1978-02-22

ROUTINE PROCEEDINGS

[Stage Direction]
employees before the April 1 deadline when DSS will become the sole contracting authority for temporary help services, I move, seconded by the hon. member for Ottawa-Carleton (Mrs. Pigott):
That this House direct all subject matter to the appropriate standing committee to immediately examine the practice of making temporary employees term employees before the April 1 deadline and that the committee call the Public Service Alliance and the President of the Treasury Board as witnesses.

Mr. John C. Crosbie (St. John's West):: Mr. Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. In view of the statement in the House of Commons by the Minister of Finance (Mr. Chretien) on Monday, in reply to a question posed by the Leader of the Opposition (Mr. Clark) as to whether it was the intention of the government to draw on the stand-by credit of $1.5 billion arranged last September, that "The answer is no, Mr. Speaker", and in view of the statement of the Minister of Finance in the House of Commons yesterday, when asked by the member for York-Simcoe (Mr. Stevens) whether he stood by his statement of last Thursday, that "We do not intervene in the marketplace and we let the value of the dollar fluctuate according to the market situation", and "Mr. Speaker, the policy is still the same", and in view of the completely opposite actions announced last night by the minister that foreign loans were to be arranged for support of the sagging Canadian dollar, I move, seconded by the hon. member for Don Valley (Mr. Gillies):
That this House unanimously resolve to award the Minister of Finance the Baron Munchausen Award for the most extravagantly mendacious story of this present parliament, and that the Minister of Finance have the length of his nose checked on an hourly basis in order to attempt to avoid the Pinocchio virus that at one time afflicted the hero of the famous Italian saga.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.



Mr. Edward Broadbent (Oshawa-Whitby):: Mr. Speaker, I rise on a matter of urgent and pressing necessity under the provisions of Standing Order 43. We have today a crisis of confidence in the Canadian dollar which is directly related to the crisis of confidence in the Canadian government. I move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That this House instruct the government of Canada to bring in immediately a budget containing specific measures to reduce the rate of unemployment and increase the level of economic activity in order to increase international confidence in the Canadian economy.


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


Mr. Speaker:: Order, please.


Some hon. Members:: Agreed.
*
* *


Some hon. Members:: No.


PUBLIC SERVICE
Mr. Dan McKenzie (Winnipeg South Centre):: Mr. Speaker, I rise on a matter of urgent and pressing necessity pursuant to the provisions of Standing Order 43. In view of the fact that the museum division within the Secretary of State Department, and the Department of Employment and Immigration in Toronto, are rushing to make temporary employees term


REQUEST BANK OF CANADA HAVE ENLARGED POWERS RESPECTING FEDERAL BORROWINGS-MOTION UNDER S.O. 43
Mr. Eudore Allard (Rimouski):: Mr. Speaker, pursuant to the terms of Standing Order 43, I request the unanimous consent of the House to present a motion dealing with an important and urgent matter.
As the Canadian government is about to borrow huge amounts of money abroad to support the Canadian dollar; as

February 22, 1978
this will do much to increase the national debt and its financing; and as it is more than high time serious steps were taken to put an end to that ruinous method of financing, I move, seconded by the hon. member for Abitibi (Mr. Laprise):
That this House urge the Minister of Finance (Mr. Chretien) that he take the necessary steps to amend the Bank of Canada Act, whose main objective is to control credit in the interest of the economic life of the whole Canadian population, so as to allow the bank to grant the Canadian government the long term loans it needs to ensure the economic development of this country, instead of having to beg for foreign credits as it now intends to do.


Mr. Speaker:: Order. Pursuant to Standing Order 43, such a motion cannot be put without the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


CANADIAN CULTURE
Mr. Donald W. Munro (Esquimalt-Saanich):: Mr. Speaker, I rise on a matter of urgent and pressing necessity under the provisions of Standing Order 43. Last year, directly as a result of the Secretary of State's freeze on federal assistance to the arts in Canada, the result of which was, to quote the chairman of the Professional Association of Canadian Theatre, Dr. Gregory Poggi, "in spite of ticket price increases, 67 per cent of our members have had to cut back the number of their productions, 55 per cent have had to lay off staff, 74 per cent have had to reduce the number of actors employed, and 55 per cent have incurred a greatly increased deficit", the Secretary of State was subsequently able to convince Treasury Board to allocate an additional $13.6 million for the pet cultural projects of his department, none of which went to sustain the very cultural institutions of our country which have time and time again proven their worth in promoting cultural expression and dialogue across Canada-


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


Donald W. Munro: I have a motion, Mr. Speaker; I was just coming to it. I move, seconded by the hon. member for Edmonton Centre (Mr. Paproski):
That the Secretary of State appear before the Standing Committee on Broadcasting, Films and Assistance to the Arts to justify his diversion of funds from such cultural organizations as professional theatre companies which Canadians strongly support in their contribution to our national sense of identity and harmony.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


OFFICIAL LANGUAGES
Mr. Eymard Corbin (Madawaska-Victoria):: Mr. Speaker, pursuant to Standing Order 43, I ask for the unanimous consent of the House to present the following motion.
Considering the oppressive tactics designed to deprive Fran-co-Ontarians of their most fundamental rights, I move, seconded by the hon. members for Vaudreuil (Mr. Herbert), Sherbrooke (Mr. Pelletier) and Ottawa-Vanier (Mr. Gauthier):
That this House condemn the federal-provincial coalition of the Conservative Party which refuses to recognize French as an official language in Ontario and regret more particularly the association of Mr. Joe Clark, leader of this party, with this point of view.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


FINANCE
Mr. Ken Hurlburt (Lethbridge):: Mr. Speaker, I rise on a matter of urgent and pressing necessity under the provisions of Standing Order 43. In light of the fact that a Crown corporation, Canadian Indian Marketing Services, owes a very small Indian handicraft enterprise on the Peigan reserve, by the name of Peigan Craft Limited, the sum of $19,301.20 for goods purchased, and that this account has been outstanding for five months, I move, seconded by the hon. member for Medicine Hat (Mr, Hargrave):
That this account, plus interest, be paid immediately to save this small industry, which employs 24 people, from brankruptcy.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.

February 22, 1978


AIR TRANSPORT
Mr. Lionel Beaudoin (Richmond):: Mr. Speaker, under the provisions of Standing Order 43, I seek the unanimous consent of the House to move a motion dealing with an important matter of pressing necessity.
Since the application of Air Canada to purchase Nordair has been followed by a combine investigation and since Mr. Robert J. Bertrand, director of investigations and research at the Department of Consumer and Corporate Affairs published yesterday a press release in which he states his concern about the very large concentration in the air transport industry as a result of that purchase application, I move, seconded by the hon. member for Villeneuve (Mr. Caouette):
That this house discuss that possibility and direct the government and the Canadian Transport Commission to hold public hearings to explain that purchase application by Air Canada.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


ADMINISTRATION OF JUSTICE
Mrs. Ursula Appolloni (York South):: Mr. Speaker, I wish to present a motion, under Standing Order 43, on a matter of urgent and pressing necessity. At the present time, when a person has been convicted of a child molesting offence and commits a similar offence while on probation, the court does not have authority to place the offender in a psychiatric institution for the duration of the period of probation. The view of many of those involved in the administration of justice is that the courts should have this authority. I therefore seek the unanimous consent of the House to move the following motion, seconded by the hon. member for Scarborough West (Mr. Martin):
That the government introduce legislation to provide that when a convicted child molester commits a similar offence while on probation, the court may place that person in a psychiatric institution for the duration of the period of probation.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.
Oral Questions



ORAL QUESTION PERIOD


Mr. Joe Clark (Leader of the Opposition):: Mr. Speaker, my question-if he will return to his place-is for the Minister of Finance. I should like to ask the minister why he said one thing here in the House of Commons relative to government policy concerning the dollar, and later, outside this House, made a contrary statement.
I would also like the Minister of Finance to tell the House of Commons why, when he made a statement outside the House which directly contradicted one he had made here, he did not have enough courtesy toward the Parliament of Canada or the people to come into the House of Commons and ask for an opportunity to make a statement on motions, which would have been granted by this side and would have allowed the minister to be subjected to questions about the very vague and troubling statement he issued last night?


Hon. Jean Chretien (Minister of Finance):: Mr. Speaker, yesterday I explained to the House the policies of the government, which remain the same.


An hon. Member:: You did not.


Joseph Jacques Jean Chrétien: The announcement I made was after the closing of the market. I would have expected the Leader of the Opposition to understand there is a market in this field and that I had to wait until it closed to make this announcement. With regard to any announcement of the borrowing intentions of the government, we do not come to the House of Commons to make these statements. So there was absolutely nothing improper in what I did. Of course, the exchange rate of the dollar is always a very delicate matter, and I would expect the opposition to show some responsibility about these things rather than to start with doom and gloom presentations which annoy the people.


Some hon. Members:: Oh, oh!


Joseph Jacques Jean Chrétien: Yesterday, Mr. Speaker, I was amazed to hear one member of the opposition tell the House that I was protecting the dollar too much and other members telling the House I was not protecting it enough. I have done the proper thing, and the policy remains the same as the one I enunciated yesterday.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: Mr. Speaker, the minister has a curious view, if he thinks that the markets of the country allow him, or somehow condone the act of giving the House of Commons information which is false. Also, of course, he did not answer the question.

February 22, 1978
Oral Questions


Some hon. Members:: Oh, oh!


Charles Joseph Clark: He did not answer the question as to why he did not come to the House of Commons to make his statement, to answer questions and dismiss any of the concern that his very vague statement might have raised.


Some hon. Members:: Oh, oh!


Charles Joseph Clark: My next question to the Minister of Finance is the following: In the very brief statement that he issued last night, the minister said that the government "would shortly be making a drawing under the revolving stand-by credit". Would the Minister of Finance tell the House of Commons and the people of Canada when he will be making that drawing?


Joseph Jacques Jean Chrétien: Mr. Speaker, I hope to be able to make this drawing in the next few days. When the amount is known, I will make it public. At this time we are in discussion with the banks.


Charles Joseph Clark: Mr. Speaker, the minister knows that there is a requirement of at least two days' notice to the banks before recourse to this stand-by credit. Will he tell us when the first formal, or informal advance notice was given to the participating banks relative to the intention to draw upon this stand-by credit?


Joseph Jacques Jean Chrétien: Mr. Speaker, when the arrangements have been made, I will make them public; but I have nothing else to add at this time.


Charles Joseph Clark: Mr. Speaker, there is absolutely no reason, relating to confidentiality or anything else, other than a determination to keep facts from this House of Commons-


Some hon. Members:: Hear, hear!


Charles Joseph Clark: There is no reason why the minister could not tell the Parliament of Canada when the first formal, or informal notice was given to participating banks. He may well have misunderstood the question; that is always possible, as he misunderstands a lot of things.


Some hon. Members:: Oh, oh!


Charles Joseph Clark: I would like to give him an opportunity, again, to tell this House when the first formal or informal advance notice was given to the banks relative to the intention to draw upon that credit.


Joseph Jacques Jean Chrétien: Mr. Speaker, if I were to make a list of the things that the hon. member does not understand, I would need a lot of the time of the House of Commons.


Some hon. Members:: Hear, hear!


Joseph Jacques Jean Chrétien: I have nothing to add to the previous answer.


An hon. Member:: That is sad, sad.


BANK OF CANADA ACTION TO BOLSTER VALUE OF CANADIAN DOLLAR
Mr. Sinclair Stevens (York-Simcoe):: Mr. Speaker, my question is also for the Minister of Finance, who has repeatedly assured this House that the government's operation in the exchange market is purely an ordinary market maintenance process. In fact, in this House only yesterday he made that statement. At 4 p.m., at a committee of this House, he went further and reconfirmed that the Canadian dollar is a floating dollar. Would the minister, in the context of what he represented yesterday, indicate whether he was aware that on Monday and Tuesday the Bank of Canada became an aggressive buyer of Canadian dollars and showed an entirely different approach to the Canadian dollar than had been seen up to that time?


Joseph Jacques Jean Chrétien: Mr. Speaker, I have always said that the governor of the Bank of Canada intervened so that the market would work in a normal and orderly fashion. That is what he did on Monday and Tuesday. Of course, the government policy remains the same and we do not intend to peg the Canadian dollar which is floating at present. Today, it did fluctuate slightly upward.


Sinclair McKnight Stevens: Mr. Speaker, my supplementary question is directed to the Minister of Finance. In view of the minister's statement that we have nothing but a floating dollar, would he indicate if he is aware that the Bank of Canada lost something over $200 million in trying to chase the dollar up on Monday and Tuesday? Does he regard that type of outflow as far as our reserves are concerned as simply ordinary maintenance of the marketplace?


Joseph Jacques Jean Chrétien: Mr. Speaker, the hon. member should know that fluctuations in the exchange reserves are known on the first Tuesday of the month. Hon. members and Canadians generally will know at that time what fluctuations there were in the reserves in the month of February. The law does not permit me to say more.


Sinclair McKnight Stevens: Mr. Speaker, my further supplementary is also directed to the Minister of Finance. As the dollar responded very little this morning to the announcement by the minister yesterday, and as there is continuing uncertainty in the marketplace, triggered to a great extent by the inept handling of this subject by the minister-


Some hon. Members:: Hear, hear!


Sinclair McKnight Stevens: -would the minister try to give a little clarity to the situation and indicate now what the nature of the foreign borrowing is that he is referring to? Who will he borrow the funds from? What is the term and the interest rate? In short, will he set it out more fully in a statement to the House, as he should have done last evening?
February 22, 1978


Joseph Jacques Jean Chrétien: Mr. Speaker, when the news hit the market this morning, the dollar performed very well; it went up to 89.80 cents.


Some hon. Members:: Hear, hear!


Some hon. Members:: Where is it now?


Joseph Jacques Jean Chrétien: It is only when a rumour hits the market to the effect that the Tories were to bring about a big scandal, and there were rumours in the marketplace that three ministers were to resign, that the market deflates.


Some hon. Members:: Oh, oh!


Some hon. Members:: Hear, hear!


Joseph Jacques Jean Chrétien: I think if the next minister of finance were to be the former president of the Bank of Western Canada the dollar would go down very rapidly.


Some hon. Members:: Hear, hear!


GOVERNMENT'S INTENTIONS RESPECTING INTRODUCTION OF BUDGET
John Edward Broadbent: Mr. Speaker, the manner in which the Minister of Finance is coping with this serious crisis makes his predecessor look like an economic genius.


Some hon. Members:: Hear, hear!


John Edward Broadbent: I should like to direct my question to the Prime Minister rather than to the Minister of Finance. Considering that the dollar crisis we are facing abroad is directly related to the crisis in confidence that the government is experiencing at home, which is directly related to the l'/2 million people who are looking for jobs, can the Prime Minister indicate if he will take steps to finally show some economic leadership, instead of sitting there smirking his way through a crisis, and bring in a budget which will stimulate the economy and produce some jobs?


Some hon. Members:: Hear, hear!


Joseph Jacques Jean Chrétien: Mr. Speaker, I think hon. members opposite are very ill-advised when they talk about a crisis. In fact, in the month of February the dollar had moved only one point, more or less, and it is not a case of crisis. They are not rendering any service in throwing around a doom and gloom image of Canada.


Some hon. Members:: Oh, oh!


Mr. Paproski:: You are the doom and gloom.


Joseph Jacques Jean Chrétien: I have said many times that I do not intend to bring down a budget before the end of March. Since January 1 we have stimulated the Canadian economy as no other western country has done. We have to see the effect of that before
Oral Questions
moving again. I think it would be perfectly irresponsible to bend under pressure that looks very weak from the other side.


John Edward Broadbent: Who does the minister think he is kidding? When the dollar is at its lowest in 45 years, compared to the American dollar, every person in the country knows it is a crisis and it is time the minister recognized it.


Some hon. Members:: Hear, hear!


John Edward Broadbent: Considering that the figures released by the minister's own government yesterday show, for the fourth quarter in a row, that manufacturing is only operating at 83 per cent capacity-which means, incidentally, it is three years in a row that more than 15 per cent of the manufacturing capacity in Canada has not been used-will the minister, in the budget that he will bring in, lower taxes for medium and low income earners in order to stimulate the provision of jobs in this country?


Joseph Jacques Jean Chrétien: We just did that, starting January 1, when we cut taxes by $100 for seven million taxpayers in Canada, plus the indexing of the income tax exemption, plus a lot of incentive for the industry to grow. We have stimulated the economy through tax cuts starting January 1 by $3 billion. I do not think the hon. member can expect the Minister of Finance to come up with such cuts every three months; it would not make sense.


Some hon. Members:: Hear, hear!


John Edward Broadbent: Mr. Speaker, considering that the very proposals which the minister just rattled off were announced by him in the mini-budget which preceded the Christmas break by two months, and ever since that time the dollar has gone down and unemployment has gone up, I would have thought the minister would have recognized he was wrong last fall and would have decided to bring in a new budget which would stimulate the economy.


An hon. Member:: That is a speech, not a question.


Joseph Jacques Jean Chrétien: What is the question?


An hon. Member:: Resign, Pinocchio.


INQUIRY WHY GOVERNMENT MUST BORROW ABROAD
Mr. Gferard Laprise (Abitibi):: Mr. Speaker, my question stems from the statement made last night by the Minister of Finance to the effect that the government intended to borrow abroad to cover the international trade deficit and support the Canadian dollar. The minister stated a few days ago at the first ministers' conference and also in the House of Commons and elsewhere that Canada's performance was the best among industrialized countries. In that case, would he tell the House why he feels obliged to go and humiliate himself in front of those same countries before the Canadian economy collapses?

February 22, 1978
Oral Questions


Joseph Jacques Jean Chrétien: Mr. Speaker, we have decided to borrow on foreign markets because we have a deficit in our current balance of payments and contrary to what was being done these past few years, provincial governments did not seek substantial loans on foreign markets in 1978. To meet our obligations, we have felt necessary to borrow on foreign markets to compensate for the effect of the deficit in our balance of payments. There is nothing humiliating in that, since it is recognized that savings in Canada are high at this time and that provinces do not have to borrow abroad. So the federal government had to compensate for that situation.


Gérard Laprise: I would like to ask a supplementary question, Mr. Speaker.
Judging by his answer, the Minister of Finance seems to think it is necessary to borrow on foreign markets every year.
I would like to ask the Minister of Finance if he intends to consider, before it is too late, the possibility of using a well established Canadian institution-the Bank of Canada-to support the Canadian dollar by making our exports acceptable to other countries.


Joseph Jacques Jean Chrétien: Mr. Speaker, I issued a release yesterday after consultation with the governor of the Bank of Canada.


NATIONAL SECURITY
[Stage Direction]
SURVEILLANCE OF MPs-GOVERNMENT POSITION
Mr. Elmer M. MacKay (Central Nova):: Mr. Speaker, my question is directed to the Prime Minister. Last October, in a letter to the Leader of the Opposition, the Prime Minister stated:
I can, however, state unequivocally, that as long as I have been Prime Minister of Canada no member of the federal parliament, without his consent, has ever been the subject of authorized surveillance, including electronic surveillance, carried out by the security service of the Royal Canadian Mounted Police.
I ask the Prime Minister whether that unequivocal assurance still remains, in view of sworn information that a minister of the Crown and a member of the New Democratic Party were, in fact, subjected to that kind of electronic surveillance.


Right Hon. P. E. Trudeau (Prime Minister):: Mr. Speaker, my letter was written on the basis of the information I had received from the security service, and that information still stands. I understand that as the House opened, the hon. member indicated that he might have some contrary information for the Solicitor General. If that is so, we would like to follow it up.

SURVEILLANCE OF MPs-INQUIRY AS TO EXCEPTIONS TO POLICY


Elmer MacIntosh MacKay: Mr. Speaker, before I ask the Solicitor General a question in this regard, I would like to say that I corresponded with his predecessor, the hon. member for Argenteuil-Deux-Montagnes, last January 12 but did not receive any response at that time; nor have 1 received any response since.
A man named Warren Hart has indicated-I believe the Solicitor General has information at this point, and perhaps has had it in the past-that exceptions to what the Prime Minister has indicated still exist. Does the Solicitor General wish to make any statement to correct the previous assurance given the Leader of the Opposition and other party members?


Hon.   J.-J. Blais@Solicitor General: Mr. Speaker, with reference to the first point raised by the hon. gentleman, if I recall correctly a letter is on its way relating to the gentleman whom he has identified. On the second point, I have just received the document to which the hon. member refers. Allegations are contained in that document and, as the Prime Minister has indicated, I would like to follow them up.


Elmer MacIntosh MacKay: Mr. Speaker, I would like to ask the Solicitor General if he intends to make every attempt to have Mr. Warren Hart appear before the McDonald commission, since on my advice he has already corresponded with the commission and, I understand, recently received an acknowledgement.


Mr. Blais:: Mr. Speaker, I will take the hon. gentleman's representations into consideration with all the seriousness they deserve.


FINANCE
Mr. Janies Gillies (Don Valley):: Mr. Speaker, I would like to return to the Minister of Finance. I ask the minister if the intervention yesterday by the government of Canada in foreign exchange markets means that the policy of the government is to have the dollar supported at 90 cents?


Joseph Jacques Jean Chrétien: No, Mr. Speaker.


James McPhail Gillies: Mr. Speaker, in that case I would ask the minister why the intervention took place.


Joseph Jacques Jean Chrétien: I have explained that the governor of the Bank of Canada has intervened, or operated in the market to make sure that the market operates in an orderly fashion.


James McPhail Gillies: Mr. Speaker, is the minister saying that going to the commercial banks to borrow $1.5 billion, and making arrangements for foreign credit, are normal operations in the money market? Does he not think it is his responsibility to
February 22, 1978

indicate to the community and to world markets the level at which the government of Canada is prepared to support the dollar, to avoid the kinds of fluctuations that are taking place now?


Joseph Jacques Jean Chrétien: Mr. Speaker, the policy of the government is to have a Canadian dollar that floats, and it is floating. The only intervention the governor makes is to make sure that fluctuations are made in an orderly fashion.


James McPhail Gillies: A final supplementary, Mr. Speaker-


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


POSSIBILITY OF ESTABLISHING INFLATION MONITORING AGENCY
Mr. Bill Clarke (Vancouver Quadra):: Mr. Speaker, my question is for the Minister of Finance. I want to ask the minister about a 40-page draft of a bill dated January 12, 1978, which I am holding in my hand and which was drafted in the name of the Minister of Finance. This bill would have serious implications. It is entitled "An act to establish an inflation monitoring agency and to provide for the reporting of financial and other information".
I gave the minister a copy of this bill yesterday in committee, even though he was not sure at that time that he wanted to receive it. Has the minister reviewed the draft, as I have asked him to do, and determined who authorized its drafting and its distribution across the country?


Joseph Jacques Jean Chrétien: Mr. Speaker, this draft was seen by me for the first time yesterday. I have never authorized such a bill. It was circulated to some people but it was never circulated as a draft approved by the Minister of Finance. We have discussed a monitoring agency for the last three years.
Many propositions were put before the last first ministers' meeting. It was agreed that we should ask the Economic Council of Canada to monitor prices and wages after the control period. We have not as yet received an answer on that. However, the bill referred to by the hon. member has not been approved by us, will not be approved and will not be tabled.


ADMINISTRATION OF JUSTICE
William Hillary (Bill) Clarke: Mr. Speaker, my supplementary question is to the Minister of Justice. I would like to welcome him back from Vancouver, where he has been doing the job of the Minister of National Revenue. The bill to which I have referred carries the name of D. Maurais, who is an employee of the legislation section of the Department of Justice. I would like to ask the Minister of Justice who in his
Oral Questions
office instructed D. Maurais to draft this bill, and who authorized the release of the bill across the country?


Hon. Ron Basford (Minister of Justice):: Mr. Speaker, I do not know the officer's name; therefore, I will have to find out who he is in order to ascertain from whom he received his instructions.


FINANCE
Mr. Allan Lawrence (Northumberland-Durham):: Mr. Speaker, I would like to question the Minister of Finance, not on Canada's credit but on the minister's credibility. There is no question that he misled the House on Monday and Tuesday and we want to ascertain whether that was done intentionally or unintentionally. Unquestionably, the Bank of Canada was attempting to stop the financial haemorrhage of this country on both Monday and Tuesday afternoons by massive expenditures to bolster the Canadian dollar. Were those actions of the governor of the Bank of Canada and the Bank of Canada without the minister's knowledge and authority, or with the minister's knowledge and authority?


Joseph Jacques Jean Chrétien: Mr. Speaker, the hon. member should be careful about the terms he uses. There was a transfer of money, not an expenditure. There was a trading of Canadian dollars and American dollars, not an expenditure. The hon. member wants to create the impression that there was an expenditure. As I have said many times, the governor of the Bank of Canada intervenes to make sure that markets operate in an orderly fashion. The policy has not been changed; the policy is the same.
I explained in French earlier that we want to borrow because, as everyone knows, at this time of the year the borrowings of Canadian institutions abroad are not enough to cope with the balance of payments problems we are having. That is why we have decided to borrow abroad. That is not at all related to fixing the rate of the Canadian dollar.


Allan Frederick Lawrence: Mr. Speaker, the minister told this House that the actions of the bank were ordinary and normal. There was a transfer of $65 million on Monday and a transfer of over $200 million yesterday afternoon. Transfers like that are not normal or ordinary. There is no question that the minister misled the House.


Some hon. Members:: Oh, oh!


Allan Frederick Lawrence: The question is whether the minister misled the House intentionally, or unintentionally. Did the minister know of those extraordinary transfers on Monday and Tuesday when he was speaking in the House? Did he know, or did he not know, at the time he was speaking in the House, about those extraordinary transfers?
3110

February 22, 1978
Oral Questions


Joseph Jacques Jean Chrétien: Mr. Speaker, I cannot accept the figures used by the hon. member. Figures with regard to the quantity of reserves in the month of February, and their fluctuation, will be known when that information is tabled on the first Tuesday of next month. I admit that there was some intervention by the governor of the Bank of Canada on Monday and Tuesday and last week; I am aware of that. I met with the governor of the Bank of Canada on Monday, as well as on Tuesday. I met him today.


Charles Joseph Clark: You met him on Monday?


Joseph Jacques Jean Chrétien: Yes, I meet him regularly. Fie is a very able person. I am not at all embarrassed to consult him, and I think he gives me good advice.


Allan Frederick Lawrence: The minister is now admitting that there were extraordinary transfers on Monday and Tuesday. They were certainly not normal. He came to this House and deliberately attempted to give the impression that there were not extraordinary measures being taken on Monday and Tuesday. I ask the minister now either to apologize to this House for intentionally misleading it, or to give a far better explanation of the fact of political cowardice in not coming to this House last night and telling us the truth-one or the other.


Joseph Jacques Jean Chrétien: Mr. Speaker, there have been questions in the House on this topic since the beginning. I have stated the government's policy. Yesterday I had to wait until the market closed to make the announcement.


Sinclair McKnight Stevens: Why didn't you announce it on Monday?


Joseph Jacques Jean Chrétien: Because we made that decision yesterday, and I could not announce something on Monday when we made the decision yesterday afternoon-


Charles Joseph Clark: Why yesterday?


Joseph Jacques Jean Chrétien: On top of that, 1 was in a committee of the House yesterday afternoon; the chairman allowed members of the opposition to ask me questions on that subject, and I replied to those points. Whenever the government decides to borrow money, never in the past has the minister been obliged to make the announcement in the House of Commons.


Sinclair McKnight Stevens: It is ludicrous.


Joseph Jacques Jean Chrétien: I love the House of Commons. I am always here because the opposition make sure I look good.


Some hon. Members:: Oh, oh!


INDUSTRY
Mr. Les Benjamin (Regina-Lake Centre):: Mr. Speaker, 1 would like to direct a question to the right hon. Prime Minister. In view of the fact that the Foothills company has asserted there can be 90 per cent Canadian content in the construction of the Alcan pipeline and the Deputy Prime Minister has said there are 100,000 man-years of employment in that project, and in view of the supreme confidence of the Deputy Prime Minister in Canadian capacity and capability, I ask the Prime Minister whether his government will give immediate approval to the $80 million expansion of the Interprovincial Steel and Pipe Company operations in Regina and Edmonton so that, in fact, Canada will have the capacity it needs to compete and obtain the 100,000 man-years of employment.


Pierre Elliott Trudeau: Mr. Speaker, if the hon. member had given me notice of his question, 1 could have followed it up with the minister responsible for regional development. Currently there is an application which will be processed in the normal way.


Leslie Gordon Benjamin: Mr. Speaker, in view of the fact that this application has been pending for several months, and in view of the fact that the Minister of Regional Economic Expansion replied to me on February 1 that it was going to take many more weeks, contrary to the confidence the Deputy Prime Minister and the Minister of Industry, Trade and Commerce have expressed about Canadian capacity and capability, will he now have his Minister of Regional Economic Expansion approve the $80 million expansion of the Interprovincial Steel Company plant? Without that expansion, Canada could not operate with sufficient capacity to provide the man-years of employment that the Deputy Prime Minister says we can obtain.


Pierre Elliott Trudeau: Mr. Speaker, of course, this government has the confidence, and the minister has the confidence, stated by the hon. member. But so has the president of the corporation. I think it is only the hon. member's party that does not have the confidence that these jobs will be created, and they say they will be going to Japan, the United States or somewhere else. We have confidence they will be created here. The hon. member should get together with his leader, who seems to say that we are not going to sell any of this pipe; therefore, why should we lend money to a company that wants to build it?


THE CANADIAN ECONOMY
Hon. George Hees (Prince Edward-Hastings):: Mr. Speaker, I have a question for the Prime Minister. The recent performance of the dollar makes it obvious that international

February 22, 1978

opinion regarding the way the economy of this country is being run is pretty much the same as the opinion in Canada, where the latest Gallup poll shows that 27 per cent of Canadians think the government is running the economy satisfactorily, and 59 per cent say it is being run very unsatisfactorily.
My question to the Prime Minister is: Does he not consider that the time is long overdue to introduce productivity incentives to be paid in direct proportion to increases in productivity, to make our products more competitive, and in that way restore confidence in the economy?


Pierre Elliott Trudeau: Mr. Speaker, of course I agree with the hon. member. I indicated in the House not so long ago that productivity in Canada had improved, compared to that of the United States; we were beginning to close the gap. The United States is still more productive than Canada, in relative terms, but the situation has been improving here. The decisions taken last week by the premiers of the provinces and myself have added to the determination by all governments to make sure that the private and public sectors are competitive.


George Harris Hees: Mr. Speaker, the government's own paper, produced by the Department of Industry, Trade and Commerce and released within the last ten days, states that productivity in Canada remains 20 per cent below that of the United States-showing that it is not moving up and it is still far too low. As the Prime Minister said last Thursday in this House that our price and cost performance is still very unsatisfactory, will he not now do something in the interest of getting the economy of this country moving and introduce these incentives, which are the only measures that will improve productivity, make our products more competitive and restore confidence in our economy?


Pierre Elliott Trudeau: Mr. Speaker, I agree that productivity must improve in Canada. I disagree with the hon. member when he says it has not improved: it has improved.


George Harris Hees: Your own paper says it has not improved.


Pierre Elliott Trudeau: The hon. member is stating a static figure, Mr. Speaker; he should refer to the facts.


FINANCE
Mr.   Jacques-L. Trudel@Montreal-Bourassa: Mr. Speaker, I wish to direct a question to the Minister of Finance.
Could he tell us how long the payment of some $1.5 billion out of our contingency foreign exchange reserves will successfully support the Canadian dollar, if its value continues to drop?
Oral Questions


Joseph Jacques Jean Chrétien: Mr. Speaker, this is an agreement between our banking institutions and the government of Canada. I do not know exactly how many years it will last, but I should say seven or eight years, and we can avail ourselves of these additional funds at any time. I indicated yesterday that for a while we would obtain a line of credit from these institutions and the agreement we have signed with them will run for at least seven years.


EXTERNAL AFFAIRS
Mr. Heath Macquarrie (Hillsborough):: Mr. Speaker, I should like to direct a question to the Secretary of State for External Affairs: it is in connection with his recent and highly commendable announcement regarding the establishment of a Canadian embassy in the Emirate of Kuwait. I ask the minister if he can advise whether it is the intention of the Kuwaiti government to appoint an ambassador solely accredited to Canada. Further, can he advise if progress has been made on another suggestion of mine, namely, the establishment and appointment of resident Canadian ambassadors to Amman and Damascus?


Hon. Donald C. Jamieson (Secretary of State for External Affairs):: Mr. Speaker, I cannot answer definitively whether the government in question is going to establish an embassy in Ottawa. I will make inquiries. Of course, the fact that we are establishing an embassy in Kuwait indicates that they will be entirely welcome here, and I hope they will establish an embassy in Ottawa. 1 will get an answer for the hon. member.
The other two posts to which he has referred are on our list for consideration as early as possible. But, as I think the hon. member knows and as I explained in committee, we have certain constraints from a financial point of view which affect the speed with which we can move in opening up these highly desirable missions.


FINANCE
Mr. J. P. Nowlan (Annapolis Valley):: Mr. Speaker, my question is directed to the Minister of Finance. When the Minister of Finance answered the hon. member for York-Simcoe yesterday, he said, as reported at page 3055 of Hansard:
Our operation in the exchange market is limited to maintaining orderly marketing conditions, and will remain so.
When he said that to the House of Commons yesterday afternoon, had he met with the governor of the Bank of
80031-55'/2

February 22, 1978
Oral Questions
Canada, and did he know there was a change in the marketing operations?


Joseph Jacques Jean Chrétien: Mr. Speaker, the intervention of the governor of the bank yesterday was to make sure that the market would operate in an orderly fashion. That is the policy of the government; it has not changed, and it is still the policy today. 1 have absolutely nothing further to reply. Unfortunately, I do not know why the hon. member finds a contradiction in that statement. I did nothing to contradict myself, and was quite open with the House on this subject.


John Patrick (Pat) Nowlan: Mr. Speaker, the reason I was glad to be recognized by Your Honour was that the minister mentioned that he loves the House. If he loves the House of Commons, he must respect it and therefore tell the truth to the House. I ask the minister to answer my question and not ramble around it.
My simple question is this: When the minister made the statement to the House of Commons yesterday, had he met with the governor of the Bank of Canada, and did he know there had been a change in the orderly marketing conditions that he said were going to remain the same?
[ Translation]


Joseph Jacques Jean Chrétien: Mr. Speaker, I stated a while ago that I had met the governor of the Bank of Canada on Monday and Tuesday. I even met him again at noon today at a purely social function, not to discuss business matters. The governor of the Bank of Canada intervened yesterday afternoon in the marketplace just as he always does, because it is his responsibility to make sure that the market operates in an orderly fashion, to ward off the effects of undue speculation. Such has been the government's policy. It will remain unchanged, although our tactics may vary from day to day.


John Patrick (Pat) Nowlan: A final supplementary, Mr. Speaker. Obviously, this question is very important, and I am not trying to use too many adjectives. At the time the minister met with the governor, was he advised by the governor that the bank was going to become an aggressive buyer of Canadian dollars and there was going to be a change in policy? If that advice was given, was it given before the minister gave his answer in the House yesterday?


Joseph Jacques Jean Chrétien: Mr. Speaker, I do not know who told the hon. member that the bank was an aggressive buyer: they were intervening yesterday, as they do regularly, to ensure that the market operates in an orderly fashion.


CANADIAN CULTURE
Mr. David MacDonald (Egmont):: Mr. Speaker, my question is for the Secretary of State. It relates to the very real concern of the Professional Association of Canadian Theatres, a group that the Secretary of State met with yesterday. Since two-thirds of the members of this group have had to cut back productions, and more than half have had to lay off staff because of the freeze over the last two or three years-a situation they describe as intolerable-what did the minister propose to them, in view of the present situation and the disastrous impact of the policies of his department? In light of the fact that the December 16 letter from the president has not yet been answered, what action is the minister prepared to take to deal with this difficult situation?


Hon. John Roberts (Secretary of State):: Mr. Speaker, 1 met with them, not once but three times yesterday. The letter to which the hon. member refers has been answered. I answered it last night; I gave it to the president of the association. I am, of course, extremely concerned about the impact of restraints on funding of theatres. There has not been a freeze, as the hon. member has suggested. There has been an increase in funding to the Canada Council through which the operation of theatres is funded. This increase is equivalent to the level of increase which has generally taken place in government departments.
Nevertheless, since theatres are peculiarly subject to the impact of inflation, there has been restraint in real terms. I hope that representations such as the one the hon. member has made will make governments at all levels more sensitive to the need of funding for these people.


David Samuel Horne MacDonald: Mr. Speaker, in spite of the minister's sanguine reply, this situation is being described as intolerable. Some 100,000 people intend to send a series of petitions to the minister to relieve the situation. The only announcement the minister has made was last fall with regard to the $13.6 million. That amount is being heavily questioned by members of this group and others as being used for purposes other than the legitimate development of Canadian culture. Did the minister alleviate fears in that regard? Can he indicate how this new money that was given, in light of previous budget constraints, is going to help this very serious situation?


John (Moody) Roberts: Mr. Speaker, I should make it clear because there seems to be some confusion on the other side of the House. Our increased funding was not a diversion, as one of the hon. member's colleagues suggested earlier, from the regular funding which has in the past been received. It was, as the hon. member correctly stated, new funding, a great deal of it to the Canada Council, the Film Board and other cultural agencies which will receive assistance, albeit indirectly-


David Samuel Horne MacDonald: Not this group.


February 22, 1978


John (Moody) Roberts: It will assist this group because a significant portion of the money is directed to supporting theatre in Canada.


David Samuel Horne MacDonald: Ten o'clock, Mr. Speaker.


FINANCE
Hon. Marcel Lambert (Edmonton West):: Mr. Speaker, I have a question for the Minister of Finance with regard to the stand-by credit he referred to in his statement last night. At what rate of interest was this stand-by credit available to the government of Canada? How much did it cost, in his estimation, per day, per week or per month? What has it cost the government of Canada to draw on this stand-by credit since last September?


Joseph Jacques Jean Chrétien: Mr. Speaker, I cannot give the answer immediately. I answered in precise terms other questions asked in the House of Commons when we established that line of credit with Canadian banks, but I will find the specific answer. The cost was % per cent, but anyway I would not want to quote a figure at random, and I will give the hon. member the exact figure when I get it.


REASON FOR BORROWING FROM ABROAD TO BOLSTER VALUE OF DOLLAR
Mr. John A. Fraser (Vancouver South):: Mr. Speaker, my qustion is for the Minister of Finance. The minister said that what has been going on is ordinary and normal. For the past ten years the government has not had to go abroad to bolster the dollar. What is ordinary and normal about that? Why did the Minister of Finance yesterday completely misrepresent the situation, and then come along today and say everything that is happening is absolutely normal and ordinary? I ask the Minister of Finance to answer that question.


Joseph Jacques Jean Chrétien: Mr. Speaker, I said earlier that we have to borrow in foreign markets because the provinces and other Canadian institutions are not borrowing in foreign markets as expected.


Some hon. Members:: Oh, oh!


Joseph Jacques Jean Chrétien: That is the explanation I am giving. It is exactly what I have reported. I cannot be more frank about this subject than I am being at the moment. I do not think 1 can give any further explanation.


John Allen Fraser: Mr. Speaker, the minister has just said he cannot be more frank than he has been. He is a lot more frank than he was yesterday, and the explanation is different. The
Oral Questions
fact is that nobody in this country believes this government with regard to anything the government is saying in terms of economics. My question is this-


Joseph Jacques Jean Chrétien: Mr. Speaker, I cannot understand the opposition. If I had given some explanation of that before the market closed, the hon. member would have been the first to complain that 1 was not being careful enough. A little bit of pressure from the opposition will not prevent me from being responsible.


Some hon. Members:: Hear, hear!


John Allen Fraser: Are we going to go through a number of weeks, perhaps months, listening to a complete expose in terms of what the government's version of the economic situation is, knowing that at any time we can have a complete contradiction put forward no matter what was said in the question period? Is the Minister of Finance prepared to tell this House, in not equivocal but unequivocal terms, what the situation is and what the government plans to do about it in the coming months, if not the coming year?


Joseph Jacques Jean Chrétien: Mr. Speaker, I have replied many times on what is the policy of the government. We do not intend to fix the rate of the Canadian dollar; we are floating the Canadian dollar. Intervention of the banks is always done under a policy that has been established for a long time in order to maintain orderly marketing positions. It was the same on Monday, Tuesday and today; I have not changed my policies. I do not know why the hon. member wants me to change something I have not changed.


HEALTH AND WELFARE
Mr. P. B. Rynard (Simcoe North):: Mr. Speaker, after listening to our financial problems I know how important this question is. It is directed to the Minister of National Health and Welfare. In view of mounting health care costs and the health care cuts that have been announced, necessitating major changes in administration from active care to chronic care to extended care as quickly as possible without prolonging the illness or a decline in the quality of treatment, which will mean a fall of $150 a day to extended care of $14.10 per day-and obviously extended care will have to be used more- has the minister conferred with her counterparts in the provinces to see that they have oxygen for patients with chronic heart diseases and emphysema, and minor illness can be treated, avoiding the trauma and cost of transferring a patient to hospital by ambulance for a few hours of treatment in many cases?

February 22, 1978
Committee Report


Hon.   Monique@: Mr. Speaker, I agree with the suggestion of the hon. member and will be pleased to transmit it to my colleagues in provinces other than the hon. member's province.
I should make it clear, however, that each province is at a different stage in the development of extended health care service, and for that reason we could not impose upon all the provinces the minimum standards that were applicable under the hospital insurance and medical care programs. It is the responsibility of the provincial authorities to define what will be the less costly programs and equipment for them.


FINANCE
Hon. Robert L. Stanfield (Halifax):: Mr. Speaker, I should like to ask the Minister of Finance when the government changed its policy of discouraging the provinces from borrowing abroad, as this was the announced policy of this government and the minister is now complaining that the provinces are not borrowing enough from abroad.


Joseph Jacques Jean Chrétien: I have stated the facts, Mr. Speaker; I said that at this time the provinces are not borrowing enough from abroad: that is all.


Robert Lorne Stanfield: A supplementary question. Since the minister refers to the current account deficit in connection with his reason for borrowing abroad, can I assume he must have a pretty up to date estimate of what the current account deficit will be during the fiscal year? Can the minister give us that figure?


Joseph Jacques Jean Chrétien: Mr. Speaker, I will examine that question and give an answer if one is required.



ROUTINE PROCEEDINGS


[Stage Direction]
First report of Standing Committee on Transport and Communications in both official languages-Mr. Campbell.
[Editor's Note: For text of the above report, see today's Votes and Proceedings.]

[Stage Direction]
A message from His Excellency the Governor General transmitting estimates for the financial year ending March 31, 1979, was presented by the Hon. Robert K. Andras (President of Treasury Board) and read by Mr. Speaker to the House.
Hon. Robert K. Andras (President of the Treasury Board):: Mr. Speaker, the main estimates of federal expenditures for the fiscal year 1978-79, which I am tabling today, reflect the government's determination to ensure that Canada's economic recovery will be sustained and that the growth trend of federal spending will remain below the growth trend of the gross national product.
I am able to inform the House that the government has lived within the expenditure framework I made public last February. Total expenditures for the fiscal year 1977-78 were set at $44,450 million and, as was the case in 1976-77, we fully expect total spending to be at or below this ceiling.
This is the third consecutive year that the government has disclosed its over-all expenditure framework, including both budgetary and non-budgetary outlays, amounts set aside for supplementary estimates and those submitted in the main estimates. It also includes all expenditure transfers to provincial governments and all transfers to individuals.
I point out that the percentage increase in total federal spending declined from 28.3 per cent in 1974-75 to 18.4 per cent in 1975-76, down again to 10.2 per cent in 1976-77, and dropped to 8.2 per cent in 1977-78. In short, Mr. Speaker, the government committed itself to restraint three years ago, has lived up to that commitment, and will continue to abide by that commitment. Restraint is, and will remain, a key concern of ministers in their ongoing review of policies, programs, and proposals.
Major changes have been introduced in the budgetary allocation process to improve further the effectiveness of cost controls, and to ensure that spending decisions conform even more rigorously to government priorities. Further changes are under consideration.
Treasury Board dealings with federal departments and agencies during the past year have provided ample evidence that the spending psychology within the government has been significantly altered. Of course we still face a number of rigidities in our attempts to stabilize federal expenditures further, some of which I will later draw to the attention of the House.
The notion that restraint is a temporary posture, a bitter medicine that we all have to take in this or that year but not in later years, the notion that the Treasury Board is somehow obligated to find additional funds for every worth-while program expansion or new program, and the notion that all is needed to get these funds is to join the spending queue-these notions, Mr. Speaker, have been definitely shattered. As a result, those who might have expected the government to

February 22, 1978

splurge in this new, pre-electoral fiscal year will be disappointed.
As already noted, I am disclosing today, for the third consecutive year, not just the main estimates proposed for federal departments and agencies in fiscal year 1978-79, but the total expenditure framework established by the government for the same period.
Main estimates include budgetary outlays of $46,476 million, to which must be added net investments and advances of $1,774 million, for a total of $48,250 million.
The inclusion in main estimates of several expenditure items of a recurrent nature, which were previously submitted to parliament in supplementary estimates, has enabled us to set realistically the reserves for contingency outlays at $1,550 million for the rest of the year.
Taking into account the usual lapse of spending authority, total expenditures in 1978-79 for the full year are forecast at $48,800 million. This amounts to an increase of 9.8 per cent, less than the presently expected increase in the value of the gross national product for the same period. It also means that, in real terms, federal outlays will increase by about 3.5 per cent.
Even though we expect inflation to abate during the next 12 months, the government sector, as all others in the country, will still have to bear cost increases.
I am pleased that the first ministers reached a consensus last week on the need to limit the growth of expenditures by all levels of government to less than the nominal growth rate of the GNP.
Hon. members will recall that the fundamental goal set by the federal government regarding spending restraint was not limited to its own expenditures. On the contrary, it was made quite clear, as the former minister of finance reiterated in his May, 1976, budget speech, that the trend in total spending by all Governments in Canada should not rise more quickly than the trend in the gross national product. This goal has now been endorsed by all levels of government in this country.
There will be some who will choose to emphasize that our spending growth target for 1978-79 is somewhat higher than that one for the current fiscal year. Hon. members will recall that we went out of our way last spring to indicate that the very low percentage increase of 8.2 per cent shown for 1977-78 reflected, to some extent, structural changes in the budgetary system. It reflected not only the government's efforts at restraint, but also changes introduced in financing of a number of well established shared-cost programs with the provinces, particularly the shift in such financing from direct payments to tax transfers.
Had it not been for these one-time, non-repeatable changes in our budgetary system, the percentage increase in 1977-78 outlays would have been about 10 per cent as, indeed, was noted by opposition critics at the time of my tabling of the estimates on February 16 last. Accordingly, the target of 9.8
Main Estimates
per cent adopted for 1978-79 is very much within the spending trends set when the government's restraint program was introduced. Moreover, Mr. Speaker, I repeat that this ceiling is below the trend in nominal GNP growth.


Sinclair McKnight Stevens: Including inflation?


Robert Knight Andras: Yes, as the hon. member opposite has said, including inflation, a factor and a formula recognized by all 11 first ministers of this country at their conference the other day as being the appropriate target.
Although federal expenditures will be contributing during the next 12 months to the growth of aggregate demand in Canada, we are not relying on more spending to give a major push to the economy. To the extent that additional short-run stimulus has been judged necessary, the government has acted mainly through tax reductions so that the recovery may be sustained through private sector expansions. Past experience has shown that any attempt to hold the economy up by federal spending alone is in fact self-defeating. Such stimulus is inevitably short-lived and soon leads to a renewal of inflationary pressures.
The government has therefore resisted the urging of some hon. members opposite to increase its expenditures by more than is required to maintain federal services and to sustain the economic recovery. At the same time we have resisted pressure from other quarters to cut savagely federal programs and apply some rigid form of fiscal rigour.
As much as anyone, the government wants the federal public service to be lean and trim, and we are cutting the fat wherever we can, but we are holding our hand whenever we realize that in cutting deeper we would be sticking the knife into somebody else's guts.


Some hon. Members:: Oh, oh!


Robert Knight Andras: I would have liked federal expenditures to grow even less rapidly in the next fiscal year, but I had to recognize that at this time an abrupt retrenchment of federal outlays would have played havoc with provincial finances, would have pulled the rug out from under private consumption, and would have deprived Canadian business of orders which they critically need to raise production and productivity.
To understand why this is so, one must look at what I call the anatomy of federal spending growth. It has been repeatedly pointed out in the past that more than 40 per cent of so-called federal expenditures actually take the form of transfers to provincial governments and individual Canadians.
Over the years the federal treasury has taken on statutory obligations and commitments, duly approved by this parliament, to share in the financing of provincial activities and programs. These transfers are what I would call the provincial dimension of federal spending. This year they will absorb more than $9.8 billion which, I repeat, are included in our total expenditure plan of $48.8 billion.
Fiscal payments, particularly equalization grants, can be used to finance the full spectrum of provincial programs.

February 22, 1978
Main Estimates
Others, such as grants for hospital and medical care, social assistance and post-secondary education, are made with the understanding that provincial governments will maintain those essential services.
These payments to the provinces are an essential component of Canadian federalism. They are a fundamental premise to Canadian unity. The government and, to a degree, parliamentarians on both sides of this House are frequently criticized for the level of federal expenditures. But the fact that right off the top about 20 per cent, this year almost $10 billion, of our resources simply pass through the federal treasury to the provincial governments for these governments to spend, is a fact that is not generally recognized.
These transfer payments occasionally give rise to some recrimination from the provinces, particularly the wealthier ones, which argue that they introduce an element of rigidity in their expenditure planning. Yet so far no one has been able to come up with a workable and equitable alternative.
Tax transfers alone will not do the trick, since they would mostly transfer tax revenues to the wealthier provinces and violate the government's commitment to the principle of equal access to basic services for all Canadians, wherever they may live, in whatever province they dwell.
I must point out as President of the Treasury Board that the so-called rigidities of transfer programs to the provincial governments are not in fact one-sided. These programs give rise to a built-in growth factor in federal outlays which must be taken into account in assessing the extent to which the federal government has managed to restrain its own expenditures. In the 1978-79 main estimates, which 1 am tabling today, for example, federal payments to provincial governments under six major programs will increase by almost $2 billion, about 46 per cent of the increase in our total spending. In other words, were it not for this provincial dimension in federal outlays, the projected rate of growth in our main estimates in 1978-79 would be about 4.8 per cent rather than 9.3 per cent.
One of the reasons why provincial governments will be in a position to ease, or at least increase only moderately this year, the burden on provincial taxpayers is that the federal government will continue to transfer more than one fifth of its resources to these governments.
A still higher proportion of federal outlays will finance a variety of direct payments to individual Canadians; more than $10.3 billion, or 21 per cent of total expenditures during the next fiscal year. These payments supplement the incomes of millions of Canadians, senior citizens, growing families, workers temporarily unemployed or acquiring new skills, native citizens and veterans. These payments are largely spent on food, shelter and other basic necessities. In other words, old age pensions, family allowances and other federal payments to individuals finance a significant element of private consumption in Canada. Furthermore, the steady growth of private consumption is required, as we all know, to stimulate business activity, production, and employment.

Accordingly, both current economic considerations and general concern for the well-being of Canadians have led the government not to propose changes in statutory provisions that require an additional $926 million this year be provided to maintain the value of social benefits and to extend those benefits to the growing number of Canadians eligible for them in 1978-79.
Had we chosen to propose changes so as to hold at current levels the aggregate value of payments to individuals as well as transfers to the provinces, the increase in main estimates this year could have been limited to a mere 2.7 per cent. Let there be no illusion that social benefits could have been transferred overnight into tax benefits, because that simply is not so.
There is nothing sacred about social programs. They have been revamped before, and they will no doubt be revamped again. We have resolved that, in this area as in others, spending restraint will be implemented to the benefit of Canadians and not to their detriment. This means that restraint in social programs must at all times take into account the real needs of Canadians as well as general economic conditions.
I would like now to draw the attention of hon. members to further evidence of the government's commitment to restraint, namely, its over-all policy on manpower requirements and compensation for the public service in 1978-79.
First, I am pleased to announce that for the second consecutive fiscal year the increase in authorized man-years subject to Treasury Board control will be held at six tenths of 1 per cent. This represents an increase of 1,848 man-years, for a total authorized level of 325,120.
I point out that authorized man-years are decreasing in 18 departments and agencies, while 18 others have been allocated the same number of man-years as in the fiscal year 1977-78. Additional man-years have been authorized for 33 departments and agencies. These increases are concentrated in a few labour-intensive and generally service-oriented government operations, such as the Post Office, the Department of Public Works, the Department of National Defence, Correctional Services and the RCMP.
It should be noted that the six tenths of 1 per cent increase in federal Public Service manpower requirements will be only one quarter of the projected growth of the Canadian labour force in 1978-79. Despite impressions to the contrary, our records during the past ten years show that the Public Service growth trend has remained below that of the labour force. I am able to announce for the fourth consecutive fiscal year that the total number of senior personnel man-years in the departments and agencies under Treasury Board man-year control will remain at the same level.
This freeze is being extended for a second consecutive year to a key component of the senior personnel categories, the senior management complement, which is comprised of senior executives and officers in equivalent positions. As in the past, provisions have been made for a measure of flexibility in the
February 22, 1978

re-allocation of authorized senior personnel man-years and senior executive and equivalent positions between departments and agencies, in order to meet the tasks of highest priority.
Finally, I am pleased to be able to inform hon. members of the compensation policy to be adopted for collective bargaining in the federal Public Service during the post-control period. It will be recalled that in the green paper entitled "Agenda for Co-operation" the government outlined the policy to be adopted. In the months since that paper was published the Treasury Board secretariat has been developing means of implementing that policy. In the process, my officials and I have consulted with Public Service bargaining agents, provincial ministers and officials, and spokesmen for the private sector. The result of this process has been to confirm the government's belief that the policy proposed in the green paper is the right way to proceed.
Briefly, the government intends to change the emphasis in its previous bargaining policy. This change of emphasis will involve explicit consideration of the aggregate value of pay and benefits in relation to hours worked. In our terms, that is described as total compensation. It will also involve much more emphasis on comparisons of total compensation with private sector employers wherever possible. Where comparisons with private sector employers are not possible, for example in the case of teachers, the past practice of making comparisons with other public employers, or taking into consideration established internal relativities, will continue.
In addition, it is intended that compensation in the Public Service will not lead compensation levels in the private sector to ensure that the federal government will not fuel wage inflation. To this end, where compensation for public servants in a bargaining unit is significantly greater or less than that of their outside counterparts, the Treasury Board will seek to negotiate rates of increase which will allow comparability of total compensation to be achieved over a reasonable period of time, taking into account the magnitude of the difference. I hope this strengthens public perceptions of the government as an efficient provider of essential services at reasonable cost, all of which are fundamental goals of the government expenditure policy for fiscal year 1978-79.


Some hon. Members:: Hear, hear!


Mr. Harvie Andre (Calgary Centre):: Mr. Speaker, I will not take as long as the minister. I have no need to build a forest of verbiage behind which to hide. I will just expose the facts and let them speak for themselves.
We have just seen performed this year's version of the annual estimates medicine show, that great show put on by the President of the Treasury Board (Mr. Andras) each year. By using his best flim-flam, he tells the House how moderate and restrained the government is with taxpayers' money. Every year since I have been here, I have heard successive presidents of the Treasury Board using the same type of flim-flam. They have had to use more of it lately. Frankly, the medicine they are attempting to sell is enough to make you sick.
Main Estimates
Ten years ago, for fiscal 1968-69 the total federal government expenditures were $13.3 billion. In these estimates we see projected expenditures of $49.8 billion, which is nearly $50 billion, or four times as much as the expenditures ten years ago. There are cancers which do not grow that fast.
Last year's deficit, the difference between expenditures and receipts, was estimated to be approximately $9.2 billion. That is more than the total expenditures the year before this administration assumed office. Obviously we cannot afford the type of spending which was carried on last year. How can we afford the expenditures called for this year amounting to approximately $49 billion? It is small wonder that the Canadian dollar is of little value on the international money markets. Our government treats Canadian taxpayers' dollars with no respect at all. How can we expect the international money markets to treat it any differently?
There is an explanation in these estimates as to why the Minister of Finance (Mr. Chretien) chose last night to announce that he is seeking foreign aid to prop up the Canadian dollar. I am sure when international money markets see this particular document, the government's plans for next year, what little confidence they have left in the Canadian dollar will be diminished.
In October, 1975, the government indicated that inflation was getting out of hand and that we are living beyond our means. At that time it imposed wage and price controls. It ordered corporations to keep their profits flat. Also it ordered that no individual wage earner could receive more than 8 per cent in the first year, and subsequently down to 6 per cent. During that period, if a wage earner earned the maximum allowable increase, his salary would have risen 22 per cent. During that time, government spending rose 44.4 per cent. In other words, what the Prime Minister (Mr. Trudeau) peddles to the rest of the country is too strong for the government.
The supporting documents produced by the President of the Treasury Board are literally full of flim-flam. The minister claims that spending will increase by only 9.8 per cent. He arrives at that by indicating that last year's main estimates, budgetary and non-budgetary, were $44,142 million. He had a reserve figure of $1,850 million, as well as normal lapses of approximately $872 million. Therefore the total spending was approximately $45,102 million. This year the estimates call for $48,250 million, budgetary and non-budgetary; the reserves are $1,550 million; and the lapses are $1 billion. That is what produces the round figure of 9.8 per cent. If we use the same estimates this year for reserve and lapses as were used last year, instead of these cooked up figures which the President of the Treasury Board has put in this document, then the increase is 10.9 per cent and not 9.8 per cent. Also the flim-flam is exposed in the budgetary expenditures. We are assuming that the loans described in the blue book are in fact loans and not some flim-flam. So we are talking about money that is being spent; we are not lending it.
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If you compare expenditures for the coming year with expenditures for the fiscal year just ending, the increase this coming year over the last year is 12.96 per cent, or close enough to 13 per cent for the government to make the honest claim that spending this year is going up by 13 per cent. That is not restraint, and it is flim-flam to claim anything else.
This document is full of flim-flam. There was the claim that last year the increase was only 8.2 per cent. The minister said there were structural adjustments and the increase might have been 10 per cent, which is the same as this year. The structural adjustment which he was able to claim on behalf of the government, the great restraint in growth of only 8.2 per cent, was in fact the transferral of the burden on the provincial governments, amounting to $1 billion.
At the bottom of page 4 of the minister's statement he states how the government has had to cut the fat. What it has done is to take the cherry off the top of a double malted deluxe chocolate sundae. On page 6 there is an attempt to blame the provinces for the increase. The minister states that if it were not for all these funds which we have to send to the provinces, our growth rate would only be 4.8 per cent in increased expenditures. Every one of the programs referred to is a federal one. They are in areas of provincial jurisdiction and the provinces are administering them, but they are federal government programs, and to blame the increase on the provinces is plain flim-flam.
At the bottom of page 6 of the minister's statement there is an attempt to blame the recipients of social benefits, old age pensioners, and those whose benefits have increased by $926 million this year. The reason those expenditures have had to go up is to allow those persons to have an opportunity to catch up on inflation caused by the profligate spending of this government over the last decade. It is a chicken and egg situation. You caused the inflation through profligate spending, and the result is that sort of increase. But the implication that somehow these persons who receive social benefits are to blame and are at fault for increased government spending is, in my opinion, irresponsible and plain flim-flam. I do not think the Canadian public is going to buy that medicine.
We do not think the medicine which the flim-flam man is trying to sell us will cure the problems facing the country. It will not make us well, it will make us sick, and we strongly suggest that the President of the Treasury Board look at the debate of February 2 when our party laid down part of a program which, if implemented, will result in substantial reductions in government spending. I would advise the government to take a look at some of the speeches given by my leader and others in my party indicating what it is possible to do, and I would also advise the government to do something about the estimates procedures. In a sense, the whole thing is an exercise in flim-flam.
Parliament has no real control over government spending. All we can do is expose the situation to a little light. In fact the funds are committed. It is a charade to suggest that parliamentary approval will be given, because we have no opportu-

nity whatsoever to influence the spending habits of this government. The only resource people have if they want to put spending under control is to change governments, which I hope they will do.
I would also like to re-emphasize the importance of the government and the Treasury Board dealing with the recommendations of the Auditor General respecting the form of the estimates. As the Auditor General stated in 1975, and in 1976, and in 1977, the procedure for passing the estimates is totally hopeless in terms of providing parliament with an opportunity for meaningful examination. Let me quote paragraph 2.18 in the latest Auditor General's report. It reads:
... a comprehensive study be made with a view to revamping the form of the estimates so that the information they contain would be more meaningful and useful to parliament and so that the approved estimates would be the cornerstone for a fully effective government expenditure control system ...
If we are going to bring government expenditure under control, we must do something with the estimates procedure, with this charade and flim-flam in which we engage every year with apparently little impact upon the spending habits of this profligate government.


Mr. Max Saltsman (Waterloo-Cambridge):: Mr. Speaker, it is a pretty sad and perverse document we have been handed today which holds no promise that the government either understands, or cares to deal with, the serious problem and scandal of unemployment.
I should like to paraphrase the minister's statement to make it read in a more likely way when he says that the statement today reflects the government's determination to ensure that Canada's economic recovery will be sustained and that the growth trend of federal spending will remain below the growth trend of the gross national product. Unfortunately, about the only thing that the statement seems determined to do is to make sure that this country continues at the highest level of unemployment in its history. This is an irony and I do not blame the hon. member for Calgary Centre (Mr. Andre) for being upset. I am upset myself, but for other reasons. I can see why the hon. member for Calgary Centre would be upset because, when the election comes, we will have the strange picture of the Liberal party running on the Tory platform.
Make no mistake, Mr. Speaker, what the government has done is to cut its expenditures. It is fine to say that the government has not done it and to point to the growth in some of the figures, but in real terms expenditure has been cut, and to that extent the stimulation that is required in the economy has been reduced. At one time the Liberals used to have better taste; they used to steal ideas from the NDP. But now all we see is the government rushing as fast as it can into a Conservative position.
The problem extends beyond what has been tabled today by the President of the Treasury Board (Mr. Andras). There is a current wave of conservatism in this country which has placed the total burden of responsibility for unemployment and slow growth on government spending. It is the new and mistaken orthodoxy of our day, and the government has bought this error holus-bolus in an effort to appease the electorate. Rather
February 22, 1978

than live up to its responsibilities-sometimes responsibility and leadership involve telling the public the truth instead of knuckling under to the current prejudices-it has opted out. It has become a chicken. That is why we have the present document before us.
Let me put some figures on the record in addition to the statement I have just made. Let us take a look to see what the relationship is between unemployment and government spending. It is very instructive to do this, and I apologize that the figures I am using are not exactly correct because the unemployment figures are in annual percentages and the estimates are on a fiscal basis. However, the figures are close enough to give the kind of picture which I think is important to see.
In 1974-75 the increase in estimated government expenditures was 28.3 per cent. Unemployment was at 5.4 per cent. In 1975-76 the government really worked hard, bought the new conservativism and reduced the increment in government estimates and expenditures to 10.2 per cent. Unemployment went up to 6.9 per cent. In 1977-78-the government's proudest year-the government held its spending down to an increase of 8.2 per cent, but at what a cost! Unemployment went up to 7.1 per cent. If we plot the pattern of government expenditures with unemployment, there is a clear relationship. As government expenditures are reduced, especially in a time of recession, the unemployment rate goes up.
What we see today is a government which has lost its capacity for leadership. It has knuckled under to a conservative reaction-which will change-in order to get votes in the coming election.
The government has abdicated its responsibility to the army of 1.5 million unemployed. I think that is a shameful and disgraceful way to behave.
Let us go on to another theory to which the government has been subscribing. This theory is reflected in the statement made by the President of the Treasury Board. The theory is that as you cut government expenditures, give bonuses to industry, and give corporations tax concessions, they will provide employment. It is a very simple theory. Perhaps I should say it is a simple-minded theory under which the government gets out of the way and private employers are supposed to rush in to fill the vacuum, except that despite the billions of dollars which have been given away in the last three budgets to the private sector, the private sector simply has not responded. When the government gets out, there is nothing to fill the vacuum.
I am not saying that the government should be in a spending position all the time or that it has to stimulate the economy all the time. What I am saying is that when we are faced with the problems associated with 1.5 million unemployed, that is not the time for the government to get out of the economy. This is not the time for the government to abdicate its responsibility because there is nothing to take the government's place. The private sector will respond only if the stimulus comes from the government. It is unfortunate that the private sector does not
Main Estimates
understand this. Who is going to invest if people are not working? Where is the purchasing power going to come from if people are not working?
At the recent federal-provincial conference the Minister of Energy, Mines and Resources (Mr. Gillespie) stated that there were billions of dollars worth of energy projects, public expenditure projects, to put forward in order to create jobs, yet the President of the Treasury Board comes to this House a few days later, gives the lie to that statement, and says the government is getting out of the spending business completely and that the private sector is going to take over.
In politics it is important for people to get elected. Everybody wants to be popular at any given time, but it is also important for people to live up to their responsibilities. In this case the responsibility is that of the government. It might have done the government some good and made it look as if it had some integrity if it had lived up to its responsibility.
The statement made today seems to indicate that the government does not feel it important to provide leadership. By getting out of the economy the government will not solve our problem, and it has displayed its cowardice in its presentation today.


Mr. Adrien Lambert (Bellechasse):: Mr. Speaker, I would like to thank the minister for letting us have a copy of the statement he made in the House a moment ago as well as the papers that accompanied it which enabled us to have a quick look at the estimates for 1978-79. We cannot conceivably examine very objectively such a large volume in a few minutes but I would still like to deal mainly with three points that caught my attention while I was examining the papers 1 just referred to and as a result of the statement by the President of the Treasury Board.
I would also like to congratulate the officials of various departments who worked on the preparation of these estimates. I feel this book is written in very small print and very small figures. I recognize that there were certainly thousands of hours of work put in this and I think that Canadians at the end of the year will realize that we were dealing with billions of dollars because this is a budget of $4.35 billion. Today we talk about billions of dollars as we used to talk about ten dollars. Nothing frightens us much anymore as figures also come under the pressure of inflation. The effect of inflation is felt not only in consumer prices but also in the area of debt servicing.
With respect to inflation it is regrettable that a cut of $323 million should be made in the budget of the Central Mortgage and Housing Corporation at a time when we need further funding in this area to properly meet the demands and needs of Canadians. The cut is unfortunate. The government might tell us: Canadians did not use all the funds made available to them. That is possible. But if they did not, it is because interest rates are too high in relation to their capacity to pay. This is due to people being a little worried over their future, and a lack of confidence. They dare not go into the building industry
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February 22, 1978
Main Estimates
at a time when housing should be encouraged, and in all aspects of the construction industry which plays a major and decisive part in the economic development of any nation. With a buoyant building industry far more tradesmen with all kinds of skills would be employed and I need to go through the whole list of them, ranging from foundation diggers to roofers, chimney workers and so forth. This is why I think this is a very important area which should have been encouraged through lower interest rates. That way, the government would have been able to get back part of the interest it has to pay out to promote development in this area, as was the case, for example, in the Maritimes and eastern Quebec, through tax credit. The idea behind all that was to help industries in this part of our country.
Another point I would like to talk about is the debt. I was shocked when I looked at this earlier. It is terrible to see a responsible government, which has all the tools to do something truly useful-we have to read this to believe it- according to the table, in 1975, which is not so long ago, the net debt of our country was $19,275 million. From the start of Confederation in 1867 to 1952, over a 100 years, the debt grew to $11,185 million, and from 1952 to 1975, our debt increased by $8 billion. This is unacceptable, Mr. Speaker, when we consider that in 1975 the debt was $19 billion and that in 1978, it will reach $38 billion, which means that it will have doubled. There has been no war, no disaster, we did not develop a merchant navy, we have done nothing very special, and our national debt has doubled.
This is the criticism that I want to make, but at the same time I would like to make a practical suggestion that the government can follow if it wishes. If not, I wonder what the national debt will be in four years since it has doubled in the last four years. At the present time, Mr. Speaker, it costs us $25 million a day, the debt grows by $25 million a day. The figure would be even more shocking if this were broken down into hours and minutes. I do not have the time to do it, but others who have the time can do so. I invite the unemployed of Canada to consider this. They have the time to figure it out and they will understand why they are unemployed because it is shocking to see that we have come to the point when we pay $25 million a day on the national debt and when we are not even able to know to whom the interest is paid. I understand that there are people who own bonds, but that interest is paid to big financiers.
I see here that there will be an increase of $1,150 million this year for interest alone. The hon. member for Levis (Mr. Guay) could build a merchant marine with this and we would get something out of it. This is a cancer. Someone talked about a cancer in his speech earlier, and he was right.


Mr. Lefebvre:: The opposition is a cancer!


Joseph Adrien Henri Lambert: The hon. member says that the opposition is a cancer, but if it is, we have a seriously cancerous democratic system because it has happened that the cancer has changed sides and this can still happen. But this remains a cancer, a necessary cancer. The opposition is not there only to

criticize, but also to inspire wisdom in those who are responsible for public funds, that is the members of the cabinet. It must be a very discouraging situation for a finance minister who will have to get all the money that the President of the Treasury Board (Mr. Andras) requested today in his estimates. It will have to be an income budget to pay the expenditures. In a healthy administration, expenditures and income should be balanced, and when they are not, we get into debt. For individuals, getting into debt means that you are not able to balance your budget, which is not a good thing. This is no good for a municipal government, let alone a provincial or national government. I would therefore suggest to the Minister of Finance (Mr. Chretien) and hon. members of cabinet the solution would be to amend the Bank of Canada Act. You feel this is funny. You are making fun, but if your former leader Mr. King was here now, he would tell you: well boys, you have not made much progress over these 50 years. Because he said there had to be a Bank of Canada, a bank for Canadians, a bank to serve Canadians, a tool to manage the nation's credit in order to create a healthy monetary system in Canada. He said so. If we are to succeed, we should therefore amend that. Let us be up to date. In 1978, the Bank of Canada can only make loans to the federal government up to certain percentages of the estimates, and for six months. How far can we go on that?
The Minister of Finance proposes to go and borrow abroad, in order precisely to protect our Canadian dollar. I read in a newspaper today the Canadian dollar will soon drop to 80 cents. This will happen for the precise reason we are doubling our national debt; if we owe more than we have, creditors will become tougher. We will soon learn about that. Creditors are beginning to lose confidence in this country's economic stability and our Canadian dollar.
I therefore very sincerely urge the minister to propose an amendment to the act to allow our own bank to lend the money our government needs. We would be lending ourselves money. Figures computed here at home by ourselves and for ourselves are as valid as those borrowed in Italy, Germany or New York, because this is only figures. So we have means, we can do so because we are a responsible parliament. In view of this, we should change our ways of financing the public sector to prevent such huge and discouraging debt increases.


Mr. Speaker:: Order, please. I think it is appropriate in the circumstances to understand the importance of the step taken by the President of the Treasury Board (Mr. Andras) today in the tabling of the estimates. They are, of course, central to the whole process of the examination of the estimates by parliament. His remarks are important, and it was for that reason that extensive participation took place by members opposite. It must be remembered, however, that the purpose in tabling the estimates and in referring them this afternoon to the standing committees is that extensive questioning will take place at each of the standing committees on the separate estimates.
February 22, 1978

Although the Standing Orders under which we are operating provide for questions to be put in circumstances of statements on motions at this time, if there are any questions at all I would think that they ought to be of a very general nature since the whole subject of the government's spending program will be the subject of questions in the standing committees. I would not necessarily eliminate the questioning at this time, but I would expect that if questions are to be pursued they will be minimum in number and of a very general nature.


Mr. Lincoln Alexander (Hamilton West):: Mr. Speaker, I will certainly conduct myself accordingly with respect to your remarks. But I would say with all due respect that it is a little unusual; we did have fairly extensive questioning the last time. Notwithstanding that, we know the minister has perpetrated a further con job on the Canadian people, and as my friend from Calgary has indicated it is the biggest flim-flam that he has seen.
There are a few things which need explaining and I will try to speak to my area which is the Public Service. The minister indicated from here on, I hope this is what he said but I do not know what he said in this regard, that salary increases were to be based on total compensation. This is a new principle about which not much is known. I wonder if the minister can give us some indication of what he is talking about in terms of total compensation. When does he expect it to come into play, or is it in play now? Can he advise whether the provincial representatives with whom he and his officials must have met of late have also accepted this phenomenon, or principle as the case may be, of total compensation?


Robert Knight Andras: Mr. Speaker, I will be pleased to elaborate now, or at a future date in more detail. We have in fact been bargaining in the federal Public Service since about 1967 on the concept of wages and salaries and some identifiable benefits on the basis of comparability with the private sector where such comparisons could be established. We now intend to widen that to include all quantifiable forms of remuneration, not simply wages and salaries, although they obviously remain the most significant, and to establish comparative compensation levels on a total compensation basis in the private sector wherever that is possible.
In discussions with the provinces, they have agreed with the concept of bargaining on a total compensation package basis. They will have somewhat more difficulty in establishing comparability than we will because the make-up of our federal service is such that we think we can establish comparability for about 80 per cent of our people, whereas they have more firemen, policemen, and that kind of content in their make-up. Therefore they will have somewhat less. In some provinces they say that no matter what the comparability might be, their basic problem is simply that of ability to pay. The concept is being discussed with the bargaining agents. We hope to institute it soon, more precisely probably after April 14 at which time the current sanction controls come off.
Main Estimates


Lincoln MacCauley Alexander: Mr. Speaker, there is another problem that has certainly exercised public servants, particularly those who are making over $30,000. I hope the minister can clarify this right now. When the minister was asked questions about this matter, particularly by the hon. member for Victoria (Mr. McKinnon), he once again flim-flammed the hon. member. I want a specific answer so that those involved in the Public Service will understand what is in the mind of the minister. They believe that all those above the $30,000 salary bracket will be removed from the bargaining unit. That is a simple statement in the form of a question. Can the minister give us an assurance, one way or another, on what is happening in this regard?


Robert Knight Andras: Mr. Speaker, I would not make such an announcement on this occasion. I will take this opportunity, however, to state that I have noted since I replied to the hon. member for Esquimalt-Saanich (Mr. Munro) that I made reference to the Finkelman report the other day. I have since been advised that is incorrect. The Lambert Committee on Executive Compensation did use it, but the other gentleman did not. I apologize for that. In answer to the hon. member, I will again say that if and when we have made a decision on the question of management or other exclusions, we will make it known in the House in the usual form.


Lincoln MacCauley Alexander: Before the minister makes a decision and announces it in the House, I hope he will take the unions involved into his confidence in order that we do not have heavy-handed unilateral steps. The minister said we are talking about a 9.8 per cent increase in terms of government spending. My colleagues will want to pursue this further. At the present time we are asking labour to restrain themselves to the extent of 6 per cent. As I understand it, under the AIB, the government, once again wrong in terms of its prognostications, indicated that the inflationary rate would be about 4 per cent this year. We all know that is way out of line. I would like to know whether those figures were given any consideration. What part of that 9.8 per cent is related to the inflation rate? Why was there no consideration given for using the inflation rate of 4 per cent which the government indicated through its AIB would be the guiding principle for this particular year?


Robert Knight Andras: The hon. member, as is only rarely the occasion, is mixing apples and oranges and grapes and bananas and coming up with the usual melange of a very strange salad. To get to the point, as I indicated the 9.8 per cent represents about a 3'/2 per cent real growth. The rest is attributable to inflation which is applicable to government expenditures as to all other expenditures in the country. I do not see how he can possibly relate the 9.8 per cent to the wage guidelines which are one component of inflation but not the only reflection of costs related to cost increases.


Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, may I ask the President of the Treasury Board (Mr. Andras) whether he will answer one of the questions put to him by the hon. member for Hamilton West (Mr. Alexander) which escaped him. Considering the two matters which he has

February 22, 1978
Main Estimates
discussed with regard to public service salaries on compensation, on the one hand a new approach or a new total package and, on the other hand, the possibility of setting a level above which there is to be no collective bargaining, can the minister say whether these two matters have been discussed with the bargaining units, the representatives of the employees? If not, will there be such discussion before a policy is finally determined?


Robert Knight Andras: Mr. Speaker, the answer is yes to both questions. Discussions have begun, are continuing, and will continue before any final decision is made with regard to possible amendments to the Public Service Staff Relations Act. I assure the hon. member of that. I regret I missed it in the question of the hon. member for Hamilton West (Mr. Alexander) a few minutes ago.


Sinclair McKnight Stevens: Mr. Speaker, my questions to the President of the Treasury Board (Mr. Andras) begin with respect to his estimates fact sheet No. 3. On page 5 of that fact sheet he sets out various increases and decreases, summarized as to the major changes in his estimates. I would first draw the minister's attention to the decreases.
Included in those decreases, for example, we have the Export Development Corporation showing an amount of $365 million less compared to the current fiscal year. Will the minister indicate if any account has been taken into consideration of the fact that the Export Development Corporation is borrowing externally? They have traditionally borrowed through the Minister of Finance, but they are now borrowing in the general public market. It is on the covenant of the Government of Canada. I wonder if included in that decrease is an allowance for the amount they will be borrowing externally as opposed to borrowing directly from the Minister of Finance.


Robert Knight Andras: I think it is quite clear that we intend to permit the Export Development Corporation to go to the private market for certain funds. We have named a target amount here. If he is talking about borrowing externally, it is under the authority of the Minister of Finance to permit the Export Development Corporation to do so. That is the intention, Mr. Speaker.


Sinclair McKnight Stevens: As the president of the Export Development Corporation, Mr. John MacDonald, had indicated that they may be committing themselves this year to a further $2 billion in export financing, and he anticipates that will be totally financed externally in the sense that he will not be drawing on the Minister of Finance or the Consolidated Revenue Fund, will the President of the Treasury Board quantify for us what would be the amount that the Export Development Corporation increase would be as opposed to the decrease if that adjustment were taken into account?


Robert Knight Andras: Mr. Speaker, I regret I cannot give the hon. member the exact detail. I am familiar with the area. There are some plans under consideration which either the Minister of Finance or myself will be making known in more detail

soon. The final details have not been set out yet. I will try to get that for the hon. member.


Mr. Speaker:: I will allow a final supplementary to the hon. member for York-Simcoe, and conclude questioning with the hon. member for Yorkton-Melville (Mr. Nystrom) and the hon. member for Northumberland-Durham (Mr. Lawrence).


Sinclair McKnight Stevens: Surely in the over-all context of Treasury Board figures, they have some figure for the external borrowing that will take place in the Crown corporations listed here? Perhaps an easier way to express it would be all the nonbudgetary amounts that heretofore would have been included as an estimate, but now, because they are being borrowed in the private sector, will not be included. Am I correct in assuming that certainly $1 billion will be added and it could be as much as $2 billion?


Robert Knight Andras: In these estimates and these statements that have been made, the fact sheet limits the identified amount which we have clearly flagged and the hon. member noticed it-that is the $365 million that we have identified with regard to the Export Development Corporation. At the moment there are no other specific items that we have identified in respect of the spending plans for 1978-79. The $365 million is flagged, and the hon. member noted it.


Mr. Nystrom:: In the remarks made by the minister he said words to the effect that he was concerned about sticking the knife into somebody else's guts. Since I thought he was concerned about programs that affect ordinary people, may I ask why the government chose at this time to eliminate the consumers' skim milk powder program which amounted to $17.9 million last year and helped low income people?


Robert Knight Andras: Mr. Speaker, with respect, 1 think that kind of detail could be conveyed to the hon. member in committee by the Minister of Agriculture (Mr. Whelan) or, if he is involved, the Minister of Consumer and Corporate Affairs (Mr. All-mand) on an appropriate occasion.
[ Translation]


Mr. Speaker:: I shall invite the hon. members for Richmond (Mr. Beaudoin) and Northumberland-Durham (Mr. Lawrence) to put a question. The hon. member for Richmond has the floor.


Léonel Beaudoin: Can the President of the Treasury Board tell the House, since the national debt went up by $9 million from 1977 to 1978, increasing debt servicing charges by 20.3 per cent, whether he intends to propose new restrictions to parliament with a view to putting a stop to this extraordinary growing indebtedness?


Robert Knight Andras: Mr. Speaker, it is known, of course, that the debt will increase this year. I would point out to hon. members that as a percentage of the economy, or as a percentage of
February 22, 1978

government expenditures, it is still much below what it was 15 or 20 years ago. While it is rising now, it is not at a level which has not been sustained or is not sustainable in an economy the size of this country's which will probably reach $233 billion in the coming fiscal year-that is the total GNP of the economy. The federal public debt is a portion of that but is not, in our view, an alarming proportion at this time.


Allan Frederick Lawrence: Mr. Speaker, bearing in mind the well known and traditional propensity of successive Liberal governments to buy their way into power in the province of Quebec, I wonder if the minister could explain to the House the very obvious imbalance, in respect of major capital public works expenditures? In the province of Quebec public works expenditures and the National Capital Region expenditures together total over $164 million in this election year. In contrast, in the province of Ontario the public works capital expenditures and the National Capital Region expenditures total $41.5 million, that is, $164 million against $41.5 million. Can the minister explain such an obvious imbalance in these figures?


Robert Knight Andras: Mr. Speaker, I would be glad to let my colleagues, the Minister of Public Works (Mr. Buchanan) or the Minister of State for Urban Affairs (Mr. Ouellet), who is responsible for the National Capital Region, note this question and deal with it in great detail for the hon. member. There are many factors involved, however, commitments for the completion of buildings, and obviously there is a fairly major expenditure involved in buildings in the city of Hull, as part of the National Capital which happens to be in the province of Quebec. This is a decision which was made some years ago and on which work is being completed now. I shall ask my two colleagues to reply in detail, and I am sure they will look forward to it.


Allan Frederick Lawrence: Mr. Speaker-


Mr. Speaker:: Order, please. Introduction of bills.


Allan Frederick Lawrence: May I just-


Mr. Speaker:: First reading of Senate public bills.


Allan Frederick Lawrence: Mr. Speaker-


Mr. Speaker:: Order, please. I have just finished denying a supplementary question to the hon. member for Richmond (Mr. Beaudoin). If I grant one, I have to grant two. I think there has been adequate questioning.


Allan Frederick Lawrence: Mr. Speaker-


Mr. Speaker:: Order, please; order, please.
Order Paper Questions REVISED STATUTES


REFERRAL OF DOCUMENT TO STANDING COMMITTEE ON JUSTICE AND LEGAL AFFAIRS
[Stage Direction]
On the Order: Government notices of motion:
February 20-The Deputy Prime Minister and President of the Privy Council

The following proposed motion:-That the document entitled Proposals to correct certain anomalies, inconsistencies, archaisms, errors and other matters of a non-controversial and uncomplicated nature in the Revised Statutes of Canada, 1970, and other Acts, subsequent to 1970, tabled on the 1st of February, 1978, be referred to the Standing Committee on Justice and Legal Affairs.
Mr. MacEachen:: Stand.


Mr. Speaker:: Pursuant to Section 2 of Standing Order 21 this government notice of motion is transferred to and ordered for consideration under government orders later this day or at the next sitting of the House.


MESSAGE FROM THE SENATE
Mr. Speaker:: Order, please. I have the honour to inform the House that a message has been received from the Senate informing this House that the Senate have passed Bill S-8, an Act respecting Fugitive Offenders in Canada, to which the concurrence of this House is desired.


PETITIONS
Elmer MacIntosh MacKay: Mr. Speaker, pursuant to Standing Order 67 I hereby present a petition relating to certain matters of security, immigration, and the privileges of members of the House of Commons.


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. Yvon Pinard (Parliamentary Secretary to President of Privy Council):: Mr. Speaker, the following questions will be answered today: 56 to 60 inclusively, 550, 694 and 1,298.
[ Text]


Mr. Orlikow: 1.	Was any Financial assistance given by the Department of Indian Affairs and Northern Development or any other department to the Yukon Native Brotherhood since the Brotherhood was organized and, if so, by year, what was the amount?

February 22, 1978
Order Paper Questions
2.	How much of the amount was used to pay legal fees and/or other technical expert consultants?
3.	How much money went to native people participating in the work of the Yukon Native Brotherhood?


Yvon Pinard: In so far as the Department of Indian Affairs and Northern Development is concerned: 1. Yes. Contributions: 1971-72, $130,506; 1972-73, $205,650; 1973-74, $510,726; 1974-75, $485,697; 1975-76, $181,764; 1976-77, $373,720; 1977-78, (commitments) $9,772. Organization and Maintenance, 1977-78, (commitments) $15,000.
2.	Approximately $60,735 was expended on consulting and legal fees.
3.	The department does not have the records required to repond to this question. While the Yukon Native Brotherhood accounts to the department that funds are spent for the purposes for which they were requested, the accounting does not reflect whether a consultant, a lawyer, or a supplier hired by the brotherhood is or is not a native person.
In so far as the Department of Employment and Immigration is concerned: 1. 1974-75, $8,220; 1975-76, $10,200; 197778, $6,406. Total, $24,826.
2.	Nil.
3.	$24,826.
In so far as the Department of National Health and Welfare is concerned: 1. Yes. Year, 1976-77. Amount, $3,700.
2.	None.
3.	$3,700.
In so far as the Department of the Secretary of State is concerned: 1. The following amounts were granted to the Yukon Native Brotherhood under the department's core funding programme: (b) 1971-72, $155,000; 1972-73, $155,000; 1973-74, $155,000; 1974-75, $176,325; 1975-76, $186,555; 1976-77, $186,555.
2.	(a) Generally 5 per cent of the amount granted each year is required to pay for technical consultants such as auditors and financial advisors.
3.	Core Funding Programme: Core funding grants are given to status Indian, Metis and non-status Indian and Inuit associations with demonstrated support of their declared constituents for costs in the following areas: (a) staff and salaries, (b) travel expenses, (c) office costs, (d) expenses of meeting, (e) professional services. The Yukon Native Brotherhood received the grants indicated in 1 above primarily for its work with its constituents.
In so far as other Departments are concerned: Nil.


Mr. Orlikow: 1.	Was any financial assistance given by the Department of Indian Affairs and Northern Development or any other department to the Indian Brotherhood of
[Mr. Orlikow.1
the Northwest Territories since the Brotherhood was organized and, if so, by year, what was the amount?
2.	How much of the amount was used to pay legal fees and/or other technical expert consultants?
3.	How much money went to native people participating in the work of the Indian Brotherhood?


Yvon Pinard: In so far as the Department of Indian Affairs and Northern Development is concerned: 1. Yes. Contributions: 1972-73, $35,000; 1973-74, $125,000; 1974-75, $582,000; 1975-76, $656,240; 1976-77, $153,507. Loans: 1975-76, $300,000; 1976-77, $345,000; 1977-78, (commitments) $760,000.
2.	Approximately $50,000 has been expended on legal fees and consultants.
3.	The department does not have the records required to respond to this question. While the Indian Brotherhood of the Northwest Territories accounts to the department that funds are spent for the purposes for which they were requested, the accounting does not reflect whether a consultant, a lawyer, or a supplier hired by the Brotherhood is or is not a native person.
In so far as the Department of National Health and Welfare is concerned: 1. Yes: Year, 1972-73. Amount, $30,000.
2. None.
3. $30,000. To conduct a survey on health attitudes in selected communities in the Northwest Territories.
In so far as the	Department of the Secretary		of State is
concerned:		Native	
1. Fiscal Year	Core Funding	Communications	Total
	Programme	Programme	
1971-72	SI 76,000	$176,0001972-73	176,000	$169,000	345,0001973-74	176,000	68,000	244,0001974-75	220,000	220,0001975-76	231,616	231,6161976-77	231,616	231,6162.	Core Funding Programme: Generally 5 per cent of the amount granted each year is required to pay for technical consultants such as auditors and financial advisors. Native Communications Programme: None.3.	Core Funding Programme: Core funding grants are given to status Indian, Metis and non-status Indian and Inuit associations with demonstrated support of their declared constituents for costs in the following areas: (a) staff and salaries; (b) travel expenses; (c) office costs; (d) expenses of meeting; (e) professional services. The Indian Brotherhood of the Northwest Territories received the grants indicated in 1 above primarily for its work with its constituents.
All other interested departments and agencies have reported as follows: Nil.
February 22, 1978


Mr. Orlikow: 1.	Was any Financial assistance given by the Department of Indian Affairs and Northern Development or any other department to the Northern Quebec Inuit Association since the Association was organized and, if so, by year, what was the amount?
2.	How much of the amount was used to pay legal fees and/or other technical expert consultants?
3.	How much money went to native people participating in the work of the Association?


Yvon Pinard: In so far as the Department of Indian Affairs and Northern Development is concerned: 1. Yes. Loans: 197374, $50,000; 1974-75, $476,000; 1975-76, $650,000; 1976-77, $500,000.
2.	Approximately $402,000 of these loans was expended on legal fees and consultants.
3.	The department does not have the records required to respond to this question. While the Northern Quebec Inuit Association accounts to the department that funds are spent for the purposes for which they were requested, the accounting does not reflect whether a consultant, a lawyer, or a supplier hired by the association is or is not a native person.
In so far as the Department of National Health and Welfare is concerned: 1. Yes. Year: 1976-77. Amount: $16,592.19; Year: 1977-78. Amount: $1,863.
2.	None.
3.	Year: 1976-77. Amount: $16,592.19; Year: 1977-78. Amount: $1,863.
In so far as the Department of the Secretary of State is concerned: the following amounts were granted to the Northern Quebec Inuit Association:
Fiscal Year	Core Funding	Student Community Services	Total1971-72	Programme $ 71,238	Programme	$ 71,2381972-73	158,000	158,0001973-74	158,000	158,0001974-75	197,500	$ 9,600	207,1001975-76	207,928	15,900	223,8281976-77	207,928	11,020	218,9482.	Core Funding Programme. Generally 5 per cent of the amount granted each year is required to pay for technical consultants such as auditors and financial advisors. Student Community Services Programme. None.3.	Core Funding Programme. Core funding grants are given to status Indian, Metis and non-status Indian and Inuit associations with demonstrated support of their declared constituents for costs in the following areas: (a) staff and salaries, (b) travel expenses, (c) office costs, (d) expenses of meeting, (e) professional services. The Northern Quebec Inuit Association received the grants indicated in 1 above primarily for its work with its constituents. Student Community Services Pro-
Order Paper Questions
gramme: 1974-75-salaries for 5 people-14 weeks, $7,000; 1975-76-salaries for 8 people-10 weeks, $9,433; 1976-77- salaries for 5 people-12 weeks, $7,783.
In so far as other Departments are concerned: Nil.


Mr. Orlikow: 1.	Was any financial assistance given by the Department of Indian Affairs and Northern Development or any other department to the Northern Flood Committee since the Committee was organized and, if so, by year, what was the amount?
2.	How much of the amount was used to pay legal fees and/or other technical expert consultants?
3.	How much money went to native people participating in the work of the Committee?


Yvon Pinard: In so far as the Department of Indian Affairs and Northern Development is concerned: 1. Yes. Contributions: 1975-76, $2,000; 1976-77, $81,228; 1977-78, (commitment) $331,653; ($91,653 paid to date). Loans, 1974-75, $168,200; 1975-76, $300,000; 1976-77, $964,282; 1977-78, $250,000.
2.	Approximately $535,345 was expended on consulting and legal fees.
3.	The department does not have the records required to respond to this question. While the Northern Flood Committee accounts to the department that funds are spent for the purposes for which they were requested, the accounting does not reflect whether a consultant, a lawyer, or a supplier hired by the committee is or is not a native person.
In so far as other Departments are concerned: Nil.


Mr. Orlikow: 1.	Was any financial assistance given by the Department of Indian Affairs and Northern Development or any other department to the Grand Council of the Crees in Quebec since the Council was organized and, if so, by year, what was the amount?
2.	How much of the amount was used to pay legal fees and/or other technical expert consultants?
3.	How much money went to native people participating in the work of the Council?


Yvon Pinard: In so far as the Department of Indian Affairs and Northern Development is concerned: 1. Yes. Loans: 197475, $1,011,526; 1975-76, $500,000; 1976-77, $1,209,175.
2.	Approximately $843,250 of these loans was expended on legal fees and consultants.
3.	The department does not have the records required to respond to this question. While the Grand Council of the Crees accounts to the department that funds are spent for the purposes for which they were requested, the accounting does

February 22, 1978
Order Paper Questions
not reflect whether a consultant, a lawyer, or a supplier hired by the council is or is not a native person.
In so far as the Department of Employment and Immigration is concerned: 1. 1974-75, $12,924; 1975-76, $75,144; 1977-78, $76,800. Total, $164,868.
2.	Nil.
3.	$164,868.
In so far as the Department of Fisheries and the Environment is concerned: 1. Financial assistance was given to the Grand Council of the Crees in Quebec for the following years:
1975-	76, $10,500; 1976-77, $15,500; 1977-78, $10,500.
2.	That portion of the financial assistance listed in part 1 which was used to pay: (i) legal fees in 1975-76 was $10,500;
1976-	77 was $10,500; 1977-78 was $10,500. (ii) other technical expert consultants in 1976-77 was $5,500.
3.	Native people participating in the work of the council received $9,000 in 1977-78. This amount is in addition to the $10,500 financial assistance given to the council in 1977-78.
In so far as the Department of National Health and Welfare is concerned: 1. Yes. Year: 1975-76, $20,406.61; 1976-77, $142,076.86; 1977-78, $79,853.58.
2.	None.
3.	Year: 1975-76 . Amount: $20,406.61; 1976-77. Amount: $142,076.86; 1977-78. Amount: $79,853.58.
In so far as other Departments are concerned: Nil.


Mr. Laprise;: 1.	Did Canada grant loans with an interest rate of 2 per cent under the terms of the United Kingdom Financial Agreement Act of 1946 and, if so, for each year from 1968 to 1976, what (a) was the amount reimbursed in millions of dollars (b) is the amount outstanding?
2.	Did Canada grant other loans to the United Kingdom and, if so, in each case (a) in what amount (b) on what date (c) at what interest rate (d) for what period of time and what were the terms of reimbursement (e) what is the amount outstanding?


Yvon Pinard: I am informed by the Departments of Finance and External Affairs as follows: 1. Canada did grant a loan to the United Kingdom at an interest rate of 2 per cent pursuant to the terms of the United Kingdom Financial Agreement Act of 1946. The following table lists total principal and deferred principal as of March 31 of each year from 1968 to 1977, followed by the combined payments of interest and principal arising from the loan during the preceding year.
Year to	SMillion Amount Outstanding	Payment of Principal andMarch 31	at Year-End	Interest During Year1968	957	401969	957	31970	937	411971	917	411972	896	411973	875	411974	853	411975	831	411976	808	411977	808	3
2. Since 1946 the government of Canada has granted no other loans to the government of the United Kingdom.


Mr. Howie: From January 1, 1977 to date, did the Department of Fisheries and of the Environment hire outside consultants and, if so, how many?


Hon. Romeo LeBlanc (Minister of Fisheries and the Environment):: From January 1, 1977 to December 1, 1977, 406 outside consultants have been hired.


Mr. Caouette (Villeneuve): Does Bombardier Limited-Valcourt owe tax and, if so (a) for what years (b) in what amount for each year (c) did the company notify the government of its intention to pay such taxes?


Hon. Joseph-Philippe Guay (Minister of National Revenue):: The provisions of section 241 of the Income Tax Act relating to communication of information do not permit the Department of National Revenue to provide an answer to this question.

[ Translation]


Yvon Pinard: Mr. Speaker, if question No. 486 could be made an order for return, that return would be tabled immediately.


Mr. Speaker:: The questions enumerated by the hon. parliamentary secretary have been answered. Is it the pleasure of the House that question No. 486 be deemed to have been made an order for return.


Some hon. Members:: Agreed.


Mr. Speaker:: Agreed and so ordered.


Mr. Forrestall: What is the government's forecast for shipbuilding until 1982, including size and function, for the Department of (a) National Defence (b) Fisheries and the Environment (c) Transportation?
Return tabled.


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


Some hon. Members:: Agreed.


Yvon Pinard: Mr. Speaker, would you please call notices of motions Nos. 58 and 63 for the production of papers?


[Stage Direction]
Motion No. 58-Mr. Orlikow:
That an Order of the House to issue for a copy of the Report to the Cabinet on the Revised Criteria for Loyalty.
Yvon Pinard: Since, Mr. Speaker, no report to the cabinet has yet been prepared, I would ask the hon. member to withdraw his motion.


Stanley Howard Knowles: Agreed.


Mr. Speaker:: Motion withdrawn.
(Translation]


[Stage Direction]
Motion No. 63-Mr. Marshall:
That an humble Address be presented to His Excellency praying that he will cause to be laid before this House copies of all the minutes of meetings, correspondence, telegrams, letters, etc., having to do with the proposal of the Newfoundland and Labrador provincial command of the Royal Canadian Legion to the government to provide a home repair programme for Newfoundland and Labrador veterans and/or widows of veterans.
Yvon Pinard: Mr. Speaker, I ask the hon. member to withdraw his motion as the required papers are quite numerous and would require considerable amounts of money and considerable time to prepare.


Steve Eugene Paproski: Transfer for debate.


Mr. Speaker:: Transferred for debate. Shall the remaining notices of motions for the production of documents be allowed to stand?


Some hon. Members:: Agreed.
Finance



FINANCE


Charles Joseph Clark: Mr. Speaker, pursuant to the notice I sent to you earlier today I rise under the provisions of Standing Order 26 to ask leave to move the adjournment of the House for the purpose of discussing a specific and important matter requiring urgent consideration, namely, the fact that the decline in value of the Canadian dollar has reached the point where government intervention has become necessary.
For the last 15 months the Canadian dollar has been falling steadily. This week it was at the lowest point since 1931. The Minster of Finance (Mr. Chretien) has announced, deliberately outside this House, that extensive borrowing is being arranged to halt its further slide. In view of the high cost of maintaining the dollar and the inflationary pressures that will result from a further decrease of its value, I think it is essential that the House of Commons should consider immediately this very serious economic emergency.


Mr. Speaker:: Order, please. At almost exactly the time I received the notice pursuant to Standing Order 26 from the hon. Leader of the Opposition (Mr. Clark), I received a similar notice from the hon. member for Oshawa-Whitby (Mr. Broad bent).


John Edward Broadbent: Mr. Speaker, I ask leave, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles), to move the adjournment of the House under Standing Order 26 for the purpose of discussing a specific and important matter requiring urgent consideration, namely, the crisis of confidence in the Canadian dollar as reflected in the dropping of the Canadian dollar to the lowest level since the great depression of the 1930's and the announcement made last night by the Minister of Finance (Mr. Chretien) that Canada, for the first time in ten years, will have to borrow internationally to protect our falling Canadian dollar.


Mr. Speaker:: As I indicated earlier, both hon. members gave notices to the Chair pursuant to Standing Order 26 of their intention to make this application at this time. Of course that gave me the opportunity to examine the provisions of the Standing Order and the subject matter in order to determine, as is required of me, whether I believe that the subject to be discussed is a proper one to be discussed within the terms of the rule.
Standing Order 26 reads as follows:
Leave to make a motion for the adjournment of the House for the purpose of discussing a specific and important matter requiring urgent consideration ...
Those are the basic terms to which I must address myself. I have to give consideration under paragraph (5) of the rule in determining whether the matter should have this urgent con-

February 22, 1978
Finance
sideration, and whether an opportunity to discuss it in a satisfactory fashion is likely to come up in the ordinary course of business of the House in the near future.
Having examined both of those provisions, and the other relevant provisions of the rule, I have initially come to the conclusion, subject to what I am about to say regarding paragraph (16)(a) of the rule, that all of those conditions appear to be met by this matter, which indeed is a matter of great importance, and an important matter involving the administrative responsibility of the government.
However, I think I should refer briefly to the provisions of paragraph 16(a) because they have formed an important part of the decisions under this rule in the past, that is, the right to move the adjournment of the House for the purpose of this rule is subject to a number of conditions, the first of which is, under subparagraph (a):
The matter proposed for discussion must relate to a genuine emergency, calling for immediate and urgent consideration;
In the past I have had occasion to set aside applications under this rule on the ground that the matter was a continuing problem and not one of an urgent nature. Certainly by taking a very restrictive stance in respect of the interpretation of the word emergency in that subparagraph I could very easily frustrate the operation of this rule altogether.
However, as I have also said many times in the past, there is one very important aspect of debates pursuant to Standing Order 26, and that is that they are always on a topic that is immediately relevant, of attention and concern throughout the nation, and therefore provide members of this House with an opportunity to discuss matters of importance at a time when they are immediately relevant and on the mind of the Canadian public.
Therefore I am reluctant to take too restrictive a stance in such a way as to frustrate the operation of the rule, for I have said in the past that if a rule is on the books it obviously means there are occasions on which it must be permitted to precipitate a discussion. Yet, in order to do so, I am called upon to make a value judgment, it seems to me, as to whether or not a situation is an emergency.
Of course the provisions of the rule are such that I cannot hear any argument. Invariably in situations of this sort the basis of the very central argument that will occupy most of the debate quite probably is that the matter is not in fact an emergency, but is a regular occurrence and has been treated in the ordinary and regular way. Certainly those are the answers that have been given by the Minister of Finance (Mr. Chretien) today.
It seems to me, therefore, that the Chiar is in a rather invidious position. To take too restrictive a stance, again, as I say, would mean it would be almost impossible to get the benefit of this rule and to bring the House to a discussion of a matter which is important and requires urgent consideration, although it is not necessarily an emergency or a crisis, as the words have been used.
In the particular circumstances of this case, and I think everyone will understand that each case has to be examined on its own merits, having satisfied myself that every other aspect of Standing Order 26 has been met, and having some doubt in terms of the application of paragraph 16(a) and the specific word emergency, I have concluded, after very serious reflection, that I ought to give the benefit of the doubt to the applicants in this case in order to precipitate a discussion of this very important matter in this House this evening.
In accordance with paragraph (8) of the rule I am obliged to ask whether the applicants have the leave of the House. In these circumstances both the Leader of the Opposition and the hon. member for Oshawa-Whitby have made applications to put a motion, the text of which is formalized by the rule, so fortunately I do not have to pick and choose between those motions. The motion will be "That the House do now adjourn", and it would be my proposal to consider that the motion, when it is taken up, will have been moved by the hon. Leader of the Opposition and seconded by the hon. member for Oshawa-Whitby.


Charles Joseph Clark: That is certainly agreeable.


Mr. Speaker:: In accordance with the terms of the rule I see no reason not to invoke the provision for setting the debate at eight o'clock this evening. I am obliged by paragraph (8) of the rule to ask whether the hon. members have leave of the House to proceed with the debate at that time. Shall the hon. members have leave?


Some hon. Members:: Agreed.


Joseph Jacques Jean Chrétien: Mr. Speaker, I do not want to quarrel with your decision, but on a point of order-


Some hon. Members:: Order!


Mr. Speaker:: Order, please. The only question now is whether the hon. members have leave to move the motion. If not, I have to ask whether they have the support of a certain number of members. Do hon. members have leave to put the motion?


Some hon. Members:: Agreed.


An hon. Member:: No.


Mr. Speaker:: If there is any question as to whether they have leave I am obliged to read paragraph (8), which is as follows:
If Mr. Speaker is satisfied that the matter is proper to be discussed, the member shall either obtain the leave of the House, or, if such leave be refused, the assent of not less than twenty members who shall thereupon rise in their places to support the request; but, if fewer than twenty members and not less than five shall thereupon rise in their places, the House shall, on division, upon question put forthwith, determine whether such motion shall be made.
Do the hon. members have leave to put the question later this day?


Some hon. Members:: Agreed.


An hon. Member:: No.
-i

February 22, 1978


Mr. Speaker:: Order, please. Are there 20 members or more who support the application?
And more than 20 members having risen:


Mr. Speaker:: Pursuant to Standing Order 26 there will be an order granted that at eight o'clock this evening the motion will be moved by the hon. Leader of the Opposition, seconded by the hon. member for Oshawa-Whitby, "That the House do now adjourn."


Joseph Jacques Jean Chrétien: Mr. Speaker, I rise on a point of order. I got up because I welcome the debate. The only difficulty and puzzlement I am having is in the fact that the opposition has had about four or five occasions in the last two weeks to debate this thing and it has not considered it important enough to raise the matter at those times.


Mr. Speaker:: Order, please. Before calling orders of the day and recognizing the hon. Parliamentary Secretary to the Minister of Indian Affairs and Northern Development (Mr. Milne), the hon. member for Nickel Belt (Mr. Rodriguez) rises on a question of privilege.


PRIVILEGE
Mr. John Rodriguez (Nickel Belt):: Mr. Speaker, I rise on a question of privilege. Earlier today the hon. member for Central Nova (Mr. Mackay) tabled a petition in the House to which there was attached an affidavit by one Mr. Hart. In that affidavit there are certain statements made which I find rather disturbing, and I think there is need for some further investigation on the part of myself and my party regarding certain activities of surveillance in respect of my person in conversation with other persons.
Since the petition was tabled in the House the hon. member for Central Nova has shown me a picture of the person who made the statements in the affidavit, and I identified such person as being the one who chauffeured a car in which I was a passenger with another person and we did conduct a conversation. I would, therefore, at this time reserve my right to raise this matter at a later date after my party and I have fully examined the contents of the affidavit and all the relevant material attached to that deposition.


Mr. Speaker:: Order, please. I have not had an opportunity to examine the contents of the petition that has been put forward, and now referred to by the hon. member for Nickel Belt (Mr. Rodriguez). I certainly take his intervention at the moment as notice regarding the preservation of his right to raise a question of privilege in respect of anything that may be contained therein.
Northern Pipeline



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Tuesday, February 21, consideration of the motion of Mr. MacEachen that Bill C-25, to establish the Northern Pipeline Agency, to facilitate the planning and construction of a pipeline for the transmission of natural gas from Alaska and northern Canada and to give effect to an agreement between Canada and the United States of America on principles applicable to such a pipeline and to amend certain Acts in relation thereto, be read the second time and referred to the special committee on a northern gas pipeline.
Mr. Cyril Symes (Sault Ste. Marie):: Mr. Speaker, I should like to say a few words on this important bill before the House, a bill to establish the authority to proceed with the northern pipeline, or the Alcan pipeline as it is called.
Last year the NDP argued for the Alcan pipeline route as opposed to the Mackenzie Valley route to bring natural gas down from the Arctic, primarily for United States markets. We argued that the Alcan pipeline route through Alaska, the Yukon, British Columbia and Alberta would be far superior to the so-called Mackenzie Valley route from the High Arctic southward through Canada to the United States.
In that debate last August we outlined the conditions we felt had to be met in order to protect people living in the area and to ensure that Canadians got the major benefits in terms of contracts and work. Our position has not changed in that respect.
What worries myself and my colleagues is that the bill before us incorporates an inadequate treaty which has since been signed between Canada and the United States concerning this matter of a pipeline. The treaty has a large number of very important deficiencies which mitigate against the best interests of Canada. That is why my party objects to the bill before us. It merely ratifies a treaty which has some very serious flaws in it.
The Alcan pipeline is one of the largest construction projects which Canada will ever experience. It has the great potential of being a project which will benefit Canada in terms of employment, steel contracts, and making Canadians enthused about its success. It will be a unifying force. At the same time the project is fraught with many disadvantages.
Unless this bill is changed and amended, we will have a bill, and hence a treaty and a project, that will not maximize benefits for Canadians. I do not think any hon. member should be in a position of having to vote for a piece of legislation which does not maximize benefits for Canadians. This project will cost $10 billion in total. The Canadian portion will cost $4.2 billion. There will be 730 miles of pipe in Alaska, 2,025

February 22, 1978
Northern Pipeline
miles in the Yukon, British Columbia and Alberta, and over
1,000	miles in the United States south of the 49th parallel.
This is a pipeline designed primarily to bring American gasoline to American markets. As Canadian natural gas consumers we will not benefit from this pipeline unless at some point in the future a lateral spur line, called the Dempster lateral, is built to tap Canadian gas in the Mackenzie Valley. Canadian consumers will not receive gas from this pipeline once construction is completed, and indeed may never receive gas from it. Therefore we are doing our American friends a favour. We are providing a land bridge for them to move Alaska gas through our territory to the United States markets.
If everything goes on schedule, the pipeline will be completed in 1983. At this stage the pipeline is envisaged to bring American gas to American markets. Indeed the Americans owe Canada a great favour for allowing this route to exist. If we did not allow it, Americans would have to liquefy the natural gas from Alaska, put it in tankers, and move it by ship down the west coast of the United States. That would cost the Americans much more than the proposed project. In return for that favour it is legitimate for Canadians to demand some sort of benefit. Once the project is completed, Canada will not receive gas from it. Therefore it is quite logical that Canadians should receive the benefit of the maximum amount of construction and steel contracts necessary to complete the Canadian portion of this natural gas pipeline.
The Deputy Prime Minister and President of Privy Council (Mr. MacEachen) promised that the pipeline treaty and this bill would mean Canadian manufacturing firms in the steel industries, and in other areas such as the manufacture of valves, compressors and so on, would receive 90 per cent of the contracts for goods and services. Also he promised that we would get 100,000 man-years of employment in manufacturing, construction, and other related economic activities. One must remember that 100,000 man-years does not mean 100,000 new jobs.
If the Dempster lateral line between the Alcan line and the Mackenzie Valley is not built, it is important to remember that we will receive only 68,000 man-years of employment. That must be kept in mind when reading newspaper headlines which indicate that Canada will be guaranteed an automatic 100,000 man-years of employment because of this project.
One has to ask the question: will the Dempster lateral be built? On the basis of my research it appears very doubtful the line will be built. The Department of Energy, Mines and Resources and the National Energy Board have indicated that 1990 is the earliest we will require the Dempster spur line to bring Canadian gas from the High Arctic to Canadian markets. Recent discoveries of natural gas in western Canada may push the need for Arctic gas even further into the future. Approximately ten trillion cubic feet of natural gas have been discovered in the past two years in western Canada alone, and there is optimism for more discoveries this year and the year following, which will total approximately 60 to 70 trillion cubic feet. With that 70 trillion cubic feet of natural gas in

western Canada it is unlikely we will require the Dempster spur line in 1990 or even in the year 2000.
When we talk about the so-called rush to get Arctic gas we should remember that it is at least three times more expensive than western Canadian gas. It does not make economic sense to move more expensive gas from the Arctic down to southern Canadian consumers, if there is the potential in western Canada at one third the price. It is only logical to proceed on the assumption that the project will be the Alcan route without the Dempster lateral. Therefore the investment reduces from $4 billion to $2.5 billion, as well as meaning a reduction to
68,000	in the number of man-years of employment for Canada.
Perhaps at some future date the Dempster lateral will be constructed. Thus it is wrong to say that this project is a $4 billion investment and a 100,000 man-year project for Canada. It is a much smaller project than the Deputy Prime Minister and the government would have us believe. Even if it is a smaller project, it has a potential to help the unemployment situation and the sagging economy we are now experiencing because of a decade of economic mismanagement under the Prime Minister (Mr. Trudeau) and his colleagues.
Will Canadian steel companies get the contracts to build the line? That is my very important concern, coming as I do from a steel community where Canada's third largest steel company is located, namely, Algoma Steel. When I look at article 7 of the pipeline treaty between Canada and the United States I find that it states that the supply of goods and services to the pipeline project will be on generally competitive terms. What does that mean? To illustrate what it means and why I am concerned about it, I should like to quote what the American secretary of energy said when the treaty was negotiated between Canada and the United States. He told the American Congress on September 23 of last year:
The agreement is particularly advantageous to the United States by providing ceilings on every aspect of potential U.S. liability while creating new incentives for efficient construction on a portion of the project that would normally be subject to exclusive Canadian jurisdiction.
In other words, what Mr. Schlesinger is saying is that the advantages to the United States will be maximized while the advantages to Canada at best will only be optimized or, at worst, minimized. When we say that the bidding has to be on generally competitive terms, that means of course we are opening the bids not just to Canadian steel companies but to American steel companies, as well as to companies in Europe and Japan.
My fear, the fear of the NDP, is that without guarantees in the bill before us which will provide that Canadian steel companies will have the lion's share or the majority share of the contracts to supply the pipe and associated parts, Canadian companies will not be able to win the 90 per cent of the contracts that the Deputy Prime Minister promised us. I do not say we will not win them because we are not competitive. Indeed we are. Our steel industry is one of the most competitive in the world. We are able to sell our steel cheaper than the
February 22, 1978

Americans are, for example, because we have modern plants and equipment, our labour costs are lower, and the cost of many of our raw materials is lower. But the key phrase here is "fair competition".
If we are guaranteed fair competition, as the president of Stelco said, he has great confidence that Canadian companies will win the contracts. But out in the hard world of international trade this concept of fair competition is one that is quickly eroded. What happens is that foreign governments have various means, through subsidies, tax policies and transportation policies, of subsidizing their steel companies to the point that they can sell their steel products at below the cost at which Canadian companies are able to produce steel here at home. That is what worries me, the ability of foreign steel producers to underbid Canadians because of unfair competition policies.
I am not drumming up some bogeyman, some imaginary case. We know this has happened in the past. But Algoma Steel has demonstrated before the Anti-Dumping Tribunal that in the past Japan has been dumping steel on the Canadian market as below cost. It is important therefore to the Canadian steel industry which employs 40,000 steel workers, and to the company in my constituency, Algoma Steel, which employs 9,000 steel workers and which will benefit indirectly by the Alcan pipeline because it will be able to supply steel for fabricating by Stelco and the other plants and it will be able to take up the slack in other areas, that we do everything possible to ensure that our steel industry gets the contracts and the jobs for this massive pipeline project.
There is a long history of unfair foreign competition in steel. There is, of course, the outright dumping which Japan has practised. That is easier to spot and easier to take action against. But also, as I have mentioned, there are hidden subsidies by government, and other forms of assistance, which make foreign steel often cheaper than we can produce here at home. I would remind the House that it was Japan, not the United States, which won the contracts to build the U.S. pipeline, the Alyeska route through Alaska. That shows to what degree the Japanese have been able to corner contracts once we get out into competitive bidding on the world markets. I would also remind the House that U.S. steel in the fall of 1977 bid on a gas pipeline from Mexico at 20 per cent below the cost of a comparable Canadian pipeline. So in the past Americans as well have been able to outbid Canadian companies on pipeline contracts.
We know that the National Energy Board has recommended a 56-inch diameter low pressure pipe, which of course is good news for Canadian companies. Stelco and Ipsco will be able to manufacture that kind of low pressure wide diameter pipe. But let us not forget that the Americans as well were the ones to ask for the 56-inch pipe as an option, contrary to what the Minister of Energy, Mines and Resources (Mr. Gillespie) is telling the public. He told us that U.S. firms cannot produce 56-inch pipe, but the U.S. technical committee said that that should be one of the options and there is a U.S. company, namely, U.S. Steel, which has the capability of producing a
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56-inch pipe. Also, Japan, Italy and West Germany will be able to produce this wide diameter pipe. It is not only Canadian companies which will be manufacturing this pipe.
I should like to draw to the attention of the House what the National Energy Board said in its report when it recommended a 56-inch diameter pipe. This is what the NEB said at page 6 of the report:
The choice of 54-inch or 56-inch diameter systems over 48-inch might result in minor diminution of Canaidan content of component parts. To some extent this will depend on the lead time available for Canadian manufacturers to respond to business opportunities.
The point there is that that should sound a warning which the National Energy Board acknowledges when it says there may be a minor diminution of contracts. Knowing the world trading scene and the experience other countries have had in the past with building pipelines and component parts, we must not forget that.
Our factories have not had an opportunity to build compressors and valves for this kind of wide diameter pipe, so there will be a race to see who can build them the fastest and the cheapest. When we get to world competition it may be that Italy, Japan, Germany, or even the United States, because of the greater size of their steel industries, will be able to produce the component parts cheaper than the industry in Canada. I worry that we might lose out on these component parts because of the increased diameter of the pipe.
Another point we should remember is that the Canada-U.S. pipeline agreement contains a clause which may limit Canadian content in the project. I do not think this has been raised by previous speakers. There is a clause in the treaty that provides a formula whereby the Americans will pay the cost of the Dempster spur line, but the cost-sharing clause says, in effect, that if the costs on the Canadian portion of the pipeline go beyond the estimates, the United States obligation to pay for the construction of the Dempster line will diminish accordingly. That would have a very important impact.
There is more incentive for the builder of the pipeline, the Foothills company, to buy goods and services abroad than would be the case under different circumstances. In other words, there is a built-in incentive in the treaty whereby costs must be held down on the Alcan portion of the pipeline if Canadians want to get Americans to pay for the Dempster spur. What way is there to keep the cost of the Canadian portion of that pipeline down? It is to go onto the international market where there is often more expertise and, because of the development of foreign technology, there is a chance that the component parts will be produced cheaper by foreign companies than by Canadian companies.
I remind the House that Canadian companies have had no experience in building some valves and compressors for 56-inch diameter pipeline, whereas foreign competitors have much more experience. In these circumstances can we assume that our costs for this new technology will be lower than those of our foreign competitors? I have my doubts, so I am there-

February 22, 1978
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fore skeptical of the assurance of this Liberal government that guarantees are not needed to ensure that Canadian companies get 90 per cent or more of the work.
I am skeptical when I am assured by this government, which sold us out on the Columbia River treaty and on the Canada-U.S. auto pact, that Canada can negotiate a good deal with the Americans when it comes to such things as the pipeline treaty we are now considering.
I am skeptical of the assurance of the Deputy Prime Minister that clause 10 of Schedule III of this bill will protect us from unfair trade practices. For example, nowhere in the legislation is there a definition of unfair trade practices. Is the United States DISC program, whereby the American government subsidizes companies in export trade, an unfair trade practice? Are government industrial and transportation financing and tax measures in Japan an unfair trade practice? We have no definition in this legislation, and without a definition my fear is that we will not have a fall-back which says there will not be unfair trade practices working against our steel companies. We cannot afford to delude ourselves with regard to this important project.
The president of Stelco says his company can compete on a fair basis, but given the past history of foreign competition where so much of it has not been fair, and given the fact that we have a government which is afraid and unwilling to build in guarantees that Canadian companies will get the work, my fear is that we will not get the lion's share of the contracts. The concern of my party is that we might not maximize the benefits of this Alcan project. We should be more than just optimistic.
If this bill passes unamended, and we rely on the assurance of the steel industry that it can be competitive, I am afraid that we will not maximize the benefits. There is no doubt that we will get some of the work, but we should get 90 per cent of the work or more, not less, because we are going to suffer the environmental and social effects of this pipeline. The hon. member for Northwest Territories (Mr. Firth) outlined those effects earlier in his speech. We will be providing a land corridor. We will not benefit from the gas. Surely with a clear conscience we can demand the majority of the contracts.
I read the report of an American intergovernmental study which estimates that approximately 30 per cent of the durable equipment for the Canadian section of the pipeline will be produced in the United States. The Deputy Prime Minister tells us there will be 90 per cent Canadian content.
I would like to quote from page 9 of a report produced by the Canadian government through the Department of Regional Economic Expansion as follows: "Unless there is effective control ensuring Canadian content, 67 per cent may be the more realistic projection". Unless we have control or some form of guarantee, the minister's optimistic prediction of 90 per cent will in reality more likely turn out to be 67 per cent. We have an American government study on the one hand, and the study of a Canadian department on another, both of which take a more pessimistic view than the Deputy Prime Minister as to what the percentage of Canadian content will be. We in

this party are not content with 67 per cent Canadian content. We say it should be 90 per cent or more.
The bill before us contains no provision to ensure that the Canadian government, and hence the Canadian taxpayer, will not end up paying for cost overruns on the pipeline. When we remember the Alaska oil pipeline experience where the cost of that pipeline was over double the original projection, I think we can expect that the Alcan gas pipeline will also experience cost overruns. The American president was wise enough to say, as part of the American commitment, that the American government would not pay the cost overruns on this pipeline. We do not see the same provision here in our legislation to ensure that the Canadian taxpayer will not bail out the Foothills company when it finds that cost projections are exceeded by a great deal.
In addition, there is no provision in this bill for the settlement of native land claims before the pipeline is built. There are no provisions for expanded environmental studies. Indeed, the government has backed off. These problems were outlined by the hon. member for Northwest Territories, and I do not have time to go into the details at this stage.
It seems to me we have an obligation to Canadian workers, whether they are in the steel or construction industry, that Canadian content and Canadian employment be maximized by means of this project. We have an obligation to the people of the Yukon and northern British Columbia who live in the areas most affected by this construction. They should have a say and they should have adequate compensation for any disruption or damage caused by the pipeline.
But, most important, we say that unless the legislation is changed we will not have these guarantees. We may end up, not with 90 per cent Canadian content but something more like 67 per cent or even less. As it pertains to steel and other associated projects we will have betrayed the 40,000 steel workers and the tens of thousands of people who may work in construction. Indeed we will have sold out this very important potential for growth in the economy and for growth in job creation if we do not have these guarantees in the bill.
We are in favour of a pipeline, but we are in favour of the conditions that Canada gets the contracts and the employment opportunities. As the bill stands now, we do not have those guarantees. I do not see how any hon. member who calls himself a Canadian, who is interested in the welfare of Canadians and the Canadian steel industry, could support this bill as it is written.


Mr. Stuart Leggatt (New Westminster):: Mr. Speaker, I would like to begin my remarks by referring to the problems that are inherent in the pipeline proposal. It seems to me my province is a forgotten area for the pipeline. I have listened with care and I would like to second the remarks made by the hon. member for Prince George-Peace River (Mr. Oberle) who I see is here, on the question of the attention that we have paid to the Yukon.
February 22, 1978

I would argue that we should pay more attention to the Yukon, but we seem to have forgotten that there are 540 miles of pipe which will run through northern British Columbia. The problems inherent in the pipeline construction are just as important in British Columbia. The native population can be affected just as adversely in British Columbia as they can in the Yukon. Yet this government did not remember that the environmental impact and the sociological impact could be just as disastrous to British Columbia. The government seems to have forgotten that this area is one of the most remarkable parts of the country. It is the great beautiful northern frontier in British Columbia, in fact British Columbia's last frontier.
When we look at the Lysyk inquiry and the Berger report, we will regret that we embarked on this project without accepting and adopting the total recommendations, particularly those included in the Lysyk report. The chance that we have in our last frontier to deal with the native population in a unique and civilized way makes us somewhat proud as Canadians. In fact up to now people from western Europe have tended to exploit the aboriginal peoples wherever they have come in contact with them. Our record in Canada is not spotless but I suggest it is better than that of the United States.
What Mr. Justice Berger, and Dean Lysyk to a lesser extent, asked us to do was to take another look at the problem to give us a new opportunity to define ourselves as Canadians and develop northern Canada. We can develop our last frontier and we can develop it in a civilized way. We can also develop it without tripling VD rates and without creating an alcoholism problem all over the north by avoiding these sociological problems.
Neither Dean Lysyk nor Justice Berger suggested we should put a fence around the north and create some kind of museum. They said we should develop the north in co-operation with the native people. We should ensure that the native people play a meaningful part and thus have pride in their culture. They can maintain the skills and work in which they excel. We will then not have a problem of the native people trying to emulate a white culture and in the process taking several generations before they have pride in themselves as a people.
When Mr. Justice Berger suggested that we should use the native people to guide and run a northern park, it is because they do those tasks better than we do. When I was in Inuvik looking at the Mackenzie Valley route, I remember sitting in a beer parlour with an Inuit who suggested to me he wanted to see the pipeline built because he had welding skills. He also said to me, "If you and I go out on the ice, I will come back alive and you will die because you cannot survive." He said, "Please do not take that away from us because then you do not leave us with anything. You do not leave us with pride in our culture". The result is the massive problem of alcohol as well as the problems we have in our prisons where the number of native people is far out of proportion to the population as a whole.
Because the proposals of Dean Lysyk, which were to some extent more modest than those of Mr. Justice Berger, were not accepted by the government-they have not been accepted in
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the treaty-I intend to vote against this bill on second reading. This bill is not acceptable to me.
What were those proposals? Let us think of some of the key ones. One was the $200 million which would be available to the government of the Yukon in terms of the sociological impact of the pipeline. That money is not available. Let us not forget we have been conned completely out of that $200 million. That $200 million was to be up front money, not money to be borrowed. It was to be plus money, and the typical little switch-


An hon. Member:: Little!


Stuart Malcolm Leggatt: All right, it is a big switch. "Here is the $200 million, but we will put it up front and take it off at the back end." The $200 million is a big round zero as far as this deal is concerned, and the minister knows that. It is not $200 million at all; it is nothing.
There is something else. I am sure this has been dealt with by the hon. member for Yukon (Mr. Nielsen). It is important. What will happen to the Yukon in terms of present federal government financing when that money starts to roll in to the Yukon council? Will the federal government then be in a position to say they are doing great, they are now on their own and it does not need to help them any longer? The pipeline will be in and there will be the tax flow. The Yukon council may be rubbing its hands now, but it could be disappointed down the line when it sees how much money goes into the Yukon after the money comes in from the pipeline.


Mr. Nielsen:: It still will not give us responsible government.


Stuart Malcolm Leggatt: I happen to think that is a matter for Yukoners to decide. I am pleased that additional revenue will go into the Yukon. It may help in terms of developing their own responsibilities and provincial status. However, I am not going to stand in this House and tell the people of the Yukon what they should do in terms of their style of government. That should be a matter for the Yukon to decide.
I do not think that anyone in this House should try to tell the Yukoners, except perhaps the representative of that area who may have more intimate knowledge.


Erik Nielsen: I wouldn't dare.


Stuart Malcolm Leggatt: This may bring self government or provincial status closer to the Yukon. However, let us not kid ourselves about the amount of revenues, the $200 million and the fact that down the line the federal government will probably back out of its present financial commitments to the Yukon as a result of the pipeline proposal.
There is reference in the Lysyk report to the Dempster spur which was proclaimed by this government to be a fantastic deal. After all, that line could ultimately tap into the Mackenzie gas reserves. Let us examine again the question of the

February 22, 1978
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Dempster spur. There has been no environmental impact study on the Dempster spur.
Environmentalists in the Yukon say that the Porcupine caribou herd will be in real jeopardy if the Dempster spur is proceeded with because it will interfere with the calving ground. In that very sensitive northern ecology, one of the most fantastic purposes of nature and great natural assets of Canada is the Porcupine herd. I hope every one in this House will have a chance to see it by air, but not during calving time because there must be no interference with that herd. If the line is brought down from the Mackenzie on the Dempster spur, there is a real chance of that herd damaged.


Erik Nielsen: No, no!


Stuart Malcolm Leggatt: The hon. member for Yukon does not agree. However, there are many people in his constituency who are very sensitive to this problem who do agree.


Erik Nielsen: The calving grounds are too far west of the line.


Stuart Malcolm Leggatt: In any event, we should certainly have a meaningful environmental study of the Dempster spur before the pig in the poke connection up to Dawson.


Erik Nielsen: Pig in the pipe.


Stuart Malcolm Leggatt: There is something which makes the risk to the caribou herd much less, that is, the amount of gas now being found in Alberta. If you examine the figures, you see that the chance of tying into the Mackenzie gas is now much more remote. Therefore that aspect of the bill is bad. It is a nothing part of the bill. Let us not get excited because we had some participation in terms of the spur up to Dawson as a part of the over-all bill.
I believe in going back to what we are trying to accomplish, which is basically three things. We are trying to create jobs in Canada for Canadians. We are trying to create purchasing power in terms of the materials for the line. We are trying to co-operate with our American neighbours to assist them in carrying their natural gas resource to the American market.
We have failed on the question of jobs. That has been dealt with extensively, therefore I will not go into great detail on it. However, if we get 90 per cent of the jobs, that is 10 per cent too few. If we get 90 per cent of the materials, that is 10 per cent too little. There is no reason why it should not be 100 per cent.
The minister is certain we will not get any part of the American section. That is clear from these estimates. The minister shakes his head. He is not sure. Let me give an example of what is occurring.
When the Americans built their pipeline, the pipe-laying machinery was bought. It is now in place in Alaska. It has been paid for as a result of the Alaskan line. Canadian competition is now being asked to amortize new equipment in order to compete in terms of bids.

If the minister talked to small contractors who are seeking small units for this line, they would tell him that there is no competition in this game. We are starting off with a handicap. The American taxpayer has paid for their equipment. It is on site. The equipment is owned by the Americans. Canadians are being asked to come in and capitalize that equipment from day one.
I am assured that the equipment in place is in excellent condition and ready to roll, for the Americans, not the Canadians. This is the kind of deal we have gotten into. Nobody is as sharp a trader as the Yankee trader. This government has again been out-traded and out-bought. We have wound up with not merely a pig in the poke, but with a sell-out.


An hon. Member:: What about the Columbia River?


Stuart Malcolm Leggatt: Someone mentions the Columbia River. The minister does not want that mentioned. He does not want to be reminded of the fantastic amount that has gone down the tube as a result of the Columbia River treaty. The Social Credit government in British Columbia is still trying to cover up. They are totally ashamed of what was done by their ancestor, the W.A.C. Bennett government. The federal Liberal government was responsible for a massive sellout on the resources of the Columbia River.
That is typical of the bargaining that has gone on by our Canadian representatives in terms of Canada-U.S. negotiations. Our typical negotiating stance is feet up, and on our back. The minister will say it is easy for us to stand up in the House and make these statements because we do not have the responsibility. However, one need only look at the record. The record of Canada-U.S. negotiations is bad. The auto-pact is one example.
Let us look where we are going with regard to sea boundaries. We have already offered to take a territorial boundary near the constituency of the hon. member for Yukon, the Dixon AB line. We have offered to give six miles of our territorial water. That boundary was set by the Alaska boundary tribunal in 1903 as the territorial boundary of Canada. We are not talking about boundary extensions, we are talking about Canadian territory. I did not notice the Canadian representatives asking the United States to shift the Strait of Juan de Fuca boundary six miles south, but we are always ready to be accommodating and always ready to compromise. Unless we learn to be independent, to be sovereign and tough in our international negotiations, this will be only one of a continuing series of sell-outs for Canadians.
I am disappointed that we did not get a good deal out of this. This party was the first to appreciate that the Mackenzie valley route was a mistake and it was the first to look at the environmental consequences of the Alaska Highway. I am not saying that the Alaska Highway is not good environmentally, because I believe it is and I think the environmental damage in that area can be reduced to a minimum. I am not satisfied
February 22, 1978

with the sociological conditions and the impact this will have on native communities in the Yukon.
This party was very pleased when the National Energy Board made its decision as it meant we still have a chance to develop the north in a civilized way, particularly the Mackenzie valley. Our pleasure turned to ashes, however, when we examined the deal. Our leader listed the minimum demands that Canada should make on this pipeline. In my view this party has no alternative but to vote against this pipeline. But we are not voting against the pipeline-we are voting against the deal. This is a bad deal for Canada and therefore we are voting against it. It could have been a good deal for this country, however. It could have had the guarantees, the environmental studies that we sought.
The government did not even have the guts to ask the President of the United States for another 90 days to make up their minds-even that was too much to ask. I think they would have received co-operation if they had asked for more time to think about it. We walk with such trepidation when we deal with our southern neighbours, it seems.
There are one and one half million people unemployed in this country, Mr. Speaker. Today we see a hemorrhaging financial situation. To the extent that we will receive substantial income in terms of balance of payments as a result of the pipeline, then it is a positive thing. We often forget that if we add our manufactured goods and the amount of raw resources we export, our balance of payments is on the positive side. When we consider what we pay for those resources in interest, dividends, service payments, and travel discounts, then we are in a negative position. That is why this pipeline was not a first priority. The first priority was to solve Canada's energy needs.
I have serious reservations about the kind of capital inflows that will be raised in Canada for the Canadian section of the line. We should give serious consideration to raising that capital abroad so that we could have more flexibility with our own capital. In this case, since it is a United States line for the purpose of carrying United States resources to the United States markets, I think if the minister had been on his toes he would have raised that as American capital.


Erik Nielsen: Debt or equity?


Stuart Malcolm Leggatt: Debt capital. We do not know how much of this is going to be drying up the Canadian capital market and how much will be from the international market. I think we could have built into the deal a proviso for foreign capital for this project so that we could reserve our own capital resources for our own energy needs. Let there be no misunderstanding- this is not going to solve our energy problems.
It is interesting to note, Mr. Speaker, that in the United States legislation there is a specific reference to no government guarantees. Why was that not in our bill? I think it was because the shrewd American traders have done a very neat job. If there are going to be overruns they know that our capacity to raise capital is more limited than theirs so they want that portion to be open-ended in order that in an
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emergency situation they could fall back on a Canadian government guarantee.
I do not think this pipeline is going to start for another three or four years, but I am willing to bet that within eight years we will be presented with a bill to cover overruns on the pipeline. We have the example of the Alaska experience, Mr. Speaker, so it is not as though we are operating in a vacuum. I think their estimated cost of construction increased at least three times and the pipeline finally cost in the vicinity of $10 billion. The original estimate was about $3 billion or $4 billion, I believe. We could very well end up in exactly that position. We could end up with the taxpayers of Canada guaranteeing a United States pipeline to deliver United States resources to the United States market. I do not think many Canadian taxpayers want to be placed in that position. Surely our efforts should be devoted to solving our own energy problems.
The initial reaction of this party was positive. It was one of the first political parties to point to the proposal as being more desirable than the Mackenzie valley line. When we consider how we were short-changed in the negotiations, however, there is not much doubt that we have been sold out again by a Liberal government.
Just the other day, in his usual witty way the minister suggested that instead of corporate bums we are now talking about corporate chums. I thought that was a very active line, and with his usual good humour I thought the minister perhaps struck a truth. There are people in my riding in the business community who hope to sell valves for the pipeline and they are rather pleased with the position this party has taken. They are convinced that we have been tough and that toughness has helped us with things like pipe specifications. They are happy there is a party in this House fighting for guarantees on jobs and materials.
I do not expect the president of Stelco, when they put a camera in front of him, to say anything except that he does not need the guarantees, that his company can compete with any in the world. His board of directors would get rid of him if he said anything else. However, I think if you asked him seriously about the positions taken by the various parties, he might say that the position taken by this party has been as supportive or more supportive of negotiating a good deal than any other party. Of course he does not have much choice.
When people say "the corporate chums", we will take part of the blame. We are not dogs in the manger on the question of the corporate sector in this country. We are happy to help them try to get a decent deal with the United States because this government hasn't done so.


Leslie Gordon Benjamin: It is our country, it is our land, and we are going to build it.


An hon. Member:: God help us!


Stuart Malcolm Leggatt: I hope this party will be proposing some amendments with regard to this particular legislation. I intend

February 22, 1978
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to oppose it. I think the S200 million payment alone is sufficient reason to vote against this bill. It represents nothing more than a fantastic con job that has been done on the Yukon.
The principle of the bill is not the building of a pipeline; the principle of this bill is whether we are in favour of the treaty. That is really what the bill is all about. I want to say that we are against that treaty. It is a sellout of Canadian interests. We must have some hardnosed bargainers in this country before we will get any decent deals.


Lorne Edmund Nystrom: Mr. Speaker-


Mr. Goodale:: Is this a filibuster, Stanley?


Lorne Edmund Nystrom: I hear the hon. member for Assiniboia (Mr. Goodale) worrying out loud about a filibuster setting in. I wonder if that hon. member is going to get up and make a speech in the House, asking that the government guarantee jobs for the steelworkers of Saskatchewan. I am sure that with a riding right near Regina he is very, very interested in making sure there are guarantees of jobs for the steelworkers in the city of Regina. Maybe the hon. member for Assiniboia thinks there are not very many unemployed in the province of Saskatchewan. I am sure that after the election there will be at least one more unemployed person in Saskatchewan.


Ralph Goodale: Bill Knight.


Lorne Edmund Nystrom: I hear the hon. member for Assiniboia is running scared. He is not running scared about losing, but the fact of the matter is that he is going to run third, and I am sure he will find that rather embarrassing in Assiniboia.


Ralph Goodale: We will see, Lome. Bill is running last out there.


An hon. Member:: It will be goodbye, not Goodale.


Lorne Edmund Nystrom: In any event, the bill before the House today is a very important bill. I am sure more members of the House should be getting up to participate in the debate. The Tory party has very suddenly died in this debate and I am wondering why. I know there has been quite a split in their caucus. They have one group in the caucus very concerned about certain aspects of the bill, as are we in our party. We want to make sure we "buy Canada first", that we have a Canadian option in this bill which will make sure we are giving jobs to Canadians for the construction of the pipeline, and giving jobs to Canadians in supplying the steel for the pipeline and so on.
I do know there are a few Tories who have the same concerns we have expressed. I would name specifically the hon. member for Vancouver South (Mr. Fraser) who made a very eloquent speech in the House. We also heard from the hon. member for Hamilton West (Mr. Alexander) and the hon. member for St. John's West (Mr. Crosbie). Then, of course, we have members of the other wing of the Conservative party, led by the hon. member for Yukon (Mr. Nielsen), who are very anxious to have this bill railroaded through the House as

quickly as possible because they believe it is very good for the international business community, namely, their friends in the United States.
I know why they are so anxious to have this bill railroaded through the House so quickly, but it is going to be quite a while before we actually start construction on the pipeline, so why are they so anxious to have the bill go through the House? Why can we not spend a little more time and get a little more support from the Conservative party in trying to force the government across the way to put into the bill some legislative guarantees which will make sure that the pipeline that goes through Canada is built by Canadians, and that the pipeline is built with materials manufactured in Canada by Canadians?


Erik Nielsen: That will be done in the committee.


Lorne Edmund Nystrom: We have before us the principles of this bill. What we are doing is supplying the United States, our good friends to the south, with a land bridge so it can carry its gas from one part of the country to another. We are supplying that land bridge to the United States of America. It will carry gas from Alaska to the United States, and none of it will be used here in Canada. Surely to God when we are doing something like that, in return for that favour we can have legislative guarantees that we will be building the pipeline and using our materials to do that. I am sure any other country in the world, particularly the United States, would insist that be a minimum guarantee in view of the problems it would put their country to if the pipeline was going across part of that country to supply us or some other country in the world.
I do not think that is asking too much because there are some problems for Canadians. There may be some environmental problems. I am sure, as the hon. member for Yukon would say, there will be problems for the native people in the north. These are problems we will have to face up to. These are problems that we will have to solve if we are to build this pipeline. In return I believe we should be getting more benefits for our country from the pipeline that is about to be built.
I want to say as clearly as possible that the most important items to me are really the following. I believe we should have put into this bill a clause that will guarantee Canadian content and guarantee Canadian jobs. Many people say we do not need these guarantees because we are competitive enough. Let me remind them of who supplied the pipe to build the pipeline in Alaska. It was supplied by the Japanese, and there is not any guarantee, from what I understand, in this legislation that we will necessarily get the contracts.
I do know that some of the steel companies in our country are concerned about this. I refer specifically to the steel company in my own province, one in which the hon. member for Assiniboia should be interested. It is about 20 per cent owned by the people of Saskatchewan and 20 per cent owned by the people of Alberta.
I would remind the House that when the Alaska pipeline was built Ipsco put in some bids to supply the pipe for part of that pipeline. It did not get the contract because of bids put in by the Japanese. I think perhaps, if all things are equal, Ipsco
February 22, 1978

might have a chance of getting some of the contracts; but there is no guarantee that the Japanese government will not intervene and subsidize the movement of pipe from Japan to the location of the pipeline. There is no guarantee there will not be that type of assistance by the government of Japan.
Are we going to sit idly by and watch that type of thing happen when we could be providing jobs in our own country? Are we going to sit by if they subsidize the ships that carry the steel over to Alaska? These are the things that could happen and may happen. This might not be such an hypothetical matter as hon. members think. It might very well happen, so why do we not put into this legislation while we are debating it a clause that will guarantee Canadian jobs on that pipeline, and guarantee for us that the steel that goes into the pipeline will be steel manufactured right here in our own country? Surely to God we have an unemployment crisis in Canada now that is serious enough to warrant having a "Canada first" clause in the bill. We should be buying Canadian goods and we should employ Canadians to build the pipeline that is going across our territory.
There are certain Conservatives who laugh and certain Conservatives who agree with me. I wish those Conservatives who agree with me would get up and speak. I wish also that those Liberals who are not continentalists but who have a little bit of Canadian nationalism would get up and speak in this debate. They are so interested in denouncing nationalism in the province of Quebec they denounce anything that looks nationalistic. I suggest that we have in this country a little bit more nationalism from coast to coast. Perhaps then this country would not be facing the problems we face today. We are such patsies we are willing to bend over and sell out anything we have in this country to the Americans or anyone else because of the power of the American dollar.


John R. Rodriguez: Don't be pornographic.


Lorne Edmund Nystrom: The hon. member for Nickel Belt (Mr. Rodriguez) is worried about my expression about bending over, but I think that is really what the Deputy Prime Minister (Mr. MacEachen) did when he negotiated with the United States. When he bent over something happened, and what happened was not really attractive. It might have been more than just a swift kick that was administered to the Deputy Prime Minister. The legislation that is before the House does not give us these guarantees that are so important. I do not think it hurts us to exhibit some nationalism in this country from time to time. It is something we have lacked in the past.
The only response to that by the government opposite is to criticize the Quebecois for expressing their nationalism. A lot of that nationalism was expressed in a positive sense. Perhaps that sense could have been channelled in a different way, if the government had shown leadership instead of letting the country be sold out in Quebec and elsewhere.
I hope the Liberal government puts some teeth into this legislation in order to show Canadians that it is interested in
Northern Pipeline
building a strong country. People must be shown that we are interested in building a strong, independent and united Canada. Instead, the government sits around being negative all the time and criticizing other people for expressing nationalism. I find it difficult to believe that younger members of the Liberal party can sit in that caucus and watch such a gutless government dealing with our American neighbours. It is not surprising that some senior members of that party can sit and laugh. They are part of the system. They have been brainwashed by being members of that party, and they sit idly by.
Jobs for Canadians is the number one concern, because approximately l'/2 million Canadians are unemployed. Not only will this bill provide a lot of jobs in steel mill communities such as Hamilton, Sault Ste. Marie, Regina and places in Quebec, but there will be a backup in the system to provide mills which did not get contracts for the pipe with other contracts. Thus, there will be a stimulus for the entire steel industry. That stimulation will snowball throughout the entire Canadian economy, and will be of positive benefit to everyone. It will help the more depressed areas such as the Sudbury basin, portions of Quebec and the Atlantic provinces. I cannot grasp why the government does not get tougher and include a clause to guarantee Canadian jobs. I am sure the Americans would respect the Deputy Prime Minister if he did that. If the shoe was on the other foot, we could not expect any less from them.
As was indicated by the hon. member for New Westminster (Mr. Leggatt) a few moments ago, there is nothing in the bill to ensure that the Canadian government will not be roped into any financial involvement or obligation with respect to the construction of the pipeline. The government has indicated that there will be no commitments to bail out the company, to build any part of the pipeline, or to get involved in cost over-runs. I have heard that promise for many years in this country. When Expo was being planned, we received assurances that it would not cost Canadians any money. That was followed by the Olympics and Jean Drapeau. Once again we were told that the Olympics would pay for itself and would not be a cost to the taxpayers of Montreal and Quebec. As a result of the Olympic Games, the people of Montreal and Quebec are now paying a lot of money. It was a big project which cost a lot of money. I have seen very few projects in the world where the projected costs of the economists, architects and engineers actually turned out to be correct in the final analysis.
Apparently this project will cost approximately $10 billion, but I am sure another 10 per cent to 20 per cent will be added to that by the time the pipeline is finished. Who will pay for that? I want a guarantee in this bill that Canadians will at no time assume responsibility for any cost over-runs or any error made by economists or engineers in their predictions. That is not too much to ask. The pipeline is being built as a favour to a good friend. It is nothing more than a bridge over Canada from one part of the United States to another. Being the good businessmen that they are, I am sure Americans would ask for the same thing if the tables were turned.

February 22, 1978
Northern Pipeline
One can look at the gigantic programs which have taken place throughout the history of Canada and the western world and find a pattern emerging. Not only do many of these projects cost more than the original estimate, but when there is a cost over-run, the private sector and the investors do not bail the company out. The company is bailed out by either the government of Canada, the government of some province or the government of some other country. I do not want to see that happen. Canada has given enough money to its corporations.
I am sure the hon. member for Nickel Belt will rise again to refer to how the government has assisted Inco to develop its mines in Sudbury and Manitoba. They have been provided with grants and subsidies. They were nurtured and fed to make sure their profits were large. Then Inco reinvested those large profits in places like Guatemala and Indonesia, at the same time as laying off thousands of Canadian workers.
The government sat idly by and indicated that the situation was too bad, but that it was part of our free enterprise system. Free enterprise for whom? Is it free enterprise for the large companies? That is really what it is. What about the poor taxpayer who foots the bill? Who will pay the bill if there is a cost over-run on this project? Can the Deputy Prime Minister and President of Privy Council guarantee that Canadian taxpayers will not have eventually to pay the bill if there is a cost over-run? Can it be guaranteed that the House will not have a bill before it in the next five or ten years requesting the provision of money to the company for the construction of the Alcan line? If that guarantee can be given by the Deputy Prime Minister and President of Privy Council, why can it not be included in the legislation? Why should Canadians pick up the tab because of careless negotiations and a sloppy government which has not been tough when defending their rights?
As I have said, the bill provides absolutely nothing for the settlement of native land claims in the Yukon. Those native people are concerned about the pipeline as well as their land claims. They would like those claims settled as quickly as possible. Once the legislation is passed and the pipeline proceeds, there will be a lessening of the bargaining position of the local native people in the Yukon. Those land claims should be settled before the pipeline bill is passed through the House.


Erik Nielsen: The reverse is true.


Lorne Edmund Nystrom: I hear what the hon. member for Yukon is saying, but I should like to point out that it will be difficult to solve the problem once the pipeline is built.


Erik Nielsen: Similar to what happened in the Mackenzie Valley project.


Lorne Edmund Nystrom: We should be thankful the Mackenzie Valley project did not go through. Many hon. members of the Conservative party wanted to see that pipeline built. They would have loved to see the pipeline go through.


Erik Nielsen: It is a crock of rhubarb.


Lorne Edmund Nystrom: It takes a pretty big crock to recognize another one. I believe we should be in no hurry to pass the bill today. I think we would be doing a disservice to Canadians if we did not add three or four strong teeth to the bill.
I have just come back from Saskatchewan. When the minister made the announcement in the House about the size of the pipe, there was general elation in my province and happiness that the decision has been made so that Ipsco will have a chance to bid and perhaps get some contracts. Ipsco, the people of Saskatchewan and people in the steel communities, however, would be much happier if the government had put guarantees into the legislation. For example, Ipsco is now talking about the possibility of an $80 million expansion to the steel plant in Regina.
My colleague the hon. member for Regina-Lake Centre (Mr. Benjamin) put a question to the Prime Minister (Mr. Trudeau) regarding assistance from DREE. DREE has been considering an application from Ipsco for several months for assistance to expand the steel mill. If we had some guarantees in the bill, I am sure Ipsco's case before DREE would be much stronger. So I would like to urge the minister to put teeth into the bill for that reason as well and also to make representations to the Minister of DREE (Mr. Lessard) to process the application as quickly as possible and give the money to the plant so that they can expand their facilities, hire more people and thus bring more industry to the prairie provinces.
This is one of the many opportunities we have in the country to build an economy that is more diversified and to provide jobs to some of the areas which would not otherwise have them. We should be making sure that there will be no financial commitment in the legislation for the people of Canada once the pipeline is built if there are major cost over-runs; and there should also be a settlement of native land claims in the Yukon.
Once again I should like to urge the government to put these guarantees into the bill and to urge the progressive elements in the Conservative party, if there are such elements apart from the two or three members who stand out in that category, namely, the hon. member for Egmont (Mr. MacDonald), the hon. member for Kingston and the Islands (Miss MacDonald) and the hon. member for Vancouver South (Mr. Fraser), to do the same thing.
Perhaps we can get the government to act. They will have to go to the polls very shortly, and if they do so with a bill such as this one which does not contain the guarantees that are needed, and which the government can easily put in, then I am sure the government will be defeated. When it is defeated, members such as the hon. member for Assiniboia, who sit by idly, will go under the great tidal wave of Canadians who are concerned about developing a country like Canada. I am glad the hon. member for Assiniboia has just returned from Estevan. I heard about the winter carnival there and how he was the third guy in the parade. People were more interested in meeting the leader of the NDP, who paid a tribute to

February 22, 19 78

Estevan; they were cheering the NDP candidate as he went through the streets of that city. I am told they are more interested even in the Conservative party than they are in the incumbent member from the riding of Assiniboia. I am sure the hon. member will be rising to participate in the debate because I know he is very concerned about his riding, about the strength of the other parties in his constituency, and the large turnout at the meetings of the other parties. The hon. member could have held his meetings in a telephone booth. That shows the enthusiasm he has been able to generate in that part of the country.
These are some of the concerns I have regarding the bill before us. I think we need a vision of this country where we can do things for ourselves and not always have to rely on other people. Why do we always have to be so wishy-washy and gutless when it comes to negotiating a deal? As other members of my party have said, there are many precedents we can look back to of negotiations with the U.S. where we have sold out to our American friends. That does not do us any good. That is one reason our dollar is down where it is today. There is no confidence in the economy. That is one reason we have in our country such a high rate of unemployment. We import more manufactured goods than any other industrialized country in the world, and one reason for this is that we have always had a program of selling our resources very cheaply to other parts of the world. We have no vision, no plan. When there is a worldwide recession, it is a country like Canada, which has no vision, no control over its own economy, that suffers first and the most. We have a branch plant economy, and in that type of situation it is the branch that dies, that falls off and withers. This is the type of economy that has been built by the Liberal party, by the government of this country which has been in power for far too long. The time has come when the government should be defeated and pulled down from their smug ivory towers, which I am sure they will occupy for only a few more weeks.


John R. Rodriguez: Mr. Speaker, I was not going to get involved in this debate-


Some hon. Members:: Oh yeah?


John R. Rodriguez: -but hearing this great silence from the loyal opposition on such an important bill I have decided to take part in the debate. Suddenly opposition members have become very silent and no longer consider their role to be that of examining the principles of the bill, elucidating its provisions for the benefit of the Canadian people and bringing forward concrete proposals.


George Harris Hees: We do not believe in thrashing old straws.


John R. Rodriguez: The hon. member says they are old straws. These old straws keep repeating themselves far too often in our history. Bill C-25 tends to put into legislation a treaty that has been signed between the world's most powerful country and Canada, a relatively small country in terms of population. It has always been my belief, as I have observed the relationship between the giant and its northern neighbour, that the manda-
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rins in Ottawa must have been brainwashed by the Department of External Affairs into believing that you cannot talk with the giant, that you must always back off; that you must never engage in tough negotiations with the giant because it will exert economic restraints on you and there will be economic repercussions. The treaty that was signed is the latest example of that kind of backing off.
May I call it six o'clock, Mr. Speaker?


Mr. Deputy Speaker:: It being 6 p.m. I do now leave the chair until 8 p.m., at which time the House will proceed to the question of the declining dollar under Standing Order 26.
At six o'clock the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.

The Acting Speaker (Mr. Turner):: Order, please. Leave has been granted to the hon. Leader of the Opposition (Mr. Clark) to move the adjournment of the House, pursuant to Standing Order 26, for the purpose of discussing a specific and important matter requiring urgent consideration, namely the steady decline over the last fifteen months of the Canadian dollar which has now reached its lowest point since 1931, the announcement, outside the House, by the Minister of Finance that extensive borrowing is being arranged to halt a further slide, the high cost of maintaining the dollar and the inflationary pressures which will result from a further decrease in its value.
Accordingly, the motion is as follows: It is moved by Mr. Clark, seconded by Mr. Broadbent:
That this House do now adjourn.


Charles Joseph Clark: Mr. Speaker, as is usually the case with debates of this kind, it is a debate which all of us wish would not be necessary because we all wish that the economic management of this country had not led us to the situation where our dollar is falling. Indeed, we wish there were in place in the government of Canada now a minister and a government prepared to be much more forthcoming, direct and straight with parliament and the people of the country regarding the policies they intend to follow in face of a dollar which has been falling consistently.

February 22, 1978
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I think it is fair to say that there are three major purposes to this debate tonight. The first is to find out what the government is doing in the face of a sliding dollar and what it intends to do. That is of interest to us, and it is also important to have that spelled out so that the uncertainty which corrodes confidence will be put aside.
Second, we in this party want in this debate to force the government to realize the seriousness with which parliament views this matter. We think we are dealing with a matter which has virtually crisis proportions, partly because of the nature of the problem itself, but more particularly because of the nature of the response of this government. The response of this government has been virtually to pretend the problem is not there, and then when there are actions to take, to be indirect, vague and evasive about the nature of those actions as well as the motivation behind them.
Finally-and I say this seriously and with some sadness-a major purpose of this debate is to tell the Minister of Finance that it is time for him to take his responsibilities and his position much more seriously than recent behaviour suggests he has taken it. I think it is fair to say that from all corners of this House there is a respect, and at times even an affection, for the minister as an individual. He is an engaging partisan. He is a man who has gone out of his way to cultivate a reputation here and in the country as a street fighter. The engaging nature of his personality and his capacity as a street fighter-


Mr. Railton:: Let's get down to the debate.


An hon. Member:: Take an aspirin and come back in the morning.


Charles Joseph Clark: The hon. member for Welland (Mr. Railton) is making his usual contribution to debate in the House. The personality of the minister is not in question, nor is his capacity as a street fighter. What is in question here, and what even the hon. member for Welland must take seriously- because his constituency among others suffers seriously when the value of the Canadian dollar drops, and if he does not care about that, the electors of Welland will make a change when the next election comes-


Some hon. Members:: Hear, hear!


Charles Joseph Clark: -is what effect the minister's demeanour and behaviour have upon confidence in the Canadian economy.
I first met the minister when I came into this House as the member of parliament for Rocky Mountain. At that time the minister was, in effect, the mayor of three of my municipalities because he was then minister of Indian affairs and northern development.
It was difficult then to get a straight answer from him, as it is now. The point is that it was probably less dangerous then for the country, and less important if the minister evaded questions and played games with the opposition, than it is now when he is Minister of Finance. It was probably even less important if he did that when he was minister of industry,
trade and commerce. But he must recognize that he is now much more than a domestic politician.
The investment community, particularly the international investment community, makes its decisions about Canada in part on the basis of its estimate of the competence and the sense of responsibility of the Minister of Finance. Unfortunately-and it is as well to have it said directly here-the recent behaviour of the minister serves to erode the confidence the international community has in this government and, unfortunately, in this country. It is bad enough that the government keeps pretending that the economic situation in Canada is better than it is. That pretence, which is probably for election purposes, makes the problem worse.
That is a matter to which I want to return because it has also got in the way of some of the solutions this government could be adopting. The minister's determination to play petty politics and his determination to be a street fighter when the nation's reputation is at stake can only endanger confidence in Canada. In recent days the minister has been treating this serious matter like some kind of debating game in this House. In answering serious questions he implied that the ten premiers of Canada had approved the position of the federal government in relation to the dollar. That is not so, and the minister knew it was not so when he said it.
Today he blamed the drop in the dollar on the hon. member for Central Nova (Mr. MacKay).


John Patrick (Pat) Nowlan: Better than the weather.


Charles Joseph Clark: He also blamed the provinces for not borrowing when it was the policy and the explicit request and position of this government that put the provinces in a position where they were asked by this government not to borrow. He condemned them for doing what he asked them to do.
Again he has been almost unbelievably careless in his statements. On Thursday in this House, in reply to a question from my colleague the hon. member for Yoric-Simcoe (Mr. Stevens), the Minister of Finance said as reported at page 2914 of Hansard:
-the Canadian dollar has been floating freely for a number of months and the government has no intention of changing its monetary policy. We do not intervene in the market place and we let the value of the dollar fluctuate according to the market situation. Moreover, the government has no intention of determining a fixed rate for the Canadian dollar.
That was Thursday, six days ago. One of my colleagues says that was last week. The policy of the government seems to change from week to week. Certainly on Tuesday, unless the minister was deliberately misleading the House of Commons when he spoke here, it literally did change from hour to hour on that day. But the point is that that careless reply by the Minister of Finance last Thursday created an impression internationally that this government would do nothing at all to bring stability to the dollar. That further endangered the position of the Canadian dollar on international markets.

February 22, 1978

Again, even when he has not been careless, he has been downright misleading. In this House on Monday, two days ago, I asked the minister a question. I will quote my question and the minister's reply.
As the minister will recall, last September the government announced the negotiation of a stand-by credit of $1.5 billion. Is it the intention of the government to draw on that stand-by credit in the foreseeable future?
That was the question on Monday at about 2.40 in the afternoon. The minister's answer was:
The answer is no, Mr. Speaker.
I repeat, that was Monday, the day he admits now he met with the Governor of the Bank of Canada, a day when there was extensive activity by the Bank of Canada to support the dollar. Either the minister was misleading the House or the minister did not know what was being done by officers who come under the general responsibility of himself as Minister of Finance.


An hon. Member:: Either way, he stands indicted.


Charles Joseph Clark: Yesterday, Tuesday, he changed his policy and announced to the public, to the country, in a press release, a policy diametrically different from the policy that he had announced to the House of Commons earlier in the day. Finally, in another move that must have been a calculated one to undermine confidence in the economy, the Minister of Finance contented himself with a brief, vague statement of position. He did not come to this House to ask for permission to revert to motions, which would clearly have been granted by this House, so that he would have an opportunity to explain to the parliament of Canada the position that his government was now taking. Had the minister done this and answered questions, there would have been some possibility of ending the uncertainty that unfortunately was created by his statement, a statement that should have bolstered the Canadian dollar significantly but did not.
The Minister of Finance has an opportunity tonight to act more responsibly. He has an opportunity now to recognize that "street fighting" is not helping the country. Until he can demonstrate that he deserves respect as Minister of Finance, his own reputation will aggravate the problems of this economy.
We are faced with a matter now that is very serious. Every Canadian in this House and across the country knows how serious it is. The problem is that we still do not know precisely what is the position of the government. The minister was anything but frank today in the House. He issued a statement in a way that shielded him from questions, so that a number of questions remain to be answered, and a great deal of uncertainty exists in the country.

Many questions remain unanswered. Rumours about money markets are kept alive and nobody knows for sure what is happening. We must be informed and the Canadians also have the right to know the answers to the following questions: First, when were the banks officially or informally advised that the government intended to obtain a credit line of $1.5 billion? Second, when will the government use that credit line? Third,
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what are the interest rates on loans and what are the conditions of repayment? Fourth, was the Minister of Finance well informed and did he approve the interventions of the Bank of Canada which began on Monday afternoon? Fifth, at what level will the government support the dollar to prevent it from falling lower?

Those are some of the questions the Minister of Finance has an obligation to answer. The failure to answer simply adds to the uncertainty which has eroded confidence in the economy and the value of the Canadian dollar.
One of the things that concerns us deeply, Mr. Speaker, is that the minister has acted as though he does not understand the reasons for the run on our dollar or the solutions necessary to stop that run. As we on this side of the House have stressed for many weeks, this devaluation is a direct vote of non-confidence in this government's ability to manage the economy.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: A decade ago the international community looked to Canada as a model of managerial competence.


An hon. Member:: They still do.


Charles Joseph Clark: Someone on the other side, in one of his infrequent interjections in the House, suggests they still do. They look to this economy and to this government now as a source of concern. Perhaps if they have that kind of sense of humour it is a source of entertainment. But the international community certainly do not look to this government of Canada as a model of management, except perhaps bad management. What the international community has seen in the last decade is, in effect, the disintegration of the Canadian economy, an economy full of potential, at the hands of this government. Having seen it, the international community has decided-and it should not surprise anyone-that Canada under this government is no longer a country in which they can invest with trust and with confidence.
The lessons are clear if the Minister of Finance wants to look at them. In previous Canadian experience, and in the experience of countries like Britain and Italy, they point to the dangers which can flow from a situation like this. Speculators feed on uncertainty and indecision. So long as the Minister of Finance allows those conditions to prevail he is encouraging speculation of the Canadian dollar. To stop speculation a government has to be certain and it has to be decisive. This government has been the opposite throughout this crisis.
Last fall when our dollar fell an initial 10 points, we on this side of the House urged the minister to make a decisive response. Instead the minister made light of the situation when everybody else knew it was serious. He insisted then, as he still insists today, on misrepresenting the actions of the Bank of Canada. Even when he has forced to move last October and to put in place a stand-by credit arrangement with the chartered banks, he insisted again on misrepresenting the scope and the extent of the problems which faced the government and the
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February 22, 1978
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country. In the intervening weeks the minister has been asked dozens of times for a statement on government policy. Instead he has offered nothing but blithe comments about a floating dollar in a free market.
The minister has talked consistently as if the government does not care to what level the dollar floats. Sir, no one believes that is true because no responsible government could take that position. But given the absence of any kind of certainty from the minister, it is no wonder at all that the currency markets have been left to speculate where the real line is in the government's mind.
During the past 24 hours the minister has repeated all of the basic errors he has made in the last six months. Yesterday he misled this House and the country as to the extent of the Bank of Canada's activities in the exchange market. What is so absurd and difficult to understand from a minister who should be sophisticated enough to know is that it is clear that the financial community knows the truth about these activities. What conclusions will they come to when they hear the Minister of Finance, Canada's senior economic spokesman, misrepresenting the situation which they see before their very eyes?
Then having misled us during the day, the minister refused to come before the House of Commons last night to try to set the record straight. Instead he issued a press release which raises more questions than it answers, and which feeds uncertainty at a time when we can stand very little more uncertainty.
This lack of economic leadership has cost this country dearly. An already serious balance of payments situation has deteriorated further. The Bank of Canada has had to put out hundreds of millions of dollars to try and stem the speculative tide. Canadians have had to pay millions more dollars out of their own pockets, be it for imported products in our stores and supermarkets, for travel outside the country, or for assistance to relatives still living in countries from which they have emigrated.
As a result of this lack of leadership, and because up to now the minister has refused to take this situation more seriously than another political street fight, Canadians may well end up paying even a larger price. The minister may not admit this- he has not levelled with us on anything else-but the hard truth is that the government now faces increasing pressure to raise interest rates in Canada as a means to attract short-term investment and thereby prop up the dollar. Higher interest rates inevitably would slow down new investment and further set back our efforts to create jobs for the million Canadians who want to work. Higher interest rates would set off new inflationary pressures in the economy. Higher interest rates are exactly what Canada does not need if we are to get our economy moving forward on any path of sustained growth.
Yet higher interest rates are the price we may have to pay for this minister's refusal to take clear and decisive action to stop the run on our dollar. It is a price that Canadians should

not have to pay. It is a price they need not have had to pay had the minister acted when we urged him to do so. It is a price that could have been avoided if the minister had shown any understanding of the problem and any sign of being prepared to deal with it honestly and decisively.
We know that the problems in this country are significant and serious, particularly economically. We know also that it is the strategy of the government to do everything it can to ignore the economy. We probably will not have a budget before the election. The minister will delay it as long as he can.
Economic legislation in the House of Commons has been shoved aside. If there were some way for the government to cut off the question period, they would do that. When the minister has statements to make, he makes them outside the House of Commons in order to avoid economic debate if at all possible.
We cannot ignore the reality of the economic problems facing Canada. The Minister of Finance (Mr. Chretien) has a fundamental job ahead of him, that is, to get our economic house in order. He might be able to bluff Canadian voters, but the hard fact is now coming home that he cannot bluff international lenders.
The obligation on the minister's shoulders tonight is to come forward and state clearly and precisely what the Government of Canada intends to do about the dollar, its own extravagance and its failure to put Canadian people and Canadian plants to work. For too long this government has been proceeding with its eye on the election. That election decision will come. However, one verdict is already in, namely the dramatic fall of the Canadian dollar.
I hope the Minister of Finance will rise to the occasion tonight and begin to take actions which can win back confidence in Canada's capacity to manage the economy of one of the most fortunate countries in the world.


Some hon. Members:: Hear, hear!


John Edward Broadbent: Mr. Speaker, the debate we are having tonight belies entirely the claim made by the Minister of Finance (Mr. Chretien) during the question period when he said there was no crisis. For months he has been doing his best to deny the reality that ordinary Canadians are living with, no matter where they live. They live in an economy that, in terms of inflation, has returned virtually to the same level we had when the government brought in controls. We have the same problem with inflation. We have the same problem in a different domain with unemployment, the worst since the depression.
Although the Minister of Finance is new in the realm of economics, I am sure he knows that when the international community respond to the estimate of the value of a dollar of a country, they are providing a collective judgment on the performance of the economy of that country. There is no doubt about it. With the dollar having dropped to its lowest level since the great depression, they are telling the Government of Canada, and indeed the people of Canada, that this govern-
February 22, 1978

ment has completely failed to manage the Canadian economy. That is what they are saying.
I said we have inflation. I am not going to produce all the statistics back to the period prior to the controls program, how we have re-emerged and the forecasts, contrary to what the government says, are that things will get worse. Farm prices are down. Farm costs are up. Food prices are up. Almost everything you can mention is up in price for the consumer. As I said, Canadians from coast to coast, no matter in what province, are experiencing unemployment in figures unparalleled since the days of the great depression.
The confidence that is now being withdrawn by the international community is more or less a direct response to the failure of the Prime Minister of Canada (Mr. Trudeau) and the premiers. However, the blame rests largely with the Prime Minister because it is he who called the conference which took place in Ottawa last week.


An hon. Member:: Oh, oh!


John Edward Broadbent: I hear a Liberal scoff. He was probably there with the movie crew that was preparing the election propaganda. The conference was prepared by the national government. They had the obligation to bring to the premiers of Canada, representing all parties, proposals for the short run and long run to deal with both inflation and unemployment. They did no such thing during the three days of electioneering that took place last week.
I want to avoid general statements as much as I can. I want to deal frankly and candidly with an assessment of the economy and the attitude now being expressed not only by the Prime Minister and the Minister of Finance but, 1 regret to say, by virtually every premier, with one exception. It will surprise no one when I say the exception is Allan Blakeney of the province of Saskatchewan.
I hope tonight we can engage in a serious debate about methods of managing the economy. I want to provide the case for managing a mixed economy. What dismayed me beyond words about the conference last week was that we heard, time after time, what can only be described at this point in the twentieth century as mindless economic cliches. We heard them from the Prime Minister, the Minister of Finance, and the premiers of Alberta, British Columbia and Ontario.
What do I mean by that? I mean there is a new convention of wisdom establishing itself at the highest level of political debate in Canada. It is as though we had not lived through the 1920's and 1930's not only in North America but in the world. The prevailing words at the conference in Ottawa, and we hear them from the Conservative party and the government, were that we must get back to free enterprise, that the government must withdraw from activities in the economy. You can hear the cheering on both sides of the House.


Some hon. Members:: Oh, oh!


Lincoln MacCauley Alexander: Don't stretch it, Ed.


Mr. Woolliams:: I didn't hear a word.
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John Edward Broadbent: Let me be clear. A Liberal backbencher is concerned I have left the impression that he is agreeing with the argument I made. I do not say that at all. I am saying that when I used the words magical cliche, free enterprise, and government withdrawing from the economy, some Liberals and Conservatives cheered that notion.


Eldon Mattison Woolliams: It is like the gas exploration in Saskatchewan; it is all dried up.


John Edward Broadbent: Mr. Speaker, it is just incredible. The same phrases were uttered by Herbert Hoover in 1929 just weeks before the stock market crash. He was saying in effect, "We must leave businessmen to manage the economy, and if governments would only do what they are supposed to do"-which for him was nothing-"that would be wonderful."
Just weeks afterwards the stock market crash came. Within months there was the beginning of the greatest depression of the century. What we are seeing now, coming from the alleged spokesmen for the vast majority of provincial governments, for the Minister of Finance and for the Prime Minister, is the same kind of cliche. There was at least a reason for Herbert Hoover thinking that way and there was a reason for R. B. Bennett's view as well-they did not live through a great depression. They did not have the experience that we have had-


An hon. Member:: Have you?


John Edward Broadbent: Mr. Speaker, the level of ignorance that prevails in this place boggles the mind.


Eldon Mattison Woolliams: 1 could not agree with you more. 1 have never heard such illiteracy.


John Edward Broadbent: It is as if they were sitting on the Titanic, laughing away, and drinking champagne as was done at that time, and just as Herbert Hoover and his benign acceptance of the market system conveyed the impression that all would be well.


Some hon. Members:: Oh, oh!


The Acting Speaker (Mr. Turner):: Order, please. It looks as if it is going to be a long night. I suggest we all listen. Everyone has twenty minutes.


John Edward Broadbent: What I say on behalf of my party is that it is time a few people for once uttered the reality that we are living in a mixed economy. The most significant economic force in Canada today, whether it be at the provincial or federal level, happens to be with the governments of the day. That is the reality. It is a reality that has changed much from the 1920's and 1930's. Instead of withdrawing from investment at a time when we have one million unemployed, and instead of saying that we must turn everything over to the private sector-which is not investing and has not invested at signifi-
80031 -SlVz

February 22, 1978
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cant levels for more than three years-we should be using the public sector with creativity and imagination.
1 want to list some of the facts.


Eldon Mattison Woolliams: What have we been listening to up until now?


John Edward Broadbent: Mr. Speaker, I listened with attention if not exactly commitment when the Leader of the Conservative Party (Mr. Clark) spoke, and 1 would appreciate the opportunity of presenting our views now.


Some hon. Members:: Hear, hear!


John Edward Broadbent: What are some of the realities that should be conveyed to the people of Canada? Let me speak first of all of investment prospects. Both the government and the Conservative party spoke of the need to have investment in the private sector. Let me point out the past performance of the private sector. The people who produced the lay-offs-Inco, Alcan, Christie Bread-are firms in the private sector. Anyone who pretends the lay-offs in those firms had something to do with government hampering them in some way, is speaking nonsense. The situation is quite the opposite. Governments in Canada have been aiding the corporations that have been laying people off. That is another argument, however.
The reality about investment is demonstrated in a planning document produced by the Minister of Finance in advance of the first ministers' conference. It pointed out that in order to get unemployment down to 5.5 per cent by 1982, we would need to increase investment in the Canadian economy by 7.3 per cent each year for the next four years. Mr. Speaker, it should be noted that for the past three years investment has averaged about 1.5 per cent. The minister gave no reason in the planning document that would lead us to anticipate significant growth in the private sector. How in God's name then does he anticipate we are going to get unemployment down to 5.5 per cent by 1982 if the expected rate of investment continues at the past levels?
Indeed, the planning document forecast no change in the level of investment for 1978 compared to 1977. The minister's expectation about improving the economy by 1982, in terms of investment, is just hog-wash according to the government's own reports.
Similarly the planning document released before the conference said that we need at least 300,000 jobs in each of the next four years. The record from each of the last three years shows that we only achieved 175,000 jobs. Therefore the forecast of
300.000	jobs to achieve the target of 5.5 per cent unemployment is just whistling in the dark. There is no reason why we should anticipate a level of job creation in the next three or four years twice as high as that in the past three or four years.
Things are the same in the manufacturing sector, which is crucial for any industrial society. The document says we need
74.000	new jobs in manufacturing in each of the next four years. In each of the past four years, however, we averaged only 17,000 new jobs. Now the minister is saying we need an

increase of 500 per cent in manufacturing in each of the next four years in order to achieve his target. Again, he is whistling in the dark. There is not a shred of evidence that we will get that number of new jobs in manufacturing. It is 500 per cent higher on average that we have had over the past three or four years.
Those are some of the facts that I appeal to members of the House to heed. If I have no hope of convincing them-and I certainly do not-I hope increasing numbers of Canadians will listen seriously to the economic debate and consider the options.
If the investment picture is as bad as the government forecast would indicate, if the prospects for new manufacturing jobs are as poor as past performance indicates, if we have no reason to believe that the private sector is going to do in the next three or four years what it has not done in the past three or four years, then I must ask why we are so reluctant to consider the logical alternatives. We must consider our immediate needs against the history of the century.
The point I am making is that when private enterprise for whatever reason, and there are complex reasons, fails to create jobs, then public enterprise must be brought to bear. Surely that makes sense.


Eldon Mattison Woolliams: Nonsense.


John Edward Broadbent: The hon. member for Calgary North (Mr. Woolliams) says nonsense. I would remind him that the premier of his own province, Mr. Lougheed, bought control of PWA, one of the largest airlines in Canada. Perhaps when a Tory government buys something that is not public ownership-but we call that public ownership.


Eldon Mattison Woolliams: That was to keep Barrett out.


John Edward Broadbent: Nonsense! Mr. Speaker, you can see frivolity that prevails here. The people of Canada will not accept frivolity. That same government led by Mr. Lougheed invested hundreds of millions of dollars in Syncrude. It made sense to have public investment there.
Bill Davis is the premier of a province which was the first in this country to embark on hydro development on a significant basis. That is a public investment that pays off in jobs now by creating energy in the future.
The point I want to make is that of all the times when we are talking about a need to deal with the Canadian economy and create jobs, and in the longer run bring down the level of inflation and therefore influence the international community which has responded in a way that has brought our dollar down, now is the time we must generate some growth in the Canadian economy. My God, 1 can tell the Prime Minister that one of his predecessors, Lester Pearson, and for that matter even Mackenzie King, recognized changing economics, and I cannot understand why the Liberals have lost their sense of historical perspective.
February 22, 1978


An hon. Member:: Oh, oh!


John Edward Broadbent: Again we hear disagreement from a man who comes from Quebec where there are 450,000 Quebecers out of work, most of whom voted for the Parti Quebecois. I say to you, fellow, you can blame your government for that.


Some hon. Members:: Hear, hear!


John Edward Broadbent: The point I am making, Mr. Speaker, is that in a mixed economy we certainly have to concentrate on stimulating the private sector. Where has the leadership been? In France and in Japan, and there are governments there that can hardly be described as social democratic, they have had research and development policies and sectoral analyses which have led to very specific conclusions about where to place their investment over the next few years. As a result, the Japanese have become the leaders in electronics. They did not rely on a free market. The Japanese did not rely on the cliches of private enterprise. They had government leadership, and the government in conjunction with private enterprise made Japan the leading industrial nation in the world.
Meanwhile we sit back with utter and complete banal economic platitudes on the one hand on the part of the people on my right, or facing a sort of economic smug drift as demonstrated by the government with that look of infinite disdain I see now on the face of the Deputy Prime Minister (Mr. MacEachen) opposite.


Some hon. Members:: Oh, oh!


John Edward Broadbent: I want to conclude with a few examples of what could be done now with imaginative enterprise in the public sector to create some jobs.


An hon. Member:: That is disdain without limit.


Allan Joseph MacEachen: For an eternity.


John Edward Broadbent: The government has the Hall Commission report. What does it recommend? It recommends that some $500 million should be spent in the next couple of years to update rail facilities in Canada. That makes a lot of sense. If the government acted on that now it would create jobs now, not only in the prairies of Canada but in Cape Breton. It would stimulate the steel industry, and it would stimulate the boxcar industry in another part of Nova Scotia. It would make sense to allocate public funds now of that kind to create jobs instead of paying people handouts to do nothing. That is one approach, Mr. Speaker.
The government committed itself to urban transit, and that means go-trains, subways, and streetcars in some cities. In 1974 the government said it would spend $290 million in this way. Now, when we have 1.5 million unemployed, this is the time when we should be embarking upon that kind of creative public investment to provide services and jobs for people today.
There are housing needs right across Canada. We could be expanding the housing budget. We could be re-equipping a fishing fleet in eastern Canada because our present fleet is a
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disgrace to the modern world as a result of neglect. If the government wanted to put some public capital into modernizing the fishing fleet for our eastern fishermen, that would not only create jobs now but would create long-range possibilities for a province like Newfoundland.
I could give some other possible examples such as solar energy. That could use some public investment now which would create jobs today and produce energy tomorrow. I want to conclude by saying simply this, Mr. Speaker. I wish the debate-


The Acting Speaker (Mr. Turner):: Order, please. I regret to inform the hon. member for Oshawa-Whitby (Mr. Broadbent) that his allotted time has expired. The hon. member may continue with unanimous consent. Does he have unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


The Acting Speaker (Mr. Turner):: Order, please, I definitely heard a no.


Joseph Jacques Jean Chrétien: Mr. Speaker, I listened to the speeches by the two leaders of opposition parties. The Leader of the Official Opposition (Mr. Clark) referred to responsibility in these matters. I am standing here tonight replying to a proposition of the opposition that we are in a state of crisis in relation to the dollar. Those hon. members say we have to act responsibly. Tonight at the closing of the market the rate was exactly the same as the lowest rate in October 1977, yet they claim we are facing a very urgent crisis.
In regard to matters that are extremely sensitive to the operations of foreign markets, we see the opposition not checking their facts but trying to create a crisis out of a situation that is exactly the same as it was in the middle of October, 1977.
This leads me to quote an hon. gentleman who is very well known in this House, the right hon. member for Prince Albert (Mr. Diefenbaker). In the book he wrote called "One Canada", at page 131 he said that one of his problems in 1962 resulted from one of his colleagues in the cabinet speculating on the level of the Canadian dollar in the marketplace. He blamed the situation on the irresponsibility of such a move. Hon. members can verify that in his book at page 131. I was very pleased that the opposition proposed this subject as the matter for debate because I wanted to point out things like that.
The opposition parties speak about a big crisis because since the beginning of the month the dollar has fluctuated from a high point of 90.30 on February 1 to 89.73 tonight. That is a fluctuation of half a point, Mr. Speaker, yet they call it a big crisis. They try to create the impression that everything is very bad in this nation. I was listening to them to see if they would tell me, both parties, what their policies were in respect of the monetary situation. No way, Mr. Speaker. They have not told

February 22, 1978
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me whether they want me to peg the dollar or not peg it. They did not speak about it.


An hon. Member:: We don't want you to peg it.


Mr. Chr6tien:: They say the crisis is in relation to the monetary policy of the government. I listened very carefully for the last 45 minutes and they virtually made no reference to that. I did not expect too much from the NDP because they know they are in the opposition and will remain in the opposition forever. But, when the Leader of the Opposition tells me to be responsible in my job, I want to tell him he has a responsibility to be responsible. Some ten years ago when we were faced with such difficult problems in this land I remember that the hon. member for Halifax (Mr. Stanfield) acted as a responsible leader of the opposition. He told the Canadian people they must pay a big price in a very touchy situation, and acted as a real Canadian who was concerned about the economic future of this nation.


Some hon. Members:: Hear, hear!


An hon. Member:: That is not what you said in 1974.


Alexandre Cyr: I wish the Leader of the Official Opposition would show the same sense of responsibility, particularly if he wants the people of this land to believe he could be a responsible leader of the government one day. Of course, he prefers to try to score some little political points against the government, and even against the Minister of Finance. I can defend myself. I have no problem in explaining the policies of the government.
The policies of the government in terms of the monetary system have been the same for a long time. We are floating the Canadian dollar, which means that the marketplace decides what is the real value of our currency against another currency. I have said many times that the Canadian dollar has to float downwards, because for years Canadians have put themselves in the position of losing their competitiveness in world markets. We have to adjust to that situation one day or another. Since November, 1976 the Canadian dollar has floated downwards from a beginning of $1.03 in relation to the U.S. dollar.
For many reasons we have priced ourselves out of international markets. The compensation in the Canadian economy was higher than in our main market, the United States, in many Fields. In my own riding, for example, workers in the papermills are receiving $1.50 or $1.75 more than their counterparts in the United States. The situation which they faced was very difficult when they were laid off for weeks this summer, because that industry was no longer competitive. We are going through adjustment processes at this time.
On top of those difficulties, everyone must recognize that we are facing a new element which adds to the uncertainty of the economy of our nation. There are a lot of people in the market place who do not know what the future of Canada is. One only

has to go to New York, Chicago, Los Angeles or San Francisco, as I have done in the last two years, to find people asking what will be the outcome of this nation as a nation. Some people do not consider that to be serious.
I went to New York twice since January to explain the economic situation of Canada, to speak about the economic prospects of this land and so on. The only question those investors asked me was: What is the situation in regard to the unity of Canada? I am only stating facts. I went there to talk about what I think, that this land has a fantastic future if this problem can be solved.


Some hon. Members:: Hear, hear!


Alexandre Cyr: If we act responsibly, this problem can be solved. I am not afraid of the future. We will stick together. When the level of the dollar today is exactly the same as it was in October, it is irresponsible to talk about a crisis. We had the same problem five months ago. This irresponsibility is not worthy of the hon. Leader of the Opposition (Mr. Clark), who is attempting to become the prime minister of this land.


Some hon. Members:: Hear, hear!


Joseph Jacques Jean Chrétien: We are having some problems with the Canadian dollar.


David Samuel Horne MacDonald: No, never!


Joseph Jacques Jean Chrétien: Yes, I admit we are having some problems. In the process of floating the dollar, the governor of the Bank of Canada is called upon to intervene in the marketplace in order to make sure the market operates in an orderly fashion. The exchange of Canadian dollars for American dollars, and vice versa, is subject to speculation. It is the duty of the governor to intervene in that field. I was amazed to hear this afternoon a graduate of the London School of Economics, the hon. leader of the New Democratic Party, talking about expenditure to maintain the dollar. He should know that it is not an expenditure. It is just an exchange of American dollars for Canadian dollars, and vice versa. There is no loss of money involved. For him to rise and create the impression that we are spending dollars to defend the Canadian dollar, rather than investing that money in jobs, is amazing. I was just a small town lawyer, and I knew that a long time ago.


Some hon. Members:: Hear, hear!


Joseph Jacques Jean Chrétien: From time to time the governor has to move in the marketplace to ensure the market behaves in an orderly fashion. He has done that every month since the Canadian dollar started to go down from its level in November, 1976. It is his role to do that. That is the mandate parliament has given him.
The hon. Leader of the Opposition is complaining that I did not answer his question on Monday, when he asked me if I was planning to draw on the stand-by credit we had arranged. 1 had discussed that in the morning with the governor. It was agreed that we were not. Because of the kind of irresponsible
February 22, 1978

questions posed by hon. members of the opposition, the market was not orderly yesterday, and the governor had to move in. In November 1977 we indicated that we had a stand-by credit which we could use when needed.
The hon. member for Halifax (Mr. Stanfield) asked me a question, and I did not have the time to reply properly to him. It is true that two years ago we asked the provinces not to borrow in foreign markets. At that time there was a very simple reason for that. The Canadian dollar was at $1.03, and borrowing in foreign markets was pushing the dollar even higher. It was substantially hurting the Canadian position in terms of exports.
Today we are not faced with the same situation at all. The Canadian dollar is not worth $1.03 U.S. It is worth 89.73 cents. The situation is different. For economic reasons, the provincial governments are not borrowing on foreign markets. One reason is to offset the balance of payments problem which is always existent in Canada, because we are a developing nation. I am not blaming the provinces. On the advice of my officials in the Department of Finance, and in consultation with the governor of the Bank of Canada, I was convinced that the right move to make was to go into the foreign market at this time in order to borrow money. That was decided yesterday afternoon. I made it public in the usual way: I made a statement after the market closed. We had discussed that matter in my office in the morning, but a conclusion was not reached. After five o'clock I called my associate deputy minister to tell him to go ahead. Even at that time we changed the formula somewhat. We do not announce every borrowing in the market in the House of Commons. I had to wait until the market closed to make that announcement. Every three months we go to the marketplace to borrow money.
Ad hon. Member. The House is sitting.


Joseph Jacques Jean Chrétien: We are sitting every day, but it is not the practice of parliament every time to ask the Minister of Finance to make a statement on his borrowing intentions before the House. There is nothing unusual about what I did.
I am extremely disappointed the opposition is acting irresponsibly at this time by attempting to create the impression that there is a crisis, when the level of the Canadian dollar is exactly the same as it was in October.
We are going through a process of adjustment in our economy at this time. Hon. members speak about more stimulus in the Canadian economy. On January 1, 1978 we stimulated the economy to the tune of $3 billion. I heard the hon. Leader of the Opposition speak about his own budget propositions the other day: $2 billion, son budget de l'an I. He indicated that he would cut expenditures to the tune of $2 billion. He said that he would fire 60,000 public servants.


Some hon. Members:: That is not true.


Joseph Jacques Jean Chrétien: He is the same man who rose from his seat in the House of Commons-


Some hon. Members:: That is not what he said.
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Joseph Jacques Jean Chrétien: He said that.


Some hon. Members:: Oh, oh!


The Acting Speaker (Mr. Turner):: Order, please. The Leader of the Opposition (Mr. Clark) wishes to rise on a point of order.


Charles Joseph Clark: Mr. Speaker, I know the Minister of Finance would never want to mislead the House of Commons. I am sure he would like to correct the false information which he has just placed with such enthusiasm on the record and make it very clear that my proposal, which I hope the government will adopt and follow, is not to fire public servants but to freeze hiring in the public service. The Minister of Finance will admit that he was wrong in the accusation he made with such delight and I hope that he will accept my rising on this point of order to correct him, not only here but anywhere else where he might be tempted to misrepresent my position without having to face me when I set the record straight.


Some hon. Members:: Hear, hear!


Joseph Jacques Jean Chrétien: Mr. Speaker, if he does not replace 60,000 people, I admit that they are not fired outright.


Some hon. Members:: Oh, oh!


Joseph Jacques Jean Chrétien: I am glad to see the hon. member for Grenville-Carleton (Mr. Baker) here. Will he tell me what will be the effect on this town if 60,000 people are not replaced?


Some hon. Members:: Hear, hear!


An hon. Member:: Right on.


Joseph Jacques Jean Chrétien: We are removing only 5,000 people in a period of five years, but the opposition admit they will not replace 60,000 people. That means millions and millions of square feet of space that will be vacated in the private sector in Ottawa.


Some hon. Members:: Hear, hear!


Mr. Baker (Grenville-Carleton):: Thank you. That is exactly what I wanted you to say.


Joseph Jacques Jean Chrétien: He will make Ottawa, as they say in English, a ghost town. If he is right, I made a little calculation and find that the maximum he can get from this is $240 million. He is still short of $1,750 million. So he came up with two other proposals, great proposals. He wants to close down FIRA. I took a look at the books and found that he would save $4 million. Then he said that he wants to close down the Department of Urban Affairs. I told myself there must be a hell of a lot of money there, but I found that the Department of Urban Affairs would bring only $16 million.
Then he had another great proposal to cut expenditures. He said he wants to transfer Eldorado Mines to the private sector.

February 22, 1978
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I checked the books and I found that this is a crown corporation which makes a profit.


Some hon. Members:: Oh, oh!


Joseph Jacques Jean Chrétien: If this is the type of facts we will be faced with, I hope he will come clean on that. Because we have stimulated the Canadian economy by S3 billion, more than any other western nation. Less than six weeks after that the opposition say we should stimulate the economy further by $2 billion. I think this is the most irresponsible proposal I have heard in years.

How can anyone, Mr. Speaker, after just six weeks, pass judgment on the income and corporate tax cuts we offered as of the 1st of January? How also can anyone believe that the Leader of the Opposition (Mr. Clark) can already judge what effects they have on the Canadian economy? At this very moment, the President of the United States, Mr. Carter, is proposing to reduce taxes by about some $25 billion in 1978, once the Senate has approved his plan. We usually multiply or divide by ten to establish the ratios; this means that our incentives are far stronger than those President Carter suggests. Furthermore, with regard to his proposals, no mention is made of the fact that he recently increased the taxes for social security and taxes on energy products so that in terms of stimulus on the American economy, if President Carter's proposal is accepted, its net results will be only half of what he in fact proposed. It is therefore very easy to conclude that in Canada, thanks to the proposals implemented on January 1, 1978, our economy has been stimulated twice as much as the American economy has been.
And the performance of the Canadian economy is starting to shape up the way we had hoped. Over the last two quarters of 1977-the relevant figures will be published shortly-the net yearly growth of the Canadian economy reached 5 per cent. As for the first quarter of 1978, we do not know yet, because this is only the middle of February. For the months of January and February, however, and as a means of maintaining this growth, we have reduced our income tax revenues by as much as $700 million to maintain and increase the purchasing power of Canadians during the first two months of the year. In the area of remuneration, for instance, Canadians are beginning to realize that we must try to reduce the demands from within the Canadian economy, and the remuneration-


Mr. Deputy Speaker:: I regret to interrupt the hon. Minister of Finance-


Mr. Deputy Speaker:: Order, please.


Joseph Jacques Jean Chrétien: May I continue, Mr. Speaker? I hope hon. members will want to hear me speak for a little longer.


Mr. Deputy Speaker:: Order, please. There does not appear to be unanimous consent of the House.


Walter David Baker: We would be delighted to have the minister carry on if he would assure us that he will begin dealing with the issue.


Some hon. Members:: Hear, hear!


Joseph Jacques Jean Chrétien: May I carry on, Mr. Speaker?


Mr. Deputy Speaker:: I heard a few "no's" from the back benches.


Some hon. Members:: Oh, oh!


An hon. Member:: It's tit for tat.


An hon. Member:: Simma said no.


Mrs. Holt:: Mr. Speaker, I rise on a point of order. I object to the unparliamentary behaviour of the leader of the NDP. He thumbed his nose from across the House. I think there is an apology owing to the members of the House. For a man who leads a party to thumb his nose so rudely is most unparliamentary. It was seen by everybody on this side.


Mr. Deputy Speaker:: Order, please. I have enough problems with words that are said and heard in the House without having to rule on gestures.


Erik Nielsen: I rise on the same point of order, Mr. Speaker. I submit to you, Sir, that it is better than having the Minister of Energy, Mines and Resources (Mr. Gillespie) with a finger up his nose.


An hon. Member:: So much for the NDP.


Sinclair McKnight Stevens: Mr. Speaker, I listened to the speech of the Minister of Finance (Mr. Chretien) with great interest, and I was particularly interested in his opening references when he said that somehow he could not see any crisis in the situation of the dollar today.
As I recall, the Minister of Finance said that some time in October the dollar was roughly at the same level as it is now, according to him, so where is the crisis? Let me say two or three things about that. First, if the minister felt there was no crisis, why did he announce last evening foreign borrowings to an extent still undetermined? Why did he indicate in the same announcement that he intended for the first time to draw down a portion of the $1.5 billion line of credit which was established last October to defend the dollar?
If the minister is honestly unaware of the crisis which exists in this country with respect to the dollar, I am more alarmed now than I was when this debate began. To have a Minister of Finance come in and say, "What is the crisis?" without admitting that between September, 1977, and the end of January he had lost $447 million of our reserves, I say is unforgiveable. For that same Minister of Finance to come into this House and deal in misrepresentations to the degree he did

February 22, 1978

this evening, without revealing that in addition to the $447 million of our reserves that had been lost up to the end of January a further $500 million has been lost so far in February, and to ask us, "What is the crisis?" is also unforgiveable. The crisis is that our reserves have run down to an unacceptably low level in terms of reserves among major industrialized nations. That is the crisis. The minister knows it, but he did not level with the people and with this House tonight.
However, the most alarming thing in the minister's address tonight was his choosing of certain convenient dates to compare the dollar. The minister did not refer to the level the dollar was at when he became Minister of Finance. At that time the dollar was at 93.17 cents. That is when the minister became Minister of Finance. His record between September 14 and approximately the middle of October was so unnerving to the international community that in one publication on October 13 we found the following headline, "Dollar Plunges Again to 27-year Low Amid an Increasingly Nervous Market".
Within a month of this minister's taking office our dollar had plunged to a 27-year low, and that was partly due to his inept handling of our economy. In order to gain time the minister at that time announced a $1.5 billion line of credit. Now that minister comes into this House and uses the low point he helped trigger last October as a basis for comparison for the dollar today. That is nothing short of shameful. I do not doubt that the minister wishes to leave.
The minister tried to tell us tonight that somehow the economy is in relatively good shape. He wondered why everyone is getting excited about the dollar. The minister has not levelled with the Canadian public. I suggest that that is one of the most significant reasons for the difficulty we are in, and it may cause the dollar to fall further. Let me be specific.
I referred to an article published on October 13. The article was written by Hugh Anderson, and this is what he said:
The foreign exchange markets are having difficulty interpreting the Bank of Canada's recent announcement that it has lowered its target range for growth in the narrowly defined money supply (M-l) to between 7 and 11 per cent, from between 8 and 12 per cent.
The confusion over official policy was increased by Finance Minister Jean Chretien's repeated statements that the government does not intend to defend any particular rate for the Canadian currency. "When you have a floating currency, you have to let it float,'' Mr. Chretien said.
Once again tonight the minister has put that view forward. Once again he has told the international market that the federal government is indifferent to where our dollar is going to end up. With that attitude prevalent among the minister's staff, those staff members have attended meetings of foreign exchange dealers. They have told foreign exchange dealers that they do not care where the dollar settles. In answere to the question "are you willing to have it settle at 80 cents?" they are saying that if the market says 80 cents, 80 cents it is. The minister's staff cannot undermine public and international confidence in a thing as delicate as our dollar without seeing the consequences we are debating here tonight.
I have referred to the loss of reserves since this minister took office. Unfortunately that also occurred prior to his taking
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office during the latter days of the former minister. For example, on December 31, 1976, we had U.S. dollar reserves of almost $3.5 billion. As a result of the deterioration in our reserves we now find that we have less than half that amount available to help defend the dollar or at least control its rapid fall.
In short, I think it is fair to say that upon this minister's becoming Minister of Finance he perhaps triggered the first run on the dollar with his unfortunate speech to the International Monetary Fund. Dealers have estimated that that speech alone cost half a point as far as the Canadian dollar was concerned. The minister's continued references to a floating dollar have cost dearly as far as our dollar is concerned.


Joseph Jacques Jean Chrétien: Are you for pegging the dollar? Tell us. Are you?


Sinclair McKnight Stevens: Let me refer to another comment which has helped undermine our dollar. On September 10, 1977, the Prime Minister (Mr. Trudeau) stated, "It's good that international money markets have forced down the value of the Canadian dollar." Those words came from our illustrious emperor, the Prime Minister. I could refer to various quotations to show how the international market has reacted to some of the unfortunate comments made not only by the Prime Minister and the Minister of Finance but also by the Minister of Industry, Trade and Commerce (Mr. Horner). That latter minister is recorded in Hansard as saying that the 90-cent dollar is good for Canadians.
Frankly, I am disappointed that tonight the minister would not grapple with the serious issues facing the country. He told us in his communique last night that he is proposing to borrow foreign funds in order to offset our current account trade deficit, but we have not yet had any indication-certainly not tonight-by this government of how it intends to narrow down that current account trade deficit.
This is a serious matter. Sometimes I feel that we overlook it, but in a Wood Gundy review dated January, 1978, covering the years 1975 to 1980 it is pointed out that from a current account trade deficit in 1975 of $4.7 billion we are heading for consistently increasing levels right through to 1980. These are the facts, and if the minister was telling us last night and presumably again tonight that they intend now to use the federal covenant to borrow foreign funds to cover that current account trade deficit, what he is telling us is that as long as we can see ahead, certainly to 1980, that requirement is to continue in Canada, putting a tremendous load, I suggest, on future generations who have to pay off that debt that this government is incurring to cover its own deficiencies.
I have referred to the carrying of that debt. Take a look at how Wood Gundy estimate the cost is to increase. In 1975 they say the interest and dividends pouring out of this country amounted to $1.9 billion. In 1978 they estimate it will be $4 billion. They estimate it will be $4.9 billion by 1980. The total
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February 22, 1978
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service account deficit by 1980 according to Wood Gundy will be $9,100 million.
The minister in his remarks asked for some proposals. He asked what would we be doing. Let me assure him the first thing we would be doing is not making irresponsible statements as he has done as Minister of Finance.


Some hon. Members:: Hear, hear!


Simma Holt: Would you peg the dollar?


Sinclair McKnight Stevens: The minister did not touch on how they intend to regain our competitive position in the world market in order to ensure that that current account trade deficit will not continue to plague this nation. We have a program to get productivity moving in this country. We have a program, when we form a government after the next election, which will bring the current account trade deficit down. The hon. member for Welland (Mr. Railton) has been asking all night for that. I do not doubt that he is getting a little desperate in that party realizing that they are absolutely void of any ideas themselves.
I am glad the Minister of Finance has returned to the House. What he and the government of the day have to do is present a package not only for domestic consumption but for international consumption that will once again restore the confidence of the international world in Canada. That is the first task this government must accomplish if it is to bring our dollar into proper balance.
You cannot continually tell the international world that you have a floating dollar when the international world knows you are losing money at the rate of $100 million a week to defend that dollar. You cannot fool the international world when they realize we have an inflation level substantially above our main competitor, the United States. You cannot fool the rest of the world when they know we have a $9.2 deficit in our own federal spending accounts this year and it is likely to be $11 billion or $12 billion next year.


An hon. Member:: What about Ontario?


Sinclair McKnight Stevens: The hon. member asks about Ontario. I wish the hon. member would look at the collective position of all our provinces. He will find they are in surplus. They are not in deficit.
The minister asks for a few ideas. When I try to give a few ideas we find members in his party interrupt. This country has got to face reality. The rhetoric of the Minister of Finance will not regain our prosperity. Every time he is asked an economic question, simply wrapping himself in the flag will not regain our prosperity. The minister's main responsibility is to get back to work. Let me assure you that if the minister thinks he can paddle to New York, U.S.A., or London, England, and expect those nations to give hundreds of millions of dollars of credit to this country without a package of solutions to present to but his house in order, he has a big surprise coming to him. The fact is that the hard nosed international lenders are going to take a solid, slow look at Canada before they push in to give this minister the support he apparently intends to seek.


Samuel Victor Railton: Doom and gloom.


Sinclair McKnight Stevens: I notice the hon. member for Welland, and I did not prompt him to give me these leads. He says "Doom and gloom." I refer him to the Chase Manhattan periodical published in October, 1977. Surely the minister likes that month, he has already put it on the record because he thought it might help him in his plight tonight.
The Toronto Star reports an article by Chase Manhattan which in a devastating and pessimistic way talked about the Canadian economic outlook saying there is virtually no hope of solving pressing economic problems. Canadian economic policy is between a rock and a hard place, it says. It calls wage and price controls a drag on the economy. We have some hard problems to solve in this country, Mr. Speaker. The time has come when this Minister of Finance, instead of pretending there is a 5 per cent real growth when his own advisers have told him he is overly optimistic, instead of pretending that we are heading for a 6 per cent inflation level when his own advisers are telling him that is not so, instead of pretending that somehow unemployment is going to be less when his own advisers are telling him that it is not so, must level with the Canadian public. It is time that he asked them, "What is the package that will correct the inflation that we have in the country, get our real growth moving?" When he can do that he will perhaps get a more satisfactory dollar and we will not have this type of debate to encounter.
The minister began by asking what is the crisis? The crisis in Canada today is our future. If we do not right our economic self our economic future will be taken from us.
Let there be no doubt the first step in our plight was the $1.5 billion line of credit. The second step down the slippery slope we are on is this proposed borrowing in foreign lands to help prop up our dollar. The third step will be into the clutches of the International Monetary Fund. If we go to the International Monetary Fund it will mean we have lost control of our economy. In short, there is a coming discipline. The coming discipline will be the regulations and control of the International Monetary Fund that will be forced on this nation if we wish to continue. That future is not needed. If this government would accept the responsibility, if it would be more disciplined and if it would stop bringing in estimates as it did today contemplating spending increases of 10 to 12 per cent, increasing the spending of this government by $5 billion, we would not be getting into the clutches of the International Monetary Fund.
Judging from the remarks of the Minister of Finance tonight I do not think he has learned the lesson. He is still talking vaguely about floating dollars and saying all is well. The fact is that, if he persists, we will have still a lower dollar and, unfortunately, all of us will suffer. It was pointed out last October that the fall of the dollar by about ten cents at that time cost Canada $2.8 billion in terms of the $28 billion of foreign debt that we had outstanding. That is indeed a costly price for any country to pay for a government led by Pierre Elliott Trudeau.
February 22, 1978


Eudore Allard: 
An hon. Member:: The same old gang! In English, the same old gang!


Eudore Allard: The same old gang, yes! As far as I know, our dollar has already suffered from a number of colds. We have only to remember that in 1962, 1968 and 1970 our dollar suffered from very severe colds and we prescribed remedies very much like those we are using today. We tried to apply the same remedies whereas we should come to the conclusion that, in our present system, the same causes produce the same effects.
Mr. Speaker, in a country the government is the authority which can introduce legislation applicable to all citizens. We live in a democratic system and each citizen who is 18 or more is part of the sovereignty of the country. That is the gist of true democracy. Inflation, unemployment and poverty are only the external manifestations of an inequitable distribution of a remarkable gross national product of $190 billion in 1977, which means an average amount of $8,300 per citizen. This economic lack of balance could be corrected by putting into practice a new monetary and economic system which can be done within the limits of our present political and monetary system, through a number of simple adjustments in various areas.
All this can be done by this government, Mr. Speaker. Even if Canada plays an important role at the economic summits of the 7, 15 or 125 most fortunate countries in the world, there is certainly place in this country of our 24 million citizens who are longing for a monetary reform which would bring about a better distribution of our national wealth.
Here in Canada, homemakers get no salary for rearing the children and look after the house. The student in our education system gets no salary either. Citizens and workers are more heavily taxed than most corporations.
So, Mr. Speaker, in a country as rich as this, citizens require and demand that their national government come back to some balance between themselves and the leaders. The Canadian people put their hopes in this government, so they expect responsible action from that same government that has been getting warnings from the opposition and from our party. We have been sounding warnings for a long time but, as I said, by its subservience to those who maintain it in place it is reluctant to do so, it cannot make up its mind to press the Bank of Canada or put forward an amendment to the Bank of Canada Act impowering the bank to make loans to the national government, provinces and municipalities, at administration cost rates, as it has been lending for years to a number of countries that get interest-free loans for periods of 60 years and over. However, for the good operation of our institutions those loans should include the cost of administration.
Finance
The government in my view should be ashamed of posting a deficit in the order of $9 billion, when the people know for a fact that over the same period the 11 chartered banks accumulated net assets in excess of $25 billion. If my arithmetic is right 9 plus 25 are $34 billion, the difference between private banks and both the Canadian people and the government administering the Canadian people.
So who is the most efficiently governed? The banks or the Canadian people, Mr. Speaker? I leave the answer to hon. members.
The way things are going, low and medium income people are gasping for air, and sooner or later everything will bust as the saying goes. The only way out is simply for the government to regain its sovereignty and to re-establish control over the economic blood of its country. Otherwise, we are finished.
This afternoon, my colleague, the hon. member for Belle-chasse (Mr. Lambert), who was taking part in the debate, reminded the government that nearly 40 years ago, the leader of the Liberal government said that a government which lacked control over its credit and its money is not up to representing a country; that man was the hon. Lyon Mackenzie King. As far as I know, he was not and never was an advocate of Major Douglas's philosophy, but he was indeed speaking the truth. And his words are even truer today than they were then. Unfortunately, the government always lends a deaf ear, and always faces the same problems for lack of listening to the wise words of their beloved leader of old.
Mr. Speaker, as I said earlier, Canada will have a deficit of $9 billion and perhaps more this year which is really $4 billion over last year's. We must ask ourselves who will pay these $4 billion plus the interest charges. Who will pay this back? You, Miss, you, Sir, you young man, you, Mr. Farmer, you, Mr. Industrialist, you, Mr. Professional, it is all of you, you, Mr. Speaker, and all of us. This is not easy to face when we consider that our national debt already exceeds $40 or $48 billion. As I said this afternoon, we are now paying $25 million a day in interest alone. This should make us think since there are no improvements foreseen for the future and the government does not seem to want to change its mind.
Mr. Speaker, our dollar is in a critical state and it is not the remedies administered each year by the government that can make it better. What is the use of constructing large buildings, like the hospital across Wellington Street in Ottawa? What is the use if we cannot use it to cure our agonizing dollar? Mr. Speaker, we should endeavour to make the symbol of our natural resources being built on Wellington Street the symbol of our true wealth. We should endeavour to make the institution of the Bank of Canada operate as it should and issue the credit required for the development and the betterment of each Canadian citizen, and this should be done in accordance with our great production, our gross national product, which is, as I said earlier, about $ 190 billion.
Mr. Speaker, I hope that the words of wisdom and good sense which will be spoken during this debate will spur the
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February 22, 1978
Finance
government and make it understand that in the present system, as I said earlier, everyone is a loser. It is essential that the government amend the Bank of Canada Act to enable it, as I said before, to finance all public and para-public works, as this would necessarily reduce our taxes.


Hon. Iona Campagnolo (Minister of State (Fitness and Amateur Sport)):: Mr. Speaker, I welcome the opportunity to speak about the economic performance of my own province of British Columbia. The hon. Leader of the Opposition (Mr. Clark) and his partner in sin, the leader of the New Democratic Party, feel that-


An hon. Member:: What is this sin business?


Iona Campagnolo: The leader of the New Democratic Party is the partner in sin of the Leader of the Opposition. They feel that by embarking on this emergency debate they can create an illusion of crisis that will reflect badly on the government. They will find, of course, that honest figures will put the lie to the outrageous and irresponsible approach that they have brought forward tonight. In fact, the only person they are harming is the personification of Canada, and the hon. member from the Western Bank knows that very well. Although Canada with the rest of the world faces the consequences of an economic downturn-


An hon. Member:: Who wrote that speech for you?


Iona Campagnolo: I write my own speeches, my friend. I wish you could do as well. You cannot even stand up and make your own comments.


Some hon. Members:: Hear, hear!


Iona Campagnolo: This country's economy has performed remarkably well and shows every sign of being on the upturn. That attests to the economic good sense of my colleague the Minister of Finance (Mr. Chretien), who spoke so forcefully in this chamber just a short time ago.
I am happy to be able to say that in British Columbia the economy is particularly healthy in most sectors. It is outpacing the Canadian economy at large because it has been the direct beneficiary of a number of federal government programs designed to stimulate the economy, and because certain British Columbia industries have also benefitted from the very phenomenon the Conservatives are so strongly denouncing tonight-the devaluation of the dollar. Devaluation has made the exports of British Columbia much more attractive to other nations. The devaluation of the dollar was very much desired by the government of British Columbia. You will not hear Bill Bennett or Grace McCarthy speaking the kind of heresy we hear tonight.
This House has heard some very critical statements from across the way. I find it shocking that a few days after a federal-provincial conference, where we saw the people concerned with the economy of our country move into a new and co-operative arrangement in order to find solutions, we see the
[Mr. Allard.)
opposition trying to refute what five governments sought to improve.
During the coming year British Columbia is expected to outperform its enviable record of the past two years. Economists in the provincial and federal governments, together with such groups as the Employers Council of British Columbia, predict a real growth rate that will exceed 5 per cent.
The recovery of the British Columbia economy from its low point in 1975 can be directly attributed to exports. Of the province's commodity production, more than 60 per cent is now exported. This level has been reached through the boost made possible by the drop in the value of the dollar.
On the west coast our major markets have been the United States, Japan-that favourite country of the leader of the NDP-and the European Economic Community. All three of these economies promised to be stronger in the coming year and all three will consume increasing quantities of Canadian goods. Many of them will be shipped through the ports of British Columbia.
British Columbia commodities that have been particularly important in this advance are first, lumber, which led the way with a gain of 29.9 per cent in volume and 48 per cent in value in the first nine months of 1977. Just a year ago the purveyors of gloom and doom across the way said lumber would not rise. Then there is natural gas, which grew by 16.9 per cent in volume and 37.1 per cent in value; aluminum at 13.2 per cent in volume and 35.7 per cent in value; and coal at 10.3 per cent in volume and 14.5 per cent in value. Other commodities have also recorded these sorts of advances.
The British Columbia fishing industry experienced an exceptionally good year last year due in part to good management by God and much of its product being exported to foreign consumers. The dollar value of the catch last year exceeded $300 million.
The provincial tourist industry recorded an increase in receipts of the order of 10 to 15 per cent.
Factors cited for this remarkable one-year advance include good weather, a low inflation rate and the decline in the value of the dollar. While perhaps the Minister of State (Environment (Mr. Marchand)) cannot claim responsibility for the good weather that brought tourists to British Columbia, the government has acted with courage to keep inflation down, courage that we do not see demonstrated across the aisle too often, I might add. The government has wisely allowed the Canadian dollar to reach its own level on international money markets. These are the reasons industries in my province have performed very well and why Canada is so attractive to foreign visitors at an ever-increasing rate.
Hon. members across the floor, of course, wish not only to make the impossible argument-


An hon. Member:: You had your turn.


Iona Campagnolo: You are not on camera; you are not on a microphone. I did not interrupt you and I expect you not to interrupt me.


February 22, 1978


Some hon. Members:: Hear, hear!


Iona Campagnolo: Hon. members across the floor wish not only to make the impossible argument that our economy is far on its way to self-destruction, but they also argue that foreign investors have lost confidence in Canada. This is the crisis the opposition wish to see and may yet create with the sort of black murmurings and mutterings we have heard this evening. They say they have a plan, Mr. Speaker. If they had, the Conservative provinces in this country would all be behaving quite differently than they did last week at the federal-provincial conference. In my province the facts point not to crisis but to confidence and to a preparedness to make long term investments in Canada's united future.
Last year as the dollar dropped below its unusually high level and sought an equilibrium more in keeping with its true position, private and public investment in British Columbia reached $7.2 billion, a 12.6 per cent increase over the previous year. This investment was spread through the whole spectrum of business activity with almost $2 billion spent on new equipment and machinery and close to $4 billion on the construction of primary industry, utilities and factories.
People who fear for the future do not invest this sort of money. It suggests that investors know something that the opposition either does not wish to see or, for political reasons alone, refuses to see, namely, that Canada is a good place to invest for excellent returns in both the long and short terms.
There are many other measures of British Columbia's economic health I could list, including a much improved labour situation, promising developments in the energy field, a buoyant consumers' service market. But to go into these in detail would be to belabour the obvious. I repeat for the benefit of the opposition that by no stretch of the imagination can we be said to be facing an economic crisis. In this country today we have unity on the verge of achievement if we can only get these doom and gloom people to look at the major moves we must take together as a unified group. In spite of the missionary of monetary disaster over there, we will make it.
If the hon. Leader of the Opposition were to say that some sectors of our economy require special attention because world economic conditions have created hardships for them, then I would agree with him. There are examples of this sort and I have them in my own riding of Skeena. They are of immediate concern to me. I think it is important to rise and debate this sort of question, which I have been doing since I came to this honourable House.
As an example of this pressing concern I would like to draw members' attention to the plight of one-industry, one-resource mining communities. These communities have suffered as a result of the temporary downturn in certain metal markets.


An hon. Member:: Get to the matter of the floating dollar.


Iona Campagnolo: Such communities have known a boom or bust cycle-
Finance


An hon. Member:: Come back to the economic question.


Some hon. Members:: Hear, hear!


Iona Campagnolo: Are you not interested, hon. members, in the plight of a one-resource town?


An hon. Member:: We are very interested in the economic situation.


Iona Campagnolo: I am delighted and I hope hon. members will stop and listen to what is being done. They are always asking for solutions.


An hon. Member:: Who wrote your speech for you?


Iona Campagnolo: They are always asking for improvements so I will tell them about some. These communities have known a boom or bust cycle for as long as they can remember. Let us use as an example the town of Stewart in my riding, perched at the head of the Portland Canal on the border of the Alaska panhandle. Stewart has been a mining community since the early 1900 when it first drew more than 10,000 treasure seekers anxious to denude the territory of its gold and silver, all southerners, I am sure.
When the easily accessible veins of these metals were exhausted most of the population just drifted away, some with their pockets filled. The discovery of an anthracite coalfield in nearby Groundhog Mountain briefly restored interest in the community in latter years. It was not until the 1940's or the 1950's that interest in copper set Stewart's future.


An hon. Member:: It sounds like somebody is in trouble in Skeena.


Iona Campagnolo: It has since been a small but prosperous copper mining community which has contributed more than its share to the health of the B.C. and Canadian economies. However, the mid-1970s recorded a dramatic slump in world copper markets. Refiners unable to sell their finished product stopped buying ore concentrates in quantity, and an over-supply caused prices to plummet. In Stewart production was cut by half in 1975 with the loss of 600 jobs. As we sit here tonight it is entirely possible that some New York owners could with the stroke of a pen close the mine altogether, if that is their choice or if prices and volume do not improve dramatically.


An hon. Member:: Speak about the dollar.


Iona Campagnolo: Stewart is faced by another bust of the sort that took place when the gold seekers went home and, yes, of course, some pockets were filled. In the face of a threat like this what can be done and what should a government do? Indeed, what have we done?


An hon. Member:: Yes, what have you done?


Iona Campagnolo: As this government is not of the mind that private companies should be nationalized at the first sign of trouble, the answer lies in the diversification of the economies of such communities. This can be done first by ensuring

February 22, 1978
Finance
the community has the infrastructure it needs to meet the demands and needs of new industries which can be encouraged to locate there.
To this end the federal government has entered into a road improvement scheme with the province of British Columbia to provide the town of Stewart for the first time with what will soon be first-rate road access to the outside world. Already a number of inland mining companies are considering using, or have decided in fact to use, Stewart as a transshipment point to help diversify its economy and improve transportation access, providing two-way traffic which cuts incoming food transport prices.
Road access to this beautiful part of the country will result in an upgraded tourist industry, increasing the number of tourists who will be able to come to Stewart and resulting in immediate and sustained growth.


An hon. Member:: Where is Stewart?


Iona Campagnolo: Oh, well, people across the way from the south have never heard of some of these towns, but then people in my area have never heard of the town which the hon. member represents.


An hon. Member:: Are you having trouble at home?


Iona Campagnolo: Through the Department of Regional Economic Expansion the government declared part of northern B.C. a designated region eligible for five different types of DREE assistance. Under three distinct but integrated programs the government has made money available to municipalities to develop sites suitable to industrial expansion-


Some hon. Members:: Get back to the motion.


Some hon. Members:: Hear, hear!


Iona Campagnolo: Mr. Speaker, the yapping hyenas across the way are still at it, and the supercilious smile on the face of the hon. member for York-Simcoe (Mr. Stevens) is really as appalling a thing as one could see. He is that economic Cheshire cat. If he feels that the debate tonight is a joke, well, he called it so perhaps it is. So we move into the various other ways-


An hon. Member:: Tell us about the 89-cent dollar.


Some hon. Members:: Hear, hear!


An hon. Member:: Meow!


Iona Campagnolo: Mr. Speaker, I believe that aside is very apt for the hon. gentleman across the way. These five programs which I have listed tonight are ones which will help diversify the small one-resource town and promise to pump more than $100 million into the economy of that single, isolated part of northern British Columbia. This is action, Mr. Speaker, not messianic mumbling by that pathetic group across the way. Canada is not prepared to listen to them. Canada saw good action last week in the federal-provincial

conference. I hope hon. members will look at the reviews on their television sets to see what happened, because obviously they missed even their own Conservative member's responses.


Mr. Deputy Speaker:: The hon. member for Pembina on a point of order.


Mr. Elzinga:: Mr. Speaker, I wonder if the hon. minister would permit a question?


Iona Campagnolo: Yes.


Peter Elzinga: I thank the minister and I thank you, Mr. Speaker, because 1 am bootlegging this question in. I would ask the minister whether she does reply to her correspondence. I sent her a letter three months ago and to date I have not had a reply.


Iona Campagnolo: Mr. Speaker, I think the question is more appropriate for the question period. I hope the Speaker will have a chance to recognize the hon. member from the oil-rich part of southern Canada. I promise I will research to see if that gentleman's letter has been misplaced.


Mr. Deputy Speaker:: The hon. member for Don Valley.


James McPhail Gillies: Thank you very much, Mr. Speaker.


An hon. Member:: Now we will hear the truth.


James McPhail Gillies: This is really "Alice in Wonderland."


An hon. Member:: No, it is "Iona in Wonderland."


James McPhail Gillies: We have a situation this evening in which the Parliament of Canada has been called together at a special session to talk about a very serious problem and we get a constituency speech, to be delivered at home, I suppose, to help the election of the hon. member. This is the most disgraceful thing I have ever seen in this House of Commons.


Some hon. Members:: Oh, oh!


James McPhail Gillies: Absolutely disgraceful!


Some hon. Members:: Hear, hear!


James McPhail Gillies: It is absolutely outrageous that the government would put up a member to make a constituency speech on a problem as important as this.


An hon. Member:: That's what you call hypocrisy.


Mr. Deputy Speaker:: Order, please. The hon. Minister of State rises on a point of order.


Iona Campagnolo: Mr. Speaker, may I ask the hon. gentleman if he truly feels that the real heart of Canada is his own constituency, since he answers for it every day in the House, and speaks for it during every question period? There is a time when we must ask where the heart of Canada is located. I submit it is located from sea to sea to sea.
February 22, 1978


Some hon. Members:: Hear, hear!


James McPhail Gillies: Mr. Speaker, some people believe the Parliament of Canada is important. Some people believe that when there are important issues facing this nation it is not an excuse to get up and not talk about the problems that are facing the country.


An hon. Member:: Talk about the issue.


James McPhail Gillies: I will talk about the issue.


An hon. Member:: Talk about southern Ontario.


James McPhail Gillies: I will not see this parliament demeaned on an evening like this when we have a serious problem that presumably you haven't the intelligence to understand.


Some hon. Members:: Hear, hear!


James McPhail Gillies: We had a speaker get up and make a constituency speech. It is unbelievable for a minister to talk so naively about the economic problems of this country. I cannot believe it when I experience this happening in the Parliament of Canada.


Joseph-Phillippe Guay: Get on with your speech.


James McPhail Gillies: The hon. member opposite has a cabinet posting because he is the only Liberal who was elected from the province of Manitoba. Another indication of Alice In Wonderland was when the Minister of Finance (Mr. Chretien) indicated that the dollar is at the same level as it was last October. He seemed to ask what the problem was. The reason the dollar is at that level today is because it has been supported for two days. The government has gone to other countries in order to get support. The government has gone to the commercial banks and asked for SI,500 million to support the dollar. That is the problem with which Canada is faced. Where would the dollar be today if it had not been supported? That is the question which is really significant, important, and counts.
The rapid drop of the Canadian dollar in the foreign exchange markets is a symbol of the attitude other nations have about this country. It is an indicator of the true shape of the Canadian economy. Markets have no political values. The market reflects the decisions of hundreds of thousands of people all over the world in regard to the Canadian economy. People who have any interest in our economy are indicating that it is in trouble. That is not a political judgment. It is a judgment of the market. That is why the dollar is falling.
The dollar floats in response to the forces of supply and demand. The manner in which the forces of supply and demand operate depends upon the economic policies followed by the government. The economic policies of this government over the past few years have been disastrous. Our economic condition, as viewed by independent forces in the market, is very serious. It is appalling to see hon. members coming into
Finance
the Chamber and laughing. It is beyond any sort of comprehension.


Iona Campagnolo: What about the economists?


James McPhail Gillies: I have outlined the problems hon. members should speak about this evening. We do not need to talk about the problems of the economists.


John Allen Fraser: The hon. minister does not know anything about international economics.


James McPhail Gillies: Apparently the Minister of State for Fitness and Amateur Sport (Mrs. Campagnolo) is a marvellous addition to the cabinet. She seems to think that 1 Vi million people unemployed is no problem. The fact that the inflation rate is 10 per cent does not seem to matter to the minister. The Canadian inflation rate is almost as high as that of Great Britain. For years Great Britain was used as an example of how badly an economy could be operated. Our growth rate has slowed down, our retail sales are off, and the operation of our plant and equipment is at approximately 83 per cent capacity. What other indicators are needed?
Everyone around the world is asking why a rich country like Canada should be in such desperate shape. The resource rich countries of the world are getting richer, but Canada is not. How can that possibly happen? The answer to the question is obvious. It is the manner in which the economy has been managed. Our difficulties are not because of lack of resources or people. Our difficulty is the manner in which the economy has been badly operated. Consistently we have been running deficits.
The deficit of the federal government this year will be close to $10 billion. One should remember that ten years ago in 1968 the total budget of the government was $10 billion, and today the deficit is about that amount. A country can handle that situation as long as there is real economic growth. Canada is not experiencing any growth. Thus, Canada cannot continue to operate with the amount of spending that is taking place.
For the last few years the government was paying for the things it gained through inflation. We have been faced with a serious inflation rate. As any economist knows, the time comes when things cannot be financed any longer through inflation because people will not accept the currency. That is the situation we are facing in Canada. If our expenditures are to be increased, as was indicated in the estimates today, and if the government is not going to tax in order to pay them, there will be serious economic problems. That situation is made dramatic by the drop in the value of the dollar.
The government has had no courage to face up to reality. How long does the government think it can spend far more than it has in revenues? At some point the courage must be found to deal with the situation. Like other hon. members in the House, I have an interest in parliament and the history of Canada. What has happened? Is the government more interested in power than in solving problems? Is it afraid to tackle the tough issues before us at this time? Will politics always be

February 22, 1978
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placed before prudence in the management of the economy? Is there no situation more important than being elected? Is Canada not to adjust to the world economic situation?
The former ministers of finance, and in particular the hon. John Turner, were not willing to put any restraint on the economy. They were not willing to tell Canadians that major changes were necessary to take care of the problems. They were more interested in receiving political bows for finessing their way through difficult situations. The government cannot say that it did not know what was happening. The problems Canada is facing at the present time were not difficult to predict. Anyone could foresee that those problems were coming.
A year ago the hon. member for Qu'Appelle-Moose Mountain (Mr. Hamilton) pointed out that if the government insisted on following policies which would result in large deficits in the balance of payments, there would be a serious decline in the value of the dollar. When there is a large devaluation, there will be an enormous amount of inflation. Thus, our inflation rate was predictable. A great deal of that inflation is as a result of the devaluation which is being experienced at the same time. The net result of this situation is that in the eyes of the world we have a discredited government. That is being expressed by the manner in which the dollar has devalued during the last two or three days. There is no confidence in the economic management of Canada. If there were confidence, there would be no problem.


Mr. Anderson:: It is travelling.


James McPhail Gillies: It is not travelling. There is no confidence anywhere in the world in the economic management of Canada.
The great question is: why has our economic management been so bad? Part of the responsibility has to rest with the Department of Finance. Forecast after forecast they made has been wrong. The monetary policy of the Bank of Canada in the mid-1970's was disastrous. The increase in the deficits against the falling rate of growth has been lunacy and, as anybody could observe, would create enormous problems for the country.
For several years many members of the House have been calling for changes in the way in which we make economic policy. It should be open and it should have countervailing forces going. Almost every country in the world has a committee system which examines estimates in a meaningful fashion, or has debates on budget-making before the budget is brought down. These things are done before, not after the fact. But in Canada we still have a closed in, locked in way of making economic policy, and we have certainly seen the consequences of that.
We have heard a lot of talk about the first minister's conference which was held a week or so ago. The reaction of the world to that conference was rapid. As soon as people assessed what really happened at that conference and what the
[Mr. Gillies.)
federal government was really going to do, it was reflected in the money markets, and the dollar fell. You can say what you want about the conference, but the evidence is clear that the assessment of world money markets was that it failed because no hard policies were put forth at that time to deal with the situation we are facing in this country. There is no secret about those things; they are not hard to understand, but you have to take some action about them.
There is something unreal when you listen to the government members talk about the economic management of the country. Just before the first ministers' conference the government put forward its short term economic forecasts. They were ludicrous. The short term economic forecast is for declining inflation. At the same time that they are forecasting declining inflation, the dollar is falling. When the dollar falls, it means higher inflation. It does not make sense.
The government is talking about decreasing unemployment. At the same time it is talking about increasing investment. You cannot have increasing investment when you have increasing inflation. It is ludicrous to put forth proposals of that sort. That is exactly what the world markets have been saying about the conference and about the dollar.
An integral part of the operation of an economy in any country is confidence. You really cannot do much in a country if you do not have confidence in it. Indeed, without it almost any economic policy you put forth will be difficult to operate. It is interesting to note what people were saying about confidence in the Weimar Republic in the 1920's. We know what happened in the Weimar Republic because people did not have confidence in it. In the 1930's, until the inauguration of the first term of Franklin Roosevelt, no one had confidence. His admonition that "we have nothing to fear but fear itself', is, I suspect, more important than any economic theory because what the people in the U.S. needed at that time was some confidence. I say as seriously as I can that the way in which the Minister of Finance is managing our economy is destroying the underlying essential and most significant ingredient we must have to get this country moving again, that is, confidence.


Some hon. Members:: Hear, hear!


James McPhail Gillies: No one believes the things he says. The Minister of Finance is not like any other minister, and I say this with no pejorative connotation. He has to be careful about every single word he utters. He cannot have a wry sense of humour, because bankers in Switzerland may not know what he means. People read and listen to what the Minister of Finance says. If it becomes apparent that one cannot believe what he says or one cannot understand or make sense of what he is saying, then his credibility is lost, and with that goes the confidence in his economic management.
I say as seriously as I can that confidence in this government is shaken to its foundations so far as any economic aspects are concerned. I do not know whether the Minister of Finance can regain his credibility. You can laugh all you want, but I tell you that this is the most serious problem in the country today,
February 22, 1978

the lack of credibility of the government and the lack of confidence in what the Minister of Finance is saying. I tell you that confidence is shaken. Confidence in the government's economic policies is shaken, because it reverses itself. But those things work themselves out. What does not work itself out is the day-to-day trading operations of the exchange markets. Those dealers, whether the Bank of England, the Government of the U.S., or the trading banks in the U.S. markets, watch and listen to what the Minister of Finance is saying.
I say that no one could watch the performance of the Minister of Finance in the last couple of days and have confidence in the economic management of this country because the minister literally said today that the Government of Canada was not intervening in the market and what they are doing is normal. But the last time they did what they did yesterday was ten years ago. Yet he is trying to say this is a normal sort of operation. To put forward such a proposition is ludicrous. There is nothing really secret about it. There is nothing secret about trading in exchange markets. These are transactions and people know what is going on. For the Minister of Finance to say that the Bank of Canada did not take defensive action to support the dollar destroys the credibility of that minister and confidence in his management of the economy. He had to know and, if he did not know, then he should not be doing the job he is doing today.
In his book "The Great Crash" professor Galbraith of Harvard points out that in the years 1927-1928 one of the most disastrous things that was happening was that the statements being made by responsible officers about the economy were not taken very seriously.
The Government of Canada is mistaken in its policy if it thinks the devaluation of the dollar will cure its problems. As the Conference Board in Canada stated today, no country can solve its problems by devaluing its currency. You become trapped in the devaluation inflation cycle, and then you have to do something about it. There is no evidence that this government is about to correct the situation.
I say, with as much seriousness as 1 can command, that what this country really wants is not more platitudes or political footwork on the part of the minister. What the country wants is honesty and candor. Why can the Minister of Finance not stand up and say "Look, we have this serious problem and we are trying to deal with it. We are willing to take you into our confidence"? The Canadian people have responded to very serious situations in the 110 years we have existed, and we can respond to another one. But Canadians cannot respond if they do not have confidence that they are being told the truth and that they are being told openly about our economic problems, that they are not having these foolish propositions put forward but are asked to search for solutions together with the government.
The decline in the value of the Canadian dollar is quite clearly a question of confidence and credibility. The lack of confidence in the minister and in the government is apparent, but I do not think there is lack of confidence in Canada. I
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think people around the world are mystified that the Canadian situation should be as it is today. What people really want is a government which will do something about these serious problems. If the government and the minister would forthrightly, openly and honestly come forward and explain the realities of the economic situation to the Canadian people and take them into their confidence, I am sure we could handle the problems we have right now.


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


Hugh Alan Anderson: Mr. Speaker, I have listened with great interest up to this point, and there have been some very worthwhile contributions. I thank the hon. member who spoke before me for the sincerity and honesty he displayed. Unfortunately, many members of the opposition tonight have not addressed the problem, or given any solutions.


Lincoln MacCauley Alexander: Let's hear what you have to say.


Hugh Alan Anderson: I have listened quietly this evening, and I hope hon. members will do the same while I am speaking.
In his statement this afternoon the leader of the Opposition (Mr. Clark) referred to the high cost of maintaining the dollar. The financial critic of the Conservative party stated that $100 million a day was being drained out of Canada. I wonder if he can table any document to show that that is the correct figure. If he does have evidence to substantiate that, I hope he will provide it to the House because I do not think that figure is correct. Until he can substantiate that figure, I think we are talking about a straw man.
There is no question that in October of 1977-the Minister of Finance (Mr. Chretien) advised the House of the creation of a $1.5 billion stand-by fund. That was not something thrust upon us today. It is not something about which none of us has been unaware. At that time the minister said that he was not pegging the Canadian dollar but he wanted to maintain an orderly floating of it. I do not have to hear what the minister said five, six or seven times. He was talking about an orderly Canadian dollar on the market, which seems reasonable. If we had not set up a fund to have an orderly marketing of the Canadian dollar, I suspect that the opposition would stand up and ask why we had not created such a fund, why we were allowing ups and downs, and why we were allowing speculators.


An hon. Member:: I can't stand it.


Hugh Alan Anderson: I am sorry the hon. member has to leave. When the government does something, it is criticized; and when it does not do anything, it is criticized.
There is no question that in the last 14 months the Canadian dollar has gone from $1.03 American to 89 cents American. To be exact, the drop is 14 per cent. I wonder if hon. members opposite have considered that the U.S. dollar has declined 50

February 22, 1978
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per cent against the Swiss franc, 34 per cent against the Japanese yen, 31 per cent against the West German mark, and 21 per cent against the British pound. Perhaps the opposition should be telling the American Congress and the American Senate that they face a crisis, an economic emergency. The figures I just related, 50 per cent and 34 per cent, perhaps do not look as bad as our 14 per cent against the American dollar. The difference between Canada and the United States is that in the American Congress and Senate there is no great worry about the economic future of the United States. Those bodies do not cry wolf every time the American dollar goes down a few percentage points against the Swiss franc, the German mark or any other currency, because they know there is strength in their economy, that economies rise and fall, and that dollar values go up and down.
Opposition parties would have us believe that we have an unusual situation in Canada and that this situation is not in existence throughout the world. The hon. member for Don Valley (Mr. Gillies) says we have nothing to fear but fear itself. I agree 100 per cent, but do all hon. members opposite believe that? Not from what I heard tonight. What 1 have heard tonight has been nothing but gloom and doom. Hon. members opposite are experts on that. By no stretch of the imagination is there any group which could be put together in any room and find as many faults with Canada and so little right. However, the opinion of hon. members opposite is not the opinion of the people of Canada.
There is no denying that the 14 per cent devaluation of the Canadian currency has had an effect on our economy. This devaluation has also had an effect on our most important trading partner, the United States. We do approximately $70 billion worth of trading back and forth, but not one hon. member opposite has stated what this 14 per cent means. Looking at it another way, Canada has erected a 14 per cent tariff on goods coming from the United States. By the same token, goods going to the United States have a reduced tariff of 14 per cent. I am not saying that devaluation is the greatest thing since green cheese, but it has made our goods more competitive on the American market, and American goods more expensive on ours. I am not arguing that there should be an 89-cent dollar.


An hon. Member:: What are you arguing?


Hugh Alan Anderson: However, if hon. members opposite do not like an 89-cent dollar, do they want a $1 dollar? Do they want a $1.03 dollar or a $1.05 dollar? If the present situation is a crisis, are hon. members opposite saying that it is beneficial to have a Canadian dollar at $1.05 pegged to the American dollar? Are they saying that it would be even more beneficial if our dollar were worth $1.25 compared with the American dollar? If they do not like it where it is, where do they want it? If they do not like the free system, do they want the dollar pegged? There has not been one hon. member opposite who has addressed the question that the opposition itself has raised.


Some hon. Members:: Hear, hear!


Hugh Alan Anderson: Time and time again I have heard hon. members opposite complain, but they have no solutions. I am used to that, but the subject they raised tonight is very narrow and precise. The Leader of the Opposition spoke for 20 minutes, but said nothing. If he had written a speech like that for the former leader of his party, he would have been fired.
The Leader of the New Democratic Party (Mr. Broadbent) spoke about the federal-provincial conference. I am not exactly sure what that has to do with the motion, but I hope hon. members opposite who speak later in this debate will say at what level they think the Canadian dollar should be in relation to the American dollar. If they do not like it where it is, where do they want it, or do they know?


Lincoln MacCauley Alexander: Your speech is better than the minister's, anyway.


An hon. Member:: Say something.


Hugh Alan Anderson: Hon. members opposite do not like being at the receiving end of catcalls and criticism, and I do not think they will get a chance to be criticized as a government. But I hope they can stand being criticized as an opposition because it is give and take on any day in the House.
Only a few months ago I was in the Fraser valley and I was talking to a group of people in the agricultural business. Those people said they were being forced out of business because of products coming from the United States. They asked the federal government to give them a 15 per cent tariff on vegetables and fruit coming from the U.S. I told them we had already done that. We did not put it in by legislation, but with the devaluation of the Canadian dollar.


John Allen Fraser: Would the hon. member accept my question?


Hugh Alan Anderson: Will he wait until I have finished my speech?


John Allen Fraser: I might point out he has been asking a lot of questions, and I would like to ask one.


The Acting Speaker (Mr. Turner):: The parliamentary secretary refuses to answer a question at this time. He has indicated he will answer it if he has time at the end of his speech.


Hugh Alan Anderson: Mr. Speaker, 1 have no objection to a question from the hon. member. I indicated that I would do it at the end of my speech. I do not want to take time from my speech listening to his questions.


John Allen Fraser: The question is not the problem; it is the answer.


The Acting Speaker (Mr. Turner):: Order, please. The hon. member for Vancouver South (Mr. Fraser) on a point of order.


John Allen Fraser: I just want to point out, Mr. Speaker, that I am quite sure-

February 22, 1978


The Acting Speaker (Mr. Turner):: Order, please. The Parliamentary Secretary to the Minister of Fisheries and the Environment (Mr. Anderson) has the floor, and I will go to the hon. member for Vancouver South at two o'clock in the morning if he wants to stay.


Hugh Alan Anderson: Mr. Speaker, I am amazed that a fellow member from British Columbia would interrupt a speech concerning British Columbia. I hope that he will allow me to finish the remarks I was making.
There is no question that British Columbia, the province which I am proud to come from, is a resource oriented province. There is no question, on the other side of the coin, that we know that having a devalued dollar does increase the price of goods. Not one person on the opposition side has ever brought up the point that if goods coming into this country are costing more, why buy them? Buy Canadian! The premiers of the provinces got this message. Why do you not understand it?
It may sound like a spurious point, but the consumer realizes it is to his advantage to buy Canadian if the price of goods coming in from the United States or any other country goes up. If the price of bananas goes up because of a lower Canadian dollar, maybe we should buy Okanagan apples. I do not find anything wrong with that.
I know the hon. member for Hamilton West (Mr. Alexander) would like me to wind up my speech, but I am speaking the truth. You are not forced to buy one thing or another. I would hope that one of the messages brought across Canada by myself and by other hon. members of this House is that it is time to look at where goods originate. If we buy Canadian, we create Canadian jobs. We create security for those people buying Canadian goods. I would hope for the hon. member for Hamilton West that we buy Canadian steel.


Lincoln MacCauley Alexander: I hope we get some of the pipeline.


Hugh Alan Anderson: I would like members on both sides of the House to make that message clear that it is to our advantage to buy Canadian goods. Members who have brought up the fact that it is inflationary are correct if one purchases imported goods. If the price of coffee goes up because of the devalued dollar, you do have that right to choose whether you will purchase coffee or not.
I realize economics is not a strong point in the New Democratic Party. However, there is a discretionary power in our economy. With the devaluation of the dollar we have a breathing space. If we use that breathing space wisely we must try to become more competitive in our industries. The resource industries cannot continue to provide a surplus of trade balance in the Canadian economy. The breathing space is there. If we do not use it wisely we know some of the consequences that may happen.
The question was brought up earlier regarding the situation of the Canadian dollar being higher than the American dollar. I hope hon. members realize that a majority of those dollars were coming in from the United States through provincial and municipal borrowing, for example the James Bay, B.C. hydro,
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and other large projects. These projects were the main stimulus to an overly inflated Canadian dollar.
It is rather unique that if we borrow more from the United States our Canadian dollar would go up in value and we would be more in debt. If we borrow less from the United States, our dollar goes down. If the hon. members in the opposition would address themselves to that question, and while they are saying there is a crisis, are they basically suggesting that we should return to the artificially high Canadian dollar which was caused by provinces and municipalities borrowing in the American market? This occurred several years ago. If you do not like the dollar where it is, there is a way to get it up again.


An hon. Member:: Change the government.


Hugh Alan Anderson: One of the basic things that has destroyed confidence in the Canadian dollar and the Canadian economy is the takeover of the potash industry in Saskatchewan. That amazed the financial communities not only in the United States but throughout the world. This was an industry that was socialized and nationalized, taken over by the Saskatchewan government. The leader of the New Democratic Party who, I understand, is a graduate of the London School of Economics, surely must realize what effect that wrought on the international markets.
We had a New Democratic government in the province of British Columbia and, in the wisdom or non-wisdom of that government, the former premier decided that he would put a super royalty on minerals. This industry has not recovered yet and it will be a few years before confidence in the British Columbia market will return.
I am sure that the hon. member for New Westminster (Mr. Leggatt) will be rising to his feet in a few minutes, and I will listen to him with great interest. Markets do change and are affected by the actions of governments, especially when they nationalize industries or set artificially high royalties. If the hon. member for New Westminster wishes to debate that, he will have a chance to contradict the statement that actions by the NDP premier of British Columbia affected the mining industry in that province.


Stuart Malcolm Leggatt: Absolutely correct.


Hugh Alan Anderson: If he says that, Mr. Speaker, I will excerpt his statement and send it back to British Columbia because there are a lot of people in the mining industry who, I am sure, will be writing letters to him.
There is no question in most member's minds that the devalued Canadian dollar is not the cause of our problems, it is resulting from problems in our economy and is reflecting them. The devalued dollar is a barometer showing us various things, including the fact productivity is not on our side at this moment.
As I said, this is a breathing period, a period when we can catch up and get our house in order. It will not only require the

February 22, 1978
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co-operation of the provincial governments, but of the municipal governments and the Canadian people. It may not be the easiest two or three years, regardless of what government is in power.
It will require one other thing. I say this with all sincerity. If the opposition parties sincerely believe in our Canadian style of government, our Canadian way of life, and believe that this country has a future, the way to express that is not to say that we are on the edge of an abyss.


The Acting Speaker (Mr. Turner):: Order, please. I regret to interrupt the parliamentary secretary but his allotted time has expired.


Harvie Andre: Mr. Speaker, this afternoon we were treated to the annual medicine show by the President of the Treasury Board (Mr. Andras). At that time I did not know it was only the matinee performance. Tonight we have the comedy acts. The hon. member for Comox-Alberni (Mr. Anderson) would have us believe the devaluation of the Canadian dollar is a marvellous thing. Now we can buy Canadian bananas cheaper than foreign bananas, and Canadian coffee cheaper than foreign coffee. It sounds as though it was a master plan by this brilliant government.
One can, of course, forgive the hon. member. He has been taking notes and learning from the Minister of State (Fitness and Amateur Sport) (Mrs. Campagnolo) who had the same thesis. They think it is wonderful that our dollar is being devalued. They believe it is having a marvellous impact. Listening to their speeches, one would think that if we could get the dollar down to a nickel, we would all be millionaires, flooded with Canadian coffee and bananas and other good things.
It is funny in one sense, but tragic in the other. It is not so tragic in terms of the hon. member for Comox-Alberni or the Minister of State (Fitness and Amateur Sport) because they do not really matter a hill of beans with regard to what happens there or anywhere else. However, it is tragic in terms of the Minister of Finance (Mr. Chretien). During the debate tonight he contributed absolutely nothing in terms of plans, policies, programs, or even an acknowledgement of the seriousness of this crisis.
In his opening remarks the Leader of the Opposition (Mr. Clark) asked the Minister of Finance five very important questions. I will repeat them. When were the banks formally or informally advised as to the government's intentions to draw down the line of credit? What will the rate of interest be on the borrowing and what will be the means of repayment? When will be the time of repayment? Was the minister advised, did he consent, or was he asked with regard to the Bank of Canada's action which started Monday afternoon? What level will the dollar not fall below? What is the dead bottom level at which time the government will step in?
Those five very reasonable and important questions were put by my leader because of our interest and concern in this question. What did we get in return? We got flim-flam from the Minister of Finance. He either does not understand the

crisis, does not care about it, has no respect for the House of Commons and the people of Canada, or was simply making his contribution to the evening performance of the medicine show.
The Minister of Finance told us there is no crisis. He used specious arguments, picking selective dates to indicate there is no crisis. Previous speakers from my party, the hon. member for York-Simcoe (Mr. Stevens) and the hon. member for Don Valley (Mr. Gillies), demonstrated the ignorance of the argument put forward by the Minister of Finance.
There is a serious crisis, a crisis of confidence. The international money markets are saying they have no confidence in the Canadian dollar. That is the message of the slide.
The Minister of Finance says the Bank of Canada has been intervening to keep an orderly market. Well, Mr. Speaker, when you intervene to the tune of $1 billion, $500,000 in the month of February alone, it is not to keep an orderly market. It is to prop up the dollar.


Walter David Baker: It is a salvage operation.


Harvie Andre: Yes; not keeping an orderly market. When you are keeping an orderly market, you are buying and selling in order to remove fluctuations. You are not continually using our reserves of foreign currency, currency which the Bank of Canada cannot print. They can print Canadian currency and use that to finance this government's operations, but they cannot print foreign currency.
They have run out of foreign reserves. We have had to go to the international money markets to make use of the bank line of credit. Now we have to borrow abroad. That action by the Bank of Canada, necessary though it may be, is not a solution to the problem. It is a dressing, merely a band-aid. It may stop the hemorrhage, but it will not heal the wound.
This crisis of confidence will not go away as a result of this type of intervention. It will not go away as a result of current economic plans by the Minister of Finance and this government. It certainly will not go away as a result of the minister ranting and raving irrelevant and erroneous critiques about suggestions made by members of my party.
The international money markets are telling anyone who cares to listen the same thing the American money markets told the city of New York two or three years ago. The international money markets are telling Canada, "Your house is in disorder. We do not have confidence you are managing your affairs. Get your affairs in order." That is the message and that is the crisis in confidence that is occurring. Only a ship of fools would ignore a message like that. It is tragic that this ship of fools who are guiding the ship of state at this time refuse or are unable to heed this message being directed at them by the international money markets.
You do not have to search too far in the Canadian economy to find this. The Canadian dollar is being devalued with regard to foreign currencies in exact proportion to the degree of inflation in Canada with respect to these foreign currencies.


Some hon. Members:: Oh, oh!

February 22, 1978


Harvie Andre: Look at the figures. The Parliamentary Secretary to the Minister of Finance (Mr. Lumley) is so busy running around protecting the Minister of Finance that he has not had time to do some simple research. The fact is those countries which have low inflation have the strongest currencies, and those which have high inflation have the weakest currencies. It makes sense.
Through our policies we are devaluing and discrediting our dollar at a rate of 9 per cent. We are debasing our own currency. Who wants to hold on to a currency being debased at 9 per cent a year when they can hold on to a currency which is holding its value? You do not need a Ph.D. in economics to figure that out. Even a country lawyer like the Minister of Finance should be able to figure it out.
Then what is the cause of inflation, Mr. Speaker? Let us consider what a big city lawyer says it is. The big city lawyer says you can never spend more that you have, otherwise you have endless inflation. Mr. Speaker, that big city lawyer was the Prime Minister (Mr. Trudeau), as reported in Maclean's magazine of October 20, 1975, if the Parliamentary Secretary to the Minister of Finance cares to look it up.


Mr. Lumley:: I will go out and check on that.


Harvie Andre: He says if you spend more than you take in you have endless inflation. So what is that big city lawyer doing with the government for which he is responsible? Last year that big city lawyer, who says if you spend more than you take in you have endless inflation, and who previously had wrestled inflation to the ground, was responsible for his government spending $44,450 million. That government only raised about $36 billion so it spent $9 billion more than it raised. Of course, it got that money by turning on a printing press across the street in the glass tower. It debased the Canadian dollar, and now international money markets are saying they want to hold on to something more stable, like the Swiss franc or the German mark. And that is what they are doing. Even a small country lawyer could figure that out and should be able to do something about it.
That is the root of the crisis in this country, Mr. Speaker. That is the problem that has to be addressed and the problem that this government refuses to address because it would take political courage to attack government spending in a vigorous way. Not only do they lack courage to attack the problem but they attack vehemently every positive suggestion put up by our side, even it they have to distort what we say in order to create a strawman at which they can flail. It is irresponsible behaviour.
Government spending is totally out of control. The annual increase in expenditures from the year this government took office until now is 11 per cent, 11 per cent, 14 per cent, 7 per cent, 23 per cent, 28 per cent, 18 per cent, 10 per cent, 18 per cent, and this year it is 13 per cent. With that kind of cancerous growth in spending it is no wonder that revenues have not kept pace. I wonder if the House and the country are
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aware that even if the government raised income taxes in order to meet the deficit of last year, it would have to raise them by a full 50 per cent. It certainly will not do that, but it does not have the courage to cut back on spending either. The $9 billion has to come from somewhere, so it has been borrowing part of it, and printing money to cover the other part. The only problem is that it has to be paid back.
Last year the interest on previous debts amounted to nearly $7 billion. That is more than the annual expenditures of the Pearson government. We spent more money on interest on the debts of this government than the Pearson government spent in total.
We are now borrowing money to pay interest on money borrowed earlier. On and on it goes. With that kind of operation it is no wonder the international money markets are saying they do not want to hang on to our dollars but want more stable dollars. Small wonder our dollar has fallen to 88 cents, and pressure is still building.
All the loans we can get from banks and offshore sources are not going to solve the problem. They may enable the government to survive until an election, however. The problem of an uncontrolled economy that is spending at cancerous rates has to be tackled, and this government refuses to do that.
I would refer the Minister of Finance to the debate on February 2 as he was not present at that time. This party put forward four concrete proposals to aid the government in addressing the problem of government spending. They were positive proposals, and the government would be well advised to adopt them.
I plead with the government to try to bring things under control because this is truly a marvelous country. We are blessed as is no other industrialized nation. We have great resources, a highly educated population, and a well developed infrastructure. We have all that is necessary to give this country a future that no other country can dream of. The only thing wrong is the continuation of the stupid, ignorant policies of this government over the last few years. As the Liberal party said in the election campaign of 1972, "The Land is Strong". We agree, Mr. Speaker. The land is indeed strong, but it cannot endure this kind of mismanagement forever, and the time has come to take corrective action.


Some hon. Members:: Hear, hear!


Max Saltsman: Mr. Speaker, in the early part of the evening it looked as though we were going to get into a great big brawl. Fortunately, it deteriorated into a debate-but this debate is becoming curiouser and curiouser. As my friend, the hon. member for Regina-Lake Centre (Mr. Benjamin) would say, "I am just a little old country boy and there are some things I do not understand." I am trying to understand, Mr. Speaker: I am a little old country boy from Waterloo-Cambridge.
What I do not understand is that speaker after speaker from the Liberal side of the House has defended the devaluation of the Canadian dollar and said how curative the whole process

February 22, 1978
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has been. It seems as though they were overwhelmed with their success and worried that it might become too much of a good thing, so they stopped it. "The dollar is dropping, and that is a good thing," they seem to say, "But we have to stop it." That approach is difficult to understand.
I see that my friends on the far right are smiling. I suspect they are rather supportive of the proposition 1 have put forward. But, Mr. Speaker, I find their position to be even curiouser. I have been trying to assess it. My very distinguished friend, the hon. member for Don Valley (Mr. Gillies), was haranguing the government, accusing it of not taking the House into its confidence. I think he was right: there should be confidence in the government. I have been listening very carefully tonight to a series of excellent interventions from this side of the House, waiting to learn the position of hon. friends to my right. I am in a very tough position because, I am just a little country boy.
I want to speak about the Conservative position, but I find it difficult because I cannot discern what their position is. In desperation, I may have to ask our favourite country lawyer who is occupying the exalted position of Minister of Finance (Mr. Chretien). 1 am sure he understands the Conservative position. I wish-just as the Conservative party wishes-with great sincerity that the government would take them into its confidence, and I wish the Conservative party would take the House into its confidence by explaining just where it stands on this issue. Do those hon. members want the dollar pegged, or do they want it to float free? That is a very simple question.
It is very difficult to understand the problem. Let us get back to the shakers and the movers in this House. Let us get some of the irrelevancies out of the way of what is a really a very important and serious discussion. First of all, it is suggested the Minister of Finance should come to the House and take us into his confidence regarding what he intends to do about the Canadian dollar. There is no way that this is important to this debate-that is, whether the Minister of Finance does that or not. As a matter of fact, if the Minister of Finance were ever to leak that kind of information, we would insist that he be thrown out of office. The last thing in the world a minister of finance is supposed to do is tip off the government's intentions respecting its currency exchanges. Let us get that suggestion out of the way.


An hon. Member:: Hear, hear!


Max Saltsman: Let us get that matter out of the way, because it is not important to this debate.
Is there a crisis? There has been a crisis for a long time, and it is difficult to know whether one crisis is worse than another. It is like watching a punch-drunk fighter: you can hit him a couple of times and he does not even feel it. That is the position the government is in: it has been in a continuous crisis for a long time. To use hyperbole, this is the worst crisis we have ever had-but we have had the worst crisis we have ever had every day for a long time.

The other question is, what is the government doing? The government is talking about trying to even things out. The worst possible thing the government could do, in my opinion- if it believes in a floating exchange rate and is committed to that and realizes the Canadian dollar has to be devalued-is to intervene in the market. If you want the gnomes to step in and speculate against the Canadian dollar, this is the way to do it: that is really the way to accomplish it.
I do not know the special circumstances. I do not know what the governor of the Bank of Canada said to the Minister of Finance to persuade him to do this, but it seems to me he has taken absolutely the wrong course. A lot of problems are associated with devaluation. There is no doubt it had to happen; and it had to happen because the government failed in its responsibility to do anything else.
Over the last period of time the government had one of two options, and only one of two. It could have stimulated the economy to full employment through positive government measures; it could have listened to my leader who has been talking about capital projects: he has been saying for a long time that, rather than putting people on unemployment insurance, the government should find jobs for them. Now is the time to do something about railway debts; now is the time to look at the possibilities of Fundy power; now is the time to consider future energy sources. There are a lot of things to do in Canada. That was an option the government had to deal with-unemployment. The government failed to deal with it; it failed to use the authority and responsibility entrusted to it to get Canadians back to work. Because it failed, the international community had disciplined the government. You can fail only up to a point, and then the chickens come home to roost-and they are roosting now.
This is going to be a corrective measure, but a painful, corrective measure. It is not a corrective measure that should be stopped. The government is to be faulted for stepping in at this time, trying to intervene in the money market. While we may not pay for this over the next month or so, what this policy will do is create a state of speculation against the Canadian dollar. That is just what the gnomes like; that is just what they want: they want to know they are being protected. If the dollar is not protected, you have one gnome speculating against another. When the Canadian government says it is going to intervene, they can speculate against the Canadian dollar without too much fear of losing out. After all, the government of Canada is protecting them to some extent.
Our dollar has been too high in relation to other currencies. This has been costing us jobs. This is not the time to go into the reason our dollar has been too high, but obviously it has been too high and had to drop. When the dollar drops, one does not go out and find a gibbet for the nation. As a matter of fact, the United States dollar, vis-a-vis other currencies, has been dropping even more substantially than our dollar. In fact, what other countries have been doing is not dropping their currency-and that is what the United States have been complaining about in relation to the behaviour of the money markets of Germany and Japan. They have been dropping

February 22, 1978

their currencies too low and, therefore, have been operating at an advantage in terms of world trade. The United States has been insisting that Japan and Germany revalue upward so that they more truly reflect the currency position as against the currencies of other countries.
What appears from the determination to intervene at this time is that it is all part of an election psychology. It seems quite clear that there is to be an election. I wonder whether, in fact, the government would have intervened at this time if that were not the climate or the mood of the country.
The unfortunate aspect of the government's willingness to behave as it has is that it knows, or should know, that the most serious problem facing this country is unemployment. This is an absolutely disgraceful situation facing this country, yet for some reason the public does not perceive unemployment as a most serious problem. The public can be persuaded by all kinds of headlines and by the kind of debate we have heard from our friends to the right-and from Liberal members as well-that the real problem is in relation to the integrity of the dollar, as though that means anything. What does mean something is the number of jobs available. That is what really means something-not the mercantile view that you have gold in the vault and money in the bank. We had plenty of gold in the vault and money in the bank during the great depression, but that did not mean anything because there were no jobs for the people.
This government, at political risk, thought it was better- rather than putting people back to work,-to put some cosmetics on the Canadian dollar which the government itself felt should be lower in relation to other currencies. This is a kind of justice from above. There is a great article in today's Citizen by Charles Lynch. The circumspect hon. member for Nickel Belt (Mr. Rodriguez) took away my article by Charles Lynch; however, I will see if I can do justice to Mr. Lynch. The trouble with reporters like Charles Lynch is that they hang around the press gallery for too long and become memories. They remember things, but what they are remembering is 15 years ago when the Liberal party sat on this side of the House and laughed like crazy at the Conservative party, which was on the other side, for devaluating the Canadian dollar.


An hon. Member:: The "Diefendollar".


Max Saltsman: Yes. And the Liberals campaigned on that and persuaded the Canadian people that the world was coming to an end and the sky was falling because the first thing the Conservative government had done wisely for four years was to lower the value of the dollar. We now have the same play and the same repertoire. We have a road show with an out-of-town cast of players. We have the reverse of the previous position. I think there is a kind of poetic justice here. 1 say to you, Mr. Minister and through you, Mr. Speaker, that if you get tossed around a little bit, if you are punch-drunk and your head is ringing, you have it coming to you. You have it coming to you and they have been waiting a long time for it.
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Charles Lynch is always around to remind the government: he never forgets anything. Some provinces did not go to the minister; some behaved foolishly: they borrowed money in the United States because interest rates were lower- The money was available in Canada, but the interest rate was higher. When provinces did that, they took a risk. I have used up enough of my time talking about Charles Lynch; 1 have given him more glory that he is entitled to.
Was it the provinces? Was it the fear of repatriation of dividends? The Minister of Finance should answer these questions. If he were frank, perhaps we would feel differently about the action he is taking. No explanation has been put before the House. Was it pressure from other countries? I suspect that it was. Was Canada becoming too competitive? I suspect that it was.


Joseph Jacques Jean Chrétien: No.


Max Saltsman: Currencies in other countries of the western world have gone down too much. They did not want that position; they were worried about it.


Joseph Jacques Jean Chrétien: Mr. Speaker, with the permission of the hon. member, I can reply to that question. There was no pressure from anyone. 1 discussed that matter with my advisers and the governor of the Bank of Canada.


Max Saltsman: I have no reason not to accept what the minister says at face value. Whether there were any direct discussions or not, it was forced on Canada. The Diefenbaker government, in 1962, paid a price for the rescue operation of the Canadian dollar. It was to go on a fixed exchange rate. That was forced on Canada; it was not wanted. There has been pressure on Canada not to be on a floating exchange rate and not to allow its rate to go too low. I am sure those views are taken into account in the Department of Finance.
A few days ago, when the minister was before the Standing Committee on Finance, Trade and Economic Affairs, I accused him of living in a fool's paradise when he told the committee that the inflation rate in the 1980s would be 3.5 per cent. That was commendable, but unrealistic, especially after one considers what people in other countries are indicating; that is, that the inflation rate cannot be brought down below 6 per cent. Given the past history of this government, it would be surprising if the government brought it down to 3.5 per cent.
This government is determined to live up to a silly projection which has very little basis in fact: it is little more than a pious hope. The government refers to this as a real figure; then it attempts to twist and distort the economy on a Procrustian bed in order to make it fit. The consequence is that the people whose arms and legs are stretched are the unemployed, while the government pursues a goal which cannot be reached.
Devaluation has a price. Nothing is costless. The price paid for devaluation is that the dollar falls, exports are improved, imports are reduced, the cost of living is raised and inflation is contributed to. While it has a positive effect on employment, it

February 22, 1978

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has a rather less than positive effect on inflation. The government cannot have it both ways. It has to choose whether it will attempt to make its record on a reduced level of inflation at the cost of keeping more people out of work, or whether employment will be looked upon as the most important objective of public policy at the same time as living with a somewhat higher rate of inflation than it wants.
Hon. members of the New Democratic Party have made a decision. The decision was not easy to make, because something wanted is traded off for something needed. There is nothing more important than putting the 1.5 million unemployed Canadians back to work. A price has to be paid for that and the level of inflation will be somewhat higher. Perhaps the government will have to eat humble pie. That is better than 1 Vi million people remaining unemployed. The New Democratic Party does not like the idea of the devalued dollar: we would rather see a full dollar and full employment. If the choice is to let the dollar fall in order to create more employment, then we are prepared to do that.
I would like to hear the government suggest something constructive, rather than just saying that everything it does is correct and everything the official opposition does is wrong. There should be an evaluation of the kind of costs; then there can be debate and the people can be asked to assess what they want. They would know the prices they are required to pay and the advantages they would receive. No advantage comes without a disadvantage. The government has been asking the opposition where it stands. In straightforward terms, the New Democratic Party stands for full employment. Whatever has to be done should be done.
Devaluation does not hit everyone the same way: the poor do not consume imported goods to the same extent as the rich. At a time when the country has to make sacrifices to put people back to work, we should be concerned about jobs and how the poor are affected. The poor are not able to buy imported stereos or to take trips to the Caribbean. That is the kind of trade-off the country should be willing to accept.


An hon. Member:: What about Canadian travel?


Max Saltsman: If public policy encourages Canadian travel, it is a good thing. There is a need for more frankness in this kind of debate. I criticize the government because it wants it both ways. It wants devaluation, it talks about the benefits of devaluation, and then for some reason it decides it will not go through with it. I think that is wrong, and it has not been explained to the country.


Mr. D. M. Collenette (York East):: Mr. Speaker, it is a great pleasure of me to take part in the debate this evening, but before I get into the subject matter of the motion under Standing Order 26 I should like to make a few remarks directed toward the hon. member for Don Valley (Mr. Gillies) who spoke about an hour or so ago. He launched into one of the most virulent and vitriolic attacks I have heard on an individual member of the House, namely, the Minister of State

for Fitness and Amateur Sport (Mrs. Campagnolo). He criticized her for being a good constituency member. I can tell the House that the hon. member for Don Valley cannot hold a candle to the efforts of the minister.


An hon. Member:: Do you want to be her parliamentary secretary?


Some hon. Members:: Tell us about Sun Life.


David Michael Collenette: Our position on Sun Life was morally defensible, I think, and one which did a lot for the cause of national unity in this country. But where was the Conservative party and where was the Leader of the Opposition (Mr. Clark)? Anyway, we do not want to get into that this evening.


Some hon. Members:: Oh, oh!


David Michael Collenette: What we have here this evening is a debate called by the Progressive Conservatives, and of course the NDP, to boost their sagging popularity, to show their concern, and to get headlines.


David Michael Collenette: It is true. Look at the Gallup polls. The P.C. party is going nowhere and they are becoming desperate.
1 also take exception to some of the remarks of the Leader of the NDP (Mr. Broadbent). My colleague, the hon. member for Comox-Alberni (Mr. Anderson), made reference to the fact that the hon. member for Oshawa-Whitby attended the London School of Economics. He was one of my professors at the university about ten years ago.


David Michael Collenette: I did not realize what was wrong with his kind of econo mics until I came to the House, as was pointed out by some of my colleagues.
Let us talk about the declining dollar and the economic situation in this country which has brought about the decline in the dollar. I believe that the dollar drop should not cause that great an alarm. A 90 cent dollar, as the Minister of


Some hon. Members:: Oh, oh!


Some hon. Members:: Oh, oh!


Steve Eugene Paproski: So that is the connection! Now we know.


David Michael Collenette: No, Mr. Speaker. I speak as one of the neighbours of the hon. member for Don Valley in metropolitan Toronto. He also ridiculed the Minister of National Revenue (Mr. Guay) for being the Liberal member from Manitoba. But he did not look around at metropolitan Toronto to see what happened to the Conservatives in that city when one of his colleagues, one of the only two Conservative members, namely, the hon. member for High Park-Humber Valley (Mr. Jelinek), is steering away from Toronto and going to Oakville where they do not want him. Let the hon. member for Don Valley remember the glass house in which he lives before he casts stones at some of the members on this side. I am sorry, Mr. Speaker, but I felt compelled to make these remarks because they came up in the cut and thrust of the debate this evening.

February 22, 1978

Finance said on a number of occasions, better reflects our trade relationship with the U.S. We should look at one reason which has not been explored fully this evening, although the hon. member for Waterloo-Cambridge (Mr. Saltsman) alluded to it. We are all aware that U.S. multinationals control a great deal of our economy, 1 believe about 85 per cent of our oil and gas industry, and 60 per cent of our manufacturing industry. Because of this extensive U.S. control, much Canadian money is being transferred to the U.S. in the form of interest and dividend payments. Interest payments are necessary because there is much borrowing in the U.S. for Canadian purposes, or at least there has been. Dividend payments are necessary because many U.S. companies operating in Canada are only listed on the New York stock market.
This extensive flow of Canadian dollars into the U.S. is increased by the fact that Canadian tourists spend more in the U.S. than U.S. tourists spend in Canada. Although we have a surplus of trade with the U.S., it is not sufficient to cover this services account deficit.
A year ago our interest rates were 4 per cent higher than those of the U.S. This higher interest rate attracted U.S. capital into Canada for safe investment. This capital more than balanced the deficit we have from interest payments, dividends, tourism, etc. Hence, our dollar was worth more than the U.S. dollar, about $1.03. Today the U.S. has raised its interest rate so that there is only a 1 per cent point spread between the rates in the U.S. and Canada. This has had the effect of drying up U.S. currency flowing into Canada. As we have switched from an over balanced account to an under balanced account, our foreign exchange reserves are low and the dollar hovers at 90 cents U.S.
To display confidence in the dollar, the Bank of Canada has borrowed on the open market. In case it slips too low, the bank can support the dollar by buying up Canadian dollars from the U.S., as it has done in the past few days.
Interest rates are a valuable tool for controlling the national economy. A high interest rate set by the central bank will discourage inflation by encouraging investment from speculative channels into long term yields. Hence, Canada's relatively high interest rate is part of an intentional policy of the central bank to keep inflation down.
Throughout the time our dollar was high, foreign borrowing exacerbated the foreign capital surplus. Lending rates were lower in the U.S. and provincial governments were borrowing extensively in New York, Zurich, and throughout the world, in fact perhaps too much. This borrowing increased the flow of U.S. capital into Canada and kept the dollar high.
Having mentioned this one aspect, which I believe is a new aspect in tonight's discussion on the decline in the value of the dollar, I want to take a general look at our economy which has been attacked on the other side all evening and which was reflected in the value of the dollar at around 89 cents or 90 cents. As we know, Canada moves into 1978 with the expectation that the worst of the recent economic slack is over and that solid economic growth will resume this year. There are increasing signs that the economic recovery has begun in the
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first quarter of 1978. Most economists believe that in 1978 we shall see better results than last year.
This optimism does not overlook the fact that rates of unemployment and inflation are far from satisfactory. It is not enough for representatives like me merely to talk confidently about the future. What is needed is constructive action to stimulate the economy without contributing to inflation, and measures to aid those who have been dislocated by the economic slowdown. I believe that the government has done that in a series of policy decisions last fall and early winter providing tax incentives to business and consumers. The government has also decided not to wait for the expected recovery to begin but to attack the unemployment problem directly by putting up the money to create jobs now.
The basic dilemma that is facing this country at the moment is one that should be looked at closely. There are many people who believe that the government should adopt similar policies to those developed in the 1930's both in the U.S. and in Canada. Critics of the government such as the Conservatives, the New Democrats, and elements of the media such as the Toronto Star in my city, to name but a few, offer a Keynesian approach which perhaps had some value but which is not the sole answer in the particular economic circumstances in which we find ourselves in 1978. They advocate the cutting of taxes, the stimulation of consumer demand, and spending on massive public works projects. This approach was successful in the 1930's because of high unemployment, which was around 20 per cent in Canada at that time, and massive deflation, in other words falling prices and values of goods. However, today we have a high unemployment rate of 8.5 per cent, but we also have continued inflation of 8 per cent or 9 per cent which we did not have in the 1930's. Therefore, I think it follows that pump priming by the federal government can only be a temporary measure and can only be an incomplete solution to the problem.
The federal government is not the only player in the economy. We saw the truth of that last week at the first ministers' conference here in Ottawa. Since we are not the only player in the economy, it would be foolish to expect that the federal government alone has all the answers. The official opposition advocates federal income tax cuts while telling the government to cut government spending. Hon. members ridiculed the President of the Treasury Board (Mr. Andras) this afternoon when he brought in the estimates for the next fiscal year. It is quite evident that the official opposition is trying to have it both ways.
Hon. members opposite are talking out of both sides of their mouths, to use an old cliche. The approach they offer belies a great inconsistency. Cutting taxes means less revenue to the government, which forces higher deficits. The other aspect of cutting government expenditures is that with less revenues generated as a result of tax cuts, some government services must be cut.

February 22, 1978
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I hope that in any federal election campaign which might come up in the next year, the official opposition will be prepared to tell the voters of Canada which services it would cut in the interest of balancing the budget or reducing government expenditures.


Walter David Baker: You will be the first cut.


David Michael Collenette: Would the official opposition cut unemployment insurance, old age pensions, or veterans' pensions? If
50,000	public servants were eliminated through attrition-not firings, but through attrition from the Public Service-the resulting saving to the Canadian taxpayer would be like a drop in a bucket. Hon. members opposite are not really getting at the root of the problem. The Progressive Conservative party wants to turn back the clock 30 years to that so-called laissez-faire free enterprise era when the weak and the poor in society were the downtrodden, and only the strong survived. I dare hon. members opposite to address themselves to the essential question of what services they are prepared to cut to achieve their economic policies.
I would like to talk for a minute about co-operation with the provinces. The Prime Minister (Mr. Trudeau) has recognized that there is a need to seek a co-operative approach to solving our economic difficulties. In his recent travels to all provincial capitals, and in talks with provincial premiers, he laid the groundwork for the first ministers' conference which was held last week, where for the first time in Canada's history- certainly in my memory-there was general agreement between the provinces and the federal government on prescriptions necessary for restoring Canada to a more healthy economic situation.
Inflation and unemployment are understandably immediate concerns for all, and have been the major focus of government attention over the past few years. What is needed is an attack on the so-called structural problems facing the country like declining competitiveness and changing patterns in manufacturing and world trade. This is the task which now confronts government leaders, but while the necessary study and adjustments are made the federal government has to concentrate on making it easier for those whose lives have been disrupted most by our economic problems.
It may be scant comfort for those without jobs, but it is generally recognized that the burden of unemployment today is not as heavy as it was in the past, thanks to generous social assistance measures such as family allowances and unemployment insurance. These and other measures provide a basic level of family income. That is one of the greatest arguments we can use for our submission that the New Democratic Party is wrong when it talks about the present situation in Canada being analogous to the 1930's. We have a generous social support system which shields those who are most hurt by economic problems. It is obvious that the Conservative party wants to dismantle those social guarantees.


Mr. Kempling:: Don't be dishonest.


David Michael Collenette: It is one thing to talk about getting better value for our dollar and another to talk about productivity in the Public Service, but what the Conservative party wants, and what it is not levelling with the Canadian people on, is that it wants to change fundamentally the nature of this country. I believe this notion will be rejected by the people of Canada in the next federal election.
Getting back to the provinces, in addition to negotiating better working arrangements between the two levels of government, the Prime Minister and the premiers discussed ways of encouraging the private sector to do its part. Hon. members in the official opposition should applaud this. Government action to promote recovery will be of little use unless businessmen take full advantage of the various tax and economic incentives this government has given. However, the business community does seem to be heeding the advice and responding to the help provided in last year's budget and last fall's economic message from the Minister of Finance (Mr. Chretien).
The business community is now less pessimistic about the future trend to inflation and is thinking in terms of getting ready to meet a resurgence of demand when the economy picks up. Is it not a pity that the official opposition does not show that same confidence? Hon. members opposite are the ones who are creating confusion on the money markets of the world with their continual hacking away at Canadian confidence. They will pay dearly for that when we go to the polls.
It is interesting to note that economic problems are worldwide. It is important to emphasize that most of the industrialized countries in the world are suffering from the twin dilemmas of mounting unemployment and inflation. Economists predict that even those economies alluded to by hon. members opposite, West Germany and Switzerland, will not grow nearly as much as Canada's economy this year.
I would like to talk about the West German and Swiss situation for a few minutes. I am prompted by comments made by the hon. member for Spadina (Mr. Stollery) in an informal chat we had the other day. He brought this to my attention, and I thank him for enlightening me. One aspect of the Swiss and West German performance bears a closer look.
When Canada admits immigrants, it does so by accepting them as equal partners in Canadian society. After three years in Canada landed immigrants have the right to apply for Canadian citizenship. Although we reduce immigration in times of high unemployment, those who are here may stay on to become citizens. That is not so in West Germany and Switzerland. That is why they have lower rates of unemployment. They put immigrants on trains and send them back to Yugoslavia, Portugal, Greece or Italy. That is why they have a lower rate of unemployment. Is that what we want in Canada? Is that what the Conservative party advocates? I dare hon. members opposite to say so.
It is bad enough that the Leader of the Opposition has stated that if a Conservative government is elected, the Department of Multiculturalism will be eliminated. What would the Leader of the Opposition do to all the people who have come here and contributed to Canadian society? He
February 22, 1978

would do the same thing the West Germans and Swiss have done. He would send them all home after they have been milked and made use of here.
When we look at the economic performance of industrialized nations, a clear picture of the strength of the Canadian economy emerges.


William James Kempling: Mr. Speaker, I rise on a point of order. I hope the hon. member will forgive my interrupting his remarks, but surely we should not leave the remarks he just made about immigration on the record. I do not know what immigration into Germany and Switzerland has to do with the devaluation of the Canadian dollar and why that matter has been raised in this debate, but surely the hon. member knows that the immigrants who come into Germany and Switzerland come under contract for a specified period of time, after which time they leave.


Mr. Deputy Speaker:: I think the hon. member for Halton-Wentworth (Mr. Kempling) will agree that his remarks constitute an argument which he could include in his intervention.


David Michael Collenette: Mr. Speaker, I hope those remarks, which constitute debate, are not taken as part of my time. It is quite evident the hon. member for Halton-Wentworth (Mr. Kempling is going one step further. He wants contract workers in this country. It is on the record here tonight. When Canadians read that, they are going to take another look at the Conservative party.


An hon. Member:: That is stupid!


David Michael Collenette: I know I have a few minutes remaining and I want to make reference to a speech made in Montreal recently by the chairman of the Royal Bank of Canada. He talked about the strength of the economy.


Mr. Mazankowski:: I was there.


David Michael Collenette: The hon. member for Vegreville (Mr. Mazankowski) knows full well what the chairman of the Royal Bank said. It was my intention to bring to the attention of the House the worth-while points made by the chairman. However, Mr. Speaker, you think my time is up, and unless the hon. members would be so kind as to let me continue-


Mr. Deputy Speaker:: Order, please. There does not seem to be unanimous consent, and there is no time for questioning either. The hon. member for Carleton-Charlotte.


An hon. Member:: Here comes the sardine man.


Mr. Fred McCain (Carleton-Charlotte):: Mr. Speaker, perhaps there are others who should eat sardines and it might give them a little brain food. Evidence from the interruptions to your right tonight indicate they could use a little brain food, so I recommend the sardine to you.
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I do not intend tonight to deviate from the subject matter of this debate, namely, what should the government do which might contribute to the improvement of the dollar's position? But I would like to say of the remarks of the hon. member for York East (Mr. Collenette) that his remarks were, in the main ill-considered, irrelevant, and non-contributory to this problem and to this debate. The dollar decline is serious, and its cause is serious. That cause is lack of properly considered fiscal and monetary economic policy in the Dominion of Canada by the government which the member just supported. That is the cause, and it is serious. There seems to be no government inclination to call in the economic doctor to get on a path to correct the problem rather than see it continued and accentuated.
No matter what the government has done or how great the hon. member for York East thinks it is, he must accept the fact that its economic policy, or the absence of well-considered economic policies, has precipitated the crisis which we are debating tonight. His historic rhetoric will not dissolve the problem. The problem will not disappear as if by magic or ill-tempered discussion, and his accusation of members of the opposition regardless of the party to which they belong. It must be a debate which remains related to the discussion of the value of the dollar. Another speech has been made for a constituency, abusing the opposition and failing to stay on the subject.
Tonight in Ottawa 1,000 farmers met in the Chateau Lauri-er hotel. They were mainly from Ontario, but they were supported by representations and messages from every agricultural province in the Dominion of Canada. They made concrete suggestions which I would like the hon. member for Comox-Alberni (Mr. Anderson) to note. Those suggestions came in the form of four recommendations and were of importance to the Canadian economy and the Canadian dollar, its value at home and abroad. The Leader of the Opposition (Mr. Clark) met with that group and he assured them he agreed with the four recommendations which they made. He was sympathetic with the problems they were experiencing and he stated he would adopt policies in an attempt to correct the problems which they cited.
Let me read three of these recommendations.
The first action required for a healthy agriculture is that markets for farm products must be expanded both at home and abroad.
Another was as follows:
Thirdly, the Government of Canada must dissociate itself publicly from open pronouncement by some cabinet ministers that the policy of this nation shall be cheap food and must abandon plans to limit the price of food.
The cheap food coming from abroad is taking Canadian dollars, it is reducing farm income, and it is detrimental to all facets of the Canadian public's economic welfare.
Finally there was this recommendation:
The federal and provincial governments must implement effective co-ordinated and meaningful stabilization and/or income assurance programs.
This last recommendation will increase agricultural production in Canada. It will incorporate a stop loss program and it would encourage production of food which we would not have

February 22, 1978
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to import but which we are presently importing to the detriment of the Canadian dollar and our total economy.
From coast to coast in Canada federal policies have contributed to a decline in the export of agricultural products, fresh and processed. I suppose the most stark example of idiotic policy was the failure of the government to hold the international markets which we had, and to combine that with an increase in the quota for cheese to be imported from abroad. We lost the U.K. market, we lost the European Economic Community market, and in turn we increased the imports of cheese to Canada. These are two contradictory measures which, for the benefit of the hon. member for Comox-Alberni, have accentuated our unfavourable cash flow differential and therefore have affected the value of the dollar.
I suggest to you, Mr. Speaker, that a reasonable and rational duty and trade policy must be adopted by Canada at GATT. We must obtain fair and equal trading opportunities with our world trading partners. We can no longer exist while duties on our products to our friendly trading partners are prohibitive, while our market is traded away for advantages about which the farmers are not informed and which are very unsatisfactory to the total economy.
We have a government dealing in total secrecy at GATT. Its members have had input which they have rejected. They have had a tariff report which has been criticized and for which there were amendments requested by agriculture in Canada. There has been no consideration given to this as far as the public knows. It is totally secret. This is not satisfactory.
We have increased imports and we have generated a weak agricultural economy. For the information of the hon. member for Comox-Alberni, we have a decline in the Canadian dollar which has put a temporary protection on agricultural products, but only temporary. We must have a trading pattern which must be permanent. If by chance the fluctuation of the dollar gives a temporary position of advantage to any industry such as agriculture, we know it will be only temporary because, sooner or later, sanity will return to the economists and government, and the dollar will return to its proper value.
The net farm income of agriculture is going down. Imports are going up, whether they be fresh or processed. The Conservative party does not stand for that kind of treatment for agriculture and that kind of effect upon the Canadian dollar's value. This industry has contributed $1 billion in trade surplus historically. It has recently declined to about three quarters of a billion, and it will decline even further if we do not have a marketing structure, with farming representatives of Canada being abroad, something we do not have at this time. In the hundred or more nations where we are represented, we have eight agricultural representatives to promote our agricultural trade. Some of those are located in cities where we could not sell anything unless they had none of a certain product or were starving. Therefore, we are not promoting trade.
Whether it be fruits or vegetables from British Columbia, dairy products from Quebec, fruits and vegetables from the
[Mr. McCain.)
Niagara Peninsula, the potato products of the Atlantic area, or the apple products of Nova Scotia, they have all been seriously affected by adverse trade negotiations conducted by this government in the last ten years. Our party does not stand for that. We believe that the billion dollars of favourable trade balance can be expanded. When it is expanded, it will increase the profitability of agriculture. When agriculture is more profitable, the economy of Canada as a whole will rise.
I suggest to the hon. member for Comox-Alberni that he acquaint himself with the curve of prosperity in Canada and relate it to the net farm income of Canada. He will see they are parallel. When agriculture is weak, the Canadian economy weakens. I make that as a concrete suggestion to the hon. member for Comox-Alberni, a suggestion which could favourably affect the value of the Canadian dollar. It would increase the favourable balance of payments which agriculture can generate and which we need to restore the dollar to its value.
I want to assure the farmers that we do not and never have associated ourselves with policy of slow stabilization payments, or trading away agricultural benefits for hidden benefits to some other industry, creating low income for farmers. That is not our policy. We wish we had a chance to correct it. We surely would take the necessary measures.
[ Translation]


Joseph Adrien Henri Lambert: Mr. Speaker, we say that a man should seek the advice of his pillow. I therefore hope that this debate which is going on into the night will help the Minister of Finance (Mr. Chretien) steer the right course for the monetary policies of our country. As for us parliamentarians, we are supposed to represent the supreme authority in the land. After this debate, we may be able to give good advice to the Minister of Finance and the cabinet.
Mr. Speaker, this debate should remind us that a monetary system is a tool which a people devises for itself. In all civilized and well organized nations there is a monetary system which serves to establish as they occur the value of things and services, and to allow the citizens to exchange services and goods. That is the role of the monetary system.
We have succeeded, in Canada. We are about to succeed in transforming our measurement system. We are gradually changing over to the metric system in all spheres of economic activity. Mr. Speaker, it is not easy to make such a change in a country like Canada. However, the government got to work and passed legislation to determine the time when such and such sector of the economy would switch to the metric system. The population accepts this and is ready to co-operate.
I meet many people in the industrial sector and many people who travel throughout Canada to promote sales for such or such a company. Housewives are accepting to change their cooking habits because the Canadian Parliament decided that those changes would be better for Canada. For my part, Mr. Speaker, I sincerely believe that the change to the metric system is much more difficult to achieve than a change in our monetary system.
February 22, 1978

In our country, we have a monetary system based on the dollar. No one questions this. Everyone agrees to evaluate the services of blue collars and white collars in dollars. No one questions this and everyone agrees. Mr. Speaker, it is the same when we want to measure the value of farm production, whether it be dairy production or livestock production. We agree about this. We know that we can make exchanges within our country because every week, in all large supermarkets, many Canadians go to do their shopping and we see women open their purse to pay in Canadian dollars the products they have selected. This is the role of a monetary system, to allow easy and quick exchanges.
Mr. Speaker, what is beyond my understanding, and I believe this should be one of our thoughts for this evening, is that the system of exchanges, this tool that we call the dollar in Canada, has been created by man. From what we see today, the dollar crisis, it seems that this creature has become master of its creator. It is man who created this tool, and man has become its slave to the point where in March 1977, in Montreal, Reverend Father Georges-Henri Levesque, a Dominican, the founder of the Department of Social Sciences at Laval University in Quebec City, gave a conference entitled "Money, Master or Servant." Well, I would urge all members of this House to read that conference. It is very rational from one end to the other and shows that money has become man's master when man should be the master of money, this instrument of exchange. And it is up to us parliamentarians to see that this instrument is truly the servant of individuals, families, municipalities, school boards, provinces and the government of Canada.
This is a really maddening situation. I cannot get it into my head that such an instrument of exchange, which should simply be a cog in the gear to enable real credit created by the work of men to move around, should be traded among men. Real credit, Mr. Speaker, is created by the work of individuals. The farmer working his farm, selling animal meat, producing dairy products is under our economic organization a creator of credit. He is the one. The worker in the factory assembling parts to make a piece of furniture becomes a true creator of true credit. And chartered banks should be there not to take over real credit, distribute it at their whim but only be an instrument to serve people, and I think when money is created to mint the credit of the nation this should be created not as a debt but as an instrument to enable the circulation of goods. That is the role of money. That is how I understand it. That is why I insist very often that the Bank of Canada which was created by Canadians, by the Canadian Parliament, should fulfill its role as the first minter of the credit of the nation and chartered banks should in my opinion ask the Bank of Canada for the necessary credits to serve the public sector.
That is how things should normally go. It is often said that banks create part of the money supply. I am convinced that it is true and I would like to quote, Mr. Speaker, to support my saying, just excerpts from testimonies given before the Committee on Finance, Trade and Economic Affairs:
Finance
The central government maintains a Standing Committee on Banks, Trade and Commerce. From March 8 to June 1, 1939, this committee held-
And I urge my colleagues to read this-
-hearings on the Bank of Canada. The witnesses cross-examined were Mr. Graham F. Towers, Governor of the Bank of Canada, and Mr. W. C. Clark, Deputy Minister of Finance.
Here are some questions and answers.
Question:
Ninety-five per cent of total business is transacted through so-called bank deposit transfers; they are merely entries by the banks on their books, allowing people to draw cheques.
Answer from Mr. Towers:
This in my view is a valid point.
This appears on page 228 of the volume referred to earlier. And the deputy minister goes on to say:
-this means that money is any instrument of exchange generally accepted in payment of business transactions, debts, etc. It therefore includes all coins, all bank notes, either central or chartered-bank, and deposits.
Hon. members are aware that under amendments passed since then chartered banks no longer have authority to issue bank notes. The Bank of Canada alone may issue bank notes, which are called Bank of Canada notes. Still further there is the following question, and I quote:
But there is not the least doubt that banks create that instrument of exchange?
Mr. Towers, governor of the Bank of Canada, had this to answer, and I quote:
Exactly. This is their reason for existing.
This appears on page 299. Following question, and I quote:
And they issue that kind of exchange instrument when they buy debentures or extend loans'!
This is what the government should be getting from the Bank of Canada rather than chartered banks, or Germany or New York, here at home. And Mr. Towers answered:
Such is the very nature of banking operations, just as a steel mill is meant to manufacture steel.
On page 299.
The process of manufacturing bank deposits is to pen or type entries in bank books, nothing more.


Mr. Towers:: Yes.
Each time a bank grants a loan (or buys bonds) it creates a new bank credit- new deposits-new money.
This was confirmed by Mr. Towers.
Practically all new money comes from a private bank in the form of loans.
Once again confirmed by Mr. Towers and I could quote many testimonies made by the governor of the Bank of Canada on this matter, but I see that the time allotted to me passes quickly.
Now, Mr. Speaker, 1 received today from the parliamentary library some data, or research which I had requested on the monetary mass of Canada and on the gross national product. I was given the following figures:

February 22, 1978
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For the taxation year 1976-77, the gross national product amounted to $194,5 billion, an increase of some $23 billion over 1975-76.
The monetary mass then amounted to $100 billion, including $24 billion in bank notes and coins and the balance, $76 billion, in bank deposits based on fractional reserves.
Mr. Speaker, if we too had the privilege of creating deposits with fractional reserves I think we would be in the right direction. For this reason, if you study the reports of chartered banks since they received special privileges in 1967, their profits have risen considerably while our country went ever deeper into debt which is really discouraging for young people, those who will come after us.
Mr. Speaker, the gross national debt of our country has doubled in the last three years; it rose from $19 billion to $38 billion and this is one of the reasons why our dollar is still floating. But I am afraid it is about to drown because of our excessive debt. I mentioned fractional reserves and it is not an idea of mine. The act regulating chartered banks requires them to keep a 12 per cent demand reserve plus a 4 per cent reserve on 30 days' notice. This is what happened in February 1978: the percentage of the primary reserve was set at $5.84.
It went too far, Mr. Speaker, the situation cannot continue indefinitely. And we talk about the gross national product. We say it is essential to restore our economic balance, to fight inflation and unemployment. Mr. Speaker, in spite of the increase in our national debt, our gross national product continues to improve regularly. Progress is on our side even if we have more than one million unemployed, people fit for work who could produce goods and services to increase the value and the stability of our Canadian dollar. Mr. Speaker, it is impossible to continue in that direction. I wish to quote here a question I put on the order paper. I got an answer. It was on February 1, 1977. It is not so long ago. On page 2589 of Hansard I asked the following question:
1.	What was the total national debt on March 31, 1976?
The answer:
$38,299 million.
Me, I am curious, and I want to know to whom I owe money. So, I ask another question, and I quote:
2.	With reference to Canadian creditors, how many are (a) individuals (b) chartered banks (c) life insurance companies (d) other financial organizations and, in each case, in order of importance (i) who are they (ii) what is the amount of the debt?
Here is the answer:
2.	At March 31, 1976 (a), (b), (c) and (d) Statistics on number of holders are not maintained. However, refer to the Bank of Canada Monthly Review Section 22 for distribution of dollar amounts.
Smart reply. Third question:
3.	With reference to foreign creditors, in order of importance (a) who are they...
Me, when I have debts, I know to whom I owe them. I know who my creditors are, when I must pay them back and also what rate of interest I pay. Now, to go back to my quotation:
... (a) who are they (b) what is the amount of the debt in each case?

Answer:
Not available.
Fourth question:
4.	In each case of compound interest (a) what is the rate ...
dates of payment...
(b) for how long was the loan made (c) what are the terms of repayment?
Reply:
Not available.
That is the reply of the Department of Finance which is supposed to give us information. "Not available". Is he, the Minister of Finance, available to answer those questions? I hope he will at least have the co-operation of the civil servants of his department to help us find out who our real creditors, the real rates of interest and the dates of repayment all are.
Fifth question, Mr. Speaker:
In each case of simple interest. ..


Mr. Peter Stollery (Spadina):: Mr. Speaker-


Donald W. Munro: You got a lot of applause!


Peter A. Stollery: Mr. Speaker, the hon. member opposite says something about a lot of applause when I rose. I find that very interesting. It is always an honour for me to follow the hon. member for Bellechasse (Mr. Lambert) in the House of Commons. The official opposition moved this motion to have this debate some hours ago, and now we have hypocrisy. The opposition are now telling us there is not very much applause. The television audience watching this debate may not be aware that there are not very many members in the Chamber at this moment.
Although I accept, as all hon. members do, any decisions the Chair might make on the need for a debate under Standing Order 26, I must say I question this particular decision. I have been here only a short time, like the Leader of the Opposition (Mr. Clark) since 1972, but I can recall when debates under Standing Order 26 were subject to some argument and discussion as to whether or not a matter was an important one, one that would lend itself to keeping this House of Commons-


Donald W. Munro: We have had plenty of discussion.


Peter A. Stollery: The hon. member from Victoria cannot wait a moment. Here we are in a practically empty Chamber at 20 minutes past 12 in the morning.


Stanley Howard Knowles: With only four Liberals.


Peter A. Stollery: Four Liberals, and two members of the New Democratic Party.


Stanley Howard Knowles: Three.
February 22, 1978


Peter A. Stollery: Where is the third? He must be behind the curtains somewhere. There are also five members of the Conservative party here. I am sorry; I see the third member of the NDP with Your Honour.
Nevertheless, I think the point is clear: this is supposed to be a debate on a matter of national importance, one that cannot be dealt with during the normal question period but requires the House of Commons and all the staff to stay here at this hour. And how many members do we actually have interested in this urgent question?


Donald W. Munro: Where is the Prime Minister (Mr. Trudeau)?


Peter A. Stollery: We have a handful, Mr. Speaker. Only five or six members of the opposition bother debating the subject.


Mr. Ellis:: They will come in when you are finished.


Peter A. Stollery: It was Mr. Speaker's decision, and we all acknowledge that he is the Speaker of this place and one of our colleagues. But it seems to me that the party which brought this important, pressing issue before the House of Commons has a responsibility to be here to discuss it.
Just what is it that we are talking about, Mr. Speaker? The motion is this-


Walter David Baker: So you have finally found it?


Peter A. Stollery: Now one of our few colleagues opposite asks me if I have finally discovered what the motion is. It so happens, Mr. Speaker, that I did check the exact wording of the motion, which apparently is a motion to adjourn so the House can discuss something which cannot be handled in the normal question period or by the usual processes and procedures of the House. I see an increasing number of members opposite are now coming into the Chamber; we now have about eight members interested enough in this especially important, pressing issue, a matter so important that it cannot be handled in the question period.


Allan Frederick Lawrence: You have driven everyone out.


Peter A. Stollery: The former attorney general of Ontario says I have driven everyone out. Since there were very few here on his side it was not very difficult.


Allan Frederick Lawrence: No, I mean on your side.


Peter A. Stollery: We are discussing Canada's arranging for some credit. 1 am sure that is an issue with which the hon. member for York-Simcoe (Mr. Stevens) is more familiar, because he was formerly in the banking business. Hon. members who follow financial matters and are close to the banking business understand the question of arranging credit. As is the case with almost every currency, the Canadian dollar has been going up and down since the decision was made to float currencies.
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Last night the Minister of Finance (Mr. Chretien) made an announcement which indicated that he had contacted banks to arrange credit. As I say, it is fascinating and overwhelming that the Speaker of the House has decided an emergency debate to discuss this issue is necessary. There has been no emergency debate on unemployment. I am sure hon. members would agree that unemployment in Canada is a serious and pressing question. No one would deny that.


Allan Frederick Lawrence: You were out of the country.


Peter A. Stollery: Now the former attorney general for the province of Ontario is talking about me being away, or some such thing. I have not been away for a long period of time. The last time I was away, I met the hon. member for Northumber-land-Durham (Mr. Lawrence).
There are many issues and arguments which are more important than this one. Fortunately no one is saying the magic word, but here we are at 12.25 a.m. discussing this question of the arrangement of credit. It is not of particular importance to the average Canadian or those unemployed. The young Canadians who are out of work do not place any importance in this matter. In fact, we are discussing something which is of interest to the banking trade only. As far as I can see, mainly bankers would be interested in this particular issue.


Stuart Malcolm Leggatt: What about the taxpayers?


Peter A. Stollery: I realize the hour is late, but most members on the government side of the House sat and listened to hon. members opposite when they were making their speeches. Is it unreasonable to expect silence rather than noise? In fact I hear a member of the New Democratic Party making noise in the corner.


Stuart Malcolm Leggatt: A storm.


Peter A. Stollery: Yes, a storm. The question before the House tonight is not in regard to jobs. The question is what the government is doing to improve the economy. Under the guise of this motion the opposition wants to attack the government's performance with respect to the economy. When the Leader of the Opposition visited Toronto not long ago, his answer to the complex economic problems facing Canada was that he would fire 60,000 public servants.


Some hon. Members:: Oh, oh!


Peter A. Stollery: His suggestion was to do away with 60,000 jobs, at the same time as injecting $2 billion into the economy. That is what I saw on the front page of the Toronto Star. His first step toward solving unemployment would be to abolish
60,000	jobs. That was rather unique. His plan was hopefully to save enough money, after doing away with those jobs, in order to do something else which has never been made clear.
The question we are addressing ourselves to is what the Canadian government should do for the dollar. It is perfectly

February 22, 1978
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clear the falling dollar is one of the best things that could happen to Canada. If the dollar is lower, our exports are cheaper and our imports are more expensive. It is to be hoped that makes us more competitive and has a good effect on our balance of payment and trade. The only question is at what point the government should protect the dollar, as all governments do. The Americans have been involved in doing that for the last two years. Our problems are rather petty when you think of the United States problems with its dollar.
Not many hon. members opposite are aware that in the United States $500 billion are offshore Eurodollars. That country is facing problems protecting its dollar because of the one half trillion dollars which are offshore and the $100 billion owned in the United States by foreigners. If the United States cannot protect its dollar, the most tremendous catastrophe the world has ever known would occur. It is far more useful if the Canadian dollar is relatively low, rather than relatively high. In fact, this debate should be a celebration of the fact that the Canadian dollar has slid, resulting in making Canadian exports more competitive and Canadian imports cheaper.


Stuart Malcolm Leggatt: Will the hon. member permit a question?


The Acting Speaker (Mr. Ethier):: Will the hon. member for Spadina (Mr. Stollery) permit a question from the hon. member for New Westminster (Mr. Leggatt)?


Peter A. Stollery: Yes, Mr, Speaker.


Stuart Malcolm Leggatt: Would the hon. member direct his attention to the question of the government's decision to intercede in the free market in terms of the dollar? If the dollar is attractive at an 89 cent level and would be more attractive at an 85 cent level, which appears to be the gist of the hon. member's argument, why did the government intercede and not allow the dollar to continue to slide?


Peter A. Stollery: That is a silly question. Because of the kind of trade we do with the United States, many Canadians are psychologically affected by the value of our currency compared to the value of the United States currency. It is nothing more or less than that.
I have not heard any members here discuss the value of the Canadian dollar as compared to the German mark, the French franc, the pound, the yen, or any other currency that is becoming increasingly important. For example, are there members who know the exchange rate of the Canadian dollar as compared with Saudi Arabian currency? The hon. member laughs. Obviously he is unaware of the fact that we have just signed a $500 million contract with Saudi Arabia to manage their telephone system. We have a $100 million contract to electrify rural regions in Saudi Arabia. I do not suppose he is interested in how much money that is in Canadian currency because he thinks it is Saudi Arabia which is a long way away, so that we can worry about that some other time.


John Raymond Ellis: Mr. Speaker, I rise on a point of order. That telephone order which the hon. member speaks about is in Canadian dollars, and the telephone equipment is coming out of the city of Belleville.


Peter A. Stollery: That is very interesting. It is also interesting that 500 Canadians will be hired for that project in Saudi Arabia, and I suspect they are not all from Belleville. Some of them may be from other places in Canada. There are 500 jobs in that single program. One hon. member said it was in Canadian dollars. I suspect that perhaps the people concerned have calculated what the rate of exchange might be between the Canadian dollar and the Saudi Arabian riyal.
It should interest the hon. member for Belleville because there are 500 jobs there and, according to the Toronto Star of yesterday-and I do not know whether that is true-400 jobs will be created in the steel factories in Saskatchewan in connection with the building of the pipeline. That is a pretty good indication of the kind of thing the Government of Canada is doing. I do not think it all relates to the town of Belleville. In fact, as I understand it, the people who will be undertaking the Saudi program will not only not all come from Belleville but will probably be administrators from Montreal and Toronto, and maybe some of them from Spadina, for all I know. The point is that we are tonight at twenty five minutes to one-


Sinclair McKnight Stevens: That is the first thing you have said that is right.


Peter A. Stollery: There we have the banker who is about to give us some of his kernels of wisdom. Here we are at twenty five minutes to one talking about arrangements made for credit with Canadian banks by the Government of Canada, drawings which I am sure will never be made. I am sure there is a pyschological aspect to the speculation in all currencies and particularly in the Canadian dollar, and probably the Minister of Finance has made the right decision to stop that speculation even if he has to deal with people whom personally I do not find terribly attractive, that is, the banking friends of the hon. member for York-Simcoe. But if it is a solution which will help us stop these speculations in all currencies, and recently in the Canadian dollar which has driven it up and down, so much the better.
An hon. member asked why it should not go down to 85 cents. As I said, Canadians have a psychological attitude to their currency that is of some importance. All I would like to say is that I think the Minister of Finance has taken not only the appropriate step of not making his announcement in the House, which would have encouraged the speculators-


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


Allan Frederick Lawrence: Mr. Speaker, I wonder if I might ask you what the word "float" means to you. Surely it means to stay on top as a result of the
February 22, 1978

internal buoyancy of whatever it is that is floating. The Minister of Finance (Mr. Chretien), ever since he took over in September, has had one refrain only. His policy has been to keep the Canadian dollar floating. Last October 8, he said: "When you have a floating dollar, you have a floating dollar". Does it sound familiar? It should. He said the same thing tonight.
But is it? Is it really staying on top as a result of its own buoyancy? It is not. The minister is not only wrong, he is being deliberately wrong in the House. He knows that one year ago, for instance, the Canadian dollar in U.S. value was worth $1.03. In October, 1977, in the last crisis, it fell to 91 cents. Within the last week it dipped to its lowest point since 1931; it fell to just under 89 cents. Canada's dollar is not floating, as the minister says, it is sinking.
The reason it has sunk, in spite of massive financial bolstering by the Bank of Canada, should concern all Canadians. First, the Canadian dollar is sinking because we have increased our imports much faster than our exports. Our wages and our prices have been rising faster than those in the United States. Yet our productivity is lower. What happens? We cannot compete at home where imports are continuing to take up a larger and larger share of what Canadians buy and we cannot compete in the export market which is essential to Canada to make up the large Canadian borrowing from abroad.
Second, the Canadian dollar is sinking, not floating, because Canadians are travelling around the world in growing number and fewer and fewer foreign and Canadian tourists are travelling in Canada.
Third, the Canadian dollar is sinking, not floating, because we lack a national energy policy; we have become too dependent on foreign oil. Only a few years ago we exported more oil than we imported. Nothing is being done by this administration to reduce that dependence.
What has been done by this government? It has tried to solve our trade and travel deficits with high interest rates and tight money. This has encouraged Canadians to borrow abroad or to sell their companies to foreigners. Obviously this has added to the problem by hugely increasing the future interest payments we have to make to the rest of the world.
The fourth reason the Canadian dollar is sinking, not floating, is that we are mortgaging our children's future, and this has also accelerated the continuing loss of control over our own economy. However, let us get back to the floating dollar, that dollar which is staying on top because of its own built-in buoyancy. If it was not such a tragedy, the answer would be to laugh at the minister. This country is surely bleeding to death financially right now. Just after this minister took over, things really started to deteriorate. Tonight he compared the activities of the last few days with what happened last October. He said-and he is quite right-that there really has not been much change since last October.
In October of 1977, about 40 days after this minister took office, the Canadian dollar hit the lowest international value it
Finance
had fallen to in 20 years. Was October, 1977 such a bright spot and such a shining example in our monetary history that it should be a standard with which we compare everything else? That is just what this minister did tonight. The situation was so bad in October, 1977 and the Bank of Canada was so alarmed at the buttressing and bolstering the Canadian dollar needed, that in November of last year the government had to arrange a special $1.5 billion stand-by credit with Canadian banks so that it could be dipped into if the situation deteriorated further.
"But," says the Minister of Finance in his by now tired old speech, "when you have a floating dollar, you have a floating dollar". By any standard, even the standard of the minister's own advisers, that floating dollar stopped floating with that very announcement. The announcement of that stand-by credit was the signal, obvious to all, that the government desired to keep the dollar from falling below 90 cents, and its purpose, motive and intent was to slow that disastrous speculation against Canadian funds which had already started. Government advisers in the minister's own department readily admit this. Bank of Canada officials agree with it. Industry and banking experts are quite open about it. But the minister continues on: "When you have a floating dollar, you have a floating dollar."


An hon. Member:: You are being disgusting.


Allan Frederick Lawrence: One other matter that foreign exchange traders point out is that because of the lack of national trade, national tourism, employment, productivity and agricultural policies Canada is going to continue to run into the red.
We have a current account deficit of about $5 billion a year. This has been going on for some time. That means we are spending more in international trade and terms than we are taking in, to the tune of about $400 million per month every month. What was the answer of the government? I think the government tried. The answer had to be a campaign to convince international investors and traders that we were capable of turning the situation around ourselves. Our Prime Minister (Mr. Trudeau), who has been very conspicuous by his absence here tonight, was prevailed upon by his own advisers to make a few economic pronouncements. The market remains skeptical. The Prime Minister certainly turned nobody on. The Minister of Finance (Mr. Chretien) was still repeating the same old speech: "When you have a floating dollar, you have a floating dollar."
Twice since January the minister went down to New York. Both trips were absolute disasters. The minister appeared so unknowledgeable and he was so insulting in his attitude that the dollar was still floating when, of all people, people in New York knew the Canadian dollar was not floating, that within hours of each trip the pressure built up even further against the Canadian dollar.
In spite of massive transfers by the Bank of Canada of reserves to bolster and buttress our dollar, the run was on. The point was reached late last week right in this House when, in answer to a question, the minister again, to almost everyone's
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February 22, 1978
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disbelief in the face of the financial hemorrhaging we were then experiencing, again repeated: "When you have a floating dollar, you have a floating dollar". It has not floated since last November, and if the minister did not know or if he still does not know that, he should not be the minister. There was no other stop-gap solution available except to arrange a new line of credit, except this time it had to be a new line of credit from foreign sources. Perhaps this is an indication that even Canadian banks have dried up against this incompetence.
Meanwhile, back at the ranch, what was happening in the House of Commons, the place this minister says he loves so much? Last week the latest rush was started by the minister when he told us our dollar still floated and that there was no intervention. The market itself knew it was being massively buttressed. With that type of deceit or incompetence-it has to be one or the other-the market finally grasped the measure of this man.
The Minister of Finance lost the confidence of the trading community. He finally did it last week, and the run was on again. On Monday afternoon, the day before yesterday, in this House at the very moment the minister was again saying there was no intervention and in spite of the fact that the American market was closed because it was Washington's birthday, in three places, London, Toronto and Montreal, the Bank of Canada was forced to transfer a total of $65 million from the reserve in a vain attempt to slow down the drain. The minister obviously misled the House on Monday afternoon.
Now we come to yesterday, Tuesday. With the opening of the market in New York after the long weekend the run accelerated. Any confidence that this minister was capable of telling the truth-or conversely, and even worse, not even knowing what was going on-completely evaporated in the western European and North American money markets. Why? The feeling was accelerated when, with horror as a reaction, again the Dow Jones tape indicated the ministerial equivalent of "When you have a floating dollar, you have a floating dollar".
The implication was that there was no intervention by the Bank of Canada in the market and that there was no intervention by the Canadian government in the market. That was the implication, and the market knew the minister was lying. They knew he was lying.


Some hon. Members:: Oh, oh!


Allan Frederick Lawrence: Even worse: intentionally, deliberately overtly and openly the minister misled this House yesterday afternoon.


Mr. Douglas (Bruce-Grey):: We will take that up tomorrow.


Allan Frederick Lawrence: 
Peter A. Stollery: Mr. Speaker, 1 rise on a point of order. I want to ask the member to clarify some point. Is he calling the minister a liar?


Walter David Baker: Let him complete his speech.


Allan Frederick Lawrence: I think even the hon. member for Spadina will appreciate the implication of what I am saying if he will just be patient.


The Acting Speaker (Mr. Ethier):: Order, please. I recognize the hon. member for Spadina on a point of order.


Peter A. Stollery: Mr. Speaker, it is most unparliamentary to call someone a liar in the House of Commons. There are other members here who are more knowledgeable than I, but if the hon. member is saying what I think he is he should clearly indicate it. Mr. Speaker, you may have to rule on it.


Walter David Baker: Mr. Speaker, on the same point of order, what the hon. member says, has said, and will say, will stand by itself without any assistance from the hon. member for Spadina. I think he should be allowed to complete his speech.


The Acting Speaker (Mr. Ethier):: Order, please. There might be an inference, but surely it does not constitute a point of order. A point of privilege can be raised and brought at a later date, but it is not a point of order.


Allan Frederick Lawrence: Let me just repeat it then, if the hon. member cannot understand what I am saying. On February 20 in this House the question was clearly asked of the minister whether "it is the intention of the government to draw on that stand-by credit in the foreseeable future". Unequivocally the Minister of Finance said "No". At 6.59 p.m. there was a press gallery release stamped "Received Ottawa, February 21, 1978" marked "For immediate release" from the information division of the Department of Finance in the name of the Minister of Finance. I quote the last few words of this release:
-the government would shortly be making a drawing under the revolving stand-by credit facility arranged last October with the Canadian chartered banks.
On the one hand the minister says there is no intention to draw on the stand-by credit. Later in his name the release is issued stating the government will "shortly be making a drawing". I say, sir, with outright duplicity like that, with a short but disastrous history of absolute inaccuracy in almost every public utterance he has made on this subject since taking over his portfolio, this Minister of Finance has not only lost the confidence of the international money market-whether the hon. member for Spadina likes it or not-but the minister has

February 22, 1978

surely lost the confidence of the reasonable members of this House and hopefully now also the people of this country.


An hon. Member:: He should resign.


Stuart Malcolm Leggatt: Mr. Speaker, I am going to be short and I hope snappy. Someone earlier in this debate said it was "curiouser and curiouser." It continues to be curiouser and curiouser. We have been listening very carefully to what various people would do in this House in response to what is admittedly a crisis situation. I am still waiting patiently, Mr. Speaker, to find out what the Conservative policy is in regard to this particular crisis.
We have gone on record and said what we would do in this very difficult situation. We would not have intervened at this point in respect to the dollar. I am waiting patiently now for the Conservative party to take this House into its confidence and tell us what their position is in this debate. I hope the next Conservative speaker will let us know. You would not want us to buy a pig in a poke. You cannot have it both ways in this debate, Mr. Speaker. It is time our Tory friends quit trying to have both sides of the debate. I want to find out where they stand in terms of this decision, and I have been here since the beginning of this debate.
Let me tell the House where the Liberal party stands. I listened very carefully, particularly to the two members from British Columbia. First of all, the hon. member for Skeena, the Minister of State (Fitness and Amateur Sport) (Mrs. Campagnolo), was delightful. We know where she stands. After all, there is no problem in British Columbia. The minister has told this House we have had a deliberate policy of depressing the dollar. She said we have kept that policy going and look at the wonderful things that have happened in British Columbia. We are selling lumber abroad. We are doing terrifically! She said it has been a deliberate policy to depress the dollar to 89 cents. She said "I cannot understand why they have intervened. What they should be doing is letting it slide further. Imagine if it slid to 75 cents and then down to 50 cents; we will be selling lumber like you wouldn't believe! We will be the richest part of the whole world." That was the position of the Liberal party as stated by the Minister of State (Fitness and Amateur Sport). It is not lack of confidence; it is deliberate policy.


Steve Eugene Paproski: It is a sport.


Stuart Malcolm Leggatt: It is a sport, and we have been doing remarkably well at it. What we should have been doing tonight is congratulating the government for the fantastic job they have done in deflating the dollar, according to the minister. The minister had some ghostwriter write her speech. She did not write it. It was written by Grace McCarthy of British Columbia, the Social Credit provincial secretary. I knew there was a coalition and there it is. No one else but Grace McCarthy could have written a speech like that. Apparently everything is coming up roses in British Columbia. Things are so good.
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I want to tell that minister, and I wish she were here, that unemployment is up, bankruptcies are up, inflation is up in B.C. British Columbia has not had it so bad for as long as I can remember. It has the third highest unemployment in Canada, yet the minister is saying that her government's great policy in depressing the dollar has made things so great in British Columbia. Oh, the Social Credit coalition is in action! Half of the cabinet are ex-Liberals. They all resigned and got together and decided they had to have this new coalition government to move British Columbia forward.
Then we hear the hon. member for Comox-Alberni (Mr. Anderson) make a most incredible argument. This argument really blows my mind. Do you know, Mr. Speaker, why the dollar is in bad shape in Canada? The hon. member for Skeena said "We put it there; we want it at 89 cents." Then the hon. member for Comox-Alberni got up and said "Darn it, it is too low; you know, it is that Dave Barrett; he is the one who has destroyed the dollar". So it is Dave Barrett's bad government that caused the dollar to go all the way down to 89 cents. Poor old Davey, I did not know how bad that guy really was. In a short three year term in office he destroyed the country and the dollar.
British Columbia will never recover from that terrible bout of socialism. The poor old hon. member for Comox-Alberni is very nervous about it. I will tell you why those two members are nervous and are grabbing on to what is left of Bill Bennett's coattails. They know they are going down the tube in the next election. That is why there is that element of nervousness. You could hear their voices quivering; you could hear the high pitch.
This was a sad evening for those of us who appreciate debate from the members from British Columbia. We are going to be sorry to lose their voices. The arguments are really curious and strange in this debate.


Leslie Gordon Benjamin: Now pick on the Tories. It is their turn.


Stuart Malcolm Leggatt: No. I want to agree with the hon. member for York-Simcoe (Mr. Stevens). Very early on he pointed out that the real problem lies in the service account deficit. I could not agree more. The figures he quoted are accurate. In 1975, the service account deficit was $1.9 billion. In 1978 it will be $4 billion. The projected deficit for 1980 is $9.1 billion. If you take our manufactured goods and our raw resources, we are selling more than we are buying. It is the service account that is creating the softness of the Canadian dollar.
We are not going to solve that kind of problem with some long-term strategy. The reason that deficit account is running so high and continues to get worse is because we are paying the absentee landlords too much rent. In fact, the amount we are paying in profits, dividends and interest, both public and private interest, is too high. We cannot eliminate the massive kind of private borrowing that has gone on in Canada in terms of importation of equity capital.
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February 22, 1978
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The $8 billion deficit and the borrowing of government on government, borrowing interest to pay interest, is a part of that total softness in terms of the crisis in Canada, the value of our dollar.
Let us not sit here and play games. We know there is a long-term problem. Because we do not own and control the resources of this country, we cannot make the decisions. We have not looked at Sweden and West Germany in terms of their performance with regard to unemployment and inflation. We are running behind every modern western industrialized country in terms of employment creation. The reason is clear. Those countries control and dominate the economic decisions within their own countries. They do not have this blood-letting every year of paying rents, profits and absentee landlord fees that are driving their currencies under. That is where our currencies have gone.


Peter A. Stollery: It is relative to both sides.


Stuart Malcolm Leggatt: The hon. member for Spadina (Mr. Stollery) should keep in mind that there once was in that cabinet a fellow named Walter Gordon. Even that mild mannered Canadian could not find room in a Liberal cabinet and had to go. Eric Kierans made some noise about owning and controlling our economy. He did too much. Even poor old Herb Gray sitting at the end of the front benches could not find a place inside that cabinet.


Peter A. Stollery: He is still here.


Stuart Malcolm Leggatt: He is not inside the cabinet because the Prime Minister (Mr. Trudeau) will not allow disagreement within cabinet. He has come to the point of total arrogance. He cannot stand anyone disagreeing with him on any subject.
We must start dealing with long term industrial strategy in our country. We must control our economy, make our own economic decisions, raise capital inside this country and not have a continual hemorrhaging of profits, dividends, rents and interest going abroad.
Somebody said there is no free lunch. That is true. However, there are a lot of people in New York, Sweden and London with a free lunch because of the rewards they are getting on their capital. I am a little tired of Milton Freedman economics, an economic philosophy that is now conventional wisdom with both the old line parties. They say the poor and the unemployed have been drawing too much. They believe they have been paid too much in social transfer payments and therefore the economy is soft. Are we going to blame the poor and unemployed for the problems instead of those who have been making the economic decisions in the world for the past 20 years?
As I said, I will not accept Milton Freedman economics which is now conventional wisdom in both the Liberal and Tory parties. Even Franklin Delano Roosevelt is a raving radical as far as the old line parties are concerned. They cannot even accept the mild solutions he proposed during the depression. After the first ministers' conference, it seems it is

only the private sector that can solve our problems. If you eliminate the option of creating jobs, you will not solve unemployment in this country.
The free enterprise sector can do something, but it cannot provide long term solutions, without the assistance of the public sector, without creating jobs. In this country, we have always had to use the co-operation of the public sector to solve our unique problems in transportation and communications. It is part of our history and heritage. Both the Liberals and Conservatives have abandoned that heritage.
The reason our dollar is in a crisis situation is because of ideological fanaticism, a refusal to accept the mildest kind of proposals that have been made by this party in terms of job creation. They refuse to accept the rational approach. No wonder the gnomes of Zurich are unhappy with us. They recognize this government will not move in even the mildest kind of way in order to put people to work in Canada. It is true there is no free lunch. Everybody has to work.


Peter A. Stollery: We heard that before.


Stuart Malcolm Leggatt: It's a great line. I don't want to lose it. It is time that salaries of deputy ministers were cut in half. The problem of paying deputy ministers $60,000 a year is that they become right wing and rich, losing touch with the ordinary people. Maybe if we cut the salary of Tommy Shoyama a bit, he would be more sensitive to what are the policies.


Peter A. Stollery: Let's cut the MP's salary down. I am in favour of that.


Stuart Malcolm Leggatt: Well, let's not go too far.


William James Kempling: Now that cat is out the bag. Here's the fox among the chickens.


Stuart Malcolm Leggatt: The crisis in terms of the Canadian dollar lies in the mismanagement of this country. We agree with the Conservative party on this. There has been an odour of putrefaction coming from the front benches for a long time. We can smell it. We are watching a government collapse. It is nice watching this come down around their ears because they deserve it so much. This is mismanagement. It is ideological fanaticism. It is a failure to appreciate that until you put this country to work, the dollar will not improve on a long term basis. Canada's balance of payments will not improve. Until we own and control this economy, there is no long term solution.


Peter Elzinga: Mr. Speaker, I wish to participate in the debate on the motion moved by the leader of this party and seconded by the leader of the New Democratic Party. It is obvious that this might be the only opportunity I will have to deliver a major speech prior to the coming election. I wish to share with the constituents of Pembina the gratification I feel for the opportunity of serving in parliament on their behalf, but one cannot help but be somewhat saddened after viewing the opportunity this government has wasted in
February 22, 1978

the time that I have been in this House. They brought in a wage and price proposal. We campaigned on that subject. Their program was very different from what we advocated during the 1974 election campaign. They wasted the opportunity to impose restrictions upon themselves.
I should like, Mr. Speaker, to come back to the few thoughts I shared with you on the evening of my maiden speech in this House. At that time I said that the constituents of Pembina had some deep feelings about the governing of their country. I refer to these portions of my speech because one cannot help but be saddened by the way this government has manoeuvred our economy, the moral issues of the day and the national unity debate.
We as parliamentarians have to be conscious of the trust placed in us by our constituents. When we review the leadership this government has offered the Canadian people we find it has been lacking in the three areas I mentioned.
The leadership of this government has not offered any inspiration or courage to the Canadian people. It is still labouring under the delusion that it is possible for a country to spend its way out of inflation. It has not grasped the simple fact that such a policy could only lead to more price increases, more wage demands, more inflation and more unemployment.
Not so long ago, Canada was a nation of people proud of their heritage, confident in their capabilities and purpose and sure of their direction and destiny in world affairs. This confidence and purpose was the cement which held together our federation of widely scattered provinces and racial groupings.
Today, this spirit of national unity and purpose has given way to doubts, fears and uncertainties in every province. Some 30 years ago there were few Canadians who were not convinced that Canada had the capacity, the resources and the will to survive as a strong and independent North American nation. Any suggestions of separation or joining with the United States were ridiculed. Indeed, the Americans supposedly envied the strength of our judicial structure, the soundness of our banking system and economic policies, the integrity and reputation of our police forces, our stability and respect for law and order. Our educational standards were matters of great pride.
In the span of only a few years much of this solid structure has crumbled into decay. We are now groping blindly and wondering just what has happened so suddenly. We are weary of inflation, bureaucracy, political scandals and the false promises of this government. We are tired of this shop-worn government which no longer commands respect.
Canadians today are asking where the answers are, Mr. Speaker. Is a cure possible or must we in sheer stupidity, while having a country rich in resources of all kinds, simply continue down the road to an ultimate bust before we learn a few simple lessons? Past records would indicate that on our present course only a near miracle can save us from a major collapse or some ultimate form of totalitarianism.
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The solution does not lie in some magic or secret formula. Nor is our situation entirely hopeless. The road to recovery in fact is really very clear, but nobody wishes to face facts as the path is painful and heavy going. Certainly the distance cannot be covered carrying ever-increasing burdens of unpaid debts, too high a standard of living, increasing social payments, shorter work weeks and increased minimum wage levels.
But speaking of miracles, what sort of miracle do we need now? In Germany in the 1950's, Dr. Erhard was able within a decade to multiply its industrial potential six times, treble its social services and increase its exports to put it in third position in world trade.
While the success of one country does not necessarily have a direct relationship to experiences elsewhere, as Dr. Erhard pointed out, the fundamental policies he adopted then could be studied with benefit in Ottawa today. As he wrote some years later, he was determined not to countenance any further price increases without keeping the public fully informed about the causes and effects of such harmful moves. He said an end must be put to the absurd game of wage increases following rises in prices, and price increases following rises in pay. A stage must be reached when individual sections are ashamed to put forward demands that are contrary to the welfare of the community as a whole.
The false ideas about distribution of incomes he rejected entirely and held that competition was the only means to secure prosperity. His own experience in Germany, he held, was clear documentary evidence that only by firmly rejecting socialist dogma and affirming a free economic order can prosperity and security be achieved.
If a nation fails to face facts and tries to buy more time with controls and a planned economy, he argued, it can only lead to greater bureaucracy, government interference and ultimate totalitarianism. The undisputed success of his policies demonstrated how much more sensible it was to concentrate all available energies on increasing the nation's wealth rather than to squabble over the distribution of the wealth.
Dr. Erhard suggested at that time what 1 suggest now for Canada. Solutions to Canada's current economic problems cannot be found in still more spending and more borrowing for social services and less individual incentive. If we try to solve long-term unemployment through more welfare, it will simply snare another generation into becoming wards of the Crown. Similarly, our problems will not be resolved outside the country; the essential job is internal. The unity of Canada can never be secured with a sick economy. Miracles can only be achieved when the will of the people can be roused by an inspired leadership.
When speaking of leadership it is interesting to note the stand the Prime Minister has taken and the stand the Leader of the Opposition has taken.


Leslie Gordon Benjamin: Horizontal.

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Peter Elzinga: In an article in the November 27, 1976, Canadian magazine Richard Gwyn amplified the kind of leadership the Prime Minister has given us when he wrote: Canadians, he (Trudeau) said in 1970, must exercise discipline and set aside trinkets like electric toothbrushes. Then he flew off to join the Aga Khan aboard his yacht in the Adriatic.
The Prime Minister has mismanaged the economic affairs of this country to such an extent that he has proved he has no answers to Canada's economic problems. We have had three finance ministers who have failed to bridge the gap between our economic difficulties and the Prime Minister's indifference. Canadians are beginning to believe that there is no solution to this economic mess, and who can blame them when the Prime Minister ignores the situation?
There are answers, Mr. Speaker, and we in this party have offered them to the Canadian people. The Progressive Conservative party, through the voice of our leader, has given clear alternatives and has charted the course that will lead Canada back to economic growth and to confidence in the Canadian economy.
On December 24, 1970 the Prime Minister told the Canadian people that inflation no longer existed, that he had wrestled it to the ground. He said he had cured the problem. Well, Mr. Speaker, it is obvious that the problem has not been cured. The only thing the Prime Minister has wrestled to the ground in this country is private investment.
In another interview on December 28, 1975 the Prime Minister stated that Canada had not been able to make the free market system work, that the government would have to play a larger role in running our institutions and that there is going to be more authority in our lives. Yet when the premiers came together for the recent economic conference in Ottawa, the Prime Minister said exactly the opposite. We cannot believe the words we hear from this man because he contradicts himself so often.
Let me compare his statements with those of our leader, who on May 11, 1977 in Toronto said that during the past decade we have wasted away our economic strength. He said Canada now has a larger portion of its economy devoted to services, including government, than any other western nation. He said that every fifth Canadian worker is employed directly or indirectly by government, that governments' share of the gross national product, the unproductive portion of our gross national product, has doubled in the last decade to 43 per cent.
The trend today is to less government involvement. We find that the policies we have advocated through the many years are now being adopted by the present Liberal administration simply because they are finding that they are being accepted by the Canadian people.
On the issue of unemployment I wish to share with you, Mr. Speaker, statements which the two leaders of our major parties have made. The Prime Minister said that there are people on unemployment insurance who prefer not to work, and they have a perfect right to make that decision. He said a man who
(Mr. Benjamin.]
lives in society should be able to enjoy his own possibilities to the maximum, but work is perhaps not the way to do it.
Let me compare that with the statement made by the leader of our party. He said the current unemployment insurance system is wasteful, inefficient, and in many cases a practical disincentive to work. He said that young people are going to develop attitudes to jobs that are very unhealthy in the long term, and that we will be paying the social cost for years to come. The Leader of the Opposition said that in the next four year we are going to have to provide jobs for more than a million people who are not now in the labour force, and that we have to have economic growth in this country so we can find nearly two million jobs. We in this party are committed to that, Mr. Speaker.
I am not sure how much time I have left, Mr. Speaker, but I wish to share with you a few excerpts from a book that has been researched and compiled by Edward Murphy called "A Legacy of Spending". In so many ways the back cover of this book exemplifies the problem of Canada's economic situation: the headline is "Federal spending still out of control".
The major difficulty we in Canada are facing is that the federal government has lost control of its spending. I wish to give the House some examples of that. In this publication there is an article dated January 17, 1974 in which a member of our party, our present national president, indicated to the House that the Prime Minister has spent $61,000 on office furnishings in his office in Ottawa. He has spent some $297,000 on his own home. This is paid for by our taxpayers. The Minister of Transport (Mr. Lang) flies around the country at great expense to the taxpayer but advocates user-pay when it comes to the carriage of freight.
Another area in which the government is deeply lacking is moral leadership. I want to refer the House to certain Canada Council grants, of which many prime examples are given in this book, but first let me put on the record some of the expenses incurred by the Prime Minister's office at a time when he was telling Canadians they must exercise restraint. Certainly he showed none himself. The cost of operation of the Prime Minister's office for the year 1977-78 is $2,500,000.


Leslie Gordon Benjamin: Fire them all.


Peter Elzinga: That is what we plan on doing after the next election. Let me compare that with the year 1968-69 when the cost was only $767,000. I am amazed how the government can preach restraint yet not exercise it.
On returning to the lack of moral leadership, we find that through Young Canada works the government has financed a documentary film on homosexuals to the tune of $6,600. This is how our government is spending our money.


An hon. Member:: It has to be the Liberals.


Peter Elzinga: Yes, it has to be the Liberals. An article reprinted from the Vancouver Sun for September 2, 1972 carries the headline, "Are gays urging boy seduction with federal money?" That is the kind of thing Canada Works
February 22, 1978

grants are funding. Another article reprinted from the Victoria Colonist for June 25, 1974 carries the headline "Homosexual centre opens on OFY grants". I say disgraceful.


Leslie Gordon Benjamin: What has that got to do with the dollar?


Peter Elzinga: When a government wastes money on things like this it shows it is being irresponsible.


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


John R. Rodriguez: Mr. Speaker, I am pleased to have an opportunity to participate in this debate at this early hour in the morning. I came to Canada from a third world country, after having observed for a long time the development of the banana republics. Now I am part of this great country, and as the years go by I realize Canada is becoming a more sophisticated banana republic. In those republics the main objective is to invite foreign investment in order to sell off resources as quickly as possible. What do we find in Canada? We find exactly the same thing being done today. Our economy is based on selling off resources as quickly as we can.
The hon. member for Don Valley (Mr. Gillies) said in Toronto that it is not shameful to be a hewer of wood and a drawer of water. Canada must give up the idea of becoming a manufacturing country. Our resources must be sold off as quickly as possible. The entire scenario is clear. In 1976 the selling off of resources in raw form provided a surplus of $3 million. Indeed, it was the only sector which showed any surplus. The drop in the value of the Canadian dollar is advantageous to those producing raw materials. It will be necessary to sell more resources in order to make greater surpluses. We should find ourselves in an irreversible position of selling off resources more quickly.
A prime example is the Canadian nickel industry. I am not a capitalist, as some other hon. members of this House are. There is a market system in effect. Supply and demand determines the price. When there is an ample supply of goods and the demand is low, the price should go down. When there is an inadequate supply of goods and the demand is high, the price goes up.
How does this work in the nickel industry? For the last year and a half the price of nickel has been $2.15 a pound. We have been told that there are approximately 420 million pounds of nickel stockpiled which must be unloaded. Why has there been no drop in price? It is still $2.15 a pound. That is an anomaly capitalists such as Chairman Zink find difficult to understand. Chairman Zink is a cousin of Lubor Zink. Why has the price of nickel not been dropped to see if it will move? I do not know anything about those things.
There is no question in the minds of many Canadians that the government has mismanaged the economy. The two old-line parties are not able to change the direction in which Canada is moving in terms of its economic structure. In
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January 1975, in an interview with Bruce Phillips, the Prime Minister (Mr. Trudeau) dared to say the free market system was not serving Canada and that the government might have to interfere in that market system. All hell broke loose in the country. The Canadian Manufacturers' Association, chambers of commerce, members of the Tory party and members of the Liberal party came down on the Prime Minister.
Nowadays we are told that the private sector will have to bring us out of the doldrums and create jobs. We cannot do any more for the private sector. We have given them concession after concession, tax break after tax break. The latest was in the amount of $1 billion. Now the government is going to relax in terms of environmental requirements, but still there are no jobs.
Everything possible has been done for Inco and Falcon-bridge in the Sudbury basin. No government could do any more. Yet we do not have jobs to show for the investment of taxpayers' money in this sector. There has been a lot of mismanagement by the government and by government run corporations. There was mismanagement by the private sector as well. With regard to Inco and Falconbridge, there has been a great deal of mismanagement. With respect to MacMillan-Bloedel in Vancouver, a portion of the surplus generated by the production of the plant was never ploughed back in to modernize the plant. The plant was allowed to run down. Because of that, it was no longer economically viable, and it had to be closed down. It was the same situation with Falcon-bridge in the Sudbury basin. Smelter processing was never improved or modernized, and suddenly, more money is being spent on maintenance. Now they have turned around and indicated that it is not competitive.
It is necessary for them to find a scapegoat. The scapegoat is the workers. They are being accused of not being productive. If workers are given modern equipment, they will produce. That has been done in the steel industry in this country. That industry provided its workers with equipment. The net result of that is that those workers out-produced their counterparts in a comparable industry.
The Canadian steel industry is far more competitive and productive than the American steel industry, because we modernized our steel plants and introduced modern techniques into that sector. That was not done in the Canadian pulp and paper industry. There is the shameful example of Temiskaming where the paper mill was closed down because it was not competitive. In fact, the plant was not modernized and therefore could not be competitive.
We seem to be headed toward ripping out our resources from the ground and shipping them out. It appears that to try to balance the deficit in our payments what we will do is to ship out more of our resources and thus earn more foreign currency in the hope that we will regain confidence in the money markets. This party has said-clearly it is different from the two old line parties in the House-that instead of extricating itself from the economy, the government must put

February 22, 1978
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itself in the middle of the planning process of the economy of this country. That is fairly obvious.
In conversation with the president of Noranda in a program called "Sunday Morning" I was told by him that had INCO not gone into Indonesia, some other company would have done so, so in effect it is better that a Canadian mining company went there. Apparently we gave them some $57 million in EDC loans at low interest. In response, I said that it was fine and I had no problem with that. I understand that INCO has a goal which is to penetrate the Japanese market, and this has led them to locate their plant in Indonesia. INCO has a plan and a goal and it will achieve that goal.
My next question to him was whether those are the goals for Canada. Who does the planning for Canada? In effect, no one does the planning for Canada, no elected leader. The directors or officers make the decisions for Noranda and for INCO and other such corporations. They have their mandate from the shareholders. But who sets the goals for Canada? The government has received a mandate from the people, but the government sets no goals, does no planning or evaluation, has no five year or ten year plan. They have all sorts of estimates of unemployment rates. The new thing now is estimates for the inflation rate. But there has been no structural planning in which the government is involved with the working people of this country and with those who invest money. There has been no planning of the economy of the country and no such thing as sector plans.
There is no planning in the mining sector. I know that the motto of Ontario Hydro says that to the people belong the resources. That may have been true when Ontario Hydro was set up, but we cannot say that today. What are the goals for the mining sector in this country? If the goal is that ore must be used to unlock other sources of wealth for future Canadians, then you start putting into place the kinds of taxation programs that are directed at achieving this goal. You put into place incentive programs, you set up evaluation processes and you put into place programs to help you achieve that goal. We have none of this. There is no sector planning and there is certainly no economic plan.
Let us take a look at those industrialized countries which are at the moment enjoying lowest unemployment rates. Let us take a look at the Japanese economy. There is economic planning there. If you look at the French economy, there is planning there, a five year plan, and they evaluate their programs as they go along to see if they are achieving the goals they have set for their economy.
What do we have in Canada? A government which says that the private sector will do it all. Indeed, the government looks upon the unemployed as the means of bringing down the inflation rate when it is high. In Toronto the other day at a Liberal conference, when the Prime Minister was asked what he intends to do with increasing inflation, he said he expects the inflation rate to go down because workers will demand less in wages next year because there is a large pool of unemployed and they will feel less secure about their jobs. That is Liberal philosophy for you. What they do is to fight inflation on the

backs of the workers of this country. There is no set strategy or plan. They are just following some old fashioned idea that you cannot have high unemployment and high inflation at the same time. That is living in a pipe dream because no plans have been laid out and no goals have been set. All we do is to stumble from crisis to crisis.
Here we are in a crisis where we find the value of the Canadian dollar has dropped to some 89 cents. As I said at the outset of my remarks, I am reminded of the banana republics. You can go to some of those banana republics where for $1 American you can get a good exchange. For example, in Mexico for $1 American you can get 13 pesos; and in Argentina you can get perhaps 325 pesetas or whatever.
That is what Canada is coming to. Very shortly we will be paying $2 Canadian dollars for $1 American. What has happened is that the government have prostituted our currency so that we are reduced to being no more than another banana republic where the resources are taken out very cheaply because the value of our Canadian dollar is at rock bottom. It could very well be that they have discovered the printing presses and are selling off our resources very cheaply, in effect mortgaging the future of Canada, because at the moment the government is borrowing to pay interest on money borrowed before. This results from relying on one's resources and literally tying them up in 25, 40 or 60 years and mortgaging the future of Canada for the short term.
Some pretty tough decisions must be made in this country, but I do not think the government has the backbone to do it. I have often thought they have a wishbone where their backbone should be. They do not have the backbone necessary to make the decisions that must be made in this country. So far as the Tory party is concerned, they are the pretenders to power. I see chairman "Sine" smiling. I do not really think we can entrust-


The Acting Speaker (Mr. Turner):: I suggest the hon. member should refer to members by their titles, not by their names.


John R. Rodriguez: Yes, Mr. Speaker. I hardly think we should turn over the economy of this country to the terrible twins in the Conservative party who aspire to become the twin ministers of finance. That will be the twin-headed monster of finance. It should be quite something to see-the hon. member for Don Valley (Mr. Gillies) and the hon. member for York-Simcoe (Mr. Stevens), Jecky and Hyde.


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


Walter David Baker: Mr. Speaker, I do not intend to enter into this debate except to say that there are no more speakers from Her Majesty's loyal opposition with respect to this matter; and on behalf of all of us in the House I would like to express thanks to the staff who have served
February 22, 1978

loyally, as always. This includes the officers at the table and others who have been with us through this long night, following in the highest traditions of the service of members of this House. I am sure I am joined in this by all hon. members.


Some hon. Members:: Hear, hear!


Stanley Howard Knowles: Mr. Speaker, I am happy to join with the House leader of the official opposition in the words of thanks he has expressed. It is true that just about every time we have one of these debates something like this is said at this time of the morning, and sometimes much later. Even so, I think it ought to be said. We appreciate the extra hours that those at the table and in the Chair have had to be with us. We are glad that the page boys were allowed to go home at midnight. We thank all others, including the protective staff and the television crew. I think perhaps it should be said-indeed I have a hunch-that those who have had to work the hardest have been the members of the Hansard staff, who have been taking down what we have been saying since 12 hours ago.


Some hon. Members:: Hear, hear!


Stanley Howard Knowles: We thank them all, and we hope the debate has been worthwhile.


Edward C. Lumley: Mr. Speaker, having sat here since one minute after eight o'clock I would like to echo what the House leaders of the opposition parties have said.


Leslie Gordon Benjamin: Mr. Speaker, 1 agree with the remarks made by the hon. member for Gren-ville-Carleton (Mr. Baker), the hon. member for Winnipeg North Centre (Mr. Knowles) and the Parliamentary Secretary to the Minister of Finance (Mr. Lumley). However, hon. members will agree that it is a rare occasion when an application under Standing Order 26 is approved by the Chair, and I want to spend a few minutes bringing us back to the matter of whether we should have a floating dollar or a pegged dollar. I thought that was what this debate was all about.
Of course we appreciate the work of the Hansard reporters and the page boys, but none, including my good friend, the hon. member for Nickel Belt (Mr. Rodriguez), and the speaker prior to him, mentioned a word about the purpose of this debate. 1 listened and watched, but I do not think they mentioned it.
As we shut this place down for whatever is left of tonight I would like hon. members to think about whether we should acquiesce in a demand of the United States or anyone else to shore up our dollar when it starts to hurt them. I remember the fabulous fifties when the Canadian dollar was worth 90 cents American. They were the fabulous fifties because we had very little unemployment. Our cattlemen did not do half bad, and I am sure the hon. member for Medicine Hat (Mr. Hargrave) will not disagree with that. Our grain producers were not doing too badly either.
Finance
There was a difference in motive and intent between the Leader of the Opposition (Mr. Clark) and the leader of the New Democratic Party in moving this motion. When Canadian dollars are spent in Canada, they are spent by Canadians, and goods are purchased at Canadian prices. When we purchase goods in Canada, we pay so many Canadian dollars for so many pounds of beef, so many ounces of vegetables or whatever. When the United States government put pressure on West Germany, Japan and Switzerland to upgrade their currencies, those countries said they would upgrade their currencies a little bit as long as they had marbles in their markets. Their markets were in the United States and Canada.
I wish the financial critic for the Progressive Conservative party would stick around because I would like him to explain why it is so important that the Canadian dollar be at par with the American dollar.
Surely the value of our Canadian dollar has to do with the value of our productivity and the value, worth and content of what we produce in competition with people in other countries.


Peter Elzinga: Mr. Speaker, I rise on a point of order. Would the hon. member for Regina-Lake Centre (Mr. Benjamin) permit a question?


Leslie Gordon Benjamin: Of course.


Peter Elzinga: When the hon. member began his remarks, he said he would state his opinion regarding whether he felt our dollar should be pegged or floated. I am curious as to his position on whether the dollar should be pegged or floated. Would he be kind enough to share that opinion with us?


Leslie Gordon Benjamin: Mr. Speaker, I was just getting to that. We are not in favour of a pegged dollar. The value of Canadian production and productivity will be challenged by our competitors in the rest of the world. I do not know why we should throw several hundred million into shoring up an artificial price for the Canadian dollar.
What we are really saying to our competitors, whether they be the Americans, the Japanese, the West Germans, the Swiss or whatever, is that since our products might be shoddy and our productivity might not be very good, we are going to shore up our dollar and give them an artificial value of our dollar. If we are really to find out what the value of our dollar is-which really relates to the value of our production and productivity- and if we really are free enterprisers we will take our chances in our relationships with other countries of the world.
We are against a pegged dollar. I mentioned the fabulous fifties. I thought that would get through to the hon. member who just asked me a question. If we are going to have a clean float, it has to be clean. It has to be like Caesar's wife; it not only seems to be clean, but it is clean.


Crawford Douglas: Can you verify that?


Leslie Gordon Benjamin: When the Leader of the Opposition raised this matter in his application under Standing Order 26, his motivation was different from that of the leader of the New
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February 22, 1978
Finance
Democratic Party. The motivation of the Leader of the Opposition is that of R. B. Bennett all over again. The Leader of the Opposition would blast his way into world markets. Neither he, nor any other spokesman for his party, has told us whether he is in favour of a floating dollar or a pegged dollar. I hope one of them will get up for a minute or two and tell us if they are in favour of it. As my colleague from Nanaimo-Cowichan-The Islands (Mr. Douglas) said the other day on another bill, they are like the oldest profession in the world; they are going to work on both sides of the street.


Peter Elzinga: Mr. Speaker, I should share with the chamber that I was just about to get to that point before I was so rudely interrupted by the NDP and they would not allow me to elaborate on our position on the pegging or floating of the dollar.


The Acting Speaker (Mr. Turner):: I would like to suggest to the hon. member for Pembina (Mr. Elzinga) that according to rule 26(14) speeches will be limited to 20 minutes.


Leslie Gordon Benjamin: I will not take that as an invitation to use up the whole 20 minutes, Mr. Speaker. Canadian industry and production has to stand up. We do not need artificial propping up of hundreds of billions of dollars of reserves. If the Canadian dollar drops another five cents tomorrow, which it will not, that gets a message through to us. In fact, if that were to happen I am sure my hon. friend from Medicine Hat would be very happy for our beef and grain exports, which would stand to benefit. In fact, the employees at the Massey-Harris plant in Brantford would be happy because the drop in the Canadian dollar will mean they will be selling farm implements out of Brantford, Ontario instead of Brazil.
A country has to earn its own way. I wish the Leader of the Opposition or someone in the Conservative party would please tell us whether they want a floating dollar or a pegged dollar. We have said we want a floating dollar. We will produce and we will make good quality merchandise and farm products. When the rest of the world decides "these guys are not doing half bad", they will buy from us at a good return. But we have to sit around at the behest of the U.S.A., who has been putting unholy pressure on the boys on the government side to prop up the Canadian dollar. They tried it with the West Germans, the Japanese and the Swiss. They put pressure on them through the International Monetary Fund and through every mechanism they could think of to increase the value of their currency. Why? So it was better for American manufacturers and producers to compete with economies which were more productive and more efficient.
The president of the Bank of Canada should say to the president of the Bank of America: "Look, we are not propping up our dollars just to help out your manufacturers and your farmers; our Canadian farmers and manufacturers are going to raise, produce and manufacture."
We have been debating the pipeline issue. Do hon. members want to put the Canadian dollar up to par? Ask the boys in the

steel plants in Edmonton, Regina or Welland what their chances are. Do we want to play into the hands of competitors who are much bigger and have more muscle than we have? We do not need artificial support for inflated dollars. We have enough trouble with that domestically.
My hon. friend asked about the cost of our imports. The penalty we pay for a devalued Canadian dollar falls on those who can least afford it. I am thinking of fresh fruits and vegetables which we have to bring in from Mexico and California during the winter. There are other products as well. There is no reason in the world why we could not protect our old age pensioners and veterans and the poor. We could raise old age pensions $50 a month and protect them from higher imported food prices over which we have no control. At the same time we say to the rest of the world that we are going to make our own way with our production and our efficiency on what the value of our dollar is worth to them. We can say to the poor of this country that, through one way or another, whether it is through a tax benefit, food stamps or equalized prices on milk, we can protect the poor and disabled. We can protect the unemployed and we can protect the old from the cost of a devalued Canadian dollar.
Surely that is part of a civilized society. Surely that is part of what a civilized parliament will do. If we are to shore up the Canadian dollar to help American manufacturing capacity, to help American export capacity and to help American corporations who can shut down branch plants in Canada, then we do not want any part of shoring up an artificial price on the value of the Canadian dollar. We will earn our own keep and make our own way.
If that makes me sound like a small "c" conservative, then 1 do not apologize for that. I am sick and tired of Liberals and Conservatives. It was Diefenbaker in the sixties and Chretien in the seventies. In Zurich, Frankfurt, London, New York, Washington, Chicago and anywhere else you want to name in the world, with this decline in the Canadian dollar, which the Minister of Finance has said is so minute, speculators last night and today gambled on some kind of a prospect that the government of Canada will pour in $500 million of the $1.5 billion dollars bought at a quarter or one-third of a per cent less Canadian dollars than they will sell them for tomorrow. We will have shored up the Canadian dollar through the governor of the Bank of Canada. Speculators are competitors in the free markets of the world and they will have made some bucks. Why? Because we are going to prop up the Canadian dollar. Speculators will clear one quarter of a million dollars overnight on a million dollars between yesterday and today.
We have said we are opposed to a pegged dollar. The Leader of the Opposition moved a motion today and neither he nor his colleagues have yet said which way they will go, whether they are in favour of a pegged dollar or a floating dollar.
We think our nation can do a good job in competition without the support of an artificially high dollar. I invite my friends in the official opposition once and for all to say whether they are for or against a floating dollar. Do they want it pegged? If so, they should say so. If they want it pegged,
February 22, 1978

what do they want it pegged at, where do they want it pegged, and when? These economic dinosaurs expect to operate with 1897 and 1917 ideas in the 1970s. Even the Minister of Finance knows better than that. He at least tried to keep his cool.
We support a floating dollar. We have repeatedly stated that if Canadian industry and agricultural producers, who are very good at their work, are going to have a fair chance against those countries with which they are competing, they must have value for their Canadian dollars. I do not care what the governor of the Bank of America does about their dollar. I visited Germany, England and a few other countries this past summer. Both the Canadian dollar and the British pound were bouncing around. No one cried about that. I do not see why this government and this parliament should panic, cry or acquiesce to pressure from the United States treasury.


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


Edward C. Lumley: Mr. Speaker, I hope the opposition respect the fact that for the past two hours there has not been a quorum in this House. I thank my colleagues, the hon. member for Saint-Denis (Mr. Prud'homme) and the hon. member for
Finance
Spadina (Mr. Stollery), who acquiesced to the hon. member for Bruce-Grey (Mr. Douglas) not calling for a quorum in the last two hours. I hope the opposition respect that fact.


Steve Eugene Paproski: Mr. Speaker, I really do not think that is a fair remark at this time of the night. There has in fact been a quorum throughout the evening. If members were not here in the chamber, they were in the lobby watching the proceedings on the monitor. That is an unfair statement.
At this stage of the evening, Mr. Speaker, I would like to thank you and the staff-


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


Steve Eugene Paproski: Mr. Speaker, I am just trying to thank you and the staff for your courtesy in remaining with us this evening.


The Acting Speaker (Mr. Turner):: As I said before, I love you all! Pursuant to Standing Order 26(13) I am satisfied that the debate has been concluded, and I therefore declare the motion carried.
This House stands adjourned until 2 p.m. this day, pursuant to Standing Order 2(1).
At 2:14 a.m. the House adjourned, without question put, pursuant to Standing Order.
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Thursday, February 23, 1978