of the population open expenditures that will create abuses to which everyone else will object. We were going bankrupt with the expenditures because there were no guidelines. We have set guidelines, which I issued in September, giving Indians on welfare 50 per cent more than the provinces give them.


POST OFFICE
Hon. W. G. Dinsdale (Brandon-Souris):: Mr. Speaker, I have a question for the Postmaster General. On November 21, 1977, the then postmaster general announced significant increases in postal rates affecting all classes of mail, to be effective April 1, 1978. A year later, because of the continuing turmoil in the Post Office, that means the deficit for the fiscal

November 16, 1978
Oral Questions
year 1978-79 will be much higher than the $525 million predicted by the present Postmaster General last June.
Does the hon. gentleman intend to pass on these unplanned, increased deficits to the taxpayer by increasing postal rates again in 1979? If so, what will be the proposed rates, and what classes of mail will be affected?


J. Gilles Lamontagne: Mr. Speaker, I appreciate the hon. member for Brandon-Souris picking up the question put by the hon. member for Winnipeg North Centre in a motion at the beginning of the sitting.
As the hon. member for Winnipeg North Centre said, "Enough is enough". But enough is enough of deficit, not necessarily the postal rates. That is exactly what we are trying to do, to reduce the deficit of the Post Office. That is why we moved so wisely by putting Bill C-8 through the House, so that we would have labour stability during at least another year.
Also, at the postal users conference, most of our users asked us to administer the Post Office as closely as possible on business principles. This means that we have to be very fair about the share which is paid by the users themselves, which must be their fair share, and the share paid by the general public. That is what we are going to do when we decide to raise rates. It is under consideration at the moment, and the hon. member should hear about it soon.


Walter Gilbert Dinsdale: A supplementary question, Mr. Speaker. There are some post offices around the world making profits today. This deficit is created by the continuing turmoil in the postal service.
The Postmaster General referred to postal users. I wonder if he has discussed the proposed increases with the publishers of periodicals and the other major users of the postal service who must have at least a six-month lead time before the implementation of new rates in order to plan their affairs and meet other rising costs. The Postmaster General neglected to consult with substantial post office users before the last round of increases. Has he met with these major customers this time around? If not, when does he intend to do so, in order that they might make their necessary plans?


Mr. Lamontagne:: Mr. Speaker, the turmoil in the Post Office is very often caused by the remarks of some opposition members. There is no turmoil in the Post Office.


Some hon. Members:: Oh, oh!


Maurice Lamontagne: I wonder where the hon. member for Brandon-Souris was at the time of the two-day postal users conference in Toronto: he was not there, of course. I was there. I consulted with at least 1,800 people from across Canada who use the postal service, including publishers, editors and others. I met with directors of most of the magazines and publishers in Canada. They have a very good opinion: they told us to administer the Post Office in a way that makes it as close as possible to operating a business. As far as postal rates are

concerned, they realize that at the moment we have the lowest rates in the industrialized world.


Some hon. Members:: Hear, hear!


PETRO-CANADA PURCHASE OF PACIFIC PETROLEUMS SHARES- EFFECT ON COMMON CARRIER PRINCIPLE
Mr. F. Oberle (Prince George-Peace River):: Mr. Speaker, my question is for the President of the Privy Council: it is with regard to his responsibility for the Alaska pipeline.
My concern is the Petro-Can takeover of Pacific Petroleums which, of course, has a subsidiary known as Westcoast Transmission which, in turn, is a partner in the pipeline consortium. Is the minister concerned over the fact that such ownership by the government would not only offend the common carrier principle but would put the government in a precarious position with regard to establishing and administering guidelines to which they themselves would later have to adhere? Is it the intention of the government to ask Petro-Can to divest itself of the interests in Westcoast Transmission after the acquisition?


Hon. Allan J. MacEachen (Deputy Prime Minister and President of Privy Council):: No, Mr. Speaker, I do not see any difficulties arising from this transaction, with regard to the northern gas pipeline, in any particular raised by the hon. member.


Frank Oberle: Can the minister indicate whether there has been a reaction from the industry, other partners in the pipeline consortium and the government of the United States? After all, this is a strange and serious departure from the principles which earned this consortium the right to build the pipeline in the first place.


Allan Joseph MacEachen: No, Mr. Speaker, to my knowledge, there have been no representations from any sources with regard to this situation.


AIRPORTS
Mr. Eldon M. Woolliams (Calgary North):: Mr. Speaker, I have a question for the Minister of Transport: it deals with the safety of air traffic particularly as it applies to the Aeronautics Act.
My question is twofold. By an order in council passed in 1977, No. 2449, hundreds of houses in the city of Calgary adjacent to the airport and quite some distance from it were affected. A zoning bylaw was passed governing, probably, two things, height and noise with regard to hundreds of houses. I wrote the deputy minister on October 31.
November 16, 1978

Oral Questions EXTERNAL AFFAIRS
First, was this order in council passed in reference to only the height of the buildings? Second, it is similar to a caveat and none of the owners received notice respecting the filing of the order in council against hundreds of houses already built and bought by citizens of that city. No notice was given. The act requires that an action with reference to any damage resulting from the filing of this zoning bylaw must be commenced within two years. None of these people received notice. Will the minister look into this fact and advise me of the reason for filing this order in council and, second, why notice was not given in accordance with the Land Titles Act similar to caveat law?


Otto Emil Lang: Mr. Speaker, I will certainly look into the matter and see the nature of the order in council and any zoning that flows from it. My impression is that it will be in relation to height only, because we have not taken general power in relation to zoning for other reasons. A bill to broaden our power in relation to zoning was before this House and held up, I must say, by Conservative filibustering in the last session.
In addition to giving us the right to do some zoning around airports when necessary, and that was only intended to be used when the municipalities were unable or unwilling to do what was required to make sensible use of airports, the bill had some additional provisions to give protection to people around airports as to the way in which notice would be served. I would be delighted if the hon. member would have discussions with his colleagues about quick passage of that bill so that we might bring it back and move it forward.


Eldon Mattison Woolliams: The minister will be pleased to know that 1 did discuss this with some of my colleagues. As I examine the new bill, I find it would make the situation even worse. The minister did not answer the main part of the question. There were hundreds, probably thousands, of these properties affected. Good money was paid for them by average people with average incomes. When they come to sell, they will find, after two years, this has been on the title without notice. I have searched the titles. How can they commence an action for any loss or damage? Will the minister explain that?


Otto Emil Lang: Mr. Speaker, if I did not, as the hon. member says, answer the main part of his question, I surely made it clear to him that I was not aware of the exact content of that particular order; that it likely did relate to height and, therefore, likely has no adverse effect upon any existing structure in the area. All of that is logical conclusion on my part, from our ordinary practices. I further told the hon. member I would check into the matter and report to him when I had more detail available.


REUNIFICATION OF FAMILIES PROGRAM-SITUATION WITH VIET NAM
Mr. Art Lee (Vancouver East):: Mr. Speaker, my question is for the Secretary of State for External Affairs. In view of the fact that negotiations with the Republic of Vietnam have been disappointingly slow in respect of reunification of families in Canada, and in view of the fact that I have received reports from people who have left Vietnam that officials in Vietnam demand $3,000 for each person who wishes to leave, will the minister undertake to express concern to the government of the Republic of Vietnam at the time it is taking to conclude this agreement on reunification of families in Canada and respecting the fact that its officials are demanding cash payment for those who wish to leave the country?


Donald Campbell Jamieson: Mr. Speaker, I have been aware of some of these charges. I thank the hon. member for having given me notice.


An hon. Member:: In caucus.


Donald Campbell Jamieson: I did not hear the hon. member's interjection. We have been making frequent representations to Vietnam with regard to family reunification. We will continue to do so. I have asked, for example, that representatives at our embassy in Peking, which is responsible for our embassy operations in Vietnam, be welcomed there to negotiate individual cases. We will resume and strengthen those representations.


EMPLOYMENT
Mr. Lincoln M. Alexander (Hamilton West):: Mr. Speaker, I wish to direct my question to the Minister of Employment and Immigration. It was revealed this morning, in committee, that the deputy minister, Mr. Manion, regretted very much discontinuance of the job vacancy survey. He has made a recommendation that it be reintroduced. Given the fact that the government was embarrassed with regard to the job vacancy survey, can the minister tell me what has happened with the deputy minister's recommendation?


Hon. Bud Cullen (Minister of Employment and Immigration):: Mr. Speaker, the preamble of the question is in error: the government was not embarrassed by it. As a matter of fact, it was a useful instrument which was used very often by my department. It was taken at the initiative of another department which prepared that statistic and which apparently felt it was not receiving extensive use. In view of the fact it had to make cuts, it decided to make cuts in those programs that were not being used.


Lincoln MacCauley Alexander: Mr. Speaker, the minister has not answered my question. His deputy minister, Mr. Manion, indicated that

November 16, 1978
Oral Questions
he very much regretted that the job vacancy survey had been discontinued. This is of significant importance to him, and he recommended that it be reintroduced. What has the minister done with that recommendation? Has he accepted it? Has he discussed it with his colleagues in order to see that this very important survey is reintroduced?


Jack Sydney George (Bud) Cullen: I commend my deputy minister for commenting in such a forthright way about the valuable use my department made of that particular statistic. However, as I have indicated, there are many projects which I would have liked, and which the deputy minister and others would have liked, which have had to be dropped. In the interest of saving, another department of government has decided that this is a project which should not, in fact, be kept alive.


AIR CANADA
Mr. J. M. Forrestall (Dartmouth-Halifax East):: Mr. Speaker, my question is directed to the Minister of Transport and Minister of Justice. I trust he is fully aware of today's public relations release by Air Canada with respect to the corporation's pilot problem.
May I ask him, first of all, whether he is seized of the release, if he is satisfied with it and, more important, whether or not he is prepared either today or later this week to give some assurance to the flying public that notwithstanding pilots having in large numbers "flown out" the contractual hours allowed, there will be no interruption or disruption of essential holiday services next month?


Otto Emil Lang: I am literally seized with it, Mr. Speaker: it came into my hands a few minutes ago as a consequence, perhaps, of notice from the hon. member's office that he intended lo raise the matter. I have not had a chance to read it thoroughly, and I want to do that before replying to the hon. member's question.


J. Michael Forrestall: One very brief supplementary, Mr. Speaker. I hope I am right in assuming that the minister was not aware of the difficulty facing Air Canada with respect to flying hours available to the pilots. I hope he will take careful notice, within his department, of their knowledge of the rate at which this situation was building up; the failure by Air Canada to exercise its internal management responsibilities to ensure that such a situation did not exist; to ensure that he or his senior officials had not been advised of this, and that he did not take earlier, corrective action to offset or negate the very serious situation which exists and which puts Air Canada in the position of having this problem in manning aircraft because their pilots do not have left over flying hours.

I ask that question because of the obvious implications to safety and the convenience of the flying public. Does he know whether he had ever been advised?


Mr. Speaker:: The hon. member's definition of a brief supplementary is quite different from mine.


Some hon. Members:: Oh, oh!


Otto Emil Lang: Mr. Speaker, I have not had this matter brought to my attention. I can assure the hon. member that my departmental safety officials will see to it that all the ordinary safety rules are adhered to and that there will be no problem in that respect.
I think the question which has been raised relates, essentially, to a management problem, and in this release, as far as 1 can see, Air Canada is, in fact, explaining how it came to be in its present difficulty. We will both look at it together at a later time.


EXTERNAL AFFAIRS
Mr. T. C. Douglas (Nanaimo-Cowichan-The Islands):: Mr. Speaker, my question is addressed to the Secretary of State for External Affairs. The Latin America Economic Report carries a statement from Buenos Aires which quotes Admiral Madero, president of the National Atomic Energy Commission of Argentina, as saying work will soon begin on the building of an experimental plutonium reprocessing plant. The report goes on to say that the plant could supply enough reprocessed material to develop a nuclear weapon and keep Argentina firmly ahead of Brazil in the arms race.
I want to ask the minister whether this development has been brought to his attention, and whether the safeguards entered into between Canada and the nations which are recipients of Canadian reactors give the minister power to take action with regard to such a development and, if so, does he intend to take action?


Donald Campbell Jamieson: I do not know of the quotation to which the hon. member refers. I deeply regret it, if it was made in that context, because our whole effort in Latin America, as elsewhere, has been to achieve total recognition of the non-proliferation treaty and, most particularly, a limitation on the reprocessing aspect which, as the hon. member recognizes, is extremely hazardous and dangerous.
Rather than give an off-the-cuff answer with regard to the safeguards, I would ask the hon. member's indulgence to allow me to look up the treaty. I can say, in passing, that I suspect the safeguards are such that we can prohibit the kind of reprocessing to which he has referred. But I will take the question as notice, look into it and give the hon. gentleman a specific answer.
November 16, 1978


Thomas Clement (Tommy) Douglas: In view of the fact that the minister, along with the Prime Minister and some of his colleagues, has repeatedly told us that these safeguards are the strongest in the world, and in view of assurances the House has been given from time to time that in the event of any recipient of a Candu reactor building a reprocessing plant, steps could be taken to discontinue the operation and the supply of equipment and repairs, can we have an assurance from the minister that he intends to take this matter seriously and apply all the powers he has under the safeguard arrangements?


Donald Campbell Jamieson: If that question had been posed originally, my answer would clearly have been yes. In other words, whatever action it is possible for Canada to take vis-a-vis that particular country, or any other country, to keep down and to prevent expansion in reprocessing, we would certainly take. I was perhaps being unnecessarily cautious by saying I would like to look at the agreement so that I could be sure. I did not want to be charged in the House tomorrow, when somebody sees the document, with having misled the House. That was the only reason.


AGRICULTURE
John Wise: Mr. Speaker, my question is directed to the Minister of Agriculture: it relates to difficulties arising from his national dairy policy. In view of those difficulties, related to the lack of adequate industrial milk supplies within British Columbia, Alberta and, particularly, Ontario, would the minister take the necessary action to revise the present quota system to take into account changing production patterns as well as changing market opportunities within the provinces?


Hon. E. F. Whelan (Minister of Agriculture):: I think I know what the hon. member has in mind: it is what the Ontario minister of agriculture said when addressing a dairy group in Ontario yesterday. I say to the hon. member that he should also refer to what the Ontario Milk Marketing Board stated as reported in the same article. It is under the jurisdiction of the provincial minister of agriculture, and not under my jurisdiction. They are the ones who decide on the national quota, how it is distributed, and so on.
No one has reported to me that there is any cheese shortage in Canada at the present time. If Mr. Newman has anything he wants to put on the record, he can do it on Monday, because we are going to be meeting with the provincial ministers and that is one of the subjects we shall discuss. We do not, as federal and provincial ministers, set that quota. That is set by a group which is representative of the dairy producers and the provincial governments; they sit down with the National Dairy Commission and they are the ones who decide what the quotas shall be. So no matter what Mr. Newman says, or what I say, we abide by what that group tells us.
House of Commons


John Wise: I appreciate what the minister is trying to say, but he has the responsibility and the authority to ensure that the national dairy policy is fair and equitable to all producers in all provinces. He also has the responsibility to ensure that financial returns to the producers are maximized and that both domestic and export needs are met. Under the present policy, neither of these requirements is achieved. Would the minister consider increasing the size of the national quota to the extent which would provide sufficient products to meet domestic and export needs?
I also want to ask the minister if he would consider lowering the present $7.50 per hundred penalty charge to encourage producers to fulfil their own individual production requirements.


Eugene Whelan: Mr. Speaker, if the dairy industry is healthy and if many want to get into the production of industrial dairy products, I will take full blame. If, because of the quotas we have placed on imported cheese, people are enticed into getting into the production of cheese, I will take full blame for that. Cheese production has been good. Our reserves are not much different from what they were a year ago. There is no shortage of specialty cheese; there is a tremendous increase in specialty cheese production. In Ontario alone I believe there has been about a 44 per cent increase in two years.
If the hon. member has any more facts to present, I would be glad to hear them, but nothing he has presented here today shows that anybody is suffering. Cheese producers are making more money than they ever have. Farmers in the dairy industry are making more money than they ever have.


Some hon. Members:: Hear, hear!


PRESENCE IN GALLERY OF GUATEMALAN MINISTER OF AGRICULTURE
Mr. Speaker:: Order, please. That happy agricultural note gives me an opportunity to ask hon. members to join with me in welcoming a distinguished visitor in our gallery in the person of the Minister of Agriculture of Guatemala, the hon. Edgar Ponciano Castillo, who is on an official visit here.


Some hon. Members:: Hear, hear!


BUSINESS OF THE HOUSE
Mr. Baker (Grenville-Carleton):: Mr. Speaker, by way of a point of order I wonder if I might ask the Deputy Prime Minister (Mr. MacEachen) about his proposals regarding the budget. I understand that it is his intention to continue the

November 16, 1978
Business of the House
budget debate tomorrow and to carry it into next week for the appropriate number of days. In order to allow us to plan, would he give us the order of his priorities following the budget debate?


Allan Joseph MacEachen: Mr. Speaker, first I want to say that today we will continue with the bill which would authorize additional borrowing authority, to be followed by the old age security legislation, and then the child credit benefits legislation. The budget will be presented tonight, and the debate will continue on Friday and on Monday, when the first vote will take place. I indicated informally to the hon. member earlier that it was my intention to continue the budget debate without interruption, but if the child benefits legislation is not passed, it might be necessary on Tuesday to interrupt the debate in order to deal with that in committee of the whole. However, that is not certain yet.
I have not cast my attention beyond the budget debate, but I highlight as one of the main items I would like to bring forward early, in line with requests made by the hon. member for Winnipeg North Centre (Mr. Knowles), the legislation affecting pensions in the public service. There is also the health resources fund legislation to be considered. By that time I hope to have on the order paper the bill relating to the Post Office. That would certainly be high on my list, but I would prefer to give a more precise indication next week.


Walter David Baker: Mr. Speaker, I thank the minister for his remarks. Some comments have been made with respect to the budget debate this evening. During the course of the day I wonder if the Deputy Prime Minister might give some consideration to making the text of the speech of the Minister of Finance (Mr. Chretien) available to members of parliament as the Minister of Finance begins his speech, so that we can follow that speech carefully.


An hon. Member:: Hear, hear!


Walter David Baker: I see that there is some support on the other side of the House for that proposition. This would enable the media to deal with the matter appropriately from the point of view of their operations outside, because I understand there has been an embargo placed on anything regarding the minister's speech until 8.30 p.m. I can understand that the privileges of parliament should not be infringed, but in these circumstances it seems to me that it would be appropriate for the Deputy Prime Minister to consider, if the media can begin dealing with the budget, whether members of parliament should have copies of the speech on their desks so that it can be followed by them. 1 would be very grateful if my hon. friend would consider that, in order to assist us and the public in understanding what is in the budget, if indeed there is anything in the budget.


Allan Joseph MacEachen: With respect to the arrangements for the media I understand that there is an embargo on media reports of the budget statement until 8.30. That seems reasonable, because it is logical to provide the minister an opportunity to make his budget statement before interpretations and reports

of the budget statement. I think it is reasonable to have an embargo until 8.30.
I will draw to the attention of the minister the matter of whether he could make copies of his speech available earlier. The Leader of the Opposition (Mr. Clark) and the leader of the New Democratic Party (Mr. Broadbent) have always had copies of budget speeches as ministers of finance have read them. I have always felt discriminated against because, as a minister, I have never had copies provided to me the way they have been provided to the Leader of the Opposition and the leader of the New Democratic Party.


Walter David Baker: Mr. Speaker, my heart bleeds for my hon. friend, but I thank him for his cooperation. I hope he will consider having the speech available at least for members of parliament.
I wonder if this morning the cabinet considered the possibility of fixing a date by which time we might begin the Christmas adjournment, if we are to have one this year, and how long it might be. If that was dealt with and if we knew where we were heading, I think it might help expedite business. That, coupled with an announcement regarding business after the budget, would help parliament expedite its work, which we always want to do.


Allan Joseph MacEachen: Mr. Speaker, I did not have an opportunity, as I had hoped, to discuss with my colleagues this morning the time for the Christmas adjournment. I can assure the hon. member that it is my intention to provide for a Christmas adjournment, and I would appreciate any comments hon. members might have as to the length of that adjournment.


John Edward Broadbent: Mr. Speaker, what I have to say does not affect the Deputy Prime Minister (Mr. MacEachen), but I know the Prime Minister (Mr. Trudeau) is a family man, and those of us who are do like to make plans, believe it or not. Would the Deputy Prime Minister consult the gentleman on his left and decide early on a fixed date so that we will all know where we stand?


Stanley Howard Knowles: Mr. Speaker-


An hon. Member:: Stanley said no.


Some hon. Members:: Oh, oh!


Stanley Howard Knowles: Mr. Speaker, if I were taking part in the discussion which has just taken place, I would do so on behalf of all the grandparents in this place. We too have rights.
I would like to have a word with the Deputy Prime Minister (Mr. MacEachen) about the business for today. He announced that we would deal first with Bill C-7, on which there is a time limit, and that then we would move to Bill C-5. Bill C-7 is the bill respecting borrowing authority, and Bill C-5 is the old age security bill. I hope, Mr. Speaker, that you will permit me to make the point that under Bill C-5 there is a provision for the
November 16, 1978

extension of the spouse's allowance in certain cases, but it will come into effect only when that bill has received royal assent.
This means that every day that we delay the passing of that bill, seven more spouses between the ages of 60 and 65 who have become widows will not get the benefit under the act. Therefore I am suggesting that the Deputy Prime Minister call that bill first so that we could pass it quickly, sent it over to the Senate, and get it passed on the earliest possible date. As I say, every day means seven more widows who will not get the benefit of that legislation.


Allan Joseph MacEachen: Mr. Speaker, the representation made by the hon. member is a good one because I have been concerned, as has the Minister of National Health and Welfare (Miss Begin), about the speedy passage of the bill, for the reasons cited by the hon. member. I would be prepared to call Bill C-5 as the first item today if I had some understanding that it would be passed without debate, so we could go on to the bill on the borrowing authority. If that is the wish of the House, I will call it, but I cannot call it without an assurance of some kind. Otherwise, it may take all afternoon and I would not be able to have the borrowing authority bill passed, which is under a time limit, and which would normally be passed within an hour.


Lincoln MacCauley Alexander: Mr. Speaker, I rise on the same point of order. I heard the minister mention the Crown corporation bill affecting the Post Office. A few days ago I heard the Minister of State for the Environment (Mr. Marchand) mention the Crown corporation bill. My concern, which has been registered by others, is that the government is thinking about introducing the omnibus Crown corporation bill to determine the conduct, control and accountability of Crown corporations. Given the fact that a Post Office Crown corporation might not be the answer, is the government considering the ramifications of dealing with a Post Office Crown corporation bill followed by an omnibus bill on Crown corporations which could perhaps wipe out the effectiveness of the previous bill? Are we not a little premature in giving the Crown corporation bill such high priority.
I am just bringing this to the minister's attention because of the great concern which not only the government but we on this side and the people of Canada have with regard to the conduct of Crown corporations. Is there any possibility of the omnibus bill on Crown corporations guiding the conduct, control and accountability of Crown corporations, being brought forward in the very near future?


Allan Joseph MacEachen: Mr. Speaker, I would say that there is little likelihood of the general bill being brought forward before the bill relating to the Post Office as a new Crown corporation. I believe the House will have to deal with the provisions of that bill on their own merit, and later we can deal with the general principles relating to all Crown corporations.
Introduction of Bills


Mr. Brisco:: Mr. Speaker, I should like to ask the government House leader whether or not it is the intention of the government to reintroduce Bill C-14 which died on the order paper in the last session, dealing with the regulation, control and development of nuclear energy.


Allan Joseph MacEachen: Yes, Mr. Speaker, I believe that that bill is on my list, but I will have to check further. I am sure there is a bill dealing with nuclear administration which will be put before the House.


Walter David Baker: Mr. Speaker, I rise with respect to a point I wish to make following the discussion we had a few minutes ago on Bill C-5. If it is the intention of the government House leader to call it immediately with the understanding that the matter would go through without debate, we are quite willing to deal with it.


Some hon. Members:: Hear, hear!


Walter David Baker: Frankly, I had anticipated that there would be a period before private members' hour when we could do that, but 1 have no objection to dealing with the bill sooner. I think, in fact, it is an excellent suggestion.



ROUTINE PROCEEDINGS


[Stage Direction]
First and second reports of the Standing Joint Committee on Regulations and Other Statutory Instruments-Mr. Robinson.
[Editor's Note: For texts of above reports, see today's Votes and Proceedings.]

Hon.   J.-J. Blais@Solicitor General: for leave to introduce Bill C-19, to amend the Royal Canadian Mounted Police Act.


[Stage Direction]
Motion agreed to, bill read the first time and ordered to be printed.
[Stage Direction]
November 16, 1978
Order Paper Questions

Otto Emil Lang: for leave to introduce Bill C-20, to amend the National Transportation Act and the Department of Transport Act for the purpose of defining the objective of the transportation policy for Canada and the powers and duties of the Canadian Transport Commission and to amend the Transport Act and the Railway Act in respect of freight rates and other matters.


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

[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. 48, 351 and 377.
I ask, Mr. Speaker, that the remaining questions be allowed to stand.


Mr. Orlikow: 1.	For the fiscal year 1976-77, what contracts for professional services were let for studies, surveys and analyses into (a) present or future policies, programmes or information analysis and their efficiency and effectiveness (b) the examination of the administration or internal operation of the Canadian Pension Commission?
2.	How much was committed on each contract and to whom?


Hon. Daniel J. MacDonald (Minister of Veterans Affairs):: 1.	(a) Bureau of Management Consultants-Supply and Services, Canada, A study of Statistical Information System, $12,500.
(b) None.
2.	See 1 (a) above.


Mr. Howie: For the fiscal year ended March 31, 1978, how many grants under the Enterprise Development Programme of the Department of Industry, Trade and Commerce were made to firms in New Brunswick and what was the total amount?


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: For the fiscal year ended March 31, 1978, two grants were made

under the Enterprise Development Program to firms in New Brunswick totalling $55,132.


Mr. Bawden: 1.	Does the Department of Supply and Services prepare the Post Office Department's payroll and, if so, at what cost?
2.	How many persons are employed at DSS in the preparation of the payroll?
3.	Does DSS lease payroll systems and, if so, on what basis are the charges determined?


Hon. Jean-Pierre Goyer (Minister of Supply and Services):: 1. The Department of Supply and Services provides payroll administration for the Post Office Department. For the fiscal year 1978-79 the cost of providing this service is estimated to be $3,000,000.
2.	It is estimated that the Department of Supply and Services applies 100 staff years to the administration of the Post Office payroll service.
3.	For payroll administration, the Department of Supply and Services develops, maintains and operates its own system.


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


Some hon. Members:: Agreed.


Mr. Speaker:: Do I understand it is the disposition of the House that Bill C-5 be called now, on the understanding that it will be dealt with, without debate?


Some hon. Members:: Agreed.


Mr. Speaker:: It is so ordered.



GOVERNMENT ORDERS


Hon.   Monique@: that Bill C-5, to amend the Old Age Security Act, as reported (without amendment) from the Standing Committee on Health, Welfare and Social Affairs, be concurred in.


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


Some hon. Members:: Agreed.
November 16, 1978


[Stage Direction]
Motion agreed to.
Mr. Speaker:: When shall the bill be read the third time?


Some hon. Members:: Now.


[Stage Direction]
Motion agreed to.
Monique Bégin: that the bill be read the third time and do pass.


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


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to, bill read the third time and passed.

[Stage Direction]
The House resumed, from Wednesday, November 15, consideration of Bill C-7, to provide supplementary borrowing authority for the fiscal year 1978-79 and to amend the Financial Administration Act, as reported (with amendments) from the Standing Committee on Finance, Trade and Economic Affairs, and the motion of Mr. Stevens.
Mr. Alex Patterson (Fraser Valley East):: Mr. Speaker, at this stage of Bill C-7 I feel constrained to express not only my own views but the feelings of a great many of my constituents, and of Canadians in general, with respect to the present government's mishandling of the business of our nation as it relates to the economy. On a number of occasions prior to the resumption of this session or the beginning of a new session, the Prime Minister (Mr. Trudeau) declared that it was imperative that parliament meet and deal with legislation vital to the economy of the country. Also, ministers of the Crown, many times after long periods of delay and inaction, have suddenly produced bills and urged their quick passage because of the urgent needs confronting us. However, time and time again parliament has resumed its sittings faced with a blank order paper, except for some inconsequential items which had little if anything to do with the economy.
In a period when there is almost universal agreement that the Canadian economy is in dire need of attention, and that some effective measures are required to reverse the trends and start moving forward, all the government has to offer are some limited measures to cushion the effects of inflation on some of the more needy in our society-redistribution of income-but not one measure to increase the productivity of the economy, thereby increasing the size of the economic pie.
I should like to refer to an editorial which appeared in the Financial Times of October 30, 1978. It reads as follows:
Borrowing Authority Act
There are a number of examples of the way some fine master plan devised by Mr. Trudeau and the great thinkers in the Prime Minister's office has fouled things up: the controls program which held back investment, stifled job creation and kept Canada in a state of semi-permanent recession while doing little to curb inflation; the hassle over resource taxes; energy pricing; overtaxation of capital; the lack of any coherent economic policy; the commitment to redistributing wealth instead of creating it. These and other "initiatives" have produced four bad years for the economy when Canada could have been enjoying four good ones.
Bill C-7 does nothing to improve the health of the economy and its ability to support the demands being made upon it.
What are some of the factors which compound our problems at the present time? As mentioned in the editorial, there is a lack of any coherent economic policy. There have been ad hoc programs, policies born of desperation and fear, lacking forethought, and devoid of any regard to the consequences thereof. They have been the order of the day, and when challenged by failure and rejection the defence has been that the people do not understand what the government is trying to do, and they fail to take advantage of the largesse of the government in its attempt to bolster and expand the economy.
I should like to refer to another article which appeared in the Ottawa Citizen on October 24, 1978. The article was written by Dian Cohen, and reads in part as follows:
The best we can say about the economic policies of the Trudeau Liberals is that they are consistently bad. The federal government has been playing the same tapes for a long time and still has not the wit to realize they are not conducive to the economic well-being of this country.
There has been no recognition on the part of the government that perhaps it might carry some of the blame for the state of the economy and not just blame the people in the private sector. The lack or loss of confidence in the government's ability effectively to guide the affairs of this nation is demonstrated by the flight of investment capital, which has been referred to on many occasions in the House. I am not only referring to the flight of capital which would otherwise be invested in Canada by the international community, but the flight of investment capital on the part of Canadians as well. This is a clear indication that there is a complete lack of confidence in the economy. These investors choose to invest their money elsewhere.
There is another problem which we face in Canada today. It is the government's waffling as to the basic economic philosophy needed to meet the requirements and aspirations of Canadian society. Yesterday we were treated to a rather impassioned speech by the hon. member for Nanaimo-Cowi-chan-The Islands (Mr. Douglas) as he extolled or implied the glories of a socialist state. I should like to remind him that we in British Columbia were rather recently the recipients of the so-called advantages resulting from such experiments. I remain unconvinced that that is the road we want to travel in Canada.
Some months ago the Prime Minister (Mr. Trudeau) intoned the obituary of the market system and predicted the further intrusion of government into the lives of Canadians. I think it was he who stated that the government had no business in the bedrooms of the nation. Even if he has followed this particular philosophy, he still claims the keys to all other

November 16, 1978
Borrowing Authority Act
rooms in the house, because more and more the heavy hand of government is strangling initiative, industry, and the efficiency of the economy of this country. The Prime Minister later proclaimed his conversion to a belief in the doctrine of the pre-eminence of the private sector. But I am afraid that this remains uncorroborated by any fruits "meet for repentance" to which the scriptures allude.
The private sector in Canada has been the strength of the nation in the past and will so remain in the future, if given an opportunity to make an effective contribution. We must think of the place of the business community in the economy of Canada in providing opportunities for the great numbers of our people who seek ways of providing for their own needs and the needs of their families. They are prepared to take the necessary time, expend energy, lay the plans and face the obstacles of entering into business opportunities in Canada, because they have the desire to make a contribution and to look after their own needs. Not only must we think of the needs of the people in the business community, but also the provision of job opportunities for hundreds of thousands of fellow Canadians.
Many times when the government enters into restrictive measures as far as business is concerned, it fails to realize the role Canadian business is playing in the economy of the nation. Approximately 60 per cent, or perhaps more, of job opportunities is provided by small and medium-sized businesses. This calls into question any suggestion that we ought to have more government control, direction, and the heavy hand of government being exercised in the business community to a greater extent than at the present time. As well as providing job opportunities for hundreds of thousands of fellow Canadians, those engaged in the small and medium-sized business sector supply a great proportion of the revenue required by the government to assist those in society who cannot provide for themselves for a variety of reasons. They do not object to this. However, they object to the confiscation of their time, energy, and resources by a government which has neither the will nor the capacity to spend its money in an efficient and productive manner.
Also we are faced with the tragedy of unrealized possibilities in this country of ours. The editorial in the Financial Times to which I referred pointed out that these government programs and policies and other initiatives have produced four bad years for the economy when Canada could have been enjoying four good ones. This is the tragedy. This country has natural resources, skills, technology, will, and all other prerequisites for progress and success. But because of the absence of effective policies and leadership, its aspirations remain unfulfilled, its potential thwarted, its capacities underutilized and its shaky economy is maintained on borrowed money. It will be a burden on the backs of our children, their children and even succeeding generations, which they will not be able to bear. These are things that we have to remember. We have to recognize that these are the things which are facing us. Unless we can reach the point in our history when government, either this one or one that will be succeeding it, faces some of these

issues, we are going to suffer from a lagging economy, an overburdened public, and the inability of our nation to achieve the objectives that the people of Canada have a right to expect.
I intended to deal with the policies which have been presented by my leader and my colleagues in the Progressive Conservative party, but due to the limited time available it will not be possible. I would commend to hon. members the statements that have been made outlining the policies which we have been proposing in order to meet this challenge of a lagging economy. I would ask that they take the time to peruse these statements and speeches so that they might realize that all our participation in debate is not negative and that we are presenting ideas which we believe are essential if the problems of Canada are to be met, and if we are to have an economy that will respond and be able to meet the challenges of the days ahead.
Another weakness of the government is its addiction to borrowing, and it is underlined once again by the presentation of this bill. I would refer to statements made by the Prime Minister nine or ten years ago in which he talked about Canada being on the road to financial disaster if nothing was done to bring spending under control. We now find down through the years since then that not only has the problem remained unsolved, but it has been aggravated. The very things which the Prime Minister predicted would happen unless something was done then, are actually happening in our economy and society today.
This bill takes the form of a third demand for additional borrowing authority. We all know that there are two main sources of revenue for government, taxes and borrowing. As far as taxation is concerned, it has just about reached the limit, and I do not believe that the general public will stand idly by for additional increases. The problems they are facing now in meeting their own needs, because of the confiscation of their savings and income by the government, even now are not acceptable, and I believe that there will be a revolt in this country if the government proceeds along this line.
We are left therefore with one alternative, and that is borrowing. After two previous authorizations for borrowing, the government is back asking for authorization to borrow $17 billion, $7 billion for this fiscal year and another $10 billion for the coming year. It is unprecedented in our history for a government to ask for borrowing authority two years in advance in order to carry on its operations. We all have heard the statement of the Auditor General that spending is out of control. As a result, there was a comptroller general appointed, but he was not given the power to exercise any control, and the problems remain unsolved, the evil still remains in our midst, and we are faced with a continuation of policies that can only spell disaster for Canada.
I would like to refer hon. members to one or two statements in a book by William E. Simon called "A Time for Truth". Mr. Simon is the former secretary of the treasury of the United States. At page 10 of his book he says:
November 16, 1978

Unfortunately, all the rhetoric about deficits and balanced budgets obscures the real danger that confronts us: the gradual disintegration of our free society.... This country is in desperate danger.
In reference to the consequences of deficits, he says at the bottom of page 11:
-we all know what they are. We all know that neither man nor business nor government can spend more than is taken in for very long. If it continues, the result must be bankruptcy. In the case of the federal government, we can print money to pay for our folly for a time. But we will just continue to debase our currency, and then we'll have financial collapse.
That applies to Canada as appropriately as it does to the United States. Unfortunately, this government has not learned the lesson. Its ministers have not faced the issue or brought into effect the policies they indicated were necessary to bring government spending under control. I believe that we are in for serious trouble unless something is done immediately. Fortunately, because of the opposition which was raised to the borrowing authority for $17 billion, the government finally yielded and asked for borrowing authority for only one year.
As our debt increases we find that a greater percentage of our income is siphoned off to pay for the interest. Just ten years ago it was $893 million, and today it is in the neighbourhood of $4 billion-the cost of interest on our national debt. It is all right for this government to go ahead and spend money, borrow money, spend money and borrow money; but I shudder to think of the burden it will put upon my children, my children's children, and the generations beyond that who will have no way in which to extricate themselves from the morass in which they have been placed by the spending of this government today.


Mr. Paul E. McRae (Fort William):: I find this debate, Mr. Speaker, on the borrowing bill sown with a good deal of confusion. Perhaps it is deliberate confusion, but if it is not it is certainly confusion based on a great deal of naivete. When one talks about debt it is meaningless to say, for example, that I owe $10,000 and somebody owes $20,000, and then to say that one person is twice as much in debt as the other. Anyone knows that they must consider the individual's assets, his earning power, and the percentage of the cost of that loan of his income. These are the questions we have to ask when talking about debt. We speak about the borrowing power of government, and about the debt going up and up, but we need some reference point to understand the magnitude of that debt.
In 1960, which was the last year that the Progressive Conservative party held power in this country, the national debt, which had been rising, was 33 per cent of the gross national product. By 1972 the debt was down to 19 per cent of the gross national product. That is a considerable reduction, Mr. Speaker, so we were better off in 1972 in view of the fact that our assets had not quite doubled in that period. The debt today, and this figure is perhaps several months old, is only 18.7 per cent of the gross national product. In 16 years, therefore, the debt has been reduced from 33 per cent of the earnings of all the products and services in our country, to
Borrowing Authority Act
below 19 per cent. In the next year or so we can expect this to grow at a moderate pace. It will probably go up to about 21 or 22 per cent.
I think it is extremely important that we consider debt as a function of earnings, Mr. Speaker. We should also consider it in terms of the cost of maintaining that debt as a function of earnings. In 1967 interest on the national debt used up 1.9 per cent of the gross national product; in 1977, in spite of the fact that interest rates had nearly doubled, the interest costs used up 2.4 per cent of the gross national product. I want to put the thing in perspective. This government is very concerned, and as the opposition points out, it has a right to be, about the growing debt and the fact that we may be spending beyond our means. It is unfair, it is confusing, naive or both, to assume that debt is an absolute thing and not to relate it to the gross national product or our assets.
Another thing that concerns me about this borrowing bill is that it is made necessary by fluctuations in the Canadian dollar. Most of the need for authority to borrow $7 billion-we are not actually spending it; through the bill we only have authority to borrow-comes about because of efforts by the government to sustain the dollar at a reasonable level, or at least sustain fluctuations in the dollar. This should be better understood.
We would not need to borrow this $7 billion if we did not need money for this purpose, and if we do borrow it we are not going to spend-we have borrowed something in the order of $5.4 billion-but we are not going to spend that money on current expenses. What it actually means is that when we borrow-as we have borrowed the $5.4 billion-we pay interest for that, then put the money into an investment of some sort or another and receive an interest on that. The cost of this borrowing is the net difference between the cost of borrowing the money and the return we get from the investment of the funds.
I believe the Canadian dollar will rise to a higher level. The assets we have bought in terms of German deutschmarks, United States dollars, etc., will appreciate, and this will give us some advantage; it will reduce the actual net cost of servicing the whole loan.
We are not talking about going to Hades in a sidecar, or that the debt is going to destroy future generations and so forth; we are talking about stabilizing the dollar, investing money and the difference in interest between what we have to pay and what we accrue from our investments.
I want to deal with the Canadian dollar because I happen to believe that the depreciated dollar, at least no higher than 90 cents, has some great advantages for our economy, particularly at this time. I can see what it has accomplished in the community of Thunder Bay which is heavily involved in the pulp and paper industry, in the movement of grain, in building rail cars and other equipment for foreign markets, through the EDC. For the last year or year and a half, we have had the lowest unemployment rate of any city in Canada, and this can be attributed to the level of the Canadian dollar as much as anything. I think some other advantages have also accrued.

November 16, 1978
Borrowing Authority Act
Earlier this year the manufacturing sector of the economy was operating at about 81 per cent capacity. I think 90 per cent would be full capacity, so 81 per cent is low. That gap has been more than halved in the last four or five months and we are now operating around 87 per cent capacity, close to the maximum level of 90 per cent. That is a very significant gain, Mr. Speaker, and is partly due to the sale of exports which were able to compete on the world market because of the depreciated dollar. Canadian domestic producers are also able to compete much more easily with imports. It is almost like saying to Canadian manufacturers selling on the domestic market that we have given them a 15 per cent tariff and telling them to do something about it. I think something has been done. Closing the capacity gap from 81 per cent to 87 per cent is very important.
When we consider the trade position we see that in the second quarter we had a surplus in commodity trade of $176 million, to be exact. In the third quarter this had risen to $600 million, a very significant increase. The third quarter, the mid-summer and early fall, is normally considered a slow period. It is significant that this happened at that time.
There are those who spend a great deal of their time deploring the state of our economy, the low value of our dollar and how badly this reflects on Canadians. They should realize that we are getting into a very enviable position. When the Japanese trade deficit starts to plummet, we begin to see the advantage to Canada of having a low value dollar. We begin to see the effect this will eventually have on our dollar, probably pushing it up to 87, 88, or 89 cents.


Mr. Hnatyshyn:: The Trudeau buck.


Paul Edmund McRae: During this debate the hon. member for York-Simcoe (Mr. Stevens) referred to Crown corporations and Petro-Canada. I wish to make a few comments in this regard. We should very seriously look at where we are going in this area. The Leader of the Opposition (Mr. Clark) and the members of the Progressive Conservative party have said without question that if they are elected and become the government of this land, they will disband Petro-Canada.


Ramon John Hnatyshyn: Not if, when.


Paul Edmund McRae: They should another look at that position. I do not think Canadians want Petro-Canada disbanded. I fought for it from the beginning. I sat in on the 19 meetings of the Standing Committee on National Resources and Public works while it was considering Article II. I did so because I believe what we were doing was right.
There are three basic reasons for doing that. First, it is one of our most important resources aspects. Ninety per cent or more of those assets is owned and controlled by foreign corporations, most of them large corporations. We have less than 10 per cent ownership in those assets. I could not see how the private sector could turn that fact around. There is not one Canadian company that could move into the big four or five.

The only way to do that was to create a national company. That was absolutely essential.
The second point is that, regardless of what is being said this year, we are being faced with a downturn in our oil supplies. We will likely be out of conventional crude oil if not by the middle of the next decade, by the end of it. It is essential that we secure a supply of crude oil, conventional or synthetic, for the future.
There are those who are concerned about debt and the legacy for future generations. They should be concerned about the fact that by the end of this century there will be virtually no oil. Early in the new century we may be out of gas. That is a fine legacy for future generations.
It is important that Canada get control of the situation and that we do the best we can to secure our supplies. This may mean drilling in areas where it will not be profitable. It will mean becoming very much involved in Syncrude.
The third season I supported strongly, and will continue to support strongly, Petro-Canada, is simply this. In the mind of the public, the oil industry of this country has virtually no credibility. I do not say the industry is lying, but the public just does not believe it is telling the truth.
At one point they say we have resources that will last 123 years. They feed this information to the National Energy Board. The next time they say we will be out of oil by 1985. All of a sudden we are going to exporting again. There is no credibility in the mind of the Canadian public. In fact there is no credibility globally. That may not be justified, but that is the case.
For the sake of the industry, and the Canadian people, it is extremely important that the Canadian government own a company that is part of the oil industry in order that it can monitor the industry. One of the beneficiaries of that kind of monitoring will be the majors in the industry. If the majors are not lying, and I do not say they are, having a group with some credibility to explain the situation and put it in perspective will do good. If the majors are lying and the figures we are given are not correct, we will then know that.
This becomes very important in view of the fact that oil and gas prices have been allowed to increase very rapidly in the last three or four years. One reason for that was so that the industry could spend more money exploring for future supplies. This is another reason why we should be in a position to monitor. It is important that we have a company owned by the Canadian people in a position to monitor the industry.
Before suggesting that we eliminate Petro-Canada let us look at a parallel situation. There may be three or four, but I can name one or two companies, British Petroleum and Acquitains, both functioning in this country and principally owned by the governments where their head offices are located, Britain and France. I am sure there are other such companies, but possibly not as large.
I have not heard the opposition say that British Petroleum and Acquitains should get out of Canada because they are socialist operations. We accept those companies. They do
November 16, 1978

business here. They function well. If this is all right for Britain and France, why is it a cardinal sin if Canadians own such a company? We must maintain a position in the oil industry.


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


Ramon John Hnatyshyn: Mr. Speaker, I do not have very much time. In the few moments remaining I want to put a little perspective on what we are talking about in this debate.
Borrowing Authority Act


Mr. Deputy Speaker:: In my opinion the nays have it.
And more than five members having risen:


Mr. Deputy Speaker:: Call in the members.


Mr. Deputy Speaker:: Order. It being 4.02 p.m., the five hours allotted for the debate on the report and third reading stage have expired and it is my duty to interrupt the proceedings, pursuant to the order made Thursday, October 26, 1978, and put the question to the House.
The question is on the motion in the name of the hon. member for York-Simcoe (Mr. Stevens) seconded by the hon. member for Edmonton Centre (Mr. Paproski). Is it the pleasure of the House to adopt the motion?
All those in favour of the motion will please say yea.


Some hon. Members:: Yea.


Mr. Deputy Speaker:: All those opposed will please say nay.


Some hon. Members:: Nay.
(Division No. 10)
Alexander
Alkenbrack
Baker
(Grenville-Carleton)
Beatty
Brisco
Clarke
(Vancouver Quadra) Coates Corbett Cossitt Crosby
(Halifax-East Hants) Crouse Darling de Cotret Dick
Diefenbaker
Dinsdale
Ellis
Epp
Forres tall Gillies Grafftey Halliday
Abbott
Allmand
Andras
(Port Arthur)
Andres
(Lincoln)
Appolloni (Mrs.)
Baker
(Gander-T willingate) Beaudoin Beehard Begin (Miss)
Blackburn
Blais
Blaker
Blouin
Boulanger
Breau
Brewin
Broadbent
Buchanan
Caccia
Cafik
Campagnolo (Mrs.) Campbell (Miss)
(South Western Nova) Campbell
(LaSalle-femard-Cote
Saint-Paul)
Caron
Chr6tien
Clermont
Collenette
++YEAS
Messrs.
Hare
Hnatyshyn
Holmes
Howie
Huntington
Johnston
(Okanagan-Kootenay) Kempling La Salle Lawrence MacDonald (Miss) (Kingston and the Islands)
Masniuk
Mazankowski
McCain
McCrossan
McKenzie
McKinley
McKinnon
Mitges
Muir
Munro
(Esquimalt-Saanich)
Murta
++NAYS
Messrs.
Comtois
Condon
Corbin
Corriveau
Cot6
Cullen
Cyr
Danson
Daudlin
Dawson
De Bane
Demers
Dionne
(Northumberland-
Miramichi)
Douglas
(Bruce-Grey)
Douglas
(Nanaimo-Cowichan-The Islands)
Duclos
Dupont
Ethier
Faour
Faulkner
Firth
Fleming
Foster
Francis
Gauthier
(Ottawa-Vanier)
Gendron
Goodale
Neil
Nowlan
Oberle
Parker
Patterson
Peters
Schumacher
Scott
(Hamilton-Wentworth)
Siddon
Smith
(Churchill)
Stanfield
Stevens
Stewart
(Marquette)
Whiteway
Whittaker
Wise
Woolliams Yewchuk-61.
Goyer
Gray
Guay
Guilbault
Harquail
Herbert
Hogan
Holt (Mrs.)
Hopkins
Horner
Isabelle
Jamieson
Janelle
Johnston
(Westmount)
Joyal Kaplan Knowles (Winnipeg North Centre) Lachance Lajoie Lalonde Landers Lang Langlois Laniel Lapointe Laprise Leblanc (Laurier)
LeBlanc
(Westmorland-Kent)

November 16, 1978
Borrowing Authority Act
Messrs.
Lee	Nicholson (Miss)	RoyLefebvre	O'Connell	(Timmins)Lessard	Olivier	RoyLoiselle	Orlikow	(Laval)(Chambly)	Ouellet	Sauve (Mrs.)Loiselle	Parent	Savard(Saint-Henri)	Pearsall	SmithLumley	Pelletier	(Saint-Jean)MacDonald	Penner	Stewart(Cardigan)	Philbrook	(Cochrane)MacEachen	Pinard	SymesMacFarlane	Portelance	TessierMacGuigan	Prud'homme	TrudeauMaine	Rae	TrudelMarceau	Railton	TurnerMarchand	Raines	WatsonMartin	Reid	WhelanMclsaac	Roberts	Wood-135.McRae	Robinson	Milne	Rodriguez	Munro	Rooney	
(Hamilton East)


Mr. Speaker:: Therefore I declare the motion lost.


Hon. Jean Chretien (Minister of Finance) moved: that Bill C-7, to provide supplementary borrowing authority for the fiscal year 1978-79 and to amend the Financial Administration Act, as reported (with amendments) from the Standing Committee on Finance, Trade and Economic Affairs, be concurred in.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


Mr. Speaker:: All those in favour of the motion will please say yea.


Some hon. Members:: Yea.


Mr. Speaker:: All those opposed will please say nay.


Some hon. Members:: Nay.


Mr. Speaker:: In my opinion the yeas have it.
And more than five members having risen:


Mr. Speaker:: Is the House agreed that we should proceed to the vote without a further calling of the members?


Some hon. Members:: Agreed.


Mr. Speaker:: I declare the motion carried.


Joseph Jacques Jean Chrétien: that the bill be read the third time and do pass.
Motion agreed to and bill read the third time and passed.
November 16, 1978


POINT OF ORDER
Stanley Howard Knowles: Mr. Speaker, I rise on a point of order. Earlier today this House unanimously agreed to the passing of the third reading of Bill C-5 without debate. I know that this involved restraint on the part of some of us on this side of the House, but we felt that the circumstances were such that the bill should be passed as quickly as possible. The fact is that more than 200 times a month the situation arises where a spouse in the 60 to 65 year range loses the older spouse and loses the allowance. The extension of that allowance is-


Some hon. Members:: Order.


Mr. Speaker:: Order, please. Would the hon. member for Winnipeg North Centre (Mr. Knowles) get to his point of order?


Stanley Howard Knowles: I will be glad to do so. The reasons for my concern are apparent from what I have said. This bill was passed and sent to the other place this afternoon. However, my understanding is that although in the other place the bill was given first reading, Their Honours refused to proceed with it on second reading today. The result is that every day's delay means that seven more widows do not get-


Some hon. Members:: Oh, oh!


Some hon. Members:: Order, order!


Stanley Howard Knowles: Mr. Speaker, on my point of order I am asking if the government House leader will have consultation with Their Honours in the Senate to see if they cannot meet again today and deal with this matter.


Some hon. Members:: Oh, oh!


Some hon. Members:: Hear, hear!


Monique Bégin: Mr. Speaker, I also heard this Senate report about which I inquired. I would like to thank hon. members, particularly my colleagues on the opposition side, who would have liked to take part in the debate this afternoon but who, having already expressed their views, agreed to withhold their additional remarks so that we could pass this bill unanimously. This is a bill which will give senior citizens $300 million in 1979 but which means starting from today a possible loss of money each day for those who receive the spouse's allowance, and I would like to say that in this case the Senate does not help speed up the business of the House.
Private Members' Business


Mr. Speaker:: Order, please. I cannot see in fairness why two other hon. members may not have occasion to praise the bill which is evidently having difficulty which is beyond the scope of our procedures by any stretch of a point of order.


Walter David Baker: Mr. Speaker, it is the concern about the relevancy of it that worried me. I just want to say, through you, to the minister that if she is concerned, beyond making a speech, with respect to her bill and about a day's delay in the Senate, I want to assure the government House leader that we will be happy to deal with an amendment very quickly to make it retroactive, so that we can deal with that matter.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


Allan Joseph MacEachen: Mr. Speaker, in reply to the suggestion made by the hon. member for Winnipeg North Centre (Mr. Knowles) I should say that when the House gave third reading to this bill, the Old Age Security Act amendment, we transmitted that information through the normal channels to the other place with the suggestion that, because of the needs that have been pointed out, particularly the benefits that would accrue to widows, action should be taken as quickly as possible and that we would attempt to arrange royal assent in order to provide that the bill be fully in effect before the end of the day.
Like other hon. members I regret that the Senate did not take action on that bill and that it adjourned without dealing with it. There is no way I can have consultations with members of the other place. I would just ask my colleagues in the House of Commons if they do not think now that the proposals made by the Prime Minister (Mr. Trudeau) with respect to the Senate-


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


PRIVATE MEMBERS' PUBLIC BILLS
Mr. Speaker:: It being five o'clock, the House will now proceed to the consideration of private members' business as listed on today's order paper, namely, notices of motion (papers), private bills, public bills. There being no items under the heading notices of motions for papers, or under the heading of private bills on the order paper, the House will proceed to public bills. I understand there is some disposition to call the measure standing in the name of the hon. member for Nickel Belt (Mr. Rodriguez).

November 16, 1978
The Budget-Mr. Chretien


Stanley Howard Knowles: Mr. Speaker, earlier today there was some discussion about this and it was understood that the hon. member for Nickel Belt (Mr. Rodriguez) was tied up in committee this afternoon and so would not be able to proceed with that bill. Perhaps there is another one.
If there is no other bill to take, this would be a good day for the House to take my bill to abolish the Senate.


Mr. Speaker:: Do I understand then that the bill standing in the name of the hon. member for Nickel Belt will not proceed at this time and will stand?


Some hon. Members:: Agreed.


Walter David Baker: Mr. Speaker, perhaps I could help the government out of a dilemma. There is a bill on the order paper in my name dealing with lobbyists. I think there may be some way of having us proceed with private members' bills. If we cannot do that, or if it is inconvenient to do that, I would think, since this is budget night and many members are preparing themselves for budget night, that it would not be inappropriate if we called it six o'clock.


Mr. Speaker:: Is that agreed?


Some hon. Members:: Agreed.


Mr. Speaker:: Agreed and so ordered. It being six o'clock, I do now leave the chair until eight o'clock this evening.
At 4.59 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.


[Stage Direction]
FINANCIAL STATEMENT OF THE MINISTER OF FINANCE Hon. Jean Chretien (Minister of Finance) moved:
That this House approves the budgetary policy of the government.
He said: Mr. Speaker, I welcome this opportunity to place before the House an assessment of the state of the Canadian economy and my proposals for improving our economic performance.
In recent weeks I have travelled to many parts of Canada. I have talked to many Canadians-my provincial colleagues,

businessmen, labour leaders, economists and laymen. Everywhere I have been told that my budget must be responsible, that it should create an atmosphere of stability and certainty in the country and that it should aim at lowering costs, including the costs of government.
[Stage Direction]
The General Economic Situation and Outlook
Let me begin by reviewing our current economic situation. The economy in 1978 made much progress, although the results have fallen short of my earlier expectations.
It is true that employment has risen strongly. In October,
362,000	more Canadians had jobs than a year earlier. A larger proportion of Canadians is working now than ever before, but unemployment is still too high.
The increase in the gross national product in current dollars is likely to be close to the 11 per cent I forecast in the April budget. But prices have risen by more and output has gone up by less than was forecast at that time.
The prices of the things we produce are likely to be up about 6'/2 per cent. The growth in output should be close to 4 per cent. We had a slow first quarter when the United States economy was depressed by the coal strike. We have not been able to catch up fully since.
The consumer price index rose more sharply than had been expected. In September, it was 8.6 per cent higher than a year earlier. This renewed outburst of inflation was not the result of any acceleration in our own incomes or our own domestic costs. It was the result of higher food prices and the decline in the dollar.
This faster rise in the CPI reduced the growth rate of real income and real purchasing power of Canadians. The result was that consumer spending rose by less than had been expected, and this was the main reason for the shortfall in growth. Consumer spending has risen this year, in real terms, by h'h per cent to 4 per cent. Employment is higher and personal income taxes have been cut. A special stimulus has been provided by the temporary reductions in provincial sales taxes, largely financed by my April budget. But higher prices of food and other imported consumer goods have weakened the impact of these expansionary forces.
Since the Bonn summit, several countries have taken measures to stimulate their economies. Growth is expected to be rather more rapid in 1979 than in 1978 outside of North America. But it will slow down in the United States. The outlook is for expansion in Canada at a greater rate than in the United States next year. But because our most important trading partner will be growing more slowly, it will be hard for us to reduce the slack in our economy. Moreover, our trade balance will not improve as rapidly as it should, given our improved competitive position, although it will be higher this year. In these circumstances, we must get better access to the markets of other countries, especially those which continue to run very large trade surpluses. The success of the Tokyo Round of trade negotiations remains critical to us. In our
November 16, 1978
[Stage Direction]
bilateral relations with other countries, we will press hard for greater opportunities to trade.
We have been through a period of great disturbance in international financial markets. The American dollar has come under severe downward pressure. The United States government has taken steps to rectify the situation, including sharp increases in interest rates. Our own situation has necessarily been made more difficult by the higher interest rates that have accompanied our efforts to control the rate of monetary expansion and maintain an appropriate relationship with interest rates in other countries.
[ Translation]
Laying the Basis for Future Growth
While recognizing the setbacks and difficulties we have encountered, I want to emphasize that Canada has made great progress since the introduction of the Anti-Inflation Program in 1975. We have been getting the fundamentals right and laying the basis for sustained growth in the 1980s.
In the last three years the Bank of Canada has gradually reduced the rate of growth of the money supply. It has set target ranges for monetary expansion, successively reduced them and consistently succeeded in staying within them.
Expenditures by all levels of government have been brought under tight control. The growth of total federal outlays has been held to less than the growth of the gross national product since 1976-77 owing in large part to the tough leadership of my colleague, the President of the Treasury Board.
The ceiling on total outlays for next year has been established at $52.6 billion, an increase of 8.9 per cent over this year's ceiling. This increase is well below the expected growth of the GNP. Many programs will have to make do with a lower level of real resources; some activities have been eliminated. We are having to cut back on the rapid growth in our transfers to the provinces. Even so, our expenditure budget is coming under great pressure from the rising cost of our statutory programs, especially interest on the public debt. There can be no weakening in our determination to keep expenditures under tight control.
Average increases in wages and salaries have been brought down from a high of 15 per cent to 6 per cent in the last year of controls. I do not attribute all of this to our prices and incomes policy, because no doubt there would have been some slowdown in any event. But I am sure that controls made a contribution to the process. That appears to be the view of economists who have closely examined the record.
While domestic costs were being brought under better control, the decline in the exchange rate reversed the loss of competitiveness which we suffered earlier in the decade. Canadian firms are now in a good position to increase their sales in foreign markets and win back the share of our domestic markets which they had lost to foreign competitors. This is already happening. The good September trade figures
The Budget-Mr. Chretien
suggest that we will have a record trade surplus this year of close to $4 billion.
Industrial Policy
Mr. Speaker, our manufacturing industries are benefiting most from this improvement in our competitive position. They suffered most when we priced ourselves out of world markets. The decline in manufacturing output and employment was a major concern, but the latest data show a turnabout in the past year.
Manufacturing production in August was 7 per cent higher than a year ago. New orders have risen sharply. Capacity utilization is back up to 86.4 per cent, which is above the long-term average. Manufacturing employment in October was up 110,000 or 5.7 per cent over a year ago.
The government has recognized the strategic importance of the manufacturing industry and provided assistance to it in many ways-through the tax system, through the Export Development Corporation, the Federal Business Development Bank and the Enterprise Development Program. In the reallocation of government expenditures announced September 8, we set aside an additional sum of $300 million to assist industry to exploit new markets, to develop new technology and to reorganize to meet the challenges which lie ahead. This will reinforce the measures contained in the last two budgets which have provided generous tax incentives for research and development.
I am frankly sceptical about the search for a single grand industrial strategy in a competitive market system. But we must have a set of sensible industrial policies, designed to provide a healthy framework for all industries and specific incentives tailored to particular needs. This government has gone a long way to putting these in place, and I will go further tonight.
The effective process of consultation between business, labour and government launched by my colleague, the Minister of Industry, Trade and Commerce (Mr. Horner) is contributing to the further development of our industrial policies.
Energy
There is good news from another critical sector of the economy-energy. The massive increase in world energy prices in the early 1970s created severe difficulties for all consuming nations. Because we are relatively rich in energy, we have been able to cushion the shock by phasing in higher prices gradually. At the same time, we have provided generous incentives to spur the development of new energy sources and we have put in place a number of conservation measures to restrain demand.
Our policies are working. In contrast to the perspective only two years ago, the outlook for energy self-reliance and the
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sector's contribution to our economic performance are most encouraging.
This is true of all the main energy sources, but particularly of oil and gas.
According to the National Energy Board, domestic oil shipments to Montreal can continue until at least 1995 and exports of light oil could be maintained at 55,000 barrels per day for three years. Compared with the Board's 1977 forecast, the new figures indicate the basis for an improvement in our trade balance of more than $2 billion in total over the next three years.
Hon. members will be aware that the National Energy Board is holding hearings on the supply and demand for natural gas and is expected to report in February. There is mounting evidence that our reserves of natural gas are significantly more than estimated just a few years ago. The indications are that there may be more than enough to meet our foreseeable domestic needs. But the whole magnitude of our reserves remains to be determined. Primary emphasis must be laid on expanding the use of gas in Canada, and this in itself will displace imported oil. The favourable trade effects of the new gas outlook will be substantial. For example, an additional 500 millions cubic feet per day, whether used to displace imported oil or for exports, would improve our trade surplus by $500 million a year.
Growing Confidence in the Economy
All of these developments are building the greater confidence in our medium-term prospects which 1 found in my pre-budget consultations. There is a growing faith that Canada can launch itself on the sort of sustained expansion which I portrayed for the February meeting of first ministers.
We should not underestimate the strength of the expansionary forces that are at work. A powerful stimulus to sound economic growth is now coming from a more competitive dollar. This will not only improve our trade performance: it will also lead to more investment as Canadian firms increase their productive capacity and modernize their equipment in order to take advantage of the new opportunities.
A recent survey showed that 300 large corporations are planning to increase their spending on plant and equipment next year by 16 per cent. Allowing for rising costs, this represents a substantial increase of about 8 per cent in the volume of investment. I welcome this evidence that firms are pressing ahead in 1979 with the investments we will need in the 1980s. We should do all we can to encourage this development. We must respond to the particular problems confronting individual sectors of the economy. We must strengthen our efforts to encourage investment and growth in the less favoured regions.
The Outlook for Costs and Prices
Our most immediate challenge, however, is to hold onto the gains we have been making in our competitive position, as we come to the end of mandatory controls over prices and incomes. Decontrol is not an easy business at the best of times; our phased approach was designed to reduce the chances of a

post-control bulge. It is all the more difficult when we have been through a surge in the cost of living, caused not by any acceleration in our domestic costs, but by the rise in food prices and the fall in the dollar.
These unfavourable influences are coming to an end. We have already seen some decline in food prices in August and September which brought about a welcome pause in the rising cost of living. A great deal more stability is expected from now on if crops are normal around the world.
There is good reason to believe that the major adjustment in the exchange rate that was required to restore our competitive position has been completed.
This can only have a lasting effect if the feedback on the domestic economy from the higher price of imports and export-related goods does not result in a fresh outbreak of large, leap-frogging wage and price increases in Canada.
Steadier food prices and a steadier exchange rate will mean that we have every chance of a much lower rate of inflation emerging even though we will probably see a jump in the cost of living for October. This will be mainly because of the ending of provincial sales tax cuts. But that should be no more than a temporary interruption of the trend unless we Canadians become unreasonable in our income demands.
In the last year, wage increases in Canada have been lower than those in the United States. So far, post-control wage settlements are showing only a very modest acceleration. I commend labour and management for the responsibility they have generally shown; increased competitiveness means more jobs. The federal and provincial governments agreed in February that compensation in the public sector should follow rather than lead the private sector.
While I urge Canadians to exercise self-discipline in their income demands, I would stress the fact that Canadian workers have done well in the last three years. Real disposable income per employee in Canada has increased by over 7 per cent. In the United States real disposable income per employee has declined by nearly 2 per cent in the same period.
Even so, there is some risk that we will launch ourselves again on a price-wage spiral which will undo all the progress we have made. We must reduce the rate of inflation to 6 per cent as soon as possible, but it will not be good enough to stabilize the rate of inflation at that level. Inflation must keep on declining if we are to expect really good economic performance.
[Stage Direction]
Fiscal Policy Choices
I have now spelled out in some detail the economic background to this budget as I see it. In considering what action I should take on taxes, the obvious question is how much room do I have.
A wide range of views on this question has been put to me in my recent talks. I have been urged to cut taxes massively in
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order to stimulate the economy. Given the expansionary forces which are already at work, I do not think this would be wise, particularly when our cash requirements are so high.
On the other hand, I have been told that I should do nothing to add to the $9.7 billion of cash requirements already forecast for 1979-80. But action is needed now to encourage investment, to respond to the needs of sectors and regions, and to keep our costs competitive, while reducing our cash requirements from the present high level.
I believe I have some room because of the efforts we have made to reduce our expenditures. I think we should share these savings with the public.
I would like now to turn to the tax measures that I am proposing tonight. Let me begin with personal income taxes.
Personal Income Tax
Mr. Speaker, an outstanding feature of our personal tax system is the inflation indexing of personal income tax exemptions and brackets. Canada is one of the very few industrialized countries that provide such indexing. Since its introduction in 1974, indexing has reduced the taxes paid by Canadians by billions of dollars.
I would like to announce that the indexing factor for 1979 will be 9 per cent. As a result, for example, the total personal exemptions for a family of four will increase by $490 to $5,970. This indexing adjustment will also increase the $200 child tax credit to $218 per child payable in the spring of 1980.
Indexing will reduce federal taxes paid by Canadians by about $1.2 billion for the 1979 taxation year. It will also reduce provincial income taxes in those provinces with tax collection agreements by some $400 million. As a result of these built-in reductions, Canadians will pay a lower share of their total income in taxes next year.
I have a further announcement to make with relation to personal income tax. Taxpayers are currently permitted an employment expense deduction of 3 per cent of wage and salary income with a maximum deduction of $250. I am proposing to double the maximum for this deduction from $250 to $500 for 1979 and subsequent taxation years.
This change will benefit most working Canadians. It is estimated that it will reduce their taxes by $270 million in 1979-80.
Hon. members expressed concern at the time of the last budget over the taxation of registered retirement saving plan proceeds. This concern was directed toward the situation where both parents die, leaving behind minor or disabled children. I undertook to review the situation. I now propose that the provisions be amended for the benefit of these children.
The Budget-Mr. Chretien Unemployment Insurance Premiums
Employees and employers will also benefit from a cut in unemployment insurance premiums. On behalf of my colleague, the Minister of Employment and Immigration, I am pleased to announce that the weekly employee rate for 1979 will be reduced from $1.50 per $100 of insurable earnings to $1.35. The employer rate will be reduced from $2.10 to $1.89. The effect of this will be to increase take-home pay and reduce costs to employers by about $300 million in 1979.
The built-in reductions in personal income tax, the increase in the employment expense deduction, and the cut in unemployment insurance premiums will improve the take-home pay of Canadians by about $2 billion in 1979. The great majority of Canadians now recognize the inflationary impact of too rapid a rise in money incomes. I am confident that they will take into consideration these improvements in disposable income in setting their income demands over the year ahead. [English]
Tax Structure Changes
Mr. Speaker, I come now to important structural tax changes. A stable tax system is essential for economic growth and development. It must be equitable. It must reward initiative and enterprise. Defects in the system and unchecked abuses lead to unfairness. Special tax incentives that miss their target do more harm than good. For these reasons, tax system stability cannot mean leaving the system unchanged.
We have to keep the tax system under constant review. I am releasing tonight two major studies made by my officials. One is a study that lay behind the decision of the government to introduce the refundable child tax credit. The second makes a comprehensive comparison of the Canadian and United States tax sytems. Mr. Speaker, this second study destroys a myth. It shows conclusively the Canadian personal tax system compares most favourably with that of the United States. I have also found that our business taxes are fully competitive. Our system is basically sound. There is, however, need for certain changes-some of a relieving nature and some not.
Commodity Taxes
First, certain changes are needed in federal sales and excise taxes. Some tax measures designed to conserve energy are not working as they should.
In my view the special 10 per cent excise tax on marine engines and private aircraft and the 5 per cent tax on motorcycles are having adverse economic effects. The contribution of these taxes to energy conservation has been minimal. I therefore propose to eliminate them, effective tonight. At the same time, I want to put all non-commercial users of gasoline on the same basis. I am therefore extending the special 7 cents a gallon excise tax on gasoline to aviation fuel for non-commercial uses.
To encourage energy conservation, storm doors, windows and automatic timer-control devices were exempted from federal sales tax. These exemptions have proven extremely difficult to control and to administer. For example, most glass
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used in new construction is now exempt from tax, even though it is less energy-efficient than solid-wall construction which is taxable. The exemptions will therefore be withdrawn effective tonight. Also, the sales tax exemption for insulation materials will apply only to items with genuine insulating properties. Solar-powered water heaters will be exempted from tax. These measures will increase the effectiveness of the government's energy conservation program.
Air Transportation Tax
An air transportation tax is currently used to help finance a widening range of airport services. Unfortunately, the costs of these services have been increasing rapidly. I have been asked by my colleague, the Minister of Transport (Mr. Lang), to take steps to improve cost recovery. For flights within Canada and to the United States, I am therefore proposing an increase in this tax to 15 per cent of the air fare, with a maximum of SI5. For international flights, the tax will be increased to $12 with provision for a subsequent increase to $15. This is another step in an ongoing process to shift the costs of airport services from the general taxpayer to those who use the airports. These increases will come into effect after March 31, 1979.
Tariffs
I am not proposing to make any tariff changes in this budget, partly because the multilateral trade negotiations are now at a critical stage. 1 do expect to be introducing in the near future a new schedule of tariff rates for fruits and vegetables.
I announced in my last budget that we were entering into negotiations on these products with our trading partners, following an exhaustive study of the industry by the Tariff Board. These negotiations are well advanced and should be concluded shortly.
Corporation Income Tax
Let me turn now to several important structural changes in the area of corporation taxes.
As a result of tax benefits introduced by this government over the past few years, small businesses in Canada enjoy very favourable tax treatment. Small Canadian-controlled private corporations pay federal income tax at less than half the normal corporation rate. The dividends they pay qualify for the generous dividend tax credit. As a result, the total tax on income from small incorporated businesses is below the level of personal tax on the same amount of wage and salary income.
Mr. Speaker, the very generosity of the measures makes it essential to ensure that they are effectively targeted. Some individuals have rearranged their affairs simply to make their personal, professional and investment income eligible for taxation at the low small business rate. It would be wrong to allow such practices to continue.
I am introducing changes to the Income Tax Act to ensure that the application of the low corporate tax rate is reserved for those small businesses for whom it is really intended. These will include those engaged in manufacturing, processing, mining, construction, farming, fishing, logging, transportation,

wholesale and retail trade and other businesses as may be prescribed. In this way the generous tax incentives will be maintained for small businesses that need capital to expand and create jobs. The new measure will apply to taxation years starting next year.
I have also concluded that it is essential to amend the Income Tax Act to change the treatment of income debentures and term preferred shares. These securities are currently treated as equities for tax purposes, even though they are essentially debt obligations. As a result, income earned on such securities by banks and other financial institutions is tax-exempt. For the most part they are used for the financing of a relatively small number of multinational and large Canadian corporations. Their use has resulted in a very substantial loss of revenues to the federal and provincial governments. This has been of concern not just to me but also to my provincial colleagues, as we held discussions last week at the finance ministers' meeting in Ottawa.
The proposed amendments will generally apply to any such securities issued after tonight. They will not apply to issues outstanding or committed. Nor will they affect the tax treatment of common and ordinary preferred shares.
I am proposing other structural changes of a technical nature in the Notice of Ways and Means Motion which I am tabling tonight. One of the more important of these is a broadening of the deductibility of security underwriting expenses.
Sectoral and Regional Policy
Mr. Speaker, a strong industrial structure is vital to Canada's future. I have benefited greatly from the sectoral consultations 1 have already referred to.
The recommendations of the 23 industry task forces and the report of the Second Tier Committee have been carefully reviewed in my department. The supplementary material contains a summary and analysis of the tax proposals in these reports. In response to some of these recommendations of business and labour, I wish now to propose measures to improve efficiency, to lower costs and to promote a better distribution of economic activity across regions.
Investment Tax Credit
My first proposal concerns the investment tax credit. Since 1975 this credit has supported expansion and modernization of business. It is scheduled to expire on June 30, 1980.
I am now proposing to extend the credit indefinitely. This will provide benefits to manufacturing, the resource sector, farming and fishing.
But I want to go further. I therefore propose that the basic rate of the investment tax credit be raised from 5 to 7 per cent, effective immediately.
I also want to give increased support to regional development. For investments in areas designated under the Regional Development Incentives Act, other than in the Atlantic Provinces and the Gaspe, the credit will be raised from 7.5 per cent to 10 per cent. These areas include most of Quebec, all of
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Northern Ontario, Manitoba and Saskatchewan, parts of Northern Alberta and British Columbia and all of the Yukon and Northwest Territories. For Atlantic Canada and the Gaspe, the investment tax credit will be doubled from 10 per cent to 20 per cent.
The importance of transportation was strongly emphasized by the first ministers last February. A modern and efficient transportation system is fundamental to prosperity throughout this vast country. I am therefore proposing that investment in equipment for rail, air, water and long-haul road transportation now qualify for the basic 7 per cent investment tax credit.
All these changes in the investment tax credit will confer benefits of $500 million in the first full year of application. This is $150 million more than under the present system.
Research and Development
A common theme of the industry task forces to which I have already referred was the importance of adequate incentives for research and development.
The government has already moved a long way in this direction. A 100 per cent write-off of these expenditures has been in place for many years. The March, 1977, budget introduced tax measures to extend the investment tax credit to both current and capital expenditures on R and D.
In April of this year I provided a new 50 per cent deduction for firms which increase their research and development. The government has also announced a package of direct grants and subsidies for industrial R and D.
I am proposing to do more. The basic investment tax credit for research and development will be doubled, from 5 to 10 per cent. In the Atlantic provinces and the Gaspe this credit will be 20 per cent. However, I want to provide a special measure of assistance for small business corporations. These corporations in all parts of Canada will qualify for a research and development tax credit of 25 per cent.
[ Translation]
Resource Taxation
Let me turn now to the resource industries, and mining in particular.
Federal and provincial finance and resource ministers have just concluded an in-depth review of the tax situation in mining. The federal tax system has been found to be basically sound. However, some changes could be introduced to spur the development of new ventures. I want to take the lead here. Following our recent meetings. I feel confident that provinces will do their part.
I propose that the current write-off for development expenditures in mining incurred after tonight be raised from 30 per cent to 100 per cent.
Furthermore, I am proposing that for new mines, the costs of associated townsites and social assets earn depletion. I am also extending indefinitely the fast write-off for pollution
The Budget-Mr. Chretien
control equipment, which will be of particular benefit to mining.
Also, Mr. Speaker, the regional increases in the investment tax credit are also of special value to this sector.
I want to assure the industry of the federal government's intention to pursue the spirit of federal-provincial co-operation established during the review. It is not my intention to initiate tax system changes that would create uncertainty. Nor will I offset the benefits from tax reductions that provinces may introduce. In the area of oil and gas, there has been a significant response to the incentive for drilling funds. This incentive expires on June 30, 1979. I have concluded that we must continue to encourage a high level of exploration activity. I therefore propose that the incentives be extended to December 31, 1981.
Pulp and Paper
I am anxious that the pulp and paper industry take advantage of the very favourable situation created by the lower value of the Canadian dollar. It should use this opportunity to modernize and so guarantee its future competitiveness. The federal government and a number of provincial governments are working together to reduce the high cost of wood supply. They are also studying ways to strengthen and modernize the industry.
Two of the measures in this budget will contribute to these efforts. The increase in the investment tax credit, and its enrichment in slower-growth regions, will be of considerable benefit to the pulp and paper industry. In addition, the indefinite extension of the two-year write-off for water pollution abatement equipment is particularly helpful.
Housing
I want to announce two measures to reinforce the government's support for housing. First, the tax incentive for multiple-unit residential buildings will be extended for one year. Second, developers will be allowed to deduct the carrying charges incurred after tonight on their land inventory.
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Manufacturers' Sales Tax
I now come to one of the most important tax measures in my budget. I am proposing to reduce the 12 per cent manufacturers' sales tax to 9 per cent, effective tonight. This will affect all goods now subject to the 12 per cent rate with the exception of alcoholic beverages and tobacco.
Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


Joseph Jacques Jean Chrétien: I do not smoke and I do not drink very much. Gasoline is not subject to the 12 per cent ad valorem rate and will not be affected. Construction materials will continue to be taxed at the low 5 per cent rate.
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This sales tax measure will reduce taxes payable at the manufacturers' level by $280 million this fiscal year and by $1 billion in 1979-80.
In accordance with standard practice, my colleague, the Minister of National Revenue has asked me to give notice that no claims will be entertained for refunds of tax in respect of goods on which the 12 per cent tax has been paid.
Unlike provincial sales taxes which apply at the retail level, the federal tax is levied on sales by manufacturers and importers. I want this cut to be passed on to consumers. That is why I have made a cut of significant size with no terminal date. Experience suggests that such tax cuts are passed on. I am appealing to manufacturers, wholesalers and retailers-I am surprised to see the hon. Leader of the Opposition (Mr. Clark) smiling. If he believes in the marketplace, he will conclude that the tax cut will be passed on.


Some hon. Members:: Hear, hear!


Joseph Jacques Jean Chrétien: I am appealing to manufacturers, wholesalers and retailers to make sure that the consumer gets the benefit. As well, I am asking my colleague, the Minister of Consumer and Corporate Affairs (Mr. Allmand), his department, the Anti-Inflation Board and the Centre for the Study of Inflation and Productivity to monitor the situation closely. Consumers themselves, by seeking out competitive price reductions, can help to make this measure effective.
Impact on the Economy
I estimate that the cut in the sales tax will reduce the increase in the consumer price index by one-half of one per cent. This comes on top of the proposed postponement of the oil price increase and the reduction in the gasoline excise tax announced in August. These two will have a similar impact.
These measures will have a direct effect on wage costs through cost-of-living clauses in wage contracts. More important, a somewhat lower rate of price increase will be helpful in moderating new settlements. The cut in income taxes as a result of indexing, the improved employment expense deduction and the reduction in unemployment insurance premiums will also help to relieve the pressures for large increases in money incomes.
I therefore 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 in 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.
I am projecting an increase in real output next year of between 4 per cent and 4'A per cent. I would expect the number of jobs to increase by at least 250,000. I expect that

the consumer price index will average 6V2 per cent above the 1978 level, but the increase from the fourth quarter of this year to the fourth quarter of next year should be under 6 per cent.
My revenue forecasts are based on an increase of 11 per cent in the current dollar value of the gross national product. The Fiscal Position
Mr. Speaker, I would like now to table projections of the government's revenues and expenditures, the Notice of Ways and Means Motion, supplementary information giving details of the measures proposed tonight, and the two studies I mentioned earlier. I would also like to ask for the consent of the House to include in Hansard the usual tables on the government's accounts together with the explanatory notes.


Mr. Speaker:: Is the House agreed?


Some hon. Members:: Agreed.


Mr. Speaker:: Agreed and so ordered.
[Editor's Note: For tables referred to above, see Appendix.]


Joseph Jacques Jean Chrétien: This fiscal year I expect financial requirements, excluding foreign exchange transactions, to total $12.1 billion. The increase from the $11.8 billion forecast in September is due to the sales tax cut and other measures announced tonight.
I am forecasting financial requirements for 1979-80 of $10,750 million. This is an increase of $1,050 million from my previous forecast of $9.7 billion. The loss of revenues from the measures I have announced tonight which had not been reflected in the previous forecast amounts to $1,380 million. But there is some offset arising from the favourable impact of these measures on the economy and from other minor adjustments since the last forecast.
The financial requirements in 1979-80 will thus decline by $1,350 million or 11 per cent from this year's level. If account is taken of the special factors relating to Canada Savings Bond interest, financial requirements would increase by about $350 million. The deficit on a national accounts basis is forecast to increase by $200 million.
These financial requirements are large, but their size must be kept in perspective. They are lower than this year and they are being incurred at a time when unemployment and interest rates are high. Morever, the provincial governments are providing rather less stimulus than in the past, mainly because of the substantial surpluses of the resource-rich western provinces. With faster growth in the private sector in prospect over the medium-term, coupled with continuing expenditure restraint, significant reductions in the deficit can be expected.
I am confident that our financial requirements this year and next can be met without causing undue pressures on financial markets.
Concluding Remarks
Mr. Speaker, in the last three years Canadians have worked hard and responsibly to regain our competitive position in world markets. We are starting to reap the benefits. Our costs
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are now competitive and we have seen recently a great improvement in our balance of trade and a firming of investment plans.
At the February first ministers' meeting and in discussions among government, labour and business an important consensus has developed. All sectors have come to recognize that to build a strong economy we must be competitive in international markets.
So tonight I have brought down a budget to build further confidence and to ensure continued competitiveness.
Everyone agrees that the future is very good for Canadians. Our resources, our people, our institutions, and our freedom make us the envy of the world. Of course, there are problems. There always will be. But the potential for even greater prosperity is there, and I am confident that Canadians are prepared to act responsibly so we can continue to enjoy one of the highest standards of living anywhere, and to make sure that we pass on to future generations a free, united and prosperous Canada.


Some hon. Members:: Hear, hear!


Mr. Sinclair Stevens (York-Simcoe):: Mr. Speaker, in making a few introductory remarks tonight in response to the budget we have just heard delivered to the House, I should first like to congratulate the minister on the various aspects of it which I believe will be good for Canadians.
The first thing I should like to refer to is the manufacturers' sales tax reduction from 12 per cent to 9 per cent. This is a move in the right direction. We may in due course have comments to make as to the form the minister has chosen in which to make this reduction. The minister will recall that over the period of the last three budgets we in the official opposition have pressed hard to have the manufacturing sales tax reduced in this country. The minister will also recall that in statements made earlier we indicated that we felt it would be more effective to have the manufacturing sales tax reduction in certain specific areas as opposed to reducing it across the board, as he has proposed tonight.
In particular, we felt that the construction industry was an industry that needs this type of stimulus, and I am disappointed the minister did not reduce the 5 per cent manufacturing sales tax that is still outstanding in respect of the construction industry.
I would like to commend the government also for deciding to go further in helping research and development in this country. This perhaps has been one of the greatest shortfalls of this government for the past ten years. The mining industry, if you add together the provincial tax portion and the federal tax portion, has had a very heavy load to bear which has undoubtedly discouraged development in this country. Once again, while it may be a bit late, I am pleased that the minister has chosen tonight to accommodate at least that resource field further.
The Budget-Mr. Stevens
One of the aspects that I think is perhaps dearest to the heart of everybody in the official opposition is the employee accommodation benefit which the minister has proposed for January 1, which allows employees in this country to increase the amount that they can properly charge for their ongoing expenses from $250 to $500. The minister will recall that only a few months ago in this House we on this side supported an increase in that expense allowance, but unfortunately we were voted down by the government forces at that time.
I am disappointed, as I am sure are many Canadians who are watching tonight, that the minister has refused to accommodate our mortgage deductibility proposal and our municipal tax deductibility proposal. Those two proposals, as we link them to meaningful expenditure reductions, are not only needed by Canadian homeowners, but they would add a stimulant to an otherwise rather stagnant economy. Perhaps the most unfortunate thing is that the government has not accepted our suggestion, for example, that we stop hiring
20,000	extra public employees per year over a period of three years. That alone would have saved the federal treasury about $1.7 billion, and over that period of time the savings on that one item alone would have been sufficient to allow the government to phase in our mortgage deductibility plan and our municipal taxation plan as described by my leader in September of this year.
I could hardly believe my ears yesterday when I heard the Minister of State for Urban Affairs (Mr. Ouellet) in this House categorically challenge the concept of mortgage deductibility and municipal tax deductibility. In fact, he said that it was something for the rich, on the one hand, and would not help the tenant, on the other hand. I would like that minister to come with me to downtown Vancouver, Winnipeg, Toronto, Montreal or Halifax and tell people with $30,000, $40,000 and $50,000 mortgages that they are the rich people, the people which the government says should not get a break in this country, the capitalists which they do not want to help.
The minister of urban affairs yesterday referred to the tenants, the group which this government pretends to defend. I would ask that minister if he were in his seat tonight, why does he think the average tenant stays in an apartment building? Does he believe that that is his first choice? The hard fact is that the majority of tenants would dearly love to move out of their apartments if they could afford to buy a home in which to live. That is the kind of program that a Clark government, after the next election, will put in place.


Some hon. Members:: Hear, hear!


Sinclair McKnight Stevens: Another area which the Minister of Finance (Mr. Chretien) either glossed over or said very little about was the small businessman. In earlier questioning to the Prime Minister (Mr. Trudeau) we pointed out that ten years ago there was one bankruptcy for every ten businesses in Canada, mainly among small business people, today it is now seven bankruptcies in every ten as compared to the United States. This is the situation which the small businessman finds himself in, and yet in this budget there is no meaningful assistance for
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these people. We will certainly be pressing the minister to tell us why he avoided helping these people in a meaningful way and making suggestions as to where he could have helped the small businessman.
Capital gains have been taxed in this country for several years. Even the minister agrees that the capital gains tax has not been a big contributor to revenues, but the government categorically refuses to index it for inflation. I would have expected the minister at least to index this tax to avoid future confiscation of private property as a result of the way taxation is now being inflicted upon people who make such investments.
I would now like to touch in a more general way on certain aspects of this budget, but before I do that I would draw to hon. members' attention the budget brief. The most amazing thing about this brief is that it is so brief that it has no figures. The budgetary figures for perhaps the first time in history have been left out of the budget brief. On reflection, it may be that the figures are so ugly-that $25 billion deficit which the government anticipates this year, including next year-that they want to say as little as possible about it. If you put that $25 billion deficit which will be incurred in the fiscal years 1979 and 1980 together, it means that this government is putting Canadians into debt to the extent of $1,000 for every man, woman and child within two years. Over these two years, they are contemplating an expenditure of approximately $100 billion, roughly $50 billion per year. Perhaps the saddest thing is not just that the expenditure is huge, but also when we look at where the government are spending the money we get the true facts of what is going wrong in Ottawa today.
Only this week the Department of Supply and Services issued its weekly bulletin showing what contracts have been let. I know hon. members have probably leafed through these contracts and their descriptions, but just in case the Prime Minister has forgotten some of the things his government is buying currently I will go over some of them. This is only one week's ordering and only one page, but it totals $11 million. There were 39,000 plastic credit cards for a total price of $20,000. What does a government that is already spending to the hilt need with 39,000 plastic credit cards? Exactly who do they intend to give these 39,000 credit cards to? It is the Canadian taxpayer who will have to pay for them. The next item is paper clips. They are spending $44,000 on a weekly order alone to buy 460,000 boxes each containing 100 paper clips.
I could go on and on, Mr. Speaker. They spent $203,000 for the purchase of 7,400 plastic floor mats. Do you know what they are for?


Pierre Elliott Trudeau: For floors.


Sinclair McKnight Stevens: The Prime Minister says they are for floors. He is partly right.


Some hon. Members:: Hear, hear!


Sinclair McKnight Stevens: Maybe the Prime Minister has forgotten, but they are for floors that have only a shag rug. That is what they were bought for-for those people who presumably have enough prestige to have a shag rug. Those are only some of the items, Mr. Speaker.
We have heard talk of some of the other studies that this government has engaged in. For example, I know the minister will recall the $170,000 that was spent to study air breathing fish on the Amazon River.


An hon. Member:: Hurrah for Romeo!


Sinclair McKnight Stevens: Sir, I know I have more time tomorrow and perhaps I will give more examples of where this government is spending the Canadian people's tax paid money and tax payable money.
I see the Minister of State (Multiculturalism) (Mr. Cafik) has come awake and says he would like me to speak about the budget. Presumably he would not hear the budget.
I do not want to be too critical of this government nor of this minister, Mr. Speaker. That is why, if I may have hon. members' attention, I should like to quote a Liberal that I know at least some hon. members on the other side have some respect for. The person I am referring to said this government has run its mandate and the principal economic minister has much less leverage than he had. He also said there has been a progressive weakening in personnel of the principal economic ministries.
That Liberal-and I know from the Prime Minister's expression that he knows to whom I am referring-was none other than a former minister of finance, John Turner. As we know, that former minister of finance now sits comfortably with his industrial friends in Toronto. In his interregnum papers that he keeps bringing out-I know the Prime Minister must read them intently-he has gone much further. Sometimes he appears to be in sharp conflict with some of the statements made by the Prime Minister.


Pierre Elliott Trudeau: You have just dropped a paper clip.


Sinclair McKnight Stevens: For example, he has stated that he believes the size of the federal deficit threatens tight money and rising interest rates should the economy recover on the investment front, with all the negatives for private investment which that prospect implies.
That statement is obviously in sharp conflict with what the Prime Minister has told the press and this House in the last couple of days. He told us that we did not have to worry about the size of the deficit, that it is the rate of increase that we should worry about.
Commenting on Petro-Can's apparent insatiable appetite for takeovers, be it Husky Oil which they lost, be it Pacific Petroleums Ltd. which they might win, heaven forbid, Mr. Turner said that these are not the actions of a government whose overriding concern is public sector restraint.
I probably would not have quoted Mr. Turner if the Minister of State had not intervened, Mr. Speaker. Now that I have
November 16, 1978

done so, I must say it is odd to hear what one Liberal says about another Liberal, particularly when we remember that when this particular Liberal was minister of finance, he was the biggest spender of all.
Tomorrow, Mr. Speaker, given the opportunity, I hope to go into greater detail about what this party, led by the Leader of the Official Opposition (Mr. Clark), would do if given the opportunity to form a government after the next election. At that time I intend to describe how we feel it is urgent that there be five-year plannings in this country, instead of having this ongoing ad hockery where there is a budget almost every five months. We feel that the government of the day should bring in a budget showing not only the immediate plan, but where they intend to take the economy for the next five years. I will be showing in a meaningful way where, during those five years, there can be significant reduction in federal government spending and where there can be meaningful tax cuts to stimulate the economy, all to the end of narrowing the $12 billion deficit we are living with in this country per annum. That is what we need.
The United States has five-year budgets. The United Kingdom has five-year budgetary plans, and the OECD is asking all member countries to follow that approach. I cannot under-
The Budget-Mr. Stevens
stand why this government so adamantly refuses to do what is only sensible. In fact, I can only guess, knowing how bad the two-year figures look, that they are frightened to show the Canadian public how their five-year figures might appear.
If I may, Mr. Speaker, I would like now to move, seconded by the hon. member for Grenville-Carleton (Mr. Baker):
That the debate be now adjourned.


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


Some hon. Members:: Agreed.
On motion of Mr. Stevens the debate was adjourned.


Allan Joseph MacEachen: Mr. Speaker, I should like to move:
That this House do now adjourn.


[Stage Direction]
Motion agreed to.
Mr. Speaker:: Accordingly, this House stands adjourned until tomorrow at 11 a.m.
On motion of Mr. MacEachen the House adjourned at 9.24 p.m.

November 16, 1978


APPENDIX
[Stage Direction]
Table 1
Government of Canada Summary Statement of Transactions Public Accounts Presentation
	1977-78 Actual	1978-79 Forecast"1	1979-80 Forecast"'
		($ millions)
[Stage Direction]
Budgetary transactions Revenues
[Stage Direction]
Expenditures'21
[Stage Direction]
32,846
[Stage Direction]
-42,882
[Stage Direction]
35,200 -47,300
[Stage Direction]
38,150 -51,100
[Stage Direction]
Surplus or deficit (- )
[Stage Direction]
-10,036
[Stage Direction]
-12,100
[Stage Direction]
- 12,950
[Stage Direction]
Non-budgetary transactions Loans, investments and advances'2'
[Stage Direction]
Annuity, insurance and pension accounts
[Stage Direction]
Other transactions
[Stage Direction]
-1,217
[Stage Direction]
1,626
[Stage Direction]
1,357
[Stage Direction]
-1,000 1,975 -975
[Stage Direction]
-1,500 2,820 880
[Stage Direction]
Net source or requirement (-)
[Stage Direction]
1,766
[Stage Direction]
-
[Stage Direction]
2,200
[Stage Direction]
Financial requirements (Excluding foreign exchange transactions)
[Stage Direction]
-8,270
[Stage Direction]
- 12,100
[Stage Direction]
- 10,750
[Stage Direction]
Foreign exchange transactions
[Stage Direction]
1,007
[Stage Direction]
3,021<3>
[Stage Direction]
Total financial requirements
[Stage Direction]
-7,263
[Stage Direction]
-9,079'3'
[Stage Direction]
<1) Numbers in these columns should be interpreted as mid-points of ranges of estimates.
121 Total outlays are composed of budgetary expenditures plus loans, investments and advances.
,31 These figures reflect actual foreign exchange transactions to the end of October. No forecast is made of foreign exchange transactions in the balance of the period. The source of funds provided by Foreign Exchange Transactions in the first seven months of 1978-79 is largely accounted for by net sales of foreign exchange by the Exchange Fund Account. The EFA's holdings of foreign exchange result from purchases in the exchange market and from borrowing in foreign currencies by the government. This foreign currency borrowing amounted to $3,586 million in Canadian dollars from April 1, 1978 to October 31. 1978.
November 16, 1978
[Stage Direction]
Table 2
Government of Canada Fiscal Position
Public Accounts Budgetary Revenues
[Stage Direction]
1977-78
[Stage Direction]
1978-79
[Stage Direction]
1979-80
[Stage Direction]
Actual
[Stage Direction]
Forecast01
[Stage Direction]
Forecast01
[Stage Direction]
Personal income tax
[Stage Direction]
Corporation income tax ..
Non-resident tax	
Customs duties	
Sales tax	
Other duties and taxes...
Total tax revenues....
Non-tax revenues	
Total budgetary revenues
($ millions)
[Stage Direction]
13,440
[Stage Direction]
14,280
[Stage Direction]
16,130
[Stage Direction]
5,828
[Stage Direction]
6,220
[Stage Direction]
6,785
[Stage Direction]
503
[Stage Direction]
540
[Stage Direction]
580
[Stage Direction]
2,312
[Stage Direction]
2,780
[Stage Direction]
3,120
[Stage Direction]
4,427
[Stage Direction]
4,650
[Stage Direction]
4,435
[Stage Direction]
2,450
[Stage Direction]
2,260
[Stage Direction]
2,180
[Stage Direction]
28,960
[Stage Direction]
30,730
[Stage Direction]
33,230
[Stage Direction]
3,886
[Stage Direction]
4,470
[Stage Direction]
4,920
[Stage Direction]
32,846
[Stage Direction]
35,200
[Stage Direction]
38,150
[Stage Direction]
(') Numbers in these columns should be interpreted as mid-points of ranges of estimates.
[Stage Direction]
November 16, 1978
Table 3
Government of Canada
Summary, Extended National Accounts Presentation
[Stage Direction]
1977-78
[Stage Direction]
1978-79
[Stage Direction]
1979-80
[Stage Direction]
Actual
[Stage Direction]
Forecast111
[Stage Direction]
Forecast111
[Stage Direction]
($ millions)
[Stage Direction]
National Accounts Transactions*21 A.
[Stage Direction]
Revenues*31
[Stage Direction]
B.
[Stage Direction]
Expenditures*41
[Stage Direction]
35,940
[Stage Direction]
-45,271
[Stage Direction]
39,195 -49,725
[Stage Direction]
42,670 -53,400
[Stage Direction]
Surplus or deficit (-)
[Stage Direction]
-9,331
[Stage Direction]
- 10,530
[Stage Direction]
- 10,730
[Stage Direction]
Loans and other transactions A.
[Stage Direction]
Loans, investments and advances
[Stage Direction]
B.
[Stage Direction]
Cash vs Accrual
[Stage Direction]
-1.413 1,965
[Stage Direction]
-640 - 1,180 250
[Stage Direction]
-1,230 1,010
[Stage Direction]
C. Other transactions
[Stage Direction]
509
[Stage Direction]
200
[Stage Direction]
Net source or requirement (-)
[Stage Direction]
1,061
[Stage Direction]
- 1,570
[Stage Direction]
-20
[Stage Direction]
Total financial requirements (Excl. foreign exchange transactions)
[Stage Direction]
-8,270
[Stage Direction]
- 12,100
[Stage Direction]
- 10,750
[Stage Direction]
Foreign exchange transactions
[Stage Direction]
1,007
[Stage Direction]
3,021|5)
[Stage Direction]
Total financial requirements
[Stage Direction]
7.263
[Stage Direction]
- 9,079's>
[Stage Direction]
(1>
Numbers in these columns should be interpreted as mid-points of ranges of estimates.
121 Referred to as 'Current transactions' in earlier budget speeches and issues of the Public Accounts. The change is intended to avoid inconsistency with standard National Accounts terminology.
<3) 'Total revenue' plus 'Capital consumption allowances' as per Statistics Canada's National Income and Expenditure Accounts.
141 'Current expenditure' plus 'Gros capital formation' as per Statistics Canada's National Income and Expenditure Accounts.
*51 These figures reflect actual foreign exchange transactions to the end of October. No forecast is made of foreign exchange transactions in the remainder of the period.
November 16, 1978
[Stage Direction]
Table 4
Government of Canada Revenues and Expenditures National Accounts Basis
	1977-78 Actual	1978-79 Forecast01	1979-80 Forecast01
		($ millions)	
Revenues
[Stage Direction]
Direct taxes, persons
[Stage Direction]
17,245
[Stage Direction]
18,360
[Stage Direction]
20,620
[Stage Direction]
Direct taxes, corporations
[Stage Direction]
5,229
[Stage Direction]
5,730
[Stage Direction]
6,375
[Stage Direction]
Direct taxes, non-residents
[Stage Direction]
544
[Stage Direction]
610
[Stage Direction]
670
[Stage Direction]
Indirect taxes
[Stage Direction]
9,153
[Stage Direction]
9,735
[Stage Direction]
9,705
[Stage Direction]
Other current transfers from persons
[Stage Direction]
14
[Stage Direction]
15
[Stage Direction]
15
[Stage Direction]
Investment income
[Stage Direction]
3,163
[Stage Direction]
4,080
[Stage Direction]
4,535
[Stage Direction]
Capital consumption allowances
[Stage Direction]
592
[Stage Direction]
665
[Stage Direction]
750
[Stage Direction]
Total revenues
[Stage Direction]
35.940
[Stage Direction]
39,195
[Stage Direction]
42,670
[Stage Direction]
Expenditures
[Stage Direction]
Current goods and services
[Stage Direction]
11.317
[Stage Direction]
12,400
[Stage Direction]
12,750
[Stage Direction]
Transfer payments to persons
[Stage Direction]
13,515
[Stage Direction]
14,750
[Stage Direction]
15,525
[Stage Direction]
Subsidies
[Stage Direction]
2.501
[Stage Direction]
2,450
[Stage Direction]
2,450
[Stage Direction]
Capital assistance
[Stage Direction]
382
[Stage Direction]
525
[Stage Direction]
675
[Stage Direction]
Current transfers to non-residents
[Stage Direction]
700
[Stage Direction]
800
[Stage Direction]
825
[Stage Direction]
Interest on the Public Debt
[Stage Direction]
5,472
[Stage Direction]
6,950
[Stage Direction]
8,250
[Stage Direction]
Transfers to provinces
[Stage Direction]
9,741
[Stage Direction]
10,125
[Stage Direction]
11,100
[Stage Direction]
Transfers to local governments
[Stage Direction]
390
[Stage Direction]
375
[Stage Direction]
400
[Stage Direction]
Gross capital formation
[Stage Direction]
1,253
[Stage Direction]
1,350
[Stage Direction]
1,425
[Stage Direction]
Total expenditures
[Stage Direction]
45,271
[Stage Direction]
49,725
[Stage Direction]
53,400
[Stage Direction]
Surplus or deficit (- )
[Stage Direction]
[DOT] 9,331
[Stage Direction]
-10,530
[Stage Direction]
-10,730
[Stage Direction]
(1) Numbers in these columns should be interpreted as mid-points of ranges of estimates.
1212
[Stage Direction]
November 16, 1978
Table 5
Government of Canada Revenues, Public Accounts and National Accounts Reconciliation
[Stage Direction]
1977-78
[Stage Direction]
1978-79
[Stage Direction]
1979-80
[Stage Direction]
Actual
[Stage Direction]
Forecast01 *
[Stage Direction]
Forecast111
[Stage Direction]
Budgetary revenues- Public Accounts
[Stage Direction]
32,846
[Stage Direction]
($ millions) 35,200
[Stage Direction]
38,150
[Stage Direction]
Deduct Post Office revenues and deficit
[Stage Direction]
Deficit of government business enterprises'21
[Stage Direction]
-1,237
[Stage Direction]
-200
[Stage Direction]
-1,320 - 135
[Stage Direction]
- 1,360 - 140
[Stage Direction]
Excess of accruals over collections Corporate income tax
[Stage Direction]
Oil export charge
[Stage Direction]
-495
[Stage Direction]
- 33
[Stage Direction]
-430 -5
[Stage Direction]
-350 - 15
[Stage Direction]
Add Government pension and social security receipts'3'
[Stage Direction]
Capital consumption allowance
[Stage Direction]
4,997
[Stage Direction]
592
[Stage Direction]
5,425 665
[Stage Direction]
5,705 750
[Stage Direction]
Miscellaneous adjustments'4'
[Stage Direction]
- 530
[Stage Direction]
-205
[Stage Direction]
-70
[Stage Direction]
Total revenues- National Accounts
[Stage Direction]
35,940
[Stage Direction]
39,195
[Stage Direction]
42,670
[Stage Direction]
Numbers in these columns should be interpreted as mid-points of ranges of estimates.
<2) In the Public Accounts, deficits of government business enterprises are a charge to budgetary expenditures whereas in the National Accounts, these deficits are deducted from remitted profits of other government business enterprises.
(3)	In the Public Accounts, these government pension and social security receipts and disbursements are treated as non-budgetary transactions whereas in the National Accounts, these transactions are included in government revenue and expenditure.
(4)	These miscellaneous adjustments arise as a result of conceptual differences between the two forms of presentation. These items represent, for example, the proceeds from the sales of existing capital assets; budgetary revenue items offset against budgetary expenditures; imputed items; and, an adjustment for the treatment of revenue in the supplementary period.
[Stage Direction]
Table 6
Government of Canada Expenditures, Public Accounts and National Accounts Reconciliation
	1977-78 Actual	1978-79 Forecast'"	1979-80 Forecast'"
		($ millions)
[Stage Direction]
Budgetary expenditures- Public Accounts
[Stage Direction]
42,882
[Stage Direction]
47,300
[Stage Direction]
51,100
[Stage Direction]
Deduct Transfers to funds and agencies'21
[Stage Direction]
Post Office expenditures
[Stage Direction]
Deficit of government business enterprises'31
[Stage Direction]
-3,295 -1,237 . -200
[Stage Direction]
-3,275 -1,320 - 135
[Stage Direction]
-3,950 -1,360 -140
[Stage Direction]
Add Expenditures of funds and agencies'21
[Stage Direction]
Government pension and social security disbursements'41
[Stage Direction]
Capital consumption allowance
[Stage Direction]
1,595 4,995 592
[Stage Direction]
1,870 5,520 665
[Stage Direction]
1,650 5,530 750
[Stage Direction]
Miscellaneous adjustments'5'
[Stage Direction]
-61
[Stage Direction]
-900
[Stage Direction]
-180
[Stage Direction]
Total expenditures- National Accounts
[Stage Direction]
45,271
[Stage Direction]
49,725
[Stage Direction]
53,400
[Stage Direction]
<1) Numbers in these columns should be interpreted as mid-points of ranges of estimates.
<2) In the National Accounts, budgetary appropriations to various funds and agencies are replaced by the expenditure actually made by the funds and agencies.
<3) In the Public Accounts, deficits of government business enterprises are a charge to budgetary expenditures whereas in the National Accounts, these deficits are deducted from remitted profits of other government business enterprises.
<4' In the Public Accounts, these government pension and social security receipts and disbursements are treated as non-budgetary transactions whereas in the National Accounts, these transactions are included in government revenue and expenditure.
<5>
As in the case of revenues, the miscellaneous adjustments arise as a result of conceptual differences between the two forms of presentation. These items represent, for example, reserves and write-offs; purchase of existing capital assets; budgetary revenue items offset against budgetary expenditure; expenditures of reserve accounts and revolving funds; imputed items; and an adjustment for the treatment of expenditures in the supplementary period.
8006 7-6 Vi
1214	COMMONS DEBATES	November 16, 1978
Table 7 Government of Canada Non-Budgetary, Public Accounts and Extended National Accounts Reconciliation
[Stage Direction]
1977-78
[Stage Direction]
1978-79
[Stage Direction]
1979-80
[Stage Direction]
Actual
[Stage Direction]
Forecast111
[Stage Direction]
Forecast111
[Stage Direction]
($ millions)
[Stage Direction]
Non-budgetary transactions-
[Stage Direction]
Public Accounts
[Stage Direction]
1,766
[Stage Direction]
2,200
[Stage Direction]
Deduct
[Stage Direction]
Loans and advances to funds and agencies
[Stage Direction]
-196
[Stage Direction]
360
[Stage Direction]
270
[Stage Direction]
Government pension and social security accounts
[Stage Direction]
-1,638
[Stage Direction]
-1,870
[Stage Direction]
-2,830
[Stage Direction]
Excess of accruals over collections
[Stage Direction]
Corporate income tax
[Stage Direction]
495
[Stage Direction]
430
[Stage Direction]
350
[Stage Direction]
Oil export charge
[Stage Direction]
33
[Stage Direction]
5
[Stage Direction]
15
[Stage Direction]
Miscellaneous adjustments(2)
[Stage Direction]
601
[Stage Direction]
-495
[Stage Direction]
-25
[Stage Direction]
Loans and other transactions-
[Stage Direction]
Extended National Accounts
[Stage Direction]
1,061
[Stage Direction]
-1,570
[Stage Direction]
-20
[Stage Direction]
<') Numbers in these columns should be interpreted as mid-point of ranges of estimates.
(21 As in the case of revenues and expenditures, the miscellaneous adjustments arise as a result of conceptual differences between the two forms of presentation. These items represent, for example, the adjustments for the treatment of revenues and expenditures in the supplementary period; the change in the reserves and revolving funds: and the adjustment required to bring financial requirements of entities included in the national accounts government sector in line with the requirements of these entities which are met through the Consolidated Revenue Fund.
November 16, 1978
[Stage Direction]
Notes to Fiscal Tables
Comparison of Current 1978-79 Forecast with April 10,1978 Budget Forecast
(Tables 1 and 2)
The current forecast of 1978-79 Budgetary Revenue of $35,200 million is $800 million below the level forecast in the April 10, 1978 budget. Some $435 million of this change represents the estimated impact of measures introduced since the April budget. The 3 per cent cut in the manufacturers' sales tax rate is estimated to reduce 1978-79 revenues by $280 million, while other changes in the budget cause a $30 million reduction. The reduction in the gasoline excise tax which took effect on August 25, 1978, the impact on the oil export charge revenues of the planned deferral of the January 1, 1979 oil price increase and the May 1978 small business tax measures are estimated to have reduced
1978-79 revenues by $125 million. (The child benefits tax changes announced August 24, 1978 are estimated to have little or no net impact on revenues in 1978-79).
The balance of the change in forecast revenues, some $365 million, reflects changes in economic assumptions, and revisions as a result of analysis of revenue collections data for the 1977-78 fiscal year which became available after April together with analysis of the revisions to national accounts economic series released in June by Statistics Canada. The largest changes resulting from these factors were a downward revision of personal income tax revenues reflecting, most importantly, analysis of final 1977-78 data, and an upward revision of customs import duties reflecting an upward revision of the forecast value of imports. Non-tax revenues were revised upward reflecting somewhat higher interest rates on government cash balances and higher cash balances than had been assumed at the time of the original forecast.
The government's expenditure ceiling is set in terms of Total Outlays, which is the sum of Budgetary Expenditures and Loans, Investments and Advances. As announced by the Minister of Finance and the President of the Treasury Board on September 8, 1978, the level of Total Outlays for 1978-79 has been reduced to $48,300 from the April ceiling of $48,450 million. However, within this total, Budgetary Expenditures have been revised up $400 million from April, while Loans, Investments and Advances have been revised down $550 million. The figure for Total Outlays includes reserves for revisions of the estimated costs of statutory programs and for supplementary estimates. At the beginning of the fiscal year, the appropriate division of these reserves between Budgetary Expenditures and non-budgetary Loans, Investments and Advances, is somewhat uncertain. In addition, it is now apparent that loan requirements, notably net loans to CMHC, will be lower than originally expected. A number of factors, including higher public debt charges resulting from foreign borrowing to supplement exchange reserves and from recent interest rate increases, have caused forecast Budgetary Expenditures to increase although the increase has been offset in some measure by the cuts in certain specific 1978-79 program costs announced in August and September.
The decrease in Budgetary Revenues of $800 million together with the increase
___!ii:
[Stage Direction]
November 16, 1978
Deficit which is $1,200 million higher than the deficit forecast in April. The $550 million reduction in loan requirements, together with a $275 million reduced source from the annuity, insurance and pension accounts (reflecting higher unemployment insurance benefits) and a $325 million reduced requirement for other transactions has partially offset the increased Budgetary Deficit, resulting in a forecast of Financial Requirements (excluding foreign exchange) which is $600 million higher than that forecast in April.
1979-80 Fiscal Outlook-Public Accounts Basis
(Tables 1 and 2)
Financial Requirements (excluding foreign exchange transactions) in 1979-80 are forecast to be $10,750 million, $1,350 million below the 1978-79 level. Underlying this Financial Requirements forecast are forecasts of 8.4 per cent growth in Budgetary Revenues to a level of $38,150 million, 8.0 per cent growth in Budgetary Expenditures to $51,100 million and an increased net source of $2.2 billion from non-budgetary transactions. The Budgetary Revenue forecast assumes growth in nominal GNP of approximately 11 per cent.
The levels of, and annual percentage changes in, the major components of Budgetary Revenues are shown below.
[Stage Direction]
1977-78 Actual
[Stage Direction]
1978-79 Forecast
[Stage Direction]
1979-80 Forecast
[Stage Direction]
$
[Stage Direction]
$
[Stage Direction]
%
[Stage Direction]
$
[Stage Direction]
%
[Stage Direction]
millions
[Stage Direction]
millions change
[Stage Direction]
millions change
[Stage Direction]
Personal income tax
[Stage Direction]
13.440
[Stage Direction]
14,280
[Stage Direction]
6.3
[Stage Direction]
16,130
[Stage Direction]
13.0
[Stage Direction]
Corporation income tax
[Stage Direction]
5.828
[Stage Direction]
6,220
[Stage Direction]
6.7
[Stage Direction]
6,785
[Stage Direction]
9.1
[Stage Direction]
Non-resident tax
[Stage Direction]
503
[Stage Direction]
540
[Stage Direction]
7.4
[Stage Direction]
580
[Stage Direction]
7.4
[Stage Direction]
Customs duties
[Stage Direction]
2,312
[Stage Direction]
2,780
[Stage Direction]
20.2
[Stage Direction]
3,120
[Stage Direction]
12.2
[Stage Direction]
Sales tax
[Stage Direction]
4.427
[Stage Direction]
4,650
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5.0
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4,435
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-4.6
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Other duties and taxes
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2.450
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2,260 -
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-7.8
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2,180
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-3.5
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Total tax revenues
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28,960
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30,730
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6.1
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33,230
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8.1
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Non-tax revenues
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3,886
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4,470
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15.0
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4,920
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10.1
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Total budgetary revenues
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32,846
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35,200
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7.2
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38,150
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8.4
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The 13.0 per cent rate of growth of personal income tax revenues is influenced by the fact that 1978-79 revenues are reduced by $760 million through transfers to provinces and to Quebec taxpayers associated with the temporary provincial retail sales tax cuts. The 1979-80 yield of the tax is reduced $270 million by the higher level of the employment expense deduction, and there is a net reduction of $655 million due to the changes in child benefit provisions announced in August. On the other hand, 1979-80 revenues are raised by the fact that the tax payable on the large amount of CSB interest cashed in November 1978 will affect tax collections mainly in the first months of the
1979-80 fiscal year.
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first year, or first full year, impact of tax measures introduced in March 1977, October 1977 and April 1978 has lowered expected revenue growth in
1978-	79, as has the large increase in the use of income debentures. The measures in this budget are estimated to cause a net reduction in 1979-80 corporation tax revenues of $75 million.
The actual decline in sales tax revenues, of course, reflects the 3 percentage point rate reduction which is estimated to lower revenue by $1,015 million in
1979-	80 compared with $280 million in the last part of 1978-79.
Other duties and taxes are forecast to decrease by 3.5 per cent in 1979-80, following a decline of 7.8 per cent in 1978-79. Falling oil export charge revenues and the impact of the 3 percentage point reduction in the special excise tax on gasoline are the principal factors causing these declines.
Non-tax revenues are projected to increase 10.1 per cent in 1979-80 compared to the projected 15.0 per cent increase in 1978-79. The dominant revenue source in this category is return on investments which is projected to increase at a 6.2 per cent rate in 1979-80, compared to a projected 22.2 per cent rate in 1978-79. The large 1978-79 increase reflects higher interest rates and increased government cash balances.
Budgetary Expenditures and non-budgetary Loans, Investments and Advances sum to the $52,600 million ceiling announced on September 8 in the joint statement by the Minister of Finance and the President of the Treasury Board. The increase in this Total Outlays ceiling is 8.9 per cent. Budgetary Expenditures are forecast to increase by 8 per cent and Loans, Investments and Advances by 50 per cent. The large increase in loan requirements basically reflects the return to a more normal level of net requirements by CMHC following the abnormally large repayments by that corporation in 1978-79 resulting from the sale of mortgages by CMHC from its existing holdings.
The source of funds provided by the annuity, insurance and pension accounts is expected to increase by $845 million over the 1978-79 level. By far the largest factor in this increase is a projected swing to surplus in the unemployment insurance account, reflecting the savings in unemployment insurance benefits from the tightening of entrance requirements and reduction in benefit levels which will result from Bill C-14. These savings are partially offset by the 10 per cent reduction in employer/employee premium rates.
Other transactions are expected to provide a net source of $880 million in 1979-80, a swing of $1,855 million from the previous year. The most important single factor here is the decline in the level of Canada Savings Bond interest encashments.
Canada Savings Bond Interest Encashment
In 1978-79, a total of $2,300 million in regular interest coupons, compound and bonus interest on the maturing SR and S24 series of Canada Savings Bonds is
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November 16, 1978
expected to be cashed. Approximately $2,050 million of this interest had been charged to budgetary expenditures in previous years, as public debt charges are calculated on an accrual basis. In 1979-80, bonus interest totalling an estimated $630 million will become payable on Canada Savings Bonds issued prior to November 1974 and still outstanding. Approximately $550 million of this amount will have been charged to Budgetary Expenditures prior to 1979-80.
When interest encashments exceed (fall short of) interest accruals in a given year, the government is faced with a cash requirement (source) which is recorded in the interest and debt accounts component of 'other non-budgetary transactions'. Thus, encashment of previously accrued regular, compound and bonus interest on the SR and S24 series is expected to give rise to a non-budgetary requirement of $2,050 million in 1978-79, and encashment of previously accrued bonus interest in 1979-80 is expected to give rise to a non-budgetary requirement of some $550 million in 1979-80. Previously accrued regular and compound interest on CSB series maturing in November 1979, and interim compound interest coupons on certain series, will also become payable in 1979-80. At the same time, in both 1978-79 and 1979-80 it is expected that interest accruals will exceed interest encashment by significant amounts on other CSB series, thus providing a source of funds to the government.
In total, the difference between interest accruing and interest cashed on Canada Savings Bonds provided a non-budgetary source of funds of $827 million in 1977-78, is estimated to give rise to a non-budgetary requirement of $1,395 million in 1978-79 and is projected to provide a source of some $300 million in 1979-80. (The latter projection depends on the fraction of the current CSB issue assumed to be sold in 'compound interest bonds' form. It is thus subject to considerable uncertainty.) The lack of an exact matching of interest accrual and encashment on the non-CSB portion of government debt (marketable bonds and treasury bills) can also give rise to a non-budgetary source or requirement of funds, although the effect is much smaller than for CSBs due to the lack of compound and bonus provisions on these other securities.
The year-to-year change in CSB interest accrual/encashment thus accounts for a $2.2 billion increase in Financial Requirements between 1977-78 and 1978-79, and for a $1.7 billion reduction between 1978-79 and 1979-80. Thus, apart from these CSB interest accrual/encashment effects, Financial Requirements will increase from 1977-78 to 1978-79 by $1.6 billion, and will increase from 1978-79 to 1979-80 by $350 million.
Direct Borrowing by Government Agencies
Direct market borrowings by agent Crown corporations which have been authorized to borrow under their respective statutes are not included in Government of Canada Financial Requirements. In 1977-78, the Export Development Corporation (EDC) borrowed $341 million directly, Eldorado
Mnrloar hnrrnuuoH	million onH Dotro-ParvaHa ronaiH CQH rr*illir\r* Dv/or tho
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projection of requirements for 1978-79 and 1979-80, it is envisaged that such direct borrowing will continue. In addition, the 1978-79 requirements for loans to the Central Mortgage and Housing Corporation are reduced due to the sale of mortgages by CMHC in that year.
Government Expenditures
Since 1976-77, the federal government has set its spending ceiling in terms of Total Outlays, the sum of Budgetary Expenditures and non-budgetary Loans, Investments and Advances. The following table shows the level of Total Outlays, the growth rate of Total Outlays and Total Outlays expressed as a percentage of current dollar GNP for the corresponding fiscal year.
Federal Government Total Outlays Public accounts basis
	1975-76 Actual	1976-77 Actual	1977-78 Actual	1978-79 Forecast	1979-80 Forecast
			($ millions)		
Budgetary Expenditures	 Loans, Investments and Advances	 Total Outlays	 Percentage Increase	 Percentage of GNP* 			 33,978 3,310 37,288 18.5 21.7	39,011 2,171 41,182 10.4 21.0	42,882** 1,217 44,099 7.1** 20.5**	47.300 1,000 48.300 9.5 20.3	51,100 1,500 52,600 8.9 19.9
* GNP for corresponding fiscal year.	.
** Savings of approximately $700 million in 1977-78 Budgetary Expenditures resulted from the partial replacement of cash transfers to provinces by the transfer of additional tax points under the Established Programs Financing arrangement Adjustment for this change would increase the 1977-78 growth in Total Outlays to 8.8 per cent, and the Total Outlays/GNP ratio to 20.8 per cent.
Another common measure of federal government spending is the sum of current expenditures (in the form of expenditures on goods and services, transfers to other levels of government, interest on the public debt, transfers to provincial and local governments, etc.) and gross capital formation as shown in the National Income and Expenditure Accounts. Fiscal year data on this basis are shown below.
Federal Government Expenditures
National Income and expenditure accounts basis
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1975-76
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1976-77
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1977-78
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1978-79
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1979-80
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Actual
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Actual
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Actual
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Forecast
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Forecast
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($ millions)
Total Expenditures on a national accounts basis Percentage increase Percentage of GNP* ...
36,505
18.5
21.2
40,343
10.5
20.6
45,271
12.2
21.1
49,725
9.8
20.9
53,400
7.4
20.2
* GNP for corresponding fiscal year.
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It will be noted that the rates of increase of expenditures as measured in the national accounts are similar to the rates of increase of Total Outlays for all years except 1977-78 and to a lesser extent, 1979-80. The higher increase in national accounts expenditures in 1977-78 largely relates to two differences in the coverage of these alternative expenditure measures. National accounts expenditures include unemployment insurance benefits on a current basis. With the rise in the unemployment rate, these payments increased by 21 per cent from $3,457 million in 1976-77 to $4,168 million in 1977-78. Total Outlays include (in Budgetary Expenditures) the government contribution to the Unemployment Insurance Account (Ul). This contribution is based on the experience of the account in the calendar year ending three months before the start of the fiscal year in question, and is affected by changes in the employer/employee contribution rates as well as by unemployment rates. The government contribution to the Ul account fell 20 per cent from $1,728 million in 1976-77 to $1,379 million in 1977-78. The second difference in coverage which proved important over this period is the fact that national accounts expenditures do not include government outlays in the form of loans. A reduction in loans between 1976-77 and 1977-78 contributed to the lower growth rate of Total Outlays in 1977-78.
In 1979-80, these two differences in coverage work in the reverse direction leading to a slower growth rate for national accounts expenditures than Total Outlays. The reductions in Ul benefits which will take effect in 1979 affect national accounts expenditures immediately but will not reduce the government contribution to the Ul account, and thus Total Outlays, until
1980-81. In addition, the large increase in the loans component of Total Outlays does not affect national accounts expenditures.
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Friday, November 17, 1978