1978-03-07

ROUTINE PROCEEDINGS


Mr. Otto Jelinek (High Park-Humber Valley):: Mr. Speaker, pursuant to the provisions of Standing Order 43, I rise on a matter of urgent and pressing necessity. One of the accused killers of Emanuel Jaques, the Toronto shoeshine boy who was so brutally murdered last year, admitted to a court last Friday that if capital punishment had been in effect at the time, the boy may not have been killed. As the law now stands, these deranged individuals will more than likely once again endanger our society with their presence in just a matter of years. Therefore, for the sake of preventing such killing, I move, seconded by the hon. member for Prince George-Peace River (Mr. Oberle):
That this House reinstate forthwith capital punishment in respect of sex-related killings as well as all other first degree, premeditated murders.


Mr. Speaker:: A requirement of Standing Order 43 is that there be unanimous consent for the presentation of such a motion. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


IMPORT QUOTAS TO PROTECT FOOTWEAR MANUFACTURERS- MOTION UNDER S.O. 43
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. In view of the fact that import quotas to protect footwear manufacturers in eastern Canada are causing cowboy boot retailers in Edmonton to sing the blues, since only one Canadian manufacturer of cowboy boots exists and it cannot meet the volume or the speciality demands of the western consumer, and in view of the fact that any proper cowboy boot store must have at least 300 styles of boots, as does Mr. Porayko in Edmonton, ranging in price
from $65 to more than $600 and including 40 lines of boots crafted in ostrich, crocodile, alligator and other exotic leathers, 1 move, seconded by the hon. member for Capilano (Mr. Huntington):
That this House direct the Minister of Industry, Trade and Commerce to pull on his boots, pick up his lariat and corral the rest of the cabinet to a round-up where the problems of cowboy boot sellers and consumers will be recognized and the import restrictions loosened before the said minister and his colleagues are loosened from office by the western electorate.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


BROADCASTING
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, although I assure the House his condition is not a serious one, it so happens that my leader, the hon. member for Oshawa-Whitby (Mr. Broadbent), was taken to hospital an hour ago. It seems that as they were wheeling him out of this building, or into the hospital, his fervent request was, "Be sure that Stanley moves my 43".


Mr. MacEachen:: It had better be a good one.


Stanley Howard Knowles: So the House will recognize it is not my language. This motion has to do with the failure of the three television networks to give any coverage last night to yesterday's debate on the status of women. On behalf of the hon. member for Oshawa-Whitby, and seconded by the hon. member for Yorkton-Melville (Mr. Nystrom), I move:
That this House awards the Male Chauvinist Black Star to the three television networks but directs that the Male Chauvinist Gold Star be reserved for CBC radio which deliriously exceeded every conceivable male chauvinist expectation on the "World at Eight" this morning by ignoring important Canadian news, yet taking time to mention that Princess Anne took part in a debate in England yesterday on the subject of "A Woman's Place is in the Harem", miraculously compressing in one item both a colonial and a chauvinist attitude, truly a remarkable achievement.


Mr. Speaker:: The hon. member for Oshawa-Whitby will have to have a better ruse than that to get that kind of a motion put under the provisions of Standing Order 43.
80033-104/2

March 7, 1978


FINANCE
Mr. Leonel Beaudoin (Richmond):: Mr. Speaker, under the provisions of Standing Order 43, I ask for the unanimous consent of the House to move a motion dealing with an important matter of pressing necessity.
In reply to a question put by the Leader of the Opposition yesterday, the Minister of Finance (Mr. Chretien) stated the following:
One problem with cutting the federal sales tax is that we cannot be sure that the reduction would be passed on to the consumer.
In view of the present depression and since the Minister of Finance is undecided, I move, seconded by the hon. member for Champlain (Mr. Matte):
That the House immediately enjoin the government to issue a rebate to consumers-a compensatory discount-on consumer goods and thus stimulate the economy.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


MANPOWER
Mr. Roch La Salle (Joliette):: Mr. Speaker, pursuant to the terms of Standing Order 43, I request the unanimous consent of the House to present a motion dealing with an urgent matter of considerable importance to the students of our country.
As the funds earmarked for the Young Canada Works program will give the green light to only about 20 per cent of the projects already submitted, as it is of prime importance that students work during their holidays to earn a bit of money and help defray the cost of their studies, as it is extremely difficult for the students, in the present situation, to find summer work, and as from the very start Canadian youths have been very enthusiastic about the Young Canada Works program, I move, seconded by the hon. member for Brome-Missisquoi (Mr. Grafftey):

That this House invite the minister responsible to look into the possibility of doubling the budget for the Young Canada Works program so that a higher proportion of our students can work this coming summer.


Mr. Speaker:: Order. The House has heard the motion of the hon. member. Pursuant to the terms of Standing Order 43, the motion requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


ENVIRONMENTAL AFFAIRS
Mr. Lome Nystrom (Yorkton-Melville):: Mr. Speaker, I rise under the provisions of Standing Order 43 and ask for the unanimous consent of the House to present a motion relating to a matter of urgent and pressing necessity.
In light of a report made by a conservation agent according to which units of the Canadian army have blown dynamite charges between January 15 and 24 last in three lakes located in the riding of Pontiac, Quebec, and have thereby probably destroyed the aquatic fauna in these lakes, I move, seconded by the hon. member for Sault Ste. Marie (Mr. Symes):
That the Minister of National Defence immediately proceed to investigate this matter and, if the report is accurate, that the minister intervene to put an end to these practices which threaten the aquatic fauna of our lakes and rivers.


Mr. Speaker:: Order, please. The House has heard the hon. member's motion. Pursuant to the provisions of Standing Order 43, this motion requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


TRANSPORT
Mr. Peter P. Masniuk (Portage):: Mr. Speaker, I rise under the provisions of Standing Order 43 to propose a motion of urgent and pressing necessity. In view of the fact that on CNR's Inwood subdivision, in the Interlake area of Manitoba, there has been no train service since last December, with the consequence that farmers of the area are now being forced to haul their grain by truck, up to 60 miles in some cases, to elevators on other branch lines on which there is service, and in view of the fact that all storage areas are full and some grain is
March 7, 1978

even stored out in the open, where it will rot if it is not soon shipped, 1 move, seconded by the hon. member for Dauphin (Mr. Ritchie):
That this House direct the minister responsible for the Canadian Wheat Board to act immediately to restore grain quotas and grain shipping service to the elevators at Fisher Branch, Manitoba, on CNR's Inwood subdivision, and in view of the fact that this line is slated for probable abandonment in 1979, that the government immediately establish the Prairie Rail Authority so that the off-line loading experiment can be instituted at Fisher Branch, as recommended by the Hall commission, and the farmers of the area can continue to deliver their grain to the elevators at Fisher Branch with the assurance that it will be shipped out of the Interlake via commercial truck to CPR's Arborg rail line, financially assisted and co-ordinated by the federal government through the Prairie Rail Authority.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.



ORAL QUESTION PERIOD

['The\ninformation requested in this question was provided in answer to question No. 2,758 in the second session of the 30th Parliament and was published in Hansard No. 163 page 7629 dated 13 July, 1977, and to question No. 893 of this session published in Hansard No. 45 page 2115 dated 23 January, 1978. No changes have occurred since then.\nNote: There are no artillery depots in the Canadian Armed Forces. Artillery equipment and supplies are held in supply depots and are overhauled either in workshops or by contracts.']
Mr. Speaker:: The hon. Leader of the Oppposition.


Mr. Joe Clark (Leader of the Opposition):: Mr. Speaker, my question had been for the Minister of Finance, whom 1 understand is due in the House for the question period. I wonder if 1 could reserve my right to ask the question when he arrives. I ask that Your Honour recognize, in my place, the hon. member for Perth-Wilmot.



Mr. Bill Jarvis (Perth-Wilmot):: Mr. Speaker, yesterday I put a question to the Solicitor General regarding a news story which appeared in the Toronto Sun over the weekend respecting subversive activities in Canada. In reply, the Solicitor General asked for more specific references to that story. Today, there appeared in the same newspaper a list of 16 individual instances of subversive activity directed against our country. My question to the Solicitor General is this: Are those specific allegations, to use the hon. gentleman's phrase, accurate in all material particulars?


Hon.   J.-J. Blais@Solicitor General: I did read the article to which the hon. gentleman has referred. I have also been advised there is a further article in today's edition. It is not the practice of the government to comment on anything of that nature.
Oral Questions


Mr. Diefenbaker:: There are none so blind as those who will not see.


CUBAN INVOLVEMENT IN SMUGGLING ARMS INTO CANADA
William Herbert Jarvis: We shall soon have to allot a day to questions taken as notice by the Solicitor General. With respect to the shipment of arms into Canada, allegedly by the Cuban government, the Solicitor General indicated yesterday that he would take a question on this subject as notice. Were the Cubans instrumental in importing these arms into Canada, and did any of those arms reach the hands of subversives operating in our country?


Hon.   J.-J. Blais@Solicitor General: Mr. Speaker, I took that question as notice because I wanted to familiarize myself with its nature. As I see it, the question falls directly within the category of the previous question, and this being so 1 shall not comment on it.


William Herbert Jarvis: We shall just keep trying, Mr. Speaker. May I ask the Solicitor General a question which has absolutely nothing to do with national security, in the hope it may alleviate his timidity? Is the hon. gentleman in a position to advise the House whether he continues to approve the government's policy of supporting financially and politically the present government of Cuba at the same time as that government is conducting activities subversive to the integrity and national security of our country?


Mr. Blais:: 1 am amazed that the hon. gentleman would pose a question in those terms.


William Herbert Jarvis: You amaze easily. Just tell us.


Jean-Jacques Blais: There is no indication that the government does other than what is announced from time to time by the Secretary of State for External Affairs in relation to Cuba.


THE CANADIAN ECONOMY
Charles Joseph Clark: Mr. Speaker, my question is to the Minister of Finance, who is now in the chamber. It is prompted by two circumstances: one is the fact that the Canadian dollar has now gone through the barrier of 89 cents U.S.; the second is the meeting this week between the Minister of Finance and the Secretary of the U.S. Treasury, Mr. Blumenthal. Undoubtedly, the minister has made preparations for this meeting, and undoubtedly he is aware of reports in Washington that the United States is considering reimposing the interest equalization tax which would inhibit the flow of funds into Canada and cause a further decline in the value of our dollar.

March 7, 1978
Oral Questions
Is it the hon. gentleman's intention to raise this matter in discussions with Mr. Blumenthal, and is it his intention to request from Mr. Blumenthal an assurance that if the United States does take the course to which I have referred, Canada will be exempt?


Hon. Jean Chretien (Minister of Finance):: 1 am aware of those rumours. This is one of the matters I intend to discuss with Mr. Blumenthal and Mr. Schultze when they are in Ottawa.


Charles Joseph Clark: I hope the minister will answer the other part of my question: whether or not it is the policy of the government to seek a commitment that Canada will be spared the impact of that course should it be followed by the United States.
In light of further rumours circulating in Washington to the effect that there will be a U.S. surtax on imports, has the government of Canada looked at the impact upon this country of an action like that by the United States, and will the Minister of Finance be discussing in detail-I emphasize, in detail-the potential impact on Canada of such an action, with Mr. Blumenthal and Mr. Schultze later this week?


Joseph Jacques Jean Chrétien: Mr. Speaker, the Leader of the Opposition is dealing with hypothetical questions. These rumours are not decisions of the administration. I will discuss many matters which are of concern to the Canadian government, but I do not think those rumours will be put into legislation in the United States.


Charles Joseph Clark: I see that the minister is as well prepared as usual and is showing as much foresight as he usually does in not taking advantage of this opportunity of a high level meeting with U.S. Treasury officials to express the very real concerns Canada would have in the event that these things did occur.


Some hon. Members:: Hear, hear!


VALUE OF CANADIAN DOLLAR-PROSPECTUS TO BE FILED WITH U.S. SECURITIES AND EXCHANGE COMMISSION
Charles Joseph Clark: Mr. Speaker, I want to deal with another matter relating to reliance upon the relationship of Canada with another agency of the United States, namely, the Securities and Exchange Commission, to which the government of Canada is having unusual recourse in an attempt to bolster our dollar. As the minister has admitted, he will have to file a prospectus with the SEC. I asked him the other day-once again, he did not answer-whether he would be prepared to make available to the House of Commons information on plans for the Canadian economy and plans of this government relative to the Candian dollar which he will be making available to the SEC. In other words, will he give parliament and Canada the same information he is going to give the SEC and the United States, and will he give that information to us before he goes to that foreign agency?


Joseph Jacques Jean Chrétien: Mr. Speaker, 1 do not know of any request with regard to this prospectus which we will be filing which will force us to give any more information than is already available to the House of Commons.


VALUE OF CANADIAN DOLLAR-INTERNATIONAL INVESTMENT IN CANADA
Mr. Sinclair Stevens (York-Simcoe):: Mr. Speaker, my question is to the Minister of Finance. Reports emanating from money markets around the world indicate that while the Canadian government has been attempting to defend the dollar, it has been buffeted by certain international investors. One particular investor from Kuwait has dumped hundreds of millions of dollars against the foreign exchange reserves of this country. Would the minister indicate whether these reports are in fact true and, if so, how did we become so exposed to this type of relatively short-term obligation?


Joseph Jacques Jean Chrétien: Mr. Speaker, the information related by the hon. member has no basis in fact. Last month we had some problems with Canadian reserves, and that is why, in order to make sure the Canadian dollar floated in the normal manner, some of our reserves were lost. However, the type of rumours spread by the hon. member are not factual or useful in the present circumstances.


Sinclair McKnight Stevens: As we have lost another $120 million of our United States reserves so far in the month of March, and as our wobbly dollar-which is now hovering in the 88-cent range-is due in part to the fall in our credit rating as far as international investors are concerned, would the minister indicate if he is aware that today, in Toronto, loan companies such as I AC and GMAC are able to borrow at a lower rate of interest than the government of Canada as far as treasury bills are concerned? If the minister is aware of this, does he expect it to continue?


Joseph Jacques Jean Chrétien: Mr. Speaker, 1 think the hon. member likes to spread all kinds of rumours and to create false impressions. The Canadian government has a very good credit rating and the real problem is that the number of people who want to lend money to Canada exceeds our borrowing needs.


Sinclair McKnight Stevens: Mr. Speaker, the supplementary question I just put to the minister is no rumour. In their last report, Wood Gundy pointed out that this may happen, and the report states that for some considerable period of time Canada's credit rating may in fact be lower than commercial credit rating in Toronto. As I have indicated, as of today this has occurred, with Canada having to pay 7.33 per cent on 90-day money, compared with GMAC and certain other companies having to pay 7.25 per cent. Is the minister aware of this fact and, if so, when will he be making a proper statement to this
March 7, 1978

House concerning the government's present credit standing and our foreign exchange reserves problems?


Joseph Jacques Jean Chrétien: Mr. Speaker, I have given information to the House every day. In the last two weeks, I was asked questions every single day and I was always glad to provide every information I had. When my estimates are considered in committee, 1 will be happy to answer all the questions of the hon. member, even if the same keep cropping up month after month.


STATUS OF WOMEN
Stanley Howard Knowles: Mr. Speaker, in light of yesterday's debate on the status of women, 1 should like to put a question to the Minister of Employment and Immigration. Has the minister received the report of the Advisory Council on the Status of Women which, among other things, indicates that women in Canada Manpower training programs are over-represented in language and upgrading courses and under-represented in apprenticeship and skill training.
The report also notes that sex typing is still practised by Canada Manpower, so that women are under-represented in courses for managerial and administrative occupations. Can the minister say whether he has given consideration to these elements in the report? What steps does he plan to take to correct these two shortcomings?


Hon. Bud Cullen (Minister of Employment and Immigration):: Mr. Speaker, I have not seen that particular report. I can assure the hon. member, given the respect we have for that particular group, that it will be studied very, very carefully by my department.


Some hon. Members:: Oh, oh!


Jack Sydney George (Bud) Cullen: 1 see the opposition does not feel we should be studying it; they just make unkind cuts and remarks.


Mr. Baker (Grenville-Carleton):: Let us see something being done.


Jack Sydney George (Bud) Cullen: In fact, we have done a tremendous amount. Certainly, we have spent more than five minutes, as the hon. Leader of the Opposition did, speaking about the rights of women.


Miss MacDonald:: Where was the Prime Minister
yesterday?
Oral Questions


David Samuel Horne MacDonald: Where was the hon. minister yesterday?


GOVERNMENT'S COMMITMENT TO EQUAL OPPORTUNITY FOR WOMEN
Stanley Howard Knowles: Mr. Speaker, I trust the minister will give those matters serious study and that he will report to the House on the results of that study within a reasonable period of time. I wanted to put a question to the minister responsible for the status of women, which arises out of the same report. In his absence, I will direct my question to either the Deputy Prime Minister and President of Privy Council or to the President of the Treasury Board.
In view of the criticism in the report of the Advisory Council on the Status of Women to the effect that the government's performance with regard to appointing qualified women to the boards of federal Crown corporations, to commissions, and so on, is unsatisfactory, may I ask what new policies the government will be adopting to change what the Advisory Council calls inaction on the question of the government's commitment to equal opportunity for women in Canada?


Hon. Robert K. Andras (President of the Treasury Board):: Mr. Speaker, I will take the hon. member's representation as notice and see what I can do to give him a satisfactory answer later.


Stanley Howard Knowles: Mr. Speaker, I am just wondering, has no minister bothered to read this important report? Are the ministers not interested?


Some hon. Members:: Oh, oh!

[ Translation]


LABOUR RELATIONS
Mr. Adrien Lambert (Bellechasse):: Mr. Speaker, I would like to put a question to the Minister of Labour.
I am sorry to disturb the minister in his conversation but considering that the work has been interrupted for several months at La Presse in Montreal, at Montreal Matin and at Le Soleil in Quebec City, although those newspapers do not always publish what is going on in the House of Commons with regard to the work of the Social Credit Party of Canada and even if this matter falls under provincial jurisdiction, it is nevertheless a matter of justice. So 1 would ask the Minister of Labour if he had any discussions with his Quebec counterpart with a view to finding a solution to that serious problem which has been lasting for several months. If so, could he tell the House whether or not he expects these strikes to come to a conclusion in the near future?

March 7, 1978
Oral Questions


Hon. John C. Munro (Minister of Labour):: Mr. Speaker, the hon. member has already answered his own question. My Quebec colleague, the minister of labour for Quebec, indicated that he does not like or want federal intrusion into areas of purely Quebec jurisdiction. All the work stoppages which the hon. member just mentioned are in his jurisdiction and any intervention on my part would be highly resented.


Joseph Adrien Henri Lambert: Mr. Speaker, taking into account the answer of the minister, we must nevertheless consider the situation of the people involved in that strike. Would the hon. gentleman be prepared to offer his service as a mediator to find a solution to this serious problem so that we do not let the economic situation of these people deteriorate since they have the right to live and to have the means to do so?


John Carr Munro: Any request for mediation services from the federal government in this dispute would be an abdication of responsibility by the province of Quebec in an area of its exclusive jurisdiction. That being so, I think it is highly unlikely that any such request would be made.


NATIONAL SECURITY
Otto John Jelinek: My question supplementary to that asked by my colleague, the hon. member for Perth-Wilmot, is directed to the Solicitor General. It refers to reports in the press reputedly emanating from senior security service forces. They state that internal security in this country is so lax that Soviet agents use Canada as a training ground for much tougher assignments in the United States and Great Britain.
In light of this assessment of our internal security situation by experts in our own security service and the KGB as well, will the Solicitor General tell the House whether he will now increase the resources available to the counterespionage work of the security service and, at the same time, take a far tougher position with regard to screening procedures for foreign diplomats operating in Canada under false pretences?


Hon.   J.-J. Blais@Solicitor General: Mr. Speaker, may I say in reply to the hon. gentleman that I think the expulsion of the 13 Russian operatives less than a month ago was an indication of the efficacious service that is being provided in terms of our national security. With reference to the allegations made by the hon. gentleman, I have no comment.


Otto John Jelinek: The action which the minister took some weeks ago regarding the 13 diplomats was just the tip of the iceberg.

The minister himself knows that the RCMP are very well aware of KGB individuals operating in Canada under false pretences, posing as diplomats. I should like to know whether the government will at last change its policy and take a tougher stand in its screening procedures, as well as in allowing fewer passes for travelling outside the capital region by these individuals who are known to the RCMP as KGB agents. Will the minister change his position, or not?


Jean-Jacques Blais: Mr. Speaker, that question was sufficiently addressed by the Secretary of State for External Affairs when a question of like nature was put by the hon. member following the expulsion of the 13 Russian operatives.


PRIME MINISTER'S VISIT TO CUBA-KNOWLEDGE OF ARMS SMUGGLING
Mr. F. Oberle (Prince George-Peace River):: Mr. Speaker, my question is supplementary to that of that of the hon. member for Perth-Wilmot, and it relates in particular to the answer given by the Solicitor General in respect of the government's relationship with the republic of Cuba. When the Prime Minister visited Cuba, giving international legitimacy to the regime there, he said that Cuba "is a model that will be followed by other developing countries". He went on to proclaim: "Long live prime minister commander Fidel Castro; long live the friendship of Cuba and Canada".
I should like to ask the Solicitor General whether the Prime Minister, before he left our country to visit Cuba, was briefed about the arms shipments to help subversives in our country, whether the Prime Minister was aware at the time he made these statements of the subversive support in our country, and what has he done about it?


Hon.   J.-J. Blais@Solicitor General: Mr. Speaker, 1 am sure the hon. gentleman could have asked those questions of the right hon. Prime Minister at the time he returned from his visit to Cuba. Undoubtedly, questions of such an inflammatory nature must have been put to the Prime Minister by the hon. member and some of his colleagues.


Frank Oberle: Whether or not these statements are inflammatory, the fact is-and the Solicitor General confirmed the reports in the press in his letter to the hon. member for Leeds-that there were arms shipments to Canada from Cuba in support of subversive elements in our country, and that this is a very serious threat to our national security. I should like to ask the hon. gentleman whether, in addition to the shipments that have arrived here from Cuba, other nations have been identified as carrying on similar activities. Could the Solicitor General enlighten us as to whether that matter is under investigation?


Jean-Jacques Blais: Yesterday I replied to a question of similar nature from the hon. member for Halton-Wentworth. Furthermore, 1 have never confirmed any allegation of that nature in any correspondence that I have ever had with the hon. member for Leeds.
March 7, 1978


AIR TRANSPORT
Mr. Steven E. Paproski (Edmonton Centre):: Mr. Speaker, my question is for the Minister of Transport. 1 would like to know the quid pro quo for the two DC-8s which we leased to Cuba two years ago. Have we received the DC-8s back, or what exactly did they do with them?


Hon. Otto E. Lang (Minister of Transport):: The hon. member for Edmonton Centre is using "we" in the royal fashion, I suppose. The fact is that Air Canada entered into a commercial arrangement with Cuba. They did so on the basis of those aircraft being no longer required in their fleet at that time. It was a completely commercial transaction between Air Canada and Cuba.


Steve Eugene Paproski: Does the minister know whether the planes were used to transport troops to Angola or to do any other military work for the Cuban government?


Otto Emil Lang: Mr. Speaker, I would have to ask Air Canada whether they have any such information.


SMOKE DETECTION DEVICES-EFFECT OF RADIOACTIVE MATERIAL THEREIN
Hon. Martin O'Connell (Scarborough East):: Mr. Speaker, my question is for the Minister of Energy, Mines and Resources. In view of the enormous benefits to life and property of smoke detection devices installed in homes, and in view of the fact that some smoke detectors use small amounts of radioactive material, with the result that their manufacture, use and, in particular, their disposal are controlled by the Atomic Energy Control Board of Canada, will the minister review the adequacy of the inspection and disposal procedures followed in Canada and particularly the information and warning notices available to the public concerning this type of smoke detector?


Hon. Alastair Gillespie (Minister of Energy, Mines and Resources):: Mr. Speaker, I should like to thank the hon. member for notice of this technical question. I shall be very pleased to review the disposal and labelling arrangements with AECB and with my colleagues, particularly the Minister of Consumer and Corporate Affairs.
At the same time, I should like to reassure the hon. member that I have checked into this question and have been assured that there is no threat to health and safety and that the radioactivity present in these smoke detectors is of minute proportions.
Oral Questions IMMIGRATION


ACCEPTANCE BY CANADA OF U.S. CITIZENS FOR CANADIAN JOBS
Lorne Edmund Nystrom: Mr. Speaker, my question is for the Minister of Employment and Immigration. Yesterday, the minister announced that a U.S. citizen, R. Sherrell, was granted permission to enter Canada to become president of the Insurance Corporation of British Columbia, with an annual salary of $80,000 a year. The minister was quoted in the press as saying:
-the fact remains that an adequate search in Canada was not made and there is evidence that at least one qualified Canadian was available.
I should like to ask, if this was indeed the case, why did the minister not take his own advice, and why did he permit a U.S. citizen to take this job when, obviously, there are qualified Canadians available?


Jack Sydney George (Bud) Cullen: Mr. Speaker, first and foremost, 1 think I should point out that the Price Waterhouse Company, who usually do an excellent job in this area, flubbed in this particular case and did not contact our Manpower and Immigration offices. It was not until the day before we heard that an announcement was to be made that we contacted cabinet minister for the province of British Columbia and indicated the difficulties involved, that we had not been contacted, did not know whether an adequate search had been made, and wanted to be satisfied that that had taken place.
On the basis of evidence that we had, we were satisfied that an adequate search had not been made, so we refused to grant the necessary points to Mr. Sherrell-who, incidentally, is the innocent party in this situation. Following that, I met with the selection committee of ICBC and went through, with them and representatives from Price Waterhouse, the number of candidates they had contacted across Canada, some 274 or 275. I was satisfied that they had not made an adequate search. They had not done any advertising east of British Columbia other than one ad in the Globe and Mail.
Having been given all this information and the present dilemma that the company finds itself in, namely, with $400 million in premiums and the necessity of finding a person for this particular job, I think the fact that they appointed a Canadian as chairman of the board is a direct result of the intervention we made. I was satisfied it was an appropriate time to exercise discretion and allow Mr. Sherrell to take this particular job and, at the same time, put provincial authorities on notice that in future they will have to go through the procedures or they will be more embarrassed than they have been in this case.


Lorne Edmund Nystrom: A supplementary question, Mr. Speaker. It is my understanding that some 90,000 non-residents were working in this country last year, mainly white-collar, professional workers. In light of the high unemployment for this group as well as other Canadians, is the minister about to tighten up the

March 7, 1978
Oral Questions
regulations so that the first priority will go to Canadians who need these jobs?


Jack Sydney George (Bud) Cullen: Very definitely, Mr. Speaker, but I hope 1 will have the backing of the opposition parties when we take this particular stance, and will not have constant representations to the effect that an exception can be made in particular instances. We have indicated it is "Canadians first". It does not matter whether we are talking about offshore labour, blue-or white-collar workers-we do take that particular stance. It is quite often necessary to bring people from outside our boundaries in order to maintain jobs in Canada. There was an instance in my own riding where 600 Americans were brought in to sustain a work force of 5,500 Canadians.


PUBLIC SERVICE
Walter David Baker: Mr. Speaker, I have a question for the President of the Treasury Board which arises from a report in today's Ottawa Journal that the government will publish a study this Thursday suggesting limits are necessary on cost of living increases for retired public servants. Could the minister confirm or deny the report? If the answer to the question is yes, will he be making a statement at the time he tables the document in the House?


Robert Knight Andras: Mr. Speaker, without confirming the specific suggestion in the apparent news article, I can tell the hon. member and members of the House that I intend to make a statement in the House on the subject of public service pensions before the end of this week.


Walter David Baker: A supplementary question, Mr. Speaker, dealing with the statement itself. The report indicates that an official of the Prime Minister's office says it will be accompanied by recommendations by the government, whereas in another part of the article the author of the Tomenson-Alexander study says that the report "does not contain recommendations as such" but, rather, it is a working paper. Could the minister state which of those representations is true?


Robert Knight Andras: Mr. Speaker, I think they are both inclined to be correct. The Tomenson-Alexander report is a working paper and advice to the government, which we are going to make public-an actuarial study-but there will also be a government statement accompanying the tabling of that report at the appropriate time this week.


EXTERNAL AFFAIRS
Mr. Donald W. Munro (Esquimalt-Saanich):: Mr. Speaker, my question is for the Secretary of State for External Affairs, who has so often spoken in glowing terms in favour of negotiated settlements especially when Canada has been one of the parties. Now that there has been a negotiated settlement in Rhodesia, will the minister tell the House how he has made Canada's position known in favour of negotiated settlements rather than settlements through arms, terrorism and murder?


Hon. Donald C. Jamieson (Secretary of State for External Affairs):: Mr. Speaker, the hon. member is quite right; I have expressed my support for negotiated settlements. They only work, however, when all the parties involved are also involved in the negotiations. In that sense, therefore, the message that I have conveyed, and that I am sure will carry the support of all parties in the House, is that 1 hope this beginning toward a settlement in Rhodesia will be extended. I hope that Mr. Nkomo, Mr. Mugabe and the others concerned can be brought into the negotiation process. I am equally urging that group to accept the invitation to become involved in the negotiating process so that in every sense it can be a negotiated settlement.


Donald W. Munro: A supplementary question, Mr. Speaker. In specific terms, would the minister say whether instructions to that effect have been sent to our delegation at the Security Council? Are they working to ensure that it is a negotiated settlement which rules in Rhodesia, and not one of force of arms?


Donald Campbell Jamieson: Mr. Speaker, in the way in which that question was phrased, 1 do not think it would be necessary to send new instructions. That has always been our position. The situation there is changing daily and there is a whole series of communications back and forth. At the moment, I think the advice of my colleague the British foreign minister is wise; that is, that we should not move too quickly or in any precipitate way at the moment, but that we should allow the matter an opportunity to settle and see what all the parties are doing and how they are going to react.
1 emphasize again that it is our judgment that a settlement along the lines the hon. member has outlined, namely, one negotiated as opposed to one involving confrontation and hostility, is clearly the desired option. We will be using all the influence at our disposal to try to bring about that goal.


AGRICULTURE
Mr. Eymard Corbin (Madawaska-Victoria):: Mr. Speaker, my question is for the Minister of Agriculture and it is about potatoes. In view of the fact that potato producers in eastern Canada have been since last summer supplying fresh produce
March 7, 1978

to the kitchens, tables and processing plants of this area of the nation at prices substantially below the cost of production, and because no apparent improvement in present market trends is foreseeable, will the minister-the farmer's best friend-consider an early initiative to alleviate the grave uneasiness and critical financial pressures now experienced by hundreds of family farm units which are more depressed than the markets?


Hon. E. F. Whelan (Minister of Agriculture):: Mr. Speaker,
I am very much aware of the plight that some potato producers in Canada are suffering, all the way from $4 per hundredweight in the rich province of Alberta to $1.75 per hundredweight in the poor province of New Brunswick. We are concerned about this and are monitoring it. We will consider stabilization. It may be of interest to the hon. member, if he is not aware of it, that they had a vote to form some kind of marketing authority or board in that area, and it carried by a huge majority.


TRANSPORT
David Samuel Horne MacDonald: Mr. Speaker, 1 have a supplementary question for the Minister of Transport with respect to the very grave situation that exists in terms of adequate transportation for the movement of potatoes from the eastern provinces to central Canadian markets. Since this matter has been under consideration by the minister and a special task force of his department for well over a year, and since its initial report on the recommendation for new units was made as long ago as last summer, can the minister indicate why it has taken so long to come to this crucial decision?
In addition to the recommendation made last summer for new cars, is consideration being given to purchasing, on an interim basis at least, the 300 cars available from Hanover Trust, in the United States, at roughly a quarter of the cost of purchasing new cars now on order or the 700 cars that are presently available for shipment this shipping season?


Otto Emil Lang: Mr. Speaker, as the hon. member knows, the report last summer indicated there would be adequate cars in the fleet for the movement of potatoes during this winter period, but that a problem would have to be faced before the shipment season next year. We have been addressing that question, including the issue of where we can get cars most effectively which would be most useful for the movement of potatoes. We are very close to results in that regard and an announcement may be made within a couple of weeks.
In the meantime, of course, we have been working very effectively with the potato producers, and in many other ways, to ensure better movement of potatoes. In that regard we have
Oral Questions
greatly improved the handling facilities at some of our main ports.


DATE AND AMOUNT OF PROPOSED TARIFF CUTS
Hon. George Hees (Prince Edward-Hastings):: Mr. Speaker, I have a question for the Minister of Industry, Trade and Commerce. In answer to a question asked in this House a week ago today, the minister said:
Respecting the Swiss formula of a 40 per cent cut, this represents merely a weighted average. In some instances one might grant a higher percentage, and in others a lower percentage.
I ask the minister when he intends to advise the manufacturing industry of Canada which tariffs will be cut by 40 per cent, which will be cut by less than 40 per cent, and which will be cut by more than 40 per cent, so that plant managers across this country will be able to calculate the effect this increased competition will have on the number of people they will be able to employ in future.
Hon. Jack H. Horner (Minister of Industry, Trade and
Commerce): Mr. Speaker, I think it is the hope of most of the negotiators at Geneva to reach an agreement on the exact cuts by some time in the middle of this year-early July.


George Harris Hees: Mr. Speaker, is the minister not aware of the fact that the give-away program which the government has been indulging in during the past few weeks regarding tariff cuts on manufactured articles, the products that produce the jobs, is going to cost Canadians a very large number of jobs in the future? Can he assure the House now that these large cuts on manufactured articles are not going to be made?


Mr. Horner:: Mr. Speaker, it is the intention of the government to set up an adjustment panel to assist industry in adjusting to the cuts. I might say that the average tariff on items coming into Canada now in the industrial sector is about 14 per cent. A 40 per cent cut on 14 per cent would be in the neighbourhood of five percentage points, just about half the advantage Canadian manufacturers now receive from the 90-cent dollar.


George Harris Hees: In other words, the minister is telling the Canadian manufacturing industry that they have never had it so good and they should be happy with the program the government is indulging in at their expense at the present time?


John (Jack) Henry Horner: No, Mr. Speaker. What I am telling the opposition is that they should appreciate the 90-cent dollar, and what an asset it is to Canadian manufacturers.


An hon. Member:: Jack, you should go into economics.


An hon. Member:: Tell it to the British.

March 7, 1978
Oral Questions ENERGY


PROPOSED HEAVY OIL PLANT AT LLOYDMINSTER, SASK.- PROGRESS REPORT
Mr. Don Mazankowski (Vegreville):: Mr. Speaker, my question is directed to the Minister of Energy, Mines and Resources. Could the minister advise the House what progress has been made, if any, since the federal-provincial conference, toward reaching agreement to build a $700 million heavy oil operating facility in the Lloydminster area as proposed by Husky Oil Company of Canada? If there has not been any progress, can he indicate why? Perhaps he might be able to outline what obstacles are now standing in the way of reaching agreement.


Alastair William Gillespie: Mr. Speaker, there have been a number of discussions with Husky Oil and with other potential partners in this massive project. There have been discussions by those partners with the federal government and with the Saskatchewan government. There has been considerable understanding of the need to provide sufficient feedstock for an upgrading facility. While the Husky production might be significant in the first half of the first unit, additional feedstock is going to be needed. That matter has been under discussion with the Saskatchewan government and discussions are in an active state at the moment.


Donald Frank Mazankowski: Mr. Speaker, since the realization of such a very expensive and high-risk project will require appropriate incentives from a tax and royalty point of view, can the minister indicate to the House the stage of those negotiations at the present time? When can we expect a definitive tax and incentives package to be advanced by the federal government ? Also, could he advise the House of the role he expects the Crown corporation, Petro-Can, to play in the development of this project?


Alastair William Gillespie: Mr. Speaker, the hon. member is quite right when he says royalty rates will be quite important. Of course they are, and that question is under discussion right now. There has been a substantial meeting of the minds between the government of Saskatchewan and the federal government with respect to federal tax incentives that will be needed. I understand the Saskatchewan government is not at the present time in a position to outline what its royalty arrangements might be. I am told they are in the process of drafting regulations with respect to new legislation which was passed recently, so that one might look forward to a statement on the royalty regime from the Saskatchewan government in the near future.
On the question of Petro-Canada and the role it will play in such a major undertaking, I would expect it to be significant. I would expect, as well, that there might be a Saskatchewan government Crown corporation involved in addition to a number of significant private sector partners.


POST OFFICE
Mr. Bruce Halliday (Oxford):: Mr. Speaker, my question is to the Postmaster General. In view of the fine record the Postmaster General is reported to have had, as mayor of Quebec City, in being able to avoid strikes, 1 would ask if he can relieve some of the anxieties of Canadians and indicate to the House the status of negotiations between the Canadian Union of Postal Workers and Post Office management; and does he expect to be able to maintain his record and avoid a strike in the near future?
[ Translation]


Hon. J.-Gilles Lamontagne (Postmaster General):: Mr. Speaker, first I would like to point out that everything is done to try to meet with all concerned people to examine the possibility of negotiations with postal workers.

I think everything is being done to avoid a strike. I can tell you, sir, that if we have a strike at this moment, it would not be our responsibility. Everything, as far as management is concerned, is being done to avoid it, as well as meetings with the union.


Charles Joseph Clark: Nothing is your responsibility.


Mr. Lamontagne:: We are ready to do everything we can to avoid a strike, but we will not abdicate our responsibility as management.


Bruce Halliday: Mr. Speaker, a further question to the Postmaster General. Now that he has had several days to consider the request of his colleague, the hon. member for Vancouver-Kingsway, by way of a question addressed to the Prime Minister recommending that a parliamentary committee be established consisting of members from all four parties, could the Postmaster General give us his considered opinion as to the validity of the request of the hon. member for Vancouver-Kingsway?
[ Translation]


Maurice Lamontagne: Given the present situation, Mr. Speaker, I believe that an interparliamentary committee is not absolutely necessary, considering that we already have all the necessary instruments to settle the dispute and that all necessary efforts are made to try to find solutions. We all know very well the postal problems-mechanization and labour-management relations. I feel that both these problems can very well be examined by our department and our management, and I believe we can find the solution to these problems. If not, I will be very happy to agree to that request.
March 7, 1978


EXTERNAL AFFAIRS
[Stage Direction]
Oral Questions

Mr. Jack Murta (Lisgar):: Mr. Speaker, I would like to direct a question to the Secretary of State for External Affairs. As the minister knows, his department has been investigating the mysterious death of a Manitoba-born RCMP constable, Lonnie Neely, while holidaying in Mexico. Are the Mexican authorities co-operating with Mr. Ken Burke, first, secretary to the Canadian ambassador in Mexico, and could the minister inform the House of the type of investigation his department is conducting? Also, has the minister received any results from Mexico concerning the investigation?


Donald Campbell Jamieson: Mr. Speaker, I will try to be succinct and give the hon. member the pertinent details. The department, through our representative in Mexico, concluded that the first findings of the local police were inadequate and succeeded in having the investigation reopened. As a result of the reopening of the investigation, the police in Mexico have invited the RCMP to participate, and representatives of the force were sent to Mexico. I would assume they are continuing at this moment to participate in the investigation.
In that context, I can answer the hon. member's question and say the investigation is proceeding, one can only assume in a satisfactory manner. The press reports give us more detail, because I have not seen any official report on the investigation. It is fair to say there was a conclusion on the part of the representative from our embassy that the original investigation had not been adequate, and we therefore pressed for and succeeded in having it reopened.


INFORMATION OBTAINED BY SOLICITOR GENERAL
Jack Burnett Murta: Mr. Speaker, so that we have all the information available, I would like to direct my supplementary question to the Solicitor General. 1 would ask, since the RCMP are involved in the investigation at the present time in Mexico, if he can inform the House whether he has any information in addition to that just given to the House by the Secretary of State for External Affairs.


Hon.   J.-J. Blais@Solicitor General: No, Mr. Speaker. I simply reiterate that the RCMP is receiving co-operation from External Affairs and from the local authorities. We are interested in reaching a final conclusion in this instance, and the representations the hon. member may wish to make will be provided to the Mexican authorities.


OIL DEFICIT-EFFECT ON VALUE OF CANADIAN DOLLAR
Mr. Paul E. McRae (Fort William):: Mr. Speaker, my question is for the Minister of Energy, Mines and Resources. The major factor in the weakness of the American dollar is a very large oil deficit of $45 billion last year, which will go up to about $100 billion by the end of the next decade. Given our own problems in this direction, and estimates that our deficit could rise to about $6 billion by about 1985, what major steps are being taken to avoid that kind of deficit which would give the Canadian dollar a lower value on world markets?


Alastair William Gillespie: Mr. Speaker, I do not have time to go through all of them. Some of those raised by the hon. member for Vegre-ville are very important. The heavy oils of Saskatchewan, the tar sands of Alberta and the heavy oils of Alberta can have a very major effect in replacing our depleting conventional oil reserves. The extension of the natural gas pipeline from the Arctic to the Atlantic Ocean could have a very significant effect in backing out foreign oil imports.
The other major projects are more in the hydro-electric area in the Maritimes, an area which is very dependent on foreign oil and one which will be dependent upon foreign oil for electrical generation unless we are able to find resources such as tidal power and the project on Gull Island.


MANPOWER
Roch La Salle: Mr. Speaker, my question is directed to the Minister of Employment and Immigration. According to my own information, I would like to tell the minister that I feel that it will be clearly impossible to carry out 75 per cent of the projects submitted under the Young Canada Works program because funds are far from sufficient. Considering the importance for students, and I think the minister agrees on this, to obtain a summer job, can the minister tell the House whether he is prepared to study the possibility of increasing funds considerably to enable students to find a job this summer?


Jack Sydney George (Bud) Cullen: Mr. Speaker, as I said yesterday or last week, we certainly have had quite a lot of success with our Young Canada Works program. Now, we have to examine the situation. I think that the hon. member's figures are not quite accurate. So we shall have to study them.

March 7, 1978
Order Paper Questions


PRIVILEGE
Mr. Speaker:: Yesterday the hon. member for Yukon (Mr. Nielsen) raised a question of privilege which is regarded by members on all sides of the House as touching a very important and fundamental matter concerning the rights of members, their immunities, and the resolution of those in terms of the Official Secrets Act.
Some consideration is being given to having that question examined by the Rights and Immunities Committee, which is not reconstituted. As a preliminary step, that committee will have to be reconstituted and then consulted to determine two things. First, it will have to determine whether it is disposed to examine the matter within roughly the terms of reference proposed by the hon. member for Yukon, and, second, the format of those discussions or examination, because the work of that committee in the past has very much been a study of problems with an effort to come to some consensus in the form of a recommendation to the House on a particular matter. That was done in the matter of questions concerning subjects that are before the courts.
If that is to be the basis of the study of this committee, which is yet to be determined, it will be possible for me to continue to preside over it. On the other hand, if it is desired that witnesses be called before the committee and that a more formal type of hearing be entered into, it will be difficult for me to continue to preside.
Therefore, two questions have to be resolved. The first is whether the Rights and Immunities Committee, having been reconstituted, is prepared to study it and try to report back in a short space of time and, second, the format of examination of it. Discussions are taking place in the usual way as to the reconstitution of that committee and the resolution of those matters.


Mr. Erik Nielsen (Yukon):: Mr. Speaker, I agree fully with what you have said. I only wish to emphasize that it is imperative, in my view, that the reconstitution of the committee should proceed at once, and perhaps consultation with the House leaders, as to the terms of reference that should be referred to that committee so that there is no delay in the committee seizing itself with the problem that I raised.


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. Yvon Pinard (Parliamentary Secretary to President of Privy Council):: Mr. Speaker, the following questions will be answered today: 257, 944, 1,025, 1,147, 1,224, 1,240 and 1,291.

I ask, Mr. Speaker, that the remaining questions be allowed to stand.
[ Text]


Mr. Herbert: 1.	Are any departmental offices tentatively scheduled for relocations in the Place Guy Favreau Project in Montreal, and, if so, which offices and from which departments?
2.	Where are the personnel presently located and approximately how many are in each location?
3.	What are the sizes of the premises presently occupied and are any owned by the Crown?


Mr. Frank Maine (Parliamentary Secretary to Minister of Public Works and Minister of State for Science and Technology):: 1. We cannot, at this early date, identify specific governmental offices which will be relocated into Complexe Guy Favreau.
2.	Public Works does not to date maintain records of numbers of personnel in client premises. Personnel are presently located in more than 100 leased premises and 19 Crown owned buildings, totalling some 160,000 sq. meters. An analysis is currently under way which will recommend renegotiations of economically favourable leases and renovation of some Crown-owned properties. The allocation of space in Place Guy Favreau will be made after this analysis has taken place.
3.	See answer to part 2.


Mr. Marshall: 1.	Were applications received from the Province of Newfoundland under the CMHC Scholarship Programme?
2.	On what date was the Programme started?
3.	In each of the years since it was started, what was the breakdown of applications, by province?


Hon. Andre Ouellet (Minister of State for Urban Affairs):: 1
am advised as follows by Central Mortgage and Housing Corporation: 1. Yes.
2.	The current programme for studies in housing and housing-related subjects was started in 1975 under section 37(1 )(e) of the National Housing Act and superseded the Fellowship Programme which started in 1967.
3.	The distribution by province of applications meeting the criteria of the programme and reviewed by the Committees of Award is as follows:
Province
of Residence	1977/78	1976/77	1975/76Newfoundland	1	-	1Prince Edward Island	2	1	-Nova Scotia	5	7	3New Brunswick	2	I	-Quebec	53	38	63Ontario	122	100	110Manitoba	19	14	13Saskatchewan	4	3	1Alberta	27	21	13British Columbia	25	26	35260	211	239
March 7, 1978


Mr. Epp: 1.	What is the total annual expenditure incurred for the purpose of establishing a Francophone Commonwealth of Nations?
2.	(a) How many meetings has Canada attended in other countries (b) in which countries were the meetings held (c) who were the Canadian representatives (d) what was the cost for travel, lodging and miscellaneous?
3.	(a) How many meetings has Canada hosted and at what cost (b) which countries attended the meetings?
4.	What countries are currently negotiating with Canada to join in a Francophone Commonwealth of Nations?
5.	Under the proposed Francophone Commonwealth of Nations, which country is to be the head and what kind of organizational structure is this commonwealth to have?
6.	(a) What is Canada's involvement in the Francophone Co-operation Agency (b) what are the terms of reference and mandate of the Agency (c) which countries belong to the Agency?


Mr. Maurice Dupras (Parliamentary Secretary to Secretary of State for External Affairs):: 1. No expenditure has been incurred so far for the purpose of establishing a Francophone Commonwealth of Nations.
2.	No international meeting involving Canada has been held specifically for that purpose and none is foreseen in the near future.
3.	Not applicable.
4.	Not applicable.
5.	Not applicable.
6.	(a) Canada has been a member of the Agency for Cultural and Technical Cooperation since it was established, in March 1970. (b) The Agency essentially works at expanding multilateral cooperation between its members in the fields of education, culture, science and technology, as well as development. (c) The membership of the Agency is the following: Belgium, Benin, Burundi, Canada, Chad, Comores, Ivory Coast, Djibouti, Central African Empire, France, Gabon, Haiti, Upper Volta, Lebanon, Luxembourg, Mali, Mauritius, Monaco, Niger, Rwanda, Senegal, Seychelles, Togo, Tunisia, Vietnam and Zaire. Cameroun and Laos are associate members. The provinces of Quebec and New Brunswick have the status of "participating government".


Mr. Herbert: 1.	Has there been for many years a demand for insulation materials during the winter months that has exceeded inventory plus production?
2.	Has there been for many years an unutilized production capacity of insulation materials in the summer months?
3.	Was an estimate received that the unutilized capacity for insulation materials in the summer of 1977 was approximately 250 million square feet?
4.	Has the government taken any steps to ensure stock piling in the summer of 1978 to avoid a shortage of supply in the following winter?
Order Paper Questions


André Ouellet: am advised as follows by Central Mortgage and Housing Corporation: 1. Typically the greatest seasonal demand for insulation is in the fall and early winter months when new housing starts are nearing completion and existing homeowners consider re-insulation. Minor delays have occurred in delivery of some materials in some centres, but such "shortages" have been temporary and localized.
2.	During the late winter and spring months demand for insulation typically drops off. Some plants do not maintain production at capacity during this period.
3.	CMHC is not aware of an estimate of unused capacity for the insulation industry as a whole.
4.	The federal government has not received any requests for assistance in "stockpiling". However, discussions have been held with many manufacturers who indicate that substantial increases in capacity are underway. Some of them are also planning to secure additional storage space for certain denser types of insulation.


Mr. McKinnon: Will church buildings, other than rectories, be considered for the Canadian Home Insulation Programme in the near future and, if so, on what date?


André Ouellet: am advised as follows by Central Mortgage and Housing Corporation: the Canadian Home Insulation Programme is available to existing dwelling units occupied as permanent residences and to hostel accommodation operated by non-profit and government organizations. There are no plans to extend the programme to apply to other types of buildings.


Mr. Alexander: 1.	During the period 1964 to 1973, how many public servants undertook language training at government expense and how many were trained in courses offered by (a) the government (b) outside institutions?
2.	For the same period, how many were trained in (a) English (b) French?
3.	For the same period, what was the total expenditure on language training for public servants enrolled in (a) government (b) outside courses?
4.	Since the introduction of continuous language training in 1973, how many public servants have received language training at government expense and, how many were on (a) continuous (b) part-time or cyclical language training?
5.	Since the introduction of continuous language training in 1973, how many public servants have been trained in (a) English (b) French?
6.	Of those public servants who have undertaken continuous language training since it was introduced, how many (a) dropped out before meeting the required standard (b) failed to meet the required standard after the full training period (c) achieved the 02 or 01 standards or higher (d) achieved the 03 or 04 standard?
7.	Since the introduction of continuous language training in 1973, what has been the total expenditure on public service language training?
8.	What was the total amount of salaries paid to public servants while they were on continuous language training since the programe began?
9.	Since the introduction of the bilingual bonus programme (a) what has been the total amount paid and over what period of time (b) how many public servants received the bonus?

March 7, 1978
Order Paper Questions


Robert Knight Andras: 1.	(a) 49,402 through Public Service Commission Language Bureau (1964 to 1973 inclusive); (b) not available since language training was not specifically identified in training programme.
2.	(a) 8,064; (b) 41,338.
3.	(a) Prior to 1968, language training expenditures of the Public Service Commission were included with those of staffing. A breakdown of these costs for the years 1964-68 is therefore not available. From 1968 to 1974 the total cost is $52,828,000; (b) not available since language training was not specifically identified in training programme.
4.	(a) 15,847 (as of December 31, 1977); (b) 15,626 (as of December 31, 1977).
5.	(a) 2,125; (b) 13,722.
6.	(a) 1,434; (b) 947; (c) 6,055; (d) 5,763. (Note; 1,648 students were on course as of the end of December 1977.)
7.	Until 1976-77, some direct and indirect costs to departments for the official languages programme were neither specifically identified in departmental budgets nor independently collected. This includes part-time in-house courses, capital and leasing costs, travel and relocation costs for continuous language training and salary costs of persons not replaced while on language training. Recognizing the unavailability of some of these costs for part of the period covered, the total expenditure on public service language training is $345.5 million for period 1973-74 to 1976-77 inclusive.
8.	$80.3 million for persons replaced, 1973-74 to 1976-77 inclusive.
9.	Exact figures not yet available. Reliable estimates are: (a) $40.8 million including retroactivity for November 1, 1976 to March 31, 1977 and all of 1977-78; (b) 36,769.


Mr. Jones: 1.	How many artillery depots are there in Canada?
2.	How many main artillery depots are in Quebec?
3.	How many ammunition depots are in Canada?
4.	How many ammunition depots are in Quebec?


Hon. Barney Danson (Minister of National Defence):: The
information requested in this question was provided in answer to question No. 2,758 in the second session of the 30th Parliament and was published in Hansard No. 163 page 7629 dated 13 July, 1977, and to question No. 893 of this session published in Hansard No. 45 page 2115 dated 23 January, 1978. No changes have occurred since then.
Note: There are no artillery depots in the Canadian Armed Forces. Artillery equipment and supplies are held in supply depots and are overhauled either in workshops or by contracts.



GOVERNMENT ORDERS


Charles Joseph Clark: That in the opinion of this House it is crucial to the strength of Canada's economy and the provision of employment opportunities that a vigorous program of technological research and development be promoted by the government, and to this end this House urges a policy which would:
(1)	set a goal of 2.5 per cent of the G.N.P. to be spent on research and development by 1985;
(2)	significantly increase the research and development tax credit for Canadian industry;
(3)	give particular priority to strengthening our research and development programs, particularly in the fields of agriculture and renewable resources;
(4)	extend the tax credit system to provide incentive for new employment in industrial research, design and development;
(5)	encourage development work in areas of acknowledged Canadian expertise.


Mr. Speaker:: Pursuant to Standing Order 32(1 )(k) and Standing Order 58(11), proceedings on this motion will expire at the ordinary hour of adjournment this evening.


Charles Joseph Clark: Mr. Speaker, I am pleased to have the opportunity to engage the House of Commons in a debate which will deal with one of the most important matters that can affect our future as a modern, industrialized country. It is clear to all of us including, even though he will not admit it, the Minister of Finance (Mr. Chretien), that this country today is in a state of very real economic crisis.
We have more than one million unemployed. We have a number of Canadian plants and industries across the country that would find jobs for those Canadians but they are operating so much under capacity because of low demand and low stimulus in the economy that those jobs are not in existence.
We have a situation where the Government of Canada continues to pretend it is engaging in restraint but in fact it is engaging in the worst kind of governmental extravagance. We also have a situation where the government's growth projections are clearly wrong on the future of the Canadian economy.
What troubles most of us is that the Government of Canada, dealing with short-term immediate problems and dealing with this crisis of unemployment, seems not to care at all about the plight of the Canadian unemployed.
The Minister of Finance continues to refuse to bring in a budget. He does that even though the treasurer of the province of Ontario, who is today bringing in his own budget, has been urging the minister in the strongest possible terms to give some meaning and content to the agreement of the first ministers' conference earlier this year and to bring in a budget that will give credence to those measures that were agreed on by the premiers when they met here in Ottawa.
As 1 have said here before, the real reason the government does not want to bring in a budget is a political reason. It is
March 7, 1978

doing everything it can to keep discussion of the economy of Canada off the floor of the House of Commons of Canada. Ministers continue to refuse to bring in any real stimulus to the economy and they continue to refuse to exercise any real restraint over the activities of the Government of Canada. Instead, they try to hide the seriousness of the problem.
The Minister of Employment and Immigration (Mr. Cullen) goes around the country pretending unemployment doesn't matter. Well, let him try it! It certainly matters, especially to those one million Canadians who cannot find work. We find also, in that department, an example of the shameful behaviour of the government inasmuch as the basis of reporting has been juggled so as to conceal the effects of lay-offs. Until last month the department used to issue a report showing lay-offs in industries where lay-offs involved more than 20 people in a month. Now, so embarrassing does the government find these statistics that the basis has been changed in an effort to hide the real face of unemployment, to conceal its real impact upon the province of Ontario and upon other provinces.
Moreover, the government continues to refuse to state clearly the economic policy it is pursuing in relation to the Canadian dollar. Last week the government announced it was going down to the SEC. This week, judging by the interest rates, we will probably have to go to HFC!


Some hon. Members:: Oh, oh!


Charles Joseph Clark: Sir, the economic crisis in Canada is the result of the worst decade of economic management in the history of this country, a situation which is entirely consistent with a government which is the worst federal government since Confederation.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: In part, also, it is due to the complete failure of the government to give any priority to economic policy and the consequent failure to establish any coherent national economic strategy to prepare us for a much tougher, much more competitive future. The absence of any economic strategy has become clear most dramatically and most dangerously in our preparation for the GATT negotiations at Geneva.
It is difficult enough for Canada going into GATT negotiations because we are, relatively, one of the smaller economies in the world. But our problems have been aggravated in the extreme by entering into these negotiations, negotiations which will require commitments which could affect us for years, without knowing ourselves what we want to do, where we want to specialize, that direction we want our growth as a nation to take in the decades ahead.
No one pretends it is easy to establish a comprehensive national economic strategy. But ease of accomplishment is not the issue. The government has failed even to try to make a start and nobody can forgive it for failing to begin the hard work of developing such a strategy. We are paying for that failure now, and the government has an immediate obligation
Research and Development
to begin the hard work of developing a genuine national economic strategy for Canada.
Naturally, an essential element of that strategy will be the frankest, fullest possible consultation with the other partners in the Canadian community-the provinces, organized labour, business and so on. But one element in any national economic strategy is already clear: we must emphasize high technology, research and development industries if we are to compete and grow in the modern world.
We are fortunate among nations in the extent and wealth of our natural resource base. But we have to face the fact that other countries, too, enjoy wealthy natural resource bases, including countries whose wage rates and productivity levels are much more competitive than ours. So we have also to use the other great resource of Canada-human ingenuity and innovation. We have to use our brains as well as our brawn as a nation or we shall not be able to compete in the modern world.
[ Translation]
The Organization for Economic Co-operation and Development published recently a list of the 110 most important technical discoveries since World War II. None of them was made in Canada. This exemplifies one of the most disquieting problems facing Canada today. At a time when progress depends largely on technology, Canada discourages research and development. Yet, technical discoveries would play an essential part in achieving all our economic objectives. They are the key to a new growth and new job opportunities. They are the key to industrial effectiveness and, by way of consequence, to greater price stability. They are the key to a better trade balance and a stronger value for the Canadian dollar.
Our problem is twofold. First, our technical discoveries are decreasing in number. Second, we are lagging more and more behind our competitors. Which means that in the area of technical discoveries, the gap between Canada and the other developed nations is forever widening. Had Canada last year applied an adequate research and development policy, nearly 50,000 scientists, engineers, research planners and other technicians would be working in the Canadian sector of manufactured industries, thus ensuring greater prospects for our economic future.

So that gap, instead of narrowing, is growing wider. The OECD has recently compared the gross expenditures of various nations on research and development as a percentage of the gross national product of those nations. In the period from 1965 to 1975 to which the study applies, the OECD selected average for all member countries remained the same at 1.6 per cent. For Canada, in that period, the percentage dropped from 1.1 per cent to 0.9 per cent.
Three points must be made about that situation. First, by investing less than one per cent of our gross national product in innovation Canada has the worst record of any western nation, the worst in the western world. Second, the Committee on

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Science Policy of the other place set a goal of 2.5 per cent of the GNP as being a proper national objective. Not only are we falling behind other nations, we are falling behind the goal which our own advisers have established. Third, while the OECD average has remained the same, Canada's investment in innovation has been dropping. The countries whose investment has increased include West Germany, Japan and even Italy. And all our major competitors invest considerably more in innovation than does Canada. That fact comes home in our trade.
Today we are running a $10 billion deficit in high technology manufactured goods. What is most dangerous about this deficit is that it is not remaining static-it is deepening. In the years before 1970 we ran a deficit of about $1 billion in trade in those goods. Since then there has been a straight-line trend downward. This means that Canada's situation is going to get seriously worse. We shall fall even farther behind in innovation unless there is a change in the approach and policy of the government.
Investment in innovation is not just something it would be nice to do. It is not part of an international game of keeping up with the Joneses. Unless we innovate, our trade problems will grow more severe, unemployment will get worse, prices will continue to rise.
General Electric in the United States recently commissioned an analysis of output, employment, and price behaviour over the last 25 years in high technology and low technology industries in the United States. Three facts stand out from that analysis. First, high technology products provide a positive trade balance while low technology products do not. Second, high technology industries grew in that period almost three times as fast as low technology industries, and their productivity was twice as high. Finally, in high technology industries manufacturing prices rose much more slowly, while employment grew almost nine times as fast as it did in low technology industries. So, in terms of jobs, lower prices, better trade, and faster growth we need to invest in innovation as a nation.
I think two comparisons with the situation in the United States dramatize the changes in attitude and in policy which are necessary for Canada. The first of those relates to research which is done outside government by the industries of the two nations. In the United States-and this is a startling, sobering fact-three companies, General Motors, IBM, and Ford, each on their own spend more on research and development than all Canadian companies taken together spend on innovation in Canada. In other words, each of three major companies there invest more, in total budget, in innovation than the total of Canadian companies invest in innovation in this country. That indicates a failure on the part of Canadian industry which we in this House of Commons have to recognize is related in part to the fact that much of our industry has head offices elsewhere, which tends to attract research elsewhere.
The second comparison is that the Government of Canada in its last budget took what amounts for this government to a great leap forward. In fact it was more like a stumble in the dark. The government brought the tax credit for research and development up to 10 per cent for those areas where unemployment is the most serious. In other words, a 10 per cent tax credit for innovation is the highest the Canadian government will go, and that only in the most strictly limited circumstances. A 10 per cent tax credit is where the United States starts. They start at our highest level, and that is one of the reasons for the difference in the interest in innovation by industry in the two countries. That indicates again an absolute failure on the part of this government to commit itself to innovation in this country.
These are not new words. These are not new warnings. The Canadian research community, and virtually every study into the question of innovation and research, have been warning about the dangers of the failure of Canada to encourage research and development. Now the research community-and 1 think this is important-and others who are concerned in the country, are joined explicitly by the ten premiers of Canada.
1 think the whole country was very much amused by the degree of enthusiasm and eagerness with which this government, which has added so much to confrontation and disunity in this country during its ten years in office, claimed credit for bringing together the ten premiers. I applaud the government for finally doing that. I think it is important that Canadians note that last year, when the need to meet was most urgent, was the first year in several that the Government of Canada failed to convene a meeting of first ministers. However, I congratulate the government for finally catching up and taking the initiative it should have taken. Calling a meeting is not difficult, but acting on the results of that meeting is the true test of commitment and concern on the part of a federal government.


David Samuel Horne MacDonald: And making proposals.


Charles Joseph Clark: Indeed, as my colleague, the hon. member for Kingston and the Islands (Miss MacDonald), points out very appropriately, making proposals is also a very important test. The most remarkable aspect of the first ministers' conference was that all the serious proposals came from the provinces.
I should make one exception. There was one specific proposal which came from the federal government. That contained a long list of projects proposed by the Minister of Energy, Mines and Resources (Mr. Gillespie) which included, prominently, the Kitimat pipeline, which his colleagues two weeks later turned around and scuttled. One specific agreement, which came about largely because of the inspiration of the government of Ontario but which also had the support of other premiers, found its way into the statement of conclusions, and I would like to read it into the record. The following is an agreement between the Government of Canada and the provincial governments:

March 7, 1978

Joint steps will be taken to improve tax incentives or credits to industry for research and development, the expansion of employment opportunities in these areas, and increase dissemination and application of existing technology.
That was the commitment. The question now is, where is the action by the Government of Canada? The question for the federal government now is, will the federal government honour the commitment it gave to the provinces and to the research community of Canada?
Will the minister himself, who is in the House today, urge his colleagues, and particularly the Minister of Finance (Mr. Chretien), to bring in a budget as soon as possible to provide those tax incentives or those tax credits? If the government is afraid of a budget, as I presume it is, will it take some other action immediately to carry out the will and the agreement of the first ministers, and to begin to make Canada competitive again in a high technology world?
I understand that the minister will be speaking later today. I hope to be able to hear him. I certainly look forward to his spelling out the initiatives-and the time-frame for enacting those initiatives-which the Government of Canada intends to take both to honour the agreement at the first ministers' meeting as well as to begin progress toward making this country competitive again in a high technology world.
I referred earlier to one of the very real problems of this country. It is a special problem, an accident of geography and history. A special problem is posed for Canada because many of the companies which are active here and many of the companies whose activities we require here send their research home to head offices. Unfortunately, we have to face this fact.
Many branch plants in Canada are miniature replicas of their parent companies. Their research and development programs often consist of very little more than adapting parental technology to Canadian tastes. As I said in Tilbury, Ontario, the other night, very often that means that we require that our rice crispies snap, crackle and pop in both official languages, but we do very little more to encourage real innovation in this country. No doubt the natural tendency-and 1 think this is a very important point to drive home-is to locate innovation at head offices. No doubt that tendency is encouraged by the fact that incentives for innovation in head office countries are much more dramatic than they are in Canada. That is the case with head offices in the United States and in other OECD countries, where most head offices are located. Competitive incentive by Canada could have some effect upon that trend, but the clear message for Canada is that this government, or the government we form, cannot continue on the path of pretending that a passive policy alone will be enough in the field of research and development.
We cannot afford to sit back and wait for proposals, because we have to face the fact that if there are proposals coming from many large corporations in this country for research and development, they do not come to the capital of this country.
They go to the head offices of those corporations in other countries. That is a reality we have to face. It is a reality which many of us are prepared to face because of the need we have for foreign investment. However, it is a very real and impor-
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tant reality which must affect government policy, and it is a reason why there should be much more emphasis on innovation instead of less emphasis, as is the case with this government.
Given the drain to other countries where head offices are located, in our view the Government of Canada should go out and actively promote innovation in areas where Canada is best equipped to compete with the rest of the world and by companies which have a clear and unfettered commitment to Canada's interest. 1 want to make this point explicitly: that includes small Canadian companies.
I would like to turn the attention of the House for a moment to some of the special problems which are placed in the path of small Canadian companies which want to be active and innovative. One of the most serious is the simple burden of paper work. The paper work involved, for example, with the Enterprise Development Program is so overwhelming that mainly large companies apply because only large companies can hire the accountants, the lawyers, and the other experts who can weave their way through all that paper work. If the Government of Canada is serious about having the Enterprise Development Program serve the interests of small Canadian entrepreneurs, it should cut away that paper work and give them an equal chance at being helped in innovation.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: The make or buy program was introduced some years ago, I believe by the present chairman of the National Capital Commission, another Liberal who has gone on to his reward at public expense. As the House will remember, that program was designed to reduce the proportion of Canadian research which was done in-house. While that make or buy program has had some success and has been of some use to the country, it has fallen far short of the success it could have registered. It was supposed to reduce the proportion of in-house research. When it was introduced, the proportion of in-house research in the country was 63 per cent in total. Today, after that program, it is 65 per cent. The reduction has been minus two. When that program was introduced, the intent was to drop the figure to somewhere in the neighbourhood of 30 per cent. Clearly the performance has fallen far short of the advertising, as happens so regularly in the activities of the government.
An active research policy, contrasted to a passive policy, would and should encourage development in areas of acknowledged Canadian expertise. We cannot run down the long, long list of those areas where Canadian expertise exists, but it is important to look at some of them. Clearly one is the communications industry, where some of our technology, particularly our satellite technology, is the most advanced in the world. Another clearly should concern ocean development through the Bedfords Institute, through others and through private firms, because as a country we have more accessible ocean floor than any other nation in the world. That holds untold opportunity for this country.

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Obviously we should give much more research attention to agriculture. One of the things which shocks me about the government is the degree to which the interests of agriculture have been consistently shoved to the background. We have a minister who makes a good speech, but has little impact on the plans and the deliberations of his colleagues. That becomes evident in the plunge in farm incomes which has occurred during the life of this government.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: Also it becomes evident in the absolute failure of the government to give that kind of priority to agricultural research and development which that industry needs and, more important, which the nation needs.
Sometimes the government opposite tends to think of the food producers of Canada as some kind of group which it has to shoo away from time to time. The fact is that the food producers of Canada are the custodians of one of the most important resources this nation needs. In the long term, our capacity to grow and to produce food as a country, a capactiy which has few parallels elsewhere in the world, could be a resource as important to us as the petroleum which exists now. Unless we waste it, the food which can be harvested from our seas and fields is not a capacity which will run out as oil and other resources will run out. It is a capacity which becomes ever more important as world dietary habits change. We will not be able to take advantage of that resource for Canada unless there is a change in policy by the government.
First, we must make it profitable for Canadians to stay in agriculture, and second, we must give attention to research and development in order to take advantage of the application of technology to the great food resources of this country.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: I should like to dwell for a moment on the food industry and agriculture. Potentially we are one of the richest agricultural countries in the world. We are one of the richest food-producing countries, taking into account the great offshore resources. The government has failed dismally to plan for these resources and to put in effect fishing fleets which would take advantage of the resources that exist within our limits. Yet, in 1976, despite this wealth, 82.6 per cent of the Canadian market for agricultural products was served by imports. The Agricultural Institute of Canada has warned us that Canada's low investment in agricultural research "threatens Canada's position as a major world producer and supplier of food." Naturally we think that far more attention must be given to agricultural and general food research. In keeping with the principle of ensuring that more of that is done out of government, more and more of that research should be done in the fields, farms, and feedlots across the country. It should not be confined to urban or government laboratories.
Energy would appear to be an area where the world demand for innovation, the Canadian capacity to innovate, and Canadian resources could yield very, very high returns for this nation. I am anticipating remarks which will be made later in

the debate by the hon. member for Athabasca (Mr. Yewchuk). Finally, we must reverse the policy of this government which has had the effect of strangling medical research in Canada.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: As the hon. member for Athabasca will point out, joining with others knowledgeable in and concerned about medical research across the country, we cannot continue a situation where the policies of the Government of Canada drive away from this country the people who could be the seedbed and the focal point of our future medical research. The medical research policies which have been carried out by the government are not only hurting us today, they are hurting our capacity to prepare for the future. They are hurting that capacity in a way which perhaps cannot be remedied, unless the government turns around its policies and adopts some of the proposals the hon. member for Athabasca will be making later in the debate.
This is a country which calls forth imagination. Unlike many other countries in the world, Canada by its very nature encourages people to innovate. This is a country where people came from literally every corner in the world. They came here by choice. They came to build. In the early days of Canada our forefathers built with their hands, by their backs and with their brawn. In some parts of this country that is still necessary, but Canada lives in a different world now. We still require the determination to build which our ancestors showed. As I travel this country, I am convinced that Canadians still have that determination to build; but we must make it clear that our hands and our backs are not enough to build in the modern world. This is the age of technology. In the age of technology we require a capacity to innovate, a determination to experiment, and a determination to try new ventures, if we are to succeed as a country.
No one who travels across Canada will claim that we lack imagination or creativity as a country. Our investment in education ranks with the best in the world, as do our achievements in basic research in fields from medicine to nuclear energy. Creative talent is here in Canada. What is not here, and what must be here, is national leadership to match that creative potential with our economic objectives. Today, by introducing this motion in the House of Commons, we are giving the Government of Canada-


The Acting Speaker (Mr. Turner):: Order. 1 regret to inform the hon. Leader of the Opposition (Mr. Clark) that his allotted time has expired. He may continue with unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


Charles Joseph Clark: I will finish my breath, Mr. Speaker. By introducing this motion, we have provided the House of Commons, and most particularly the minister who is responsible for science policy in this country, with an opportunity to come forward and spell out a fundamental change in direction to stop a policy where Canada has been wasting our talent to
March 7, 1978

innovate, and to restore to this country a respect for building and for imagination, which is the only way we are going to succeed in the world.


Some hon. Members:: Hear, hear!


Hon. Judd Buchanan (Minister of Public Works and Minister of State for Science and Technology):: Mr. Speaker, as the minister responsible for science and technology, 1 welcome the opportunity provided by the hon. Leader of the Opposition (Mr. Clark) to speak on the state of research in Canada, and in particular on the state of industrial research and development. It is a matter of fundamental importance to the future well-being of this country and of concern to all of us.
Without a satisfactory level of industrial research and development, we cannot expect our economy to remain competitive in world markets, to create the new industrial opportunities which will create more jobs and raise our standard of living.
It is in recognition of these facts that the government has in recent years brought forward a number of measures to help and stimulate industrial R and D. The approach has been so designed as to assist all firms having an interest in research and development-whether they be large, small or medium sized.
The measure with the widest application is the 5 per cent to 10 per cent tax credit for research and development which was introduced a few months ago in last year's budget. It provides an immediate incentive of $35 million to $40 million to Canadian industry to increase expenditures on R and D. It has the advantage of leaving firms free to decide where and when they will invest, without direction by the government. This seems to me to be the most appropriate approach to take whenever possible.
The tax credit benefits mainly the larger and medium sized industrial establishments in Canada. On the other hand, smaller firms have tended to benefit from the contracting out policy under which new research for government is, whenever this is possible, carried out by the private sector. Under the policy, contracts placed with industry, which amounted to $18.9 million in 1973-74, the year in which the policy was put in place, rose to $86 million in 1976-77, and are expected to exceed $100 million this year. This amount will increase further as a result of the application of the policy to existing research activity within the government.
For R and D proposals originating with companies, the government has a number of programs of direct assistance. The most important of these is the enterprise development program which has a budget of $23 million. Other programs to meet specific needs are the NRC's technical information service, the industrial research assistance program, and the pilot industry laboratory program which are designed respectively to assist small firms with little or no research capacity of their own, to encourage growth of research capacity in companies,
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and to facilitate the transfer of technology from NRC to industry.
In total, the government will spend $275 million to support industrial research in Canada in 1978-79. This amount excludes the revenue forgone as a result of the tax credit.
Industry has not been unresponsive to the need to increase Canada's R and D efforts and the measures taken by the government to encourage it. Its real rate of expenditures has risen during the seventies, but not to the extent desired. Thus, industry accounts for 34.9 per cent of all funds spent on R and D in 1977, compared to 32.4 per cent in 1971, and it performed 44.2 per cent of all research carried out in Canada compared to 41.4 per cent in 1971.
This redistribution of the national R and D effort is in the right direction. It remains evident, nevertheless, that by any reasonable standard of comparison, Canada's over-all R and D effort is too low compared to other industrial countries. For OECD countries as a whole, expenditures on R and D average 1.4 per cent of GNP. The corresponding figure for Canada is 1 per cent. A further analysis of these figures shows that while in Canada the private sector performs about 44 per cent of all R and D, in other OECD countries the percentage is something in the order of 50 per cent to 60 per cent.
It is fair to conclude from these comparisons that the shortfall in Canada's R and D effort is not mainly on the government side nor on that of the universities, but on the industrial side. Furthermore, it is clear that the shortfall is in the order of hundreds of millions of dollars. For instance, if a target for R and D of 1.5 per cent of GNP by 1983 were adopted, as suggested by the Senate committee, and if, furthermore, the industrial share of this total were to increase to 50 per cent, expenditures by industry on R and D would have to increase in constant dollars from an estimated $864.4 million in 1977 to $1.9 billion in 1983. The target proposed by the Leader of the Opposition would call for an over-all increase of $4.7 billion, or 17 per cent per annum. The task is formidable and cannot be accomplished without the full cooperation and co-ordination of all major R and D performers-the government, the universities and, most important, the industrial sector.
There are a number of general policy conclusions which can be drawn from this brief review of industrial R and D in Canada. First, Canada is seriously lagging behind other industrial countries in its R and D effort; second, while government and university research have a part to play in strengthening our R and D effort, the main responsibility and drive must come from the private sector itself; third, and more particularly, while there are no accepted criteria for establishing the amount of R and D which a country should perform, it appears that the shortfall in Canada must be measured in the hundreds rather than the tens of million dollars; fourth, the bulk of the R and D financing required by Canada must come from the private sector and not the government; fifth, the private sector must not only speak about the need for R and D, but show by its actions that it believes in investing in it; sixth, the government must continue to support R and D through not

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a single measure but a variety of measures, such as a tax credit, whereby we can reach and assist all companies in the industrial sector; seventh, these measures should have a high leverage and call forth from the private sector several dollars for each dollar that the government commits.
These then are the general considerations which the government must take into account in the development of its industrial R and D policy. They are entirely consistent with the agreement at the first ministers' conference that "joint steps will be taken to improve tax incentives or credits for research and development". I am actively pursuing this matter with my colleague, the Minister of Finance (Mr. Chretien). One of our concerns about such a measure is that it should not result in a lower tax to firms now carrying out R and D without producing an appropriate increase in the level of R and D performed. It is possible to overcome this potential problem, but I would be more reassured if the private sector were to give a strong and clear indication that, if such a measure were taken, it would indeed increase its R and D expenditures.
Another factor that must be taken into account in considering the R and D situation in Canada is the high degree of foreign ownership. There is no doubt that Canada has benefited immensely from past foreign investment and the technology associated with it. But it has also created a number of structural problems which carry with them serious disadvantages. Most foreign firms tend to establish themselves in Canada to serve the Canadian market. In general, they rely on their parent for much of the R and D. To the extent they do perform R and D in Canada, it is frequently only the type required to adapt a product to the conditions of the Canadian market. The end product may be satisfactory to the consumer, but considerably less so in regard to the technological capacity of our industry. The cost of adaptation can be high and at times higher than the cost of doing the original R and D.
Many of the difficulties associated with this situation would be overcome if parent companies assigned R and D responsibilities to their subsidiaries hand in hand with the assignment of a product line for world-wide development.
Certainly, the R and D component of foreign investment in Canada must receive much more attention than in the past. FIRA, with the support of my colleague, the Minister of Industry, Trade and Commerce (Mr. Horner), intends to give considerably greater weight to this factor in assessing the question of significant benefit so far as Canada is concerned.
The Leader of the Opposition referred to agriculture. 1 would just point out that the department of government with the largest expenditure on research and development is the Department of Agriculture. It spends more than $100 million a year on research and development. The largest operation it has is located in Alberta south of the riding of the Leader of the Opposition, in Lethbridge.
The government can also support the development of Canadian research and development capacity through its procurement policy. Admittedly this is an instrument which must

be used with a great deal of care. Nevertheless, it has in the past been used with successs as, for instance, in the case of national defence, space, and to a lesser extent so far, oceans. It is my intention to ensure that similar opportunities are fully exploited in the future. There are a number of areas which can be looked at, including transportation, energy, communications, and certain parts of the service sectors, all of which are technology and research and development intensive.
As I have already mentioned, the government has a number of grant programs designed to help small and medium-sized companies where cash constraints may be a serious short-term obstacle to investment in research and development. These programs need to be re-examined. Small businesses do have difficulties in getting access to new or up-to-date technology which they need to be fully competitive. There are great gains to be made by facilitating the access of these firms to this information.
Finally, I should say Mr. Speaker, that the vitality of any country's industrial research depends in the long run on basic research. The universities are uniquely capable of carrying out this task. Nevertheless, a far better bridge needs to be built between industrial and university research if the important problems affecting Canada are to be met effectively. This whole question of technology transfer was the subject of Report No. 28 published by the Science Council of Canada. It is for this reason that the government is urging universities to address more of their research to areas of national concern and to direct the results of their work, perhaps through such measures as innovation centres and changes in curriculi, to the economic and social enhancement of the lives of Canadians.
The Leader of the Opposition referred to the Kitimat pipeline. 1 found that interesting because, I suggest, there is a conflict within his own party. It is rather difficult to suck and blow at the same time. It seems to me it is either desirable to have tankers cruising up and down the west coast of British Columbia and coming into ports there, or it is not. I know the hon. member for Vancouver South (Mr. Fraser) is very much opposed to this. The Leader of the Opposition should state his position clearly. Either he wants tankers coming into western Canadian ports, or he does not. If he does not, he must appreciate the decision that was taken not to proceed with the Kitimat pipeline at this time.


Some hon. Members:: Hear, hear!


Mr. David Orlikow (Winnipeg North):: Mr. Speaker, I think all Canadians would agree that one of the primary objectives of the people in this country should be the provision of jobs for all who are willing and able to work, yet in March, 1978, we have over one million people unemployed. The rate of unemployment is running at over 8 per cent of the labour force compared to the target of 3 per cent advocated by the Economic Council of Canada as late as 1964. It has been estimated an average of 475,000 school leavers will enter the labour market each year between now and 1985, yet in each of the last three years jobs have been found for just half that number entering the labour market.
March 7, 1978

In every industrialized country where the standard of living is high there is a very successful, very aggressive, and very efficient manufacturing industry, particularly in fields of high technology, that is, in every industrialized country except Canada. We in the New Democratic Party believe that Canada has a large enough population to maintain a successful manufacturing industry. After all, countries smaller than Canada such as Sweden, Switzerland, and Holland have built highly successful and sophisticated industries which compete on world markets.
Let us examine Canada's record, Mr. Speaker. In 1951 there were 1.3 million employees in manufacturing industries in Canada, but in 1976, 25 years later, only two million were involved in manufacturing-in other words a gain of only
700.000	jobs. To put it another way, in 1951 the manufacturing sector made up 25 per cent of the employment opportunities in Canada, but by 1976 the proportion had dropped to 20 per cent. Of the increase in jobs in this period, only 16 per cent came from the manufacturing sector and 86 per cent from the service sector. There was a net decline of 2 per cent of the total in utilities and construction.
These figures are taken from the sector papers tabled by the government at the first ministers' conference last month. They show that in primary textiles in 1973, the peak year, there were 86,000 employees, but three years later there were only 78,500, a decline of nearly 9 per cent. In clothing in 1973 there were about 125,000 employed, and now there are only 120,000; in electronics 67,917 were employed in 1966, but by 1976 only 64,000, a drop of almost 5 per cent; in electronic products
80.000	were employed in 1974, but by 1977 only 70,000 were employed, a drop of just under 13 per cent.
The problems were grave in every agency and every group I examined. One of the major difficulties is that our institutions-government agencies, universities, and even the private sector-are not contributing to research in the way that has been done in other industrialized countries. Both the Leader of the Opposition (Mr. Clark) and the Minister of State for Science and Technology (Mr. Buchanan) alluded to this.
I should like to put on the record an excerpt from a brief dealing with science in Canada which was submitted to the Prime Minister (Mr. Trudeau) by the Royal Society of Canada. The last paragraph on the first page reads as follows:
Although it was generally recognized that government support of industrial R & D was far too small in 1969, and although a substantial improvement was made in 1970, by 1975 it had decreased, when considered as a fraction of the GNP, to as little as 87 per cent of that in 1969; in terms of the fraction of federal budgetary expenditures it had fallen to 68 per cent. To make matters worse, the Department of Industry, Trade and Commence has abolished its IRDIA program (for which the 1974-75 expenditures were $32 million) and has cut back its PAIT program. These programs are of vital importance to high-technology industries and these actions will seriously hamper the attempts of these industries to improve their foreign markets and increase their productivity.
It has been calculated that the proportion of the gross national product spent by the federal government for basic research through the two main funding agencies, the National Research Council and the Medical Research Council, has been
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steadily decreasing since 1969. Then it was a mere 0.10, in other words, one tenth of one per cent of the gross national product. By 1976 it was an appalling 0.07 per cent. By contrast, Belgium spent 0.3 per cent; Germany 0.3 per cent; France 0.4 per cent; Japan 0.4 per cent, and The Netherlands 0.6 per cent of their gross national product. In other words, Canada spent about one quarter of the average support level of these west European countries and Japan.
Or, to put it another way, in 1974 Canada's increase over the 1969 support level was about 8 to 10 per cent, whereas that of West Germany was 150 per cent, France 100 per cent, United Kingdom 60 per cent, and the United States 50 per cent. Clearly, unlike Canada, these countries recognized that their basic research capability provides the underpinning for future technological development which promotes a strong secondary manufacturing section with its high growth of employment opportunities.
As I have indicated, the Leader of the Opposition and the Minister of State for Science and Technology have dwelt on the failure of Canada to meet the needs of this country in the fields of research and development. But both of them wish us to continue to depend on the private sector of our economy by providing it with more tax incentives. This type of approach has failed in the past and there is little reason to expect a real change in the future. The reasons why it has failed should be obvious. It has failed because to a large extent our basic industry is in the resource extraction area, which requires a minimum of research and development. For example, in 1969 among the 14 nations belonging to the Organization for Economic Co-operation and Development, Canada has the second lowest percentage of workers in the manufacturing area-23 per cent; with Ireland being the lowest-20 per cent. By comparison, the percentage in West Germany was 38 per cent, in the United Kingdom 36 per cent, and the United States 34 per cent.
As well, Canada has the highest degree of foreign ownership and control of its industry among the OECD countries. In most of these multinational companies, of which Canada has such a proliferation, a major part of their research and development takes place in the head office country. For example, Ford of Canada is a major industrial firm in Canada, yet Ford carries out no research and development in Canada and employs not one science Ph.D. in all of its Canadian operations.
We have seen in the last few years as the world economy has moved into its present state of recession that only a small amount of research and development was carried on by Canadian corporations. Let us face the fact that the bulk of Canadian research and development is carried on in most countries by large corporations. But because such a large percentage of Canadian industries, and particularly of our manufacturing industries, is composed of mere branch plants of multinational corporations, we have had very substantial cutbacks in the meagre research and development carried on by those corporations.

March 7, 1978
Research and Development
A classic example, Mr. Speaker, which can be repeated many times, is what happened to the RCA research facilities in the Montreal area. As the corporation headquarters, mainly in the United States, felt the fall off in business, they moved the entire RCA research facilities which employed hundreds of people in the Montreal area back to the United States.
I know that I am not exaggerating the difficulties. In a study prepared by the Science Council entitled "Uncertain Prospects-Canadian Manufacturing Industry, 1971-1977" they say in part, and I quote from page 2 of their report:
In 1971 the Science Council was especially concerned about the viability and survival of medium and high technology industries. In 1977 there are real fears about the prognosis for Canadian manufacturing as a whole.
In other words, the Science Council is worried about our whole manufacturing industry. It goes on to say on the same page:
It is apparent that the technological capability of Canadian industry has not improved. It has in fact deteriorated. Exports of technology-intensive goods have fallen in relative terms, and many of the industries which produce them are unable to meet foreign competition in the domestic market. Job opportunities for scientists, engineers, M.B.A.s, executives, and other specialists are scarce or non-existent. .. This year's university graduates face the most dismal job prospects of the last forty years. Human resources, which have been created at great cost, are being squandered.
Having spent 25 years developing an educational system in which our universities can compete in quality with universities the world over, we now find ourselves in a situation in which we are turning out something in the neighbourhood of 2,500 Ph.D.'s a year, for most of whom there are really no jobs in Canadian industry, Canadian universities, or in Canadian governments. This is the situation, Mr. Speaker. Neither the Leader of the Opposition nor the Minister of State for Science and Technology faced up to this situation. They did not face up to it because they refused to face up to the fact that our industry is to an overwhelming extent controlled by multinational corporations. Its policies are devised not in Canada but in other countries and those multinational corporations are under the constant pressure of the governments and the peoples of the countries in which their headquarters are located.
How can Canadian citizens and the Canadian government expect multinational corporations to act any differently when we live so close to the heartland of the industrial population of the United States? We know of the situation in which they are. We know they are facing unemployment at rates almost as high as those in Canada. Why should we be surprised if United States corporations and U.S. workers and unions are now calling on the American government to protect the jobs and well-being of the people of that country?
We find it almost impossible to deal with that situation. We are caught in the same trap as all of the other countries in the industrialized world because of the recession which has increased unemployment to a height we have not experienced since the end of World War II. To a large extent the decisions are not made by Canadian governments, corporations or workers, but by the multinational corporations. I do not say that in criticism of them. If there is to be criticism, it should be criticism of the Canadian governments and the Canadian
[Mr. Orlikow.J
people who elected those governments which, over the years, have failed to face up to the problems arising out of the result of this situation.
Over the years we have encouraged the development of our resource base industry. We have failed to realize, even today, that those industries are to a large extent capital intensive rather than labour intensive. Compared with our manufacturing industries, they do not employ many people. We have failed to realize that those industries face competition from other countries. A classic example is what happened at Sudbury.
At the same time that INCO, one of our largest corporations, was operating plants in Canada, employing Canadian workers and making profits in Canada, it was using those profits and the know-how it learned in Canada to develop competing sources in Indonesia and Guatemala. I do not blame INCO. It is responsible to its shareholders. It did what it thought it should do for its shareholders. However, that was not at all in the best interests of the Canadian people.
If we are to use the full potential of Canadians and have full employment, we must change our policies. We should concentrate more of our efforts on the manufacturing industry rather than the resource industry. We must concentrate on high technology and modern industries.
Canadian people are well educated. We have the research facilities, if we want to use them, to compete with other countries. Our manufacturing industries must be concentrated. We must break the stranglehold of the multi-nationals. Our efforts must be concentrated on developing Canadian owned and operated corporations which will make their own decisions and which will try to meet the needs of the Canadian people. That can be done by greater emphasis on planning and direction by the government, not only of its resources, facilities, and the use of Canadian universities, but by bringing Canadian industries into those fields that will meet the needs of the Canadian people.
We support in general the criticisms made by the Leader of the Opposition in today's motion and support most of the provisions in the motion he proposed on behalf of the official opposition. However, we believe there is a serious lack in that motion. Therefore I move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That the motion be amended by changing the period at the end thereof to a semi-colon and by adding thereafter a new paragraph (6) to read as follows:
"(6) require Canadian subsidiaries of foreign-based corporations to devote a
specified portion to Canadian-based research and development expenditures,
in order to break the branch-plant nature of our manufacturing industry."


The Acting Speaker (Mr. Turner):: I am advised that the amendment is acceptable.


Mr. Gerard Laprise (Abitibi):: Mr. Speaker, I am pleased, on this allotted day, to take part in a discussion on a topic of special concern to all Canadians, namely our economy. Today,
March 7, 1978

serious problems such as unemployment have been dwelt upon and stressed. It was pointed out that we now have over a million unemployed in Canada. It was also pointed out, and rightly so, that a high number of our large, medium and small businesses are underemployed, that they do not produce as efficiently as they could. Now, Mr. Speaker, those are problems we must face today, and which could have largely been avoided, to my mind, if most of the recommendations that were made had been implemented fairly quickly.
The Senate Special Committee on Science Policy, set up in 1970, looked into all aspects of the science policy in Canada. They published a three-volume report explaining at length what problems we have in Canada and what would happen if we did not consider immediate reforms in those fields.
Unfortunately, the government put off implementing those recommendations. It did appoint a minister with some responsibilities in the early '70s, a few responsibilities, not too great, with the result that during the summer of 1975, the Senate had to resume its studies and publish a fourth volume to complete its study. As a result of that second inquiry, the existence of great concern came to light, and the chairman of the committee, Senator Lamontagne, revealed in November of 1977, that in real terms there had been no progress since 1970 with regard to the level and distribution of national and government effort in the field of scientific research and development.
Indeed, the Senate committee which carried out special studies in this area practically blamed the federal government for not doing anything tangible or worthwhile to solve this problem. I would like to take the opportunity of this debate to show that it is essential to have a strong Canadian economy and intensify the employment policy that the government establish a long term scientific policy; as everyone knows, strong research potential is essential to Canada's progress. That potential has yet to be developed to an acceptable level.
It would even appear that the present level of research is threatened due to a lack of young scientists involved in basic research which results in an average aging of researchers without any possibility of replacement. This problem will reach its crucial point in the 1990's and probably even before the 1990's. And one of the reasons of this lack of interest of young scientists for research is surely the freeze on grants that was imposed in December 1975 and which mainly affects university researchers.
Indeed, Mr. Speaker, in early November 1977, at the Social Credit Party of Canada convention which was held in Drum-mondville in the province of Quebec the members who were attending that convention passed a resolution dealing with long term scientific policies, and with the Chair's permission, I would like to read that resolution into the record as follows:
Research and Development
That a government headed by the Social Credit Party of Canada undertake to reinvigorate (university) private research by establishing at least a five year scientific policy along the following three basic principles: (1) the need for an adequate budget; (2) the urgence of establishing a three to nine year long term Canadian scientific policy; and (3) the presence of a representative of the research community on grant committees.
We believe, Mr. Speaker that it is very important to have a representative of the research community on a grant committee for university researchers. Furthermore, another thing we fear is that the few researchers we have in Canada might not want to stay because long term employment opportunities are nearly inexistent in this country. So this causes them to go and look somewhere else for a steady job and results in Canada being a sort of bank of researchers for other countries.
Mr. Speaker, Canada is now investing only 80 per cent of what Italy invests in research and development. Yet Italy ranks eighth among the rich countries. It invests 1.1 per cent of its national product, and we invest 0.8 per cent. I have here a table for the year 1975 of OECD member countries. We are told that the United States spent 2.3 per cent of their gross national product on scientific research; the United Kingdom, 2.5 per cent; West Germany, 2.4 per cent; Holland, 2 per cent; Japan, 1.8 per cent; Sweden, 1.6 per cent; France, 1.5 per cent and Italy, 1.1 per cent, and Canada came in ninth and last with 0.9 per cent.
Mr. Speaker, it amounts to saying that our efforts were surely not very considerable and for a country like Canada I think that in the field of scientific and technological research we could have accomplished for many years a lot more than we have done till now. Mr. Speaker, at the beginning of 1976, government investments fell to less than 0.5 per cent of the gross national product and only 0.1 per cent has been assigned to research carried in the universities and 0.1 per cent to industrial research the two most productive sectors for such spendings. The United States invest 2.3 per cent of their gross national product into research. This is why we are dependent on them as well as on the multinationals. They are the ones who have that research work done for us. They are the ones who can offer secure and long term employment opportunities for scientists.
Mr. Speaker, the issue of the non-availability of objective information is so fundamental to the solution of our problems in the field of evergy policies that it has been raised by a Liberal minister, the Hon. Donald S. Macdonald in 1974 in an interview with the representatives of the magazine Oil Week, and I quote: "One of the difficulties facing the Canadian government is that it is almost completely dependent on the multinationals for its sources of information". This is why, Mr. Speaker, it is absolutely necessary that the government react right now and see to it that the monies allocated to research and to development reach 2.5 per cent of the gross national product by 1985 at the latest, in order to restore in that manner a strong economy and to increase the employment opportunities already existing in that field.
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Research and Development
The minister mentioned that tax credits have been granted to Canadian businesses and companies. As for me, I think that the large businesses, these national corporations can well manage by themselves but the small or medium size business finds itself in a different position. Small or medium size businesses have little opportunities to undertake scientific research even if they are entitled to tax credits. This is why other institutions such as universities for instance are put in charge of scientific research work and have to constitute data banks which are made available to small and medium size businesses. In my opinion such is the way, Mr. Speaker, whereby we will meet the needs of these businesses for they do not have non the means to make this research even if the government is to grant them tax credits.
Mr. Speaker, up to now the planning of natural resources such as energy has been left to multinationals whose only purpose is not the common good but profits made even at the risk of ruining the people in years to come. I think we should increase our research, through universities, in the field of renewable energy and it is on that point that 1 want to conclude my comments this afternoon. In connection with multinationals, especially those involved in the development of energy resources, I think they are doing their best. Those resources are not renewable, but very little has been done to develop resources such as solar energy.
Until recently, only 0.4 per cent of the amounts allocated by the government was spent on research in solar energy, wind energy, renewable energy, whereas these are the very fields, Mr. Speaker, where heavy investments should have been made several years ago. Thus Canadians would not be running scared, constantly hearing as they do that in a few years we may lack energy for heating, for manufacturing consumer goods, for transporting them or for transporting ourselves.
Mr. Speaker, I believe one of our priorities should be to intensify research in renewable energy, and our universities, provided we grant them the necessary funding, can capture the interest of the young in that field, and ensure that we do not face a lack of researchers in a few years, because they will then be too old and unable to produce, and because we will not have foreseen the necessary replacements to carry on. Mr. Speaker, I think the motion we are debating today is an extremely important one, which should encourage the government to implement reforms which have been recommended mainly by the Senate committee, the universities and other organizations which have offered to co-operate with the government to improve this situation.


Mr. J. Robert Howie (York-Sunbury):: Mr. Speaker, in a rapidly changing technology oriented world research and development are the key to the future. Without research and development we will lose in international competition to competing countries and lose our place as an industrialized nation.
[Mr. Laprise.l
Clearly, research and development are the great multiplier that enables Canadians to maintain and improve their high standard of living by producing goods in our industrial sector for sale in Canada and abroad at competitive prices, and putting more Canadians to work at good jobs to produce those goods. There is a clear need for a strategy to stimulate significantly our innovative research and development capacity in those industries in which we have the potential for a comparative trade advantage.
Canada has had some excellent success in pure research science but appears to be weak in applied scientific research.
It is not easy to determine the effect of the government's policies in achieving Canada's scientific goals because, as the latest report of the Senate committee on science policy indicates, Canada's stated policy objectives have not always been those it has implemented. In promoting industrial development the government would financially assist universities to train scientists and engineers while building its own laboratories where the bulk of the nation's research would be conducted. Industry would then be provided with the results of this scientific research to solve its problems and to manufacture new products as technology advanced.
This concept seems to prevail still although its wisdom is called into question when we consider the 30 per cent decline in research and development since 1970, last year's $12 billion deficit in end product trade, and the capture of almost one third of all domestic sales by imported goods.
As a provider of jobs, Canada's manufacturing industry has eroded to the point where today it accounts for only 19 per cent of the nation's work force as against 25 per cent in 1950. Indeed, without the auto pact, defence production sharing, and similar bilateral arrangements with the United States, Canada would have few exports of manufactured goods.
Our lack of technological innovation, the problems of inadequate industrial research, and difficulties in transferring technology from government laboratories to meaningful functions in our manufacturing industries are major factors contributing to our present economic stagnation. Canadians have demonstrated the ability to replace our absolete second-hand technology with meaningful research which can make us world leaders in selected manufacturing areas. Examples of Canadian industrial success exist, but they must be built upon and multiplied. To do this, research and development must be encouraged through the development of coherent national policies aimed at enhancing our industrial base.
In October of 1977 the special committee of the Senate on science policy published its fourth and last report in its series on science policy for Canada entitled "Progress and Unfinished Business". The report concludes that much time has been wasted and that only now are some of the recommendations of several years ago being put into practice.
The Ministry of State for Science and Technology was expected to become the pivot around which science policy decisions would be made, but in practice it has become a mere service agency assisting other departments in the preparation
March 7, 1978

of their own particular scientific programs. If the Ministry of State for Science and Technology is to have an important role and make a major contribution to maintaining and expanding the standard of living enjoyed by Canadians, it will require the leadership and internal stability which can be achieved only with a full time minister through a continuity of management personnel and a minimum of reorganization. In six years MOSST has had five different ministers and three different deputy ministers. That can hardly be called stability. No wonder the Science and Engineering Council established by Bill C-26 last July has never been appointed, and neither has its chairman nor any of its members.
This same haphazard, lackadaisical approach toward science is reflected in the failure of the government to appoint the chairman of the Medical Research Council since that position became vacant last June.
No wonder the budget for the Medical Research Council in the current estimates is increased by only 5.7 per cent, which does not even keep pace with the decline in purchasing power of the dollar.
The National Research Council estimates, on the other hand, show an apparent increase of 11 per cent, and this may look good in terms of the consumer price index. The CPI measures the percentage change over time in the price of a constant basket of goods and services normally purchased by the average Canadian family in the average Canadian city. These are not, however, the same goods and services which Canadian scientists must purchase in order to do research in this country.
The Medical Research Council and the National Research Council have each developed a specialized cost index to calculate the true impact of inflation in their areas of interest. Both indices show that the erosion of the science dollar by inflation over the past seven years has been much greater than the increase in the Consumer Price Index.
For the period 1969-1976 the difference between the Consumer Price Index and the National Research Council science cost index was 28.8 per cent or, in terms of 1969-1976 constant dollars, this represented an extra loss of $23.5 million in the purchasing power of NRC supported non-governmental research.
In view of this very large discrepancy in the results shown by the specialized science deflaters on the one hand and the Consumer Price Index on the other, the government should be prepared to use a cost index which would accurately measure the effects of inflation when determining the size of granting budgets allocated for research. This returns us again to the question of how to measure the impact of government policies on Canada's scientific effort.
I suggest that the best method, and the one most commonly used, is to relate the sum of all research in private and public sectors to a fraction of the gross national product and compare it with other industrialized countries. This would compensate for price fluctuation related to inflation and would also reflect population and economic dimensions.
Research and Development
The conclusions in terms of Canada's contribution are not very good. Canada does not spend as much relatively on research and development as do competing industrialized countries. In fact, Canada today spends less than half as much of its gross national product on research and development as do the United States, the United Kingdom and West Germany.


Mr. Kaplan:: What about Japan?


J. Robert Howie: Less than Japan too. I thank the hon. member. In moving to the position where we spend 2.5 per cent of our gross national product we shall be approaching the fraction now spent in those other industrialized countries I have just mentioned.
Our performance to date is not good, and it is getting worse. What are the results? Today imports serve nearly 30 per cent of the Canadian market for manufactured goods, 88 per cent of the Canadian market for computer and office equipment, and 60 per cent of the Canadian market for consumer electronic products. Considering the decline in the value of the dollar on international markets, we can clearly see the terrific price Canadians will soon be paying for the failure of this government to stimulate Canadian industry to keep abreast of innovations in the field of research and development.
If this record were not bad enough, the tragedy is that 83 per cent of the Canadian domestic market for farm machinery is supplied by imported goods. Unless this situation is completely turned around, our hard pressed farmers will soon be dealt another cruel and severe economic blow. The Minister of Industry, Trade and Commerce (Mr. Horner) says this is good for them!
Research must be encouraged to the maximum, especially applied research. A significant increase in the research and development tax credit is imperative, and we must extend the tax credit system to provide special incentives for new employment in industrial research, design and development. These incentives must be of a continuing nature, with a definite time commitment given to industry to give it confidence that the government is convinced of the importance of research and development as an essential base for economic advancement. The government should also encourage the transfer of scientific knowledge and technology in a co-operative effort between universities, government, and industries. There are tremendous opportunities for scientific research and development to be encouraged in areas of regional disparity in Canada. I am thinking of fisheries, forestry, food processing, oceanography, and specialized fields. For example, in the area of fisheries, experimentation is warranted in fish culture and breeding, fish ranching, fish processing, fishing technique, apparatus development, fish boat construction and equipment. A new first could be achieved in seaweed culture on which very little has so far been done in North America.
In forestry I think in terms of silviculture, parasite control, and wood processing. In food processing, effective research can
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March 7, 1978
Research and Development
be done in fish and farm products. In oceanography, tidal studies as an outgrowth of the Fundy project are a natural area for development in the Atlantic provinces. The Bedford Institute of Oceanography in Halifax is the best in the world and is not adequately supported by this government.
We can expand research and development associated with using waste hot water from thermal and nuclear plants for fish growing, seaweed culture, farming and greenhouse cultivation. In this respect we have a potential to grow vegetables which we now import.
In renewable energy we have unlimited opportunities for research and development, not just in solar energy and wind energy, but also including peat moss, methanol, and wood as a fuel. We can explore even the possibilities of accelerating present research into the use of hydrogen as an energy fuel and developing it with the electric energy generated by tidal action used as a catalyst in our oceans.
Our universities have offered us a tremendous opportunity to have excellent research performed, while at the same time stimulating the teaching and learning potential of our universities and assisting in the development of the badly needed young scientists who can take their places in the private sector of our economy, after it is stimulated by the next government with a meaningful industrial strategy.
I should like to share with hon. members some relevant comments made by Dr. Thomas Vanderslice at the Financial Post conference held in Ottawa on January 25, 1978. He said the following:
The underlying paradox in all of these trends today is the accumulating evidence that there is a high and positive correlation between technology and the things we need: jobs, improved productivity, resistance to inflation and economic growth.
To get a fix on this, we asked data resources to make an analysis of output, employment and price behaviour in high and low technology industries in the United States over a 25-year period.
We found that high technology industries grew almost three times as fast.
The same is true for productivity, output per employee in high technology industries was double that of the low.
The favourable labour productivity is mirrored in the price record: with high technologies much more resistant to inflation.
An even more significant finding is that the gains in output per worker were not at the expense of employment. Employment in high technology industries in the United States has been growing almost nine times as fast as in the low.
The same kind of favourable ratios prevail in terms of international trade. The positive contribution of "high technology" products is up to a plus of over $25 billion a year.
While the United States trade balance in products with "low" technical content is down from break-even in 1960 to a $16 billion deficit.
Thus, our experience clearly indicates that high technology industries have outperformed intermediate and low technology industries in terms of real growth, productivity, less price inflation, and higher employment. From 1950 to 1974, output per man-hour rose at a 4 per cent annual pace in sectors devoting an above average share of income to research and development. This is better than twice the productivity growth achieved by industries with lower than average commitments to new technology.
Ours is a young country, rich in resources, with a shining promise for tomorrow. All that is necessary to bring it about is a new attitude and constructive new policies, such as the ones just enunciated a few moments ago by my leader. My leader

has demonstrated that he is the best leader of any political party in Canada today, and that he has the vision, determination, and energy to lead this nation out of the economic mess in which it now finds itself.


Some hon. Members:: Hear, hear!



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mr. Turner):: Order, please. It is my duty, pursuant to Standing Order 40, to inform the House that the questions to be raised at the time of adjournment are as follows: the hon. member for Ottawa West (Mr. Francis)- Public Service-Proposed raise in retirement age-Capping of indexed pensions; the hon. member for Simcoe North (Mr. Rynard)-Health and Welfare-Reductions in health care programs-Government reasons for change in policy; the hon. member for St. John's West (Mr. Crosbie)-Fisheries-Sinking of Trawler "Cape Royal"-Request for public inquiry.



GOVERNMENT ORDERS


[Stage Direction]
ALLOTTED DAY S.O. 58-RESEARCH AND DEVELOPMENT POLICY The House resumed consideration of the motion of Mr. Clark:
That in the opinion of this House it is crucial to the strength of Canada's economy and the provision of employment opportunities that a vigorous program of technological research and development be promoted by the government, and to this end this House urges a policy which would:
(1)	set a goal of 2.5 p. cent of the G.N.P. to be spent on research and development by 1985;
(2)	significantly increase the research and development tax credit for Canadian industry;
(3)	give particular priority to strengthening our research and development programs, particularly in the fields of agriculture and renewable resources;
(4)	extend the tax credit system to provide incentive for new employment in industrial research, design and development;
(5)	encourage development work in areas of acknowledged Canadian expertise.
Alan Gray Martin: Mr. Speaker, 1 am pleased to have an opportunity to participate in this debate concerning research and development. 1 do not think anyone doubts the importance of research and development as part of an economic strategy in Canada to help us make a transition to more technically efficient industry. We know that research
March 7, 1978

and development are an essential element in any policy for a rapid return to full employment based on expansion of the manufacturing and resource sectors. In some parts of industry, these sectors are in a cul-de-sac of technological dependency, which is a term used by the Science Council of Canada. This dependency refers to a weak capacity, to weak opportunities and to weak incentives for research and development in Canada, thus not helping us to break out of that situation of dependency into a more technically efficient base for the future.
Research and development are a key element in securing for Canadian industry a higher share of the world market and a higher share of the domestic market, which is rapidly being occupied by imports. Research and development turn the key to better performance and a more competitive Canadian industry. Thus, none of us can doubt their importance.
The resolution before the House emphasizes the tax environment as an encouragement to research and development. I do not think a great deal of argument can be found with the proposals in the resolution, so far as they go. They really go only so far as the tax system can go to assist greater research and development activity in Canada. I will attempt to present an argument to my colleagues in the House indicating that a wider policy and support framework than taxation is required. Even improved tax incentives will not prove adequate. Some reasons for this have already been mentioned. For example, the structure of Canadian industry is so highly foreign-owned that most research and development is done outside the country and transferred into it.
While the magnitude of tax incentive is important, they will not do the entire job. However, so far as the tax environment goes, from my examination of the subject I believe the tax credit for investment in research and development should be increased significantly. At present it stands at 10 per cent in the Atlantic area and the Gaspe. It is IVi per cent in other designated regions. It is 5 per cent in the faster growth regions of the country. Five per cent is not enough. While we should retain regional differentiation, we should move up to at least 15 per cent, with a low point of at least 10 per cent. Discussing these percentages, however, is not perhaps as useful as saying that we should put ourselves on an equivalent basis with the investment tax credit in the United States.
Our investment tax credit of, say, 10 per cent works like this: if an investment is on a scale of $10 million, the investment tax credit is $1 million applied to that. This sounds like a very powerful incentive, but when you consider that it becomes taxable in the hands of the receiver and that perhaps 46 per cent of it is taxed back, it has lost a good deal of its punch. When you consider also that it is deducted from the capital cost in our example of $10 million, and one begins the capital cost allowances at the $9 million level, again it has lost some of its impact, which it does notloseinthecaseofourcompetitorsin the United States. So I think the principle should be that in the research and development tax environment we should be at
Research and Development
least as competitive as are our U.S. companies. The tax credit should be adjusted upward to achieve this goal.
I should like to refer also to the tariff environment because it is one of the important horizontal type policies under which all our companies operate. We are going through the GATT negotiations in Geneva in which most of the countries in the world are engaged, and if various formulae changes come through, there will be significant across the board reductions in tariffs, amounting to perhaps more than 40 per cent. We in Canada would have to ensure that we do not go only for an across the board tariff reduction but that we negotiate the average 40 per cent or so in terms of an industrial strategy which has singled out some industries for maintained tariff protection, while we proceed through a transitional period to a more competitive strength for them. That transition will require a host of policies in addition to taxes and tariff.
We should be highly selective, having made some choices of the industries with the promise of a future in this country. We know in general where they are. They are in telecommunications; they are in the ocean industries where we must have enormous potential advantages; they are in transport technology where we have enormous spaces to cover at low cost and therefore we must do the R and D necessary to ensure that low cost. We have advantages in petrochemicals where we should be looking at the average tariff reductions to maintain positions in the key exposed but potentially favourable sectors and to compensate with lower tariffs where we can face world competition because of world scale production and other advantages. The same holds true in the plastics industry, and 1 could also mention machinery, pharmaceuticals, and the construction industry, to continue the list of examples. However, the main point is that in tariff structures, as in tax structures, we should have R and D incentives in mind in certain industries.
I said I wanted to argue for a wider framework of policy than the tax suggestions indicated in the resolution in front of us, and I will do that by noting that in the forefront of our concerns now is the structure of the Canadian industrial economy. The structure of the economy need not be a difficult concept for us. Such items as I will mention enter into the question of the appropriate Canadian economic structure to face into the new world environment in which we find ourselves. Part of that new world environment is the oncoming of the Third World with industrial products of quality. We will have to face their competition doubly because we have given them preferred low tariffs. How can we ensure that Canadian industry will face that stiff new competition if we do not help reorganize its structure and reshape it?
1 will mention some of the elements which I think fit into that kind of restructuring of our basic industrial plant. First, we should adopt policies which encourage a larger scale in many industrial sectors so that they can achieve the gains from specialization and so that they have a base of production big enough to support the huge R and D expenditures that are necessary today.

March 7, 1978
Research and Development
When we consider, for example, that Northern Telecom- which is perhaps our outstanding example of R and D work in Canada-had to spend some $70 million to bring in its latest piece of hardware for the world market, an advanced kind of switching equipment for telephone systems. It remains a leader in the world but the R and D base had to be $70 million. Surely that requires a large scale company. There will be hundreds of suppliers of equipment to Northern Telecom across Canada which will be able to produce and supply components for that piece of advanced technology developed through Canadian research and innovation. They are dependent on these big core companies being so large and specialized that they can carry the weight of $70 million. We must therefore have the policies that will support that kind of scale. Taxes alone will not assure us that. That means that our competition Act and other policies must support enterprise structures capable of specialization and scale of operations.
Second, it means that the whole market in Canada must be collected, as it were, or aggregated so that key companies have a home base and a somewhat assured market. Tariffs are one form of giving some assurance, but today they cannot be taken too far. Another form of assuring the home market is procurement policies of governments. Should our hydro systems purchase Canadian technology or should they go to Switzerland, Britain, Japan or Germany? If we are serious about aggregating the market to give a home base for our own companies, then we must consider the industrial strategy advantage of procurement policies which pull the market together. While ensuring that these are good products-and there is no question in anybody's mind that we have a leading technology in heavy electrical equipment-we need to help companies come together in consortia without falling afoul of the competition act, if we are interested in the industrial implications of employment and income in Canada, faced as the country is with new problems.
For example, let us consider the amalgamation which took place of Canadian General Electric, General Steel Wares, and Westinghouse to put together a large enough company to manufacture many lines of electrical goods, and also the consortium represented by Petrosar in Sarnia where four very large Canadian companies were not large enough individually to build a polyethylene plant on a world scale, but the four together, assisted by government encouragement, are big enough and are now in the final stages of a technology and an enterprise that will supply Canada with resins which go into the plastics industry. That leads one to look at intermediate manufacturing stages.
What about the security of the plastics industry in Canada? Thirty per cent of that market is occupied by imports, an unusually high share in terms of western countries. Why do we have a low occupation of our own market with all of these new polyethylene and resins coming into play? What can we do to ensure R and D in the plastics industry so that it will play a full role in processing the products of the petrochemical industry? Let me illustrate. Auto parts will use a lot more plastic. There are about 200 pounds of plastics in an automobile today.

In five years' time even smaller automobiles will use 600 pounds of plastics. Are we going to produce them? Will we have the R and D to do it, and will we have the other industrial policies to encourage the plastics industry to establish in Canada?
There are certain other major projects, such as the liquid natural gas project which could bring natural gas from the Arctic islands to the east coast. That major project approach embraces many technologies and would require research and development in tankers, transportation systems, liquifaction systems, electronic and processing equipment, control equipment, and so on. We need co-ordinated policies in order to put all these things together. I mention them to illustrate that more than taxes is required to form the incentive for research and development. The structure of the economy and the way we co-ordinate policies count for much. Without research and development we are not likely to pull ourselves out of our present situation.
I will quickly mention venture capital corporations and tax incentives to encourage individuals and institutions to invest in them, particularly in small and medium industries where much innovation is found. These industries need venture capital to carry them through all stages from research and development to the production of prototypes, testing of the market and getting into exports. We need policies much broader than tax policies to assist small and medium industries to come together, perhaps in research consortia and to find venture capital so that they can enter the market successfully. If we are serious about research and development we will have to do these things.
Something else we must do is to stimulate the growth of Canadian multinational companies. Our experience is that most multinationals-and we have their subsidiaries in this country-do their research and development at head office. These subsidiaries receive the technology after it has been developed and the parent company has made the product innovation and established the world market. This is no longer good enough. We must help Canadian companies become multinationals so that they will have the wide base that will enable them to afford research and development and produce goods that they can sell around the world.
1 want now to come to my final remarks, Mr. Speaker, and move from the question of industrial structure to the government's approach to new policies. In the four months preceding the first ministers' conference the Prime Minister (Mr. Trudeau) dealt personally with the industrial strategy issue in Canada. I think that as a result the prospects for the future look good. The first ministers in their February meeting agreed that they would examine the Canadian economy sector by sector-they would examine the problems of the pulp and paper sector and what could be done there, the machinery sector, the furniture sector, plastics, pharmaceuticals, automobiles and so on. As the hon. member for Winnipeg North (Mr. Orlikow) pointed out, the automobile industry is a hollow
March 7, 1978

industry in Canada. There is no research and development done here.


An hon. Member:: Why not?


Mr. O'Connell:: That is a good question. The Leader of the Opposition (Mr. Clark) dealt only with taxes, which are important but are not the total problem.
The sector approach will mean that both levels of government and both sides of industry, labour and management, will look at the same facts and set objectives for an industry. These working groups may discuss the share of the home market an industry should seek and the share of the export market it should seek and what this would require in productivity gains or what it would require in terms of labour-management adversary relationships or greater collaboration-what it would mean in terms of federal tax policy, provincial tax policy and federal and provincial incentives. All this will be examined by working groups sector by sector. 1 think this is perhaps the most hopeful sign in some time of help to improve the performance of the Canadian economy in its most important sectors.
The second approach required is that the federal government put its own house in order with respect to the many departments in the economic policy field. Should the Department of Industry, Trade and Commerce take the lead-the Department of Employment and Immigration, the Department of Finance, or of science and technology and so forth? There must be greater co-ordination.
Finally, Mr. Speaker, we must review the parent-subsidiary relationship in industrial sectors. Some parent companies do all the research and pass the technology on; some Canadian subsidiaries such as Canadian General Electric do some research and supply it to the rest of the world as is the case in heavy electrical turbines. Other subsidiary companies have a free hand, and companies such as Hewlett-Packard develop laboratories in Canada with their own engineering staff. Any product they develop they can take anywhere in the world. That is the kind of relationship we must strive for in an industrial policy, so that subsidiaries can be innovative and can do their own research and development. If there is not that relationship with the parent company, all the tax changes we can devise will not bring about greater research and development.
1 will conclude, Mr. Speaker, by saying that tax measures are fine but they only go part way. This is a bigger question, however. We need action programs and policies in order to devise industrial strategies sector by sector and bring research and development into full bloom in Canada.


Some hon. Members:: Hear, hear!


Mr. Paul Yewchuk (Athabasca):: Mr. Speaker, having listened to the Minister of Public Works and Minister of State for Science and Technology (Mr. Buchanan), and to the hon. member who just resumed his seat, I am convinced that the government still has not recognized the important role that
Research and Development
investment in research and development can play in the economic growth of this country.
I welcome the opportunity to speak in this debate today and I want to deal largely with the area of medical research since it has also been neglected by this government. It seems to me that an accelerating erosion has been taking place in this area, to the point of utter destitution. I am very sorry that the minister who opened the debate for the government failed to answer questions which people across the country are asking about the future of research, and particularly about the future of medical research in Canada.
Evidence can be found everywhere in the country that the policies of this Liberal administration have demoralized and discouraged the research community to the nth degree and have given rise to the threat of massive unemployment in that community.
I suppose, to put it in perspective, one should analyze the basis of Liberal policy, or rather the lack of policy. Careful examination of their behaviour in the area of research reveals two very significant factors. First, the government does not believe that research has to be done in this country if you can get it from other countries free of charge by reading their scientific journals. That is one of the basic premises upon which the Liberal government's science policy has been based over the life of the current Liberal administration.
Another premise on which they seem to be basing their science policy, or lack of it, is that money put into research is just another expenditure. It is just like paying the light bill or the gas bill at the end of the month. That is a horrible misconception of research. Anyone who has thought about this matter for any period of time quickly comes to the realization that money put into research is one of the best investments any country, any company, or anyone can make.


Some hon. Members:: Hear, hear!


Paul Yewchuk: If we look at some of the documented evidence that has been provided to members of this House we can easily find examples showing expenditures on research or investments which bring huge returns. I would like to cite two examples. The first is the dollar savings because of decreased mortality, morbidity, loss of earnings, and institutionalization following the development of the polio vaccine in the United States. If we compare the cost of the various factors which I have just mentioned prior to the use of polio vaccine to the cost of the development and administration of a polio vaccine program, we can see quite clearly that the costs prior to the vaccine were $6.7 billion. During the same period, the research costs and the administration of the program were $653 million. That is a ratio of return on investment of very close to 100 to one.
We can look at another area for which calculations have been made, that of immunology. The cost benefit analyses which have been done relating to immunology show the ratio of savings is again 100 to one. That is not to say all research

March 7, 1978
Research and Development
done results in a return in permanently reduced health care costs of 100 to one. But if you tidy it all up the ratio perhaps for the over-all field is in the range of 10 to one or 20 to one.
Any government which stands before this House and tells the country we are in a time of restraint and that we must save money by cutting expenditure on health research is simply being stupid. I am sorry I have to use that word but I cannot think of a more fitting term to apply to the kind of approach this government has been following.
I want to point out, Mr. Speaker, evidence of the crime. 1 consider the policies of this government a crime. 1 want to cite a number of examples which can only open one's eyes more to the situation that has resulted. Not only in the long run but even in the short run all of us are affected in terms of higher costs and in a reduced ability to improve a health care delivery system because of decreased funding. On this side of the House we are not the only ones concerned about this as Liberal speakers have attempted to point out. They have suggested that perhaps we are panicking over a situation which they feel is well under control. However, all we have to do is look outside of the House to an organization known as Canadians for Health Research. That organization, which now consists of 200,000 people, was born approximately a year ago as a result of the emergency situation which exists in the area of health care and research funding.
My hon. friend from the Liberal side who has been wincing at my comments will soon be able to rise and explain. I am sorry, I do not know his constituency because he speaks so rarely in this place. Perhaps he can identify himself, Mr. Speaker. I will let him do so if he wishes. 1 understand he is a former scientist and will perhaps make his comments known.
We know that some 200,000 Canadians, lay people, people from various health professions and from all walks of life have demonstrated their concern at this government's lack of vision and understanding, by forming an organization known as Canadians for Health Research. Through such an organization they might increase the awareness of the public to the dirty deeds of this government and hopefully express the consternation of the research community to the public. By this method the government might be pressured in some way to change and reverse its negative role, a role which has been practised far too long.
No one says that research does not cost money. I certainly agree that it does. 1 contend that the benefits of research, as 1 have already mentioned, far outnumber the initial costs. In the past seven or eight years medical and scientific research in all fields in this country has been starved for lack of funding. The number of researchers and scientists has thinned out to a point where virtually no new people are coming into the research field because there simply is not the funding and there are no prospects of adequate employment in that area. This results in a deterioration of our research capacity together with a feeling of utter instability in the research community. We have a good peer review system in this country which reviews project applications on a regular basis in order to weed out bad projects. But the lack of funding is resulting in the cancellation
[Mr. Yewchuk.l
not only of bad projects but of excellent and productive projects which have already been under way, setting aside any exception for consideration of new projects or giving consideration to future projects submitted to the committee for approval.
Because of these Liberal policies basic research in Canada is becoming a dying field. Yet without it we all know that Canada can never hope to contribute internationally or even put to use its findings here at home to compete internationally.
Let me point out how important increased funding in basic and clinical research is by citing some examples of significant developments in the area of cancer research-colon cancer recognition by a blood test developed by Dr. Phillip Gold of Montreal; recognition of lung cancer antigens, a protein in the blood, which is of assistance to the diagnosis and perhaps treatment of lung cancer, developed by another researcher, Dr. Julia Levy of Vancouver; recognition of leukemia antigens by Dr. Michael Baker of Toronto. Similar work in the cancer antigen field is being done here in Ottawa by researchers at the Ottawa General Hospital, and perhaps other places. All these are very important contributions pioneered here in this country.
This year because of a substantial cut in research funding many of these projects will not be funded at all, or funded to such a low level that it is impossible to carry them on in a meaningful way. The result will be that this research will be done elsewhere. Because the work has been good and internationally recognized someone else will pick it up and do it. Canada will therefore remain at the bottom of the list of contributing western industrialized nations to this important field of research. Important, I might add because cancer has become one of Canada's top killers bar none. It is a serious disease and a serious problem and the government is freezing research in that area.
The former minister of science and technology has now gone to greener pastures with the National Capital Commission. He espoused the theory that each research program should be examined in the planning stage and, if it were cheaper to buy the results abroad than to carry out the work here, we should buy it. While that is perhaps a valid view for certain limited technical questions, I wish to list its fundamental flaws.
First, the less we do here the less we will be able to do here. Research cannot be turned on and off like a water tap in a sink. It will never be economical to carry out work here unless related work is being carried out here on a continuing basis.
Second, and perhaps this is the most important consideration against this idea or notion that you can buy research, is that no nation sells knowledge except as a loss leader. They sell products and services derived from those products and they are quite properly sold at a profit. The further loss of our economic independence would be reflected by an even worse balance of payments problem if the long range effects of "make or buy" are ignored. The decline of the research capability here means that foreign advances will be applied here incompletely
March 7, 1978

with lags of three to ten years. What I am attempting to say is that the economic and social costs of thinking we can buy research would be enormous.
Perhaps I can use the example of a new military weapon. A country might take the research position of Canada rather than a country like the United States which does a lot of research. Country A and country B may become locked in conflict. Country B may appear on the battle field with a new weapon that has not been seen before by country A. Obviously country B has been doing research and development. Country A might be able to go to country B and say they would like to buy their new weapon or they may try to get one, take it apart and attempt to build one of its own along similar lines, or improve on it. The battle would be lost before country A could develop such a weapon because of a time lag in such development which could be as much as three to ten years. If you are locked in battle and you need ten years to build a weapon to counter the weapon of your opponents, it is obvious who the winner will be.
That is the position in which the government has placed this country. In the area of scientific research and in all other areas of research we are taking a strange and backward approach. The results can mean nothing but harm to the public interest of this nation in the long run.
Let us take a quick look at the government's record in medical and scientific research funding. In 1975 Canada contributed only .9 per cent of the gross national product to research and development. During the same time the United States spent 2.3 per cent of its GNP. By early 1976, the actual federal expenditure on research and development had fallen to less than 0.5 per cent of the GNP. Of this 0.5 per cent spent by the government, only 0.1 per cent found its way to university research and only 0.1 per cent to industrial research, the two most productive areas for such expenditures. More current, a couple of weeks ago the Medical Research Council received their annual increase. Their principal budget for 1977-78 was $56.7 million.
The Minister of State for Science and Technology announced an increase of 7.8 per cent for the council bringing its budget for 1978-79 to $61.1 million. Even that announcement was dishonest, sneaky, underhanded, and misleading. Here's the catch. Last year the council received an added $1.1 million, a cost increase or borrowing against the future, which was substracted from the 1978-79 budget bringing the total down to $60 million, which represents an increase of 5.8 per cent not 7.8 per cent.
Even that is not an accurate reflection of what actually happened. An accurate reflection would be that that $1.1 million should be added to last year's budget because that is when it was spent, and reduced from this year's budget because it was not contained in it. The actual increase you come up with is 3.8 per cent. That is the actual increase in the medical research budget for this year, yet the minister had the gall to announce in his press release that this increase was 7.8 per cent. 1 cannot think of anything more despicable, and 1 can
Research and Development
think of a lot of despicable things to say about this administration.
Every year the budget of the Medical Research Council has been decreasing by about 10 per cent. 1 say that not only to reflect the actual gross increases but taking into consideration the cost of inflation. This increase of 3.8 per cent, matched with the erosion of funds by inflation, which in the medical research field is in the range of 15 to 16 per cent this year, leaves a clearly substantial cut in the budget.
If the Minister of State for Science and Technology were honest with the people of Canada, he would not be issuing a news release stating that there is an increase in the budget of the Medical Research Council. He would have stated that there was a cut in the MRC budget of approximately 10 per cent this year. That would have been a more accurate reflection of the facts.


Mr. Deputy Speaker:: Order, please. 1 do not know how much longer the hon. member requires to complete his remarks. His time has expired and he may continue only with consent. Is it agreed that the hon. member may complete his remarks?


Some hon. Members:: Agreed.


Paul Yewchuk: I thank hon. members for their courtesy. Because of that, I will not give the second half of my prepared comments but will proceed to something that everyone in this country should know, namely, the Progressive Conservative policy with regard to medical research.
The stop and go policy of this government with regard to research funding has created substantial instability. It is becoming greater because the government has offered no encouragement to the field and certainly does not appear to have any plans to start pouring money into research at this time.
My main message to the people of this country and the scientific community, particularly those involved in health research since that is the area of my responsibility for this party, is that if they want a change of policy, which I am sure they do, the only way to make that happen is with a change in government. The only viable alternative to the existing government is the Progressive Conservative party.


Stanley Howard Knowles: Oh?


Paul Yewchuk: There is no use supporting the socialists. The most that could be is an objection to the existing policy. It would not change the policy or the government. I call even on all socialists in the research field to abandon their desire to vote socialist and instead vote for the Progressive Conservative party. That is the only way to get a change in policy in the field of medical research or other research.


Stanley Howard Knowles: This is the party that gave you extra time.
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Research and Development


Paul Yewchuk: 1 have already thanked the hon. member for his courtesy in allowing me extra time. I shall be very brief in outlining the policy to which this party is committed and which will become government policy after the next election. Not only shall we be aiming to keep the level of funding up to previous years, taking inflation into account, but over the next five years it will be our intentions to catch up to the level of funding provided by other nations with which we shall be competing. I have in mind, for example, the United States where the contribution to medical research is fourfold that of Canada. Over a five year period this party is committed to bringing expenditures up to that level, an investment which will yield returns as high as 100 per cent over the long term. Only with this kind of commitment can we hope to reintroduce into the research community the stability it requires, an abandonment forever of the "stop-go" concept and of the idea that we can let others do our research for us.
We intend to give adequate attention to ensuring that research flourishes in this country at all times. Research in the health care delivery field is of particular importance. We must ensure that there is an adequate base for education in the health field and that there is an improvement of scientific and technical knowledge as a foundation for health care. We must see that investigators in the health field are adequately trained and support those who make contributions to new knowledge.
The last portion of my remarks contains an outline of Conservative policies. These are serious proposals. 1 hope the Liberal party will take note of them; perhaps it will have a chance to implement some of them before the next election. Otherwise, it will not have an opportunity to do so.


Francis William (Frank) Maine: A point of order, Mr. Speaker. The hon. member for Athabasca (Mr. Yewchuk) said he did not know my constituency because I speak so seldom. 1 suggest he would not know because he himself is so seldom here. He is probably stuck in the tarsands. Anyway, if he were able to read and use a seating plan he would be able to find out my constituency.


Stanley Howard Knowles: Is that a point of order?


An hon. Member:: What is your name?


Francis William (Frank) Maine: A further point, Mr. Speaker. During his remarks the hon. member said, "If the minister were honest he would admit the budget had been cut by 10 per cent." 1 reserve the right to raise a question of privilege on behalf of the minister.


Mr. Deputy Speaker:: Order. I have to remind the hon. member that that is a matter of debate.


Mr. Gus MacFarlane (Hamilton Mountain):: Mr. Speaker, although I may quarrel with what I consider to be the confining nature of the detail in the motion I do find much merit in the body of the motion. Indeed, it is my opinion, one shared by others, that it is crucial to the strength of Canada's economy

and the provision of employment opportunity that a vigorous program of technical research and development be promoted by the government.
I am one who believes we should be spending more and more on the development of new technology. If the bubble city of science fiction is ever to come into being, surely it will happen in our land where the environment of the north cries out for solutions. Surely we Canadians could be the first in the world to develop a new technology to enable all forms of life to grow, to live better and to exist together on this planet. The Russians and the Americans have set their sights on outer space, but hopefully they will look back from the moon and see Canadians bringing forward new technology not only to make our very existence on earth possible but to ensure that the earth itself has a more vibrant and glorious future.
In helping others we will help ourselves, for new technology brings about new job opportunities and never-ending spin-off of job situations which will ultimately do much to alleviate the problem of unemployment. New technology itself may be exported. In coping with our environment and the ills which befall human beings, plant and animal life, as well as with the sociological difficulties of living together, our research should lead the world.
At the outset I suggested that the five points in the motion are restrictive. As the Hon. Bud Drury once said:
A single science policy is not, however, a meaningful concept. What in fact exist are numerous policies for the use of science and technology, developed in relation to the objectives of federal departments and agencies and also in relation to objectives of the private sector.
1 find it hard to believe and intolerable that the motion makes no specific reference to university research. I note with interest that the present science minister, the hon. member for London West (Mr. Buchanan), gave high priority to university research in his remarks. I well remember, and with interest, that many of the speeches of the hon. gentleman's parliamentary secretary, the hon. member for Wellington (Mr. Maine), gave great support to the development of research in universities. Industries have their own facilities for research and development. Government, equally, has a need to provide such facilities. However, properly funded university research across the breadth of this country is able to serve industry, governments and all Canadians.
I realize that in this time of restraint great emphasis is placed on target-oriented research. There is also great emphasis on obtaining immediate results for each dollar spent. It would be a great error on our part, however, if we were to succumb entirely to these pressures. If we are to be the country of the future, then our future lies in true research. Our universities have been the ones which have clung to their academic purposes in the face of all pressures-with government support and without government support and with private support and without private support. Researchers have carried out their personal quest for knowledge in spite of all obstacles. I urge the minister to increase support so that great Canadian minds might remain in Canada and make a great
March 7, 1978

Canadian contribution for the benefit of all of us on planet earth.
Let me quote from a letter written to me on March 3, 1976 by Donald Sprung, Dean of the Faculty of Science at McMas-ter University. He wrote:
As a practising scientist, and dean of one of the most research-active science faculties in Canada, I fully share the concerns expressed by Professors Yates and Polanyi. Within our faculty the vast majority of professors are actively engaged in research. Many of them have national and international reputations for the value of their work. The high quality of my colleagues is reflected in the fact that at McMaster our research support from government and other granting agencies has not fallen as far behind as it has at other universities. Nonetheless, it has fallen in value, and by a considerable percentage over the past six years. These are just the years during which they are doing their best creative work, the years at which one would expect the level of support to be increasing. In fact, it is only in very rare cases that an individual has been able to secure an increase in funds.
Time and time again researchers across the country, professors and others, write to us to give advice and suggestions. Over the weekend I had the pleasure of being present for the Canada Jaycees Vanier Award to five outstanding Canadians. Among those honoured was Dr. John F. S. Crocker of Dalhou-sie University. He is noted for his research into Reye's syndrome. Dr. Crocker mentioned that we had gone through a period when it was considered fashionable to say: "Do not waste money; other countries are far ahead of us and we can either borrow or buy their research". In his own case a large amount of the funding for his research had to come from outside this country. We agreed that there is a marked change in that attitude, and there is every reason to believe that there is renewed interest in and sincere backing for Canadian research at all levels.
We must remember that federal funding of university research is necessary because of the importance of highly skilled scientists who are required to tackle problems facing Canada concerning the use of limited resources, population pressures, pollution and protection of the environment, health care, agricultural productivity and developing new sources of food and materials.
1 have had extensive dealings with the biology department at McMaster University. I would like to quote from some of the correspondence I have received from that department. This correspondence illustrates the understanding of that department of how this minister, his department, this government and others have responded in a real way to the requests of researchers across the country. Mr. Davidson, chairman of the biology department of McMaster University, wrote the following:
Our concern at the level of support for research is not only that our individual efforts as scientists are affected. As teachers, we also know that the approach active scientists bring to teaching is more critical and more alive because they have first-hand experience of contemporary problems in our knowledge. The active scientist is generally a more interesting teacher and is certainly a better informed teacher than a scientist who depends solely upon books for information. Thus our concern over research funding is not purely selfish; we see research as an integrated part of our teaching responsibilities.
Research and Development Professor Bayley from the same department wrote:
The human population is putting increasing demands on limited natural resources. To tackle the problems this creates, Canada like the rest of the world will require all the skilled scientific talent it can get. But maintaining and training skilled scientific talent means practising science "at the state of the art." With the sophistication of much of today's science, this cannot be done cheaply. If, to save relatively small amounts of money (by national standards), Canadian science is forced to lag behind, it will take years to recoup the lost ground. In the meantime, when up-to-date experts are required in Canada, the only reasonable step would be to import them from abroad. For a country of Canada's wealth and aspirations to continue to rely on imported scientific talent would be as unprincipled in my view as expecting other countries to provide us with trained medical staff-or hockey players.
Professor Douglas M. Davies of that same department wrote:
University research differs from government research ... in several important ways.
1)	Applications for university research grants are carefully appraised by specialists in each discipline ensuring that only the best is supported.
2)	Research at universities usually involves also the training of specialized graduate students who will be Canada's scientists of the future.
3)	A university teacher engaging in original research is able to bring to his teaching of undergraduate and graduate courses a first-hand excitement and freshness in presenting the latest in view scientific knowledge.
The head of that department, Mr. Davidson, seems to recognize not only our research problems but also our political problems. He wrote the following:
A problem for any government is to justify to the electors the allocations it makes of public funds. Thus, it would be easier for Mr. Trudeau's government to direct funds into, say, cancer and heart research, than into basic research on, say, wood production in eastern Canada, or fish breeding in northern Canada. But, as we tried to show you, the solution of problems unique to Canada will never be achieved in the U.S.A. or Europe. We have unique problems and to attack them we must, to some extent, be chauvinistic and parochial. We need a group of highly skilled highly trained scientists who recognize Canada's problems and are given the chance to work on them. To us, the solution is an adequate level of funding to support research.
All this and more has been said by researchers across the country, written to members of parliament and presented to the government and the Prime Minister (Mr. Trudeau).
1 would like to note the fact that Max Chernesky, a virologist at St. Joseph's Hospital in Hamilton, along with Donald Savage, head of the Canadian Association of University Teachers, presented a report which is quite lengthy. However, there were three recommendations in their report, and 1 would like to tell the House how the minister, his predecessor and others have tried to respond to those recommendations.
One of the recommendations is as follows:
We recommend that governments at all levels consult with the organizations which represent professors and researchers prior to proposing new policies in higher education and, in particular, in regard to any negotiations between the federal and provincial governments over the financing of higher education.
The almost immediate response to that recommendation was the formation of the Canadian Committee on Financing of University Research. It is not a federal-provincial committee; it is a Canadian committee. This committee almost immediately stepped in to bring those forces together as a direct response to the brief presented by the Canadian Association of University Teachers. The committee was announced on November 2, 1976. It was announced that the committee
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would be composed of 20 members; that the secretary of the Ministry of State for Science and Technology would be the chairman; that nine other federal officials, including the heads of the three granting research councils, would complete the federal representation; and that the provincial members would include deputy ministers responsible for universities, university presidents or principals or vice-presidents or vice-principals and representatives of university councils or commissions.
It was also announced that there would be a regional balance in the provincial contingent. The establishment of that committee marked the achievement of a new level of understanding and co-operation between the federal government and provincial governments in the matter of university research.
I now move to the second recommendation in that report which was produced in about February of 1976. The second recommendation was the following:
We recommend that government restore some of the lost purchasing power to the granting councils (the Medical Research Council, the National Research Council and the Canada Council).
There was an almost immediate response to that. Let us consider the estimates which have just recently been placed before us. The estimates provide for inflationary increases in the costs of research supported by the councils. The estimates tabled also carry forward into 1978-79 the additional increase of $8 million provided in the previous fiscal year and now adjusted for cost increases for programs relating especially to regional balance of scientific capability, national problem areas and the support of interdisciplinary research.
It is interesting to note that the budgets in 1978-79 will be: for the National Research Council, $105 million, an increase of $7.1 million; for the Medical Research Council, $60 million, an increase of $3.3 million; and for the social sciences and humanities program of the Canada Council, $31.1 million, an increase of $2.3 million. That is a direct response to a representation made by the Canadian Association of University Teachers.
The third recommendation is as follows:
While we would favour a change in the delivery system for the funding of universities and colleges, we recognize that the moment may not be propitious for such significant change.
This recommendation itself admits that it would be difficult at this time to engineer changes in delivery systems, but a direct response to this recommendation was the presentation of what was Bill C-26. That legislation has not as yet been proclaimed, but in time it will and it indeed makes a dramatic change concerning delivery systems. It does a great deal to bring forward some ideas which are a conglomeration of thoughts of people in many areas.
Granted, we have merely a reorganizational task at this point, but last session's Bill C-26, which was passed by parliament in June, 1977, has as its main thrust the creation of two new granting councils: the Natural Sciences and Engineering Research Council, formed by separating the support for university research in the natural sciences and engineering from the National Research Council; and the Social Sciences and Humanities Research Council, formed by separating support
[Mr. MacFarlane.l
for university research in the social sciences and humanities from the Canada Council. The Medical Research Council was not reorganized by the bill, although its mandate was modified.
The three granting councils, NSERC, SSHRC and MRC, will be responsible for the majority of direct funding of university research by the federal government. Each of the councils will report to parliament through its own minister. The members of the councils and their presidents are appointed by the governor in council. The councils themselves are subject to certain administrative and financial constraints. Otherwise, the councils are free of government intervention and enjoy independence and autonomy. Neither the governor in council nor the designated minister can direct or instruct the councils. However, the minister may refer matters to the councils for advice.
Of course, the councils depend on the government for funds. In deciding on the amount of funding, the government will be influenced by the separation and revision of the councils. Therefore, it is only fair that the councils be made aware of the government's objectives and wishes. The manner in which they are conveyed to the councils is important and is being considered carefully.
In these few remarks I have been able to indicate my own desire to serve the research communities, my own confidence in Canadian researchers, and my own belief that we should be much more interested in all universities across the country which can, in a very real way, serve all of us by pure research in itself. All research must not be target-oriented. All research must not only be done on the basis of a dollar out is a dollar back, or a dollar out is ten cents back. Much research must be done on the basis that we have confidence in the minds in our universities and the minds the universities will have some participation in forming. No respectable researcher believes he is dealing with anything but plastic character when he deals with his students. He recognizes fully that he may be a sounding board, he may be somewhat of an example, he may open a few doors, but really he is dealing with the development of minds which will lead us on to much greater things in the future.
As 1 said at the opening of my short remarks, who else but Canada would be involved in the great plastic dome cities of the Buck Rogers world or the space world? Who else but Canada should really know how to deal with the environment? Who else but Canada will really have concern for those small pieces of life which exist on some of the islands in the north? Who else but Canada, sitting at the crossroads of the world between the United States, Russia and China, will have the responsibility for exporting not only technology but human technology? That is the technology which comes from the social sciences. As was mentioned earlier by an hon. member of the opposition, the basic idea is how we on planet earth can live together, healthy in a physical way, healthy in a mental way, and healthy in a way to exist on a planet so that we
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ourselves do not bring about the demise of the planet. That is a great challenge for Canada.
I appreciate the fact that the motion has been introduced. I believe we are taking steps in the right direction. Perhaps some think we should move more quickly. I doubt if anyone thinks we should move more slowly. The hon. Minister of Public Works and Minister of State for Science and Technology has indicated direction. First, he responded immediately to recommendations placed before him; second, he established delivery systems which will ensure the involvement of all facets of the Canadian people; and third, he has shown a great recognition for the role our universities and research minds must play in any future which Canada wishes to lay any claim to at all.


Mr. Harvie Andre (Calgary Centre):: Mr. Speaker, the hon. member for Hamilton Mountain (Mr. MacFarlane) presented what amounts to a total condemnation of the government's performance in science and technology. I compliment him on his speech. As he indicated by reading the record of his former colleagues at McMaster University, their community is less than happy with the government. 1 found the hon. member's comments rather interesting.
In view of the hour, may I call it six o'clock?


Mr. Deputy Speaker:: Is it agreed that we call it six o'clock?


Some hon. Members:: Agreed.


Mr. Deputy Speaker:: It being six o'clock, I do now leave the chair until eight o'clock.
At six o'clock the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.
The Acting Speaker (Mr. Turner):: Order. At six o'clock the hon. member for Calgary Centre (Mr. Andre) had the floor.


Harvie Andre: Mr. Speaker, it is a pleasure to participate in this debate. Since 1 have been here this is the fourth opportunity to discuss this subject on the floor of the House of Commons. Three of those opportunities were created by this party using one of our allotted days to indicate our concern and interest in this subject.
The recent history of the science policy in Canada can only be described as pathetic. By way of historic perspective it might be recalled that the first movement in this area occurred in 1919 when the Conservative government of Sir Robert Borden created the National Research Council. From that time until 1941 there was little concern or interest in a science policy. As a result of the interest created by the war, a Privy Council committee on science matters was created but in the period between 1950 and 1958 when the St. Laurent government was in office it did not meet even once.
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In 1961, the Diefenbaker government introduced as a tax measure or 150 per cent write-off of incremental increases in research and development which had a very beneficial effect, but that measure was withdrawn by the Pearson government which, as a sop, created a science secretariat within the Privy Council.
In November of 1967, the other place created a special committee on science policy to look into such questions as recent trends in R and D in Canada; research and development carried out by the federal government; federal assistance to research and development; and the principles and structure of a science policy for Canada. This committee did an excellent job. I am not in the habit of praising the other place, but in this case 1 admit they did an excellent job.
I will not try to summarize the findings of that committee because they are rather extensive. Suffice it to say that they came out with three volumes, with a subsequent addendum, but their initial analysis was characterized by four rather profound and disturbing comparisons of Canada's performance. They concluded-this was in their first report in 1970- that Canada at that time invested a smaller percentage of its GNP in R and D than did most industrialized nations. They also concluded that of the tax money spent by the Canadian government, Canada spent a greater proportion on government labs than any other country of the western industrialized nation; that there was less spending on R and D in the private sector than in most industrialized nations; and that Canada spent a greater percentage of its R and D funds on basic research than did most industrialized nations.
That was the deplorable situation which existed in 1970. How has it changed in the last seven or eight years? Let us look at some figures. In 1967, Canada spent about 1.4 per cent of its GNP on R and D. The Lamontagne Committee recommended a goal for Canada of some 2.5 per cent as being appropriate. At the time the U.S. was spending 3.6 per cent, so they gave, as an appropriate target for Canada, something less than what the United States was spending. By 1971 the proportion of the GNP devoted to R and D in Canada had dropped to 1.2 per cent. By 1974 the figure had dropped to .85 per cent, and by 1976 this figure had dropped down to .8 per cent. In other words, a situation which was bad in 1967 became much worse seven or eight years later.
That performance can only be described as absolutely tragic for Canada, and there are a number of very good reasons why that is so. One of the foundations of a nation's future is its ability in the area of science and technology. Historians who like to pigeonhole epochs and areas describe this as the technological age. Obviously that is an accurate description.
How we use science and technology will clearly define both our standard of living and our quality of life. If governments feel they have a responsibility to the people and are concerned about our standard of living and quality of life-and I believe they are-surely they would give science policy a very high priority. Science and technology is vital to the performance of

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any nation in areas such as trade. No economic unit can indefinitely buy more than it sells whether it be a family, a corporation, or a nation.
As a nation we have three commodities to sell to the rest of the world in order to generate the funds to buy the things we need but do not produce. Those three commodities are renewable resources, such as agricultural products; non-renewable resources, such as energy, minerals and the like; and our human value products or services. The latter can come in the form of brains or brawn. I do not think it desirable, nor do 1 think it possible, to expect Canada to compete with third world nations in terms of brawn. We cannot expect Canadians to endure the decrease in their standard of living that would be necessary if we were to compete with third world, low income nations for commodities and services in which sweat or back-power is the main component. This means that if we are to compete in the world marketplace in human value added materials, we have to do it in terms of brains, skill, talent or technology. In this regard Canada's performance is absolutely abysmal.
Last year our trade deficit in high technology manufactured goods was between $10 and $11 billion. That is an astronomical figure, but it is even more disturbing when you look at the trends. A decade or two prior to 1970 we ran approximately a $1 billion deficit-in constant dollars-in manufactured or high technology goods and paid for it easily with the export of agricultural products and non-renewable resources.
Since 1970 there has basically been a straight line deterioration in trade imbalance in manufactured, high technology goods from $1 billion to $10 billion. The trend is devastating and there has not been a single policy initiative from this government to try and arrest the trend or turn it around. If this is not done we are going to think that 10 per cent unemployment is nirvana compared to what we will experience in the future.
It is absurd in the extreme to have our officials in Switzerland talking about reducing tariffs and thus curing all our problems. The government has no apparent understanding of what is happening in Canada in terms of our deteriorating trade position. Cutting tariffs will only make a bad situation worse. We need a careful strategy, of which research and development is a fundamental element, to ensure that we can compete in the world. As long as we play "monkey hears nothing, monkey sees nothing, monkey speaks nothing," which is the posture the government has adopted, we will continue to have this kind of deterioration. Cutting tariffs will only speed the day when 15 per cent unemployment is the mean in this country.
In order to provide jobs for Canadians we must look to manufacturing, and that means high technology. We cannot compete with third world nations in manufacturing where there is a small skilled component. Primary industries simply do not create the jobs necessary to reduce unemployment. It is estimated that about 6V2 cents of every dollar from primary products goes into wages, whereas in manufacturing it is something like 35 cents of every dollar. For each dollar earned
[Mr. Andre.l
from manufacturing products there are six times as many jobs created as from the sale of primary products.
If the government is sincere about addressing the problem of unemployment, not just unemployment today but the unemployment we will have in the next three to four years, they should tackle the question of science policy and research and development and recognize that our performance in these areas is worse than any other industrialized country in the west.
That cannot be said often enough, Mr. Speaker. Our performance is the worst of all western industrialized nations. That cannot be blamed on international factors, on the weather, on the EEC, or on any of the unknown forces which seem to be causing all our other problems with dollars and so on. The fact is it is Canada's fault-the fault of this government.
What has this government done? When the Science Committee reported in 1970 the government quickly established a Ministry of State for Science and Technology to look after our problems. It was designed to generate policy, I assume. It generated one policy statement and that was the "make or buy" policy. It was a good policy designed to reduce the amount of government funded research conducted inside government labs. At that time, 1971, 62 per cent of all money spent by government directly was spent on research done inside government labs. As a result of that policy the figure has gone up to 65 per cent. So the one policy this ministry has produced in six years has had exactly the opposite effect to that which was intended.
I have said before, and I say again, that if that department were abolished we could save $6 million immediately. There are people in this country who think the government is concerned about science and technology just because there is a department with people making up to $60,000 per year sitting around thinking about science policy. People expect they will come up with great ideas because this government knows what is best for all of us and all these high priced people who are going to find out the answers. Mr. Speaker, they have produced nothing. I say we should get rid of them immediately. We would save that money and the attention of the public would not be deflected by that flim-flam.
I should like to elaborate a little on the problem that the government was trying to arrest with this policy, the amount of research being done in government laboratories, rather than in the private sector. I should like to point out for the benefit of the House the importance of research performed in the private sector. It is important not just from the point of view of the more efficient and effective action you get from the private sector as opposed to the government. It is also important because of the time lag between new discovery, innovation and implementation in a commercial way, which is greatly reduced.
As an example, Mr. Speaker, you have to look no further than the area around MIT and Harvard in Massachusetts, or the area surrounding Stanford and Berkeley in California, to
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see the tremendous number of high technology industries, which have spun out of the fundamental research that has occurred at those institutions, research by and large funded by governments but performed in the private sector. If an idea is generated in the private sector, the time lag between idea and commercial application is greatly reduced. When those ideas are generated in government labs there is an unwarranted delay between discovery and implementation.
In this party our opinion is by and large, except for some areas where it may be necessary, that government should not do research and development. Government should sponsor research and development. They should help pay for research and development but they should contract it out to the private sector and not do it in-house.
We also believe that there is a role for government funding for fairly large projects. In addition, that activity can be used in a beneficial way. As an example, the largest research project of this century has to be the NASA program to put a man on the moon in the United States. As a result of powerful southern Senators primarily, but for other reasons as well, a good deal of the research money provided by the National Aeronautical and Space Administration went to companies and institutions which were located in the southern United States rather than the more developed northern United States.
In the southern United States, in the so-called sun belt, one of the effects of that benefit was to create tremendous growth of high technology industries, the net result being that regional discrepancies and regional economic differences between the north and the south were greatly reduced. What would happen if we took the $500 million a year that the Department of Regional Economic Expansion is spending-to no avail because regional problems are getting worse in this country and not better-and we used that vast amount of money to create worth-while large scale projects which would be of value to Canada? The benefits would be considerable.
In the Canadian private sector in 1971 it was estimated that industry spent .41 per cent of the gross national product on research and development. By 1977 the figure had dropped to about .3 per cent. In other words, a very serious situation in 1970 had become much worse by 1978. The last budget of March 31, 1977 had a small tax credit for R and D activities of 5 per cent, rising to 10 per cent in the high unemployment areas. The United States, which is already doing four times as much R and D as Canada, has a tax credit of 10 per cent across the board. If the government was really interested they would be looking at tax credits in the area of 25 per cent, going up to possibly 50 per cent in areas of high unemployment.
Why is this so? Very quickly, I believe the answer was given by Dr. Robert Uffen, former head of the science secretariat that existed before the creation of the Ministry of State for Science and Technology. He said, and I am quoting from an article in Maclean's magazine:
The Trudeau government views science and technology as instruments for political manoeuvring both domestically and in international affairs.
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That is dead accurate, Mr. Speaker. That is all this government recognizes science and technology for-as instruments for political manoeuvring. It is nice to go to Moscow and sign a scientific exchange to send a couple of scientists back and forth. It is nice, when one feels a little pressure about energy, to set up a research institute and say: "Hey, we are doing something'', and wave a flag. It is strictly a political instrument for the government's manoeuvring both domestically and in international affairs. There is no recognition whatsoever by the senior gurus in the government opposite of the importance of science to the long-term future of the government.
It is sad to say, but investments in science and technology have a long-term payout. Investment today may not yield a return for 5, 10, 20 years. As this government thinks only of next month's Gallup poll or next year's election it is not going to make that kind of investment in Canada's long term future. It is very sad for the nation, but that is the case. That is only one of a whole score of reasons why it is essential we get rid of them, and soon.


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


Mr. F. A. Philbrook (Halton):: Mr. Speaker, it is a pleasure to be talking about this subject today. I would like to congratulate the opposition on putting forward this motion. In general terms it is a very good motion; the general thrust is right. The specific details of this motion probably require some further study with a fair bit of caution. There is absolutely no question, I agree with my colleagues in the opposition, that we need to be doing more research and development in this country. This is particularly so in the industrial and free enterprise sector, especially in contrast to the research that has been done in the government sector along with the universities.
We have a definite need for research and development at the present time because we have a definite need for an increased industrial thrust for an improved economy. Research and development and innovation, without question, is the base, I am sure we all agree, for a new type of prosperity and a new type of direction for this country.
Having been in research and in industry, I feel confident that we have the potential in this country to do much better and more effective R and D to produce a much more efficient industry. We have the scientists, an excess of them. They are excellent; they are as good as any in the world. Many of them have had to leave the country and go to the United States or elsewhere to follow their careers because there is not enough potential for them in Canada and in some cases they become over-specialized for a country like ours. This is not the biggest or the most powerful country in the world. We cannot enter all the brand new specialities the way our neighbour the United States does. But in the meantime we can probably provide more satisfying work for the vast majority of our scientists.
As the opposition party which proposed this motion has indicated, we also have many natural areas of research and development of industrial thrust in this country, areas of immense advantage to Canada such as the north, forestry,

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mining, the oceans, agriculture. These areas also should be exploited.
In the past we have had some misguided notions, however well meaning, particularly in the 1960s. We had a very strong thrust in consumerism that led us down some wrong roads. We have had some strong ideas about economic nationalism, wanting to do everything for ourselves, by ourselves in isolation. That has been a handicap to our thinking and planning at times. We have learned our lesson on those scores. Our thinking is more in balance now. That is an advantage we could use in terms of scientific and industrial policy.
We have had some concerns about helping the big multinational corporations that maybe do not need help. These multinationals would use our efforts and money to their own advantage, perhaps for other countries' advantages and not for the advantage of Canada. Possibly there is some truth in that. It is rather a mixed picture. I still think we need to work on the multinationals, the big corporations in general, because they have a great deal of ability, a great deal to offer this country. Aside from the big companies, this is essentially a country of small business, small industry, small factories. There is a great deal we can do both in a positive and negative way to help our small businesses, which form the majority of the businesses in this country.
Of course, we know the usual government measures. We have technocrats, highly skilled experts both in the government and outside, who can tell us just how to help our companies, big and small, and our research and development with tax exemptions and grant programs of various kinds. Fortunately, we are tending to get away from giving people money, giving them packaged programs. As has been said in recent times, probably the most useful thing we can do is get out of their way with our restrictions, bureaucrats, red tape and so on. Many government policies and other kinds as well should, frankly, be simply eliminated. I will talk about that again in a minute.
There is something that is important which other countries have discovered much more effectively than Canada, certainly the United States, many European countries such as Switzerland and Germany and, in more recent years, Japan. It is that there must be a general thrust of research and development. It must be much greater than we have had up until now, one that is less academic and more applied, one that goes into producing new products, new exports and so on. That would make this country much stronger industrially than it ever has been, and it certainly has been strong in recent times.
Government also has a responsibility which it perhaps has not fulfilled. When I say government, I am not only talking about the federal government but all levels of government, because this is a very layered country in terms of government. This is a very important function I would like to see fulfilled: government should act as a catalyst in trying to bring together the private sector, industry and businesses, on the one hand, and universities on the other.
There is, unfortunately, something that has happened in this country to which we have not addressed ourselves. Aside from the cultural solitude, the French and English Canada, we have many sectoral solitudes such as government, business and universities. We have not pulled together as effectively as we should have. This is probably one of the causes of our problems. This will have to be absolutely essential in future if this country is going to compete in a much more competitive world. Our government has the prime responsibility for doing that.
In terms of what has happened in recent years, I wish to give some of my own experiences with a couple of examples. One is the pharmaceutical industry. I would like to say quite a bit about that. Second is the plastics industry, of which 1 have just become a little more aware and which 1 think is equally important. I hope to at least support that, if not make some contribution.
First, I wish to talk about the pharmaceutical industry. It is a very unusual and interesting example. In the fifties, as far as Canada was concerned, this industry consisted of a few small companies that made many simple medicines. At that time- and it is easy to forget because companies change so fast- there were not many powerful complex medications. We could have our small companies, our simple formulas, our Galenicals, whatever they were called.
Things began to change very quickly, namely through research and development. Ail of a sudden the industry became huge. It became very complex and expensive. We found the products could only be purchased in countries such as the United States and shipped here. Like any responsible country-and this is probably a carry-over of the C. D. Howe thrust which had many benefits as well as creating certain problems-we found we could induce our American and European friends to locate some of their plants here. They located more and more of their functions here, not just the packaging and assembling, and not even just the manufacturing. We actually began to have a pharmaceutical industry here. Granted it was almost totally foreign owned, but we began to have what looked like a modern, competitive pharmaceutical industry. It even began to catch on with some of our native Canadian companies like Ayerst and Frosst. We did not have many, but a few started to develop as full modern companies of which we could be proud.
What did we do? We got into a way of thinking in the sixties which was new to us. Hopefully, we will now look at it in a more balanced, moderate way. Things were going well. They were producing a lot of benefits. However, some things were going wrong. We swallowed the line about new wonder drugs being expensive-unnecessarily. We believed there may have been monopoly agreements in order to keep up prices and so on. Therefore, we decided on laws which stated these companies had to share their new products with other companies, so-called compulsory licensing. They had to share the fruits of their efforts and lose their competitive advantage. In some cases they could not even regain the expenditures they had made in the development of new wonder drugs. By law they had to share these commercial, medical advantages for a
[Mr. Philbrook.l
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very small return, something like 4 per cent. This may have been well meaning, but I am not sure it was wise or accurate.
That example is not directly related to research and development policy, but it has most certainly affected research and development in the field of pharmaceuticals. Even if that field was mostly foreign owned, we still gained many advantages. It had a great deal to offer, including keeping many of our top scientists active and satisfied and working in their own country.
Now we are into patent laws. There is a suggestion of further patent restrictions coming forward. These patent laws will only give the pharmaceutical companies an exclusive right to their own development and production for a particular number of years, for example nine years, which may not be long enough to regain their expenses. Sometimes it takes 25 years to develop a drug that will receive government approval. That is the nature of the game; it changed drastically overnight.
These are matters which we need to thoroughly rethink. They are not directly research and development. They do not come in the form of direct taxation or tax exemptions, but nonetheless result in a lot of pharmaceutical research and development being withdrawn from this country. That is a shame. It is entirely the wrong trend.
I wish to state a few of the advantages that we have from our pharmaceutical industry. It is the most research intensive of all intensive industries. It has the highest percentage of funds devoted to basic research, 25 per cent versus 4 per cent for the industry in general, toward the advancement of scientific knowledge without specific commercial objectives.
Almost 25 per cent of all research in Canada is done by pharamceutical companies. It is the highest self-financing of research and development expenditures as a percentage of sales, 36.8 per cent versus 1.5 per cent for an average of all industries. It is by far the largest employer of research and development scientists compared to the total number of people employed. It accepts a lesser percentage of research and development money from the government, about 4 per cent, while other industries average four times that much. In other words, it gets by on its own. It asks for less help and makes a great contribution. It is one of the leading recipients of dollars from outside Canada for research and development done here.
One in five research and development employees has a Ph D compared with one in 20 in industry in general. It is very highly science oriented. It had nearly twice the rate of growth in terms of intramural research and development from 1963 to 1975 by comparison with industry in general. In fact, growth has doubled every five years. Finally, the pharmaceutical industry spends the third highest amount on current research and development for value added. If every industry in Canada were capable of accomplishing that much, I think we would be on top of the heap in terms of prosperity, the economy and industrial power. Yet for some reason, as I said before, the pharmaceutical industry is a peculiar example; we have singled
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it out because it is small, very visible and very susceptible to government regulation. I think it has provided a valuable example and we should be very careful of that type of practice in future.
1 also mentioned the plastics industry. My hon. friend from Wellington (Mr. Maine) knows more about that than I do. It provides another example. He has probably talked about it already. The great concern of that industry is not directly related to research and development. What affects them most is the subject of trade regulations. They wonder where the GATT negotiations will end up. They do not know and they are very worried. This industry is important to us. It is new. It has grown fast. It has a great future. It has much to offer. It is already providing products to our Canadian people that we are not even aware of, products we take for granted in the food industry, in health care and so on. Yet here we are at the moment, those people feel, leaving them high and dry and not knowing where they are going to be in terms of competitive advantage.
Many of our industries are in this position. All they want to do is compete. They do not mind competing at all, but they are terribly worried that their representatives in Geneva will agree to arrangements which leave them at a great disadvantage. Many other countries would do things we are not prepared to do, particularly in the area of non-tariff barriers. It is all very hard to sort out and for some reason or other many of our most important Canadian industrialists are not yet convinced that we are going to protect them as properly as we should. That certainly applies to the plastics industry.
What has been our performance? I know this has been talked about many times today in this debate, probably in a partisan way, which is fair enough. I still am not clear myself but I think I see some trend. I certainly stand to be corrected on this, Mr. Speaker, but I am not entirely satisfied with the figures I have from Statistics Canada. I have tried to see some trends in them today, and 1 think this is what they are. I think it is important we should at least try to put an interpretation on them to find out what we have been doing in research and development and why.
What do the figures tell us about ourselves? 1 do not think there is any question that, compared to other countries, our spending has been relatively low, for whatever reason. I suppose somehow or other it has to come back to policy, but whether it is a conscious policy or not I am not sure. I referred a while back to one of our former policy setters, Mr. C. D. Howe, who helped this country develop very quickly but who also left us with an awful lot of foreign ownership. Perhaps this is what most of the trends tell us. Maybe there is more to it than that, but it certainly seems to me that this is one of the reasons. As long as we are a branch plant economy it will be difficult for us to keep up with all the leading countries, particularly in terms of private enterprise industrial sectors.
We spent more on research in the government sector than in the private sector compared to other countries. This may be interpreted as bad or good. We seem to have fed more government money into industry, at least on a relative basis,

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and all of this suggests that somehow or other we have fallen into the unfortunate habit of having government try to make up for what is lacking in the private sector. It is the government which spends most on research in this country, even if it does not spend enough, then business and then the universities.


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


Jack Burnett Murta: Mr. Speaker, I should like to join in this debate and deal with a specific area which was touched on today by the Leader of Opposition (Mr. Clark) but which has not been discussed at length by other speakers. I refer specifically to agriculture and the contracting out provision which is very worrisome to the agricultural community.
The contracting out proposals we were talking about today in terms of allocating more money for research to the private sector is a sound proposition as far as most areas of the economy is concerned. But agriculture is the exception. Agriculture is different. It is not at all practical to make this provision applicable to certain sectors of the agriculture industry. In fact, it would be detrimental. As far as I am concerned, two people are principally to blame for the position in which plant breeders, for example, find themselves. One is the minister responsible for science and technology for not really understanding the implication of this policy for agriculture; the other is the Minister of Agriculture (Mr. Whelan) for not fighting harder for the farmers who might otherwise have been exempted from these provisions.
There is no doubt that in the future agriculture will be Canada's largest earner on the export market. At present it is about number three on the list of dollar earners helping with our balance of payments. As the incomes of countries around the world rise they will demand food of increased quality and variety. It is interesting to note that the standard of living in Russia is rising, and as this happens the demand for meat increases. The significance is that Russia is importing more cereal grain than ever before. The only major region in the world from which extra supplies of food can be grown in the foreseeable future is North America. Agricultural research is going to be a very important factor in this question of food production.
What has happened to agricultural research over the past few years? Mr. Speaker, it has not fared very well. In fact, it is not really keeping up with inflation. One of the greatest returns on dollars invested results from investment in agricultural research. What will be the result in years to come if we follow this same policy? If the agricultural research dollar investment is not increased, there will be reduced production. The result of reduced production will be higher food prices for the consumer and lower export earnings. On numerous occasions rapeseed producer organizations have lobbied the government for greater research assistance, but their needs have not been adequately met. Funding is inadequate with regard to machinery research, especially in western Canada. Unless research is increased, farmers will not be competitive.
[Mr. Philbrook.J
The recent policy of reducing agricultural research in the public service should be reconsidered. Most organizations are against the government's proposal. The Canadian Federation of Agriculture which represents organizations all across Canada is against the proposal. At a western agricultural conference held recently in Regina, representatives from western Canadian farm organizations were against the proposal. The Agricultural Institute of Canada, speaking for professional agriculturalists across Canada, spoke against the proposal. In its brief the Agricultural Institute of Canada said, and I quote:
The latest proposal from government to transfer research from government laboratories through normal attrition to industry contracts will inevitably lead to chaos and to the destruction of the present ongoing and effective agricultural research programs, with only a remote chance of successfully establishing them on a permanent basis in industry.
The Agricultural Institute of Canada said that Canada needs a greater research effort in the industrial area but, and I quote:
... this must not be accomplished at the expense of established research teams in either government or university where a capability in the primary industry is presently non-existent.
The only solution, the AIC says, is to increase expenditures for research in three areas: government, university and the private sector. The AIC is, of course, correct. The Canadian Federation of Agriculture, which represents farmers across Canada, has stated:
Farmers are under increasing pressure to compete with producers in more favourable climates, and if Canadian agriculture is going to keep abreast we simply must continue to seek new potentials in breeds, breeding, technology and management.
The greatest concern is the policy of the federal government to reduce research in the public sector. Obviously farmers were not consulted when that policy decision was made. Farmers and farm organizations have repeatedly contacted various departments but to no avail.
The title of the directive which has caused all the concern in the agriculture community is "Policy and guidelines of contracting out of the government's requirements in science and technology". It sets out the principle that, except in certain circumstances, research requirements are to be contracted out to the private sector. Once again that is all right, except when it comes to agriculture. A very important part of agricultural research would be jeopardized, and that part is plant breeding research. Operationally under the proposal, for the Department of Agriculture to decide it necessary to carry on a plant breeding program it would be required to consult with the Department of Supply and Services and with the Minister of for Science and Technology (Mr. Buchanan) to confirm that there are no private facilities capable of performing the function. In some circumstances it might be required to consult with the Department of Industry, Trade and Commerce and the Department of Regional Economic Expansion. Finally, Treasury Board would have to be satisfied before funds for this purpose could be approved.
March 7, 1978

This procedure is not in keeping with the nature of plant breeding research in this country. Plant breeding research is an ongoing operation. There could be circumstances under which a university might have a particular expertise upon which the department might wish to draw to augment its own resources in a given project. This could be contracted out under the Treasury Board proposal, but that is hardly necessary since there are already arrangements for grants for that purpose.
There are few, if any, crops with which the department is involved for which any private facility now has the physical or scientific resources to duplicate what the department is now doing. That is one of the key arguments in this whole debate. In order to provide those resources to the private sector, government funding would be required, and of necessity that funding would be restricted to one or very few firms or organizations. This would present the practical and political problem of deciding which private facility should be contracted. For a major crop like wheat this would be completely impractical.
Finally, one particular feature of the Treasury Board proposal is completely impractical for plant breeding research. Under the proposed contractual arrangement the government would finance the cost of the research project conducted for it by a private sector facility. In return for that, the right to technical information, designs and so forth arising out of the contract would remain with the government. With regard to plant breeding this would mean that if a seed firm working under a government contract developed a useful variety, it would turn over to the government the rights to that variety.
This type of arrangement might be workable in some areas of research-and I concede that it probably would be-but not in plant breeding research. When a private firm develops a variety of grain it retains the right either to the price at which it sells the seed or to the royalty which it collects on its sale. It finances its costs and makes a profit which, of course, is the purpose for which it is involved in plant breeding in the first place. Under this proposal that would not be allowed; hence there would not be any activity in the private sector in any event.
Agricultural research is not a stop and go affair. It must continue in the light of new products and new technologies. It is difficult to see how it can be maintained by calling in outside researchers for a variety of programs. Private researchers do not have the incentive to maintain lenghty research programs. This applies not only to plant breeding but also to animal breeding research. This is not to discount the research now being carried out by various industries. Progress being made in the development of pesticides, herbicides, insecticides and fertilizers is significant and should be carried on in the private sector, but government programs must differentiate between the various kinds of agricultural research.
What is being said loudly and clearly by farm organizations across Canada is that the government must drop the idea of contracting out agricultural research because it would ulti-
Research and Development
mately increase costs for consumers and would worsen our balance of payments deficit.
Farmers are going to be put in a position of competitive disadvantage in relation to other farmers in North America, mainly those in the United States. The policy we have been talking about and about which the agricultural sector is so concerned was drafted by bureaucrats who had no idea of the importance of agriculture or the effect this kind of intervention would have on this most basic industry. I urge the government to look very closely at dropping its agriculture proposal.


Mr. Cyril Symes (Sault Ste. Marie):: Mr. Speaker, I welcome this opportunity of making a contribution to this very important subject before us today, namely, the state of Canada's economy, especially as it applies to the manufacturing and industrial sectors and the relationship thereto of research and development in this country.
Before beginning my main remarks let me say that I was listening with interest to the comments by members of the Conservative and Liberal parties. I wish for once the Conservatives could get their act together. We heard one spokesman say that the government should get out of research and another one say he wants the government to maintain its involvement, and he was castigating the goverment for its plans to withdraw from certain sectors of research.


Jack Burnett Murta: Mr. Speaker, I rise on a question of privilege. The hon. member knows full well that the area I was talking about was a specific area of agricultural research. If he does not agree with me I hope he will stand up and say so, but I would not want him to misrepresent the remarks of members of our party in the way he has just done.


Some hon. Members:: Hear, hear!


Reginald Cyril Symes: 1 was just listening a little bit earlier to one of the official spokesmen on science policy, the hon. member for Calgary Centre (Mr. Andre), who argued just the opposite to the hon. member for Lisgar (Mr. Murta). That is my difficulty, finding out where the Conservatives stand on this important issues. I agree with the hon. member for Lisgar, who I assume is a minority in his party, that there is a place for government research in Canada, especially in the field of agriculture and elsewhere.
Then I listened to some of my Liberal colleagues who say there is a problem but they do not know what is the cause. I should like to go into what I think are the causes of the difficulties we are in. I lay them right at the doorstep of this government and its lack of science and industrial policy over the past few years.
Research and development is essential to any modern industrial economy, and it is sad to note when we look at the history of science policy, especially in the field of research and development, that Canada has one of the worst records of any modern industrial state.

March 7, 1978
Research and Development
Research can be divided into three major areas. First, what we call curiosity or motivated research; that is, research of a general nature to create more information in the general pool of scientific knowledge. It is important for scientists and those in universities to pursue this field.
Then there is a second area of research and development, the mission-oriented kind of research, or research that is addressed to some of the fundamental problems facing any country, involving things from the environment and industrial health to renewable energy, urban transit and so on. That is a very important sector of our research that likewise has been neglected over the years.
The third area, which is the area we seem to be concerned with in the motion tonight, is applied research. That is research we can apply directly to industry in the economy to enhance our manufacturing sector and our ability to produce and trade.
When we look at this government's policy-and this government has, of course, been in power for such a long period of time it cannot say this is something that has just occurred overnight-and when we look at past ministers of science and technology, especially the former minister, Mr. Drury, we find that the policy has been that we move to interdependence in terms of science; that we rely on importing from other countries much of our technology and research. It is argued that it is too expensive for a country like Canada to embark on research in these major fields, and it is much easier to import it.
As a result of that deliberate government policy of withdrawing from these very important fields, which every other modern country recognizes as necessary, we have seen a 30 per cent decline in research and development in Canada since 1970. As a result, is it any wonder that members of parliament when they are in their constituencies have more and more young people with university degrees coming to them with the lamentable story of how they or their parents have invested a great deal of money for their training and education yet now they cannot find jobs? That kind of problem in respect of unemployment among highly skilled young people today has to rest right at the doorstep of this government. The government has pulled us out of that kind of field of research, and we now find that our bright young engineers, technicians and scientists are having to leave the country. Indeed, the Prime Minister (Mr. Trudeau) said that if they cannot find jobs here they should leave the country. What kind of future hope is that for the young people of Canada? It is a lamentable state of affairs.
Research and development has been downgraded by this government and we are seeing the results in terms of higher unemployment. We are also seeing the results in terms of a declining manufacturing sector that has not been able to keep up with modernization, redesigning plants and moving into new basic areas that research and development could provide for them.
Today we rank almost last of all the industrial countries in terms of our commitment to research and development. I think
(Mr. Symes.]
we are second to that little country of Ireland in that sense. In 1975 only .36 per cent of our gross national product was devoted to research and development. It should be a minimum of 2.5 per cent.
Why are we sliding into this abysmal state of affairs? As I said, we have to look at the government, its lack of goals and its lack of planning. I am really amazed sometimes when 1 listen to the debates in this House and the contributions by members of the Liberal and Conservative parties who assume that, if we just let business alone and just let the economy return to the good old days of laissez-faire and Adam Smith, somehow we will solve all the problems we face now and achieve great progress. Those days have gone.
Any modern industrialized country today is involved in highly sophisticated economic planning. The governments of these nations have played a very activist role. No longer can we go back to the 18th century and that kind of competition and free enterprise. It does not exist any more in the world because we have moved into a more monopolistic kind of situation with the advent of the large and powerful multinational corporations. Even the multinationals undertake planning on a long-term basis. Modern governments undertake planning on a long-term basis. However, Canada moves from month to month and year to year without any coherent plan.
Is it any wonder, then, that we are facing economic difficulties today? You just cannot survive in the modern industrial world with an ad hoc policy or no policy at all. You have to commit yourself to goals and planning, and you have to bring the state into an interventionist role in the economy in order to survive, in light of the very powerful interest groups that exist today in the world economy.
We have to move along that line, and I do not see that direction forthcoming from this government, either in terms of economic strategy and planning for our economy or in terms of enhancing research and development through an impetus that government can put into this field. The great danger today is that we are moving toward a state of staid industrialization. We are going downhill rather than progressing so far as our manufacturing sector is concerned.
The Science Council of Canada and many other studies have shown that the Canadian manufacturing sector is very sick. We have a trade deficit in manufactured goods which has grown by approximately $9 billion since 1970. That has resulted in a loss of at least 350,000 jobs in this country over the past seven years. That was as a result of the trade imbalance, the American DISC program, and the repercussions of an auto pact which benefits the United States more than us. Also we have been locked into an economy which goes back to the days of C. D. Howe: Canada is used as a resource hinterland. Our minerals are mined from the ground, our trees are cut down and our wheat is harvested. Then these raw materials are exported to other countries. As long as Canada is locked into that type of economic development, we export jobs at the same time as we export raw materials.
March 7, 1978

Jobs can be found in areas where raw materials are refined, processed and manufactured into finished goods which are sold to consumers. That is where the labour intensive sector of the economy is. We export our resources and in turn import the finished product. Mainly we export our raw materials to the United States. The raw materials are turned into finished goods which we import from the United States. Thus the Americans receive jobs. It has been estimated that for every job created in the Canadian resource sector, perhaps we forgo two to five jobs which could have been created in manufacturing. The resource sector is capital intensive. All one has to think of is Syncrude and other energy projects. A large amount of money is poured into those sectors of the economy. One should compare the number of jobs produced as a result of those projects to a similar investment of moneys into the manufacturing sector and the amount of jobs produced there. We are losing out in that sense.
Because Canada depends on the export of raw materials and the import of manufactured goods, we are faced with perpetually high unemployment. Until that type of economic development is changed, Canada will continue to be faced with high unemployment. Projections have indicated that there will be 475,000 young people graduating from or leaving shcool each year between now and 1985. Yet when we look at the past record, in 1976 only 209,000 more jobs were provided than in 1975. As long as we depend on a resource based economy, jobs cannot be created to meet the demands of more and more young people coming on to the market. We require an industrial strategy which eliminates dependence on resources alone and which moves toward developing a strong and healthy manufacturing sector where the jobs are.
1 have looked at many studies which 1 do not have the time to go into. The Belgium study has shown that the return on research and development investment is two to four times the return on investment in fixed assets. We are beginning to appreciate how important it is to develop that sector. We must move toward creating a viable manufacturing sector in Canada. When we recognize that research and development is so essential to creating a healthy manufacturing sector, why do we continue to import so much of this research and development? Why is it not done in Canada? One of the reasons is the lack of policy and direction from the federal government. Another important reason is the degree of foreign ownership in the Canadian economy today.
When one looks at foreign ownership and the policies of parent companies which affect the branch plants in Canada, one finds an active and deliberate policy to discourage research and development in Canadian subsidiaries. 1 could document this by referring to various cases. Foreign ownership has discouraged research and development as well as having fragmented and distorted the entire structure of our manufacturing industry. For example, as of 1970, 53 per cent of our manufacturing was foreign owned. I will not bore the House with figures, but we are aware that it ranges from a high of 96 per cent of our petroleum industry being foreign owned to 53 per cent of our manufacturing industry. If so much of our
Research and Development
economy is foreign owned, how can we expect to develop an independent policy or strategy in terms of manufacturing research and development?
Ford of Canada has sales amounting to billions of dollars, but not one Ph.D is employed by that company. Ford has no research and development facilities in Canada. Research and development is done in its parent company in the United States. That is where university graduates are being hired, not in Canada. That is evident in every industry. The foreign parent company retains research and development in its own country, mostly the United States. The foreign parent company does not want to release that information and technology to a subsidiary company located in Canada.
Thus, research and development to design a car that can withstand Canadian winters is not done here, it is done in the United States. We do not have openings for our young people to find jobs, nor is there a chance for indigenous industry in Canada to strike out on its own on a path which would benefit our economy. It is controlled by the parent company in the United States or wherever. Canadian branch plants have mainly become assembly points for the products produced by foreign parent companies. Canadian employees merely put the pieces together. That does not require highly skilled people, such as the scientists and technologists that would be necessary in order to partake of research and development.
In 1975 S4'/2 billion in auto parts were imported into Canada. Those auto parts were produced in the United States and provided jobs for Americans. Another problem which results from foreign ownership is: if there is a slowdown, the parent companies lay off people in their own countries. Thus, if there is a slowdown, Canadians are laid off before Americans and Europeans employed by the parent companies.
Another disadvantage Canada faces is the outflow of profits, dividends, royalties and management fees, which could have remained in Canada and provided us with capital to expand. Because we are so highly foreign owned, the profits and dividends leave the country and benefit the parent companies. As a result, we are all the poorer.
Canadian industry is faced with a situation where there are such powerful multinational corporations in the world that any Canadian company is at a real disadvantage when attempting to Find export markets. The parent companies do not want subsidiaries to be competing with them. Thus, Canadian subsidiaries are discouraged from going out into the world market in order to participate in trading, which would create more jobs for our country.
The other problem, of course, is that any Canadian industry now is faced with the problem of high competition from the multinationals which are moving into third world countries where there is cheap labour, where there are very few environmental laws, etc. As a result, we find the Inco situation and others where Canadian workers are being laid off, all symptoms of how we as a nation have lost control over our economy

March 7, 1978
Research and Development
and have lost the ability to plan, which every other modern country worth its salt has been able to do.
This is why I argue that we need government planning and involvement. If we cannot rely on industry alone to solve the problems in Canada because industry is foreign owned, we will never move beyond the branch plant economy in which we are now. Therefore, we must have government planning, economic planning, and government investment decisions in co-operation, or in some cases maybe with coercion, with some of these companies operating in Canada. We have seen how West Germany, Japan and the Scandinavian countries have been able to do this successfully.
It is amazing to me that that lesson has not been learned by my colleagues opposite. Laissez faire will not do in Canada any more. We have gone beyond that. We are in too much of a predicament. We need research and development; we need government initiatives. I am afraid that unless we have a change in government, we will never solve this fundamental problem facing our economy today.


Miss Aideen Nicholson (Parliamentary Secretary to Minister of Supply and Services):: Mr. Speaker, the opposition motion before us is an important one and probably there would be no disagreement with the principle, although obviously there is a good deal of room for disagreement on methods of application and on deciding priorities. The motion states that it is crucial to the strength of Canada's economy and the provision of employment opportunities that a vigorous program of technological research and development be promoted by the government. It goes on to deal with industrial research, to which the hon. member for Scarborough East (Mr. O'Connell) and the hon. member for Halton (Mr. Philbrook) have already directed their remarks. The motion also addresses the question of agricultural research, and I would like to speak briefly on this.
The Department of Agriculture's expenditures have increased very greatly in the past three years on work on new crop varieties, the efficiency of animal hybridization in the development of modern strains of animals and poultry, and the protection of plants and animals from diseases, insects and weeds.
The budget of the agricultural research program since the 1971-72 financial year has increased 2.4 times. Science expenditures related to agriculture by all departments have increased from $116.8 million in 1975-76 to $159.5 million in 1978-79. Expenditures on science and technology in 1978-79 will be $134.1 million in Agriculture Canada and will represent 18 per cent of Agriculture Canada's total estimated expenditures. Of this, it is expected that $5 million will be spent extramurally, compared to $6.3 million in 1977-78, of which $0.8 million will be spent in industry and $3.3 million in universities.
The agriculture industry produces nearly two thirds of the food consumed in Canada. In addition, agricultural exports play a significant role in our international balance of trade. The Minister of Agriculture (Mr. Whelan) aims to preserve
[Mr. Symes.l
and influence the productivity and prosperity of agriculture in Canada within the context of a total food system.
The research branch of Agriculture Canada has as its mission to ensure the efficient production of an adequate and appropriate supply of food and agricultural products and to help maintain a stable and profitable agricultural industry in Canada. The research program has a management-by-objectives philosophy. Most of the objectives are based on various crop and animal commodities. Goals are set so as to provide real targets for assessment, accountability, and cost benefit analysis. Some objectives, however, embrace a broad class of agriculture; for example, soil survey or environmental protection. In others a discipline basis is used for setting objectives and goals.
Apart from administration and research services, the program is organized into 14 research areas, namely, horticultural crops, cereal crops, forage crops, beef cattle, biosystematics, oilseed crops, land and water resources, field crops, dairy cattle, environmental quality, poultry, swine, sheep and honey bees and other animals.
The department operates 47 science establishments, sited across the country so that local factors in the production and utilization of agricultural products are considered in research programs.
To ensure that department research is co-ordinated with research in the provincial, university and industry sectors, and that the national research effort is responsive to needs, the branch uses three national advisory groups: the Canadian Agricultural Services Co-ordinating Committee; the Canadian Agricultural Research Council; and 17 Canada committees, each concerned with a specific commodity, discipline or subject area. Each of these groups has representation from the federal, provincial, university and industry organizations concerned.
Within the research programs, increasing emphasis is being placed on the breeding of new crop varieties; the efficiency of animal hybridization in the development of modern strains of animals and poultry; the protection of plants and animals from diseases, insects, and competing weeds; the culture of plants in a way that uses space, light, and nutrition with the greatest efficiency; the storage of primary products for off season demand and future export; and the utilization of agricultural production to provide Canadians with a greater variety of more appealing and nutritionally processed products.
As the petroleum sources of nitrogen for fertilizer manufacture become scarcer and more expensive, one new avenue of research will focus on the microbial fixation of atmospheric nitrogen. The fact that many leguminous crops naturally draw, or fix, nitrogen directly from the air challenges scientists to attempt to extend this symbiotic relation of plants and bacteria to other crops.
A program of soil classification and mapping being run co-operatively with the provinces is one of Agriculture Canada's most important activities. It will take many years to complete but is already providing useful information to plan-
March 7, 1978

ners who are attempting to improve the efficiency of land use. Only 5 per cent of Canada is improved farm land, and only about 2 per cent, or 20 million hectares, is available for future expansion, much of it marginal or located in less desirable climatic areas. In fact, the arable land of the Canadian north is one of the last agricultural resources still awaiting development. The department's staff is studying northern soil capacity, climate and crops.
Also being investigated are more efficient ways to use energy in agricultural operations and the possibility of saving energy by modifying cultural practices, even though at the farm level the industry is not a major user of gasoline.
In addition, research is being done on the use of waste products for methane production and the use of biological materials-biomass-as an energy source. Another program is to study the conversion of agricultural waste into animal feed.
Science activities in the Department of Agriculture include the activities of the economics branch which conducts research into the behaviour of economic and social variables affecting the agricultural industry, with particular emphasis on issues affecting policy development and implementation.
Research on animal diseases is carried on by the animal pathology division of the health of animals branch in Ottawa and at eight regional laboratories. In addition to studying the causative agents of animal diseases and methods of transmission, the division develops and improves tests for detecting diseases as well as producing diagnostic reagents and biological products for halting outbreaks of disease. Tests are also developed to qualify breeding stock and meats for export and to prevent the entry of foreign animal diseases into Canada.
The grain research laboratory at Winnipeg monitors and assesses the quality of cereal grains and oil seeds grown and marketed in Canada and also conducts research on quality related to the end-usage of these crops.
The production and marketing branch expects to continue its contributions at about $1 million in 1978-79 to provincial agencies, industry and universities to stimulate, develop, and adapt new agricultural crops and varieties for commercial production.
I should like to conclude by reference to some figures for the research program of the Department of Agriculture. In 1971 total expenditures were $50 million and for 1978-79 they will be $121.5 million. Of course, there is always room for disagreement on priorities. However, this must remain a matter of disagreement since we have not heard this evening the precise proportion the opposition recommends for agricultural research.


Mr. Bert Hargrave (Medicine Hat):: Mr. Speaker, it is a full year since the government's new restrictive policy on research and development was initiated. Tonight 1 wish to make a few personal and quite specific remarks about the effects of this policy, especially in the field of Canadian agriculture.
Research and Development
In the opening speech of this debate by my leader this afternoon he quite properly pointed out that agricultural research and development must have a much higher priority if only because of the obvious and very necessary association with human food production. He pointed out that Canada's capacity to produce food is one that will not run out but is truly a renewable resource. Those are facts that we should always remember.
At the food strategy conference in Ottawa last month, the agricultural producers took some obvious satisfaction out of one of the stated objectives of this much publicized conference which said that the conference was aimed at improving farmers' incomes and lowering food prices.
Peter Hannam of the Ontario Federation of Agriculture and Dobson Lea, the new president of the Canadian Federation of Agriculture, were quick to point out the disparity or dilemma in this statement about improving farmers' incomes and lowering food prices. This is impossible, of course. One might argue that there is a very slim possibility of some improved efficiency, but farmers are getting sick and tired of being told to be more efficient. If you tried that approach on a cattleman who survived last summer's drought and who is not yet through a severe winter, you would get a very frosty and sarcastic answer. Nevertheless, it is possible to improve farmers' incomes and lower food prices through adequate research and development. This is really the only way it can be done.
While there is a definite place for contracting out some research occasionally at the expense of some in-house research,
I make a plea tonight for a continuation of, and even stepped up support for, the research branch of our federal Department of Agriculture. I have been pretty well in touch with the Department of Agriculture's research activities in western Canada, especially for many years beginning in 1938 when 1 was a student at the Swift Current research station or, as we called it in those days, the experimental farm. Later the Lethbridge station became a favourite place to meet and visit, as well as the Manyberries sub-station, the only truly short grass cattle research station in Canada.
The new research building in Lethbridge must be the foremost of its kind in the world. It was jointly planned, financed and operated by the federal Department of Agriculture and the Alberta agriculture department, and, of course, it was officially opened last summer. It is a good example of federal and provincial agricultural forces working together.
The Lethbridge research station is ideally suited to cattle breeding research along with the Manyberries sub-station. This type of livestock research does not lend itself to contracting out to the private sector, essentially because its research projects take so many years to complete properly.
Southern Alberta now has approximately 500,000 acres of irrigation and more is being added every year as a result of the sprinkler techniques. The Lethbridge station has become the headquarters for all western research related to irrigated crops and the techniques of irrigating. In many respects this aspect of research and development is in its infancy-that is, dealing with irrigated crops and the technique of irrigating them.

March 7, 1978
Research and Development
There is a real need for alternative irrigated crops to the traditional ones such as sugar beets, edible garden crops like beans, peas, corn, carrots, onions, and so forth. The alternative is needed because of suddenly increased costs of specialty equipment in some of those earlier irrigated crops.
With suitable new grain varieties developed for irrigation, greater dollar returns are possible using standard grain seeding, cultivating and harvesting machinery. For example, there are now about 170,000 acres seeded to soft white spring wheat in the irrigation areas of southern Alberta. Most seed varieties for this soft white spring wheat come from Idaho; our growth season is just too short for these varieties. In addition, these imported varieties eventually become infected with mildew mutations that require a new southern Alberta variety. There is only one place they can possibly be developed and that is in the Lethbridge research station. Tremendous yields of this particular crop of soft white spring wheat of over 100 bushels per acre make the research worthwhile and necessary.
Soybean production under irrigation has never been good enough, at least in western Canada. New varieties for our latitudes are needed and needed now. The Faba bean has probably the greatest potential of any of our legumes presently under irrigation because of two important factors. First of all it has a very high protein content, being well over 30 per cent. Secondly, the nitrogen-fixing characteristics are the best of any of our legumes. But improved irrigated varieties are needed.
The same argument can be made for irrigated varieties of malting and feed barleys. There is a growing demand for the white malting varieties instead of the traditional blue malting varieties. There will always be a demand in the cattle feeding country of southern Alberta for high yielding barley grown by irrigation. In general there will be an increased demand for R and D in cereal breeding just to keep ahead of the disease problems in cereal grains grown with irrigation. As irrigation costs, energy costs and land costs continue to increase, it is only a matter of time until our systems of irrigation will have to change. By that 1 mean the methods of physically distributing the water. Research and development will point the way from present, open systems, which are very wasteful of water and very inefficient, to totally enclosed systems both for the total distribution system and for the individual farm.
The Lethbridge research station is a unique institution in Canada in many ways, not the least of which is its opportunity to serve Alberta's continually growing irrigation. This station's research budget should not be restrained.
On a related research subject I want to say a few words in support of the VIDO concept, meaning the Veterinary Infectious Diseases Organization. This is a new organization based in Saskatoon working in conjunction with the Western Veterinary College at the University of Saskatchewan. It has been set up for research on cattle, hogs and poultry in the disease field. It began in September 1975 and will eventually be staffed by about 50 research scientists and veterinarians.
[Mr. Hargrave.)
VIDO is already deeply involved in calf and pig scours, especially in those matters that need intensive research. In Alberta alone calf scours cost Alberta cattlemen $17 million in 1974. Losses to the Canadian beef and dairy industry comes to $74 million per year, which amounts to about $8.67 for each live calf born.
Here is how this worth-while institution has been financed so far: $2.2 million from the Devonian group of charitable foundations in Calgary; $1.87 million from the government of Alberta; $200,000 per year for five years of operation from the government of Saskatchewan, and it is in its third year now. In addition, the government of Saskatchewan has put up another $50,000 for expenses this year. I should point out that the Devonian grants are on a matching grant basis only up to 1982. Another $1.25 million will be on a declining matching basis. In addition there is some financing from other sources. For example, the Saskatchewan Veterinary Association gives $1,000 a year; the Manitoba Veterinary Association $200; the Alberta Veterinary Association $5,000; the Alberta Egg and Fowl Marketing Board $10,000; the B.C. Swine Breeders $250; and the B.C. Cattlemen $5,000. The Alberta Cattle Commission, which is the organization that makes the checkoff from every cattle animal sold in Alberta, has subscribed $70,725 in ongoing projects up to now. It is very likely that they will continue to support VIDO in future on a project by project basis.
VIDO now needs operating funds. Considerably more are needed, something over $1 million a year for the next five years. Up until now the federal funding has been very, very limited. Surely the need here for funding is beyond question. Cattlemen fully recognize this by subscribing their own research dollars.
I want to close, Mr. Speaker, with a very brief tribute to a fine Canadian scientist who retired at the end of last year. I am referring to Dr. Bert Migicovsky. I want to recognize the contributions of Dr. Migicovsky who retired at the end of the year as director general of research in the Department of Agriculture, or he may have been known as the assistant deputy minister of research. At any rate, he was one of Canada's top agricultural scientists. His regular appearances before the Standing Committee on Agriculture over the last five years have become one of the highlights of that committee every year. His broad knowledge based on such wide experience, always expressed so forcibly, made those meetings very special occasions. There is no question but that we should salute him for a job well done at his retirement.


Some hon. Members:: Hear, hear!


Francis William (Frank) Maine: Mr. Speaker, first of all I would like to join with the hon. member for Medicine Hat (Mr. Hargrave) in paying tribute to Dr. Migicovsky, the recently retired assistant deputy minister of the research branch of Agriculture Canada, for the extremely fine job he has done there. He helped me a great deal in setting up my tours of the research laboratories of the
March 7, 1978

agricultural departments across the country as well as those in Ottawa. He did a very fine job in helping me to understand the research that is going on in Agriculture Canada. 1 understand very few members have taken advantage of this opportunity, which is a shame since so much is talked about agricultural research and development. I think few have had a first-hand opportunity to learn what is going on in Canada.
I support in general the motion put by the Leader of the Opposition (Mr. Clark) this afternoon. There is no question that we have far from succeeded in the task of tackling industrial research and development in this country. 1 would differ with the Leader of the Opposition only in the details and strategy to pursue this goal. I agree with most of the speakers who have spoken today, with the exception of the extremely partisan and irresponsible comments made by the hon. member for Athabasca (Mr. Yewchuk) as well as the recommendation from the hon. member for Calgary Centre (Mr. Andre) to abolish the Ministry of State for Science and Technology. The news release of the Minister of State for Science and Technology (Mr. Buchanan) on the estimates was an effort to try and elucidate exactly what was going on. Great care was taken to make sure the data were accurate. It is totally irresponsible to accuse the minister of being dishonest in his representation. If the hon. member for Athabasca would check to find out how those figures were arrived at I suggest he would see they are quite validly prepared and he may find that some of the assumptions he is making are erroneous, not those of the minister.
The suggestion made by the hon. member for Calgary Centre to abolish the Ministry of State for Science and Technology will not accomplish anything. The work that the Ministry of State for Science and Technology is doing is essential. The only question is where is that work to be done. Should it be done by a department or a ministry of state that is separate from the rest of the government branches, or should it be done in conjunction with one of the other departments, such as the Treasury Board secretariat or other policy areas of the government, including the Ministry of Finance which is also a policy setting department of the government? The work which is being done is valuable and necessary. It would have to be done in any event whether or not MOSST is abolished. His comments are extremely spurious and only politically motivated.
My main comments today will be directed toward industrial research and development. The major factor here is the makeup of industry in Canada.
I would like to quote some information from a Statistics Canada study that shows the degree of foreign ownership in this country. It was released just last month. Of almost 30,000 companies engaged in manufacturing, mining and forestry operations, essentially the business sector of our economy, 100 account for 46 per cent of business activity, almost half. Of that 100, 66 are foreign controlled.
Research and Development
Going through the top 1,000 companies of those 30,000, which represents roughly 3 per cent of the number of companies in the country, 57 per cent, or 572, are foreign controlled. These represent over one third of the companies of the top 1,000.
We only have a small percentage of the total number of companies in Canada, foreign owned and controlled, 5.5 per cent or 1,626 of the 29,812 companies. They are mostly concentrated in the top 1,000 and have a tremendous effect on the economy. It is therefore relatively easy to see from that that we need a different policy to deal with this sector of the economy as opposed to the balance of industry which is largely Canadian owned and controlled.
As mentioned during the debate today, there is a different motivation for the foreign based multinationals to do research and development in this country. There is absolutely no incentive for them to do it here. In many cases there are incentives not to do research and development in Canada but in the parent's country.
I have outlined many times some of the disincentives to do research and development in this country and some of the areas the Canadian government should tackle to reduce the level outside this country which we have to pay for in using the results of research and development done outside of Canada. To be positive and constructive as to how to tackle the situation, 1 suggest there be joint efforts with the foreign based multinational companies involved in the top 1,000 companies. This would mean about 500 companies. Discussions should be held with them to make sure they are fully aware of the situation in Canada. They should know it is not acceptable to have this very low level of industrial research and development conducted in Canada, this low level being concentrated in the foreign based multinationals.
We should try and agree on a fair rationale whereby industrial research and development is increased in Canada. Certainly the best way is the example of companies like General Electric or Pratt & Whitney, whereby the Canadian operations are made responsible for a product line worldwide and research and development for that product line. That is a very responsible attitude, one I would like to see encouraged.
The attitude of the three major automobile companies, Ford, General Motors and Chrysler, is totally unacceptable. They do absolutely no research and development in this country, yet the Canadian market represents 10 per cent of the North American market. It is justifiable in our case to have 10 per cent of the research and development of those three companies done in this country. Work is done primarily in the Detroit region. The environment in Windsor is no different from the environment in Detroit. Therefore, this could easily be accomplished without any loss of communications or other problems that may be raised as reasons why this should not be done.
It is irresponsible for the big three auto makers not to show their concern for fair practice in Canada as far as research and development is concerned. I admonish the Department of Industry, Trade and Commerce to tackle this problem serious-

March 7, 1978
Research and Development
ly in the negotiations they have with the auto companies, especially with regard to the auto pact. This area was not negotiated in the past. It is an example of what is not done at present but what should be done.
We should find out the attitude of the various types of industries in this country. A year ago the Ministry of State for Science and Technology wrote to the largest 125 companies in the country and asked what they were doing and why. A lot of them, both Canadian and foreign based multinationals, were fairly responsible in their answer, interested and encouraged by the concern of the Canadian government.
There were some notable exceptions. I found it totally unacceptable and irresponsible when United States based multinationals said that they were doing their research and development in Houston and intended to leave it that way. That kind of attitude is completely insensitive to the realities in this day and age of the needs of both our countries. If we are to work co-operatively in this regard, we need a much more positive approach than that kind of crass, bald statement. The words I think of are not parliamentary. However, I think hon. members appreciate the sentiments I am trying to express.
The problem is being recognized and worked on at the policy level. I look forward to seeing very soon some concrete results of these efforts which have been presented, as the Minister of State for Science and Technology said in the debate today. 1 hope we will see some positive results in the not too distant future.
We have come a long way in the past decade in recognizing the problems in industrial research and development. They were spelled out by a Senate special committee on science policy. We have tried a variety of techniques to fully understand the whole problem and all of the nuances. We have come to the realization that the investment tax credit is the best way to handle this situation. It minimizes the amount of bureaucratic involvement. The decision is left to industry, as it should be in a free enterprise system. The only involvement of bureaucracy is in the taxation system of the end of the business year.
1 agree with several comments made today to the effect that the amount of the investment tax credit is too low. It being a taxable item, as all National Revenue tax credits are, the real effect of a 5 per cent investment tax credit is only 2.6 per cent. That 2.6 per cent real benefit is of negligible use to industry. Therefore, to be effective as an incentive it has to be increased substantially.
I certainly agree with several sectors of industry that have recommended a 25 per cent level for the investment credit which, after taxes, would be in the order of 12 per cent or so. That is a reasonable incentive, one that governments can responsibly handle. I urge all members to encourage the Minister of Finance (Mr. Chretien) and his department to look very favourably on the suggestion in the next budget.


David Samuel Horne MacDonald: Make it 100 per cent instead.


Francis William (Frank) Maine: I think a 100 per cent investment tax credit would be a very expensive proposition. Whereas I applaud the idea and the direction of the suggestion, it is somewhat irresponsible for us to assume the amount at this time, keeping in mind that we are trying to keep some serious kind of restraint on our budgetary and fiscal policy.
There is no question that we have to increase industrial research and development in this country. We can do it. I urge that we do it co-operatively with the foreign based multinationals. They have many reasons to be seriously interested in doing research and development in this country. There are many examples of good corporate citizens, but there are also many examples of those which are not good corporate citizens.
These problems should be tackled by the government of Canada. This is a very sensitive, serious and ticklish problem. Both the parent companies and the governments of parent companies must realize just how serious this problem is that we have to tackle. I notice it is ten o'clock, Mr. Speaker.


Mr. Deputy Speaker:: It being ten o'clock, it is my duty to inform the House that, pursuant to section (11) of Standing Order 58, the proceedings on the motion have expired.



PROCEEDINGS ON ADJOURNMENT MOTION

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

Mr. Lloyd Francis (Ottawa West):: Mr. Speaker, on January 30 of this year I directed a question to the President of the Treasury Board (Mr. Andras). There had been a report in the Toronto Globe and Mail that a document had been presented to the conference of federal-provincial finance ministers suggesting that a cap be placed on the indexing provisions applied to pensions paid to retired public servants and that there would be changes concerning the age of retirement. In reply, the minister indicated that proposals of this nature were not made to the conference. Nevertheless, a series of reports was carried subsequently in the press. Today, in response to a question from the opposition side, the President of the Treasury Board indicated that later this week he would be tabling the Alexander report on the public service retirement plan and that he would be making a statement at that time.
I believe there has been a great deal of misconception about the present superannuation plan for public servants. That superannuation plan account presently has in excess of $8.6 billion to its credit. Interest is being accumulated at a rate in excess of 7.6 per cent per annum, and the rate is increasing.
March 7, 1978

The basic fund is now being credited with interest at the rate of more than $650 million a year and the fund itself is increasing at a rate close to $1 billion a year. The fund of which I am speaking is used to pay basic rates of pensions.
There is, in addition, a supplementary retirement benefits fund which is supported by contributions of one per cent from the employer and the employee, out of which the indexed portion of pensions is paid.
The criticisms which are being made in many quarters relate to the actuarial soundness of the supplementary retirement benefits fund. If we look at the two funds together we see that there is very adequate provision made for the payment of benefits. The original actuarial calculations were made on the basis of a rate of 4 per cent. The yield today, as I said earlier, is in excess of 7.6 per cent.
A number of actuaries have looked at this fund and made projections which suggest it could be in difficulty in the future. In so doing they have had to make assumptions with regard to the rate of interest in the future, the rate of inflation, the age at which people are going to retire, and so on. On the basis of very unfavourable assumptions they could forecast difficulties; on the basis of a good combination of assumptions they could reach the conclusion-as I believe to be the case-that the plan is over-funded.
The fund as it now exists is more than adequate to pay for the basic pension rate and escalation. One of the complications which arise in the assumptions which actuaries are making relates to retirement age. It is the policy of the government of Canada to be a good employer. The superannuation scheme as it presently exists is a good plan and the objective of all of us should be to provide equal protection for all Canadians in order that the cost of living should not rob retired people year by year.


Stanley Howard Knowles: Hear, hear!


Cyril Lloyd Francis: About 8 per cent of all Canadians have retired. They receive something like 5 per cent of our national income. All we are asking-and I am pleased to have the applause of hon. members on the other side-is that the same proportion of the national income should be afforded to retired people. They should have the same protection. The suggestion that the provision of the same amount of purchasing power throughout the years of retirement is something which would bankrupt Canada is one which I simply cannot accept.
All of us have looked at horrible examples of senior public servants retiring at age 55 with 30 years' service and getting pensions which are not reduced and which are escalated from the date of retirement. The particular examples which have been cited are very difficult to comprehend as such, but the overwhelming majority of thousands now retired-I believe over 80 per cent-are getting an average pension of about $6,000 a year. The actual pensions being paid are nowhere near the sums which have been cited in a few individual cases.
Adjournment Debate
If we have to make a choice, over a long period there is a good case for saying that there is a limit to how far premature retirement at an early age can take place, but every effort must be made to protect those who are retired against the constant erosion of their incomes which inflation brings about. The priority must be to protect indexing so that those who are helpless and cannot look after themselves will not become victims of inflation. If the price of this is some sacrifice in the reduction of the age of retirement, I would be prepared to say that we could look at those provisions of the plan; but I would not be prepared to support any changes in the indexing provisions.


Mr. Thomas H. Lefebvre (Parliamentary Secretary to President of Treasury Board):: Mr. Speaker, the hon. member for Ottawa West (Mr. Francis) has once again brought a subject of very deep concern to the attention of this House. We are all aware of his continued interest in the wellbeing of his constituents, including those who are members of the public service and who have retired from the public service after long and valued careers.
The hon. member has cited some very important figures on the subject of public service pensions. In view of the fact-and the hon. member mentioned this in his remarks-that the President of Treasury Board (Mr. Andras) has committed himself to making a public statement on this suject later this week in this House, I am sure the hon. member will understand the dilemma I am presently in. 1 do not wish to go too far on this subject. I ask the hon. member to show the patience he usually does. I am sure that on the day the President of Treasury Board makes his intervention on this subject the hon. member will have an opportunity to make further statements and to question the minister in this regard.


HEALTH AND WELFARE-REDUCTIONS IN HEALTH CARE PROGRAMS-GOVERNMENT REASONS FOR CHANGE IN POLICY
Mr. P. B. Rynard (Simcoe North):: Mr. Speaker, 1 want to thank the Minister of National Health and Welfare (Miss Begin) for her reply to be found at page 3313 of Hansard for February 22, stating she would bring my suggestions to the attention of her colleagues across Canada. The minister went on to state, however, that each province is at a different stage in the development of extended health care, so she felt she could not impose minimum standards which were applicable under the hospital insurance and medical care programs.
The minister knows that under the Medical Care Act four criteria must be met. There must be 95 per cent coverage, quality of care, portability and comprehensive physicians' services. These criteria must be provided as insured services by participating provinces. The Medical Care Act empowers the government to include any additional health services under terms and conditions which may be specified by the governor in council. Let us settle that once and for all.
These additional health services are insured without exclusion. 1 hope I have made that abundantly clear. The reference is at page 270 of the Canada Year Book, 1969 under the

March 7, 1978
Adjournment Debate
heading "Public Medical Care". Since that time there have been changes-$20 per capita, tax points and the Canada Assistance Act-but in no way do they change those basic rules.
There are five types of health care. First, there is intensive care for people who are very ill. There is active treatment. Costs for active treatment run from $100 to over $200 per day. Patients are transferred as quickly as possible to chronic care at $40 to over $100. They are transferred from there to an extended care home, which runs to about $14.10 per day. We then have home care, which at the present time is on a trial basis. There are three pilot projects underway in the province of Ontario in three major cities, but what the results will be I do not know. In any event it is a patchy thing right now.
Home care is only for short periods, obviously designed to keep costs down. The transition is made as quickly as possible from stage one to stage four, keeping in mind the patient's condition. Many of the extended care homes do not have the necessary equipment for treating minor illnesses, or conditions such as emphysema or cardiovascular disease. They do not have the ability to render oxygen occasionally to bring up a patient's oxygen level. As a result, the patients have to be transferred back to the hospital under emergency conditions by ambulance with all the attendant increases in cost and inconvenience to the chronically ill.
This situation should be remedied without delay through the provision of a sick-bay in the extended care homes and trained personnel who know how to operate an oxygen tank safely. This surely could be done as it is now under the home care program with certain instructions, warning signs and intelligent personnel in charge. 1 hope 1 have made myself clear in this regard. I am sure the minister is an intelligent lady and will see that the act is carried out responsibly, cutting costs by efficient methods which will improve medical care without cutting quality.
There is one other thing I should like to add which is perhaps not relevant, and 1 apologize in advance. 1 do not believe court orders in respect of the production of a patient's history should be issued at any time except under extreme conditions. If a patient's chart is required the patient should be contacted and asked to sign a consent form. In that case the doctor can release the patient's case history. We must make every effort not to break up this relationship that exists between a doctor and a patient. If the relationship is broken up there will be a deterioration in respect of histories. No doctor who has been given information by a trusting patient will include that information in a case history, particularly if there is any danger that such information may be used adversely against that patient.


Mr. W. Kenneth Robinson (Parliamentary Secretary to Minister of National Health and Welfare):: Mr. Speaker, at the outset I should like to say that the government is quite aware of the doctor-patient relationship and would certainly
[Mr. Rynard.l
not like to see this hampered in any way. This is a point well taken by the hon. member for Simcoe North (Mr. Rynard).
What the hon. member has pointed out is that there may in fact be a gap in services. Although he knows that the present plan provides for quality, portability and comprehensive service, there may in fact be gaps in carrying this out. The hon. member speaks from his extensive knowledge and experience about intensive care, active treatment, extended treatment, chronic care and home care. All these have to be kept in mind when we are considering the kind of health care citizens of Canada need, expect and are entitled to. The hon. member has made this very clear.
I am pleased to comment on the important concerns raised by the hon. member for Simcoe North. His continuing and learned support for the provision of high quality and cost-efficient health services, particularly for Canada's senior citizens, is well known to all members of the House of Commons.
This government, in collaboration with all provinces, has in recent years been promoting the development of alternative forms of health care so that the high costs and trauma associated with transferring patients to costly forms of hospital care can be avoided. The hon. member has pointed this out very well.
Detailed discussions have been held for a number of years about the possibility of increased federal financial support for lower cost forms of health care such as home care. These discussions culminated with the introduction, as of April 1, 1977, of the extended health care services program. Through this program the federal government provides a substantial financial contribution to assist provinces in the provision of many forms of lower cost health care.
Specifically, this new program provides all provinces with assistance in the provision of nursing home and adult residential care, home care, and ambulatory health care services. For example, this program encompasses the provision of home oxygen therapy for persons suffering from chronic heart diseases and emphysema. As well, the federal financial contribution will assist the provinces to provide renal dialysis in the home, rather than in expensive hospital settings.
I should like to make one other point. The licensing and inspection of hospitals, nursing homes and other institutions providing care to the sick and disabled is, of course, a provincial prerogative under our constitution, as is the responsibility to ensure that adequate standards are met. Nonetheless, the minister is always prepared to discuss with provincial counterparts such important matters as the standard of care to extended care patients in nursing homes. The technical advisers of the Department of National Health and Welfare also are available to provide assistance to provinces in developing programs and standards of care.
March 7, 1978


FISHERIES-SINKING OF TRAWLER &quot;CAPE ROYAL&quot;-REQUEST FOR PUBLIC INQUIRY
John Carnell Crosbie: Mr. Speaker, on August 9, 1977 the side trawler, the 132 foot side trawler, Cape Royal left Burgeo on the south coast of Newfoundland to go to Marystown in Placentia Bay, to the shipyard there for some work to be done on the vessel. She was not going out fishing. She was just travelling to Marystown for repair work. So she did not have a full crew. She had a captain and seven men on board. Now, that voyage, Mr. Speaker, normally takes something like 13 hours. She left around 6 p.m. on August 9. She should have been at Marystown by 10.30 a.m. the next day. For some unknown reason, Mr. Speaker-well, the reason is known. Fishing vessels do not usually report when they are going to arrive or where they arrive when they go out fishing. Apparently this tradition was kept up, although the vessel was only going to Marystown for repairs. Nobody apparently expected to hear from her when she got to Marystown. Nobody checked, Mr. Speaker, for 216 days to see whether that vessel had reached Marystown or not.
When somebody did happen to call Marystown 2Vi days later on Friday, August 12, they discovered that the vessel had never reached Marystown and she was lost. After an extensive search, all that was ever found, Mr. Speaker, was one lifeboat. It was found on August 17, and nothing else has ever been found. Now, of course, this is a case that called out for a public inquiry. Because radio station CKCM in Marystown and the people on the south coast were not getting any action from their member, the Secretary of State for External Affairs (Mr. Jamieson), and could not get any information from the Minister of Transport (Mr. Lang), they contacted me.
On October 26 I put a motion under Standing Order 43 before the House, asking the House to direct the Minister of Transport to proceed immediately to appoint a public commission of inquiry into the loss of this side trawler and her crew, and into the adequacy of safety procedures and regulations governing transport by sea on the south coast of Newfoundland, with such inquiry to commence immediately and to report its recommendations as soon as humanly possible. The motion was not passed because an hon. member on the government side would not give it unanimous consent and said no.
On the same day 1 asked the Minister of Fisheries and the Environment (Mr. LeBlanc), in the absence of the Minister of Transport, whether an inquiry would be ordered. Well, eventually in December, Mr. Speaker, which was four months after the vessel sank, the Minister of Transport told me when I inquired of him that he was going to have a public inquiry; and I was able to pass that information on to the people of Newfoundland four months after this vessel was lost with all hands. However, from December there was still no one appointed in January; no one was appointed to the inquiry in February. But now, finally on March 1, a commissioner has been appointed to hold this inquiry, Judge Rupert Bartlett of the District Court in Newfoundland. So some seven months after the vessel was lost the commissioner is finally appointed,
Adjournment Debate
and he is going to start his work in the inquiry on April 4, 1978, eight months after this vessel and all her crew were lost.
Now, Mr. Speaker, this is an inexcusable delay, in my opinion an unnecessary delay. There is no reason for this. But another thing I have to point out is that l was the man who initiated the questions, the Standing Order 43's, and the private discussions with the Minister of Transport. The minister issued a release on March 1 but did not even send me a copy. I was not given the courtesy by the minister of a copy of that release or the information that the commissioner was appointed. It is a scurvy kind of behaviour.
The minister is morose. He is as morose as a moulting mule. He is some kind of a sorehead that he would not give a member of the House of Commons the courtesy of sending him a release when an appointment was made like that. I had spoken to him three or four times in that connection, but at last, finally, this inquiry is underway. Hopefully it will recommend better safety procedures on the south coast of Newfoundland and recommend that fishing vessels and all vessels should report when they leave the harbour and when they arrive at their destination, and should report every day so that this kind of an incident where a vessel is missing for two and a half days and nobody knows that it is missing will not happen. In that case it was not known until a phone call was made at Marystown by a relative of one of the crew who discovered that the vessel was not even there. Of course, It would even be that much better if the inquiry can find out why the vessel was lost.
While I have this opportunity, Mr. Speaker, I want to say that the fund raising committee for the Cape Royal disaster fund-their spokesman is Mr. George Coley who, I believe is from Burgeo-Ramea on the south coast-has collected $134,000 for the lost eight crew members on that vessel. Of course, their families also get workmen's compensation and compensation of that nature. Donations came from all over Newfoundland and from parts of Nova Scotia. In the old Newfoundland tradition a fund is being started, and this $134,000 will be used to help the six widows and 17 dependent children. It is a very, very sad affair and I cannot understand why we had to wait for eight months for the inquiry to even commence. There is an inquiry into the William Carson which I do not think has reported as yet, but in that case there was not even loss of life. Here eight lives were tragically lost.
In connection with safety around the coast of Newfoundland, the question arises as to what the minister is doing with icebreaking services for Newfoundland. The Canadian government has six heavy icebreakers. Three of them are stationed in Quebec City and three are stationed in Dartmouth; and here is Newfoundland, in the middle of the Arctic ice, in the middle of the ice that comes through the straits of Belle Isle, through Labrador down our north east coast, and we have one medium icebreaker in St. John's, the Sir Humphrey Gilbert, and one icebreaking cable vessel, John Cabot, which is supposed to watch the patrolling of cables off Newfoundland in the Atlan-

March 7, 1978
Adjournment Debate
tic. So there are three in Quebec and three in Dartmouth, when they should be in St. John's, Newfoundland.
We have two more large icebreakers under construction. One will be commissioned on July 1 of this year. I think they were built in Vancouver. That icebreaker will go to Quebec. We have a second one under construction which will be in service in 1979, and that vessel is to go to the Haiifax-Dart-mouth area. Why is it that everything in the Department of Transport is so patently political? There are four heavy icebreakers to be stationed in Dartmouth, one medium icebreaker in St. John's, four in Quebec. What is up, Mr. Speaker? These icebreakers should be stationed in St. John's where they are close to the scene of the action, where they are needed off the coast of Newfoundland.
I want to ask the minister to do something about that and to improve safety and the icebreaking capability of his forces off the coast of Newfoundland by stationing at least two more heavy icebreakers in St. John's or some other suitable port in Newfoundland. If Gander were a port-it would get these icebreakers, but Gander is not a port-so perhaps St. John's can have some hope. I would like the minister's apology. He is not here tonight-


Mr. Deputy Speaker:: Order, please. The hon. member has run over his time.


William Kenneth Robinson: Mr. Speaker, at the outset I would like to say to the hon. member for St. John's West (Mr. Crosbie) that I think the matter he has raised is in fact a serious matter, as he has pointed out. He has also made some very serious representations, particularly with regard to safety and the whole question of the use of icebreakers and where they should be located. I hope the Minister of Transport (Mr. Lang) will take notice of this because the representation appears to be well founded.
It is unfortunate that the hon. member did not receive a copy of the news release of February 28, which I assume is the one he is referring to. I am sure it was an oversight and was not done deliberately.
The Cape Royal, a 132-foot side trawler of 350 tons gross tonnage, sailed from Burgeo on what should have been a 15-hour voyage to Marystown, Newfoundland, where she was to undergo refit. In preparation for drydocking, all her fishing gear had been removed and when she sailed the vessel was
without ballast or ice. Eight persons were on board, all of whom are presumed lost.
In brief, the sequence of events appears to have been as follows. First, at 1820 hours local time on August 4, 1977, the Cape Royal left Burgeo. Second, at 1920 hours that same day, the Cape Royal called the fishing vessel Gulf Gerd but when the latter replied she received no answer. This was the last time any message was received from the Cape Royal. Third, that the vessel was overdue was not realized until 1620 hours on August 12, when a routine message from Burgeo to Marystown concerning her refit drew attention to the fact that the Cape Royal had not arrived. A check with St. Pierre established that she had not taken shelter in that area. Fourth, at 1905 hours on August 12, traffic control centre in St. John's was advised that the Cape Royal was overdue. Search and rescue operations were put in hand immediately.
Nothing has been seen or heard of the missing men to date. The vessel's overturned lifeboat was located on August 17, the indication being that it had not been launched, and two life rings were subsequently found ashore in the St. Bride's area of the Avalon Peninsula. The exact cause of the casualty could not be determined, but the absence of any distress signals and the apparent failure to make use of the lifesaving equipment would seem to indicate that disaster struck suddenly. No further wreckage has been located despite extensive search, and it now seems unlikely that anything further will be found. In consequence, the coast guard commissioner recommended to the minister that a formal investigation be ordered.
As you may be aware, Mr. Speaker, the Minister of Transport announced February 28, 1978 that there would be a public inquiry into the disappearance of the trawler Cape Royal to begin in St. John's, Newfoundland. As was pointed out by the hon. member, on April 4, 1978 Judge Rupert W. Bartlett of the district court of Trinity-Conception has been appointed commissioner and Eric C. Facey, of Gander, will be commission counsel.
I realize that a lot of time has passed since this most unfortunate accident, but at least now something is going to be done by way of an inquiry which I hope will clarify matters for the hon. member.


Mr. Deputy Speaker:: The motion to adjourn the House is now deemed to have been adopted. Accordingly, the House stands adjourned until tomorrow at two o'clock.
Motion agreed to and the House adjourned at 10:28 p.m.

Wednesday, March 8, 1978