1978-05-24

ROUTINE PROCEEDINGS


Mr. J. M. Forrestall (Dartmouth-Halifax East):: Mr. Speaker, I rise under the provisions of Standing Order 43 to move a motion of urgency and concern to a number of Canadians. It has now been some 14 weeks without settlement of claims of the surviving families of those killed in the crash of the PWA Boeing jet at Cranbrook on February 11.
In light of the agreement that came out during the coroner's inquiry among counsel for Pacific Western Airlines, the Boeing Aircraft Company, the manufacturer of the reverse thrusters, the town of Cranbrook and others to pool the liability so that claims might be at least partially settled, thereby relieving the undue financial distress caused by this accident, and in light of the failure of this proposal being implemented because of refusal by counsel for the Ministry of Transport, I move, seconded by the hon. member for Kootenay West (Mr. Brisco):
That this House direct counsel for the Ministry of Transport to immediately review its position with respect to the pooling of liability so that some measure of relief from the Financial burden imposed on these families may be realized.


Mr. Speaker:: Presentation of such a motion for discussion, pursuant to Standing Order 43, would require the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


TRANSPORT
Mr. Jack Murta (Lisgar):: Mr. Speaker, I rise on a matter of urgent and pressing necessity, that being the mounting crisis in Canada's grain industry reflected in what as of this week amounts to a one million ton backlog in shipping. Ships are now waiting to load grain in all Canadian ports-Vancouver,
Thunder Bay and on the St. Lawrence. Because of the seriousness of this matter, which will reflect itself in lower quota levels, a larger than expected carry-over of western Canadian grain, and demurrage charges that will be the highest on record, I move, seconded by the hon. member for Swift Current-Maple Creek (Mr. Hamilton):
That the government immediately pass an order in council freeing money for the 4,000 grain hopper cars the Canadian Wheat Board has requested and launch immediately into a boxcar rehabilitation program.


Mr. Speaker:: Presentation of such a motion, pursuant to Standing Order 43, would require the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


METHOD OF DEALING WITH QUESTIONS OF PRIVILEGE-MOTION UNDER S.O. 43
Mr. Stuart Leggatt (New Westminster):: Mr. Speaker, I rise under the provisions of the same Standing Order. In view of the allegations that the hon. member for York-Simcoe (Mr. Stevens) has violated the privileges of this House, I would move, seconded by the hon. member for Central Nova (Mr. MacKay):
That in the event our Speaker Finds a prima facie question of privilege in that case, that this House at the same time be given an opportunity to vote again on the question raised concerning the violations of the privileges of the hon. member for Nickel Belt-


Mr. Speaker:: Order, please.


Stuart Malcolm Leggatt: -so that we may have an opportunity to support-


Mr. Speaker:: Order.


Stuart Malcolm Leggatt: -Mr. Speaker in all instances-


Mr. Speaker:: Order, please.


Stuart Malcolm Leggatt: -and not merely those which may suit our convenience.


Mr. Speaker:: Order, please.

May 24, 1978


FEDERAL-PROVINCIAL RELATIONS INQUIRY WHETHER GOVERNMENT WILL REVISE POSITION RESPECTING QUEBEC SALES TAX-MOTION UNDER S.O. 43
Mr. Lome Nystrom (Yorkton-Melville):: Mr. Speaker, under the provisions of Standing Order 43, I request the unanimous consent of the House to present a motion on an important and urgent matter.
In view of the statement made last Sunday by the leader of the Quebec Liberal party to the effect that stubbornness of the federal government in the dispute over the sales tax has increased the popular appeal of the independent option of the Quebec government, I move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That this House request the government to alter its policies which, in addition to being unfair, also do considerable harm to the unity of the country, and that it agree to revise its current position with regard to the sales tax.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


TRANSPORT
Mr. John C. Crosbie (St. John's West):: Mr. Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. In view of the fact that the m. v. William Carson sank off Labrador on June 3, 1977, almost 12 months ago, with the result that 37 passengers and the crew of 91 lost their possessions and various cargo owners lost cargo totalling 1,000 tons, all of which resulted in severe financial loss and hardship to passengers and cargo owners, particularly in Labrador, and especially because CN Marine refused to pay for the losses of passengers and cargo owners, and in view of the fact that the hon. Mr. Justice Noel, as a commissioner, has now found that due to the default of the operator of the vessel, CN railway company, and her master the sinking was caused by ice penetrating the hull, I move, seconded by the hon. member for Dartmouth-Halifax East (Mr. Forrestall):
That the government instruct CN Marine to pay immediately to the passengers and crew on board the m. v. William Carson on June 3 and to the owners of cargo their losses, costs and expenses immediately so they will be spared further hardship, together with interest on amounts due since last June 3, and that the government advise CN Marine that it will be held responsible financially to the government for the costs involved to the government and taxpayers of Canada in the loss of the said vessel.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


NATIONAL DEFENCE
Mr. Allan B. McKinnon (Victoria):: Mr. Speaker, I rise under the terms of Standing Order 43 on a matter of urgent and pressing necessity. Some two weeks ago, in answer to a question, the Minister of National Defence (Mr. Danson)
stated in the House:
We do not have any nuclear weapons nor would they be deployed on our soil.
One week later he said he never answered questions on that subject. But this week he has changed his mind again and is answering questions on the subject outside the House, contradicting his original answer which misled the House. I would, therefore, move, seconded by the hon. member for Winnipeg South Centre (Mr. McKenzie):
That this House direct the Minister of National Defence to make a statement on motions clearly setting out the truth about Canada's nuclear position and explaining to the House his misleading remarks on May 8 and 15.


Mr. Speaker:: Under the terms of Standing Order 43, such a motion requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


GOVERNMENT POLICY ON DEPLOYMENT OF NEUTRON BOMB-MOTION UNDER S.O. 43
Mr. Andrew Brewin (Greenwood):: Mr. Speaker, in light of the fact that the world disarmament conference is taking place at the present time and that the question of the production of the neutron bomb will be on the agenda, and since it has been suggested by the press that the Prime Minister (Mr. Trudeau) proposes to disclose the Canadian view on this question at the conference, I ask consent to move a motion under the provisions of Standing Order 43 on an urgent matter of pressing necessity. I would move, seconded by the hon. member for New Westminster (Mr. Leggatt):
That this House direct the government forthwith to disclose to the House of Commons, the proper forum for such disclosures, what is the attitude of the Canadian government as a member of NATO and of the international society to the production and deployment of this bomb.


Mr. Speaker:: Presentation of such a motion would require the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.
May 24, 1978


NATIONAL SECURITY
Mr. Tom Cossitt (Leeds):: Mr. Speaker, I rise on a matter of urgency concerning the fact that the Progressive Conservative government of Ontario yesterday blocked a $25,000 Ontario Arts Council grant pending a full review of the operations of the Kensington Arts Centre, the Centre for Experimental Art and Communication, and the tabloid "Strike" which supports terrorism. I might add that the city of Toronto took similar action a few days ago. In light of these decisions, I ask consent to move, seconded by the hon. member for Winnipeg South Centre (Mr. McKenzie):
That this House condemns the government and the Secretary of State in particular for failing to take similar action and for failing to justify the allocation of large sums of public money to these groups previously; and, finally, demands an explanation from the Prime Minister as to why he continuously maintains a position of silent inaction with regard to the award of public funds to extreme leftist-oriented organizations which advocate terrorism.


Mr. Speaker:: In conformity with Standing Order 43, unanimous consent is required before the motion can be presented. Is there such consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.



ORAL QUESTION PERIOD


J. Michael Forrestall: Mr. Speaker, my question is for the Minister of Transport. In light of the implications of the report of the coroner's inquiry into the crash of the Pacific Western jet on February 11 at Cranbrook which, among other things, publicly rebuked the minister and called for immediate and necessary changes with respect to certain navigational, communications and firefighting capacities, would the minister tell us what steps he intends to take to meet these recommendations and in a general way to upgrade the standard of airports such as Cranbrook?


Hon. Otto E. Lang (Minister of Transport):: First of all, in referring to me the coroner was actually dealing with certain reports and statements, some of them taken out of context. I am not sure how far apart we would be if we were meeting face to face.
We have an investigation under way and our experts will continue to analyse all factors from an aviation and safety point of view. The results will be reviewed by our independent
Oral Questions
review board and at that point I will expect to receive a report and to be acting upon it.


J. Michael Forrestall: I appreciate the minister's response, Mr. Speaker. I wonder if he is now in a position to indicate to the House whether consultations with the various provinces and other jurisdictions have gone far enough to permit him to move ahead with tabling in this House the long overdue legislation with respect to the establishment of an independent commission of inquiry.
If consultations have not gone that far or proceeded to that point at this stage, is the minister now prepared to indicate to the House and to the people of Canada that he will name a senior court judge with competent authority to conduct a proper public inquiry so as to remove the uncertainty and continuing confusion surrounding this tragic incident?


Otto Emil Lang: Mr. Speaker, my answers to those questions really remain the same as they were last week. I will await the report from our investigating team before deciding on the second question.
As far as the first question is concerned, it has been our proposal to go ahead with an independent accident board. One of the questions which has involved most of the time in discussions with the provinces and others has been the matter of the provisions which can assure that the role of coroners is not interfered with in any way by the accident board which we may create. Those discussions have been very useful and I think have very much warranted the time we will have spent between first proposing the board and the time when we will introduce the legislation. We are now in the final phase of developing proposals, after those discussions, into legislative form, and as soon as that is complete we will move forward with the legislation.


J. Michael Forrestall: Mr. Speaker, I wonder if the minister is now prepared to have further consultations with the Minister of Justice and other colleagues with a view to having counsel for the ministry reopen the question of the pooling of liability so that at least a partial settlement of claims arising out of this accident might be proceeded with. There is some urgency and considerable financial distress. Has the minister addressed himself to this question? Is it a matter of ongoing concern within the department, or must we wait until the minister has all the final reports and until he can make some judgment about the establishment of a public commission of inquiry?


Otto Emil Lang: Mr. Speaker, the matter of compensation for persons seriously affected by an accident like this is always of great concern to us all. The matter is very much in hand. It is being handled by our legal personnel in consultation with myself and the Minister of Justice and I hope progress can be made, but I do not think it would be appropriate for the details of the problem to be analysed here in this House rather than being handled by the lawyers and representatives of the parties involved.

May 24, 1978
Oral Questions


ADMINISTRATION OF JUSTICE
Mr. Eldon M. Woolliams (Calgary North):: Mr. Speaker, I would like to put a question to the Minister of Justice concerning the same air crash which took place on February 11 and in which 43 people lost their lives. When the coroner was summing up, he rebuked the federal Minister of Transport for his suggestion that the inquest should concern itself only with the immediate cause of death. The coroner went on to say that inquests have a tradition of 1,000 years.
Did the Minister of Transport consult with the Minister of Justice, the chief law officer of Canada, regarding the advisability of holding a public inquiry prior to the inquest or while the inquest was adjourned so that all the best evidence-and I emphasize, best evidence-could be placed before the coroner and so there would have been scientific research done with reference to the tape which was transcribed but which was not clear?


Hon. Ron Basford (Minister of Justice):: No, Mr. Speaker, not with me personally. Whether he consulted with officers of my department or his officers consulted with officers of my department, I am unable to say today.


CRASH OF PWA AIRCRAFT AT CRANBROOK, B.C.- CONSULTATION BETWEEN MINISTERS OF JUSTICE AND TRANSPORT
Eldon Mattison Woolliams: Mr. Speaker, I would like to turn to the Minister of Transport. The Minister of Transport has heard my question with reference to the rebuke by the coroner. Did the Minister of Transport consult with the Minister of Justice and, if not, why not, especially when the Minister of Transport refused at the beginning to have the tape admitted as evidence and then later changed his mind?
Did the minister consider, not only as Minister of Transport but as a person with some knowledge of the law, that a public inquiry would have added to the best evidence not only on the cause of death but on the cause of the crash which led to 43 people meeting death?


Otto Emil Lang: It is obvious that hon. members will stray a long way away from the facts when they rely on press reports and on what are not even correct statements. Of course, he has the example of the hon. member for York-Simcoe who creates press reports of a similar false nature. Perhaps that is part of their operation.
If the hon. member had listened to my first answer, he would have noted that the coroner was not even dealing with a very exact expression of any statement of mine in dealing with

the issue of coroners' inquests and accident review boards. So we part company on that. Second, if the hon. member had watched the second set of press reports instead of the first, he would have known that at no time did we refuse to make the tapes available. We did indicate at a certain stage to the coroner that we did not have what we considered to be the final transcript available. What we had was a rather incomplete one; in fact, one not unlike the one he had earlier thrown out when it was produced in front of him by someone else. We could not produce what we did not have; I think that position is very clear. But it was also very clear to us that, in fact, we were always willing to produce the evidence which we had available when it was asked for.


Eldon Mattison Woolliams: It is rather strange to hear the minister talk about evidence when he actually refused to give them the tape-now he says he did not refuse, but that is not what the report states-or transcribe the tape so scientific research could be done and so that the pure facts could be put before that inquest. I put this question to him again: Why did he refuse to have a public inquiry so that the best evidence could be put before that inquest, not the evidence he is now trying to set out here in the House?


Otto Emil Lang: Mr. Speaker, I would think that the hon. member would accept the fact not only as it was in the press but what I say to him, namely, that we always made the tapes available and were willing to make them available. What we could not do was to provide a transcript which we did not have. Having regard for the traditions of the House, I would think that when I said that for the second time the hon. member would accept that statement without any further problem.


Some hon. Members:: Oh, oh!


An hon. Member:: You are testy, Otto.


Otto Emil Lang: I see that hon. members opposite from the Tory party have no respect for the traditions of the House and I am not surprised to see that further evidenced today.


Some hon. Members:: Oh, oh!


Mr. Hees:: Testy ministers get nowhere, Otto.


Otto Emil Lang: Mr. Speaker, the experts who are in the process of analysing what is on the tapes have indicated that it may take them a month to complete their analysis to a degree of satisfaction which is really adequate for conclusions to be drawn from it. When experts who know the business of what they are analysing tell me that, I accept it as a fact; and, indeed, any final conclusion or any final report of a successful investigation will only come about after that transcript has been completed to the best satisfaction of experts. I hope the hon. member will find a way to accept that as a fact as well.


Mr. Alexander:: What are you getting so sore about?
May 24, 1978


TRANSPORT
Mr. Edward Broadbent (Oshawa-Whitby):: It was touching to hear the Minister of Transport give verbal support to parliamentary institutions. A royal commission headed by Mr. Justice Emmett Hall made a recommendation to this parliament and to the minister. Mr. Justice Hall is quoted in the press yesterday as saying:
The federal government has virtually ignored the recommendations in the report.
He also said:
Lip service has been given to the report rather than its being implemented.
So much for parliamentary respect for tradition. I ask the minister whether he can now assure the House that he will stop subverting this eminently sensible report and positively go beyond that and assure the House that at this time the government accepts the full recommendations of that report and intends to implement them as a package.


Otto Emil Lang: Mr. Speaker, when the government receives a report of a commission, the government still has to take the responsibility for either carrying out or not carrying out the provisions or the recommendations of that commission. I think that also is an understood tradition of the House. In fact, we have carried out very effectively and very fully most of the important recommendations of the Hall commission which, after all, was composed of five eminent commissioners.
I have great respect for Mr. Justice Hall-he is an old friend, colleague and teacher-but the fact is that I find it very hard to sustain his objection to our not going ahead with the prairie rail authority when I have the support for not going ahead with it of virtually every farm organization, including the Saskatchewan Wheat Pool, the Alberta Wheat Pool, the Manitoba Wheat Pool, Palliser, Unifarm and all the other important organizations in the farm areas of the west. Furthermore, if Mr. Justice Hall or any of the opposition speakers think that it is wrong for us to go ahead with a $700 million program for rebuilding rail lines, I would like them to go out to the communities of the west and say so. For my part, it is the most important thing which has been done for western rail lines and grain handling for a long, long time. It will continue to be well received in the west. It is important there, and I will fight for it.


John Edward Broadbent: Mr. Speaker, I rather thought the minister would give me precisely the answer he did. Mr. Justice Hall is probably an ex-friend of the minister at this point, not a current friend.


Some hon. Members:: Hear, hear!


John Edward Broadbent: He has said that the government, in all its wisdom, intends to spend the next eight years doing what farmers in western Canada need now: he is going to spread that over eight years.
Oral Questions


Some hon. Members:: Hear, hear!


John Edward Broadbent: Considering that the time-frame for upgrading the grain handling facilities of western Canada is now, not eight years down the road and, considering that we have over one million unemployed, will he not do what the Hall commission intended and what the farmers want: will he not cut this time in half and spend the money, which he has announced for eight years, over a four-year period to meet the needs of western farmers as well as to provide jobs to people in Nova Scotia who would be employed in building those facilities?


Otto Emil Lang: Mr. Speaker, at least I am glad the hon. Leader of the New Democratic Party endorses the spending of $700 million on rail rebuilding, which apparently was not being endorsed in his earlier quote.


Some hon. Members:: Oh, oh!


Otto Emil Lang: However, I should like the hon. member to recognize that the eight-year period makes very good sense in terms of planning the rebuilding program and the use of crews. Indeed, I had representations from the unions involved to spread the rebuilding over that kind of time period so that sensible work could be done. Furthermore, before this work could be done or begun in any sensible way, we had to go about the business of buying the necessary ballast cars, dump cars and sleds to do the work.
We have a $47 million order of those pieces of equipment in the process of being filled. With that equipment we will be able to carry out this program and complete the work in eight years. The important thing is that at the end of the eight-year period we will have a permanent grain system in the west, with every line retained in that permanent system rebuilt to standards to carry hopper cars and rebuilt in a manner which will confirm the faith of communities in the fact that that system is going to be around for a long time to come. This is dramatic action in favour of western farmers and western communities, and I think it will be seen as that out there.


John Edward Broadbent: Mr. Speaker, the minister is not making speeches in his constituency now.


Mr. Hnatyshyn:: He would not make that speech in his constituency.


John Edward Broadbent: He has made no fewer than three distortions in his answer: I will not put it any more bluntly than that. Since he talked about spending the money, he knows full well the Hall royal commission recommended that we stop giving away millions of dollars carte blanche to the railway companies, and instead recommended that any compensatory payments made to subsidize the railways between their costs and the actual Crow rate should be made to them in the context of the government announcing its intention to maintain the Crow rate and putting the onus on the railways to maintain and upgrade the grain handling facilities.

May 24, 1978
Oral Questions
Given that recommendation, which is central to the needs of western farmers, could he tell us why he continues to give out millions of dollars to the railways? Second, why has he not made an unequivocal commitment to maintain the Crow rate?


Some hon. Members:: Hear, hear!


Otto Emil Lang: Mr. Speaker, time and time again I have made the unequivocal commitment to maintain the Crow rate. 1 have said it is extremely important to me, as a westerner, that the value of the Crow rate be considered in the full relationship in this country of the cost of the tariff to grain farmers. I have observed that there may be better ways of conferring those benefits. When the west is ready to receive those benefits in another way, I will be delighted about that. The rate is being maintained; therefore, it is completely clear that that recommendation is being carried out. In any case, there is no departure from the Hall commission recommendation in that regard.
With regard to the moneys being paid to the railways, the Hall commission in its report would have us pay something in the order of $200 million to $250 million a year over the next four years, on and forever in order to make up the difference. We are not paying that full amount; we are paying that part of the amount which we force the railways to match dollar for dollar into the rebuilding of rail lines. In other words, every dollar we transfer is for the purchase of equipment to rebuild those lines and for the actual rebuilding of the lines. We have not given the extra $150 million or so which the NDP is now urging we give to the railways. Imagine that, Mr. Speaker- the NDP urging that we give that amount to the railways.


Some hon. Members:: Oh, oh!

[ Translation]


MANPOWER
Mr. C. A. Gauthier (Roberval):: Mr. Speaker, I would like to direct a question to the Minister of Employment and Immigration. It looks as if the minister has already decided to reduce the personnel in charge of the preparation of projects under the Canada Works program in my area. A few employees have been laid off so far, so that in November not more than 50 per cent of the personnel will be left.
Does the minister mean by that that he intends to cut his third phase budget down by 50 per cent of what it was for previous phases?


Hon. Bud Cullen (Minister of Employment and Immigration):: No, Mr. Speaker, what we will, in effect, be doing is

maintaining the figure at $225 million. But in keeping with the recommendations of the first ministers' conference, and as a result of recommendations from both sides of this House, $50 million of that will be put into the economic growth component factor so we will be able to create more permanent jobs rather than the temporary jobs created under the Canada Works program. We are trying to blend the two programs to make them as effective as possible in dealing with unemployment.


Charles-Arthur Gauthier: Mr. Speaker, is the minister not concerned that with such a restricted personnel, even if it is permanent, the quality of the projects might suffer because they will not have time to make the necessary contacts with promoters and that could affect the number of projects?


Jack Sydney George (Bud) Cullen: Yes, Mr. Speaker, most assuredly I have that concern, but I also recognize that the people who are on the job recognize the responsibility they have and will do their utmost to see that the quality of the projects does not, in fact, suffer. But you cannot have it both ways: on one hand criticizing the government for spending too much money, and on the other suggesting that we continue to hire temporary employees to complete our staff. You cannot have it both ways.


Charles-Arthur Gauthier: Mr. Speaker, I would like to ask a supplementary question. Can the minister tell the House if we can expect about the same amounts for phase III as for phase II?


Jack Sydney George (Bud) Cullen: Mr. Speaker, certainly the figure will be reduced by about 22 per cent, in rough figures, but not in each riding. The figures in that respect will come out in approximately one weeks time. Where unemployment has increased in a particular region, of course, there may be more money available. The basic figure for each riding will be established at about $150,000, rather than $50,000, so it is difficult until we come out with specifics on each individual riding to give the hon. member a better answer.


PRESENCE IN GALLERY OF DELEGATES OF CANADA-MEXICO BUSINESSMEN'S COMMITTEE
Mr. Speaker:: Order, please. Before continuing the question period, I know that all hon. members will want to join with me in signalling the presence in our gallery of a distinguished visitor, the chairman of the Businessmen's Committee in his own country and head of the delegation to the eighth bilateral Canada-Mexico Businessmen's Committee in the person of Mr. Jose B. Zozaya.


Some hon. Members:: Hear, hear!
May 24, 1978


TRANSPORT
John Carnell Crosbie: Mr. Speaker, my question is directed to the Minister of Transport. Yesterday the minister released the report of Mr. Justice Noel on the sinking of the Canadian vessel m.v. William Carson last June 3. In that report Mr. Justice Noel finds that the sinking was the fault of the vessel's operator, Canadian National Railways, and her master.
The report is dated January 27, which is 116 days ago. When did the minister receive the report, and why has it been delayed so long in being made public? In view of this finding that the CNR was responsible or was at fault, is the minister going to direct the CNR to pay the passengers and crew loss claims and the cargo owners their claims which have been in abeyance now for 11 months? They were to be paid for personal effects. There has been a great deal of hardship in Labrador, Happy Valley, because of these claims not being paid. Will the CNR now be directed to pay them?


Otto Emil Lang: Mr. Speaker, I would have to check the exact date on which I received the report. The time in between has been taken up with printing and preparation for publication, as well as for some advance distribution to provincial authorities, and so on. It would not be my intention to give directions to the Canadian National. I am sure they are looking at their legal position and what is their proper course of action. They have, no doubt, the knowledge that I would want them to do what is right for them to do.


John Carnell Crosbie: Mr. Speaker, it is very important to find out when this report was received. Some 16 weeks is a long time to print a report. If the minister could check that, I am sure the House would be interested. A number of cargo owners in Labrador were practically made bankrupt by the loss of this cargo, not insured by the CN, and they neglected to insure it themselves because they always considered they could recover if the vessel owner was at fault. Will the minister take steps to have the CN speed up the settlement, in view of this finding, to help these people who have had a lot of problems in the last 11 months?
The other part of my question is, what about the government itself? The government owns this vessel. Is it now going to take action against the CN to recover the value of the vessel at the time of the sinking due to the finding of fault on the part of the CN, or are the taxpayers going to be asked to cough up the $4 million odd to meet the fault that the judge found on the part of the CN? What action is the government going to take?


Otto Emil Lang: Mr. Speaker, I would certainly be glad if I could do anything to speed up the resolution of the questions referred to in the first part of the hon. member's question. As far as the second part is concerned, the Canadian National was operating this vessel on behalf of the government and I would want
Oral Questions
first to have legal advice as to the implications of that in respect of any potential claim.


STEPS TO IMPROVE GRAIN HANDLING
Mr. Frank Hamilton (Swift Current-Maple Creek):: Mr. Speaker, my question is for the minister responsible for the Canadian Wheat Board. As the backlog of grain exports on the west coast continues to worsen, and we now have over 10 million bushels of lake shipping waiting idle at Thunder Bay, with the Churchill movement about to begin, it seems the only way out of the transportation tangle is to comply with the Canadian Wheat Board's request that the government help repair out-of-service boxcars and order some additional hopper cars.
Has the government approved a program to repair 5,000 out-of-service boxcars as requested, and has the government let a contract for an additional 4,000 hopper cars, because the Canadian Wheat Board now has 10,000 fewer boxcars at its disposal than it had when the minister first took over?


Otto Emil Lang: Mr. Speaker, what the Wheat Board has at its disposal is, of course, 8,000 additional hopper cars, at a cost of $255 million, supplied by the people of Canada to ensure that there would indeed be a significant ability to move our grain. The very question of additional cars is one to which the hon. member knows I have always given close attention, having been the initiator of the program to purchase hopper cars and renewing those orders to the extent that 8,000 have now been acquired.
We are looking at the question of additional acquisition at this point in time. The movement of grain is making use of all possible cars. We are also looking at the question of how to turn those cars around more quickly. I welcome the hon. member's support for the additional steps in repair and the purchase of cars, because there are those who have been critical of this thought and I am very happy to have support from him in this regard.


Frank Fletcher Hamilton: The highest quality grain line in Canada, the southern line through Saskatchewan, has not had a train since last March. I would repeat that the Wheat Board now has 10,000 fewer boxcars to use than when the minister took over. I ask him, once again, if he will look at the transportation section in that way.


Otto Emil Lang: Mr. Speaker, in fact, the hon. member is quite wrong: the Wheat Board had zero cars. The railways have a certain number of boxcars for a variety of services. We now have-that is, the Wheat Board and government-8,000 hopper cars. That is an increase of 8,000. Whether a train is run on a particular line is very often a decision taken by the Wheat Board and the railways, having regard to the conditions of the line. In spring conditions, and until these lines are rebuilt to proper standards, there will be these difficulties. Again, I now welcome the hon. member's support for the program of rebuilding which has come under some criticism from other corners of the opposition.
5682

May 24, 1978
Oral Questions


RAILWAYS' GRAIN CARRYING FACILITIES
Mr. Don Mazankowski (Vegreville):: Mr. Speaker, my question is to the Minister of Transport. The problem rests largely with the rapid decline of the railways' grain carrying fleet. Just to inform the minister, our figures indicate that the capacity of the grain carrying fleet has been reduced by some 20 million bushels since 1975, and projections indicate that by 1981 it will have been reduced to some 6,300 cars, from 20,000 cars in 1975. It is hardly an encouraging situation.
Can the minister explain, in view of these circumstances, how the government can justify the payment of these huge subsidies, these huge hand-outs to the railways-the $700 million that the minister referred to earlier and the $800 million write-off of the CNR debt-while they at the same time are reducing their grain fleets and are not discharging their mandate and responsibility? To many, this constitutes the sell-out of the century.


Mr. Speaker:: Order.


Otto Emil Lang: Mr. Speaker, first of all, it is useful to put the hon. member's question into context since this year, when he says we have reduced the capacity for moving grain, we are likely to move into export 850 million bushels and perhaps one billion bushels in total, which along with two other years earlier in time than my responsibility for the Wheat Board represent a record three years of all-time movement. We have the capacity to move a lot of grain, but we are not satisfied with that because we believe there will be more grain, and a need for more, and we will continue to move it.
I find it odd that the hon. member now comes down against his colleague in criticizing financial support for the rebuilding of the rail lines. This is not a gift to the railways; it is a transfer of funds to obtain a very specific upgrading of branch lines like the Conquest line which was completed during the course of last summer, and hundreds of thousands of miles of line which will be completed during the course of this summer. It is far less than the transfer we would make to the railways if we had carried out literally the recommendation of the Hall commission report which has just been urged upon me by a variety of colleagues. That would have seen twice as much money per year go to the railways, without the commitment in relation to upgrading unless we had actually put in more money. We are getting exact results for our dollars, whether in hopper cars or rebuilt lines, when we spend the dollars to get the results.


Donald Frank Mazankowski: Mr. Speaker, to put the matter in perspective, I am quoting figures from the minister's own publication put out by the Canadian Wheat Board entitled "Grain Matters". The fact is that the railways' fleet has been reduced dramatically, while the government pours millions of dollars into the hands of the railways with, obviously, no strings attached. Is the minister going to undertake a review of the policy in this regard to ensure that the railways will not
[Mr. Lang.)
only maintain an adequate fleet but will ensure that that fleet is operative at all times?


Otto Emil Lang: Mr. Speaker, the very gist of the recommendations of Hall and Snavely in this regard were that the government should pay the railways enough money so that they would in fact be able to operate at a profit in this area. They would have had us transfer the money without strings attached. What we have done is quite the contrary: every dollar that we have put in, whether for the rebuilding of lines or for the purchase of hopper cars, has been directly for results that are visible. Every dollar is visible there. Not one of those dollars, in addition to that, has gone for the profit or better advantage of the railway systems.
The railways, of course, have been letting their systems deteriorate. Without the cash which the Snavely and Hall commissions found them to be short of, they have not been rebuilding cars. Thus, in 1972 and at intervals since that time this government has been taking action by buying hopper cars and putting them in place.


Donald Frank Mazankowski: Sit down.


Otto Emil Lang: So, Mr. Speaker, when you talk about dropping from 20,000 cars to 7,000, you really should not ignore the 8,000 hopper cars which, after all, have 1 1/2 times the capacity of even the best boxcars.


CANADIAN WHEAT BOARD
Mr. Doug Neil (Moose Jaw):: Mr. Speaker, my question is also to the Minister of Transport. In view of the fact that demurrage charges for the 1977-78 crop year will possibly total $17 million to $20 million, the highest in our history, in view of the fact that these charges are incurred through no fault of the producers but, rather, as a result of this government's incompetence, and in view of the fact that the grain producers' income is being eroded year by year, and that the minister stated recently there will be no final payment this crop year, will the minister give an undertaking that all or a portion of the demurrage charges will be borne by the public treasury for this year?


Otto Emil Lang: Mr. Speaker, the last estimate that I saw with regard to demurrage charges was that it would not be as high this year as in the record year. Therefore, the hon. member is using imagined figures again. He says "possibly", but they are simply in his imagination. I should say, as well, to correct the hon. member, that I certainly never made a blanket statement about no final payments and, indeed, I would expect final payments with regard to many types of grain, including barley, select barley, and durum. There had been some question about the spring wheat pool, although I must say that with wheat prices now having
May 24, 1978

5683 moved into the area of $4.30 to $4.35 a bushel, things are looking rather better.


Douglas Charles Neil: Mr. Speaker, I might point out that the information as to the figure of $17 million to $20 million comes from the Canadian Wheat Board. Is there some doubt about what is going on? As a supplementary, can the minister confirm that because of the situation in the St. Lawrence Seaway, namely, with 12 ships waiting and 12 due this week, demurrage charges will be incurred in the St. Lawrence for the first time in history?


Otto Emil Lang: Mr. Speaker, I would be glad to look into that. Of course, the fact is that when we have a record movement in grain, we are bound to run into situations where the system is not capable, with a lot of slack, to deal with delays and ship arrivals and the need for cars in all directions at the same time. This year we have a particularly tight situation because potash movements are at very, very high levels. We have a shortage of potash cars for potash movement alone and the normal movement of cars from potash to grain is not taking place.
I wish hon. members would understand that when you shoot for a record, you may not have a transportation and handling system capable, without a little bit of tough sledding, of easily handling that record. We have a system that can handle twice as much as ever had to be handled during the regime of the right hon. gentleman from Prince Albert, because we are up to twice as much in our regular pattern.


Some hon. Members:: Oh, oh!


PUBLIC SERVICE
Mr. Lloyd Francis (Ottawa West):: Mr. Speaker, I have a question for the President of the Treasury Board. Was the preliminary 1976 study of job classification in the Ottawa-Hull region, to which reference was made in this House yesterday, based on a comparison of jobs within the public service and jobs in private industry? If the study was not based upon comparisons with outside private employers, is it the intention of the government to conduct a number of similar studies before suggesting changes in something like 16 per cent of the job classifications in the public service?


Hon. Robert K. Andras (President of the Treasury Board):: Mr. Speaker, the classification study of 1976 was an internal audit, as the hon. member knows, of a sampling of the federal public service in the national capital region. It was to some degree based on comparisons on the outside world and comparisons with other levels of public service, but as to the recognition of overclassification and underclassification, that study is now being continued in a second audit in the public service outside the nation's capital. We will not be drawing any final conclusions about changes to classifications or meth-
Oral Questions
ods of monitoring until we get the other report, which I expect in about two or three months. We will be discussing any proposals as a result of that matter with the various public service bargaining agents involved.


TRANSPORT
Mr. Les Benjamin (Regina-Lake Centre):: Mr. Speaker, I would return to the Minister of Transport and to questions asked earlier today. In view of the splendid performance in achieving the goal of a new record in grain movement, which could be increased if we had sufficient railway rolling-stock to an even larger record than the minister envisages, could he advise the House what action he is taking to require the railroads to repair and refurbish railway cars? In view of the fact that taxpayers have already provided 8,000 hopper cars and we have not gained ground in the capacity to move grain because of the withdrawal of rolling-stock by the railroads from grain movement, can the minister say if he is taking any action to require the railroads to repair some of their equipment?


Otto Emil Lang: Mr. Speaker, we do not necessarily have the power to require the railways to do that without the dollars to go with the requirement. Certainly, whether we have the technical power or not, the spirit of the Hall and Snavely commissions was that because the railways do not make enough money out of moving grain, we ought to pay the railways additional sums so that they would have the facility to keep their stock in good shape. We have chosen to go a more limited route than that, and that is to specifically acquire equipment or authorize rebuilding of cars. We have now, in addition to the 8,000 hopper cars, rebuilt at a cost of $4 million or $5 million a certain number of boxcars so that they will remain longer in the fleet, and we are now looking into the question of what we should do with approximately 5,000 cars which will be retired unless they are repaired. We in the government are looking into that question at the moment.


Leslie Gordon Benjamin: Mr. Speaker, I find it amazing that the government cannot tell a railway that we own what they should do. While the government and the taxpayers of Canada were placing hopper cars on track, since April of last year the railways have removed 1,881 cars from grain movement. They will be removing another 501 by July 1, 1978, and another 700 and some by December of this year. Canadian Pacific's $50 million-


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


Leslie Gordon Benjamin: Mr. Speaker, in view of the fact that none of the investment being made by CP and CN is going toward
80038-69!4

May 24, 1978
Oral Questions
grain cars designed to move grain, and the railroads are withdrawing rolling-stock so that we are not improving our capacity to move grain to the ports to load ships, can the minister say if he will now instruct Canadian National and if he will now request, if not require, Canadian Pacific to channel some of that investment into rehabilitation of several thousand railway cars that are presently sitting around not being used?


Otto Emil Lang: Mr. Speaker, I would not request the railways to divert money which they are now putting into other investments such as cars, plant or equipment because that investment is needed as well for the movement of many other products. The very specific question is, what should be done additionally to make sure they have capacity to move grain? The Hall commission recommended that we pay the railways a couple of hundred million dollars a year and then have them rebuild the cars and the like.
We do not think we have at this moment the cash to make that kind of contribution, so we are looking at the very specific issue of the purchasing of additional hopper cars, the repairing of certain cars, as well as the rebuilding of track. It is not that the railways are withdrawing these cars out of some kind of malicious design: the cars are effectively coming to the end of their useful life unless they are rebuilt. So it is a major investment decision as well as a major financing decision whether the cars should be rebuilt, and then by whom they should be rebuilt or who should pay for them. According to the Hall and Snavely reports, it is very clear that the cash must come from the government because the Crowsnest rate does not give the railways enough to do their job.
That is the very issue we are considering, having previously taken steps to rebuild lines, to build hopper cars, to repair cars so that we have this record movement of 850 million bushels of grain. I am not content to rest with that movement because I am looking forward in two or three years to the movement of a billion bushels of grain into export.


PURCHASE OF HOPPER CARS
Jack Burnett Murta: Mr. Speaker, I would like to direct a supplementary question to the Minister of Transport. According to very reliable sources within the Canadian Wheat Board-and we are talking about this week-yesterday there were one million tons of shipping waiting at all ports in Canada and over 300,000 tons waiting in the St. Lawrence area. Also, according to the Canadian Wheat Board, the record the minister talks about will not be reached this year, demurrage will be in the area of $20 million and quotas will not be as high as expected.
Will the minister inform the House whether he is giving consideration to allocating moneys for building the 4,000 hopper cars which have been repeatedly requested by the Canadian Wheat Board?


Otto Emil Lang: Mr. Speaker, three times today and in previous question periods I indicated

that that very matter is being considered. Indeed, the specific request from the Canadian Wheat Board was a response to my request to them to give me an analysis as to their need for cars. There are some who think we can move more grain with the existing cars by turning those cars around more quickly and taking various further steps. That is a question we must also address carefully. We are addressing that and at this moment in the government we are considering what the next steps should be with what are obviously very limited dollars in Canada, for all kinds of purposes, in order to ensure that this constant grain movement which is so important to our country can continue.


Jack Burnett Murta: Mr. Speaker, we are in a situation at the present time where there is no doubt that things are getting worse in terms of the movement of grain, and the backlog is not being used up: it is getting worse, and it will get worse between now and the end of the crop year. Can the minister inform the House whether there will be any grain sales lost to the Canadian Wheat Board because we cannot export the amount of grain that we should be exporting?


Otto Emil Lang: Mr. Speaker, at particular points in time the fact that our transportation system has already been committed to its full capacity means that we cannot add to that. We have been stretching it to the limit. As a result of that, it has obviously got into the odd back-up situation when ships have been late and, therefore, cars have not been available. This situation does happen. We can, indeed, lose some sales. It should be recognized that the volume we are moving this year is, effectively, more than the available grain from the whole of the 1977 crop plus a significant amount of the backlog available from the previous year. That was a very good crop: it was close to being one of the best.
We are moving the whole of the available crop plus, perhaps, a couple of million bushels of the rest. We have been managing to do that with our system because of the steps we took in planning to make sure it could happen. A few years ago the thought of being able to move 600 million bushels was a dream-a dream which was suggested from time to time in the early 1960s. We have now moved over 800 million bushels and, with this year, it will be three years this has been done.


HEALTH AND WELFARE
Miss Coline Campbell (South Western Nova):: Mr. Speaker, my question is directed to the Minister of National Health and Welfare. Could the minister tell the House if the government has plans for the celebration of the International Year of the Child and, if so, will the private sector be involved in these plans?


Hon.   Monique@: Mr. Speaker, plans for the celebration next year of the International Year of the Child in Canada by governments
May 24, 1978

and the private sector are currently under consideration in cabinet. As soon as I am able to make an announcement, I will do so.


TRANSPORT
Right Hon. J. G. Diefenbaker (Prince Albert):: Mr. Speaker, I have listened with continued interest to the observations of the minister. I have never heard anything to equal the babble that he put out here today.
Some bon. Members: Hear, hear!


John George Diefenbaker: Indeed, some of the statements that he made bore no relationship to the truth.


Some hon. Members:: Oh, oh!


An hon. Member:: Order.


John George Diefenbaker: Mr. Speaker, I was referred to, and surely I can answer.


Mr. Speaker:: Order, please. The hon. member was indeed referred to, and he has the floor. It is the question period, it is not a debate, and the hon. member will have to put a question.


John George Diefenbaker: I might point out that the minister dragged me in; I did not do it.


Some hon. Members:: Oh, oh!


John George Diefenbaker: As far as his statements are concerned, I cannot use an expression which was used the other day and caused the eviction of one of our members, but I can quote Nye Bevan who said, "It's time to puncture this bladder of falsehood with the poignard of truth."


Some hon. Members:: Oh, oh!


John George Diefenbaker: I ask one simple question. Does he realize that under the previous Liberal government, when we came into office there were 600 million bushels piled up, the government could not sell any, and it was sold under our administration?


Some hon. Members:: Hear, hear!


John George Diefenbaker: Because we stand in danger of losing potential markets, I ask the minister just one question. Having regard to the Chinese purchases which we secured in the face of the most outrageous criticism on the part of the Liberals-


Some hon. Members:: Hear, hear!


John George Diefenbaker: -did he not say the other day that Canada will likely miss out on major new wheat sales to China because of the outmoded prairie railway transport system? Is
Oral Questions
that a fact? Did he say that? I am quoting from a summary of Hansard.


Some hon. Members:: Oh, oh!


John George Diefenbaker: I ask him: Are we in danger of losing any potential contracts with China because of outmoded transportation facilities?


Some hon. Members:: Oh, oh!


Some hon. Members:: Order.


Otto Emil Lang: Mr. Speaker, I always enjoy dragging the right hon. gentleman into these debates. He has been a little hesitant to ask questions recently, and I am glad to see him back at it. He talks about selling grain. He accuses me of not giving facts, yet in his long preamble he did not refer to any single fact or statement which is wrong: he simply makes the generalization.
I repeat, during the time he was Prime Minister we at no time exported 500 million bushels of grain. We have not been below 600 million bushels of grain in the time that I have been responsible for the Wheat Board. We have continued to maintain a first-rate, superb relationship with China. We will continue to be one of the principal suppliers to them, and they will continue to be a main source of our marketing. The right hon. gentleman appears to approve of that: I am glad he does. Let him or his leader, if he recognizes him, go to Alberta-


Some hon. Members:: Oh, oh!


Otto Emil Lang: -and tell that to the Premier of Alberta who the other day criticized us for having too large a share of our market committed to China. The fact is that in 1961-62, with the right hon. member, it began to be 22 per cent. This year it is about 23 per cent. The thing is, of course, that the 23 per cent with us is twice as much as 22 per cent was with the right hon. member.


Some hon. Members:: Hear, hear!


Mr. Speaker:: Order, please. This promises to be a very fascinating debate. It is not the proper subject of a question period; however, I will permit one supplementary.


John George Diefenbaker: I am still waiting to be free of the circumlocution common to the law faculty of Saskatchewan when he was dean. I am now asking, did he, or did he not, state the other day that we stand in danger of losing potential markets in China? "Yes" or "no"- no evasion, no equivocation and no mental reservation?


Otto Emil Lang: Mr. Speaker, the answer is no, I did not. The right hon. member's summary is as bad as his summaries usually are. Once again he failed to refer to any fact which he said I had put in error before him. He simply stands and

May 24, 1978
Privilege-Mr. Basford
makes these personal attacks which have no bearing whatsoever upon the facts.


Some hon. Members:: Hear, hear!


PRIVILEGE
[Stage Direction]
MR. BASFORD-FINANCE-ALLEGATIONS MADE BY HON. MEMBER FOR YORK-SIMCOE REGARDING SPECULATION ON DOLLAR BY MPs
Mr. Speaker:: Yesterday, the Minister of Justice (Mr. Basford) raised by way of a question of privilege certain remarks which were attributed to the hon. member for York-Simcoe (Mr. Stevens), who indicated that he would be here today. I understand he now wishes to contribute to that subject.


Mr. Sinclair Stevens (York-Simcoe):: Mr. Speaker, I rise on a question of privilege relating to the matter raised yesterday in this House by the Minister of Justice (Mr. Basford) and the hon. member for Winnipeg North Centre (Mr. Knowles).
I regret I was not in the House yesterday to deal with the subject when it was first raised, but I had made three commitments in my home area which I simply could not cancel at the last minute. In fact I did not know there would be a question of privilege raised until noon yesterday at which time I had left my first meeting and was heading for my second meeting of the day.
The proposed questions of privilege raised by the two members concern a report carried by the Canadian Press news agency last Friday night in which I was quoted as saying:
We've learned through the banks that nine Liberal MPs played the Canadian dollar as it was going down.
That report originated from a lengthy 90 minute interview I had Thursday last with a Canadian Press reporter. During the course of our discussion reference was made to the circumstances in which charges are or are not made in this House. I gave two examples of charges that we had made only after we were satisfied we had concrete evidence to make our point. On the other hand, as an example of a situation which I had not raised here, I mentioned that we had received the above reports to the effect that as many as nine Liberal MPs, and there were supposed to be two or three cabinet ministers in the nine, had speculated against the Canadian dollar, but that I had not pursued the question in the House. I said that because as yet I had not been able to obtain concrete evidence to substantiate those reports.
Mr. Speaker, that was a true and honest statement. I had received such information from what I considered to be credible sources. And I had decided not to raise the matter in the House unless and until I had concrete evidence.
It may be helpful if I read into the record a partial transcript of what the Canadian Press reported me to have said. In their report they quote me as stating:
There are things we could be mentioning, that we have not mentioned. I'm very curious about some of these things. Like I noticed Trudeau twice has said 
about opposition members trading on the Canadian dollar. I don't know whether you've noticed that.
Who was the member that shouted out to me yesterday, "Are you buying Canadian dollars?"
I don't know why they say that. Because we've learned through the banks that nine Liberal MPs played the Canadian market as it was going down.
Q: Were they named?
Stevens: Not to me. But apparently the names are available. But we've been in a real dilemma as to whether we should press it or whether we should just let it lie. I don't know.
I cannot understand why Trudeau would be inferring that we were doing it, other than whatever guilty conscience he's got, eh?
The two references I was referring to in connection with the Prime Minister (Mr. Trudeau) appear in Hansard, one on February 16, page 2914. The statement I would like to read into the record was in answer to a question put by myself with respect to the desirability of an 80-cent dollar. The Prime Minister stated, and I quote:
The hon. member knows that if I were to give an answer, it would set up a wave of speculation which he and his friends might perhaps make money out of, but that is not our intention.
In response to a question put to the Prime Minister by the hon. member for Waterloo-Cambridge (Mr. Saltsman), again dealing with the 80-cent dollar, asking whether there was some policy to hold it at that level, the Prime Minister stated, as recorded at page 4192 of Hansard for April 6, and I quote:
It is a floating dollar. I understand hon. members opposite would like to engage in a bit of speculation; they would like us to tell them the way it will float. If they want to risk some money, they can do it on their own.
Those are the two references I referred to in the Canadian Press interview. I could have also mentioned an exchange that took place on November 9, mainly involving the Minister of Industry, Trade and Commerce (Mr. Horner). This exchange appears at pages 758 and 759 of Hansard, and I quote:


Mr. Kempling:: Tell us about the dollar.


Mr. Horner:: Hon. members opposite are asking me to tell them about the dollar. The hon. member for Provencher referred to the dollar in his speech.


William James Kempling: What about the balance of trade?


Mr. Clarke:: What about the deficit?


John (Jack) Henry Horner: There are Canadian citizens on the other side of the House betting that the Canadian dollar will go down more. They are buying American dollars, Canadians sitting on the other side of the House.


William James Kempling: Name them, Jack.


William Hillary (Bill) Clarke: Name them!


John (Jack) Henry Horner: Yes, I can name some.


Mr. Paproski:: Then, name them.


John (Jack) Henry Horner: Mr. Speaker, I will do neither because that is not impugning. Everyone in this House can rise and speak on this debate.


Mr. Blackburn:: I have.
MR. Horner: Good. Everyone can rise and say that they are not buying any American dollars. That is fine with me.


John (Jack) Henry Horner: But many financiers are, and some of the hon. members on that side of the House are.


An hon. Member:: How many on the government side are?


Steve Eugene Paproski: Name them.


John (Jack) Henry Horner: I do not have to.
May 24, 1978

Be that as it may, Mr. Speaker, on reflection I was wrong even to raise the matter of dollar speculation with the CP reporter, even in the context of explaining why I had not pursued it in the House. I made statements which I now realize constituted an allegation or are perceived as an allegation which I cannot substantiate at this time.
That being the case, Mr. Speaker, and in keeping with the established practice, I wish to withdraw any such allegation against any member of this House. While I made no reference to any individual member, I regret any embarrassment which I have caused to any hon. member of this chamber.


Some hon. Members:: Hear, hear!


Stanley Ronald Basford: Mr. Speaker, I was pleased to listen to what the hon. member for Simcoe North had to say. He has, I take it, given you, Mr. Speaker, and the House an unqualified and unconditional withdrawal and retraction of any remarks made by him with regard to speculating on the dollar. I am pleased that we on this side raised the question of privilege and that this matter is now cleared up. I would, however, observe that we have seen a somewhat slick performance this afternoon.


Some hon. Members:: Oh!


Mr. Speaker:: Order, please. I have before me a procedural matter to decide. The question was raised by the Minister of Justice (Mr. Basford) yesterday as a matter of privilege and, as I have said many times in the past, there is no machinery available whereby I can call upon the same member to contribute twice to the same question. In some circumstances I extend that opportunity, at least in a nominal way; there are occasions, such as today, when the House has given an hon. member the option to withdraw a remark or make an apology. In such cases it is not at all extraordinary, I think, to allow some indication from the original mover of the motion that the apology has been accepted as put forward. In that sense I thought it appropriate on this occasion to recognize the original mover of the motion. However, on strict procedural grounds I ought not to accept a second contribution on the same question of privilege by any member, and that is a rather safe course to follow.
The second point I wish to make is that during the course of the remarks made by the hon. member for York-Simcoe (Mr. Stevens) I was weighing the information he was presenting to the House, and I must say I came to precisely the same conclusion as he did. He had an explanation for his remarks; that he had put them forward in a somewhat strict context. His explanation was this was an example of a case which he would not pursue in the House because he lacked evidence, and in doing so-as he realized on reflection-that in itself was an indiscretion which had rather heavy consequences for the reputation of the House in general. I was, of course, very pleased that he had come to the same conclusion as I had, and I felt he had done entirely the honourable thing in reaching that conclusion and extending his apologies.
Privilege-Mr. F. Hamilton


Some hon. Members:: Hear, hear!


Mr. Speaker:: In any case, my opinion of the course he followed is not important, except in a procedural sense. The hon. member made these allegations outside the House. He was the subject, as a result, of two motions, one put forward by the Minister of Justice and the other by the hon. member for Winnipeg North Centre (Mr. Knowles). With respect to those motions the hon. member came in to make his contribution today and, again in a procedural sense, having made his apology for the action he took in making those allegations, and having withdrawn those allegations, the matter is now totally closed.


Some hon. Members:: Hear, hear!


Mr. Speaker:: The hon. member for Swift Current-Maple Creek (Mr. Hamilton) on a question of privilege.


Stanley Ronald Basford: Mr. Speaker-


Some hon. Members:: Oh!


MR. HAMILTON (SWIFT CURRENT-MAPLE CREEK)-ANSWER GIVEN BY MINISTER OF TRANSPORT DURING QUESTION PERIOD
Frank Fletcher Hamilton: Mr. Speaker, my question of privilege arises out of an answer given today by the minister responsible for the Canadian Wheat Board in which he indicated that he has loaded out twice as much wheat as the administration of the right hon. member for Prince Albert (Mr. Diefenbaker). I would like to quote from the current Canadian Wheat Board annual report-


Mr. Speaker:: Order, please. Surely the hon. member will realize that if he is making a refutation of certain statements or of interpretations which may be put on them, he is into a matter of disagreement or debate. If he is not speaking to a matter of disagreement or debate I will be glad to hear him if his subject resembles privilege. On a simple matter of disagreement, however, I am afraid I cannot give the hon. member the floor.


Frank Fletcher Hamilton: It is not a
matter of disagreement, Mr. Speaker, it is a matter of misleading the House.
In 1963, the last year of the Diefenbaker administration, when wheat was still king, we exported wheat and flour to the tune of 592 million bushels, an all-time record, representing 28.4 per cent of the world market. In 1976-77, the record year under the present minister, it was down to 494 million bushels, 21 per cent. This year so far 350 million bushels have been exported-below 20 per cent of the world market. Those are the figures of the Canadian Wheat Board and are presented under the minister's own signature.


Otto Emil Lang: Mr. Speaker, I think the hon. member was referring to wheat. In most of my answers I was referring to grain, and 1 understand-


Some hon. Members:: Oh, oh!

May 24, 1978
Privilege-Mr. McKinnon


Otto Emil Lang: I understand why the members in the Tory party would miss that fact. Even now I know they would not recognize its importance. Until we got into the business, the Conservative regime was totally neglective of barley; they were not exporting any rapeseed.


Mr. Speaker:: I am sure that the House will now be convinced that it really is a matter of disagreement in debate and not a question of privilege.


MR. RYNARD-INCORRECT CONSTITUENCY ATTRIBUTION BY MINISTER OF JUSTICE
Mr. P. B. Rynard (Simcoe North):: Mr. Speaker, the hon. member for Vancouver Centre (Mr. Basford) referred in his remarks to the hon. member for Simcoe North. I am the hon. member for Simcoe North and, if I heard correctly, that reference to the hon. member for Simcoe North is on the record. I am not insulted by the reference but I do want the record corrected. The minister did refer to Simcoe North and it will appear that way in the record. I want it corrected, Mr. Speaker.


Mr. Speaker:: I am sure the reference was intended to be to the hon. member for York-Simcoe (Mr. Stevens).


MR. MCKINNON-ANSWERS GIVEN BY MINISTER OF NATIONAL DEFENCE
Allan Bruce McKinnon: Mr. Speaker, my question of privilege is raised at this time because the evidence upon which it is based was only available to me minutes before one o'clock today. Otherwise I would have given Your Honour the usual notice. I would like to report that the Minister of National Defence (Mr. Danson) has given answers in this House which appear to have been misleading. I am not quite certain of the appropriate parliamentary language, but I can say that the answers he has given are not the truth. I brought this matter up a week ago on a point of order. It has become more explicit with the passage of time, and I believe it now qualifies as a question of privilege.
Your Honour will recall that on May 8 the hon. member for Greenwood (Mr. Brewin) asked a question about the neutron bomb. The minister answered with respect to another subject, nuclear missiles. He said, "We do not have any nuclear weapons, nor would they be deployed on our soil." I asked the minister about this a week later and strangely enough he said to me, "I believe the hon. member knows I do not answer questions on that subject." That was after I had asked him about the previous question asked by the hon. member for Greenwood. This served only to confuse himself and perhaps the House. It certainly did not mislead me, but it seemed to be an attempt to mislead the House.
He at the same time tried to cast a certain aspersion on a previous minister of national defence by saying that the previ-

ous minister had not answered questions on that subject. He said, and I quote:
Mr. Speaker, I believe my predecessor neither confirmed nor denied such allegations.
A few minutes later, as Your Honour will recall, I brought the record into the House and showed where the previous minister had stated that, and I quote:
Mr. Speaker, none of our aircraft are equipped with nuclear missiles, but we do have in storage, and this has been public knowledge for several years- nuclear missiles at Comox and at the other bases from which our interceptor squadrons take off.
I would like to read a news report put out by Broadcast News. It starts off as follows:
Danson-Nuclear
Ottawa-Defence Minister Barney Danson has confirmed reports there are nuclear weapons in Canada.
The minister has refused on several occasions in the past to comment. However, he told Broadcast News in Ottawa today that Canadian planes attached to the North American Air Defence Command have nuclear capabilities. Danson said the aircraft are stationed at Comox, British Columbia. However, he would not say how many nuclear weapons are on Canadian soil, their size, or their capabilities.
But the minister says the weapons will be returned to the United States when Canada gets its new fighter aircraft. Danson said the nuclear weapons were needed because Canada's aging fighters weren't a credible deterrent with conventional weapons.
However, Danson said the new planes will be so sophisticated they won't need nuclear capabilities.
A large part of the release is true, although it did miss the point in a parliamentary sense. The point here is that on May 8 the minister said that we do not have any nuclear weapons, nor would they be deployed on our soil, and in this Broadcast News release he confirmed reports that there are nuclear weapons in Canada. The minister may have thought he was doing what he did for security reasons, or perhaps because of ignorance of the facts.
I do not know how many people, if any, were misled. It depends upon how many people believe the minister when he speaks about defence matters. However, it is a clear case of misleading the House, and I believe the minister should apologize to the House. If he does not, I am prepared to move a motion that this matter be referred to the Standing Committee on Privileges and Elections.


Hon. Barney Danson (Minister of National Defence):: Mr. Speaker, I think the hon. member was also somewhat confused when he referred to the question put by the hon. member for Greenwood (Mr. Brewin). We were talking in the context of the so-called neutron bomb, and it was in that context that I was speaking. Indeed, I have advised the hon. member for Greenwood that it was in that context, and my answer might have given the impression that there were no nuclear weapons of any type whatsoever. It was my impression that my predecessor neither confirmed nor denied that. I did check the record and found that that is incorrect. Quite properly in answer to a question in this House, and before a committee in response to questions from the hon. member for Comox-Alber-ni, my predecessor indicated that there are weapons which are not under Canadian control but which are on our soil. Their
May 24, 1978

deployment, of course, is under joint control under our NORAD agreement. They are designed to be placed in our Voodoo 101 fighters which have only that capability in the full deterrent sense. The new fighter aircraft which will replace the aging Voodoos will have more sophisticated conventional weaponry, and those other weapons will be returned. If indeed it was a misleading of the House, it was not intentional. It was a misunderstanding which I am pleased to correct.



ROUTINE PROCEEDINGS


Mr. Ed Lumley (Parliamentary Secretary to Minister of Finance):: Mr. Speaker, pursuant to section 17(2) of the Anti-Inflation Act I wish to table, in both official languages, copies of ten reports sent to the administrator by the AntiInflation Board.


SMALL BUSINESS
Hon. A. C. Abbott (Minister of State (Small Business)):: Mr. Speaker, I am pleased to table a document for discussion purposes entitled "Improving the Equity Financing Environment for Small Business in Canada".


Mr. Jelinek:: Mr. Speaker, I rise on a point of order. My point of order deals with yet another example of shameful disregard for parliament. On behalf of the small business community in Canada this House has been waiting for years for this government to present parliament with its policies.
Yesterday the minister felt that he should not make a statement on motions in this House and instead was led by the hand by the Prime Minister (Mr. Trudeau) to the Prime Minister's press conference-to the dismay of the media as well, as we saw on television. Today when the minister made his first presentation to this House he did not have guts enough to make a statement on motions, which has been the tradition in this House. We hope the minister will be brave enough to make statements on motions regarding small business because of its importance not only to this House but also to the millions of Canadians who are involved in small business in Canada.


Anthony Chisholm Abbott: Mr. Speaker, I rise on the same point of order. This is a lot of unqualified rubbish. Yesterday afternoon in the House of Commons I spoke in the debate, if the hon. member would care to refer to Hansard. If the hon. member had been present, he might have participated in the debate in which I announced the initiatives we have developed, many of them in
Criminal Code
cooperation with other government departments, but which did not necessarily or appropriately lend themselves to a debate on motions. We have been advised that hon. members opposite and others are loath to have a presentation of documents become a lengthy debate. I did welcome an opposition day upon which small business matters were discussed, and I felt it was appropriate to participate in the debate yesterday at approximately 4.30 in the afternoon. I am sorry that the hon. member was not present.
This discussion paper was introduced today for the purpose of eliciting public discussion, and it is my hope that we will be ultimately translating the outcome of those discussions into legislation. Needless to say, at that time I will welcome a lengthy debate in which the important matter of venture capital will be discussed.


CANADA LABOUR CODE
Mr. Peter Elzinga (Pembina) moved: for leave to introduce Bill C-456, to amend the Canada Labour Code (right to work).


Some hon. Members:: Explain.


Peter Elzinga: Mr. Speaker, the purpose of this bill is to protect an individual's right to work, thereby ensuring an individual's right to join and maintain membership in a union, and also an equal right not to join or maintain membership in a union.


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

Peter Elzinga: for leave to introduce Bill C-457, to amend the Criminal Code (death sentence).


Some hon. Members:: Explain.


Peter Elzinga: Mr. Speaker, the purpose of this bill is to impose the death sentence in all cases of premeditated murder.


Mr. Speaker:: On a precautionary note, I point out that it is the habit of the Chair to indicate a seconder for a bill, and the seconder at first reading always supports the principle of introduction of any bill but is not necessarily in agreement with the subject matter.


[Stage Direction]
Motion agreed to, bill read the first time and ordered to be printed.
5690
[Stage Direction]
May 24, 1978
Order Paper Questions

[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: 1,275, 1,276 and 1,608.
I ask, Mr. Speaker, that the remaining questions be allowed to stand.

FITNESS AND AMATEUR SPORT Question No. 1,275 -Mr. Cossitt:
1.	Since the appointment of the Minister of State (Fitness and Amateur Sport) in what way has the government improved (a) physical Fitness (b) amateur sport in Canada?
2.	Is it government policy to have the Minister pose wearing skates with the Vice President of the United States or leading a parade of a few people to the 1977 Grey Cup Game in Montreal and, if so (a) how does this help physical fitness and amateur sport (b) does the government have plans for further pictures of a similar nature?


Hon. Iona Campagnolo (Minister of State (Fitness and Amateur Sport)):: The role of the Minister of State, Fitness and Amateur Sport, is to promote and develop fitness and amateur sport in Canada. This role comprises objectives which are pursued in a variety of ways: through financial contributions to some 88 national sport and recreation associations and to the National Sport and Recreation Centre which houses and provides support services to 54 of these associations; through financial assistance to student-athletes as part of our grants-in-aid program and to Canada's elite athletes as part of our Game Plan Assistance Program. The fitness and amateur sport branch also offers communities, associations, schools and other institutions and special groups specific programs including the Canada Fitness Award Program and the Sports Demonstration Program, designed to encourage involvement in physical activity. The branch supports participaction in their efforts to promote the benefits of such involvement.
2. (a) Since it is the role of the minister of state to encourage and promote fitness, the government sees nothing incongruous in the minister donning a pair of skates to greet a visiting dignitary at the Rideau canal-a major tourist attraction and recreational facility in the national capital region. Similarly, as walking is held to be excellent exercise, the government sees no incongruity in the minister participating in a walk to the site of the 1977 Grey Cup Game, (b) The government believes that the minister of state should continue to encourage and promote fitness and amateur sport to the fullest extent possible.


Mr. Cossitt: 1. Since becoming the Minister of State (Fitness and Amateur Sport) has the Minister used a government owned aircraft and, if so (a) on how many occasions and, in each case, what was the point of departure and arrival (b) what type of

aircraft was used (c) what was the total cost of flying time and waiting time in each case?
2. Has the Minister used helicopters operated by the Department of Transport or the Canadian Coast Guard and, if so, on how many occasions has she used them to (a) fly into and out of her constituency or to and from points in her constituency (b) to or from any other place in Canada?


Iona Campagnolo: 1. (a) and (b) For information regarding flights prior to August 1st, 1977, see reply to question No. 29 tabled October 17th, 1977. For information regarding flights after August 1st, 1977, see list below, (c) See reply to question No. 2,881 answered October 17th, 1977.
2. Yes. (a) Nil. (b) Once.
Aircraft	Point of	Point ofType	Date	Origin	Stops	DestinationBell 212	22-01-77	Gander	Baie Verte-Grand Falls	GanderViscount	06-08-77	Ottawa	Trois-Rivieres-Moncton	St. John'sJetStar	18-08-77	St. John's	OttawaJetStar	20-08-77	Ottawa	Winnipeg-Edmonton-	VancouverJetStar	25-08-77	Sandspit	Kelowna Va ncou ver-W i n n i peg	TorontoViscount	19-09-77	Toronto	OttawaJetStar	20-09-77	Ottawa	Frobisher	OttawaJetStar	26-09-77	Victoria	Winnipeg	OttawaViscount	30-09-77	Ottawa	Montreal-Mirabel-	OttawaKing Air	12-10-77	Ottawa	Shearwater-Halifax Peterborough	OttawaKing Air	13-10-77	Ottawa	Kitchener	OttawaJetStar	01-11-77	Terrace	Edmonton	OttawaJetStar	07-11-77	Terrace	Saskatoon	OttawaJetStar	14-11-77	Victoria	Edmonton	OttawaJetStar	17-11-77	Ottawa	TorontoViscount	08-12-77	Montreal	OttawaJetStar	09-12-77	Ottawa	Thunder Bay	WinnipegJetStar	12-12-77	Prince Rupert	Winnipeg-Montreal	OttawaJetStar JetStar	22-12-77	Ottawa	Calgary	Vancouver21-01-78	Prince Rupert	Winnipeg	Ottawa28-01-78	Regina	Fort St. John-Dawson	OttawaJetStar JetStar	02-02-78	Ottawa	Creek-Calgary	Prince George


Mr. La Salle: Did the Ministry of State for Federal-Provincial Relations grant money to organizations interested in national harmony, in order to finance pre-referendum activities and, if so (a) in what amount (b) to whom were such grants paid?


Yvon Pinard: No.


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


Some hon. Members:: Agreed.

May 24, 1978


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


Mr. Speaker:: Is it agreed?


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from May 18, consideration of the motion of Mr. Chretien that Bill C-56, to amend the statute law relating to income tax and to authorize payments related to provincial sales tax reductions, be read the second time and referred to committee of the whole, and of the amendment (Mr. Broadbent) (p. 5548).
Miss Flora MacDonald (Kingston and the Islands):: Mr. Speaker, it was just over a month ago that I expressed my concern in this House during the budget debate about the potential for damage to our federal system when one level of government fails to consult and reach accord with the other, and the past few weeks have indeed shown that my fears were justified.
- The process of consultation between levels of government is vital to any federal state, but it is an absolute imperative in matters relating to fiscal measures, especially when federal initiatives affect the fiscal planning of the provincial governments. I say that, sir, because the provinces are responsible for the collection of something like 60 per cent of the public revenues in Canada, and for about 60 per cent of total public expenditures. That being the case, they have a heavy responsibility to plan their financial affairs carefully. Their budgets are not something that can be thrown together at the last moment, and yet in the instance that we have before us in consideration of this bill we have the federal government intervening in the financial planning of the provinces in a capricious and arbitrary way. Capricious and arbitrary intervention is what we have witnessed throughout this entire sales tax fiasco, a fiasco that has gone from bad to worse over the past month.
Let us take a look at how the government has managed, in the few weeks since it introduced its budget, to turn bungling into disaster, incompetence into disunity. The original proposal put forward on budget night was for the provinces to agree to reduce their sales tax and, in return, to be compensated by a
Income Tax Act
transfer of federal income tax into their treasuries. This proposal required consultation and negotiation with the provincial governments affected. Consultation to some degree there may have been; negotiation there was not, even though it was in a field of provincial jurisdiction.
The federal government apparently decided in advance that the only acceptable variation to its proposal would be a minor one, that is, it would agree to lengthen the time to three months and reduce the amount of the sales tax cut. The more affluent provinces were required to pick up one third of the cost of the reduction. That proposal, as the Minister of Finance (Mr.Chretien) stressed in his press conference on the night of the budget speech, was not disclosed in full, as a matter of policy, to any province until two or three hours before the minister spoke in the House of Commons that night.
The other provinces which were bringing down their budgets that night, namely, British Columbia and Manitoba, had to wait until the Minister of Finance confirmed his proposals in the budget speech itself before they could vary their own budgets to take that initiative into account. Indeed the Minister of Finance pointed out in a television broadcast last Sunday that, as of budget day, all he had discussed with the provinces was, as he put it, a hypothetical situation. "If I were to do such and such", he said to the provinces, "what would you think?" That was what the minister stated at the press conference last Sunday.
Those provinces which were in the process of drawing up their own budgets for presentation the same night had to plan for two possibilities: one, if the Minister of Finance proceeded with his proposal, and another, if he did not. Manitoba is a case in point. Being just one hour behind Ottawa's time, Manitoba's minister of finance was getting ready to present his budget as the federal minister's budget speech was being made in the House of Commons. The Manitoba minister of finance, Mr. Craik, had his two possibilities ready: one, if Ottawa proceeded, and the other, if it did not. So as he began the presentation of his own budget his aides were required to monitor the budget proposals of the Minister of Finance in Ottawa to ensure that the sales tax proposals had indeed been included in the budget presentation. Only then, by monitoring what the Minister of Finance in Ottawa had said, could Manitoba's minister of finance include in his presentation a special section that would ensure that the two budgets dealt simultaneously with the sales tax proposal. That is what consultation really amounted to.
In these circumstances there was precious little time for manoeuvrability or even for consideration on the part of that particular province, and certainly none for meaningful consultation about a proposal that was finally made firm, but made firm only on the night that the Minister of Finance presented his budget.
The consultation of which the Minister of Finance has boasted in the House must have been casual, informal, and indefinite in the extreme for such a situation, such a scenario as the one that I have described, to have been allowed to develop.
80038-70(4

May 24, 1978
Income Tax Act
The provincial ministers of finance throughout the country thought something was coming. It had been indicated to them that something was coming, but they had no assurance that in fact anything would be coming until the Minister of Finance made the announcement in his budget speech. The consultation of which he boasted amounted to this. A proposal was made; the provinces were told that one variation to it would be acceptable, all other variations would be rejected out of hand. That is indeed what happened. It was: take it with or without this slight modification, or leave it. As I have already pointed out, according to the minister's own statement the discussions ' until then had been about a purely hypothetical situation.
The minister of finance in the province of Quebec was in a different position from his colleagues in the other provinces because he had a manoeuvrability that they lacked. Since he was the only minister of finance whose budget had not been brought down by April 10, he was able to consider a concrete proposal rather than a hypothetical one, and he had time to advance a counter-proposal.
Would anyone in this House, with the possible exception of the Minister of Finance or the Prime Minister (Mr. Trudeau), believe that Mr. Parizeau would fail to take advantage of that opportunity? Why did the Minister of Finance proceed without the agreement of the Quebec minister of finance? Since the date of the Quebec budget had been announced well in advance, why did this government not wait for the Quebec minister of finance to show his hand before they showed theirs? One can only surmise that the reason they did not wait was a political one. They were attempting to provoke a confrontation with the government of Quebec to shore up their position for the election campaign that they have been orchestrating throughout the winter and early spring. The reason a budget was brought down in this House on April 10 was to provide a platform for the Liberal party in that election, an election that they never did get around to calling.


Some hon. Members:: Hear, hear!


Flora Isabel MacDonald: That platform would have been one which could be presented as an attempt to co-ordinate federal-provincial fiscal policies and to stimulate the economy. Also they could claim the attempt was being resisted by the separatist provincial government in Quebec. That was their game, and that is what they set out to try to achieve. Obviously hon. members opposite knew the advantage and value of having a convenient enemy.
In its calculation of this Machiavellian strategy, the government ignored the fact that the province of Quebec, like every other province, had a legitimate right to resist this proposal or to modify it, since it dealt with an area of unquestioned provincial jurisdiction. As has been said on many occasions throughout the history of parliamentary democracy-this edict has been said over and over again-"the right to tax is the right to govern." For the federal government to attempt to dictate the manner in which a province raises, lowers or

abolishes its sales taxes, is to violate that basic democratic principle.


Some hon. Members:: Hear, hear!


Flora Isabel MacDonald: As for the other provinces, for reasons having to do with their desire to co-ordinate fiscal policy, or because the proposal promised benefits to their people, they, with greater or less degrees of reluctance, chose to co-operate with the federal government's initiative. This was not an easy decision for them to make. Whereas an across the board sales tax reduction throughout Canada would benefit consumers in all provinces with such taxes, it would disproportionately benefit those provinces with disproportionate shares of Canada's manufacturing capacity. Moreover, each province, except the Atlantic provinces, was being asked to re-order its priorities to pay one third of the cost of this reduction. In other words, the province of Saskatchewan, for example, was paying out money to subsidize not only its own consumers, but also the manufacturing sector in British Columbia or in Ontario. There is no question that this proposal would provide-and indeed it may have been designed to provide-more benefits to some provinces than to others.
Mr. Parizeau's decision was an attempt to ensure that the people of Quebec obtained full benefit for whatever sales tax reductions were made as part of this package. While his motives in doing so may have been questionable, his proposals are based on an undoubted and important provincial right. That is why his proposals have been supported by all the parties in the Quebec national assembly and by almost all shades of public opinion in the province of Quebec, ranging from separatist to staunchly federalist. His proposals undoubtedly were designed also to place the federal government in a most embarrassing position. They have succeeded in doing so.
The federal government obtained the consent of the other provinces to this scheme on the understanding that the sales tax cuts would be across the board in all the provinces, but the Quebec government legitimately challenged whether that uniformity should be forced on them. Then the federal government had to decide whether to accept the modifications proposed by Mr. Parizeau, or to exclude the province of Quebec from its initiative. Instead of confronting this dilemma, the Minister of Finance has attempted to make an end run around it. This attempt was made by using the federal taxing power to rebate directly to the taxpayers of Quebec a sum of money equivalent to the value of the sales tax cuts which the minister refuses to negotiate with the government of Quebec, the sum of $186 million. Now we are faced with a situation which almost perfectly illustrates a concern raised in the abstract some nine years ago during the discussions on constitutional review.
I should like to refer to some of the arguments raised during the period of the constitutional review between 1966 and 1971. For a long time there had been a consensus among the provinces on the need to manage their own fiscal affairs, to do so without the intervention of the federal government. Also there was a consensus that they should have the right to obtain
May 24, 1978

their revenues in the way they judge consistent with their fiscal needs, and to spend those moneys on projects of high priority to them.
In 1969 when the federal government began to recognize the force of some of these arguments during that constitutional review, the question of using federal fiscal muscle to regiment the provinces into line came up for broad discussion. In those discussions, the Trudeau government acknowledged the desirability of limitations on its spending power. Simultaneously it made proposals about what to do when a province did not want to join a scheme to which most of the other provinces had formally and officially agreed. At that time the Trudeau government proposed making payments directly to individuals, a proposal which was attacked by the provinces, including those which are strong supporters of a vigorous central government.
I should like to refer to a few of the arguments made by the premiers against that federal proposal to make payments direct to individuals. Mr. Smallwood, the then premier of Newfoundland, said the following:
Has it ever been done and ought it to be done? If there is to be a federal redistribution of income surely it ought to be on a national basis and not provincial.
He went on to say that, if it is to be provincial, it must be done by the legislature of the province.
Mr. Robarts, the then premier of Ontario, said the following:
If you do attempt to return the money to the individuals in the province, we must realize, of course, that you are not going to return it to the people who paid the tax.
He continued by indicating that it simply would not be exact, and asked the following:
Are you going to return it just to taxpayers or to every single individual?
That was his question. It is very relevant today.
Mr. Bennett, the then premier of British Columbia, perhaps signified the danger of the federal proposal most clearly back in 1969 when he made the following statement:
You are going to play provincial governments against the federal government and you are going to break up this country and not build up Canadian unity. You are going to make for disunity.
Therefore the proposal of the federal government to proceed by direct payments to individuals, in the way it is proceeding now, was tabled by the Prime Minister, who said the following:
I think the views have been fully aired all around and the most we can do at this time is to let them lie there until further meetings. There is nothing to add to that.
Indeed, he did not add anything either at the Victoria constitutional conference or subsequently. The federal government's method of dealing with this kind of impasse was discussed back in 1969 and was rejected by the provinces at that time. Also it was rejected by the joint parliamentary committee on the constitution in 1972. That proposal has now been resurrected unilaterally by the Minister of Finance.
Income Tax Act
Why has that been done, Mr. Speaker? I suggest it is for two reasons. The first is, it is his attempt to regain the initiative in the bungled confrontation he deliberately staged with the province of Quebec. That motivation is understandable, if contemptible. But the second motive of the Minister of Finance in putting forward this proposal is to extend the use of the federal spending power by deliberate invasion of provincial control of the sales tax field. That motive would be understandable only if we were to assume that the government is an agent provocateur working on behalf of the cause of separatism. What better strategy could the proponents of separatism conceive than to have the federal government boldly stake out a claim to use the federal spending power to bludgeon provincial governments whenever an impasse was reached between them and Ottawa?
The minister of Finance and the Prime Minister are acting in such a way as to give an aura of credibility to the image of confederation which the Parti Qu6becois has desperately, and to this point with diminishing success, tried to portray as reality to the people of Quebec; an image of an aggressive, centralizing, power hungry government at Ottawa, eager to grasp every opportunity to destroy the exising balance of federalism and to move Canada toward a unitary state.
Someone, somehow, must get it through the heads of the Prime Minister and the Minister of Finance that Canadian nationalism and the cause of federalism in the province of Quebec will best be promoted by wise and effective use of the powers now enjoyed by the federal government, not by a backstairs usurpation of the powers assigned by the constitution to the provinces.
Claude Ryan, the Leader of the Liberal party in the province of Quebec, put that case so succinctly when he said in an interview last Sunday that the strength of the Parti Quebecois "has definitely been helped by the federal government's stubborn position".
This view is reinforced by a Quebec journalist, Don McGill-vary, writing in the Montreal Gazette on May 23 in these words:
And Chritien and Prime Minister Trudeau seem to be unaware still that they are giving federalism a bad name. Quebeckers may well be persuaded to stay in confederation if they feel that the rights of their province will be guaranteed and respected.
But if the future that Ottawa holds out to them is a succession of episodes of federal meddling, like that of the past few weeks, the case for independence is bound to seem more persuasive.
That is the kind of result this federal government may well promote.
The direct tax rebate is not only a dangerous innovation, but one unprecedented in our history and which strikes at the very balance of confederation. Not only is it dangerous, and not only does it strike at the balance of confederation, it is also very meanly conceived. It calculates that for an S85 cheque the taxpayers of Quebec will abandon the option of looking to their provincial government, whatever political stripe that government might be, to defend the existing distribution of

May 24, 1978
Income Tax Act
powers under the constitution. It presupposes that $85 is the asking price for the loyalty of Quebeckers.
It is no longer good enough, according to those opposite, to be a federalist in the province of Quebec unless one's definiton of federalism precisely and on every point coincides exactly with their own. That kind of rigid "them and us" approach calls into question the very basis of federal-provincial relations. It is one of the key reasons why it is becoming more and more clear that this government is part of the problem and not part of the solution to the problem of national unity.
And what has this face-saving proposal in the bill done to the economic initiative which was supposed to have been the point of this whole exercise? What has it done to the original budget proposal? It has, literally speaking, turned that proposal on its head. Instead of a sales tax cut which benefits all consumers, what the Minister of Finance proposes is a direct income tax rebate in one province; a rebate which discriminates against those too poor to pay income taxes, and which favours those most likely to save rather than spend the rebate they would receive. That tendency to save is exactly what the minister wanted to avoid in the first place.
Here is what the minister had to say in this regard at his press conference on the night he presented his budget:
It is an economic package to restore confidence, to stimulate demand very quickly. That was the aim ... to increase demand in the Canadian economy. The other tax cuts available to me were of a different nature and we were not sure that they would go to the people who spend their money. Income tax? Perhaps the people would have put that money in savings.
This, suggests the minister, is what went wrong with his earlier income tax cut. The people saved it and did not spend it, but the sales tax cut, he promised, would be different. Again I quote from the press conference on the night the minister presented his budget:
This retail sales tax is going to everyone who spends his money. Even those who don't pay any income tax, the poor in the society, will get a benefit in spending their money.
In the context of the minister's statement that night about his budget, Mr. Parizeau's proposal bears a closer resemblance to the avowed purpose of the budget initiative than the provisions of the bill we are debating here today. Mr. Parizeau's proposal benefits all the consumers in the province of Quebec, rich and poor, and it directly stimulates purchasing in that province, and that was what the Minister of Finance said on budget night he wanted to do. How he has turned that proposal around! Since no province has a complete monopoly on any industry, the proposal which is put forward in the province of Quebec at this time benefits manufacturers in many other provinces of Canada. The effect is disproportionately beneficial to Quebec, to be sure, but the effect of the original budget proposal, as I have already noted, is in itself disproportionately beneficial to those provinces in which manufacturing is concentrated.
However ingenious may be the rationalizations of those opposite for their course of action, however many red herrings they may wish to lay across their trail of blundering, arrogance, stupidity, and cynical political manipulation, they will

never convince anyone that they are the victims rather than the authors of their own misfortune. That fact would ordinarily be of concern only to those interested in an attractive image for the Liberal party. But in this case the stakes are far more serious. By their approach to all provinces in formulating their original proposal, by the action they have taken to punish the one province which chose not to go along, and by their arrogant assumption of the right to use the federal spending power to expand clandestinely the area of federal authority, they have put the Government of Canada in a position of saying to every province implicitly, "That we will do what we like regardless of the constitution, with your consent if possible, without it if necessary".
That position is objectionable not just to the Parti Quebe-cois, not just to the province of Quebec, not just to provincial governments everywhere, but to every Canadian who believes in a federal system of government. Their position does not even have the merit of candour. The federal government is saying in effect, "We believe in a unitary state, we know that is unacceptable, but we are going to move toward that goal at every opportunity."
I could respect a government that wanted to change the federal system radically to centralize power and jurisdictions at Ottawa, much as I would disagree with that position. But what I cannot respect, and what I protest against with real anger, is a government that professes to defend federalism while undermining it at every opportunity, whenever it believes it can confuse or frighten the people of Canada into going along with it.
Canadians need a government at the federal level that is strong, dynamic, and effective. Those qualities flow from imagination, vigour, and ability. They do not come from attempts to weaken the other partners in the federal system, but from making good and efficient use of the powers and the opportunities which the federal government itself holds. The federal government will be respected in Canada when it respects the rights of the provinces, when it is sensitive to their needs and aspirations, and when it effectively uses its resources to work with those partners to develop the full potential of this country. Sadly, sir, this textbook case of bungled federalism will be justified only if the government has learned that lesson.


Some hon. Members:: Hear, hear!
Hon. Jack H. Horner (Minister of Industry, Trade and
Commerce): In listening to the hon. member who has just taken her seat, Mr. Speaker, I could not help but think that it was delivered very well indeed, with just the right amount of indignation towards the government. It was a beautiful delivery. It is too bad the content was not as worthy as the effort the hon. member put into the delivery and the amount of indignation she expressed in her voice from time to time.
Let me just say a few things about Bill C-56 and perhaps give it its proper interpretation. First of all, the federal government, in bringing about the tax measures that it brought in on
May 24, 1978

April 10, went to great pains to seek out the co-operation of the ten provinces in Canada. For the first time in my history in parliament, a finance minister, before bringing down a budget, seriously talked at length to the finance ministers of the ten provinces. It was a tremendously innovative, daring and risky initiative. The hon. member talked about wanting a strong, effective, and dynamic government. Well, the Minister of Finance (Mr. Chretien) showed effectiveness, dynamism, and initiative in talking to the provincial finance ministers.
The purpose of the sales tax reduction was to stimulate the economy and to encourage Canadians to go out and shop now.
I would say buy now in Canada. Why did the Minister of Finance want to encourage that when profits were up in Canada in the last quarter of 1977 by 22 per cent and savings were up nearly an equal amount? It was because our factories and their efficiency were only at a production level of approximately 80 per cent. The idea was to encourage Canadians to buy, but not necessarily equally in all provinces. That was not the case. The Minister of Finance dealt with each province. He went out and consulted with each finance minister individually. One can look at the budget papers where it clearly states that he offered to compensate them for a reduction of 2 percentage points in their retail sales tax for a period of six months. He states:
In return, I have asked them to bear the cost of either a further one percentage point for the same period, or an extension of the two-point cut for a further three month period.
He clearly outlined what he wanted the provinces to accept. He went on to say that he recognized the Atlantic provinces were in a different position because of the tax and revenue structures of those provinces, and he also commented that he recognized that Alberta was in a different position.
Quebec, after consultations with Mr. Parizeau, its minister of finance, chose not to go along with the federal Minister of Finance. It was not the choice of the federal Minister of Finance, but a choice which was made by the province of Quebec. Is that such a strange thing for us federalists to believe? Was it completely unexpected that Quebec would not go along with the federal government? To me it was not unexpected because the government of Quebec today has stated quite clearly that they want to separate from Canada and that they want to do everything they can to prove to Canadians that federalism is not working. The choice was not that of the federal Minister of Finance but of the Quebec government, and if they had done anything else than what they did, I would have been surprised.
The federal Minister of Finance, however, did not remove any of the benefits in his budget for the people of Quebec. He did not in any way, but Mr. Parizeau did.


Mr.   La Salle@: And Mr. Ryan too.


John (Jack) Henry Horner: I am sorry but Mr. Ryan is not in power.


Mr. Deputy Speaker:: Order.


John (Jack) Henry Horner: Mr. Parizeau was the one who prohibited the poor people from taking advantage of the offer made by the
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Minister of Finance of the federal government, but he went on to give $40 million under the four items on which Mr. Parizeau said he would reduce the sales tax. It is perfectly within our constitution and within the prerogative of the minister of finance of a province to remove the sales tax completely if he so wishes. That is what Mr. Parizeau did, and there is nothing wrong with that.
This government asked for an across the board removal of the sales tax. Mr. Parizeau did not what to comply with this, and the Minister of Finance chose the most appropriate way to pay back to the people of Quebec the approximately $215 million which they would have had if the minister of finance of Quebec had accepted the offer.
There has been a lot of statements made about this country of ours and federalism. There is no question in my mind, in the 20 years that I have been in this House, that Canada, the very fact that we remain a nation, has been questioned very severely. It might well be that in this budget of April 10 we are once again seeing our country being questioned as a nation. The Minister of Finance has done his utmost.
I for one regret to see the official opposition wholeheartedly supporting Mr. Parizeau, the one who is deliberately attempting to divide and destroy this country. I am not surprised, however, because just a little over a year ago when I was in that party they told me to go easy on Mr. Levesque and not to attack him. They wanted him as an ally the next time a federal election rolled around. Maybe that explains why they are stoutly defending Mr. Parizeau today. Why I do not know; one can reach his own conclusions.
I know that the federal government has a responsibility for the over-all defence of the nation. I know, as a nation, that the federal government has a responsibility and that responsibility can be shared with the provinces with regard to the question of immigration.
I know, as a nation, we have a responsibility to provide a transportation system across Canada and at the ports. I know, as a nation, we have a responsibility to look after our trade, with other countries. I certainly know that, as a nation, we must have a strong, effective, dynamic minister of finance, and I think that is what we have in the present Minister of Finance. The finance of the nation is the very key and the heart of keeping a country together.
I know, and the budget dealt with it at length, that the question of energy has become of national importance to this country. It is of importance to every country in the world. As far as we can see in the foreseeable future, energy will remain of national importance to every nation, particularly Canada. We are in a very fortunate position, and I intend to deal with that point at length further on in my speech.
First of all I want to say a word about the differences that the Minister of Finance recognized in the field of taxation. In taking a look at personal income tax as it affects this country of ours, one can readily see that personal income tax as taxed by the provinces is a percentage of the basic federal tax. In the

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province of Newfoundland it is 58 per cent of the basic federal tax. In the province of Quebec it varies slightly. Quebec levies its own income tax. Depending on how many children a married couple has, it varies from 58 per cent to 63 per cent of the basic federal tax. One could go down the list, but I want to cite Alberta's position and put it on the record. I will name only three provinces although I have the figures here for all of them. For the province of Alberta it is 38 per cent of the basic federal tax.
There is a logical reason why the Minister of Finance in his attempt to bring and hold our country together should address himself to the problem that exists in Canada, a huge tax rate in some provinces and a lower tax rate in other provinces. Similarly, in some provinces there is a high sales tax rate, and in another province there is no sales tax rate at all. The Minister of Finance, in my opinion, was quite right in addressing himself to that problem.
I want to deal now with another question. I read very carefully the speech of the finance critic for the opposition party. It was rather a poor speech, but he said this:
If it becomes the law of the land will not the residents of Alberta be taking the right position in saying they should be included?
That is why I wanted to put those tax figures on the record. What citizen of Alberta would not recognize that they have, by far, the lowest tax rate in Canada? If the Minister of Finance attempts to increase purchasing by increasing the purchasing power of citizens, to get our economy turned up a little more by lowering the sales tax by 2 per cent for a period of six months-


Donald Frank Mazankowski: Don't be an Olson now, Jack.


Some hon. Members:: Oh, oh!


John (Jack) Henry Horner: I will continue to quote the hon. member for York-Simcoe (Mr. Stevens):
If the government is shifting from an essentially sales tax related type of revenue sharing scheme to an income tax credit arrangement for at least one province, why should the province of Alberta not also be included?
He goes on to say:
A colleague of mine suggests they do not care about Alberta. Certainly if one were to read Bill C-56 one would see that not only do they not care about Alberta, they are indifferent to that province.
The hon. finance critic for the opposition party obviously did not read the bill, or he cared not to hear or see what he read. I could say a lot of things about the present critic on the opposition side-they had two critics before him and either one of them was better than he is-but I want to put on the record just what kind of a financier he really is. Is he reliable? Is he capable of handling the finance portfolio? We know that he is a very close adviser to the present Leader of the Opposition (Mr. Clark).


Lorne Edmund Nystrom: Who is that?


John (Jack) Henry Horner: The only evidence we have is his past performance of handling finance. I quoted the hon. member for York-Simcoe's speech from Hansard about how he thought

the present Minister of Finance was neglecting Alberta and western Canada. How did he neglect western Canada when he was attempting to form the Bank of Western Canada?
First of all I should point out the supposed bank charter was named the Bank of Western Canada. One could assume from that that here was a knight in shining armour riding forth to the west to help them to get rid of the eastern bankers that were forever robbing and hurting great western Canada. Here was the shining knight riding out to the west, to save the west with his finances. Not so, Mr. Speaker. Why did he name it the Bank of Western Canada? That is very interesting.
Western Canada at that time was a surplus depository area. The former governor of the Bank of Canada, James Coyne, admitted that to me before a finance committee. He said, "Yes, my records prove to me western Canada is a surplus depository area." The inspector general of banks at the time, before the finance committee admitted to me that, "Yes, western Canada was a surplus depository area". This all took place, for the benefit of members, in 1966 and 1967 when the bank interest rates were frozen at 6 per cent. But there had been a Porter Royal Commission on Banking in Canada. The Porter Royal Commission recommended to the government of the day that they should raise the interest rates and take the ceiling off banks so they could charge more than 6 per cent-


An hon. Member:: What about sales tax?


John (Jack) Henry Horner: So, the shrewd finance critic, what did he do? He proposed a bank just before the interest rates were being raised; a very opportune time. He called it the Bank of Western Canada-


Mr. Deputy Speaker:: Order, please. The hon. member for Saskatoon-Biggar (Mr. Hnatyshyn) is rising on a point of order.


Ramon John Hnatyshyn: Mr. Speaker, I am sorry to interrupt the proceedings. I know you have been listening to the debate, as we have been in this House, and we have been listening with some interest to the minister's comments. However, I submit to you with all deference that the comments of the minister, even with the widest latitude given by yourself on second reading in a debate on Bill C-56, bear absolutely no relevance to content of the bill. It is in fact an attempt on the part of the minister to comment on the financial critic of the opposition with respect to his capabilities to act in that capacity. With the greatest of deference, if the minister wants to get up and speak in support of the bill, we will be interested in hearing him. If he wants to get up and give the names of those on this side of the House he alleges were playing the market, we will be glad to listen to him on that.


Mr. Deputy Speaker:: Order, please. I think the hon. member for Saskatoon-Biggar has a point. I was following the minister's remarks closely. He did lay aside the subject matter of the bill for his own purpose. I am sure he was about to come back to the bill. I hope he will do that.
May 24, 1978


John (Jack) Henry Horner: I intend to deal with the bill at length, Mr. Speaker. I was quoting the speech of the hon. member for York-Simcoe. I had suggested earlier that the hon. member for Don Valley (Mr. Gillies) would have been a far better finance critic, and the hon. member for Edmonton West (Mr. Lambert) would have been a far more credible finance critic.


Ramon John Hnatyshyn: Even you could do a better job, I suppose!


John (Jack) Henry Horner: We again have Sir Arthur riding to the rescue. He looks beautiful on the white horse with the hon. member for York-Simcoe. The beauty of those two hon. members is that they can ride a horse, which is more than the Leader of the Opposition can do.
In his whole speech the hon. member attempted to build on the premise that the Minister of Finance knew not what he was doing and was incapable of being Minister of Finance. This has been his whole line of attack. I was, as Your Honour correctly stated, nearly at the end of my remarks about the Bank of Western Canada.
The hon. member tried to run $195,000 into a pyramid and control $13 million-not a bad stroke of business if you can do it overnight. However, he was not able to do it.
He had called it the Bank of Western Canada. He wanted the deposits of western Canada. The interest rates were coming off. Where was the control going to be? It was to be held by a consortium of basically his family and two other people in the city of Toronto. He would not put 53 per cent on the market for sale. It was not because the remainder was not gobbled up. The nearly six and a half was gobbled up quickly. He kept control in Toronto and tried to perpetrate the belief that he was some kind of a saviour to western Canada and that he cared about western Canada. He cared about his own pocket and not much else at that time.
I want to say how Alberta has benefited in recent years and will continue to benefit by the budget of April 10.


Sinclair McKnight Stevens: I rise on a point of order, Mr. Speaker. I did not interrupt the minister when he was making certain comments concerning the formation of the Bank of Western Canada, but I hasten to add, in case anybody has inferred otherwise, there is not one tittle of truth in what he has said.


John (Jack) Henry Horner: That is not a question of privilege. What I said is on the Finance Committee records. What I said was supported by the former governor of the Bank of Canada, Mr. James Coyne, when he blew the whistle on the hon. member and said, "produce your $4V4 million," and he could not. I am not saying any untruths. It all can be substantiated and, in fact, has been substantiated in the past.
I wanted to deal with how the energy development incentives announced on April 10 will benefit the province of Alberta. Most Canadians are aware of the energy picture in the world today. I will paint the picture as vividly as I can so that Canadians can clearly understand.
In the known conventional oil reserves there are about 6.4 billion barrels of oil in Canada. We in this country use about
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600 million barrels a year, or 1.6 million barrels a day. If someone looks at this speech tomorrow, he can use a computer or check my mathematics and he will see that we have in conventional oil reserves, if our consumption does not increase, somewhere between ten and 12 years' of known supplies.
What about the tar sands and the heavy oil, the development of which this budget attempted to encourage? In the tar sands in Alberta there is estimated to be 900 billion barrels of oil, a fabulous amount when you equate that to our conventional reserves. Three hundred billion barrels of oil can readily be mined in the tar sands if we put the capital investment into that area. With regard to the other 600 billion, we may have to develop new technology. We may have to develop a better in situ method of recovery. Of the 300 billion barrels I spoke of in the tar sands, about 80 per cent is recoverable with today's technology. Of the remaining 600 billion, with today's technology we can probably recover something in the neighbourhood of 15 to 20 per cent.
Looking at those Figures one can see how fortunate this country is, if we develop the tar sands quickly enough and have it coming on stream when our conventional oil begins to slow up.
We have a lead time of 12 years, at best 15. Therefore it behooves the federal government to encourage tar sands development now. Did the Minister of Finance take that into consideration in his budget? Yes he did, in about three different ways, and I will deal with them.
Outside of the conventional oil wells and the tar sands, we have in northeastern Alberta what is commonly referred to as the heavy oils. They are in the ground. The present method of bringing them up is to pump steam down which forces up the oil. In the known estimate of reserves of heavy oils, there is about 30 billion barrels of oil. Roughly speaking, we have five times the amount of reserves in the heavy oils and 150 times the amount in the tar sands that we have in the conventional wells.
There is only one other industrial country in the world today that can say down the road, if proper care is taken now, that it will be self-sufficient. We can become a major exporter of oil. We have that much. Action must be taken.
I am often accused of comparing our country with other countries. Today I want to compare our country with the United States with regard to the question of oil. One year ago the United States were using approximately 14.7 million barrels a day. Today they are using 17.1 million barrels a day. They have had a tremendously rapid increase in their consumption of oil. What has their production been? One year ago production in the United States was 8.7 million barrels a day. Today it is 8.1 million barrels a day. Their consumption has risen rapidly and their production has gone down nearly as rapidly.
This is a very fortunate country. Our consumption has not gone up as fast, and our production and our capabilities of producing have increased substantially. If Canadians ever

May 24, 1978
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looked around, they would see we are at the bottom of the rainbow. This country is very, very fortunate.
What is the federal government doing through this budget which is being attacked, by innocent people, I believe, because they know not why they speak? Some of them know not why they are here, even from the province of Alberta. 1 have heard Albertans stand up in this House and say that Alberta is not helped in any way by this budget. How foolish can they be! How unknowing of the truth can they be of the province of Alberta?
Previous ministers of finance introduced in budgets, and the present Minister of Finance reinstated it again last fall, drilling exploration funds that individuals can put together to invest in oil and gas exploration in the province of Alberta. Individuals can get together and invest in gas exploration in Alberta. Why do I say in Alberta? It so happens that in our great nation between 83 per cent and 85 per cent of the oil industry is in Alberta.
This tax provision, allowing individuals to invest in drilling and exploration, brought tremendous funds into the province from all over Canada. The president of Ranger Oil told me when I was speaking with him recently that, as far as his company was concerned, it was the largest investment put together in Canada for a Canadian firm. I asked him, out of curiosity, where the money came from, and he said that, by and large, most of it came from people in Montreal. More than 100 investment funds had been put together to back exploration and drilling. Dome Petroleum, which has done such tremendously good work for Canada in the Arctic exploring for oil and gas in the Beaufort Sea, has put a fund together using the tax provision brought forward in the budget and extended by the present Minister of Finance.
In his present budget the Minister of Finance has recognized the importance of heavy oil and of the tar sands. The federal government has put together a research fund under which $2 million a year will be devoted to extending our knowledge, particularly of the tar sands, in the next five years.
The Syncrude project alone involved an expenditure of some $2 billion, and the contribution made by the federal government was 15 per cent, or $300 million. Mr. Speaker, that is more than Quebec is getting under this sales tax proposal. That province is getting something in the neighbourhood of $215 million. But Ottawa put $300 million into Syncrude, bringing the consortium together after Atlantic Richfield backed out. The project is now coming on stream and will produce something like 125,000 barrels a day. I estimate that Syncrude cost $2 billion. A large proportion of that money was spent within the province of Alberta. Wages and salaries of workers accounted for half the cost. That money was spent within the province, and those people pay income tax into the provincial treasury. And I am not taking into consideration, now, the royalties which the provincial government will receive on the sale of this oil, oil developed through the encouragement of the federal government.

Look at page 10 of this document under Energy Development Incentives. The Minister of Finance clearly spells out:
Second, it will be important to extract as much oil as technologically possible from all deposits. It has already been established that enhanced recovery systems can greatly increase total production. After today, therefore, special machinery, equipment and other facilities acquired for enhanced recovery systems-specifically, so-called "tertiary" recovery-will be able to earn depletion at a rate of $1 for every $2 of expenditure as compared to the normal earning rate of $1 for $3.
This change means substantially more revenue for Alberta because it will continue for a lot longer than six months. The sales tax reduction is only for six months. Let us keep things in perspective.
The budget went on to say:
Finally, earned depletion may be applied at present only to reduce taxable resource profits, and only up to a ceiling of 25 per cent. This provision will be significantly improved. Effective immediately, corporations may deduct depletion earned through certain qualifying investment in non-conventional oil projects up to the extent of 50 per cent of total income.
These two measures will greatly encourage investment in the tar sands and in heavy oils. Further, the minister states, as set out on page 10 of the budgetary papers:
I want to make clear that the up-grading plants to process the heavy oil produced from wells into a type of oil similar to conventional crude will be treated as a manufacturing facility, eligible for fast write-offs and the reduced tax rate.
All this gives us an idea of the immense amount of money which will be invested in Alberta as a result of the encouragement given in the budget. I suppose the oil industry is still not clear as to the interpretation of these tax measures or as to what their full effect will be, but there is no question in my mind that there will be far more potential benefit from the assistance given to the development of oil deposits in Alberta than from the total of the tax reduction, which amounts to around $1.1 billion.
In other words, these measures will mean more by way of financial benefit and encourage more investment in Alberta than all the other benefits seen in the budget for all the other provinces put together.
If this is correct, one might say, "Surely, this is too much to give one province?" Mr. Speaker, it is not going out to one province. It is benefiting the whole nation. We know that sooner or later we must develop these resources. Indeed, we could become energy sufficient, and if we develop the proper technology we could even become a major exporter of oil after 1995, I estimate.
What has all this meant to the province of Alberta? I am told that many people are envious of that wealthy province. Many say it was Premier Manning, through his connection with the Lord above us all, who put the oil below the surface of Alberta. Today, many newcomers believe it was Premier Lougheed who put the oil below the surface of the province. There are some in this House who believe that the prosperity of Alberta is the result of the way in which the affairs of the province have been managed by its present government.
Mr. Speaker, I am well connected with the present government of Alberta, and you might say I even have good relations with that government. But I am fair enough to realize that the
May 24, 1978

tax measures to which I have referred were brought in by the former minister of finance and by the present Minister of Finance. The tax measures contained in the budget of April 10 have contributed and will continue to contribute to a dramatic growth in the part of Canada about which I have been talking.
Looking at the growth figures for the population generally I see a figure of 1.25 per cent. I look out to Alberta and find that the population there is growing at close to 4 per cent. The population of the city of Calgary is growing at the rate of 1,500 a month. The city of Edmonton is growing at a like rate. Fort McMurray-


An hon. Member:: How about Cessford?


John (Jack) Henry Horner: It is growing too. It is very near my home ranch and it is growing faster even than the rest of the province. I feel a little like Khrushchev when I say that, because when you start from nothing it is very easy to grow quickly.


An hon. Member:: Not with this government.


John (Jack) Henry Horner: Calgary is growing at the rate of 1,500 per month, and the same is true of Edmonton. In 1973 Fort McMurray had a population of about 8,000. Today it is
23,000.	Citizens from all over Canada have gone to the province of Alberta. Rightly or wrongly they are now paying income tax to the province of Alberta. I think it is right that they should, but we have to recognize that it was the federal government, particularly since the oil dispute of 1973-74, which caused a great deal of rapid expansion of that province.
Alberta has benefited immensely. As I flew out of Calgary on Monday I looked at the skyline of that city and wondered what it was like ten years ago. It was nothing like it is today. I also thought of the gigantic roadways traversing the valley of the Saskatchewan River, and the gigantic hotels and apartment buildings built at the edge of the Saskatchewan River in the city of Edmonton. I thought to myself about how the skyline of that city has changed immensely in the last ten years.
One can say that the Minister of Finance neglected Alberta in his April 10 budget, but if one wanted to be parochial and to divide Canada into regions, he could do that too. 1 do not particularly like that. I got into federal politics because I am a federalist. One could even accuse me of being a centralist. I do not mind that, because I believe that in order to hold this nation together we have to accept the fact that there should be one government for the whole of the nation.


Some hon. Members:: Hear, hear!


John (Jack) Henry Horner: When I was a member of the other party I once asked my leader what power he would decentralize, so that I could know what he would do to my country. He could not tell me what power he would decentralize. It is a nice sounding phrase, but I said to my leader that he could not go on forever saying it. I told him that someone would ask him
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what he would do, but he could not tell me. I hope he has thought up an answer by now. Perhaps the hon. member for York-Simcoe has given him an answer. The hon. member for York-Simcoe seems to have many answers and rumours ready.


Ramon John Hnatyshyn: We decentralized by giving you to the Liberals.


John (Jack) Henry Horner: When the hon. member for York Simcoe was in Calgary he said on a radio phone-in program that he was very glad to see the hon. member for Crowfoot go because he could not get along with him. I explained in my speech today how he and I disagreed about what he was trying to do with the Bank of Western Canada. Anyone who reads my remarks will readily see why I could not get along with the hon. member.
We are changing the law regarding rape. The hon. member for York Simcoe was attempting to rape western Canada financially, and I will never forgive him for his intentions. Of course he was not a politician then. His true business ethics were coming through loud and clear, to me in any case.


The Acting Speaker (Mr. Ethier):: Order, please. I regret to interrupt the hon. minister, but his allotted time has expired. Nevertheless, he may continue if there is unanimous consent.


Some hon. Members:: Agreed.


Mr. Epp:: No.


John (Jack) Henry Horner: Mr. Speaker-


Arthur Jacob (Jake) Epp: Mr. Speaker, I said no.


The Acting Speaker (Mr. Ethier):: I heard one hon. member say no.


Some hon. Members:: Hear, hear!


Francis Andrew Brewin: Mr. Speaker, I welcome the warm applause with which I was greeted by Liberal backbenchers when I stood up. It seldom happens, but I do indeed welcome it.


Some hon. Members:: Oh, oh!


Francis Andrew Brewin: Mr. Speaker, is somebody else conducting the debate?


The Acting Speaker (Mr. Ethier):: Order, please. The hon. member for Greenwood (Mr. Brewin) has the floor.


Francis Andrew Brewin: I have never claimed to be an expert on taxation problems and, indeed, I am not an expert on taxation problems, but I know there are certain basic principles which should be applied to test all taxation problems. These principles depend, in my judgment, on whether proposed tax changes tend toward more equality or more inequality, whether they benefit those who already have too much or whether they are calculated to assist those below the proverty line and those in urgent need. Judged by these tests I find the present bill totally

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inadequate. I propose to deal with the sales tax later, but I wish first to speak about the bill as a whole.
In March of this year the National Council of Welfare, which hon. members know is a responsible and experienced group of Canadians, produced a report on taxation and the distribution of income. This report reveals a society, and I quote:
-which continues to be marked by vast inequalities of income-inequalities which condemn three millions of our citizens to lives of poverty in the midst of Canada's widespread affluence.
The income gap separating the richest and poorest 20 per cent of Canadians has grown enormously over the past 25 years, and this drastic increase has been at a time when Canada has been creating an elaborate multi-billion income security system. In 1976 the lowest income 20 per cent of Canadians received barely 4 per cent of the total national income. The highest 20 per cent-in other words, the same number of people at the top level-received more than 40 per cent, a share ten times as great as the poorest 20 per cent.
It is a striking fact that this picture has not changed relatively over the past quarter of a century. In 1951 the bottom fifth of Canadians received 4.4 per cent of the national income. Today those people receive 3.9 per cent. The top fifth got 42.8 per cent. Today those people receive 44 per cent.
The incomes of the lower 20 per cent in 1951 stood at $3,060 which, adjusted for inflation, was the equivalent in 1976 of $6,900. By 1976 the difference between the richest and poorest fifths had increased by $18,000. In other words, the gap had increased by over four and a half times in constant dollars. Despite all the rhetoric about the welfare state, our system of taxation and welfare has had no effect in tempering the overwhelming inequality of income distribution. The supposed levelling effect of the tax system has turned out to be a myth.
The income tax system is indeed progressive, but the tax system includes a great deal more than personal income tax. There are federal and provincial sales taxes, excise taxes, import duties, property taxes, provincial health insurance premiums, contributions to the Canada and Quebec pension plans, and unemployment insurance premiums. These are all taxes under another name. What, then, is the reason for this situation?
In 1972 the Economic Council of Canada found that over the lower portion of the income scale the system tends to contradict the ability to pay principle by taxing the poor at a higher rate than those who are better off. The effect of the few taxes that are progressive, such as the income tax, is completely offset by the remainder of taxes in the system. Most important, a host of new exemptions and reductions has been introduced into income tax, all provisions which give no benefit whatsoever to those too poor to pay taxes, only modest benefits to lower and middle income persons, and the greatest benefits to those with the highest income. In 1976 the National Council of Welfare issued a report discussing these exemptions and reductions. In that report, entitled "The Hidden Welfare System", they estimated the cost of just 17 of these tax

subsidies-there are more than 60 all told-at $6.4 billion, with the taxpayer making over $50,000 a year receiving an average of $4,000 in annual benefits, and the taxpayer with less than $10,000 income receiving less than $500.
Much has been said about equity in the tax system. The scrutiny to which it has been put by the National Council of Welfare suggests that no such equity exists. I say-this is something that all of us from all parties in the House should know-that we in this country, despite all the good things we say about ourselves, despite the good fortune which we enjoy, have created a society in which there are gross injustices and inequalities along the lines which I have not dug up but which are based upon the report of the National Welfare Council.
To remedy this would require amendments to the methods of securing funds for the Canada and Quebec pension plans, unemployment insurance, and health care plans. The report of the National Council of Welfare goes into these in detail, but I will not do so here. Let me only remark that we in this party have supported and do support the welfare provisions. Indeed, we take some responsibility for their introduction. However, I will say that we too have underestimated the importance of making sure that the acquisition of funds or payment of these schemes is supported progressively rather than regressively, and adds to rather than diminishes the income of the poorer people. Nor is the objective of more equality merely a moral or humanitarian objective. It is not an objective of people of soft hearts and kind dispositions. It is a condition of a healthy economy?
With hundreds of thousands of Canadians below the poverty line, these Canadians are effectively debarred from playing an effective part in our market system. The net result of this unfair contribution of income is the state of depression, recession, and stagnation with which we are all familiar. The government plans in the tax bill with which we are dealing have failed to make any effective dent in these facts.
I want to return for a minute or two to the sales tax and the means devised to distribute the compensation benefits from the sales tax reductions. It is well known that the sales tax is one of the important means of taxation of the provinces. The provinces have claimed, and no doubt have the right to claim, the right to dispose of the proceeds of direct sales tax according to their own judgment and without interference from the federal government. The present legislation contemplates an intrusion in this field by the federal government. In so far as the provinces agree to this and accept federal leadership, there can be no objection, but interference over the objection of the provinces is interference in a provincial field which is highly important to our whole federal system. In the case of Quebec and the other provinces, the federal government offered to repay compensation equivalent to the reduction in the sales tax and the losses from that across the whole field. This has been accepted with varying degrees of grumbling from all the provinces except the province of Quebec.
May 24, 1978

The Quebec government preferred a scheme where there should be a total abolition of the sales tax for certain essential commodities. I think it included textiles, furniture, etc. I will not go through the list, but they are unquestionably essentials. This reduction was to be a total reduction, not limited in time, and obviously presented a real contrast to the proposals made by the federal government. However, the purpose of these reductions was to promote employment, which is the objective of the exercise claimed by the federal government. It provided for the stimulation of employment through reduction in the prices of the goods covered by the tax. The federal government has obstinately refused to pay compensation, as requested by the government of Quebec, except in the form of direct payments to the citizens of Quebec who pay income tax.
The federal proposal has earned the opposition of the government of Quebec and all the other parties in the legislative assembly of Quebec, of all the opposition parties in the House of Commons, and some opposition from other provinces. The federal government has persisted in its particular plan with an obstinacy worthy of a better cause.
There may be arguments as to whether the federal or Quebec scheme for the reduction of the sales tax is best. I myself prefer the Parizeau to the Chretien model, and one of the basic reasons for that is that the federal scheme excludes the most needy of all, the people who do not earn enough even to have to pay any income tax, those who are on the poverty line and who do not benefit, even though they still have to pay sales tax on what they purchase. It is here that the general principle which I outlined at the beginning of my speech is applicable, namely, that all tax proposals should be judged by the effect on the poorest people in the community. But the real tragedy is that this comes at a time when the federal government claims to give leadership to strengthening and preserving our federal system.
What the federal government has proposed gives aid and comfort to separatists, and is a blow to the future of Canada. Furthermore, it appears to violate the government's own proposed guidelines on conditional grants for federal-provincial programs. The hon. member for Kingston and the Islands (Miss MacDonald) has dealt with this matter and I will not repeat what she said but will summarize some of the points in my own way.
In 1969 the Government of Canada issued, under the signature of the Prime Minister (Mr. Trudeau) himself, a constitutional working paper entitled "Federal-Provincial Grants and the Spending Power of Parliament". The white paper stated that the proposed principles would establish two limitations on the use by parliament of its power to make conditional grants for general federal-provincial programs. Of course these schemes for the sales tax are precisely that because the Government of Canada, quite rightly, is going to spend the money and was asking that the moneys received be applied to the sales tax.
According to the white paper on the federal proposal, first, there must be the existence of a broad national consensus in favour of the program, and second, there must be the assur-
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ance that a fiscal penalty would not be imposed on the people of non-participating provinces. I note the constitutional paper refers to people and not governments. Perhaps the Minister of Finance (Mr. Chretien) and others would claim that looking after the claims of the people of Quebec and bypassing the provincial government is in accordance with the guidelines proposed. I do not think the guidelines intended any such thing. The people of Quebec, as selected by the federal government, may well not be the same people as those who would benefit from a disposition of the funds by the provincial legislature.
Undoubtedly it is the constitutional right of the Quebec legislature to prefer to receive the payments in lieu of sales tax. In my understanding of our constitutional system, the federal government communicates in such matters with provincial governments and not with individuals in the provinces. All the preliminary papers I have read constantly refer to the provinces. Our system is composed of a federal parliament and provincial legislatures which are supreme within their own realms. This is not a new doctrine. It was pronounced by learned law lords in the privy council of Great Britain, which was the final court of appeal, nearly a century ago. The provincial legislatures have sovereign rights within their own jurisdictions.
The constitutional paper produced by the Prime Minister goes on to suggest that the first step toward ensuring a consensus would be the introduction in parliament of a money resolution preceding a bill to be proceeded with if and when a consensus was reached. This has not been done yet. Obviously it may be done in the future. It was contemplated to be the first step. Then this resolution was to be sent to each province for approval or rejection in their legislatures. That was contained in the statement of the Prime Minister on behalf of the government when the future constitution of Canada was being dealt with.
The Minister of Finance has not come close to following the proposed method of operation of the federal government. One must assume the federal government is abandoning its own scheme of instituting a federal plan for conditional grants to the provinces. As this is a central feature of federal-provincial relations, greater attention should have been paid to it by the government. Its failure to do so constitutes a blow to the unity of Canada and a blow to Canada itself.
Now I should like to turn to the other provisions of Bill C-56. As I read them, apart from the corporate sales tax, there is little or nothing designed to assist those in the greatest need, or to equalize the distribution of income. Clause 1 of the bill deals with the removal of taxes and expenses of a second residence needed for temporary purposes. Perhaps this is a good idea, but it is hardly an important one. Clause 4 deals with loans to shareholders by corporations. Certainly it is not an earth-shaking measure. Clause 6 deals with additional allowances for scientific research. Indeed this is needed and beneficial, but it can hardly be said to have any direct impact

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upon the distribution of income. Clause 11 and other clauses deal with registered retirement income funds. The proposals in clause 11 may be a measure of relief for those who contribute to these funds. Perhaps much of the clause can be commended. Elowever, it encourages saving and not spending. To that extent it fails to stimulate employment, which is a major priority of the day.
Clause 14 deals with the transfer by a taxpayer to his child resident in Canada of shares of a qualifying farm corporation. Indeed this is a helpful provision, but it is of very little significance in the over-all picture. Clause 30 deals with the reduction in 1978 of the tax payable by individual residents in prescribed provinces by $100. Indeed this may have some small effect on stimulating purchasing power, but it would be far more effective in redistributing income equitably if income taxes were used and if it were removed entirely from those at the lowest level.
I cannot say that I have read the bill carefully, but I have glanced at the 66 pages which constitute the involved provisions before us. Also I have read the notice of the ways and means motion to summarize some of the proposed amendments to the Income Tax Act. The same observation is true of nearly all of these provisions. Some of them may remedy minor injustices, but none of them provide an adequate stimulation of the economy by making more purchasing power available, none of them reduce the enormous gap between rich and poor in the country.
My party has made its stand very clear. It believes it is necessary to fulfil these dual purposes: on the one hand, the stimulation of the economy and reduction of unemployment and, on the other hand, more justice in our tax system and a redistribution of income by income tax reductions at lower levels. The government has not taken this advice although many others, as well as the New Democratic Party, advocated this course.
For these reasons I cannot support this bill. It might be said cynically but justly, as my party is against the bill, as I work with the party and attempt to support it when I can, that my vote against the bill is no more than a party vote. Indeed it is a party vote, but it is much more than that. It is an endeavour to express my regret that the government has failed to stimulate the economy adequately, to deal effectively with unemployment so far as the tax system can and, above all, has failed to maintain the principle of a more just and fair distribution of income in Canada to those who are at the poverty line or below.
Also, the government has failed to reduce the gap between those who have acquired substantial and secure incomes in Canada and those who live in poverty. In my view, this is the essence of this legislation. It is ample reason for saying it is not good enough, if we are truly concerned about the welfare of all Canadians.


Some hon. Members:: Hear, hear!


Mr. Marcel Roy (Laval):: Mr. Speaker, I am honoured to bring my humble contribution to the second reading of Bill C-56, an Act to amend the statute law relating to income tax and to authorize payments related to provincial sales tax reductions. I do not claim to be an expert in taxation or even in constitutional law, but I think I know the problems of Quebec as much as the member who had the floor before me, and I will try to be practical regarding the study of the bill.
To start with, Mr. Speaker, I will confess that I have never felt so surprised in seeing the attitude of the members of the opposition because the issue is to sell a sales tax reduction to all Canadians. There is nothing about increasing taxes, and yet it seems that we are experiencing difficulties in getting people to accept a lower sales tax. I hope that my intervention will not be considered and interpreted by some as an interference into provincial jurisdiction or as the attitude of a traitor to the people of Quebec or even as that of an unconditional federalist. Rather I am appealing to my fellow citizens from Quebec so that they will consider my intervention as that of a representative of Quebec who had been elected to the House of Commons and has the courage of defending his convictions, who believes in the Liberal philososphy and wishes to continue improving the standard and quality of living of his fellow citizens in the city of Laval, in the province of Quebec and all accross this country by supporting a program designed to meet a most difficult economic situation not only in Quebec or even in Canada but in all industrial countries of the world. Throughout my speech, I will endeavour to point out the reasons which justify Bill C-56 while trying to provide some explanations on the crippling attitude of finance minister Parizeau, and also voice my opposition to a general transfer from government to government for if we consider the objectives of this legislation a general transfer cannot reach them.
This bill is in line with the main measures deriving from the economic and fiscal statement made before the Commons on October 20 of last year. Under this initiative from the Minister of Finance (Mr. Chretien), Canadians have benefited from a $100 income tax reduction for the months of January and February. Altogether this amounted to a reduction of some $700 million which, coupled with the indexation factor of 7.2 per cent, represented another saving, or if you prefer another federal government revenue loss, a saving of $850 million for Canadians. The April 10 Chretien budget reflects this trend by offering the provinces a reduction in their sales tax. The two-thirds compensation by the Canadian government comes in addition to the $700 million which I mentioned earlier, so to these $850 million granted through indexation we are adding another contribution of some $1,147 billion, namely the value of the proposed reduction of the retail sales tax.

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The budget is a positive reform in the context of our current economic problems, increasing as it does the consumer's purchasing power and the level of production of a number of our manufacturers who are now using some 60 per cent of their capacity. So we are increasing our industrial production, which will in turn foster job creation. Mr. Speaker, the sales tax reduction initiative has been supported and indeed called for by a number of economic groups. As an illustration, I would like to quote from the Canadian Chamber of Commerce report, Impact, Vol. 2, No. 3, the March 1978 bulletin issued when the Canadian Chamber of Commerce came here to Ottawa to meet with the Minister of Finance (Mr. Chretien) and the Minister of National Revenue (Mr. Guay):
If the Canadian government feels it has an absolute duty to stimulate the economy, the Canadian Chamber of Commerce believes the best way would be a 2 to 3 per cent reduction of provincial sales taxes. In the pre-budget brief issued in Ottawa on March 6, the chamber indicates it can easily be proven the government should maintain the size of its deficit...
And it goes on with a number of other suggestions. I would once more quote a paragraph from the Canadian Chamber of Commerce submission to minister Chretien:
But in order to absorb the high unemployment rate and the serious underutilization forecast for the Canadian economy this year, the Canadian Chamber of Commerce recommends that the federal and provincial governments share equally in the provincial sales tax reduction. However, Ottawa should pay an extra percentage point in areas where unemployment is above the national average. The chamber feels that such reductions will meet a number of prerequisites for a real economic pickup.
That proposition was put forward by the Canadian Chamber of Commerce. I heard no member indicate this was suggested by the Canadian Chamber of Commerce, an important group in our Canadian economy. I would also have welcomed associations and chambers of commerce from various Quebec towns and cities if they also had been in support of the Minister of Finance's initiative at the suggestion of the Canadian Chamber of Commerce. I also have here, Mr. Speaker, another report on the conference of industry, trade and commerce ministers, a federal-provincial conference held here in Ottawa. That document was signed by Mr. Rodrigue Tremblay, the Quebec minister of industry and commerce. I am quoting from page 5 of the magazine Commerce of April 1978:
Precise and immediate actions needed.
Care should be taken however that, under the pretext of discussing medium and long-term industrial strategies, concrete and immediate steps needed to correct the most urgent problems are not neglected. The Canadian manufacturing sector is probably more seriously affected by the current economic recession than other sectors of the economy.
Due to insufficient demand, most companies are now experiencing below normal capacity utilization. Demand stimulation measures therefore appear to be urgently needed to strengthen the manufacturing sector.
We would be doing a real disservice to companies and workers if, in the course of such a conference-
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This was the January conference-
-we simply discuss medium and long-term strategies. It is imperative that each level of government take concrete and immediate steps to stabilize and strengthen employment in the manufacturing sector.
So, Mr. Speaker, there you have Quebec's position as stated by its minister of industry and commerce, Mr. Rodrigue Tremblay, after a federal-provincial conference of ministers of industry, trade and commerce.
So the budget is indeed a positive response to representations. It is an answer to the representations made either by the chamber of commerce or by other organizations in the economic sector-and even trade and commerce minister Tremblay agreed-to do something to stimulate consumer activity. The Chretien budget is a positive reform for economic problems. It has many elements. I referred earlier to the sales tax and I shall come back to this later on, but the budget is also an incentive for industrial development. As the Minister of Industry, Trade and Commerce (Mr. Horner) said this afternoon, it is an incentive for research and development, and will have short term and long term effects on investments, productivity and employment. These measures are essential to reinforce the position of Canada in an increasingly competitive world.
The third and not the least aspect of this budget which we sometimes forget to mention is the expansion in the field of social legislation of the possibilities offered to the two million individuals who contribute to a registered retirement savings plan and the creation for those who reach retirement age of a new plan for accumulated savings which will be called the registered retirement income fund. I am somewhat disappointed to see that my colleague who spoke before me did not even mention this benefit contained in the budget. The budget also contains other measures such as the extension to incorporated farms of the tax free transfer of farming operations, which now applies only to members of the same family. Mr. Speaker, those are the main features of the Chretien budget, which also includes the firm commitment to reduce federal expenditures by $350 million. How have the various sectors of the Canadian economy reacted to this budget?
Chretien budget favourably received by Canadian business sectors.
Despite a small group of dissatisfied business interests, most Canadian business sectors quickly applauded yesterday the federal budget introduced Monday evening by finance minister, Jean Chretien.
We fully endorse the fiscal co-operation between provincial and federal governments which has made sales tax cuts possible, stated the Canadian Manufacturers' Association.
This measure will help create jobs because Canadians will buy more Canadian products and it will also result in lower prices at the consumer level.
Chamber of commerce chairman Sam Hughes, to whom I referred the representations made to the Minister of Finance last January, said about the last budget:
Mr. Chr6tien has taken the "basic measures that were required".
According to him,...

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... the chairman of the Canadian Chamber of Commerce ...
... sales tax cuts will do much to eliminate regional disparities and will encourage demand at the consumer level "where it is required".
Mr. Hughes believes that Mr. Chretien was right not to reduce personal income tax as it would have interfered with capital inflow into government coffers.
The Chairman of the Canadian Federation of Independent Businessmen, Mr. John Bulloch, said that the last budget showed fiscal creativity and emphasized that the government did its best with little money. Those are a few comments on this budget from various organizations in the private sector.
The budget, as presented, has surely answered the wishes of several organizations to which I have referred and it is obvious that it cannot get the unanimous approval of all those individuals. The budget has even succeeded in suggesting steps likely to increase the total demand of the Canadian economy. Following meetings and consultations with the provinces, the budget is the first step towards the distribution of responsibilities between the two levels of government as regards the stabilization policy and more especially the economic stimulus.
Rather than being an intrusion into provincial autonomy, the budget provisions reflect the importance of divided responsibilities as a result of economic conditions. As stated on several occasions by the Minister of Finance, we must bear in mind that 60 per cent of taxes in Canada are levied by provinces and municipalities while 40 per cent are collected by the federal government. It is therefore impossible for the federal government to take full responsibility for the employment situation and to implement alone an economic stabilization policy without the provinces' co-operation.
This situation is most obvious, it seems to me, in the Chretien-Parizeau dispute, especially since in negotiations, with a separatist government whose "raison d'etre" is to leave Canada, and solutions are apt to be slow in coming. The aim of the Quebec government is precisely to show the people of that province that it is impossible to live under a federal system. Mr. Levesque said in October 1967, and I quote, as I think this is extremely important in the context of this debate:
A sovereign Quebec assumes all powers and all financial resources of the public sector. Thus it has all the tools of decision and the total product of its fiscal efforts.
Today, this same Mr. Levesque goes to the United States, Mr. Morin to London and others to African countries who are stating that this is a sovereignty association. It is therefore not surprising that negotiations between the province of Quebec and the Minister of Finance cannot take the form of a dialogue as with the other provinces. Mr. Speaker, it seems as difficult to come to an understanding with the P6quiste government on the sharing of goods and obliglations as it is to reconstitute the eggs from an omelet. That is an absolutely impossible task, Mr. Speaker. Quebec sells more manufactured goods to other provinces than it buys from them and most of its sales consist of highly protected products such as clothing and footwear. To

substantiate this, one has only to look at the latest figures published in this regard and which show that Quebec does indeed sell more manufactured products to the rest of Canada than it buys from the other provinces. In textiles, for instance, sales are in the range of S192 million.
In the furniture industry, $134 million. In clothing, $503 million. In the leather industry, $59 million. In textiles, $111 million. In this whole sector, products worth $1 billion are manufactured in Quebec and sold in the rest of Canada. Quebec also sells a high percentage of its products in the other provinces, for example 41 per cent in the rubber industry, the leather industry 47.8 per cent, textile industry 38.6 per cent, knitted wear industry 39.4 per cent, clothing industry 41.7 per cent and furniture industry 40.2 per cent.
What would be the consequences if the other provinces did not cut their taxes on these products? The crippling attitude of Quebec finance minister Parizeau might very well balkanize the provinces. There are other products which are made in Quebec and on which there is absolutely no sales tax cut. I have in mind the refrigerator and range industries in l'As-somption which are providing jobs to some 400 people. In the area of electric lamps, Westinghouse is providing jobs to 600 people in Trois-Rivieres. I have also in mind sporting goods and cooking ware industries in Cowansville, Cookshire, Drum-mondville, and trailer manufacturers in Cookshire, and many other firms which are being penalized because they cannot cut the sales tax by the amount suggested in Mr. Parizeau's budget. I am also thinking of electric controls in Granby and cars in Sainte-Therese, with some 3,000 people employed, near my riding. It seems to me that these figures should matter to us, that Quebec also benefits from some products, and that several of the sectors which were meant to be protected were already protected by a number of measures to which I will now refer.
In light of those statistics and the request of representatives of various economic sectors, the Chretien budget was definitely a necessity. But the situation deteriorated after Quebec finance minister Parizeau refused the Chretien proposal for reducing the sales tax across the board and suggested instead that the cut apply only to furniture, clothing and textiles. I must say, Mr. Speaker, that I was very disappointed with minister Parizeau who, instead of congratulating the Minister of Finance (Mr. Chretien) for having consulted the provinces before preparing his budget, accused him of interfering with provincial budgets.
Mr. Speaker, that is an opinion to which I have given a lot of thought. I am a Quebecker, I was born in Quebec, and I find that language problems are not the only source of confrontation between Canadians: there are also problems of power. Cultural, social and economic problems become political as soon as one wonders which government has authority to solve them. That may be even truer in Quebec. The problem of the sharing of powers is fundamental to any given society. The
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political aspect is important but basically sharing of power is much more important, more dramatic than sharing of powers.
Mr. Parizeau's refusal to co-operate in economic matters was given support by several provincial groups of constitutional experts that are less competent in the economic and financial field than the organizations which 1 referred to at the outset of my speech. And yet, being an economist, Mr. Pari-zeau must know that the economy of any country cannot be dissociated and that it is a joint responsibility of the federal government and the provinces to stimulate the economy by appropriate measures.
It is obvious that the sales tax comes under provincial jurisdiction. Some people are still pointing that out as if the Minister of Finance was not even aware of it. That is precisely why he spent three weeks negotiating with the provinces and that eight out of ten agreed because he knew perfectly well it was a provincial jurisdiction. The sales tax does belong to the provinces but they are not losing anything because the federal government is prepared to pay two thirds of the total cost of the proposed reduction. General reduction of the sales tax on all products in all provinces should increase demand for consumer goods. We should recall that in his budget of April 1975 Ontario finance minister McKeough allowed a 2 per cent sales tax reduction until December of the same year.
Retail sales in Ontario had increased by 14 per cent in that year, i.e. 2 per cent over and above the Canadian average. All the stores have shown a certain amount of prosperity with increased sales of goods. The Chretien proposal has seemed so interesting for the Quebec government which had identified itself a few months ago with levying tax on children's clothing and shoes that today, being conscious of their error, they have taken through their minister Parizeau this opportunity to exempt clothing, shoes and even furniture. And the federal tax on children's clothing had been completely removed at the wholesaler's level three years ago. The imagination of finance minister Parizeau had been involved to a greater extent in the levying of taxes on children's clothing and shoes than with any reduction of sales tax. Has minister Chretien's proposal led minister Parizeau to think about removing that sales tax that he had himself initiated for Quebeckers?
Given its economic objective, the Canadian government has committed itself along with the provinces to overcoming unemployment, creating jobs and straightening out the economy all across Canada. They therefore suggested to the Canadian provinces a reduction in consumer sales tax for all manufactured goods sold by any busines or store, for any retail sale. Recently, I met a group of manufacturers, at an exhibition held in Quebec. Naturally, I was asked what was my reaction, my attitude to the Parizeau proposal as against the Chretien budget? They were manufacturers at an exhibition. I told them: "I will reply by asking you a question. You will then say that it is the way a politician answers but I would rather be a political man of action than be called a politician." I asked
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how many of the 126 participants in this exhibition were displaying footwear and clothes? Not a single one. This means that none of those manufacturers could benefit from the sales tax reduction, because Mr. Parizeau has decided to act on a selective basis rather than reduce the sales tax on all manufactured goods. I think that this somehow describes the situation of our industries in Quebec. They are being penalized by the action of Mr. Parizeau.
Alberta-a province that has no retail sales tax, and one of the three Canadian provinces contributing to equalization payments, which Quebec will receive this year to the tune of $1,350 billion, that is, 45 per cent of the total amount- accepted the Chretien proposal, and not necessarily to benefit from it, because there is no sales tax in Alberta, without receiving the contribution of the Canadian government. That participation, it seems to me, which amounts to $186 million in Quebec, is precisely the federal contribution for the 2 per cent cut in the retail sales tax.
It is unfortunate that millions of Quebec consumers, thousands of Quebec manufacturers, and hundreds of Quebec businessmen and dealers should be penalized because of the attitude of minister Parizeau who restricts the tax cut to textiles, clothing and shoes. I checked whether sheets made in the Eastern Townships, sheets and pillow cases made in Quebec would be tax free, and found they would not. The reason why the sales tax applies is that the goods covered by the Parizeau budget include only yard goods and not sheets, pillow cases and things like that. Yet, all goods imported from Taiwan and manufactured abroad will not be taxed. So, I feel it is unfortunate that millions of consumers, manufacturers and dealers in Quebec should be penalized because of that decision.
The implementation of selective tax cuts will not be an easy matter. It is not easy to monitor retail stores nowadays, shops which sell combs, dishes, tires, paint, electric appliances, and even sweaters imported from Taiwan. The Chretien formula cut the sales tax on all the products sold. The Chretien formula applied to all products; it is much simpler and much more direct for all consumers, including those who have no taxable income, which means those who do not pay income tax.
If we changed the formula, it is because of Mr. Parizeau's refusal. It is rather the formula of the Quebec finance minister, a tax measure, which balkanizes the Quebec industry. This late proposal by Mr. Parizeau, being discriminatory, could result in a balkanization of the Canadian economy, it could paralyze the retail sales industry and penalize the consumers in Quebec. I think a responsible government which wants to negotiate an association with the other provinces of Canada should act in a less selfish, not to say in a less separatist manner.
I hope that during this debate we shall make the people in Quebec realize what this dispute means and how important it

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is that the Government of Canada develop with the provinces a sound climate of co-operation, if we want to solve together the economic problems in the country and continue to improve the situation of the population which should not be penalized by this dispute. Let us stop bringing politics into the economy, because in so doing, we distort the mechanisms at the expense of all taxpayers, both in the business world, in industry and for the consumers.


Mr. Gordon Ritchie (Dauphin):: Mr. Speaker, in rising to speak on Bill C-56 I would like to put on record some of my reservations about the way the minister has handled the provincial tax situation. First, although our expenditures are some $45 billion, with an $11.5 billion deficit, the minister and the government have shown their ineptitude by getting involved in a measure that has only created confusion and consternation. It is doing nobody any good, while the country suffers. I do not disagree but that it is a reasonable tax change as regards sales tax if it could be administered easily, but in our complex federal system it is obvious from the beginning that it was a maze of contradictions, difficult to administer and still more difficult to institute.
The previous member spoke of economists and businesses and suggested that this sales tax abatement is a good idea. I agree, but not in our complex federal system. Furthermore, many of the negotiations seem to have been by telephone and, unless they are recorded, there is no record but merely the verbal recall of the Minister of Finance (Mr. Chretien) of the various provinces.
This is interesting because the Prime Minister (Mr. Trudeau) and the Minister of Finance suggested they had long consultations with the four western premiers and with Mr. Parizeau. However, these gentlemen generally denied there were any great consultations. In the case of Manitoba, they were more or less told, rather than there being negotiations.
Given the situation in Quebec, Mr. Parizeau has roundly outfoxed the Minister of Finance, and the federal government will be putting up some $ 140 million more money from general revenues, according to my calculation, than what it would have if the government had followed the same course with Quebec as it has followed with Ontario, Manitoba, Saskatchewan, and British Columbia, the so-called provinces that have economic stability. The dilemma of the government can be best summarized by the editorial in the Globe and Mail of May 18, and I quote:
The federal government has done what nobody thought could be done. It has united the Quebec National Assembly. It has induced all members of all parties in that assembly to denounce as "totally unacceptable" the federal response to the Quebec government's refusal to cut its sales tax to fit federal demands. It has produced a unanimous request from the assembly to members of all parties in parliament, including members of the Liberal party, to oppose the federal legislation which would grant tax rebates to Quebec taxpayers in place of the across-the-board cut in provincial sales tax which the Quebec government has refused to make.
Even Prime Minister Pierre Trudeau virtually admitted that his government was in the wrong. "The federal government" he told the House, "should not use

tax leverage over the provinces to force a province to do certain things." He tried to contend that Mr. Chretien had not done such a thing because he had consulted the provinces for three weeks before he brought in his budget which guaranteed that Ottawa would pick up two-thirds of the cost of a temporary across-the-board reduction in sales taxes if the provinces would pick up the other one-third.
Yet on budget night Mr. Chretien himself admitted that Quebec had not agreed to the deal. And Quebec did not agree to the deal. It decided instead to eliminate the sales tax entirely on certain items that are chiefly produced in Quebec, thus providing maximum stimulation to the Quebec economy. That was within its right.
In the Montreal Gazette of May 18 we have what I think is a very good account of the problems of the Minister of Finance in dealing with Mr. Parizeau. It had always been my impression that the Minister of Finance had the tacit approval of Mr. Parizeau when he introduced the controversial sales tax measure. But instead, he, Mr. Parizeau, did something entirely different than what the rest of the nine provinces have done.
In effect, the provinces of the rest of Canada, where they have sales taxes, reduced their sales tax by 3 per cent. This, in effect, helped the manufacturing industry mainly in Canada rather than any specific region, and I think it allowed the province of Quebec, more than any other, relative advantage.
According to Mr. Cam Nappi of the University of Montreal, as recorded in the Gazette of May 17, Quebec manufacturers would lose 30 per cent of their existing market while manufacturers in the rest of the country would lose only 10 per cent of their existing market. This heavy dependence of Quebec manufacturers on the rest of the country is because of two things. The rest of the country represents a larger market than Quebec alone, but it also means Quebec is more heavily depending on markets in other parts of the country than any of the other four regions in Canada. He went on to state that although statistics of interprovincial trade are incomplete, Quebec is, and I quote:
-the only region for which the Canadian market is more important than the international market.
Fifty six per cent of Quebec exports go elsewhere in Canada while 44 per cent go to other countries. He estimates that Quebec manufacturing exports over 100,000 Quebec jobs to Ontario while Ontario exports to Quebec about the same number of jobs. Canadian tariff barriers have strongly benefited Quebec manufacturers because industry in that province is concentrated in sectors protected by the highest tariff walls. Exports from Quebec to other provinces are protected by tariffs averaging 9.9 per cent, exports from Ontario averaging 8.4 per cent, and those from other provinces averaging 7.8 per cent.
By the Quebec action of the selective tariff cuts, they have in fact benefited most industries concentrated in those provinces, but the exports of Quebec manufactured goods will benefit from the reduced sales tax in all other parts of the country that have taken up the federal offer.
There has been complaining by the provincial premiers of Manitoba, Saskatchewan, and British Columbia that there was not enough consultation, and that now a new ballgame has developed that is inimical to their interests. I certainly agree, but I wonder why the provincial governments were hood-
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winked into agreeing with the Minister of Finance when he invaded their provincial jurisdictions on this short term episode.
Provincial jurisdictions have been invaded in the past through unemployment insurance, old age pensions, health and welfare programs forced on the provinces by the federal government and too expensive for efficient running of these programs. I might add that I believe one of the problems of disunity in this country is the fact that in the last 25 years the federal government has invaded provincial jurisdiction through massive health and welfare programs. This has caused much disunity in this country.
It is folly for the Minister of Finance to invade once again provincial jurisdiction without having very clear outlines as to what was at stake. He has done confederation a great disservice. His complaint in the budget speech that the federal government was losing control of the fiscal responsibility is not quite true. He points out that in 1945 the provincial sector had only 30 per cent of total government revenues whereas it now is 60 per cent. He further states that the provincial and municipal sector actually holds a larger share of total government revenues than does the federal government. But this argument is falacious because most of the increase in terms of percentages has been in the fields of health, welfare and education; in the last 20 years provincial governments have taken over from private plans, and the financing of these very expensive programs has fallen on the provincial governments instead of upon individuals. Some 60 per cent or more of provincial revenues are spent in the health field so the argument put forward by the minister is not valid.
I turn, now to the complex question of cash rebates to the citizens of Quebec. I can understand the contention of the Prime Minister that in the absence of a tax arrangement with Quebec the rebate must be different. But the decision to give a cash rebate to citizens of Quebec in the next few weeks smacks of political opportunism. In Manitoba, when income tax forms are made out in 1979 for 1978 tax, there will be a box in which citizens of that province will be able to claim a rebate of $100 on their 1978 tax from the federal government and, correspondingly, this amount will be taken up by the $100 recovery tax on the provincial side. Why does the federal goverment not reduce the $100 or its equivalent, $85 or whatever it is, on the tax returns for 1978 to be filed in Quebec next year? This would bring them in line with the other provinces.
The Minister of Finance accused Mr. Parizeau of bad taste. But in the matter of payment to Quebeckers it seems to me the Minister of Finance is just as guilty. Cash payments to Quebeckers will induce them to feel they should vote for the Liberal administration in October, if there is an election, and presumably, also, with the referendum coming up in Quebec, citizens of that province will look to Ottawa as a benevolent institution giving them payments they would not otherwise receive.
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This must explain Mr. Parizeau's objection, because obviously the total economy of Quebec gains relatively more than the rest of the country. Mr. Parizeau has made selective tax cuts which will presumably effectively minimize the benefits to goods produced in the rest of the country and also to imports which in our financial position is its only saving grace. But Quebec industry will be able to benefit from the tax cuts in all the other parts of the country and their industries should get a relatively greater improvement than industry in other parts of the country.
Now what about the selective tax cuts? In these the federal government has assumed, I believe, that at 3 per cent applied across the board in Quebec as in other provinces they would have cost the Quebec treasury some $330 million, assuming the estimates given are correct, and I would assume that they are probably rough in nature. However, the selective tax cuts will presumably diminish the Quebec treasury by only some $120 million during the six months that the federal plan remains in force, so that the federal government says that it must make up $220 million to be even with the other provinces. Having allowed a $40 million credit for the selective tax cuts, the federal government proposes to pay $186 million to the citizens of Quebec. Assuming that all citizens of Canada paid approximately the same federal tax, the citizens of Quebec would have paid in some 25 per cent of $186 million, or some $45 million.
In the other provinces such as Ontario and Manitoba the provincial treasurers gave up 3 per cent of their sales tax income with 2 per cent reimbursed by their own citizens through the abatement of the federal tax system, and in the province of Quebec the provincial treasurer should have given up $330 million, as I understand the minister's calculations but, in fact, they are only giving up some $120 million, at least for the lifetime of the six months' agreement.
Now, Mr. Speaker, I submit that the rest of Canada is putting up some $140 million through the cash rebates to Quebec citizens over and above what the Quebec people themselves paid to the federal tax. It should be understood that during the lifetime of the agreement of six months, which is the only thing we are talking about, the provincial treasury of Quebec will not lose nearly the revenue that they would have under the across the board 3 per cent reduction. This represents a transfer from one portion of the country to the Quebec economy and a form presumably of equalization. I do not necessarily disagree with this but I should recognize it is a form of equalization payment.
I do not disagree one whit with the right of Quebec to impose selective tax cuts, but it is probably wrong to extend some form of federal subsidy hidden under the guise of sales tax rebates. I think it would have been better to allow the tax reduction to the Quebec taxpayer at the time he Filed his

May 24, 1978
Income Tax Act
income tax return for 1978. Taxation would have fallen more evenly across the country.
One of our taxation problems in this country is that justice must be seen to be done, it must not only be done. When taxpayers in different parts of the country are taxed differently-


The Acting Speaker (Mr. Ethier):: Order. It being six o'clock this House stands adjourned until tomorrow at 2 p.m., pursuant to Standing Order 2(4).
At six o'clock the House adjourned, without question put, pursuant to Standing Order.

Thursday, May 25, 1978