1978-11-17

Mr. John C. Crosbie (St. John's West):: Mr. Speaker, I rise on a matter of urgent and pressing necessity under the provisions of Standing Order 43.
Air Canada, in its magazine "En Route", distributed in aircraft ostensibly to inform the travelling public, carries a guide to what is happening across the country, entitled "Canada Calendar 1978", outlining events across Canada which travellers may wish to attend. Since the province of Newfoundland is not included in this calendar, leaving unrepresented the most interesting and culturally stimulating part of Canada, I move, seconded by the hon. member for Saskatoon-Biggar (Mr. Hnatyshyn):
That the president of Air Canada, Claude Taylor, be summoned before the bar of the House to explain this strange, if not sinister, omission, including an explanation as to why Newfoundland has been separated from Canada without even a referendum, and that Mr. Taylor be sentenced to one week's landings by aircraft at Torbay airport, after midnight and in fog, without the guidance of air traffic control as proposed by the Minister of Transport in his drive for economy, particularly in essential services.


Mr. Speaker:: Order, please. The hon. member for Selkirk (Mr. Whiteway).


VETERANS AFFAIRS
Mr. Dean Whiteway (Selkirk):: Mr. Speaker, I rise under the provisions of Standing Order 43. In light of the fact that Mrs. Betty Dali, a member of the Women's Auxiliary of the Royal Canadian Legion, Prince Edward Branch 81, was not allowed to sell poppies in a federal Canada Manpower building at 220 Henderson Highway, in Winnipeg, and was ordered to leave by the supervisor, I move, seconded by the hon. member for St. Boniface (Mr. Hare):
That the Minister of Veterans Affairs, who is aware of this incident, investigate with a view to establishing a policy which would permit the selling of
Remembrance Day poppies in federal buildings across Canada, and that an appropriate apology be extended to Mrs. Dali and Prince Edward Branch 81 of the Royal Canadian Legion.


Hon. Barney Danson (Minister of National Defence):: Mr. Speaker, I rise on a point of order.


An hon. Member:: Twelve o'clock.


Mr. Speaker:: Order, please. I will allow the minister one sentence to indicate the nature of the point of order, and then I will take it at twelve o'clock.


Barnett Jerome Danson: Mr. Speaker, the nature of the point of order is the use of Standing Order 43 regarding matters of allegedly urgent and pressing business. Some of these items are of deep concern to all of us in the country, but they can hardly be considered urgent in this sense. Representations could be made to ministers and departments, and I do not think the use of the time of the House in this way should be permitted.


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please. In order to present this motion for debate, pursuant to Standing Order 43 unanimous consent must be given. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


THE BUDGET
Mr. Bob Rae (Broadview):: Mr. Speaker, I rise, under the provisions of Standing Order 43, on a matter of urgent and pressing necessity. In view of the fact that last night's budget brought down by the Minister of Finance (Mr. Chretien) was his third in 13 months, I move, seconded by the hon. member for Humber-St. George's-St. Barbe (Mr. Faour):
That this House unanimously concludes that the minister has brought down a Toronto Argonaut budget: he has had his third down, fumbled the ball, and time has run out.


Mr. Speaker:: Order, please.

November 17, 1978
Oral Questions



ORAL QUESTION PERIOD


Mr. Sinclair Stevens (York-Simcoe):: Mr. Speaker, my question is for the Minister of Finance. Based on the figures given by the minister last night in his budget, it now appears that federal debt servicing costs next year will be $8 billion, compared with $2 billion in 1970, which means that next year every worker in Canada will have to carry a debt servicing load of $800 as far as the federal government is concerned.
Would the Minister of Finance indicate what he anticipates the ongoing debt servicing charges for 1981 and 1982 to be? Can he let us see down the road a little further than he did last night?


Hon. Jean Chretien (Minister of Finance):: Mr. Speaker, because I had been preoccupied with that situation, I decided in my budget to reduce cash requirements for the next fiscal year from $12.1 billion to $10.7 billion. I am always surprised that hon. members opposite complain about the size of the deficit. Last night they complained that I had not cut taxes enough.


Sinclair McKnight Stevens: The minister knows well enough-at least, if he has been talking to his own deputy minister-that if you take out the Canada Savings Bonds rather extraordinary circumstances, the cash requirements will actually go up next year, not down.
Let me put this question to the minister: would he indicate what he would anticipate to be the deficit in Canada in 1980 if there were full employment in the country, as analysts are currently anticipating-as has been stated this morning-that the deficit, with full employment, would still be $6 billion to $8 billion? Would the minister indicate if that is, in truth, so?


Joseph Jacques Jean Chrétien: Mr. Speaker, I think the first point is that there will be a debate on the budget this afternoon, as we have agreed, so I am not about to discuss what the budget would have been if there was no unemployment, what is the level of full capacity in Canada, and so on. Those questions are difficult to answer and assumptions are difficult to make.
I can just say that I stimulated the economy last night as much as I could. At the same time, I took steps to reduce our cash requirements, and I think this was the soundest economic policy I could provide under the circumstances.


Sinclair McKnight Stevens: My question is again directed to the Minister of Finance. The minister, in his answer to me, shows that it is the "ad hockery" in which he engages that is causing the problems in this country.
My final question to the minister deals with the impact on the private market sector of the extensive borrowings that he

now anticipates, which will mean that in the coming years 28 per cent of the total available private funds will go into the federal coffers, as compared to an average of 10 per cent in the decade ending in 1976. Would the minister indicate whether this will not have a tendency to raise interest rates still higher, and consequently raise unemployment above the objectionably high level at which it is today?


Joseph Jacques Jean Chrétien: I am glad that the hon. member referred to the marketplace. In fact, this morning, because the budget was a responsible budget, the value of the Canadian dollar increased in the marketplace.


Some hon. Members:: Hear, hear!


Joseph Jacques Jean Chrétien: May I say, in reply to the question put by the hon. member, that there are many savings available on the Canadian market at this time. The savings in the Canadian economy are at a high level and there is absolutely no problem-I forecast this-for the government to raise this money and for the private sector to use it to expand planning and increase investment by 16 per cent next year.


VALUE OF CANADIAN DOLLAR-GOVERNMENT POLICY
Mr. James Gillies (Don Valley):: Mr. Speaker, my question is for the Minister of Finance. It is interesting to note that the dollar edged out of the 84-cent level by one-fifth of 1 per cent in response to the budget.


Some hon. Members:: Oh, oh!


James McPhail Gillies: Last night, the minister said in the budget speech that there is good reason to believe that the major adjustment in the exchange rate which was required to restore our competitive position has been completed. Does that statement mean that the Government of Canada has taken the position that it will support the Canadian dollar at around the 84-cent or 85-cent level?


Joseph Jacques Jean Chrétien: We have always said we do not intend to fix the rate of the Canadian dollar; the rate will be fixed by the market. We do think that the level of the dollar at this time is a good level for maintaining our competitive position. We hope that the fluctuation will not be downward, but if the pressures of the market bring the dollar down, we will have to live with it because we are not the ones who fix the dollar; it is the market which determines the value of the Canadian dollar.


James McPhail Gillies: Again, I would like to have this point clearly clarified, Mr. Speaker. Is the Minister of Finance now saying in the House that, regardless of what pressures may be exerted, through speculation or any other forces, on the Canadian dollar, the Canadian government will not intervene, even though it is the position of the government that a downward change in the exchange rate would be damaging to the Canadian economy?
November 17, 1978


Joseph Jacques Jean Chrétien: The position of the Canadian government on the dollar is that the Bank of Canada intervenes to make sure that the market operates in an orderly fashion.


PROJECTED INCREASE IN GROWTH RATE-EFFECT ON UNEMPLOYMENT
Bob Rae: Mr. Speaker, I also have some questions for the Minister of Finance. In his April budget, the minister stated that he expected a "5 per cent growth in real output. .. (which) should bring about some modest decline in unemployment." In fact, the minister admitted in last night's budget that the 1978 growth rate will be less than 4 per cent; and, of course, unemployment has increased in Canada since last April.
[DOT] (no)


An hon. Member:: Come on.


Bob Rae: In view of the 4 per cent to 4.5 per cent growth rate, can the minister indicate to the House whether the unemployment rate is expected to come down in 1979 and, if so, to what extent?


Joseph Jacques Jean Chrétien: Mr. Speaker, I stated in my budget that the growth in output should be close to 4 per cent for 1978 and that with such a growth rate the level of unemployment went down by one percentage point in October 1978, compared to 1977. I think that with a decrease in inflation in Canada, an increase in investment in the private sector and the job-creation programs put forward by the federal government, if all that works, there should be a decline in unemployment in the course of next year if, of course, the manpower participation rate does not edge up too quickly.


Bob Rae: Mr. Speaker, it is of interest to note that the unemployment figure did not even appear in last night's budget speech. The minister bases real growth in Canada on the assumption that there will be a 3 per cent growth rate in the United States. In view of the fact that with this optimistic forecast, the minister seems to be alone among all forecasters in saying the rate in the United States will be this high, can he now indicate to the House why he is choosing, deliberately, a policy of high unemployment which makes Canada a leader in world unemployment figures?


Joseph Jacques Jean Chrétien: Mr. Speaker, yesterday I brought down a budget with as many incentives as I could. We reduced personal income tax by increasing the indexing factor to 9 per cent, we reduced them through a raise in the employment expense deduction, we reduced unemployment insurance premiums for Canadian workers thereby boosting their purchasing power; furthermore, we reduced the sales tax which should lower the inflation rate by 0.5 per cent, which will help further
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to contribute to increase the purchasing power of the people of Canada. I am very surprised that with such incentives, a stimulating policy which was also proposed by the New Democratic Party-and I refer to the sales tax cut-the hon. member says today that those policies are bad. The members of the New Democratic Party advocated such policies themselves.


Bob Rae: Mr. Speaker, we do not want to take credit for this budget: I can assure the minister of that fact.
I have a final supplementary question. In view of the fact that housing and construction markets remain particularly depressed, and that high interest rates, land prices and the profits of large developers make it impossible for many working Canadians to buy their own homes, can the minister explain why the only housing proposal in his budget was a tax haven for land speculators and housing developers?


An hon. Member:: Tories!


Joseph Jacques Jean Chrétien: Mr. Speaker, we have had, in the past-and they are still in place-very good housing policies. Over the last few years, we have managed to create more than 250,000 units per year.


Some hon. Members:: Oh, oh!


Joseph Jacques Jean Chrétien: It was exactly the level set by the Economic Council of Canada for the housing policies of Canada. The money we use in that field is targeted to help people at the low end of the income scale in Canadian society. At this moment, we think that Canadians, as has been said by many people, are probably the best housed people in the world.


INQUIRY WHETHER BUDGET FOR CANADA WORKS PROGRAM WILL BE INCREASED TO CURB UNEMPLOYMENT
Mr. Richard Janelle (Lotbiniere):: Mr. Speaker, I would like to direct a question to the Minister of Employment and Immigration.
In view of the budget presented last night by the Minister of Finance, which would seem to generate much more unemployment than jobs, is it expected, within his department that budgets will be increased for Canada Works projects, which are indeed job-creating?


Hon. Bud Cullen (Minister of Employment and Immigration):: Mr. Speaker, if the hon. member is giving that interpretation to the budget, clearly he is wrong. I am happy my colleague did not yield to the temptation to put in the kind of stimulus suggested by the opposition, which would have been fiscally irresponsible and really would have caused Canada to lose jobs.

November 17, 1978
Oral Questions


INQUIRY WHETHER BUDGET CUTS WILL ELIMINATE SELECTION COMMITTEES ON CANADA WORKS PROJECTS
Richard Janelle: Mr. Speaker, my question is to the same minister, who has not answered my question concerning budget increases for Canada Works projects. I suppose he meant that there would be no increases. Is it therefore true that next year selection committees, which are composed of local residents, who are really responsible in the ridings, will be abolished; is it true that to save money these selection committees will be discontinued?


Jack Sydney George (Bud) Cullen: Mr. Speaker, the hon. member is not in tune with the facts. The fact of the matter is that there is a significant increase in money made available over this winter for the Canada Works program.


BUDGET PROVISIONS RESPECTING ISSUANCE OF TERM PREFERRED SHARES-PETRO-CANADA, PACIFIC PETROLEUMS DEAL
Mr. Allan Lawrence (Northumberland-Durham):: Mr. Speaker, my question is for the Minister of Energy, Mines and Resources. As a result of the budget last night, the government is closing a very real tax loophole relating to the issuance of term preferred shares. As the minister knows, of course, the issuance of term preferred shares is a very crucial and critical part of the Petro-Can, Pacific Pete deal.
Then a curious and rather contradictory limitation pops up in the budget papers, at page 38, and I quote this, sir, very briefly. In reference to closing the loophole, it states, "This will not apply to a security issued pursuant to a written agreement made prior to November 17, 1978". That has obviously been written in there so this will not queer the Pacific Pete deal.
My question to the Minister of Energy, Mines and Resources is this: was there any communication by, or on behalf of, Petro-Can with the finance minister or any of his officials in respect of this special, discriminatory, favoured treatment of Petro-Can?


Joseph Jacques Jean Chrétien: Mr. Speaker, I am informed that many of these instruments have been negotiated in the last little while by all sorts of corporations across Canada. We decided to change the law, to clarify the definition of income debentures, and retractable preferred shares and make the decision effective yesterday because many business decisions by different corporations, banks and financial institutions in Canada had been negotiated. It is a principle in law that, when you make a change, you make it non-retroactive; and this applied to all transactions that were negotiated between financial institutions and other corporations in Canada up to last night.


Allan Frederick Lawrence: Of course, that is a non-answer, because the budget actually does plug the loophole for shares issued prior to today, but the limitation in there is that there is an exception which covers the Petro-Can deal, for an agreement made prior to today. That is a phony-boloney limitation.
My question to the Minister of Energy, Mines and Resources is: it now seems-this is with regard to the Petro-Can, Pacific Pete dubious deal-that there is going to be a battle for control of Pacific Pete, involving a Canadian group which is interested in trying to gain control, because both the minister of energy and the Minister of Finance-


Some hon. Members:: Question.


Allan Frederick Lawrence: All right. My question relates to the representations made by both those ministers, that the purpose of it is to repatriate control of this oil company. If there is a Canadian group that now wants to purchase it, my question to the minister is: will he give directions to Petro-Canada, a Crown corporation, a baby of this government-


Some hon. Members:: Order.


Mr. Speaker:: Order, please.


Allan Frederick Lawrence: Will he give directions to Petro-Can to withdraw from the deal if there is a Canadian group interested in taking over?


Hon. Alastair Gillespie (Minister of Energy, Mines and Resources):: Mr. Speaker, that is an extraordinary suggestion. The deal has been entered into in good faith between Petro-Canada and the shareholders of a controlling block of Pacific Petroleums, and I refer to Phillips Petroleum, a very large United States corporation. This is a transaction which will repatriate control of Pacific Petroleums, a significant Canadian entity, to Canada. That deal has been made, it was made in good faith and there is no intention whatsoever to go back on it.


COMMUNICATION BETWEEN DEPARTMENT AND PETRO-CANADA PRIOR TO PACIFIC PETROLEUMS DEAL
Mr. Joe Clark (Leader of the Opposition):: Mr. Speaker, my supplementary question is to the Minister of Finance, who I think neglected to answer a very key question asked by the hon. member for Northumberland-Durham regarding the existence, or not, of any communication between anyone related with Petro-Canada and anyone related with the Department of Finance so that there might have been some advance knowledge on the part of anyone related to Petro-Canada that might have led them to become involved in the Pacific Petroleums deal before the budget was brought down.
Is the minister able to give the House of Commons categorical assurance that there was no communication of any kind between anyone associated with the Department of Finance and anyone associated with Petro-Can that might have given
November 17, 1978

Petro-Can a special advantage in anticipation of this budgetary proposal?


Joseph Jacques Jean Chrétien: Mr. Speaker, the Deputy Minister of Finance, Mr. Shoyama, is by law a member of the board of Petro-Canada. At the meetings he did not know, did not speak or give any indication at all to anybody about what was to be done in the budget. The final decisions about a change in the law for income debentures and retractable preferred shares were made Saturday morning when I closed all the elements of the budget.
Mr. Shoyama has assured me that he has given no indication whatever, to anybody, of my intentions. He even said at the press conference that it was my decision and he could not give an indication because he had to respect his role as the Deputy Minister of Finance. I have complete faith and confidence in this public servant-who has served many governments, not only this federal government-having acted properly throughout. If somebody is accusing him of wrongdoing, I would like them to give me the information and I will make inquiries. I have been assured by Mr. Shoyama that at no time did he give any indication, to anybody, of my intentions.


Charles Joseph Clark: Mr. Speaker, just so that I understand this correctly, we do have a statement now, a confirmation by the minister that the Deputy Minister of Finance was present at the meeting of the board of directors of Petro-Canada which took this decision. That is an established fact which the minister has now admitted to the House of Commons.
Will the minister advise the House whether the Deputy Minister of Finance, seized of the knowledge of the intention of Petro-Canada as he was, gave any indication of that intention of Petro-Canada to the Minister of Finance, before the minister took this decision-which he modestly claims as his own-on Saturday morning?


Joseph Jacques Jean Chrétien: Mr. Speaker, before Saturday morning, I was aware of the decision of Petro-Canada to buy Pacific Petroleums; but as I had not made any decision, I did not mention to Petro-Can or to anybody that the changes were to be made. Until Saturday morning, I was not sure whether I was to move or not move: there were arguments for and against the proposition. I kept the secret vis-a-vis Petro-Canada all along, and I never mentioned the intention of the government.
Of course, I wanted to move on it because I had received letters from the treasurer of Ontario, two letters from the minister of finance of Quebec and representations from other ministers of finance that this interpretation of the law on income debentures and retractable preferred shares was causing the federal and the provincial governments losses in revenue. I decided to put it in the budget on Saturday, and I made it public yesterday.


Charles Joseph Clark: Mr. Speaker, certainly we will want to examine in some detail, at a later stage, what happened to the deputy minister who was placed in a very invidious position by the
Oral Questions
determination of this government to become directly involved in most of the economic activities of this country.
I ask the minister to clarify what I think he told the House. Is he saying that he gave a special exemption, referred to by my colleague, the hon. member for Northumberland-Durham; that he put that into the budget, knowing it would confer a special and specific advantage upon Petro-Canada in relation to the Pacific Pete acquisition?
[ Translation]


Joseph Jacques Jean Chrétien: Mr. Speaker, the new policy became effective as of last night and it applies to all transactions of all companies which have negotiated loans with financial institutions in order to finance their development. It applies to all companies, including Petro-Canada, and I did not want to discriminate either for or against Petro-Can.


SOCIAL SERVICES
Mr. Heward Grafftey (Brome-Missisquoi):: Mr. Speaker, my question is directed to the right hon. Prime Minister.
As the Minister of National Health and Welfare signed an agreement with the provinces last spring concerning the block funding of social services and as a bill was put before the House on the matter two weeks ago, I should like to know why the Minister of Finance, a few days ago, unilaterally rejected and cancelled that agreement with the provinces, and how the federal government is going to explain that flip-flop to the ministers of the provincial government.


Right Hon. P. E. Trudeau (Prime Minister):: Mr. Speaker, the hon. member surely knows that last year the transfers of federal government to the provinces grew by 13 per cent to 14 per cent. Last February we agreed with the provinces to lower that growth rate.
The government, with regard to its own expenditures, considerably reduced the growth rate to about 9 per cent. It was therefore quite proper for the transfers to the provinces to be reduced as well. We discussed plausible reductions with the provinces, we told them we would not act unilaterally. The provinces refused to let us decrease expenditures stipulated by law or agreement. Consequently, we simply said, in the case of expenditures which were planned but not yet confirmed by law; very well, we shall withdraw that bill for the time being. But we can go back to it later on when the economic situation allows it.


William Heward Grafftey: Mr. Speaker, it is not only a matter of budget. The minister will conclude an agreement with the provinces

November 17, 1978
Oral Questions
and that is a totally different approach to financing the problem of social services. Therefore, I would like the right hon. Prime Minister to tell us what is the situation now as regards social services? How are those changes made within the provinces? And does the federal government intend to call an early conference with the provinces to explain this turnabout? That is not a matter of budget but of changing completely the financing pattern of social services.


Pierre Elliott Trudeau: Mr. Speaker, unfortunately for the hon. member, his indignation is based on a mistake in the facts. He is talking about the signature of an agreement with the provinces, but there has not been any agreement signed with the provinces. There were plans for an agreement, but it was never confirmed by legislation or in an official agreement. We wanted to proceed in a certain way and we are still interested to do so. Next week, I think, the minister will meet with his provincial counterparts to discuss other possibilities.
However, the hon. member knows that on August 1 we announced that we had to reduce the rate of growth in our spending. That is indeed one sector where expenses will be cut down. We would have preferred to do it in other sectors as well, for instance through the Established Programs (Interim Arrangements) Act, but the provinces turned that solution down. They said that it was a signed agreement. So we said very well. You do not want us to touch this one, we will change the ones which have not been signed yet.


HEALTH AND WELFARE
Mr. F. A. Philbrook (Halton):: 
THE CANADIAN ECONOMY
Mr. Fonse Faour (Humber-St. George's-St. Barbe):: Mr. Speaker, may I put a question to the Minister of Finance? On October 30, I asked the minister to consider in his budget a special economic program for the province of Newfoundland. He replied that he always takes into account the different regions of Canada in drafting a budget, and that "special efforts"-to use his words-are always made to help provinces experiencing difficulties.
In view of the fact that last night's budget contained nothing in the way of special consideration for Newfoundland, I would like to ask the minister why he did not present a special economic package to help alleviate the serious economic conditions in that province.


Joseph Jacques Jean Chrétien: Mr. Speaker, in my budget yesterday, in all the different programs that I proposed I made special provision for the maritimes and the Gaspe because I felt those areas are of slow growth and should have more tax incentives in order to promote development of industries and economic activity. On top of this feature, we have increased substantially the Canada Works programs. Under those programs the Minister of Employment and Immigration has spent most of the money in the maritimes. Of the maritime provinces, on a per capita basis, it is always Newfoundland that gets the biggest share.
By the way, Mr. Speaker, despite the fact that the riding of the hon. member has been in opposition with the Tories and with the NDP, they have always qualified first for grants coming from the Minister of Employment and Immigration.


Alphonsus Faour: Mr. Speaker, I have no quarrel with the minister that Canada Works programs have been set up in the Atlantic region; but as the minister knows, these programs do not alleviate the fundamental problems in the region and the reasons why unemployment is so high.
I would ask the minister if he would seriously consider sitting down with the provincial government to develop a New Deal or Marshall Plan type of economic program to radically change the position of Newfoundland within the Canadian economy, so that lasting benefits might result.


Joseph Jacques Jean Chrétien: Mr. Speaker, I met with the minister of finance of Newfoundland when he came to Ottawa and he explained the problems of the province to me. That led me to make sure that the tax incentives for development and construction would be doubled for that part of Canada, which is facing difficult problems.
November 17, 1978

In all the measures I put forward yesterday in terms of tax incentives, I doubled them in order to help economic development in the maritimes and with the prospect in sight for the development of the fisheries industry. The fact that we have doubled the incentives for development will certainly help in the creation of many more activities in that part of Canada.


REGIONAL ECONOMIC EXPANSION
Mr. Robert Muir (Cape Breton-The Sydneys):: Mr. Speaker, my question is for the Minister of Regional Economic Expansion. In light of the fact that the work force at the Prince mine, operated by the Cape Breton Development Corporation, is continually being reduced, and fears are being expressed by the workers that the corporation is not proceeding with the development work as quickly as was promised, can the minister give a clear and concise report as to the future of this coal mine and its work force?


Hon. Marcel Lessard (Minister of Regional Economic Expansion):: Mr. Speaker, I think I might reassure the hon. member as well as the workers of Prince mine in Cape Breton regarding the future of that operation. As he knows and as many hon. members in this House also know, we had some problems with roof fallings in the mine. We are now looking for a new process to go deeper and reach a new coal deposit which seems much more promising to us and will provide clearly more secure working conditions. We had some problems recently when workers did not report to work, last Tuesday I think, and the mine management decided to suspend them for one day according to its policy. But I am told that yesterday all was back to normal, all workers were back to work and drilling for new approaches and new development possibilities were going on normally. However, we hope to be able as early as next spring to accelerate current works in order to reach the new development area which will allow us to develop on a larger scale the deposit we have found there.


Robert Muir: Mr. Speaker, I am sure I do not have to remind the minister that the situation is very volatile and the work force is discouraged because they do not know what is going to happen tomorrow.
In view of the fact that the statement was made by an official of Devco before a committee of this House, that when development was completed at the Prince mine, the work force would number in the vicinity of 500, can the minister reassure the workers that this commitment will be fulfilled? In addition to that, can he say how long these coal miners will be displaced from their normal place of employment? As the minister knows, these miners are forced to undergo undue hardship in
Oral Questions
having to travel to and from another mine so many miles each day, which takes up so much time that they do not have much time to sleep during the night.


Marcel Lessard: Mr. Speaker, I understand the difficulties the workers are experiencing due to a reduction in the level of operation of the Prince mine as a result of a roof falling, which was causing security risks for the workers. The workers were informed that they would not be laid off, that they would be reassigned to other operations partly within the Prince mine but, as well, would work in other mining operations within Devco. I understand they travel from their normal place of work to the other place. However, that was the best solution in the circumstances.
I can assure you, Mr. Speaker, and the hon. gentleman that we expect, if the development plan for Prince mine follows the projections we have set, the mine to return to normal operation within a reasonable time. I hope at that point the level of employment at Prince mine will reach the figure we projected, which was roughly 500 workers.


FINANCE
Miss Flora MacDonald (Kingston and the Islands):: Mr. Speaker, my question is to the Minister of Finance. The other day he confirmed his intention to reduce the unconditional transfer payments to the provinces by some $220 million, but he declined to be specific as to how much the programs would be cut.
In the absence of any elaboration in last night's budget on these cutbacks, I would like to know, now, if the Minister of Finance will tell the House how much of that $220 million reduction will be equalization payments. Will it be $25 million, $50 million or $100 million? Will he give us that figure?


Joseph Jacques Jean Chrétien: Mr. Speaker, I answered that question earlier. Unfortunately I do not have figures with me. I gave explanations to all the ministers of Finance when I met them. We are not dealing with a reduction of equalization payments. On the contrary, the amounts paid by equalization are going to increase. If necessary, I will provide the hon. member with the list. In each province, they will rise from 9 per cent up to 15 per cent. We intend to change the formula to ensure that equalization payments do not increase too quickly because the Canadian government could not cope with that. That would have happened if we had not introduced these changes. Indeed, the province of Ontario would have qualified for equalization payments and everybody understands that. The treasurer of the province of Ontario did understand that it was absolutely normal under the circumstances to see that equalization payments rise normally and that we do not come to a point where the province with the

November 17, 1978
Oral Questions
highest per capita income in Canada is eligible for equalization payments.


Miss MacDonald:: Mr. Speaker, I appreciate that lengthy tirade by the Minister of Finance, but I was really looking for a simple answer to a simple question. I fail to understand how he can be so definite about the $220 million total reduction, if he cannot give us the figures that make it up.
Could the minister tell the House, in addition to the amount that will be made up in the reduction to equalization payments, just how much of that $220 million will be absorbed by the elimination of the social services financing act, the block funding provisions of which were, indeed, agreed to at a federal-provincial conference earlier this year, contrary to what the Prime Minister may say?


Joseph Jacques Jean Chrétien: Mr. Speaker, when I had discussions with the provinces I told them that it was impossible, in a reduction program of government expenditures, to proceed with the social services act and to proceed with the program next year for the Department of Urban Affairs. I informed them of that. We discussed it. I have explained to the ministers what I had to do on the question of equalization payments. Mr. Speaker, I do not have the figures with me; I will have them at the next session.


AIR CANADA
Mr. Dan McKenzie (Winnipeg South Centre):: Mr. Speaker, in the absence of the Minister of Transport, I will direct my question to the acting minister. Air Canada has announced they will be cutting back on 15 routes due to the necessity for pilot training. This is going to cause serious inconvenience for the travelling public, as well as causing no end of problems for travel agents across Canada. Recently, on flights out of Winnipeg and Calgary, passengers have had to sit in aircraft from three to four hours waiting for Air Canada to find flight crews.
Could the acting minister explain why Air Canada has been so negligent in its pilot training program and why there is such a pilot shortage within Air Canada?


Mr.   Claude-Andr@: Mr. Speaker, I will take this question as notice.


A. Daniel McKenzie: Mr. Speaker, Transair has given notice to a number of its pilots that they will be laid off due to the PWA-Transair merger. Would the parliamentary secretary inquire of Mr. Claude Taylor whether any of these Transair pilots could be hired, due to the pilot shortage within Air Canada?

[ Translation]


Mr. Lachance:: Mr. Speaker, I will transmit the question to the minister as soon as he comes back.


VETERANS AFFAIRS
Mr. Mike Landers (Saint John-Lancaster):: Mr. Speaker, my question is for the Minister of Veterans Affairs. As next year marks the thirty-fifth anniversary of D-Day, can the minister tell the House if Canada will be participating in any special events to mark this occasion?


Daniel Joseph MacDonald: Yes, Mr. Speaker. I previously announced the fact that plans are now being made for June, 1979. My hopes are to lead a delegation at this very important function. The ceremonies will be held at Beny-sur-Mer and other important cemeteries.


PARLIAMENT OF CANADA
Mr. Ray Hnatyshyn (Saskatoon-Biggar):: Mr. Speaker, I have a supplementary question for the Prime Minister. Over a week ago, my colleague, the hon. member for Norfolk-Haldi-mand, inquired whether it was the intention of the Prime Minister to continue the veterans preference with respect to the appointment of Black Rod in the other place. Has the Prime Minister had an opportunity to consider this matter in detail, and could he report to the House at this time?


Pierre Elliott Trudeau: Mr. Speaker, I do recall the question and I said I would consider the suggestion. The point is, there is no appointment which is imminent; therefore, I do not feel I have to decide who is going to be Black Rod until the vacancy eventually occurs.


PUBLIC WORKS
Mr. R. E. McKinley (Huron-Middlesex):: Mr. Speaker, my question is for the Minister of Public Works. Since the minister indicated last year, in his testimony to a committee of the other place, that he favoured putting his department on a revenue dependency basis as a common service agency, charging government departments for accommodation, and since the committee of the other place recommended such a change in its recent report on the Department of Public Works' accom-
November 17, 1978

modation program, has the minister done anything toward implementing this provision?


Hon. Judd Buchanan (Minister of Public Works and Minister of State for Science and Technology):: Mr. Speaker, I am happy to have the support of the hon. member on this suggestion. A committee of Treasury Board is currently examining this proposal in an endeavour to see how it can be most feasibly and sensibly put in place.


Robert Elgin McKinley: Mr. Speaker, will the minister be bringing in legislation during this session to revise the Public Works Act which, as the financial committee of the other place noted, is grossly out of date and out of line with the Department of Public Works' actual contemporary responsibility?


J. Judd Buchanan: Mr. Speaker, at this time we do not intend to make any changes in the act. However, in view of the report of the Senate committee and other matters, we may well reconsider that question later in the session.


FINANCE
Mr. Ron Huntington (Capilano):: Mr. Speaker, my question is supplementary to those put by the Leader of the Opposition and the hon. member for Northumberland-Durham to the Minister of Finance. It has to do with the cut-off date of November 16 on dividend refunds to private corporations. I do not think the Minister of Finance realizes the unfairness which exists throughout Canada with this ruling.


Some hon. Members:: Order.


Arthur Ronald Huntington: Mr. Speaker, there are members in the business community-


Mr. Speaker:: Order, please. The hon. member understands, I am sure, that we are about to embark on six days of debate on the budget. If there are questions to be put on the budget, I think they should be questions, and questions only.


Arthur Ronald Huntington: The question I want to ask the minister is this: does he think it fair that the cut-off date should apply to people who have been waiting for rulings from his department for over eight months on this very ambiguous point which arises within the present legislation? Companies have paid $ 150, asking for a ruling, and now they are wiped out by the stroke of a pen on November 16, leaving a class of businesses in a preferred position-


Mr. Speaker:: Order.


Joseph Jacques Jean Chrétien: Mr. Speaker, this is precisely what I wanted to avoid. I said that all
Oral Questions
corporations which had entered into agreements with banks and which are now waiting for a ruling from Revenue Canada do not need to worry. If they are found eligible, the ruling will be respected. All parties who have already made commitments with financial institutions will know in the next few weeks the ruling of Revenue Canada, but as of today the department will not accept any commitment.


Arthur Ronald Huntington: Mr. Speaker, there are companies which had this class of share ready to put into effect for many months prior to November 16 and which were awaiting a ruling from the minister's department. Will the minister give serious consideration to allowing firms which have been waiting for a ruling to implement this qualification?


Joseph Jacques Jean Chrétien: Mr. Speaker, perhaps I did not make myself clear. I said that anyone who has a legal obligation or has a signed, binding contract with a financial institution, even if a ruling has not been received so far, will be able to receive a ruling and qualify.


Arthur Ronald Huntington: You did noi hear the question.


Joseph Jacques Jean Chrétien: I think I heard the question, and I have given a good answer.


EXTERNAL AFFAIRS
Mr. Thomas Siddon (Burnaby-Richmond-Delta):: Mr. Speaker, my question is addressed to the Acting Secretary of State for External Affairs: it concerns the case of Danylo Shumuk who, as the minister knows, is a political prisoner in the Soviet Union, suffering from the effects of deprivation and malnutrition.
We recently learned that Mr. Shumuk has probably contracted terminal cancer of the stomach, and we recall that Mr. Shumuk has been imprisoned in Poland and the U.S.S.R. for at least 34 of his 64 years for alleged political crimes, acts which would not likely be regarded as offensive in a free, democratic-


Mr. Speaker:: Does the hon. member have a question?


Thomas Edward Siddon: Mr. Speaker, this matter has been raised many times in this House in recent months, and recognizing that a plea was finally entered-


Mr. Speaker:: Order, please. Does the hon. member have a question?


Thomas Edward Siddon: Mr. Speaker, this is my preamble to the question-


Some hon. Members:: Oh, oh!


Mr. Speaker:: The hon. member for St. John's West.

November 17, 1978
Oral Questions NATIONAL REVENUE


INCOME TAX-CASES RESPECTING JOHN C. DOYLE
John Carnell Crosbie: My question is to the Minister of National Health and Welfare, Mr. Speaker, in her capacity as Acting Minister of National Revenue. I am trying to help the government gain revenue and reduce its debt.
Can the minister tell us the results of the settlement of the seven income tax cases against one John C. Doyle and a company known as Javelin Foundries? There are minutes of settlement filed in the Federal Court on November 6 for $6 million in cash and interest being claimed in those cases going back to 1966, and in the two cases in 1950 and 1954 where $5 million is owed. Has the government now collected these moneys? What are the terms of the settlement which has been filed?


Claude-André Lachance: Mr. Speaker, the question of the collection of Mr. Doyle's account has been dealt with extensively in the past days and weeks-

-and I am pleased to tell the hon. member that an agreement has been concluded with Mr. Doyle for repayment of funds he owed to the Department of National Revenue and there remains only the matter of funds owed by the company itself.


John Carnell Crosbie: Since the government has been working on this matter for 25 years, I would like to ask the parliamentary secretary this question. I have a taxpayer who is being pursued for $250, and he says, "I have no money, own no oil; why not treat me like John C. Doyle?"
Would the parliamentary secretary tell the House whether the government is going to collect all of the $ 11 million owing, or whether the government has agreed to collect less than the $11 million owing since 1950-1956?


Claude-André Lachance: Mr. Speaker, this government has always believed that whatever the wealth of taxpayers, be it one company or another, they should refund the money owed to the government. Thus the government has instituted proceedings for the refund of the money owing in that case and it intends to see it through.


THE CANADIAN ECONOMY
Mr. T. C. Douglas (Nanaimo-Cowichan-The Islands):: Mr. Speaker, my question is directed to the Minister of Finance, arising out of the statement he made in the budget speech in
which he said indications are that natural gas reserves are more than enough to meet our foreseeable domestic needs.
In view of the fact that his colleague, the Minister of Energy, Mines and Resources, has said that there should be no export of gas to the United States until we have supplied gas to Quebec and the maritime provinces, and used gas to replace oil in central Canada, are we to take the hon. gentleman's statement as meaning that he is rejecting the position taken by the Minister of Energy, Mines and Resources, and supporting the position taken by the Minister of Industry, Trade and Commerce and the oil industry, that our surplus gas be shipped to the United States?


Joseph Jacques Jean Chrétien: If the hon. member would look carefully at my statement, he would find I said indications are there, but we are waiting for the National Energy Board to estimate the quantity of the reserves.
Indications are that the reserves are greater than was estimated, but we are waiting for the proof to be established. I said that the energy could be used in two ways, either to replace oil in the eastern market or for export. But this decision will not be made until we have received a report from the National Energy Board and decided the extent and nature of the need in the east. I think we should serve Canadians first, but having that gas in the economy will help displace imported oil which is causing a lot of problems for our balance of payments position.


Thomas Clement (Tommy) Douglas: Will the minister make a distinction between our immediate needs and our foreseeable needs? I ask the minister whether, in the category of "foreseeable needs", he places the need for gas in Quebec and the maritimes, and gas to replace oil consumption in central Canada as being primary, as coming first, before any gas will be exported to the United States?


Joseph Jacques Jean Chrétien: It is too early to reach any decision about this matter. We are waiting to hear from the National Energy Board. As a member from Quebec, I wish we could use more gas in Quebec, but it is not an easy proposition because there is the cost of building a pipeline and the economic viability of such an operation. Of course, we shall use our resources for Canadians first, but if there is a surplus we shall try to sell it.


BUDGET PROVISIONS RESPECTING PRICE
Mr. Maurice A. Dionne (Northumberland-Miramichi):: Mr. Speaker, I would direct my supplementary question to the Minister of Energy, Mines and Resources.
In view of the special provisions in the budget last night for Atlantic Canada, can the minister confirm reports in yesterday's press that all provincial representatives, especially those from Atlantic Canada, at the federal-provincial energy conference this week were opposed to his efforts to moderate the rise


November 17, 1978

in prices of petroleum products scheduled for the beginning of next year and, if so, does the minister intend to follow this incredible and irresponsible advice?


Alastair William Gillespie: Mr. Speaker, I can assure the hon. member that we are actively pursuing an understanding to try to make a very important agreement work. That agreement provided for increases in oil prices at intervals, measured steps, but with one very important condition: that was that the price would not be raised in Canada if it were to exceed the United States price. That is in the agreement: it was put there to protect Canadians.
I have been seeking the support of consuming provinces and others in this venture, and I regret that they seem to be less interested in protecting Canadian workers than is the federal government.


Mr. Speaker:: Presenting reports from standing or special committees.


POINTS OF ORDER
Hon. Robert K. Andras (President of the Treasury Board):: Mr. Speaker, I rise on a point of order. The day before yesterday the hon. member for Calgary Centre (Mr. Andre) addressed a question to me which I wanted to examine. I said I would respond the next day, which was yesterday. I did not give that answer yesterday because the hon. member was not in the House. He is not in the House today, but I am prepared to give the answer. I would like to get it on the record, if hon. members would permit me.


Mr. Speaker:: That, of course, could only be done with the consent of the House. It may be that it would be of benefit to have the answer put on the record so that the hon. member could have an opportunity to look it over before perhaps putting supplementary questions. I have no way of knowing. In any case, it could not be done without unanimous consent. Does the minister have unanimous consent to put his answer on the record now?


Some hon. Members:: Agreed.


Mr. Baker (Grenville-Carleton):: Mr. Speaker, it was the question of supplementaries which was concerning me, and Your Honour dealt with that. I think the minister should be allowed to answer.


Robert Knight Andras: Mr. Speaker, the question was with regard to the capital budget of Petro-Canada. First I would like to note that the capital budget to which the hon. member referred was the first supplementary capital budget of Petro-Canada for the
Point of Order-Mr. T. C. Douglas year 1978, and it was indeed intended to allow Petro-Canada to make an offer for Husky Oil Limited, which was a transaction under consideration at that time. In fact, it did call for common share issues of $205 million and preferred shares of $64.5 million for a total of $269.5 million. The hon. member inadvertently and incorrectly remarked that it called for preferred shares alone of $270 million. He said that was the figure apart and aside from the common shares amounting to $205 million.
Second, while the hon. member was correct in noting that subscription by the Crown for common or preferred shares is a statutory charge on the Consolidated Revenue Fund and, as such, should appear in government estimates of spending programs, he should also note that it had indeed been properly recorded through main estimates for 1977-78 and 1978-79. Two hundred million dollars toward subscription of common and preferred shares is shown in each of the main estimates for 1977-78 and 1978-79.
The requirements for share subscription amounting to $269.5 million in the first supplementary capital budget approved in June, 1978, are in fact within the spending plans duly recorded in the main estimates. It is done by combining draw-downs during the last quarter of the 1977-78 fiscal year with draw-downs during the first three quarters of the 1978-79 fiscal year.
The last thing about which I think the hon. member should be aware is that the recent major acquisition approved for Petro-Canada will not entail any increase in the government's planned subscription of shares as displayed in the main estimates.


MR. T. C. DOUGLAS-AGREEMENT WITH ALBERTA ON PRICE OF OIL
Thomas Clement (Tommy) Douglas: Mr. Speaker, I rise on a point of order. The Minister of Energy, Mines and Resources (Mr. Gillespie) made reference to an agreement with the province of Alberta regarding the price of oil. Since so much depends on the wording of that agreement and the interpretation placed upon that wording, I wonder if the minister would be prepared, if he has not already done so, to table that agreement so that we may be in possession of the facts and so that the matter may be cleared up. The point of difference is whether a provision in that agreement, to the effect that if the one dollar every six months increase in price goes beyond the American price, means that the government is not obliged to agree to an increase in price. Everything depends on the wording. We cannot decide until we see the agreement itself. I wonder if the minister, with the consent of the House, would be prepared to table that agreement?


Alastair William Gillespie: Mr. Speaker, I am not sure whether the agreement has been tabled in the House previously. It certainly is a public document, and I would be very pleased to table it later this afternoon, if it has not already been tabled.

November 17, 1978
Point of Order-Mr. Danson


PETRO-CANADA PURCHASE OF PACIFIC PETROLEUMS SHARES- CONTINGENT LIABILITY OF GOVERNMENT
Sinclair McKnight Stevens: Mr. Speaker, I have a question to put to the President of the Treasury Board (Mr. Andras) arising out of the statement he made. He referred to what I think he called the first supplementary capital budget for Petro-Canada for 1978. We know that there was the original December capital budget. We know there was the one which was approved by order in council in June of this year. Would the minister tell us whether there has been a second one since the June one? I refer to the June one as the one which authorized, in total, $819 million either in borrowings or in equity issues for Petro-Canada.


Robert Knight Andras: Mr. Speaker, as the hon. member knows, that transaction for which that order in council was authorized in June did not take place. If it has not already been done-and I am not quite sure-there will be a revocation of that order in council and an adjustment of the capital budget, but there will be a further adjustment to reflect the more recent decision with regard to the acquisition of Pacific Petroleums, and I think those details will be available before too long.


Sinclair McKnight Stevens: Would the President of the Treasury Board tell us what the new order in council will show? Will there be an amount greater than the $800 million which will be revoked, or will the amount be a lesser one? Can he tell us that at this time? Obviously it will be a matter of public record shortly. What specifically has been okayed by the cabinet with respect to Petro-Canada's total takeover of Pacific Petroleums?


Robert Knight Andras: Mr. Speaker, I am not able to give the hon. member the figures off the top of my head. As I indicated, he can examine Hansard tomorrow. The answer I gave to the hon. member for Calgary Centre was relatively complex. It was about the budgetary process related to the June shares, but I did say at the end that there is no increase in the acquisition of capital shares of Petro-Canada related to the recent transaction, so the order in council is related to the borrowing process in which Petro-Canada will indulge.


Sinclair McKnight Stevens: How much?


Robert Knight Andras: I will get the actual figures for the hon. member. I think they will be revealed in the order in council in any event, before too long.


MR. DANSON-S.O. 43 MOTION RESPECTING SALE OF REMEMBRANCE DAY POPPIES IN FEDERAL BUILDING
Barnett Jerome Danson: Mr. Speaker, I would like to pursue the point of order I raised during routine proceedings. My point relates to the use of Standing Order 43. I am not a barrack-room lawyer, I am not even a lawyer. I do not usually nit-pick about these things, but I think this is becoming more important, particularly since we have television in the House and proceedings under this standing order have made this House a stage rather than a debating arena.
With impeccable parliamentary logic, Standing Order 43 follows Standing Orders 41 and 42. Standing Order 42(1) deals with 48 hours' notice. Standing Order 42(2) deals with other matters. Standing Order 42(3) deals with proceedings when Mr. Speaker is unable to act. I have never seen Your Honour unable to act. However, Standing Order 43 is provided to deal with matters of urgent and pressing necessity, and reads as follows:
A motion may, in case of urgent and pressing necessity previously explained by the mover, be made by unanimous consent of the House without notice having been given under Standing Order 42.
The standing order specifically says "urgent and pressing". It does not say "important" or "frivolous", as many motions are. Even to the uninitiated I think this would appear to be a misuse of the rules and the spirit of the House. As a veteran, and as a member of the Royal Canadian Legion, I could not be more concerned about poppy sales and about whether they are handled appropriately. But the hon. member for Selkirk (Mr. Whiteway) raises this as a matter of pressing national urgency and wants to deal with it in the House, when there are many others ways of making such a representation.


Mr. Speaker:: Order.


Some hon. Members:: Sit down.


Mr. Speaker:: Order, please. I do not want to interrupt the minister; I know he has a point to make in respect of this particular application. He had an opportunity to raise it, and he did indicate its nature, and now he has been able to add to that. However, I would like to ask his indulgence in this matter because, as he knows, only a few days ago we had an extensive and exhaustive argument on the provisions of Standing Order 43 which has now left me with the duty to review all the obligations of this standing order, including the question to which he has now addressed himself, namely, the question of urgency and how that may or may not be determined by the Chair.
There is also the matter of points of order to be raised in respect of Standing Order 43-whether or not they can be raised, and, if so, how they should be dealt with by the Chair, whether they can be taken into account during the period before questions or whether they can be deferred until this time, just after the question period.
Therefore, all these questions to which the minister has addressed himself are very much on my mind as a result of that discussion. I only ask for his indulgence to leave it with me now because I would be reluctant at this stage to reopen the whole discussion, which was very extensive. I am called upon now to review all the provisions of this rule, which we are doing at present. I expect to be able to make a statement to the House about it on Tuesday or Wednesday of next week. The minister's point is well noted and it will be part of the

November 17, 1978

considerations. I wonder if I could have his indulgence to leave it at that.


Barnett Jerome Danson: Mr. Speaker, I was not in the House because I was with the defence minister of Norway when this matter was first raised. Perhaps I could add to it by saying that there were examples of it each day of this week, but obviously those are foremost in your mind, sir.


Dean Waldon Whiteway: Mr. Speaker, I feel it is necessary for me to say a word about that point of order because the minister implied that my motion was frivolous. I simply want to suggest to him that it had some urgency on two points. First, the lady involved, Mrs. Dali, who went-


Some hon. Members:: Order!


Dean Waldon Whiteway: -to the Canada Manpower Centre in her uniform was embarrassed and hurt. The Prince Edward branch of the Legion felt slighted and are rightfully angered, and the community as a whole is upset. Second, I spent some 30 minutes with the Minister of Veterans Affairs (Mr. MacDonald) discussing this very problem, and it was with his agreement that I decided the way it should be raised by me was under Standing Order 43 in the House. So I would invite the minister, instead of raising spurious points of order, to get behind the efforts and concerns of the Minister of Veterans Affairs to help right the wrong.


Some hon. Members:: Hear, hear!



ROUTINE PROCEEDINGS


[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. 248, 259, 263 and 275.
I ask, Mr. Speaker, that the remaining questions be allowed to stand.


Mr. Epp: From June 1, 1974 to date, what lawyers in the Constituency of Provencher were given work by the Department of Indian Affairs and Northern Development and what amount was each paid per year?


Mr.   Claude-Andr@: In so far as the legal agents of the Minister of Justice are concerned: None.
The Budget-Mr. Stevens


Mr. Epp: From June 1, 1974 to date, what lawyers in the Constituency of Provencher were given work by the Department of Industry, Trade and Commerce and what amount was each paid per year?


Claude-André Lachance: In so far as the legal agents of the Minister of Justice are concerned: None.


Mr. Epp: 
Mr. Epp: From June 1, 1974 to date, what lawyers in the Constituency of Provencher were given work by the Department of Communications and what amount was each paid per year?


Claude-André Lachance: In so far as the legal agents of the Minister of Justice are concerned: None.


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


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
FINANCIAL STATEMENT OF THE MINISTER OF FINANCE The House resumed, from Thursday, November 16, consideration of the motion of the Minister of Finance (Mr. Chretien) that this House approves in general the budgetary policy of the government.
Sinclair McKnight Stevens: Mr. Speaker, yesterday, following the budget speech, I made a few introductory remarks concerning the budget that is now before us, but perhaps in my remarks today I should start out by saying how concerned we are, not only for the general economy in Canada

November 17, 1978
The Budget-Mr. Stevens
but for those who will literally be walking the streets of Canada looking for jobs in the coming winter months, because if you assess this budget you would have to say that it is certainly not a stimulative budget. If anything, on balance it is slightly negative so far as the economy is concerned.
It is disturbing to think of the unemployed whom we are going to see in the coming winter months. We must also point our finger at the reason why the unemployment situation will get worse. Essentially, this government, through its bungling and mishandling of our economy, has put us in a deficit position that is the worst deficit position of any industrialized nation with which we have to compete in international trade.
I know that currently the government likes to rationalize our deficit position. It likes to say that if you relate it to the GNP, it is not that bad. I suggest to you that ministers are carrying that type of rationalization to the point that it is clear they do not yet understand the serious situation of the economy and, in particular, the serious consequences of their federal fiscal policy. I say this because it is not a matter of having deficits and of having the resulting high interest rates structure. Unfortunately, it means that with those deficits we will have ever rising and constant inflation in this country-there is no avoiding it.
What is most disturbing, I think, is to hear that tone which is now being set by the emperor himself, the Prime Minister (Mr. Trudeau), that somehow or other it is not the size of the deficit we must worry about but rather the rate of increase. Let us meet him on his own ground in this argument. I hope he has taken a look at how the rate of increase of our deficit compares with the rate in such countries as the United States, Great Britain and West Germany. Clearly, it is now demonstrated that the borrowing requirement of Ottawa today is between 4 per cent and 5 per cent of our GNP, which means that, in turn, we have a greater borrowing requirement than that in the U.K., certainly greater than that in the U.S. and in the Republic of West Germany. Those are the facts. We in Canada have put ourselves in a position, under the misguidance of this government, where the total impact of our borrowing in relation to our GNP is now higher than in those three countries to which I have referred, and I could give a long list of other countries of which we are well ahead.
What is the resulting impact? What is the impact, for example, of Canada now having a financial requirement which, relative to the United States, is triple the impact there? Let me put that in another way. The United States have been able to get their current deficit at the federal level down to approximately $38 billion. We in Canada, as we have found out last night, have been introduced to a deficit of merely $13 billion! If you take into account the relative GNP in our two countries, you will find that the Americans now have a deficit that is only a third of the deficit we have to live with in this country. What is the impact of that? The impact hits the poor of this country hardest because, with high interest rates and high inflation, it is the poor person who finds it most difficult to adjust.

Sometimes when I look at the record of this government I can only say that this government must in truth love the poor, or why would it have created so many in Canada?


An hon. Member:: Shame!


Sinclair McKnight Stevens: For example, if one refers to the Statistics Canada figures, which only came out a short time ago, it is very startling to find on a family income basis that families in Canada in 1977 actually lost income in real terms compared to 1976. In fact based on those figures, the number of Canadians who slipped below the poverty line was 300,000. They are now treated and considered to be poor. That is the increase-
300,000	Canadians in one year.
For those who are curious as to what Statistics Canada is saying, I should like to put the figures on the record. In 1976 it shows that families in Canada, including unattached individuals considered as a family unit, had salaries of $16,095. In 1977 their income was $16,602. That was barely a $500 increase on a $16,000 base. If one works that out, in constant terms it is an increase of a little under 3 per cent. Once inflation is taken out, in truth the average Canadian family actually has fallen behind in 1977 compared to 1976. The figures we are now looking at, and the deficit we are living with, destines hundreds of thousands of Canadians to join the poor in this country. This is something which no government or no member of the House should continue to tolerate.
One of the most disturbing aspects of the government's attitude on deficit is that it will not really show us what the future holds. Not only in our budgetary response last night, but in several others we asked and virtually pleaded with the government to give us some idea how it views revenues, expenditures and deficits down the road. What will be the figures for 1982, 1983, and 1984? Other countries are making five-year projections. The current budget in the United States sets out a five-year program, as does the budget in the United Kingdom. The Organization for Economic Co-operation and Development asked its member countries for projections, but our government constantly refuses to do so.


Mr. Railton:: That does not necessarily indicate that they are doing any better.


Sinclair McKnight Stevens: I hear what my hon. friend is saying. Presumably he is referring to the United Kingdom and the United States. I would ask him to take a look at their record, and if he is an honest man he will move quickly off the benches supporting the Trudeau Liberal government. The fact is that the United States, the United Kingdom and West Germany currently are doing very, very much better.


Samuel Victor Railton: Mr. Speaker, I rise on a point of order. Is the hon. member for York-Simcoe (Mr. Stevens) questioning my honesty?


An hon. Member:: That is what he is doing.
November 17, 1978


Sinclair McKnight Stevens: Mr. Speaker, the hon. member is still my friend. I must assure him that he is just a little too touchy. I was only setting out one guideline.


Samuel Victor Railton: Thank you very much. Very good.


Sinclair McKnight Stevens: I should like to show hon. members the impact of Canada continuing to live with the deficits it has. Presuming government expenditures continue at the roughly 9 per cent per year increase, and presuming that revenues follow roughly the line anticipated by the Minister of Finance (Mr. Chretien), which was 4 per cent to possibly 4.5 per cent, here are the deficits we will walk into: As we know, last night it was disclosed that the deficit on a budgetary basis for fiscal 1979 was not the $10.9 billion deficit which we were told only last April 10, but it was $12.1 billion. According to the figure revealed last night, it was up $1.2 billion compared to the April 10 figure.
Also last night we were informed of the budget deficit which possibly is low, again because the figures of the minister are not credible. Time and again we find that his figures are proven wrong negatively all the way down the line. But last night he admitted, as he looks into fiscal 1980, that he sees a budgetary deficit of $12.95 billion, or almost $13 billion. Let us look a little further. If we project that figure, we find that by 1983 the deficit the government will be living with is a minimum of $16 billion, and that the aggregate deficit between 1979 and 1983 inclusive will be nearly $70 billion.


Mr. Martin:: This is ridiculous.


Sinclair McKnight Stevens: Mr. Speaker, those are the facts. I agree with the Parliamentary Secretary to the Minister of Finance (Mr. Martin) when he said that it is ridiculous. I agree it is ridiculous the government would allow our economy to drift to that point. If one reads what was revealed by the Minister of Finance last night, and adds the fact that the Prime Minister said in the House and in a press conference that he anticipates the deficit may be even higher, the truth of the matter is if that is spread over a five-year prospectus, that we will be dealing with $70 billion worth of deficits.


Alan Gray Martin: Mr. Speaker, there was a clear misinterpretation made of my interjection. I said that it was ridiculous for the hon. member for York-Simcoe (Mr. Stevens) to claim that the figure which he is pulling out of the air as forecast proposals are factual.


Mr. Deputy Speaker:: Order, please. If the Chair were to allow interventions from hon. members who say things from their seats, we would be on points of order all day. The hon. member can make a correction when he speaks in due time.


Sinclair McKnight Stevens: Thank you, Mr. Speaker, As usual, you are more than fair. I suggest, in answer to the parliamentary secretary if he has figures which show otherwise, let him produce them.


Charles Joseph Clark: That is right.
The Budget-Mr. Stevens


Sinclair McKnight Stevens: That is what we are asking the government to do. It should stop showing little ad hoc solutions which it comes up with concerning the state of the nation. Let us see its long term prospectus as to where it sees our deficits, expenditures, and revenues down the road.
I have some other matters which must be dealt with. Not only are we living with the deficit I have referred to, but the government has now embarked on that happy little illusion of somehow rewording or cooking the books. That is what is going on. The government has hit upon a few cute accounting tricks. On the one hand it is able to show expenditures coming down which it claims makes the record look better on expenditure increases. But it does not make clear as the expenditures fall that revenue is diverted at the other end. The net result is that there is a widening deficit, yet the government claims there has been an expenditure reduction, or at least a curtailment in increases.
This is perhaps one of the most serious things the government has started to do. In short, it is doctoring the books in order to make the facts look a little more palatable, without realizing that it will doctor us into a worse economic position than we are in at the present time.
Let me give you an example of this. If you review the figures we have before us you will find that the provincial sales tax revenues loss was not shown as an expenditure in the current year. It was actually shown as a diversion of revenue. What the government should do is take that item, which is up in the hundreds of millions of dollars, and add it to its expenditures. This government very cleverly came up with the notion of saying this is not really an expenditure but is simply a diversion of revenue.
Let us take a look at the family allowance approach. As you know, we on this side are not objecting to the idea of giving a $200 extra grant per child to Canadian families, but we must be aware of the consequence of the family allowance realignment on the books, as we saw last night. In a nutshell, what the government has done is say it will take roughly $8 off the amount of family allowance going to Canadians, which reduces the $28 amount that would be payable next year to $20-that is, de-indexing it. That makes a savings as far as government expenditures are concerned of $690 million. That comes off the expense side. When we look down to the revenue side we find the government has taken $810 million in revenue and diverted it off to give the $200 income tax credit to Canadian families on a per child basis. The net effect of this is to make expenditures look lower, when in fact the deficit is certainly as great as ever, if not a little greater as a result of this government's approach. All I am saying is, let us really look through the figures.
The other thing I would like to comment on, as far as this doctoring of the books is concerned, is what the government is doing with our Crown corporations, and this is something we on this side of the House find disturbing. It is one thing to have a Crown corporation and have the government of the day
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November 17, 1978
The Budget-Mr. Stevens
showing in a proper way whatever the loss is if the Crown corporation is losing money. It is quite another thing for the government to disguise that loss or, in the case of the borrowing activities of a Crown corporation, not to reflect that in the books at all. That is what is happening here.
If we take a hard look at the financial requirements revealed last night by the minister, we will find it is not just $12.1 billion which he says we will need in the current year, or $10,750 million in the next year. What will be required are those amounts plus the total amounts to feed the almost insatiable appetites of Crown corporations such as the Export Development Corporation and Petro-Can.
Perhaps here is the great distinction between where a Clark government would be taking this country today compared to where the Trudeau government is taking it, that is, in respect of this matter of Crown corporations.
Let us take Petro-Can, for example. The government has an investment in Petro-Can. It is hard to get the exact figures, as we know from listening to the President of the Treasury Board (Mr. Andras) today. We do know it has at least a $550 million investment in equity in that Crown corporation. Our position is that there are better purposes for the use of that money than leaving it in Petro-Can. We would like to free up that capital and, if nothing else, reduce the amount we have to borrow. What we are suggesting is that if you liquidate by privatizing Petro-Can, that will give the treasury about $550 million, providing we could at least get the money back, and that is a serious question. The way this government has so mishandled its investment in Petro-Can perhaps it would be difficult to get $550 million back. We must bear in mind that the corporation last year only earned $9 million on that $550 million in government investment.
We in this party say the government should free up that money. In fact we are saying that if the corporation is only earning $9 million on a $550 million investment it is absolutely foolhardy to be borrowing $550 million at a minimum of 9.5 per cent, which is the offset of the earnings on that investment. In short, the government no longer can afford the luxury of owning things such as Petro-Can. It is too far in hock to afford that type of thing. Even its cousin in the United Kingdom, the labour government, got out of British Petroleum to the extent of 21 per cent. The International Monetary Fund said to that government in its dark days of 1976, "Start liquidating. If you are in trouble debtwise, start to liquidate some of these luxuries you have, such as the investment in British Petroleums." By coincidence, when it liquidated that 21 per cent it picked up $4.1 billion.
I referred to that as coincidence because this is the bottom line with Petro-Can. Not only does the government insist on preserving Petro-Can and borrowing money to do it, and the Minister of Energy, Mines and Resources (Mr. Gillespie) only today confirmed that the government has absolutely no intention of backing down, it now intends to take us $1.4 billion further into debt so the empire builders in Petro-Can can in turn acquire Pacific Petroleums.

Let it be clearly understood that the acquisition of Pacific Petroleums will not contribute to the production of one extra barrel of oil in this country, and it will not mean the employment of one more person.
Let me point out what this will actually mean. The servicing of the debt the government has to incur in foreign funds to pay for the takeover of Pacific Petroleums will cost the exchange fund $50 million a year over and above the dividends which, up until now, have flowed from Pacific Petroleums to Phillips and other American shareholders in that company. The specific figures are in the records. If the minister has not already noted them, they are as simple as this. Pacific Petroleums has been paying roughly $20 million a year in total dividends. Once this deal goes through, the total drain to the American side will be about $70 million, which means the extra flow of Canadian funds to service that debt will be $50 million.
The interesting thing as revealed in the question period today is that, in order to structure this deal, Petro-Can needed to take advantage of what has often been called a loophole in the existing income tax position in Canada. Let me describe that loophole. Under the provisions of the Income Tax Act, prior to today it was possible for one company to give what was called income debentures or preferred types of securities to another company with relatively low interest, because for income tax purposes this was treated as an after-tax payment. In short, one could borrow money at 7 per cent because the recipient did not have to pay any tax on that 7 per cent. If you had to pay tax you would probably have to pay 11 per cent or 12 per cent.
In taking over Pacific Petroleums the government is taking over a company which had after-tax earnings of about $85 million and, as I say, the vast bulk of that money stayed in the country. It was re-invested and the company's pay-out in dividends was about $20 million. Because Petro-Can had to finance the deal, they structured an income debenture in foreign funds which will be serviced by Pacific Petroleums by paying the dividends to the subsidiary of Petro-Can, which in turn is the amount of money which is needed to service the income debenture. This way nobody pays any taxes. It is a beautiful thing for the people in the United States who put up the money to allow our Crown corporation to buy Pacific Petroleums.
The net cost on a yearly basis will be about $50 million a year. The interesting thing is that the deputy minister of finance sits on the board of Petro-Can and that the blocking of the income debenture is effective today, November 17. Clearly that date was chosen to ensure that any written agreements prior to that date could not be challenged.
The most tragic thing is when we listen to our friends to the left champion their brain child, Petro-Can, saying in effect, "Why don't you take over virtually everything in the resource industry?" I cannot understand how a party which likes to pretend that they have the average Canadian at heart can miss the point so badly. Just think, Mr. Speaker, what that $1.4
November 17, 1978

billion would do for Canadians if it were channelled in another way, instead of giving a most fortuitous price to American shareholders and other foreign shareholders in Pacific Petroleums.


Some hon. Members:: Hear, hear!


Sinclair McKnight Stevens: Just by coincidence the budget filed and approved for CMHC was $1,356 million, almost the same amount which will go into Pacific Petroleums' takeover. CMHC, however, has different intentions for their budget. Under section 43 of the public housing legislation incorporating them, they intend to build 5,750 dwelling units, under section 40 they intend to build 1,910 public housing units. They intend to assist with rental supplementals in the amount of 11,200 units, and under another section they are empowered to assist in the building of 1,300 other rental units. Under what is sometimes referred to as non-profit enterprise, CMHC will be able to accommodate 3,700 dwelling units. In total out of their allocation, which is very close to the allocation for Pacific Petroleums, they will be able to build 23,860 dwelling units. They are not only able to provide that kind of assistance, but they will be able to help municipalities with their water and sewage programs, and in regional planning in urban areas.
The point I want to make is that if the $1.4 billion, which presumably has been approved by the cabinet, had been routed to CMHC or some other agency to help Canadian home owners, it would have allowed for the building of 23,860 additional dwelling units, with nearly $100 million left over to help with sewage and water treatment assistance and planning assistance to our municipalities. That is the perspective in which we must put this. There are all kinds of things that the government of the day might want to do, but there is the question of priorities. Our word to this government and to their allies on our left is simply that if they want to borrow $1.4 billion in the name of Canada, it should be routed to other things than the takeover of an oil company which has been profitable, which is certainly bringing oil into production in this country and is giving employment to Canadians. This takeover will not add one job or one extra barrel of oil or one cubic foot of gas to oil production in Canada.
There are other examples I could give. Earlier I referred to the Export Development Corporation, another concern which is borrowing money extensively. These borrowings, however, are not reflected in the accounts that are now before us. The capital budget for the Export Development Corporation in the current year is $2.4 billion. This corporation has been using its money to finance pulp and paper mills in Poland which will eventually compete with Canada, financing like types of development in Cuba, and even financing steel mills in the United States. I am sure hon. members can imagine what that amount of money would do to help fishermen refurbish their fleets on the Pacific and Atlantic seacoasts, to assist in the infrastructures which could be put in place to help improve grain handling facilities in the west or to help in urban areas- for example the rapid transit system which is needed in Vancouver, and the commuter situation in Toronto.
The Budget-Mr. Stevens
I could go on describing the mismanagement and mishandling of this government, but I think I should put on the record once again the things that we as a party would like to see done. The focal point of a Clark government will be to restore confidence in the Canadian economy for all Canadians.


Some hon. Members:: Hear, hear!


Sinclair McKnight Stevens: To do that we must first accept the fact that after ten years of mismanagement it will take at least five years to get the economy turned around to where it is at a more buoyant level. That is why we believe that it is necessary, not only to show a little further into the dark valley, but to show what is on the other side. Hopefully, it will be a side that is a little brighter with more sunlight. In short, we, through a budgetary response on the night of our first budget, will describe how we plan to have control on the expenditure side and how we will suitably stimulate the economy to upbring revenue. First we will narrow this deficit, and secondly we will give meaningful tax cuts to Canadians who need them.
When I say that, one of the things a colleague will be touching on in his remarks will be the hard fact, in spite of what the Minister of Finance tried to say last night, that the average Canadian is today over-taxed by 20 per cent compared to his counterpart in the United States. That cannot be allowed to continue. The Carter commission made it clear it was a growing problem when it reported that long ago. That is one of the reasons why we say this government has been negligent in not bringing in a mortgage interest deductibility scheme and a municipal tax deductibility scheme for Canadian homeowners. Certainly that is an approach this party will follow.
With the savings we are able to indicate of a meaningful nature as far as government spending is concerned, by saving or at least not hiring an additional 20,000 civil servants per year as is proposed by the President of the Treasury Board, we can pick up a saving of about $1.7 billion per year. By cutting out some of those contracts the government loves to throw around, particularly to political friends, we could save a quarter of a billion dollars-


Robert Knight Andras: Absolutely not.


Sinclair McKnight Stevens: The President of the Treasury Board says absolutely not. If he is sitting in opposition when we form the government, I hope he will stand up and say, "You did it, and I did not think you could do it."


An hon. Member:: He will not be here.


Robert Knight Andras: -including manpower agreements and everything else? You are still playing that game.


Sinclair McKnight Stevens: Obviously the President of the Treasury Board does not like to hear the truth too directly.


Robert Knight Andras: I rarely do from that side.
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November 17, 1978
The Budget-Mr. Stevens


Sinclair McKnight Stevens: Mr. Speaker, I could go on outlining where we can see obvious savings that this government could make. There is at least $50 million that could be chopped off the advertising budgets it has been signing on a regular basis. We feel not only is there room to give mortgage deductibility and the municipal tax deductibility approach that I have indicated, but there is room for further tax cuts.
We can come up with a budget, given the opportunity, that would have the net effect of lessening the deficit in this country over a period of years, bringing it down to a much more manageable level and putting Canadians in a more attractive tax situation.
Before I end up my comments, Mr. Speaker, I should like to refer to the Minister of Finance very quickly. If there is another budget before the election, it is most likely that he will not be minister of finance at that time.


Maurice Adrian Dionne: How do you
know?


Daniel Joseph MacDonald: He wants the assurance.


Sinclair McKnight Stevens: I know the hon. member is as far back in the Liberal ranks as you can find-


Maurice Adrian Dionne: Better back here than up front over there.


Sinclair McKnight Stevens: From the curtains I heard a Liberal ask how I know. Obviously he is hoping I am right.


Maurice Adrian Dionne: Even you could afford to be wrong once.


Sinclair McKnight Stevens: Before this minister goes from our midst, let us look at his record. He has many firsts to his discredit. Up until last night he was the first minister of finance to crack the $10 billion deficit level in Canada. As of last night he excelled that record. He is the first minister of finance to crack the $1 billion per month deficit level in this country.


Mr. Woolliams:: Oh, dear!


Sinclair McKnight Stevens: He is the minister who has let the dollar go down to 84 cents, the lowest level since the dirty thirties. In his budget speech last night he had the nerve to take credit for that. It is the classic example of the more this government gets into trouble, the more it turns around and tell us it smells like perfume.
Let us look at something else in which this minister has excelled. Under his guidance the banks' prime interest rates stand at an historical high in Canada. As far as federal borrowings are concerned, they are costing the treasury almost 20 cents of every revenue dollar they take in. Put another way, the next time you pay your income tax, take off 20 per cent- that is exactly what you have had to pay to carry the debt that this government has incurred on your behalf. As we know, the average worker in Canada now has to work two days simply to pay government taxes.

There are other things this minister has to his discredit. He has given us more budgets and economic statements in a shorter period than any other minister back to confederation.


Samuel Victor Railton: Hear, hear!


Sinclair McKnight Stevens: I see my friend has come alive again. Obviously the hon. member for Welland (Mr. Railton) loves ad hockery ad nauseam.
This minister also has to his credit the fact that he has evolved a new economic approach of shifting expenditures to revenue losses, which allows him to leave the illusion of falling federal spending levels while our deficit soars.
Finally, Mr. Speaker, never before has any minister switched Canada Savings Bond interest rates once, let alone twice, during their period of initial sale as this minister has done. Now he finds he may not be able to close the issue unless he can get a special act of parliament passed to give him authority to do so.
May I call it one o'clock, Mr. Speaker?


Mr. Deputy Speaker:: It being one o'clock I do now leave the chair until two o'clock p.m.
At one o'clock the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.
Sinclair McKnight Stevens: Mr. Speaker, a colleague to my left is wanting to speak shortly, there are other colleagues on this side of the House who would like to speak, and perhaps even the odd government member will dare stand up and support this budget-I do not know.


An hon. member:: They are not that odd.


Sinclair McKnight Stevens: -But in that connection, if government members are thinking of their political future, I think the wisest thing for them to do is to duck, just sit in their seats and not say too much. If the public gets a chance to deal with them in the voting booths, I do not think there is very much doubt about what will happen to many of these fellows who have been babbling so actively while I have been speaking, considering what happened in our recent by-elections.
If I may summarize, the greatest disappointment in the budget last night was the fact that the figures are so terrible. The fact is they are worse than the minister has been representing. We are now into a $12 billion, almost $13 billion deficit range as far as next year is concerned. Not only are the figures terrible, but there is no concrete indication on the part of the government as to how they see these deficits narrowing. It is all just hope. It is just "trust us. Somehow or other we will lead the country out of the chaos that we have led you into."


Alan Gray Martin: Doom and gloom.
November 17, 1978


Sinclair McKnight Stevens: The Parliamentary Secretary to the Minister of Finance says "doom and gloom." He should know, because they have certainly led us into the doom and gloom that he likes to speak of.


Some hon. Members:: Hear, hear!


Mr. Paproski:: Is that the hon. member for Scarborough West?


An hon. Member:: Yes.


Steve Eugene Paproski: Goodbye, Scarborough West.


Sinclair McKnight Stevens: The Canadian public now know that this government has got them into trouble. You do not have to tell the average voter and citizen in this country that he is not doing as well as he should be. What he is now looking for is some hope. He is looking for some type of alternative that will hopefully ensure that there are better years to come.


An hon. Member:: Not Tory years.


Sinclair McKnight Stevens: A Clark government will give him that new hope.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


An hon. Member:: That is doom and gloom.


Mr. Abbott:: You cannot be that discouraged.


Sinclair McKnight Stevens: When I look over at some of these fellows- and I better not mention their names-I find it interesting to note the difference between what they tell you privately and what, with a stiff upper lip, they show publicly. They know they are on borrowed time over there. They know they have a few months left and that when those months have run out they will be sitting in the opposition if they are lucky enough to be re-elected, and that we will be the government. When we form the government under my leader-


Samuel Victor Railton: Let us get back to the budget.


Sinclair McKnight Stevens: My hon. friend from Welland says he wants to get back to the budget.


Samuel Victor Railton: I have heard enough.


Sinclair McKnight Stevens: I say to my hon. friend, I would like to get back to the type of budget we will be introducing when we form the government.


Some hon. Members:: Hear, hear!


Sinclair McKnight Stevens: The focal point of the budget will be the restoration of confidence in the Canada that can be.


Some hon. Members:: Hear, hear!


Sinclair McKnight Stevens: Details of where we will cap the expenditure extravagances that this government has led us into will be
The Budget-Mr. Stevens
brought in. Those cappings are going to ensure that there will be more money to share with the Canadian taxpayer as well as to lower the deficit to which I have referred.


An hon. Member:: Let us hear your budget.


Sinclair McKnight Stevens: The new budget which the hon. member for Welland (Mr. Railton) is referring to is one that he, being a doctor, will enjoy much more than the budget that was introduced last night. I do not know whether he is one of those doctors who have incorporated their own personal corporation on the side and who were cut off at the pass last night, but certainly his colleagues in the professional field I believe will not be too happy with the government that he is wont to support after last night's budget. As I say, the focal point of our budget will be to lessen the deficit, to give tax breaks such as I have described to the Canadian public, but above all, and I think the comments made by the President of the Treasury Board indicate the need for this, we feel there has got to be expenditure control brought back to parliament.


Some hon. Members:: Hear, hear!


Sinclair McKnight Stevens: I say the comments made by the President of the Treasury Board indicate this. When I was talking about cutting a quarter of a billion dollars in the contracts that they have been putting out, cutting say $50 million from some of the lavish advertising contracts, I was a little startled to hear the President of the Treasury Board say, "No way." What better evidence do we need that there should be a change of government? Essentially when the President of the Treasury Board says that there is no further way to cut expenditures, you know it is time to replace the president of the Treasury Board.


Some hon. Members:: Hear, hear!


Sinclair McKnight Stevens: This government has become defensive of its previous mistakes, it is a problem it is living with. Literally ministers are surrounded with advisors who perhaps advised them to get into the problems that have now developed. Naturally those advisors are telling them not to change from the original advice given, because they might look bad if they had to admit they made a mistake. That in truth is part of the problem. There would be breaths of fresh air come into the bureaucracy if a Clark government was able to take over. There would be new attitudes. There would be new basic concepts of saying, "Don't tell me why we can't do something, tell me how to do it."
I think it is important, as I said when we were debating Bill C-7, that we consider the possibility of establishing an expenditures committee responsible directly to parliament which would function much as the public accounts committee does, the difference being that the expenditures committee would look first-hand at every expenditure which was proposed, just

November 17, 1978
The Budget-Mr. Salt smart
as the public accounts committee deals with them after the event when the money has been spent. In short, in great contrast to the budget last night-perhaps William Shakespeare put the best name on it when he called his play "Much Ado About Nothing,"-we would bring in a budget, given the opportunity, which would restore for Canadians the vision they see for Canada, restore their hopes in our future, which can be a truly great future and, above all, again ensure that the enterprise system can get on with creating wealth in this country, instead of a government which concentrates on trying to redistribute wealth at the expense of creating wealth itself.
In short, it is the difference between a worn out group of people who call themselves a government, and a fresh, alternative group who are only too willing to do a few positive things to get our country and our confidence restored. With that, I should like to move, seconded by the hon. member for Eglinton (Mr. Parker):
That all the words after "That" be struck out and the following substituted
therefor:
this House rejects a budget which increases the deficit without providing a
genuine economic stimulus such as mortgage interest and municipal tax
deductibility and which continues a policy of stagnation instead of beginning
the structural reforms needed for the 1980s.


Some hon. Members:: Hear, hear!


Mr. Deputy Speaker:: Order, please. The reason I want to look at this proposed motion is because-


Anthony Chisholm Abbott: It is so outrageous!


Mr. Deputy Speaker:: -because to my mind there might be a relation between the object of this amendment and a decision previously made this session on this question of mortgage interest. I do not have before me the other confidence motion put forward by the opposition toward the conclusion of the debate on the Speech from the Throne so I am not in a position to judge. I hope the House will give me a few minutes before putting the amendment. In the meantime I ask the hon. member for Waterloo-Cambridge (Mr. Saltsman) to begin his remarks.


Walter David Baker: I think you should know, Mr. Speaker, that before it was submitted the motion was cleared with the Table.


Mr. Deputy Speaker:: Yes, but it is always for the Chair to decide.


Mr. Max Saltsman (Waterloo-Cambridge):: Mr. Speaker, I hope you will find the motion in order, but I must say that if the remarks of the hon. member for York-Simcoe (Mr. Stevens) are any indication, nothing he has been saying recently is in order. I have some unkind things to say of those who are applauding across the way, But I shall leave that for the moment.
I do want to say one thing about some of the comments made by the hon. member for York-Simcoe on the subject of the dividend question. I found it difficult to believe what I thought I was hearing from the hon. member when he was

talking about the rip-offs that came from the loophole being closed in the budget regarding the use of reserve funds and dividends. It was perfectly all right for private industry to do that, but Petro-Canada should not avail itself of that opportunity! An hon. member to my right says he was not saying that at all. I have been listening for years to the hon. member for York-Simcoe but not once have I heard him rise and bring to the attention of the House the fact that this loophole existed for the private sector and that it should be closed. But now that it seems that when Petro-Can is eligible to use this loophole, it becomes a crime!
Mergers go on in this country every day, mergers which really do not provide any new jobs but merely allow for a change of ownership, a change of shares. Again, I have not heard the hon. member raise a protest and say this should not take place, nor have I heard members of his party rise and say mergers are a terrible thing because all you are doing is changing shares, changing ownership, without providing new employment opportunities.
What really seems to be bothering members to my right is that Petro-Can will turn out to be profitable and that the Canadian people will make something on their investment. It is intolerable that anything in the public sector should be profitable! If it is profitable it should be turned back to the private sector, but the public sector should be starved of all these things. We pick up the losers. We are not supposed to go into business and do something profitable on behalf of the Canadian people.
One way of clearing the House of Tories is to tell them what they don't want to hear. They just want to hear themselves talking. They do not realize the incredible double standard they are putting forth as an argument in this House, that whatever the private enterprise system does, regardless of whether it rips off the tax system, regardless of whether it does not create any jobs or not, that is fine, but don't let the government get into the field at all. It is really an argument not based on logic but on a prejudice against public involvement.
I listened to the minister's speech last night and the only thing that came through was a message that we had a minister and a government which were not prepared to provide leadership in this country, had no vision and concern for the future, and did not really want to try to control what was going on in the economy.
It reminded me of a nephew of mine when he was very young. He called me in to watch him in the bathroom as he was performing. He was very proud, and he said, "Uncle, I can do it with one hand". I said that that was pretty good. He said, "Look, no hands," and he took both hands off. Hon. members will know what the consequences were. That is the kind of budget the minister brought in last night. It just splattered all over the place, without hitting the bowl once.


Anthony Chisholm Abbott: You have such an elegant way of characterizing it.


Max Saltsman: If we were not on television I would apply a name to it, but the CBC might object.
None of the measures in the budget are really very specific. There is no plan. There is no strategy. As a matter of fact the minister went out of his way in the budget speech to eschew any kind of strategy. He said, "1 am frankly sceptical about a search for a single grand industrial strategy in the competitive market system". What competitive market system? There is some competition in our market, but increasingly the evidence is that it is no longer a free competitive market system.
The minister is thinking about a century which has passed, and trying to solve problems in a modern society with outmoded ideas and an unwillingness to act and behave as a government and a minister should. The message of the budget is that this government does not think it can do anything. It is waiting for the American economy to recover. It is the old story of government after government in Canada. They wait for the Americans to bail us out of our situation. The difficulty is that the Americans are in trouble, as deeply as we are, and perhaps even deeper, and were it not for the fact that many of the things my friends to my right and my friends opposite call socialist measures-things such as unemployment insurance, old age pensions and family allowances-we would be in a worse recession than the one we are in now.
Our economy is suffering greatly. Unemployment is high, and that accounts for a measure of suffering, but at least there is some cushion. There is still some purchasing power left in order that society can move along. The government is waiting for the Americans rather than setting out an independent policy of its own, which is something it could do.
I know it is a common view in both the Liberal and Conservative parties that we really cannot do much on our own and that we must wait and see what other countries are going to do. To some extent that is true, but, having said that, there is a great deal we can do on our own. We should analyse our strengths-and we have many in this country-and act independently of other societies.
Instead of concentrating on exporting to the extent we do- as if we have to export in order to live, and again there is always some truth to the assertion that a certain amount of exporting is necessary-we should be concentrating on import replacement. The province of Ontario has made a tentative move in that direction. Manufacturers in Ontario are being exhorted to look around and see what kinds of things are coming into this country. Most of the things which are coming in are things we could be making ourselves. The purpose of an industrial strategy is to work with the market and with the manufacturers of Canada. We should be saying to them that there are things they can be making in this country rather than importing, and that manufacturing would provide employment, which in turn would provide opportunities to the people of Canada.
The Budget-Mr. Saltsman
We are in a period of high unemployment and, unless government policies change, that will continue for a number of years. However, if we look a little beyond that, five to ten years, there will not be unemployment but a labour shortage. Therefore it seems to me that the government's fear of stimulating the economy is groundless and that in fact we should be stimulating the economy now. We should be building the capital works which are required now.
In statements put forward by my leader on many occasions he has pointed out the things which should be done at this time and the number of jobs those projects would create. For instance, we need a $400 million federal-provincial-municipal capital works program. That has been urgently demanded unanimously by all ten premiers and by most municipalities. That would create 60,000 new jobs. Instead of that we get reports like the one published in this morning's Globe and Mail which says:
Federal move felt endangering renewal plans of municipalities
"Ottawa is trying to curtail their spending at the expense of the municipalities ... It is trying to make us pay for these programs by raising our property
taxes-"
The government is cutting back on its spending, and the consequence of that will simply be that more people will be thrown out of work. The cost of unemployment insurance, welfare, and other social support programs will increase. We should be viewing the present period of high unemployment as a moment of opportunity. Not only should we try to put people back to work, with all that means in terms of the benefits of working and the moral benefits of working rather than being unemployed, but we should put people back to work on projects which will be needed for the future. The need for municipal projects is obvious. The need for urban renewal is obvious.
Another suggestion we have made is that $500 million be spent on railroad upgrading and rebuilding. That has been recommended by the Hall commission. While creating 70,000 new jobs, that would maintain railroad branch lines, and grain elevators would be repaired and modernized. Surely that would be worth while, particularly when we know that the future calls for more and better rail transit services. When is the government going to contemplate this-when we have labour shortages later on, or now when there are so many who are unemployed? All we need is a little direction from the government and a little courageous fiscal management to put people back to work.
Another project we have advocated is a $300 million urban transit program which would provide needed transportation services in urban communities in Canada and create an estimated 40,000 new jobs. A $500 million special housing program is needed to reverse CMHC overspending of its 1977 capital budget by almost that amount. That would provide needed funds for non-profit, co-operative and public housing, and for neighbourhood improvement and residential rehabilitation programs. We think that would create 70,000 new jobs in the high unemployment construction industry. The cost of these capital works projects comes to about $1.7 billion. They

November 17, 1978
The Budget-Mr. Saltsman
would get the private sector involved in important areas of the economy and decrease the level of unemployment. The government should be concerned about moving into these areas, particularly now when the private sector seems so weak and so unwilling to invest.
My friends to the right say that the problem is lack of confidence. The government brings in a regressive budget and says that it is meant to instil confidence in the business community. The official opposition turns that around and says confidence consists of having the hon. member for York-Simcoe in a blue serge suit as minister of finance rather than opposition critic. I think the word "confidence" is grossly misused by both parties. Confidence comes from looking at a government, or an official opposition, which has the courage to advocate programs rather than standing pat all the time, playing it safe and doing nothing beyond the immediate and short-term. There is a reason for this malaise, and again a clear message comes from the budget.
The government is totally preoccupied with the problem of inflation. However, that problem has, for the most part, passed. The government itself acknowledges that the worst of the inflationary spiral is over, that from thereon in-while there will still be inflation and while we still have to be concerned about it-there will not be the rise in inflation we have had for the last number of years.
I am very proud to say that if you look at organized labour in Canada you will find that it has been behaving in a very responsible and concerned way. Its members have, in fact, been taking wage settlements below the increases in the cost of living to demonstrate that. The trade union movement is doing its part in terms of controlling inflation, and I think it deserves a word of commendation.


Some hon. Members:: Hear, hear!


Max Saltsman: I see there are many members who agree with that statement. So there is no longer, if there ever was, any pressure from wage demands on inflation.
I was rather surprised to see the following statement in the minister's opening sentences in the budget speech, to give some verisimilitude to a somewhat misleading document:
In recent weeks I have travelled to many parts of Canada. I have talked to many Canadians-my provincial colleagues, businessmen, labour leaders, economists and laymen. Everywhere I have been told that my budget must be responsible.
While the minister does not say so in so many words, he certainly implies that he has the support of labour for this kind of budget, or that labour would consider this budget responsible. I think he must know that on both grounds he is wrong. Labour would not support this kind of budget; labour would not support a budget that does nothing to cure the high unemployment rates in this country, does nothing to increase growth in Canada, and does not concern itself about the future. Labour would certainly not endorse this budget, nor in fact would labour consider that the minister's budget was in

any degree responsible. So the minister should not try to make it appear as if he had the support of labour, because he certainly does not have it. Obviously labour is not pushing in any way that would contribute to inflation.
If we look at the other factors that were blamed for inflation, we find that energy prices have settled down. We do not have the quantum leap, the quadrupling of energy prices which you had a few years ago.
Agricultural prices, after being set back sharply for many years, have recovered some of their position, and there does not seem to be a great push on food prices projected into the future-the minister acknowledges that in his budget speech. The worst of inflation, which has been created by the increased cost of imports arising from the devaluation of the Canadian dollar, is over. I do not think the Canadian dollar will be going down much further than it is now, and, if it does, it is just a fluke, and it will not stay there.
A much greater problem that faces the government-if it is problem at all-is not that the Canadian dollar will go lower but that it will start to rise pretty soon because it is undervalued now, and when it starts to rise it will ease the inflationary pressures in Canada.
What I am putting forward in enunciating these four items is that these are the four main components which go into any assessment of whether things will be more or less inflationary in the future. I think the evidence is stark, it is quite clear, that the past basis for the surge in inflation is over. The government really does not have to pin its whole policy on fighting a situation which is settling down. The war is not over in any absolute sense, there are always problems with inflation, but it is settling itself down.
To say that you cannot stimulate the economy, or you cannot move to provide employment, because you are afraid of inflationary pressure, is not only the wrong analysis of the situation but a dishonest statement about what is happening in our society, and a way of avoiding the necessity of taking responsibility for getting people back to work and getting this country growing again. It is shocking to see this sort of juvenile economics used in arguments put forward by the government.
Again the message is quite clear in the budget, that while the government has tried to show that labour, provincial premiers and businessmen have all asked the minister to present the kind of budget he presented last night, what is quite clear is that the only ones who wanted him to present such a budget are some of the business people who have been advising the government, and to whom the minister has been talking. It was quite clear, from the comments and the reaction after the budget speech last night, that the minister has struck a responsive note and is now competing with the Conservative party for the affection of business in Canada. They have been wrong before. These are the people who have been advising governments over and over again and getting this country into nothing but trouble.
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Certainly there are many prominent businessmen whose advice is very useful, but to listen to only one side of the argument-because it was only to business that the government was listening-not to labour because labour's priorities are different, not to the provincial premiers, because their priorities are different and they differ among themselves, and to say this is a consensus budget is wrong. I think that the advice the minister is getting is bad advice and will not get the country going.
Let me talk about some of the incentives that are in this budget. The government proposes that the investment tax credit be extended for an indefinite period of time and that it be raised beyond its present 5 per cent level. There are two points about that. First, is it really necessary at this time? The government itself says in its budget address that the indications are that plant utilization is increasing.
A recent report is that a low of 80 per cent to 82 per cent plant utilization has now increased to about 87 per cent. What that means is that when plant capacity starts to approach 87 per cent of utilization, they will expand anyway without incentives. They will not expand at 82 per cent, and all the incentives the government offered in the last two budgets to get them to expand at that level have fallen. All this has accomplished is to fill the coffers of the various corporations which took advantage of those tax plans to depreciate allowances. It has not got the economy going.
Now they may say, because we improved these tax arrangements for business, the economy is starting to move again." I think it will start to move again, but the truth is it will move again because plant utilization has increased, not because of what the government has done with tax incentives, and the consequence is that money will be given away for virtually nothing.
I want to go back to what I said about the rather questionable simile which I used at the commencement of my remarks about my little nephew in the bathroom. If you are going to give incentives all over the place-and we in this party believe there are times when you should be giving far more in the way of incentives to certain kinds of business-you have to do that within the context of an industrial strategy. If you are going to give incentives, you have to do it within the context of knowing that certain industries, if they receive benefits out of public funds, will use those benefits to create jobs, to innovate, to do research, to do something specific for the benefit of the country, rather than to simply make a welfare payment to them through the tax system. That is what an industrial strategy is about, to pinpoint those areas of greatest usefulness for the future development of Canada. Without that, just to give these incentives across the board is like going all over the bathroom. You do not know what it is going to hit and what good it will do.
We have gone through this before with incentives and all the evidence we have, as a result of giving across the board incentives and increases, has been that it has not accomplished the purpose for which the incentives were intended. Quite the contrary, there is now some evidence to suggest that as a result
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of government generosity, as a result of industry being given benefits and the absence of investment opportunities, much of those benefits have resulted in cash surpluses for industry which start to move back and forth across the Canada-U.S. border in search of higher interest rates. Many of the problems we are facing, because of the outflow of capital from Canada, arise from the excess generosity of the government giving them more money than they can use. Therefore we find ourselves in this unbelievable position, as a consequence of government action and misplaced generosity which was designed to help industry and create jobs in Canada. We must take action against this misplaced generosity. We must raise interest rates to keep capital in Canada. In the course of raising interest rates, the opportunities for industry to expand and jobs to be created are cut down. The government has created a circular piece of mischief.
I had hoped that somewhere in the budget the minister would have given form to words he has expressed on many, many occasions. He is a very straightforward minister. We have heard him indicate in the House and on public platforms that the level of savings in Canada is too high. He has not said the following but I will extrapolate for him: the tax system has been so generous to people with higher incomes, or industries which could not use their cash flow, that problems of surplus savings have been created. These surplus savings are used to seek nothing but higher and higher interest rates in Canada or the United States. Then a yo-yo-ing back and forth and a jockeying for interest rate preferences occur between one country and the other. If ever there was a government policy which was a clear failure, it is this one. Yet it is included in the present budget.
Does the Minister of Finance and his advisers want this kind of situation? I do not think so. Their industrial strategy and planning are no good. They say the government should stay out of the economy; we should curtail our spending and let the private sector move in. It is a commitment to ideology which causes the problem. That is at the heart of the failure of the budget. The government cannot see this problem. Public policy will fail without planning, intervention, strategy, a setting of priorities or evaluation. The government feels that it must be scattergunned all over the place, without knowing the consequences, benefits, costs or losses.
Strangely enough, while I think the performance of the economy will leave a lot to be desired in the next five or six months, or until the next budget, a kind of statistical optical illusion may take place as a result of some of the measures in the budget. From what we have seen in this budget, I am not too hopeful that any other budget will make any difference or result in much of an improvement. The cut in manufacturers' sales tax from 12 per cent to 9 per cent will do some good. This is something we advocated. We are sorry the government did not pick up more of our package. It only picked up part. To the extent that the government has picked up part of it, one must acknowledge that it will be of some value. As pointed out by the minister in his budget speech, its chief political value
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probably will be a drop of one half of 1 per cent in the consumer price index.
In reviewing some of the factors which have led to inflationary pressures in the past, one comes to the conclusion that the consumer price index will start to decline, particularly if the Canadian dollar starts to move up. I do not think the government wants it to move up rapidly, but it will start to move up and there will be a very convenient decline in the consumer price index somewhere just prior to election time.
Another measure which will provide a statistical illusion of well-being is the changes in unemployment insurance. Those changes will knock a lot of people out of the visible labour market and into the invisible one for which no statistics are kept. Even with the government uncommitted to the creation of jobs and admitting that it will create 100,000 fewer jobs this year than in the past year, unemployment figures may drop. Again it is a statistical illusion conveniently appearing some time before the next election. By the government's own admission, the employment effect will be less than last year. Unemployment figures will drop, not because of increased employment, but because a lot of people have been thrown out of the labour force as a result of the changes made in the Unemployment Insurance Act.
Despite the government's effort, the exchange rate will start to rise. Again this will give the illusion of things improving. Today the government argues very vociferously that every time the exchange rate drops it is very good for the economy. But I am sure the government will find a congruous argument as soon as the exchange rate starts to rise, an argument demonstrating how that is even better for the economy. In my estimation, many of the measures in the budget are not very effective and are grossly inadequate to solve the problems we face. Yet these measures will show up as statistically charming in time for an election.
The general public, the taxpayers, the voters and the citizens of Canada are concerned about government spending. They feel that care should be exercised in government spending. These concerns are legitimate ones. Much of what the government has done to persuade those concerned people has been nothing more than an exercise in public relations. Even though my friends on my right have expressed concern about public expenses, they are engaging in a public relations exercise as well. As a matter of fact one of my friends in the Conservative party expressed concern about what the government was doing in relation to Petro-Canada. His concern was that by enlarging the role of Petro-Canada the government is making it impossible for his party, when it forms the government, to sell Petro-Canada, because the stock market will be disrupted too much. Thus, I would say to my friends who have been berating Petro-Canada up and down that they should be careful and heedful of that. Perhaps they will end up being the custodians. Who knows, perhaps the hon. member for York-Simcoe will be made commissar in chief of Petro-Canada? Then he will have to eat some of his words, as the present Prime Minister (Mr. Trudeau) had to eat some of his words about the Liberal party

on another occasion, and as all of us have to do from time to time.


Mr. Fleming:: What about some of your comments this afternoon?


Max Saltsman: I added my last comment because I was very much afraid that someone might bring up something I said 12 years ago. I was afraid someone would have it tucked up his sleeve, ready to trot out before the House.
Recently the government announced that it was going to cut back on public services. The Prime Minister came out with a great big axe in his hand. I presume he did not tell anyone about it. He came out looking like Henry VIII, chopping off ladies' heads, and saying, "Off with their heads, off with their heads". In the meantime, the heads are not rolling rapidly, nor should they roll rapidly. By the time you get through that exercise you really have not changed very much.
There is room and there is need for scrutiny in the public sector. All of us have some private and pet horror stories about what goes on in the public sector, or all of us should have, and some of us have stories about what goes on in the private sector. These things can only be handled on a day to day and consistent basis with a determination to make the public sector work. This is part of the problem.
If you wonder why bureaucracy is the way it is, and why there is less concern about the public sector than there should be, it is because governments, federal governments at any rate, up until the present time have had a kind of death wish. Sometimes one feels it really does not want the public sector to work. Like my friend, the hon. member for York-Simcoe, instead of putting their very considerable talents to work trying to figure out how to make Petro-Can of more service to the Canadian people, hon. members are busily trying to destroy Petro-Can. Like that hon. member, hon. members in that part of the House do not want Petro-Can to work because that would put a lie to the belief which is currently popular among members of the Conservative party. I say "currently" because things were not always that way. Many good endeavours have come from the Conservative party in its better days.
One of the great challenges of the future is not so much related to whether there should be more or less public involvement. I do not think it is possible any more in the kind of world we live in, and with the kind of future we foresee, for the government to get out of involvement in the economy. No government can divorce itself from that involvement. Quite to the contrary, there is an increasing need for the government to be involved in managing the economy. What is critical is not the extent to which the government is involved in the economy, but the extent to which people in public life ensure that the public sector always performs efficiently and humanely.
Because of our concern about the need for public investment and government leadership in the public sector, I move,
November 17, 1978

seconded by the hon. member for Winnipeg North Centre (Mr. Knowles)-


Mr. Deputy Speaker:: Order, please. While the hon. member still has three minutes available to him, perhaps this would be an opportune time for me to intervene, just before he proposes a sub-amendment to the House, to render my decision concerning the amendment proposed by the hon. member for York-Simcoe (Mr. Stevens).
When the hon. member proposed his amendment, pursuant to Standing Order 511 indicated it was my impression that the amendment contained a matter in respect of which the House had already made a pronouncement. For that reason I hesitated to put the question to the House, and I base that impression on citation 200 in Beauchesne. It clearly states as follows:
An old rule of parliament reads: "That a question being once made and carried in the affirmative or negative, cannot be questioned again but must stand as the judgment of the House." Unless such a rule were in existence, the time of the House might be used in the discussion of motions of the same nature and contradictory decisions would be sometimes arrived at in the course of the same session.
That citation clearly indicates that a like motion cannot be put to the House, or the House should not be asked to make a pronouncement on the same type of motion within the same session. As a result I hesitated to accept the amendment, and I signified that hesitation to the hon. member for York-Simcoe.
I see the hon. member for Grenville-Carleton (Mr. Baker) is ready to stand and take part in the discussion. Let me first say that, to my mind, the best and simplest way of correcting the motion proposed by the hon. member for York-Simcoe would be to exclude the words "such as mortgage interest and municipal tax deductibility", which is that part of the motion I feel is faulty under the rules and practices of this House. This would leave the motion reading as follows:
-this House rejects a budget which increases the deficit without providing a genuine economic stimulus and which continues a policy of stagnation instead of beginning the structural reforms needed for the 1980s.
Having said that, and before making a final decision, I would invite the representations or comments of hon. members of the official opposition of others.


Walter David Baker: Mr. Speaker, as I mentioned to you earlier, this matter was referred to an officer at the Table to determine whether it was procedurally correct in so far as the rules of the House are concerned. It was indicated to me that it was procedurally correct.
I would have to say that I would not argue with that text of citation 200 in Beauchesne, but I would argue that it ought not to apply in this case. I do so for two reasons.
I want to go back, if I may, and read the motion which causes you the problem. It is a motion moved by the hon. member for St. John's West (Mr. Crosbie) during the throne speech debate on October 18, 1978. That motion stated:
-but this House regrets to inform Your Excellency that the policies of your ministers have severely damaged the Canadian economy, and that your ministers have not proposed those measures of taxation relief, including home mortgage interest and property tax deductibility, which would promote economic growth and recovery and ensure a more equitable tax system for all Canadians.
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The issue in that particular matter was the damage to the Canadian economy, taxation relief, including among other things, implicit in those words, home mortgage interest and property tax deductibility, for the purpose of promoting economic growth and recovery and to ensure an equitable tax system. Within that issue and implicit in the words "including home mortgage interest", "taxation relief' and other things, is set forth a number of things of which this is only one.
The guts of this motion, if I may put it to you that way, does not deal with the Canadian economy as such, but with the question of the deficit policy of the government and its failure to provide a genuine economic stimulus. It goes on to state that, as a result of that policy, stagnation is continuing in the Canadian economy. That is the guts of this motion which calls upon the government to provide the structural requirements we need as we go forward to the 1980s. It is quite a different motion. I grant you that the words "including home mortgage interest and municipal tax deductibility" are similar and appear therein, but they appear as merely one of the items, among others, that are included, and are not germane to the motion. Therefore it is open for us to argue that they could be removed from the motion without destroying it, as you Mr. Speaker, have pointed out, and that is the strongest support for my argument that this is ancillary to the motion rather than being the central or focal point.
I have given you the arguments as best I can, sir, with respect to the substance of this motion as compared to the substance of the motion put on October 18, 1978. The thing which offends the Chair, and which is the most eloquent argument one can possibly have for the point I am trying to make, could be included within the general scope of the motion, but it is not necessarily exclusive nor germane to it. Therefore, I think that on those grounds it should be allowed to stand, because that is what probably moved the officer at the table to take the position he did.
There is ample precedent for my position because in an amendment with respect to the budget there is a considerable amount of scope, as there is on motions with respect to the allotted days given to the opposition. Therefore, I do not believe that citation 200, which has as its substance a provision against a question being put more than once, applies to this particular amendment. You, sir, supplied the most eloquent argument for granting this amendment, as it is appropriate to the terms of the rules of the House of Commons.


Mr. Lambert (Edmonton West):: Mr. Speaker, I would like to add to the remarks of my colleague, the hon. member for Grenville-Carleton (Mr. Baker). He referred to the fact that there is a good deal more latitude in consideration given by the Chair to the wording of any amendments in, for example, the throne speech debate or the budget debate, than when a bill is at second reading, committee stage or even third reading.
While there may be a similarity in this motion of five or six words to the motion made on October 18,1 would suggest that the thrust of the amendment on October 18 was that the
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government policies had damaged the Canadian economy. There is no such reference in the motion made today by my colleague, the hon. member for York-Simcoe (Mr. Stevens). In the motion on October 18 the hon. member for St John's West (Mr. Crosbie) had not proposed certain tax measures which would promote economic growth or the assurance of a more equitable tax system, both of which are proposed in this motion.
There is mention in the amendment proposed by the hon. member for York-Simcoe about damage to the Canadian economy, but he is proposing certain measures to stimulate the economy. The two measures cited in the hon. member's amendment are used in a different context, and it is mere coincidence that there are five words similar to the amendment of October 18. As my colleague the hon. member for Gren-ville-Carleton has said today, the two amendments are entirely different and for that reason the amendment proposed by the hon. member for York-Simcoe should be accepted.


Mr. Nowlan:: Mr. Speaker, I have a few remarks that I would like to add to what has already been said here, partly because it is Friday afternoon. It is nice to see the hon. member for Northumberland-Miramichi (Mr. Dionne) smiling at this late time in the week. My argument refers to the citation which you read, sir, and which my friend, the hon. member for Grenville-Carleton (Mr. Baker) suggested that you follow, that if you cut a piece of the whole and still have the whole, then nothing has been decided upon in a previous question. All hon. members I think understand citation 200. This House would become even more confused if the Chair were to repeat and debate questions that have already been put and decided upon.
The amendments to the Speech from the Throne on October 18, as it appears at page 238 of Hansard, and the question which was decided by the House then, of a much more broader nature, not the precise, specific provision of home mortgage interest deductibility and/or taxation as outlined in the amendment proposed by the hon. member for York-Simcoe. The citation says that you cannot put a question more than once, and if we had that precise question in either amendment, then perhaps the matter would never have come before you, sir. Because I do not think that either the House leader or the table officers would have proposed the specific deductibility feature which is only a piece of a more substantive motion that is much more general.
Of course, as my hon. friend from Edmonton West just mentioned, there is a broader interpretation given to amendments to the Speech from the Throne or to the budget than to a specific issue which has been decided upon in the House. For those two reasons, and without getting into all the forms and precedents of Beauchesne or Standing Orders, I use your own words, sir, to put my point across, namely that if you cut a piece out of the amendment and you still have a substantive amendment, then you have not had this House decide the issue, which was used only as an example in both substantive motions and not per se the substantive motion.


Mr. Baldwin:: Mr. Speaker, I know that it is customary wherever possible on Fridays to launch into sparkling and scintillating debate on procedure, and that you, sir, are waiting to hear other members. The hon. member for Northumberland-Miramichi (Mr. Dionne) was laughing a moment ago. I think it is a great tribute to the enduring characteristics of hon. members on the other side that they can still laugh after last night.
That is my only contribution to the budget debate, and I will now deal with the procedural issue. The Chair is probably seeking advice from hon. members because the general principle is that the Chair must always seek diligently for ways to find motions in order. That rule is particularly applicable when looking at the many traditional amendments moved in debates on the Speech from the Throne or debates on the budget.
After some soul searching 1 decided to vote for the amendment moved in the Speech from the Throne debate and which has been referred to by the hon. member for Grenville-Carleton. At that time I looked at the wording and saw that it dealt with home mortgage interest and property tax deductibility. Those are specific words that have an interpretation which falls squarely within your knowledge, sir, and mine.
I am not going to traverse the ground already covered by my colleagues on this. They have dealt adequately with it and I imagine Your Honour is prepared to find a way which would give effect to their arguments.
I would simply put this additional argument. In the motion in question appear the words "a genuine economic stimulus such as mortgage interest" which go far beyond the question of home mortgage interest. This could include mortgage interest on an industrial property or on a number of things. I submit there is a very considerable difference between "home mortgage interest" and "mortgage interest".
I do not know what I am going to do on this amendment. I still have to make up my mind.


Some hon. Members:: Oh, oh!


Gerald William Baldwin: Mr. Speaker, I hear some raucous amusement from hon. members opposite. I am simply delighted that my friends opposite can laugh today.


Mr. Roberts:: A point of order, Mr. Speaker. The hon. member usually has an open mind. This is the first time I have heard he has an empty mind on a subject.


Gerald William Baldwin: Well, Mr. Speaker, unlike my hon. friend I do have a mind. To go back to where I was before I was so rudely interrupted, there is a substantial distinction between home mortgage interest and mortgage interest. We all know what a home is and mortgage interest on a home is very distinct. Home mortgage interest, as I see it, could include mortgage interest on any type of property. It may well be, as the debate develops, that colleagues on this side of the House may refine that distinction, but I see the motion at this time coming down
November 17, 1978

to a very common sense use of those words. I think I am in a lot different position in coming to a decision on this than I would have been at the time of the first motion.
I should like to go on to the second aspect. On October 18, on page 238 of Hansard, there appear the words dealing with the deductibility- "property tax deductibility". Here we have municipal tax deductibility. That is a very plain distinction. Property tax deductibility may have connotations far beyond that of municipal tax deductibility. I suggest to Your Honour, without trying to force the Chair to reach for meanings, that given the general principle that you must seek diligently, and within the limits of discretion, of course, to find ways and means to make the motion one which can be put to the House so that there can be a debate, surely Your Honour can take into account the plain distinctions that can be made in respect of the words used on October 18 and the words used today.
Those are the general arguments advanced by my colleagues. I submit there is an irresistible case made for allowing this amendment to be put.


Yvon Pinard: Mr. Speaker, on this particular point, the objective of our parliamentary procedure is to prevent the House of Commons from making conflicting decisions during the same session. If we compare the amendment suggested by the Progressive Conservative party to the main motion during the throne speech debate, and their amendment motion to the budget moved today, we realize that in both cases a major part of the motion is similar. Of course, I do not want to join in the acrobatics attempted by the hon. member for Peace River (Mr. Baldwin). A mortgage always applies to a building, but he is attempting to distinguish between a mortage on private property and a mortgage on something else. This is irrelevant because mortgages are always on buildings in any case.
I believe it was the hon. member for Edmonton West (Mr. Lambert) who said: "Mr. Speaker, it is not because four or five words in the two motions are somewhat similar that you can conclude that these are motions of the same nature as described in citation 200 of Beauchesne on page 171". I believe that there lies the whole problem. You must answer the following question: Is it indeed a motion of the same nature as that which was moved during the throne speech debate? I recognize that it is not an easy question to answer.
In my opinion, what we must do is determine whether the motions are similar in part or whether the similar part in the two motions are in both cases major elements of the motions, which would mean that in principle, if the House were to agree to this motion today, its decision would be in conflict with that which it made during the throne speech debate. This is the question that you must answer, Mr. Speaker. The issue is not to determine whether both motions are identical from all aspects, but to see whether the similar parts are of such importance that, as a result, the House of Commons would risk in principle making two contradictory decisions within one
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month or five weeks of each other, or at least during the same session.
This is what Beauchesne wants to avoid by enunciating the principle that a question once made and carried in the affirmative or negative cannot be questioned again but must stand as the judgment of the House. That is a sacred rule and I think there is a very simple solution. If you have any doubt, it is because you fear that the House might indeed make a contradictory decision. Then it would be so simple if this part of the motion is not important to the Progressive Conservative party to put forward another motion through another speaker which would not include this question of mortgage interests and property tax deductibility, which was disposed of by the House very clearly during the throne speech debate.


Mr. Knowles (Winnipeg North Centre):: Mr. Speaker, as must be obvious, I have been reluctant to take part in this procedural debate for the reason that we voted against the amendment the hon. member for St. John's West (Mr. Cros-bie) moved on October 18 and which was voted on on October 30. It might seem, therefore, that we have a conflict of interest here. Since we did not like the amendment that was moved on that occasion, it would follow we are not exactly happy with the motion before us now; but I want to make it clear that we will not shy away from expressing our views on it or from voting on it if Your Honour puts it to the House.
Your Honour interrupted my hon. friend, the hon. member for Waterloo-Cambridge (Mr. Saltsman), as he was about to move our subamendment. Without upstaging him, I can say that our subamendment was drafted as though the amendment of the hon. member for York-Simcoe (Mr. Stevens) was in order and it touches on that in that sense. In the intervening time, however, I have done some redrafting so that, if the original amendment has to be changed, our subamendment will be changed.
I want also to say that in view of these considerations I am not going to press Your Honour with all the vigour one can command in procedural debate; I do not think the world hangs on this issue. But in view of the positions that have been taken by members of the Progressive Conservative party, I feel someone in the opposition should support the position that the Chair has taken.
My friends to my right seem to be making a good deal out of the fact that the part in today's amendment that Your Honour does not like, is like the part in the amendment of October 18, and that since they are just incidental or ancillary bits in both cases, you should not be worried about them. It seems to me to work the other way. When this House on October 30 defeated the amendment moved on October 18, it did not defeat just part of it but all of it. Indeed, if there were three or four parts to that amendment and if it is possible today for the official opposition to revive one of those parts and get another vote on it, then as we move on through the session it can revive the other parts. Indeed, if we can revive this one today, we can revive it again. Therefore, a coach and

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four has been driven through the rule Your Honour has cited about it not being proper to seek again in the same session a decision on a motion or question on which a decision has already been taken.
My hon. friend the parliamentary secretary to the government House leader seems to approach this matter with concern lest the House reverse its position. I would say in terms of its rules the House is breaking the rules even if it takes the same decision over and over again. In my view, we should not be doing that. It seems to me the question that you raised, Mr. Speaker, is a legitimate one. I do not doubt the desire of my friends in the Progressive Conservative party to raise this issue of mortgage interest and municipal tax deductibility just as often as they can during the course of this session, but surely the rules should be observed. Although, as I say, I do not make it the case of the century, and we are not concerned, we are ready to move our subamendment either way. I hope you will stand by the view Your Honour expressed when you first raised this issue.
While I am on my feet, I must say that I have always enjoyed the contributions of my friend from Peace River (Mr. Baldwin). We have had a good time together through the years we have been here. But I did get a smile or two out of his attempt today-talk about Your Honour reaching for some way to find this matter in order, but my friend from Peace River was reaching-to try to find a difference between home mortgage interest and mortgage interest. If he is arguing today that deductibility from mortgage interest is broader than home mortgage interest, does he mean that his motion calls for all the big companies in the country that have big buildings or properties or what have you to get deductibility for those mortgages?


Sinclair McKnight Stevens: They already have.


An hon. Member:: You did that.


An hon. Member:: You have already given them that.


Stanley Howard Knowles: And my friend is asking for more than that. I thought my friends were concerned about the homeowners, these "poor" people who own homes. But now my friend from Peace River is not quite sure. In fact, he may not be able to vote for this. He said he had not made up his mind yet, because it refers to mortgage interest; not just home mortgage interest, but mortgage interest in the widest possible sense.


An hon. Member:: You voted on this.


Stanley Howard Knowles: We voted against the amendment that was made on October 18, and my friend knows it.
Then my friend from Peace River really stretches the point when he tries to see a difference between the phrase "property tax deductibility" and "municipal tax deductibility". Well, it is a different word. I do not know what happens to it in French;

we do not have the French translation of this day's motion yet. But really that stretches it.
I suggest, Mr. Speaker, that when the House voted on October 30 on the motion moved on October 18, it voted against a request for home mortgage interest and property tax deductibility. But when the Progressive Conservatives are asking us to vote today on a request for mortgage interest and municipal tax deductibility, they are asking us to vote on something on which the House has already made a decision. As I have said, we are ready to submit our amendment, to fit whatever motion comes from the Chair. But I suggest to Your Honour that your original statement was correct.


Gerald William Baldwin: That is a rigid socialist mentality.


Maurice Adrian Dionne: Mr. Speaker, I will be brief. However, I do want to point out in deference to my knowledgeable colleague, the hon. member for Winnipeg North Centre (Mr. Knowles), that there is in fact a great deal of difference between municipal tax deductibility and property tax deductibility. I do not know precisely how all the other provinces are organized, but I know that in New Brunswick the province itself levies property tax against homeowners and there are thousands of homeowners in New Brunswick who do not live within municipalities. I would like to know what the Tories are aiming at, whether it is municipal tax deductibility or property tax deductibility. Or are they, as they usually do, trying to fudge the issue so that they can take two different positions, or four if necessary?
The same, of course, applies to home mortgage interest and mortgage interest deductibility; the hon. member for Peace River (Mr. Baldwin) has tried to make a difference there. He is right in the first instance but I am not so sure that he is right in the second, unless he is going to make all kinds of mortgage payments and so on deductible. It seems to me that in bragging about the brain he has he has been too clever by half. I believe he has hoisted his party upon the horns of a huge dilemma that they are now going to have trouble crawling down from unless, Mr. Speaker, you rule the motion out of order and take them down from the horns of their own dilemma.


Mr. Deputy Speaker:: I wish to thank hon. members for their advice and contribution to this debate. Some hon. members use such different arguments that I find it hard to come back to my own decision. The last remark made by the hon. member for Northumberland-Miramichi (Mr. Dionne), along with remarks made by the hon. member for Annapolis Valley (Mr. Nowlan) and the hon. member for Edmonton West (Mr. Lambert), in trying to help convince me as to an analogy or a difference between two propositions is not clear to my mind. They do not take away the doubt I have.
I have forgotten which hon. member it was who said if five or six words could be taken out of the motion that would be enough to prove that they do not represent the main proposition and are secondary to the motion. This I can go along with. And I agree that the question proposed in the motion and in
November 17, 1978

the debate was broader than the one we have in front of us at this time. I agree it was twofold. As mentioned by one hon. member, on the one hand it suggested that the economy had been severely damaged; on the other, it blamed the government for not proposing some measures for tax relief. In the end, that motion, although it was twofold, singled out only one solution-among others I agree-to achieve its objective.
I do not disagree with the point raised by the hon. member for Winnipeg North Centre (Mr. Knowles) that it was the old motion voted upon. I wonder what the situation would be if the motion had been adopted. What if another motion or a motion to abolish property tax deductibility or a return of interest on mortgages was made? To my mind it is the duty of the Chair to protect the House and to make sure that the workings and the decisions of the House are orderly. I would like to suggest to the hon. member for Grenville-Carleton (Mr. Baker) that the mere fact of speaking to the incumbent of the Chair or to a clerk at the table is not enough to obtain an absolute guarantee that a motion or a position can be acceptable. The Table is there to advise members. When I am not in the chair I do not have full power of decision. I do not have all the elements. It is when I occupy the position of Mr. Speaker that I exercise that authority.
To my mind, the Parliamentary Secretary to the President of the Privy Council brought out the specific point that is contrary to citation 200 of Beauchesne which states that a question having been made and carried once, it cannot be questioned again in the course of the same session.
The fact remains that I harbour a very clear and specific doubt in my mind in allowing the House to vote again. In putting before the House the proposed amendment of the official opposition, I thereby put to it part of a question which was debated and voted upon at the opening of this session. [English]
It still seems to me that by putting forward for debate the proposition of the hon. member for York-Simcoe (Mr. Stevens), I would be putting one of the questions that was voted upon in the debate on the Speech from the Throne and upon which the House has already pronounced itself. There could be other means available to hon. members, but I will not fall into the trap of accepting the invitation of the hon. member to discuss the specifics of the motion before the House in that proposed amendment or try to indicate the exact words that could be embodied in the new proposition in relation to mortgage interest and municipal tax deductibility and try to argue the case with the hon. member as to whether or not there is a difference between those words and those contained in the motion of the hon. member for St. John's West (Mr. Crosbie).
I am looking through the notes I took while hon. members were so eloquently trying to convince me one way or the other and I am not sure I have covered everything, but the same
The Budget-Mr. Saltsman
doubt that struck me at the beginning is still on my mind. I did make a suggestion earlier. Is the hon. member for York-Simcoe rising on that alternative solution to the dilemma?


Sinclair McKnight Stevens: Mr. Speaker, I can well understand your doubt, as you express it. But I feel we must not delay a budgetary debate. In consultation with the seconder of the original motion, I suggest a revised wording of the motion. The wording I should like to suggest is:
That this House rejects a budget which increases the deficit without providing a genuine economic stimulus such as would follow from meaningful personal income tax reductions, and condemns the continued acquisition of private corporations by the government and the government's general policies ?s evidenced in the budget which continue stagnation instead of beginning the structural reforms needed for the 1980s.


Mr. Deputy Speaker:: There is one thing I want to say. The rules do not allow an hon. member to amend his own motion. That rule can be found in citation 204 of Beauchesne. No member may amend his own motion, but with the leave of the House he may withdraw it and substitute another. The motion proposed by the hon. member was not put to the House. I have tried to look into the precedents taking account of the fact that I did not put the motion. If it had been put, I could not modify it without the consent of the mover, the seconder and the House. The Chair did decline to put the motion on the basis that the amendment might have been out of order.
To make it easier, taking into account the fact that some advice was sought as to its acceptability and that the main substance of the motion is definitely acceptable, I wonder whether there might not be consent, so as to simplify the problem and find a quick solution, to allow the hon. members, without further discussion, to move his amendment.
Is there consent that the hon. member be allowed to substitute an amended proposition?


Some hon. Members:: Agreed.


Mr. Deputy Speaker:: Then I will put the modified motion to the House.
The hon. member for Waterloo-Cambridge (Mr. Saltsman) will now resume his speech.


Max Saltsman: After such a long period of time, Mr. Speaker, it is going to be a little difficult for me to remember what I was about to move. If I might be permitted, I would say to Your Honour that this is one time when procedure and logic go together. We had the same reservations about the amendment which the hon. member for York-Simcoe offered as you did, and my hon. friend with great prescience framed a motion originally to strike out all those words as though he knew they were offensive both to procedure and equality in tax administration.
Therefore, I should like to move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That the amendment be amended by deleting all the words after the words "such as", and by substituting therefor the following words:
"the implementation of a program of public investment in housing, upgrading
of railways, urban transit and provincial-municipal capital works, and this

November 17, 1978
The Budget-Mr. Saltsman
House condemns the government for carrying out a policy of deliberately high
unemployment and for failing to reduce personal income taxes on middle and
lower-income earners. "
I find that despite the changes in the new motion moved by the hon. member for York-Simcoe, it is just as unacceptable as the old.


Mr. Deputy Speaker:: I am very hesitant about this and I would be prepared to hear arguments from hon. members. My first impression is that the subamendment proposed tends to modify the first proposition completely. Unless it is worded in such a way as to add words to the proposition, I wonder how far we can go toward accepting subamendments which go beyond the scope of the proposition which is before us.


Max Saltsman: Mr. Speaker, if this motion is in order, it is somewhat accidentally in order. I therefore ask the indulgence of the Chair, in view of recent events surrounding this motion. It seems to me that what we are doing in our subamendment is clarifying and being very much more specific, but nevertheless along the same lines as the amendment itself. The amendment of the hon. member for York-Simcoe talks about meaningful changes. We are being very specific in terms of the use of the vague word "meaningful"; we are specifying reduced personal income taxes for middle and low income earners.


Sinclair McKnight Stevens: Mr. Speaker, I rise in support of the rather quick decision you have indicated. I think in drafting the proposed amendment to my motion the hon. member for Winnipeg North Centre (Mr. Knowles) was a little too sweeping. The fact that this is the case was demonstrated when the mover of the subamendment commented that almost regardless of the final wording of our amendment his amendment would fit all right. In effect, what he was saying was that provided the New Democartic Party could tack on anything it liked after "such as", the New Democratic Party apparently felt it had a free rein to amend our motion as it saw fit.
As I understand the rules, Your Honour is perfectly correct that basically we cannot amend away the whole thrust of the motion. That is what the New Democratic Party is proposing, and I think members of the NDP must at least restrict their amendment in such a way as to agree with some of the points in our motion before they propose to amend it virtually out of existence, as is the case now. In short, if they do not like our motion, they will have an opportunity to vote against it in due course; but in the meantime they may not amend it to such an extent that they automatically defeat our motion with their amendment.


Stanley Howard Knowles: Mr. Speaker, it is both obvious and true that we have been doing quite a bit of drafting this afternoon. First we had to draft a subamendment to the amendment which was first moved by the hon. member for York-Simcoe (Mr. Stevens). Then, we had to redraft that to fit the suggested change proposed by the Chair. Then, with about 30 seconds' notice, another amendment was submitted

by the hon. member for York-Simcoe, and we had to try to fit into that.
1 do not ask for any concession because of that, but that is part of the picture. However, I point out in answer to what the hon. member for York-Simcoe just said that his is a motion which is critical of the budget. In fact, it rejects the budget because it increases the deficit without providing a genuine economic stimulus. We accept that, but we qualify the reasons for our rejecting the budget and make other suggestions as to how to do something about it.
It is perfectly true that a subamendment has to be relevant to the amendment. The amendment deals with the budget and its faults and proposes something in its place. I suggest that in our subamendment we are accepting the rejection of the budget. We are qualifying or altering the reasons for that rejection, but it seems to me that it is in the same ball park. It is in the regulations that a subamendment must be relevant to the amendment, and I hope we do not have to have another hour's debate on procedure.


Walter David Baker: Mr. Speaker, the subamendment may be in the same league, but I have to agree with the hon. member for York-Simcoe (Mr. Stevens) that it is certainly not in the same ball park nor part of the same ball game. I have always emulated and admired the example set by the hon. member for Winnipeg North Centre (Mr. Knowles) in supporting the Chair on every possible occasion. I think he saw fit to support the Chair when my amendment was under consideration. The amendment moved by my colleague, the hon. member for York-Simcoe, is under consideration now, and I must say that I hope the hon. member for Winnipeg North Centre will find it equally admirable of me if I support the Chair in the reservations Your Honour expressed regarding this subamendment.
I think the hon. member for York-Simcoe is quite correct in saying that one cannot amend away the whole thrust of an amendment. For whatever reason, I think that is what is being attempted here, and I am sure that given a few moments and given the drafting skill of the hon. member for Winnipeg North Centre, which is revered in every parliament in the Commonwealth, he will be able to come up with an amendment which will satisfy the Chair, the government-which will have the right to vote-and also satisfy us as to its procedural acceptability. If the hon. member for Winnipeg North Centre needs a little time, we are, of course, prepared to give it to him.


Gerald William Baldwin: It would be easier if the government would review its budget.


Yvon Pinard: Mr. Speaker, surely no one has any objection to your taking all the time required to give a ruling on whether or not the subamendment is receivable. What strikes one, however, is how difficult it is for the opposition parties to criticize legitimately the budget brought down by the government. Which leads one to wonder what they would do if they were on this side of the House. Mr. Speaker, I suggest we resume the
November 17, 1978

debate. We have, on this side of the House, several hon. members who are willing and ready, to say the least, to praise last night's fine budget. We shall await your ruling at your leisure on the subamendment of the New Democratic Party.


Mr. Deputy Speaker:: I hesitate to accept the suggestion of the parliamentary secretary because it might bring about the same problem and at the same time work against one of the parties in the House who has a priority at this time, under the practices of this House, to present a subamendment.
If I were to come to the Chair on Monday and make a negative ruling on this subamendment, at whatever time, that might preclude a representative of the New Democratic Party from exercising his right to move another subamendment. 1 wonder if the House would be prepared at this time to accept my suggestion that I reserve the right of a representative of the New Democratic Party to move another submendment. I base my suggestion on the fact that I am quite concerned about the wording of this subamendment. Perhaps its objective might not go against the rules of the House if it were worded in another way or attached to the amendment in another way. So without ruling out the content of the motion, I find fault with the way it is attached to the amendment. At the same time, I am ready to protect the right of the hon. member's party to have one of his colleagues move another amendment on Monday.


Walter David Baker: Mr. Speaker, I am prepared to agree to allow the NDP to put an amendment in an appropriate way, as you suggested, or in some other way that we could work out. However that is done, we are certainly prepared to agree to that.
[ Translation]


Yvon Pinard: Of course, Mr. Speaker, we are willing to help the opposition in its efforts to adjust to the rules of the House.


Stanley Howard Knowles: Yes, Mr. Speaker, we are prepared to accept that. I was trying to draft something fast, but it would make more sense for us to present a new motion on Monday. But I take it that if the House agrees now to what is proposed, the Chair will not accept a subamendment from anyone else until another New Democratic Party member gets the floor.


Mr. Deputy Speaker:: Is that agreed and so ordered?


Some hon. Members:: Agreed.


Mr. Deputy Speaker:: For the information of hon. members, the House agrees to reserve the right of another member of the New Democratic Party to introduce an amendment to the amendment moved by the official opposition and the Chair will then decide whether that amendment is in order. At this time I consider that even if the amendment to the amendment
The Budget-Mr. Saltsman moved by the hon. member for Waterloo-Cambridge (Mr. Saltsman) might not be contrary to our standing orders and our practices, the manner in which it is proposed and related to the proposal of the official opposition seems to me entirely out of order and thus goes beyond the substance of the main motion and at the same time, I think, gives rise to a new proposal which replaces part of the one already made by the official opposition.


Walter David Baker: Mr. Speaker, there has been some consultation among the parties with respect to the debate. It had to do with the divisions that will be taken. In fact, announcements were made by the government House leader on the time of the vote when he answered questions on the business of the House yesterday. I would just like it to be understood that in terms of the consent we are giving to accommodate reasonably the dilemma in which we find ourselves, we can take it that today is the first day of the budget debate. I want to make sure there is no doubt in my friend's mind about that.


Stanley Howard Knowles: That is quite clear.


Walter David Baker: And it is understood that the second day will be Monday, and that there will be a vote on that amendment on Monday evening, assuming an appropriate amendment is put by my friend or his colleague; and that the debate will carry on, not as I had agreed, but as the government House leader has indicated and in accordance with the plans of the government for the balance of the week.


Yvon Pinard: I rely on the statement made by the Deputy Prime Minister yesterday. I think it is obvious that we have to act accordingly.


Stanley Howard Knowles: But there might be an interruption. Should that not be made clear? The hon. member for Grenville-Carleton is speaking as though the debate would go on every day next week. I think there was a reservation regarding the possibility of one day's interruption.


Yvon Pinard: When I said I would rely on the statement made by the government House leader, it included that possibility, of course.


Mr. Deputy Speaker:: To make sure that this is clear, let me ask whether that possibility could not arise on Monday.


Yvon Pinard: No, Mr. Speaker, that was not specified. I still have to rely on the statement made by the Deputy Prime Minister. If anything is to change before Monday, of course the House leaders of the other parties will be informed in advance.


Mr. Deputy Speaker:: On the second day of the budget debate, the Chair will ensure that a member of the NDP seeking the floor will be recognized for the purpose of presenting a subamendment.

November 17, 1978
The Budget-Mr. Laprise


Mr. Gerard Laprise (Abitibi):: Mr. Speaker, we found ourselves in some confusion probably because there was confusion as well in the speech on the budget itself last night. Such problems of "adjusting" to move amendments or subamendments as we were just faced with a while ago makes us smile because generally we never had much problems to devise appropriate amendments and I could hardly comment on that amendment or subamendment because so many have been tabled. Still I can at least speak on the intent of the amendment and subamendment since the latter was preceeded by a speech.
Now, Mr. Speaker, the amendment proposed by the representative of the Progessive Conservative party, the official opposition, calls for a lower deficit and economic incentives. Well, Mr. Speaker, we can only approve strongly such an amendment. Elowever, the hon. member for York-Simcoe (Mr. Stevens) did not tell us what the Conservative party would do if it were in power to lower the considerable deficit we have known for years. And knowing the monetary policy of the Conservative party, which is more or less the same as that of the Liberal party, I think they will have much difficulty devising ways of cutting down those deficits while at the same time improving the Canadian economy since they follow the same monetary policy.
Mr. Speaker, earlier I heard the hon. member for York-Simcoe criticize this administration. He was right on nearly everything, but as I was listening to him I wondered what would have happened if since 1968 for example, he had been on the other side of the House? Undoubtedly, Mr. Speaker, we would have had roughly the same difficulties. The Progressive Conservative party is undoubtedly full of good intentions but the administration it gave us when it was in office in the late fifties and early sixties shows that in terms of administration they are not much more capable than the Liberal administration has been since 1963. During the Progessive Conservative administration we had a period of terrible unemployment, the dollar went down, we had a period of intense inflation, and that is in part practically what caused the Progressive Conservative party to be defeated in 1962-63. So today, Mr. Speaker, they want to replace the Liberal party but with the same means to administer this country. Mr. Speaker, the same causes have the same effects. So as far as I am concerned 1 do not have any more confidence in the policies of the Progessive Conservative party than I have in the Liberal party currently in office.
I listened also to the arguments of the hon. member of the New Democratic Party, the hon. member for Waterloo-Cam-bridge (Mr. Saltsman), and he was practically at the opposite of what the representative of the Conservative party proposed. For the representative of the New Democratic Party, public projects should be increased substantially to fight unemployment. Fighting unemployment, Mr. Speaker, would be a good

idea but increasing public projects in the sense that was suggested means increasing the current government deficit.
Mr. Speaker, that deficit is considerable and has become a frightening plague for the taxpayers of this country. Since 1975-and that is only three years ago-the public debt in Canada has doubled. If you take the budget deficit of 1977-78 and 1978-79 and the forecast for 1979-80 you get a total deficit of $31.12 billion. Mr. Speaker, administering like that when you have a Minister of Finance (Mr. Chretien) coming out with estimates like that, you do not have to be a genius to administer with debts like that. Anyone, Mr. Speaker, could do it, but administering a country soundly and running a country like the people want it to be run is another thing. I believe that what we have now on the government side is an incapacity to do so. The Minister of Finance might be well intentioned but last night he was unable to introduce a budget to revive the Canadian economy which is in great difficulty, he was unable to introduce a budget to reduce the rate of unemployment in Canada, he was unable to introduce a budget to reduce substantially the cost of living we now have in Canada. Of course, Mr. Speaker, the margin of the Minister of Finance is very narrow, I would say almost nonexisting, because of huge expenses which are far higher than revenues. And the government can hardly get more from income tax than it already does, because Canadian taxpayers are overtaxed as it is. They cannot afford to pay more. And today our workers, those who have a job, are overburdened. They must pay for about 50 per cent of the Canadian people and they account for an ever decreasing percentage of the labour market. They must pay for just about all those who do not work for one reason or another. They have to support all those people and the entire government machinery.
Some workers are beginning to wonder whether it is more advantageous to be outside the labour market rather than being at work. More and more people are worrying about that. The gap between the poor and the rich grows wider and wider, and it is increasingly difficult for the middle class to live under such an administration. So, Mr. Speaker, a lot of criticism can be levelled at the government that has been in power for the past ten years, at least with regard to the present administration and it has been done in all sorts of ways and I do not intend this afternoon to come back on this kind of criticism. I would rather spend a few minutes trying to make the House of Commons and the Canadian people understand that we must get off the beaten path, that we must forgo this system which is leading Canada to bankruptcy.
We have come to the point, Mr. Speaker, where the interest on the national debt this year is as large as the Canadian government's budget in 1962, a date which is not so remote after all. One is entitled to wonder in what kind of a situation we find ourselves and when we are talking about billions of dollars we are not dealing with peanuts. These are billions of
November 17, 1978

dollars which we are giving away every year. We have now gone over the $6.5 billion mark in interests on the national debt and these $6.5 billion are not recycled within the government. When we tax workers to pay for old age security pensions, family allowances and the cost of public works, development projects of all kinds, all that money eventually finds its way back to the government somehow. But when we tax the same workers to pay the interest on the monumental debt of our country to those who have a claim to that debt, all that money is not redistributed, it has to be borrowed again at current annual interest rates which have now reached 10 per cent.
Mr. Speaker, Canadians have the right and are beginning to wonder where all this will lead us. What will the situation be next year? What will it be in two years? This cannot last forever, there will be a breakdown somewhere, sometime. We have had the 1939 crash and we undoubtedly find ourselves on the eve of another one because there are limits to the level of indebtedness of a country and its people. In the thirties, when the crisis took place, which was called then an economic crisis, nobody had any money. There was a surplus a goods everywhere which people did not know what to do with, the stores were stacked up with all kinds of commodities. There were unemployed people everywhere eager to work but there was no employment for them and those worked were not getting paid.
Then, Mr. Speaker, people were suffering in the midst of abundance. When war was declared, suddenly we could find the money that was lacking a few months before. However, tractors, had to be built to make war, machines had to be built, ammunitions were needed and there was work for everybody. The necessary money was found. And as men were workig in factories producing war equipment and ammunitions, salaries were paid and wage earners were buying consumer goods which in term gave work to other people so that during the war everybody was working, any disabled man could find a job; in fact, everybody was working. Such was wartime economy. But no sooner had the hostilities come to an end, that we found ourselves in the same predicament. We were having economic and financial problems and the government, in an attempt to save the economy and preserve jobs, sank ever deeper into debt.
Mr. Speaker, surely it is easy to find an alternative to such an administration, and other means must be looked for, other than those we know and other than those proposed by current economists.
We are laughed at on occasion. When I heard the minister making his speech, I remember the sixties when the same minister was making jokes at the Caouette dollar, the Social Credit dollar. He found that funny. But today we have Chretien's 85 cents, and this is not much funnier. Social Credit monetary proposals were then called "funny money." Today we have sad money and it hurts even though the minister repeatedly suggested last summer, that the Canadian dollar devaluation was something that could enhance the economy,
The Budget-Mr. Laprise
would promote exports. Mr. Speaker, rather than trying to export our production, developing an international market, let us try rather to develop a domestic market, a home market by giving back our Canadian dollar its purchasing power, the real value it has lost because of this administration.
That is what he should try: The Minister of Finance stated that the 90, 89, 88 cents and even 85 cents, and it went down to 84 cents, that dollar made for cheaper exports. We could export more. But last night the minister of Finance told us the opposite in his budget. This is what I find on page 5, and I quote:
The consumer price index rose more sharply than has been expected.
He erred across the board, this is nothing new.
In September, it was 8.6 per cent higher then a year earlier. This renewed outburst of inflation-
Please note this:
This renewed outburst of inflation was not the result of any acceleration in our own incomes or our own domestic costs. It was the result of higher food prices and the decline in the dollar.
Last night the minister agreed that the renewed outburst of inflation was due to the decline in the dollar. This flies in the face of the statements he made during all of last summer, when we questioned him, in the course of the last session and the beginning of the current one, on the Canadian dollar devaluation. If the Canadian dollar devaluation could help our exports and improve the Canadian economic climate, why not lower it to 83 cents, 75 cents and even 50 cents if this is effective?
The proof is that the minister did not believe it at all since, along with the governor of the Bank of Canada, they made every effort to borrow on the American market and elsewhere in an attempt to save the dollar. Each time it was exactly the opposite that should have been done. All they did in fact was to devise a means of exporting interests and dividends, of exporting and increasing the flow of our money out of the country, when it should have been kept here.
Now, Mr. Speaker, the government has only three means of obtaining the funds needed to meet its obligations, and for the government, the main obligation is to provide an efficient administration to the entire population, not only to parts of it but to the entire population. That is why it must offer advantages not only to big owners of what I would call chicken coops, but also to owners of single family dwellings, not only to big owners but to small owners as well. That was omitted in the budget speech we heard last night. There is nothing there for the small homeowner or the tenant who wants to buy a home, they were completely disregarded. Now, Mr. Speaker, this is one of the government's obligations.
Small and medium-sized businesses were also largely overlooked. Nothing new was done in addition to what we already have, and the government is only starting to show concern for small and medium-sized businesses. Yet we know how much

November 17, 1978
The Budget-Mr. Laprise
this type of business generates jobs. Therefore, much more should be done in that direction, but there was nothing in the budget speech which was far more noteworthy by its omissions than by its content. Also, Mr. Speaker, the government has the obligation to ensure a decent standard of living to the people of Canada. At present, 20 per cent to 25 per cent of the population is living below the poverty line, especially the senior citizens of Canada. There are disabled, sick and socially handicapped people who are without jobs and there are others who do have a job but who work for the minimum wages allowed by the provincial governments. Mr. Speaker, almost 25 per cent of our population live below the poverty line. As a matter of fact, somebody mentioned today that the poverty line for a family of four was $11,000 a year. Mr. Speaker, many families live on a much smaller income. It is the government's responsibility to take care of them.
Mr. Speaker, in order to obtain the necessary funds to meet its obligations, the government can levy taxes-and we know it does not hesitate to do so. It has the authority to tax citizens and corporations alike, to take the money out of their pockets. Last night, while I was listening to the minister's budget speech in the House, I noted the tax cut offered to the Canadian people. I noted the 9 per cent tax credit or indexation of the personal income tax and true, I felt relieved for the Canadian workers, but the government has nothing to lose by granting this indexation.
In the tables which were tabled before us last night in the budget speech and which have been included in Hansard we can see in Table 2-Forecast for 1979-80-under personal income tax that despite a supplementary indexation of 9 per cent the government is going to collect an additional $1.85 billion. The minister can always brag about his allowing for a fiscal reduction; in fact because of the wage increase that almost all workers get during the year, the government will get an ever increasing tax amount but it will not be seen as such by the people.
Mr. Speaker, when the minister proposes to reduce the sales tax from 12 per cent down to 9 per cent, he plays the same trick once again, since prices and costs increase, the government is able to get more money through the taxes on manufactured items. The government does not lose anything in this 3 per cent reduction, even though we hope the consumer will draw some kind of advantage out of it in the end. Mr. Speaker, the government can get money through taxes and we know how it uses it.
Here is another way: the government could borrow from the people, from institutions and corporations and pay back the money it has borrowed. But the government almost never pays these sums back, it pays only the interest. When Canada Savings Bonds fall due, the government makes every effort to convince the buyers to keep them for another term. The

government offers higher interest rates in the hope that bond owners will renew them. But if the owners want their money, the government must borrow to pay them. Then it is like digging a hole to fill another one, but at the end we are still left with a hole.
That, Mr. Speaker, is the second system the government is using to get funds for its administration.
The third system the government may use to get funds and which they do not want to resort to is simply to create money and spend the funds thus created for public projects. That is the very third power of the government which could change completely the administration of the country and restore a sound administration which Canadians call for and are entitled to expect.
Mr. Speaker, the government refuses to exercise that third option because its masters, those who control it behind the curtains, that occult power which nobody knows, nobody sees, forbid the government to exercise that third option.
In 1977, my colleague from Richmond (Mr. Beaudoin) asked the Minister of Finance a question which I shall repeat here for your information, Mr. Speaker, and that of hon. members. I quote:
-this misunderstanding between the federal government and the province of Quebec depends mostly on the fact that we have economic problems; since money is manmade, why does the Minister of Finance not urge the Bank of Canada to open a new credit for the federal government, in co-operation with the provinces, to promote or Finance new public projects in municipalities and school boards in order to deal with unemployment and create new jobs?
Well, Mr. Speaker, here is the answer of the Minister of Finance, the Minister of Finance of the present Liberal government, and I quote:
The Canadian monetary policy is well known and it has been formulated by the governor of the Bank of Canada and I do not intend to ask him to change his policy.
Then, Mr. Speaker, who is governing the country? Is it the Minister of Finance elected by Canadians or the governor of the Bank of Canada who is only known by 1 per cent of Canadians because nobody votes for him? And yet he is the man who administers our financial policy in Canada. He is in the driver's seat but answerable to nobody. Mr. Speaker, such conditions cannot go on. The present minister or the next one, this government or the next one will have to assume their responsibilities. They have to assume the responsibilities entrusted by the people and instruct the Bank of Canada to do what they have to do. At the present time, it is the tail that makes the dog wag and not the other way around; everything is mixed up. We have to put back some order and put things as they should be. The Minister of Finance did not say that in his budget speech yesterday and the spokesmen for the Progressive Conservative party and the New Democratic Party avoided making such proposals. They have good intentions, but they did not suggest any measure to do something. We should remove those who are not qualified to manage our economy
November 17, 1978

and give that responsibility to the people's representatives elected by the people. They are the ones who should assume that responsibility.


Anthony Chisholm Abbott: As
the first supporter of the government speaking on the budget, Mr. Speaker, I want to congratulate the Minister of Finance (Mr. Chretien) for what he has produced in what are agreed to be very difficult circumstances. The minister has come up with a prudent, responsible and equitable budget which goes a long way to both stimulating the economy and also showing the national and international community that the government is wholly responsible in its position today and in the circumstances that limit it. I think that the responsible comment in the press tends to confirm this fact.
The official critic for the opposition, the hon. member for York-Simcoe (Mr. Stevens), spoke, I think somewhat irresponsibly, on a number of issues and failed to a large extent to come to grips with some of the real benefits and concerns in the budget. He gave a very lengthy, gloomy resume of what he saw to be the problems in the economy. He referred to matters like paper clips, floor mats, and his concerns about Petro-Canada, all inaccurate and ominous statements about the national state of the economy; but he is filled with hope that there will be a Tory government in 1979.
I believe it was Samuel Johnson who said that if a person marries for a second time, it is the triumph of hope over experience. Every now and then I think that the public mind tends to forget the years under Tory governments. Mercifully we have not had too many of them, but those we have had are a very sharp reminder to any who have experienced the mismanagement, irresponsibility and reactionary character which they have imposed. Whether it was R. B. Bennett or the right hon. member for Prince Albert (Mr. Diefenbaker), they were dismal and hapless performances.
When the hon. member for York-Simcoe speaks of his high hopes for the Clark government, as he refers to it, I suggest that these hopes are perhaps excessive or optimistic. As hon. members may be aware, 1979 has been designated by the United Nations to be the International Year of the Child, but I do not think that members opposite should hope that it will be the year of a Clark government. I do not think that the International Year of the Child should be taken as an automatic assumption that we will have a Clark government.
Listening to the hon. member for York-Simcoe last night and today would suggest to any new arrival to this parliament or to the country who was listening to his speech that Canada has had a deplorable ten years economically and is on the verge of financial collapse. All the facts, however, are contrary to that statement, and these facts have been stated both by the Prime Minister (Mr. Trudeau) and the Minister of Finance, who last night, for instance, stated that in this past year
362,000	more Canadians were employed and that our exports reached an all-time high.
The Budget-Mr. Abbott
A recent report of the Minister of Industry, Trade and Commerce (Mr. Horner) on the annual survey of the capital intentions of the large industries in Canada shows that there is going to be a very distinct strengthening in capital intentions. In other words, all the measures and indices that are currently revealing themselves show that, far from the economy being in the depressed and deplorable state that the hon. member would try to convince the Canadian people it is in, in reality it is showing real signs of improvement. The record of the past ten years has been considerably brighter than he would suggest.
One need only refer to the statistics supplied by the OECD to confirm this. They show, for instance, that the rate of growth in the labour force in Canada between 1968 and 1977 was the highest of all member countries. The cost of living index for 1978 showed the United States had the smallest increase, Canada was second, then came West Germany, Sweden, Switzerland, Belgium, Denmark-countries that the hon. member tried to suggest last night and today had done much better than Canada. Food prices are shown as being the least costly in Canada in 1978, with the United States coming second. The rate of growth in real domestic product between 1968 and 1977 showed Canada first. There is much talk about the need for greater stimulus through their regrettable tax proposal in the area of housing starts, yet Canada is listed second amongst the countries from 1972 to 1977. Belgium came first and the United States third.
It is one thing for hon. members opposite to engage in the cut and thrust of parliamentary debate, one thing for them to try to fool themselves. But I suggest that at a time when a lot of Canadians are looking for leadership from parliament, and are expecting some degree of responsibility, for the official financial critic of the official opposition to try to cast such a spurious pall of pessimism across the Canadian scene, suggesting that our economy is in a shambles, does no credit to him, to his party or to his country.
I should like to touch on some aspects of the budget itself for a few minutes, Mr. Speaker, and on some things other budgets in the recent past have provided in the area of small business. The hon. member who last spoke suggested that nothing was done for small business in this budget. I would point out that the provisions relating to development and the increase in the employment allowance are two notable features which mean a great deal to small business people. These come on the heels of recent changes which have given support to small business.
In the provision for the reduction of the manufacturing tax from 12 per cent to 9 per cent, it should be remembered that
8,000	of the 9,000 members of the Canadian Manufacturers' Association are involved in small business. The vast number of manufacturers in Canada fall into this category. The reduction of this tax will not only stimulate big industry but will have a marked impact on the prosperity of industry as a whole in Canada in which small business is dominant.

The Budget-Mr. Abbott
The pattern in tax policies that now exists in Canada for small business has cut a wide swath. I reminded hon. members before of the very real accomplishments of the government. We have a tax system for small business which is more favourable than that of any other country in the world.
I do not say this, as the hon. member for York Simcoe would, simply because I want to say it or hear it said, and hope somebody is going to believe it. I say it because other commentators, such as Mr. John Bulloch, president of the Canadian Federation of Independent Business, say it. The report that was issued by the Minister of Finance last night gives a careful study of the comparative tax systems of the United States. The hon. member for York-Simcoe tried to assert theirs was so much more beneficial than Canada's but he had not read the report.
The report states it is evident that the Canadian system is considerably more generous than the United States system. Canada extends the low rate of a significantly larger amount of small business income and does not impose any special penalties on the sheltering of business income in the corporate entity, it points out. The report also says that the combined corporation and personal tax burden on corporation income is much lower in Canada than in the United States due to the presence of the dividend tax credit. It says that the credit causes the combined corporation and personal taxes on small business income to be even lower than the personal tax on, say, wages and salaries.
When you consider the special tax rate for small business which results in some 20 per cent or 21 per cent less tax being paid than is paid by larger companies, and add to that the recent tax change whereby family businesses have been provided with roll-over provisions so that intergenerational transfers can take place without the application of the capital gains tax, when you consider the elimination of the sales tax payable by small businesses representing 20 per cent of all the manufacturers in Canada, with almost 50 per cent of them being eligible for a much reduced filing of returns system, when you remind yourself that as of last spring we have had a far more liberal provision for write-offs of losses against other income, then I think I can say with confidence, without going into a number of other measures which have been passed by the government to help small business in the way of tax reform, that it amply substantiates my point that this government has set its sights on small business and has helped them to an extent that no other country in the world can demonstrate in the area of taxation.
I think as the member of parliament for Mississauga, an area in the industrial heartland of Ontario, I should point out that the greatest job-creation vehicle, the greatest engine for economic growth, is the manufacturing sector. I was very pleased that the Minister of Finance addressed this area and provided relief in the form of a reduction in the manufacturers' sales tax so that this important sector will receive the stimulus it needs to generate the sort of jobs we need in Canada.
I should like to say something about the accusations concerning the Petro-Canada transaction. I think it is unfortunate

November 17, 1978
that the hon. member for York-Simcoe attempted to cast doubts on the merits of this proposal. Of course, he was an active member of the energy committee. Many of us who sat on that committee remember his dogged opposition and his attempt to filibuster passage of the bill. From the inception of the idea of Petro-Can it was said that, apart from the United States, no other western industrial country lacked a government oil company. British Petroleum belonged to the British government, the French government owned a company, the German government had a company. All these government-owned companies act as a balance-a player at the table in their country's national strategies to counteract the overwhelming influence of the great international oil companies that are dominant elsewhere. Canada is particularly vulnerable as a major oil producer where all the major oil companies doing business have been foreign dominated, foreign owned and foreign managed. When I say the United States is an exception, it must be remembered that three or four of the largest oil concerns in the world are based in the United States, which has a very real interest or control over their policies. Canada lacked this.
Today, by virtue of this transaction, Petro-Can if fulfilling the mandate it was given, which is to equip itself to be a player at the table and thus provide a kind of balance against the policies of the major oil companies. The suggestions made by the hon. member for York-Simcoe that a vast new debt is being placed on the shoulders of the Canadian taxpayer, when the reverse is true, is a misleading comment. Whether it was deliberate or not, I am not prepared to say. It is well known that Petro-Canada is financing the acquisition through banking sources of its own negotiations. The payment of these loans will be paid out of cash flow from the combined assets of the two companies, amounting to some $232 million annually. The banks that have assisted in financing this acquisition have done so with hard-headed realism because these loans are not being guaranteed by the federal government, which is the advice I have.
Therefore, I suggest his representations that somehow the Canadian taxpayer is having money extracted from him that should otherwise be put into homes or into other forms of activity in Canada is entirely misleading. I suggest it should be revealed as such and the hon. member should rise in his place and point out to the Canadian people, through parliament, the inaccuracy of his statement.
The hon. member's anxiety to show up the malevolence of Crown corporations as he sees it was revealed in his condemnation of the Export Development Corporation. Here is a corporation that has never had a loss. It consistently earns a profit, it has created thousands of jobs in Canada for foreign projects and has insured projects by Canadians. It has seen hundreds of millions of dollars invested at no cost to the Canadian taxpayer, and it has given great opportunities to Canadian manufacturers. Yet the hon. member and others over there say the policy of the Export Development Corporation is to export Canadian jobs, somehow trying to suggest that

November 17, 1978

there are projects abroad that, if Canada does not agree to do them, will not get done.
By using these red herrings, and by making them a large part of his condemnation of the very responsible budget that was delivered last night, the hon. member has shown the bankruptcy of his own ideas and that he is incapable of meaningful criticism. The hon. member is filled with hopes for a Clark government. Some of us, however, were struck by the inability of himself and his colleagues to draft even their motion in opposition, with the result that we had to take valuable time to straighten up what should surely have been a simple task, and not recite again what parliament had seen fit to dispose of previously.
I would like to turn to the question of mortgage interest deductions. This is a subject that we are going to hear a great deal more about. I think there is a real misunderstanding among a lot of people as to what should constitute an equitable tax system. I was reading a comment the other day in an American paper on tax policy. The question of tax in the American system was discussed. It spoke of the "three martini lunch". I know that the hon. member for York-Simcoe is a man of abstemious habits and I certainly would not accuse him of having a three-martini lunch, although the content of his speech would seem to indicate some blurring of ideas.
The three-martini lunch, the expense account lunch, was one element in the ability of people with large incomes to treat themselves to rich meals on a daily basis and write them off against income tax in a way that citizens of poorer status cannot do. This is greatly resented by many people who hear about expense accounts. I do not suggest there are many business people in Canada who take advantage of this type of tax deduction.
The American system also provides for donations to museums or art galleries by people in very high income tax brackets. They are able to take the entire donation and write it off against their taxes. While indeed the art gallery may be the beneficiary, frequently people in the 75 per cent tax bracket are able to create for themselves a very substantial tax relief in a way that is not available to ordinary citizens. The esteem of such individuals is raised in the eyes of the community and the art gallery benefits. Nonetheless, it is a deduction from income tax revenue which must be raised in other ways from somebody else. Therefore, the burden falls on those who do not have the means to contribute to such charities.
Then there is the deduction the Americans have for municipal tax free bonds. Again, the municipalities are the beneficiaries. They get money which is invested by wealthy people in high income brackets who then get tax-free income from these tax-free municipal bonds. Nonetheless, the fact that those taxes are not received by the federal government from these wealthy citizens means that the over-all tax has to be higher. I suggest once again there is something basically inequitable about that deduction.
The United States allows for what hon. members opposite have been advocating for the last few weeks, that is, the deduction of mortgage interest and municipal taxes. Who is
The Budget-Mr. Abbott
entitled to enjoy this benefit? People obviously who have initial capital to invest in real property in homes, and people who are paying municipal taxes. What of the ederly people who have already paid their mortgages off and have spent their lives doing so? Out of their modest income they must pay the full tax without such a reduction for mortgage interest. What of the poorer people who, by necessity, remain tenants? There must be a growing number of them due to the high cost of buying a home. They must watch while those who enjoy home ownership and a larger income deduct the interest on their mortgage payments from their income. So again, what are the consequences? Some people get a benefit and others do not, and the over-all rates of taxation must be higher so that the system as a whole may raise the tax revenues needed.
The Tory idea sounds good and it sounds as though it will create a lot of new housing. The fact is, if you trace these kinds of deductions you see they are essentially inequitable. If we have this kind of inequity in a tax system where poorer people on modest incomes see people across the street enjoying rich expense account living, making handsome donations to art galleries and writing them off against their taxes, buying tax free bonds or deducting all their mortgage interest or municipal taxes, somehow there will be a massive number of people in this country who will say: "Our basic tax system is unfair, I have no respect for it, and consequently I have no respect for the government that imposes it."
I suggest it is not enough for an opposition, loyal or otherwise, to come forward with measures which would create growing inequity in our taxation system. The Minister of Finance last night produced a budget which maintained a consistent attitude toward this whole question of equity. Some commentators in their wisdom criticized it as a business budget without noting the number of measures which took away certain of the advantages business has been getting, such as the loophole provision for debentures and preferred stock being classified as equity instruments whereas they are really debt instruments. This is one area where business will have to pay more for its borrowing.
The budget as a whole leaned toward the creation of tax relief. Consumers will benefit from the reduction in the tax on manufactured goods. Also, we have built into the system the indexation of taxes so that where there is an increase in the cost of living citizens will enjoy some protection. There is also the raising of the exemption so that families pay less tax when costs are higher.
I simply wish to reiterate that while the economy is not as strong as we would wish it to be, and while there are great ills afoot in this country and in the world, I consider that the Minister of Finance has approached his very difficult task- and let no one doubt that he has on his shoulders as heavy a burden of responsibility as any minister of finance in the history of this country-with optimism, with intelligence, with courage, with prudence and with wisdom.

November 17, 1978
The Budget-Mr. Abbott
We in this country often feel that it is open season on all politicians and that they can be criticized at will. That is fair game. But I do think it is irresponsible for an opposition, which for some reason or other is now dreaming ever more positively that it will form a government, to cast such doubt upon the economy as to lower the self-esteem of the Canadian people and their standing in the eyes of the world. I believe that in the months ahead the revitalizing of the economy, the renewed growth of our industry taking advantage of the lower rate of the Canadian dollar, the increasing productivity of the workers, the increased trade opportunities and the stimulation afforded by this budget, will enable us to show that the government and the Minister of Finance have rendered Canada very effective service in the budget which has been brought down.
I do not know whether it is possible to call it five o'clock, Mr. Speaker, but if it is I would so recommend.


The Acting Speaker (Mr. Ethier):: Is it agreed we call it five o'clock?


Mr. Ellis:: I think the minister has used his time. With all due respect, perhaps I might call it five o'clock.


The Acting Speaker (Mr. Ethier):: Hon. members have heard the suggestion that we call it five o'clock. Is that agreed?


Anthony Chisholm Abbott: I was prepared to call it five o'clock but I do have one or two more comments to make and if it is not five o'clock I had better carry on.


The Acting Speaker (Mr. Ethier):: The minister still has two minutes in which to conclude his remarks. Does he have consent to conclude his remarks?


Anthony Chisholm Abbott: I presume that if I do have two minutes left I do not need the indulgence of the House to use them. I am sorry the Leader of the Opposition (Mr. Clark) has only just arrived. I had hoped he would have listened, a chastened figure, to what I had to say, but he is a busy man and will have to read my remarks. I would have liked him to be here, though. I heard him on television explaining his position on mortgage deductions and it did not seem to me he was quite clear about it. I do not know how much time he has spent reviewing the experience in the United States, but no doubt at a later stage he will want to consider whether his proposal is as responsible as he thinks it is at the present time.
Last night, when we talked about the inequity of certain people not being homeowners and thus not being in a position to take advantage of a mortgage allowance, the hon. member for York-Simcoe gave us the impression that somehow, just because some people are tenants and want to become homeowners, the problem is corrected.


The Acting Speaker (Mr. Ethier):: Order. I have to interrupt the hon. gentleman. His allotted time has expired.


John Raymond Ellis: As I indicated a while ago, Mr. Speaker, I will now call it five o'clock. 1 know the Leader of the Opposition has a very strong stomach but I doubt he could stand reading the drivel we have been hearing for the last while.


Stanley Howard Knowles: It is five o'clock anyway.


The Acting Speaker (Mr. Ethier):: It being five o'clock, the House stands adjourned until Monday at 2 p.m. pursuant to Standing Order.
At 4.59 p.m., the House adjourned, without question put, pursuant to Standing Order.

Monday, November 20, 1978