1978-11-22

Mr. Joe Clark (Leader of the Opposition):: Mr. Speaker, I rise, under the provisions of Standing Order 43, on a matter of urgent and pressing necessity. My motion concerns the refusal of this government to bring before parliament all aspects pertaining to the state takeover of Pacific Petroleums by Petro-Canada.
I therefore move, seconded by the hon. member for North-umberland-Durham (Mr. Lawrence):
That the annual report of Petro-Canada, together with the subject matter of the takeover of Pacific Petroleums, be referred immediately to the Standing Committee on National Resources and Public Works,


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


TRANSPORT
Mr. Tom Cossitt (Leeds):: Mr. Speaker, I rise on a matter of urgent necessity concerning the fact that the government has called for proposals for the leasing of the grain elevator at Prescott, Ontario, rather than continuing on the present basis under which it is operated by the government at a substantial profit.
I would move, seconded by the hon. member for Grenville-Carleton (Mr. Baker):
Whereas the government has not made clear its full intentions, and whereas members of local 583 of the United Food Processors Union at the Canada Starch Company in Cardinal, and public service employees at the elevator itself, have expressed deep concern about the impact this situation will have on their
job security, this House requests the Minister of Transport to immediately clarify the matter in a way that will not affect job security in these areas, and also that he guarantee the Prescott grain elevator will not be leased to foreign interests, particularly United States interests which reportedly have some advance arrangement with the government which can only be considered highly improper.


Mr. Speaker:: The presentation of such a motion for debate at this time would require unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.

[ Translation]


AGRICULTURE
Mr. Adrien Lambert (Bellechasse):: 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.
Because, when he announced the dairy policy of the government for 1975, the Minister of Agriculture (Mr. Whelan) stated that the support price of industrial milk would be revised periodically to take into account increases in the cost of production of 4 per cent or more; because production costs have risen to an extent that would justify a higher support price; I move, seconded by the hon. member for Richmond (Mr. Beaudoin):
That this House urge the Minister of Agriculture to authorize an increase in the support price to be paid fully and directly to dairy producers, that it be recommended to them that they spend a few cents per additional hundredweight on publicity urging the people to consume more dairy products.


Mr. Speaker:: According 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.

November 22, 1978
Oral Questions


PARKS CANADA
Mr. Andy Hogan (Cape Breton-East Richmond):: Mr. Speaker, I rise, under the provisions of Standing Order 43, on a matter of urgent and pressing necessity. In view of statements of the Minister of Industry, Trade and Commerce (Mr. Horner) urging Canadians to take domestic vacations, and in view of the fact that Parks Canada has cut down the operating season for Fort Louisbourg by four weeks, I move, seconded by the hon. member for Northwest Territories (Mr. Firth):
That the Minister of Indian Affairs and Northern Development immediately restore the full tourist season at the fortress to promote tourism and local employment, and his department begin immediately on the restoration of the Royal Battery as requested by the Louisbourg and District Planning and Development Commission.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.



ORAL QUESTION PERIOD


Charles Joseph Clark: Mr. Speaker, my question is directed, I suppose, to the Acting Prime Minister, pro tern, who I think is the minister of everything across the way. My question relates to an answer given by the Prime Minister yesterday to my colleague, the hon. member for Grenville-Carleton, who was inquiring about any guidelines that might exist in relation to the role of deputy ministers who serve on Crown corporations.
The Prime Minister indicated that the purpose of the presence of the deputy ministers or other representatives of the government on Crown corporations was to ensure that they represent the interests of the government. What is of concern is the possibility that their presence may confer some special advantage upon a Crown corporation; that is a matter which is of concern both to the public and to the public service. In light of the possibility of some special advantage being conferred upon Crown corporations which is not available to their competitors, because of the presence of deputy ministers, 1 wonder if the government is now considering the preparation of any guidelines to cover the conduct of deputy ministers in that kind of situation? If the government is considering such a prepara-

tion, could we have an undertaking now that these guidelines will be presented to the House of Commons?


Hon. Otto E. Lang (Acting Prime Minister):: Mr. Speaker, of course, it is the nature of some Crown corporations that they are in a very special position in the economy as instruments of government policy in order that certain things can be accomplished which would not happen otherwise in the private sector through the ordinary operations of the free enterprise system. In that sense, a very close relationship, obviously, is a rather natural thing.
It has been our broad practice to distinguish between those corporations which are in that position, where they are relying very heavily on ongoing votes of money from this House for their continuing work, from those others where they have a greater amount of independence and are more in the straightforward competitive field. I am thinking now of the moves we have made in relation to CN and Air Canada.
Generally speaking, I would say that as we see a Crown corporation move into the second category, we tend to move away to independent boards of directors as well and sever that closer connection except through the appropriate forms of capital budget approvals and such estimates as may be required in this House for specific projects which they undertake at our request.


Charles Joseph Clark: Mr. Speaker, I take it, then, that there are no formal guidelines and, indeed, that the informal guidelines, if they exist at all, are very general. If that is incorrect the minister might want to correct it when he rises.
My specific question now is, is it the practice of the government, in relation to a Crown corporation such as Petro-Canada, to restrict in any way the activities of any deputy minister who might be present on the board of that Crown corporation to a role that would narrowly ensure that the specific purposes of the Government of Canada are accomplished by this Crown corporation? If so, is that restriction conveyed by way of any guidelines or any kind of communication?.


Otto Emil Lang: Mr. Speaker, the question is essentially too general in its nature. The reason for not having a specific or single set of guidelines is that each of those Crown corporations may be quite different from the others in the exact purpose they are to serve, and in the exact relationship between the Crown corporation and the government. Therefore, if the hon. Leader of the Opposition has a specific question about a specific relationship, it would be better directed to the minister with the responsibility for the Crown corporation, or at least to the minister whose deputy minister is serving on that board.


Charles Joseph Clark: Mr. Speaker, the reason I am addressing these questions generally is because there is an increasing policy on the part of this government to become active in more and more
November 22, 1978

areas of the economy. I am interested in the general policy that applies in this situation.
Can the Acting Prime Minister tell this Elouse, in relation to this general policy, whether there are any restrictions on deputy ministers who serve in a capacity as members of the board of Crown corporations as to the transmission of inside information pertaining to the policies of the Government of Canada to other directors of the same Crown corporation?


Otto Emil Lang: Again, Mr. Speaker, I would say that that question is put too broadly. There may be times when a specific form of government information is needed and is exactly part of the way in which the corporation would carry out its mandate.
That has no reference whatever to the recent debate about Petro-Canada. It is not this government's view that greater intervention is required in general by the government in the private sector; but nonetheless, notwithstanding our broad belief that the private sector is the basis and the mainstay of our development in Canada, it continues to be our belief that it may be necessary occasionally to take steps where we or Crown corporations are involved. I would think that the acquiring of a big oil company from otherwise foreign interests is a very good step indeed.


Charles Joseph Clark: Mr. Speaker, the Committee for an Independent Canada does not agree with that, and the minister has overlooked the fact that 30 per cent of the shareholders of Pacific Petroleums are Canadian citizens.
In light of the fact that there are a wide number of concerns resulting from the discrepancy between the view as stated by the minister, and the government's practice in acquiring airlines one day and oil companies the next day, I wonder if the Acting Prime Minister would be prepared to give this House an assurance that the government would make an immediate reference to the appropriate standing committee of the House of the annual report of Petro-Canada, with specific reference to the possibility of that committee having a mandate large enough to look into the several questions arising from the proposed acquisition by Petro-Canada of Pacific Petroleums?
Would the Government of Canada make that reference immediately, so that the Parliament of Canada can look quickly into the implications of an arrangement which causes very real concern across this country?


Otto Emil Lang: Mr. Speaker, I will certainly convey that request to the government House leader. I am sure it has been noted by the ministers responsible for this area.
I would say, again, that the Leader of the Opposition is quite wrong to take note of the purchase of Nordair as some acquisition by the government that is in some strange way inconsistent with our policy. That was made for a very specific reason having to do with the whole restructuring of airlines. As the hon. member knows, it was Premier Lougheed, a Conservative, who acquired an airline, apparently intending to keep it, and only agreeing gradually to dispose of it after I talked to him about the matter.
Oral Questions


DEPUTY MINISTERS ON BOARDS OF CROWN CORPORATIONS REPORTING BACK TO MINISTER
Mr. Allan Lawrence (Northumberland-Durham):: Mr. Speaker, I have a supplementary question for the Acting Prime Minister. Obviously, if the purpose of having senior civil servants and deputy ministers on these corporations is to solidify and to be an implementation of public policy, at the very least the top civil servants or the deputy ministers on the board have to report back to the minister. There is at least an expectation that they will report back.
Surely there is some general policy. Is there some general policy, is there some directive, is there some guideline in respect of the manner of reporting back to the minister by the deputy minister, especially in the sensitive post of Deputy Minister of Finance in a time of budget-making? Are there guidelines? Is there policy in respect of that particular matter?


Otto Emil Lang: Mr. Speaker, I did indicate that the various corporations involved are so different in their make-up and the nature of their role in the private sector, or in the economy generally, that that question cannot be answered in a general fashion. If the hon. member would like to put it in committee in relation to each of the corporations in question, I am sure he can be answered fully then.


REPORT OF DEPUTY MINISTER TO MINISTER OF FINANCE
Allan Frederick Lawrence: Mr. Speaker, it is unbelievable that there is no general policy. May I now put a question to the Minister of Finance? How did, when did, and what did the Deputy Minister of Finance report to the Minister of Finance just prior to the budget, in respect of the Petro-Can, Pacific Petroleums deal?


Hon. Jean Chretien (Minister of Finance):: Mr. Speaker, I was informed at the time by my deputy minister of the desire of Petro-Canada of the acquisition of these corporations. In relation to the retractable term preferred share system, I should like to give information to the House that this system was used by Petro-Canada two years ago when they acquired Atlantic Richfield of Canada, they negotiated the same type of operation when they tried to acquire Husky.
When people are trying to convey the impression that they could have been informed by my deputy minister, in fact this technique was known by Petro-Canada for two years and had been used two years ago. The hon. member should not be afraid that the Deputy Minister of Finance had given any indication before the budget.


PUBLIC SERVICE
Mr. Edward Broadbent (Oshawa-Whitby):: Mr. Speaker, may I put a question to the Secretary of State. On November
80067 - 1 5 Vi

November 22, 1978
Oral Questions
16 I asked the minister about the firing of Mr. Garth Brewer by the Department of Revenue because he had decided to become a candidate for the New Democratic Party in the recent election in New Brunswick.
In his letter to me, which arrived this morning, the minister seemed to give his full support to the commission's decision that, by becoming a candidate, his function in the civil service would be impaired. Considering that the Liberal candidate in the riding of Winnipeg North is on leave from a senior position in the minister's own department which involved making recommendations on grants to ethnic groups, would the minister agree that such a position is at least as politically sensitive as that of a clerk in a Customs department in New Brunswick? If so, what action does he plan to take to see that Mr. Brewer is treated justly?


Hon. John Roberts (Secretary of State):: Mr. Speaker, I am slightly surprised at the interpretation the hon. member places on my letter. It is not for me to support, endorse, criticize or deny the decision of the Public Service Commission. It is really my function simply to report, which I was seeking to do without editorial gloss, the news which had been conveyed to me by the Public Service Commission.
If the hon. member interpreted my letter as either an endorsement or criticism of the Public Service Commission, he is mistaken in this regard. He has asked me to intervene. I gather from his comments he is asking me to take some course of action, perhaps to overrule the Public Service Commission or have their opinion changed. I do not have that power, so I would not intend to follow the advice of the hon. member in that regard.
[DOT] (M22)
I can add, however, that if he were to think there was some sort of calculated plot against the New Democratic Party there is, in the Post Office, a Mr. Serle who applied for and was granted leave to seek the NDP nomination for Brandon-Sou-ris, Manitoba. Mr. Serle has not yet taken his leave; he is waiting for the writs to be issued. In that case, at least, the solicitation of an NDP nomination has not, as a result of the Public Service Commission or the department's actions, been denied. So the case which he has raised is one that you can see was considered by the Public Service Commission as an individual case. The conclusion that they came to is their conclusion and I simply reported it to the hon. member.


John Edward Broadbent: Mr. Speaker, a question of fundamental rights is really involved. I raised the Liberal candidate's position, not to disagree-because we fully support that man having the right to run-nor to raise the general question about discrimination against candidates in my party. I am talking about a particular man who was denied. The minister said in his letter:
The department, therefore, took the necessary action to deal with this offence.
It is for this reason that I said to the minister that he seemed to agree with the commission. Since other courses of action were open to the commission, short of dismissal, it was not

necessary for them to take this action. Would the minister intervene, as a minister of the Crown who has some responsibility in this area, to ensure that this man gets his job back? It is absurd to pretend that the function he has in the civil service would be impaired if he became a candidate for any political party.


John (Moody) Roberts: Mr. Speaker, I will consider the hon. member's representations, but I must say my response at this moment is that my responsibility is to report. It is not to make my own assessment of the justice of the case and to intervene with the Public Service Commission to impose my assessment on them. I believe that is not the role of the Secretary of State in his relationship with the Public Service Commission.
I will reflect on the hon. member's remarks, but it would be wrong for me to mislead him by saying that it was likely, as a result of that reflection, that I would take the course of action he has recommended.


John Edward Broadbent: Mr. Speaker, my final supplementary question is this: since there is no provision in the law that permits another appeal by this individual, I ask the minister to consider very carefully what he has just said, which seems to lead to a negative conclusion. Considering this man is not doing a job that any reasonable person could consider to be politically sensitive, and considering that there is no other recourse open to the individual, he has lost his job, and there was no criticism about it before, will the minister intervene on his behalf and urge reinstatement? Also, will he consider amending the laws that now exist to avoid such cases in the future?


Some hon. Members:: Hear, hear!


John (Moody) Roberts: Mr. Speaker, I assure the hon. member, as I did in my previous answer, that I will consider it very carefully. 1 do not want to mislead him by saying now that there is a course of action which I am disposed to take, that is to say, the one which he recommended. There is perhaps an alternative which I will also look into, that of the Human Rights Commission being seized of the issue.
I must say to the hon. member honestly that on the basis of the exploration which I have so far undertaken, while I would consider seriously what he has recommended to me, I cannot say at the moment that I am disposed to follow the recommendation that he has made.


AGRICULTURE
Joseph Adrien Henri Lambert: Mr. Speaker, my question is for the Minister of Agriculture and relates to the dairy
November 22, 1978

industry. As in the case of many other matters, this question must be raised from time to time.
The heads of the federation of Quebec agricultural producers are now meeting with federal members of parliament to inform them of their grievances concerning the indexation of industrial milk support price. Could the minister tell the House whether he has received representations to this effect from the authorities for this federation? As far as the Canadian Dairy Commission or the Department of Agriculture are concerned, were these representations examined in order to determine by how much production costs have gone up and to raise the support price accordingly, if need be, in a reasonable proportion?


Hon. E. F. Whelan (Minister of Agriculture):: Mr. Speaker, the formula that is used for pricing and triggering the support price for industrial milk products showed that it should be triggered, I believe, around October 1. The statistics we use are from Statistics Canada. It takes about three months to have them finalized, so that you can tell when the price should be triggered.
However, the Canadian Dairy Commission has authority to recommend to the Minister of Agriculture certain changes at any time they see fit. They recommend that at the present time we not go ahead with a price increase because it would not necessarily be beneficial to the producers of the product, as consumer buying would probably back off if the product were priced too high. In turn, they would stockpile more industrial products. We have a surplus, although not a big one, at the present time. Therefore, they would not be enjoying the extra income some think they would be receiving.
We have a new program advertising industrial dairy products which is just getting off the ground. We are satisfied that this will be beneficial. I understand the Canadian Dairy Commission will be making a written recommendation to me within the next few days on just what action we should take.
[ Translation]


Joseph Adrien Henri Lambert: Mr. Speaker, in view of the minister's answer, I would like to ask him if, following the recommendations of the Canadian Dairy Commission, a price is set and an increase decided?
Can the minister take the necessary action, even if that means amending some regulations, to ensure that the increase is passed on directly and totally to producers and that the producers, on their part, agree to put a few cents a hundredweight at the disposal of their organization or the Canadian Dairy Commission to help finance publicity aimed at encouraging Canadians to consume more Canadian dairy products?


Eugene Whelan: Mr. Speaker, we are running an advertising program with the dairy producers and processors to do just what the hon. member is asking be done. I generally follow the
Oral Questions
Canadian Dairy Commission's recommendations. As I said, they are concerned about a drastic increase in the price of industrial products which would turn off the consumers. At this time, I do not know what their final recommendation will be to me. However, I am sure it will be for the benefit of all concerned, both the consumers and the producers.


ADMINISTRATION OF JUSTICE
Right Hon. J. G. Diefenbaker (Prince Albert):: Mr. Speaker, my question is directed to the Minister of Justice. On October 24, Keith Richards was convicted of possession of heroin. He is famous for being connected with The Rolling Stones. He had previous convictions for the same offence a week before coming to Canada the last time. He was given a suspended sentence of one year and was admonished to improve his general situation with respect to drugs.
I endeavoured to move a motion in the House the next day calling for action to be taken to appeal that ridiculous and preposterous sentence. It was turned down by the Minister of Justice, who was vocal on that occasion, and other Liberal members. At that time-


Some hon. Members:: Order.


Mr. Speaker:: If the right hon. member has a question, would he put it forthwith, please.


John George Diefenbaker: I always have to make it clear. Apparently I cannot do it, Mr. Speaker.


Some hon. Members:: Order.


Mr. Speaker:: The right hon. member has already had a rather generous preamble. Would he put his question.


John George Diefenbaker: Mr. Speaker, it is most unusual that I am treated generously by you.


Some hon. Members:: Shame.


John George Diefenbaker: If that's the way you want it, all right.


Mr. Speaker:: Order, please. The hon. member for Peace River.


NATIONAL SECURITY
Mr. G. W. Baldwin (Peace River):: Mr. Speaker, 1 have a question for the Solicitor General which relates to the rather

November 22, 1978
Oral Questions
ridiculous affidavit filed by the minister under section 41(2) of the Federal Court Act denying access by Douglas Creighton and Peter Worthington of the Toronto Sun to 548 documents which reputable counsel says are necessary to their defence against charges under the Official Secrets Act.
Since this government action and that of the minister is in violation of ordinary principles of criminal law and could lead to a possible miscarriage of justice, and since it also indicates vindictiveness and bad faith on the part of the government on this particular issue, will the Solicitor General review his decision and withdraw his affidavit?


Hon.   J.-J. Blais@Solicitor General: Mr. Speaker, the hon. gentleman knows full well that the charge was laid under the Official Secrets Act, and no comment is to be made by me on a matter which is sub judice. I wish the hon. gentleman would abide by the same principle.
There were two affidavits filed. One related to section 41(1) of the Federal Court Act and dealt with some 16,500 documents which are made available to the court in order that the court may determine the validity of the grounds I have advanced in terms of the documents themselves, in terms of their sensitivity and in terms of the necessity of not producing those documents during the trial.
As for the 548 other documents which are the subject of the second affidavit, Mr. Speaker, the reason for that affidavit being filed is simply that it relates to documents obtained from third country agencies and the hon. gentleman knows, or ought to know, that the security we maintain with third country agencies must be respected and is dependent upon the confidentiality of information received.


Gerald William Baldwin: Mr. Speaker, on the question of sub judice, I am dealing with bad executive action, not questioning what is before the court. Having in mind the admission of one former solicitor general that he signed a letter containing inaccurate information, and bearing in mind it is very doubtful that this Solicitor General examined every one of those 548 documents, would he not withdraw his decision and allow the court to examine the documents and make its own decision?


Mr. Blais:: The major portion of those 16,500 documents, as I have already indicated to the hon. member, are subject to section 41(1); the court will have access to those documents and will review them. I have spent the better portion of 17 hours going through every File containing those documents, and I stand by the affidavits I have filed.


Some hon. Members:: Hear, hear!


PRESENCE IN GALLERY OF SECRETARY OF STATE FOR THE UNITED STATES OF AMERICA
Mr. Speaker:: Before continuing with the question period, may I invite all hon. members to join with me in signalling the

presence in our gallery of a very distinguished visitor in the person of the Secretary of State for the United States of America, the Honourable Cyrus Vance.


Some hon. Members:: Hear, hear!
* # *


NATIONAL SECURITY
Mr. Speaker:: The hon. member for Peace River for a final supplementary.


Gerald William Baldwin: My final supplementary is directed to the Prime Minister. As this instance of government secrecy follows on the heels of the refusal of the Prime Minister to live up to his undertaking to Mr. George Bain of the Toronto Star to make available to Mr. Bain certain documents in the Treu case, will the government get off their collective, asinine fear of secrecy, words which the Prime Minister well understands, and bring in strong freedom of information legislation first promised in this House by Mr. Mitchell Sharp in February of 1976 and, by so doing, pension off this ridiculous section 41(2) of the Federal Court Act and the discredited part of the Official Secrets Act which we have been talking about?


Right Hon. P. E. Trudeau (Prime Minister):: Mr. Speaker, there seems to be a lot of confusion in that question. I do not know whether I can draw all the threads of it together, in spite of the hon. member's asinine considerations.


Some hon. Members:: Oh, oh!


Pierre Elliott Trudeau: He referred to a promise I made to George Bain. That promise had to do with saying we had no objection if NATO had no objection. They were NATO documents which somebody had worked on. I still have no objection if NATO wants to produce them, and if Mr. Bain wants to address himself to NATO I see no objection to that.


An hon. Member:: He did.


Pierre Elliott Trudeau: Well, he did? Then complain to NATO. 1 don't know what NATO will say. They are not our documents, Mr. Speaker, they are NATO documents and it is NATO which asked certain individuals to work on them. 1 have no objection if NATO wants to respond to the advocate of Mr. Bain sitting on the opposition benches here.
As far as section 41(1) is concerned, I know the hon. member has stated before that he thinks this section should not exist. That is a matter of disagreement. We think the government cannot discharge itself of its obligation to protect documents which, as the Solicitor General has said, were given to us in confidence by other countries. When they make us party to their information and security operations, such documents are given to us on the understanding that we will not make
November 22, 1978

them public. I am surprised to hear the hon. member say we should go back on our word and just treat these matters very lightly, as I know the hon. member would.


SOCIAL SERVICES
Mr. James A. McGrath (St. John's East):: Mr. Speaker, my question is directed to the Minister of National Health and Welfare. Now that the minister has held the meeting with her provincial counterparts, a meeting to which she had to be shanghaied in order to get her to attend, and now that the block funding proposal as presented in a bill before the last parliament is dead, can the hon. lady tell the House whether she has set a ceiling on the amount of funds to be transferred to the provinces under the Canada Assistance Plan for social welfare programs and, if so, what is the amount of that ceiling? Would she also tell us whether she consulted with the provinces before setting that ceiling?


James Aloysius McGrath: Mr. Speaker, given the penchant of this minister and of this government to act unilaterally, and given the fact that the provinces have been trying to have this meeting since September 1, since which time two bills have been presented to us, specifically the unemployment insurance legislation which is of special concern to the provinces, as the minister well knows, because it will transfer some of the responsibility for unemployment to the provinces, thus adding to the welfare burden, will the minister consult with the provinces either bilaterally or on a multilateral basis, especially with provinces such as New Brunswick which has already told the minister it will be obliged to pay an additional $8 million in welfare on account of the changes in the Unemployment Insurance Act and the decrease in the amount of the equalization payment?


Miss Begin:: Mr. Speaker, 1 would remind the hon. member that the Canada Assistance Plan is made up of two sections, the largest being a federal payment of about $1 billion a year which goes to personal welfare. This is a cost-shared program
Oral Questions
on a 50-50 basis which we intend to continue, fully honouring our commitment. I remind the hon. member that the restraint program put to the Canadian nation by the federal government last summer was accepted by all my provincial colleagues, and their own governments have set the tone by agreeing with the Prime Minister last February. They have the same problem we do: there is no more money in their budgets than there is in ours.
We are all honouring the CAP commitment to provide personal welfare to protect Canadians who are having difficulties because of unemployment or for other reasons. As a result of the reduction in the monthly family allowance, some of the richest provinces will lose small amounts of revenue because family allowances are taxable. But I remind the hon. member that the huge additional child tax credits and the increased guaranteed income supplement will be spent in provincial economies. More money will therefore be made available to them as a result of the federal sales tax cut.


James Aloysius McGrath: Mr. Speaker, the minister did not really address my question. There is concern in the provinces where unemployment is highest and, consequently, where welfare is highest. This applies particularly to the five eastern provinces. Given the fact that in their presentation yesterday, the ministers lumped the UI proposals, the family allowance proposals and block funding all together-because obviously these things are of concern to them-will the minister consult with the provincial ministers, either on a bilateral basis or meet with them in the Atlantic provinces and Quebec, where unemployment is most concentrated, to discuss ways and means of offsetting the additional burden which will be placed upon them by the proposals which are now before the House in the bill sponsored by her colleague, the Minister of Employment and Immigration, dealing with unemployment insurance? Will she deal with that, because she knows that this will mean a substantial additional burden on many provinces and municipalities?


An hon. Member:: You voted for it.


Monique Bégin: Mr. Speaker, I would like to make it quite clear that if the welfare rolls of the provinces become larger-we have estimated the cost will increase by $50 million-the UI program is being tightened up and there will be a saving of over $700 million to the Canadian taxpayers. We are going to share half of the additional welfare cost through CAP personal assistance.
When the very generous UI program was first introduced a few years ago, the provinces made a lot of money because many people were taken off their welfare rolls. I remind the hon. member that, generally speaking, the philosophy of the welfare ministers of the provinces favours tightening up the Unemployment Insurance Act much more.

November 22, 1978
Oral Questions FINANCE


RELATIONSHIP OF NET NATIONAL DEBT TO GROSS NATIONAL PRODUCT
Mr. Paul E. McRae (Fort William):: Mr. Speaker, my question is for the Minister of Finance. It has to do with the national debt, which is a meaningful subject only if it is compared with income. In 1952 the net national debt was 52 per cent of the gross national product; in 1962 it was 33 per cent; in 1978-


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


Paul Edmund McRae: With the amount of borrowing that has been going on in the last year and which will be going on in the next year, can the minister assure us that this debt will remain well below 25 per cent or well below 30 per cent, which is the average for this period?


Joseph Jacques Jean Chrétien: Mr. Speaker, I can give the assurance to the hon. member that the present debt level in relation to the gross national product level is well below what it was in 1962, when it was 33.4 per cent. For this year it will be 18.9 per cent.


Some hon. Members:: Hear, hear!


RESEARCH AND DEVELOPMENT
Mr. David Orlikow (Winnipeg North):: Mr. Speaker, I would like to direct a question to the Prime Minister. In view of the fact that many of the largest multinational corporations in Canada allocate very small percentages of their research and development expenditures to their Canadian subsidiaries, and since this failure has meant the loss of thousands of skilled jobs in Canada, was this question discussed with the U.S. Secretary of State in meetings in the last couple of days?


Pierre Elliott Trudeau: Mr. Speaker, I will have to inquire. I myself did not discuss this subject with the Secretary of State of the United States. We discussed mainly international issues, disarmament in particular.


GOVERNMENT POLICY VIS-A-VIS RESEARCH BY MULTINATIONAL CORPORATIONS IN CANADA
David Orlikow: Mr. Speaker, my supplementary question is to the Minister of Industry, Trade and Commerce. Has the government any views on what the appropriate level of research and development expenditures by these multinational corporations should be in Canada, and does the government have any intention to discuss this marked reluctance of multinationals to establish effective research and development programs in Canada with their corporations; or

does the minister believe that the tax concessions and writeoffs offered by the Minister of Finance in his budget the other day will be enough to persuade them to invest in research and development in this country?


Hon. Jack H. Horner (Minister of Industry, Trade and Commerce):: Mr. Speaker, we have stated publicly that we would like to see the private sector spend 1.5 per cent of our gross national product on research and development in this country. With regard to every application before the Foreign Investment Review Agency respecting new companies or the takeover of existing companies, we stress that a greater amount of research and development should be conducted by corporations and in some cases multinational corporations which are coming into Canada.

[ Translation]


CORPORATE AFFAIRS
Mr. Roch La Salle (Joliette):: Mr. Speaker, my question is directed to the Minister of Finance. Last Monday the minister confirmed that the proposed Manulife-Standard Life merger agreement had been cancelled. Now can he tell us the real reasons behind the failure of those negotiations?


Joseph Jacques Jean Chrétien: Mr. Speaker, it does not fall on me to give the real reasons for this development, it is up to the companies to give explanations to the public. I think they have issued a press release and I was told that Standard Life intends to keep operating in Montreal. When this whole matter was submitted to me, I was concerned with maintaining the rate of employment in Montreal and I thought this was the best solution. According to Standard Life, things seem to have improved and it has decided to stay in Canada. I am very happy about it.


INQUIRY WHETHER STANDARD LIFE WILL STAY IN MONTREAL
Roch La Salle: Mr. Speaker, following the comments of the minister which we found interesting, could he tell us also whether he has been assured that the Standard Life Company estimated $200 million surplus will remain in Canada and whether it will continue to operate in Montreal with the same labour force? What kind of assurance did he receive to tell us that the company will remain in Montreal and will keep the same labour force for the benefit of Montrealers or Quebeckers working there?


Joseph Jacques Jean Chrétien: Mr. Speaker, I am pleased that the officials of the company have decided to continue to operate and I hope that the climate in Quebec will improve to enable them to operate in both official languages so that they may be in position to serve their clients throughout
November 22, 1978

Canada. As for the mandatory reserves of course they must comply with the standards set by the superintendent of insurance of Canada and they must maintain the necessary level to protect their policyholders in Canada.


IMMIGRATION
Mr. Ray Hnatyshyn (Saskatoon-Biggar):: Mr. Speaker, my question is to the Minister of Employment and Immigration and it relates to the proposed admission to Canada of the Vietnamese people on the Hai Hong.
Can the minister inform the House as to the authority upon which these refugees are being brought to Canada? The Hai Hong is assumed to have arranged its voyage with the co-operation of ship operators who have collaborated with a Vietnamese policy of allowing persons deemed undesirable to leave the country in return for their money and other possessions.


Hon. Bud Cullen (Minister of Employment and Immigration):: Mr. Speaker, I doubt that anyone who is familiar with the plight of these individuals would deny the fact that they are refugees. It has been determined in a prima facie way by the United Nations High Commissioner that they are refugees. During the Second World War there were many people of the Jewish faith who paid exorbitant sums of money to get out of a particular country. I do not think anyone would deny that they were refugees. This is an escape route which has been found by some people.
I think it is reprehensible: I think very little of people who trade in this kind of human tragedy. My suggestion has been that these people should be allowed off the ship, that the ship should be seized and sold and that the money be used to look after the refugees. However, we are not going to turn our backs on these people who are in very desperate need.


Ramon John Hnatyshyn: Mr. Speaker, I-and I think everyone in this House-accept absolutely the proposition that people are being victimized. However, I am concerned about the over-all refugee problem and the quota the government has on refugees, and I am concerned about the position the government is taking with respect to this particular Vietnamese policy.
This government is becoming an unwilling partner in a situation in which the Vietnamese government is apparently victimizing people. The situation is very tragic. I wonder if the minister is taking any steps regarding this apparently growing international situation. We may be faced with the very same situation again in the not too distant future.


Jack Sydney George (Bud) Cullen: Mr. Speaker, this matter is obviously of concern to the Canadian government. We are concerned about the actions which are being taken, but I do not think that those who are being victimized should be punished. To the credit of the Malaysian government, I must say that that government
Oral Questions
has accepted in excess of 35,000 people who have been considered to be legitimate refugees. The Malaysian government does not want to do anything to encourage this particular trade.
In this particular instance, we just felt some action had to be taken. We have taken what we think is an appropriate step. Probably we could have taken more, but obviously it has acted as a catalyst: it has made Canada a leader in this particular instance. I am very pleased to see that other countries have now taken up our initiative. We are concerned, as Australians and others are, about the impact of encouraging people in this particular way. That is something we will have to look at. I think probably the United Nations is the proper forum in which to do that. Right now they are people in need, and we are going to help them.


Some hon. Members:: Hear, hear!


POST OFFICE
Mr. Stan Darling (Parry Sound-Muskoka):: Mr. Speaker, my question is directed to the Postmaster General. Considering the great concern the decision of the Postmaster General has engendered in the Canadian direct mail industry, and noting that various alternatives to postal services are being considered by the direct mail industry which will lead only to an even higher deficit for the Post Office, is the Postmaster General now willing to review his decision to increase postal rates? Is he looking at alternatives to reducing the Post Office deficit, including introducing a heavy dose of healthy labour-management relations?


Hon. J. Gilles Lamontagne (Postmaster General):: Mr. Speaker, I think there is no question of reviewing our decision about postal increases. Consultation has taken place with direct mailers and I think they understand our situation very well. I think they realize, if we want to act on businesslike principles, that we had to act the way we did.
As far as labour-management relations are concerned, I think we are doing everything we can at the moment to return to a climate of stability. We had a meeting today with the union in an attempt to discuss grievances and the differences we have with them. In general, the atmosphere is much better than it was before the strike.


Stan Darling: Mr. Speaker, my supplementary question is also directed to the Postmaster General: it concerns the postal users' conference which I attended in Toronto approximately two months ago and about which the Postmaster General has talked so profusely.
In view of the fact that postal users, the substantial ones, account for 83 per cent of the total revenue of the minister's
1372

November 22, 1978
Oral Questions
department, and that the input from the conference may help to provide some guidance in matters currently afflicting the Post Office, can the Postmaster General give an undertaking to the House that the proceedings of this conference will be studied carefully by officials of his department and made available, at the earliest possible time, to members of the House and others concerned?


Mr. Lamontagne:: Mr. Speaker, I would like to remind the hon. member that the postal users' conference was not the Post Office conference; it was the users' conference. It was organized by them, for them and for us. We had some input. They gave us some reports on what they thought. They had working sessions and some small groups working together. If the hon. member was there and if some opinions were issued, he could have registered the opinions of different groups. The Post Office had some input in it. I can deliver to the hon. member, if he wants, some of the opinions we received from some of our users. But if my memory is correct, there was no report of the conference as a whole.


PUBLIC SERVICE
Mr. Lincoln M. Alexander (Hamilton West):: Mr. Speaker,
I have a couple of questions for the President of the Treasury Board. When he introduced Bill C-12, on indexation, he indicated that in due course, or in the matter of a few weeks he would give some indication as to the special arrangements for 1979-81.
Has he given some consideration to this particular problem? Does he have an answer in terms of what the special arrangements will be, given the fact that he has some $535 million in the kitty and that the public service is quite concerned about knowing just what will happen in the next three years?


Hon. Robert K. Andras (President of the Treasury Board):: Mr. Speaker, I do not know why the hon. member had to confuse us by talking about a hidden $535 million.


Lincoln MacCauley Alexander: I did not say it was hidden.


Miss MacDonald:: He did not say that.


Robert Knight Andras: In March, I believe, I clearly stated that this was the potential income. If I did not hear the hon. member properly, I apologize. At any rate, as I have indicated to another hon. member, those figures are now decided. The chief actuary as made his recommendations. I have consulted with the advisory committee on superannuation. I hope to reveal the exact degree of supplementation of basic pensions related to Bill C-12 on second reading which, hopefully, we will be dealing with next week. Then we can proceed from there.


Lincoln MacCauley Alexander: Mr. Speaker, I appreciate the answer given by the minister, but at the same time there is another question which is equally important. Once we start talking about index-

ation, of course, we are concerned about the classification study, a report which was taken outside of the capital region.
As 1 understand it, the minister has had this study on his desk for a few weeks. Is he in a position to report whether he has taken action, in light of the fact that I have heard there is a move afoot to red circle? More importantly, the minister has given an undertaking to table this very important report, given the fact that we are dealing with millions of dollars in terms of overclassification. Is the minister prepated to table that classification study or report regarding overclassification of public servants? If so, will he do it this afternoon? Has he arrived at any solution to this very serious problem which is costing taxpayers millions of dollars?


Robert Knight Andras: Mr. Speaker, I will be making the results of that classification audit, inside and outside the national capital region, public within the matter of a few days. Also, I will deal with the response of the government to the findings of that audit at the same time.


DETRIMENTAL EFFECT OF GOVERNMENT POLICY ON CANADA'S SCIENTIFIC COMMUNITY
Mr. Thomas Siddon (Burnaby-Richmond-Delta):: Mr. Speaker, my question is directed to the Minister of State for Science and Technology: it relates to the demoralizing effect of current government policy on the Canadian scientific community.
In view of recent statistics released by the Professional Institute of Public Servants, PIPS, to the effect that more than 250 scientists will be out of work by next April, and recognizing recent statements by the president of the National Research Council expressing concern for Canada's economic welfare if our technology continues to be imported from abroad, will the minister advise the House as to what shortterm policies he proposes in order to reverse this frightening trend?


Hon. Judd Buchanan (Minister of Public Works and Minister of State for Science and Technology):: Mr. Speaker, 1 find it rather interesting that the party across the way, which I think is advocating cutting 20,000 or 30,000 public servants, is suddenly so concerned about 250 scientists.


Lincoln MacCauley Alexander: Don't mislead the House.


J. Judd Buchanan: I am sorry-60,000 over three years. My arithmetic was wrong. There are two points I should like to make in response to the hon. member. We have put in place certain programs to try to increase the use of government laboratories. One of these is the scientific and technological employment program, which is a program under the economic growth component of Canada Works. It encourages the private sector to make use of university laboratories for conducting research. That is useful in the private industry.
In the budget of the Minister of Finance, we put in place a 25 per cent tax credit for small business and doubled the tax
November 22, 1978

credit for larger size firms to try to increase the level of activity in research and development in Canada.


FISHERIES
Mr. Lloyd R. Crouse (South Shore):: Mr. Speaker, 1 wish to direct my question to the hon. Minister of Fisheries and the Environment. On January 1, 1979, the Northwest Atlantic Fisheries Organization will replace the International Commission for North Atlantic Fisheries as the regulatory body governing fishing in the Northwest Atlantic.
In light of the fact that this organization will be establishing regulations and setting quotas, I should like to ask the minister what steps he has taken to assure that fisheries ministers in Atlantic Canada, as well as Quebec, and representatives of the fishermen and fishermen's unions will have a chance to make some input into the establishment of quotas for fishing in the Northwest Atlantic?


Hon. Rom6o LeBlanc (Minister of Fisheries and the Environment):: Mr. Speaker, I do not know if the ministers of the various provinces are involved, but certainly their dputies are. I assume they communicate with each other. In fact, the provinces are fully represented on the offshore groundfish advisory committee and on all committees which deal with these matters.
I might underline, for the hon. member, that the stocks we are talking about today are outside the 200-mile zone, and that in fact it is very much in Canada's interest, and I think a tribute to our negotiators, that we have been able to have a say in respect of what takes place outside the 200 miles because that does have a considerable impact on the economies of these provinces, particularly Newfoundland.


Lloyd Roseville Crouse: Mr. Speaker, in light of the minister's answer, it is my understanding that the NAFO convention has been signed by Canada, the U.S.S.R., Romania, East and West Germany, France, Italy, Portugal, Norway, Denmark and Great Britain. I would, therefore, ask the minister whether the United States, Spain, Poland, Cuba, Japan and Bulgaria have signed the NAFQ convention and, if not, what effect will this non-compliance with regulations laid down by NAFO have on foreign fishing, not only in the areas the minister mentioned off the Flemish Cap, outside the 200-mile limit, but also in respect of established quotas within our 200-mile zone?


Mr. LeBlanc (Westmorland-Kent):: Mr. Speaker, I would have to check on this, but I know that the convention has been open for signature and that some countries which did not sign indicated that really was because of problems of procedure. For example, in the case of the United States there is a procedure through Congress which has to be followed. I understand from discussions that they agree with the sub-
Point of Order-Mr. Clark
stance of the new convention or treaty. I know in specific cases that subdelegates told us verbally at the signing ceremony that once they had overcome procedural problems involved, they would sign, and that meanwhile they would live up to the expectations of other countries.


POINT OF ORDER
Charles Joseph Clark: Mr. Speaker, I rise on a point of order relating to a comment made in the House yesterday by the Minister of Energy, Mines and Resources (Mr. Gillespie). It may well be, sir, that this could have been raised as a question of privilege, but it came to my attention only during the question period and I did not have the opportunity to give you notice. In any event, 1 would prefer to treat it as a simple question of disorder.
The matter arises from page 1319 of Hansard of yesterday in relation to an alleged question of privilege which Your Honour dismissed by indicating it was simply in the nature of debate. I do not want at this point, of course, to deal with the subject matter of that debate, which has to do with a difference of view between those of us in this party and those in the government as to the reality of obligations incurred by the people of Canada in the acquisition of Pacific Petroleums.
What concerns me is that the Minister of Energy, Mines and Resources, in reference to my party, and in reference particularly to me, made the following statement:
-that the opposition are trying to distort and trying to mislead.
Those were his words precisely.


An hon. Member:: Right on!


Charles Joseph Clark: I am sure that in spite of the rather Pavlovian reaction of some members on the other side the minister will recognize, as we all do, that from time to time in this House we state things a little more strongly than we intend. He will know, I am sure, that the imputation he has made in this statement is contrary to Beauchesne's fourth edition, Rule 154(3), and so I will not go to the extent of quoting it. I am sure he would want to take the opportunity now, as a gentleman, in the House to indicate simply that he spoke more enthusiastically than he intended, and withdraw the suggestion that we in this party are trying to distort and to mislead.


Some hon. Members:: Hear, hear!


Hon. Alastair Gillespie (Minister of Energy, Mines and Resources):: Mr. Speaker, I would like to reply to those words of the Leader of the Opposition (Mr. Clark). I think any reasonable person who had followed the debate, as I have tried to follow it, would come to the same conclusion that I came to. I think the kind of statement put before the House yesterday by the hon. member for Brome-Missisquoi (Mr. Grafftey) was
80067-16Y2

November 22, 1978
Point of Order-Mr. Clark
clearly aimed at using the television media to create the impression that the Government of Canada had borrowed funds for the purchase of Pacific Pete, funds which the Government of Canada might have used, in the words of the Leader of the Opposition, to assist the people. I think his words which appear at page 1288 of Hansard were:
Surely there are a number of Canadians looking for homes who could put that money to better use.
The Leader of the Opposition picked up exactly the same theme used the day before. It seems to me there was a clear implication in those words of the Leader of the Opposition that the Government of Canada might have used those funds for this purpose, implying that the Government of Canada had borrowed those funds to acquire Pacific Petroleums.
The Leader of the Opposition knows that Petro-Canada raised the funds, and I challenge him to say otherwise. He knows, from repeated evidence that has been put before this House, that Petro-Canada, or a subsidiary of Petro-Canada, raised these funds from the banking system, using a commercial instrument to finance a commercial transaction involving a Crown corporation of the government. This was organized by that Crown corporation, Petro-Canada.
As I have read the record it seems to me I can come to no other conclusion than that the opposition was trying to mislead. Whether it has been successful-


An hon. Member:: Withdraw.


Alastair William Gillespie: Whether or not the opposition has been successful, I am not sure. However, if in your judgment, Mr. Speaker, the words I used are unparliamentary, of course I would be the first to wish to put the record straight. I really want to make the observation that quite clearly there seemed to be an intent to create an impression other than the fact.


Mr. Speaker:: Order, please. I rise to my feet, of course, to accept the offer of the hon. minister to withdraw that line, and I presume that is what he did by his last sentence. I will give him the opportunity to make that perfectly clear in a moment.
I think what the minister has just said, and what all other members who have contributed to this in the last few days will realize, is that the rules which surround parliamentary propriety never govern what an hon. member is able to say, what they govern rather is the manner in which a statement can be made. The minister has said today that his impression was that remarks and questions by members of the opposition have been designed to create a certain impression which he has said is not in accordance with reality. That is precisely what he wanted to say, and that is the parliamentary way of saying it.
However, to say that there is an attempt to mislead or an attempt to distort, if not unparliamentary is certainly dangerously close to unparliamentary language. Therefore I welcome the offer of the minister to withdraw that language. I wish he would do so now unequivocally so we can close the book on this as a procedural matter and leave it in the realm of debate where, I said yesterday, I believe it belongs.


Alastair William Gillespie: Mr. Speaker, you have used a felicitous phrase in describing what was my concern. Certainly I have no intention, and I make this quite clear, of in any way jeopardizing or in any way abusing the rules and practices of this House. I want to make that quite clear. In addition, I realize now that I might have used other language to convey my sentiments and to say exactly the same thing. However, for judicious reasons, I am quite prepared to withdraw those words.


Hon. A. C. Abbott (Minister of State (Small Business)):: Mr. Speaker, on the same question of privilege, I think the minister is being unduly generous in his withdrawal.


An hon. Member:: Oh, come on.


Anthony Chisholm Abbott: I would refer you, Mr. Speaker, to page 1321 of Hansard of yesterday, where the hon. member for York-Simcoe (Mr. Stevens)-


Mr. Speaker:: Order. With due respect to anyone who wants to participate in this matter raised by way of a point of order to request the Minister of Energy, Mines and Resources (Mr. Gillespie)-


An hon. Member:: By way of privilege.


Mr. Speaker:: It was not done by way of privilege, but by way of a point of order, requesting that a given minister withdraw certain remarks that he made, and the minister has done so. I have no authority to deal with that matter in any other way. The matter is closed.


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order.


PRIVILEGE
Anthony Chisholm Abbott: Mr. Speaker, I have a further question of privilege. It relates to a similar type of incident in which the hon. member for York-Simcoe (Mr. Stevens) stated-


Mr. Baker (Grenville-Carleton):: Where?


Anthony Chisholm Abbott: -at page 1321 of Hansard, that the Minister of Energy, Mines and Resources (Mr. Gillespie) "misrepresented the true nature" of the Petro-Canada transaction, and that "it is in truth intolerable that this government persists in misleading the Canadian public" concerning this transaction. Why, Mr. Speaker, with language like that, can the Leader of the Opposition (Mr. Clark) get up and ask that the Minister of Energy, Mines and Resources withdraw his comments? I would ask that you instruct the hon. member for York-Simcoe,
November 22, 1978

Introduction of Bills POINT OF ORDER
in light of this situation, to withdraw his comments made yesterday.


Some hon. Members:: Hear, hear!


Mr. Speaker:: Order, please. The hon. minister will realize in respect to the point raised by the hon. Leader of the Opposition (Mr. Clark) that I am not even sure that, as a result of his point of order, I had jurisdiction to compell the withdrawal of that remark. Under the circumstances it was not done on procedural grounds which would give me the authority to do that. However, the minister very happily withdrew the remark.
In respect to proceedings which have taken place earlier, without notice of some question of privilege today I believe that the Chair loses jurisdiction, as I indicated just recently to three members from the province of New Brunswick who were offended by remarks that were later gratuitously withdrawn. Therefore, if any withdrawal from those remarks is to be made, it would have to be done, not upon the basis of any procedural order from the Chair, but on the same basis upon which the minister just did so a moment ago, on his own.


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please.


Anthony Chisholm Abbott: On a point of order, Mr. Speaker, I fail to see the consistency between your having the good grace to listen to ihe Leader of the Opposition and accept a withdrawal from the Minister of Energy, Mines and Resources and my situation, when I raise an equally improper comment that was made yesterday and ask for withdrawal. You have said that I am out of order.


Mr. Speaker:: Order, please. I did no such thing. I think that we had better close the book on this before we all get into more trouble.
I will take the hon. minister through it step by step, if I must. Today the Leader of the Opposition stood in his place on a point of order, and the minister made a contribution to that point of order during which he indicated his willingness to withdraw certain remarks. 1 then saw the minister on a similar point, which he misdescribed as a question of privilege. Had the hon. member for York-Simcoe risen to make an equal contribution, he would have had the floor, but he did not. Therefore I have no procedural jurisdiction, and the matter is closed.
Some bon. Members: Hear, hear!


Some hon. Members:: Oh, oh!


MR. LANG-ADMINISTRATION OF JUSTICE-PROVINCES IN FAVOUR OF LINGUISTIC RIGHTS IN COURT
Otto Emil Lang: Mr. Speaker, I have a point of order. On November 15 I was answering a question asked by the hon. member for Ottawa-Vanier (Mr. Gauthier) when he inquired about the implementation of a bill passed on June 23 last year with regard to linguistic rights in the courts. I had said that New Brunswick, Quebec and Ontario had in effect responded affirmatively to our suggestion of April 1, 1979, as the date for implementation. It has now been brought to my attention that the correct date which we had suggested and to which they had agreed was March 1, 1979.



ROUTINE PROCEEDINGS


John (Moody) Roberts: Mr. Speaker, in accordance with the provisions of Standing Order 41(2) I would like to table the agreement signed on September 21, 1978, between the Postmaster General and the Secretary of State concerning the transfer of responsibilities for subsidization of losses through publishers' rates.


CRIMINAL CODE
Mr. W. Kenneth Robinson (Toronto-Lakeshore) moved: for leave to introduce Bill C-444, to amend the Criminal Code (impaired driving).


Some hon. Members:: Explain.


William Kenneth Robinson: Mr. Speaker, the effect of the bill is to remove the statutory requirement of an automatic two weeks in jail for a second offence and so leave it to the judge's discretion with regard to incarceration or otherwise in deserving cases.


[Stage Direction]
Motion agreed to, bill read the first time and ordered to be printed.
[Stage Direction]
November 22, 1978
Order Paper Questions GOVERNMENT ORGANIZATION

J. Judd Buchanan: for leave to introduce Bill C-23, respecting the relocation of departments and government agencies and matters related thereto.


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

Mr. Diefenbaker: What are the names and addresses of all Canadians who received the Queen's Jubilee Medal?


John (Moody) Roberts: The nominal roll of recipients of the Queen's Silver Jubilee Medal was tabled in the House of Commons on March 16, 1978-Sessional paper No. 303-7/13. At the same time lists of recipients, collected and bound by province and territory, were placed in the Parliamentary Library.


COST OF ENTERTAINMENT
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. Yvon Pinard (Parliamentary Secretary to President of Privy Council):: Mr. Speaker, the following questions will be answered today: Nos. 49, 132 and 188.
I ask that the remaining questions be allowed to stand.


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


Daniel Joseph MacDonald: 1.	(a) See list below.
(b) None.
2.	See 1(a) below.
1- (a)
M. Gerald Lefebvre Reseau de developpement d'organisations Inc. 5055 Gatineau,
Montreal, Que.
Consultation on the development and application of a methodology for a longitudinal survey of Veterans Affairs employees which will measure improvement in administrative practices.


[Stage Direction]
M. Yvan Joly 1532 est, Gouin, Montreal, Que.
Consulting services during the
process of gathering and analyzing
data on which to base strategies
for improving administrative
practices.	$4,123.65
Bureau of Management Determination of overhead	$ 1,711.00
Consultants Supply and Services,
Canada
Mr. Howie: Since April 1, 1977, what amount was spent on entertainment by the Department of Industry, Trade and Commerce?


Mr. Bernard Loiselle (Parliamentary Secretary to Minister of Industry, Trade and Commerce):: (a)	Fiscal year 1977-78
Department	$2,191,602 *
(b)	Period April 1, 1978-September 30, 1978
Department	$ 568,243 *
*This includes hospitality costs incurred by the foreign service officers abroad.



STARRED QUESTIONS


Mr. P. B. Rynard (Simcoe North):: Mr. Speaker, 1 rise on a point of order with respect to starred questions and their status in parliament. I first brought this topic up in February, 1975. At that time I inquired about a question which had not been answered for approximately a month. Your answer on this point, sir, was that there was no way which you knew of by which you could enforce an answer on the particular question.
I would like to go over the history of the starred question and to say that I am fighting this case because of your position, sir, as well as the position in which it puts every member in this House, no matter on which side they sit. The starred question goes back to the time when the nation of Canada was formed. At that time the rules and regulations came from the Mother of Parliaments at Westminster.
During the Confederation Parliament of 1867 questions were put only on the order paper, and there were no oral questions or starred questions. It was not until members began to get fractious, as they do here occasionally, and were asking questions, that Sir Wilfrid Laurier, the only pure blooded French prime minister that we have had, in 1910 brought in the policy of putting an asterisk behind the question on the order paper instead of asking oral questions, because they were becoming too obstructive. The rule he introduced was that an

November 22, 1978

asterisk would be put beside the question on any given day, and the following day that question would be answered.
It was not until the years 1929 to 1955 that starred questions were no longer put on the order paper. It was the Liberal government under Mr. St. Laurent that saw the wisdom of the starred question and had the procedures committee meet, which you and I have asked for several times, to try to establish the status of the starred question as one of the important procedures of our parliamentary system. At that time one of the speakers ruled that a starred question had to be answered.
As you know, custom dictates what this parliament does over the years. There is an idea prevalent among the newer members of this House, however, that a starred question need not be answered by a minister and may be left to fade away. I think Your Honour will agree that far too many questions are left on the order paper today.
In 1955, in order to speed things up, the Liberal government under Mr. St. Laurent saw fit to establish the status of the starred question. When I came here in 1957 it was a very well known fact that a question was to be answered within a period of seven days or less. Otherwise the minister of whom the question was asked was to get in touch with the member and ask for more time. I understood that to be a courtesy, that the question might be deferred for an answer, but we see it happening every day now. A question requiring a little more research was starred for the minister. In the United Kingdom they have two days, but under Sir Wilfrid Laurier we had one day.
It all goes back to the efficiency of parliament. Some members recently elected may find it difficult to catch Your Honour's eye or even to get up and ask a question, so it is much simpler for them to put it in written form. Sir Wilfrid Laurier stated that one of the reasons for doing this was to give a member the opportunity to bring up something of particular concern to his riding but not necessarily to the Dominion of Canada. This is as relevant today as it was in his day.
One meeting of the Standing Committee on Procedure and Organization has been called in the last five years, Mr. Speaker. It was an organizational meeting and is referred to by the hon. member for Edmonton West (Mr. Lambert), the vice chairman of the committee, at page 4204 of Hansard, as follows:
I want to put on record that the committee has not met once during this past session except for the formal organizational meeting. Not only in this session but in the long prior session, the government House leader has refused consistently to refer one item of House rules to that committee.
I went to the government House leader about this on three occasions. The first time he told me it would probably take six weeks, and the next time he said it would take a couple of weeks. I went to him again and he said he would call it within a week because there were other things that had to go on. I know, and you know, Mr. Speaker, and all members of the
Point of Order-Mr. Rynard
House know that they do not always carry out the things they want to and, indeed, it is sometimes impossible for them to do so. But it is three times-and you're out!
Be that as it may, Your Honour also asked for help from hon. members. It puts you in a very embarrassing position not to know how to rule on a particular question. It also takes something away from parliament that two prime ministers, Liberal leaders, had seen fit to introduce. For these reasons we have tried to get the matter back before the House. I would bring to Your Honour's attention that it was not until 1964 that even the oral question was accepted under the rules.
Custom dictates why these things are done. Just two weeks ago I spoke to the President of Privy Council (Mr. Mac-Eachen), who was very courteous and told me that he would see a meeting was called to look into this, as he was not aware of the situation. Today he sent me a note saying it was unfortunate he would have to leave the House because he was meeting Mr. Vance, the Secretary of State for the United States.
That is the situation to date, Mr. Speaker. Someone is certainly dragging his feet when a member of this House does not have the privilege of asking for a ruling and for that committee to meet. I say they should all be fired, although I do not know how the House leader can be fired. I have sat in this House a good many years and found him to be a man of wisdom, knowledge, and capability. I have a lot of respect for him and I hope he will-I am sure he will-see that the committee meets.
I am not fighting this thing for myself, Mr. Speaker, but I am going to keep on until something is done, out of respect for Your Honour. I realize your decisions must be made quickly, with wisdom, with honour and knowledge, and in all conscience.
[ Translation]


Yvon Pinard: Mr. Speaker, the remarks made by the hon. member for Simcoe North (Mr. Rynard) with respect to the past look fairly accurate to me. He was quite right in his description of the historical context of the rules of this House which included provisions for starred questions, and the only reservation I might have has to do with his description of my very distinguished predecessor, Sir Wilfrid Laurier who once sat as the hon. member for Drummond-Arthabaska in this House; I agree with the hon. member that he was a very great man and the terms I would use is that he was and still is a very great Canadian, a genuine Canadian, and I think it is good to point that out and refrain from making distinctions based on one's mother tongue.
With respect to the starred questions itself, Mr. Speaker, if Sir Wilfrid Laurier was right in 1910 in introducing it in the rules, things have changed entirely today. As the hon. member pointed out, he now has the opportunity to put a question during a 40-minute period every day, and if it is not urgent he can have it put on the order paper. I do not see what difference

November 22, 1978
Point of Order-Mr. Rynard
it makes whether the question he puts on the order paper is answered orally or just printed in Hansard the next day as in any case he is not entitled to a supplementary question. So the reasons which historically justified the introduction of starred questions are no longer valid today. If the hon. member has a question to ask, all he has to do is rise any day of the week and put his question to the appropriate minister. If the question is not all that urgent, he can have it put on the order paper and he will get an answer printed in Hansard. I do not see what the hon. member would gain if I were to rise and, instead of quite simply having the answer printed in Hansard, read to him an answer which he cannot debate and on which he cannot ask a supplementary question. So I think that Standing Order 39(2) could be referred to the Standing Committee on Procedure and Organization; I personally think that it is the most insignificant rule in our parliamentary procedures. And as to referring such a limited and unimportant matter in my mind to the Committee on Procedure and Organization, it seems to me that if we are to make this parliament work more effectively, as the hon. member would wish us to do, all the rules of this House should be referred to that committee. What the hon. member is actually proposing, Mr. Speaker-I mentioned this to the right hon. member for Prince Albert (Mr. Diefenbaker) who was complaining about motions introduced under Standing Order 43 last year-represents 1/116 of our problem. There are 116 standing orders making up the rules of this House. I think they should all be reviewed together so we could modernize our procedures and make parliament younger, more modern and more efficient. And in that context I agree with the hon. member that this will provide an opportunity to review Standing Order 39(2) which I find has become insignificant in the context of 1978. But beyond that, referring to that committee only scraps of the procedures of this House I say is a waste of time, we have been procrastinating for too long and time has come to proceed with an in-depth reform which will enhance the role of members of parliament and make our presence in this House more rational, more efficient and all that to the benefit of the people of Canada.
Mir. Rynard: Mr. Speaker, I rise on a question of privilege. Why does the parliamentary secretary talk in this language? A week ago I spoke to the House leader who said that this matter would go to the procedure committee. As well, why did he say last year that it was because of some Tory decisions that he could not get the procedural committee to meet, whereas today he is saying that it does not matter? Mr. Speaker was put in an embarrassing position in February, 1975. At that time he had to rule on the matter as it stood. Here the parliamentary secretary is leaving it up in the air and he is not helping any member of this House by his attitude today. I might add that I intend to carry this matter further.
[Mr. Pinard.J


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


Some hon. Members:: Agreed.



MOTIONS FOR PAPERS

Yvon Pinard: Mr. Speaker, 1 ask that all notices of motions for the production of papers be allowed to stand.


Mr. Speaker:: Is it agreed?


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Tuesday, November 21, consideration of the motion of Mr. Chretien that this House approves in general the budgetary policy of the government, and the revised amendment of Mr. Stevens (page 1249).
Mr. J. Robert Howie (York-Sunbury):: Mr. Speaker, when we concluded our sitting last night I had just reviewed a number of discursive measures of short duration employed by the government over the past 15 years to stimulate research and development in Canada. I concluded that it is no wonder the private sector has not confidence in the government's programs to promote research and development. Research programs by their very nature are long-term operations. While the rewards are great, the waiting time for results is frequently not short. The transfer of technology from government and university research laboratories to the private sector of our economy has not been accomplished with the efficiency and frequency that I would like to see.
Recent Canadian research has shown that the use of particular semi-conductors of electrodes in photoelectro-chemical batteries may be a promising alternative to the costly power lines presently used.
Basic research led to the development of soft contact lenses with enormous commercial potential. Scientists have found that a placenta derived substance may confer considerable protection against cancer of the breast.
Engineers have invented a device which enables a rapid and complete separation of the components of sugar cane. This could lead to a relatively low cost alcohol which can be distilled and used as a gas supplement. Many of these could be the invention of the decade. They are just a few of the recent
November 22, 1978

Canadian innovations which, if properly used, promoted and marketed, would assist our economy.
The government has before it a proposal from my own province, New Brunswick, that was alluded to at the recent federal-provincial conference of ministers responsible for science, research and development. The New Brunswick proposal relates to the basic resource of the province of New Brunswick, that is to say, forestry. The Minister of State for Science and Technology (Mr. Buchanan) made an announcement in this House last June about centres of excellence. He gave indications that the federal government would assist in the development of regional centres of excellence, both to build upon the diverse strength of Canada and to ensure local expertise and initiative.
The Canadian forestry service and Agriculture Canada are well represented in New Brunswick. The New Brunswick department of natural resources, the maritime forest rangers school, and the Fredericton area conservation school are also located in the area and are related to the forest industry. The University of New Brunswick has an excellent forestry faculty, and related faculties of engineering and science. It has ongoing programs such as forest extension, a fire science centre, and forest engineering. It is establishing new activities, such as a forest materials institute, a forest soils research centre, and a remote sensing research centre. The University of New Brunswick also has the largest wood lot of any university in Canada. With forestry as a principal dynamic in the Canadian and New Brunswick economies it is only right that these facilities should exist and be fully utilized.
Clearly a forestry complex which could focus the attention of all levels of government and the most advanced research on the problems of the forest industry, and transfer new technology quickly and efficiently to industry, would be a tremendous step forward in New Brunswick. I support this concept and this program strongly.
I believe that if the centres of excellence program is to have a maximum impact, it should focus its attention on programs like this and on areas that suffer from chronic regional disparity, rather than fragmenting its effort over a large area with less regional impact. I sincerely hope that the Minister of Finance (Mr. Chretien) will use his good office to encourage recognition of the forestry complex at the University of New Brunswick as one of the important dynamics in moving our economy forward.
I would ask the minister also to take another look at the $5,000 tax credit my leader mentioned in his address, for investment in small business, and to re-examine our proposal to negotiate long-term tax contracts with companies locating in slower growth areas. Both these measures are predicated on new enterprises coming into being. There is no real net loss to our public revenues by simply deferring their tax paying potential for a few years to bring them into being.
I would also ask the minister to examine the success rate of the small business program which is promoted by DREE. My impression is that this is a very good program. My deepest regret is that this discrimination which this particular depart-
The Budget-Mr. Howie
ment of government practises against Fredericton is now about to be perpetrated on the county of Sunbury which has a very high unemployment rate.
It seems that a part of the Fredericton industrial park, the new section in fact, is located in Sunbury county, and qualifies for this program, while the rest of the park does not. I am advised of a movement to disqualify all of the park. I think that the minister will find the Sunbury portion of this park is easily identified and should continue to be included in the program that is intended for Sunbury county. This is the right thing to do, and I want to bring it to the minister's attention. Indeed, I recommend that the program apply equally throughout all of New Brunswick.
Finally, I want to point to the extreme importance of enabling the universities to produce the young scientists who are essential if we are to stimulate our economic recovery through research, development and innovation, and to get back in the world markets and to get our country moving forward again. We have a double plus with the research that we promote at the university campuses. We not only improve instruction and the level of learning, but we develop excellent young scientists for the future. The $60 million or so in research and development cutbacks announced in September that are reflected in different departments of government will have to be examined on their own merits as the estimates come before our appropriate committees.
It would be premature to make any judgment at this time, but it must be embarrassing for the Minister of State for Science and Technology to announce measures to strengthen and encourage research and development in Canada, and to meet with his provincial counterparts and still not be able to produce guidelines for a procurement policy by his own government, a policy designed to encourage the purchase of Canadian manufactured goods with a high research and development component. It must be embarrassing for him not to be able to tell the minister from New Brunswick where that province's proposals for a forestry complex stand. It must be embarrassing to have to indicate repeatedly that these programs are held up in Treasury Board. But the most embarrassing thing of all must be to see the sun set on the highly visionary but rapidly fading national research and development goal of 1.5 per cent of gross domestic product by 1983. In relation to all the other industrial nations of the western world, it was a small target, but it was a goal.
The new national priority for research and development in Canada is unclear. The government is continuing its ad hoc approach to financial decision making in Canada. We have a short-term budget. There are some good measures in it, but there continues to be no long-term planning, no national industrial strategy and some good opportunities have been missed.
In concluding, I wish to refer to a telegram I received today from one of my constituents identifying a problem with the budget proposal to reduce the federal sales tax from 12 per

November 22, 1978
The Budget-Mr. D. J. MacDonald
cent to 9 per cent. It contains a suggested remedy. I will read it and credit the author, Mr. John Clark, of Fredericton. I quote:
With reference to the recent budget whereby the federal sales tax was reduced from 12 per cent to 9 per cent it is imperative that this reduction include present vehicle inventory of auto and truck dealers. Assuming the average cost of $7,000 resulting in a tax reduction of $200 and that the average dealer has 100 vehicles in stock which is minimal then the 3,000 dealers who are members of a federation of automobile dealer associations of Canada (F.A.D.A.) would incur a loss of $60 million or more.
There is precedent for this kind of relief. In 1958 the removal of the excise tax from cars included inventory and in 1974 we received tax rebates on heavy duty vehicles.
Would appreciate any steps you can take to have 3 per cent tax reduction applicable to present dealers' inventory.
J. T. Clark Past President FADA 1976-77
I commend this solution to the minister.


Daniel Joseph MacDonald: Mr. Speaker, it gives me a great deal of pleasure to take part in this debate. As a Prince Edward Islander I appreciate the positive steps the Minister of Finance (Mr. Chretien) has taken toward the preservation and expansion of industry and business in Atlantic Canada. The greatest need in that region is for a strong industrial base that will provide year-round employment and lessen our dependence on grants and subsidies from the federal government. The importance of programs like Canada Works and unemployment insurance to the Atlantic is well known to all hon. members.
No one would be happier than maritimers and Newfoundlanders to lessen the importance of these programs to our economy. The sad fact is that few large employers have found it profitable to locate outside the already prosperous areas of Canada.
There was a time when the maritimes were the economic centre of Canada. In my own province of Prince Edward Island, we at one time had a thriving shipbuilding industry. The lumber would come from our own forests, and the boats would be sailed by our own fishermen. We were self-sufficient to a far greater extent in food. One of the legacies of becoming more and more dependent on the central government was a general decline in self-sufficiency.
Maritimers are a proud people. It is not easy to accept assistance from what we call the "have provinces" when the desire is to be self-reliant and productive. It is difficult to watch each new generation leave to find work in Toronto, Calgary or Vancouver, when we know we have the natural resources, the manpower, and what should be an ideal location for carrying on trade that should make the maritimes a centre of commercial and industrial activity.
I see now a new era beginning very soon, however. There are very positive and concrete reasons for this. As I mentioned, the incentives for increased investment and research and development included in this budget should prove a tremendous boost to the economy of Atlantic Canada by encouraging the establishment of permanent industries which will continue to expand and provide year-round employment opportunities.

The budget also contains provisions for an increase from 30 per cent to 100 per cent in the write-off for development in the mining industry. This, coupled with the extension of the incentive for oil and gas exploration, should go a long way toward ameliorating our energy supply problem. There is an abundance of coal in Cape Breton, and positive signs of the existence of significant offshore oil and gas deposits. These factors provide a further encouragement for industrial growth.
The development of the region is dependent on a secure source of energy. Atlantic Canada has that energy. In addition to coal and oil, possibilities exist for massive hydro development at the Bay of Fundy and Gull Island. As well, a system of inter-connected power lines, such as that recently laid between New Brunswick and Prince Edward Island, will provide further security of supply.
The oldest industry in the Atlantic region has again become the most promising for the future I believe our fisheries are on the threshold of an era of fantastic growth and prosperity. The main reason for this change was the government's declaration of the 200-mile limit. The other reason has been the very responsible and successful policy of my colleague, the Minister of Fisheries and the Environment (Mr. LeBlanc), who has demanded that care be taken to nurture the fish stocks back to a healthy, exploitable population before beginning a program of greatly increased fishing activity.
I know the pressure the minister has been under at times to relax that policy for certain species of fish, but his wisdom has been proven by the success of his program to rebuild the Altantic fishing industry. Our main concern now will be to ensure that it is the fishermen themselves, as well as the rest of the Atlantic region, who benefit from this huge potential growth in the fisheries. This means encouraging the orderly development of a strong, independently owned fishing fleet, continued surveillance over the 200-mile limit, and programs to increase the value of the fish catch. This can be done by expanding processing facilities so that an increased amount of processing can take place in the Atlantic.
Also, there is a need for expansion and improvement of fish marketing efforts and increased exploitation of under-utilized species. I can best describe my optimism concerning the future of the fishing industry by comparing it to the discovery of oil in Alberta, only our oil is swimming in the ocean.
One development of which I am particularly proud is the move of the headquarters of the Department of Veterans Affairs to Charlottetown. This, of course, is in keeping with the government policy of decentralization, the reasons for that policy being well known. They bear repeating, however, for they demonstrate the commitment by this government to positive action to counter regional disparity. That attack on regional disparity is certainly a primary consideration in a relocation of this magnitude.
It should also be remembered that by decreasing the concentration of public servants in this part of the country, we are responding to a widespread feeling that the federal bureaucra-
November 22, 1978

cy, by being cloistered in the national capital region, is insensitive to the needs and concerns of Canadians from coast to coast. The proportion of public servants in the Ottawa area is up to twice that of federal employees in the capitals of other western nations. This policy of decentralization, therefore, has my unqualified support. It is only fair and just that Canadians in all parts of Canada-and we all pay federal taxes-should benefit as greatly as possible from the presence of the federal government throughout the land.
With particular reference to the move of DVA headquarters to Charlottetown, the benefits which will spread to all parts of the province are very significant and exciting indeed. For just the construction phase of the relocation, our studies indicate that the direct impact will be to create approximately 300 jobs. About $5 million will be paid in wages and salaries for those jobs.
During the operating phase we estimate that the number of jobs available for Islanders to compete for will be from 350 to 450. The wages paid to Veterans Affairs employees on the Island should total approximately $10 million per year. Of this it is projected that about 70 per cent, or $7 million, will be spent by those employees on various commodities every year, with most of that, presumably, being spent on the Island. The impact of this spending by DVA employees will, it is estimated, mean the creation of approximately 250 new jobs over and above those new jobs within Veterans Affairs headquarters. In addition we have estimated that the total indirect income generated will be in the area of $2.8 million.
Additional local employment and income are expected to be generated by the ongoing expenditures necessary for the operation of the departmental headquarters. It is anticipated that approximately 77 new jobs will be created, and that additional income of about $675,000 will be generated as a result of annual head office expenses of $1.8 million.
Including this indirect employment, along with the number of employees who will be working at DVA headquarters, we arrive at a total figure of around 1,000 new jobs being added to the Prince Edward Island work force. The total additional income created by the move has been estimated at about $15 million per year.
In a province with a total population of just over 120,000, an employer providing 1,000 jobs is obviously going to have a major impact, not just on the economic life of the province but also on the social and cultural areas. For a city of its size, Charlottetown already boasts considerable cultural amenities and educational facilities. The involvement of Veterans Affairs staff in the various activities of the community will be most welcome.
I see this relocation of a federal head office as one of the keystones of the economic development which is about to take place in Prince Edward Island. It is a non-polluting industry which will not have a negative impact on the high quality of life on the Island. The department will require the services of diverse professional, clerical and other support staff, thereby providing opportunities at home for our youth now enrolled in college and university. It is an incentive for our young people
The Budget-Mr. MacKay
to remain and help with the developing of our other resources. That will mean putting the emphasis on those areas in which we do our best, and ensuring that the maximum added value is placed on our products before they are exported.
Farming and fishing will remain the economic mainstays of the Prince Edward Island economy. The increasing sophistication of these industries demands the continued updating of our knowledge in those fields, and I am hopeful that the research and development incentives which have been so substantially increased in this budget will be used to full advantage to benefit those two very important areas.
Liberals have been criticized recently for being too optimistic and expressing too much confidence in the future. I feel strongly that at no time in the last few decades has there been more reason to be hopeful about the future prospects of my own province and Atlantic Canada in general. A new frontier has been opened up with the 200-mile limit, the possibilities of which are endless and not yet even dreamed of. The energy resources I mentioned earlier are real and in the process of being developed. Moreover, there is a new realization on the part of maritimers that their area, with its long history and well-known and envied spirit of community and common cause deserves another chance to regain the proud place it has held in the past. There is a quality of life in the maritimes that cannot be found anywhere else in Canada-a concern for one's fellow man, and a sense of identity which was never broken by the economic privations of the past. With the bright future ahead, those traditional values and qualities will stand us in good stead as more prosperous days become a reality.


Mr. Elmer M. MacKay (Central Nova):: Mr. Speaker, I consider it a privilege to follow the Minister of Veterans Affairs (Mr. MacDonald). I think he made a fine speech and I commend him for his optimism, speaking as he does as a representative of the last provincial outpost of liberalism. As we know, very shortly the present administration will have presided over the complete disintegration of federal liberalism in this country.


Daniel Joseph MacDonald: Don't fool yourselves.


Elmer MacIntosh MacKay: Well, the minister, with that indomitable Scottish fighting spirit, says "Don't fool yourselves". But 1 think he would be quite willing to concede privately that the chances of halting the onslaught of the leader of the opposition, Mr. Angus MacLean, in Prince Edward Island, are almost negligible at this point.


An hon. Member:: Another good Scot.


Elmer MacIntosh MacKay: Yes, another good Scot. Which makes it all the more difficult to do.
Mr. Speaker, to start off this speech on a gracious note, I was interested in the very sincere tribute paid to the Minister of Finance (Mr. Chretien) by the hon. member for Vancouver-Kingsway (Mrs. Holt). I thought it was a most deserved and gracious tribute, and I would like to associate myself with much of what she said.

November 22, 1978
The Budget-Mr. MacKay
The Minister of Finance, who brought down this budget, is certainly held in great esteem as a person by all members of this House. However, I must say in all candour that I think his talents do not lend themselves to the portfolio which he holds. It has been suggested that to ask the minister to adjust our economy is like asking the Boston strangler to adjust your necktie! I don't believe it is quite that bad, but I see the member from Toronto who represents small business here in the House today and perhaps he would agree with me that the minister has had about as much success in the financial league as the Argonauts have had in the CFL during the past few years.
In any event, Mr. Speaker, there are measures in the budget which do deserve some commendation. The federal sales tax reduction and the removal of the special excise tax on marine engines, private aircraft and motorcycles, were measures that were applauded by those opposite when they were imposed, and are now applauded just as vigorously when they are removed. So you see this government is capable at times of learning from its mistakes. The sector and regional incentives are also sound moves. However, the minister's room to manoeuvre in this budget has been severely limited by past mistakes, excesses, and mismanagement on a massive scale during the last number of years by this government.
Huge expenditures on non-productive projects have put our country in a position where funds for worth-while projects of the type which I am sure the Minister of Veterans Affairs would agree would be appropriate for the Atlantic region, are hard to come by. They are hard to come by because of past mismanagement and there just aren't enough funds available to go around any more.
The initiatives regarding the unemployment insurance legislation, which were proposed in the name of restraint and in an attempt to save money, are commendable. However, there are some pitfalls which I see implicit in what the government is doing. These amendments have to be fine-tuned in committee in an attempt to prevent the savings being made at the expense of people in those areas of the country where there are no jobs to be, shall we say, an object of evasion. There is really no disincentive factor which affects the maritime region at this time because, frankly, there are no jobs there, in most cases, for people to avoid taking.
A reduction in premiums is risky at this time. It is welcome in some ways, and while it is tempting to look upon premiums as a tax because they are deducted at source, they really are not. Although contributions will be $300 million less, unless unemployment insurance benefits are reduced accordingly, the savings on premiums will become increased government expenditure, and the increased spending will have to be financed either by increased revenues or higher deficits, neither of which is desirable.
I think the government should take a very hard selective look at what it is doing with respect to unemployment insurance legislation because it is not in the Atlantic region, where

the problem is greatest, that the abuses are taking place. The abuses are taking place in the more prosperous areas of the country, and they are being perpetrated by middle income families who are systematically using unemployment insurance to supplement their incomes.
A lot of money has been lost by this government through foolishly conceived projects. Certain tax concessions, however, have been made in slow growth areas. I think they are well intended, but, frankly, I had hoped to see in this budget a greater input from DREE; for example, a widening of eligibility of the industries which can participate in DREE programs to allow industries other than manufacturing and processing to benefit from DREE grants, provided they meet the other criteria. I think this would have been a sound thing to do, and I am sorry the minister did not see fit to do that in his budget.
Another thing which should be done soon-and again unfortunately it was not done in this budget-is to reduce some of the confiscatory aspects of the capital gains tax. Many sound financial people across the country have been urging the government to consider, if not abolishing the capital gains tax, at least modifying it. Our party strongly believes that it must be indexed and perhaps done away with altogether because the benefits received are not commensurate with the harm done to the free enterprise system. As has been said by a former deputy minister of finance of many years, Dr. Kenneth Eaton, it is a bad idea, that a tax on capital gains comes mainly out of capital or out of income that otherwise would be saved for capital formation. The absence of a tax on capital gains, while ordinary income is being taxed at high rates, results in a positive incentive to capital formation, particularly equity capital. On both counts, therefore, in a country which must import capital for development, a tax on capital gains is not a good idea.
I also suggest to the minister that capital gains taxes to some extent are inflationary because when people are confronted with capital gains taxes their first reaction is to ascertain how much extra they have to pay in tax, and they adjust their asking price accordingly in an attempt to get away with as much profit-deserved in many cases-as they can.
I think that the incentives given to the mining industry are acceptable, but if it came to weighing the balance of benefits it would have been more appropriate to have been a little less generous in that field and to have applied some relief on the capital gains tax side in order to provide incentives and promote the desire to take the risks which have always been part of the Canadian industrial and development psyche. To have had this present tax in place has done immeasurable harm to the development of our country.
Another thing which has been counterproductive to some extent-and I do not think it was thought through carefully enough, particularly when nothing was done about the capital gains tax-is the way that the minister singled out certain small business service corporations, which have been incorporated and have been paying taxes as small businesses, and made it impossible for them to obtain the preferential small business tax rate. This measure does not apply to small
November 22, 1978

businessmen engaged in production or trade. Although the wording is somewhat unclear, this measure seems to catch doctors, dentists, accountants, professors, management consultants, entertainers, journalists, engineers, and other professionals who have structured their financial affairs so as to qualify themselves as businesses. This kind of ad hoc measure which is being taken by the minister, while well intentioned- particularly in the absence of relief for small business on the capital gains side-is not, on balance, a good thing for the economy.
Even though by some measurements our country is nearly broke because of our excessive borrowing and spending in the past for needless capital works projects and things of that nature, about which we all know and which we have discussed many times in this House, there still has to be some massive capital works expenditures if we are to promote growth and better the standard of living in areas of Canada such as the areas which the Minister of Veterans Affairs and I represent. I come again to the merits, for example, of a corridor road through northern Maine which could, in partnership with our American friends, provide important benefits to Atlantic Canada and some to the United States. It would greatly facilitate tourism and the marketing of Atlantic Canada products. Transmission facilities to bring electricity to Prince Edward Island and Nova Scotia are critical. The minister referred to this as well.
These projects require the expenditure of vast amounts of money, and there is no choice but to proceed with them because high energy costs are hampering the standard of living and the prospective development of this important region of our country. Greater efforts must be made if this part of Canada is to realize the destiny it must achieve.
This government has had some very strange fiscal and financial policies. I want to mention specifically the situation with regard to Canada Savings Bonds. Last August in a newsletter the Bank of Canada made reference to the maturing of past issues of Canada Savings Bonds. On October 1 the 1968 special replacement series, SR, came due, followed by the 1969-70 series, S-24, on November 1. Over 900,000 Canadians held maturing bonds worth approximately $2.6 billion. In addition, said the Bank of Canada in its newsletter, accumulated interest and cash bonuses on the bonds added an additional $ 1.9 billion to the amount coming due.
My point is that on the current issue of Canada Savings Bonds, of the initial $4.5 billion, $2.6 billion will be for refunding purposes and $1.9 billion to cover the cost of accumulated interest and special bonuses.
I think that Canada Savings Bonds ought more often to be a topic of discussion and consideration in this House because having such a large percentage of our national debt in call money, whereby holders may redeem their investments at any time, has proved to be very costly. In each period of high interest rates investors have rolled their issues into better rate bonds, or the government has reacted, as it has done again-it had to-by raising the interest rates on all outstanding issues. Substantial fees are paid to advertisers and to financial institu-
The Budget-Mr. MacKay
tions. In addition, there are many hidden charges tied to the Bank of Canada internal process. I believe that Canada Savings Bonds should be available through the payroll system and to small investors. The government should periodically announce the rate of interest which is payable and adjust the rate up or down to reflect current conditions.
There are many financial problems facing this country, but one of the reforms which should be implemented is a change in government policy regarding our debt financing. After all, when we are faced with a deficit of $11 billion or $12 billion, which works out to about $1 billion a month over the year, it is shocking that we must meet our interest obligations by borrowing. I trust that the Minister of Finance will look into this and make the needed adjustments.
I see my friend the Solicitor General (Mr. Blais) is in the House today. I would like to say a few things about the McDonald commission of inquiry in the context of the budget debate. I think it is quite relevant to do so because it is financed through the Privy Council office, the budget expenses of which have increased about 78 per cent over the past few months.
I think that the McDonald commission is something in which many members of parliament and most people in Canada are very interested. They hold great hopes for its success. I have a few comments to make which are constructive suggestions. I hope they will be of some use, and I hope they will be accepted in the spirit they are given. I am under the impression that the maximum information available is not coming out in the hearings to date. Also, I have some concern that the talents of all counsel are not being utilized to the fullest. In some areas I have the fear that counsel are not asking the right questions, and perhaps from the investigative side some potentially valuable witnesses are not being contacted.
I should like to deal with two main areas of interest to the commission. They are mail openings and the relationship of the security service to the Department of National Revenue. When a case file or files are opened on an individual by the security service, always there are two parallel files, one of which is secret. When an investigating officer decides that they merit hard investigation, a number of procedures are available. There are telephone taps, surveillance, checking tax records, mail openings such as Operation Cathedral, and so on. But practically all these procedures must be approved by the officer in charge of the division, and then sent to headquarters in Ottawa for final approval. As the Solicitor General well knows, periodically warrants are brought in for his personal signature.
Let me first speak of mail opening. My impression is that the commission and the Canadian public need to know a great deal more about the scope, size, and the procedure of this operation. For example, in almost every sizeable city in this nation an interface has existed for many years between the security service and the Post Office. The "watcher" service of

November 22, 1978
The Budget-Mr. MacKay
the Royal Canadian Mounted Police, which many people do not know about, also was an important part of the operation outside the Post Office. In Ottawa, if it has not already done so, the commission might consider contacting Mr. Harry Hurd, who has had major responsibilities in this now civilian oriented service. As a matter of interest, it takes a lot of personnel to keep a suspect or target under 24-hour surveillance. For two suspects at a time, on a 24-hour basis, perhaps as many as 200 people are required.
Let me come back to the procedures involved in opening mail. I know the Solicitor General is interested, because who could ever forget the expression on his face that day in the House as Postmaster General, when his colleague, the then solicitor general, told him, yes, in fact mail was being opened? I will speak in the past tense because I do not know exactly what is happening today. When a person was being followed and posted a letter, a large envelope about the size of the interior of the post box immediately was dropped in by the person observing him. All of the mail below that envelope, which sealed off the box, was then available to be opened.
One could say, "How did they get access to the post box?" It is very simple. The superintendent of a shift of the "watcher" service had a key. The mail was opened in due course and examined In many cases it was opened on a wholesale basis. By necessity it involved a lot of people who had nothing whatsoever to do with the target or suspect, but' whose mail just happened to be below that strategically inserted envelope. So much for mail outside of the Post Office.
When one looks at local post office one finds some other very perceptive and definite methods of operation which were followed. For example, in Montreal Sergeant Rick Neal happens to be the contact. I am sure the commission would want to talk to a man like Rick Neal. His job was to check with the designated supervisor or person at the Post Office and collect mail periodically which was set aside for that purpose on a daily basis. He brought the mail to the identification laboratory where it was opened and, if appropriate, photographed and processed. Sometimes it was brought back to the post office in the same day, which at least is very commendable. I emphasize that this type of operation does not exist in merely one or two isolated instances. It is nation-wide. It must be approved by the appropriate security service officer in the division. In Montreal it would be someone like Chief Superintendent Cobb or one of his predecessors, Chief Superintendent Larry Forrest or Ray Parent. At any rate, it has been going on for years.
Before an "Operation Cathedral" is put in place, as I said, each one has to be approved by RCMP headquarters and by the Solicitor General, in theory. This is from where the commission ought to seek additional information, by asking officers in charge across the country just how long this situation has gone on. My information is that this has been going on for many years. Indeed, I spoke with an officer who told of setting up photographic facilities in a post office in an out-of-the-way spot in an attempt to develop techniques which would allow mail to be photographed without being opened.

All of these things are relevant, because I am convinced that sufficient testimony has not been brought to the attention of the public or the commission, about the scope of the operation. Goodness knows there are many witnesses whom I suggest the commission might want to contact. Perhaps they have contacted some of them, but I do know the commission has not seen fit to bring Warren Hart back yet. He opened mail on a wholesale basis in Toronto. They should talk to Don Cobb, or perhaps the director of the security and investigation services branch of the Post Office in Ottawa, Mr. Paul Boisvert.
As the Solicitor General would say, "without breaching national security", let us have a look at what the RCMP security service has been doing in offices of the Department of National Revenue across the country. I am not talking about the CIB branch or the correspondence which was exchanged between the then solicitor general and the then minister of national revenue. This correspondence has been alluded to in the commission hearings. I am talking about contacts over the years between the RCMP security service and the Department of National Revenue. There were everyday methods by which the security service would be in touch with its contact men in the Department of National Revenue. The security service would then be handed a complete file on one of its targets. I do not believe that type of procedure could be justified, unless there was ministerial and departmental knowledge involved.
I commend to the commission for questioning, for example, Superintendent Fernand Bosse, if they have not questioned him already. Superintendent Bosse of "C" Division in Montreal would go into the National Revenue office and talk with his contact there. I understand at one time his contact was a man in the verification and collection branch of Taxation Canada, Mr. Cote. He would say to Mr. Cote, "I want a file". It could be the file on anyone. Mr. Cote would bring him the file, and he would look at it. If the file was informative, then he would have complete access to it. But, as I understand it, if the file was not sufficiently or completely informative, he would say to his contact at National Revenue, "Go and do an investigation", and an investigation or audit would be done.
I do not want to belabour this point. I do not want to drop names and hurt people who are doing security jobs in the national interest. I do not pretend that I know it all, or even very much, but I am disturbed about what I have learned so far. The counsel and investigators are more to be faulted than the commission itself, because they have not asked the right people the right questions. The Solicitor General would be well advised to talk to more rank and file officers in the security service, assuming indeed he wants to talk to them. It is no secret. This has been going on for years and years. Practically anyone of any rank in the security service knows about this. The reason they are not testifying about it is that they are not being asked the correct specific questions. In some cases counsel are so ill-informed or have done so little homework that they do not know the type of questions to ask, and the answers complicate matters even more.
I will make the Solicitor General an offer. If he wants to, on a confidential basis I can tell him of a man who will go before
November 22, 1978

the McDonald commission and testify in great and specific detail about a lot of things which so far have not come out.
1 got the impression from ex-Commissioner Higgitt's testimony that "Cathedral" operations were fairly seldom invoked procedures about which he knew nothing, or very little. If Commissioner Simmonds had said that, it would have been more credible because he did not spend very much time, if any, in security services. Ex-Commissioner Higgitt spent almost all his time in security services. I would put to the Solicitor General and to the commission, through you, sir, that surely in the national interest, since this commission has been given such an important mandate, it should take a more in depth approach to what it is doing and should contact people such as some of those I have mentioned here today.


Mr. Derek Blackburn (Brant):: Mr. Speaker, I do not know how many budget debates in the course of the last seven or eight years I have taken part in, but I am not particularly pleased to participate in this one. However, I feel an obligation to the House, and particularly to my constituents, to enter into this debate, not entirely in a negative way, but certainly to bring attention to and to counter some of the statements made in a general sense by Liberal speakers, and to bring out the meat or lack thereof in the budget, as this will affect the average Canadian, those lower and middle income people who pay most of the taxes in this country and contribute most in terms of numbers because they make up the largest group.
The message delivered in the budget is clear. The government and the Minister of Finance (Mr. Chretien) have abandoned any pretense of providing economic leadership in this country. At a time when unemployment is high, when inflation is running at close to 9 per cent and real growth is lagging far behind expectations, what we need is a dynamic program of economic recovery. What we got was a do-nothing budget that will not even inject enough stimulus into the economy to undo the damage done by the government's spending cuts announced during August and early September.
In this budget the government has deliberately chosen a policy of slow growth and high unemployment, in short, a policy of economic stagnation. The victims, as always, will be the unemployed, and the average Canadians who are trying to cope with inflation.
Apparently the reason for the finance minister's budgetary inaction is his belief that the economy will perform as well in 1979 as it did this year, although 1978 was hardly an impressive year in terms of our economic performance. There is no indication in the minister's budgetary remarks, as there has been from private economists, that the economy is likely to weaken next year in line with a U.S. recession. Rather, the government is trusting the United States to ensure our continued economic stability. The budget makes the unsupported assumption that the United States will achieve real growth of 3 per cent this year, despite the fact that American forecasters are predicting hard times in that country that could cut growth to 1 per cent at best. We cannot wait for the Americans to bail
The Budget-Mr. Blackburn
us out. They are just as much in trouble as are we. It is time to embark on a course of forthright and independent economic action. One look at the finance minister's forecasts for 1979 will underline this fact.
We know now that Canada will not achieve 5 per cent growth for this year as the Prime Minister (Mr. Trudeau) pledged at the Bonn economic summit. He said we would achieve 5 per cent this year, but obviously we will not. In fact our growth this year is likely to be closer to 3.5 per cent and, according to the Minister of Finance, growth will not increase much next year either, when the best we can hope for is 4 per cent or 4.5 per cent. This is significantly lower than the 5 per cent rate of growth required just to hold unemployment at present levels. The minister recognized this when he forecast only 250,000 jobs will be created in 1979. That is 110,000 fewer jobs than were created in 1978 which has been a year of record unemployment.
In light of the fact that this budget will increase the number of Canadians without jobs it is understandable the minister neglected to mention in his remarks that unemployment is likely to climb to 9 per cent next year. Prices, according to the minister, would increase 6.5 per cent. This is higher than earlier recovery path projections made by the finance department, but still lower than this year's 8 per cent or 9 per cent increase. Unfortunately the minister gives very little justification for his inflation estimate beyond his oft expressed hope that there will soon be a dramatic turn around in food prices. If there is a significant drop in inflation it will certainly not be as a result of his efforts in this budget.
As one listened to the Minister of Finance and other members on the government side who spoke during this debate, one got the impression that he was still listening to R. B. Bennett and Herbert Hoover. We are back in the 1930s when prosperity "is just around the corner."
Given these forecasts, Canadians can be forgiven for believing the government would introduce budgetary measures designed to improve our economic performance. This is especially true considering that the majority of economic forecasters have indicated that growth in 1979 will be substantially lower than the minister's own projections, and that inflation will be substantially higher.
I have before me seven economic outlooks for 1979, issued by various banks, securities firms, and advisory bodies, all of which suggest the minister's figures over-state the health of our economy. The most optimistic of the private forecasts was issued by the Conference Board in Canada, and puts growth at
3.7	per cent, inflation at 7.4 per cent, and unemployment at 9 per cent. The most pessimistic of this group of references was issued by Wood Gundy, which puts growth at 2.2 per cent, inflation at 7.6 per cent, and unemployment at 9.1 per cent.
Faced with these discouraging economic forecasts, the minister had a clear responsibility to stimulate the economy. As he said at page 5 of the budget, and I quote from his statement:
Consumer spending rose by less than was expected, and this was the main reason for the shortfall in growth.

November 22, 1978
The Budget-Mr. Blackburn
This opinion has been seconded by economic experts who have pointed to the fact that the minister's last two budgets failed precisely because they did not provide enough stimulus to boost the purchasing power of Canadians. Without more purchasing power in the economy, business simply cannot afford to expand and jobs will not be created.
The budget before us today demonstrates that the minister has not learned from his mistakes. He ignored the advice of his government's own economic advisory body, the Economic Council of Canada, and, I might add, of my own party, the NDP, and refused to make personal income tax cuts of any real significance.
We have to inject money into the economy in order to put people back to work. We in our party have estimated that a $1.5 billion tax cut, through increasing purchasing power and the accelerated economic activity it would promote, would create up to about 100,000 new jobs.
Certainly the Minister of Finance tried to show in his remarks that he was injecting stimulus into the economy but, despite the impressive snow job, the fact remains that he did not. This becomes painfully clear when we examine the specific provisions of this neutral and ineffective budget.
The only real tax cut in the budget is the doubling of the maximum employment expense deduction from $250 to $500 annually in 1979. The government estimates this will put $270 million into the economy and that 6.2 per cent of the 11 million taxpayers in this country will benefit from the change.
However, because Canadians will still be required to claim for only 3 per cent of their income up to the $500 maximum, those Canadians earning less than $8,333 a year will not receive any benefit from this cut, and those earning over $16,666 a year will get the full benefit, that is, up to $500. Once again, in typical Liberal fashion, the rich get richer and the poor get poorer.
It is time that the government tried to revitalize their very antiquated tax policies. The effect of the increased employment expense deduction to the average taxpayer earning $12,000 a year, will be $110 a year more in deductions. If he is taxed at a rate of 20 per cent, he will receive a tax cut of between $20 to $25 a year, or about 50 cents a week. The story is much the same for the unemployment insurance premium cut highly touted by the minister, where the rate will decrease from $1.50 to $1.35 per $100 of insurable earnings for employees and, from $2.10 to $1.89 for employers. This means that Canadians will be taking home approximately 35 cents more a week, or about $18 a year. I am basing my calculations on the maximum insurable earnings allowed under the UI plan, which will be $11,700 in 1979.
There are a lot of people in this country who make far less than $11,700 a year, and they will not even get 35 cents off their payments a week. It will be less. However, it should be noted that while premiums are being reduced, unemployment benefits are being drastically cut back as part of this government's restraint program, from 66% per cent of insurable

earnings to 60 per cent. This is very significant, not only for those who are getting the maximum UI benefits, but also for those who are getting minimum benefits.
It is not generosity which inspires this premium reduction, since the Unemployment Insurance Act legally requires that contributions be cut when the unemployment insurance fund is running at a surplus. This is currently the case, so the minister had no choice. Yet he made it look as if he was giving this paltry 35 cents a week out of the goodness of his heart.
Together the increased employment expense reduction and the UI premium cut add up to less than $1 a week for the average Canadian. This is hardly enough to boost significantly consumer spending in this country. In fact, it is nowhere near enough to help the average family even catch up to inflation, which I would remind hon. members, by all the best forecasts for next year, will be at least 9 per cent if not higher.
Although the minister attempted to make next year's 9 per cent indexing increase in personal exemptions sound like a new tax exemption, Canadians are not so easily fooled. This exemption results from the automatic adjustment of tax rates to past inflation, and was introduced by this House into the Income Tax Act in 1974. In fact, it is a means to prevent the government from automatically raising taxes due to inflation, and not in any way a tax cut that can be spent by the consumer.
The cut in manufacturers' sales tax from 12 to 9 per cent is the most positive aspect of this budget. It is a proposal which we advocated and which we welcome. However, by itself it is not enough. The federal sales tax cut will continue the stimulative effects provided by the retail sales tax cut contained in last April's budget, but it will be far less effective. First of all, the cut amounts to only $1 billion over the whole of 1979, whereas the retail sales tax cut amounted to more than $1 billion over a six to nine month period. In fact, the economy will suffer net loss in stimulation.
Secondly, and more significantly, there is no assurance the cut will be passed on to consumers. The finance minister states that "experience suggests that such tax cuts are passed on", but he knows that is simply not the case. What generally happens is that much of the impact is lost among the middlemen. The minister's appointment of three government agencies to monitor the cuts shows he is aware of this fact. This is true whenever you take away part or all of a hidden tax; immediately prices tend to drop, and then there is a mysterious tendency for those prices to climb slowly back up again within six months, and this is not necessarily due to inflation.
Although this cut goes into effect immediately, its impact will not be felt until current inventories are run down. The best that can be hoped for, if the benefits are passed along to consumers, is a reduction of one-half of one percentage point in the cost price index next year. To this extent the measure is at least a step, albeit a tentative one, in the right direction.
Disregarding for a moment an analysis of the altogether more generous incentives provided for business in this budget, the government says the total impact of its measures will be a
November 22, 1978

$1.38 billion cut in taxes in 1979. This level of stimulation is far short of the $2 billion worth of spending cuts that have been taken out of the economy in recent months.
When the Prime Minister returned from Bonn last August with his pledge to stimulate the economy toward 5 per cent growth, he said this would be accomplished "by reduction in both our expenditures and our taxes". We have seen the spending cuts, but we are still waiting for the tax cuts. The government, in its policies announced last August, and in this unbelievably regressive budget delivered last week, is actually restricting the economy.
For the one million Canadians who want to work but cannot find a job, this hold-the-line budget offers no hope. Without stimulation in the economy, unemployment is likely to climb over 9 per cent, not go down. Canada is in a mess now as far as unemployment is concerned, and here the government is bringing in a budget that will not only not stimulate the economy, but will exacerbate the unemployment problem and make it even worse.
The minister has given generous incentives to business and the resource section to expand, but even if jobs are created- and experience suggests they often are not-these will take at least a year to materialize.
The unemployed need jobs now, and what was needed in this budget was an immediate program of public investment in transportation, housing and public works projects. My party has long been advocating such a program, which would put an estimated 225,000 people back to work. Spending on needed facilities in communities where they are lacking is infinitely preferable to the make-work programs the government has relied on in the past few years. For example, we need a $400 million federal-provincial-municipal capital works program. This has been demanded by the premiers of the provinces and supported by most municipalities. Such a program would create 60,000 new jobs.
The second element in our program is a $500 million investment in modernizing and rebuilding Canada's obsolete rail system. This would provide better grain transportation facilities and has been recommended by the Hall commission. It would create 70,000 jobs.
Thirdly, we have suggested a $300 million urban transit program which would improve much needed rapid transit services in major cities. This project has the recommendation of the Prime Minister himself, who committed the government to just such a program on the eve of the 1974 election. Or perhaps the Prime Minister has forgotten. At any rate, we believe this would create 40,000 new jobs. I suggest that the Prime Minister remember that proposition, particularly in the city of Toronto, considering what happened in the by-elections there.
Finally, we need a $500 million special housing program which would provide funds for non-profit, co-operative and public housing, and also for neighbourhood improvements and residential rehabilitation projects. These are socially oriented programs on which the government could spend money that
The Budget-Mr. Blackburn
would in turn go to the purchase of goods and services and thereby get the economy moving again. This need is particularly acute in view of the fact that the housing market and construction industry are seriously depressed, and that high interest rates and land prices make it impossible for many Canadians even to consider buying their own homes. The minister's only housing proposal in the budget-a tax shelter for land speculators and developers-certainly will not improve this situation. We estimate our program will create
70,000	jobs in the construction industry.
Unfortunately, rather than having the courage to introduce innovative programs, the government chose to stand pat. That is precisely the reason for the economic malaise in this country. The government refuses to take the positive economic action required to reduce unemployment, to stimulate growth, or to chart a course toward economic recovery.
Even more glaring than the government's failure to come up with immediate, short-term measures to deal with our economic problems is the minister's failure to plan for the future. Other countries plan for the future, but this government seems to be very sluggish about it. There is no strategy in this budget. In fact, in his budget remarks the minister said, as reported at page 1199 of Hansard'.
I am frankly skeptical about the search for a single grand industrial strategy in a competitive market system.
I do not believe that there is just one basic strategy for the next five years, seven years or four years or whatever, but why does the minister at least not bring in a budget that would give us several alternatives so that we could plan ahead for our monetary and fiscal activities? The Minister of Finance refuses to recognize that government has a vital role to play in the economic management of our country. Canada does not have an industrial strategy, and until we have another government, we probably never will.
1 think the minister has been listening to too much conservative talk across the country. After all, private enterprise plans years ahead, whether in the manufacturing or resource oriented industry. I cannot, therefore, understand why Conservatives say that private enterprise should plan ahead, but that they do not have to and can operate on an ad hoc basis and blunder their way through. Even more glaring than the government's failure to come up with immediate short-term measures to deal with our economic problems is the minister's failure to plan for the future. As I said, there is no strategy in this budget. I quoted the minister as saying that he is frankly skeptical about a search for a single program.
The aim of such a strategy would be to develop the industries involved in the key sectors of our economy, such as housing, transportation and food. Instead, the government scatters its development incentives all over the place, without knowing the consequences. That is why from the same government we get budget incentives to increase research and development in this country, but drastic spending cuts in the research budgets for fisheries, farming, forestry and transpor-

November 22, 1978
The Budget-Mr. Blackburn
tation. This budget will grant at least $750 million to businesses through new tax cuts and the extension of existing ones. These will supplement the billions of dollars provided to corporations in previous budgets.
The government should seriously examine the consequence of its policy of across-the-board corporate tax cuts. I will not dwell on any specific examples here, but it is relevant to note the effect such cuts have had on a corporation such as Northern Telecom. Going back a few years I will use two examples of tax concessions, rapid write-offs and concessions that previous ministers of finance have used as vehicles to stimulate the economy but which did not stimulate the economy.
Northern Telecom has received close to $14 million in federal grants and loans. As of December 1977, its deferred taxes were about $50 million. In addition, the Export Development Corporation has loaned $200 million to foreign countries to buy Northern Telecom equipment. Between 1971 and 1977 sales doubled and profits increased from $12 million to $85 million. Yet while the company profited from the government's "no strings attached assistance," Canadian workers and the Canadian economy have been less fortunate. In the early 1970s, Northern Telecom employed 26,000 people. Last year, it employed 15,000 and by the end of 1978, 1,000 more jobs are expected to be lost. Obviously the government's program of corporate incentives is not working. It is certainly not working in the interests of the employees or of consumer demand.
Inco is another well known beneficiary of the government's corporate largesse. Between 1967 and 1976 Inco had a profit of $1.7 billion, and could defer $368 million in taxes. It also received $17 million in tax credits and a low interest $70 million loan from the Export Development Corporation to develop operations in Indonesia. The result was 3,000 people laid off in Sudbury and Thompson last year.
These abuses, Mr. Speaker, are precisely why we need an over-all industrial strategy. Instead of across the board tax cuts for corporations, which only increase the deficit and do nothing to decrease unemployment, the government must take an active hand in directing where its investment in business goes and what it will be used for. Instead of handouts with every budget, the government should be prepared to negotiate long-term planning arrangements with the corporate sector.
In other words, there should be strings attached; taxpayers' money should not be just handed over to the government to create a certain number of jobs within a certain period of time. Of course, once that obligation was fulfilled, the lay-offs would begin with the excuse that there was something wrong with the market or with the product. Industry could always find excuses to lay people off and cut back on the cost of operation. Specific tax incentives should only be granted to specific corporations in return for the company's pledge to do more research and development or increase investment in Canada.
For this reason, I question some of the incentives included in what can only be described as this "pro-business" budget. The government is extending the investment tax credit for an indefinite period and raising it from 5 per cent to 7 per cent. Is such an incentive really necessary when the government tells

us plant utilization has already increased from a low of 82 per cent last year to 87 per cent now?
This credit has not worked in the past as an incentive for companies to expand and create new jobs. All too often, the money has simply been used to re-equip plants with more up-to-date equipment, with the result that fewer employees than before are needed to produce the same amount of goods. With plants already expanding, there is no justification for the continuation of this credit.
I would like to reiterate once again, Mr. Speaker, that if the government is going to grant incentives out of the public purse, those benefits must be directed to create jobs, to promote research, and to benefit the economy. Across the board incentives to companies do not and will not accomplish the purpose for which they were intended.
We need more planning, and this will mean more government direction of our economy. That will require more courage than this government demonstrated in its budget, where it has managed once again to avoid its responsibility to put people back to work and get Canada growing again.
A few moments ago I alluded to the impression I have that the Prime Minister, the Minister of Finance and other members of cabinet are listening to conservative elements in the country with the feeling that perhaps there is a great wave of conservatism moving from one ocean to the other. I dispute this. The results of the by-elections, and particularly the result of the provincial election in Saskatchewan a few days afterwards, show that although people may be conservative on certain specific issues, certainly in my riding in southwestern Ontario and in other parts of the country people are not taking a broad, general, small "c" conservative attitude to every aspect of government and every aspect of life. We still have progressive thinking people in the country and we still have great numbers of reform-minded people. I think it is a shame that in a panic, knowing he has only a few more months to go, the Prime Minister is prepared to bow, to bend, to twist and to cater not just to moderate "c" conservative opinion in the country, put to large "C" Conservative opinion, politicized, of course, in the Progressive Conservative party.
The Prime Minister would do well to be his own man for the next two months. Instead of giving in to pressures from my colleagues to the extreme right, he should think things out for himself and remember the purpose of small "1" liberalism as well as the philosophies of social democracy-philosophies which he espoused ten years ago. As a result of certain pressures being brought to bear on him by certain outspoken and vocal conservative elements in the country, he seems to have forgotten those philosophies and be prepared to go the conservative route in order to get votes.
I notice my time is just about up, Mr. Speaker, but I should like to say that people in this country are demanding action. They did not get action from this budget. They will not get action and they will not get assistance. Business, particularly small business, the main street retailers, shopkeepers or whatever term one wishes to use, will not benefit either. What businesses need is customers. They do not need government
November 22, 1978

assistance and hand-outs, they need customers, and if they do not have customers they are in trouble. Businesses will not have more customers as a result of this budget. This budget will not in any effective way increase the purchasing power of ordinary Canadians who make up the vast majority of the consumers in Canada.
I do not know how many times we on this side of the House, particularly we in the NDP, have to drive the point home to the Liberal government that people need money. They need substantial tax breaks in order to increase their ability to consume. In this way we can get things moving again and not have to sit back with a constrictive budget waiting for Uncle Sam south of the border to bail us out. In the interests of the Canadian public I hope that over the next few months the government will pull itself together, get some new blood in it and attempt to rectify and turn around what is at the present time a depressing economic outlook.
[ Translation]


Mr. Pierre Bussieres (Parliamentary Secretary to Minister of Energy, Mines and Resources):: Mr. Speaker, the night of the budget, I was both astonished by and happy about the attitude of the Minister of Finance (Mr. Chretien). I was astonished because everybody knew what temptations the minister had to fight against in the preparation of his budget in the present circumstances, and I am not thinking only about the fact that there is a general election coming, but also about the fact that various groups had given him pieces of advice as to what to include in the budget.
The Minister of Finance, and I am quite pleased, has proceeded in a responsible manner, in a prudent manner that the previous speaker has identified as being a certain conservatism, but prudence is not conservatism; respect for reality and prudence about decisions which are extremely important for the future of the country and all Canadians is not a conservative but a responsible attitude.
Mr. Speaker, it was strange to hear some commentators on budget night say that there was nothing in the budget, that there was no substantial personal tax reduction and so on. Mr. Speaker, such an attitude was all the more ironic that, had there been substantial personal tax reductions in the budget, we knew that the same commentators would have said that the Minister of Finance was an opportunist looking for vote-catching manoeuvres before the general election, but as they could not lay that charge, they said that there was nothing in it. Mr. Speaker, it is obviously extremely difficult to please everyone and when a politician adopts a responsible attitude it is seldom recognized. That responsible attitude on the part of the Minister of Finance is obvious in the main objectives of the budget. The first objective is to allow our industry to maintain and increase its capacity to be a serious competitor in international markets. That, Mr. Speaker, is extremely important for us Canadians.
The Budget-Mr. Bussieres
Its second objective, Mr. Speaker, is to keep inflationary pressures as low as possible. Obviously it would be tempting to resort to the solution proposed by the New Democratic Party and to slash personal income taxes thus increasing purchasing power but one had to ask himself seriously, and that is what the Minister of Finance did, what effects such cuts, that extra flow of money would have on inflationary pressures; whether such a decision might not precipitate a new wave of inflation, and whether it might not reach the level we have known in the last few years but have now managed to contain. The danger was that much greater that we are just coming out of a period during which controls were applied to subdue inflationary forces. I am happy that the Minister of Finance resisted that suggestion and took a far more responsible decision, namely that of containing inflationary forces by refraining from opening too wide the gates of purchasing power.
Mr. Speaker, we also know that those forces could have led to greater expectations in salary demands destroying what we managed to get from all workers, that is recognition that lower increases were needed as compared with those we saw during periods of development. They recognized themselves that it constituted an inflationary force; as we know, a renewal of high demands in salary increases would exceed the present capacity of the Canadian economy.
As I see it the fourth objective is designed to stimulate investment in as many Canadian firms as possible. I shall refer later on, Mr. Speaker, to some measures which can actually help us achieve this new economic impetus. Finally another objective has to do with research and development in all sectors of the Canadian industry.
Mr. Speaker, I would like to speak about some measures that will enable us to achieve these objectives. First, the reduction of the federal sales tax from 12 per cent to 9 per cent. I think this measure is very significant and that everybody should be involved not only the manufacturers but also those who are situated between the Canadian manufacturer and the Canadian consumer to see that this reduction is actually passed on to the consumer. If we can achieve these objectives, I am sure that everybody from the producer to the retailer will recognize the useful repercussions of this measure on the economy and that they will help the government reach these objectives by passing on this 3 per cent reduction to the Canadian consumer, for not only will the consumer benefit from this but also the business firm because reducing the price of goods by 3 per cent will create the demand, which had been the purpose of previous tax cuts, by lowering the cost to the consumer by 3 per cent. I suggest, Mr. Speaker, that this measure is of significant importance.
Mr. Speaker, I reiterate my trust in all intermediaries between the producer and the consumer. I dare hope they will do their utmost to pass this reduction on consumer goods on to all consumers.

November 22, 1978
The Budget-Mr. Bussieres
There is a second point which I want to emphasize, Mr. Speaker, in connection with personal income tax. For instance, with fiscal year 1979, the deduction for employment expenses will be increased from $250 to a maximum $500. It will enable 6.2 million taxpayers in Canada to take advantage of a tax deduction representing a loss of revenue of about $270 million for the government. It is extremely important.
Someone said earlier that with a reduction in personal income tax it would be possible to put more money in the consumer's pockets; well, those $270 million will in fact go into the pockets of the Canadian taxpayer to enable him to buy more new goods. This is a relief from employment expenses.
The third measure, Mr. Speaker, relates to the indexing mechanism which is incorporated in the Income Tax Act. We know that it was already implemented and that it will reduce federal tax by $1.2 billion next year. I come back once again to what was said earlier about the request for sizeable tax cuts, and 1 shall say that this indexing provision makes it possible indeed to put new funds in the hands of taxpayers.
Mr. Speaker, there is also a provision about registered retirement savings plans which will benefit minor or disabled children where their parents die. Furthermore, Mr. Speaker, the budget provision concerning unemployment insurance will benefit the employer or the employee. It will also enable us to stimulate our industry.
Mr. Speaker, now I would like to say a few words on provisions which will affect more particularly our economy in terms of natural resources. Among those provisions, I want to mention first the investment tax credit. This provision, as everybody is aware of, is extended for an indefinite period and above all its rate is higher. Also, although not limited to natural resources it will benefit that sector significantly because of its regional impact. Indeed the rate is raised to 20 per cent in the Gaspe area. Recently I was listening to the hon. member for Gaspe (Mr. Cyr) commenting on what is happening in Murdochville and Madeleine mines and I am sure he is very happy that this increase to 20 per cent should apply to his riding.
I am also convinced that all hon. members from the Atlantic provinces share the opinion of the hon. member for Gaspe. In the other designated areas it was increased to 10 per cent. These include the major part of Quebec, all northern Ontario and western Canada, except for the southern part of Alberta and British Columbia. Since most future investments in mining and forestry will be in these areas, the impact of this measure is far from being negligible for the mining industry. Thus most of the $500 million allocated in the first year by the recently introduced budget will affect the sector of resources in the areas I have enumerated.
Exploration and development in the mining and oil industries will be particularly encouraged by the new measures

reducing considerably the corporate tax paid by companies operating in this sector. For example, new mining development expenditures will be deductible at 100 per cent instead of the 30 per cent rate previously used. That is a considerable raise, Mr. Speaker. That is to start from 30 per cent and say that from now on everything you spend to develop new mines will be deductible. Expenditures incurred by resource industries for new social assets or local facilities will be eligible for the additional deduction of $1 for every $3 spent, as will the expenditures for exploration and development of the industry itself. This would increase the interest on investments and stimulate the economy of many mining areas. This measure would also improve the welfare of the people living in those areas where mining facilities are being installed.
The Department of Finance has estimated at about $25 million the cost to the federal government of these two measures.
The accelerated amortization of pollution control equipment is extended indefinitely. We all know, Mr. Speaker, that it is extremely costly to instal pollution control equipment, either in the energy, mining or paper sectors, and companies engaging in such programs will be granted a tax reimbursement. This will also be in the interest of the people living in those areas, as we are increasingly conscious of the dangers of pollution for those people. As the mining industry is going through a period of uncertainty, this extension will be very beneficial to them. It is sometimes difficult for companies which are experiencing overproduction and a reduced rate of profitability to make the necessary expenses in the fight against pollution in order to improve the quality of life. That measure will help us in the pursuit of our objectives relating to the quality of the environment, and at the same time it will stimulate the economy in many regions.
The extension of incentives for drilling funds is also an extremely positive measure. That program, which was supposed to expire on June 30, 1979, gives individuals an opportunity to get directly involved in oil and gas research through a drilling fund and to benefit from the generous incentives offered to that industry. That program also makes it possible for us to find right here in Canada the capital needed for the implementation of our energy policy. The extension of that measure will only confirm our commitment to government policy and our determination to take all necessary steps for its implementation.
There are other things, Mr. Speaker, and I quote:
Extension of coverage to transportation
The coverage of the investment tax credit is to be expanded to include expenditures on rail, air, water and ... road transportation equipment. The basic rate of credit of 7 per cent will apply to all such qualified expenditures.
Mr. Speaker, we know that many and substantial investments are necessary in the transport industry, and you will see that this measure will be particularly helpful to the mining
November 22, 1978

industry transporting, for example, sulphur, potassium and coal.
I would now like to say a few words, Mr. Speaker, about the business transaction that allows all Canadians to be able to say that today their oil company, Petro-Canada, is now one of the giants in the oil industry. By acquiring Pacific Petroleums, Petro-Canada has become one of those giants. As a Canadian, Mr. Speaker, I am very proud of that transaction and I suspect that most Canadians are going to reject the idea of the Leader of the Opposition who would sell the Canadian corporation that is Petro-Canada.
I would like to point out what I believe to be a great abuse of language, namely that that was an act of nationalization. I do not believe, Mr. Speaker, that it can be said that that transaction freezes government funds and requires serious outlays by the government at a time of spending restraint. As was suggested on several occasions in this House, the purchase by Petro-Canada is a business transaction in which all the rules of business transactions were followed. Petro-Canada went and got its funds through the Canadian banking system and bought shares of Pacific Petroleums. So that transaction is a business deal, and Petro-Canada through the profits it will derive from that new organization will be able to invest a lot more in the research for and supply of energy in Canada. That will allow us to achieve the objective of meeting more than 70 per cent of Canada's needs in petroleum products. That purchase will also allow us to have better guarantees as to our reserves of energy. The amounts generated by Petro-Canada will also allow us to reduce the government expenditures that will be necessary to give Petro-Canada a second breath, new energy and a new financial capacity to broaden its operations.
And, as was said and repeated, Mr. Speaker, that purchase was made without having to use government funds but on a commercial basis, financed through the banking system.
Mr. Speaker, those were the few remarks I wanted to make on the budget and I am sure all Canadians will give their support to those budget measures, they will also give their support to that transaction, and 1 would invite them to read the editorial in today's Toronto Star which contains an excellent analysis of the attitude of the Leader of the Opposition with respect to the purchase of Pacific Petroleums by Petro-Canada.


Mr. Robert de Cotret (Ottawa Centre):: Mr. Speaker, 1 should like to preface my comments, if I may, with a special word of appreciation and thanks to all my workers in the recent by-election in Ottawa Centre for their efforts, for the long hours they put in and, in many cases, for the sore feet they suffered, indeed for everything they did in responding so well to a hotly contested campaign. I am highly indebted to them for their efforts in getting me into this House. 1 should also like to take the opportunity to thank the electors in
The Budget-Mr. de Cotret
Ottawa Centre for the clear-cut mandate they gave me to represent them in this place. Finally, 1 should like to thank all the hon. members in this House who have helped me make the transition to parliamentary life as easy as it has been in the last month.
It is with great pride and very real humility, Mr. Speaker, that I came forth one month ago to this chamber to represent the people of Ottawa Centre. It is a responsibility I do not take lightly, particularly at this time in our country's history. The challenges are great and the opportunities before us unparalleled in the industrial world. Yet as 1 travelled across this land I could only detect to my sorrow a lack of confidence in our ability to meet these challenges, uncertainty about our future and, indeed, fear at our current situation.
These deep-rooted concerns among Canadians are graphically portrayed by the comments and queries of my constituents in Ottawa Centre. To many to the east and to the west of us, Ottawa Centre appears as a constituency unique in Canada. It is a riding situated at the heart of the nation's capital. Its topography is graced by rivers, lakes, canals and parks. It is the riding in which this House is located and as such it is the major focal point of political activity in this country.
Yet in reality, Mr. Speaker, far from being highly unique and highly favoured, the riding of Ottawa Centre is in most respects a microcosm of Canadian society. The income level of my constituents parallels very closely that of Canadians as a whole, ranging from wealth to poverty. So does the educational background of my constituents parallel that found elsewhere in Canada. While there are many employed in the service industries, not the least important of which is the federal government, Ottawa Centre also has a strong constituency of small businessmen, of professionals, of tradesmen, of construction workers.

Mr. Speaker, the constituency of Ottawa Centre also has ethnic characteristics which are comparable to the ethnic diversity of our country. Moreover, there are as many tenants as homeowners in Ottawa Centre. This constituency is therefore very representative of Canada as a whole in many respects.

But, Mr. Speaker, Ottawa Centre is not a highly favoured riding. It is a riding which suffers a rate of inflation equal to, or higher than, that of most major urban centres in this country. It is a riding which, surprising though it may be to people from elsewhere, unfortunately has a rate of unemployment which is generally higher than the average for Canada as a whole. In this respect the concerns and expectations of the people of Ottawa Centre mirror well those of many Canadians. In electing me to the House last October 16, the people of Ottawa Centre gave me a strong mandate to speak out, and speak out strongly, on their behalf and to make their concerns known in this forum of public debate.

November 22, 1978
The Budget-Mr. de Cotret
In addition to these general concerns, there are also considerations over and above the over-all situation of the economy of this country, of the state of the nation as a whole and of the management of the public sector. My constituents are concerned about the industrial future of Ottawa Centre in the near term; and they are concerned about the relocation program of the federal government and the policies the federal government intends of pursue unilaterally in terms of its employees.
But, Mr. Speaker, today-
[ Translation]
I would especially like to talk about the proposals made last week by the Minister of Finance (Mr. Chretien), concerning the present economic situation in Canada as he sees it. I would therefore like to talk briefly about the economic situation in Canada. However, I am getting more and more concerned, Mr. Speaker, to find so many different opinions and different interpretations about the present economic situation. I also deplore the fact that the debates often become personal attacks. To underline my concern, Mr. Speaker, I would like to mention as an example, the recent discussions in public forums such as this institution about the situation on the labour market. If we talk about unemployment during such debates, we are quickly accused of being prophets of doom. However, if we look only at job creation in Canada in the last 12 months, we always forget to talk about the unfortunate situation of those who attempted to join the labour market without success. I have another example, Mr. Speaker.

Another example, Mr. Speaker, of this divergence in the interpretation of current economic conditions, can be found in the debate over the rate of real output growth in this country. Less than a year ago I had, I believe, the unique distinction of being in full agreement with the Minister of Finance in terms of the prospects for the Canadian economy in 1978. Both our evaluations of possible developments this year, led us to believe that real output would grow by 5 per cent. Yet, Mr. Speaker, for the government that 5 per cent, became a goal to be achieved and against which it has fallen short, while for us it was a barely acceptable economic performance that desperately needed to be surpassed through more aggressive economic policies.
Other examples of widely diverging interpretations of the same numbers abound. I need not detail them because I feel I have made my point. Essentially, my point is that the current situation hardly provides an environment of factual analysis, that leads to appropriate policy proposals.
What, then, is the current economic situation against which the measures introduced last week by the Minister of Finance must be evaluated? First let me talk about the positive elements, because there are many. Let me start by calling attention to our human resources.


First of all, Canada is a young nation with a young, dynamic and aggressive manpower. If we compare the age of Canadian workers on the basis of the total Canadian population with the average age of the population of our main trading partners, we find that Canada's population is much younger on the average. The Canadian population also has an education level greatly superior to that of the manpower of our trading partners. If we look first of all at access to education, we find that in Canada, between ages 3 and 34, 49.8 per cent of the population enjoy direct access to the educational system, which is much more than the percentages of 44 per cent in the United States, 22 per cent in the United Kingdom, 16 per cent in West Germany and 23 per cent in Japan.
If we look at another statistic, Mr. Speaker, which concerns the number of years spent full-time in the educational system in Canada, between ages 7 and 25, we find that Canada ranks third among the countries of the OECD, behind Sweden and the United States. In addition to a young, aggressive and well-educated manpower, Canada has an abundance of workers, which instead of being described as one of our great advantages, is often thought to be one of the weaknesses of our system and one of the main causes of our high unemployment. For my part, I like to consider this abundance of workers as one of the positive factors of the seventies and future decades. [English]
The human resources of this country are unparalleled in the industrial world. They are the cornerstone of the future development of this country, particularly as we enter the 1980s. To the same extent that our human resources are the cornerstone of that development, our physical resources are the tool of that development.
Let me assure this House that we are far from being deficient in physical resources. Let me name but a few. We have a total forestry inventory equal to that of the United States. We have proven oil reserves per capita twice those of the United States. Proven gas reserves per capita are two and a half times larger than those found in the United States. In terms of cultivated land we have a factor of 2Vi per cent per capita over the United States. Our uranium resources per capita are three times the size of those in the United States. I need not tell the House that we exceed by much larger factors the wealth and resources of countries such as the U.K., West Germany and Japan.
Turning to our mining sector, our production levels for nickel, zinc, copper, potash, asbestos, uranium and iron ore, to name but a few, surpass absolutely those of our major industrial trading partners. If they do not surpass in absolute terms, they do in terms of per capita production.
Our resources are not running out. We have an abundance of resources left in the soil. That is our potential, and realizing that potential will be the main challenge facing Canadians in the 1980s.
November 22, 1978



But to date, Mr. Speaker, our economic performance remains far short of the potential I have just indicated. I would like to take a few moments to deal with the economic conditions now prevailing in Canada. At this point in time, in the last months of 1978, we find ourselves in a period of economic stagnation that has been going on since the 1974-75 recession which, it will be remembered, is the most severe experienced since World War II. Since that time our economic performance record, although it may be considered acceptable based on certain international comparisons, is indeed noticeable for its failures to realize our potential. We have been performing much below our potential. In 1975, our growth rate in real terms was 1.3 per cent. In 1976, thanks to a strong first quarter, growth was 5.5 per cent. In 1977, the figure was 2.7 per cent and to date, this year, we have had a first quarter where real growth was 0.7 per cent, and a second quarter where growth was only 1.1 per cent.
Therefore, Mr. Speaker, over that 13-quarter period, ever since the 1974-75 recession, we had ten quarters when economic growth in Canada was below the level needed to accommodate the increase in the labour force and to maintain the level of our industrial capacity utilization. In other words during three quarters only of those three years did we experience the kind of economic growth this country needs to fulfil its potential.

If we consider current economic indicators, about which we hear in this House every day and about which we read in the newspapers of this nation every day, there is very little to lead one to make a statement as to the emerging recovery of this economy. Our real domestic product is increasing at a rate of approximately 2'h per cent per year. Our industrial production is increasing at a rate of less than 4 per cent per year. When we consider new orders, retail trade, machinery and equipment, we find indicators which show no great vigour and no move toward a sustained recovery.
In terms of housing starts there has been a very serious slump over the last 12 to 18 months. Only when we look at employment creation do we find a glimmer of hope. That will soon be dashed by labour force growth, the increase in the number of those Canadians who are legitimately entering the labour market to seek employment. There again by comparison there is a significant shortfall, and there will be a consequent increase in the rate of unemployment.
I have described our economic potential and our economic performance to date. There is a very great distinction between our potential and our actual economic performance. The fact that there is a difference between our potential and our performance is the tragedy of this government. This government has been unable to understand and appreciate, in policy terms, the distinction between what we can be and what we are at the moment. I can say only that no amount of comparisons with countries which are not as well endowed with natural
The Budget-Mr. de Cotret
resources as we are and which are not as fortunate as we are in terms of human resources will hide from Canadians the basic fact that we are experiencing some very serious economic difficulties.
We must not compare our economic performance with that of other industrial countries, because at this time and into the 1980s we are and will be a country which stands in a class of its own, given those resources and our potential. The meaningful comparison which has to enter public debate and serve as a basis for policy formulation is that between our actual performance and the potential we know we can realize. In that respect I am afraid we will find ourselves seriously lacking in terms of initiatives. We will find ourselves in great need of new policy directions, new initiatives, new leadership and, in one word, new government.


Some hon. Members:: Hear, hear!


Robert René de Cotret: In response to the current economic situation and to our potential, let me review briefly what the policy stance in this country has been and how it has evolved in the last 12 months. Let me say very boldly that 12 months ago we had a more aggressive and a more expansionary monetary policy. Twelve months ago we had a more aggressive and a more expansionary fiscal policy. Over the last three years, the monetary targets set forth by the Bank of Canada, as a prime indicator of its policy direction, gradually have been reduced from a range of between 8 per cent and 12 per cent to a range of between 7 per cent and 11 per cent last year; to a range of between 6 per cent and 10 per cent this year. The last reduction to a range of between 6 per cent and 10 per cent was accompanied by no less than six increases in the bank rate, leading to unprecedented high levels of interest rates across the country.
That is not to say that is a restrictive policy. Money is available, but money is very expensive. It is a high priced policy. But definitely it is a policy which is less expansionary than that which we could find in the country only 12 months ago.
On the fiscal side, the situation is much the same. We have gone from a position where we had temporary income tax cuts earlier this year to a temporary reduction in sales taxes. Recently we have seen the end of that measure, the introduction of significant expenditure cutbacks, and in this latest set of proposals from the government the reintroduction of only a small part of the stimulus which we could find in the economy in the earlier months of this year.
When I look at the measures presented by the Minister of Finance in his budget last Thursday, I find the biggest criticism which can be directed toward those measures is the one which flows logically from my comments-that we are not addressing the question of our economic potential.
There are specific measures in the budget which must be applauded. Let me applaud them and name them. I was happy to see the government make a move, as timid as it may be, in

November 22, 1978
The Budget-Mr. de Cotret
the area of manufacturers' sales tax. Also I was very happy to see the investment tax credit measures introduced. I think the R and D initiatives are in the right direction; we have been talking about that for a long time. The move in the area of resource taxation is one which should be applauded, as well as the employment expense deduction. This is something we have favoured and recommended to the government over the past several months.
When one looks at the over-all budget, what does the government offer to Canadians? Certainly it offers no hope that Canada will enter in the near future a period of economic recovery and sustained economic growth. It offers another year of 4 per cent growth, a rate of growth which is inferior to what is required to accommodate new entrants into the labour force. It offers employment creation of 250,000 jobs, which is exactly the same number as the increase in the labour force, if we assume absolutely no increase in the participation rate. I know the minister would be the last person to make a forecast of the participation rate, or for that matter the unemployment rate. In my own timid way, let me say that given the social and economic environment in this country, I expect to see continued increases in the participation rate. On that basis, a job creation forecast of 250,000 inevitably leads to a forecast of higher unemployment for the 12 to 14 months to come.
With regard to inflation, the minister offers the hope to Canadians that our inflation rate next year will be about the same as it is this year. The budget does nothing to restore the stimulus we had in the system earlier in the year. The budget does nothing to offer Canadians the reasonable expectation that they will know better economic times in the next 12 to 18 months. It is a stagnation budget.
In looking at the over-all budget, my second observation is that it is a short-term budget. I am not sure if that should be viewed as a criticism, because in the tradition of recent budgets it seems to me that all we can expect is a five-month budget from the government. It is a budget of adjustments of the margin. It is a budget which does not deal with the very critical problem of addressing where we are going as a nation in the 1980s and 1990s. It is a budget which gives no indication of direction or goals, and no commitment to stability in policy. In fact, it is a budget which is a stop-gap measure. It is a stand-fast budget which inevitably will lead to the continuation of the period of economic stagnation which we are now experiencing. The proposals introduced in the guise of a budget do nothing to help Canadians realize the potential they have and to get Canadians, as they have in the past, enthusiastically behind a move toward economic prosperity.
In conclusion, I should like to address specifically three myths which have been perpetuated in the public debate generally, and to some extent in the recently introduced budget measures. The first myth I should like to dispel is that at best in Canada we can expect an economic performance equal to that of the United States. Have we forgotten that over the years we have had a stronger growth in income per capita in Canada than in the United States? Have we forgotten that in the whole post-war period we have had more rapid produc-

tivity growth in Canada than in the United States? Have we forgotten than on average over this period we have had more rapid real growth in Canada than in the United States?


Yvon Pinard: Because of the Liberal government.


Robert René de Cotret: We have. To suggest that the best we can achieve is a rate of real growth equal to the United States, and that we should be thankful for that, should be put aside immediately. We can and we must achieve a rate of economic development, growth and wealth generation in the country to allow the kind of distribution of income we would like to achieve. We must and can achieve a rate of economic development superior to that of the United States.


Some hon. Members:: Hear, hear!


Robert René de Cotret: The second myth I should like to talk about briefly is that only a high level of unemployment will solve inflation. I am sure members of the House will remember that myth because it has been widely publicized across the country. Have we forgotten the costs of unemployment, the costs of having available human resources who are non-productive? There are human costs, social costs, and some very real economic costs which must be borne by the rest of us who are productively engaged.
In an environment in which there is rampant excess demand, inflation, shortage of manpower, shortage of goods and in which we are facing bottlenecks, certainly a higher level of unemployment traditionally has led to a decrease in inflationary pressures. But in an environment in which no such pressures exist from the demand side, in an environment in which there is ample excess capacity, in which demand is weak, and in which unemployment is hovering between the 8 per cent and 9 per cent level, the economic and social costs of unemployment, far from decreasing inflation, are fed right through the line, add to the over-all cost pressures on the economy, and contribute to a higher rate of inflation. At that point the policy prescription is clear: we can fight both unemployment and inflation at the same time. I remain firmly convinced that that is an objective which we should set for ourselves.


Some hon. Members:: Hear, hear!


Robert René de Cotret: The third myth which I was most disappointed to see emerge in our nation approximately a year and a half ago is that Canadians must accept a slower rate of growth, no doubt a justification for the fact that our rate of growth already was quite slow. What exactly does that myth mean? When we look at it on a per capita basis, does it mean that we must accept permanently a higher rate of unemployment of human resources? If not, the only other thing it could mean is that we must accept permanently a lower rate of productivity growth.
Very frankly, I reject both. We need not accept a higher rate of unemployment of human resources We have all the means at our disposal to achieve at least the same kind of productivity growth in the next decade or two, as we have in the last decade or two. On a per capita basis, we can and we
November 22, 1978

must achieve the kind of economic growth this country is capable of, given its potential.
If I have been able to dispel these three myths, Mr. Speaker, what must we accept? The basic proposition is that we must accept that Canada's potential is unique among industrial nations; we must accept that this potential has to be addressed; we must accept the need for a set of comprehensive strategies and policies to ensure that Canadians can maximize that potential over the decades to come. The Progressive Conservative party in the last several months has put forth suggestions, policies and initiatives that would provide Canada with just that type of policy-not a marginal policy, not a policy of adjustment or of tinkering and not a policy to deal with specific issues, but a framework in which the potential of this nation is clearly identified and against which policies can be introduced to help maximize this potential. These are policies dealing with individuals, housing, small business, the corporate environment and labour relations. These policies have been made public and we will discuss them further.
These are the policies for the 1980s. They are the policies of hope and they are the policies of a country that will realize its potential in the next decade.


Anthony Chisholm Abbott: Mr. Speaker, I rise on a point of order. I wonder if the hon. member would permit a brief question.


Mr. Deputy Speaker:: That is a decision for the hon. member as he still has a minute of time.
The Budget-Mr. de Cot ret


An hon. Member:: What a bunch of cry babies.


Mr. Deputy Speaker:: Order, please. I think the best solution to this matter is to put the question and I will do so. I would ask hon. members for their co-operation.


Mr. Deputy Speaker:: It being 5.45 p.m., it is my duty, pursuant to Standing Order 60(7), to interrupt the proceedings and forthwith put the question on the amendment now before the House.

The question therefore is on the amendment by the hon. member for York-Simcoe (Mr. Stevens). Is it the pleasure of the House to adopt the said amendment?


Some hon. Members:: Agreed.


Some hon. Members:: No.


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


Some hon. Members:: Yea.


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


Some hon. Members:: Nay.


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


Robert René de Cotret: I would be very happy to entertain a question, Mr. Speaker.


Anthony Chisholm Abbott: First of all, Mr. Speaker, I would just like to congratulate the hon. member for an excellent maiden speech. He showed a very high degree of skill. My question is, will he not agree that in light of his thoughtful remarks it is high time he replaced the wholly discredited financial critic of the opposition?


Robert René de Cotret: Mr. Speaker, in view of the policies this party has put forward in the economic area and the direction we are trying to give the debate on economic policy for this country, that question answers itself. There is, of course, no such need.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: Mr. Speaker, I think it might be important to note on this point of order that what we have seen here today is a violation of a very long-standing parliamentary tradition in relation to a new member of parliament making his maiden speech in the House of Commons. There is no question but that the hon. member of parliament for Ottawa Centre (Mr. de Cotret) dealt very effectively both with the issues facing the country and with the intemperate intervention by the Minister of State (Small Business) (Mr. Abbott).


Some hon. Members:: Hear, hear!


Mr. Deputy Speaker:: Call in the members.
The House divided on the amendment (Mr. Stevens), which was negatived on the following division.
(Division No. 13)
Alkenbrack
Baker
(Grenville-Carleton)
Baldwin
Balfour
Beatty
Beaudoin
Brisco
Cadieu
Caouette
(Villeneuve)
Clark
(Rocky Mountain) Clarke
(Vancouver Quadra) Corbett Cossitt Crosbie
(St. John's West) Crouse Darling de Cotret
++YEAS
Messrs.
Dick Dinsdale Ellis Epp Fraser Friesen Gauthier (Roberval) Gillies Grafftey Halliday Hamilton (Swift Current-Maple Creek) Hnatyshyn Holmes Howie Janelle Jarvis Jones Kempling
Knowles
(Norfolk-Haldimand)
Lambert
(Bellechasse)
Lambert
(Edmonton West)
La Salle Lawrence MacDonald (Egmont)
MacDonald (Miss) (Kingston and the Islands)
MacKay
Mazankowski
McCain
McCrossan
McGrath
McKinley
McKinnon
Mitges
1396

November 22, 1978
Munro
(Esquimalt-Saanich) Murta Neil Nowlan Pa proski Patterson Pigott (Mrs.)
Ritchie
Abbott Anderson Andras (Port Arthur)
Andres
(Lincoln)
Baker
(Gander-Twillingate) Basford Bee hard B6gin (Miss)
Blackburn
Blais
Blaker
Boulanger
Breau
Broadbent
Bussi&res
Caccia
Cafik
Campagnolo (Mrs.) Campbell
(LaSalle-femard-Cote
Saint-Paul)
The Budget-Mr. de Cotret
Messrs.
Messrs.
Roche
Rynard
Scott
(Victoria-Haliburton)
Siddon
Smith
(Churchill)
Stanfield
++NAYS
Messrs.
Caron
Chrfctien
Clermont
Collenette
Comtois
Corbin
Corriveau
Cotfc
Cullen
Cyr
Danson
Daudlin
Dawson
De Ban6
Demers
Dionne
(Northumberland-
Miramichi)
Douglas
(Bruce-Grey)
Douglas
(Nanaimo-Cowichan-The Islands)
Duclos
Stevens Stewart (Marquette) Towers Whiteway Woolliams Yewchuk-70.
Dupont
Duquet
Ethier
Faour
Faulkner
Firth
Fleming
Foster
Fox
Francis
Gauthier
(Ottawa-Vanier)
Joyal	MacEachen	RaeKaplan	MacFarlane	RailtonKnowles	MacGuigan	Raines(Winnipeg	Maine	ReidNorth Centre)	Marchand	RobertsLachance	Martin	RobinsonLajoie	Mclsaac	RodriguezLalonde	McRae	RompkeyLamontagne	Milne	RooneyLang	Munro	RoyLaniel	(Hamilton East)	(Laval)Lapointe	Nicholson (Miss)	SaitsmanLavoie	O'Connell	Sauv6 (Mrs.)Leblanc	Olivier	Savard(Laurier)	Orlikow	SmithLeBlanc	Ouellet	(Saint-Jean)(Westmorland-Kent)	Parent	SymesLee	Pearsall	TessierLefebvre	Pelletier	TrudeauLeggatt	Penner	TrudelLessard	Peters	TurnerLoiselle	Philbrook	Whelan(Chambly)	Pinard	WoodLoiselle	Portelance	Yanakis(Saint-Henri)	Prud'homme	Young-128.
Lumley MacDonald
Gendron Goodale Goyer	(Cardigan)
Gray Guilbault
Harquail Herbert	Mr. Speaker: It being
Hogan Hopkins	adjourned until tomorrow at
Horner	At 6.15 p.m. the House
Johnston (Westmount)	pursuant to Standing Order.
six o'clock, this House stands

Thursday, November 23, 1978