1978-06-13

Mr. G. W. Baldwin (Peace River):: Mr. Speaker, I rise on a matter of urgent and pressing necessity under the provisions of Standing Order 43, the circumstances of which speak for themselves. I move, seconded by the hon. member for Sas-katoon-Biggar (Mr. Hnatyshyn):
That this House require that the Minister of Justice appear before a parliamentary committee of this House and show cause why he, as Attorney General, authorized and directed the laying of technical charges against Dr. Alexander Peter Treu, in connection with the protection of documents under the Official Secrets Act, when the government was aware, at the same time, that Dr. Treu was still receiving classified documents and contracts dealing with defence matters from NATO;
and that the Minister of Supply and Services should also appear and show cause for the basis on which his Director of Security, Mr. S. M. Jenkyns, the Canadian security liaison with NATO, is alleged to have cancelled Dr. Treu's security clearance and to have been involved in instigating the investigation leading to the trial and conviction of Dr. Treu, when he, Mr. Jenkyns, was either present or knew that Dr. Treu participated in confidential meetings and continued to receive NATO contracts and documents.


Some hon. Members:: Hear, hear!


Mr. Speaker:: Order, please. The introduction of such a motion for debate can be done only with unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


LABOUR CONDITIONS
Mr. James A. McGrath (St. John's East):: Mr. Speaker, 1 rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity.
According to figures released today by Statistics Canada, employment in Newfoundland has been reduced by 5,000 jobs in twelve months. This, coupled with the fact that today's
unemployment rate for the province is a scandalous 17.9 per cent, seasonally adjusted, a substantial rise over previous months, and in real terms the unemployment rate for the province is closer to 30 per cent; and, further, what is even more disturbing is the fact that the government seems to have conditioned itself and the rest of the country to the situation, with its potential for human suffering, with the consent of the House 1 would move, seconded by the hon. member for St. John's West (Mr. Crosbie):
That this House views with alarm the serious unemployment situation in the province of Newfoundland, and directs the Minister of Regional Economic Expansion, the Minister of Employment and Immigration, and the Minister of Fisheries, to comprise a special committee of cabinet to enter immediately into talks with the government of Newfoundland, with a view to putting into place a special job creation program centred around the substantial natural resources of the province.


Mr. Speaker:: The presentation of such a motion for debate can be done only with unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


THE CANADIAN ECONOMY
Mr. Edward Broadbent (Oshawa-Whitby):: Mr. Speaker, I rise under the provisions of Standing Order 43. Considering that unemployment remains at 8.6 per cent for the third month in a row, clearly demonstrating that there has been no improvement in the Canadian economy, and considering that the real unemployment rate for young people in Canada has jumped alarmingly to 19.4 per cent, I move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That this House instruct the Minister of Finance to announce a major new direct job creation program comparable in scale to that which has worked so well in the United States, and that he work out the administrative details of such a program at next month's meeting with provincial ministers of Finance.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.

June 13, 1978
5.0.	43


EXTERNAL AFFAIRS
Mr. Leonel Beaudoin (Richmond):: Mr. Speaker, under the provisions of Standing Order 43, I ask for the unanimous consent of the House to move a motion dealing with an important matter of pressing necessity.
Today the newspaper Le Devoir refers to two reports of the Inter-American Commission on Human Rights about cases involving serious violations of human rights in Paraguay and Uruguay. The report mentions "sexual tortures on political prisoners." As for Paraguay, the report points out that:
During the siege, several individuals died in mysterious circumstances. Hundreds of people of all political leanings have been arrested without any charge being laid against them nor any judgment delivered. The Catholic Church and other religious organizations have been persecuted, etc.
As a result of those serious violations of human rights, I move, seconded by the hon. member for Roberval (Mr. Gauthier):
That the House severely blame the Paraguay and Uruguay authorities for serious violations of human rights as quoted in the ICHR report and ask that those two states allow the ICHR to investigate on the spot.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


CANADIAN WHEAT BOARD
[Stage Direction]
5.0.	43
Mr. Jack Murta (Lisgar):: Mr. Speaker, under the provisions of Standing Order 43 I would like to move a motion of urgent and pressing necessity. There is a massive backlog of grain shipments that has developed this spring whereby Canada is at least 1.2 million tons behind schedule, an amount that represents one full month of grain delivery to our ports. Since the demurrage charges paid by the western farmer are mounting daily and are projected to total $30 million by July 31, the end of the current crop year, I move, seconded by the hon. member for Medicine Hat (Mr. Hargrave):
That the Prime Minister chair a meeting with top officials of the Canadian Wheat Board, and senior management of the railways, and port authorities, in order to try to resolve the disaster threatening western grain shipments. This emergency meeting should be held as soon as humanly possible.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


LABOUR CONDITIONS
Mr. Paul Dick (Lanark-Renfrew-Carleton):: Mr. Speaker, I rise on a matter of urgent and pressing necessity which affects almost 500,000 young Canadians. During the past five years the Liberal federal government has allowed the youth unemployment problem to get totally out of control. The government has blamed the problem on world economic problems, the baby boom, the increase in the participation rate-


Mr. Speaker:: Order, please.


Paul Wyatt Dick: Therefore, I move, seconded by the hon. member for Don Valley (Mr. Gillies):
That the government develop and table in this House an all-inclusive youth employment strategy so that it can be discussed by all members in this House and so that a concerted effort can be mounted by this House to deal with youth unemployment, rather than the current stop-gap, band-aid programs offered by this government.


Mr. Speaker:: Is there unanimous consent for the presentation of such a motion?


Some hon. Members:: Agreed.


Some hon. Members:: No.



ORAL QUESTION PERIOD


Mr. Sinclair Stevens (York-Simcoe):: Mr. Speaker, with today's tragic unemployment figures showing that our unemployment has jumped 119,000 in the year, 14,000 in the last month, and with 27 per cent of our youth who do not plan to go back to school on the jobless list at the present time, would the Minister of Finance indicate to the House what has gone wrong with his tax credits that he told us would give stimulus to the economy in January and February? What has gone wrong with his employment credit program to create jobs in this country?


Hon. Jean Chretien (Minister of Finance):: Mr. Speaker, I would like to point out to the hon. member that he forgot to mention that there were 300,000 more people working this May than there were last May. Of course the increase in the participation rate is still a difficult problem to cope with. I
June 13, 1978

would just remind hon. members that in the last year we have created a lot more jobs, and that the measures which we put forward in the budget of April 10 will take some time to find their way into the Canadian economy. The performance of our economy is just as good as any other country's in the western world with the exception of Japan.


Sinclair McKnight Stevens: Surely the minister must agree that the greatest challenge we have in this country is that of getting people back to work. The minister says our record is good. Would he tell the Elouse if, as we have suggested repeatedly, he has done a study to determine how the United States has been able to keep its unemployment level down to 6.1 per cent compared to our 8.6 per cent, bearing in mind that if we had the same rate in this country a quarter of a million people would be working today who are not presently working due to the policies of this government?


Joseph Jacques Jean Chrétien: Mr. Speaker, the increase in the labour force in Canada is double that of the United States, and we have created 300,000 new jobs since last year. I think that is a commendable performance, although there is still room for improvement. The growth of the labour force far exceeds that of other countries and with our expansionist policies we continue to encourage growth in Canada. That is why hon. members sometimes complain of the current level of budgetary deficit of the government, but that policy is aimed at stimulating the Canadian economy.


Sinclair McKnight Stevens: I have a final supplementary question, Mr. Speaker. Apparently the Minister of Finance cannot see the strained situation in this country, of high deficits and high unemployment at the same time. If the minister has not done a study generally with respect to how the United States brought its unemployment levels down, has he at least done what we have suggested also, and that is make a study of the New England states to see how they have been able to get their unemployment levels down to almost half our level, bearing in mind that Newfoundland now has unemployment of over 17 per cent, that there is 13 per cent unemployment throughout the Atlantic provinces, and 11.5 per cent in Quebec?


Joseph Jacques Jean Chrétien: Mr. Speaker, I know there is a special problem in the east. It is a traditional problem. The Department of Manpower and Immigration has some job creation programs that are directed to the level of unemployment in those parts of the nation. We are following some very aggressive policies on fisheries development which I think will find some long term benefits for that part of Canada.
Oral Questions MANPOWER


DISCONTINUANCE OF JOB EXPERIENCE TRAINING PROGRAM
Paul Wyatt Dick: Mr. Speaker, I should like to address my question to the Minister of Employment and Immigration. As of May 31 all funding ceased to the one program offered by the federal government which was helping to provide useful permanent jobs, that program being the year-round JET program. When the minister replied to a question I put on March 14 this year he stated:
... I am particulary impressed with the job experience training program which has resulted in an increase from 1,000 to 14,000 young people participating. It is a good program.
Did the minister know the program would be discontinued eleven weeks after he made that statement?


Hon. Bud Cullen (Minister of Employment and Immigration):: Mr. Speaker, it is nice to see the conversion of the hon. member. I indicated to him what an excellent program it was, and he poured nothing but scorn on it. When we decided to change the emphasis of that program and move it into the tax credit program, all of a sudden it is a wonderful, brilliant program. It was that before. It was while it was being implemented, and it is a program of which we can be proud. It took the lead for things like the employment tax program. The hon. member had better make up his mind if he wants us to implement this program, which he says is a good one, and give it emphasis so that instead of creating 10,000 jobs we might be able to use it to create 50,000 jobs.


Paul Wyatt Dick: Mr. Speaker, I regret that the hon. minister is misleading the House. I never objected to JET on one occasion. I should like to put a supplementary question. In view of the fact that unemployment for young people remains at 15.1 per cent, and for those not returning to school it is up to 27 per cent of people in the age group of 20 to 24, why does the minister terminate a program which was directed toward youth and which was administratively workable, and replace it with a program which is not directed toward youth and which will force the private sector employers into more bureaucratic red tape? Does he feel this is an effective way of helping youth unemployment?


Jack Sydney George (Bud) Cullen: Mr. Speaker, I think the hon. member should not lose sight of the fact that we have poured $96.2 million into job creation programs for youth. In addition to that there is the Adult Occupational Training Act under which we have agreements with the various provinces and there is about a 4 per cent youth component in that program. There is the Federal Labour Intensive Program and the Young Canada Works Program. I think the hon. member misses the boat. He sees the glass of water which is 95 per cent full as being 5 per cent empty.


Paul Wyatt Dick: A final supplementary question, Mr. Speaker. Statistics indicate that the number of male students between ages 20 and 24 not returning to school this year and unemployed at the present time is 27.9 per cent, and for women it is almost 30 per cent. Has the government taken any steps, or

June 13, 1978
Oral Questions
does it intend to take any steps, to try to help those people in the 20 to 24 year age grouping, who are not going back to school, to find meaningful jobs?


Jack Sydney George (Bud) Cullen: Yes, Mr. Speaker, but we did not wait for this month's or last month's statistics. We saw this as a particular problem with youth and we appointed a national youth advisory group. They have been given a briefing on the various and myriad programs that we have in place. Incidentally, Senator Hubert Humphrey indicated that if the United States followed our lead in dealing with youth unemployment, they would be well ahead of the game.


Mr. Gillies:: Did he do that recently?


Some hon. Members:: Oh, oh!


An hon. Member:: Was that in his presidential campaign?


Jack Sydney George (Bud) Cullen: Mr. Speaker, if I needed any indication that our programs are good and are having their effect, that indication is evidenced by the nervousness displayed by the opposition who do not want to listen to answers.


Some hon. Members:: Hear, hear!


LABOUR CONDITIONS
John Edward Broadbent: Mr. Speaker, I say to the minister that government programs are 5 per cent water and 95 per cent hot air, right off the top-


Some hon. Members:: Hear, hear!


John Edward Broadbent: The Minister of Finance, for whom 1 have a question, just a minute ago misinformed the House, I hope inadvertently. He said that we have done as well, dealing with unemployment, as anyone else. The minister should know that unemployment in the United States during the past year has improved. In their March figures they had one million fewer unemployed, precisely at the time we reached one million unemployed in Canada.
Considering the success in the United States of direct job creation programs which have resulted in bringing their unemployment down steadily during the last year and a half, would the Minister of Finance now commit the government to such a program here and discuss the details of implementation with the finance ministers of the provinces with whom he is meeting next month?


Joseph Jacques Jean Chrétien: Mr. Speaker, I did not speak about the unemployment situation. The economic performance forecast for Canada in 1978 will be as good as anywhere else for jobs in terms of growth. However, within that performance we have the very difficult problem of growth

in the labour force and the level of unemployment. We are preoccupied with that. I intend to review our economic policies in conjunction with the provincial ministers of finance in Winnipeg on July 7 to try to find a co-ordinated approach in order to solve this problem. But as I said earlier the fact that the Canadian labour force has grown at a pace of 3.5 per cent a year for the last seven years has created some very difficult problems for the Canadian economy which has to absorb that many new people coming into the labour force. We are doing our best to cope with it.


John Edward Broadbent: Mr. Speaker, the message is clear. The economy is fine; the problem is there are just no jobs. The minister should tell that to the unemployed in this country.
Considering the Secretary of Labour in the United States has said that for every dollar spent on direct job creation, in addition to other economic benefits, 40 cents are saved in welfare and unemployment costs; considering that reality, that we will save on handouts by direct job creation programs, why is it that the minister will not commit the government now to increase its allocation for direct job creation programs that have worked so effectively in the United States?


Joseph Jacques Jean Chrétien: Mr. Speaker, the Department of Employment and Immigration has established in this regard a very well known policy for direct job creation. However, the federal budget is limited when it comes to finding employment for all people who are now looking for a job. I just explained that manpower growth is very strong in Canada, but that the creation of new jobs from May to May has also been very significant. Between May, 1977, and May, 1978, 300,000 new jobs were created, and since 1971 the Canadian economy has succeeded in raising the number of its workers from eight million to more than ten million, which is probably a better performance than that of any other developed country in the world.


John Edward Broadbent: Mr. Speaker, once again the minister misleads the House. Considering that the United States Congress has just decided to allocate $11.5 billion for direct job creation, which is 20 times the equivalent amount allocated for direct job creation by this government, and considering that in addition to providing jobs it is going to increase production of goods and services in that country and reduce welfare costs, why can the Government of Canada not do at least as well for our people as the American government is doing for its people?


Joseph Jacques Jean Chrétien: Mr. Speaker, I think that the policies on manpower and immigration and all those types of programs are as good in Canada as they are in the United States.
June 13, 1978


OFFICIAL LANGUAGES
Mr. Eudore Allard (Rimouski):: Mr. Speaker, I have a question for the Prime Minister.
Since the Ontario premier would not allow the French language rights bill to be passed, although it had the almost unanimous support of the Ontario legislature, and considering the negative impact that this action will have on Canadian unity and the respect of the fundamental rights of French Canadians, could the Prime Minister tell us whether he intends to make representations to the Ontario premier so that he will at last do justice to the French Canadians in his province?


Right Hon. P. E. Trudeau (Prime Minister):: Mr. Speaker, I have already stated my views on this matter. Several ministers, including Ontario ministers, have expressed their disappointment following the Ontario premier's decision. Furthermore, 1 must remind the hon. member that several members of this House, including the hon. member for Ottawa-Vanier (Mr. Gauthier), have moved motions along those lines. The hon. member is aware, I am sure, that our policy on this matter is quite clear. We disapprove of the Ontario policy.


THE CANADIAN CONSTITUTION
Eudore Allard: Mr. Speaker, could the right hon. Prime Minister tell the House whether, in connection with his constitutional proposals, he intends to have discussions with the provinces with a view to their guaranteeing respect for the fundamental rights of French-speaking minorities, thus avoiding repetition of unilateral decisions such as that of the Ontario premier?


Pierre Elliott Trudeau: Mr. Speaker, the hon. member will see in the bill we plan to introduce in the House before the end of the month specific proposals to that effect. 1 must say to the House that, when hon. members read that bill they will see that the federal government plans to proceed above all with the approval of the provinces rather than forcing them to follow a specific avenue. The remark of the hon. member with regard to Ontario could apply mutatis mutandis to the Quebec bill 101.
Oral Questions FINANCE


GOVERNMENT PROGRAMS TO CURB UNEMPLOYMENT IN QUEBEC
Mr. Roch La Salle (Joliette):: Mr. Speaker, I should like to put a question to the Minister with regard to a problem which affects the province of Quebec more specifically.
According to a recent study, it has been proved that from August 1977 to April 1978, the rate of unemployment which, among men of 35 to 44 years of age was 3.9 per cent and among those of 45 to 54, was 3.8 per cent, rose to 9.2 per cent or 9.3 per cent which represents an increase of 116 per cent to 128 per cent. As the Minister of Finance is supposed to meet his provincial counterparts in the near future, would he be willing to assure us that he will put on his agenda proposals to help that category of people?


Joseph Jacques Jean Chrétien: Mr. Speaker, at that meeting, we will have a look at all economic policies throughout the land, and in each one of the provinces. Naturally, I, too, am sorry to see that since November 1976 the Quebec economy has been ailing increasingly.


Roch La Salle: Mr. Speaker, 1 have a supplementary question for the Minister of Finance.
It is a fact that according to this study, this phenomenon would be attributable to the structural weakness of the manufacturing sector, emphasizing that 55,000 jobs have been lost in Quebec over the past three years. 1 am sure the minister will understand that all this happened before the election of the current government. Under these circumstances, would the Minister of Finance agree to make concrete proposals to his provincial counterparts concerning especially the manufacturing sector?


Joseph Jacques Jean Chrétien: Mr. Speaker, we have made considerable efforts trying to help Quebec's economy. Let us take for instance the case of quotas for footwear and clothing. We had taken this action long before the Quebec government decided to intervene.
Also, Mr. Speaker, we have made very extensive efforts in the case of Canadair, a corporation which was about to close, where we increased the number of jobs from 1,200 to 4,800. 1 should like to indicate that in connection with this project, the Quebec government had refused to co-operate with the federal government's efforts to improve the situation.


Roch La Salle: Mr. Speaker, 1 notice that this study also reveals that 55,000 jobs were lost, more particularly in the textile, furniture and footwear industries. Can the Minister of Finance explain why his government waited so long before imposing controls on the import of those products?


Joseph Jacques Jean Chrétien: Mr. Speaker, I think we acted at the beginning of November, 1976, before the change of govern-

June 13, 1978
Oral Questions
ment in the province of Quebec, in order to protect or help those industries. But the hon. member should also understand that we have to consider the interests of consumers in the other parts of Canada and that in any circumstance the federal government, through its assistance programs under the Department of Regional Economic Expansion, does its utmost to stimulate the economy of Quebec. However, the climate is not very good in Quebec at the present time. Let us take, for example, the fact that more than 40,000 or 50,000 people allegedly left Quebec because the climate which persists now is certainly not likely to stimulate the economy of the province.


LABOUR CONDITIONS
James Aloysius McGrath: If the government would treat this problem with the seriousness it deserves perhaps we might get a new sense of direction from the government in dealing with this situation.
I would like to direct my question to the Prime Minister. 1 realize we have a national rate of unemployment of 8.6 per cent-it has been at that level for three consecutive months. I realize that the rate exceeds 11 per cent in Quebec. Coming as I do from a province where the unemployment rate is now 17.9 per cent seasonally adjusted, I ask the Prime Minister how unemployment can be so high in a province which is endowed with resources, developed and undeveloped, has over half of the iron ore exports from this country, timber resources, and 67 per cent of the economic zone? 1 ask the Prime Minister how it is that-


Some hon. Members:: Order, order!


Mr. Speaker:: Order, please. Surely the hon. member's question is highly argumentative. Perhaps the hon. member would phrase a proper question.


James Aloysius McGrath: I am sorry, Mr. Speaker. I am so concerned with the situation that 1 did not see or hear Your Honour.


Some hon. Members:: Oh, oh!


James Aloysius McGrath: I assure hon. members opposite that to the unemployed people of Canada this is no laughing matter. 1 wish to ask the Prime Minister if the government is prepared, as it was ten years ago, to recognize the problem; it then promised a Marshall Aid type program, though no such program was implemented apart from the disastrous DREE program. Will the government admit to the seriousness of the situation in certain of the regions of this country not the least of which is the province of Newfoundland? The Minister of Communications laughs smugly. 1 would like to ask the Prime Minister whether the government is prepared to establish a cabinet committee to examine the causes of ongoing unem-

ployment in the Atlantic provinces, in Newfoundland, and Quebec, to see if they can come up with some solution to address to this urgent situation.


Pierre Elliott Trudeau: Mr. Speaker, the hon. member suggests some solutions. Those that have been brought forward and are working he discounts as being nothing. For instance, the DREE program which is very much supported by the present government of Newfoundland as it was by the previous government in that province, is something the hon. member dismisses as having no value at all. If the hon. member has some proposals to make perhaps he should communicate them to the government or to the premier of Newfoundland.
As far as my government is concerned, we have been meeting repeatedly with the Newfoundland premier and his officials. I met with them not many weeks ago. 1 accepted the request to have the Economic Council of Canada launch a special inquiry into the problem of high unemployment in Newfoundland, and the premier and the government of that province, as well as the Government of Canada, are working as actively as they can to reduce the historically high rate of unemployment in that province.
The Minister of Fisheries and other ministers have taken steps in the past several months which will have a great impact on the future of the fishing industry in Newfoundland. All these steps which have been taken are dismissed by the hon. member opposite who prefers to indulge in histrionics.


James Aloysius McGrath: I suggest to the Prime Minister that the three ministers who have a special responsibility should form a cabinet committee and go to Newfoundland to discuss job creation based on natural resources.


FISHERIES
James Aloysius McGrath: I now ask the
Minister of Fisheries whether he can explain to the House why he arbitrarily, and with an arrogance which 1 regret, decided not to award to Newfoundland all of the shrimp licences to the new fishing grounds discovered off the north coast of that province in an area of high unemployment-licences which would mean immediate jobs for Newfoundland. Why did he take some of these licences and award them to other parts of the country where they did not belong? Why did he take that decision himself without consultation with the government of Newfoundland, knowing what it would mean in terms of jobs?


Hon. Romeo LeBlanc (Minister of Fisheries and the Environment):: Mr. Speaker, I am amazed at the hon. member's ignorance of the geography.


Some hon. Members:: Oh, oh!
June 13, 1978


Roméo LeBlanc: The fact is that Newfoundland and Labrador did benefit-they got five out of the 11 licences allocated, and it was made clear at that time that if further licences were to be issued priority would be given to areas contiguous to where the fishery is taking place-we took a very cautious approach to this new stock of fish which had been discovered. The hon. member should know that if we start to balkanize the fisheries strictly on provincial grounds it would mean the end of the east coast fishery.


Some hon. Members:: Hear, hear!


SOCIAL SECURITY
Mr. F. A. Philbrook (Halton):: Mr. Speaker, my question is for the Minister of National Health and Welfare. In view of the need to continue improving the efficiency and economy of Canada's social security program, does the minister have any further progress to report on the special Manitoba study on a guaranteed annual income and how it might influence the national plan? Can the House be assured that the government will not proceed with such a plan until all studies have been completed and thoroughly considered?


Hon. Monique Begin (Minister of National Health and Welfare):: Mr. Speaker, I do not have at hand the date by which we expect to receive the reports on the Manitoba "Mincome" experiments. I will try to have that information available tomorrow. Of course, we will be studying the results of the various experimental projects under the program. There are already reports published and available which I am willing to send to any member who is interested in receiving them. All forms of the income supplementation programs did maintain positive incentives for working Canadians in Manitoba.


STATUS OF WOMEN
Mr. David MacDonald (Egmont):: Mr. Speaker, my question is directed to the minister responsible for the status of women. Prior to 1968, the year the Prime Minister took office, the unemployment rate for women was traditionally lower for women than for men. Since that year women have consistently suffered more than their share of the country's unemployment. Two years ago the female jobless rate stood at 8.2 per cent. Last year it was 9.1 per cent and, today, it stands at 9.9 per cent. This represents an increase of almost 100,000 in two years-from 33 per cent-and is clearly a situation which is intolerable. I wonder if the minister has advocated specific recommendations or proposals either to his cabinet colleagues or to the provincial governments, or the private sector, in order to try to turn this very serious situation around.
Oral Questions


Hon. Marc Lalonde (Minister of State for Federal-Provincial Relations):: One point which the hon. member forgot to stress in his question is the fact that over the last few years, including the last two years, there has been a tremendous increase in the participation rate of women in the work force. This is a development which we very much welcome.
We realize that many more women want to return to or join the work force. That is a welcome development as far as the composition of Canadian society is concerned. It is not, therefore, very surprising as more and more women join the work force that the percentage of unemployed should increase because of general economic conditions. The solution in this respect, because we do believe in equality of opportunity for everybody, is not specific programs which will be oriented vis-a-vis one particular sex or another but, as the Minister of Finance has been doing consistently over the last few years, to try to have general programs which will direct the Canadian economy in the right course and improve the general prosperity of Canada. If that takes place, I am not worried. Women will take care of themselves very well indeed in the work force.


DISPARITY IN JOB OPPORTUNITIES FOR WOMEN
David Samuel Horne MacDonald: Mr. Speaker, since it is obvious that the minister responsible for the status of women has made no recommendations and seems to express no concern, except to acknowledge a social phenomenon which has existed much longer than the last ten years, I would like to direct a supplementary question to the Minister of Employment and Immigration.
There has been a widening gap regarding the participation of women in the work force. This was referred to by the minister responsible for the status of women. The gap has been widening very seriously over the last year or year and a half, particularly for young women students, who represent 30 per cent of those who are unable to find work at the present time. Given the comments from time to time about problems finding employment through Manpower offices, can the minister indicate whether he is completely satisfied that Canada employment centres in no way discriminate against female applicants, and has he issued any recent or special directives to his local officials to counter the growing disparity in job opportunities for women, particularly young women?


Jack Sydney George (Bud) Cullen: Mr. Speaker, thanks to the initiative of my colleague, the Minister of State for Federal-Provincial Relations, who has special responsibility for the status of women, we have embarked upon a series of studies in this area to see how we might better accommodate the growing number of women who wish to participate in the work force. Thanks to the initiatives shown by my colleague, this is highlighted not only for the government but for all Canadians.
There has to be an attitudinal change in business about hiring. There is a mental block from time to time that only males can do particular jobs. The board of directors of a

June 13, 1978
Oral Questions
particular bank is a good example. That attitudinal change has to take place. Certainly from my own departmental standpoint we are working on a series of programs to see what we can do to help women who want to join the work force, and to help women who are returning to it in ever greater numbers.
Frankly, 1 do not feel it is necessary that there should be any concern about discrimination as far as Manpower offices and Canada employment centres are concerned. What we are endeavouring to tell our Manpower officials is that they should be going out more and more into the business community and telling the business community to keep in mind that a large percentage of the work force is in fact female, that job openings should be for both sexes, and that there is no discrimination at Manpower offices.


David Samuel Horne MacDonald: Mr. Speaker-


Mr. Speaker:: Order, please. The right hon. member for Prince Albert.


ADMINISTRATION OF JUSTICE
Right Hon. J. G. Diefenbaker (Prince Albert):: Mr. Speaker, my question is directed to the Prime Minister. It has to do with the Peter Treu case. Anyone reading the report this morning by George Bain in the Gazette must conclude that justice was not done and that the accused was denied the rights to which every accused should be entitled.
This matter has been before the House in recent weeks, once through the initiative of the hon. member for Peace River. The article in today's Gazette outlines the responsibility of the government to act. As one reads over what this reputable writer has to say, one can only be reminded of the Dreyfus case. Justice must be done, and it must appear to be done. Anyone reading this report could conclude neither. I point out to the Prime Minister, on whose shoulders the responsibility must rest, having regard to the revelations, particularly in today's press, that if ever there was a case in which a new trial should be ordered by the Government of Canada, it is this Treu case. I ask him to look into it because the way this trial was conducted was nothing short of scandalous.


Pierre Elliott Trudeau: Mr. Speaker, the right hon. gentleman refers to an article in this morning's Gazette which I have not seen, and therefore I cannot base my reply on that. The right hon. gentleman also refers to the evidence in this case. As far as I know that evidence is secret, and 1 do not see how the right hon. gentleman could have access to it any more than 1 could. The judgment itself is secret, but as the right hon. gentleman knows, the Minister of

Justice has made an application-which, I understand, will be heard Friday-for the publication of that judgment. It is his belief and our hope that after having read the judgment perhaps a little more light will be shone on this case.
We have the assurance that the secret trial was made secret at the demand not only of the Crown but also with the acceptance of the defence-


Some hon. Members:: Wrong.


Pierre Elliott Trudeau: -and that therefore both parties agreed to this procedure.
We also know that the case is being appealed, and the right hon. gentleman knows that, if justice is to be done, the usual way for litigants to obtain justice is to appeal to a higher court and not to jump from the judicial system to the legislative or parliamentary system, as the right hon. gentleman is suggesting.


John George Diefenbaker: Mr. Speaker, that is interesting, but it is the right of the Government of Canada to grant a new trial when every vestige of reasonable conduct is set aside during a trial. Except for the sentencing, which took place in open court, all of the trial was conducted in secret. Even the judgment is not available to be seen. Witnesses were sworn to secrecy and were not allowed to hear other witnesses.
One witness, a United States air force officer, has been bound to an undertaking not to talk about the Treu case since 1975. There is no justice in that kind of conduct, and I appeal to the Prime Minister to ensure that justice is in fact done by ordering a new trial. Appeal courts will not be able to determine that any of these things were of such a nature as to deny a fair trial.
Anyone outside the legal circumference can come to no other conclusion than that what was done in this case was a disgraceful travesty of justice.


Pierre Elliott Trudeau: Mr. Speaker, the right hon. gentleman is suggesting that the federal government interfere with the judicial process. If we were to do that, he would be the first to cry indignantly that that should not be done.
A case begins before a magistrate in a province. Magistrates are not even appointed by the federal government. This case comes under a law which is a law of this parliament but which has not been changed since the right hon. gentleman was Prime Minister, so the issue is not a matter of taking issue with the law which the right hon. gentleman himself knew about when he was Prime Minister. He is taking issue with a process before a court which is not under our jurisdiction, and between parties who did not ask our advice on how to proceed but who accepted a procedure and who have now gone to appeal.
The right hon. gentleman is suggesting that the government of the day intervene in this process, say we do not trust courts of appeal, and tell them what to do. That is absolute nonsense.


Some hon. Members:: Hear, hear!

*

June 13, 1978


John George Diefenbaker: Mr. Speaker, I was in the courts before many hon. gentlemen opposite ever knew they existed. I simply point out that the supreme court of all is the Parliament of Canada, and where there is grave injustice-


Some hon. Members:: Elear, hear!


Pierre Elliott Trudeau: Mr. Speaker, the right hon. gentleman is trotting out that old cliche-


An hon. Member:: Oh, a cliche.


Pierre Elliott Trudeau: -that parliament is the supreme court of the land. There is a division of powers in this country. The government and parliament make laws. It is up to the courts to administer them and apply them. The right hon. gentleman would be the first to object if, on the basis of some newspaper article, we were to intervene in the judicial process. Absolute bunk!


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order. The hon. member for Nanaimo-Cowi-chan-The Islands.


DEVELOPMENTS IN PROPOSED TAKEOVER OF HUSKY OIL BY PETRO-CANADA
Mr. T. C. Douglas (Nanaimo-Cowichan-The Islands):: Mr. Speaker, my question is directed to the Minister of Energy, Mines and Resources. My question has to do with the press report which indicates that the Occidental Petroleum Company of Los Angeles and the Husky Oil Company of Calgary through their management and directors have agreed to the acquisition of Husky by Occidental. In view of the minister's statement in the House yesterday that the acquisition of Husky by Petro-Canada was in the national interest, I should like to ask the minister whether or not Petro-Canada still has some opportunity to revise its offer, or whether the deal is closed completely except for the compliance of the shareholders and, if it is, I want to ask the minister what action he proposes to take to retain this large deposit of heavy oil for Canadians to be developed by Canadians for the benefit of the people of this country.


Hon. Alastair Gillespie (Minister of Energy, Mines and Resources):: The hon. member may have seen the press release issued by Petro-Canada. Petro-Canada has made it known that they are reviewing their position in the light of the exchange offer made by Occidental to the shareholders of Husky Oil. As to the second part of the hon. member's question, perhaps it is best answered by reference to the press release which was issued by Occidental when they noted that their particular
Oral Questions
proposal would have to receive the approval-I believe those were the words-of both governments.


Thomas Clement (Tommy) Douglas: In view of the fact that our light conventional crude reserves have only a life index of some ten years and that Canada will have to depend on heavy crude in order to lessen its dependence on imported oil, I wish to ask the minister, in the event that Occidental and Husky go through with the deal-and there is every indication that they intend to-since this matter will have to come before the Foreign Investment Review Agency, whether it is the government's intention, either through Petro-Canada or through the minister, to point out to FIRA how important the development of these heavy oil reserves is to Canada, particularly in view of the fact that there is a good deal of evidence that Husky has not been very aggressive in developing them, either through lack of capital resources or for some other reason, and that it is essential to proceed with that development as quickly as possible in the interests of the Canadian people.


Alastair William Gillespie: I am sure the hon. member knows, as I do, that FIRA and others in Canada are well aware of the government's priorities with respect to the development of heavy oils in western Canada. I have stated the position of the government many times in the House. However, I think the hon. member would not want me to prejudge in any way the question of an application before FIRA regarding significant benefit to Canada.


IMPACT OF PROVINCIAL TAXES ON EXTRACTION OF SASKATCHEWAN HEAVY OIL DEPOSITS
Mr. Harvie Andre (Calgary Centre):: I have a supplementary question for the Minister of Energy, Mines and Resources. Given the fact that the tax and the royalty regime of the province of Saskatchewan is one of the major reasons for the delay in the development of the heavy oil deposits in that province-


Some hon. Members:: No way!


Mr. Nystrom:: Here's another apologist for the large companies.


Harvie Andre: -and given the fact that Petro-Canada as an agent of her Majesty would be exempt from any taxes-


Some hon. Members:: Oh, oh!


An hon. Member:: The Exxon kid!


Harvie Andre: Mr. Speaker I wonder if the noisy members of the NDP would allow me to finish my remarks.
Also, given the fact that Petro-Canada would not have to pay any taxes levied by the province of Saskatchewan, can the minister confirm that one of the reasons the government has encouraged Petro-Canada's takeover bid of Husky is in order to avoid the payment of these taxes or royalties to the province of Saskatchewan?

June 13, 1978
Oral Questions


Alastair William Gillespie: I am sure that if the hon. member were familiar with the land holdings of Husky he would know that one of the reasons that Petro-Canada is interested in moving into the situation is that the Saskatchewan government does not have a very significant lever with respect to the Husky properties. A very large proportion of those properties is freehold and they are not royalty paying properties.


ADMINISTRATION OF JUSTICE
Mr. Joe Clark (Leader of the Opposition):: Mr. Speaker, my question is for the Prime Minister. Yesterday the Prime Minister introduced to the House a document which spoke, among other things, in its first resolution about the importance of human rights and respect for civil liberties in this country. Today he defended passionately the practice of the Government of Canada of maintaining a secret trial in the case of Dr. Treu. He has told us that even though the article by Mr. Bain has been published for two days now, the Prime Minister has not informed himself of the allegations and of the information contained in the article.
May I ask the Prime Minister a simple question? This is a short article, it is light, witty, and easy to read. Would the Prime Minister, with that interest in civil rights which he brought to parliament and then apparently forgot, review the facts set forth in that article, inform himself, and report back to parliament today on whether or not, on the basis of having become informed, he is prepared to instruct his Minister of Justice to ask for a new trial?


Pierre Elliott Trudeau: Maybe the article is easy to understand, but I suggest that there must be facts which are either not understood by the Leader of the Opposition or are not stated in the article. The Leader of the Opposition suggests-and those are his words-that the government is maintaining a secret trial-


Some hon. Members:: Supporting a secret trial.


Pierre Elliott Trudeau: The word used by the Leader of the Opposition was "maintaining". But the words are secondary. The fact is that the trial was started with the two parties agreeing on the procedure before a provincial court. Now the appeal is in process; an appeal has been lodged by the defendant. Every notion of a Bill of Rights with which I am acquainted says that justice must follow its course and there should be no interference from politicians, such as we see on the other side of the House, into the judicial process.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: Mr. Speaker, there are hundreds of thousands of people who came to this country because they found the process of a secret trial reprehensible, and have an apprehen-

sion of secret trial. The Prime Minister knows that the appeal procedure in Dr. Treu's case could take up to a year and a half in the life of a man whose resources and reputation are already spent. Would the Prime Minister do this one simple thing in the name of the civil liberties which he claimed to honour before he became the Prime Minister of this country, and review the facts of the case which are available to him as Prime Minister in a way that they are probably unavailable to some others of us in the House, and would he then make a statement to the House on whether or not he is personally prepared to consign Mr. Treu to another year and a half of proceedings that may well be secret, or whether he would order a new trial?


Pierre Elliott Trudeau: The Leader of the Opposition shows ignorance of the law when he suggests that the proceedings of the trial are available to me any more than they are to him. I understand they may well be made available to a member of his party who will now act as co-counsel.


Some hon. Members:: Shame!


Pierre Elliott Trudeau: What is shameful about making such a remark? They are certainly not available to me. The government has taken some steps through a motion before the court to plead that the judgment should be made public, and this motion will be heard on Friday. If the judgment is made public I would hope that the Leader of the Opposition-and his other leader over there, and his counsel-will acquaint themselves with the judgment before pleading a case of which they know nothing.


Some hon. Members:: Hear, hear!


Mr. Baker (Grenville-Carleton):: This makes the
Shcharansky trial look good.

[ Translation\


PRIVILEGE
Mr. Speaker:: Order, please. On May 8 last, the hon member for Bellechasse (Mr. Lambert) rose on a question of privilege. According to his question of privilege, 1 believe that he considered that the coverage of the leadership convention of the Social Credit party held in Winnipeg on May 7, 1978, was inadequate. On May 11, 1978, the hon. Secretary of State (Mr. Roberts) gave his reply. 1 have taken under consideration the complaint of the hon. member for Bellechasse, the reply of the hon. Secretary of State as well as the precedents concerning parliamentary privileges. The definition of parliamentary privilege is well known to hon. members, and I shall repeat it in English-
June 13, 1978

Parliamentary privilege is the sun of the peculiar rights enjoyed by each House collectively as a constituent part of the High Court of Parliament, and by members of each House individually, without which they could not discharge their functions, and which exceed those possessed by other bodies or individuals. Thus privilege, though part of the law of the land, is to a certain extent an exemption from the ordinary law.

Therefore, parliamentary privilege is extended collectively to the House and individually to the hon, members. It does not extend to the political party as such, and it does not go much further than the right of the House to obtain the services of members of the House and the right of hon. members to freedom of speech in this House. It goes without saying that I fully appreciate the difficulty raised by the hon. member for Bellechasse, which is essentially a grievance. It is unfortunate that our procedure does not provide hon. members more opportunities to express grievances and obtain direct answers.
It is therefore impossible for me to consider this matter in the context of parliamentary privilege and I can only suggest to the hon. member for Bellechasse that he pursue this affair by other means, perhaps before the Standing Committee on Broadcasting, Films and Assistance to the Arts, which is now considering the estimates of the Secretary of State.


POINT OF ORDER
[Stage Direction]
mr. Macdonald (egmont)-lengthy replies of ministers
David Samuel Horne MacDonald: Mr. Speaker, I rise on a point of order regarding a situation which, to my mind, has become increasingly worse in recent months and which typified itself today in the difficulties I had with Your Honour in asking a further supplementary question. I realize the considerable pressure Your Honour is under in respect of the limited time of the question period. However, one of the basic difficulties we are encountering increasingly here is in respect of questions posed directly to ministers. 1 know that no minister is under any obligation whatsoever to answer a question, but 1 would think that at least it should be the tradition of this House, since this tradition seems to be more honoured by breach than by observance, that it should now be part of the rules that there should be some inhibition, if not prohibition, on ministers giving lengthy answers that in no way respond to the questions posed.
In two instances this afternoon in respect of the exercise of jurisdiction by the minister responsible for the status of women and the Minister of Employment and Immigration (Mr. Cullen), I asked specific questions about actions that might be taken under their jurisdictions, given the serious situation with regard to unemployment of women today. Instead of that I received lengthy answers which in no way even attempted to deal with the questions posed. The additional question was an
Privilege-Mr. Broadbent
important one I wished to raise with the President of the Treasury Board (Mr. Andras) regarding an outstanding obligation on his part, and with the Minister of State for Federal-Provincial Relations (Mr. Lalonde) on the status of the government's own employment of women-its equal opportunities program which was introduced in 1975.
This makes it difficult, if not impossible, for the question period to serve its fundamental purpose, particularly if ministers are allowed to answer at length but in no way deal with the questions that have been put, taking up so much time of the House that it is impossible for a number of members to ask either subsequent questions or to follow up specifically on the questions they originally posed.


Mr. Speaker:: Order, please. The hon. member raises a very valid point. Unfortunately, in his particular example this afternoon, if he will take the trouble to measure, he will find his questions were equally as long as the answers given.


PRIVILEGE
John Edward Broadbent: Mr. Speaker, I rise on what I consider to be a very serious question of privilege. On June 1 I raised in this House the question of the possibility of a clear conflict of interest involving the situation of a former minister of finance, the same man who was former minister of national defence, in taking a position, so soon after he exercised these particular government responsibilities, with the MacDonnell-Douglas Corporation.
My concern at that time was that the minister, having had such major responsibilities in the government as finance and defence, should have exercised more discretion in terms of time in moving to a corporation which was in itself involved in serious negotiations and contract proposals involving millions of dollars with the federal government.
I have been disturbed subsequent to that time, June 1, by further developments involving the government, which by no means eradicate my concern about the possibilities of political interference in contracting procedures of the federal government. According to minutes of a meeting that took place in 1975, involving the present Minister of National Defence (Mr. Danson), who was then the minister of state for urban affairs, it is stated, and I quote from those minutes:
The minister wants to make sure the firms chosen for major contracts... are cleared politically with the ministers responsible, through his office.
This matter was appropriately raised in the House yesterday by a member of the Conservative party in the form of a question. When that particular matter was raised in a responsible fashion in the form of a question, I had hoped the minister, in this case the Minister of Finance (Mr. Chretien), who dealt with it would have taken the opportunity of removing any possibility that there was political interference in the

June 13, 1978
Privilege-Mr. Broadbenl
awarding of major contracts in government financial operations.
Quite the contrary took place. Not only did the minister not say that this was not the practice in 1975, he went on to say, and I quote from Hansard from yesterday at page 6277:
-I do not see anything wrong with that statement.
What are the implications of this? It would seem to me that the implication is that for a major contract-and God knows what happens if the contract is just a minor one-the normal competitive tendering processes are being ignored. I hope the minister will take the time to clarify this situation.
If it is normal to get political clearance, then it is normal by logical processes to conclude that the normal competitive tendering procedures are being abrogated in some way. This is why we have to be concerned about this matter. As I understand it, the normal contracting procedures do allow for some ministerial discretion. The company with the lowest bid does not automatically get the contract, and that makes sense; there are good arguments which can be made in support of that. For example, the firm with the lowest bid may not be a reliable supplier. For other reasons in the consideration and the view of the ministry the company may not have the capacity to deliver on time or in kind. There could be other technical considerations that would cause a responsible minister not to accept the lowest bid.
However, the implication of the minute of 1975, to which I referred earlier, and the answer given yesterday in the House by the Minister of Finance, is that among the considerations that pertain to major contracts is the political reliability of the company concerned. How is that to be defined? Is it a bonus by that company to the Liberal Party of Canada? Is it to be defined as a company that normally helps out the Liberal party of Canada, if not in a direct financial way, by some other means? It seems to me that political reliability cannot mean anything else other than one of these two possibilities. I submit that either one of them is contrary to the public interest.
I thought that it had been taken for granted some time ago in the procedures of this parliament that major contracts are to be resolved entirely on non-political considerations. I was deeply disturbed when I read that original minute of 1975 where it said political considerations were going to come into play, and I was even more disturbed yesterday in the House when 1 heard the Minister of Finance, who had the opportunity to deny the practice, in fact confirm it, saying that he could see nothing wrong with the statement.
My question of privilege, Mr. Speaker, is very straightforward, and I can rely on a prima facie case. I would think that the people of Canada would be scandalized by the implications, unless this matter is cleared up irrevocably today. Canadians expect the Government of Canada to have honest, clear-cut, non-political dealings with corporations involving public funds. If that is not the case, then it reflects unfavourably on all members of this House. All members of parliament
[Mr. Broadbent.l
are implicated when there is a serious wrongdoing by the government, if that is what is involved.
If you rule, Mr. Speaker, after we hear from others who may want to participate in this question of privilege, that I have a prima facie case, I will move that the matter be referred to the committee on privileges and elections.


Joseph Jacques Jean Chrétien: Mr. Speaker, on the question of privilege-


Mr. Speaker:: Order, please. I will certainly hear the Minister of Finance (Mr. Chretien), but whatever legitimate concern the hon. member for Oshawa-Whitby (Mr. Broadbent) wants to raise, although it may be a matter of very grave concern, of valid concern and of widespread public interest, I have no difficulty in saying that I cannot fit it in under the guise of privilege under any circumstances. It does not constitute a procedural matter in any sense of the word. However, if the minister wishes to reply, I will give him the opportunity to do so.


Joseph Jacques Jean Chrétien: Mr. Speaker, I think this matter deserves an explanation even though it is not a proper question of privilege. With regard to the questions asked yesterday by the hon. member for Central Nova (Mr. MacKay), he referred to the fact that a minister wished to be informed as to what was going on in his region. There is the obligation that every minister follow the rules as set out by the Treasury Board, which state that all contracts are awarded to the lowest bidder. If it is not the lowest bidder that gets the contract, then it has to be approved by the Treasury Board, and there must be valid reasons as to why the lowest bidder did not get the contract. This has happened, of course.
What the hon. member was referring to, however, perhaps needs clarification. It is absolutely normal that ministers would want to be made aware of what is happening within their regions. It is extremely important because among the responsibilities of the ministers in cabinet is that they make sure that what is done by this government is made well known to the people.
There is no inference that the normal way of proceeding is to interfere with the allocation of contracts. The rules and regulations are well known. They are established by the Treasury Board and all contracts have to be approved according to the practices. When they say that matters should be referred to the regional ministers, it is just normal practice because the minister coming from one part of Canada or another has a role as a minister to make sure that the activities of the federal government in that area are knwon to him in order that he can explain it to the public. This is not interference into the due process of the allocation of contracts. That is what I meant.
It is very normal that a minister representing a region would want to be informed, and he is certainly entitled to know if there is a contract being allowed within his jurisdiction. In no way did I intend to lead the House to believe yesterday that a minister has the right to intervene in the allocation of contracts. It is just not the practice because the rules and regulations are well known. Every contract must go to the lowest
June 13, 1978

bidder unless there is a valid reason not to do so. When it is allocated, it is allocated by the Treasury Board and not by the minister himself.


John Edward Broadbent: There is nothing in there about its being regional.


Joseph Jacques Jean Chrétien: I just wanted to say that that was the context of my comments in the House yesterday. If a minister seeks to be informed of what is going on in his province, it is not intervention in the due process of the allocation of contracts. This is not a question of privilege; it is merely a political point.


Mr. Speaker:: The hon. member for Central Nova (Mr. MacKay) was the one who raised this point yesterday. 1 have indicated that there is nothing so far that has persuaded me to believe there is a question of privilege in this debate. I have nothing to say about the practice. There may be areas of debate and discussion, or attack and criticism of the practice, but that has nothing to do with the procedural decision I must make as to whether or not this matter can pre-empt the business of the House on the basis of privilege. I see no privilege in it.
However, in fairness, I ought to hear one other member, and that is the member for Central Nova, who first raised this matter yesterday.


Mr. Elmer M. MacKay (Central Nova):: Mr. Speaker, I am pleased to hear the minister elaborate on the explanation which he gave yesterday, but with the greatest of respect, sir- and I had hoped to ask some questions today-the issue still has not been cleared up, at least in my mind. I am being very specific in referring to the words of the minute, and they are the world "politically cleared". I am not talking about projects, as the minister said yesterday and as I believe he is referring to today, or ordinary information on a joint government project, or keeping one minister informed because he happens to be in another province. I am talking about a situation which I believe to be true.
For example, Oswald Parent, the former Liberal minister of intergovernmental affairs, I believe, used to collaborate, as the Minister of Finance (Mr. Chretien) well knows, with now Senator Marchand on certain of these projects. I suggest to the minister, with the greatest of respect, that what was done in fact was that there was a short list prepared before the NCC officials even knew about it. The point 1 bring to the minister now is that any rules of consideration or tendering were pre-empted long before this situation ever arose. I suggest again to the House and to the minister that this is a matter of great import, as the leader of the New Democratic Party has pointed out.
It was, sir, precisely this form of "profitable federalism", as the government referred to it, that the voters in Quebec rejected when Claude Ryan said to them, "vote for a clean government." My party has been accused in this House of contributing to separatism. It is this kind of shoddy dealing that was rejected by the people of Quebec and which, incidentally, caused the rejection of now Senator Marchand and the
Point of Order-Mr. Walter Baker then minister of intergovernmental affairs, Mr. Parent, in their respective elections by the voters of Quebec, that is probably contributing to this situation. With the greatest of respect I would say to the minister that I think he owes the House a bit more of an explanation; and he ought to be more frank with the House when he says that this matter strictly referred to projects, as he did yesterday.


Mr. Speaker:: Order, please. I have no machinery by which I can hear the minister a second time. The matter, as has been recognized by the minister and has been described by both members of the opposite side, is a serious matter. Indeed, it is regrettable that the hon. member for Central Nova (Mr. MacKay) did not have an opportunity to pursue the matter in question period today. The House, obviously, was occupied on other matters for the duration of the question period, but I would hope that the hon. member and other hon. members would have an opportunity to pursue it quite fully in the days to come.
That, however, only stresses to me the point that the matter, while important, is one that has to be pursued in the normal way. It does not in any way have a connection with the privileges of hon. members to operate in the House, and if it is a matter, as the hon. member for Oshawa-Whitby (Mr. Broadbent) says, that reflects badly on any members of the House, that does not in any way stretch it into a question of privilege. To do so, it seems to me, would be to say that every grievance against the government or government practice would be such as to qualify that subject for pre-eminence over every other order of business under the heading of privilege, and that would stretch our definition of privilege beyond all recognition.
Accordingly, having given all three participants an opportunity to carry this matter slightly today, it will have to be pursued in a more normal means in ensuing days.


POINTS OF ORDER
Walter David Baker: Mr. Speaker, on a point of order. Yesterday, I was very critical of the government with respect to absent ministers. I stand by that. With respect to the issue which has been raised by the hon. member for Central Nova (Mr. MacKay), however, I just want the House to know that the Minister of Public Works (Mr. Buchanan) had hoped to be here today to answer questions. He was kind enough to phone me to indicate that he would not be here today but would be available tomorrow with respect to this matter.
1 do not know whether there has been any communication by the Minister of Finance (Mr. Chretien) to the Minister of National Defence (Mr. Danson) with respect to this matter as referred to in the House yesterday. It was the Minister of National Defence who was the minister in question at the time

June 13, 1978
Point of Order-Mr. MacKay
the meeting took place in September, 1975. I merely raise this matter as a point of order because, naturally, we would want to direct some questions to him as to what he may have meant by the words "firms chosen"-not "projects"-for particular matters, and on the aspect of political clearance.
The reason I say that and put the government on notice is that for the first time, in answer to the response by the leader of the New Democratic Party to the point raised by the hon. member for Central Nova, the minister has introduced the concept of regional ministers who are politically clearing projects. That is the first time. It does not come out of the-


Joseph Jacques Jean Chrétien: I never used that term.


Walter David Baker: I think it is extremely important that the government consider whether it might be appropriate for the Minister of National Defence to make a statement to clear up this matter one way or the other.


Mr. Speaker:: Order, please. The Minister of Finance (Mr.Chretien) on the same point of order.


Joseph Jacques Jean Chrétien: On the same point of order, Mr. Speaker, I never used the term "clearance". I just said that some ministers want to be informed of what is going on in the government in relation to the regions. I think there is nothing abnormal about it but it is not interpreted in the normal process of allocation of contracts with the normal tenders.
I have not had a chance to talk to the Minister of National Defence but I know he was not in the House yesterday nor in his office. He is ill, Mr. Speaker, and I do not know when he will be back. I have not seen him today and I do not know when he will be available.


Elmer MacIntosh MacKay: Mr. Speaker, may I just say that the Minister of National Defence was good enough to call my office today and explain that he could not be here. I want to thank him publicly for that courtesy.
MR. MacKAY-RESPONSE OF PRIME MINISTER


Elmer MacIntosh MacKay: Mr. Speaker, 1 have a point of order which is very short. It concerns the response of the Prime Minister (Mr. Trudeau) to the right hon. member for Prince Albert (Mr. Diefenbaker) and also has reference to page 6324 of Hansard. I may be mistaken, Mr. Speaker, but I believe this is important. I believe that the Prime Minister, in making the points he did, left the impression with the House that the matter of Alexander Peter Treu was primarily a matter of provincial responsibility. He used the words "magisterial responsibility" when he referred to this particular point.
I think it would be useful to read a very brief excerpt, which I guess the Prime Minister has not had the chance to read, from yesterday's Hansard, the sentence pronounced by His

Lordship Luc Trudel. Referring to the Minister of Justice (Mr. Basford), he said:
I must add, since it is part of the case, that an authorization from the Minister of Justice was filed-I have it here-in accordance with s. 12. The text is in English, but in accordance with s. 12 of the Official Secrets Act, the Attorney General of Canada, Mr. Basford, has authorized all the proceedings against you in accordance with our laws here in this country, I do not have to tell you- everyone knows-that the Attorney General of Canada holds the highest positions, at least as regards the administration of justice in this country, and no action under the Official Secrets Act can be brought against anyone without the approval or consent of the Attorney General.
1 bring this up only to point out that the Prime Minister may have inadvertently not, perhaps, misled the House but may have placed too much emphasis on the provincial aspect of this matter when really it is a very serious federal matter. He should have made that clear.


Mr. Hnatyshyn:: He does not understand the law.


Mr. Vvon Pinard (Parliamentary Secretary to President of Privy Council):: Mr. Speaker, on the same subject, 1 would like to add that all the right hon. Prime Minister said was that the judge who presided over the trial had been appointed by the justice minister of the province of Quebec. The hon. member for Central Nova (Mr. MacKay) should know that in any case the trial which was closed to the public was held in such a way, as the right hon. Prime Minister remarked today, with the agreement of both parties.


MR. MUNRO (ESQUIMALT-SAANICH)-REFERENCE FOR STANDING COMMITTEE ON FISHERIES AND FORESTRY
Mr. Donald W. Munro (Esquimalt-Saanich):: Mr. Speaker, I have a point of order and I would like some advice on this matter. On Thursday last I asked the governmemt House leader if he could provide us with a reference for the Standing Committee on Fisheries and Forestry so that we could investigate further the matter of the fishing dispute between this country and the United States. I was wondering whether I should wait or pursue this daily on a point of order until we get it. I would be grateful for your advice on this, Mr. Speaker.


Mr. Speaker:: Order, please. I am sure the President of Privy Council (Mr. MacEachen) will respond at the earliest opportunity.
June 13, 1978



ROUTINE PROCEEDINGS


Mr. Andrew Brewin (Greenwood) moved: for leave to introduce Bill C-462, to amend the Federal Court Act (executive privilege).


Some hon. Members:: Explain.


Francis Andrew Brewin: Mr. Speaker, this bill is designed to repeal section 42(2) of the Federal Court Act. That act provides that a minister of the Crown may, by means of filing an affidavit, absolutely debar production of any document disclosure of which he thinks may be injurious to international relations, national defence or security, federal-provincial relations or disclosing a confidence of the Privy Council. The repeal would mean that a court might examine the document and order its production if the court saw fit.
An important principle is involved in this bill. If it is passed, a minister cannot allege or put forward an absolute power to keep a document secret from the scrutiny of the courts in cases where the court says it wishes to see the document to assure itself whether the affidavit is properly filed and whether the exemptions to which it refers in fact exist, instead of leaving it to the minister to judge his own case.


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

Joseph Jacques Jean Chrétien: Mr. Speaker, further to the notice I gave the House yesterday afternoon concerning allocation of time for the committee stage of Bill C-56, I move, seconded by the Minister of State (Fitness and Amateur Sport), (Mrs. Campagnolo):
That in relation to Bill C-56, an act to amend the statute law relating to income tax and to authorize payments related to provincial sales tax reductions, two sitting days shall be allotted to the further consideration in committee of the whole stage of the bill; and
Order Paper Questions

that on the second of the said days, fifteen minutes before the expiry of the time provided for government business in such sitting, all proceedings before the committee shall be interrupted, if required for the purpose of this order and every question necessary to dispose of the bill at the committee of the whole stage shall be put forthwith and successively, without further debate or amendment.


Mr. Speaker:: Order, please. We have only the answering of questions before completion of routine proceedings. I wonder if the House might be disposed to take them at this time and conclude routine proceedings, then proceed with the two-hour debate on this motion and follow with orders of the day. Is that agreed?


Some hon. Members:: Agreed.
Motion (Mr. Chretien) stood.

[ Translation]


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Yvon Pinard: Mr. Speaker, the following questions will be answered today: 798, 884, 952, 954, 1,326, 1,356, 1,396, 1,605, 1,612 and 1,693.
Mr. Speaker, I ask that all remaining questions be allowed to stand.


Mrs. Pigott: 1.	What was the total number of houses built under the Rural and Native Housing Programme (a) nationally (b) in each province?
2.	What amount, including start-up funds, sustaining grants and bridge loans, was allotted for such construction (a) nationally (b) in each province?


Hon. Andre Ouellet (Minister of State for Urban Affairs):: am advised as follows by Central Mortgage and Housing Corporation: 1. See list 1 below.
2.	See lists 1 and 2 below.
Province
Newfoundland
Prince Edward Island
Nova Scotia
New Brunswick
Quebec
Ontario
Rural and Native Housing Financed under the National Housing Act(,) by Province, 1977
Non-Profit Section 15.1 Units $000
20	245
4	134
Federal-
Provincial
Section 40

Section 34.15
Off Reserve Section 58
On Reserve Section 59
Total
Units	$000	Units	$000	Units498	10,135	-	-	-20	508	-	-	-140	3,131	-	-	3106	2,762	5	133	4 12 39113	3,229	-	-	$000	Units	$000	Units	$000_	498	10,135-	20	50844	-	143	3,17594	1	20	116	3,009110	-	-	32	355841	6	105	162	4,309
June 13, 1978
Order Paper Questions
Non-Profit
Federal-
Provincial

Off Reserve
On Reserve
Province
Manitoba
Saskatchewan
Alberta
British Columbia Yukon Territory Northwest Territories
Canada
Section 15.1	Section 40	Section 34.15	Section 58	Section 59	Total	Units	$000	Units	$000	Units	$000	Units	$000	Units	$000	Units	$000-	329	9,349	1	24	21	440	1	16	352	9,82911	203	521	14,786	-	-	18	378	1	11	551	15,37812	315	210	7,320	-	-	4	94	31	580	257	8,30914	295	258	7,430	16	572	21	558	22	576	331	9,431-	-	21	639	-	-	-	-	-	-	21	63961	1,192	2,216	59,289	22	729	122	2,559	62	1,308	2,483	65,077
(1)Data are gross.
Start-up Funds and Sustaining Grants Approved Under the NHA Rural and Native Housing Program By Province, 1977
Province	Start-Up Funds Number $000	Sustaining Grants Number $000	Newfoundland	-	-	-	-Prince Edward Island	-	-	1	27Nova Scotia	13	70	1	75New Brunswick	-	-	3	127Quebec	-	-	1	144Ontario	16	53	3	609Manitoba	-	-	3	305Saskatchewan	-	-	2	343Alberta	-	-	1	18British Columbia	-	-	-	-Yukon Territory	-	-	1	25Northwest Territories	-	-	1	102Canada	29	123	17	1,775


Mr. Alexander: 1.	Was an announcement made regarding the Hamilton Municipal Airport and the government's plans for its expansion to a Regional Airport and, if so, on what date was the announcement first made?
2.	How much money was set aside at that time for this purpose?
3.	How much money is now available for this purpose?
4.	Of this money, how much is for the purpose of (a) acquisition of land (b) reconstruction and extension of runway or runways (c) new terminal facilities (d) navigational aids, control tower and hydro relocation?
5.	How much land and what number of passengers per year are involved in the planned new facilities?


Hon. Otto E. Lang (Minister of Transport):: 1. Yes. March 2, 1972.
2.	An amount of $25,000,000 was identified in the 1972 Canadian air transportation administration five year plan for expenditure at Hamilton in the 1973-76 period to expand the airport. Funding approval was not pursued as, subsequently, the Hamilton airport study program was undertaken. This study program was announced on September 23, 1974 and has now been completed. On January 30, 1978 Transport Canada announced approval of the recommendations of the study program as contained in the Hamilton airport technical recommendations report. The primary recommendation was that further development of air facilities to serve the Hamilton-Niagara-Brantford area should take place at the existing Hamilton airport.

3.	Now that the site decision has been taken and after the master plan for airport development has been drafted, an investment schedule will be developed and will be included in the Cata five year capital plan.
4.	Not applicable.
5.	Additional land requirements for the three concepts for development of the existing Hamilton airport range from 650 to 865 acres. The present airport site now occupies 819 acres. The additional land will be required to accommodate a new runway. Forecasts used in the Hamilton Airport Study Program estimate annual enplaned plus deplaned passenger levels of 960,000 in 1985 and 1,680,000 in 1990 assuming that airport facilities are developed in the Hamilton area to meet the air travel needs of this area. This also assumes that air services for the Hamilton area will be provided by air carriers on a basis similar to that provided to serve other Canadian urban centres.


Mr. Howie: Since January 1, 1977, how many new housing units were constructed for native people in New Brunswick?


André Ouellet: am advised as follows by Central Mortgage and Housing Corporation: During 1977, CMHC financed new housing in New Brunswick under its Rural and Native Housing Program
housing units for native people in New Brunswick?


André Ouellet: am advised as follows by Central Mortgage and Housing Corporation: (a) See the answer to question 952 answered this day. (b) Grants have not been made to assist in financing new housing for native people in New Brunswick.

as follows:	Units	$000	F/P Partnership (Section 40)	106	2,762	Assisted Home Ownership (Section 34.15)	5	133	Indians Off Reserves (Section 58)	4	94	Indians On Reserves (Section 59)	1	20	
Question No. 954-Mr. Howie:			
Since January 1, 1977, what amount was	(a) loaned (b) granted for new		[DOT]
June 13, 1978


Mr. Jones: 1.	How much money, if any, was given by Parks Canada, or any government department, to assist in the production of the play De Conquele en Conquete (From Conquest to Conquest). Please specify grant or grants given, reasons for grant or grants given, and general nature of such grant or grants, if any?
2.	What other such grants have been awarded, if any, and what were the respective amounts of these grants?
3.	In the awarding of these grants, is the material to be produced reviewed, and if so, what were the comments of the department or departments with respect to the above allocations?
4.	Is the government aware that the play in question one, above, is termed "hate literature" and if so, what actions are they pursuing as a result?


Mr. Ross Milne (Parliamentary Secretary to Minister of Indian Affairs and Northern Development):: In so far as the
Department of Indian and Northern Affairs is concerned, the reply is the following: 1. Through its Summer Student Employment Program, the Department of Employment and Immigration awarded Parks Canada a grant of $50,000 given to the theatre company "Les Productions pour enfants de Quebec Inc" for the summer of 1977. The grant was awarded to cover research and direction costs, production costs (costumes, scenery, music, lighting, etc.) and the performers' salaries.
2.	None.
3.	The theatrical adaptation of this particular work was reviewed by Parks Canada interpretation officers before it was performed publicly. The purpose of this review was to check the historical and sociological accurateness of the play's message; it was not meant to impose any government censorship on the theatre troupe.
4. As for the play being considered "hate literature", we should point out that more than 2,500 people have seen the play and no complaints have been made. The department does not consider it "hate literature".


Mr. Mazankowski: 1.	To date, in overall terms, what is the total government support for the development and production of the Dash-7?
2.	To date, what is the amount of (a) loans (b) grants (c) contributions (d) interest on loans, given to de Havilland of Canada by the government?
3.	What is the total number of employees at de Havilland of Canada and how many are engaged in the development and production of the Dash-7?
4.	What are the names and the salaries of the top five executive officers employed at de Havilland of Canada?
5.	What is the average amount per capita of government loans, contributions or grants for employees involved in the development and production of the Dash at de Havilland of Canada?


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: 1. As of March 1, 1978, $92,985,760.
2.	As of March 1, 1978; (a) $3,072,919; (b) Nil; (c) $114,999,547; (d) Nil.
Order Paper Questions
3.	The total number of employees at de Havilland is 4,000. Current direct labour, excluding labour overhead: Dash-7 production, 700; Dash-7 development, 300. Total employment on Dash-7 development and production since the start of the project to date is about 3,890 man-years.
4.	The top executive officers of de Havilland Aircraft of Canada are: President, Mr. R. Bannock; Senior vice president, Mr. D. B. Annan; Vice president, Special Projects, Mr. W. T. Heaslip; Vice president, Engineering, Mr. R. D. Hiscocks; Vice president, Customer Support, Mr. F. A. Johnson; Vice president, Finance, Mr. S. B. Kerr; Vice president, Marketing and Sales, Mr. J. A. Timmins. Following normal commercial practice, the individual salaries of the senior executives of de Havilland Aircraft of Canada are confidential.
5.	The average amount of per capita government support of the development and production of the Dash-7 to date is $23,900. This support contributed for the most part, towards the direct employment in the development phase and the manufacture of the prototype aircraft. As such, it represents capital costs which will create employment in future years in terms of Dash-7 production over the life of the aircraft.


Mr. Schumacher: 1.	By year since January 1970, how many post offices have been closed to date in the Province of Alberta?
2.	Where were these post offices located and, in each case, what alternative service has been provided?
3.	In each case, what was the cost involved in (a) closing the operation (b) providing alternate service?
4.	In each case, what savings have been gained by the Post Office Department through the actions taken?
5.	How many other post offices in the Province of Alberta are under consideration for closure in (a) 1978 (b) after 1978 and where is each located?
6.	What alternative service is proposed for post offices in the Province of Alberta which are being considered for closure in (a) 1978 (b) after 1978?


Hon. J.-Gilles Lamontagne (Postmaster General):: (See list below.) Records are not kept in such a way as to provide information on the closing of sub post offices since January, 1970. Following is information on the closing of post offices only since January, 1970. 1. 1970, 39; 1971, 3; 1972, 2; 1973, 5; 1974, 1; 1975, 7; 1976, 3; 1977, 3; 1978, 1. Total closing of post offices excluding subs-64.
2.	See list below. (Alternate service is usually the nearest existing post office).
3.	(a) There are no records which would provide accurate figures as to the cost of closing a revenue post office. The main factors would be a visit to the office by a postal official plus administrative work, cost would be less than $100. (b) Since alternative service is usually the nearest post office or existing rural route, additional cost would be negligible.
4.	See list below. (Saving-Represent annual salary and rental allowance paid to the Postmaster of a particular revenue


André Ouellet: I				3,
am advised as follows by Central Mortgage and Housing				
Corporation: Rental units financed under the National Hous-				
ing Act in 1977 follow:				
Province/City		CMHC Approved Lenders		
(a) Fredericton				320	
(b) Toronto Metropolitan Area	3,374	7,733	(c) Vancouver Metropolitan Area	69	6,267	(d) New Brunswick	104	398	(e) Quebec	2,305	12,002	(f) Ontario	5,504	20,952	
June 13, 1978


Mr. Cossitt: 1.	Is Mr. Pierre Robert Allard employed by the National Capital Commission and, if so (a) on what date was he hired, in what capacity and at what salary (b) has he or is he doing a specific project for the Commission's General Manager referred to as "Secret" and what is the nature of the project (c) what is a complete list of his experience as a planner and what are the details of his educational background?
2.	In September 1976, was he sent as a visiting lecturer to the University of Moncton with the approval of NCC and, if so (a) was his salary paid by the NCC during his absence (b) were moving expenses for himself and his family paid and, if so, what was the amount paid to cover the move in both directions?
3.	What were the nature of his lectures at the University of Moncton and specifically what subjects did they deal with?
4.	Has Mr. Allard entertained foreign diplomats at government expense and, if so, on what date and for what reasons and did he specifically hold a private luncheon in the Executive Office of the NCC on or about December 1977 and, if so, at what total cost to the taxpayer and what are the names of the countries the diplomats represented?


André Ouellet: 1. Yes. (a) He was hired on continuous strength on September 1, 1969 as an architect-planner at a salary within the AR-2 range ($10,670 to $12,127). (b) No. (c) Mr. Allard pursued studies at the Academie Royale and at the Ecole de design in Brussels. He trained for various periods with architects and town planners in Belgium. In Canada, he studied at the Centre d'etudes nordiques at Laval University, the Centre de recherche arctique de ITnstitut H.E.C. in Montreal, and l'lnstitut d'urbanisme et d'amenagement at the University of Montreal. In October 1969, he was admitted as a member of the Canadian Institute of Planners. With the NCC, Mr. Allard participated in the preparation of the report "Hull 1969-95" and the preliminary sketches for downtown Hull. He headed up studies for Gatineau Park and studies of recreation and leisure in the Quebec portion of the national capital region, as well as a number of regional studies on the national capital region dealing with such topics as road systems and water and sewer infrastructures. In 1974, he co-ordinated the planning group for the public report entitled "Tomorrow's Capital".
2.	Yes, through the Public Service Executive Interchange Program with the approval of the National Capital Commission. (a) Yes, salary range of $29,573 to $33,200. (b) Yes, at a cost of $717.37.
3.	The lectures dealt with the following subjects: the national capital region, problems of a capital for Canada; accomplishments in the national capital and their application throughout Canada; urban aesthetics; urban and regional problems in general. He also prepared a development plan for the campus of the University of Moncton.
4.	No.


Mr. Caouette (T6miscamingue): In 1976-77, did the government accept, for the Province of Quebec, submissions for rural mail delivery for approximately 76 miles and, if so, for what amount in each case?
S.O.	75C


J. Gilles Lamontagne: One. Rigaud R.R. No. 2, 79.8 miles, $12,761.83.
| English]


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


Some hon. Members:: Agreed.


Mr. Speaker:: Before proceeding with orders of the day, the question is on the motion of Mr. Chretien.


BUSINESS OF THE HOUSE
Joseph Jacques Jean Chrétien: Mr. Speaker, pursuant to Standing Order 75C, I move, seconded by the Minister of State (Fitness and Amateur Sport) (Mrs. Campagnolo):
That, in relation to Bill C-56, to amend the statute law relating to income tax and to authorize payments related to provincial sales tax reductions, two sitting days shall be allotted to the further consideration of the committee of the whole stage of the said bill; and
That on the second of the said days, fifteen minutes before the expiry of the time provided for government business in such sitting, all proceedings before the committee shall be interrupted, if required for the purpose of this order and every question necessary to dispose of the bill at the committee of the whole stage shall be put forthwith and successively, without further debate or amendment.
Mr. Speaker, I do not intend to make lengthy remarks. I merely wish to say that today is the twentieth consecutive day of debate on the budget I proposed last April 10 and that this motion provides that, apart from the rest of the day, as soon as it is passed, two additional days will be allotted for consideration of that bill in committee and then we shall proceed with third reading before the bill is referred to the Senate. I wish to say, Mr. Speaker, that to date, we have spent 22 days or maybe 23, 24 or 25 to discuss that bill and the budget which leaves only two months to the government to dispose of its current business and, as we have other bills to discuss, I thought it would be wise to move this motion as soon as possible at the committee stage, which will leave us several other days for debate. We might witness something exceptional, because following the tabling of my motion yesterday,
6356

June 13, 1978
S.O.	75C
immediately after, we have seen the committee proceed much more expeditiously so that yesterday, at the time of adjournment at ten o'clock, we were considering clause 20 which makes me believe that if we proceed as expeditiously today we might dispose of that bill even before the expiration of the allotted time for the consideration of that bill in committee.
I want to say in conclusion that after 1 gave notice that 1 would introduce this motion there was a change of attitude on the part of the opposition parties. They became co-operative and I welcomed that. Yesterday during the last two hours of the day at "notre dix-neuvieme jour" of the procedure we managed to approve the first clause. After that we proceeded quite rapidly to clause 20. We will be commencing at that clause when we come back to the committee stage today.
We have today as well as two more days to complete the committee stage. Of course, there will be third reading. We have already spent 19 days on the budget debate and the study of this bill, excluding another day that we spent on the customs tariff bill and other bills relative to the fiscal measures that were introduced in the budget of April 10. Iam confident with the change of attitude in the House yesterday that we can proceed rapidly with the committee stage. It will be a good precedent, in spite of the motion that I have introduced which will be voted on later-


James McPhail Gillies: Withdraw the motion.


Joseph Jacques Jean Chrétien: -if we can dispose of the bill even before the time allocated for this motion is used up by the House of Commons.


Charles Joseph Clark: Mr. Speaker, if this minister had any respect for the institution of parliament, which we know he does not, if it was his feeling that we could reach the conclusion of this stage of the debate without imposing closure, then he should not violate the traditions of this House by introducing closure when even he knows that it is not necessary.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: At the very least, what the Minister of Finance (Mr. Chretien) has done is to indicate that it was highly premature for him to force upon this House one more piece of evidence of his distrust of parliament and his dislike of debate.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: On this most important budget measure we have had only two days of discussion of the detail of the proposals which the Minister of Finance is bringing in. Since the minister assumed his portfolio, which is clearly beyond his capacity, he has throughout his tenure as minister been complaining about his inability to carry the burdens of the office of Minister of Finance, burdens which previous ministers, even of his government, were able to carry out without complaining
[Mr. Chretien.)
and without the kind of failure of effect which has marked the tenure of this Minister of Finance.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: Indeed, he is becoming and deserves to become known in the country not as the Minister of Finance but as the minister of closure. He invoked closure on Bill C-ll. He invoked closure last week and he has invoked closure again this week. The reason for that is not simply because the minister is incompetent. What we have here is closure caused by television. As debate last night revealed in the House of Commons, the Minister of Finance-forced to answer questions from this side of the House and from his own members-does not know why he is introducing some of the measures that are in the budget bill, and the government does not want his incompetence to be telecast into the living rooms of the nation. That is why we have closure here. So instead of giving us a new minister who understands his job, this government cuts off debate in the House of Commons.
When we were debating last week's closure motion-and with this minister we get closure and a violation of parliament at least once a week-the hon. member for Winnipeg North Centre (Mr. Knowles) recalled that at one stage of the 1956 pipeline debate, which was the worst abuse of closure in the history of this parliament, Mr. Howe was able to stop debate after reading only one phrase or one sentence. Considering that we may not be able to deal with all of the clauses in this complex, important bill in the limited time the minister proposes, it could very well be that some of these measures will be passed without even one sentence of debate. In the case of some clauses it may be that not one word of debate will be allowed by this government.
This has happened here. This shutting out of the right and the duty of parliament to debate is happening at the stage of proceedings in this parliament when there is supposed to be detailed examination. Instead we will be denied even one word of debate because every word, every question, demonstrates that this minister is too incompetent to do his job.
There are some provisions of this bill which need detailed study. To have impact we cannot send them out without analysis, which may perhaps cause concern and disharmony in the country. Because of closure, some of these measures may pass into law without any real discussion of their consequences in this House and without any real analysis of the effect that they will have on the Canadian economy.
The measure to impose a minimum age for the starting date of a registered retirement savings plan will impose a real hardship on some Canadians. A number of financial institutions are concerned about provisions for the taxation of benefits from savings plans at death. Many questions remain unanswered. This is the place and this is the stage of debate where those questions could be put and where those answers should be forthcoming.
As the minister should know, and certainly as members on this side of the House know, section 32 will have the effect of making it much harder for small businesses to finance continu-
June 13, 1978

ing operations and to expand into new areas. Not a word will be uttered, unless we reach that stage, about the effect that restrictions on the use of dividends will have on the working capital positions of small businesses.
There are some tax penalty clauses in this bill. Some members of our party are hoping to discuss past enforcement standards for the Income Tax Act, particularly as it relates to individuals like John C. Doyle. We will not be able to explore that with closure. We have here an absurd situation with closure at the detailed study stage of this bill after only two days of debate, indeed introduced only after one day's debate of a very complex, detailed bill.
It is interesting to note that in the other institution of this parliament, the banking, trade and commerce committee is now studying in detail many of the matters which I have raised. They are hearing witnesses in an attempt to determine whether these budget resolutions, which this minister is pushing through this House, are in fact workable. It is an irony and a tribute to the disrespect for democracy of this minister and this government that, in the legislative assembly where members are appointed, there is a right to detailed debate. But here, where we are elected, that right to detailed debate is cut off by a minister who cannot stand the heat of the questions.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: I make the point that by this invocation of closure-by closure once a week which we get with this minister-on almost every bill that he brings in, the minister is not just restricting the ability of members on this side of the House to do our job and to analyse this bill. He is also seriously restricting the ability of members of his own party to carry on examination of the provisions of this bill. Some of them may not want to, but there are some-and I am pleased to see the hon. member for Maisonneuve-Rosemont (Mr. Joyal) in the House-who may want to introduce amendments to some of the clauses, unless closure prevents us from getting to them.
I think, for example, of clause 30. There may well be a disposition on the part of that member of the minister's party to introduce an amendment to that offensive clause of the bill if he is given a chance and not denied that by closure. Perhaps another reason why we have closure is to stop members of the government party from having an opportunity to comment on the legislation which this minister is trying to force through the House of Commons.
Last night there were other members-I think of the hon. member for South Western Nova (Miss Campbell) and the hon. member for Battleford-Kindersley (Mr. Mclsaac)-who asked good questions about some of the measures in this legislation. They indicated their concern about the negative impact these measures might have upon their regions.
This government does not want to hear about what is wrong with budget measures they introduce but do not understand. Instead, the minister wants to force them through this Panins'. 0. 75C
ment in a way that offends the principles of this place and prevents us from doing our job.
We in this party oppose this closure. We think it is an inexcusable abuse by this government. We are not going to debate it at length today. We are not going to take the two hours that are available to members on this side of the House, but we are certainly going to vote against this imposition of closure by this minister of closure. We hope it will be possible for this House of Commons, having dealt with this attempt to limit debate by this minister, to get on with an examination of the budget, an examination that is limited by a government that subjugates parliament's duty to examine to its interest in maintaining the image of its own incompetent minister.


Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, we in the New Democratic Party join with the official opposition in stating our absolute opposition to the motion that the Minister of Finance (Mr. Chretien) has presented to the House today. I must say that I thought from the way he was speaking when he rose to take part in this debate that he was going to withdraw the motion. He said that yesterday, when he gave notice, we were still on clause 1, but as a result, so he said, of his giving that notice things have moved a bit and we have reached clause 19 or 20. I doubt whether it was his threat that produced that. In any event, he was now of the opinion that the closure motion was not needed, that we might finish the debate in two or three days in any case. If that is the situation, why does he affront parliament by bringing in another of these closure motions?


Some hon. Members:: Hear, hear!


Stanley Howard Knowles: Almost every time that we on this side of the House refer to this device as a form of closure, the minister interrupts that it is not closure but an allocation of time. 1 do not know why he did not interrupt me. I suppose he is busy doing something else.
May I remind him that what that this motion does is to close off debate. You can call it any name or title you want: the effect of the motion is to close off debate. As the Leader of the Opposition (Mr. Clark) has already pointed out, the effect of this motion could well be, if members decide they want to debate some of the matters in detail, that there are clauses in this bill that will not be debated at all.
There are 59 clauses in this bill. We have dealt with about 19, although we stood two or three. It could well be that if this closure rule comes into effect and the axe falls when the minister wants it to fall, there will be important measures in this bill that will not have been discussed in committee of the whole.


James McPhail Gillies: Thank God we have the Senate.


Sinclair McKnight Stevens: You cannot close the Senate.


Stanley Howard Knowles: Don't get irrelevant on this side just because the minister has been irrelevant today in telling us about the number of days we have been debating
80045-3S'/2

June 13, 1978
S.O.	75C
his budget. You notice that he refers to all of the debate that has taken place since April 10. He counts up the six days that were spent on the main motion for the approval of the government's financial provisions. Then he counts the days that were spent on second reading of this bill and on the amendment that was proposed by my leader. He adds up to the number of some 20 days.
Surely what counts now is the time this House is permitted to spend on the actual details of this bill. All we have had so far is two days. I suggest that this is an affront to parliament. It is another abuse of a rule that ought not to be there at all and this House should not tolerate it.
I agree with the Leader of the Opposition that since we are under this kind of restriction every hour counts, and there is no need for us to use the two hours granted to us. We are stating from our side of the House that this motion should not be passed. We shall be voting against it. I hope there will be members on the other side who will either see our viewpoint or stay out and let the House for once say that it believes in free debate in this place.
There is one other point I want to make. It has been demonstrated in the life of this session of parliament that when the government brings in good legislation, measures that are acceptable, this House does not waste any time on them. There were two veterans affairs matters dealt with, in both cases in an hour or so. Others were brought in by the Minister of Justice (Mr. Basford) which made good sense and were dealt with quickly. It is only when legislation is faulty, bad, inconsistent or imposes unfairness or injustice that the House insists upon debate. The government responds to that by saying: "No. We are king around here. We run the show. We have decided this is to go through and there in fact need be no debate."
One of the things that has been going on in this debate has been an attempt on the part of members of the opposition side to get the minister to answer specific questions about clause 30. He keeps saying he will do that when we get to clause 30. I have no idea how long the clauses between 19 and 29 are going to take. It could be they will take all the time and we will never get to clause 30. In the end we might never get the answers, yet we will be expected in one moment to vote on the committee of the whole stage and to proceed to third reading. That is no way to run the parliament of Canada. We are voting against this motion.


Mr. Rene Matte (Champlain):: Mr. Speaker, I have been sitting in the House for ten years and we have seen a few motions such as the one introduced by the Minister of Finance (Mr. Chretien) today. We have even discussed in the House the passage of that famous Standing Order 75C enabling a minister to restrict unilaterally the debate as the Minister of Finance is doing today.
Mr. Speaker, we are constantly before the following dilemma between the government and the opposition, that is the government wants to pass bills quickly while the Opposition wants to consider them in depth to gather all the information

before the question is put. As a result of that dilemma, the government is always inclined to conclude the debate quickly. It happens sometimes that the debates are too long, but in the present case, 1 would like to point out that the minister is presuming that the debates will be dragging. That is a cavalier and arrogant way of measuring the value of the debate and contributions of members of this House. That bill was not even discussed properly considering that already it has somehow come up against opposition on second reading and then in this debate in committee, well, no sooner had we begun this debate that the minister already anticipated that it would be too long and he had to limit it. That is in my opinion, an entirely abnormal way of holding up the rights of this House.
Mr. Speaker, like other members who spoke before me, I must object categorically to that. Indeed, I believe that if you finally reach the conclusion that a new rule will be established in this House, the debates will automatically be limited as soon as the issue being considered is controversial. Well, Mr. Speaker, a regime applying such principles is a dictatorial regime. So I do not believe that this government should be allowed to get into that. So, Mr. Speaker, as I said, I am most strongly opposed to that, particularly as an independent member of this House, being accountable only to the voters of my riding, who have the right like anyone else to know the opinion of their representative in this House, perhaps even more than other members, I must categorically object to that decision.
The minister, the Prime Minister and the whole government have already become so tied up in a way that I would describe as stupid in this debate and the fact the minister should continue to want to breach our rights in another way leaves the impression that he thinks he is condoning the ill-intentioned and clumsy moves he made by cutting down this debate. As other members have suggested before me, the minister regrets what he did and no longer wants to hear about the solution he proposed.
We are not in this House to cover up the mistake made by a government or by a particular minister. That is why I do not believe they are justified in breaching the rights and privileges of members of this House simply because a minister messed things up. Mr. Speaker, as my voters expect, I hope I will have an opportunity to discuss this bill which indeed affects them very much.


Mr. Lloyd Francis (Ottawa West):: Mr. Speaker, I should like to make a few remarks at this stage. This will be the only opportunity I shall have to participate because I shall be leaving later today for parliamentary business outside Canada.
On listening to the hon. member for Winnipeg North Centre (Mr. Knowles) it occurred to me we should do some hard thinking as to why there was not the same unanimity on this
June 13, 1978

bill as there was with regard to the veterans legislation to which he referred. Mr. Speaker, the day of the traditional budget has gone. The days when the minister could call in his advisers and prepare appropriate tax and fiscal measures in great secrecy and then introduce them with a flourish in a dramatic way are probably gone for ever. There are many reasons for this, not the least of which is the new economic situation in which we find ourselves, the continuance of inflation at a time when unemployment is so high. We look to those in the academic community for guidance in these matters but there is no Lord Keynes on the scene today.
The Minister of Finance (Mr. Chretien) has a difficult task. He has to devise a new type of budget in new circumstances. For one thing, combined municipal and provincial expenditure substantially exceeds that of the federal authority, as has been the case for some years. The state of the economy in the various regions of the country is, moreover, so diverse that it is no longer possible to take a uniform course as dictated by the wisdom of the minister of finance and the mandarins in Ottawa. This implies discussion with provincial spokesmen and, of course, abandonment of the traditional approach to the budget which was one of complete secrecy since, in the process of consultation, there is bound to be some sacrifice of that principle.
I congratulate the Minister of Finance for his innovative approach. He travelled. He consulted with provincial ministers. He sought ideas. The approach he took to the previous budget was based on personal income tax cuts and corporate tax concessions which failed to stimulate the economy. It did not work. Mr. McKeough of Ontario suggested there ought to be a cut in sales tax. That was a suggestion which came from a member of a government of a different political complexion but was adopted as the essence of the solution found by the Minister of Finance in his search for a new approach.
Eight of the provinces agreed with that approach. No sales tax existed in Alberta. A different deal was struck with the maritimes which, as we all know, had special problems. The minister thought a consensus had been reached. But Quebec held out. Then, after the budget had been announced, a game was played in hindsight by the spokesmen for Quebec. It was not played in good faith because whatever the federal government did there would be an attempt at political one-upmanship.
Any concerned Canadian who is worried about the management of our economy knows we cannot rely on the traditional fiscal and monetary tools to do the job in the way it has been approached in the past. Innovation has proved to be a difficult procedure. Nevertheless, those responsible for the attempt to denigrate the preparation of a budget by a new process will have to answer to the voters and to the people generally. I support the budget because it is the first of a new type which the situation demands. Today a minister of finance must innovate. He must be flexible and the measures he takes must respond to the needs of different parts of the country.


S O. 75C
[Stage Direction]
The hon. member for Winnipeg North Centre said, in effect, that if we can all agree on something we can put it through quickly-we do not even need to debate it. The point is that we do not agree. Even the analysis of the subject matter is open to disagreement among prominent people both in the academic and in the business world. As I say, today a minister of finance has to innovate, but whenever there is innovation there is bound to be a difference of opinion.
Opposition spokesmen complain that we have spent only a short while on this stage of the bill. Of course, it means nothing to them that we have already spent six days discussing the budget itself and another 11 days on second reading, or that debate at that stage was brought to an end only by a time allocation order. I noted that when the minister gave notice of a time allocation order yesterday with respect to the committee stage there was a sudden change of heart and things moved along a little faster. But I for one am standing up and saying I support the new approach. I support the innovation.
I look forward to more innovation in future budgets and to new attempts to do things based on consultation and respect for regional differences and problems. This bill has to pass. We cannot debate until the end of time. We cannot go through the sophistry of saying that there have been six days for the budget, 11 days for something else and a day for tariff resolutions but that that is all irrelevant and that we have to work on all these clauses and spend all the time we have. No legislative body can afford that luxury. Let us get on with the job.
The Acting Speaker (Mr. Ethier):: Is the House ready for the question?


Some hon. Members:: Question.


The Acting Speaker (Mr. Ethier):: Is it the pleasure of the House to adopt the motion?


Some hon. Members:: Agreed.


Some hon. Members:: No.


The Acting Speaker (Mr. Ethier):: All those in favour of the motion will please say yea.


Some hon. Members:: Yea.


The Acting Speaker (Mr. Ethier):: All those opposed will please say nay.


Some hon. Members:: Nay.


The Acting Speaker (Mr. Ethier):: In my opinion the yeas have it.
And more than five members having risen:


The Acting Speaker (Mr. Ethier):: Call in the members.


Mr. Speaker:: I therefore declare the motion carried.



PROCEEDINGS ON ADJOURNMENT MOTION


Mr. Speaker:: Before calling orders of the day and resolving into committee of the whole, perhaps I might indicate to the House at this time the matters to be dealt with pursuant to Standing Order 40 tonight at the ordinary time of adjournment. The hon. member for Fort William (Mr. McRae)- Consumer Affairs-Reason for beef price increases; the hon. member for Frontenac-Lennox and Addington (Mr. Alken-brack)-Agriculture-Requested increased milk quotas for Ontario cheese manufacturers; the hon. member for Egmont (Mr. MacDonald)-Canadian Culture-Importation of U.S. editions of Canadian books.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Monday, June 12, consideration in committee of the whole of Bill C-56, to amend the statute law relating to income tax and to authorize payments related to provincial sales tax reductions-Mr. Chretien-Mr. Ethier in the chair.
The Assistant Deputy Chairman:: When the committee rose last evening clauses 16 and 17 were allowed to stand, clause 19 was agreed to.
On clause 20-


Sinclair McKnight Stevens: Mr. Chairman, for the record, perhaps the minister could tell us the significance of the addition of the 4.1 reference in this section.


Joseph Jacques Jean Chrétien: Mr. Chairman, this is a technical amendment consequential on the amendment to subsection 84(4.1) in clause 18 of the bill. Subsection 84(4.1) treats certain distribution under the reduction of capital of a public corporation as a dividend brought in in a return of capital.


[Stage Direction]
Clause agreed to.
On clause 21-
[The Acting Speaker (Mr. Ethier).]
June 13, 1978
Sinclair McKnight Stevens: Mr. Chairman, as the explanatory note to this clause states that it is designed to correct an error relating to the application of subsection 85(7) as amended by chapter 1 of the statutes for the current session, could the minister tell us what the error is that they have made here and why we are being called upon to correct it?


Joseph Jacques Jean Chrétien: Mr. Chairman, as usual, I will read the technical explanation. This is a relieving technical amendment bringing into force the provision of last year's tax legislation, being Bill C-l 1. Section 85 of the act provides a roll-over that is a mechanism for the deferral of tax that will otherwise arise on certain transfers of property to a Canadian corporation. In order to qualify for this roll-over an election must be filed by the due date of the tax return for the year of transfer.
In a number of situations, taxpayers failed to Tile the required election on time. Subsection 85(7) was amended in Bill C-l 1 to permit the filing of an election within three years from the normal due date. The amendment in Bill C-ll was made applicable to transfers of property made in 1975 and subsequent taxation years. The Bill C-ll amendment should have been effected before an election normally due after May 6, 1974. This change simply corrects the coming into force accordingly.


Sinclair McKnight Stevens: Mr. Chairman, could the minister confirm that this is one of the amendments that he hoped to make in the committee of the whole stage with respect to Bill C-l 1 but got caught in his own closure mechanism and was not able to make the amendment at that time?


Joseph Jacques Jean Chrétien: Mr. Chairman, it was an amendment that I wanted to put forward in the debate, but because there was a lot of foot dragging in second reading, we did not have the time to proceed normally clause by clause and we had to limit the debate, I believe, after five weeks. Of course, it is one of the consequences that when we do not have the collaboration of the opposition in the early stages of a bill we get caught in these difficult situations in the last hours that the bill is in front of the House.


Sinclair McKnight Stevens: Mr. Chairman, it is most unfortunate that this minister continues to misrepresent the facts to the House and to the Canadian public. The fact is he brought in closure prematurely with respect to Bill C-ll. The committee of the whole was just nicely into the consideration of the bill clause by clause. The minister had indicated that he had 11 or 12 amendments that he felt should be made to the bill because it had been inadequately drafted.
In spite of the fact that he has his own amendments to make, he brought in closure at that time, not only shutting out his own people who had questions to raise on the bill and shutting out the opposition, but shutting out his own capability to make amendments. Now we are in the rather ludicrous position of finding that closure once again has been put on us within a day of getting into clause by clause discussion of this
Income Tax Act
bill, and part of the time of the closure is now being utilized to allow the minister to pass amendments that he was not able to pass because of closure being invoked by himself on Bill C-ll.
This type of inept handling, not only of Bill C-ll but of Bill C-56, must be driven home time and time again. When we say that this is the most incompetent, the most inept Minister of Finance since confederation, we kid nobody. The fact is he is.


[Stage Direction]
Clause agreed to.
On clause 22-
Sinclair McKnight Stevens: Mr. Chairman, as this clause relates directly to clause 6(1) which was stood, as you will recall, yesterday, it may be sensible to stand clause 22, and I think one or two other clauses as well. It would enable us to consider all those clauses at once. We would also like clause 6 to be delayed a little longer because one of our members is considering a possible amendment to it, and, therefore, it would facilitate the committee if we could stand clause 22 at this time.


Charles Robert Turner: Is there unanimous consent that clause 22 be stood?


Joseph Jacques Jean Chrétien: Mr. Chairman, we should proceed either with clause 6 or with clause 22. We postponed two clauses yesterday. If the hon. member wants to deal with clause 6, we can go back to it and after that go to clause 22; or if he wants to pass clause 22 right away, that is fine.


Charles Robert Turner: Order, please. There is not unanimous consent.


Sinclair McKnight Stevens: Mr. Chairman, obviously the minister gets more and more uncertain of his position as we go along. If he does not want to stand clause 22, perhaps he can give us the explanation for it and we can then decide whether it should be passed.


Joseph Jacques Jean Chrétien: Mr. Chairman, section 87 of the act provides the technical rules that apply when two or more Canadian corporations amalgamate. The four amendments to this section relate to the research allowance, charitable contributions, paid up capital and certain involuntary dispositions.


[Stage Direction]
Clause agreed to.
Clauses 23 to 26 inclusive agreed to.
On clause 27-
Sinclair McKnight Stevens: Mr. Chairman, as we pass these clauses, particularly clauses 25, 26 and 27, 1 take it we have the undertaking of the minister that if there should be some change in clause 35, which is the clause that is interrelated with these various clauses, any necessary consequential change could be made subsequently to some of these clauses that we are passing.

June 13, 1978
Income Tax Act


Joseph Jacques Jean Chrétien: Mr. Chairman, if we do make amendments to clause 35, we will make the necessary amendments to the clauses which have already been accepted by the committee. [English]


[Stage Direction]
Clause agreed to.
On clause 28-
Sinclair McKnight Stevens: Mr. Chairman, this is a fairly important change that is being proposed. It is important to certain life insurers and I think the minister owes the House an explanation why it is requested.


Joseph Jacques Jean Chrétien: Mr. Chairman, the amendment is required to deal with losses of certain life insurance companies. Bill C-ll contains rules to deny the carryforward into 1978 of losses and deductions for prior years to the extent that they arose as a result of the reduction of excessive reserves deducted in past years. The technical formula by which this is achieved produces a harsh result for certain small insurance companies that have suffered losses. The proposed amendment provides relief for losses in the few cases where the formula now in the law operates too severely.


Mr. Lambert (Edmonton West):: Mr. Chairman, would the minister explain whether this is a proposal to plug a loophole or to "even out" at the request of the industry?


Joseph Jacques Jean Chrétien: It is to assist small companies that have incurred heavy losses, in order to be fair to them.


Mr. Ritchie:: 1 want to ask the minister about the form of those losses that the insurance companies suffered. In what manner were these losses suffered, in a general way?


Joseph Jacques Jean Chrétien: It is related to real losses apart from the reserves.


[Stage Direction]
Clause agreed to.
On clause 29-
Mr. Alexander:: Mr. Chairman, I should like some clarification of this clause as I think a very important step is being taken. The explanatory note reads as follows:
This amendment, which would delete a reference to the Northwest Territories as not being a province for the purpose of section 120, together with the amendment to subsection 124(1) proposed in clause 31, would implement paragraph (12) of the income tax motion, which read as follows:-
What is the implication?


Mr. Lumley:: It is nice to see you.


Lincoln MacCauley Alexander: The parliamentary secretary is so smart that perhaps because of the incompetence of the minister he is liable to get the minister's job. I want to ask the minister what is going on in terms of the required deletion, as the minister sees fit, of the Northwest Territories as not being a province.
[ Translation]


Joseph Jacques Jean Chrétien: The inappropriate remark from the hon. member does not call for any comments. I would simply say that if he had read the act, he would readily understand that

this is a very positive measure designed to allow the Northwest Territories to reach a more autonomous status than they had before. This is in line with the policy established by this government when I was Minister of Indian Affairs and Northern Development with a view to transferring to the northern council more power than it had under the governments which were in power before the Liberals came in. Regarding this amendment, Mr. Chairman, I will read the general comment as I have done for the other clauses, and I quote:
Since January 1, 1978 the Northwest Territories have their own income tax system and have since concluded a tax collection agreement with the government of Canada.
The amendment proposed to the definition of the term "province" contained in paragraph 120(4)(b) of the act results from the Northwest Territories being granted the status of a province for the purposes for the Income Tax Act. Before January 1, 1978 residents of the Northwest Territories had to pay a federal income tax of 43 per cent under section 120(1) of the act. Residents of the Yukon remain subject to this additional federal income tax. The amount of income tax payable by Northwest Territories residents for fiscal year 1978 and subsequent years will not be modified by this change because the additional tax which they would otherwise have had to pay to the federal government will be paid to the Northwest Territories government.


Marcel Joseph Aimé Lambert: Mr. Chairman, with respect to the Northwest Territories I would like to ask the minister if he can tell us the approximate rate of taxation to which the taxpayers of these territories will now be subjected? Is it based on an average of the federal income tax and that of the various provinces? Is it rather calculated on the basis of the tax in Alberta or Ontario? And with regard to the Yukon which as a territory has not yet availed itself of the powers granted to it on January 1, 1978, what will be the rate of taxation for the taxpayers of that region?


Joseph Jacques Jean Chrétien: Mr. Chairman, the bill does not provide for any change in the amount of tax paid by the people from the Northwest Territories at this time. They will pay the same income tax as their neighbours from the Yukon, and we will not change in any way the amount of income tax paid by the people from the Northwest Territories, but we will change the process through which the government of the Northwest Territories will be able in the future to increase or reduce income tax within its budgetary authority. Of course, there is a collection agreement with the federal government, but through this bill we are giving the government of the Northwest Territories the authority to pass legislation pertaining to income tax.


Marcel Joseph Aimé Lambert: Why is the Yukon not included? Perhaps at that time the Yukon council did not request it, but since the minister told us a moment ago, when he explained the reason for this amendment, that this would affect that Yukon and the Northwest Territories which have, since January 1, 1978, a power of taxation, that is why I was wondering-I think I did hear the minister say so-under what authority a territory had the rights of a province to levy that kind of tax.
June 13, 1978


Joseph Jacques Jean Chrétien: Under our policy of devolution of authority to the Northwest Territories and the Yukon, we allowed them, from January 1 in the case of the Northwest Territories, to levy income taxes because we made the same offer to the Yukon but the council of the Yukon did not pass the legislation and they did not make the request to have the system applied in the Yukon.


Charles Robert Turner: Shall clause 29 carry?


Some hon. Members:: Carried.


Charles Robert Turner: Shall clause 30 carry?


Some hon. Members:: Carried.


Mr. Lachance:: On clause 30, Mr. Chairman, I would simply like to ask the minister whether, as far as the province of Quebec is concerned, according to the fact that the House decides in favour of one of the two formulas put forward, namely either the $85 refund if the taxation year 1977 is considered as the base for reference or a $100 refund if 1978 is used as the year of reference, he will be able to choose, as Minister of Finance, the formula he prefers, and whether the bill as it now stands, and in particular clause 30, authorizes him to add the province of Quebec to the schedule of the provinces which have already reached an agreement and will receive $100 for 1978. In other words, is he empowered to disregard clause 2 amending section 122.1(2) which stipulates that where no fiscal agreement exists between the federal government and the provinces, there is an $85 reimbursement? Can he disregard that provision and refer instead to clause 1 which provides for a $100 reimbursement merely by changing the schedule?


Joseph Jacques Jean Chrétien: Legally, Mr. Chairman, we have a choice, once clauses 30(a) and (6) have been passed, to add the province of Quebec to the schedule to part 1 of the act. However, the government has decided to proceed as the bill stipulated as introduced, that is by reimbursing immediately $40 million to the Quebec government, and reimbursing to the Quebec taxpayers an amount of up to $85 as provided for in this bill. Naturally, as we know, Mr. Chairman, 1 made proposals to the Quebec government exactly two weeks ago with a view to coming to an agreement, and if the Quebec government had accepted my proposal on that Wednesday, we could have included Quebec in the first schedule, and payments could have been made in the spring of 1979. But, in the reply 1 received from Mr. Parizeau one week later, he told me that, as the formula advocated by the second part of clause 30 was public knowledge, he had no objections to it and advised me that he would, one way or the other, take steps to recover those amounts of money, which it is in his power and his duty to do if he has budgetary problems and has to increase his taxes; and I have no business interfering in that field.
Income Tax Act
The second proposal he made in his letter would lead to amendments in clauses 30(a) and 30(b). That, of course, would involve interest payments and a substantial change in clause 30. Since I gather, from his letter, that he would be satisfied if we adopted clause 30(6) concerning Quebec, I did not think it appropriate to choose the other alternative as this would result in major changes and administrative complexities. So I shall opt for the formula which seems acceptable to the Quebec government. I had myself suggested that Quebec be included in clause 30(a), but that was rejected by Mr. Parizeau who wanted a cash payment of $40 million, which was impossible under 30(a). That is why 30(6) seems acceptable to Mr. Parizeau, and the government has decided to go that route.


Sinclair McKnight Stevens: I rise on a point of order, Mr. Chairman. Hon. members will recall that the Speaker ruled that this clause could not be dealt with until we had a proper ways and means motion concurred in by the House. Was the ways and means motion tabled by the minister concurred in?


Joseph Jacques Jean Chrétien: The motion was concurred in yesterday afternoon.


Charles Robert Turner: We are informed by the Minister of Finance that the motion was concurred in yesterday afternoon.


Thomas Clement (Tommy) Douglas: Mr. Chairman, I merely wanted to ask the minister to clarify the statement he made. I may be incorrect but my understanding is that Mr. Jacques Parizeau, the minister of finance of the province of Quebec, had asked for $40 million as part of the settlement, and that the balance, the $186 million, could be paid on either basis, either by an $85 rebate on this year's tax or by a rebate of $100 for 1978.
The minister says that there is some administrative difficulty. I would have thought the opposite would be true, that it would be much better if all the provinces were on the same basis, namely that this reduction would be for the 1978 tax year and would be for $100. The government has always been strong in saying that it does not want any special status for any province, it wants them all to be treated alike. If it is correct that Mr. Parizeau said that he does not care which of the options the federal government selects, I cannot understand why the Minister of Finance has not selected the one which would have had uniform application to all the provinces and removed a good deal of the irritation that has been generated during this debate.
6364

June 13, 1978
Income Tax Act


Joseph Jacques Jean Chrétien: Mr. Chairman, in Mr. Parizeau's letter, what is called his option two, he is asking for $40 million right away and $85 for those taxpayers on the list for 1978, but to be deducted from the income tax of the Quebec taxpayers only in the spring at the time of filing. That is why in his request there is something different from the other provinces. The week before I offered to deduct $100 in the spring of 1979, but he rejected that proposition. He wanted $40 million cash and $85 in the spring. As we wanted to make the federal contribution of the money left over-because there was no agreement on the $186 million-not to penalize Quebeckers but because there was no agreement between the governments we decided to proceed with the $85 payment right away.
There are a lot of people who do not know why we have to proceed that way. As the hon. member knows, 1 believe it was at the time when he was premier of Saskatchewan that Mr. Duplessis decided to have his own tax collection system and that is why we have to operate in a different fashion. It is not due to any action by the federal government. For Saskatchewan, Ontario and Manitoba on budget night the federal government reduced the income tax by $100, and those ministers of finance a week later raised their income tax by $100, and agreed to my plan to reduce sales tax.
In the case of the province of Quebec there was no such agreement. There has been no tax collection agreement with Quebec since 1954. That is why we have to rebate the money to the Quebec taxpayers directly. If the provincial governments want to collect any part of it or all of it, or even more than it, it is within their own power to do so. It is always their privilege and option to do whatever they want with their own tax, just as the federal government does with federal tax.
If Mr. Parizeau had agreed to what I offered two weeks ago, namely to have Quebec included in option one, I would have been willing to do this and it would have been exactly as with the other provinces regarding clause 38. But he does not want that. Mr. Parizeau wants $40 million cash because he has qualified partially to participate in the national program. As for the rest, I am just following the government's intentions at the time of tabling the bill.


Charles Robert Turner: Before recognizing the hon. member for Nanaimo-Cowichan-The Islands on a point of order raised previously by the hon. member for York-Simcoe, if we refer to the Votes and Proceedings for Monday, June 12, at page 858 in the fourth paragraph, the motion reads:
The order being read for the consideration of a ways and means motion to amend the Income Tax Act (Sessional Paper No. 303-1/308D), laid upon the table, Thursday, June 8, 1978;
Mr. Chretien, seconded by Mr. Cullen, moved,-That the motion be concurred in.
And the question being put on the motion, it was agreed to.


Thomas Clement (Tommy) Douglas: Mr. Chairman, this is not the first time the minister has tried to explain this situation by virtue of the fact that Quebec is the only

province which does not have a tax collection agreement with the federal government. 1 know they have not got that. In fact, I was at the conference when Mr. Duplessis announced they would not continue the tax collection agreement with the federal government. However, I do not follow the logic of the minister as to why that needs to make any difference.
If the federal government made it clear that when people submit their 1978 income tax returns next spring they will be allowed a $100 deduction, the provincial government of Quebec could then adjust this tax as it saw fit. They could either collect that $100 or let the Quebec taxpayer have it. I see no reason why there should be two different schemes on two different bases.
A good deal of the difficulty the minister has had with this bill has been quite unnecessary. The minister several times has been very critical of the government of Quebec because he does not agree with their separatist policies. Neither do I, but I resent this intent to smear anybody who asks for fair and equal treatment for Quebec as being a separatist or as being in bed with the separatists. That is a cheap type of politics that will not get the minister or the government anywhere. It smacks of the McCarthy era. If they could not call you a communist, they said you were soft on communism, in bed with a communist or advocating what a communist would advocate if he were in your place. That does not do anything for anybody.
We have to look at this fairly. I did not get into the fight when the minister was being attacked. 1 think he has a difficult job and is doing the best he can. However, I say the minister got himself into a good deal of trouble by the hamhanded way in which this whole question of the reduction of the retail sales tax has been handled.
First, there was a finance ministers' conference and then a first ministers' conference. Those were the places where it should have been suggested to the provinces that the federal government thought that the most speedy way in which to give a stimulus to the economy was to cut the retail sales tax, and that the federal government was prepared to make some compensation in return for such action.
That was not done. The finance ministers and the premiers went home and proceeded to prepare their budgets. I ask the members of this committee to put themselves in the position of a provincial premier. After working out his budget, he has a very small surplus. He thinks he will break even and might even have enough to cover any unforeseen contingencies. He then receives a telephone call or a visit from the federal Minister of Finance who says he is prepared to pay two thirds of the cost of cutting the sales tax by three percentage points for six months, or two percentage points for nine months.
What does that mean to the provincial treasurer? It means he will be put in a deficit position. He does not want to be in a deficit position, but he cannot turn it down. What position would he be in on budget night when the Minister of Finance would say that he offered province A or province B a cut in sales tax of three percentage points and that province did not want it? What if that province turned down millions of dollars which it would have received in compensation?

June 13, 1978

The minister did not say that the provincial treasury would have had to find the money to put up the provincial share of that reduction. If given enough notice prior to making their budget, the provincial treasurer and premier could probably adjust to that. However, they cannot do it on the basis of a few days' notice. That is the reason why much of the difficulty has occurred. The minister overlooks that.
In handling the situation vis-a-vis Quebec, instead of making a cause celebre out of the situation, the Minister of Finance would have been much better to have been completely flexible. I am convinced he has done a great deal more to strengthen the hand of the Quebec government than to weaken it. Also, having two different formulae and two different tax years as a basis for paying this rebate will continue to rankle among the provinces. It was totally unnecessary. There could have been a uniform arrangement. There is no reason why the minister could not have paid the $40 million to Quebec and put them on the $100 deduction for the tax year 1978. If the minister had done that, he would have saved himself a lot of headaches.


Joseph Jacques Jean Chrétien: I am pleased to hear the hon. member say that I should have consulted even more. 1 would like him to talk to his leader who, the day before the budget, got up in this House and asked me to tell the House and the nation that I had not fulfilled my obligation as the Minister of Finance to budget secrecy, that by talking to the provinces I had done away with the great British tradition of having no one know anything about the budget beforehand.
The hon. member has more experience than his leader. Perhaps he will teach him a lesson on that. I may not have had enough consultation, but it was much too much for the hon. member for Oshawa-Whitby. He felt I had betrayed the great British tradition of secrecy where, some years ago, the minister of finance only informed his cabinet colleagues hours before presenting his budget.
I say to the hon. member that this was not done in any rush manner. I first raised the problem at the meeting I had with the finance ministers in October. It was felt that the problem in the economy was too low a demand and that we had to stimulate that demand.
When I raised the question with them in October, there was some interest, although not much. I again raised it in the month of January. There was more interest, but no agreement. For three weeks before the budget I tried to negotiate an agreement with all the provinces. Eight were involved-Alberta with no sales tax was not involved-and they agreed to the procedure I set out to deal with this problem in a difficult situation. Everyone said yes except Mr. Parizeau of Quebec. He came along 48 hours later with a different scheme. It was too late for the other provinces to do the same because they had already introduced their own legislation.
In terms of the problem for the treasury, if there is an increase of something like 15 per cent over normal sales in the six month period, the provinces will generate enough money to cover their one third of the cost. In fact, I have heard some
Income Tax Act
reports from the treasurers of the different provinces. They are very pleased with the increased retail tax revenue following the cut. They only have to pay one third of the cut, and there has been a 15 tc 20 per cent increase. The added revenue they receive will certainly compensate for their losses.
I have done my best. I am the first to say that the mechanism is not perfect. I have tried to involve the provinces for the first time in history in attempting to develop an economic policy that makes sense for everybody. Some say that I went a bit too far. Others have told me that I was naive not to force everyone to sign an agreement before the night of the budget.
It was not, in my judgment, naivete. It was-


Sinclair McKnight Stevens: Incompetence.


Joseph Jacques Jean Chrétien: Having regard to the hon. member's great success in banking, he would be well advised to shut up.


Sinclair McKnight Stevens: Go on. Tell us about it. Tell us about the banking.


Joseph Jacques Jean Chrétien: I considered the separatist minister of finance from Quebec not as a separatist but as a minister of finance who was there to do what was best along with the ministers from the other provinces to stimulate the Canadian economy. Some say I should have forecast that he wanted to throw a wrench into the gears of a good federal scheme, but I do not apologise for treating him as a normal minister of finance. If I had got up in this chamber on the night of the budget and said: "I am sorry, I did not try because I could not trust the Quebec government since they do not share the same goal of a prosperous Canada as we do", everyone would have laughed at me and said: "Chretien, you are wrong; you should have treated all the ministers of finance equally".
What I want to say is this: I have tried to do something that no Minister of Finance has tried to do before. The hon. member for Nanaimo-Cowichan-The Islands will recognize that as being the case. Never before has the federal Minister of Finance gone to Saskatchewan to discuss a federal budget before introducing it into the House. At the time the hon. member was premier, if I am not mistaken, cabinet ministers were informed what was in the budget on the day of the budget. So I think I have come a long way from a tradition which, in my judgment, no longer makes much sense as long as speculation in the marketplace is avoided.
I believe there should be more consultation. Indeed, it is my opinion that some of these matters should be referred to a committee of the House so that an input might be made not only by the very good advisers we have within the department but by the House of Commons on certain specific questions. I have already made a reference this year of commodity tax problems to a committee of this House so that the subject can be examined and recommendations made. I do not know whether I shall accept them or not but I should like to have input from both sides of the House before I make up my mind. The process is not easy, because if the public are allowed to
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know too much about what one is thinking there is a risk of speculation which could lead to major difficulties. Any attempt to combine the British tradition of secrecy of the budget with, if 1 might use the phrase, participatory democracy involves some risk, but I have taken many risks since I became Minister of Finance and I am willing to take that one too.
To return to the Quebec situation, if Mr. Parizeau had replied to me by saying that my proposition of two weeks ago to the effect that a $100 deduction based on the Quebec taxpayer list of 1978 was acceptable, and would have confirmed the Quebec situation to the others, I would have been pleased. But one of the problems is that although the flow of money is going into the economy of the other provinces right away, in the case of Quebec, since there is no agreement, there is $186 million which I keep in my treasury. If I want that money to go into the Quebec economy, I have to take the 1977 taxpayer list and send the taxpayers their rebate right away. Otherwise they have to wait until we have the 1978 list. That list will be available only in 1979, and so the money will not be in the Quebec economy, in theory, until the spring of next year. Since 1 was dealing with a budget intended to stimulate the economy right away, 1 think I have to move quickly. That is why 1 am proposing my present course.
There is, of course, another element, though people forget about it. Because we are dealing directly with Quebec taxpayers and not collecting the taxes for Quebec, there are some 200,000 Quebeckers who will not receive a rebate if I take the list of 1978, for the reason that since we have deducted for them $100 so far this year, in January or February or later, they will not qualify at all. It is only those who pay between $100 and $185 in taxes who will qualify. So we would have eliminated 200,000 Quebec citizens from being entitled to that credit.
I do not know what Mr. Parizeau will do. Perhaps he will decide to tax back. He has not told anybody yet. Perhaps he will consider adjusting income tax rates, perhaps he will consider adjusting the sales tax or the corporation tax. 1 do not know. I have to treat the taxpayers of Quebec on the basis of the knowlege I presently have, and on that basis, if I want the money to flow into the provincial economy and if I do not want to penalize 200,000 taxpayers in Quebec, I have to take the taxpayers list of 1977. That is the only one available to me at this time. I will then send those taxpayers a tax rabate based upon the tax they paid last year.


Thomas Clement (Tommy) Douglas: Mr. Chairman, the minister is worried about the 200,000 taxpayers who won't be covered if this matter is left until 1978. He is saying nothing about the hundreds of thousands of people who buy goods but will not get any rebate because they do not earn enough to pay income tax.
He said to the provinces: We want you to reduce your retail sales tax as being the fastest way to get money into circulation, to give the economy a shot in the arm. Would it not have been comparatively simple to have said instead: We will make an
estimate, which can be adjusted at the end of the fiscal year, as to what it will cost you to cut your tax either 3 per cent across the board for six months or 2 per cent across the board for nine months, or even to make selective adjustments, and we will pay you in cash 90 per cent of what our share would be, and make the adjustment at the end of the year? We may owe them some money, or they may owe us some money, but we will have paid them whatever is the federal government's share of reducing the sales tax in a lump sum that would have gone into the treasury and been available to everybody.
What the minister is now proposing is to hand money out to taxpayers, many of whom do not need it. The amount of money they are getting bears no relation whatsoever to what they have paid by way of sales tax, as compared with others who are going to get nothing although they may have paid a great deal in sales tax, being responsible for bringing up large families. I have never understood why the minister made this so complicated.
May I say one other thing to the minister. He is quite incorrect when he says my hon. friend from Oshawa-Whitby took exception to the minister's consulting the premiers. The day before the budget my hon. friend objected to the fact that the press was already reporting that aspect. He did not know the premiers were being consulted; the minister told us later they were being consulted. My hon. friend was objecting to the press being informed and to leaks of information.
We in the party have never held to any sacred tradition by virtue of which provincial governments or other agencies of government were not to be consulted before a budget was bought down. There may, it is true, be certain instances in which a person would make a killing on the stock market by having advance information about certain forms of taxes which were to be proposed, but this happens very seldom.
I do know something about the preparation of budgets, having prepared some 18 of them. Not only have I consulted with my cabinet but I have consulted with my caucus, and sometimes with my party, as well as with representatives of the municipalities through their organization. There is no need for all the traditional secrecy. I agree with the minister as to that and I am glad he is moving away from the old tradition. But he has yet to convince me that this cumbersome way of compensating for the reduction in sales tax has been justified.
I get the impression that the government has been clutching at straws. The government recognizes, as does everyone with an elementary knowledge of economic rules, that the way to get the economy moving is to put purchasing power into the pockets of people with low incomes. We all recognize that today we are not suffering from inflation. If we were suffering from inflation, we would be producing more goods. We do not have a situation in which too much money is chasing too few goods. We are not operating at more than 82 per cent of our capacity. Our problem is that the people who have money do not need any more goods so they are reinvesting it.
Those who need goods do not have the money to buy them, and therefore the minister is quite right in recognizing that we

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do have to stimulate the economy. But how did the government stimulate it? It tried to do so by cutting corporation taxes. When the predecessor to the minister's predecessor, Mr. Turner, was cutting corporation taxes, we told him that corporations would not invest money-even if they had tax cuts- when they were not using the capacity they had.
Now this minister has clutched at another straw. He says he talked to the finance ministers at the finance ministers' conference-I think that was in January-and that there were discussions for a while at the first ministers' conference in February. But was any specific proposal put before them? 1 know there may have been casual reference to the fact that if retail sales taxes were cut, that would give the economy a shot in the arm; but was any specific proposal put before them? Did the federal government say it was prepared to pay the majority or part of the cost to reduce sales taxes in order to get money into circulation, particularly among low-income people? If a proposition like that were put before the first ministers or finance ministers, I think they would have accepted it; but to put it before them after they had made up their budgets and finished two conferences at which no agreement was reached really was to make their situations worse. The minister has made the situation difficult for the provinces and difficult for himself, but totally unnecessarily. I ask him specifically whether a concrete proposal was put before the finance ministers or before the first ministers when they met in January and February?


Joseph Jacques Jean Chrétien: Mr. Chairman, in a way we put forward a precise proposition to the ministers of finance in October. The proposal was to reduce sales taxes by two points. I was to pay half and the provinces were to pay half. That was rejected on or about October 10, 1977.
We kept talking about it. There were discussions among officials and ministers, and we made some progress. It was not discussed at the first ministers' conference because we felt it should be dealt with at the finance ministers' level. I do not think I took anybody by surprise. The provinces were well informed six months prior to the budget that this was my priority. I was trying to get agreement.
The hon. member asks why we did not adjust cash payments to the provinces and let them have all the freedom they wanted with that money. I tried to find a way to put money into circulation without having to make a federal government expenditure. If I signed cheques amounting to $800 million, I would have been obliged to write that amount into my expenditures, and the provinces could have used that money to cut taxes. 1 know the NDP would not have objected to that approach, but many people would have considered me a big spender politician if I had added $800 million to my expenditures. I wanted to find a way which would not add to my expenditures, but which would put money into circulation. Under the scheme I am reducing my take by about $800 million and making room for the provinces so that they can raise their income taxes.
The hon. member wonders why we did not give the provinces freedom. We gave them freedom. At the beginning I told
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them I wanted to cut sales taxes and we discussed how to do that. I proposed that we pay the totality of the money to the maritimes because they could not afford to participate. They do not have a manufacturing base, and they can ill afford to go into a scheme like this. Everyone agreed that that made sense.
I told Alberta that there was nothing in this scheme for Alberta. I told the Alberta finance minister that I would like to help him by cutting his sales tax. He laughed and said that Alberta has no sales tax. I told him Alberta would not be involved but that he should not be too nervous because there would be other things in the budget to please some sector of Alberta's economy. That is why there is a special provision in the budget for the heavy oil schemes which are of great interest to Alberta.
There were all kinds of suggestions made by all the other provinces as to how to cut sales taxes. We decided to call a meeting in Ottawa of the officials of all the different governments. They were to come to Ottawa for a full day. We even provided for two days if that much time would be necessary to work out the details.
Some officials said they did not want to cut their sales taxes on alcohol, cigarettes and recreation. Ontario officials said that because they had just raised those taxes. They said putting money into that area would not stimulate the economy. The officials agreed among themselves that this scheme would not apply to those three commodities. B.C. and Saskatchewan had a different problem because, being on both sides of Alberta, if they were to cut sales taxes by three points for six months there would be a lot of political pressure not to reintroduce them later on. However, they said that the two-point scheme would make more sense and would be less difficult.
I proposed that they cut their sales taxes two points for nine months rather than three points for six months. We discussed that with the other provinces. I made the same offer to the other provinces, and nobody else was interested. Now I am being asked why this was not discussed. A question was asked by the hon. member for Brome-Missisquoi with respect to selective sales taxes. This was not raised by Quebec at all at the time of the negotiations, so we could not forecast that Quebec wanted that. Quebec did not express its views about it or show any interest in it, so 1 could not make an offer, discuss it or call a meeting on it.
On the day of the budget Mr. Parizeau said he had no answer for me, contrary to the agreement we had. He came along 48 hours later with his special way of cutting taxes. I do not want to judge whether his scheme is good or bad; it is within his jurisdiction. He did what he wanted to do, and that is fine with me. Mr. McKeough did the same thing in Ontario two years ago with his own money. I was informed at three o'clock in the afternoon on the Wednesday following the budget that the sales tax in Quebec would be cut selectively at six o'clock that night. There was no consultation. I was informed three hours prior as to what was to be done unilaterally. The question was whether I could accept that and whether I would pay for it. I told Mr. Parizeau that that was not

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part of the deal which had been agreed upon by the others and that I did not know what I would do.
Before I gave him my answer I called some other ministers of finance and told them what Quebec was doing on its own. I told them that Quebec would like to qualify for the national scheme. Three ministers of finance said that it was too late; they had already announced the scheme in their own jurisdictions. Their sales taxes had been cut since that Monday night, and it was now too late for them to make the same choice. I had given my word with regard to a procedure to all ministers of finance. I tried to get them to agree to Mr. Parizeau's scheme, but they said "no way". 1 had given my word to the ministers of finance prior to the budget. The proposition was on the table. It was agreed upon as the most sensible way to cut sales taxes.
Since there was no agreement with the other finance ministers with regard to the Quebec proposal, I could not agree. I had given my word to the ministers of finance and I evolved the scheme with them during the three weeks. Mr. Parizeau decided to go unilaterally, but under the scheme the province was qualified to receive $40 million only and we decided to pay it as a result of the tax collection agreement.
Hon. members will see that under this act there is provision for an adjustment at the end of the year. We forecast that in the reduction of income tax in Ontario, $100 will be too much for the cut in the sales tax, so that province will have to pay us back some $56 million; but in the case of British Columbia, it will not be enough and we will have to add $90 million and make an adjustment at the end of the year after verifying their books.
We did not come to an agreement with Quebec that would be acceptable to other ministers of finance; that is why we had this unpleasant confrontation. I am sorry about it; I did not provoke it, and I meant well. I even wanted to do something which was proposed by the Tory critic in a memorandun to members of his caucus in January in which he said they had to keep pressing the federal government for a scheme to cut sales tax at the retail level. This memo was read in the House by the Minister of Public Works, proposing a scheme to cut sales tax at the retail level. There were other proposals.


Sinclair McKnight Stevens: You mean, the federal tax.


Joseph Jacques Jean Chrétien: No. I will read it later. It mentioned the federal sales tax and also the provincial tax. I know the hon. member changes his mind according to the political mood, but he concluded at that time that cutting sales tax at the retail level was the most efficient way of doing it. There was a consensus on that. That is what I tried to do. Perhaps I am imputing motives to Mr. Parizeau.


Sinclair McKnight Stevens: I rise on a point of order, Mr. Chairman. The minister has referred to a memorandun allegedly written by myself in which I said that the provincial sales tax was the

proper approach. I would like him to produce that memorandum.


Joseph Jacques Jean Chrétien: I quoted what the Minister of Public Works read to the House from a text which he attributed to the hon. member for York-Simcoe. If the hon. member wishes to deny he ever wrote such a memorandum, I will accept his word and later I will produce the document.


Some hon. Members:: Oh, oh!


Sinclair McKnight Stevens: Will you produce it?


Joseph Jacques Jean Chrétien: If you did not say that, then say so.


Sinclair McKnight Stevens: Produce it.


Joseph Jacques Jean Chrétien: I do not have the document.


Sinclair McKnight Stevens: You are wrong, again.


Mr. Chr6tien:: If the hon. member denies he ever wrote such a piece, let him say so. I just said I had good reason to believe that when the Minister of Public Works spoke, he spoke with some knowledge. We will find out where he got his documentation. I do not have it with me. I am just saying that in the case of Quebec, they did not want to agree to the national scheme. I said, and I repeat, that I am not surprised. In their view of Canada, any good thing that is proposed by the federal government is not in their political interests. We know what their political interests are. Their political interests are to prove that confederation has never worked, is not working now, and will never work in the future. It was in their political interests to throw a wrench into the gears of my scheme. I said they did not want to try it, but I worked in good faith and treated them as I treat any other government, as is proper so long as they are part of confederation.
What Quebec did, after eight provinces had reached agreement, was to come 48 hours later and say to us that they wanted something else. I have no choice: I will pay them $40 million and I will pay $85 to each Quebec taxpayer right away. If Mr. Parizeau wishes to collect it back in taxes, that is within his jurisdiction and he can do so. It is up to him, not me. If he wishes to incur a bigger deficit, that is his option. I am not running his shop. We are reducing the tax of the federal taxpayers in Quebec right away so that the money will be in their pockets as quickly as possible.


Sinclair McKnight Stevens: That is the good political way of doing it.


Thomas Clement (Tommy) Douglas: Mr. Chairman, I see that the hon. member for York-Simcoe wishes to speak and I will certainly not monopolize this discussion. I just want to say two things with respect to what the minister has just said.
First of all, I find it absolutely appalling that a Minister of Finance would say the reason he adopted a clumsy technique of making rebates, which is inequitable and unjust, rather than paying cash to the provincial governments for tax collection which they have forgone, is that by so doing he would have
June 13, 1978

enlarged his budget by some $800 million and would have been criticized for it. Surely, it is incomprehensible that a minister would adopt such a clumsy, unworkable and administratively difficult process.


Joseph Jacques Jean Chrétien: It is not at all difficult.


Thomas Clement (Tommy) Douglas: The minister shakes his head. We will see before he is finished with it. I have watched rebates. I have watched the Social Credit government of Alberta making payments to every citizen who was to get a certain share of the oil revenue. Some people were paid twice, many people were not paid, and some dead people were paid. The minister has not finished with that one yet. I think it is administratively clumsy, unfair and inequitable. The only reason the minister gave for it was that if he had adopted a more simple procedure, he would have added several hundred million dollars to the budget and would have been criticized. The people of Canada would not be so naive as to criticize him if they recognized that the money was being used to enable provincial governments to reduce their sales tax for a short period of time. The minister does not have much faith in the public if he advances that as an argument: it is a very weak argument indeed.
The other point I want to make is that when the minister outlines, as he has several times, his quarrel with the government of Quebec with respect to selective sales tax cuts, he gives as his reason the fact that the other provinces were not in agreement and thought an agreement had been entered into and, therefore, Quebec should be required to make a lateral tax cut rather than a selective tax cut as they did.
1 do not think the minister has always felt it necessary to follow what the provinces have done. If the provinces had chosen to select an across-the-board tax cut, they should have been prepared to accept it. They agreed to that, and I do not see why they should have objected to a selective tax cut, because one of the values of a selective tax cut is not only that it would reduce the taxes paid by the consumer, but it would, at the same time, stimulate local industry. Certainly, if British Columbia had had the opportunity to cut taxes on building materials in order to stimulate housing, it would have had a double effect: it would have reduced the expenditures of the consumer and, at the same time, given quite a fillip to the forest products industry.
Therefore, I think the main objective the minister had in mind was to stimulate the economy, and whether a province wanted to do it by lateral tax cuts or by selective tax cuts was, it seems to me, totally irrelevant. I remind the minister that that is not the reason he gave to the House when he was debating the matter on second reading and when we were discussing changes in the ways and means motion. The minister then said that to allow any province to apply selective tax cuts was equivalent to putting up tariffs, and that was protectionism. That is sheer nonsense. It would have been protectionism if a province had said, "We will cut the tax for those things that are produced in our province, but if a product comes in from another province the sales tax will apply." That
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would have been protectionism. But to remove a portion of the sales tax, or all of it, from any single commodity which would be of benefit to whatever province produced it would have been of benefit to the economy and would certainly have been of benefit to the consumer.
I am not going to belabour this any longer, but I say again to the minister that the difficulty in which he finds himself results from lack of long-term planning. Much of this difficulty could have been eliminated if the government, instead of proceeding on an ad hoc basis, trying something today and something else next week, had sat down last fall and made a concrete proposal. The minister said he made a concrete proposal, offering provinces 50 per cent of the cost of the cut in retail sales taxes. I tell him right now that if I had been representing the provinces, I would not have accepted 50 per cent compensation from the federal government. Does the minister realize that in many of the provinces, retail sales tax revenue is one of the most important items-the largest item in some of them? To ask the provinces to absorb half the cost of that reduction would be asking them to assume a burden they cannot afford. Therefore, the minister could not have expected anything else. If he was going to offer to put up two-thirds, he should have made that offer last October, rather than making it a couple of weeks before the announcement in the budget.


Sinclair McKnight Stevens: Mr. Chairman, I heard the rather weepy tale of the minister respecting how we arrived at the position we are in today regarding provincial sales tax cuts. Could the minister be a little more specific as to the situation at present, as opposed to telling us how he got into his present difficulties? Specifically, we have the letter of June 7 which the minister appended to Hansard of June 8. Has the minister replied in writing to the letter from the minister of finance for Quebec?
[ Translation]


Joseph Jacques Jean Chrétien: Mr. Chairman, I talked to the minister of finance of Quebec on the phone on Monday.


Sinclair McKnight Stevens: I take it from the minister's comment that he has not gone to the extent of sending a formal, written reply; is that correct?


Joseph Jacques Jean Chrétien: I think, Mr. Chairman, that Mr. Parizeau's letter gave me complete liberty to choose one option or the other. I talked to him on the phone on Monday, and I advised him of the government's intentions at that time.


Sinclair McKnight Stevens: Could the minister advise hon. members of the gist of what he told Mr. Parizeau would be the government's position?

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Joseph Jacques Jean Chrétien: I told him exactly what I announced in the House of Commons yesterday evening, namely that we intended to proceed with clause 30(b).


Sinclair McKnight Stevens: Mr. Chairman, the minister has repeated quite frequently, and again today during the debate, that Mr. Pari-zeau has accepted his position in respect of the $85 tax rebate to Quebeckers. Would the minister listen as I read into the record certain portions of Mr. Parizeau's letter, and then clarify why he feels Mr. Parizeau has accepted his government's position, in the first paragraph, Mr. Parizeau states:
Since your budget speech of April 10 last, we have had several opportunities to explain the point of view of our respective governments concerning the federal proposal on the provincial sales tax reduction.


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


The Chairman:: Order, please. The hon. member for Labelle on a point of order.


Maurice Dupras: Mr. Chairman, I would simply like to know whether the letter the hon. member is reading is the letter read a few days ago by my colleague the hon. member for Levis (Mr. Guay). We could save the time of the House and this long reading because the hon. member for Levis has already read that letter.


Gérald Laniel: Perhaps the hon. member could answer that. I do not have the letter before me.


Sinclair McKnight Stevens: Mr. Chairman, like yourself, I have no idea what letter the hon. member is referring to. I am trying to do this in a relatively orderly way. I want specifically to refer to certain parts of Mr. Parizeau's letter and ask the minister for his comments. I was reading from the first paragraph, which states:
Since your budget speech of April 10 last, we have had several opportunities to explain the point of view of our respective governments concerning the federal proposal on the provincial sales tax reduction. Following our exchange of correspondence and our discussions, it seems clear that our governments disagree about the formula for the sales tax reduction in Quebec and that it would be useless to seek a formula other than the one which was approved by the Quebec government and supported unanimously by the National Assembly.
In view of that opening paragraph of Mr. Parizeau's letter, would the minister explain why he feels Mr. Parizeau accepted his proposal? I would think to most people that letter indicates exactly the reverse in the opening paragraph: it says they could not arrive at an agreement.


Joseph Jacques Jean Chrétien: Mr. Chairman, if you allow me, 1 will add that the hon. member would have derived a lot of benefit from reading the following paragraph, which reads like this, and I quote:
In this regard, I would like to submit to you a three-part proposal which includes the various elements of solution suggested in recent weeks.
And then, he starts to describe first clause 30(b), and after that, he switches to another proposition.
Of course, it is clear; it is evident. There has been no agreement as to how Quebec could participate in the national sales tax reduction program. This much is clear. Two days after the presentation of the budget, everybody knew that. However, in his letter, Mr. Parizeau, after enumerating all the elements, comes up with a three-part proposition, and his first one corresponds exactly to clause 30(b). I concluded from that that he agreed with clause 30(b). For me, this is quite clear; it is very simple to understand.


Sinclair McKnight Stevens: Mr. Chairman, I hope the minister will be patient with us. He is leap-frogging ahead, anticipating questions I will be putting to him later. Dealing with paragraph one, if we can take them one at a time, will the minister agree with Mr. Parizeau's observation where he states:
-it seems clear that our governments disagree about the formula for the sales tax reduction in Quebec-
Is that a fair statement of the situation between the two governments?


Joseph Jacques Jean Chrétien: We disagreed, Mr. Chairman. I have said that many times. I do not have to repeat it again.


Sinclair McKnight Stevens: At least now we have established that Mr. Parizeau, when he stated in the letter that there was disagreement, was stating the truth even as it exists in the mind of the Minister of Finance. Let us go to the second paragraph of Mr. Parizeau's letter, where it is stated:
Your government therefore accepts to pay to Quebec in one form or another the federal contribution originally offered in its provincial sales tax reduction proposal, which amounts to $226 million. Recognition of this principle should have led to a settlement between our two governments. You have not accepted that.
Will the minister indicate whether Mr. Parizeau is correct in that observation?


Joseph Jacques Jean Chrétien: Mr. Chairman, I think I made one, two, three, four, five different propositions to Mr. Parizeau. The first one he ever made was in this letter of June 7. Prior to that he unilaterally cut sales taxes. I would make this one point to the committee, Mr. Chairman, as a lawyer, that if a lawyer were to proceed in that way before a judge, he would soon find himself out of a job.


Sinclair McKnight Stevens: Mr. Chairman, whether the minister likes it or not, all we are trying to do is seek the truth in one way or another and, hopefully, we will get it on the record. If the minister could bring his attention back to paragraph two of Mr. Parizeau's letter, I would be pleased if he would tell the House whether the observation of Mr. Parizeau which I read into the record is correct; that is, the $226 million sales tax reduction proceeds to which Mr. Parizeau thought Quebec was entitled were, in fact, not agreed to between the two govern-
[Mr. Stevens.l
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ments. Is Mr. Parizeau correct in the observation to which 1 referred in paragraph two of this letter?


Joseph Jacques Jean Chrétien: If I have said it once, I have said it a thousand times in the last two months: there was no agreement. I made a deal with eight ministers of finance. One did not make a deal. That is clear in French, English, Greek, Spanish or joual, and should not have to be repeated.


Sinclair McKnight Stevens: Mr. Chairman, at least now we have it established that there was no disagreement in the minister's mind with respect to Mr. Parizeau's observations in paragraphs one and two and that they in fact had not agreed. 1 wish the minister would in future quit creating the aura that somehow or other there has been at last an agreement between Mr. Parizeau and himself. I could come to the next matter which I believe the minister refers to as either clause 30(a) or (b); I am not sure of the letter he attaches to it. I refer the minister to the fourth paragraph of Mr. Parizeau's letter. It reads:
Second, if you do not intend to amend Bill C-56, the government of Quebec will take the necessary action to recover a global amount equivalent to the sum which otherwise would have been paid to the province by the federal government. However, should the federal government choose to amend Bill C-56 and pay the balance of $186 million through a personal income tax reduction at the end of the 1978 fiscal year, the government of Quebec might consider recovering that amount through a special tax equivalent to the federal rebate.
My question to the minister dealing with the fourth paragraph is this: Why does he imply that Mr. Parizeau is accepting his position, when in this paragraph he makes it so clear, "if you do not intend to amend Bill C-56, the government of Quebec will take the necessary action to recover a global amount. . . ? I would think that any ordinary person, reading that paragraph, would conclude that Mr. Parizeau is basically saying, "If you will not accommodate us in the way I am suggesting; if you will not amend"-presumably, clause 30; the clause we are now dealing with-"we will take steps to collect, in a global amount, the equivalent of the sum which otherwise would be coming to us." Would the minister explain why he wants that, and implies that Mr. Parizeau is now agreeing with what he is doing in clause 30?


Joseph Jacques Jean Chrétien: Mr. Chairman, I repeat it for the umpteenth time. In this regard, says Mr. Parizeau, I am submitting a three-part proposal: Point No. 1: $40 million cash; point No. 2: 30(b); point No. 3: the other proposal he made. These proposals are put forward by Mr. Parizeau and are in accordance with the bill. So I do not think I am putting words in Mr. Parizeau's mouth; indeed, he said so himself on television. I understand the hon. member was unable to follow him on television, but I did hear him as did many others, and here is what he said: As far as we are concerned, we can live with Mr. Chretien's proposal. That was a surprise in Quebec and I was surprised as well, because in the previous weeks, strong words were used to discredit this proposal. It was unfair and so on. No word was strong enough to describe how bad the situation was.
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In his letter dated June 7, 1978, he said: I am submitting a proposal to you and that was precisely what he could not admit.. .


Sinclair McKnight Stevens: Mr. Chairman, does the minister not sense the important constitutional differences between what he is saying and what has been represented by the National Assembly to be a better approach with respect to the handling of this provincial sales tax matter in Quebec? As I understand it-and this is the reason I have gone through this letter paragraph by paragraph-it is abundantly clear that what the Minister of Finance-
[ Translation]


Mr. Guay (Levis):: Mr. Chairman, I rise on a point of order.


Gérald Laniel: Order. The hon. member for Levis on a point of order.


Raynald Joseph Albert Guay: Mr. Chairman, since this debate started, members of the opposition have kept referring to the unanimity in the Quebec National Assembly. They say: they agreed on a resolution, all opposition parties, the Liberal party, the PNP, and all parties agreed on a resolution. I would like to ask the hon. member for York-Simcoe (Mr. Stevens) and the hon. member for Joliette (Mr. La Salle) whether they-


Gérald Laniel: Order. The hon. member will agree with me that his point of order is a question that could be put to the minister and a point he could make in a contribution of his choice and that it has nothing to do with order. It is quite simply a difference of opinion with other members.


Raynald Joseph Albert Guay: Mr. Chairman, I rise on a question of privilege.


Gérald Laniel: The hon. member for Levis on a question of privilege.


Raynald Joseph Albert Guay: Mr. Chairman, I want to point out to the Chair that as a member of this House I am quite simply asking hon. members of the opposition what they are talking about, what is in that resolution and I think I have the right to do so because I know exactly what is in it-


Gérald Laniel: Order. This is a question the hon. member could have put on second reading and which he can put in the debate now in the process of taking part in the debate but not under a point of order or a question of privilege.


Sinclair McKnight Stevens: Mr. Chairman, if I could continue with my question to the minister, the thrust of it was simply this: does the minister not see the constitutional differences between the approach that he is insisting on taking with respect to the payment of $85 to individual taxpayers in Quebec, compared to the suggested alternative, which would simply be to make

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provision within the 1978 income tax payment for a $85 deduction from the federal tax otherwise payable by residents in Quebec and in anticipation of that $85 being taken up by the provincial government in Quebec as they see fit? In short, that would put Quebec on virtually all fours with the other eight provinces but would reserve the constitutional problem about which the minister seems to be so careless.


Joseph Jacques Jean Chrétien: Mr. Chairman, 1 think the hon. member is no better with constitutional problems than he is with banking problems. There is no problem with the constitution. Mr. Parizeau has the power to do as he wishes within his jurisdiction, as I have in my jurisdiction. There is no problem with the constitution in the way the government pays the money. It could be a matter of agreement between the two governments. I am merely cutting the income tax of federal taxpayers in Quebec. There is no problem with the constitution in that. The hon. member should have someone explain to him that one plus one equals two.


Gérald Laniel: Order, please. It being six o'clock, I do now leave the chair until 8 p.m.
At six o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at 8 p.m.
Sinclair McKnight Stevens: Mr. Chairman, before dinner I was discussing with the minister his general reaction to the Parizeau letter of June 7. I was asking whether the minister did not feel there was a constitutional problem in the way he has persisted in handling the payment of $85 to residents of Quebec, compared to the much easier system he used with the other provinces, which was simply giving a reduction for 1978 of $85 with respect to federal tax. That would be something in which residents of Quebec could share, and in turn the Quebec government would simply take over the room given up by the federal government.
I was making the point that if the minister had co-operated in following that approach, he would have been in a similar position to that which he is now working out with the other eight provinces, which is presumably an approach that would be acceptable not only to Mr. Parizeau but to the majority of members of the National Assembly.
It makes such sweet, reasonable sense that once again 1 ask the minister why he persists in doing it the hard way, as opposed to the relatively easy way of giving a reduction of $85 to the residents of Quebec in 1978 similar to the $100 he is giving the other provinces, and let the Quebec government adjust their own tax structure to take up the $85. The two things would dovetail during 1978 and the minister would avoid the confrontation which he seems to relish with the Quebec government.


Joseph Jacques Jean Chrétien: Mr. Chairman, I have explained the situation many times, but I suppose I have to repeat it. I have answered that type of question since April 12, but the hon. member still does not seem to understand. There was no agreement with Quebec to cut sales taxes. They left $186 million on the table. The government decided not to penalize the citizens of Quebec because there was no agreement. We decided, within our own jurisdiction, to cut income tax up to $85 with that money for Quebec residents who pay taxes. We chose 1977 over 1978 because we wanted that money to be in the Quebec economy right away. If we had waited, the money would not have been in the Quebec economy until next spring. If Mr. Parizeau has to raise some money because he made a miscalculation in his budget, he can do it tomorrow. He could have done it yesterday. He can do whatever he wants, in his jurisdiction.
If he needs more money because he could not come to terms with the federal government, that is up to him. He can raise sales taxes, he can raise income taxes, he can raise corporation taxes, he can invent a new tax within his own jurisdiction. We decided that $186 million was available, but he did not take it up in the national program so we are sending back to Quebec taxpayers amounts up to $85. We want it to be done as quickly as possible.
We do not know what kind of system Mr. Parizeau will choose in order to raise this money or other moneys. Some 200,000 people in Quebec will not receive the $85. Because we had already given a tax exemption of $100 in January and February, we chose 1977, as well as the fact that the money will come into the economy right away. The problem did not arise in the other provinces, because there was a national agreement with them. We reduced our income tax and they increased theirs and used the money to cut the sales tax in the way we wanted. The money is flowing into provincial coffers because of the agreement between the other provinces and the federal government. The money will flow into the provincial economies from April 10 until October 10.


Sinclair McKnight Stevens: Mr. Chairman, in answer to an earlier question, I believe the minister stated that one of the reasons he did not want to make a payment to the other provinces who preferred to go the deduction route was that he did not want to pass through the expenditure column at the federal level whatever the amount would have been, say $800 million. I think he pointed to the members on this side of the House as those who would have complained if he had increased his spending. Would the minister state if 1 am correct in understanding that as one of the reasons for his favouring the deduction route for the other provinces, as opposed to some type of expenditure route?


Joseph Jacques Jean Chrétien: Mr. Chairman, what we have done is simple. We decided the night of the budget that we would reduce personal income tax where there Was an agreement for cutting sales tax. Legally, the only thing we have done is reduce personal income tax by $100 in provinces except Quebec and Alberta, for different reasons. We asked the provinces, in
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return, to raise income tax and, with the proceeds, reduce sales tax.
The federal government will verify the books at the end of the year. If we have cut our tax too much in relation to the amount the provinces need, they are to return some money to us. On the other hand, if we have not cut income tax enough and the provinces spend more in reducing sales tax, the federal government will compensate for the difference. What we have done is to reduce the income tax of federal taxpayers in all the provinces except Quebec and Alberta.


Sinclair McKnight Stevens: Mr. Chairman, the minister will save a lot of time this evening if he will try to answer the questions. Specifically, did I understand him correctly when he explained why he chose to go the reduction route which he has just described with the other provinces? Did he say that one of the reasons he did not want to go through an expenditure increase was that he did not want to go through some type of assistance whereby he would be paying money to the provinces and it would show in the spending estimates of the government? Instead, he felt it was more desirable to simply reduce their income tax revenue and in that way it would not be an expenditure increase when he worked out his deal with the other eight provinces: is that correct?


Joseph Jacques Jean Chrétien: Mr. Chairman, I said this afternoon, and I repeat it: yes. One reason was that we were to reduce our income tax, thus making room for the provinces who agreed to raise their own income tax and with their profits they would cut their sales tax. We operated in that way because it was the best way to reduce our taxes-in other words, our take from taxpayers federally-and make sure that the money was directed in the best way to stimulate the economy.


Sinclair McKnight Stevens: Mr. Chairman, the minister has now agreed that one of the reasons he chose that route with the other eight provinces was that he did not have to increase his spending at the federal level. Would he indicate why he chose to increase his spending as far as Quebec was concerned? Why has he adopted a concept of paying S85 per person to residents of Quebec which will increase spending in some fiscal year?


Joseph Jacques Jean Chrétien: Mr. Chairman, the $85 for taxpayers of Quebec is a reduction in taxes. We will be reducing the taxes of those taxpayers by $85. It will not be seen as an expenditure. It is a reduction of taxes on the taxes we received from those taxpayers in 1977. It is not an expenditure.


Sinclair McKnight Stevens: Mr. Chairman, I suppose we should all study to see how the minister twists an $85 payment going back to the residents of Quebec into something that he said is not a federal expenditure. I am willing to acknowledge that he is pigeon-holing it; he is neatly saying that in his mind the $85 is a refund on 1977 tax payable. But 1 suggest that surely it has to go through an account somewhere and would normally show as an expenditure, perhaps with respect to refunds in a previous year, in this case 1978.
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Joseph Jacques Jean Chrétien: Mr. Chairman, it is a reduction of the tax paid by taxpayers in 1977. It is not an expenditure; it is a reduction of the tax liability of Quebec taxpayers for 1977. That is not a payment and it will not be written in the books as an expenditure of the government. It will be a reduction of the revenue, which is another way of saying a reduction in taxes.


Sinclair McKnight Stevens: Mr. Chairman, let us put it this way. Will the Quebec moneys, whether they are an expenditure, a refund, a reduction or however the minister would like to term it, be reflected in the 1978 fiscal year for the government?


Joseph Jacques Jean Chrétien: Yes, Mr. Chairman.


Sinclair McKnight Stevens: Mr. Chairman, will the bulk of the refunds, reductions or whatever with regard to payments of the amounts going to those who live in the other eight provinces be reflected in the government's 1979 fiscal year?


Joseph Jacques Jean Chrétien: The situation is the same, Mr. Chairman, because the tax cuts will be made during 1978 in the other provinces. As I am speaking, the federal government is collecting $100 less for every taxpayer in the other provinces, except Quebec and Alberta, and at the same time, Ontario and Manitoba taxpayers are paying their respective provincial governments $100 more, and with their profits, these provinces are reducing their taxes. As we are collecting their taxes on their behalf, we are of course making payments to them on a six month basis beginning in April.


Sinclair McKnight Stevens: Mr. Chairman, I will take another run at it. The minister has identified the fact that the Quebec payment, be it a refund, an expenditure or whatever, will fall into the federal government's fiscal 1978 figures; in other words, the March 31, 1978, fiscal year end. My second question was, where will the other amount fall: will it fall into fiscal 1979?


Joseph Jacques Jean Chrétien: In both cases, Mr. Chairman, the payments will be made during the taxpayers' year, because the taxpayers' year is not the same as the government's fiscal year. The taxpayers' year is 1978. The government's fiscal year is from April 1, 1978 to March 31, 1979. In both cases, payments will be made on the basis of the 1978-79 income year; as to the federal government's revenues, that is the 1978-79 fiscal year.


Sinclair McKnight Stevens: Mr. Chairman, I thought I understood the minister first of all when we were dealing with 1977 payments in Quebec. But how can he say that the payments he will be sending to Quebec residents will fall into fiscal 1978-in other words, in the current year, March 31, 1979-while five minutes ago he was telling us that it was not an expenditure this year but a refund of 1977 income taxes? Surely the minister cannot have it both ways: it is something that will be reflected in fiscal 1978-which I presume it is, if it is a refund

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for 1977 taxes-or, in fact, it is not as he has been representing it to be, and that is a refund for 1977. Would the minister clarify that? I am talking about two different types of situations. As far as the fiscal books are concerned, will the Quebec payments be relfected in fiscal 1978 and, second, will the payments with respect to the other provinces be reflected in fiscal 1979?


Joseph Jacques Jean Chrétien: Mr. Chairman, the reductions will fall into the federal government's fiscal year 1978-79. In making those reimbursements to Quebec taxpayers based on the reduction of tax liability for 1977, the cash loss will be seen in the fiscal year 1978-79 for the federal government. It is exactly the same thing for the cash that we are losing in relation to the other provinces. It will fall within the fiscal year 1978-79 in terms of cash requirements for the federal government.


Sinclair McKnight Stevens: As we have been contemplating certain amendments to clause 30, will the minister indicate whether he would entertain an amendment which would have the effect of simply putting the Quebec situation on a basis comparable to that of other provinces, rather than having this $85 going out in a cheque in relation to 1977? The thrust of our amendment would be simply to make the $85 a deduction with respect to 1978 for residents of Quebec.


Joseph Jacques Jean Chrétien: Mr. Chairman, I cannot accept that proposal because it would not be acceptable to the Quebec government. In his letter, Mr. Parizeau demanded in addition the payment of interest, something which was not provided in all payments made to the other provinces and since that aspect is not acceptable this is why we are not prepared to entertain any amendment to clause 30(a) or 30(b).


Sinclair McKnight Stevens: Mr. Chairman, will the minister clarify whether it is simply the payment of interest that is the reason he does not want to go along with that proposal, or are there other reasons why he does not want to accept the proposal I have made?


Joseph Jacques Jean Chrétien: On several occasions, I explained to the House all the reasons why the government has suggested when it introduced Bill C-56 an immediate refund of $85 to Quebec taxpayers. We wanted that incentive to be injected immediately in the Quebec economy. We also wanted to cover 200,000 taxpayers who would not be included if we take the 1978 taxpayers' roll because having already received a $100 reduction, then they would not qualify for the $85 refund. The third reason is that if I agreed to the proposal of the hon. member for York-Simcoe, the money would be injected into the Quebec economy only in the spring of 1979 and in the case of taxpayers filing their income tax return late, either in March or April, before the tax returns could be analysed and finalized

many among them would receive their refund only in June and even perhaps in July 1979.


Charles Robert Turner: Order, please. I regret to interrupt the hon. member, but his allotted time has expired.


William Gordon Ritchie: Mr. Chairman, I wish to ask the minister a few questions as to numbers, particularly in relation to the Quebec situation vis-a-vis the other provinces which have accepted 3 per cent across-the-board. If the province of Quebec had instituted the 3 per cent across-the-board tax cut, what would each percentage point have cost? What is the estimate in dollars?


Joseph Jacques Jean Chrétien: If Quebec had complied with the national scheme, it was calculated that the total amount that would be flowing would be $225 million for two points. They had to put into play half of it as their contribution. It was to cost them $112 million, that is, if they had complied like Ontario and Manitoba. That varies from province to province according to the amount of money collected on sales tax.


William Gordon Ritchie: Will the minister tell us what the estimated 1 per cent is in selective tax cuts? How much is that worth in relation to the $113 million total across-the-board? What is the total the department estimated as the 1 per cent although, as the minister says, they must give 2 per cent?


Joseph Jacques Jean Chrétien: Across Canada?


William Gordon Ritchie: How much is 1 per cent of the selective tax cuts which the province of Quebec instituted? What is the estimated loss to the provincial treasury?


Joseph Jacques Jean Chrétien: With regard to the selective system they have adopted, we have calculated that two points for six months would be $40 million, more or less, subject to verification. Therefore, it is $20 million per point on the selection of the four items.


William Gordon Ritchie: I believe the Quebec tax is 8 per cent. Assuming it is 8 per cent, the abatement or loss of tax to the province would be $160 million. Is that correct?


Joseph Jacques Jean Chrétien: Yes, for six months. However, they decided to cut for a full year. That is why they calculated it would cost them $320 million. We are not sure about those figures. It will be very difficult to verify that; there is controversy about it. According to the papers, Quebec claims the cost of those cuts for one year will be $320 million. According to extrapolations by officials of the department and the treasury in Ontario, that does not seem possible. We hope to be able to determine that figure more precisely at the end of the year.
I want to advise the hon. member that this is very complicated, because when you go from eight to zero you have no base on which to verify it. When you go from seven to four, it is quite easy to verify. If they collect four, you just multiply up to seven and you know exactly their cost. However, with zero
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there is no base to verify precisely, as is possible in the other provinces.


William Gordon Ritchie: If I recall correctly, the minister stated that his department had made an estimate. Would he care to put that estimate on the table, or does he feel he should not do that at this time?


Joseph Jacques Jean Chrétien: We are talking about $40 million: that is the estimate we made from their figures. At the end of the year, as we do with the other provinces, we will verify that to see whether it is accurate. There is a difference in view between the treasury of Ontario and the treasury of Quebec in terms of the number of dollars. There is a difference of opinion on our side as well, but we are not into retail sales tax. I am not trying to create a controversy; that is a comment made, according to the press, by the Ontario government six or seven weeks ago. At the end of the year we will try to find a way to make sure whether it is $40 million, or less. I do not think it could be more. According to our estimates, it will be somewhat less than that.


William Gordon Ritchie: I suggest to the minister that the payment of $186 million to Quebec is quite different from that being given to the province of Ontario or the province of Manitoba. In order for them to get the abatement through income tax, the room left in the $100, they must have a sales tax cut. The province of Quebec is not under the obligation to have a sales tax cut, or has not assumed it is going to have a sales tax cut. Therefore, there is a fundamental difference between the two payments. I would regard the $186 million injected into the Quebec economy as a payment to individuals. Before it can be earned in the other provinces or abated by the federal government, there must be a sales tax cut. That must reflect in the actual purchasing of consumer goods, which will stimulate business, which is what the minister indicated in the first place.


Joseph Jacques Jean Chrétien: That is exactly the point I have been trying to make for two months. That is because Quebec has not come into the national scheme. They left on the table $186 million, because they qualified for $40 million of the $226 million which we had planned as our contribution to an across-the-board cut of two points for six months.
As they did not agree to the national scheme, they left $186 million on the table. Rather than penalize Quebec's citizens, we decided to cut the income tax for an equivalent amount to the benefit of taxpayers in that province. We did not sign an agreement with Quebec because Quebec did not want to sign the same agreement as the others. It was always envisaged by my ministry that if we could not get everyone to agree, there would be another income tax cut; but we preferred our policy of cutting sales taxes. We decided we would deal with the provinces in which there was a sales tax, and since there was $186 million left we further decided to cut income tax to the taxpayers in Quebec by that amount.
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William Gordon Ritchie: I understand that direct tax remissions made to citizens tend to be put into savings, whereas in order to save under sales tax cuts, citizens have to buy something. Has the minister any estimate of the effects of the economic stimulus brought about by the injection of $186 million into the economy as a cash payment, as opposed to the effect of cuts in sales tax of a similar amount?


Joseph Jacques Jean Chrétien: We have not made that calculation. But I have always said I would much have preferred Quebec to join the national scheme. As the province has not done so, we have decided to cut the income tax of federal taxpayers in Quebec by $85. We recognize it would have been better for the national economy had Quebec joined in the sales tax cut agreement.


William Gordon Ritchie: This is a type of non-tariff barrier by selective cuts, and at least it is a change. Presumably, Quebec looked over the range of goods it manufactured and tended to favour its own economy. In the rest of the country, Quebec would have the benefit, whatever it might be, of the lower sales tax, and in essence the provincial treasury is protected since it has lost only $20 million as far as the 3 per cent is concerned. It seems to me the effect has been a non-tariff barrier to some extent inasmuch as the Quebec sales tax has remained the same as they affect industries which are not prominent in that province.


Joseph Jacques Jean Chrétien: The intention of the Parti Quebecois is clear. They have issued communications indicating they took the course they did in a protectionist frame of mind to aid the Quebec economy. The other day the hon. member for Levis read a letter in this House which was really quite funny. On June 3, Mr. Parizeau wrote a letter to the shoe manufacturers of Quebec who had asked him to cut the sales tax on shoes. He said that to cut the taxes from 8 per cent to zero would be no good at all; that such a policy would make no sense. That was his view in January. But he did a complete about turn in April so as to undermine the national scheme. They were doing it in the way in which the hon. member suggests, in a protectionist spirit for the sake of their own economy.
In the case of shoes, according to the letter written by Mr. Parizeau to the shoe manufacturers, more than 60 per cent of the shoes sold in Quebec do not come from Quebec. In fact, more come from Ontario than from Quebec. But the avowed intention of the government was to protect its own economy and to try to break the so-called national common market. We have not yet made a study to determine whether their scheme is better than ours. If all the provinces were to go ahead on a selective tax basis, Ontario would probably prefer to cut sales tax on automobiles, British Columbia would go for building materials, and the maritimes, Saskatchewan and Manitoba would have chosen products appropriate to them.
The argument which I used in the west was this: even though you do not have a manufacturing base of great strength, half of the cost in the retail economy is not the cost of production but the cost of services-transportation, publicity, storage, and so on. These factors make up half the cost of all goods bought from a store. That is how I persuaded them to

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join the scheme. It was designed to stimulate the retail business in the local economies. But the Quebec government has claimed over and over again that Mr. Parizeau was out to be a protectionist and did not give a damn about the Canadian market.


William Gordon Ritchie: I understand from some figures given out at the conference held in Montreal that Quebec benefits more than any other province from the Canadian market in commodities because it produces goods which, by and large, have greater sales in the rest of Canada than do the goods of most of the other regions.


Joseph Jacques Jean Chrétien: If we look at the general aspect of the Canadian economy, Quebec is not the province which benefits most from the domestic market. Ontario, which has a much larger share of the manufacturing sector, benefits more than Quebec. This is one of the criticisms directed at me during the preparation of my program-that I was helping Ontario more than Quebec. It could be true that this program is helping Ontario more than Quebec, but I would point out it is helping Quebec more than any of the other eight provinces. Some clothing is manufactured in Manitoba, but the part of it which goes into the local economy is less than in Quebec.


Mr. Elzinga:: Mr. Chairman, it is obvious that this piece of legislation has created provinces with special status. It seems obvious that the minister was anxious to bring down a budget at this time because he was posturing in preparation for a July election. Earlier today the hon. gentleman told the hon. member for Nanaimo-Cowichan-The Islands that he would welcome input from a committee of this House, and that he was a great believer in the principle of participatory democracy. It is hard to believe this is the same minister who has brought in closure on two occasions in connection with the legislation before us. That is a fine way to support participatory democracy.


Joseph Jacques Jean Chrétien: 1 wish to raise a point of order, Mr. Chairman. We have so far spent 19 days in debate on this measure. We are on clause 30, and at second reading this legislation was filibustered for 11 or 12 days. We could have reached clause 30 a long time ago. There is no precedent for such a long debate on a tax bill.
Hon. members have been rambling without dealing with the clauses. We spent two days on clause 1. There was general debate, and the hon. member is still making general comments. We had an occasion this afternoon to talk about time allocation. Hon. members opposite did not want to speak at that time; they wanted to discuss clause 30. The hon. member should ask questions and I would be happy to reply. He had 19 days in which to speak, but was not seen in the House on those days.


Peter Elzinga: Mr. Chairman, my comments are related to clause 30. It is interesting, the degree to which the minister has been participating in this debate ever since he brought in

closure. This afternoon, when he was speaking, he went on for approximately 15 minutes on one answer which could have been given in two minutes. If the minister is serious in criticizing me for going on, he should take a little advice himself.


Joseph Jacques Jean Chrétien: Ask a question.


Peter Elzinga: As has been said on many occasions in this House, Alberta has no sales tax and that is why Alberta originally agreed to the proposal put forward by the minister. However, when Albertans became aware that the minister was going to give an $85 rebate to Quebeckers for the 1977 taxation year, they became concerned. It is obvious that some individuals will participate twice under this proposal. If a Quebec resident moved to Ontario but filed his 1977 tax form in Quebec, would he be eligible for the $85 rebate, while at the same time being able to take advantage of the sales tax reductions in Ontario?


Joseph Jacques Jean Chrétien: Mr. Chairman, any citizen who moves from one province to another finds himself in a different situation. If a citizen of Ontario moves to Quebec, or the reverse takes place, he will qualify because the list for 1977 is used. If somebody moves to Newfoundland, he moves to an 11 per cent sales tax rate. If he moves from Alberta, he leaves a province where there is no sales tax. It is a person's own choice. We will take the list of 1977 taxpayers. The same thing would happen if we used the 1978 list, because there is movement of people during the year.


Peter Elzinga: It is obvious that an individual who moves out of Quebec will receive the $85 rebate. In addition, he will have the advantage of living in a province where sales tax is reduced, so in essence there will be a double benefit. Earlier this afternoon we heard from the minister about the great concessions being offered to Alberta with regard to the heavy oil industry. It should be pointed out to the minister that these concessions are not simply for Albertans; they are for all Canadians. When we review what Albertans have contributed to confederation through our oil and natural gas industries, we find that because our prices are below the world price, Alberta has saved Canadians about $10 billion. I think that is a significant contribution to confederation on the part of Albertans.
It becomes more and more obvious that this government has no concern whatsoever for the province of Alberta. This has even been stated by this government's own Minister of Industry, Trade and Commerce: he has stated that the government has no feeling for Alberta whatsoever. Just to substantiate my point, I would like to read a couple of lines from the Saskatoon Star-Phoenix. In a Canadian Press story headed "Horner says Post "Lonely", we find the following:
Jack Horner says he has had a lonely first year as federal Minister of Industry, Trade and Commerce.
Horner told a nominating convention recently he is frustrated because there is no one else in the cabinet "who really deeply cares about the province of Alberta."


An hon. Member:: Order.
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Mr. Epp:: Do you want him to table it?


Peter Elzinga: The truth seems to hurt my hon. friends. It can be documented that over and over again Alberta has been shortchanged under numerous government programs. We can read about the contract awards of the Department of Supply and Services. The former minister of national defence, the hon. member for Winnipeg South, has stated that he hopes to see equitable spending in all government departments. This matter has been pursued by numerous hon. members on this side of the House. Various government programs are not equitable as far as Alberta is concerned.


Joseph Jacques Jean Chrétien: Clause 30, Mr. Chairman.


Peter Elzinga: With regard to clause 30, Mr. Chairman-


Some hon. Members:: Hear, hear!


Peter Elzinga: -hon. members opposite feel that theirs is the only party to keep this country together. The leader of my party has spoken about this. The proposals in clause 30 are a fine example of the disunity the Liberal party is creating within Canada. The Minister of Finance claims that we, as federal Conservatives, are in bed with the Quebec separatists simply because we support the position which has been taken unanimously in the Quebec National Assembly. We have the Minister of Transport who says we are spreading anti-Quebec lies and hatred across the west.
I would like to share with the House what a journalist in the Montreal Star has said about this. He is curious as to how we can be in bed with one group while at the same time hating them. It is ironic that one minister says we hate them, and another says we are in bed with them. However, that is the kind of trickery we see far too often on the part of hon. members opposite. That concludes my remarks on clause 30.


Arthur Jacob (Jake) Epp: Mr. Chairman, I would like to follow up my comments on second reading and ask whether the minister received any formal objections from the government of Alberta or a minister of the government of Alberta when the sales tax rebate for Quebec was modified to become an income tax rebate in the amount of $186 million.


Joseph Jacques Jean Chrétien: Mr. Chairman, I spoke to Mr. Leitch about this. I informed him of my plans. I do not recall exactly what he said. He did not write me a letter or communicate any formal protest. We discussed the matter. Everyone at that time was very sorry that the Quebec government did not agree to the national scheme. Everyone understood that I was doing my best to solve a difficult problem. Hon. members can understand the frustration we all felt. Of course, I took the brunt of it. Mr. McKeough of Ontario has made two speeches about this. The others kept rather silent about it, but they understood that they were to come out on the day of the budget with a "yes" or "no". Quebec did not respect that commitment, and that put everyone in a difficult position.
I explained what I was trying to do, that I was trying to solve the problem as best I could, and before I tabled this bill I
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informed the provincial ministers of my intentions. I cannot say that all provincial ministers rejoiced. They were quite sorry and their reaction was, "Jean, do your best". They did not raise any formal protest, but I must recognize that they were not happy.


Arthur Jacob (Jake) Epp: I am sure the minister is correct when he says he was encouraged to do his best after the difficult fiasco he got himself into. I ask him whether there were objections to the proposals contained in clause 30 long before the Quebec government made known its objections to the sales tax rebate. I am referring to the meeting of the four western premiers: they met shortly after the budget was announced in this House on April 10. The western premiers took very strong exception on two counts, not one, of intrusion into provincial jurisdiction.


Joseph Jacques Jean Chrétien: It is not what they said, Mr. Chairman. I would like to correct the hon. member. He should read the letter of the Prime Minister in reply to Mr. Blakeney who wrote on behalf of the western premiers. They said they agreed with the substance of the proposition but they were not satisfied with the extent of consultation. I have explained to the House many times that when they agreed with the substance and complained about the form, they were not talking about invasion of their jurisdiction.
With regard to the extent of consultations, I have explained to the House all the limitations 1 have in terms of consultations. I went to all the provinces to meet their ministers of finance. I was faced with the possibility of an eventual leak, which actually occurred in a column by Dalton Camp in the Toronto Star the night before the budget. Everyone knows that I am not in daily communication with Dalton Camp. I never talked to him in my life. I do not know where the leak came from, but he had the full story.
They agreed with the substance of the proposal but complained about the extent of consultation. It is the kind of statement that is so easy to make. We have spent 20 days on this bill and only today did we start to move on to other clauses; yet people still rise and say that not enough time was given. We have to make a decision once in a while if we want the House to operate. When I was in England, 1 felt sad that we do not operate our House of Commons in the same way as the British. They would never spend 20 days on a bill.


Arthur Jacob (Jake) Epp: Mr. Chairman. I should like to point out to the minister that England is a unitary state, not a federal state, and therein lies the difference when you talk about consultation. I have another question for the minister. There is a distinct difference of interpretation here. I believe he has agreed with me that the western premiers were not pleased with the consultative approach. I do not think many arguments have come forward to the minister, from any quarter, that the reduction of the direct retail sales tax is the quickest way to stimulate retail buying. You have no argument from me on that score.

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The point 1 am trying to make-1 think the minister has to concede it - is that whether we say consultations were sufficient, or not, is at this point not something with which I will agree. But the point that must be made is that the western premiers were saying that the consultations had not gone far enough in that there was an encroachment into provincial jurisdiction. That point must be made. The minister mentioned earlier that there will be federal reinbursement to these provinces for lost revenue, for the 2 per cent reduction in sales tax over a six-month period. To what extent will this increase the deficit in current accounts?


Joseph Jacques Jean Chrétien: We have operated through an income tax cut across the board, and the calculation was that the federal share of this program would be $1.1 billion. The federal cost was about $680 million-I speak from memory-and half of it would come from a reduction in our own expenditures of, say, $340 million: the other $340 million was to be added to the deficit, or the cash requirements. So before the budget was brought down, the cash requirements were about $11.1 billion and I said that the cash requirement would be about $11.5 billion, an increase of some $350 million. So the total package was $1.1 billion and the cost in terms of our deficit would be about $350 million.


Arthur Jacob (Jake) Epp: I take it from the minister's comments, to confirm what he said earlier, that the extra draw on the federal treasury will bring the projected deficit to $11.5 billion. The minister has mentioned that approximately $340 million or $350 million will be saved in the sense that expenditures will be cut back in that order. Can he indicate, in broad terms, where those savings will take place?


Joseph Jacques Jean Chrétien: Mr. Chairman, the President of the Treasury Board is working on the program. In the letter which was circulated, the Prime Minister gave orders to the various departments to come up with plans for a reduction in expenditures. We are in the process of doing that internally. When the program is completed, the announcement will be made.


Arthur Jacob (Jake) Epp: Will the reduction of approximately $340 million or $350 million be from the expenditures that were deemed to be passed on May 31? I know that some committees kept on meeting after that date. Were those the expenditures from which savings are to take place?


Joseph Jacques Jean Chrétien: We are having to reduce expenditures in the fiscal year 1978-79.


Arthur Jacob (Jake) Epp: I should like to ask the minister the following question: There has been a fair amount of discussion of the fact that the provinces had to go along with the plan, and 1 am not saying whether the plan was good, bad or indifferent. In the past we had what is known as a 50-cent dollar; in other words, the federal government makes cost-sharing arrangements under which the provinces, especially those with lower per capita incomes, simply must take part in the program because of the argument that it is a 50 per cent cost rather than a 100 per cent cost to the provincial treasury.

In this case, one could argue that the federal government was advancing a 66%-cent dollar to the provinces. Has the minister had any consultation with the provinces as to what effect the reimposition of the sales tax will have on Canada's economic situation as we go into the winter months of 197879? It is hypothetical in one sense, and in another it is not; but I wonder what will happen to the Canadian economy when the provinces reimpose the sales tax at its level prior to the April 10 budget.


Joseph Jacques Jean Chrétien: We have looked into that. We felt that reintroduction of the sales tax, if the provinces decide to reintroduce it in mid-October, will come at the time of an increase in sales because of the pre-Christmas period. We have looked at the experience of Ontario which tried that two years ago; that was what started the wheels rolling. We have reason to believe there must be a difference in the economy, sometimes, between what is an investment and what is a non-investment, if production is reflected in the increase from the 83-cent dollar to the 89-cent dollar. This is the kind of push that can get the wheels rolling in the right direction; everyone has recognized that. Of course, when the time comes in the fall when the sales tax is reintroduced by the provinces who need the money, they will not be as completely happy with it as they were to join this program.
I would like to say to the hon. member, who comes from Manitoba, that sales in that province since the April 10 budget have increased substantially. I met someone from Winnipeg the other day, when I was in Toronto to make a speech, who told me that he is a good friend of the minister of finance in Manitoba, Mr. Craik, who said that sales tax revenues are increasing very satisfactorily. As I was saying this afternoon, if increases in sales are in the order of 15 per cent in that period, the province will have recaptured all the money it has invested in the program. This is not so in my case because I am not collecting the sales tax alone; I will lose the revenue completely.


Arthur Jacob (Jake) Epp: Mr. Chairman, it has been my theory all along that excessive taxation acts as a damper rather than a generator of revenue. Very often the government takes revenue out of private hands, thus reducing spending power. Obviously, the provinces will speak on their own behalf at the end of the six-month or nine-month period. The provinces had very little choice because two-thirds of the sales tax savings was to be advanced by the federal government.
Have projections been done, based on the early part of 1979? Generally, retail sales rise in the last quarter as a result of Christmas sales. Traditionally there is a dramatic slump in the first quarter of the year. Are we selling 1979 potential sales in 1978? This could have an adverse effect on the high unemployment and high cost months of the first quarter of 1979.


Joseph Jacques Jean Chrétien: It is not shifting the time of buying. Perhaps that will be the effect in some cases, but that is not the
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intention. Perhaps a person who wants to buy a television, an automobile, or something like that, will do so right away. It is intended to be a boost to the economy. At the present time, there is a difficulty because Canadians are not spending some of their savings. For the third year in a row we have been faced with record levels of savings-11.5 per cent. 1 am not saying that people should not save, but perhaps they should save a little less in order to stimulate the economy.
As the hon. member indicated earlier, the fastest way to get the ball rolling is to stimulate the economy through a reduction in retail sales tax. This is the first time it has been attempted and it is unfortunate that Quebec did not agree. I should like to thank all ministers of finance, except the Quebec minister, for collaborating in this great scheme. Of course, the Quebec minister of finance is attempting to prove that confederation is not working, but I am sure that view is not shared by the hon. member.


Arthur Jacob (Jake) Epp: At the present time there is an income tax rebate in the order of $85 per federal income taxpayer in the province of Quebec, for a total of approximately $186 million. The March, 1977, budget did not stimulate the economy as hoped; therefore, the route employing a reduction in sales tax was taken by the minister. In view of the fact that Canadian savings are at an all-time high, what portion of that $186 million which will be reimbursed to Quebec federal income tax payers will be savings?


Joseph Jacques Jean Chrétien: Mr. Chairman, it is impossible to make such a calculation. We recognize that some people will save their rebates. We hope they will not, but it is impossible to arrive at an exact figure. In January and February there was an income tax cut of $100 because of the mini-budget of October 20, 1977. We realize that some of that money went into savings but we cannot measure precisely the amount; we could only make a guess.


Arthur Jacob (Jake) Epp: The minister's tax cuts took place in January and February, and now taxpayers of the province of Quebec will benefit by another rebate. To what extent will the economy of Quebec be stimulated by the $186 million, as opposed to the $40 million which resulted from direct sales tax cuts on selective items?


Joseph Jacques Jean Chrétien: As I said earlier, I would have preferred it if Quebec had joined the national scheme; there is no doubt about that. But that province did not want to participate in the same manner as the other provinces. As money was left over, we decided to reduce income taxes. That was a second best proposal. Perhaps Quebec feels its selective tax cuts were a better approach. It would have been nice if Quebec had mentioned its proposition during our three weeks of consultation. In that event, perhaps I would have joined with Quebec in believing that they had a good scheme. It was raised as a possibility 48 hours after I had given my word, on behalf of the federal government, to the other eight provincial minister of finance. Thus, we decided to take the second best route by giving a tax rebate.
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Arthur Jacob (Jake) Epp: I should like to return to the situation in Alberta which has been raised by other hon. members. If my understanding of per capita income is correct, Albertans enjoy the second highest in Canada, Ontario being the highest. If a person in Alberta makes "X" number of dollars and has the same family responsibilities as a person in any of the other provinces earning the same amount, what rationale is there for not providing a rebate to an Albertan? He will not receive any income tax or sales tax rebate. Of course, he could not receive a sales tax rebate because he was not required to pay one. But when the rebate was changed to an income tax rebate, a federal taxpayer in Quebec would receive two advantages. First, he would receive the income tax rebate because of his residency in Quebec. Then, if he moved to a province which received the benefit of sales tax reduction, he would receive another advantage.
How can the minister rationalize the statements of the Prime Minister indicating that that is not a special deal, particularly when one considers that residents of Alberta are left out in the cold without either a sales tax or income tax rebate?


Joseph Jacques Jean Chrétien: That answer was given to the committee a couple of minutes ago. We were faced with a situation similar to one in which two individuals made $10,000 each. One paid sales tax and the other did not. We decided to benefit the person who was paying sales tax. I had occasion to call Mr. Merv Leitch in Alberta to indicate that we wanted to cut the sales tax of the province. He indicated that they did not have a sales tax. Thus, my proposition was not feasible. We were interested in assisting those who were required to pay sales taxes. In order to treat everyone equally it would be necessary to have a sales tax system across Canada applied uniformly in each province. One must remember that the residents of the province of Newfoundland pay 11 per cent sales tax on everything they buy, whereas Albertans are not required to pay any. They are not in the same situation. In such a scheme nobody is in exactly the same situation.
The government paid all the costs for the maritime provinces because we felt they could not afford to participate using their own money. We made a special case with Saskatchewan and British Columbia because they had a specific problem. In the case of Alberta, they do not have a rebate because we made money available only to the provinces where there was a sales tax. However, we are very preoccupied with the economy of Alberta; for example, we have given some stimulus to the heavy oil scheme. There is no heavy oil scheme in Nova Scotia, Prince Edward Island or Newfoundland. There is no discrimination against any of the other provinces because heavy oil is found only in Alberta, and probably will be in north Saskatchewan one day. The government wishes to help this type of economy because it is good for the country. There are different situations for different taypayers because there is not the same level across-the-board in Canada. It varies from one province to another.

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Walter David Baker: Mr. Chairman, 1 listened with care to what the minister said, and I wanted to intervene between speakers rather than interrupt an hon. member. In the course of answering the hon. member for Pembina with respect to the time spent on this bill, the minister said there had been 20 days. The minister now indicates he was wrong in that respect. He was covering the budget period as well as this bill. The minister knows full well that the budget time is allotted under the Standing Orders. I do not want there to be any misrepresentation of the factual situation with respect to the time on this bill, however inadvertent it might be. I am sure, too, that the minister would not want to mislead the House in that way.


Joseph Jacques Jean Chrétien: Mr. Chairman, I will be extremely precise: six days on the budget debate, 14 days on this bill. This amounts to about two months of the work of the government because the rest of the time is taken, more or less, by opposition days in this House. We have not yet completed debate because there are two more days to go, and we have third reading. I wish, as the hon. member said earlier, we could import some of the good, British tradition- and for a French Canadian like me to want to import British tradition is something-and have the power to say that the debate will last three or four days. The British do not spend 20 or 30 days on a tax bill. It is my hope that we will import some of the British common sense into this House.


Walter David Baker: Mr. Chairman, I do not know whether that is government policy or not, but it is very interesting. The government seems to be moving in this way and I am delighted to see my friend attracted to British traditions to such a great degree. I know that it has not escaped him, however, that during the course of this bill we have been in the unprecedented position, with respect to a tax bill, to have closure within two stages of the bill within days of one another, or time allocation, to be more precise: but a rose by any other name is still a rose.
I want to make it clear to the minister that he can hold his view with respect to time, as I can mine, but there is only one view with respect to the facts. I am sure it was through inadvertence that the minister was talking in terms of a 20-day debate on this bill. He has now cleared that up and I am grateful to him.
[ Translation]


Léonel Beaudoin: Mr. Chairman since the Quebec government decided not to accept the finance minister's proposal contained in the budget, I would like to know why the minister took exception to Mr. Parizeau's proposal of giving the approximately $200 million difference from the sales tax to the Quebec government? He was to give that money to the Quebec government rather than refunding $85 to some taxpayers.


Joseph Jacques Jean Chrétien: That is very simple, Mr. Chairman. If the hon. member followed the debate, and being a conscientious member, I am sure he did, he will remember that on budget

night we reduced the income tax of taxpayers in the eight provinces party to the program. Quebec did not qualify for the program, except for an equivalent of $40 million which I am ready to pay. It left $186 million on the table. So we reduced the income tax in the other provinces. We are reducing the income tax of Quebec residents. It is as simple as that. We are rebating the federal income tax paid by the taxpayers, since we are not collecting the Quebec government's taxes because there was no collection agreement. If Mr. Parizeau has to increase his taxes tomorrow, the day after, next month or next year, that is his business. Since the time of Maurice Duplessis, it has been important for Quebec to collect its own taxes. Being of the Mauricie region, I am sure that Maurice must have turned in his grave when he saw Mr. Parizeau asking me to collect taxes for him, because that is the greatest sin against autonomy. Duplessis would never have done that. Barrette would never have done that. Sauve would never have done that. Lesage would never have done that. Johnson would never have done that. Bertrand would never have done that, and Bourassa would never have done that.


Roch La Salle: Neither would I!


Joseph Jacques Jean Chrétien: Neither would he. But Mr. Parizeau did. The virginity of Quebeckers was worth $185 million. What do you want me to do about it?


Léonel Beaudoin: Quite so, but you say that you would hand over an amount of $40 million to the province of Quebec in an envelope-


Joseph Jacques Jean Chrétien: Yes.


Léonel Beaudoin: -and they turned it down?


Joseph Jacques Jean Chrétien: Yes.


Léonel Beaudoin: Then they agreed and you are going to hand the money over to them in an envelope?


Joseph Jacques Jean Chrétien: We are going to send approximately $40 million in equal payments for April, May, June, July, August and September. For the rest, we are going to grant a tax cut to all taxpayers. Why have we decided on this method? Because there is no tax collection agreement with the province of Quebec. In the other provinces, the operation was painless. On budget night, I reduced the federal tax by $100. The finance ministers in Ontario or New Brunswick increased their respective taxes by $100. And with the profits they made, they will reduce their sales tax by 3 per cent on all goods for the next six months. However, Quebec refused to go along with this scheme. Quebec did what it wanted to do. When some say that I infringed upon provincial jurisdictions, that is not true. Not at all! In proof of this, Mr. Parizeau did what he wanted, exactly what he wanted, I did not stop him. It was in his jurisdiction. And as for me, I do what I want, that is I cut the taxes of Quebec taxpayers by $85 as soon as possible.
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Léonel Beaudoin: Mr. Chairman, I would like to point out to the minister that I knew the answers to the questions I just asked, but I ask them as the man in the street would ask them now because he believes all the press reports and he says: the federal government has interfered with the provincial government's business, and so forth, he says that Mr. Parizeau is the saviour of New France. I want to know why and where?


Joseph Jacques Jean Chrétien: That is exactly the problem, because everybody got excited as though it were a constitutional problem. Here is what I did: on the very first day I said that the sales tax came under provincial jurisdiction because I phoned the provincial finance ministers I told them: "Gentlemen, you have a so-called sales tax; could I help you to reduce it? I will pay you 2 per cent during six months. If you cut it by 3 per cent for six months, you will pay the difference". Eight ministers of finance said: "Yes, Mr. Chretien, we agree". The discussions went on for three weeks. During those three weeks, the Quebec finance minister, Mr. Parizeau, remained silent. When the agreement was concluded with the other finance ministers, he said 48 hours later: "I do not want that, I want something else. He had missed the boat.


Roch La Salle: The train!


Joseph Jacques Jean Chrétien: It is quite simple. I had given my word to the other finance ministers. It is like the train, but I will not repeat the saying about watching the train go by, but it is as simple as that. It is just as if the hon. member for Richmond were going with ten others. There is a car or a small bus going to Montreal. After the bus has left, someone aboard says: No, I want to go to Quebec city." The others tell him: "Listen, this bus is going to Montreal. We cannot go to Montreal and to Quebec city at the same time." So the one who wants to go to Quebec city has to walk because the bus only goes to Montreal. It is as simple as that. If Mr. Parizeau had been willing to discuss, it would have been all so simple. But I said it before and I say it again: the Quebec government is bent on proving that everything we are doing now is wrong. Even before the paper on the renewal of the Canadian Federation was published, even before he got a copy. Mr. Levesque said: "It is profoundly insignificant". He had not even read it yet.


Léonel Beaudoin: That is what we want to know.


Joseph Jacques Jean Chrétien: As I said, they are bent on proving that federalism cannot work. No wonder! But when I simply proposed to help them cut their sales tax, they all took refuge behind the constitution. There is no constitutional problem at all in all this, there has never been and there will never be. The sales tax comes under provincial jurisdiction, I admitted it and said: "I will help you." It is as if 1 told the hon. member it is his business if he wants to go home. But if I offer to pay two-thirds of his trip, he can tell me to go to hell. Only, if he
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wants to pocket the money, I shall be very happy to give it to him.


Léonel Beaudoin: Mr. Chairman, I should like to tell the Minister of Finance that if he had given the very simple explanation he has just given me also to the journalists, there are still some left who are honest, things would not have been as complicated as they have been with the province of Quebec in the last three months.


Joseph Jacques Jean Chrétien: Mr. Chairman, I agree wholeheartedly. I tried for all I am worth to give that explanation. I was given a chance to explain myself only last week, seven weeks after, when the French network of the CBC invited to me to appear on the program Telescopie for 25 minutes. All that network did until then was to run around the halls and find people who were against the idea.


An hon. Member:: Like the hon. member for Joliette.


Joseph Jacques Jean Chrétien: They avoided the people who were for it. It is as clear as that. It is painful, but that is democracy. I am not complaining too much about it, Mr. Chairman, because it must be remembered that one has to be in good health to put up with a system like that. Let me explain: I am glad to see the hon. member understands and is asking questions so people will understand. I am not personally worried about the people from that point of view. They have a lot more judgment than they are often given credit for and the best proof of that is that in spite of the great controversy over the sales tax our rating increased according to the Gallup poll.


Mr. Roy (Laval):: Mr. Speaker, I want to ask the Minister of Finance a question about the proposal he allegedly made to all provincial ministers of finance to reduce the sales tax by 3 per cent where his contribution would be 2 per cent on all products in all Canadian industries and all retail sales outlets across Canada, in face of the refusal of Mr. Parizeau who preferred a selective sales tax.
Could the minister say whether from the point of view of the collection of a selective sales tax such a collection could pose problems with respect to forecasts or lower revenues because according to what we hear, and I heard it said as recently as this past weekend, some retailers because certain products do not qualify for the sales tax cut in Quebec would want to use other products and thus the province would be deprived of revenues because this would mean a reduced tax base for the province of Quebec and then there could be a danger if the sales tax were less than anticipated that Mr. Parizeau would be tempted to increase his taxes next year and perhaps call it "Chretien's" tax. Could the minister say whether this would make sense, that the selective sales tax cut could result in reduced revenues and an increase in taxes next year in Mr. Parizeau's budget?

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Joseph Jacques Jean Chrétien: Of course, the question is whether the implementation of a selective tax cut from 8 per cent down to nothing will result in an administrative problem to the Quebec revenue department. I do not know. Let me say the temptation is great, and I give you an example, and I say it is very complicated-if you buy furniture there is no sales tax but if you buy a television set there is a sales tax. They say that sometimes people might put down "chair" instead of "television" on a bill. I do not know about this. It is up to the Quebec revenue officials to see to it that the law is obeyed. However, there is a lot of confusion because not all textile products have been exempted: You must pay 8 per cent on drapes, carpets, sheets, pillow cases, but there is no tax on other items such as suits. I have enough problems of my own without solving theirs and deciding how they will collect their taxes.
I do know one thing. When time comes to determine the consequences of all these decisions, it will be very complicated because according to our agreement with the other provinces, we shall have to check how much this has cost them. If a province which had a sales tax of 7 per cent reduces it to 4 per cent, it is very easy to know how much this costs because we shall simply transpose the whole amount of the 4 per cent tax at 7 per cent and this will give us the exact cost. It is a simple mathematical operation. It is easy to figure out. But when you talk about going from 8 per cent down to nothing, you have no data on the amount sold because you have no invoice, no account to the government, no means of control. I am not saying that it was done intentionally, I am simply saying that we have no means of control. This is where the particular problem raised by the Ontario finance minister Mr. McKeough, and his deputy minister, arises namely that according to their own extrapolation they cannot see how a selective tax cut by the Quebec government could cost Quebec $320 or $340 million. They took their own figures and made extrapolations to come to the conclusion that it would cost $250 million. I am caught between both, and as no agreement has been reached with the government of Quebec, I cannot make a judgment, I can only reduce my income tax. The financial critics of the opposition in Quebec will have to see if the Ontario government is right on that. I do not wish to interfere in the administration of the province of Quebec.


Marcel-Claude Roy: Mr. Chairman, has the minister recognized in his statement that the selective tax cuts proposed by Mr. Parizeau could mean a reduction of his revenues, next year and an increase in his next budget?


Joseph Jacques Jean Chrétien: I have no comments to make as the hon. member might come to the conclusion that there are some abuses. I do not know. I do not intend to look for them, but Revenue Canada will check the amount of $40 million at the end of the year. I have no judgment to make. Since the hon. member is asking me questions about the financial situation of the government of Quebec I should point out that I am not the financial critic of the opposition in Quebec, but if I were I
would have fun. In the circumstances I must make my own fun here in Ottawa.


Mr. Towers:: Mr. Chairman, it was fairly obvious that the government -intended to have an election during the period this sales tax reduction was in effect. Now that we are not going to have the election, I wonder if it is the government's intention to continue the program until October 15 or 16 when it will start to expire.


Joseph Jacques Jean Chrétien: Mr. Chairman, we have no such plan at this time. I know the maritime ministers of finance have made some public comments about that. I expect to have a discussion on the effect of the sales tax cut when I meet the ministers of finance on July 7 and 8.


Thomas Gordon Towers: Mr. Chairman, in view of the fact that this program is discriminatory toward the province of Alberta, may I ask if any consideration was given to that province as its minimum wage is about 90 cents an hour less than it was in the province of Quebec when this matter was discussed?


Joseph Jacques Jean Chrétien: Mr. Chairman, would the hon. member please repeat his question? I am sorry, but I missed it.


Thomas Gordon Towers: Mr. Chairman, was any consideration given to the fact that the minimum wage for the province of Alberta is about 90 cents an hour less than it is in the province of Quebec, when the minister had discussions with regard to putting this program in place?


Joseph Jacques Jean Chrétien: It was not under consideration. I had occasion to tell the minister of finance of Quebec at one time that having the highest minimum wage in the world was not conducive to having a very good economic situation in Quebec because having that kind of minimum wage tends to push up all the costs. This was not relative to sales tax at all; it was in another context that I raised that point.


Thomas Gordon Towers: Mr. Chairman, could the minister tell us the effect this payment to the provinces will have on equalization payments?


Joseph Jacques Jean Chrétien: The effect on the equalization payments was one of the problems discussed during the three weeks that we debated with the provinces. We have devised a formula, that is written in the act, by which the equalization payments are isolated from this temporary scheme. This means that the scheme will have no effect on the equalization payments. Some of the maritime provinces were afraid they would lose on equalization payments if we did not to make provision for that. That is another example of the consultations that I had during the three weeks before the budget.


Mr. Clarke:: Mr. Chairman, I wanted to make some remarks at the time of consideration of clause 1, but knowing the minister was nervous about general comments on clause 1 and how he wanted to proceed as quickly as possible to clause 30, I thought he would now like to hear a few of the comments I

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have saved up for this occasion. I am sure the minister has heard some of these comments before.


Joseph Jacques Jean Chrétien: Many times.


William Hillary (Bill) Clarke: I am hopeful I may be able to reiterate in a different way some of the concerns that have been expressed. Particularly, I am concerned about the apparent view of the public and the media who seem to think that this bill has only to do with the provincial sales tax issue. In fact, if one can believe what one hears via the media, it only has to do with the Quebec sales tax issue. It should be obvious to anyone who has been following the debate up to clause 30 that many other issues are covered in this legislation other than sales tax.
It is obvious from the speeches the minister has heard from this side of the House that the emphasis as far as the sales tax issue is concerned has been the unusual payment-which is all I can call it-of the cash refund, a refund of tax paid relative to the 1977 taxation year to the residents of Quebec. I compare that with the remarks of the Prime Minister who earlier in this debate referred many times to the so-called tax room that the federal government has been prepared to give on the 1978 taxation of individuals in Canada.
I am not quite sure how the two relate to one another. The Prime Minister was hard-pressed to explain and he could not understand why nobody else could follow what was happening. It is also obvious that the retail sales taxes affected by the measures of the Minister of Finance are provincial measures and do not have the raison d'etre of this House in respect of their determination. The Minister of Finance has told us all about the consultations he has had with the various ministers. He has told us in a very self-righteous manner how he had almost achieved agreement with the various ministers of finance and, as well, how the province of Quebec let him down in not finally agreeing with his proposal. Not only did the province of Quebec not agree, but the minister tells us they turned around two days after he had made the announcement on his agreement with the other provinces and said they would not agree with the federal government's proposals. I find it difficult to reconcile that with the Prime Minister's great pains to explain on a number of occasions in the Houses that the treatment of all provinces was the same.
The Prime Minister went to great lengths to explain to the Leader of the New Democratic Party that he could not understand how the Leader of the New Democratic Party and other members on this side could not understand how a refund of $85 in cash against the 1977 income tax of certain taxpayers was not the same as allowing tax room-that was his expression-in the 1978 taxation year to provinces other than Quebec. One might be forgiven if he could not understand how that is not the same. But yesterday the Minister of Finance said-and I note the parliamentary secretary is nodding agreement with what I am about to say, and I am glad he is so perceptive-that he had told the minister of finance of Quebec that if he did not go along with the national scheme, the province would not qualify for the same plan as the other provinces. I do not understand-and I hope I may be forgiv-
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en-if the Prime Minister said that all provinces are being treated the same, how the Minister of Finance can tell us, the House of Commons, that the treatment he was prepared to give the province of Quebec was the same as he was prepared to give the other provinces.
The Minister of Finance says he will pay it back to the taxpayers: I think that was the expression he used-he is paying it back to the taxpayers of Quebec who have already paid the money. But he knows, and 1 note that he has been very careful not to say much about this in the current debate, that Quebec taxpayers who do not pay income tax because they are too poor will not receive any benefit from the refunds paid to the taxpayers of Quebec.
I hear my colleague-

-for Brome-Missisquoi and the hon. member for Joliette who have expressed their agreement with-

-my statement.
The minister has indicated how those in British Columbia will benefit. I recognize that the taxpayers of British Columbia will benefit because the federal government is giving tax room, in the Prime Minister's words, to the taxpayers of that province. I also recognize that there is a difference in the treatment being accorded the residents of British Columbia because everybody in the province will benefit through a reduction in sales tax. People in Quebec who are not paying the sales tax will not receive that benefit.
1 said at the outset that there are many issues included in this bill. I draw attention to the fact that some of the other issues touch on personal income tax. Some of these questions were debated as we proceeded to clause 30; some were not. Touching on personal tax, we are dealing with matters such as employee loans, deferred profit-sharing plans, registered retirement savings plans, life insurance in more than one way-I will come back to that in a moment-and the transfer of family farms. I might say another word about that in a moment. There are also measures in this bill dealing with corporation tax, such as surplus stripping and other matters dealing with life insurance companies as opposed to life insurance and the individual.
The minister likes to assure us that everything in this bill is simple, that it will all be understood by the people and that we should have no hesitation in passing his wonderful measures. I want to refer to an article in the April, 1978, CA Magazine. It makes an observation on the 3 per cent inventory allowance which 1 questioned in some detail last time the minister presented us with a bill such as this. I quote from CA Magazine:
The government therefore was introducing an annual allowance, equal to 3 per cent of the tax cost of qualifying inventory on hand at the start of the year, as a deduction in computing income from a business. That seemed simple enough,

June 13, 1978
Income Tax Act
and when the amendment was introduced and eventually passed in the fall of 1977, few people challenged the legislation in terms of whether it was workable.
Most businesses have now completed the first fiscal period for which the inventory allowance applies and the problem areas have begun to surface: basic issues such as what kinds of inventory qualify, under what circumstances and when. That these problems, and the lack of answers, did not come up earlier is undoubtedly due largely to the apparant simplicity of the provision and also to the fact that many people were focusing their attention on timing rather than substance.
I make that reference to indicate that the minister and his officials who sit waiting for something to do should be considering the real effect of that measure, and some of the measues contained in the bill before us, on the business community and individuals before so glibly assuring the House that there is no problem and these matters should be passed quite easily. To support that contention I refer to the tax letter issued on April 10, 1978, by Peat, Marwick, Mitchell and Company, an international firm of chartered accountants which makes reference to the provisions concerning insurance companies. I quote from the tax letter as follows:
An unintended result of the 1977 technical changes would have eliminated from any future deduction for certain life insurers, non-capital losses in existence as at December 31, 1977. It is proposed that such losses be restored as non-capital losses of the 1977 taxation year.
I am a chartered accountant, not a lawyer. However, I think that unintended result was dealt with by the minister in the presentation he made to the House. The point I am making is that the intentions of the minister are so unclear, when we come to clause by clause study, that it is very difficult for us to know exactly what is meant. If it is difficult for us, I am sure it is far more difficult for the average Canadian to know what is intended by the minister.
I think we will be coming to other clauses of this bill which will deal with the individual and insurance policies, in particular insurance policy loan, the difficulty parliament had, the difficulty the individual holder of a life insurance policy had, and probably what the business community and the life insurance industry had in dealing with the provisions for interest on insurance policy loans and the accounting thereof in the last budget. I thought we buried that issue the last time we had a budget debate. I again quote from the Peat, Marwick, Mitchell letter:
It is proposed that interest on policy loans made prior to April 1, 1977, would now be treated the same as interest on such loans made after March 31, 1977, i.e., deducted or added to the adjusted cost base of the policy. In addition, interest paid before 1978 on policy loans will not be included in computing the "adjusted cost base" of the policy at any time after March 31, 1978.
I hope I will be able to ask a few questions of the minister when we come to that clause. I hope the committee will agree that wording such as that, which has caused such confusion to the renowed firm of chartered accountants, Peat, Marwick, Mitchell, really has no place in the legislation we are considering. There are no fewer than two sections of the ways and means motion which deal with interest on policy loans, section 3 and section 15 which purport to deal with the adjusted cost base of a life insurance policy after March 31, 1978.
We dealt with the clauses which touch on the passing on of family farms held by corporations to the heirs. At that time 1

commented on the fact that these farm businesses were accorded different treatment from small businesses in a city constituency such as the one I represent. I also commented that I felt it unreasonable that less than six weeks after the Minister of Finance presented his budget dealing with this kind of transfer and the avoidance or deferment of capital gains tax on farm properties, the Minister of State (Small Business) introduced provisions to provide for the passing on and deferment of capital gains tax in the case of small businesses.
I might also say the minister alluded to this in answering my questions earlier-that the definition of "small business" is completely unclear in the mind of parliament. The minister has not given us the definition that we need. He said that farms are treated differently from other businesses. I want to put on record the fact that businesses which I and other city members might be familiar with are not to be considered small businesses unless they deal with such things as manufacturing, processing, wholesaling, retailing and one or two other restrictive items. The point is that no small business, regardless of its family history, concentration or anything else, will be considered eligible for the passing on of these benefits if it is involved in any kind of service business. Apparently this covers such businesses as real estate and insurance. We are not told why family businesses which happen to render services or be involved in real estate should be excluded from the benefits passed on by the Minister of State (Small Business). However, I recognize we are not debating this topic at the moment; no doubt there will be opportunities to do so.


Roch La Salle: Mr. Chairman, of course I had a few comments to make on this clause. I think it is a very important clause for us members from Quebec. I am sure the minister is aware of that. Mr. Chairman, I would also like to take this opportunity to note that the minister seemed very relaxed during most part of the evening and the day about the answers he had to give, seemingly finding them very simple. The Quebec government, backed by a unanimous National Assembly, was entirely to blame and its proposition was totally wrong.
Even then, 1 think one must-


Raynald Joseph Albert Guay: Mr. Chairman, would the hon. member for Joliette permit me to ask him a question?


An hon. Member:: He is not honourable.


Roch La Salle: Someone dared say I am not honourable, so 1 refuse to allow the question, Mr. Chairman.
1 should like to continue my remarks. I know the hon. member for Levis (Mr. Guay) will surely have time to put the questions he must to the Minister of Finance. Anyway, as 1 pointed out a while ago, Mr. Chairman, the hon. member for Levis went to consult the Minister of Finance. I have a feeling
June 13, 1978

that some arrangement was arrived at on what questions the hon. member for Levis could put and which would perhaps embarrass the Minister of Finance too much. The Minister of Finance would have told him-


Raynald Joseph Albert Guay: Mr. Chairman, I rise on a point of order. The hon. member for Joliette says that I go for my information to the Minister of Finance; I feel that is the best place to go for it; he goes for his to the separatist premier of the province of Quebec instead of going to his leader or to the hon. member for York-Simcoe who is the financial critic of his party, unless he was replaced recently.


Roch La Salle: Mr. Chairman, the hon. member for Levis seems to have been insulted because Premier Levesque did not invite him into his office. I had the great honour, just as the right hon. Prime Minister did of course, of meeting the Quebec premier. Mr. Chairman, for the information of the hon. member for Levis, I should like to add that I told Mr. Levesque that quite a long time had elapsed since 1 had had a cup of coffee with a provincial premier. The last time had been when I had met the late Daniel Johnson, a former premier of the province of Quebec. I do not know why, but some people are blaming me for meeting the Quebec premier, although the right hon. Prime Minister himself has met with all premiers.


Raynald Joseph Albert Guay: He is the Prime Minister.


Roch La Salle: Our leader has met with all Canadian premiers too. The Minister of Finance gets to meet them from time to time, and we have nothing against that, Mr. Chairman. So 1 wonder why the hon. member for Levis once again criticizes the fact that 1 had the pleasure to meet a man who, whether you like it or not, was legally elected in the province of Quebec in spite, of course, of the efforts made by our friends opposite.
Any way, Mr. Chairman, I would still like to make a brief history of this piece of legislation and of this clause in particular. The Minister of Finance made his comments this afternoon, and 1 remember some of his remarks; he talked about the agreement reached with his provincial counterpart. And there, my question is specifically directed to the Minister of Finance. I do not want to repeat it. The Minister of Finance talked about an agreement with his provincial counterpart, so here is my first question: could the minister explain what kind of agreement was reached with his provincial counterpart and when?


Joseph Jacques Jean Chrétien: What agreement?


Roch La Salle: Mr. Chairman, 1 remember and noted immediately that the Minister of Finance talked about an agreement reached with his Quebec provincial counterpart because several members in his party have accused the Minis-
Income Tax Act
ter of Finance of not keeping his word and saying the minister of finance of Quebec had not replied.
I would like to ask him a second question. The Minister of Finance is a man who is surely capable of answering a second question also. I think that in the proposal that was made, in the observations-I do not call that proposals, I call that observations-it seems the minister of finance of Quebec would have hoped for a way of finding a settlement where the federal government could have dealt as between one government and another. And I wonder whether with a little effort at this point the Minister of Finance could tell us if he cannot within the prerogatives that are his come up with a formula which would preserve a very basic principle we have been fighting for for two and half months, a treaty between governments. I imagine the Minister of Finance with the prerogatives his position gives him could come up with something which would be readily acceptable to both sides of the House but would include that basic principle which we and others would also hope for and which Quebec and the National Assembly would accept, I am sure, namely a treaty between one government and another. Could the Minister of Finance clarify that for us?


Joseph Jacques Jean Chrétien: Mr. Chairman, I cannot help laughing when the hon. member is so convinced about the separatist cause. He is already talking of treaties between two governments in Canada, of agreements between governments. When you talk of treaties, you are talking about two independent countries.


Roch La Salle: The government concludes agreements with the provinces.


Joseph Jacques Jean Chrétien: A treaty is between two countries.


Roch La Salle: Let us say arrangements.


Joseph Jacques Jean Chrétien: I would not like to give a lecture in international law but a treaty is between two countries. Very well, but that is because the hon. member's thoughts always have strong separatist overtones. Obviously he could not help using those words. Slips of the tongue like this one can happen. It is very simple. I discussed with the provincial ministers about a possible agreement between provincial governments and the federal government relating to the sales tax. All ministers had agreed that they would be in a position to tell me "yes" or "no" when 1 would phone them in the afternoon of budget day just before tabling my budget. When 1 phoned Mr. Parizeau, he said "I'm not saying either yes or no". But all other ministers had answered yes. Then I claimed, and I repeat it, that Mr. Parizeau had broken a gentlemen's agreement. Some will say it is Mr. Parizeau's word against mine. That is correct. But there is circumstancial evidence. Why would the other ministers have taken the responsibility of answering yes on the very day I tabled the budget if there had not been a previous agreement between all of us? It would be easy for me to satisfy

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Adjournment Debate
any court that there was an agreement between Mr. Parizeau and myself by presenting circumstancial evidence.


Roch La Salle: He did not say either yes or no.


Joseph Jacques Jean Chrétien: All the others said yes.

Progress reported.



PROCEEDINGS ON ADJOURNMENT MOTION

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

Mr. Paul E. McRae (Fort William):: Mr. Speaker, last week I asked a question of the Minister of Consumer and Corporate Affairs (Mr. Allmand) about rising beef prices as reflected in retail outlets. I think we all appreciate the difficulties farmers and beef farmers of this country have faced over the last three or four years. In my own community, many farmers have had to sell off their herds simply because they could not make ends meet: there just was not enough revenue to justify the expense of raising cattle.
I do not think any Canadian would object to a 35 per cent or 40 per cent increase in the price of cattle on the hoof. The price of slaughter cows in Winnipeg between early March and June 3 went up 39 per cent. The price of A1 steers increased by 38 per cent. When I see the increase in retail prices, I do not think this is the problem we are facing: I think there is a very important need for stability in the beef market across the country. I think all Canadians, farmers and consumers alike, could do nothing but gain from such stability.
There are some difficulties. The agricultural industry in this country is divided among provincial jurisdictions. The difficulties in bringing these together are very important. I think these difficulties have some effect on stability. However, there is more to it than that. Just doing some comparisons in retail outlets, I found that the price of ground beef went up from 79 cents to roughly $1.39 in about three months, an 87 per cent increase. I mentioned this figure before. But at the same time the price of cows went from $36.15 to $50.25, an increase of only 39 per cent.
I know there are some variations here, but let us look at it in another way. When the slaughter cow price was $36.15 on the Winnipeg market, ground beef cost 79 cents. That was 119 per cent higher than the price on the hoof. Some of this is explained by the fact that there are bones, loss of water, fat, and so forth. However, when the price went to $50.25 on the hoof, the price in the store for ground beef went to $1.39. That is an increase of 178 per cent. Those are the kind of differences we have to examine.

We can go through the same thing with more expensive beef. The price of T-bone steak went from $2.50 to $3.75, while the price of No. 1 steers went from $49.95 to $68.90 on the Winnipeg livestock exchange, an increase in the price of No. 1 steers of 36 per cent and an increase in the price of T-bone steaks of 50 per cent. I recognize that there may be some variations and it is always difficult when we do not have a large research group to do the kind of things we have to do; but I must say I am suspicious of these increases. We are now out of price and wage controls. In a sense, prices were controlled. Certainly, prices at the processing and retail levels were controlled; but prices at the farm gate were not.
Over a period of two or three years several hundred large companies had to turn money back because they made profits in excess of 90 per cent or 95 per cent of their five-year average. With the phasing-out of these controls coming at the same time as the increase in the beef price on the hoof, which 1 think is justified, some things have happened and we should look at them very carefully.
I would like the minister and the government to take a much closer look at this variation, the difference in an increase of, say, 39 per cent and 87 per cent. That is what I am concerned about. I think it should not only concern the consumer; it should concern the farmer; and I am sure it does because in many ways farmers are being blamed. They should not be blamed because they are getting a legitimate increase, yet the consumer is paying what I consider to be close to robbery.


Mr. Alan G. Martin (Parliamentary Secretary to Minister of Consumer and Corporate Affairs):: Mr. Speaker, I should like to say at the outset that in a very general sense, the Minister of Consumer and Corporate Affairs (Mr. Allmand) does, indeed, share the concern of the hon. member for Fort William (Mr. McRae). This is one reason why last fall the minister, assisted by the Minister of Agriculture (Mr. Whelan), initiated the three-phase food policy conference program which took place last autumn and winter. This is just a beginning. It is the intention of the Department of Consumer and Corporate Affairs, again assisted by the Minister of Agriculture, the Minister of National Health and Welfare and others, to move from this base to work toward the further development of a desirable food policy for Canadians which will give consideration to both the production and consumption ends of the scale, bearing in mind the complexities of moving and processing produce from the time it leaves the farm gate to the point at which it may be purchased by consumers at the local level. This is a long-term program.
As I understand the specific situation at hand, there are two main factors behind the recent rapid increase in the price of cheaper beef cuts such as hamburger and blade roast, relative to the more expensive cuts such as T-bone steaks and sirloin steaks. The first, and principal, factor is the natural unfolding of the beef cycle; the second is the current high level of the export of cows to the United States. Let me explain more fully. The beef cycle has two distinct phases: an expansionary phase
June 13, 1978

and a liquidation phase. Over the past few years we have been experiencing the liquidation part of the cycle, not just in Canada but in North America as a whole. This came after a nearly uninterrupted expansion in cattle herds which started away back in the early 1950s. During this time, beef producers expanded cattle herds nearly every year in response to overincreasing consumer demand. Per capita consumption, mainly in beef, doubled over this period from about 50 pounds in 1950 to more than 100 pounds in 1975 and 1976.
The liquidation phase of the beef cycle is characterized by a high level of slaughterings and low prices for caitle and for beef at the retail counter. Also, during this time the supply of beef from which hamburger and blade roasts can be cut is greater than during the expansionary part of the beef cycle. This is because farmers tend to sell off their cows. Thus, the rapid increase in prices for the lower quality cuts relative to the high priced cuts reflects a turning point in the beef cycle: Canada is facing a tight squeeze on its low-grade beef supply and cow marketings are expected to continue to decrease through 1978. The decline of the Canadian dollar relative to the U.S. dollar has aggravated this situation by making it attractive, at times, for American buyers to purchase Canadian cows which could have been slaughtered in Canada.


AGRICULTURE-REQUESTED INCREASED MILK QUOTAS FOR ONTARIO CHEESE MANUFACTURERS
Mr. A. D. Alkenbrack (Frontenac-Lennox and Addington):: Mr. Speaker, I rise tonight on a matter very vital to our national economy and pursuant to my question appearing in Hansard of June 9, 1978, page 6230, as follows:
Following the recent meeting between the Minister of Agriculture and the Ontario minister of agriculture, has a solution been reached to provide increased milk quotas to Ontario cheese manufacturers who are experiencing a serious shortage of milk in their efforts to supply markets waiting for cheese?
The question of the above date and the S.O. 43 motion of May 31, 1978, moved by myself and seconded by the hon. member for Oxford (Mr. Halliday), arise from strong representations made to me and to my party and our agricultural critic, the hon. member for Elgin (Mr. Wise), and the agricultural committee of the PC party, by the Ontario Cheddar Cheese Association and its member manufacturers regarding the diminishing and inadequate supplies of milk available to the Ontario Cheddar cheese factories.
Also we have received a brief from the Ontario Cheddar Cheese Association, an organization recently formed in that industry. They total at least 32 cheese manufacturing concerns which speak with one voice in the interests of a sound economy for the dairy and cheese producing industries of Ontario. The No. 1 problem in the industrial milk field is the severe shortage of market-sharing quotas for the province of Ontario. This is widely recognized by producer and processor alike. When one couples the MSQ shortage with the specialty cheese market expanding at a high percentage every year, the Ontario Cheddar cheese processor is being placed in an unbearable
Adjournment Debate
situation. Cheddar cheese factories cannot begin to supply the markets which they have developed carefully over long years. Buyers are purchasing a higher percentage of their Cheddar cheese out of the province at the present time.
In 1969, the Murchie-Stewart report advised that several of the smaller plants in Ontario be phased out of operation under the plant consolidation assistance program, and that the remaining plants update their facilities to handle extra milk in a more efficient manner. Most Cheddar factories have spent large sums of money in the past to acquire a greater quota. Now they are faced with the same quota diminishing year after year to the specialty cheese market, at no cost whatsoever to them. The Cheddar processors have virtually no way of expanding their businesses or even holding them at a reasonable level because of this situation. Cheddar plants are running far below their processing capacity during peak milk periods. In the winter months, when monthly percentages go as low as 3 per cent or 4 per cent, this situation becomes critical. The rapidly diminishing milk supply, the variance of monthly milk percentages from a low of 3 per cent or 4 per cent to a high of 14 per cent in May and June, and the fixed overhead costs of these plants place a great deal of the factories in a most undesirable position. Some are facing the prospect of closing their plants for good.
The Ontario Cheddar cheese industry has had a proud and historic record ever since the dairy industry was first instituted in the province. In fact, it was the heart of the dairy industry for a number of years. Ontario has become famous throughout the world for its excellent quality of Cheddar cheese. Now we must ask ourselves whether we will let this great industry wither and die; or will we finally take steps to preserve an industry as much a part of our Ontario heritage as farming itself?
There is one more point I should like to make in the limited time I have. We have a continuing responsibility to see that the Cheddar cheese industry of Ontario obtains its proper and sufficient quota of milk supply. Over the past 20 years, the Canadian government has participated in the amalgamation of cheese factories: it has spent millions of dollars in subsidizing these factories in the succession of amalgamations. Many of the older ones which were obsolete and inefficient, closed. Amalgamation grants were given to the other successor factories which were willing to make improvements and investments in the interest of the economy of the industry. If Ontario's share of the national quota for cheesemaking milk is not increased, we are not supporting past policies; the money put into these amalgamations will go down the drain like so much whey-and perhaps the result will be a bankruptcy of the industry. I, for one, will not stand idly by and see this happen. I am sure the Minister of Agriculture (Mr. Whelan) agrees with me.
When I was in Britain a month ago as a delegate to the CPA conference, I asked assembled members of the British Parliament, in a question and answer forum, why our markets
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Adjournment Debate
for Canadian cheese in Britain were shrinking so drastically. The answers were not very optimistic: they pointed out that Britain was now a member of the EEC and every country of that common market was a cheese producer to some degree. 1 point out to the minister that in this regard it is our duty to watch every facet of the cheese economy in that every member country of the EEC is subsidized in the products they produce and in the export of those products. We can be-and must be-just as astute.
I am not asking that the Ontario Cheddar Cheese Association be subsidized tonight, tomorrow, or ever. All I am asking is that they be given an ample share of our national milk quota for cheese manufacturing only, to create more production for farmers, to protect the investment and the jobs of the men who make Ontario Cheddar cheese, and to supply the waiting markets with their peerless product.
[ Translation]
Mir. Yves Caron (Parliamentary Secretary to Minister of Agriculture): Mr. Speaker, in reply to the hon. member for Frontenac-Lennox and Addington (Mr. Alkenbrack), I shall say that the Minister of Agriculture is not responsible for the rules governing the distribution of quotas among the provinces but rather the Canadian supply management committee. This committee is made up of representatives of the governments and the producers of each province under the leadership of the Canadian Dairy Commission.
The control of the industrial milk production in Canada results from a national agreement whereby each province accepted as a basis the percentage of milk which it produced at that time. The same principle applies for eggs, broilers and all other commodities.
As it is a national scheme, there is no evidence that the Canadian consumers do not get the dairy products of the quality and in the quantities they want. So, there is no evidence that Cheddar cheese is scarce at the national level. The supply is adequate.
As for Ontario and specialty cheeses, the Canadian production which stood at 106.1 million pounds in 1974-75 has gone up to 160 million pounds in 1977-78, or increase of 50.8 per cent.
At the same time, in Ontario, the specialty cheese production has gone from 41.2 million pounds to 62.9 million pounds, which represents an increase of 53 per cent, practically the same as the national average.
Given the Ontario production compared with the Canadian production as a whole, it is obvious that the problem experienced by the Cheddar cheese producers is due to the fact that Ontario has reduced the quantities of milk available for this type of dairy product to the benefit of butter producers. It is therefore a problem of milk movement within the province of Ontario itself and consequently it comes under provincial jurisdiction.

The Ontario request for an increase in its marketing quotas is no different from the requests of all the other provinces. Every province from East to West is asking for increased marketing quotas and every Canadian dairy producer wants an increase in his individual marketing quota, and wonders why he does not get it. The answer is quite simple.
The Canadian government has implemented a stable dairy policy and both the producer and the manufacturer are getting a fair return on their investments and their work.


@Acting Speaker: Order, please! I regret to interrupt the hon. member, but his allotted time is now expired.


CANADIAN CULTURE-IMPORTATION OF U.S. EDITIONS OF CANADIAN BOOKS
David Samuel Horne MacDonald: Mr. Speaker, 1 rise tonight in pursuit of a matter that I raised about five times during the earlier part of this session with respect to a very serious problem that faces Canadian publishers and authors, particularly the two dozen or so authors of this country who are successful enough to have their books published abroad, primarily in the United States. It is a problem, really, affecting whether or not we can be masters of our own house with respect to the adequate protection of writers and publishers in this country. I suppose in some ways it is a classic Canadian dilemma, for 1 know of no other country that has so exposed its writers and publishers to the low-cost selling of wholesale editions of works from abroad as we do.
It is not a new problem, Mr. Speaker, as I pointed out the first time 1 raised this matter on November 18, 1977. As far back as 1972 the Ontario royal commission on publishing gave notification that the relevant provision of the Copyright Act was "unworkable in practice and should be reviewed and clarified. We have known of the very serious situation."
Subsequently, since 1975, the government has been notified directly by the Writers Union of Canada, among others, that thousands of dollars in revenue were being lost to publishers and authors and that we were rapidly destroying incentive for major authors to have their works published here. We have made successive representations to this government. I have raised the matter on a number of occasions in this session, but it has been impossible to get action from the government. 1 find this incredible in view of the fact that the basic solutions are not too difficult.
As a solution 1 have suggested repeatedly enforcement of the law through a test case or a specific amendment to the law in instances that would cover, under the Copyright Act, the kind of exposure we are getting today-this kind of threat, the undermining of the publishing industry and the authors of this country. On November 18, 1977, the Secretary of State said there would be clarification of the difficulties in the very near future. On February 27, he said he would "look into it with the
June 13, 1978

utmost dispatch." On June 6, he said they would be making some announcement about this in the very near future.
On other occasions, the Minister of Consumer and Corporate Affairs (Mr. Allmand) indicated he was also concerned about the problem and would be taking appropriate action. It is quite obvious that he is not prepared to take any action that would involve amendments. As a matter of fact, a fairly straightforward amendment was proposed to the minister by those who represent not only the writers but others involved in his problem, to make the law clear and, in effect, make it say what it is supposed to say and be workable. To this time, the minister-as I understand it-has not taken this matter up with his officials or attempted to draft an amendment. If he has done so, he has not communicated it to this side of the House.
In spite of the offers that have been made informally to pass a specific amendment with dispatch, I do not think any attempt has been made to do so. As far as the powers of seizure by Revenue Canada are concerned, which I believe the minister has indicated might be employed against the sale of remaindered issues, I think it is, at best, an imperfect solution in view of the inevitable and lengthy litigation required before the writers would know if the existing law gives them adequate protection.
We have allowed a situation to develop where the three major book chains in this country, Coles, W.H. Smith and Classic, have opened up the market to the sale of thousands of remaindered editions-American publications of Canadian authors. Initially, only Coles was involved in 1975 when the problem became more acute. By 1977, all three major booksellers who cover a substantial portion of the Canadian market were involved, and virtually nothing has happened.
My specific question tonight relates to the February 27 question I raised in the House, first with the Secretary of State (Mr. Roberts) and latterly with the Minister of Consumer and Corporate Affairs. I referred to the specific instance of one publication, a book intitled The Book of Eve, by Constance Beresford-Howe, published by MacMillan of Canada and on sale in Montreal and Toronto despite being listed for a year and a half under schedule C in response to complaints by both the author and the publisher. Counsel for both Revenue Canada and the Department of Consumer and Corporate Affairs stated they will not take action because they claim schedule C does not specifically encompass books.
In earlier discussions, the Secretary of State and the Minister of Consumer and Corporate Affairs said they might develop a mechanism that would reduce the effective notification period from something like six months to one month. On February 27, the Secretary of State said, "I will look into it with the utmost dispatch." If that is the kind of utmost dispatch we get from the Secretary of State (Mr. Roberts) or from any other minister of the government, these poor authors and publishers will have to wait a mighty long time. The early expression of pious hope or the use of moral suasion on the
Adjournment Debate
three major Canadian book chains seem, to me, to have been abandoned by this government. As yet it appears that we have received no substantial indication of action. I would hope that tonight the parliamentary secretary can give us an indication of clearcut leadership that will now be taken on this very important problem.


Alan Gray Martin: Mr. Speaker, the minister and his officials are well aware of the position advanced by the Writers Union of Canada concerning remainders. What appears on the surface to be a simple, direct problem capable of rapid solution is, however, far more complex than would appear to the hon. member's eye. The writers have available to them the normal civil processes available in all forms of intellectual property law. For a multitude of reasons, they have not fully exploited the benefits available to them under these provisions.
If the government were able and decided to enter directly into litigation, the long-term consequences could be significant indeed. Officials of the department, in conjunction with officials of the Departments of Justice and National Revenue, have been attempting to find a solution to the problem that would permit a judicial review of the existing legislation and, at the same time, relieve the potential financial liability writers would face in bringing the matter to trial. I am pleased to say that we are now close to the solution and in a few days it may be possible to make an announcement to that effect.
One proposal put forth by the Writers Union, and supported in a statement by the hon. member, is for a quick and simple amendment to the existing statute. The minister has considered this and is reluctant to proceed on the matter. In part, this reluctance stems from the fact that the entire copyright law is undergoing comprehensive review which has recently generated more than 90 briefs on proposals made to the government last year. If the government were to make an exception for the Writers Union in this case, it would quickly be inundated with requests for special treatment in a myriad other cases. The benefits of a general and comprehensive review would be lost and the consequences to the long-term welfare of both creators and users of copyright material would be significant indeed.
A careful reading of the proposed amendment mentioned by the hon. member in an earlier communication to the minister raises some doubt as to the central purpose of the amendment. It would appear, to some at least, that the change would not only exclude remainders but the importation of any foreign editions of Canadian authors whether or not they were available in Canada. If this is, indeed, one of the possible outcomes, then Canadian readers and buyers of books could possibly experience a substantial increase in book prices and Canadian authors might expect a decline in sales since there are few, if any, products whose sales are immune to substantial price increases.
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Our objective in revising the copyright legislation is to make it an act that is cognizant of current technology that will afford both users and creators and environment which offers both access and protection without undue cost to either, and this includes an effective solution to the remainder problem that is consistent with these over-all objectives.


Mr. Deputy Speaker:: Order, please. A motion to adjourn the House is now deemed to have been adopted. Accordingly, the House stands adjourned until tomorrow at 2 p.m.
At 10.30 p.m. the House adjourned, without question put, pursuant to Standing Order.

Wednesday, June 14, 1978