1978-04-19

ROUTINE PROCEEDINGS


Mr. Donald W. Munro (Esquimalt-Saanich):: Mr. Speaker, I rise under the provisions of Standing Order 43. The urgency of my motion is related to the uncertainty of the length of this parliament, and its pressing nature is related to the deplorable inflation rate which this government's failure in the economic area has permitted to become one of our nation's major concerns. I therefore move, seconded by the hon. member for Parry Sound-Muskoka (Mr. Darling):
That this government bring forward without delay legislation restoring the basic amount of the war disability pension in accordance with the 1973 formula and for according prorated pensions to widows of veterans where the veteran's pension is less than 48 per cent.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


ANNUAL INCREASE FOR EMPLOYEES-MOTION UNDER S.O. 43
Mr. Stuart Leggatt (New Westminster):: Mr. Speaker, I rise on a matter of urgent and pressing necessity pursuant to Standing Order 43. In view of the fact that the possibility of a federal election call increases daily, in view of the fact that employees of the House of Commons are now three weeks late in receiving notice of their annual April 1 increase, and in view of the fact that the April 1, 1977, increases were in the order of 3 per cent below the cost of living increase for that year, I move, seconded by the hon. member for Timiskaming (Mr. Peters):
That this House instruct its commissioners of internal economy to immediately table salary increases for House of Commons personnel equivalent to no less than the cost of living increase since April 1, 1977.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


RAILWAYS
Mr. F. Oberle (Prince George-Peace River):: Mr. Speaker, I rise on a matter of urgent and pressing necessity and ask for unanimous consent of the House to a motion which seeks to end the uncertainty and the concern of all residents of northeastern British Columbia over the fact that a vital section of the British Columbia Railway may be abandoned.
Having regard to the fact that the entire industrial base supporting the town of Fort Nelson as well as the general area of northern British Columbia relies almost exclusively on the railway for its survival, and considering that the abandonment of this railway from Fort St. John to Fort Nelson would place in jeopardy several hundreds of jobs, and further considering the importance of that section of the BCR in the context of the northwestern rail authority as recommended by Mr. Justice Hall, I move, seconded by the hon. member for Vancouver Quadra (Mr. Clarke):
That the government enter into discussions with the province of British Columbia immediately with the view of applying the resources and jurisdiction of the federal government not only to prevent the abandonment of the British Columbia Railways' northern line but to plan, jointly with the provinces of Alberta and British Columbia, the extension of this rail line to the Yukon and the establishment of certain interchange connections with other northwestern railways, in order to accommodate such industrial development schemes as the Alaska Highway pipeline which are already committed for the area.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.

April 19, 1978
[ Translation]


BANK OF CANADA ACT
Mr. Eudore Allard (Rimouski):: Mr. Speaker, under the provisions of Standing Order 43, I ask for the unanimous consent of the Elouse to introduce a motion dealing with an important matter of pressing necessity.
In view of the fact that current public financing is likely to debit the present and future generations of Canadians towards foreign financiers at the daily rate of $31 million guaranteed by Canadian bonds; considering also that the primary aim of the Bank of Canada is to control credit in the interests of the economic life of Canadians and since the policy of that organization is dictated by the Canadian Parliament, I move, seconded by the hon. member for Bellechasse (Mr. Lambert):
That the House direct the Minister of Finance (Mr. Chretien) to take all necessary steps as soon as possible to have the Bank of Canada Act amended to enable it to grant to the federal government long-term loans guaranteed by Canadian bonds at interest rates based on administrative costs which could help stimulate the Canadian economy.


Mr. Speaker:: Order. 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.


EXTERNAL AFFAIRS
Mr. Dan McKenzie (Winnipeg South Centre):: Mr. Speaker, I rise under the provisions of Standing Order 43. My motion concerns the detention of a family in the Soviet Union. In 1970, Vladimir Slepak applied to Soviet authorities to emigrate to Israel. He was refused permission on the grounds that he had been involved in secret work. Since then, Mr. Slepak has been harassed, refused employment and imprisoned. His wife, who is a qualified radiologist, also has been refused employment. One of their sons has gone into hiding in order to avoid being drafted into the army; another son has fled the country altogether. In view of this totally inhumane treatment, I move, seconded by the hon. member for Portage (Mr. Masniuk):
That this House direct the Secretary of State for External Affairs to discuss with Soviet authorities the possibility of the Slepak family being allowed to leave the Soviet Union and take up residence in Israel.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.



ORAL QUESTION PERIOD


Mr. John C. Crosbie (St. John's West):: Mr. Speaker, I have a question for the Prime Minister. As a result of the first ministers' conference in February it was decided to set up some 22 consultative task forces on Canadian manufacturing with representation from the provinces, business and the federal government. The government prepared a document for them setting out their policies, objectives and comments on the manufacturing sector. I refer to page 11 of that document, which reads as follows:
In the Quebec manufacturing sector the overriding issue is one of adjustment to competitive pressures on the traditional sectors-textiles, clothing, footwear and furniture.
Also, it states that average manufacturing employment in Canada dropped by 34,000 last year, with 30,000 of those a net loss in Quebec in those sectors. My question to the Prime Minister is: In view of these findings by the government as expressed in the government's own official documents, why is the government opposing the suggestion of the province of Quebec that the sales tax be eliminated in the areas of textiles, clothing, footwear and furniture, which would therefore help Quebec consumers in those areas to spend more and encourage those manufacturing sectors and manufacturing employment in Quebec? Why does the government continue to oppose this?


Right Hon. P. E. Trudeau (Prime Minister):: Mr. Speaker, the hon. member has misunderstood the government's position. We have not opposed this; on the contrary, I have said repeatedly that we understood the Quebec government taking these steps to bolster its own particular industry. Therefore, we are not opposing it. Obviously, this is a tax within provincial jurisdiction. They are free to cut those taxes, as indeed other provinces have increased and cut taxes in other areas. We know of one province which has no sales tax at all. This is entirely within the jurisdiction of the provinces.
Not only do we not oppose it, but we supported it in other ways: we have brought in quotas; there are tariffs which exist; there are many measures of direct support from the Department of Industry, Trade and Commerce which have been made to these sectors so that jobs could be created and retained in that area. It is a misunderstanding to say we are opposed to it. What we do say is that if the province wants to do that by its own budget, with its own tax resources, we applaud it. If it wants to co-operate with the federal government in a series of tax measures that will help the whole

April 19, 1978

country and not only industries in one province, then this is what we proposed on budget night.


John Carnell Crosbie: Mr. Speaker, this is federalism so rigid that it is rigor mortis federalism. In this same document the federal government makes the finding that there are particularly difficult problems in respect of textiles, clothing, leather, furniture and shipbuilding concentrated in Quebec; and the government made special arrangements with British Columbia and Saskatchewan to meet their suggestions. The government is using S800 million of the taxpayers' money across Canada to assist in lowering these provincial sales taxes, but the government is refusing to assist Quebec in lowering its sales tax on these items. Now, how-


Some hon. Members:: Sit down.


Mr. Speaker:: Order.


John Carnell Crosbie: Mr. Speaker, my question for the Prime Minister is the following, and I know the hon. gentleman does not like this: How can the Prime Minister justify a special deal for B.C. and a special deal for Saskatchewan, and how can he justify special protection in Newfoundland in respect of clothing and footwear when he refuses to assist in Quebec where manufacturing industries are very hard hit and where, in spite of the federal government's measures, employment has been lost? How can he justify that?


Mr. Speaker:: Order, please. Surely the hon. member realizes that he is putting forward an argument in that question and not searching for information.


John Carnell Crosbie: Mr. Speaker, my question to the Prime Minister is this: Apparently the federal government's policy to assist in maintaining employment in those four industries in Quebec has been a failure and further assistance is needed because 30,000 jobs have been lost.


Some hon. Members:: Question.


John Carnell Crosbie: If the government will not assist Quebec in the way they have suggested, what other measure of assistance will it give for that sector in that province if it will not agree to flexible federalism in this area?


Pierre Elliott Trudeau: Mr. Speaker, of course, I do not agree with the premise. When we talk about flexible federalism, as the hon. member refers to it, we mean federalism in which the federal government and the provincial governments get together-as we did in February-to try to chart a course for the economic future. That is exactly what was done by our Minister of Finance when during a period of three weeks he met with the finance ministers of every province and his officials met with the officials of the finance departments of every province.
That is our position. We believe in co-operation and we have practised it. The other day I offered to put before the House
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and the hon. member the dates and times during which this subject was discussed with the provinces individually and collectively. In so far as helping these particular industries, Mr. Speaker, I just indicated to the hon. member that we have taken several measures, the most recent one in the area of establishing quotas, to protect those very industries.
I would like to hear clearly from the hon. member, on behalf of his party, or perhaps even from the Leader of the Opposition, that they are saying they support the Quebec measure, one which tends to discriminate against the industries of other provinces. I have not heard that yet.


SALES TAX PROPOSAL OF QUEBEC
Mr. Roch La Salle (Joliette):: Mr. Speaker, I would also like to direct a question to the right hon. Prime Minister on that subject. In view of the fact that at a press conference last week the Prime Minister stated that the aim of Quebec's proposal was to undermine federalism, in light also of the large scale support given to the Quebec government for its proposal, both in the National Assembly and by the general public and even by people outside Quebec, would the Prime Minister be willing to reiterate today that all those who believe that the Quebec proposal meets Quebec's special needs, who support that proposal, also want to break up the country?


Pierre Elliott Trudeau: That may be the hon. member's opinion, Mr. Speaker, but not mine. I do not say that those people intend to break up the country.


Roch La Salle: Mr. Speaker, I have a supplementary.
I was referring to a statement made by the Prime Minister who said that the Quebec proposal was of a separatist nature, as the Minister of Finance states in a document which he presented only to his colleagues and which he did not make public. In any case, in the circumstances we admit that the proposal made by the federal government has been accepted by some provinces through special arrangements. How can the Prime Minister refuse to make a special arrangement for a province he knows well, with the problems he is aware of, when he accepted-and we are proud about it-special arrangements with other provinces.


Mr. Speaker:: Order, please. This is exactly a repetition of the question asked by the hon. member for St. John's East.

April 19, 1978
Oral Questions


ELECTIONS
Mr. Edward Broadbent (Oshawa-Whitby):: Considering that a public debate on television would be the single best means, in a modern democracy, for the parties and their leaders to convey their positions to the electorate in an election, I would ask the Prime Minister if he would end the vacillation of his party on this question and accept in principle the offer that has been made jointly by the CBC and the CTV for a public debate in the coming election campaign?


Pierre Elliott Trudeau: Mr. Speaker, the leader of the New Democratic Party tends to forget that this government for three years attempted to get television into the House of Commons, and finally got the support of the other side of the House. We are having debates on television every day that parliament sits and we are going to continue to have these debates in front of the television cameras.
As to what happens during the election campaign, perhaps the hon. member can come around and talk about that when we have decided to have an election campaign.


Some hon. Members:: Hear, hear!


John Edward Broadbent: Mr. Speaker, the master of the half-truth strikes again. The Prime Minister knows very well that it was this party that first proposed televising debates in the House, and that it was his party that took ten years to implement it. I would like to ask him, instead of vacillating on the question, why does he not say now, in advance, than when the election is called-whether it is next week or the week after; whenever- he, as leader of his party, will commit himself in principle to taking part in a public debate on television?


Pierre Elliott Trudeau: Mr. Speaker, for a party that has been wanting to have television for so long-


John Edward Broadbent: Why don't you answer the question?


Pierre Elliott Trudeau: Why did the hon. member make a preamble if he does not wish me to comment on it?


Some hon. Members:: Oh, oh!


Pierre Elliott Trudeau: I have not noticed that any of the provincial governments which are headed by the NDP have introduced television into their Houses. Is there some fear there?


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: I repeat, if the hon. member wishes to make plans for the coming election, he can make plans if he wants. As far as we are concerned, we have an order paper, we have bills to pass, and we will discuss the election when the election is called.


Some hon. Members:: Hear, hear!


John Edward Broadbent: The Prime Minister, Mr. Speaker, is as coy as ever. Considering the fact that the senior officials in his party know that if the election is to take place in late June or early July, they must know within a matter of days, in terms of their scheduling, whether they can arrange such a debate, does the Prime Minister not recognize that his backing away from such a debate makes it quite conceivable that it will not take place in the future?


Mr. Speaker:: Order. The hon. member for Bellechasse.


ANNIVERSARIES
Mr. Adrien Lambert (Bellechasse):: Mr. Speaker, my question is directed to the hon. Secretary of State.
Considering that several municipalities will celebrate their tricentennial in June or early July, which is an uncommon event in the life of a municipality, and that the program Festival Canada is under his jurisdiction, could he tell the House whether he has made plans to enable these municipalities to benefit from Festival Canada?


Hon. John Roberts (Secretary of State):: Of course, Mr. Speaker, the purpose of the Festival Canada program is to celebrate Canada's birthday, not particularly those of municipalities. In view of the hon. member's representations, however, I will look into the matter and examine any cases that he brings to my attention.


GATT NEGOTIATIONS RESPECTING AGRICULTURE
Mr. Jack Murta (Lisgar):: Mr. Speaker, I would like to direct a question to the Deputy Prime Minister who I believe is in charge of answering questions in the House in connection with GATT negotiations. We on this side are concerned that during the GATT negotiations the government may sell out Canadian agriculture.
Since a number of very serious problems are still outstanding, one being the Japanese non-tariff barriers which, while reduced to manufacturing, are still very high with respect to Canadian agricultural products, specifically livestock and processed oilseed products, what position is the government taking to get the non-tariff barriers removed on trade with Japan?
April 19, 1978

Hod. Allan J. MacEachen (Deputy Prime Minister and President of Privy Council): Mr. Speaker, in a general way the question of non-tariff barriers and their elimination is featuring more prominently in this GATT negotiation than any previous negotiations. It is one of the objectives to achieve a reduction of these non-tariff barriers on all products that are impeded by these devices.


Jack Burnett Murta: Mr. Speaker, that was no answer at all. We all know that one of the reasons for this round of talks is to try to reduce non-tariff barriers. I am speaking specifically about agriculture. Many people in this country are concerned about it. If the minister does not know the answer, I wish he would tell the House. Another area we are very concerned about is greater access to the European Common Market for grains, dairy products and oilseed products. Can the minister inform the House what position our negotiators are taking on the question of access to those markets?


Mr. MacEachen:: Mr. Speaker, as the hon. member knows, Canada has already tabled its requests and its offers in the field of agriculture before its partners at Geneva, and other participants in the negotiations have done likewise. As I indicated in a reply to a question asked two days ago, at the present time participants in the negotiations are examining these proposals and counter-offers, seeking improvements or adjustments. It is not possible to make these offers public, however, because in accordance with the practice they are confidential to the negotiators.


Jack Burnett Murta: Mr. Speaker, a final supplementary question. I am really asking the Deputy Prime Minister if he will inform the House in a general way, taking Japan and the European Common Market as two instances, how we are moving toward the lowering of non-tariff barriers. Is this something we are firmly committed to as a government?


Allan Joseph MacEachen: Mr. Speaker, our objective is greater access for Canadian agricultural products to other markets and securing that access whether in the form of removal of tariffs or non-tariff barriers. Certainly, one of our objectives is greater access to the agricultural markets of the world.


THE CANADIAN ECONOMY
Mr. Sinclair Stevens (York-Simcoe):: Mr. Speaker, in absence of the Minister of Finance, who I understand is taking a sabbatical in the west, I will direct my question to the Prime Minister. It centres on the manufacturing sales tax at the federal level that the government has left in place notwithstanding the budget brought in on April 10.
Would the Prime Minister indicate if consideration has been given by the government to reducing the 12 per cent federal manufacturing sales tax in Canada, bearing in mind that 12
Oral Questions
per cent means that next to Pakistan we have the highest such tax of any country in the world?


Pierre Elliott Trudeau: Mr. Speaker, I am surprised that the hon. member does not know that the Minister of Finance is in Vancouver to attend meetings of the Inter-American Development Bank. These meetings are attended by ranking bankers of the world, and he has been elected chairman of that meeting. It is a pity that the economic critic for the opposition does not understand the importance of international developments on economic affairs in Canada.


Sinclair McKnight Stevens: Mr. Speaker, my question is to the Prime Minister. I might add it is a pity his Minister of Finance does not understand the consequences of our economy in Canada.
With respect to the manufacturing sales tax, is any consideration being given to reducing this tax, which at 12 per cent means that we are tied with Tanzania and Ghana as far as our tax level is concerned, bearing in mind it is regressive? In short, you would not get tangled in the meat-grinder as you are with the provinces if you had chosen to reduce that tax as opposed to the provincial sales tax approach which you took.


Pierre Elliott Trudeau: Mr. Speaker, the hon. member is making comparisons with other countries, and he knows how misleading that can be. He knows that many other countries have turnover taxes and rollover taxes. They do not have this same kind of federal sales tax, but they have the equivalent and it is much higher in other countries. I am surprised the hon. member is not informed of that.


An hon. Member:: It is not true.


Pierre Elliott Trudeau: In so far as why we chose the sales tax rather than the federal tax, it was for a very simple reason, Mr. Speaker. One reason which should be convincing to the hon. member is that this is the form which was judged best by the treasurer of Ontario, and it was supported by every other provincial finance minister. That is a good enough reason.


Sinclair McKnight Stevens: Including Parizeau?


An hon. Member:: Talk to Darcy.


Sinclair McKnight Stevens: Mr. Speaker, my final supplementary question is to the Prime Minister. Is the Prime Minister aware that with the sales tax level in Canada being approximately 20 per cent higher than that in the United States, it results in a Canadian having to earn, say, $44,000 to have the same take-home pay that an American has at $27,000 after tax? If he is aware of that, is any consideration being given to removing some of the double-taxation that exists in this country among the federal, provincial and municipal levels?


Pierre Elliott Trudeau: Mr. Speaker, it is quite obvious that these are arguments that the hon. member has just thought about. If he had thought about them, he could have made these points during the budget debate.

April 19, 1978
Oral Questions


An hon. Member:: What is your answer?


Pierre Elliott Trudeau: He has lost his chance of speaking now and he is trying to crowd in a new part of the debate. These are arguments, Mr. Speaker. We have been debating the budget, and we will continue to speak about it for the next two days-


Sinclair McKnight Stevens: When are you going to speak?


An hon. Member:: You haven't spoken yet.


Pierre Elliott Trudeau: If the hon. member has good suggestions and he can get some of his colleagues to believe they are as good he thinks they are, maybe he can crowd them into some of their speeches; but I doubt it.


HIGH LEVEL OF INFLATION
Hon. George Hees (Prince Edward-Hastings):: Mr. Speaker, I have a question for the Prime Minister.


Some hon. Members:: Oh, oh!


George Harris Hees: Just wait, boys; here it comes. As inflation is just below 9 per cent and has been going up steadily, giving every indication that it will continue to rise, and as this parliament gives the indication it is about to end with a general election to be held, would the Prime Minister undertake to give this House one last exciting demonstration of how he wrestles inflation to the ground?


Some hon. Members:: Oh, oh!


ENVIRONMENTAL AFFAIRS
Mr. Jean-Robert Gauthier (Ottawa-Vanier):: Mr.Speaker, my question is addressed to the Minister of State (Environment). Recent press reports concerning pollution levels in the Ottawa River indicate that a federal-provincial study by the Ontario, Quebec and federal governments has found very high levels of phosphorous and mercury in the Ottawa River system.
Considering that this report has not been made public as yet, and that there are serious health implications for all communities depending for their water supply on this river system, can the minister tell the House if he has received such a report and, if the answer is in the affirmative, when does he intend to make it public so that it can help speed up the provision of better pollution control of the Ottawa River?


Hon. Len Marchand (Minister of State (Environment)):: Mr. Speaker, I am aware of this particular report. We are consulting with the minister of environment for the province of Quebec about certain aspects of the report. He made some comments about the accuracy of some of its contents. I expect

to be hearing from him again very soon. We will be making the report public.


ADMINISTRATION OF JUSTICE
Mr. Bill Clarke (Vancouver Quadra):: Mr. Speaker, I hope my question will illustrate the tenacity required to get an answer from the Minister of Justice. Eight weeks ago I asked the minister about the act to establish an inflation monitoring agency. At that time he said he would have to find out the answer. Two weeks ago he said, after notice, that he had undertaken to get the information and that he would get it immediately and supply it. Last week his office said-


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


William Hillary (Bill) Clarke: I want to ask him again, who instructed Mr. D. Maurais to draft this bill and who authorized its release across the country?


Hon. Ron Basford (Minister of Justice):: Mr. Speaker, I am amazed at the hon. member's tenacity about trivial points. This, of course, is characteristic of his record in his riding-


Some hon. Members:: Oh, oh!


An hon. Member:: At least he is going to run again.


Some hon. Members:: Oh, oh!


Stanley Ronald Basford: The draft bill to which the hon. member refers was drawn up by an officer of my department on the instruction of officers of the Department of Finance. It reflected, in part-I emphasize, in part-a cabinet decision that we obviously had to prepare various proposals dealing with withdrawal from the control program. The instructions issued to the drafting officer went beyond the cabinet decision. It was a draft supplied to the Department of Finance whose officers discussed it, in the new climate of federal-provincial relations that exists in this country, with provincial finance officials.
Obviously, the draft bill to which the hon. member refers does not reflect government policy in terms that we have introduced other legislation, and as a result of close federal-provincial co-operation and discussion we have arrived at different agreements for the post-control period.


William Hillary (Bill) Clarke: Mr. Speaker, I am shocked that the minister thinks that draft bills floating around the country are such trivial issues. Is the minister telling the House that the Minister of Finance lied to the committee when he said that he did not know anything about this bill, and the Minister of Justice now says that it came out of the Ministry of Finance?


Stanley Ronald Basford: Mr. Speaker, I do not know my colleague's statement in the finance committee. It is conceivable, as far as
April 19, 1978

I know, that the draft bill to which the hon. member refers was never reviewed by ministers because, as I say, it never represented government policy.


RECOMMENDATION LEGISLATION COVERING RAPE BE AMENDED
Stuart Malcolm Leggatt: Mr. Speaker, my question is directed to the Minister of Justice. It concerns the report of the federal Advisory Council on the Status of Women which recommended that the subject of rape be dealt with in the Criminal Code by being placed in a different category from sexual offences, to emphasize the violent nature of the offence rather than the sexual nature of the offence.
Can the minister advise the House what action he proposes to take with regard to that particular recommendation? Could he also advise whether the Law Reform Commission made a similar recommendation to him?


Stanley Ronald Basford: Over the past two years since the last amendment to the Criminal Code with regard to rape which represented a considerable advance in the law, we have been receiving representations and doing studies as to changes in the law. When those changes are proposed, they will be made public.


Stuart Malcolm Leggatt: Mr. Speaker, we have had a substantial increase in reported rapes and we continue to have a low conviction rate for that particular crime. The Law Reform Commission have recommended a change in terms of crossexamination techniques for the victim. There is still a continuing problem that the exploratory nature of those cross-examinations is making the complainant the victim rather than the person who committed the offence.
Given the fact that there are recommendations from both the federal Advisory Council on the Status of Women and the Law Reform Commission to de-emphasize the sexual nature of rape, and also that rape crisis centres continue to be inadequately funded, can the minister advise whether there will be additional funding for rape crisis centres in view of this problem? Can he give us a time schedule as to when we can expect legislation with regard to these very worth-while recommendations that have come before him?


Stanley Ronald Basford: Mr. Speaker, with regard to the hon. member's remarks about there being a higher complaint rate, 1 think part of the reason for that is attributable to the amendments we made in the last session easing the burden of cross-examination of the complainant and the amendments which were made to encourage complainants to come forward and lay a complaint and have a charge prosecuted.
With regard to rape centres, I appreciate the immensely valuable work they are doing. However, with regard to their funding I can make no commitment because essentially the funding of those centres is a provincial responsibility for the provincial attorneys general. With regard to a time schedule as
Oral Questions
to changes, I am not in a position to give that information at this time. We have been carefully studying and analysing the proposals we have received from the Status of Women committee, the rape crisis centres and the Law Reform Commission. When we are ready to propose changes in the law, as I indicated, they will be made public.


TOURISM
Hon. W. G. Dinsdale (Brandon-Souris):: Mr. Speaker, my question is for the Minister of Industry, Trade and Commerce. It relates to the tourist insert in Reader's Digest entitled, "Canada ... it'll never cease to amaze you", a publication designed to promote tourism in Canada, keep the Canadian dollar at home and support national unity. Inasmuch as the eastern edition neglects the west and the western edition neglects the east, will the minister advise why his department, the tourist and publicity branch, reinforces east and west balkanization in this way?


Hon. Jack H. Horner (Minister of Industry, Trade and Commerce):: Mr. Speaker, a number of editions of various magazines are put out across Canada. The whole idea is to make Canadians more aware of this great country. There may have been incidents, as the hon. member has suggested, but in other papers there has been a complete mix of both parts of Canada.


Some hon. Members:: Hear, hear!


Walter Gilbert Dinsdale: Did budget cutbacks after the project was well under way force drastic changes in the text of the booklet that contained the errors and omissions pointed out recently by the hon. member for Carleton-Charlotte, whereby Fundy national park was placed in Nova Scotia, rather than New Brunswick-errors and ommissions that are detrimental rather than helpful to tourist promotion? What is the minister doing to correct this situation?


John (Jack) Henry Horner: There are a number of typographical errors in the book, which we regret. One was pointed out by the hon. member for Moncton. There is one that has not yet been pointed out by any member opposite, but which I noticed. We are making an attempt to have these corrected.


EXTERNAL AFFAIRS
Mr. John A. Fraser (Vancouver South):: Mr. Speaker, my question is for the Secretary of State for External Affairs. As the minister knows, for some years there has been a debate over the flooding of the Skagit Valley, British Columbia, by

April 19, 1978
Oral Questions
Seattle City Light. I understand the minister has received a communication from the association opposing that flooding, suggesting that because the American northwestern United States now need our power and we have a surplus of electric power, this could be a lever to use against Seattle City Light in the sense of encouraging them to make a settlement with the province of British Columbia so that that valley will not be flooded. Can the minister report to the House what he is prepared to do and what the situation is in this regard?


Hon. Donald C. Jamieson (Secretary of State for External Affairs):: Mr. Speaker, I thank the hon. member for bringing it to my attention, and tell him quite frankly that I have not yet seen those reports personally. They may be in my office or in the department. I will undertake to make inquiries and respond to him as quickly as possible.


SOCIAL SECURITY
Mr. Louis Duclos (Montmorency):: 
INDIAN AFFAIRS
Mr. Bob Brisco (Kootenay West):: Mr. Speaker, I have a question for the Minister of Indian Affairs and Northern Development. In light of the fact that the minister is withholding $1.7 million from the National Indian Brotherhood and $28 million is being held back while the Beaver report is before Treasury Board, is the rationale for these

actions due to the fact that the National Indian Brotherhood has withdrawn from the cabinet consultative committee, or is it because his own department's administration is in chaos, with a 17 per cent increase in the cost of administration and a multimillion dollar deficit in his budget for the province of Saskatchewan?


Hon. James Hugh Faulkner (Minister of Indian Affairs and Northern Development):: Mr. Speaker, that question demonstrates that the hon. member is totally confused. The only way I can reasonably deal with his problem is to talk with him privately.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


Robert Hylton Brisco: In light of the minister's answer, it is obvious he is trying to hide the fact that his department is in a chaotic state. If the minister is in serious difficulty with the National Indian Brotherhood over the lack of auditing controls within his own department, and the multimillion dollar deficit in Saskatchewan, is that the reason he is not prepared to bring his estimates before the standing committee and let us look at the can of worms he is afraid of?


Mr. Speaker:: Order, please. Surely that question is argumentative.


ROYAL CANADIAN MOUNTED POLICE
Mr. Allan Lawrence (Northumberland-Durham):: Mr. Speaker, my question is to the Solicitor General. Some time ago an RCMP investigation was started into a rather strange series of transactions sponsored by the Department of Supply and Services, called Project Iran. My understanding is that it involved the sale of certain military supplies to the royal imperial government of Iran, and that the RCMP investigation related to the payment of certain agency fees and commissions involved in that sale. Has that RCMP investigation been completed?


Hon.   J.-J. Blais@Solicitor General: Mr. Speaker, I am not familiar with the allegation the hon. member is advancing. I will look into the matter and report to him further.


Allan Frederick Lawrence: If the minister refreshes his memory about this matter, he will see that some members on this side of the House have been aware of certain matters relating to this transaction for some time. We have been unwilling to speak about it publicly because we did not want the allegation made that we were in any way impeding a police investigation into the matter. It should not take the minister very long to find out if the police investigation is still proceeding. Can he undertake to let us know within a day or so whether that investigation is still proceeding?
April 19, 1978


Mr. Blais:: Mr. Speaker, I was not aware that hon. gentlemen were aware, because the hon. gentleman opposite did not previously make any of the allegations which have been advanced publicly known to me privately. I have not been very far away from the hon. gentleman and if he was serious about keeping this matter private for the purposes of investigation he could have made a previous effort to apprise me of the allegations.


POST OFFICE
Mr. Leonard C. Jones (Moncton):: Mr. Speaker, my question is directed to the Postmaster General. I would like to know when the restrictions on house to house mail delivery will be removed.


Hon. J.-Gilles Lamontagne (Postmaster General):: Mr. Speaker, I have already answered that question repeatedly. Though we are in the process of revising the whole postal policy with regard to door-to-door delivery, I think it would be hard to do better than we are now doing, for lack of the required financial resources.


EXTERNAL AFFAIRS
Mr. Lloyd R. Crouse (South Shore):: Mr. Speaker, I wish to direct a question to the Secretary of State for External Affairs. The Law of the Sea conference convened in Geneva on March 28 and it is scheduled to adjourn, I believe, one month from today.
In view of the importance of this conference to the people of Canada, especially those living in Atlantic Canada, I ask the minister whether any progress has been made on a number of substantive issues which are before the conference, such as a nickel production ceiling on seabed mining, a definition of the outer edge of the continental margin and the related matter of revenue-sharing in respect of seabed resources between the 200-mile limit and the edge of the margin, as well as establishing a regime for the prevention of marine pollution within the 12-mile territorial sea and the 200-mile economic zone, a problem which I am sure the minister is well aware has been highlighted recently by the Amoco Cadiz oil spill off the coast of Brittany.
Hod. Donald C. Jamieson (Secretary of State for External Affairs): Mr. Speaker, I regret very much to tell the House
Oral Questions
and the hon. member that the current session of the Law of the Sea conference had produced very little up until at least the past few days, primarily because of a procedural dispute between the various groups of the more than 100 countries involved with regard to the matter of the role of the secretary general: I believe that this is his official title. In any event, much of the time to date has been preoccupied with this particular issue, with the result that not very much by way of substantive discussion has taken place on all of the matters to which the hon. member refers.
I can tell him, however, that in informal discussions and intercessional meetings of various groups a number of proposals are shaping up. They are tentative and therefore I am still hopeful, now that the matter of the role of the secretary general has been clarified, that they can make progress rather quickly in the weeks which are left. However, it is a matter of record and, I repeat, of regret that up until the present time not very much has been done. As a result, I am personally worried, and the government, and I am sure hon. members are worried, about the fate of the conference.


CANADA PENSION PLAN
Mr. Perrin Beatty (Wellington-Grey-Dufferin-Waterloo):: 
Henry Perrin Beatty: 
Henry Perrin Beatty: Mr. Speaker, my concern did not arise from a newspaper article; it arose from the fact that in recent days

April 19, 1978
Oral Questions
four of my constituents have suffered through serious backlogs because this government cannot administratively solve problems regarding applications for Canada Pension Plan disability pensions.
Can the minister confirm to the House that the branch of her department which processes disability pension applications has been seriously understaffed for a year and a half? Also, can she tell the House what advice should be given to applicants for disability pensions who have run into problems because their unemployment insurance disability benefits run out after 15 weeks and they are left waiting longer than three months before the government processes their applications for disability pensions?


Miss B6gin:: Mr. Speaker, in the circumstances I think the best answer I could give would be to ask all hon. members or members of the public who know of any cases, to let me know. People will work overtime as much as is needed to solve the problem of the backlog which has arisen in some regions of the country.


HEALTH AND WELFARE
Mr. David Orlikow (Winnipeg North):: Mr. Speaker, 1 would like to direct a question to the Minister of National Health and Welfare. In view of reports yesterday that the number of employables on welfare in cities such as Hamilton, London, Sudbury and Peterborough has increased by 40 per cent to 50 per cent in the last year, and in view of the difficulties this will cause the people concerned and the cities in which they live, will the minister discuss with the Minister of Finance the possibility of the federal government's re-establishing a program of special grants to cities to help them meet these extra costs which are brought about for reasons over which they have no control?


Monique Bégin: Mr. Speaker, I do not think the question should be addressed to me. Welfare is a provincial responsibility and questions of policy should be put to Mr. Keith Norton. Mr. Norton has not raised this problem with me. If the hon. member wants me to answer questions on the general state of the economy, he is playing a game.


David Orlikow: Mr. Speaker, the problem of employables who are on welfare is not a problem solely in Ontario, as I am sure the minister knows. The problem regarding employables on welfare is caused to a large extent by the failure of the federal government to do something about creating employment. I think the minister cares about people, so I am asking her to discuss with the Minister of Finance whether Ottawa should not be sharing the increased cost of welfare in cities.


Monique Bégin: Mr. Speaker, we have just reached quite a significant agreement regarding financial arrangements with the provinces. The money involved is Canadian taxpayers' money. Under the agreement the provinces can set up whatever programs they think appropriate to cope with regional and local problems. Some provinces, such as New Brunswick, have developed programs which integrate manpower possibilities, services and welfare so that people on welfare rolls can be employed. It is not my fault if the government of Ontario decided not to go that route.


THE BUDGET
Mr. Joe Clark (Leader of the Opposition):: Mr. Speaker, my question is to the Prime Minister. I hesitate to interrupt his conversation. I wonder if the Prime Minister is in a position now to tell the House of Commons whether the Government of Canada has initiated or is involved in any discussions at the moment with the government of Quebec regarding any changes in formula with respect to the sales tax measure introduced in the budget which might ensure the full impact of that provision upon the province of Quebec.


Pierre Elliott Trudeau: Mr. Speaker, the hon. member knows we always hoped that the full impact would be felt in the province of Quebec, and we have indicated that we are prepared to discuss that. As a matter of fact, we discussed it for three weeks before the federal budget. It is possible that the Quebec government may want to suggest something further. I am not aware of any further proposition which the government of Quebec has made.


Charles Joseph Clark: Mr. Speaker, once again the Prime Minister did not answer the question. I would like to try him on another matter of economic policy which has particular impact in the province of Quebec. In debate the other night, the Minister of Finance indicated that the drafting of Bank Act revisions has been completed and the only problem is translation. In other words, the policy is set. Is it the policy of the Government of Canada to include in the Bank Act caisses populaires and credit unions?


Pierre Elliott Trudeau: Mr. Speaker, of course, these two institutions would be included in the Bank Act. I presume the Leader of the Opposition would like to know what is said about that. The usual practice would be for him to see the bill at first reading.


Mr. Grafftey:: Preferably after the election.
April 19, 1978


POINT OF ORDER
James Hugh Faulkner: Mr. Speaker, I rise on a point of order. During the course of the question period the hon. member for Kootenay West (Mr. Brisco) misled the House; I will not say that he did so intentionally. He repeated the assertion he had made outside the House that I had refused to appear before the parliamentary committee dealing with my estimates.
The facts are these. My estimates have been before that committee since March 1. The committee has not met and it has not issued an invitation to me. I would have appeared before the committee had I been asked.


Some hon. Members:: Oh, oh!



ROUTINE PROCEEDINGS


Mr. James A. McGrath (St. John's East) moved:: That the Third Report of the Standing Committee on Justice and Legal Affairs, presented to the House on Wednesday, March 22, 1978, be concurred in.
He said: Mr. Speaker, it is not our intention to debate this motion. Indeed, we would like to see it receive speedy concurrence by the House. It has been on the order paper now for almost one month, since March 22. We have been waiting for the Minister of Justice (Mr. Basford) to be ready to proceed with the debate, and we feel that he has now been given sufficient time to make a statement or else that there has been sufficient time to allow the House to express itself on the recommendations in this unanimous report, the third report of the Standing Committee on Justice and Legal Affairs.
May I say, by way of historical background, that the report arises out of an order of reference of the House dated November 18, 1977, by which the House referred the subject matter of the following private members' bills: C-206, C-207, C-239, C-241, C-318, C-325, C-348, C-399, C-400 and C-402. All these bills deal with the question of pornography and suggest amendments to the Criminal Code to provide a more precise definition of pornography or obscenity and to provide for stricter penalties.
Very briefly, the committee held a number of hearings and heard witnesses.


Mr. Speaker:: Order, please. The hon. member for St. John's East (Mr. McGrath) has the floor.
Justice and Legal Affairs


James Aloysius McGrath: Thank you, Mr. Speaker. I was saying that the committee held a number of hearings, heard witnesses from all across the country, chiefs of police from the major cities of Canada, representatives of the churches, and representatives of the scientific and academic communities, and as a result of the evidence and of examining some of the more blatant forms of hard pornography that are in fact being smuggled into the country as part of the underworld system of distribution of this kind of trash, the committee came to the unanimous conclusion in the form of its recommendations that there should be major changes in the Criminal Code. It recommended also a new definition to deal with the subject of pornography and, more particularly, the exploitation of children in this manner.
I want to pay tribute to the hon. member for Windsor-Walkerville (Mr. MacGuigan), the chairman of the Standing Committee on Justice and Legal Affairs.


Some hon. Members:: Hear, hear!


James Aloysius McGrath: He is an outstanding parliamentarian and has demonstrated that he is able to preside over a committee with fairness and impartiality. I wish some of his colleagues opposite would emulate that kind of performance.


Some hon. Members:: Hear, hear!


James Aloysius McGrath: I can assure my colleagues opposite, such as the hon. member for Ottawa-Vanier (Mr. Gauthier), that if they were to take a page out of the book of the hon. member for Windsor-Walkerville, we would get much more work done in committees, and committees of the House would become much more productive.


Some hon. Members:: Hear, hear!


James Aloysius McGrath: I commend this unanimous report to the House and I hope that the House will give it speedy concurrence. We expect that if the House does concur in the unanimous recommendations of the committee, ultimately the Minister of Justice will do his duty and bring in a bill reflecting the recommendations of the standing committee.


Some hon. Members:: Hear, hear!


Stanley Ronald Basford: Mr. Speaker, may I reply briefly to the hon. member's remarks in moving concurrence of this report. Without in any way getting into a contretemps, may I say that I had hoped I might have more notice that this report would be called at three o'clock today. However, I want to second the hon. member's remarks regarding the hon. member for Windsor-Walkerville (Mr. MacGuigan), the chairman of the committee, and I want to compliment both that hon. member and all members of the committee on the work that they did in committee on the subject of pornography, which has concerned all members of the House and which certainly has been of great concern to myself and to my officials as well as to officials of the Department of National Revenue who are responsible for policing of the Customs Act. Also, it has been of great concern

April 19, 1978
Justice and Legal Affairs
to provincial attorneys general with whom I have discussed this subject on a number of occasions, and to local police forces who are responsible for the enforcement of laws at the local level.
The committee has done a great deal of work and its report is a valuable document. Therefore, we on this side will be supporting the hon. member's motion. However, in doing so I want to place several caveats on the record. As the committee has been advised, and as I have been advised by a formal communication from the provincial attorneys general, they would not like to see this subject legislated without having the opportunity to make further representations. We discussed this matter at the federal-provincial meeting of attorneys general last fall. The provincial attorneys general had a further discussion on the subject and they indicated to me that they wanted some changes made but that they would forward to me their concrete proposals.
During the course of the committee's hearings and proceedings I received a communication from the provincial attorneys general to the effect that they wanted to discuss changes in the law relating to pornography, first, at the federal-provincial conference of attorneys general to be held in July and, second, at the meeting of the commissioners of uniformity which will be held in August. Ever since I have been Minister of Justice I have introduced amendments to the Criminal Code only after consultation with provincial attorneys general who, after all, are responsible for the enforcement of the laws that we write here.
There are two recommendations of the committee that give me some concern. I do not have the committee's report in front of me, but one recommendation relates to the fact that the provincial attorneys general may be empowered under the Criminal Code to order that a person accused of producing, manufacturing or distributing pornography be subject to trial by judge and jury only. That is to say, a provincial attorney general, in spite of the election of the accused to be tried by a judge, may order that he be tried by judge and jury.
The second area deals with the calling of expert witnesses in a pornography trial. In such a trial, expert witnesses as to what community standards are will not be allowed to testify. I have some real grave reservations about that. It is one matter which I am considering and thinking about a great deal. It is a matter on which I want to consult the provincial attorneys general. There is a question as to whether that recommendation, if enacted in the Criminal Code, would not be contrary to the Bill of Rights, which provides that people are entitled to due process and a full and fair defence. I know this matter troubled the committee a great deal, and I know its recommendations have been made in very good conscience. On both sides of that committee, very good lawyers are represented.
What has been fundamental to our system of law is that an accused person is entitled to put to the court, or to the court and the jury, the fullest possible defence. It is up to a jury to weigh whether that defence is any good or not, and then make

its judgment. At this point, without further consideration and study I am very hesitant about adopting the proposal that the accused is not entitled to call experts. I have some concern and fear that in fact it is contrary to the Bill of Rights.
I agree with the concern expressed by the committee in the substance of the report. In a statement to the committee, I indicated my concern about the issue. I hope to be able to introduce amendments to the Criminal Code very shortly, as I indicated to the committee. These amendments would deal with the recommendations of the committee's report, deal with the question of the definition of pornography, deal with the question of the use of children in the manufacturing and portrayal of pornography, and the banning of certain explicit acts by children in the production of pornography. I hope to introduce amendments which would increase the penalties applicable to both the manufacturing and distribution of pornography. In fact, I hope to introduce those amendments very shortly. In reacting to my concern about the issue of pornography, the concern of provincial attorneys general, and the concern expressed in the committee's unanimous report, I hope to introduce those amendments shortly.
Generally we on this side of the house would support the hon. member's motion, but I wanted to make those two caveats. I am not privy as to how long this parliament will be sitting, but I hope to have an opportunity to introduce the amendments of which I speak. I look forward to hearing the reactions of provincial attorneys general to the specific amendments I am proposing, which would result in the Criminal Code being amended to deal more effectively with the question of pornography. I indicated that in my statement before the committee, and it was indicated in the report of the committee.


Mr. Eldon M. Woolliams (Calgary North):: Mr. Speaker, I was very happy to hear the Minister of Justice (Mr. Basford) indicate that he would second the motion of concurrence in this report, which was the unanimous report of all parties. As has been stated by the hon. member for St. John's East (Mr. McGrath), we have attended many meetings and we have heard many witnesses.
It was refreshing to see the Minister of Justice displaying this afternoon that flexibility he can exercise on many occasions. When he came before us and gave his first statement, he was of the opinion that the definition of pornography under the Criminal Code was adequate. If we check the precedents in reference to that definition, we will find that was the greatest part of the inadequacy in reference to our study of this report. When one is dealing with community standards, one must remember that community standards differ from one place to another. I was most happy to see that now we have a Minister of Justice, even if he is leaving us, who is flexible enough during the short period of time between now and the election. He has changed his mind and now believes the report is correct, that we require a new definition of pornography.
In reference to the two reservations which were mentioned under the caveat he was filing, I emphasize the report recommended that only expert witnesses would not be able to testify in reference to community standards. We in this party believe
April 19, 1978

the jury system is fundamental to the freedom and liberty of the subject. If we are to use the words "community standards" in any definition, then it should be a decision made by juries without confusion from various experts. On the other hand, the report was most silent in reference to calling expert witnesses regarding other definitions or matters referring to pornography.
In reference to the question of trial by judge and jury, I am sure the Minister of Justice, with his wisdom, knowledge and expertise, as well as that of people within his department, is well aware that an indictable offence of this nature falling under the proper part of the Criminal Code, after some teeth have been put into the act, would mean that anyone could be tried by judge and jury throughout the country. Election by judge alone would not be legal under the Criminal Code as it stands now. Thus, there would be no real fundamental change.
The only province which would experience a change is the province of Alberta, from whence I come. That is the only province in Canada that can eliminate the jury, even on a serious murder trial. The reason for that is no one has ever amended the Northwest Territories Act which is incorporated in the Criminal Code. It was incorporated there because at the time the Northwest Territories Act was drafted there were not enough people in Alberta to gather together 12 good men and women to form a jury. The population of Calgary now is growing at the rate of 3,000 per month, so it is obvious that problem has been overcome.
I am happy to see the Minister of Justice has endorsed the report, has changed his opinion, has been very flexible, and is ready now, as he has done, to second this report, which was a unanimous study by all members of the House. I believe this report will be accepted across the land as a step in the right direction to stop the filth factory of material which is being imported from the United States into Canada.
It was shown in committee that $20 million was made in the maritimes alone from the sale of periodicals, magazines and other types of equipment which were studied by members of the committee. Perhaps the minister is straddling the line when he agrees and votes for the report, and files these caveats. I hope he does not straddle it too far, but stays with the unanimous recommendations of the report. We do not want half a piece of pie; the committee recommended that we get the whole pie and eat it.


Stuart Malcolm Leggatt: Mr. Speaker, I was a member of this particular committee and I have no hesitation in supporting the bald recommendations on changes to the Criminal Code. However, I have severe hesitation in accepting some of the rhetoric which went into the report and which is not relevant to the actual changes recommended by the committee.
I should like to review the specific changes recommended by the committee so that we do not mislead the press; the press is easily confused on this particular subject. The specific changes in the report dealt with the creation of a new section on child pornography. My party supports that change. It did not ban
Justice and Legal Affairs
the testimony of expert witnesses entirely, but that testimony was banned in a limited sense. It dealt with the evidence that could be put forward to a jury regarding current community standards, which continue to be the criteria for cases of this nature. There is no ban in this report, as the press unfortunately has reported frequently, on the calling of any expert witnesses on the subject. What the committee decided was that to determine community standards a jury is a better forum than to allow someone from a university, who may not be as familiar with those community standards, to make a report with regard to them.
The private members' bills that were submitted to this committee represented a great case of overkill. In fact, if those private members' bills had been allowed to pass we probably would have wound up banning the bible since it specifically describes acts which would clearly have come within the changes that were contemplated by several members of this House in terms of the Criminal Code.
To show how dangerous this particular subject can be, when we look at the question of what we can control and what we cannot control, the decision of the Ontario censorship board in which it banned a movie called "Pretty Baby" is a classic case-


Mr. Baker (Grenville-Carleton):: And rightly so.


Stuart Malcolm Leggatt: This is a movie that has tremendous literary merit, a movie that the people of Ontario will no doubt see by simply crossing the river to Hull, making a lot of money for some people in Quebec. I am not against that, but that same censorship board approved a movie called "Taxi Driver" and that movie dealt almost exclusively with violence, sex and teenage prostitution. The movie the board banned dealt with the subject of a child who in her early years matured in a house of prostitution but was able somehow to come out of that grime and have a successful life. There is an interesting story in the Louis Malle movie.
This is the difficulty when members of parliament start sitting in judgment on matters that have great artistic merit. There is always an agony in this business in determining whether there really is sexual exploitation, or whether there is literary merit in what happens.
Therefore, I support the bald recommendations of the committee, but I stand here warning the committee and the minister that when it comes to changes in the Criminal Code which deal with censorship we should not ban those things which have classic literary merit, and that judgment is always going to be a discretionary judgment. It is not going to work if you apply the standards of some small community to the whole province in respect of what the people can or cannot see.
We are not opposed, of course, to increasing the penalties that are involved, but we are opposed to a present law, the Customs Act, that allows a customs officer, with no experience whatsoever as to what has literary merit, to decide on his own that a certain publication is unworthy for the eyes of Canadi-
4658

April 19, 1978
Justice and Legal Affairs
ans. When you look at the junk that is allowed presently into this country, junk that is full of exploitation, junk that has no literary merit and junk that is shown in every film theatre across Canada-


Eldon Mattison Woolliams: Which side are you on?


Stuart Malcolm Leggatt: Eldon wants to know which side I am on. He is always confused in this place. When you make this kind of decision the matter should not be considered in the simplistic way in which private members have advanced, that somehow all you have to do is ban the description of the sexual act and that will solve all our problems in respect of pornography. That will not happen. There has to be a judgment decision. Otherwise works of literary merit in this country and in our heritage would all be banned, and the great art of history would be banned. That is what will happen if you paint this subject with a broad brush.
If I can go back to the narrow question of the specific recommendations that were made by the committee, they are largely supportive of the position taken by the province of British Columbia which left the question of undue exploitation to the decision of a judge and jury. In this case it would now be left to the jury. I agree with that recommendation. There must be some kind of subjective decision in respect of what is or is not pornography.
It is pointed out that child pornography is a very special matter, and that the abuse of children is something that should be placed under control. We support that recommendation. We support the recommendations about increasing the penalty. However, there is a good deal of rhetoric, and if this were taken to its logical conclusion-and I am not talking about changes to the Criminal Code which the committee recommended and which are sound and wise-we would be banning anything that offends someone. As a result we would find that the cultural heritage of this country would become a pretty thin thing indeed. That will happen if we overreact on this subject.


Mr. Mark MacGuigan (Windsor-Walkerville):: Mr. Speaker, I do not want to delay the giving of concurrence in this motion, and I sense that, following the lead of the Minister of Justice (Mr. Basford), the House will shortly be ready to do that. However, I do think it appropriate that I make a few comments.
I begin by thanking those hon. members who have made comments of personal commendation. Personally, I feel that the lion's share of credit should go to the hon. member for St. John's East (Mr. McGrath) and those other members on all sides of the House who put forward the bills which enabled the committee to deal with the problem that is the subject matter of this report.
I want to say a few words because this is a subject in respect of which rhetoric is of some importance. I agree with the comment of the hon. member for New Westminster (Mr. Leggatt) that one must not confuse the recommendations and the rhetoric either of the report or of any other speaker in this
[Mr. Leggatt.)
House. Nevertheless, I think it is very important to observe that the committee, in making its recommendations, on the one hand is not greatly extending the law that exists in radically new directions, but on the other hand is considerably deepening the law, if I may put it that way, in respect of the rights of two target groups who have not always been considered in our legislation. Those two groups are women and children.
Having regard to children, the recommendations of the committee are obviously there for all to see; they are to protect children from exposure to the material and also to protect them from being exploited by being involved in its production.
Having regard to women, I think the point has been missed by some of those in the media who have criticised our report. It is important to realize that the changes in the law and in the definition of the law which we have suggested, other than those aimed at protecting children, are particularly aimed at bringing the woman's point of view into our law in this area for the first time.


Some hon. Members:: Hear, hear!


Mark R. MacGuigan: That was our purpose in introducing the concept of the degradation of the human person, which expressed the views of women witnesses who appeared before us and who wrote us from across the country.
It was also the purpose behind broadening the definition through severing the link which previously had to be found between violence and sex, and the other categories and sex, and to say that even if sex were not involved, these other categories of crime and horror and violence could in themselves be considered to be obscenity when there is undue exploitation. The purpose the committee had in mind was to give protection in this branch of the law, for the first time, to the sensibilities of women, as the principal target group of most pornography.
If I may say so, I believe the people of Canada have a much more basic understanding of this issue than those who have written, accusing us of all kinds of intellectual and moral sins, comparing us to Cromwell, Mao Tse-Tung and others in history who perhaps are often thought of as having less savoury reputations. The people, as my own constituents have manifested, support such legislation very strongly, and I am sure that the members of this House who were involved in this study have received a great deal of support for the recommendations which we have made.
It is with a sense of pride that all of us who were involved with this subject can stand before the House and present this report and vote its concurrence.


Walter David Baker: Mr. Speaker, as the seconder of the motion for concurrence, I would like to say a few words with respect to this matter. Much has been said of the leadership given in this field by my colleague from St. John's East (Mr. McGrath) and the hon. member for Wind-
April 19, 1978

sor-Walkerville (Mr. MacGuigan). All of the laudatory comments that have been made with respect to them are certainly deserved.
The record and the country ought to know who were the other members involved in this matter, and it is extremely important that it be understood that this was an all-party committee.
It was expressing a concern felt in every part of Canada with respect to what is occurring and what is seen on the newsstands and what is available to people of tender years, for example-the exploitation, as the member has said, of women, and a whole host of other areas. I would like to say to the hon. member for Windsor-Walkerville, to my friend, the hon. member for St. John's East, and others on the committee that not only was the work of the committee supported in the letters and mail from one's constituency, particularly with reference to the members of the committee who received mail but it was supported from all over and from my own constituency as well. I can report to the hon. member that with respect to the official opposition the work of the committee was supported throughout.
Having said that, Mr. Speaker, I think it is important that we identify the members who served on that committee, and, indeed, who were the sponsors of the bills which were the subject matter of the reference to the committee. The hon. member for York South (Mrs. Appolloni), the hon. member for Kenora-Rainy River (Mr. Reid) the hon. member for Surrey-White Rock (Mr. Friesen), the hon. member for Selkirk (Mr. Whiteway), the hon. member for Provencher (Mr. Epp), the hon. member for Northumberland-Durham (Mr. Lawrence), the hon. member for Brandon-Souris (Mr. Dins-dale) and the hon. member for New Westminster (Mr. Leg-gatt) also concurred in this report.
I want to make this clear in view of what occurred just a few moments ago when the hon. member for Calgary North (Mr. Woolliams) was tempted to ask the hon. member for New Westminster where he stood with respect to the report. It is important to note, as the hon. member for Windsor-Walkerville has said, that the rhetoric-a word sometimes used in a pejorative way-and the sentiments and feelings expressed in that rhetoric, has been expressed by most people throughout the country.
If there is a standing vote today with respect to this report, I hope that the hon. member for New Westminster and his party will support it.


Mr. Knowles (Winnipeg North Centre):: The answer is "Yes, we will."


Walter David Baker: I think it is extremely important that there be an expression from this parliament that is more than merely deep concern with respect to what we see, hear and read, and in regard to the exploitation that occurs, but that it goes against Canadian society. This parliament will not be fooled into thinking that the people of Canada are not extremely concerned about it.
Regulations and Other Statutory Instruments
I was not a member of the committte, nor did I sponsor a bill, but I supported the idea and I am pleased to be able to second this motion. I hope that if a vote is called it will have the support of all members of this House.


Mr. Speaker:: Order, please. The hon. member for St. John's East, seconded by the hon. member for Grenviile-Carleton, moves:
That the Third Report of the Standing Committee on Justice and Legal Affairs, presented to the House on Wednesday, March 22, 1978, be concurred in.
Is it the pleasure of the House to adopt the said motion?


Some hon. Members:: Agreed.


Mr. Speaker:: Carried.


[Stage Direction]
Motion agreed to.
Eldon Mattison Woolliams: Mr. Speaker, I rise on a point of order. Are there yeas and nays on this vote?


Mr. Speaker:: Order, please. I asked the House if the motion was carried and the House concurred.


Eldon Mattison Woolliams: Mr. Speaker, is there-


Mr. Speaker:: Order, please. I heard no negative voices at all.


Eldon Mattison Woolliams: I did not hear you say "Are you all in favour?" Just because it was a unanimous report does not mean that the yeas and nays should not be called.


Mr. Speaker:: Order, please. I put the question, and the question was carried. I did not hear any negative voices. If I had heard a negative voice I would have asked for the yeas and nays, but I did not.


Eldon Mattison Woolliams: Mr. Speaker-


Mr. Speaker:: Order, please.


REGULATIONS AND OTHER STATUTORY INSTRUMENTS
Walter Gilbert Dinsdale: Mr. Speaker, on behalf of the hon. member for Peace River (Mr. Baldwin), I would like to move concurrence in the fourth report of the Standing Joint Committee on Regulations and Other Statutory Instruments. This report was tabled, and it is recorded in Votes and Proceedings for April 13. It deals with the rights of parliament, and I would think that, as happened in the case of the previous report, in which we had unanimous concurrence, it will receive the same treatment on behalf of the members of the House.
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April 19, 1978
Order Paper Questions


Mr. Speaker:: Order, please. The motion stands in the name of the hon. member for Peace River (Mr. Baldwin), and in order to safeguard our procedures I would want to know that the hon. member for Peace River has given his consent that the matter be moved on his behalf.


Walter David Baker: Mr. Speaker, I wish to inform this House that the hon. member for Peace River has given his consent, and so it is quite in order from that point of view for the hon. member for Brandon-Souris to move the motion. I spoke to him directly.


Mr. Speaker:: Order, please. That being the case, does the House consent that the matter be moved in this way at this time?


Some hon. Members:: Agreed.


Walter Gilbert Dinsdale: That the fourth report of the Standing Joint Committee on Regulations and Other Statutory Instruments, presented to the House on Thursday, April 13, 1978, be concurred in.
He said: I do not wish to delay the proceedings of the House because I know that we all want to get on with the budget debate. I would merely like to reinforce the unanimity presented in the committee. The committee is chaired by the hon. member for Peace River (Mr. Baldwin) and co-chaired by Senator Forsey; thus it had all-party support in the joint committee.
The subject has been discussed in this House on many occasions, and without further comment on my part I would ask for the unanimous consent of the House.


Mr. Speaker:: Order, please. The House has heard the motion. Is it the pleasure of the House to adopt the said motion?


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. Yvon Pinard (Parliamentary Secretary to President of Privy Council):: Mr. Speaker, the following questions will be answered today: 995, 1,285, 1,297, 1,321, 1,330, 1,358 and 1,423.
[ Text]


Mr. Howie: Since January 1, 1977, has the Department of Consumer and Corporate Affairs banned or recommended against the use of (a) clothing because of its flammability (b) medicine containers because of danger to small children?


Mr. Alan G. Martin (Parliamentary Secretary to Minister of Consumer and Corporate Affairs):: (a) November 2, 1971, all textile fibre products for consumer use that are hazardously flammable were banned from advertisement, sale or importation into Canada under the Hazardous Products Act. At the same time, a separate more stringent minimum flammability level was established for children's sleepwear and on April 1, 1972, articles of bedding (blankets, sheets, bedspreads, etc.) were similarly regulated at the more stringent level. Approximately five clothing products were seized in 1977. (b) As medicines come within the purview of the Food and Drugs Act, the packaging of such products falls within the jurisdiction of the Department of National Health and Welfare Canada. CCA did, however, amend the Hazardous Products (Hazardous Substances) Regs, on July 21, 1977 so that household products containing toxic amounts of petroleum distillates, turpentine, methyl alcohol and pine oil be packaged in child-resistant containers. The amendment specifies that as of October 1, 1978, affected products packaged on or after July 15, 1977 must be packaged in child-resistant containers. Prior to the above amendment, the Hazardous Products (Hazardous Substances) Regulations required child-resistant containers on certain corrosive drain cleaners, cyanoacrylate adhesives and certain liquid wood furniture polishes.


Mr. Marshall: 1.	With reference to the answer to Question No. 835, what are the details of (a) summer student employment amounting to $330,000 (b) park awareness of $140,000 and what are the names of the projects and/or particular programs?
2.	What are the details for the $1,000,000 to accelerate reconstruction of Highway 430 within the boundaries of Gros Morne National Park?


Mr. Ross Milne (Parliamentary Secretary to Minister of Indian Affairs and Northern Development):: 1. (a) Details of summer student employment are given below by region. Records are not available which indicate the names or types of programs, but in all cases students performed the duties of jobs of a seasonal nature that would otherwise have been performed by casual non-student employees.
Native	Regular
Region	Employment Number of	Recruitment Number of	Totals Number of	students	$	students	s	students	$Atlantic	8	17,600	12	26,400	20	44,000Quebec	8	17,600	8	17,600	16	35,200Ontario	20	44,000	0	0	20	44,000Prairie	24	52,800	0	0	24	52,800Western	3	6,600	17	37,400	20	44,000Headquarter	30	66,000	20	44,000	50	110,000Total:	93	204,600	57	125,400	150	330,000
(b) Details of the Park Awareness Program (students hired through contractual agreements with conservation-oriented agencies and organizations): the total funds allotted to Park Awareness were received in two amounts prior to the commencement of the program. Treasury Board Minute 48853 dated December 6, 1976 allotted $110,000, while Treasury
April 19, 1978

Board Minute 74-9109 dated April 21, 1977 allotted $140,000. Thus all details of employment and particular projects are reported in total for the entire $250,000 allotment. Below is a list of all projects carried out showing the number of students. A total of 69 students were hired. The allotment and actual expenditures of moneys by region are as follows:
Region	Allotment	Expenditures (as of February 28/78) 'Atlantic	97,000	96,700Quebec	48,000	36,000Ontario	16,000	8,200Prairie	46,000	44.200Western	43,000	43,000Total:	250,000	228,1002.	The $1,000,000 supplementary funds to accelerate reconstruction of highway 430 within Gros Morne National Park relates primarily to commencement of upgrading of the highway between Lobster Cove and Gun Point ($800,000) and repairs to highway 430 south due to severe frost heaving ($200,000).
Park Awareness '77 Projects:
Note: Students were recruited by universities and associations listed.
Atlantic Region: 1. Nova Scotia College of Art and Design, three students-A multi-media travelling exhibit. 2. Heritage Canada, eight students-A travelling clown show entitled "Clown Chowder". 3. Halifax Field Naturalists and Heritage Trust of Nova Scotia, four students-A series of conducted walks, illustrated lectures and an illustrated guide to natural areas. 4. Moncton Field Naturalists, four students-Photographs, slide talks, newspaper articles and texts for exhibits. 5. Memorial University, four students-A multi-media travelling communication program.
Quebec Region: 1. Quebec Forestry Association-Chicoutimi, four students-Introduction to conservation and Parks Canada aimed at young people. 2. Quebec Forestry Association-Rouyn, four students-Introduction to conservation and Parks Canada aimed at young people. 3. Biology Department, Bishop's University, three students-Illustrated talk and direct publicity about Parks Canada. 4. Clubs of Junior Naturalists, three students-Introduction to Parks Canada through club locals and at private campgrounds in the province. Audio-visual presentation, newspaper articles. 5. 4H Clubs Inc., four students-Introduction to Parks Canada at various 4H camps and at the 4H provincial convention. Talks, brochures and newspaper articles. 6. Shawinigan CEGEP, three students- Historical audio-visual presentation: "From Village to National Park".
Ontario Region: A Park Awareness coordinator was hired at a salary of $8,200 per annum.
Prairie Region: 1. National and Provincial Parks Association of Canada, Five students-An original drama, "The Mountain Show" on mountaineering in national parks, also documented on film and tape. 2. National and Provincial
Order Paper Questions
Parks Association of Canada, one student-Slide/tape program, "Legends of the Nahanni". 3. National and Provincial Parks Association of Canada, one student-Slide/tape program, "Legends of Kluane". 4. Banff Centre, School of Fine Arts, one student-Exhibition of prints on Kluane National Park. 5. Yukon Conservation Society, three students- Summer cinema and exhibition on Kluane National Park.
Western Region: 1. Wildland Recreation Faculty and Student's Association, Selkirk College, two students-Develop for community use, a kit of slides, script and pamphlets on national parks as seen through children's eyes. 2. Environmental Welfare Club, Lakeland College, two students-Audiovisual presentations on purpose, role and use of national parks.
3.	Student's Liaison, University of Calgary, two students- Artistic expression of children's perceptions of national parks.
4.	Banff Centre, School of Fine Arts, eight students-A series of arts and crafts expressions of Banff National Park. To tour western Canada.


Mr. Rodriguez: 1.	(a) How many persons have been hired to date, in Ottawa, under the Federal Labour Intensive Programme (FLIP) allotment to the Department of Energy, Mines and Resources Office of Energy Conservation (b) how many have been hired through Canada Manpower or the Public Service Commission?
2.	How many relatives of employees in the Office of Energy Conservation have been hired by the Office, including those under FLIP, in the last year?


Hon. Alastair Gillespie (Minister of Energy, Mines and Resources):: The Department of Energy, Mines and Resources reports as follows: 1. (a) 124 persons, (b) 110 through the Canada Manpower Centres, 14 through the Public Service Commission.
2. Seven.


Mr. Scott: 1.	Does CBC mail copies of its French language TV program guides to the newspapers and, if so (a) to how many newspapers (b) under whose authority (c) what class of mail is used and for what reason (d) what is the annual cost?
2.	How long has the practice of sending out the guides been followed by CBC and/or Radio Canada?
3.	Are TV program guides sent out in the English language and, if not, for what reason?


John (Moody) Roberts: I am informed by the Canadian Broadcasting Corporation as follows: 1. Yes. (a) 283 French and English dailies and weeklies throughout Canada, (b) By a decision of CBC management under the Broadcasting Act. (c) First class, for reasons of speed, (d) Thirty cents per piece, totalling $4,414.80 per year.
2.	Since La Semaine a Radio-Canada began publication in 1952.
3.	Not in the same format as the French services division publication, which serves as a source of information for its subscribers as well as for newspapers, but extensive typed

April 19, 1978
Order Paper Questions
program notes and listings are distributed to all newspapers by the English services division.


Mr. Blouin: 1.	During the past five years, did CBC carry out any studies with a view to setting up a television station in Sept-Isles, Quebec and, if so, at what cost?
2.	Will such a facility be constructed and, if so, on what date?


John (Moody) Roberts: 1 am informed by the Canadian Broadcasting Corporation as follows: 1. At a public hearing of the CRTC on May 17, 1972, CBC officially announced its intention of establishing its own French television production facilities in Sept-lles. However, long and difficult negotiations over the purchase of a site necessitated the choice of an alternative site and, as a consequence, the revision of construction plans and specifications. Meanwhile a transmitter at Sept-lles has relayed the program service of the Matane station since late 1973. Studies carried out in this regard were part of the CBC's over-all operations and were not costed separately.
2. At a CRTC hearing on October 18, 1977, the CBC reiterated its intention of carrying out the Sept-lles project and has stated that it expects to be operating a production centre there by the fall of 1980.


Mr. Haidasz: What is the budget for Petro-Canada for the fiscal year 1977-78 and what amounts were allocated to (a) exploration of various sources of energy (b) research of energy supplies?


Alastair William Gillespie: Petro-Canada reports as follows: See Order in Council P.C. 1977-3594 of December 22, 1977, for the capital budget of Petro-Canada for the financial year 1978. (a) 1978, $140 million; (b) 1978, $2.5 million.


Mr. Elzinga: 1.	Since 1964, what was the total amount that the government allocated to the Canada Student Loans Programme?
2.	How much of the loan money owing to the government (a) has been repaid by the recipients (b) is still outstanding?


John (Moody) Roberts: 1. The total value of loans authorized under the program from 1964 to June 30, 1977, was $1,093.7 million.
2. As of June 30, 1977. (a) $485.5 million had been repaid to banks, (b) $608.2 million was outstanding at banks. This figure includes $342.7 million for which students have not yet become liable to repay because they are still enrolled.


Yvon Pinard: Mr. Speaker, if you would be so kind as to call starred question No. 1,388, I would answer it immediately.


Mr. McKenzie: Did any Indian bands receive funds from the government in order to finance the travel of old-timer hockey teams to the European tournament this year and, if so, how many?
[ Translation]


Yvon Pinard: As far as the Department of Indian Affairs and Northern Development is concerned, see answer to question No. 1,210 given on March 3, 1978.
As far as the Department of State (Fitness and Amateur Sport) is concerned, the answer is no.


Mr. Speaker:: Shall the remaining questions be allowed to stand?


Some hon. Members:: Agreed.


Yvon Pinard: Mr. Speaker, I ask that all notices of motions for the production of papers be allowed to stand.


Mr. Speaker:: Shall the remaining notices of motions be allowed to stand?


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Tuesday, April 18, consideration of the motion by Mr. Chretien that this House approves in general the budgetary policy of the government.
Hon. Alvin Hamilton (Qu'Appelle-Moose Mountain):: Mr. Speaker, we are now back to the main budget motion. What I
April 19, 1978

am going to do today is put forward what I think are the good features of the budget and some of the features which are not so good.
First, the good news. I want to thank the Minister of Finance (Mr. Chretien) for putting into the budget amendments to the registered retirement savings plan provisions to make them more flexible and thereby attract more savings. When I spoke on this matter two years ago and made the proposal to the then minister of finance, the Hon. Donald Macdonald, he said he would put the matter before the committee that served him in the Department of Finance and get their judgment on it. I was very pleased to see it in the budget two years later.
To give an idea of the importance of this matter, it should be remembered that just seven years ago about 360,000 Canadians invested in registered retirement savings plans. In his budget address the minister said there are now nearly two million, a six-fold increase in seven years. With these amendments I think that over the next five or ten years we can look forward not only to a 20 per cent increase but to as high as 40 or 50 per cent. This not only helps the individual to save for his later years in addition to the universal programs that are in place, but it provides the nation with more capital with which to finance the heavy capital intensive programs we face in the next two or three decades.
The other advantage is that the more people who put money into this type of program, the greater the stabilizing effect on the economy. I think it is clear that the advantage finally rests with the person who puts money into this type of savings.
In particular, I should like to commend the minister on the addition not only of the set number of years mentioned in the budget of up to 20 or more that a person can have as a flexible alternative at age 60 to 71 to take the money out, but also the alternative where he puts the funds into a registered retirement investment fund. This would allow those people who are capable of looking after their own funds to even increase them during the period of pay-out.
The point I am concerned about is that it is not clear from reading the budget speech or the ways and means motion that the alternative of taking out a single payment has been retained for those who want it. It will be remembered by those who know the technique of the RRSP that at one time you could just take it out in a life annuity. Then it was amended in section 146 of the Income Tax Act so that you could take it out as a single payment. Those were the two alternatives.
In 1976, I asked the minister if he would consider more alternatives to give greater flexibility so that people would not be locked into limited choices but could get the money out in a way that suited them. The minister has kept the life annuity system which many people like-you can buy it from life insurance companies as you do now-and he had added two new ideas which are good. Now you are allowed to take a number of set payments. The third choice of the RRSP, namely the RRIF, is better for those who feel able to look after their finances from age 60 to 71 and into the future.
The Budget-Hon. Alvin Hamilton
I am concerned, however, that he may have taken out, inadvertently, the alternative of the single payment. Some people may want the freedom of taking out the money and paying the full tax. If we are to encourage people to save, I think we must do everything we can to make the plan as flexible as possible and give them a choice. I think this would bring more people into the plan. The primary aim is no longer just saving for the future but saving for the health of the nation.
I should like to commend these proposals to the government.
I am sure that after the next election they will be added to the plan. I cannot take away from the government, however, that they have done as I asked two years ago and I should like to thank them for that.
There are other proposals which I made in my speech in 1976 and one which was made by the hon. member for Surrey-White Rock (Mr. Friesen). He suggested that when a person came to the age where he could take money out of the RRSP, if he wanted to he be allowed to add a church, some sort of university or any form of charitable institution to share the money instead of just a spouse. That would still give the individual the choice and the money would go some place where it would do some good under the tax law and help the country out as well. 1 think that should be added to the list of proposals I made two years ago.
There is another choice that the government should consider as well as the one advanced by the hon. member for Surrey-White Rock. Banks, credit unions, trust companies and the like could hold the money, and then let the individual take it out at his convenience and pay tax on it. This would give maximum freedom to the individual. Some people feel uncertain about the future at age 60 to 71 and might like to postpone payment, or take smaller payments in the earlier years and larger ones as they get older when the costs of medical care are likely to arise. Individuals who have worked hard all their lives and done without recreation and holidays might like to spend a lot of money in the first years, on the other hand, and have less in later years. We should not be concerned about what the individual does with his money. He should have the choice as long as he pays income tax on what he receives. I think these additional proposals should be considered by the committee that works under the Minister of Finance when drafting future budgets.
I conclude these remarks by saying to the government once again that, as a member of parliament and as a Canadian, I appreciate the willingness of the Department of Finance to accept the positive ideas that bring improvements about.
Now I come to the bad news, Mr. Speaker. As I have said many times before in this House, I have watched ministers of finance take on the job with enthusiasm for the recognition and the great honour that the prime minister of the day has placed in them by giving them this onerous task. I have seen minister of finance after minister of finance go down the drain by being handed a budget to deliver in this House which in essence destroyed that minister. I saw it happen back in 1956. The Liberal minister of finance of that year disappeared

April 19, 1978
The Budget-Hon. Alvin Hamilton without a trace because of the unhappy budget of 1956. I have seen this happen to minister after minister. I have recited their names and what happened on previous occasions.
I asked this new minister, having great faith in his background, coming as he does from a small town where common sense is supposed to prevail, to try and avoid this type of fate for himself. Obviously he had the confidence of the Prime Minister (Mr. Trudeau). He had the confidence of this House because he was well liked and is well liked. But yet he had to bring in a budget the like of which we heard on April 10. Why this budget is bad is simple to explain. Essentially it is the same as the last four budgets, those of 1974, 1975, 1976 and 1977. The budgets of the last five years have been neutral budgets. They have tried not to go one way too far or the other way too far because of a particular mythology which is held like an article of faith by the financial advisers of the government. These advisers believe that there is a relationship which is contradictory-having unemployment on the one hand, and inflation on the other. The name for this mythology is the Philips curve. In using the Philips curve one tries to help the unemployed by doing things to make more jobs available but it increases inflation.
On the other hand, in trying to do things to reduce inflation it adds to the unemployed. This idea that one works against the other has been analysed and analysed over the last 20 or 30 years. Without any exception, to my knowledge, every analysis shows that by quantitative analysis this theory of the Philips curve is wrong.
Instead of simply ending my comments when I spoke to the minister on his mini-budget last fall, I put forward a sample idea of how the minister could fight both unemployment and inflation in the same move. I labelled that proposal "potential budgeting". I pointed out the precedent of 1964 that exists in the United States. At that time the situation there was very similar to the situation we have in Canada today. It was not as serious, but it was similar with much unemployment and rising inflation. They also had a budget deficit as we have now. The president at that time, President Kennedy, accepted the advice of his new adviser, Mr. Heller, and deliberately reduced taxes to the extent of $10 billion. This caused one tremendous uproar across the United States. But because those tax reductions were at a time when there was unemployment and unused plant capacity it precipitated a rush of work, thus giving people jobs. When the year was over the big gainer by $19 billion was the government of the United States. In other words, there was a situation which could only be described as taking advantage of the potential.
If one uses the theory of potential budgeting it must be recognized that it can only be used at a time when there is unused plant capacity and when there is available a labour supply. In providing tax reductions they must be aimed at those things which the country and the people need and which are not presently available. There is no use trying to encourage people to build more plant capacity when there is already more

plant capacity than needed. There is no lasting benefit in providing temporary jobs. That solves nothing. If tax incentives are put forward to produce things that people do not have and need, people will buy them.
I gave the minister one or two examples in that speech last November. He asked me then if I would present these ideas to him in written form. I did this in the form of a letter. In that letter I pointed out that these were not the end of all his problems but these ideas primarily were an example of where I thought we could provide $1 billion, a new year of production and consumption, and where the multiplier effect of two or three times would bring back to the various governments in Canada more money than the tax reduction had amounted to. When a tax reduction is given on items which people are not using and no longer making, there is no loss to the balance of ways and means. One simply says that if one does these things, there will be no tax or that the tax will be reduced so much. Therefore, it would not hurt the balance of ways and means, which the minister could not afford at this time with a big deficit.
However, it would provide these incentives to people to buy goods and have them produced and there would be a net gain. This net gain would show up not only in the wages of the people employed but also in the reduction of the social costs of unemployment insurance and social welfare. As these goods go through the system, the multiplier effect takes place and the various governments along the way would probably end up with $2 billion in extra revenue.
I think the minister was most impressed by my discussions with him but he had to take the matter up with his advisers. I will not quote his whole letter to the House, but I will quote two sentences because they say it all:
Your proposal would represent a major departure from the general policy of only permitting deductions with respect to assets used for the purpose of gaining or producing income. In my view, allowing deductions for such personal expenditures would create a dangerous precedent and might seriously erode the tax base.
I knew the minute I received that letter, which is dated March 2, 1978, that the minister had signed a letter written by his advisers who had turned down my proposal. In essence, my proposal was simply that on the 17 things I had listed which were needed and wanted by the people and the country and which were not being produced he should allow an individual in Canada to buy those items and then be allowed an exemption against income tax for the amount spent.
For example, if a person is asked to buy a heat pump to extract the heat out of the ground, out of water, out of the air, or even from a pile of rocks so as to heat his house, that person would have to spend in the neighbourhood of $1,000 to $3,000, depending on the type of equipment, size of his house, and so on. That means that by spending that amount of money, that person would eliminate the need to purchase oil and gas. He would be able to eliminate monthly and annual fuel expenses. His monthly charge would be replaced once and for all by a capital payment. If that man and his family were in business, every expense like this would be looked at under the Income Tax Act as the expenditure of money to make money, as the
April 19, 1978

minister points out. I suggested that the same privilege which is given to businesses to encourage them to spend money to make money be given to the individual homeowner or the man who owned a high-rise, or who owned a business establishment or any other form of business which could reduce the money spent on forms of energy which are becoming short in supply and more costly. You replace a monthly bill with a once and for all capital expense good for 20 or 30 years.
This proposal is not necessary for businesses because it is already in the tax law. However, there are four million, five million or six million homes in Canada that would immediately benefit if the minister had accepted that proposal. There are any number of high-rises where businessmen who own them could take advantage of it.
In any case, my point is simple. The minister signed a letter turning down this proposal, even though he himself personally liked it, on the ground that it would create a dangerous new precedent. Imagine treating an individual in Canada fairly, like you treat a business, being a dangerous precedent according to the financial advisers of the government! In effect, these very sincere individuals who know all the precedents have unwittingly destroyed that minister. Now he cannot go out and face the people of Canada, or even the people of his constituency, and say "I gave the individuals in this country the same treatment as we give to business. If a business goes out to save money by putting in new equipment, it can get a reduction; but if you as an individual do it, you cannot because I yielded to my financial advisers."
That is the key issue in all of our western democracies. Our governments have become so complex-governments are into everything today-that we have had to develop these huge advisory groups, in a simple word called a bureaucracy, who go on year after year and develop these great pyramids within the system. They are so used to funneling advice to ministers that they, in effect, become the decision makers.
The test today in our western governments of a minister, particularly the Minister of Finance who carries the can finally, is that the elected representatives of the people who go into the executive or the cabinet exert some control over this solidly entrenched bureaucracy.
On the basis of the principles I have put forward, I doubt whether 5 per cent of the people of Canada would object to that type of proposal. I know the minister did not object. He thought it was a good proposal. However, his advisers say it is a new precedent. When a business puts money into assets, that is a deduction. When an individual does it, that is a dangerous precedent.
I know the reason the advisers say that. They agree we will not lose any taxes on these 17 different items I listed, but they feel that somebody may come along and name another item that will save the individual money and people will ask for that same privilege to be applied to that item. I can accept the logic of that. However, I still say why not apply it?
The Budget-Hon. Alvin Hamilton
I can accept that in the national interest we have to save more money. People are doing that with RRSP's. It is not the only way, but it is one way that we do it. We not only have to save money out of our income, but we save money by looking after our affairs in such a way that our costs are less. To get at the root of this cost-push type of inflation we are suffering from, the government should not only encourage business to reduce costs, for which they give them incentives, but also it should give that inducement to individuals. This was the push of my proposal. This was the suggestion that I made, in a constructive way, I hope. The minister accepted it.
When the minister came in with the budget, and when he came in with that letter a month before the budget, I knew that the public servants were still in charge of the writing of the speech for the minister. Therefore, my heart, and I hope the heart of every politician, goes out to a very fine gentleman, the Minister of Finance, who really took it on the chin on April 10.
The minister knew that economically this country was in a bad way. He knew this country was not strong. He knew the people of this country were worried. Every time they picked up a newspaper, listened to the radio or television, they heard all the bad news.
The current thing is the shaky state of the dollar. The minister is not wrong when he says that he wants the dollar to float. That is a sound policy. However, once you let the dollar float, then inflation is purely a national matter, not an international matter. When you have a pegged dollar, inflation can be exported or imported, but not when you have a floating dollar.
The minute the minister came out with a policy of a floating dollar and allowed the public servants to sneak in and monkey around on the excuse they were stabilizing the ups and downs of the market, they helped destroy that minister. They created a state of uncertainty among those who invest or speculate in the currencies of various countries. They knew there was a possibility of making money on speculation.
If the dollar is floating freely, one speculator fights another speculator. The one who made the wrong guess would take a beating. That would stabilize it. However, when the Bank of Canada monkeys around and puts in blocks to slow the slide of the dollar, you create a situation of great uncertainty as to what the policy is which gives maximum opportunity for the speculators to raid the dollar.
The minister was forced to bring in a neutral budget. The only thing he did in trying to get at the question of costs was reduce the sales tax temporarily in order to get by the election. It will not have any more effect than the mini-budget of last fall or the budget of a year ago. When the facts come out and inflation, prices and unemployment continue to rise, the Minister of Finance will take the blame.
For five years we have had these neutral budgets because the public servant does not know what to do. He will not accept these new theories of potential budgeting. He will not accept any new precedents. The only thing he knows is what the precedents are.
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April 19, 1978
The Budget-Mr. Horner
This situation is not new. I happened to be minister of a government for five years or more and I saw the same things. We knew the advice we were getting from our financial advisers was wrong, but how does a group of ordinary MPs who have become cabinet ministers do anything about it? All you have is this one type of advice. Therefore, we proposed the setting up of an Economic Council of Canada where we could have people from the business world, labour and the academics sitting as a separate institution with their experts, looking at the economy from a completely unbiased point of view and yet representing the people who have to do the work to make this country run.
The Economic Council of Canada really did not get started until 1964. It has produced over a dozen reports. For years they have asked the government to consider potential budgeting. It is so bad that when the committee was meeting in the House three or four years ago, one of the public servants got up and in that committee meeting attacked the Economic Council of Canada for the colossal gall of advocating a new theory, even though that theory had been used in the United States in 1964 and 1965.
The head of the Economic Council of Canada disappeared. They moved in new ones more tame and amenable to the view of the Prime Minister. Today we witness the Economic Council of Canada, which was designed to give at least a second point of view to the government, being allowed to die. The bureaucracy is opposed to it. It attacks the heads of the Economic Council publicly, and it knows that the government is opposed to them too. Therefore, we see this fine institution, composed of volunteers, so to speak, from the business world, the labour world and the academic world, having its advice ignored by the government. The government goes the opposite way. The evidence of what I am saying about its dying is the fact that if we look at the number of people sitting on that council-there should be about 26 or 27-it is down to half that number now, and the government is just waiting for it to die and disappear entirely.
In conclusion, the tragedy of this budget debate is not that the country will not survive; we will change governments eventually. The tragedy is to see a human being for no good cause destroyed by having to accept advice which is wrong and which has been wrong for the last 30 years. That will be the issue upon which we will fight.


John (Jack) Henry Horner: Mr. Speaker, before rising to participate in this budget debate I read some of the speeches. I have been unavoidably away for some of the debate, but I would like to deal with the budget and the economy of the country in the context of where we are in the manufacturing world, what some of our problems are and how we are attempting to solve them.
It has been said that one of the characteristics of Canadians is to downplay our achievements, to emphasize the negative and to exaggerate the problems. Certainly all three of those

things have been pretty evident in this debate. We have seen an abundance of this recently, not only in this debate but in many other places across Canada. I suppose in a way I will be attempting in this speech to redress the balance. It seems to me that it is of extreme importance that we as Canadians look at the whole picture, because without doing so nothing can really be achieved.
In common with the industrial world, Canada certainly has problems, but many of our problems have been exaggerated almost beyond recognition. As Minister of Industry, Trade and Commerce I must be concerned, above everything else, about our international competitive position. Canada's prosperity clearly depends on our ability to sell our products in world markets. Whenever our costs and prices get seriously out of line with those of our trading partners, the nation as a whole is in trouble, and we were beginning to have problems on this score by the end of 1975 as far as our United States markets were concerned.
For several years before, the average increase in Canada's unit labour costs in manufacturing had actually been somewhat better than those of the United States. From 1967 to 1974, for instance, our labour costs in manufacturing increased by about 35 per cent. Those in the United States increased by about 43 per cent. This was offset, I suppose, to some extent by the rise in the value of the Canadian dollar during that period, so that by 1974 Canada's labour unit cost picture in United States dollars was slightly worse than the U.S. manufacturing picture.
The big disparities, however, really emerged in 1975. In that year unit labour costs in manufacturing rose by 16.4 per cent in Canada compared with 7.8 per cent in the United States, a sharp reversal of the picture between 1967 and 1974.
It was against this background that the program of prices and incomes controls was launched. Steadily, the growth of wage costs in manufacturing has been brought into line with that of the United States. In 1975, new wage settlements in manufacturing increased by 18 per cent in Canada compared with 10 per cent in the United States. These were in the first year of contracts. In 1977-and this is the point I want to make-new wage settlements for the first year of contracts were down to 7.6 per cent in Canada compared with 8.4 per cent in the United States. Surely, this is a remarkable achievement. 1 only hope that that trend continues, certainly now after April 14 when we began to remove wage and price controls.
Average hourly wage rates in manufacturing, however, continued to rise somewhat faster than in the United States in 1977, 10.8 per cent in Canada and 8.5 per cent in the United States. But what is even more important is that Canadian productivity in manufacturing increased by 4 per cent in 1977 compared with 2.2 per cent in the United States. That gives us some indication that our productivity is catching up in relation to productivity in the United States.
Even before adjusting for the exchange rate, our unit labour costs in manufacturing increased by somewhat less than they did in the United States, that is, by 5.7 per cent compared with
April 19, 1978

6.5 per cent. The depreciation of the Canadian dollar has had the useful effect of offsetting the extent to which our costs went out of line in relation to those in the United States in 1975 and 1976. By the end of 1978 we should be back in the position we were in in 1970 and 1971 with regard to manufacturing costs compared with those in the United States. The reason I am making this comparison with the United States is that Canada as a nation sells between 66 per cent and 70 per cent of what it sells in the American market.
It is clear that our manufacturing performance has recovered. Our productivity performance in 1977 was in line with our performance in the last 25 years. In that period of time manufacturing productivity in Canada increased by 158 per cent compared with 86 per cent in the United States. In other words, year by year the margin of productivity between Canadian and United States industries has been reduced, although some difficulties still remain.
There is another aspect of our competitive position which is widely ignored, and that is the steady improvement in our competitive position vis-a-vis industrial countries other than the United States. The point is that in general while our productivity has not increased as fast as it has in western Europe and Japan, our unit labour cost position has improved because inflation has been lower in Canada. Moreover, our competitive position in western Europe and Japan has improved further because of the rise in the value of their currencies vis-a-vis the Canadian dollar and the United States dollar.
The next major question about which I am concerned is the question of confidence in the business community, confidence in the consumer and confidence in the country as a whole. There is no doubt that in the last couple of years there has been a weakening of confidence throughout, I suppose, the whole industrial world. This can be seen by the advent of third world countries now acquiring tremendous wealth and becoming industrialized to some extent. People have become more uncertain about what the future holds for Canada, and there has been concern about the existence of Canada itself which has caused a great deal of apprehension and instability.
Perhaps it is natural that we should have periods in which the future looks bright and periods in which the future becomes cloudy and we become uncertain. I suppose it is inevitable that we have these periods in our country.


Mr. Friesen:: Mr. Speaker, I wonder if the minister would permit a question, or would he prefer that I wait until the end of his speech?


John (Jack) Henry Horner: The hon. member can ask his question now, if he likes.


Benno Friesen: Mr. Speaker, I have been listening with interest to the statistics the Minister of Industry, Trade and Commerce (Mr. Horner) has been quoting. They conform quite closely with the statistics I received two days ago from the Secretary of State for External Affairs (Mr. Jamieson) which were from the Department of Finance. They show that
The Budget-Mr. Horner
productivity rose very strongly in Canada during the period from 1968 to 1977. It rose almost 40 per cent during that decade, a growth which was 20 per cent better than that in the United States, which is somewhat in line with what the minister has been saying.
As I read those statistics, I remembered the statement the Prime Minister (Mr.Trudeau) made on October 19, 1977, as reported at page 32 of Hansard.


Mr. Deputy Speaker:: Order, please. The hon. member will be able to make his speech in due time. If he has a question, would he please put it.


Benno Friesen: I am coming to it, Mr. Speaker. The Prime Minister said:
We are only 80 per cent as efficient as the United States in our manufacturing sector ... We are 80 per cent as productive-
I wonder which statement the minister would like us to believe.


John (Jack) Henry Horner: If the hon. member has difficulty believing both of them, 1 could give him a lengthy explanation. Both are quite plausible. We have been considerably behind the United States in productivity for a number of years. We are gaining ground in productivity and making substantive gains because of the greater capitalization within our industry and our increasing ability to enter larger markets.
As I was saying, clearly we are entering a period when our confidence is increasing. There are a number of reasons for this. First, there is a renewed growth in the economy. In the last year, from the fourth quarter of 1976 to the fourth quarter of 1977 our economy grew at an average rate of 4 per cent. This is still less than is required to reduce unemployment, but it marks the beginning of a recovery. We expect a continued growth in 1978 amounting to about 5 per cent, as the Minister of Finance (Mr. Chretien) has stated on a number of occasions. Obviously business confidence has also been improved by the restoration of our competitive position and by the strength of our export performance, with commodity exports in 1977 22 per cent higher in volume than in 1975. I, as well as the Minister of Finance and the Prime Minister (Mr. Trudeau), have put these figures on the record on a number of occasions. We had a surplus in commodity exports of about $2.9 billion in 1977, which was a substantial increase over the 1976 and 1975 figures.
Business confidence is also improving because the business corporate profit position is moving back to more normal levels, with an increase of 19 per cent in 1977 in corporate profits after tax. Moreover, the corporate profits available for investment, that is after taxes and the payment of dividends, increased by 26 per cent in 1977. It is true that the business profit position is not yet back to what is required, but very significant gains were made last year.
I think that confidence is improving also because of the growth in employment. We hear a great deal about unemploy-
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April 19, 1978
The Budget-Mr. Homer
ment but, as the Minister of Finance has stated on a number of occasions, there has been a substantial growth in employment. It is true that unemployment continues to be much higher than I and many other members of the House would like to see, but we have brought about an increase in new jobs in the last year by 287,000, amounting to 1,391,000 in the last five years. In my view that is a substantial growth in a country with a population as small as Canada's.
One should look at the participation factor in our economy. It has never been higher than it is now. I would like to relate back to the war years, back to 1944 when Canadians had a common goal and a common enemy and everybody was making gigantic efforts to go out into the labour force and work. More women than ever joined the labour force and worked in factories and young people sought jobs. In 1944, the participation factor was 57.5 per cent. Today the Minister of Finance stated that it is 62.4 per cent. That gives us some indication of the number of people who are now participating in our economy.


Some hon. Members:: Hear, hear!


John (Jack) Henry Horner: In my view this is a very significant factor which should be taken into account when one considers unemployment and the creation of jobs.
There are also indications of an improvement in consumer confidence. The Conference Board's surveys, for instance, have shown that consumers tend to increase their purchases over what they had intended earlier. With the additional stimulus provided by the budget, we would expect an increase in real terms of close to 5 per cent in consumer expenditures for 1978 as compared to only 2.8 per cent in 1977.
I mentioned earlier the improvement in corporate profits which lays the ground for a renewed growth in business investment. This should begin in 1978, but will certainly strengthen in 1979. However, it must be pointed out that the current level of business investment is, in fact, relatively high. Business non-residential investment in 1977 amounted to 13.7 per cent of the gross national product, about the same as in earlier years. The average from 1965 to 1975 was 13.8 per cent, and from 1970 to 1975 13.6 per cent.
Now let us take a look at the future of this country. Canada, as a major trading nation in the world, is dependent on the health of the economies of other countries and principally the United States economy. Therefore, the expectation that strong growth will continue in 1978 in the United States is reassuring. Moreover, it is to be hoped that there will be stronger growth in western Europe in 1978 than occurred in 1977. Inflation continues to be a major international problem, but Canada is faring far better than many other countries.
Now I would like to take a look at some of the charges that have been made, particularly by the media, that the province of Alberta did not benefit from the budget which was recently announced. It was said that since Alberta does not have a sales tax, they could not be compensated by the federal government for reducing it. Many newsmen asked me about this. I say that

I find the budget to be tremendously helpful to the province of Alberta.


Some hon. Members:: Hear, hear!


An hon. Member:: How?


John (Jack) Henry Horner: I like to think that I contributed a lot of thought and effort to the budget announcement.


Some hon. Members:: Hear, hear!


An hon. Member:: It certainly showed.


John (Jack) Henry Horner: Thank you. I hope it was evident to many Albertans as well as to people in British Columbia.
I have worked for four or five years to convince the Department of Finance that farmers owning family farms which are incorporated should have the privilege of passing their farms on to their sons, daughters and grandchildren without being burdened by the capital gains tax. This was finally understood and accepted and I was pleased to see it announced in the budget. I know that many farmers and ranchers in the province of Alberta are very pleased at this measure as well.


Stanley Howard Knowles: You did that when you were on this side.


John (Jack) Henry Horner: The hon. member is quite right. I did that for every farm except those which are incorporated. Now I have succeeded in doing what I could not do on the other side.
I should like to say a few words now about the Hall report on railroads in western Canada. Mr. Justice Hall said in his report that 2,100 miles of railway track should be upgraded to what he termed the year 2000 standards. How do you get the railroads to get to work and invest in the upgrading of that trackage? The major track through the northern part of the constituency of Crowfoot has always been a concern of mine. I presented a brief to the Hall commission when it was studying the railway situation in the west urging them to retain that line, which they did. They recommended that it be upgraded. I was particularly pleased to hear the minister announce it in his budget address. It will be tremendously beneficial not only to the constituency of Crowfoot but to the whole of western Canada, because it will encourage railroads to reinvest and they will have an increased cost allowance in the upgrading of the railway system there. This should speed up the whole rationalization of the railway trackage in the prairies. Naturally I think also of the $100 million which the federal government in investing directly in railroads to improve the trackage and thus western Canada's ability to get its products to market.
The government has committed itself to $75 million direct investment, over the next five years, to improve railway trackage in western Canada.
Also there have been measures to encourage investment in the development of heavy oils in northeastern Alberta and
April 19, 1978

Saskatchewan. There are three distinct measures in the budget which would encourage a third tar sands plant in Fort McMurray. The increased depletion allowance from 25 per cent to 30 per cent will encourage the building of a heavy oil refinery in Cold Lake. That project is being proposed by Imperial Oil. It will be a $3 billion to $4 billion expenditure.
Pacific Petroleum is proposing another one in and around the neighbourhood of Hardisty, Alberta. That happens to be in the northern part of Crowfoot. I was pleased to have some input in encouraging the Minister of Finance to take into consideration speeding up the development of our heavy oils.
There is a third one on the drawing board by Husky Oil in the province of Saskatchewan. There is a royalty question regarding that one which has to be ironed out with that province. Husky Oil hopes to spend $600 million in the province of Saskatchewan for its heavy oil refinery. Pacific Petroleum expects to spend in the neighbourhood of $600 million, and Imperial Oil expects to spend $3 billion to $4 billion on its refinery. If we can get these projects moving along and if the decision can be made, they are tremendous projects which will encourage employment all across Canada in the building of these refineries.


Some hon. Members:: Hear, hear!


John (Jack) Henry Horner: The current level of the Canadian dollar will stimulate significantly our exports, as well as encourage Canadian industry to supply more of the domestic market. In other words, Canada should look at the opportunities for improvement in our trade position which is affected by the present exchange rate. I like to look ahead with considerable confidence. It would be foolish to ignore current problems. The country as a whole has faced up to the problems in the past few years. On the average, Canadians are richer today than they were in past years, despite heavy and high unemployment.
As Minister of Industry, Trade and Commerce, I should outline some of the things we are attempting to do in my department. These things will benefit Canadian industry, our trade picture and small independent businessmen.
Much has been said about the textile industry in the province of Quebec, and whether or not the government has assisted that industry. Not only has this been said about the province of Quebec, but it has been said about other provinces as well. In the early part of April, an article appeared in the Financial Post. I should like to refer to that article to prove beyond a shadow of a doubt that the import controls on textiles assisted the textile industry. Investments in the first quarter of 1977 were up substantially in that industry. In part, the article reads:
Gemini Fashions of Canada, Ltd., a Winnipeg outerwear producer, is projecting a 35 per cent upswing in sales, spearheaded by a nearly 50 per cent increase in its exports to 17 countries.
That is a substantive improvement in the textile industry. The article continues:
Style Guild Ltd., a Montreal shirt manufacturer, reports a 25 per cent increase in fall bookings. Spring orders were so good it will be entering its fall
The Budget-Mr. Horner
season later than usual. Employment, though still below 1975 levels, has increased...
It continues:
Majdell Manufacturing Co., a children's sportswear producer in Montreal, has had its best spring ever and is projecting a 50 per cent increase in sales over 1977.
I could continue to quote from that article, but I put these examples on the record because of the representations some people have made that the federal government has not helped the textile industry right across Canada with its import controls and the encouragement of investment within that industry. My department has helped substantially in many other ways. We are prepared to help them further.
I have been involved in negotiations with the opposition in order to pass the bill quickly through all stages. There is a great mood for passing legislation now. I should like the Export Development Corporation bill to pass through the House quickly. That corporation is practically out of financing to ensure and guarantee loans to customers who buy Canadian manufactured goods. The Export Development Corporation began in 1969. One can look at its accelerated guaranteeing of loans, which has been tremendous. One can compare it to the export of manufactured goods and see that the Export Development Corporation has created markets for Canadian manufactured goods, and in that way created employment.
In my negotiations with Ontario members of the opposition,
I cannot understand why they are reluctant to assist me in the passing of that piece of legislation. In doing so, they know their action is very, very detrimental to the employment picture in the province of Ontario. What can one expect from the hon. member for York-Simcoe (Mr. Stevens)? On March 14, 1978, the hon. member and I were talking about de Havilland in the Standing Committee on Finance, Trade and Economic Affairs. I indicated to him that de Havilland was a going concern which employed 3,700 workers. Also I indicated that de Havilland had on order 37 Twin Otters, 17 Buffalo aircraft, eight Dash-7 aircraft and so on.
The hon. member for York-Simcoe indicated that de Havilland was one of those Crown corporations which he would put out of business, if he ever got at the reins of government. He callously disregarded de Havilland, and would throw them out of the door with one sweep of his hand. When hon. members opposite rise in the House and concern themselves with unemployment, sometimes I think they are really not serious, especially when I hear them make remarks such as that in committee. These remarks by the hon. member for York-Simcoe affected labourers and workers relatively close to home. De Havilland operates in the city of Toronto, and the hon. member's riding is somewhat north of Toronto.
I should like to refer to what my department is doing with regard to the Enterprise Development Board. Individual boards have been set up in each province. These boards have the power to guarantee loans of up to $200,000 at chartered banks. If necessary, we are prepared to increase that to $300,000. The guaranteeing of loans over and above that amount must come before the national board. Under the

April 19, 1978
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Enterprise Development Board, approximately $101 million of guaranteed loans to Canadian industries have been approved. Direct grants of $19 million have been made to Canadian industries for increased productivity initiatives and new products to meet Canadian demand.
Much has been said about the Federal Business Development Bank. Continually we are attempting to encourage it to become more venturesome with risk capital. The number of authorizations for the last fiscal year was 9,800, which is more than a 5 per cent increase over the previous year. The amount of dollars authorized by the Federal Business Development Bank in the last fiscal year increased 10 per cent over the previous one. That is some indication of what is being done within my department to encourage Canadian investment and to encourage Canadian industry to meet Canadian demands.
Much has been said about the operation of the Foreign Investment Review Agency. What about foreign investment coming into the country? If one looks at foreign direct investment in Canada one will see that in 1976 we had a deficit picture of minus $295 million. That was caused by a number of huge withdrawals, and I think particularly of Atlantic Richfield selling out and taking its money back across the line, as well as a number of other large companies doing the same. In 1977 we saw that situation reversed and we had an increase in direct foreign investment in Canada to plus $175 million. To me this is encouraging, and I am certain that in 1978 the trend which started in 1977 will continue.
The number of applications under the Foreign Investment Review Act has increased substantially. In each case we demand that before an application is approved the applicant prove to us that he will offer a significant advantage to Canada in the field of employment, a significant advantage to Canada in the field of investment and a significant advantage to Canadians in their right to participation in any takeover or new company coming into Canada.
We are doing a great deal within the department to encourage confidence in the Canadian industrial and manufacturing sectors. I want to deal briefly with the 22 sector studies we have set up within the department. For the first time we have brought business, labour and the federal and provincial governments together acting as a catalyst in a secretariat. They are studying the 22 major sectors within our economy to ascertain what stage they are at now, how large a market we can expect to gain in each of those sectors, and how we can obtain those gains. We are looking closely to see whether we can remove some of the duplication of tax structures that exist between federal and provincial governments, and we are looking closely to see whether-


The Acting Speaker (Mr. Turner):: Order, please. I regret to interrupt the hon. minister but his allotted time has expired. He may continue with unanimous consent.


Some hon. Members:: Agreed.


Some hon. Members:: No.


John (Jack) Henry Horner: May I just complete my remarks?


Stanley Howard Knowles: As far as I am
concerned, yes.


The Acting Speaker (Mr. Turner):: I definitely heard a "no" when I asked for unanimous consent.


Stanley Howard Knowles: Mr. Speaker, I should like to begin my remarks for today by confirming that I am a member of the opposition in this House of Commons and I do not like the government we have across the way. In fact, I do not believe that Canada can stand that outfit much longer. My reason for saying that is that in a good deal of what I am going to say this afternoon I shall be remarking favourably about statements made by one of the members of the present cabinet. I am not referring to the minister who has just taken his seat. He would not want a kiss of death like that. I am referring, rather, to the Minister of National Health and Welfare (Miss Begin).
As she well knows, I referred in the Standing Committee on Health Welfare and Social Affairs, on Tuesday, April 4, to a speech she made on Monday, March 13, to the Sherbrooke Federal Liberal Association. The speech was entitled "The Myths of Social Policy". I told her in the committee that I have not been so excited when reading a document since the day many years ago when I first read Edward Bellamy's "Looking Backward". She is so young I do not think she knew what I was referring to, but the fact of the matter is, for a chart of what we ought to be doing in social policy in Canada today, that speech of the minister's on Monday, March 13, was indeed outstanding. I was able to persuade the committee that day to append it in its entirety to the Minutes of Proceedings and Evidence of the Standing Committee on Health, Welfare and Social Affairs. It can be found as an appendix to issue No. 6 dated Tuesday, April 4, 1978.
I want to refer to a few things the minister said on that occasion, but before doing so may I say two other things. First, I think it should be required reading for every member of the Liberal party in this House of Commons and for every Liberal candidate who takes part in the forthcoming election, and, in particular, it should be required reading for every member of the present cabinet.
The other day the same minister made a speech during this budget debate which is to be found in Hansard for Friday, April 14, beginning at page 4528. Again, I wish to tell her that she made a very interesting and a very important speech, and I hope members of the Liberal party will read it. Indeed, I hope she is, by those speeches and the stand she is taking on social policy, causing at least a little bit of thought in the Liberal party so far as this whole field is concerned.
I shall paraphrase a few of her most important words rather than read them directly, because she did relate them to a specific item. I think the Minister of National Health and Welfare indicated the tone of both of those speeches, the one in Sherbrooke on March 13 and the one in the House of Commons on April 14, when she said words to the effect that
April 19, 1978

when one has a progressive concept it should not be lost in times of economic uncertainty. She went on to urge that people not panic and question the universality of some of our programs or their indexation to the cost of living or some other measure of monetary depreciation. I thoroughly agree with that sentiment and support it as strongly as I can. Just because the government says we are in difficult times or in times of restraint is no reason for saying that this practice of restraint has to be taken out in respect of our social programs or on the people in this country who benefit from those programs.
The theme I got from both those speeches by the minister, and it ran all through them, was that instead of talking curtailment of our social programs we should be expanding them. The speech that was made to the Sherbrooke Federal Liberal Association emphasized this point when the minister said that not only can we afford more equality, we must afford it.
I stand here today in full support of what this new Minister of National Health and Welfare is saying. I deplore as strongly as I can those who argue that there should be a falling away from the universality of some of our programs or that there should be cutbacks affecting old age pensions or family allowances or medicare programs. On the contrary, I agree with the sense of pride with which the minister referred to those programs that have been developed in the last few decades as some of the best programs that we have in Canada today.
The Prime Minister, whether it was in jest or something else, referred to my friend, the hon. member for Nanaimo-Cowichan-The Islands (Mr. Douglas), and myself as leftovers from the depression, but he certainly cannot say that about the Minister of National Health and Welfare. She is far too young to have any memory of the depression. She knows about it only from reading about it in the history books. However, she is aware, as a person who is alive today, of the fact that unless our society continues to exercise compassion and concern for all our people we are not worth the name "civilization" or anything else.
I shall now refer to that speech that the minister made at Sherbrooke, Quebec, on March 13. She started it quite openly by noting that in recent times there seems to have been a drift to the right. She noted the fall of certain social democratic parties in countries in Europe, and she also noted that the New Democratic Party had lost two governments in western provinces in the last two years. As I say, this was the theme of her speech: There is a move to the right and we had better face it. She goes on to say:
But there is a danger in all this too-a danger of which I have to be aware as Minister of National Health and Welfare, of which all of us should be aware as decent human beings.
What she is saying is that the danger of which we have to be aware is the drift to the right, particularly when that drift starts to attack social programs. She goes on:
That danger is that in the current swing of the political pendulum we will overlook the needs of millions of Canadians who are far less fortunate than we
The Budget-Mr. S. Knowles
are. It is after all, very easy to turn our backs on poverty, on the struggles of a deserted welfare mother with three or four children or of a young blind person or of the 55-year-old single man crippled by accident or disease, unable to work but not old enough to receive an Old Age Pension. It is all very convenient to turn our backs on the nearly 600,000 families in Canada who are poor in spite of the fact that they do work, many of them very hard indeed.
I emphasize the next sentence:
If we turn our backs on them we can hardly claim to be a society that believes in social justice or in the worth of dignity of humanity.
Later on, as she is going through that speech seeking to dispel all the various myths about social policy in these times, she dealt with a particular one in these words:
Another of the cherished myths to which Canadians hold-the fourth one on my list-is that the distribution of income in Canada is already too equal and that this is destroying the incentive to work.
I am not reading from some speech, Mr. Speaker, that the hon. member for Nanaimo-Cowichan-The Islands or I made back in the 1930's. I am reading from a speech made this year by the present Minister of National Health and Welfare. Continuing:
To really believe that, one has to be quite blind to reality so please consider the actual figures. In 1977 the poorest 20 per cent of Canadian families received less than 6 per cent of total Canadian family income while the richest 20 per cent of Canadian families received 40 per cent of all the income. These figures are, unfortunately, very stable. The share of income going to our poor families has scarcely changed since the end of the second world war. It rises a bit in good economic times and falls in the bad, indicating that more affluent Canadians, whatever their good intentions, do make a habit of riding out recessions on the backs of the poor, but in general, the last 30 years have not seen significant redistribution of income.
This is not a speech left over from the depression, nor is it some street corner attack; this is a speech by the present minister speaking, out of her study and perception, on the problems facing many Canadians today. My hope is that this speech will be read by every member of the Liberal party in this House, and in particular by every member of the cabinet.
I have a few more lines that I would like to read from this Sherbrooke speech:
What this means is that Canada's poor families are getting along on an average of one-seventh of the income of families on the upper one-fifth of our population. You-
I gather that the "You" referred to the Liberals who were in the audience she was addressing in Sherbrooke.
You are likely all in that upper one-fifth. Divide your family income by seven and try to imagine what it would be like living on that one-seventh.
She goes on and refers to further statistics that are highly sophisticated and technical, but which show that Canada and the United States are twice as bad as the next worst country, Britain, and are far worse than Germany, Norway, Denmark or Sweden. She is referring to the way our income is distributed and how wealthy the wealthy are and how poor the poor are. Then she says:
Yet we happily go along punishing the poor while we cherish the comforting myth that we cannot afford any more equality.
I am still quoting the hon. Minister of National Health and Welfare, and I emphasize the next word and the words that follow. She says:

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The Budget-Mr. S. Knowles
Nonsense. Not only can we afford more equality, if we look at how well some of the more equal countries have done economically we could argue that not only can we afford it, we must afford it.
I have no qualifications to make in my praise of that speech made by the minister at Sherbrooke, Quebec, on March 13. It is a stirring call for all of us to realize that we have built up in this country over the last few decades measures of social policy that are good-and I am going to quote something she said in the House that underlines that point. But I realize that that minister is afraid that, because of the swing to the right and because of the calls for restraint, her own cabinet colleagues will yield to the pressure to cut back on those social programs. I am sure that she expresses the view, and I certainly express mine, that the answer to calls for restraint in times like these is to fight those calls with the call that really matters; namely, for more equality and for programs that will really get to and help all of the people of this country.
Not only was there that speech by the minister in Sherbrooke, Quebec, on March 13, but there is also the speech she made in this House on April 14 when she went over the programs we have developed and said:
Of course, numerous social programs which have been set up during the last decade or in the last fifteen years do not only benefit Canadians who are poor. Indeed, those social programs improve the quality of life of the vast majority of Canadians, which explains their being so popular.
Later she talks about another phase of the matter and says:
We are all richer for the fact that our society is compassionate enough to care for those of our people who need services like day care, rehabilitation, counselling or nursing home care. Even more directly, we are all made richer by the provision of universal access to complete medical care via programs instituted by federal governments over the last three decades.
I am so pleased with such statements that I do my level best to forget what the Liberals in this House were saying during the years we were fighting for improved social programs, fighting for hospitalization and fighting for medical care. I cannot really forget their opposition and the decades it took to persuade the Liberals to go through with the things they committed themselves to in 1919. Because we have this minister now saying that much of what is good for society is measured by the extent to which we have established income support programs, health programs, day care programs and programs that enable people to have a richer quality of life, I commend her and I am pleased to draw attention, as I am doing, to these two speeches of the minister, the one made in Sherbrooke on March 13 and the one made in the House of Commons on April 14.
I think it is clear that she means one should not lose a good concept in times of economic uncertainty and that people should not panic because there are attacks on programs of universality, and so on. I think we should be doing the very opposite and doing it in this House. That is why I am doing it today. The time has come to say, as some of us have been saying every chance we get, that what is needed today are improvements in the programs we have.

The Ontario Royal Commission on Pensions is meeting in this province. I know it is a provincial commission and thus not the responsibility of this government or this parliament, but I think we all ought to be interested in the briefs presented as it travels from city to city. The press has reported most of those briefs. I hope hon. members are aware that a number of themes run through the briefs, whether they come from the Canadian Labour Congress, pensions associations, individuals, or whatever. To a considerable extent the theme is that with all we have done to establish the universal old age pension, guaranteed income supplement, Canada Pension Plan and so on, there are still many thousands of older people having a difficult time getting by and that we ought to be increasing the basic amount of old age security.
The government must not give us the line that indexing by the consumer price index every three months keeps old people in a position that they can keep up with things. The amount of the pension is always behind and the amount it is based on was inadequate to begin with. The fact is that a substantial increase is needed and practically all the briefs presented to the Ontario royal commission, or all that I have noted, have said this.
They have also made a particular point of another matter which is a real concern of mine, the fact that older women seem to have a tougher time even than older men. Women in the 60 to 65 age bracket are finding things very tough, particularly with the spouse's allowance that does not do anything for those of single status. It is also true that women between age 65 and 75 seem to suffer the discrimination that women have suffered all their lives.
I do not accept the contention that because this is a time of restraint we should not be saying these things. In a time of restraint there should be more of an attempt to divide what we have. We should not be riding on the backs of the poor or of older people to try to get our economy going. I believe attention should be paid to these appeals that are being made, so I take my stand again in these so-called times of restraint for a substantial increase in the basic amount of old age security.
I contend that we should also do something right away about the position of persons between ages 60 and 65. The spouse's allowance helps a few, but very few. It is still based on the proposition that a woman can get a pension if she is in that bracket, provided she has a man. The fact that she may have a need or some other entitlement does not help her. It is wrong in every respect.
I think on some basis we should be getting the pension at age 60. The minister comes back at times and says persons between age 50 and 65 are in trouble. I am prepared to listen to some other ways of providing pensions for people in that bracket who need them, but let us not put it on a marital basis. Most of the people in that age bracket who are in need are women. It can be said that the spouse's allowance is an equal pension because it works either way, but most who get it are women. To the extent that we do not do something for the age bracket, whether 60 to 65 or 50 or 55 to 65, we are carrying
April 19, 1978

forward into later years the discrimination that women seem to have suffered all their lives.
I can mention plans like the railway pension, pensions of retired civil servants and those pensions that have not been escalated although others have-all those things should receive attention. We should also be doing something right away for our veterans. I was pleased to see that someone else has taken up the motions that my friend Jack Marshall used to move. We had one today from one of my friends to my right, calling for an increase in the basic rate of the war disability pension and the correction of the 48 per cent rule as it affects widows. I am sorry that someone on the government side said no to that motion. These things ought to be adjusted now. Let us not have the line that there is restraint. That was not the argument when these people joined up to serve the country, so let us not have that argument now.
Another thing I should like to refer to is the question of reciprocity in terms of agreements between this country and others. For a long time we expressed concern, particularly about United Kingdom pensioners in this country who do not get any escalation. We were told it was because there was no agreement and there was no legislative basis for such agreement. Last year we passed a bill which provides the legislative basis for an agreement between Canada and other countries with plans similar to ours. We are told that negotiations are still going on, but the people who are waiting for their pensions to be escalated are in many cases dying while they wait.
Medicare is one of the highlights of the social programs in this country. It is under considerable attack in this province at the moment because of the increase in fees that the government at Queen's Park is proposing. One hopes the discussions that are going on there and the minority situation in which the government finds itself may result in a resolution. It is not enough to keep and maintain medicare as it is. There are problems in terms of home care. Some of the provinces have moved way ahead in this field and there are provinces which are way behind. Surely we have reached the day where we can recognize the truth of the minister's statement which she made the other day. I shall read it again. It says:
We are all richer for the fact that our society is compassionate enough to care for those of our people who need services like day care, rehabilitation, counselling or nursing home care.
This is not a call for us to spend money or a call for us to be extravagant; this is a call for us to be a decent and compassionate society. That call is just as important in times of restraint as it is in times of affluence. That is why I was so appreciative of the speech which the minister made in Sherbrooke a month or so ago and again of the speech which she made in this House last Friday afternoon.
The other angle, of course, that is facing us is the question of a guaranteed annual income. I have been so nice to the minister up to this point that maybe I can still be her friend if I express a disappointment. It really annoys me to witness the number of times that she gets up and blames the provinces
The Budget-Mr. Lalonde
because we have not made any progress in terms of a guaranteed annual income. The leadership for these things should come from here. I regard this as just an excuse to say that the provinces are not willing. As a matter of fact, when there were three New Democratic Party provincial governments in this country at least there were three provinces which agreed.
Just before the 1974 election I remember being telephoned and asked by one of the officials in the Department of National Health and Welfare whether we would mind if the negotiations went on during the election so that progress could be made no matter which party came into power after the election. I certainly gave my approval to that idea. But all of the things this minister has been saying about our society being good for what it does for our people, about our society being good because it is a compassionate society, that it is a society which believes in justice, hinge upon what she said at Sherbrooke, that to increase the amount of equality and to increase the availability of a good, rich life to all our people we will have to crown our social legislation, our pensions, old age security, Canada Pension Plan, family allowance, medicare, housing programs and so on with a guaranteed annual income program. Because, as she says, the hundreds of thousands of people who are at work still do not have enough to enjoy life as the upper echelons in this country enjoy it. In my view, this is what a budget should have been all about, Mr. Speaker.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


Stanley Howard Knowles: May I just say again that I hope hon. members of the Liberal party will read their minister's speech.


Hon. Marc Lalonde (Minister of State for Federal-Provincial Relations):: Mr. Speaker, I am very happy to participate in this important debate on the budget tabled last week by my colleague the Minister of Finance (Mr. Chretien). First I would like to congratulate him, because I think it is a remarkable budget, not only on the economic level, but also on many other aspects. I rise today in this debate to talk about a subject especially dear to my heart-federal-provincial relations. I would also like to correct the distortions and glaring misconceptions which the hon. member for Kingston and the Islands (Miss MacDonald) took the liberty of spreading yesterday with remarkable impudence concerning the federal-provincial perspective of the budget presented on April 10 by my colleague the Minister of Finance.
As many speakers before me have said, it is a budget which satisfies the short and medium term needs of the Canadian economy as they appear now, a responsible budget which aims

April 19, 1978
The Budget-Mr. Lalonde
to spur consumption, and hence production, while slowing down inflation, an innovative budget which, notwithstanding the comments of the spokesman for the official opposition, represents a step towards closer federal-provincial consultation on budget matters.
In this regard, I would have more faith and confidence in the views expressed by Ontario finance minister Darcy McKeough than in those of the Conservative opposition in the House, which in the last week has endeavoured to find faults in all the federal-provincial aspects of this budget. And contrary to the Conservative members in this House, here is what the finance minister of the Ontario Conservative government had to say before the provincial legislature on April 10. Dealing with the budget introduced by the Hon. Jean Chretien, Mr. McKeough said, and I quote:

It contains a major new federal-provincial initiative to stimulate the Canadian economy and improve confidence across the country. This short-term and shared-cost action represents a significant first in fiscal policy co-ordination in Canada. Ontario has played an important role in the design, development and implementation of this proposal.
That is the view expressed by the Conservative minister of finance for Ontario. I would hope that the Conservative opposition in this House would take the trouble to listen. If they do not want to listen to us. I would ask that they listen to a man of experience and knowledge, and to good politicians too who are at the provincial level in their party but not in this House.


An hon. Member:: Give some consideration to the outbacks. [Translation]


Marc Lalonde: A budget which is not only innovative, Mr. Speaker, but at last a budget whose overall thrust is consistent with the positions unanimously endorsed and proclaimed by the right hon. Prime Minister of Canada (Mr. Trudeau) and his provincial colleagues at the end of last February's economic conference. I should say unanimously minus one, since the premier of Quebec had chosen by then to act as a sulky child, to back out at the last minute and not to endorse the final communique of the conference.
The reason for that unreasonable gesture is quite transparent. Chances were the conference would have shown the people of Quebec and of the other provinces that Canadian federalism can function harmoniously and lead to co-ordinated federal and provincial policies, provided all governments show good will and good faith. Now, there is nothing insulting to the Quebec government in saying it is a separatist government. It is therefore in its interest to block systematically every federal-provincial agreement or consensus in the hope that it can thus convince Quebecers that federalism does not work and never will.
Therefore, Mr. Levesque, at that first ministers' conference, left the conference room, slamming the door. Again it was to promote the cause of separatism, as I shall show shortly, that the present finance minister refused for three weeks to say

whether or not he was in favour of reducing the sales tax accross-the-board as a step to give new impetus to our economy. For three weeks, Mr. Speaker, he was unable to give an answer, unable to decide whether such a step should be taken or not. His silence had but one purpose, at least the only logical one I can imagine, and that was to allow Mr. Levesque to commit another of his flights of language, through which he tries to stay in the public eye if not to keep his popularity with the electors, and to scream rape and prostitution and put forward a counter-proposal which tries to create the illusion that Canadian federalism cannot work. Once again his mano-euver is obvious, transparent. Obstacles are put in the way to keep the Quebec cart from going forward, and then right and left there are cries saying it got bogged down in the federal ruts. And, as usual, hon. members opposite swallowed it all, hook, line and sinker.
That is why, as the right hon. Prime Minister pointed out recently, the position stand they chose to adopt on the matter is wrong. We do not doubt their sincerity, but we have good reason to doubt their political acumen. In that regard, the unbelievable speech committed yesterday by the hon. member for Kingston and the Islands (Miss MacDonald) quite astonished me.
As usual when she deals with federal-provincial relations, the hon. member peered at the sales tax issue through her bifocals. The big bad federal government was cast by her in the darkest, most sinister perception. The poor little provinces were seen through the rosiest of rose-coloured glasses.
One heard the hon. member refer to Alice in Wonderland although she added two new characters to Lewis Carroll's famous fairy tale, the big black federal bobcat and the big provincial flamingos. The hon. member seems to think the provinces can do what they want, when they want and how they want without any obligation whatsoever to consult with the federal government even in areas such as budgetary planning, which has obvious implications for both our orders of government. Thus ten provincial budgets were recently tabled without provincial treasurers bothering to consult with the Department of Finance, even in general terms, on the budgetary options open to them and their respective economic implications for the Canadian economy as a whole. I have not heard the hon. member for Kingston and the Islands (Miss MacDonald) complain about that.
On the other hand, it often appears that the sensitivity and consideration which the hon. member would want the federal government to apply to federal-provincial relations would prevent that government from doing anything, even in areas under its exclusive jurisdiction, unless all provinces had previously signed a formal agreement on the dotted line.
Such is the tale we were served yesterday by the official opposition. It can only be dismissed by anyone the least bit familiar with the political realities of federal-provincial rela-
April 19, 1978

tions as electoral posturing. In fact, I am tempted to paraphrase Lewis Carroll and call it "Flora in Postureland". Why posturing? Because the hon. member purports to agree with the government's approach to federal-provincial relations and then distorts and misrepresents the facts on the sales tax issue in her fruitless attempts to show that we do not practice what we preach.
The hon. member says that federal-provincial co-operation must be a two-way street. We agree. We have said that many times and we have practised it. She says there should be an input from the provinces in federal decision-making. We agree, although we would like her to add in order to be consistent with the statement to which I have just referred that there should also be a federal input in at least some provincial decision-making.
The hon. member says that in areas of shared interest or joint jurisdiction the federal government should not adopt a take-it-or-leave-it attitude. Again, we agree. She says that the Minister of Finance (Mr. Chretien) should have taken his cues for the budget from the February first ministers' conference. The government fully agreed with that and the Minister of Finance did so.
What is all the fuss about? The fuss is about the Tories clutching at every straw in the wind to avoid being blown away in the next federal election.


Some hon. Members:: Hear, hear!


Marc Lalonde: I do not have to clutch at straws to show that, in the matter of sales tax, not only were the provinces consulted, but their views had a decisive influence on the substance of the budget tabled on April 10 by the Minister of Finance.
The notion that the reduction in sales tax could well be the most effective stimulus in the country at this juncture did not come out of the blue. It has been the object of public discussion in Canada for over a year. It was broached by my colleague the Minister of Finance at a meeting with his provincial counterparts last October. It was raised again by some provincial representatives at the December federal-provincial conference of finance ministers preparatory to the first ministers' economic conference. The arguments in favour of this measure have been vigorously and publicly rehearsed through these months by prominent members of the business community and the treasurer of Ontario, among others.
No attempt was made at the first ministers' conference to deal with, or come to agreement on, the specifics of budgetary planning. Government leaders rather sought agreement on broad principles which would guide and harmonize their action in the medium and long term. One such agreement was on the need to ensure that-and I quote from the final communique of the conference:
-the trend of government expenditure growth should be held, on average, to less than the trend growth in the value of the g.n.p. or gross provincial product.
As a result, the Minister of Finance announced in his budget speech that the expenditure ceiling previously set by the President of the Treasury Board (Mr. Andras) for fiscal year
The Budget-Mr. Lalonde
1978-79 had been lowered by $350 million. Most provincial budgets similarly reflected this federal-provincial agreement on expenditure restraint.
The tax concessions proposed by the Minister of Finance for research and development expenditures, oil recovery systems, upgrading plants and earned depletion for non-conventional projects also reflected concerns expressed by the provinces at the first ministers' conference. As for the tax advantage extended to railways, it responded to concerns privately expressed by provincial representatives, both at the first ministers' conference and at meetings preparatory to it.
But the first ministers also agreed at their February meeting that-and I quote again from the conference's final communique:
-the general instruments of monetary and fiscal policy should be used to encourage the growth of demand which would bring the desired growth of output and employment, at declining rates of inflation.
It was from this agreement that my colleague the Minister of Finance took his cue in proposing to the provinces a jointly-financed reduction in sales tax. It soon appeared that this fiscal instrument was by and large the most appropriate one to achieve both accelerated growth in demand and lower inflation rates.
Having tentatively reached this conclusion, the Minister of Finance and his officials initiated what are probably the most extensive pre-budget federal-provincial consultations ever in our financial history.


Some hon. Members:: Hear, hear!


Marc Lalonde: They did that not only by telephone, although I cannot understand the excitement, worry and concern of the hon. member for Kingston and the Islands about using the telephone as a system of communication. In any event, it was not only through telephone calls, as the hon. member suggested yesterday, but also through a series of meetings with provincial counterparts.
So that everyone will know, particularly opposition members, I would like to put on the record the chronology of these consultations. On Thursday, March 23, the Minister of Finance discussed the sales tax proposals by telephone with Mr. McKeough of Ontario and Mr. Parizeau of Quebec.
On Friday, March 24, the minister was in contact with Mr. Parizeau to discuss the sales tax proposal and other issues.
On Monday, March 27, the Monday right after Easter, the deputy minister of finance got in touch with all his provincial counterparts, with the exception of Mr. Collins of Alberta, where there is no sales tax, as hon. members know. The proposal was elaborated upon and discussed by finance officials on Monday afternoon, and a series of meetings was arranged for Wednesday.
On Tuesday, March 28, arrangements were completed for meetings with provincial officials on Wednesday. By this time the Minister of Finance had tried to contact all provincial

April 19, 1978
The Budget-Mr. Lalonde
ministers of finance and had spoken with all of them, with the exception of those for Nova Scotia and New Brunswick.
On Wednesday, March 29, the minister travelled to western Canada for discussions with his counterparts in Manitoba, Saskatchewan and British Columbia and with their officials. The minister telephoned Mr. Leitch, the minister of finance of Alberta. Finance officials met with the four deputy ministers of finance of the Atlantic provinces in Halifax and with the Quebec deputy minister of finance in Quebec City. Ontario officials met with the federal deputy minister of finance in Ottawa, and the latter also spoke with the deputy minister of finance of Alberta.
Then on Thursday, March 30, the federal Minister of Finance met with Mr. McKeough and Mr. Parizeau in Montreal. Mr. Parizeau was to call back on Friday, March 31.
On March 31 the minister tried to contact Mr. Parizeau, but was told that he could not be reached.
On Saturday, April 1 and Sunday, April 2, officials confirmed a meeting of officials on Monday in Ottawa, and work proceeded in the department on the preparation of material for the meeting. The minister of finance of British Columbia, in discussion with the federal Minister of Finance, stated that instead of adding one point for six months to the two points to be Financed by the federal government, British Columbia would prefer to add two points for a further three months.
On Monday, April 3, a meeting was held in Ottawa with representatives of all provinces to discuss the proposal further. A consensus emerged from the meeting that alcoholic beverages for home consumption should not be included. It was also recognized that in all provinces, with the exception of Newfoundland, tobacco products are taxed under separate legislation and should therefore be excluded. In Ontario amusements are taxed under the retail sales tax act, and Ontario officials indicated that they would prefer to exclude amusement taxes from the arrangements.
From Tuesday, April 4, to Friday, April 7, the Minister of Finance discussed the matter with Mr. Lyon, premier of Manitoba, who was in Ottawa. New Brunswick delivered its budget on Tuesday. During this period the minister was constantly in contact with provincial ministers and spoke with some of them on several occasions. He advised them that it would be desirable if they would be ready to respond to his offer should he decide to present a budget. This enabled both Manitoba and British Columbia to take the proposal into account in their budgets and to present them on the same date as the federal budget.
The deadline for completing budget preparations was Thursday evening. By this time all provinces, with the exception of Quebec, had agreed to the proposal.
On Monday, April 10-budget day-the minister telephoned all provincial ministers before delivery of the budget to confirm his proposal and officially seek their responses. Only Mr. Parizeau indicated that he would disclose his answer within a few days. All the others gave a positive response.

Is this lack of consultation? Is this a take-it-or-leave-it attitude? How can the opposition seriously talk about lack of federal-provincial consultation? How can hon. members opposite talk about paternalism and take-it-or-leave-it attitudes? Never in the history of this country has there been a federal budget in which there has been more honest, clear and precise consultation with the provinces.


Some hon. Members:: Hear, hear!


Marc Lalonde: The hon. member for Kingston and the Islands likes to refer to press articles. I suggest to her that she refer to an editorial in the Ottawa Journal of April 14 which I think summarizes the situation extremely well. It says:
Mr. Levesque and his finance minister aside, the country should be applauding the co-operation between Finance Minister Jean Chretien and his provincial colleagues. As the proportion of tax dollars controlled by Ottawa continues to shrink (it is now down to 40 per cent), so does the ability of the federal government to influence the course of the economy. Intelligent, non-partisan collaboration is required in these times.
Mr. Chretien believes that the good spirit developed at the so-called economic summit was the reason he was able to achieve such general agreement on the sales tax idea. That encounter certainly helped. The country is fortunate that provincial leadership, Quebec excepted, is now probably in the hands of more reasonable, moderate men than at any time in Canadian history.
Mr. Chretien sought and received help, and all Canadians should applaud that.


Some hon. Members:: Hear, hear!


Marc Lalonde: I am sorry that only the opposition in this House seems to be unable to applaud such a development.

Mr. Speaker, there was never any rigidity nor any paternalism in our relations with the provinces on that subject. The consultation that has taken place was more than just a series of quick phone calls. The meetings I have indicated in the file and which cover an 18-day period should satisfy any honest person that extremely comprehensive consultation has taken place during the whole period between the Minister of Finance and his counterparts of the various provinces.
This is certainly not a question of taking it or leaving it since, like all other provinces, Quebec had 18 days to suggest changes. In fact, Saskatchewan and British Columbia did so and the Minister of Finance accepted them and took them into consideration in his budget. Only the Quebec finance minister was unable to come to a decision even insofar as accepting or refusing a proposal as simple and as elementary as this one. I should note that had Quebec said no at any time during these discussions, the Minister of Finance would certainly have re-examined his proposal and reconsidered the whole issue.
But how can there be normal federal-provincial relations when a government like that of Quebec simply seems to play hide-and-seek and tries to prevent the system from working? If at times we reach a stalemate in this area, the blame does not rest with the federal government but with the Quebec government which is doing everything it can to prevent federalism from working.
April 19, 1978

Mr. Speaker, the federal government has never suggested and is not suggesting now that the retail sales tax is its responsibility. Provincial authorities set and administer this sales tax, they are the ones who must decide what type of sales tax they want to collect, whether they want to increase them, reduce them, or increase them across the board or selectively.
In this budget, we have offered to share the cost of reducing the sales tax in the various provinces without any product discrimination, and all the provinces except Quebec have accepted this offer. Like I said earlier, even after three weeks of consultation the Quebec government was unable to make up its mind before the presentation of the federal budget on April 10. Since then it has come to the conclusion which we all know and which prevents Quebec from being eligible for the total sum that we have provided in our budget in this regard.
Mr. Speaker, the offer of the Government of Canada remains on the table and we do not intend to withdraw it. Since the Quebec finance minister took his decision, the federal government has already indicated its willingness to consider some changes to this formula if necessary. For example, we would be prepared to consider that the provincial contribution of 1 per cent not be required on each and every item or product which could benefit from the federal contribution of 2 per cent, and that the provincial government might reallocate as it pleases its contribution to restrict it to some products only.
Mr. Speaker, I shall add that the government is still prepared to consider, after consulting the other provinces concerned since Quebec is not the only province involved in this matter, any other sales tax arrangement the government of Quebec could propose provided it does not have the effect of using federal funds to break up the Canadian common market.
Mr. Speaker, I shall add that as federal government we shall make every possible effort to prevent the people of Quebec from being penalized in comparison with the people of Canada as a whole, because of the lack of co-operation on the part of the Quebec government with the federal government and with the other provinces. The people of Quebec are affected enough by the negative effects of the separatist options of the government which has been in power for two years in that province.
Mr. Speaker, my time is almost up. I would simply like to stress once again that in this matter the federal government took all the action that could be expected to come to an agreement with all provinces. For the reasons I indicated the Quebec government did not want to co-operate in the time frame available. Nonetheless, I repeat, we are still willing to continue to co-operate and to try to invent solutions which will be fair for the population of Quebec and for Canadians as a whole. But that requires that the other side have something else in mind than preventing the federal system from working.
The Budget-Mr. McKenzie


A. Daniel McKenzie: Mr. Speaker,
I welcome the opportunity to speak on the budget which was presented on April 10. It is a budget which will not bring any great change in Canada's economy or in the rate of unemployment. How can anyone take seriously the budget presented by this government which is spending $1 billion more a month than it takes in? The facts speak for themselves. It is ridiculous, and it shows what an irresponsible group of individuals they are who would allow such a situation to come about. They are telling us that this budget will create a miracle with temporary sales tax reductions. We will see absolutely no improvement in the record of unemployment or in the economy of this country.
I will be checking very closely the remarks made by the Minister of State for Federal-Provincial Relations (Mr. Lalonde) who gave his version of the consultations with the premiers, and I will be checking it out with the premier of Manitoba.
I have to laugh at the comment made by the minister that we do not practise what we preach. The most classic example of the government not practising what they preach is contained in a document that has been printed recently entitled "A Legacy of Spending". The author is Edward Murphy of CJOR, a radio station in Vancouver. He has the government's ten year dismal record here. It shows how the Canadian taxpayer has been taken to the cleaners like no other taxpayer. Mr. Murphy states on the first page:
On Wednesday, August 13, 1969, Prime Minister Pierre Elliott Trudeau went on national television in a major press conference to talk to the Canadian people about inflation and the country's financial future. He said this: "We would be on the way to financial disaster if nothing were done to bring spending under control. To spend vast sums on welfare, education and other programs while allowing inflation to continue would merely place hundreds of thousands of Canadians on a treadmill they could not escape."
The Prime Minister also committed his government to a substantial cut in the federal civil service. What has happened since August 13, 1969 ...
Government spending increased by .. .
It increased by 410 per cent, or over $35 billion.
Federal civil service increased by ... 45 per cent.
How could anyone take this government seriously? Their word means absolutely nothing. The whole history is in here. I cannot read it all, but one thing that really annoys Canadians no end is the ridiculous Canada Council grants. I would like to read one classic one: $170,000 to study air breathing fish of the Amazon river. How ridiculous can you get? How can anyone take this government seriously? Another grant of $17,700 was given to carry out a dialectological survey of the French language spoken in eastern Canada. Here is another one: $7,605 to study the economic basis of Machiavelli's political thought. Good heavens! How could we take this budget seriously? What kind of an elected official would hand out taxpayers' money like that?
There are other examples of grants to different publishing companies. I would not dare read out in this House the words

April 19, 1978
The Budget-Mr. McKenzie
which are written out in these poems that have been compiled and paid for with taxpayers' money. Here is one in language which can be read out in the House:
Mix Mix Tom Mix
Mix Mix Tom Mix
Mix Mix Tom Mix
This goes on for about 25 paragraphs. Canadian taxpayers paid money to someone who does not want to work to compile this ridiculous nonsense.
There are many concerned Canadians who are putting out publications. Here is one on the cover of which is written: "Pierre Elliott Trudeau . . . You have failed ... miserably! The Trudeau Record, 1968-1978". In the opening pages the author, Michel Robert, states:
Who am I to write this book? A nobody! Just an ordinary but concerned citizen. But it is high time the nobodies of Canada speak out loud and clear.
The government will be hearing more from the nobodies because they are fed up. In fact, they are so fed up that they are willing to spend their own money to publish documents such as the one by Michel Robert.
The book continues:
As a matter of fact, there are many Canadians that think that Pierre Trudeau is deliberately creating economic chaos in Canada to prove that the system does not work and to gain sympathy for his socialist cause.
That is a very devastating and strong statement. We must look at the record unemployment, debt borrowing and uncontrolled spending. Those records do not indicate good management of the country. The facts speak for themselves.
The hon. member for Winnipeg North Centre (Mr. Knowles) commented upon the government and politicians turning their backs on the blind, crippled and underprivileged. I want to assure the hon. member that no one in the Conservative party will turn his back on the blind, the handicapped or the poor. We made this perfectly clear during the 1974 election campaign. We pointed out in our prices and incomes program that over five million Canadians were below the poverty line, and that it was important to bring inflation under control in order to help these people. They are still below the poverty line and still suffering under the same government which has been in power for the last 15 years.
I was amused by the Liberal speeches yesterday which praised the government for the budget and indicated how wonderful the last ten years have been. I do not know how such statements could be made. Our standard of living dropped from second position down to tenth. How can the government indicate that it has done a good job? The evidence indicates a good job has not been done. It is unbelievable what has been accomplished by the government.
Many Canadians are leaving this country, and much investment money is leaving as well. I should like to deal with that in some detail. Canada is no longer an attractive country to invest money in. If the government was good and managed its affairs properly, investment money would be attracted and

investors and their money would remain here. That is not the case. This government is helping out an economy; it is assisting the American economy. The government is the best friend the United States has ever had. There is a real boom in Florida and California, and Kentucky is now calling itself the eleventh province because so many Canadians and Canadian firms are moving to that state. I did not hear any of the Liberals mentioning those facts yesterday. Neither did I hear any of them say how they propose to stop this outflow of capital and attempt to keep Canadian businesses here. The government's make-work projects such as Flip will not make up for this.


Mr. Lumley:: What do you want to do?


A. Daniel McKenzie: The parliamentary secretary thinks it is a big joke.


Edward C. Lumley: We have not heard your policy yet.


A. Daniel McKenzie: If the parliamentary secretary allows me to continue, he will hear my policy in a minute. The government should adopt a policy which does not harass, regulate and tax business to death. Everything should be done to encourage business. It is a matter of philosophy, not a matter of policy.


Edward C. Lumley: What is your philosophy?


Walter David Baker: Stop interrupting.


The Acting Speaker (Mr. Turner):: Order, please. The hon. member for Winnipeg South Centre (Mr. McKenzie) has the floor.


A. Daniel McKenzie: Another thing which is driving business out of Canada is the 3,300 orders in council which were implemented last year. The government has caused much uncertainty in the country. These problems did not exist before. Liberal members talked about the last ten years and praised the Prime Minister (Mr. Trudeau), who has the most disgraceful record of any politician in Canada. In April 1968 there were 375,000 unemployed. Today there are well over a million. The unemployment rate in 1968 was 4.5 per cent. Today it is around 8.3 per cent.
Youth unemployment is another real problem in Canada. In 1968 the rate was 7.4 per cent, and today it has doubled to 14.8 per cent.
The record in Quebec is very dismal. In 1968 unemployment in the province of Quebec was 5.9 per cent. Today it is 10.9 per cent. Under the aegis of the present Prime Minister (Mr. Trudeau), total unemployment has practically tripled. Approximately ten years ago Canada had an unemployment problem in only a few areas, but today it has spread right across the country.
I should like to refer to some statistics regarding the differences between Canada and the United States. Over the past ten years, our deficit has increased 11.5 per cent. In the United States, where some control and some sound management is being exercised, it is only 2.7 per cent. In Canada expenditures have increased 3.9 per cent, and in the United States 2.4 per
April 19, 1978

cent. The deficit expenditure rate in Canada rose from 7.3 per cent to 22 per cent, which is indicative of complete and total mismanagement of the nation's economy and the taxpayers' dollars. The deficit expenditure rate in the United States fell from 16.5 per cent to 14.6 per cent. The Americans are attempting to control government spending. This is necessary if inflation is to be cured.
Returning to the matter of investment leaving Canada, in 1976 this question was raised, first by the hon. member for Edmonton West (Mr. Lambert). At that time he pointed out that it was becoming a very serious problem. Also he indicated a very serious political climate was being created, and this trend of investment and business leaving the country was commencing. I received some documents from an investment
The Budget-Mr. McKenzie
councillor in Winnipeg, Mr. Peter Henry Jerch. Mr. Jerch is working on behalf of 64 Canadian companies that are planning to move out of Canada and expand their facilities in the United States. This is a clear indication that the business community has no faith in the government or the country. There is no way any of the government's short-term projects will counter the mass movement of business investment money which is occurring.
May I call it six o'clock, Mr. Speaker?


The Acting Speaker (Mr. Turner):: Order, please. It being six o'clock, this House stands adjourned until 2 p.m. tomorrow.
At six o'clock the House adjourned, without question put, pursuant to Standing Order.

Thursday, April 20, 1978