1978-05-16

ROUTINE PROCEEDINGS


Mr. Paul Yewchuk (Athabasca):: Mr. Speaker, I rise under the provisions of Standing Order 43 on a matter of urgency which affects the future of vaccine production in emergency epidemic situations in this country.
In view of the fact that Connaught laboratories supplied the Department of National Health and Welfare with 12 million doses of swine influenza vaccine during the expected countrywide influenza epidemic in 1976, and in view of the fact that the Department of National Health and Welfare now refuses to pay for the final two million doses of influenza serum and is facing a lawsuit by Connaught Laboratories for a claim of $2.5 million, plus interest, I move, seconded by the hon. member for Simcoe North (Mr. Rynard):
That the Minister of National Health and Welfare make a statement on motions to explain why her department refuses to pay Connaught Laboratories for the two million doses of vaccine, and in not doing so has broken a link of mutual trust with a vital source of vaccine and is thereby endangering the lives of Canadians in the event of another national epidemic emergency.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


FINANCE
Mr. Roch La Salle (Joliette):: Mr. Speaker, under the provisions of Standing Order 43, I ask for the unanimous consent of the House to move a motion dealing with an urgent matter.
Considering that the bill introduced by the Minister of Finance (Mr. Chretien) concerning the refund of the $186 million owed by the federal government to the lawful Quebec government is an arbitrary gesture, a dangerous precedent and a constitutional hurdle; considering that the suggested formula ignores the unanimous desire voiced by all parties at the provincial legislature and the wish expressed by leaders to hold direct negotiations between governments; considering that the bill would frustrate over 300,000 citizens of that province who do not pay any federal tax and consequently will not get any compensation to which they are as much entitled as are all other Quebec and Canadian taxpayers, 1 moved, seconded by the hon. member for Brome-Missisquoi (Mr. Grafftey):
That the House unanimously urge the Minister of Finance (Mr. Chretien) to withdraw immediately that unfair bill which does not meet the objectives aimed at in his budget and could forever jeopardize relations between Ottawa and Quebec.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


CORPORATE AFFAIRS
Mr. Edward Broadbent (Oshawa-Whitby):: Mr. Speaker, I rise under the provisions of Standing Order 43 to move a motion of urgent and pressing necessity. In view of the fact that the report of the Royal Commission on Corporate Concentration constitutes a $3 million whitewash of the problems associated with the concentration of corporate power, problems which have now been recognized by most other industrial countries, I move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That this House urges the government to consider seriously applying the Minister of Transport's user-pay principle and regain from large corporations in Canada the $3 million misspent in producing this slick advertising propoganda on their behalf.


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

May 16, 1978


Some hon. Members:: Agreed.


Some hon. Members:: No.


FINANCE
Mr. Ray Hnatyshyn (Saskatoon-Biggar):: Mr. Speaker, I rise on a matter of urgent and pressing necessity under the provisions of Standing Order 43. Whereas the people of Canada have a right to know the true rate of inflation in Canada, and whereas the government appears to be hiding behind a temporary artificial drop in the consumer price index, I move, seconded by the hon. member for St. John's East (Mr. McGrath):
That this House request that the Minister of Industry, Trade and Commerce direct Statistics Canada to publish data showing the rate of inflation without the sales tax cuts, which is the rate voters will experience after the fall election.


Mr. Speaker:: Presentation of this motion for debate would require the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


REQUEST MINISTERS DELIVER SALES TAX CHEQUES TO QUEBECKERS-MOTION UNDER S.O. 43
Mr. Lome Nystrom (Yorkton-Melville):: Mr. Speaker, I rise under Standing Order 43 and request the unanimous consent of the House to discuss a motion relating to a matter of pressing necessity.
Given the unbelievable decision taken yesterday by the Minister of Finance (Mr. Chretien) in what we might call the sales tax affair, I move, seconded by the hon. member for Nickel Belt (Mr. Rodriguez):
That the House ask the Minister of Finance, the Minister of State for Urban Affairs and the Minister of State for Federal-Provincial Relations to go in person and give each Quebec resident his cheque. While so doing, they might seize that opportunity of trying to explain to the people of Quebec the tact and the intelligence of the federal Liberals.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


NATIONAL SECURITY
Mr. Tom Cossitt (Leeds):: Mr. Speaker, I rise on a matter of urgent necessity.


Some hon. Members:: No.


Thomas Charles Cossitt: It pertains to an organization known as the Centre for Experimental Art and Communications, 15 Duncan Street, Toronto, the publishers of a monthly news magazine entitled "Strike". Its current issue reads in part:
In the manner of the Red Brigades, we support leg shooting/knee capping to accelerate the demise of the old system.
I move, seconded by the hon. member for Central Nova (Mr. MacKay):
That the Prime Minister make a full statement concerning sizeable federal government grants to this organization in the amount of many thousands of dollars, including Canada Council grants of $29,000 in 1975-76 and $47,200 in 1976-77, that he make public the amount of travel grants given to this organization and whether our security services are aware if such grants were used by representatives of the group to meet with terrorists abroad and, finally, whether the government is aware that this organization advocating terrorism owns the building at 15 Duncan Street in Toronto where the Liberal party occupies spacious offices.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


ANNUAL INCREASES FOR COMMONS AND LIBRARY STAFF-MOTION UNDER S.O. 43
Mr. John Rodriguez (Nickel Belt):: Mr. Speaker, I rise under the provisions of Standing Order 43 to ask the unanimous consent of the House to deal with a matter of urgent and pressing necessity. In view of the fact that the possibility of a spring or summer election has been the primary excuse for not giving the employees of the House of Commons, members of parliament staff and the library of parliament their annual increases which are now a month and a half overdue, I move, seconded by the hon. member for Yorkton-Melville (Mr. Nystrom):
That this House instruct the government to immediately introduce a 9 per cent wage increase for employees of the House of Commons and library of parliament and to reconsider plans to re-evaluate the work of employees of members of parliament so that they may begin to be paid salaries that reflect the work they do.


Mr. Speaker:: The hon. member for Nickel Belt (Mr. Rodriguez) will realize that pay increases related to the staff
May 16, 1978

of the House of Commons are not at all the responsibility of the government; they are the responsibility of the Speaker.


Some hon. Members:: Oh, oh!


Some hon. Members:: Hear, hear!

[ Translation]


EXTERNAL AFFAIRS
Mr. Claude-Andre Lachance (Lafontaine-Rosemont):: Mr. Speaker, I rise under the provisions of Standing Order 43 to ask for the unanimous consent of the House to move a motion about a matter whose urgency will be obvious to everyone.
Given the fact that with the opening of the trial in the Soviet Union of physicist Yuri Orlov who is accused by Soviet authorities of having established a group to observe the implementation in Soviet territory of the provisions contained in the Helsinki agreement and to report abroad violations of human rights in that country, Dr. Orlov does not seem to enjoy in the course of that trial minimum legal guarantees, that he has been refused the right to present a full and complete defence, that access to the court has been denied to foreign journalists and that clearly he will not have a fair and just trial, I move, seconded by the hon. member for Maisonneuve-Rosemont (Mr. Joyal):
That this House urge the Secretary of State for External Affairs (Mr. Jamieson) to express to Soviet authorities the concern of the Canadian government and people about what appears to be another violation of human rights in the Soviet Union.


Mr. Speaker:: The House has heard the terms of the hon. member's motion. Under the provisions of Standing Order 43, that motion requires unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


INDUSTRY
Mr. Elmer M. MacKay (Central Nova):: Mr. Speaker, I rise on a matter of urgent and pressing necessity under Standing Order 43. Since two key industries in Nova Scotia, Hawker Siddeley and Michelin Tire, continue to be adversely affected by legislation and unfair competition from abroad, in the case of Hawker Siddeley by unfair competition from Japan and the EEC and in the case of Michelin Tire by discriminatory
Oral Questions
countervailing duties initiated by the United States, I move, seconded by the hon. member for St. John's West (Mr. Crosbie):
That appropriate members of cabinet immediately explore measures to counter these adverse conditions which could affect many hundreds of jobs by instituting high-level negotiations in particular with the United States, the United Kingdom and Japan.


Mr. Speaker:: Presentation of such a motion for debate at this time, pursuant to Standing Order 43, requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


ANNUAL INCREASES FOR COMMONS AND LIBRARY STAFF
Mr. Speaker:: Before beginning the oral question period, and arising out of the motion put forward by the hon. member for Nickel Belt (Mr. Rodriguez), I would like to address the House regarding pay increases for the staff. There has been concern expressed a number of times by members on both sides of the House about the progress of the salary arrangements for this fiscal year for staff members of the House of Commons.
I would like to indicate to the House that the matter has been under very diligent consideration on my part and on the part of the Commissioners of Internal Economy. We have shared responsibilities in this respect. On my part it is to represent the interests of the staff of the House of Commons, and on the part of the commissioners, of course, it is to represent the expenditure side of the ledger. We have undergone considerable review and re-examination of several proposals. We are not delaying the matter but are simply endeavouring to come to a consensus, which we hope to be in a position to announce very soon.



ORAL QUESTION PERIOD


Mr. Joe Clark (Leader of the Opposition):: Mr. Speaker, my question is to the Minister of Finance. It concerns the government's latest variant in the sales tax proposal as it applies to the province of Quebec, a proposal that is not equitable as it concerns the people nor as it concerns the provinces.

May 16, 1978
Oral Questions
Could the Minister of Finance advise this House of Commons whether he or his officials denied the request of at least one other province that it vary the federal sales tax proposal by using the money from their one point of sales tax to finance job creation programs? If they did deny that to one other province, will that denial stand in light of legislation introduced by the minister, and will the government open alternatives for variance of the sales tax proposal to other provinces?


Hon. Jean Chretien (Minister of Finance):: Mr. Speaker, there was, during the discussions, a proposition made by the provinces. Some wanted many ways to operate that. I think there was some suggestion of that nature. 1 discussed with my colleagues what could be done and how we could make it as flexible as possible. Of course, we have not accepted the proposition that the money could be applied to other things than sales tax.


Charles Joseph Clark: A supplementary question, Mr. Speaker. I want to be clear on this. The government's proposal is to make an exception in the application of that proposal as it applies to Quebec but to deny that exception to other provinces. I understand that to be what the Minister of Finance just said.
I want to get to the equity of this proposal as it deals with individuals. It is clear that what the government is proposing is a bonus to the rich: it proposes to pay $85 to Quebeckers like the Prime Minister, like Senator Giguere, like Bud Drury, but to deny it to the 2.2 million Quebeckers who are now of working age but who last year did not pay federal income tax in the province of Quebec.
Will the Minister of Finance tell us why he is denying aid to low income Quebeckers who would have been aided by a reduction in sales tax on those commodities for which they pay as the rich pay but for which they have more need?


Some hon. Members:: Hear, hear!


Joseph Jacques Jean Chrétien: Mr. Speaker, I think the hon. member does not comprehend very well what we have done.


An hon. Member:: Nobody does.


Some hon. Members:: Hear, hear!


Joseph Jacques Jean Chrétien: In Ontario and in all the provinces, what we have done-and it can be found in the budget speech-is reduce the income tax of every taxpayer in all provinces but Quebec by $100. Every province in the agreement has raised its own income tax by $100, and with the proceeds of that money they have decided to reduce the sales tax.
The government of Quebec has not agreed to reduce the sales tax across the board, so we have decided to carry out our commitment as much as we can in paying the $40 million that goes to the items they have cut. If the Quebec government and the Leader of the Opposition would like to be fair to everybody, they should have been on my side when I said to Quebec

that they could cut the sales tax to everybody on all items so that the poor would have the money.


Some hon. Members:: Hear, hear!


Joseph Jacques Jean Chrétien: On top of all that, with the way Quebec has cut its taxes, and when talking about the rich, if a rich man goes into a store in Quebec today and buys his wife a fur coat at $10,000, he will have a tax reduction of $800. If another rich person goes in a store in Montreal to buy furniture coming from France, like the Roche-Bobois type, and pays $10,000 for it, he will get an $800 break. The best way for all the people would have been for the government to do the sensible thing that the other provinces did and cut the sales tax across the board for everybody.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: Mr. Speaker, the Minister of Finance should stop worrying about buying fur coats and address himself to the question of why his government is proposing a measure that clearly penalizes the poor in two ways: first, by ignoring some 2.2 million Quebeckers who would have been able to take advantage of sales tax cuts as proposed by the government of Quebec and, second, by introducing a sliding-scale arrangement.
Our estimates show that there are some 150,000 Quebeckers who in the 1977 tax year paid less than $85 in income tax. Consequently, they will be receiving less than $85 through this arrangement-less than the rich in terms of the benefits of this proposal. Why did the Minister of Finance not introduce some measure, if he intended going to this extreme, that was more equitable than giving more to the rich and less to the poor, as he is proposing in this measure?
[Translation\


Joseph Jacques Jean Chrétien: Mr. Speaker, I shall have to explain again to the hon. member what we are in fact doing in our budget. What we did is that we have reduced the income tax in all provinces in a fair way, which means we have reduced the income tax by $100 in Ontario, in Manitoba, in Saskatchewan, in British Columbia or in the Maritimes; on the other hand, the provincial governments have raised their income tax, and as we levy taxes for both levels of government, we have offered Quebec $85 in the same manner. If Mr. Parizeau wants to increase his income tax or other taxes, he can do so, except that we do not levy taxes for the provincial government; this is why we passed the reduction directly on to the individuals. We did it in such a way that we have vacated a field which the government of Quebec can take over if they wish but they cannot get benefits from both sides, which means they cannot increase their taxes and receive a benefit which the other provinces did not receive. As a matter of fact, the other provinces had to raise their income tax, and Mr. Parizeau can do the same thing. We have simply left one tax field.
May 16, 1978


Charles Joseph Clark: May I ask one further simple question of the Minister of Finance? Since we have now been assured by the Prime Minister that there was never any intention to call an election and that there was never any urgency, consequently, to bring in a budget, why did the Minister of Finance not avoid all of this problem? Why did he not secure the absolute agreement of all the provinces before he proceeded with an act that involved an intrusion into provincial jurisdiction?


Joseph Jacques Jean Chrétien: Mr. Speaker, for the first time I, the Minister of Finance of the land, took the time to visit the provincial ministers of finance and discuss this proposition.


An hon. Member:: And you messed it all up.


Joseph Jacques Jean Chrétien: It is beyond me to listen to the Leader of the Opposition who for weeks and months was asking me when we would have a budget, and today he gets up and says we were too early with the budget.


Charles Joseph Clark: I said you are incompetent.


Joseph Jacques Jean Chrétien: In a nutshell, I want to say that what we have done for Quebec in reducing federal income tax is the same thing that we have done for the other provinces.


Some hon. Members:: Hear, hear!


PAYMENT OF INCOME TAX REBATES
Miss Flora MacDonald (Kingston and the Islands):: Mr. Speaker, my question is also to the Minister of Finance. I want to refer him to a statement made by the Prime Minister at the December, 1969, constitutional conference regarding the rationale for direct payments through income tax rebates by the federal government to individuals. The Prime Minister said:
Within each province where the scheme applies, there is going to be a redistribution of benefits and certainly we are going to tax all rich Canadians, no matter where they are, a little more to help the less rich Canadians-
I would like to ask the Minister of Finance how he is going to explain to those 2.2 million poor people in the province of Quebec who are at the lower end of the income scale how the federal government can justify paying a rebate to those in the higher income levels, reversing what the Prime Minister said would be the rationale for this type of payment back in 1969?


Joseph Jacques Jean Chrétien: Mr. Speaker, 1 am doing exactly the same thing for Quebec as I have done for the other provinces. I have reduced the income tax of the federal taxpayers. That is exactly what I am doing in Quebec with the balance of the money that the Quebec government did not want to use to cut sales tax. I think it is very clear what we are doing. There is no difference in treatment between Quebec and the other provinces. We have cut income tax in the federal budget for the citizens of all provinces and the provinces raised their own income tax by the equivalent amount of money.
Oral Questions


Flora Isabel MacDonald: Mr. Speaker, once again referring to the 1969 statements of the Prime Minister which seem to have been so reversed now, when referring to the spending power and payments to persons and institutions at that time the Prime Minister said:
It is not possible to enter into a discussion of this particular proposition without considering the whole of the structure of Canadian federalism-
Now that the Minister of Finance has taken the country into an era of balkanized federalism and established a very dangerous precedent in what is going on, why has the government decided to endanger the very basis of our federal system by choosing a method of payment which bypasses the provincial governments and which the government at one time considered should only be proceeded with in a review of the whole structure of federalism?


Joseph Jacques Jean Chrétien: Mr. Speaker, 1 made exactly the same offer to the Quebec government as I made to the other provinces at the time of the budget. It is not me; it is the Quebec government which decided to balkanize the country in proceeding the way they have.


Some hon. Members:: Hear, hear!


Joseph Jacques Jean Chrétien: After I made the offer there was no way I could go back to the other provinces and offer the same deal, because I wanted to be fair to everybody. For example, the citizens of Ontario would like to see the automobile tax cut; however, that would not have been agreeable to British Columbia because they are more interested in building materials. The ones who are trying to divide this country are the Parti Quebecois in their manoeuvring. I am surprised that a national party wants to save the neck of the Parti Quebecois.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


THE CANADIAN ECONOMY
John Edward Broadbent: Mr. Speaker, when the Minister of Finance has no other argument, he hides behind the Canadian flag.
I have a question for the Prime Minister. The Royal commission on the effects of corporate concentration having wasted $3 million of taxpayers' money on behalf of Argus, Power Corporation and the like, I would like to ask a question on this important subject which we thought would be dealt with by the royal commission. When the Prime Minister cancelled plans for a summer election, he said he wanted co-operation on measures to deal with the Canadian economy. The Royal commission said nothing about the serious effects of multinationals like Inco setting their own priorities: having

May 16, 1978
Oral Questions
the exclusive right, for example, to invest millions abroad precisely at the time we need such investment to create jobs here in Canada.
Will the government in the next few weeks bring in legislation similar to what has been done in most other industrial countries, which will give the Government of Canada authority to enter into long-range planning agreements with such corporations to ensure that when decisions like that are made by Inco to invest abroad, the public, through the Government of Canada, will have a crucial say in such decisions?


Right Hon. P. E. Trudeau (Prime Minister):: Mr. Speaker, the leader of the New Democratic Party is making light of a report by the Royal commission with which he does not happen to agree. The position of the government is that this Royal commission researched into a very difficult and complex subject. They came up with many recommendations, some of which are liable to be accepted by the government and some of which are not liable to be accepted by the government.
However, we will not, as the leader of the New Democratic Party does, let our prejudices speak for an intelligent judgment on it. We will study it and the Department of Consumer and Corporate Affairs will make a report to cabinet on it.


John Edward Broadbent: I wish the Prime Minister would at least pay members of the House the courtesy of listening to the questions. I simply said the Royal commission did not deal with that issue. I pointed out that Canadians are losing thousands of jobs because multinationals in this country, unlike most other countries, have the unilateral right to transfer funds out of the country. Will the government of this country, like most other countries in Western Europe, and Japan, bring in legislation which will give it some authority to play a role in this decision-making process? 1 would like the Prime Minister to reconsider and answer that question.
I will ask a related question. Another area that was neglected by the Royal commission was the right of the banks, for example, to set their own investment priorities. In particular, considering the kind of decision that was made by the Royal Bank of Canada at the time, which was to give Power Corporation $150 million to buy Argus-which would have created no new jobs and would only have resulted in the concentration of more power-will the government bring in legislation similar to that which exists in other countries in order to give the Government of Canada a role to play in major investment decisions affecting the economy?


Pierre Elliott Trudeau: Mr. Speaker, the second question was a variation of the first. The hon. member uses the fact that he does not agree with the Royal commission report as a pretext for making a certain number of representations to the government. I will note those representations.


John Edward Broadbent: Mr. Speaker, in 1975, as a result of questions I asked, the Prime Minister set up this silly Royal commission and we have seen where it has got us after three
{Mr. Broadbent.]
years. Bearing in mind that he has asked for co-operation from this side of the House in the coming months to deal with serious legislation, allegedly to find jobs for Canadians who need them, can he tell the House what plans he has to bring in legislation either in the short-term or the medium-term which will effectively come to grips with the shortcomings of the Canadian economy?


Pierre Elliott Trudeau: Yes, Mr. Speaker. We shall be announcing such legislation very soon.


John Edward Broadbent: After ten years!


FINANCE
Mr. Gilles Caouette (Temiscamingue):: Mr. Speaker, my question is directed to the Minister of Finance. Since we have been informed today that the generous handouts of the federal government in the sales tax field were made at the expense of the provinces and that they have been forced to increase their taxes by $100, we can appreciate the attitude of the government and its sincerity in helping people. Considering that the Quebec minister of finance has decided to help productive sectors with this tax reduction, that is furniture, textiles and footwear, and that the province of Quebec had every right to use these funds as it saw fit, what does the minister propose to do to respect those decisions and to give to everybody equal opportunities of obtaining his fair share of the refund made by the federal government and not only to those who file a federal income return?


Joseph Jacques Jean Chrétien: Mr. Speaker, we have made the same proposal to Quebec as to other provinces. The federal transfer of funds has been made through a federal income tax reduction and provinces other than Quebec have increased their income taxes accordingly. As for the benefit they have obtained, they applied it to all items covered by the sales tax. It was up to the Quebec government, if it wanted all taxpayers to take advantage of it, to reduce the sales tax on other items.


Gilles Caouette: I wish to direct a supplementary question.
In view of the fact that the application of the sales tax is not limited only to taxpayers but to the public as a whole, and that the minister was wrong a while ago when he said that Quebec was the only province out of step, is the minister aware that the four western provinces have supported Quebec's claims?


Joseph Jacques Jean Chrétien: Mr. Speaker, I am afraid this is not the right interpretation to give to the statement of the western prov-
May 16, 1978

inces. As a matter of fact, a number of provinces have not supported Quebec's decision to cut off this tax unilaterally, and all the ministers of finance have indicated to me when I talked to them how disappointed they are that Quebec has refused to co-operate in this matter as they did among themselves.


THE CANADIAN ECONOMY
Mr. Sinclair Stevens (York-Simcoe):: Mr. Speaker, my question is for the Minister of Finance. Now that the Statistics Canada figures with respect to inflation have been made public, indicating that when the provincial sales tax figures are added back in, the inflation level in Canada in the past year has been 9.1 per cent, would the right hon. gentleman tell us whether Governor Bouey of the Bank of Canada was expressing government policy today when he said the falling dollar was contributing to inflationary pressures, and that whatever advantage it would give to Canadian exports would be lost if we did not contain the fall-out effect of the devalued dollar on costs and prices?


Joseph Jacques Jean Chrétien: Mr. Speaker, I have not read the speech by the governor of the bank, who agreed to appear before a committee this morning. I will look into that. I think the hon. member should recognize that in the last three weeks the value of the Canadian dollar has increased substantially.


Some hon. Members:: Hear, hear!


Joseph Jacques Jean Chrétien: Perhaps, Mr. Speaker, you should give permission to the hon. member to be away for another week, because when he is not here with his rumours the dollar moves up.


An hon. Member:: Go home.


Sinclair McKnight Stevens: A supplementary to the Minister of Finance, who ignores the fact it was he who triggered the fall in the dollar initially: it would never have fallen so low but for his inept handling. Since the inflation levels now prevalent will be aggravated by the fall in the dollar, and since the governor of the Bank of Canada indicated today that it was "mone>
incomes that are causing the problem" and that "we are paying ourselves too much money", would the minister tell us whether he agrees with the governor that the efforts of wage earners seeking to keep up with inflation will in turn cause more inflation?


Joseph Jacques Jean Chrétien: Mr. Speaker, I have recognized many times that Canadians ir. the last little while have been very responsible on that score. The level of compensation in this country is now more competitive, the dollar is at a more realistic level
Oral Questions
and the economy is gaining greatly. This was evident last month when we saw the biggest ever surplus in our monthly trade balance.


Sinclair McKnight Stevens: Speaking about the competitive balance, particularly between Canadians and Americans, it is generally agreed that the excessive tax rate in Canada is one reason Canadians are tending to demand higher wages. Would the minister tell us, since the Bryce report is suggesting the phasing out of corporate income tax, whether the government plans any review of personal income taxes to ascertain whether there is some way in which they can be lowered?


Joseph Jacques Jean Chrétien: The Prime Minister said earlier we would study the recommendations in the report tabled yesterday. I do not accept the suggestion that the level of taxes is unfair in Canada. The corporate tax rate, for example, is comparable to the American level. As to personal income tax, as I have said on other occasions in this House, we enjoy social services in Canada which are much better than the Americans offer to their citizens.


STATISTICS CANADA
Mr. James A. McGrath (St. John's East):: Mr. Speaker, my question is directed to the Minister of Industry, Trade and Commerce. Can the minister explain why it is that Statistics Canada, notwithstanding the fact that the sample of the consumer price index was made prior to the bringing down of the budget, showed the advantage to the CPI of the reduction of the sales tax even though it became effective after the sample was taken? Perhaps he would assure the House that there has been no interference by himself or by any member of the government with Statistics Canada or the consumer price index.


Hon. Jack H. Horner (Minister of Industry, Trade and Commerce):: Mr. Speaker, I can assure the House there has been no interference with the sampling or with the index. I should also like to tell the hon. member that if the sales tax comes off for half a month, that half month is taken into consideration in computing the index for the whole month.


James Aloysius McGrath: Mr. Speaker, as usual, the minister is uninformed. If that were the case, we would obviously have a far different consumer price index from this one which reports an over-all reduction for the entire month when it should not reflect any reduction at all.
Will the minister give us an assurance that the government will ask Statistics Canada to change the method of calculating the consumer price index so that it will show a more accurate measurement of the cost of living of low income earners, the fastest growing group in the country?

May 16, 1978
Oral Questions


John (Jack) Henry Horner: Mr. Speaker, I disagree with the preamble completely. I might inform the House, also, that Statistics Canada is working on a new formula for the consumer price index which I hope to be able to announce. I might say, also, that we were asked to devise a new formula for the consumer price index by the Premier of Ontario and by the Premier of Alberta at the first ministers' conference, and this was agreed upon by all first ministers at that conference.


James Aloysius McGrath: May I ask the minister if it is the intention of the government to ask Statistics Canada not to proceed with its plan to change the base rate in the consumer price index from the 1971 dollar to the 1974 dollar, which again, of course, will give the false impression that this government has inflation under control?


John (Jack) Henry Horner: I think that today Statistics Canada is using a formula devised in 1969. We intend to update that.


HEALTH AND WELFARE
Mrs. Simma Holt (Vancouver-Kingsway):: Mr. Speaker, my question is for the Minister of National Health and Welfare. In view of the fact that the head of the health protection branch who precipitated the arbitrary and total ban of cycla-mate in the summer of 1970, claiming that cyclamate was carcinogenic, this action causing severe damage to Canadian independent business, and since the same spokesman stated just last week that the great preponderance of world evidence indicates that cyclamate does not produce cancer, would the minister reconsider the competence of that person and the authenticity of his alleged science which led to the current precipitous ban of saccharin, using the identical claim, and even the same words, relative to the cyclamate ban eight years ago?


Some hon. Members:: Hear, hear!


Hon. Monique Begin (Minister of National Health and Welfare):: Mr. Speaker, I know that moving saccharin from grocery store shelves to pharmacies has created some hardship, which we are trying to eliminate as soon as possible by bringing in new artificial sweeteners which are not damaging. I know that it also reopened the whole question of cyclamates, but I should like to confirm to my colleague, as well as to other members of the House, that we review and update scientific knowledge on that subject regularly.
The cyclamates which were used together with saccharin in previous artificial sweeteners and which were thought at that time to be a possible cause of cancer have now been identified as a separate element which does not cause cancer. I think it is unfair to make the assumption she made in the preamble to her question. The state of knowledge in the area is being constantly perfected and, as the government, we must act on

what we know and as everyone would agree we must take a calculated risk in order to protect the health of Canadians.


FINANCE
Mr. Heward Grafftey (Brome-Missisquoi):: Mr. Speaker, my question is directed to the right hon. Prime Minister: it relates specifically to the sales tax matter in general and the province of Quebec in particular. When this matter first came up and our party supported the proposition put forward by the Quebec minister of finance, we were accused of encouraging separatism.
The question I put to the right hon. Prime Minister today is: Why is his government, with one policy for Quebec and another policy for the rest of Canada in reality, encouraging the two solitudes and not only encouraging but practising separatism?


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: Mr. Speaker, in the preamble to his question the hon. member suggests that his party wanted us to follow Mr. Parizeau and give the money to Mr. Parizeau, the finance minister of the province of Quebec. Today we have been hearing a series of questions from the Leader of the Opposition and the hon. member for Kingston and the Islands saying we should give the money to the poor people. Obviously, within a matter of a week the Tory party has flip-flopped. First they want to go to Parizeau and now they want to go to the poor.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: Serge Joyal is not laughing.


Pierre Elliott Trudeau: As to the question itself, Mr. Speaker, about treating the country differently, I repeat what the Minister of Finance said to the Leader of the Opposition. Obviously, the hon. member for Brome-Missisquoi does not understand what is being done. In the case of every province, including the province of Quebec, what this scheme involves is giving tax room to the provinces. We did this in the budget on budget night by giving tax room to every province so that they could occupy that tax room. We have done just the same thing for the province of Quebec. We have given it tax room so it could occupy it. It is the same thing for all the provinces.


Some hon. Members:: Hear, hear!


William Heward Grafftey: I wonder if that includes the province of Alberta.


Some hon. Members:: Oh, oh!
May 16, 1978


SALES TAX COMPENSATION FOR QUEBECKERS NOT FILING INCOME TAX RETURN
William Heward Grafftey: Mr. Speaker, my supplementary question is for the Minister of Finance. In view of the fact that, since he made his statement here yesterday, several members of his party here in Ottawa have indicated that they are against the proposition, including a number of Quebec representatives from the government side-


Some hon. Members:: Give us their names!


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


William Heward Grafftey: Mr. Speaker, in view of the fact that several members from the government side here in Ottawa are against this proposal-


Some hon. Members:: Give us their names!


Mr. Speaker:: Order, please. I was not asking the hon. member to repeat the preamble.


Some hon. Members:: Oh, oh!


Mr. Baker (Grenville-Carleton):: Tell them to keep quiet over there.


Mr. Paproski:: Tell those Liberals to keep quiet. [Translation]


William Heward Grafftey: Considering that only the citizens of the province of Quebec who pay income tax will receive a rebate from the federal government, could the Minister of Finance inform the House today how, specifically, he intends to compensate the poor people of the province of Quebec who do not pay any income tax? Moreover, considering that Mr. Pari-zeau's proposal received the support of all opposition parties in the province of Quebec and several federal members of parliament, will he forget his confrontation policy and accept Quebec's proposal as soon as possible?


Joseph Jacques Jean Chrétien: Mr. Speaker, I am pleased to tell the hon. member that we have offered a taxation field which could be taken over by Quebec, much as we did for the other provinces. The formula used was to cut the federal income tax and allow the provinces to move into this taxation field. Quebec received the same proposal as the other provinces. I do not understand how the hon. member fails to comprehend that aspect. It is obvious to me.
As to the members of my own party who might not have supported this proposal, I wish the hon. member would try to name them.
Oral Questions


ALLEGED INJUSTICE TO QUEBECKERS RESPECTING SALES TAX
Roch La Salle: Mr. Speaker, when I look at the proposal of the Minister of Finance, I see it is true that if ridicule killed, he would not be in the House today.
Here is my question. As, according to the proposed formula, couples where both partners work will normally receive S85 each, while families where only the father works will receive only $85, can the Minister of Finance tell us whether he considers that as an answer to the just society promised by his Prime Minister?


Joseph Jacques Jean Chrétien: Mr. Speaker, when we cut taxes, we cut taxes. The same thing goes for Ontario and the other provinces. We cut the income tax of every taxpayer. The proposal of the hon. member to the House at this point does not hold any water because we did exactly the same thing throughout Canada. We have withdrawn from a field of taxation which the other provinces have taken over without the hue and cry the Quebec government is trying to stir up in an attempt to derive the political advantages the hon. member supports.


Roch La Salle: Mr. Speaker, allow me to remind the Minister of Finance and the Prime Minister that the Quebec Minister of Finance got the support of all opposition parties, as well as that of Mr. Ryan, and the Prime Minister is aware of that.
Here is my question. Since the Minister of Finance intended it as an incentive to industry and since he recognized yesterday that his proposal no longer meets completely his basic objective, I conclude that the Minister of Finance deliberately lied to the Canadian people and, under the circumstances, does the minister-


Mr. Speaker:: Order. If the hon. member has a question, I would ask him to put it immediately.


Roch La Salle: Mr. Speaker, here is my question. The Minister of Finance intended this as a direct incentive to industry. Yesterday, he recognized that his formula was not a direct incentive. So, I conclude that he deliberately lied to the Canadian people, and I ask him to apologize to them.


Joseph Jacques Jean Chrétien: Mr. Speaker, I rise on a question of privilege. I ask the hon. member to withdraw his words because they are unparliamentary. He used the terms "deliberately lied". Such words are unparliamentary and he should withdraw them before I can answer his question.


Mr. Speaker:: Without being able to verify the exact language of the hon. member, my recollection is that what he had accused-

May 16, 1978
Oral Questions


Roch La Salle: That is what I said, Mr. Speaker.


Mr. Speaker:: Order, please. What he did was accuse the hon. minister of directly lying to the population. Whether or not that accusation is made in respect of the House or whether or not it is made in respect of any action on the part of the minister, it seems to me the accusation by one member of another member of a direct lie is unparliamentary and must be withdrawn.


Some hon. Members:: Three o'clock.


Roch La Salle: Mr. Speaker, if I understood well, you want me to withdraw. In view of the commitments made by the minister regarding the proposals contained in his budget, and after what he did, I repeat that he is a liar.


Mr. Speaker:: Order, please. Without having an opportunity to examine the record, the question period will not proceed unless and until the hon. member withdraws the remark he has made in respect of an accusation of lying by the minister, if that is in fact what has taken place. If the hon. member did not say what I have accused him of saying, I am prepared to listen to him. However, if he has accused the minister of lying directly, I would expect him to withdraw that. Otherwise, the question period cannot proceed.


Walter David Baker: Mr. Speaker, I rise on what I think amounts to a point of order at this point. It may be something else.


Some hon. Members:: Oh, oh!


Walter David Baker: In Your Honour's initial reaction to what was raised in the House by the Minister of Finance-and I am sure you did it deliberately-you mentioned that perhaps there might be a distinction. Quite frankly, I would like a few moments to consider what Your Honour has said in respect of that distinction. It is now five minutes to three o'clock: I wonder if the matter can wait until three o'clock.


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please. I have not heard from the hon. member for Joliette that he did not accuse the minister of lying directly. If he has accused the minister of lying, I would expect him to withdraw it. If he has not, I would expect him to make representations to that effect now. However, if that has been his accusation, the question period will not proceed unless and until that accusation is withdrawn.


Some hon. Members:: Hear, hear!

[ Translation]


Roch La Salle: Mr. Speaker, I listened attentively to your comments, and with all due respect, I also listened to the statement made by the Minister of Finance, his objectives, and his reaction to the allegations he made against us. We have always concurred in the unanimous stance taken by the National Assembly in this matter. The Minister of Finance always persisted in saying that we upheld a separatist measure or a measure aimed at undermining federalism, and such a statement is false. That is why I repeat that the Minister of Finance has been deliberately lying in this regard for the past three weeks, and I do not retract what I have said.


Mr. Speaker:: Order, please. I have made a decision in respect of the accusation of the hon. member for Joliette. He has not in any way withdrawn or in any way retreated from the accusation he has made against another member of the House of directly lying. The proceedings of the House will not go forward unless and until the hon. member either withdraws or retires.


Some hon. Members:: Out!


Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, I do not wish to get into the dispute as to what the hon. member said or what he should do. But it seems to me it is hardly fair to the rest of the House to cut off the question period for that reason. It seems to me, as is the case with most points of order or disputes, that this one should be raised at three o'clock.


Some hon. Members:: Hear, hear!


Mr. Speaker:: Order, please. I am prepared to respect that there were a few minutes remaining in the question period. However, there is clear disorder in the House with the allegation and the statements made by the hon. member for Joliette in respect of another member of this House. In the face of that clear disorder, no other proceeding will take place unless and until either the hon. member withdraws that remark or extends an apology to the House for the use of that unparliamentary language, or else withdraws. Failing his withdrawal, I will have to compel his withdrawal from the premises.


Some hon. Members:: Hear, hear!


Hon. Marcel Lambert (Edmonton West):: Mr. Speaker, the question has now been clarified by Your Honour with regard to the use of the word "liar".


Some hon. Members:: Oh, oh!


Marcel Joseph Aimé Lambert: I put it to Your Honour, and Hansard will show it-some hon. members present will remember-that during the years prior to Your Honour's accession to the Chair the word "liar" was used many times on both sides of the House. We can pick on the members who did it then; some of them are no longer here.


Some hon. Members:: Oh, oh!
May 16, 1978


Marcel Joseph Aimé Lambert: I would suggest it is an unfortunate extension of the question of privilege in that it has always, in my estimation, been that no hon. member could accuse another of being a liar in the House or to have deliberately misled the House. The hon. member for Joliette said that the minister had lied to the Canadian public. I know, as I stand here, that certainly Mr. Speaker Lamoureux made the distinction that one could say it was a lie to the public, but not in this House.


Some hon. Members:: Oh, oh!


Marcel Joseph Aimé Lambert: 1 have all the time in the world, too. An accusation of lying outside is certainly not an accusation of lying in this House. The privilege is in this House, not outside.


Mr. Speaker:: The hon. member for Edmonton West wishes to argue with the decision I have already taken. Rulings in respect of unparliamentary language are within the province of the Speaker. I heard the hon. member accuse another hon. member of the House of deliberately lying. This has been raised by that hon. member as a question privilege. I have found, unless the hon. member withdraws that remark, that I will have to ask him to be removed from the chamber.


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please. The House will understand that in the failure of action on the part of the hon. member to whom I have extended the opportunity to withdraw the remark of unparliamentary language, it will be required that a motion, in the ordinary course of the precedents of our House, be put, as is the usual case, by the government House leader in respect of the withdrawal from the chamber or the eviction from the chamber of the hon. member who has uttered the offending remark.


Some hon. Members:: Oh, oh!


Some hon. Members:: Hear, hear!


Mr. Speaker:: All hon. members are aware that it has become an accepted part of our practice, before arriving at this stage, that an individual member who refuses to comply with an order of the Chair leaves the Chair no choice except to name that hon. member. Once again, before arriving at the stage of naming individually the hon. member for Joliette, I am now indicating to him again, for the third time, that I have found the language that he has used to be unparliamentary and it must be withdrawn, failing which I will have no alternative except to name him and ask that the government House leader make the necessary motion to have him ejected from the chamber for failing to comply with a direct ruling of the Chair.


Walter David Baker: Mr. Speaker, with respect, I believe it is important that all of us have an opportunity to see the blues, particularly the government House leader since
Oral Questions
he will be asked to move a motion. This parliamentary institution will not crumble to the ground, sir, if we proceed with other business until those blues are ready. I believe it is important that we see them.


Mr. Speaker:: The hon. member would have a very valid point had it not been for the fact that the hon. member to whom I have referred not only made the allegation in the first place but, in a subsequent presentation after an initial ruling by me, he got up in his place and repeated the allegation that he had made, in substantially the same terms. It is not necessary for me to read the transcript in the face of that. Therefore, in the absence of any action on the part of the hon. member for Joliette, I am left with no alternative but to name Mr. Roch La Salle.


Hon. Allan J. MacEachen (Deputy Prime Minister and President of Privy Council):: Mr. Speaker, because of the importance of the situation that has arisen I feel I should explain, at least to the satisfaction of myself, the proceeding in which I am now engaged.
It has been the tradition of the House of Commons that when the Speaker names any particular member, the leader of the government in the House supports the Speaker in that decision. That, I believe, has been the unvarying tradition of the House of Commons with one exception, and when that occurred the Speaker of the day was left in a very exposed, unprotected, and unsupported position. It is therefore my desire in discharging my responsibility to support the Speaker.
I would add that while the Speaker did make the suggestion that I put this motion, it is a decision which the leader of the government in the House makes on his own account, and he can either agree-


Walter David Baker: Move a motion.


Allan Joseph MacEachen: -or disagree to move the motion. With that in mind, Mr. Speaker, and in accordance with the responsibility that you must discharge to the House, and in support of your responsibility, I would move, seconded by the Minister of Justice (Mr. Basford):
That the hon. member for Joliette be suspended from the service of the House for the remainder of this day's sitting.


Mr. Speaker:: Order, please. It has been moved by Mr. MacEachen, seconded by Mr. Basford, that the hon. member for Joliette, Mr. Roch LaSalle, be suspended for the remainder of this day's sitting.
Is it the pleasure of the House to adopt the said motion?
Some hon Members: Agreed.


Some hon. Members:: No.


Mr. Speaker:: Those in favour of the motion will please say yea.


Some hon. Members:: Yea;
5458

May 16, 1978
Oral Questions


Mr. Speaker:: Those opposed to the motion will please say nay.


Some hon. Members:: Nay.


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


Mr. Speaker:: Call in the members.
The Elouse divided on the motion (Mr. MacEachen) which was agreed to on the following division:
(Division No. 46)
Abbott Allard Andras (Port Arthur)
Andres
(Lincoln)
Appolloni (Mrs.)
Basford Beaudoin Bechard Begin (Miss)
Benjamin
Blackburn
Blais
Blaker
Boulanger
Brewin
Broadbent
Buchanan
Bussi&res
Caccia
Cafik
Campagnolo (Mrs.) Campbell (Miss)
(South Western Nova) Caouette (Temiscamingue) Chretien Clermont Collenette Condon Corbin Corriveau Cot6 Cullen Daudlin Dawson De Ban6 Demers Dionne
(Northumberland-
Miramichi)
Douglas
(Bruce-Grey)
Douglas
(Nanaimo-Cowichan-The Islands)
Alexander
Andre
(Calgary Centre) Baker
(Grenville-Carleton)
++YEAS
Messrs.
Duclos
Dupont
Dupras
Duquet
Faulkner
Fleming
Foster
Francis
Gauthier
(Roberval)
Gauthier (Ottawa-Vanier) Gendron Goodaie Goyer Gray Guay Guilbault Harquail Herbert Holt (Mrs.)
Horner Jamieson Joyal Kaplan Knowles (Winnipeg North Centre) Lachance Lajoie Lalonde Lambert (Bellechasse) Lamontagne Landers Lang Laniel LeBlanc
(Westmorland-Kent)
Lefebvre
Leggatt
Loiselle
(Chambly)
Loiselle
(Saint-Henri)
++NAYS
Messrs.
Baldwin
Beatty
Brisco
Cadieu
Lumley
MacDonald
(Cardigan)
MacEachen
MacFarlane
MacGuigan
Marceau
Marchand
McRae
Munro
(Hamilton East) Nicholson (Miss) Nystrom O'Connell Orlikow Ouellet Parent Pearsall Pelletier Penner Peters Philbrook Pinard Portelance Raines Reid Roberts Robinson Rompkey Roy
(Laval)
Sauv6 (Mrs.)
Savard
Smith
(Saint-Jean)
Stewart
(Cochrane)
Stollery
Symes
Tessier
Trudeau
Turner
Watson
Whelan
Wood
Young-116.
Clark
(Rocky Mountain) Cossitt Crosbie Darling
Messrs.
Dick	Jelinek	NeilDinsdale	Johnston	NielsenEizinga	Kempling	NowlanEpp	Knowles	OberleForrcstall	(Norfolk-Haldimand)	PaproskiFriesen	Lambert	PattersonGillies	(Edmonton West)	Pigott (Mrs.)Grafftey	MacDonald (Miss)	RitchieHalliday	(Kingston and the	RodriguezHamilton	Islands)	Rynard(Qu'Appelle-Moose	MacKay	SchellenbergerMountain)	Mazankowski	SmithHargrave	McCain	(Churchill)Hees	McGrath	StevensHnatyshyn	McKenzie	WenmanHolmes	McKinley	WhitewayHowie	McKinnon	WhittakerHuntington	Muir	WiseHurlburt	Munro	Yewchuk-62.Jarvis	(Esquimalt-Saanich)


Mr. Speaker:: Order please. I declare the motion carried. 1 must now order the hon. member for Joliette (Mr. La Salle) to leave this chamber pursuant to the House order that has just been adopted.

And Mr. La Salle having withdrawn:


Mr. Speaker:: Presenting reports from standing and special committees. Tabling of documents.


Charles Joseph Clark: Mr. Speaker, I rise on a point of order. As Your Honour will recall, the question of privilege was raised by the Minister of Finance before the end of the question period. In all fairness to the House of Commons, I think Your Honour would want to grant parliament the opportunity to have at least the seven or eight minutes left in the question period.


Some hon. Members:: Hear, hear!


Mr. Speaker:: Order, please. It seems to me that choice was in the hands of the hon. member for Joliette, not of the Chair.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


Mr. Erik Nielsen (Yukon):: As I understand the rules, Mr. Speaker, questions of privilege and points of order are reserved if matters arise during question period until three o'clock when question period is terminated. Without intending in any way to be critical of the Chair, the fact remains that the Minister of Finance raised a question of privilege prior to three o'clock. It should not have been heard at the time it was heard. It should have been heard at three o'clock.


Mr. Speaker:: Order, please. The hon. member for Yukon raises a valid point, one that ought to be explained to the House. The discretion is in the Chair as to whether or not any question of privilege raised can be deferred until three o'clock or the end of the question period, or whether it is of such a nature that it ought to be taken up forthwith before proceeding further with the question period.
(Mr. Speaker.]
May 16, 1978

Obviously, with respect to a matter of unparliamentary language, as I dealt with yesterday in the case of the hon. member for Saskatoon-Biggar when he had made a remark which I found to be unparliamentary, and, incidentally with respect to the point raised by the hon. member for Edmonton West, I did not find that based on any accusation regarding the Prime Minister's conduct in respect to the House but on a general accusation, the hon. member for Saskatoon-Biggar rose in his place and withdrew that remark forthwith.
The fact of the matter is that once the Chair has drawn disorder to the attention of the House, the disorder exists and the House cannot proceed in the face of a disorder and a finding of disorder by the Chair. Had the hon. member for Joliette done precisely the same today as the hon. member for Saskatoon-Biggar did yesterday, the question period would have continued. However, the Chair, it seems to me has no choice in the face of a finding of disorder, in permitting the question period, or any other proceedings for that matter, to go on, when in fact disorder has been found by the Chair. That is a discretion which the Chair has to exercise every day.


Erik Nielsen: Mr. Speaker, may I now be permitted to make the central point of order that I rose to speak to, and that is, that having proceeded in this fashion, and the question of privilege having been raised prior to three o'clock and considered by the Chair prior to three o'clock, it would seem to me, and I submit this to you, sir, that what your decision means now is that you take the position that we cannot resume the question period in that the infraction of the rules by any member, whether he sits opposite or on this side, is sufficient, if we follow this route, to penalize all the members of the House. I submit that that is not a fair way to proceed at all and that we should be permitted to continue with the order of business which was interrupted at the time, and that all the members of the House should not be penalized for the infraction of the rules by any one member.


Walter David Baker: Mr. Speaker, yesterday, as reported at page 5409 of Hansard, this was your ruling with respect to the matter involving the hon. member for Saskatoon-Biggar. Your position was different today than it was yesterday. Yesterday as reported at this page you said this: Order, please. I will extend the question period by a moment or two to recognize two or three hon. members who have been attempting to be recognized-
1 am reading exactly what it says.
However, before I can go on, I will have to ask the hon. member for Saskatoon-Biggar to withdraw the remarks he has just made about the Prime Minister.
In that case, the member chose to withdraw. In this case the member chose not to withdraw. None the less, there are other members in this House who are quite outside the difference of points of view, and of the view expressed by the hon. member for Joliette, who ought not have their right to ask questions deprived on the day after you preserved their rights under a similar circumstance. That is precisely why I rose, sir. I think you should understand it.
Oral Questions


Some hon. Members:: Oh, oh!


Walter David Baker: I rose not to defer consideration of a matter that affected the Minister of Finance. We all know the House had to deal with that matter, and it did. I rose for two reasons, first, to have you consider the step that you were about to take-you did quickly and decided to move on-but second, to preserve as well the rights of all members with respect to the question period. I cannot see, sir, and I say this with great respect, why there should be one order made on one day and another order made on the other.


Mr. Stuart Leggatt (New Westminster):: Mr. Speaker, I wish to make just one brief point. You have discretion as to whether you wish to continue the question period at all, but it seems that if you wanted to contribute, with the greatest respect, to a calmer atmosphere in the House, surely the right decision is to exercise your discretion and permit the five minutes that were lost to the question period so that there is not an appearance of chastising the opposition for something one individual member may have done. I urge you, Mr. Speaker, to exercise your discretion in this particular instance so that the rights and prerogatives of the opposition are preserved.


Allan Joseph MacEachen: Mr. Speaker, I think there is a bit more involved here than discretion. I believe the rules do provide a definite duration for the question period, and while, from time to time, we permit the question period to go beyond three o'clock and the period is extended until 3.05 or 3.07, I think that if any hon. member rose on a point of order at three o'clock he would be entitled to do so, and it seems to me the discretion of the Speaker could not openly and blatantly turn aside the words of the Standing Order. I do not really believe it is entirely a question of discretion. But I am not arguing that point.
If the Speaker chose to exercise a different discretion today than he did yesterday, I would support him in that because I believe the circumstances were so different that not only the Speaker but many others would like to express their displeasure at the conduct we have witnessed today.


Some hon. Members:: Hear, hear!


Mr. Speaker:: Order, please. We are dealing with two issues, and I think we ought to be careful here to separate entirely the two issues. I will endeavour to do so and come to some disposition of this matter now.
The history of our practice during the question period has been a rather happy one because about a year ago we developed the practice of purging from the question period points of order and questions of privilege, anu I think all hon. members would agree that has been a very beneficial experience and that the ability of the Chair to defer until the end of the fixed question period any such questions of privilege and points of order has been of great help to the conduct of the question period.
80038-55)4

May 16, 1978
Oral Questions
That, nevertheless, has left, as I indicated to the hon. member for Yukon, a residual discretion with the Chair that it is still possible for the Chair to determine, on any given day, that a question of privilege during the question period is so important and so fundamental that the question period, or no other proceedings, can really take place unless that matter has been set aside. In the light of that, I dealt with this matter which I thought was of a very fundamental importance today, and I hope hon. members will agree, whatever their disposition in terms of support was for the motion which ultimately arose, that it was a point that had to be taken up at once because it was of such a fundamental nature.
I do see a certain inconsistency. Having the ability to rely on a daily basis on this improvement in our practice which has purged the question period of these matters of privilege, or at least deferred them to three o'clock for the benefit of all members, I do see a certain inconsistency on a daily basis in the Chair relying on that, and the House relying on that, and then one day getting in difficulty and taking up a point that had to be dealt with and thereby depriving the House of the balance of the question period. Perhaps in not carrying on for the last five minutes of the question period I was being a bit precipitous in tying the two points together. However, in the circumstances, giving the House the benefit of the doubt, I think we ought to separate the two questions entirely and recognize that there were about five minutes remaining in the question period.
I do not believe, if my memory serves me correctly, that I had as yet recognized a second speaker in the New Democratic Party. I will do so, and he will be followed by a new speaker from the Conservative party.


CONSUMER AFFAIRS
Lorne Edmund Nystrom: Mr. Speaker, I choose my words to the Minister of Agriculture carefully. Perhaps I can switch for a minute to the consumer price index without insulting the hon. gentleman. I see from statistics which came out this morning that the increase in the price of food this year over last year amounted to about 14.7 per cent. The minister expressed the view on May 2 that much of the reason for this was too great a reliance upon food imports. Since about 70 per cent of these imports could be produced here I should like to ask the hon. gentleman whether he is prepared to introduce a national program to promote self-sufficiency in food in this country.


Hon. E. F. Whelan (Minister of Agriculture):: Mr. Speaker, the hon. member says much of these products can be produced here. There is no doubt about it considering the growing season and the climatic conditions. But fresh leaf vegetables account for 31.6 per cent of this increase in one month.
If the hon. member would describe a way of growing these things in snowbanks, I would be glad to listen to him.

But if we want to have those products, we will have to import them. It is our desire to increase production of those products which we have the ability to produce in the most efficient manner, and our discussions with our trading partners in Geneva are conducted with that aim in view.


Lorne Edmund Nystrom: Mr. Speaker, I am talking about a lot of products other than just lettuce. I am talking about beef, poultry, many fruits and vegetables, and also cheese, much of which we could be producing in this country. Since last week the Department of Industry, Trade and Commerce announced a program of half a million dollars to promote the consumption of Canadian manufactured goods in the country, I should like to ask whether or not the minister will talk to his colleague and devise a similar program for the promotion of the production of food in our country, because if you take away grain and oilseeds, last year our deficit amounted to $1.8 billion.


Eugene Whelan: I think that again the hon. member is forgetting that this is the nation called Canada, which does not mean that if you take away one thing from one sector of the country, you would not have it. We are one of the most fortunate nations in the world because we do have all those things, and we have a tremendous balance of trade in agricultural products of about $800 million.


Lorne Edmund Nystrom: Mr. Speaker, I wonder if the minister is aware of the fact that we could be producing in Canada about 70 per cent of the foods we import from abroad, according to the figures from his own department, and that if we were producing them here in Canada we would be putting several hundred thousand more people to work. In light of those circumstances, would the minister consider at least setting up a task force to study the possibility of self-sufficiency in food in Canada?


Eugene Whelan: Mr. Speaker, we are doing just what the hon. member is talking about, we are considering this. Our whole trading program is designed to encourage production of those products which we produce in our country in an efficient manner. We should increase production of those and import only those products which we do not produce efficiently here. The hon. member refers to some of the products that we import. With regard to commercial beef, we have trading partners with whom we have traded for years from whom we buy beef which we do not produce in our country. Is the hon. member suggesting that we stop trading with them and break our Commonwealth ties and our agreements under GATT? If he is suggesting that, let him say so.

May 16, 1978

Order Paper Questions
HARBOURS	Standing Order 69 is very clear. It reads:


PROPOSAL TO IMPROVE DOCKYARD AT ST. JOHN'S, NEWFOUNDLAND
Mr. John C. Crosbie (St. John's West):: Mr. Speaker, I have a question for the Minister of Industry, Trade and Commerce on a matter that is now lying before the minister, that is, the matter of the government dockyard in St. John's, Newfoundland, which is owned by the Government of Canada. The minister has had a proposal before him since March 21 requesting an $8 million expenditure to put in a synchro lift facility so that the dockyard can get a contract with the U.S.S.R. for the repairing of 60 ships a year, which would bring in an extra 200 jobs in St. John's, Newfoundland. Can the minister tell me whether that is now before him and whether he has made a decision to advance that money for the expansion of the dockyard in St. John's, as he has done in Quebec and British Columbia recently?


John (Jack) Henry Horner: Mr. Speaker, the minister from Newfoundland, as well as a number of Newfoundland members in the House, have discussed with me the whole matter of the St. John's shipyard. The matter is still under discussion before the cabinet.


John Carnell Crosbie: Would the minister advise the House whether his colleagues on the other side are supportive of this proposal, or are they discussing it with the minister in an unsupportive manner?


John (Jack) Henry Horner: Certainly all members from Newfoundland to whom I have spoken are supporting the province and doing everything they can to help development there.



ROUTINE PROCEEDINGS


[Stage Direction]
MEASURE TO REGULATE POLLS DURING ELECTION CAMPAIGNS On the order: Introduction of bills:
May 10, 1978-Mr. Whiteway-Bill intituled: "An Act respecting public opinion polls"
Mr. Speaker:: Order, please. Yesterday, through inadvertence, a motion standing in the name of the hon. member for Selkirk (Mr. Whiteway), for the introduction of Bill C-455, an act respecting public opinion polls, was introduced and the bill was read the first time, ordered printed, and ordered for second reading at the next sitting of the House. All this is reflected in yesterday's Votes and Proceedings. I must now bring to the attention of the House, regrettably, that while the document in respect of the motion was prepared, the bill itself had not been finalized and therefore is not ready for introduction.
No bill may be introduced either in blank or in an imperfect shape.
I now find myself required to direct that the order for second reading of the bill be discharged. We should also note that I ordered yesterday that the notice in the name of the hon. member for Selkirk be carried under "Introduction of Bills" on the order paper until the bill is drafted, which I expect will be shortly, and the hon. member will then be able to proceed to ask leave to introduce it pursuant to standing order.


BUSINESS OF THE HOUSE
Walter David Baker: Mr. Speaker, I have a point of order which I should like to put forward while the Minister of Finance (Mr. Chretien) is in the House. It has been brought to my attention by someone outside the House that the bill he introduced yesterday has not as yet been distributed. It is an important bill, and I understand the government House leader regards it as having some priority. Perhaps the Minister of Finance has some comment on this. The fact is that the bill has not been distributed as yet. If we are going to go ahead with it tomorrow, I think it would have to be distributed within the next hour. I suppose that if we are not going to go ahead with it tomorrow, there would be time. I just warn the minister.


Mr. Chr6tien:: Mr. Speaker, I followed the traditional pattern. The responsibility for the distribution of the bill in the House does not rest with the department; it rests with the House of Commons. I have introduced the bill in the usual manner.


Mr. Speaker:: Order, please. The bill was in my hands yesterday and it should have been printed and distributed in the ordinary manner for the benefit of hon. members. I will inquire forthwith why that step has not taken place, if it has not.


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. Yvon Pinard (Parliamentary Secretary to President of Privy Council):: Mr. Speaker, the following questions will be answered today: 33, 941, 1,382, 1,457, 1,458, 1,466 and 1,597.
I ask, Mr. Speaker, that the remaining questions be allowed to stand.

May 16, 1978
Order Paper Questions


Mr. Cossitt: 1.	Has the government in recent years announced its annual current year dairy policy well into the year concerned rather than before the year begins and, if so
(a)	for what reason (b) is the government considering changing the announcement date to an earlier date?
2.	Has the Minister of Agriculture received complaints from dairy farmers that late announcements do not allow time to properly plan their year in regard to quotas, finances, imports and exports, etc., and, if so, is he prepared to take action to satisfy these complaints?


Eugene Whelan: In so far as
the Canadian Dairy Commission is concerned, the answer is: 1. No. (a) The dairy year runs from April to April and the announcement is made around April 1 of each year, (b) Yes.
2. Yes. This question is presently under study with the Canadian milk supply management committee.


[Stage Direction]
would like to draw attention to the following point in the Statistics Canada outlook statement: "It should be remembered that realized net income is the residual between two other forecasts i.e. cash receipts and expenditures, and as such is very sensitive to changes in the two larger series. Indeed, if cash receipts were to increase by 2 per cent more than forecast, realized net income would increase."
2. If realized net farm income declines in 1978 then that would be the third consecutive decline. However it should be noted that even if such a decline occurred, realized net farm income in 1978 would be 45 per cent higher than it was in 1972. The Government operates programs under the Agricultural Stabilization Act, Western Grain Stabilization Act, Farm Product Marketing Agencies Act and Canadian Dairy Commission Act which take into account farm operating costs and reduce the effects of instability in Agriculture. In addition to such measures the agricultural development strategy, now being formulated in cooperation with the provinces, will assist agriculture to realize its full market potential.
Mr. Mazankowski: 1.	Does the Department of Agriculture agree with the forecast of Mr. E. S. Boyko, Assistant Director of the Agriculture Division of Statistics Canada, that realized net income of Canadian farmers will decline by 6.1 per cent during 1978 and, if not, what is the Department's forecast?
2.	Will 1978 be the third consecutive year in which realized net farm income will have declined due to rising farm operating costs which are not being met by increased income and, if so, what specific actions is the Department planning to take to reverse this disastrous trend?


Mr. Dionne (Kamouraska): Between 1972 and 1977, did any Europeans, students or other workers come to Canada to work on fruit or tobacco farms in Ontario or other provinces under an agreement with the Department of Employment and Immigration and, if so (a) how many (b) what were their terms of employment (c) what was the nationality of the persons involved?


Eugene Whelan: 1. The . Hon' Bud Cul,en (Minister of Employment and Immigra-
Department of Agriculture accepts Mr. Boyko's forecast but t'on): Yes. (a) and (c)
Year	Total	Austria	Belgium	France	Ireland	Netherlands	U.K.	West Germany1972	814	75	289	150	-	75	150	751973	1,163	36	350	251	-	150	266	1101974	1,332	19	350	294	-	200	319	1501975	1,172	16	350	296	-	150	245	1151976	670	10	225	180	-	75	122	581977	669	9	225	180	32	75	90	58
(b) All workers were participants in the arrangement known as the European Student Tobacco Workers Program. Participants were required to be: students; pay their own air fare to and from Canada; and remain with their employer for the full tobacco harvest period (from the first of August to approximately the middle of September). Employers were required to pay the European students at least the local prevailing wage rate, depending upon the exact duties and the types of tobacco kiln used. Employers also provided the students with free room and board as long as the students remained to the completion of the harvest.


Mr. Lambert (Bellechasse): In 1976-77, what was the volume of Canadian cheese available on the Canadian market and (a) at what price (b) what variety of cheeses were sold (c) what was the rate of consumption?


Mr. Bernard Loiselle (Parliamentary Secretary to Minister of Industry, Trade and Commerce):: Statistics Canada reports the following: The following table shows the domestic disappearance of Cheddar and other cheese in Canada during calendar year, 1977.
Disposition of Cheddar and Other Cheese in Canada-1977
	Cheddar	Other
	Cheese	Cheese
	'000 lb	'000 lb
Stocks January 1, 1977	55,114	15,926Production 12 months 1977	177,159	118,980Imports 12 months 1977	-	43,759Stocks December 31, 1977	61,766	19,367Exports 12 months 1977	1,630	2,370Domestic Disappearance 1977	168,877	156,928(a) This information is not available.	

May 16, 1978

(b)	Varieties, other than cheddar, manufactured in Canada during 1977 include the following:
Alpin	Formaggio	Portuguese	Amfrom	Fresco	Provincal	Basilica	Fresh Cheese	Provolone	Blue Vein	Furlano	Quark	Bra	Gouda	Richelieu	Brie	Gruyere	Romano	Burini	Jowa	Serra-Vaquinla	Caciocavallo	Lemoine	Semi-Soft	Camembert	Limburger	Spiced	Dolce	Maigrelet	Suries	Duro	Montasio	St-Paulin	Ermite	Monterey	Swiss	Esrom	Mt.-St. Benoit	Swisca	Feta	Mozzarella	Tilsiter	Fontina	Oka	Cheddar	OtherCheese	Cheese(c) Per capita consumption	7.24 lb	6.73 lb
Order Paper Questions


Mr. Lambert (Bellechasse): During the 1976-77 fiscal year, did Canada import cheese and, if so (a) in what volume (b) which kinds and, in each case (i) in what quantity (ii) at what price per pound?


Bernard Pierre Loiselle: Statistics Canada report the following: during the 1976-77 fiscal year, Canada imported 49,135,200 pounds of cheese for a total value of $52,598,758. A breakdown by kind and price appears on the following table.


[Stage Direction]
VALUES IN CANADIAN DOLLARS APRIL, 1976 TO MARCH, 1977 INCLUSIVE 11 APRIL 1978 PAGE 1			
CHEESE CAMEMBERT CWT	CHEESE GOUDA CWT	CHEESE PROVOLONE CWT	CHEESE GRUYERE PROCESS CWT	CHEESE N. E. S. CWTHUNDREDWEIGHT	20,488 2,091,511 141.13	43,607 4,541,154 104.14	9,723 1,450,540 149.19	50,208 5,543,831 110.42	367,326 38,171,722 103.92
Mr. Allard: 1.	Since the implementation of the Young Canada at Work Programme, did the government allocate money to the Constituency of Rimouski and, if so, in what amount?
2.	For each project accepted, what was the (a) name of the project (b) amount allocated (c) year of acceptance (d) name of the municipality involved (e) number of jobs created?


Hon. Bud Cullen (Minister of Employment and Immigration):: 
Mr. Beaudoin: How many passengers did CNR and CPR carry in (a) 1977 (b) 1967?


Bernard Pierre Loiselle: Statistics Canada reports the following: A comparison of the number of passengers carried by Canadian National and Canadian Pacific in (a) 1977 and (b) 1967 is provided in the table below:
Year
(a)	1977
(b)	1967
Revenue Passengers Carried1
by CNR and CPR 1967 and 1977
Canadian National
Railways	Canadian Pacific Ltd.
9,538,522	3,861,761
17,620,665	6,138,757
1 Includes commuter passengers.
It should be noted that 1967 data reflect the influence on passenger travel of Expo 1967 in Montreal and other celebrations marking Canada's centennial.


Yvon Pinard: I ask, Mr. Speaker, that the remaining questions be allowed to stand.


Some hon. Members:: Agreed.



POINT OF ORDER


Mr. Benno Friesen (Surrey-White Rock):: Mr. Speaker, I submitted question No. 1,306 on February 10. It is not that complicated a question to answer. Much of it is statistical, but it is very important for me that I have the information for which I asked in that question. I would ask the parliamentary secretary if he could ensure that this question is answered quickly.



GOVERNMENT ORDERS


Mr. Otto Jelinek (High Park-Humber Valley) moved:: That this House regards the small business sector as a key to the regeneration of economic growth, increased employment, an improved balance of payments position and increased Canadian ownership of the industrial and resource sectors, and therefore urges the government to end the delay in formulating small business policies by immediately taking steps to:
(1)	implement a small business act, to include a realistic definition of small business, the criterion for which will be owner-management;
(2)	give tax rebates and other incentives to those small businesses which invest in research and development;
(3)	provide an incentive tax credit to any Canadian citizen who makes a direct investment in the equity of a Canadian-owned business;
(4)	amend those provisions of the Income Tax Act which discourage the transfer of small businesses within families or to employees; and
(5)	create a small business secretariat, independent of the Department of Industry, Trade and Commerce, its duties to include:
(a)	ensuring that the decisions of the federal departments and agencies reflect the interests of small business,
(b)	assisting small businesses to form consortia to improve opportunities for export and domestic trade,
(c)	establishing a Fixed proportion of government-purchased goods and services, to be supplied by small businesses, and
(d)	exempting small businesses from the application of federal legislation potentially harmful to them.


Mr. Speaker:: Order, please. Hon. members will note that the proceedings on this motion will expire at the ordinary hour of adjournment later this day, pursuant to Standing Order 58(11).
Before giving the floor to the hon. member for High Park-Humber Valley (Mr. Jelinek), I should like to bring to the attention of hon, members that I have been advised just now
May 16, 1978

that at ten minutes to three o'clock this afternoon the bill referred to by the hon. member for Grenville-Carleton (Mr. Baker) was distributed.


Otto John Jelinek: Mr. Speaker, hon. members will note that my motion is rather lengthy. The reason for that, of course, is to catch up on lost time, the time since the Department of State for Small Business was formed two and a half years ago. It was just over two and one half years ago that a long awaited and welcomed move took place when the Prime Minister (Mr. Trudeau) appointed a member to his cabinet who would be responsible for looking after the interests of the small business community. At that time a glimmer of hope arose within this vast and major sector of our economy, and we hoped that at long last specific action would be taken to reduce the maze of bureaucratic regulations, controls, and directives, and that the general paperwork onslaught would be replaced with meaningful, incentive-oriented programs. Unfortunately our hopes have turned to disappointment. What seemed like an emerging light at the end of a long dark tunnel turned into nothing more than a marathon of studies upon studies.
In the meantime, we have attempted to offer a number of realistic recommendations dealing with the potential solution of the Canadian small business problem, in the House as well as across the country. We have developed a number of positive programs which we were looking forward to implementing as early as this coming fall. However, the Prime Minister put a monkey wrench into that by postponing the call for a federal election. Now that we will have to continue to suffer the government's inability to deal with the problems at hand for at least another few months, and possibly a full year, we would like to present a number of recommendations and proposals which have received general acceptance from the small business community, some of which are outline in the motion before us.
As we all know, because small business is the backbone of the Canadian economic way of life; because Canadian-owned and operated enterprises are diminishing rapidly, as witnessed by the number of bankruptcies which increased over 38 per cent in 1977 from the previous year, not to mention the number of businesses which are moving south of the border in order to operate within healthier economic climates; and because of the importance of restimulating the small business community, we must deal with the matter on as strictly a non-partisan basis as possible. Therefore it is my hope that the government will consider seriously, either by stealing, begging or borrowing, some of our recommendations. In fact the government does not have to stoop to that. It should consider seriously some of the recommendations, if not all of the recommendations and suggestions, that my colleagues and I will make today.
Before dealing with the recommendations, I should like to compliment the hon. Minister of State for Small Business (Mr. Abbott). I am sure that compliment comes as a surprise to him. I compliment him for taking at least the initial, long-
Small Business
awaited steps in attempting to reduce the paperwork burden which is so harmful to small businessmen, and for having produced the CALURA amendments. Also I compliment the minister and his predecessor for initiating the many studies, as outlined in the minister's booklet entitled, "Perspectives". These studies are all that have taken place. Unfortunately, those ongoing studies do not solve, in any way, shape or form, the present problems and concerns faced by small businessmen in this country.
I know we have received promises of action by the government, even as recently as last Friday when the minister indicated that he hoped to bring new programs before the House soon. We heard them in the throne speeches of 1973, 1974, and 1976. We heard them in a number of budget proposals. Yet, next to amending or updating existing programs, such as the Small Businesses Loans Act, no specific incentive oriented programs to assist small business have been implemented.
I sympathize with the minister because he is living in a policy vacuum. The small business community is slowly becoming aware of the fact that he is offering nothing more than lip service. Is it any wonder? 1 do not blame the minister himself. I blame the government and the Prime Minister for creating a lame duck department which does not have the power or the right to deal directly with the problems and potential solutions of the small business community. Imagine the unfortunate position of being dictated by and responsible to the minister from Crowfoot, who is serving out his time in parliament very quickly.
The manner in which this ministry is set up creates yet another horrendous bureaucratic animal, where the minister is responsible to so many other departments and ministries that he loses track of who to see, about what, and when. Therefore our first recommendation is to make the small business secretariat independent of the Department of Industry, Trade and Commerce, as well as other departments, and basically to make it a one stop service centre. Instead of keeping small firms abreast of all aspects of government policy, the sector divisions of the Department of Industry, Trade and Commerce are usually ignorant, and small producers often are forced to deal with several other divisions of that department, as well as with other departments and agencies. I am referring, for example, to special import policy, enterprise development, revenue, finance, DREE, and the anti-dumping tribunal, just to name a few.
The small business secretariat, as proposed by our party, must be made aware of the policies of other departments regarding small business. It should be capable of co-ordinating the various policies so that a small firm requiring assistance will have the benefit of a one stop service centre and will not be shunted from department to department. Small firms are far too important to be kicked around.
Although the Ministry of State for Small Business has failed to develop programs and policies beyond the promise and study stages, after two years and two different ministers,
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May 16, 1978
Small Business
several departments administer programs meant to encourage small business development. The Department of Finance is responsible for the Small Businesses Loans Act. We propose the transfer of responsibility for this act to the small business secretariat, as is the case with any other matter relating to small business.
The Department of Regional Economic Expansion has developed extensive programs for the encouragement of small business in the developing regions of this nation. The small business secretariat must move out of its glass tower at the Department of Industry, Trade and Commerce and be prepared to work with others in the field to develop further small businesses. The secretariat must be aware of the programs and activities of other departments which may have an adverse effect on small business. I am referring to the Department of Finance Bank Act, the Department of Consumer and Corporate Affairs competition policy, the Department of Agriculture marketing boards, the Department of External Affairs international development agency, and the Department of National Revenue tariff policies.
Without awareness of the policies of other departments which directly affect small business, and the mandate to administer most small business-oriented programs, the secretariat can never move beyond the purposeless and functionless existence which it operates within presently. Because we believe small business is so important, we could not but expect the small business secretariat to become a focal point for Canadian small businesses.
What is small business? What is the definition of small business? I have attempted to receive a definition for some time from the government in order to know with what part of the Canadian constituency we are dealing. For example, in March, 1977, when asked to define small business, the then minister was unable to do so, even as it related to his own portfolio. Later he indicated that perhaps it would not be wise to define small business in any event because it would confuse matters. However, in September, 1977, the government finally made public the following definition:
-independently-owned firms which have not developed the managerial structures typical of large, mature corporations ... and that branch plants should not be excluded automatically from the small business community.
Therefore, according to that definition, branch plants of foreign-owned multinational corporations were included in the government's definition of small business.
Again last Friday when questioned in the House, the minister defined small business as follows:
-as a business with fewer than 100 employees and which in general terms is legally and financially independent of a large corporation.
We finally have our first incentive to small business provided by this government. It was created two and half years ago, and it is an incentive not to increase growth and employment in order to remain within the limits of that definition. It is one of the most ridiculous definitions I have ever seen because it limits companies on the verge of breaking the 100

employee mark if they want to increase their employment and therefore their productivity and growth.
Notwithstanding that definition by the minister, this government in less than one year has come up with four different positions in so far as a definition is concerned. Is it any wonder that a nightmare of confusion and uncertainty exists within not only the small business sector but our whole economy? My party's definition, which we have been consistently recommending for a number of years, is based on a definition-and I am not ashamed to admit it-put forth by the United States Small Business Administration, "a small business is one that is owner managed and not dominant in its field." This definition has worked effectively in the United States and is being widely accepted by many.
We should not be ashamed to borrow things that work, and certainly we should look at the example of the United States Small Business Administration which has been in existence for 25 years, including some of the incentive-oriented programs they have established. This definition is accepted by many business-oriented groups such as the Canadian Federation of Independent Business, and even by some Liberals. As a matter of fact, the Ontario Liberal party's official definition of small business is exactly the same as our proposed definition, and I would hope that the federal Liberals would at least follow the example of their counterpart in the provincial legislature.
Despite all of these studies which we are talking about, the government continues to remain confused, whether it be on the issue of definitions or of presenting incentive programs because of the promises which have never been kept, from that first promise in the 1973 throne speech. We need less government interference and far more incentive-oriented programs and opportunities if our Canadian owned, operated and controlled, small business sector is to prosper. It is as simple as that, and we cannot continue to swamp them with bureaucratic directives.
The minister must agree that all of these studies have gone far beyond the guidelines and have created a maze of bureaucracy. None of the studies has produced any legislation or a program that has even been presented on behalf of the small businessmen. The small business ministry in this country, as I stated earlier, has been in existence for roughly two and a half years, yet the government's own attitude toward the small business sector has not changed. The government still does not have a small business policy. Two and a half years, the minister says.


Mr. Abbott:: It was created in the fall of 1976.


Otto John Jelinek: Two years. I stand corrected on that, Mr. Speaker. However, even at that the government still does not have a small business policy nor does it have a small business act, and probably has not even considered one. Yet the minister in answer to many questions comes back and says, "John Bulloch of the Federation of Independent Businessmen agrees with what we are doing." However, John Bulloch also agrees with a small business act, and I am not suggesting that we
May 16, 1978

follow the wishes of John Bulloch to the "t". I repeat, I am more satisfied with the United States Small Business Administration outcome. Their small business act has worked effectively and proficiently for the United States small business sector.
I believe that if the government is serious in dealing with the problems of small business, the most realistic and effective way of committing itself to these problems is to implement a small business act. This we are recommending.
The small business act would co-ordinate and define federal law and policy affecting the small business sector. Such an act would adopt the definition of small business used in other effective legislation as "owner operated companies not dominant in their field", as I said earlier. More important, that act would ensure that a small business program is not tucked away and isolated in some department whose first concern lies elsewhere.
The independent secretariat would then, as a result of this act, be committed to deal with the problems first hand. It would ensure that the decisions of other federal departments and agencies reflect the interests of small business. It would exempt small businesses from the application of federal legislation potentially harmful to them.
What legislation is harmful? For example, in the present case of import quotas, we accept the need to limit temporarily footwear and textile imports to a percentage of the Canadian market. That is a piece of legislation offered by this government which has, indeed, been harmful to many Canadian small businesses. The Minister of Industry, Trade and Commerce (Mr. Horner) has muddled what ought to have been a positive move to protect Canadian jobs. Some would suggest that he has destroyed more jobs through store closings caused by the quotas than are protected by these import restraints.
I am sure the minister knows that by imposing the quotas for the protection of large shoe manufacturers or textile manufacturers he has forgotten, or ignored as is the case on most occasions, the small business sector which automatically falls within those quotas. The small specialty shops across the country cannot compete with the large manufacturers in any way but they also fall under these import quotas on textiles and shoes, and they go bankrupt as a result.
There are many cases of this. I have received a number of concerned letters in my own office and I am sure the minister has received similar letters. I have received representations from small business shoe retail outlets across the country and the same with textiles and clothing stores which import specialty items from, for example, Italy or Mexico. So the job of the independent secretariat, instead of being dictated to by IT and C and by the other large departments and instead of going through red tape in order to effect anything on behalf of the small businessman, would be in a far better position to deal separately with small business and keep it away from the harmful pieces of legislation that are good for the large corporations but not necessarily good for the small ones.
We have yet to hear the small business minister either publicly denounce the treatment small retailers have received
Small Business
at the hands of the quota administrators or to intervene to protect small retailers from the disastrous effects of such quota administration. Our proposed small business secretariat could exempt when necessary small firms from such harsh regulations. It would intervene before the regulatory body to assist the development of clear criteria for small business that would consider the problems such quotas may cause when constructed and administered without thought for these small firms.
I believe I have indicated that the only action this government has taken thus far, generally speaking, was to reshuffle old programs and amend and update existing legislation, whether it be changing the IDB to the FBDB or amending the Small Businesses Loans Act in order to keep up with the times. But even those amendments are not realistic. For example, in the loans act, those businesses eligible are defined as a small business enterprise whose estimated gross revenue does not exceed $1.5 million a year. You will recall that this is one of the amendments that increased the gross revenue from $1 million to $1.5 million.
On June 13 I moved a motion in the Standing Committee on Finance, Trade and Economic Affairs as the Small Business Loans Act was being amended, and I quote in part the text of that motion as follows:
-to change the definition so that subsidiary companies with parent companies who have sales over the amount ($1.5 million)... would not be eligible-
The then minister of small business was forced to accept the concept embodied in my motion. In committee he stated:
I have accepted the spirit of the recommendation. I make a commitment that we will bring forth an appropriate amendment at the report stage.
Although promises were made, th: amendments to the Small Businesses Loans Act passed tht House of Commons on June 13, 1977, without any reference to the ability of subsidiaries of large multinational companies to receive assistance under the act.
According to this legislation, which is the law of the land, today a small business is one having less than $1.5 million in sales. Let us consider several of these companies. There is, for example, Nordex Explosives Ltd., based in Montreal. Their sales in 1976 were $855,000. This company is safely under the small business sales limit of $1.5 million. But is this company in fact a small business? I would argue that it is not. And I think the major shareholder of the company, the Dow Chemical Investment and Finance Corporation of Michigan, would be rather surprised to hear that a company they control is a small business. Dow Chemical's assets exceeded $7.7 billion in 1977.
Another Canadian firm which appears to fit into this small business definition in the legislation, with only $1.3 million in revenue, is Debhold (Canada) Ltd., a subsidiary of De Beers Consolidated Mines Ltd., the international conglomerate holding a near monopoly in the world diamond market, yet they are eligible under the Small Businesses Loans Act. There are many others. There is Husky Leasebacks Ltd., and the list goes on and on. It is sufficient to show that a definition based
80038-56^

May 16, 1978
Small Business
on size alone, as used by the Small Businesses Loans Act, does not always describe what is the most important feature of a small business, that it be owner managed, as in our definition. The minister and the government must consider using that definition which has been accepted internationally. Naturally, this party would like to remove the ability of subsidiaries of multinational corporations operating in Canada to apply for and receive assistance under this act.
Still on the loans act, Mr. Speaker, in order to help owner-operated enterprises raise working capital, we are recommending that the small business loans program cover working, as well as investment capital where such funds are not available through normal commercial arrangements. We feel that including working capital assistance within the loans act would enhance the use of the act and assist the small firms where assistance is most required.
Now, Mr. Speaker, I have attempted to be as general as possible in talking to our very positive motion today. I will not repeat all the points in the motion, but it spells out many of the incentive-oriented programs we proposed, including-and this is a surprise to me and maybe the minister could speak on it- amendment of those provisions of the Income Tax Act which discourage the transfer of small businesses within families or to employees. The last budget indicated that incorporated farms would be exempt from the implications of this, so it is beyond me why the rest of the small business sector was excluded. I understand the minister will reply to my remarks, so I hope he will try to answer this question. We have made this proposal for a number of years, and prior to the minister's appointment, of course.
Some of my colleagues will speak on the areas of taxation and farming, and the hon. member for Hal ton-Wentworth (Mr. Kempling) will discuss research and development. But I have one point to make on that subject. In the last budget no mention was made regarding small business proposals, with the exception of the reduction in the provincial sales tax which is a short term, phony way of improving the situation. We do not see consumers flocking to retail outlets. As a matter of fact, Mr. Ted Burton, who represents Simpsons, the large Canadian retail outlet, has indicated that the reduction of the sales tax will not substantially increase consumer purchasing in retail outlets. Yet this was the minister's answer to the problems that small business in this country was facing.
I have said I will not dwell on research and development because my colleague will deal with that matter. Tax breaks were given for research and development, however, but in what sector were they given? To multinational foreign-owned oil conglomerates. There is nothing wrong with that, but again small business has been left out. This government supports a trend toward centralization and concentration of power, be it larger and fewer multinationals, bigger and stronger labour unions, or costly and more powerful bureaucratic governments.
The whole issue here is to decentralize, of course, and that is why when speaking on behalf of the small businessmen, not necessarily on behalf of my party, I am truly disappointed with the results of the just announced Bryce commission which not

only supports but strongly recommends the concentration of economic power which would, on a long term basis, allow small business literally to go down the drain. That has been the trend of this government for at least ten years.
The fact that this government is more costly than any in the history of Confederation is no secret. I shall not go over the statistics. The concentration of union power is as damaging to the economy as a whole as to the small businessmen. The Post Office deficit alone has increased by 872 per cent to over $651 million. Yet in ten years postal rates have increased from six to 14 cents, while the mail service has deteriorated to such an extent that Indian smoke signals over one hundred years ago were more efficient and cheaper.
We must no longer allow this permissiveness on the part of the government to continue. We must begin to decentralize and, I believe, especially in the case of the Post Office, the right to strike should be removed from all monopolistic essential services in Canada.
I have outlined some of the positive, incentive-oriented programs which we are recommending and which the government has ignored since and before this minister was appointed.
I hope that serious consideration will be given to our proposals. Had the Prime Minister not backed down from calling an election, in a month or two we would be in a position to implement these programs.
In closing, I would like to repeat what I have said often in this chamber, something which I believe is imperative if our democratic way of life is to survive. If we want the small business sector to survive within our society, as I am sure we all do, then immediate action must be taken by the federal government. The small business community is what the free enterprise system is all about. It is what this country is built on and what this country can prosper by. Other countries which presently are more fortunate than Canada with respect to unemployment, inflation, productivity, and other areas by which the standard to success is judged, have all concentrated their economic energies toward their small firms sector within their industrial way of life.
My concern is so genuine regarding the problems of small business and freedom of enterprise that I hope the seriousness of these problems can be dealt with, as I said, on a non-partisan basis. We cannot wait any longer, the small business community cannot wait any longer, and Canadians cannot wait any longer for the government to move in a positive direction in this regard. I hope hon. members will realize the seriousness of the situation and consider some of the proposals which we are outlining today. Opportunities still exist in Canada-


The Acting Speaker (Mr. Turner):: Order, please. I regret to interrupt the hon. member but his allotted time has expired. He may continue with the unanimous consent of the House. Does the hon. member have unanimous consent?


Some hon. Members:: Agreed.


Otto John Jelinek: Mr. Speaker, I appreciate the unanimous consent. I was just coming to the end of my remarks. I repeat
May 16, 1978

and emphasize to the minister, who sits there grinning, that I hope he will approve some of the recommendations we have been making. I hope he will seriously consider putting into effect some of the studies the government has made in the last few years, as well as our incentive-oriented programs, including the recommendation for a secretariat separate from the Department of Industry, Trade and Commerce. I am sure the minister himself would like to see that. I hope the minister will seriously consider implementing these things before it is too late for the small businessman in Canada, and before it is too late for the free enterprise that Canadians have grown to accept as a way of life.


Some hon. Members:: Hear, hear!


Anthony Chisholm Abbott: Mr. Speaker, first of all I would like to thank my hon. friend, the member for High Park-Humber Valley (Mr. Jelinek), for his remarks, and for those which were complimentary.
I would like to say that the debate today is a very useful one.
I believe the motion that was put down is a responsible one. It introduces a number of areas to which I have given a good deal of consideration. Some of which I would not view as necessary as others, but within them they possess a good deal of merit. I want to assure my hon. friend and his colleagues who are interested in this area, as well as my own colleagues, that as early as possible I intend to introduce new measures and to bring new programs to bear which I hope will meet some of the points raised here, but which will go a good deal further and do more.
There are, however, one or two areas with which I would take issue. The hon. member spent some time talking about definitions and the importance of such definitions. I have not yet become convinced that this is the most important problem that we face. He and I, and everyone else interested in this area, know what small business is as opposed to big business and I believe this definition suits the general purpose.
The other day I said that a small business is essentially one of 100 employees or fewer which is financially and legally independent. That probably could be qualified. It might be different in numerical breakdown in certain types of business than others. The hon. member's own definition, I believe, is to the effect that a small business is owner managed and not dominant in its field. This is reflective of the United States small business act which does purport to define small business in that country. By their statute they say a small business is deemed to be a firm which is:
"independently-owned and operated and which is not dominant in its field of operations".
Significantly, however, the act then proceeds to delegate to the administrator of the SBA authority to make more detailed definitions using, among others, such criteria as the number of employees and the dollar value of business. Moreover, the legislation specifically notes that, where these criteria are used, the upper limits established may vary from industry to indus-
Small Business
try to the extent necessary to reflect differing characteristics of the industries and "to take proper account of relevant factors".
The problem with a definition is that it tends to be difficult to put in precise words an explanation of what any small business might be. I think perhaps Professor Rein Peterson has best expressed it. Professor Peterson is a teacher at the York School of Business Administration who has written a very good book on small business. He has been associated to some extent with the Canadian Federation of Independent Business. In his comments he says:
In defining small business, we are attempting to grapple with generalizations that in practice must apply to a large and diverse group of legal and economic entities. Therefore, it is somewhat naive to expect that one can come up with a single, simple, concise legal definition of small business likely to be adopted by the diverse interests in an economy. We are also trying to describe a continually moving target group, because relationships between relative size, necessary specialization, and economies of scale-both internal and external to the firm- vary from time to time, from region to region, from product to product, and between one technology and another.
I could go on to quote other authorities that cast some doubt on the essential value of a definition. For instance, my hon. friend may have investments while he is an active member of this House and could not personally manage those investments. He might own a small business but not manage it. If he owned, for instance, a business manufacturing horseshoes in Prince Edward Island, he might own a business that by almost any standard would be described as small but would, I am told, be dominant in its field. Actually such a business exists. Therefore he might want to take advantage of the various programs we have to offer in Canada to small business. More, we hope, will be forthcoming. However, he would be excluded because of the precise restrictive nature of his definition.
I suppose you could say the T. Eaton Company is owned and managed by its owners but is not dominant in its field. It is a major operator in its field. I think the Simpsons-Sears Company would prefer to believe that it is not dominated by the T. Eaton Company. And yet I do not think it would qualify by anyone's judgment as a small business.
You can appreciate that while I do not want to spend the afternoon quibbling with my hon. friend about the merits of one definition over another, he will agree with me that one can get trapped into a easy assumption that some definition will suit the bill and be workable and useful.
I took some exception to another point mentioned by my hon. friend. He was annoyed that the Small Businesses Loans Act-


Otto John Jelinek: Mr. Speaker, would the minister permit a short question?


Anthony Chisholm Abbott: Yes.


Otto John Jelinek: Mr. Speaker, without getting argumentative about the definition situation, I wonder if the minister now is saying that the government does not need a definition for small business and it does not have a general definition, although he has quoted several in the past?

May 16, 1978
Small Business


Anthony Chisholm Abbott: Mr. Speaker, I said I had defined small business in a way that I thought was sufficiently adequate when I stated that I thought a business of 100 or fewer employees, which is financially and legally independent, was sufficient to provide a curtain or an umbrella. I differ in some ways with the definition put forward by the hon. member. I went on to cite some interested authorities that say one definition does not suit. I am saying that I feel less concerned, and place a lower priority on the existence of one definition or the other. He and I, and most everyone else who is concerned in this field, know what small business is. I believe the hon. member mentioned in his remarks about the Small Businesses Loans Act that a subsidiary, however small of a major company, should not be included if we are talking about certain beneficial programs, and to that extent I agree.
The hon. member went on to mention the Small Businesses Loans Act, and I want to correct his impression. The Small Businesses Loans Act administration has been moved over and is under my responsibility. This is helpful, because already we have studied the procedures which are required. I believe they can be streamlined and improved upon. A good deal of work is going on in this respect.
In mentioning the Small Businesses Loans Act the hon. member failed to give us credit in the time the secretariat has existed for amending the act and changing the regulations so it is now a far more useful instrument for small business than it had been before. The limit is raised to $75,000. The regulations have been amended so that the interest rate is a point above prime. Because of the fixed interest rate during times of fluctuating interest rates, the bank managers found the bill totally unpopular. Indeed, there has been no encouragement whatever for the use of the act.
I had several conferences with them. If business under the act was unprofitable, the banks preferred to lend money under their own rules or not lend it at all. At our consulting meetings, they agreed with me that they would be prepared to give a lot more support to the act if it were changed. We did that.
We have published a brochure. Thousands have been distributed to bank managers and through organizations such as the CFIB. While we do not have precise figures, I am advised there has been a very substantial increase in utilization of the act. In due course we will have firm statistics on that point. I see the hon. member for Sault Ste. Marie (Mr. Symes) shaking his head. No doubt he has done an exhaustive survey of the volume of business being done across Canada.


Mr. Symes:: Not in my riding.


Anthony Chisholm Abbott: They probably have not heard about it yet. If the hon. member would promote the bill and the act with his bank managers, as I have been trying to do, he would find that they are much more responsive. It is interesting that last year there was some $80 million in such loans by the banks under the act notwithstanding the fact they did not like it. I am told

by those managers who are enjoying a higher volume of business that they find it a very good business indeed as a result of greater utilization of the act to the benefit of small business.
The hon. member raised the problem of certain businesses that do not deserve to be able to use the act. I do not think it is all that important. If the banks want to deal with a business that may have an affluent parent company, it does not cost the taxpayers any money. The bank simply takes the guarantee of the federal government to help repay the loan. Assuming it is a solvent subsidiary, the problem of security does not exist. I doubt there are many companies in that area which would need to avail themselves of that. However, that is just a matter of opinion. Considering this is a precise area we have brought up-to-date, I think that contradicts the hon. member's suggestion that we have done very little in that area.
I would add a number of other things that we have done. During the budget debate I discussed such areas apropos of what he was talking about in the area of paper burden. 1 realize he was generous enough to say we have started this program. I would like to see more done more quickly in the area of paper work elimination. However, I am convinced that, given a fair period of time since the organization was set up, very substantial results will be achieved.
I am hopeful that within a few weeks we can place before the public several examples of where the controller of paper burden can demonstrate that he has done his job.


Mr. Beatty:: Controller of paper burden?


Anthony Chisholm Abbott: No doubt much excessive paper work will continue to exist. However, I hope hon. members opposite will be fair minded enough to say that we have made a good beginning.
Something else we have done this year is to open our business centre. It is an efficient, well staffed operation-not lavishly staffed-of competent people. Small businessmen can visit there and receive information, not simply about the work of one government department, but, apropos of what the hon. member was saying, avail themselves of a whole breadth of information. They can have appointments made. They can be taken, not sent, to someone else to get the help they need.
In addition, the business centre, which is located in the Sparks Street building which houses our secretariat, and Industry, Trade and Commerce has a toll free Zenith number, Zenith 03200. Any businessman can telephone from anywhere in Canada. My advice is that it has been very successful and that it has resulted in positive help to the business community. That is a precise and specific measure, and while not earth shaking, deserves support.
We have also introduced a program known as the Small Business Internship Program. We hope it will succeed in providing jobs for a number of Canadian graduates on an internship basis with Canadian small businesses, which can both use the help they are afforded and, hopefully, create permanent jobs.
May 16, 1978

With regard to the question of a small business act, I share to a certain extent the hon. member's view that were we to have an act and create a separate department it would perhaps give the minister a greater feeling of importance. It might give us a function independent of other departments, perhaps of the department in which the secretariat is located.
That, of course, could be achieved. We could bring in an act, and I suppose everybody would support it. Like most acts setting up government departments, it would be relatively brief and non-controversial. We could include in that act certain targets and objectives for the department, and draw from some of the ones in the motion today and others like it.
Upon analysis, however, one has to recognize that a department so created would hardly create a sense of much priority or a sense of great importance, either in the business community or other government departments. Unless you were to allocate to that department a number of functions which may or may not be solely related to small business, the department could stand isolated. It would not achieve any more than what we are capable of doing today within the Department of Industry, Trade and Commerce.
The other problem is that the Department of Industry, Trade and Commerce has a variety of programs. For example, there is the enterprise development program, programs related to tourism, and a variety of others which cannot be severed from their impact on large business or small business. If the department the hon. member would want set up does not have access by right and regularity to these major programs, it would be cut off from the mainstream of government initiatives as they apply to businesses. Although he and I might agree it would give all of us a sense of greater self-esteem to be completely separate, upon analysis it does not have as much merit as appears on the face of it.
The effort and co-operation I receive from my colleague, the Minister of Industry, Trade and Commerce (Mr. Horner), the officials who serve us both, and the growing realization in that department and the whole government of the expanding importance of small business, show that we are being served well. I do not say there is not room for improvement or no need for more programs. I do not say there is not need for changes in our tax structure, statutes of other departments, our purchasing policy, and a whole variety of efforts that, I hope, will ultimately be achieved.
But I think it would be unfair not to pay some tribute to the tax structure which exists today in Canada because it stands preferable to that of any other country in the world. I believe most observers of the small business scene, looking at the tax benefits it enjoys, would agree with that statement. A good many of the most beneficial of these changes were made, I might add, in the spring of 1977. They included a number of proposals such as the favourable measure dealing with employee stock options, income-splitting between family members in unincorporated small business firms, the elimination of federal sales tax for small producers of handcraft, deferral of
Small Business
capital gains on voluntary sales of assets, and the option offered to venture capital investors to choose whether to be taxed on a basis of capital gains or ordinary income. I could go on, but I have already made that speech in the budget debate.
Of course no one should mention the tax system without stressing the importance of the corporate income tax rate for small business, together with the dividend gross-up and credit which provide a significant benefit to businesses with less than $150,000 in income and retained earnings of up to $75,000 which pay some 21 percentage points below larger businesses.
For instance, a taxpayer with $30,000 of income pays only 26 per cent on additional income received from a small incorporated business. A wage or salary earner would be taxed at a rate of 46 per cent on incorporated income. All this shows that the government has not been idle when it comes to producing tax measures. While my predecessor and I cannot claim to have introduced these measures formally, they are the result of advocacy, of influencing the Minister of Finance (Mr. Chretien) to the best of our ability. We believe we can do a better job on those lines than by trying to create a large empire from which we can crow about all the things we have managed to do for small business. It is better to develop a small, hard-hitting organization, to take policy initiatives and to influence our colleagues to put certain changes in place.


Otto John Jelinek: What about the transfer of businesses?


Anthony Chisholm Abbott: The hon. member has made reference in the motion to the transfer of businesses and I acknowledge that in our ten-point program we forecast a need for intergenerational transfers. This is something I believe in, and I hope we can achieve it.


Otto John Jelinek: Why was it not in the budget?


Anthony Chisholm Abbott: The Minister of Finance had a number of high priorities to deal with and he could not deal with them all. He could not do it this time, but I am hopeful we shall achieve it.
The Minister of Finance is not the only minister who has important areas under his control. The Department of National Revenue does its share to produce an efficient and relatively polite tax-gathering service, but it also imposes some onerous burdens on small business while carrying out its responsibilities. Here again there is a case to be made for influencing the Department of National Revenue to change certain of its procedures.
I do not want to take up more time because I recognize that this is a day upon which the opposition puts forward its ideas. I can assure members opposite, in all honesty, that I appreciate their motion. A good deal of it agrees with my own views and fits in our plans. Anything that is said today will help us. I know that is the attitude the hon. member has taken. I know he is eating his heart out to sit on this side, but if he continues to perform the useful service of telling us his ideas from over there, such a change will never become necessary.


Henry Perrin Beatty: The minister explained the various things that have been done since he became Minister of State for Small

May 16, 1978
Adjournment Motion
Business. Can he tell the House briefly why it is that the rate of failure among small businesses has increased during the period he has been minister?


Anthony Chisholm Abbott: I did not even begin to scratch the surface of all the things we have been able to do, but I will say this: I do not for a minute suggest that the Minister of State for Small Business can create a climate in Canada that will ensure prosperity. I do not suggest that my efforts have either been mainly contributory or otherwise to present economic conditions. But I will say that I am greatly concerned about the fact that business failures have increased. I worry, as does the hon. member, about the high volume of bankruptcies.
One of the problems is that in prosperous years of high economic growth a good many people get into business. They find the money and they start up. Some of them, it must be admitted, are not all that expert. Dun and Bradstreet, the people who specialize in receiverships, estimate that some 90 per cent of bankruptcies are caused by management difficulties I am by no means blaming businessmen for all their problems, but there is a natural condition that when the economy tightens up it affects small businessmen particularly, and the situation is especially hard for those who lack business skills. That is why the case consultative service we have set up is able to play a really important role in helping small businessmen.
What the higher bankruptcy rate indicates is not so much that small business is suffering unusually but that the economy itself has been going through a difficult time. But there are signs of improvement on the horizon, and we may hope to see a significant reduction in these figures.



PROCEEDINGS ON ADJOURNMENT MOTION


Mr. Deputy Speaker:: Order, please. It is my duty, pursuant to Standing Order 40, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Simcoe North (Mr. Rynard)-Communications-Television programs for the deaf; the hon. member for Halton (Mr. Philbrook)-Post Office-Plans to prevent incidents leading to workers being sent home; the hon. member for Surrey-White Rock (Mr. Friesen)-National Security-Status of former RCMP officer.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Jelinek:
That this House regards the small business sector as a key to the regeneration of economic growth, increased employment, an improved balance of payments position and increased Canadian ownership of the industrial and resource sectors, and therefore urges the government to end the delay in formulating small business policies by immediately taking steps to:
(1)	implement a small business act, to include a realistic definition of small business, the criterion for which will be owner-management;
(2)	give tax rebates and other incentives to those small businesses which invest in research and development;
(3)	provide an incentive tax credit to any Canadian citizen who makes a direct investment in the equity of a Canadian-owned business;
(4)	amend those provisions of the Income Tax Act which discourage the transfer of small businesses within families or to employees; and
(5)	create a small business secretariat, independent of the Department of Industry, Trade and Commerce, its duties to include:
(a)	ensuring that the decisions of the federal departments and agencies reflect the interests of small business,
(b)	assisting small businesses to form consortia to improve opportunities for export and domestic trade,
(c)	establishing a fixed proportion of government-purchased goods and services, to be supplied by small businesses, and
(d)	exempting small businesses from the application of federal legislation potentially harmful to them.
Reginald Cyril Symes: Mr. Speaker, today we are debating a motion on small business which I find very timely and worth-while considering the sad state of our economy, especially as it affects small businesses. After listening to the minister this afternoon outlining in catalogue form all the things which this government is doing for small business, I can only lament at the state of small business in coming months when we consider that, despite these policies, we have record bankruptcies and record financial difficulties facing this important sector of our economy. Unfortunately, I was not reassured by the programs and the lack of new initiatives forthcoming from the minister this afternoon.
This motion is timely for another reason as well, because today is the day after the tabling of the report of the Royal Commission on Corporate Concentration, more familiarly known as the Bryce commission report. In it the Royal commission examined the operation of our economy and looked at the very important role that large businesses and large corporations play in our economy. That, of course, has a direct bearing on how small businesses operate in Canada today.
The very disappointing conclusion of this commission, as far as the NDP is concerned, was its conclusion that no radical changes in the laws governing corporate activity are necessary at this time to protect the public interest. I note that "in the public interest" includes not only consumers but all small businesses. Indeed, the royal commission went so far as to recommend the ending of corporate income tax and came up
May 16, 1978

with the conclusion that big is beautiful. Our party parts company very dramatically with the royal commission in that conclusion because we look at the evidence provided by Statistics Canada and other sources, and conclude that corporate capitalism is not competitive capitalism and, as a result, the small business sector of our community suffers very badly because of the domination, in both supply and price, of a few relatively strong and powerful corporations.
Indeed, if we look at the statistics provided by the government in 1975, we find that in Canada there are 206,695 non-financial enterprises. These are companies outside of banks and trust companies, etc. Of those 206,000 corporations or enterprises, only 500, or less than one quarter of one per cent, control 59 per cent of the assets, 51 per cent of the sales, and 63 per cent of the profits of all business in Canada. Those are very disturbing and startling figures. What we have in effect is oligopolistic or near monopoly capitalism in this country. We do not have free enterprise or competition, as most economists or even members of the House would define it.
I submit that when 500 firms control 59 per cent of the assets of this country, it is absurd to suggest that the remaining 200,000 corporations or businesses can provide any meaningful competition. When we have four firms in the motor vehicle sector of our economy which control 90 per cent of output, is it any wonder that here in Canada cars of any kind produced in Canada cost more t lan in the United States, even though the same cars are produced here and shipped across the border where they sell at a lower price? Surely that kind of concentration and the resulting price policies must indicate to any unbiased observer that we have price fixing of a sort and that we do not have true competition in that sector of the economy.
When four firms control over 50 per cent of all capacity in the primary metal sector, can anyone tell me that we have effective competition in this country, or when three sugar companies are dominant in their field-and recently, as we all know, have been charged with price fixing-does the consumer, or indeed any other business competitor, benefit from that kind of economic situation? The answer must be no.
This concentration of corporate power is detrimental to consumers and to small businessmen alike, because those corporations that control these important sectors of our economy dominate supply and price, and that affects both consumers and small businessmen. I wonder when was the last time that Imperial Oil or Loblaws asked us if the price was right. Indeed, Imperial Oil, which was chartered back in 1881, had accumulated by 1970 $2.3 billion in assets. Just five years later, in 1975, their assets had grown to $6.2 billion, or almost tripled in five years.
You can go through sector by sector in the economy and you begin to see the concentration of corporate wealth and power, you begin to see that the small businessman has little chance competing against these huge giants which have policies of underbidding, underselling, cornering markets and driving out their competitors. Anyone who looks at the food chain or the
Small Business
oil industry in Canada might wonder what has happened to the small independent retailers. Of the estimated $10 billion in unpaid corporate taxes, we find that about $9 billion are owned by the largest 1,000 corporations.
In terms of the government's tax policy, year after year this Liberal government has favoured the large firms as opposed to small business in terms of total amounts of tax concessions and deferred taxes. That, of course, is an unfair situation. It is unfair from another point of view as well, because it is the small businesses that are mainly engaged in manufacturing, and that is where the job creation is. This government continues, in its tax policy, to give preference to large corporations, mostly in the resource field, which are highly capital intensive and not job intensive.
Indeed, if members on the government side have difficulty in accepting the words of the NDP in that regard, I should like to quote the comments of a former Liberal cabinet minister and president of the Stock Exchange, Eric Kierans, who said:
With the exception of the United Kingdom, I doubt that any nation in the world has given its corporate 1,000 a more handsome gift package of subsidies, tax allowances, two-year write-offs, deductibility of merger costs, cheap loans, export credits and insurance than our present Trudeau government.
In light of that kind of growth of corporate power and the disadvantages it entails for small business, and in light of the report of the Royal Commission on Corporate Concentration, which in effect did not find anything substantially wrong with this concentration of corporate power and wealth, 1 was shocked to read in the press today the comments of the hon. member for Halton-Wentworth (Mr. Kempling) on what is the view of the Conservative party of the royal commission. I should like to quote him from the Ottawa Journal of May 16. He said:
"It's a blue report and that's our colour baby," Bill Kempling, Progressive Conservative business spokesman said Monday night, expressing a positive reaction to the report of the Royal Commission on Corporate Concentration.


Mr. Orlikow:: So much for small business.


Reginald Cyril Symes: Yes, so much for small business. The article continues as follows:
Kempling, was speaking literally-the book is blue-and figuratively: it contained what he said were recommendations Conservatives have advocated for years.
I am rather tired of the hypocrisy and duplicity of the Conservative party. Time and time again they have stood in the House to move motions and put questions in an attempt to indicate that they are in favour of small business. On the other hand, they have indicated that they are in favour of corporate concentration and the concept that big is beautiful in this situation.
Conservative members should get their act together. They should be honest. Either they are in favour of small business or they are in favour of big corporations. The two are not mutually synonymous or compatible in their aims. It is a shame for Conservatives to attempt to have it both ways. As I have illustrated, corporate concentration is operating to the

May 16, 1978
Small Business
disadvantage of small business. 1 regret the Conservative party is supporting the conclusions of the Bryce commission.
We in the New Democratic Party have repeatedly emphasized the necessity of revitalizing our manufacturing industry. That is where the jobs are. This important sector of Canadian industry has been declining year after year because of the government's allowance of foreign ownership and dependence on resource exports. Our manufacturing trade deficit has risen from $3 billion to $11 billion. That means we are importing more manufactured goods than we are exporting. That has resulted in a loss of some 400,000 jobs in Canada over the years. We have allowed this very vital sector of our economy to decline. Part of that is the result of a branch plant economy and allowing foreign ownership to take over.
Some 280 of the 500 corporations which 1 mentioned earlier are foreign controlled. The result of that is that when there is a slack in the economy the lay-offs are in the branch plants in Canada first. Also it means a lack of research and development in Canada, as well as policies to bar Canadian branch plants from exporting their products to other countries in order to develop a market of jobs here.
The role of small business in our economy could be much greater than it is now. That sector should be revitalized in order to get our economy back on the rails, to provide jobs, and income, and revenue for the federal government. At the present time small business employs between 30 and 60 per cent of our work force, depending on how it is defined. Most people would say the definition of small business is a firm employing under 200 people, owner managed, and not dominant in its field.
I want to stress the important role which could exist for small business in the rebuilding of our economy. When we look at budgets and small business policy, one can only conclude that the government favours the large corporations over the small businesses. Over the years it has allowed corporate concentration to exist. It has allowed foreign ownership to exist. It has allowed the higher prices these corporations can charge by virtue of control of the market. It has allowed high unemployment. It has associated with the decline of our manufacturing sector by allowing the record number of bankruptcies in small business. Surely the record is clear. The government is not interested in revitalizing small business and controlling the power of the dominant corporations in our society. We need a positive and imaginative small business policy in Canada. The New Democratic Party supports a healthy small business sector.
I should like to outline briefly what my party thinks small business requires, and what we would do to encourage this sector of our economy. It should be obvious that we need to put limits on the power of large corporations and their ability to manipulate price and supply. This can be done by breaking up the oligopolistic or near monopolistic situations which exist in many sectors of our economy, so that there will be true competition and benefits to be derived from that. There are cases which can be made in favour of not breaking up monopolies. For example, I am thinking of Bell Canada. If we are not

going to break up the monopolies, then there must be effective regulation of these monopolies, either through a government regulatory body which has some muscle, or through a competition act which has the power and ability to restrict unfair competitive practices that are detrimental to consumers and small business. We must restrict the power of large corporations which enables them to manipulate the market, supply and demand, and price.
We must assist small businesses with their cash flow problems. Any hon. member who has taken the time to talk with small businessmen will know that is the first complaint made. Small businessmen require start-up funds, cash and capital in order to commence business, expand, or tide them over through difficult times. When I think of the minister's carrot, the Small Businesses Loans Act, as a solution to that problem, I have to weep. The small businessmen I have spoken with indicate that bank managers laugh them out of their offices when the idea of assistance under the Small Businesses Loans Act is mentioned. The act contains no compulsory requirement for banks to set aside a certain proportion of their money to be loaned to small businessmen. Most bank managers realize that if they hang tough they can force small businessmen to borrow at the prime rate, rather than the slightly lower rate applicable under this act. There must be some mandatory requirements for the banks to loan under this act.


Mr. Deputy Speaker:: Order, please. The hon. Minister of State for Small Business (Mr. Abbott) on a point of order.


Anthony Chisholm Abbott: Mr. Speaker, will the hon. member allow me to make a correction to the point he just made?


Reginald Cyril Symes: Yes, Mr. Speaker.


Anthony Chisholm Abbott: The banks charge the prime plus 1 per cent under the Small Businesses Loans Act. The hon. member indicated that the banks would prefer the prime rate. I assume they would prefer one extra percentage point of interest. Rarely would they charge less than the intrest rate under the Small Businesses Loans Act.


Reginald Cyril Symes: I thank the minister for his correction. The number of small businessmen who would like to take advantage of the terms of the Small Businesses Loans Act compared to the number who are able to is very disappointing. When one looks at the total number of loans by private banks, under normal lending practices, and compares that with loans under the act, the latter is minuscule. That entire area requires reform. The loan limit should be raised, and there should be a much more lenient policy on the part of banks. Also the tax system should be reformed. The bias is toward large corporations as opposed to small businesses.
NDP provincial governments have taken initiatives toward reducing the small business corporate tax rate. We could learn something in that regard. Also there should be a restructuring of the Federal Business Development Bank. The small businessmen I have spoken with indicate that they receive more hassle and have more problems with the FBDB than private
May 16, 1978

lenders. Yet the FBDB was established to assist small businessmen who did not have the traditional forms of collateral. Indeed, often they are much more difficult to get assistance from than the private lenders.
A third area that we need to move imaginatively into is a federal government policy which ensures that at least one third of all government spending on goods and services will be contracted out to the small business sector. This is a beginning for this government to take instead of its ad hoc policy. We need to subdivide large orders so that the small businessman can bid easily on them. We have to end some of these large bid tenders, complex tendering forms, and large bonding requirements that put roadblocks in the way of the small business trying to get a part of government business. The paperwork, as we all know, must be reduced. The minister, indeed, has begun in this area to reduce what he calls the paper burden, but there is much more improvement that could be made.
I am glad to see the government has implemented the employer tax credit idea. This was long overdue. Many other countries have used it to great effect. Finally, we need a long term industrial strategy to develop our manufacturing sector and get this economy back on the road. That can only be done with some investment planning in which government has a say in this country.
We need to support small business. The government is not taking the initiative it should and until it controls corporate power and comes up with some imaginative policies, the small business sector will remain in great difficulty.


Mr. C. A. Gauthier (Roberval):: Mr. Speaker, first of all I want to thank the mover of this motion on small businesses. The motion being rather lengthy, I will quote only its first paragraph as an introduction:
That this House regards the small business sector as a key to the regeneration of economic growth, increased employment, and improved balance of payments position and increased Canadian ownership of the industrial and resource sectors, and therefore urges the government to end the delay in formulating small business policies by immediately taking ...
Necessary steps starting with the implementation of a small business act and the definition of what exactly is a small business. Mr. Speaker, I think the best definition of a small business is the following: it is a business which is operated by its owner and which does not have the management structures typical of large corporations or companies.
Mr. Speaker, when we talk of medium size businesses we usually have in mind those with fewer than 100 employees whereas a small business has 50 employees at most and is also called a tertiary enterprise. We are right in saying that the small business is the key to the future of a country because it is the one from which it springs forth. A region is always opened by private business and it is always that business which makes the first test of a new economy. Large companies follow later.
Small Business
It is almost contradictory that large businesses are always openly welcome whereas the arrival of a small enterprise alway occurs in almost complete silence. Yet small businesses are those which generate most of the employment since 60 per cent of workers owe their living to them.
Today we urge the federal government to formulate small business policies. I think this representation should be made to all governments in this country and draw the attention of all citizens so their attitudes will change vis-a-vis small businesses. Even at the municipal level we have seen multinational corporations get 20- and even 25-year tax exemptions while small businesses in those same municipalities could never get a one-cent exemption on those same taxes. I think this is a bad attitude which has been perpetuated from generation to generation-always worshipping millionaires and forgetting about those who provide the basis of our existence.
Even today it is sad to see that big corporations and multinational companies have the assured protection of governments because they fill up the election coffers. The largest revenues belong to industries and multinational companies which barely pay 25 per cent of the whole national budget while the millions of workers who pay altogether 75 per cent of the national budget get 20 times less revenue than large corporations.
Some will say: We are helping our small businesses, there is the Industrial Development Bank with its thousands of advisors. Mr. Speaker, what kind of help are they providing? Loans for 50 per cent of their needs at interest rates of 10 per cent, 11 per cent and even 12 per cent. Flow is it possible for a small business starting out to make even a net profit of 11 per cent or 12 per cent to be able to pay only that interest? The subsidy they are given does not even pay the interest on three years of operation. Even if after three years the small business has survived, after that time taxes will eat it up.
That is why 90 per cent of our small industries end up going bankrupt or being bought by monopolies. In that respect I will give only one example experienced in my area, that of the bakeries in the four constituencies in my riding. A few years ago, we had only one bakery in each large municipality. Those bakeries were not making millions but they were doing well enough and were thus able to provide work for several heads of families. Then came the time to modernize, which involved mechanization will all its requirements, and since the small industries could not find help to obtain money at reasonable rates, they were swallowed up by the few monopolies of the areas who can now dictate to the whole sector. They even control the quality and the price of bread, and what a price it is, Mr. Speaker! They have eliminated 90 per cent of the jobs. Our bread is trucked in to us from a distance of 125 miles and we must accept it as it is, good or bad. Should this monopoly ever decide to call a lockout, the whole area would have to do without bread. The worst of it is that these monopolies have the blessing if not the protection of the governments.

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Small Business
We do have the Small Businesses Loans Act, but this legislation is ineffective because of the criteria which make it nearly useless. 1 am in complete agreement with today's motion which urges the government to give tax rebates to small businesses which invest in research and development. If we were to compare them once again with large businesses, we would be amazed to see how the latter are favoured.
I especially want to draw the attention of the government to the tertiary industries which are the most neglected in my opinion. I do not know if this is because the criteria are too strict or because the civil servants are given orders to refuse all requests for help from those small businesses, but of all the applications made in my area, only two per cent are accepted.
We ask the government today to end the delay in formulating a small business policy, and I would even urge the government to take concrete action through our present legislation by accepting the applications made by small businessmen. The government may claim that it is prepared to help the development of new small businesses, but if it refuses 98 per cent of the applications or else, which amounts to the same thing, if it imposes unacceptable conditions to those small businesses, the offers of the government will certainly remain only empty promises. There is the matter of financial help in which case the government offers a 10 per cent or 15 per cent participation in total investments. This does not even cover the interests nor the legal costs the owner has to pay during the first year.
As for guaranteed loans, the interests the owners of small businesses will have to pay outweigh by far the net income of the business during the first year when economic efficiency cannot be stabilized like in subsequent years. As to tax exemptions, unlike large companies, small businesses are subject to tax from the very first years of operation, which is the cause of 90 per cent of the bankruptcies I have just mentioned. The government should give priority to small businesses which often start with the means at their disposal and where the owners risk their whole future because they have limitless confidence in the survival of their business.
After their initial efforts they turn to the government, which is quite normal since it is there to support the efforts made by citizens and not to create an industry by spending millions of dollars at a time to advantage a select group of its supporters. It happened in the past and unfortunately it still happens regularly today. We deplore it and denounce it vigorously.
If we really want to help our small businesses, the government must further encourage those who are anxious to invest in such enterprises, particularly through the Income Tax Act which now stands in the way of transfers of small businesses to members of the family or employees. It is another weakness of the legislation that strikes a deadly blow to any small business operated by the family head. When he dies the Income Tax Act strikes it lethal blow. When the family head transfers his

business to his children or his employees, he should declare bankruptcy because it would be cheaper for his heirs to purchase the bankrupt business than having to pay succession duties. This is a sad situation I have witnessed many times and experienced myself with the result that the business is crushed under the tax burden.
Another way for the government to help small businesses efficiently consists in buying in Canada. Obviously small businesses cannot assure the money support offered to the old parties by big corporations but it would be compensated by the social effects that would benefit all Canadians. If only the government were concerned about the well-being of the people instead of profitability, I think that many acts would be amended and that many false criteria would disappear.
Last, the motion says that the government should create a small business secretariat independent of the Department of Industry, Trade and Commerce. Mr. Speaker, I am afraid that those secretariats created by the government are nothing but a group of civil servants who want to impose their will on small businessmen. If that secretariat supported by the government were made exclusively of small businessmen I would agree, but please do not impose on us a group of civil servants delegated by the parties in power and who will play into the hands of politicians.
I think that the only persons who can really work in the interest of small businesses are businessmen with no political ties and whose only interest would be the success of small business. Mr. Speaker, I think that the only way to fight against monopolies at the production level as well as the distribution and consumer level is to encourage the development and multiplication of small businesses that can really benefit all people.
Today we are almost passive witness to a war without quarter against the financial monopolies of production, distribution and consumption on the one hand, and the labour monopoly and big unions on the other. And who is the victim of that macabre spectable? Always the consumer. That is why we are asking the government to take the necessary means to introduce legislation clearly favouring small business to enable it to play its true role in the Canadian economy by living on parallel lines with the monopolies without falling prey to them. That is why, Mr. Speaker, we approve and support this motion before use today on small business.


Mr. Stan Darling (Parry Sound-Muskoka):: Mr. Speaker, it is certainly a privilege to take part in the debate this afternoon. I wish to commend very highly my colleague and spokesman for small business, the hon. member for High Park-Humber Valley (Mr. Jelinek) for the content of the motion. He has spelled things out very correctly. Even the Minister of State (Small Business) (Mr. Abbott) said that while he did not agree 100 per cent with everything that was said-which we would hardly expect-he certainly agrees with
May 16, 1978

the content of the motion. This motion gives the minister and his department a chance to speak on behalf of the government, to present their views and to let the people know that a great many of us have grave concerns for small business in Canada today. We feel that it should be given every possible incentive to help it.
I am pleased to speak on this topic, not just from the isolated position of a member of parliament but because prior to coming to the House of Commons I operated a small business in a small village in the riding of Parry Sound-Mus-koka. Thus I am aware of the many problems that exist. Of course, similar problems are faced by colleagues in the same type of business in which I was engaged, that of general insurance and real estate. A great deal of the credit for giving assistance to small business and also for speaking on behalf of small business can be given to the Progressive Conservative party.
1 certainly feel that our party can be classified as the party really beating the drum for small business. It is only logical for the Progressive Conservative party to follow this course considering the enormous contribution that the small business sector makes to our economy. Approximately 55 per cent of all businesses in Canada can be classed as small businesses. It is a well endowed source of revenue for the government. Of course, the government has seen fit to ignore this important section of our economy, perhaps not entirely, but certainly it has not given it its due place in the sun. I consider the small business sector to be the backbone of our economy. If the government took heed and implemented some of the sound economic proposals contained in the motion, the smallscale business sector could provide the remedy to our economic ills, give hope to the unemployed, and restore some balance to our lopsided international trade account.
Because of the important role it plays in our economy, not too long ago the government saw fit to establish the Ministry of State for Small Business. I would like to underscore and strongly support the suggestion contained in the motion to establish a "small business secretariat" which would be independent of the Department of Industry, Trade and Commerce. This proposal will not require any further expansion but would be merely a transfer in the status of importance attached to the small business sector.
A small business secretariat will serve as a conduit to many businessmen who currently spend costly time trying to untangle themselves from government red tape or desperately trying to free themselves from the quagmire of government's stifling procedures affecting small businesses. Quite bluntly, Mr. Speaker, it will help the operator against the familiar "runaround", a commodity that the government dispenses so abundantly, whether in calling an election or providing solutions to our economic problems.
I was pleased to hear the minister mention that the secretariat is open and that there is a Zenith line where small businessmen can call in without cost. I hope that a good many
Small Business
of them will take advantage of that facility. I understand the minister gave the telephone number, but for the record again it is Zenith 03200. If anyone has problems let us hope they will call in. If they do not get answers from the secretariat, I hope that they will then contact their local members to intercede on their behalf.
The small business sector comprises firms operating in a variety of industries ranging from tourism to construction and from farming to manufacturing. Since I represent the picturesque riding paradise of Parry Sound-Muskoka, it behooves me to focus attention on small business operators in the tourist trade. Tourist trade immediately conjures up images of small scale operators. This is rightly so. Tourist trade is synonymous with small scale business. The plight of the tourist facility operators is a miserable reflection of the lack of concern that the government has shown in lending a sympathetic ear to the small business sector in the past.
It is well to note that in spite of our economic woes, tourism is one of the areas with the greatest potential for regenerating and fuelling our blighted economy. It is worth noting that tourism is now the sixth largest earner of foreign revenues for Canada. I may further add that travel in Canada is a $10 billion industry, but regrettably statistics also reveal that our travel habits have plunged us into close to a $2 billion deficit. Tourism expenditures in Canada provide employment for about one million people and the total annual investment is around $1.5 billion. Over $5 billion is poured into government coffers. In the province of Ontario it is the second largest generator of export dollars, exceeded only by the automobile industry.
I have briefly outlined the importance of the tourist industry to our economy and I repeat that this industry is comprised of small scale businesses. At this stage, Mr. Speaker, I would like to pose a simple but realistic question. Why has the government failed to recognize the importance of this industry? Is it because it is operated by a large number of small businesses? Why is the area of tourism cuddled up in some nook in the Department of Industry, Trade and Commerce? I will take the liberty of further suggesting that the motion call for the establishment of an independent department of tourism. This is not a call to expand the bureaucracy but merely to transfer personnel from the Department of Industry, Trade and Commerce to an independent unit.
This would facilitate the efficient handling of matters affecting the numerous operators who contribute to the tourist industry. It would also provide for some serious studies to be conducted in order to grapple with one of the fastest growing industries which may become the most important revenue earner for Canada in the not too distant future.
We need to do some long-range thinking. The role that tourism can play in eliminating our dismal and lopsided balance of payments account is certainly worth considering. Too little has been done to generate enthusiasm and to tap foreign markets so as to entice people from abroad to visit our beautiful and friendly land. Think for a moment of the tremendously favourable impact such a move could have on

May 16, 1978
Small Business
reversing the flow of much needed foreign exchange that this country is being depleted of at an alarming rate. These suggestions and proposals are not put forward as lofty ideals but can be achieved with some realistic approach by the government. That is why the opposition has consistently come forth with positive suggestions such as those contained in the motion before us today.
I will reiterate briefly what I have put forth on a number of occasions in this House. The small business sector needs special consideration in order to provide adequate financing. There ought to be special long-term loans to help the many ailing small tourist operators. Mr. Speaker, short-term and inadequate financing is the wrong formula to apply to solve the tourist trade equation. Small businesses also deserve to be given special consideration for tax credit purposes. This, Mr. Speaker, is well spelled out in the motion, which calls for tax rebates and other incentives to those small businesses with investment in research and development. It is the small business which usually ends up contributing heavily to the government revenue, for small businesses lack the services of skilled tax specialists. This sector is merely requesting a fair reward.
When speaking this afternoon, the minister mentioned small business loans and the more attractive interest rates. Let us hope that becomes a reality. Many members of parliament have been approached on this subject by small businessmen. I have mentioned this in the House before and it certainly bears repeating. They are asking where are the small business loans announced by the Minister of Finance (Mr. Chretien). I am sure almost every member in the House has been asked about this. We tell them they do not get these loans from the Federal Business Development Bank or from the Ministry of Finance, that they must put in a request to their local chartered bank or financial institution. After doing this, they find there is no money there. This has been proven to be the case time and again, and has been documented by many members on both sides of the House.
In past years, the rate was set. At one time it was 9% per cent. The prime rate was that high or higher. What bank or financial institution will lend money at a loss? Not many. They say they are out of that kind of money. It is important to small business to be able to get adequate financing at reasonable rates. This is one of the most serious problems facing the small businessman today.
Many of our small businessmen are tourist operators. They find it difficult to secure funds in order to upgrade or enlarge their facilities. Even in small towns where there is a personal relationship between the businessman and the bank, a tourist operator is at the bottom of the list as far as being a credit risk is concerned. This is most unfortunate.
The farmer was in the same boat. When he went to the bank, he was more or less told that his ability to repay was not among the highest. Therefore, the farmer had difficulty securing suitable credit over a reasonable period of time. We must

not forget that farmers are just as much small businessmen as limited or small companies.
The Minister of State (Small Business) said that the Federal Business Development Bank is a federal agency. Its interest rates are not as reasonable as some private institutions. It has been and probably still is known as a bank of last resort. 1 believe their current interest rate is around 11% per cent. After approaching the Federal Business Development Bank for a loan, they sometimes find that they can get a better rate and even a longer term at their local bank. The period of the loan is most important to many small businessmen.
The loan period with the Federal Business Development Bank is probably ten to 12 years. It is very difficult for a small businessman to repay a loan in that period. I hope something can be done about longer term loans at reasonable interest rates for small businessmen, tourist operators in particular. That is one class of business that finds it most difficult to secure financing. As a result, they must carry on with less than adequate facilities. Therefore, they cannot charge the rates they could charge if they were able to provide more up to date and more luxurious accommodation. Canadians and visitors from outside Canada demand the very best in accommodation and are willing to pay for it. I hope the Minister of State (Small Business) will use his good offices to see that something special is done for those in the tourist industry, an industry with which he is familiar.
The minister is well aware that that industry can bring tremendous revenue into Canada, if only we do a real selling job on it. I concede that is not his responsibility but that of the Minister of Industry, Trade and Commerce (Mr. Horner), as the government agency and services come under his department. If money is spent in the right way to attract tourists to this wonderful country, it will be the old story that if you cast your bread upon the waters, it will come back in no small amount.
Small businesses are an integral part of any community, and are very important in my constituency of Parry Sound-Mus-koka. I can hardly be blamed for beating the drum and speaking on behalf of the many small businesses in my constituency. There are about half a million small businesses in this country. It is a tremendous market. I therefore appeal to the government to accept the motion and implement the various statements made by the hon. member for High Park-Humber Valley.
The newspapers have recently given considerable publicity to the tourist industry. A headline in the Toronto Star reads "Tourist Trade Braced for the Yankee $1.12 Invasion". Let us hope that is right. I say a word of caution to the tourist operators. Our American visitors know there is a substantial difference in the exchange rate. They do not want to be ripped off. They must be assured they will be given every break possible. I know they can get the latest exchange rate at the banks.
Tourist operators are aware that the great American influx of tourists and tourist dollars have dropped off drastically, from a high of 50 to 60 per cent some years ago down to 10 to
May 16, 1978

15 per cent. That percentage certainly must be brought back up. May I call it six o'clock, Mr. Speaker?


Mr. Deputy Speaker:: I might bring to the attention of the hon. member that he has about 30 seconds remaining. If he does not mind I will recognize another member. I do not think he will be back for 30 seconds, after eight o'clock. However, if he wishes, he will be allowed to say a few more words at this time.


Stan Darling: Mr. Speaker, I did have a couple of comments I wanted to make; they reflect the opinions of tourist operators in Muskoka. Tourism is Ontario's second largest industry. In 1976, 102 million visitors spent $2.8 billion here. Last year, 105 million spent an estimated $3 billion and this year it is expected the amount will be more. So let's hope our tourist operators will be able to benefit from the fact that the U.S. dollar is at a premium. Together with Canadians in all types of businesses we want to make Americans as welcome as possible, along with visitors from other countries. Canada is a tourist's paradise and small business can earn tremendous amounts of revenue and, with the continued development of this resource, become more and more successful.
[ Translation]


Mr. Gaston Clermont (Gatineau):: Mr. Speaker, may I now call it six o'clock and start my speech at eight this evening?


Mr. Deputy Speaker:: It being six o'clock, I do now leave the chair until eight o'clock.
At 6.03 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.
The Acting Speaker (Mr. Turner):: Order, please. At six o'clock the hon. member for Gatineau (Mr. Clermont) had the floor.


Gaston Clermont: Mr. Speaker, the opposition motion we are studying in the House of Commons today deals with small businesses and what could be done to improve their situation. Mr. Speaker, I have always thought that small businesses are a very important topic worth considering. Because of their large number, they can have a great impact in our economy. It is a matter worth discussing at various times during our parliamentary debates and I thank the hon. member for High Park-Humber Valley (Mr. Jelinek) for having given us the opportunty to discuss it.
Small Business
Mr. Speaker, in the Speech from the Throne of October 12, 1976, as reported in Hansard for that date on page 2, we can read, and I quote:
... Small owner-managed firms are a mainstay of employment in cities and towns across the country. They supply goods and services essential to consumers and to other business, and they demonstrate the innovation and entrepreneurship from which successful enterprise must spring. More than that, small businesses, and the people who own them, manage them, and work in them, are the economic backbone of countless communities throughout Canada.
Mr. Speaker, I have considered this matter on several occasions and I am happy to take part in this debate. The motion includes recommendations and measures to improve the situation. I am referring to the first recommendation which
is:
(1) implement a small business act, to include a realistic defintion of small business, the criterion for which will be owner-management;
Mr. Speaker, I remember that when the Standing Committee on Finance, Trade and Economic Affairs was discussing the white paper on taxation in 1970, various studies were made to arrive at a definition of small businesses. The mover suggests that the criterion for this definition be owner-management. I feel, Mr. Speaker, that the terms of this recommendation are too limited. Some would rather use the assets of the business as a criterion; others, the number of employees or the turnover. As you see, it is not easy to arrive at a consensus, but I say it is worth trying.
Mr. Speaker, here is the definition of a small business, according to section 632 of the small business act of the United States, and I quote:

For the purposes of this chapter, a small business concern shall be deemed to be one which is independently owned and operated and which is not dominant in its Field of operation. In addition to the foregoing criteria, the administrator, in making a detailed definition, may use these criteria, among others: Numbers of employees and dollars, volume of business. Where the number of employees is used as one of the criteria in making such definition for any of the purposes of this chapter, the maximum number of employees which a small business concern may have under the definition shall vary from industry to industry to the extent necessary to reflect different characteristics of such industries and to take proper account of other relevant factors.
Mr. Speaker, the small business act could consolidate current programs and would serve as a basis to a policy aimed at promoting the interests of that sector. Policies to be implemented under that act could also include certain considerations. I would like to mention a few, Mr. Speaker. The lack of capital and especially of long-term and equity capital to get these small businesses started and developed is for them a major problem. This is not surprising. Most often small businesses have not proven themselves and occasionally lack qualified management. They therefore represent a risk for creditors. Their size is also another disadvantage.
Firms specializing in risk capital are rarely interested in investing less than $100,000. In any case, it would not be very

May 16, 1978
Small Business
profitable for such a firm to spend about SI,000 to enquire as to the solvency of the business in order to lend $20,000. To increase the sources of credit open to small businesses, the existing government financing programs must be improved and new financing services must be created.
On another level, the availability of risk capital should be considered. Businessmen are often concerned that the lending requirements of the Federal Development Bank are as stringent as those of private lenders. As this bank is supposed to be a last resort lender, its lending requirements should be revised to put more emphasis on the commercial potential of the future business than on the usual guarantees.
However, the revision of the Federal Development Bank's lending requirements will probably not provide small businesses with all the risk capital required. There are always serious restrictions to having government agencies investing risk capital.
First of all, Canadians might not necessarily agree with the investment of public funds in high risk endeavours. On the other hand, the investment of risk capital forces the investor to work in close co-operation with the management of the business concerned, a situation which many businessmen would consider undue interference of the state in the board rooms of the nation. The government could encourage private sources to supply risk capital to small enterprises. The government could consider the possibility of encouraging the creation of private firms specializing in supplying credit capital and long-term participation in small commercial undertakings. Companies of that type, Mr. Speaker, known as investment companies in the small business sector have been very successful in the United States for several years now. They have the advantage of being allowed to borrow up to 50 per cent of their share capital from the American small business bureau. They are also granted tax rebates. Similar programs have been introduced in some Canadian provinces.
Mr. Speaker, there is no doubt that other proposals can be included in such a legislation. There now exist opportunities and certain programs to promote small business development and expansion, as the counselling assistance to small enterprises tendered by the Federal Business Development Bank to small businessmen on their management problems. The business expansion program offers grants to Canadian manufacturing firms and guarantees loans for developing new products and implementing new production techniques. Under the Small Businesses Loans Act, the Canadian government has the authority to guarantee loans up to $75,000 granted by private institutions to set up or expand small businesses, and the income tax employment credit has also been in place since March 1978.
Moreover, we have the Enterprise Canada 1977 program implemented by the Minister of Industry, Trade and Commerce in co-operation with other departments and other services. It sponsors information sessions between officials and

business people to inform the latter of the range of programs and services offered by the Canadian government.
In another area, Mr. Speaker, the approach used to set the interest rate allowed under the Small Businesses Loans Act should be reviewed to come up with a formula that would allow for interest rates that would be more competitive with current rates. In the latest report to parliament submitted by the Department of Finance for the first three months of 1978, the interest rate on loans under the Small Businesses Loans Act was 8% per cent, while the prime rate was 9'A per cent over the same period. I wonder if in the circumstances the private sector has any real incentive to make those loans, when it can get higher rates on regular loans.
I read in recommendation No. 5 of the motion: Create a small business secretariat, independent of the Department of Industry, Trade and Commerce.
It is a known fact, Mr. Speaker, that the right hon. Prime Minister (Mr. Trudeau) established in September 1976 the function of Minister of State for Small Businesses, in order to defend and promote the latter's interests.
The first minister was the hon. member for Kamloops-Caribou in British Columbia (Mr. Marchand) and now it is the hon. member for Mississauga (Mr. Abbott) in Ontario.
Mr. Speaker, I do not see any serious opposition to the recommendation of the hon. member for High Park-Humber Valley but, if it were implemented, we should not allow a duplication of responsibilities and we should not create at this time the impression that the Department of Industry, Trade and Commerce is looking only after big business. On the contrary, Mr. Speaker, the activities of that department prove it is not so.
Concerning the procurement policy of the Canadian government, small and medium size enterprises-those having 100 or fewer employees-are encouraged by the Canadian government through the Department of Supply and Services whose minister is the hon. member for Dollard (Mr. Goyer).
When he participated in the debate on the motion, the hon. member for Sault. Ste. Marie (Mr. Symes) urged that at least 33 per cent of the Canadian government's purchases of goods and services be handled through small businesses.
During the supper recess I made inquiries and was told that the current percentage was about 41 per cent for small and medium size businesses-and again I repeat those having at most 100 employees. Mr. Speaker, I hope that percentage will continue to increase. Maybe in some cases we will have to change the tender system so that it will be less expensive and complex for small business.
In concluding, Mr. Speaker, I hope the Minister of State responsible for small and medium size business will take all necessary steps to help them expand, as he said he will soon table legislation toward that end.
May 16, 1978


Mr. Bill Kempling (Halton-Wentworth):: Mr. Speaker, I want to spend the bulk of my time talking about research and development. Before getting into that I should like to make a few remarks based on the comments of my colleague the hon. member for High Park-Humber Valley (Mr. Jelinek), and those of a few other members, possibly just adding a bit to what they have said.
Hon. members will have noticed that in our motion we recommended the establisment of a small business secretariat. The minister in his remark in reply said he felt the present structure of a Ministry of State for Small Business, under the wing, so to speak, of the Minister of Industry, Trade and Commerce (Mr. Horner), was adequate. I believe that was the gist of his remarks.
Let me just say that the concern we have on this point results from the fact that we all saw the establishment several years ago of the Ministry of State for Science and Technology. Like many Canadians, we thought it was really going to be something, but we find on examination of the administrative structure that a ministry of state, though set up by act of parliament, can be cancelled by order in council. Essentially it is a weak structure from which you cannot expect too much muscle. For that reason my colleague and others who have looked at this situation felt that a small business secretariat not under the wing of the Department of Finance or the Ministry of Industry, Trade and Commerce would be a better structure through which we could carry out programs.
Let me just say a word or two about the Small Businesses Loans Act. Because I have had a good deal to do with it in my constituency during the years I have been a member here, let me make a suggestion to the minister, if he will consider it. Probably one of the most valuable things the minister could do as far as the Small Businesses Loans Act is concerned, now that we have the rates sorted out, is to put together a little booklet on how to apply for a small business loan.
In talking with people in banking I have been told that the greatest difficulty they have in granting a loan is with the applicant. Applicants do not as a rule come in with adequate information. They do not bring a financial statement in most cases or a statement in respect of cash flow, and in many instances do not have a clear idea of what they want to accomplish. Applicants usually come in as a result of a cash bind in which they find themselves at particular times. They run into the bank and say they would like to have a loan under the Small Businesses Loans Act, but they do not have the supporting information. These applicants do not get their loans and consequently feel aggrieved and call their member of parliament.
I think that if a very straightforward brochure was put together on how to apply for a small business loan, explaining also that the government only guarantees the loan, it would be of assistance. It should point out that the money does not belong to the government but is the bank's money and the
Small Business
bank has to approve the loan. That is something else most applicants do not understand. The brochure should point out that if the applicant expects to get bank approval he should take these several elementary steps, putting this information together, as this will assist the bank manager to assess the application for a loan. I pass that suggestion on to the minister for his consideration as I think it might help the situation considerably.
Having regard to the paper flood we seem to have experienced and about which everybody is complaining, let me just repeat what I have said a couple of times in this House. Perhaps others can do what I did in a practical way to cut down on the paper work coming into my office from the government. I bought a rubber stamp on which was engraved simply "not applicable". I took all those pieces of paper that dealt with taxation and put them to one side because I realized I had to pay the taxes, but anything that did not deal with taxation I stamped "not applicable" and sent it back to Ottawa. After I had done this three or four times my paper work was reduced by 30 per cent or 40 per cent. I pass that information on to any members who would like to use it because I can say from experience that it works.
Let me now deal with research and development as it applies to the small business sector. When you look at the structure of small businesses you must ask yourself where these people come from. In most cases you find they come from large businesses. These people have worked for a large business concern and have a desire to go out and make it on their own. Whatever the rationale is, away they go and they take with them a variety of talent.
In many cases these individuals have design talents, engineering talents or what-have-you. The great difficulty facing a small businesman is insufficient cash flow. These people just do not have the cash to carry through a research and development project. They may have the idea and the desire, and the market may be there, but they do not have the cash to carry the idea through.
The first suggestion we make in that regard is that we should consider setting up a reserve for research and development from tax payable. In other words, when you make out your tax return and get right down to the amount of tax you must pay, you should be allowed to reserve a portion of that for research and development. This could be accumulated for a period of two to five years, depending on what it is you are going to do, so that when you begin your research and development project you will have the cash available to carry it through.
The second suggestion we would make to the minister is that we amend the Small Businesses Loans Act to allow small and medium-sized businesses to borrow under the act in order to supplement their reserves for research and development. We should allow research and development as a reason for granting a loan under the Small Businesses Loans Act. In fact, the two things could flow together. We should allow a portion of the tax to be set aside out of profits as a reserve for research and development, and follow that up with a loan to make it

May 16, 1978
Small Business
possible for the individual to build the jigs and fixtures, allowing the project to be set up. In this way the cash would be available and something could be started.
Many of these small companies have a sort of mechanic who has worked in business and starts off on his own, designing and building a piece of machinery. Most of this is done by experimentation or by trial and error. If the part breaks, the man reinforces it. In many cases there is very little sophisticated engineering involved. One of the great things we might do in this country is make better use of our provincial research councils and research facilities at universities.
If a small business had a research and development project that had been approved, had the money set aside and the research facilities, perhaps in certain cases the government would agree to pay a portion of the engineering costs to bring that article to market. We could do this through provincial research foundations on a contract basis, thereby relieving the small business sector of that cost. We could also do this through our universities, because all provinces do not have research councils. In these instances we would be supplying the engineering and research facilities to the small businessmen who do not have this capability on their own premises.
In many cases we have people with ideas who know the market, how to sell something, how to market it, how to advertise it. But there may be engineering which has to be done to the product in order to put it in such condition that it can be easily manufactured. The product may require engineering that is not within the competence of the individual concerned. I am suggesting that we use the facilities of the provincial research foundations and the universities to assist the small business community in this regard.
Furthermore, I suggest to the minister that we establish a series of tax-free prizes or awards for new innovations that have a significant effect on reducing our unemployment and balance of payments. These prizes would be for new devices that could be manufactured, engineered and brought into the marketplace. There is a lot of this going on throughout the country. The federal government could sponsor national contests where small business people design and develop products that will have a market either inside or outside Canada. It could work on an award basis where the government gives a tax free prize to the business or individual who designed the device. This is something that people will strive for, such as municipalities do when building a new building. They hold a context among architects for the best design. This is along the same line, something that will stimulate the interest of the people.
The problem we face in Canada is how to get more things made in this country. Look at the tremendous balance of payments problem and the deficit we have in finished goods. We cannot go on like this. We have to make more in this country. We import more per capita in finished goods than any other western nation. We import more machinery per capita than any country in the world, and last year we imported $24

billion of high technology products. Certainly a good deal of that can be made in this country.
There are those who will try to convince people that everything we do has to be based on the economies of scale, and that we have to have large manufacturing facilities to carry this out. I would just refer to the report we tabled yesterday of the Royal Commission on Corporate Concentration, page 408, where it states:
A healthy small and medium-sized business sector can offset the effects of high concentration in some industries, although stimulation or encouragement of small business will not fundamentally transform Canada's industrial structure, and many industries in Canada will continue to be dominated by large, capitalintensive firms. Nevertheless smaller businesses can increase competition in some industries and have beneficial social effects. They have demonstrated their ability to innovate and to sustain market competition when they are given a reasonable chance to grow.
That is the point I am making.
One of the difficulties our small business section faces is venture capital. We are going to have to address ourselves to this very serious problem and put in place instruments that will assist in getting these small businesses this capital. In fact the capital gains tax we have in the country today has done more harm to the small business sector than to anyone else, because in the past businesses were able to get a good deal of their funding from wealthy people within the community who were prepared to loan money on the possibility of a capital gain at a future date. Now, however, the small business must deal in the short-term money market with the banks. Businesses just do not have the facilities with the level of activity in the country to go ahead and develop things on their own. this is why we are suggesting to the minister than he seriously consider these points on research and development for the small business sector.
I would like briefly to review these points again. Firstly, to allow the small and medium-sized business to set up a reserve for research and development from taxes payable so that funds could be accumulated that would allow research and development projects to be carried through to completion. Under this scheme a small business would be able to accumulate funds over a period of from two years to five years, without affecting their cash position from their normal day-to-day operations, with which they could undertake a research and development project. That is the main thrust of it.
The second step is to amend the Small Businesses Loans Act. We do not use the Small Businesses Loans Act enough. We have all been through difficult times in the past. I can recall speaking to the one-time minister of finance, Mr. Turner, when he was here about the anguish of the small business community and how they would go to a banker who would say: "We have never heard of the Small Businesses Loans Act and we do not handle it in this branch." Mr. Turner's reply was to the effect that he would speak to the chairman of the Canadian Bankers Association and see if he could alleviate the problem. Of course, nothing ever happened.
There was also a problem with the rate formula, but that was changed and now we have a formula where borrowers pay one per cent above prime, and I believe that is reasonably
May 16, 1978

acceptable. We now have to move to be sure that it is understood, and the minister must do more lobbying with the bankers and be damned sure that it gets down to the branches because this is where the difficulty lies. I hope we will see the day when the small businessman can go into a chartered bank that will say: "We know about the Small Businesses Loans Act, here are the necessary forms, fill them out and we will consider your application".
I do not wish to put all the onus on the banks because it is a two-way street when borrowing money. The individual borrowing has to supply adequate information to the banks if he is going to expect to get a loan. I suggest to the minister that he put together a booklet on how to get a loan through the Small Businesses Loans Act. Many people just do not know what is required, and I know this from the number that I talk to. 1 tell them quite openly if they are turned down by one bank to go to another. After all, we have six banks and we are not tied to one.
If the banks choose not to move in this area and the minister cannot make any progress, when we are looking at the Bank Act revision I will suggest to him that perhaps near banks, caisse populaires, trust companies and credit unions should move into the field covered by the Small Businesses Loans Act. Somewhere along the line we have to find funding for the small business sector, and it must be more than we have now. We have to find credit facilities. If we do, I know there will be more entrepreneurs and the hiring of more people.
I know this from people of my own acquaintance and from experience of my own personal business. In my own little business we have designed three products we hope to receive the patent for within the next 18 months. We did this all on our own without any assistance from the government. We are just one small company, and there are thousands across this country that have far better abilities than my company has. I know that it can be done and that we must move into this area to assist the small business sector. If we take this action, I know that Canada generally is going to gain. I urge the minister to heed my remarks and find some way to move in this direction in the very near future.


Mr. Paul E. McRae (Fort William):: Mr. Speaker, in this critical period when vast changes are occurring over a very short period of time, it seems difficult for those participating in these changes to have a clear perception of what is happening. Only much later is the nature of the crisis described by historians.
The failure to perceive global crises perhaps explains the nature of the deliberations in this House over the last year, with emphasis on alleged RCMP misdeeds, concentration on elections and polls and the kinds of events that occurred this afternoon. These factors, I believe, tend to belie the true nature of the period in which we are living.
The quantum leap in the problems facing all nations, the unheard of phenomena of growing energy shortages globally,
Small Business
and the failure of conventional techniques to deal with these problems either because the techniques are not commensurate with the magnitude of the problem or because they are, worse still, counterproductive, are factors which should suggest to all that we are in a critical period, a period between one era and another.
One of the characteristics of the era that we have lived through is the great faith in bigness. If something is big it has got to be better, cheaper and more efficient. I believe one of the causes for the changes in our time which will bring the end of this era is that faith in bigness. It is my belief in a new era, when we come to grips with these problems and the nature of this crisis of our time, that we will find smaller units and smaller groups, smaller businesses and smaller governments. These are some of the things which will characterize this new period.
I am pleased today to be involved in this debate on small business. I would like to congratulate the hon. member for High Park-Humber Valley (Mr. Jelinek) and those who were responsible for putting this motion together. I think the motion is well thought out. I would also like to congratulate the Minister of State (Small Business) (Mr. Abbott) for his response. It seems to me that in this debate today there has been a general good mood in terms of this problem. We all see different things that can be done, but in general we are looking at suggestions from all over this House so as to move in an intelligent direction, a direction which I think presages a new era.
Dealing with the motion, there are a couple of areas which 1 perceive as being important. One of the ways that governments can change direction is in their purchasing policies. Certainly I believe that governments, because of the very large nature of the operation, can make some significant advances in supporting small business by adopting purchasing policies which will support small business. The minister alluded to this. We have taken some steps but I am sure more can be taken.
The notion of a consortia of small businesses is one that I find particularly pleasing provided, of course, the consortia themselves do not become a large business. There are many ways this can be done. Perhaps more than anything John Bulloch's group and other groups in this country are explaining and pointing to a direction to make this possible.
I agreed with the minister when he took some exception to the limited nature of the definition of small business as described in the motion. One definition might very well be "owner-management" but I think this definition, as the minister explained, is somewhat limited and should be broadened and made a little more flexible. Generally in this House we know what we are talking about when we are discussing this problem.
In my area of the country, which is northwestern Ontario, we see some problems which communities and small businessmen are facing. I see that there are things sensitive governments can do to resolve some of these problems. I must say, Mr. Speaker, that in the first three or four years I was here I was not very happy with the approach taken to small busi-

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nesses. I always had the feeling that officials in the Department of Industry, Trade and Commerce were much more big business oriented, looked at big things and were only interested in big things. But I think in the last couple of years since we have had two ministers move into this area that there has been a great improvement and a new sensitivity is developing. It occurs to me that some of the communities and small business people, particularly in the small manufacturing sectors, require more managerial assistance.
There are one or two other factors which I would like to mention. First of all let us take a theoretical situation. As an example I would cite a community with a good supply of wood, some entrepreneurial skills in terms of working with that wood, a perception of the wood chip industry potential and the need to create jobs. Incidentally, the market for the wood chip industry is expanding, particularly in the United States. Here is a scenario that is found in many northern Ontario communities.
When governments look at this kind of scenario there are things they can do to change the situation into a productive one where jobs would be created. Money is one of the factors, but I think this factor is being solved. We are moving in a direction where it becomes more possible to get hold of the kind of funds necessary, at least in many cases. Other managerial skills beyond the skills needed to run the production unit are probably necessary. One that comes to mind, is the skill of finding a market. Very often the market is something that eludes the small entrepreneur because the market may very well be dominated or controlled by large business and large corporations. From the discussions I have had with a number of small businessmen, with community representatives and industrial groups looking for new industry, this kind of support is needed badly.
I suggest at this point that there is a rather fortunate economic situation which should make it easier for small businesses to compete in some of the traditional markets. This results from the depressed value of the dollar. We are all aware, since there has been a great deal of discussion of it in this House, of the 90-cent dollar or the 87-cent dollar and the effect it has on our exports. It is easier to sell our exports in traditional markets under these circumstances.
However, one of the things that has not been mentioned and which has not been part of the discussions to my knowledge- perhaps it has on one or two occasions only-has been the relative competitive advantage that the higher price of imports gives to the Canadian entrepreneur. If the import is 13 or 14 per cent higher in price than it traditionally should be, this could give the small Canadian businessman a chance to compete in this market. Sometimes I think the reason why more of this is not happening is that the business community and governments do not realize what the position is and do not try to stimulate that kind of activity. I think it is very important that we realize that when the dollar is depressed people selling on the local market-that is, the Canadian entrepreneur- have a distinct advantage over the importers of foreign goods.

I think that the era of "small is beautiful" is going to dominate in the future much more than in the past. From my own experience in the business world of large industry, and as principal of several high schools large and small, I have come to believe that the smaller the unit, the more efficient and productive it is, and the happier are the people in it. Smaller businesses, smaller government units and decentralized government will offer many opportunities in the future which we did not have when we were so busy trying to make things bigger.
I want to compliment the Canadian Federation of Independent Business which I think has done more to bring the small businessman, the entrepreneur and the small company to the fore in this country than any single group up to this point. One of the things that John Bullock and the people associated with him has done is to differentiate between small business and the large corporation. In the past small businessmen, I think, had seen themselves as almost identical to large businessmen, the only difference being size. I think the Canadian Federation of Independent Business has identified a qualitative difference between the two groups and this is extremely important.
They have also indicated their concern about big government, big labour-the whole spectrum of bigness. This is one of the contributions being made to the new era which is fundamentally important in terms of where we, as Canadians, are going.
I should now like to make one or two comments on the report of the Royal Commission on Corporate Concentration which came down yesterday; I think it is very appropriate to this debate. I am one of the two or three members of this House who put in an appearance at the commission hearings and presented some thoughts on the question of corporate concentration. I agree with critics of the commission that the terms of reference were too narrow and that the commission should have dealt with the concentration of power in all areas. The terms of reference are what they are, however, and the commission had to work within them. I became very disturbed in particular about the global nature of multinational corporations or, as some people call them, global corporations-the extent of their power and the branch plant mentality which has had a great effect on the economic structure of this country. I was disturbed, too, about the control of global assets.
I would recommend to hon. members a book entitled "Global Reach" which deals with the assets of some global corporations. It indicates that the liquid assets of the major global corporations in the world are one and one-half times to twice the size of the liquid assets of all the national banks in the countries where they function. It also states that some of the currency problems of the past four or five years are the result of the great power that these liquid assets confer and the extent to which these assets are mobile. The United States Senate finance committee did a great deal of work in 1973-74 and the very first report it produced provides the basis for my figures.
May 16, 1978

Local corporations have some definite advantages. They are able to move goods around the world and encourage manufacturing in developing or non-developed countries, but they also create serious problems. Sometimes the type of production activity, the type of product or the type of advertising may not be appropiate to the country in which they function. Very often third world countries are faced with many problems because of the nature of global corporations. That is not to say that we make a judgment whether global corporations are good or bad, but one has to say that some things global corporations do are not desirable and other things they do are very desirable.
The problem of control, which was one of the topics I raised when I appeared before the royal commission, is a very difficult one. Some of the efforts being made by UNCTAD, the OECD and other such groups are very necessary, as are some other multination efforts to maintain some kind of regulation over global corporations, particularly in the area of tax transfers. There is a tendency to set up tax regimes which are not designed particularly for the benefit of the nation states of the world. These are some of the matters I dealt with in my submission to the royal commission.
Obviously, Mr. Speaker, I have not read through the 32 volumes of the report, but in the summaries I have read I was disappointed at the almost total endorsement without any real criticism of the nature of these forces. I was very disappointed for many reasons. I think the great concentration of power in the hands of global corporations could be a source of global depression.
One of the associate editors of The Economist, Norman McRae-no relative-published an article within the last six months in which he predicted some of the very grave problems facing us and the possibility of global depression because of the largeness and insensitivity of global corporations. He felt that only those global corporations that were able to decentralize their operations so that units in a given country, such as small factories, were able to function independently might survive this kind of depression. 1 think it is very important that we understand there are inefficiencies in global corporations attributable to bigness. A great deal of care must be taken to ensure that because of the largeness, the difficulty of administration, the remoteness-


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


Paul Edmund McRae: May 1 have just one more minute, Mr. Speaker?


Some hon. Members:: Agreed.


Paul Edmund McRae: I am just completing my remarks. Because of the nature and bigness of these corporations, there is great concern here. This concern must also be felt by the global corporations. In conclusion, I support the nature of the motion. I am very pleased that we will not be voting on this motion,
Small Business
but it is one we can all discuss. We can raise points and make suggestions and, in the end, it is hoped we will have a much more viable small business community in this country.


Mr. Bert Hargrave (Medicine Hat):: Mr. Speaker, this allotted day debate on small business is very timely indeed, particularly since it follows the day after the tabling of the Bryce commission report on corporate concentration.
About two weeks ago, during my nomination meeting in my constituency of Medicine Hat, I made this very short and succinct statement which I think is appropriate in this debate:
We should let the private sector operate with much less government restraint and involvement and, given such an opportunity, the private sector would stimulate far more jobs than any make-work projects by governments.
While it is obviously an over-simplification, it seems to me that statement, in a nutshell, is what the Bryce commission report had to say in its 450 pages which came out yesterday after three years of serious work. However, today I want to relate this small business theme to Canada's agricultural industry and, if time permits, to a few other local small business operations that are typical in my constituency.
The original small business in Canada, as in many other countries, is, of course, farming. Every farmer by any definition is a small business operator-manager. In the total picture, they are certainly the most important since they produce society's prime necessity, food. If there has to be a case made for private enterprise, then surely farmers lead the way. As a group, they are probably the last natural private enterprisers left in our society today.
Farming, at least many sectors of it, as a business has had some rather serious problems over the past three or four years. There are now some indications we are emerging from at least some of the short-term difficulties. I want to now examine some of these situations.
I want to make reference now to Canada's hog industry, especially in western Canada. Over the last three or four years, Alberta's hog population has dropped by about one million hogs. At the same time, Quebec's hog population increased by that same amount, about one million hogs. At first glance, it would appear that we have lost our western hog population to Quebec, but this is not so. We lost it to the United States.
Last year, 1977, Canada had to import 202 million pounds of pork from the United States. In that same year we exported only 20 million pounds to the U.S.A. The Quebec hog increase was the result of their provincial incentive and subsidy programs. However, in total we could not produce enough hogs to supply our own requirements. That was last year, and the same situation appears to be continuing now.
Why has this situation developed? I suggest that we lost those million hogs in the west because of a change in the price of our barley. Over that three to four-year period, western barley changed from three bushels for $1 to one bushel for $3. The small businessman hog producer made the obvious business decision to sell his barley instead of slopping hogs. It was the right decision under those circumstances.

May 16, 1978
Small Business
An added reason was the lower cost of hog production in the United States corn belt. Although western barley is somewhat lower in price now, somewhere between $1.75 to $2 a bushel in the west, this situation still exists. There is no stampede back into hogs in the west.
This hog situation has had some serious implications in the west in many of the related industries. Our meat packing industry, which is very labour intensive, now has a serious unused slaughter capacity for both hogs and cattle, especially in Alberta. Our 17 major slaughter plants in Alberta have seen three or four closures over the last year, and more will likely follow. Some of these are modern, efficient plants like our plant in Medicine Hat, which closed rather suddenly in late December.
Our livestock trucking service industry, a very valuable industry that we cannot get along without, has experienced a serious backlash from this meat packing crisis. The fact that cattle and meat prices have suddenly taken off to record high levels has not changed the bottom line problem for our western Canadian meat packing industry.
There is no easy solution to this hog production situation, certainly not in the short term. Surely the long-term approach must be for all concerned to recognize that the natural and obvious market for our western barley is right on the farm where it was grown, or on the one across the road with a hog operation or cattle feed lot on it.
Crop prospects now all across western Canada are very, very favourable, even at this early date. They are favourable because of excellent moisture conditions which extend over the whole of the west. This is in sharp contrast to last year's very serious drought conditions.
A somewhat later seeding, possibly due to wet fields and cool weather, could mean more barley being seeded and less wheat, perhaps all across the west. We might very well produce more feed grains than wheat in Alberta this year. We could see a western barley crop in excess of five hundred million bushels.
If an increasing portion of these feed grains could be fed on the prairies and converted to value-added food products, the load on our railway grain transportation system, which is now very heavily overloaded, would be considerably lessened. We should be exporting our domestic value-added agricultural products, especially to the United States, and not exporting those secondary value-added jobs. This is what is happening when we now export our live feeder-cattle to the United States.
Let us examine that overloaded railroad grain transportation system to which I just referred. The problem has been building up since the mid-sixties. I refer hon. members back to the government task force on agriculture. Among other things, it recommended that two out of every three western farms should go, as there was no real future in the grain industry. It also recommended that we should export 500,000 feeder calves from western Canada every fall because we could not grow them out or finish them in the west. This was followed by the

famous LIFT program. It also indicated that the government had no confidence in the western grain and feeding industry.
The immediate problem is the shortage of boxcars. There is no labour problem. There are no rail stoppages. In 1975 the railways had 20,000 boxcars and 6,000 government hopper cars. This car count has now shrunk to 13,000 boxcars and
8.000	hopper cars, for a net loss of about 14 million bushels capacity. It is expected to decrease by another five million bushels capacity by the end of this year. The immediate need is for a boxcar repair program to provide some relief until the
4.000	new hoppers requested by the Wheat Board come into service. Our country elevators and branch line systems have never been a bottleneck. Yet for political reasons these areas have received all the attention over the past decade.
These are situations which have hurt every small businessman farmer in western Canada over the last ten years or more. Well-planned, long-range solutions are required, some of which will take years to implement. One such issue requiring attention concerns the statutory rate, or the Crowsnest rate, as it is called. This has been with us for 70 years or so. It won't go away by itself. We shall have to face up to it some time, though that cannot possibly be now, or before the election, whenever it comes.
Now I want to turn to a brief review of other small business matters. I have selected a few examples from my constituency which are typical of what one could find in most regions of Canada. I want to show how small business operators, especially in the rural areas, have been able to get along. First, there is a hockey stick manufacturing company in the short-grass country near Medicine Hat which combines imported Thailand hardwood with British Columbia wood to produce "Westar" hockey sticks used in our western junior league to a large extent and chosen in competition with well known brands manufactured in central Canada.
There is a glass blowing industry called Altaglass involving only six people which creates beautiful works of art through an almost forgotten trade.
There is another manufacturing plant called Scott Manufacturing which specializes in playground equipment and large outdoor Christmas decorations. They ship their products all across Canada, a fair amount going into the northwest United States.
In the towns of Brooks and Bassano there are a variety of small business manufacturers catering to the oil and gas industry. Needless to say their business is flourishing in Alberta today.
In Taber, the heart of the irrigated area, there are other specialized industries which relate to the highly developed and productive irrigation zone in southern Alberta.
These are just a few examples of small businesses which fill a great need, a need which was not being supplied from other sources. They are typical in that they turn their profits back
May 16, 1978

into their businesses within their own community. That is the only way they could get started and expand.
Hon. members may recall Winston Churchill's description of Britain in the dark days of the war as "a nation of shopkeepers".


Stuart Malcolm Leggatt: It was Napoleon who said that, not Churchill.


Herbert Thomas (Bert) Hargrave: Surely it is appropriate to suggest that Canada is a nation of small business operations with farmers leading the way. The time is long overdue for considered attention to be given to our small business sector along the lines of the motion we are presently debating with its five-step policy suggestions.
Before concluding these brief remarks it seems appropriate to comment on the Bryce report which I mentioned at the beginning of my speech. The suggestion that the capital gains tax should cease can be taken as the end result of seven years of serious inflation which began with the introduction of this new tax approach on, I believe it was, January 1, 1972. It seems to me that either the capital gains tax has to go or inflation must be positively controlled. The capital gains tax rollover provision in the budget last month affecting incorporated family farms is a direct result of the serious threat to family farms due to a combination of inflation and the capital gains tax.
As to the other suggestion in the report that we can live with big business, 1 say that if Canada is serious about engaging successfully in international trade, big business is not only justified but necessary, if only to take advantage of economies of scale. I can also agree with the recommendation in the report that corporate profits ought not to be taxed provided they are re-invested in the business. After all, that is how all business grows, especially small business. I would add, in conclusion, that farmers have always had to do this, though with them it has been a survival technique.


Hon. Martin O'Connell (Scarborough East):: Mr. Speaker, the importance of small business in the Canadian economy can be doubted by no one, not only in terms of the number of firms that are small business firms- something like 90 per cent of all the firms in Canada-but also in terms of the employment created by those firms. Well over one third of all the members of the work force are in small business firms and at least one fifth of all the value of goods and services produced in Canada is in small business firms.
We cannot doubt the importance of policies to foster the viability and success of these firms, nor can we hide from ourselves the fact that small firms in many Canadian small towns across the country are in a state of difficulty. This difficulty arises from erosion of their position. In some cases they are simply manufacturing goods of a standard technological character and are faced by competition coming over the horizon from the third world countries where there has been a transfer of technology, a transfer of industry. We support that, but we also have to take special measures now because small industry in our country is threatened.
Small Business
Just think of some of the small companies in many towns manufacturing, for instance, bicycles or textiles or chainsaws or auto parts. Sometimes they provide income and support for the whole community. Therefore, support for small industry is important. It is important socially and economically to maintain small communities. It is important from the point of view of regional balance in Canada. How much of industry is concentrated in the central provinces and how great a sense of unfairness can develop across the country if there is not a fair share of industry in the towns and cities in parts other than central Canada? Policies have to take account of that concern too.
Small industry is more than a romantic ideology. It is possible economically with today's technology to have a thriving and decentralized economy with small industry, and many countries demonstrate that, as does ours to some extent. It is not only possible but it is good social and regional policy as well. So I would like to congratulate the mover of the motion for bringing it forward and giving us this opportunity to make some remarks by way of proposing a network of supporting policies. I say network because what I want to stress, as indeed the motion does, is that there is needed not one given policy but a whole network of policies.
Let us look first at the question of taxation. Too often we think of taxation as the only way to approach the problems of industry, particularly small industry. Already major steps have been taken, inadequate as I suggest they still are, but we should at least recognize that the government has, in effect, rolled up its sleeves with respect to the problems of small industry. It is moving, not only by the creation of a special secretariat in the Department of Industry, Trade and Commerce and a special minister, but also by a whole host of provisions, including tax provisions.
Let us review some of them to see what has been done. There is a special low rate of tax on the profits of small companies. It amounts to 25 per cent compared with the 46 per cent maximum rate of tax on larger companies. There are rebates and tax incentives for investment in research and development. Most recently in the budget, two tax measures were brought forward. There is the proposal for tax credits of 5 per cent, ranging up to 10 per cent in slow growth areas, for new investment in industry and for research and development.
Then, in the most recent budget, there was a special measure to increase the write-off for new research and development over a certain base period. This added budget measure will allow small and large companies to deduct from their income 50 per cent of the costs of increased R&D activities, a very important measure for small business. This would raise the total immediate write-off to one and a half times the amount spent on new R&D. For example, if a company spent $100 on new R&D, it could write off $150 against the taxable income.
This is of considerable help to small business. What would be the savings to a small business? These tax savings would amount to about $16 in every $100 of new expenditure on

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research and development. Instead of the net cost of R&D after tax being $75, the net cost would be approximately $59 in Ontario and $55 in the slow growth regions of Canada.
I should like to suggest an improvement over even this salutary measure which I hope the Minister of Finance (Mr. Chretien) will take into account. It would be an improvement on behalf of small business not granted to large business with respect to these R&D tax incentives. The point is that small businesses pay a low rate of corporation tax on their profits. When that low rate is applied in the R&D context, it means that small businesses receive, in effect, a lesser advantage than that gained by corporations paying at higher rates of taxation. I would like the minister to consider whether it would be possible to expand the tax credit in the case of small businesses.
What are the objectives of R&D? I think we should be clear on what they are because the network of support policies have to focus very strongly in this area. The objects of R&D are to help a company to be technically advanced in its processes, in the methods it uses, in innovating new products and in modifying a product which it has in order to expand its market-in effect, to be aggressive in the entrepreneurial sense, to be right at the leading edge of change in the market.
In the face of these needs, Canada has one of the poorest performances in R&D among the western industrial countries and its performance has actually deteriorated in recent years. Does anyone really believe that this poor performance in R&D is related mainly to the tax environment? I do not think so, and I do not think the situation can be corrected by simply applying tax incentives and tax measures.
The tax environment can help, but there are other aspects that I think are more important. One of them is the relationship between and within firms that exists in a country like ours because of the high degree of foreign control and ownership in the economy. I do not say this in an aggressive sense but I wish it to be recognized that it is the practice for companies to do their main R&D at their head offices where their main market is and where their main corporate strength is. That means that Canada gets R&D transferred to it after new technology, new processes and new products have been developed elsewhere. This lag is important because it puts us behind in getting into new markets. We come in late.
We should recognize at the same time that many subsidiaries of foreign corporations do significant R&D in Canada. The picture is a mixed one. For example, Ortho Pharmaceutical, which is a wholly-owned subsidiary of Johnson, and Johnson, a huge multinational company, has one of the few research and development laboratories in this industry with 40 scientists who have developed worldwide products in certain fields. That is the kind of autonomy and relationship that we need, but all subsidiary firms do not have it. Canadian General Electric has it to a limited extent, so does Eli Lilly and so does Hewlett Packard, DuPont and others; but in the main our branch plant economy lags in R&D because of that parent subsidiary relationship. We have it in our own case where Northern Telecom, a Canadian multinational, does its R&D in Canada.

What we need to do is to examine the relationship which is dragging R&D down in Canada. I think we can do that in the 23 task forces which have been set up a month or so ago and which are due to report for the first time in six weeks. They are developing action plans in 23 sectors, such as in plastics, in the auto industry, in pulp and paper, in mining, and in other manufacturing sectors. They can examine the impact on R&D of the high degree of foreign ownership and control which exists in Canada. We should not rely simply on changing the tax environment, because it will not change fundamentally the underlying patterns which are well entrenched.
I should like to suggest further in this connection that perhaps we should be considering a Canadian institute for intermediate scale technology. There is, however, a bias against new agencies and new initiatives of this kind. Nonetheless, it will work against our interests if we allow that bias to proceed too far. Why do I suggest a Canadian institute for smaller scale technology? In the first place, small businesses to succeed, certainly in manufacturing, have to be discontented with simply being a manufacturing firm manufacturing products on behalf of some other firm which has done all the design, all the research, all the development, and then says: "Bid on this contract. If you succeed fine, if you do not, we will go elsewhere". They must have independent, autonomous sources of product improvement and process improvement. Given the fact that we are on the lagging end because of the ownership and control situation, perhaps we do need research into intermediate scale technology to help Canadian businesses benefit from those improvements by developing them, and ensuring those improvements get into their operations.
As many hon. members have mentioned, perhaps we also need export consortia to help small firms grow out beyond their regional and domestic market. Because they are small and do not have a marketing organization to sustain the penetration of foreign markets, it would be an advantage for government to assist in the formation of export consortia. Let us not be driven off from such proposals by the argument that yet another government bureaucracy is being formed.
My main point in all this is that tax incentives are the easy way out. They will not do the whole job because of the particular problems we are faced with. I am referring to problems with the third world, the industrialized world and the scattered character of the Canadian economy. One aspect of the motion I should like to support was proposed and passed at the Liberal party national convention. I am referring to an amendment to the Income Tax Act which would suspend the operation of capital gains tax when small businesses pass within families or indeed to employees of firms.


Some hon. Members:: Hear, hear!


Mr. O'Connell:: I am glad to see the party opposite has reached the same conclusion. Obviously that is because the need is evident. I hope it will not take long for the Minister of State (Small Business) (Mr. Abbott) to convince, with our
May 16, 1978

assistance, the Minister of Finance of the importance of that provision.
There are other tax breaks for small businesses which are appropriate at this time as part of a network. Again I say that they are not the entire story. The Minister of State (Small Business) is proposing and developing what Americans have called small business investment corporations. We are likely to call them small business venture capital companies. What is such a company? Canadians with some savings can put their money into an intermediary corporation known as an investment corporation, a venture capital corporation, and not therefore directly into a small business itself. What will that venture capital company do with the money? It would invest in a number of risky ventures, some more and some less risky than others. It would diversify its total investment. It would protect investors by its diversification. It would be similar to an insurance principle. If one puts one's own money into a risk area, the risk is quite high. If one puts one's money into a company involved in the business of investing money in a diversified manner, then one has a chance at making a profit. Thus our small Canadian companies would be provided with the venture capital they need to go forward. Currently we lack such institutions. As I understand the minister, he is proposing their creation through a statute. I am sure all hon. members would support that.
What would be the inducement for Canadians to put money into such ventures? Well, they are given tax incentives. What kind of incentives? They are not difficult to find. They are allowed to write off any losses they might incur against other income. Also, they are allowed a lower than normal rate of tax on the gains made. As they look at the prospect of making gains with lower tax and being sheltered against total losses, then they will put their money into such a venture capital corporation. Entrepreneurs who would be assisted through other means in the network of policies would have this new source of capital with which to be innovative in products, and to become involved in new industries. With the capital gains adjustments mentioned earlier, they would be encouraged to retain capital and build it up.
I should like to mention another item, the special funds such as those the Canadian auto part manufacturers are requesting. This is not a tax measure. They are asking for repayable loans. Why are they requesting that? It is because we are entering a new phase of the auto industry. There is a demand for smaller, more economic, energy-saving, safer cars. The manufacturers will be required to make new parts. They will be using more plastic parts and will require new designs. Will we have our share? The auto parts industry is asking for a loan fund of a quarter of a billion dollars. That would be a repeat of a similar loan fund which was implemented 10 or 12 years ago when the auto pact began. They need such a fund again. Most of the money loaned from the previous fund was repaid. That is one method of assisting many of the smaller plants in the small towns and large cities across Canada. It would assist them in becoming involved in the next phase of the auto industry.
Small Business
My time is running out but I should like to refer to the plastics processing industry. That industry has 1,400 firms. It is growing at twice the rate of our economy. Its productivity gains annually are twice the average in the manufacturing industry. It requires stabilized framework policies in tariffs and taxation. Above all, it needs a plastics institute to assist in the development of new technology in order for that industry to become very advanced. Other policies could be mentioned in the areas of procurement and tariffs.
At this stage, however, I should like only to refer to the need for a change in the internal organization of the federal government. We require more than a minister of state for small business. There should also be a senior economics minister. I am thinking of the office of the Deputy Prime Minister and President of Privy Council (Mr. MacEachen) as being assigned that role. One should consider the government's position in policy, the need for coherence and the meshing of policies. For example, one could look at such economic ministries as the Department of Regional Economic Expansion, the Department of Industry, Trade and Commerce, the Department of Finance, the Department of Science and Technology, as well as others. At a time when policy and the creation of certain agencies are being considered, surely we need one minister who can bring it all together. The Deputy Prime Minister and President of Privy Council is the person who ought to be assigned that special role.


Some hon. Members:: Hear, hear!


Mr. Dan McKenzie (Winnipeg South Centre):: Mr. Speaker, I congratulate the hon. member for High Park-Humber Valley (Mr. Jelinek) for presenting this excellent motion today. If all of the recommendations in this motion were accepted and implemented, certainly Canada would be back on track. It is evident we are off track today.
There was a previous excellent motion regarding the role of government in society and the economy on February 2, 1978. It was an attempt at bringing some sanity back into the Government of Canada. Also it was an attempt at bringing expenditures under control and to implement methods to limit the growing and undemocratic use of legislation which stifles Canadian businesses. Of course, the Liberal and New Democratic Parties united to vote against this excellent motion on February 2. No doubt we are going through an exercise of futility tonight.
It was interesting to hear the hon. member for Scarborough East (Mr. O'Connell) talking about venture capital. I have in my possession a document which was prepared by Peter Henry Jerch and Associates. Mr. Jerch in this document, which appeared in a recent weekend magazine, states:
For years I've been hearing the same scenario over and over again, with hardly any variations. It goes like this: Canadian entrepreneur develops hot idea, sets up company, gets successful in a small way, needs money to expand, goes to banks, goes to government agencies, goes to venture capital firms, knocks on half the doors in the Toronto-Dominion Centre, gets nowhere; his proposal is met with
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May 16, 1978
Small Business
incomprehension or, at the very best, a cautious display of interest that's followed, weeks later, by a short letter saying no thanks.
Mr. Jerch in his document goes into some detail about the 40 firms he represents which are looking for capital venture so they can expand but are getting absolutely nowhere.
I should like to congratulate the Minister of State (Small Business) (Mr. Abbott) and the government for the excellent job they are doing to expand the economy. Unfortunately it is not the Canadian economy they are expanding but rather the economy of the United States. They are doing an excellent job of driving businesses and money out of this country, to the extent of billions of dollars.
I have done a little research into this and I know the amount of money that has gone to nine states. It totals $6.5 billion since 1976. Would it not be wonderful if we could have kept that money here for venture capital? We would then really have grown. I would like to challenge this government tonight, and perhaps the Minister of State (Small Business) could take this up with the Minister of Finance (Mr. Chretien), to determine how much has gone to the other 41 states. If $6.5 billion has gone to nine states, what are we looking at in regard to what has left this country? These businesses are just not staying here. Businessmen have no faith in this government and are losing faith in this country. They are flocking to the United States with billions of dollars and numerous business ventures.
I have done a geographic breakdown in respect of this departure of businesses and money. Florida is going to be taken over by Canadians. The estimated capital expenditure in the state of Florida by Canadians is estimated to be more than $2.5 billion. While Florida is attracting large amounts of Canadian capital, California has become the second most invested area. To this date over $1.5 billion from Canadian pockets has ended up in California. Texas and New York comprise the third largest area of investment for Canadians, and the figure is $1.3 billion. In Colorado $500 million has been invested. In New Jersey the figure is $400 million, in North Carolina it is $400 million, and in the states of Georgia and Illinois the amount invested is $300 million. There is one area I have left off which should be listed. Some 30 per cent of the high rise apartments in Seattle, Washington, are owned by Canadians. Canadian Pacific invested $150 million in New York recently.
The Ottawa Citizen did an excellent study last year on the number of businesses moving out of Ontario. That article pointed out that 140 Canadian manufacturing firms moved to the state of New York, taking $28.6 million with them.
Union Nationale Leader Rodrigue Biron pointed out recently that $4 billion has left the province of Quebec. You can see how serious the situation is, Mr. Speaker. Until this situation is corrected we can talk all we want about the nice things we are doing to help Canadian business, but where will the money come from? As I have just pointed out, in respect of nine states alone $6.5 billion has left Canada for investment there since 1976.
Peter Henry Jerch and Associates also prepared a document regarding the number of firms they represent. That firm represents 42 Canadian firms, and right now 30 of them are looking for expansion or a move to the United States. Let me give the reasons why they are going. While the known facts about small private investment in the U.S. makes Canada the most active foreign investor, even these facts are considerably understated according to Mr. Jerch. The vast majority of such investments or acquisitions are never reported officially, mostly for the reason that the normal successful businessman is good at operating a business but is generally publicity shy or fears that he may get burned somewhere in that process and that it may hurt his business to expose the transaction prematurely.
This is one of the problems we have when these investors or businesses decide to leave. They do not put ads in the paper. I hope the government is trying to keep some track of the number of businesses which are leaving as well as the amount of investment money they are taking with them in order that we can see how serious this problem is. This is a matter which has been raised in the House a number of times. The Prime Minister (Mr. Trudeau), the Minister of Industry, Trade and Commerce (Mr. Horner) and the Minister of Finance have been questioned a number of times about this but we have received nothing but a negative response. We have seen absolutely no response from them, and no suggestions about meeting with these people in an attempt to keep this investment money in Canada.
In addition, Mr. Jerch goes on to say that many of these businessmen have tried to make their experience known, only to meet with civil service or political apathy. The experienced businessman therefore adopts the attitude that he should stick to what he knows best. Of course, they are worried about government reaction too, which tends to take the approach of controls-for example, control on exchange, like Italy, rather than taking the enlightened approach of making equity investment in a company at home less of a risk.
Mr. Jerch, in this document he has provided to me, points out that of 42 Canadian smaller and medium-sized active manufacturing and service enterprises, only 12 were looking for acquisitions in Canada only. Some 15 thought they would consider a further acquisition or investment in Canada as a second alternative, which suggests that reason tells them to go elsewhere, but they still tend to be optimistic despite all their complaints. However, 30 of the 42 are either actively looking in the United States or have already made one or more acquisitions or investment decisions there.
He also provided me with a document regarding a group of firms in Manitoba on whose behalf he was working. They total
49	and all are planning to move out of Canada. The amount of investment money they would be taking to invest in U.S. plants would amount to $196 million. According to Mr. Jerch's figures, this would mean a loss of up to 17,000 Canadian jobs.
50	hon. members can understand the difficulty we are running into.

May 16, 1978

Let me give additional reasons for this flight of capital and business. There are numerous reasons that money is fleeing Canada, and all of them are directly related to the economic policies of this government. Let me now examine briefly some of the more important causes of the lack of business confidence in Canada. Such an analysis will clearly show that neither Canadian businessmen nor American chambers of commerce can be blamed for the exodus of capital from this country.
Contrary to widespread public belief, the Quebec situation is not the only factor accelerating Canadian investment abroad. While events in Quebec have had a serious negative effect on investment in Canada, capital had been departing this country at alarming proportions for several years prior to the election of Mr. Levesque.
The way to judge whether you have a good government and an attractive country is to determine whether you can attract investment money. Canada is no longer a country attractive to investment money. We cannot even keep the investment money of our own companies in this country. If there has been an exodus of $6.5 billion from Canada to nine states, I wonder what the amount has been for the other 41 states. Are we looking at $100 billion which has left Canada in the last few years? This is a staggering thought. There will be a huge burst one of these days when we find out the total amount.
We know what the effect of this has been in Canada, or at least the partial effect. We have one million unemployed, and unemployment is costing Canadian taxpayers $8 billion a year. More specifically, a climate of uncertainty has existed for several years in Canada, created by the policies of the present government. The best climate for quarterly and normal business growth is economic and social stability. During the decade this government has been in power, Canadian businessmen have been living in a state of uncertainty and insecurity because of the lack of leadership by this government.
Instead of enacting policies conducive to investment, the government seems to have done everything in its power to scare it away. The vast increases in spending, the proliferation of boards and regulatory agencies with numerous arbitrary powers and overlapping jurisdictions, and the lack of consultation for enterprising entrepreneurs, are just a few of the factors contributing to the uncertainty. These policies reflect the socialist leanings of this government, and it is no wonder that businesses look elsewhere when investing their money. References by the NDP to the effect that corporations are welfare bums does little to enhance investor confidence in Canada.
Mr. Jerch did a study on the number of businesses that were leaving Manitoba when the socialist government was in power. The number pulling out plus invested money would contribute to the loss of 4,000 jobs in the province of Manitoba.
Also related to the preceding point is the problem of too much government. The ever-increasing size of the federal public service and the problems created by this expansion are factors which hinder business activity. Businessmen are forever
Small Business
hassled by federal regulatory agencies, departments, boards, bureaux, offices and councils with their myriad of rules, regulations, laws, edicts, orders, decrees and statements. In short, they are inundated with paperwork. Moreover, should a businessman disagree with a ruling it is extremely difficult to appeal to that body, and the time and effort involved usually precludes an appeal anyway.
Businessmen do not run into this problem in the United States. The government and labour there welcome businessmen and investment money because they know there is no alternative to a business establishing a factory or a plant. They do not harass businesses to death.
Government involvement in the economy has increased to the point where 42 per cent of our GNP, which is the sum of all goods and services produced in Canada, is produced by the government. If present trends by provincial and federal governments continue, 88 per cent of all goods and services produced in Canada by 1990 will be under the state. Only 12 per cent will be left for private enterprise. That is the reason why businesses are pulling out. They have no faith in their government. There is so much uncertainty that they are not going to leave their money here.
It is all very well for government members to be talking about venture capital and what-have-you. There is not going to be any venture capital in this country. This is high risk capital, and nobody is going to take any risks in Canada. The solution to the problem is to slowly reduce the size of the government, not through massive lay-offs of dedicated civil servants, but by attrition. In addition, wasteful make-work projects could be eliminated. If governments want to make work, the best way to do it is through proper incentives to private industry.
Our motion on February 2 of this year was put forth to deal with these things, but the last thing this government wants to do is to reduce the size of any of its bodies. The NDP want more and more government employment because they want to do everything in their power to harass business as much as they possibly can so they can drive more and more of it out. They want everybody to work for the government. Everybody is going to work for the government and they are going to chase every business out of the country. That is what they want to do and they are successful. We saw it with Blakeney in Saskatchewan when he started it all in 1975 by nationalizing the potash industry. He put the fear of death into the American investor. They also did the same thing with the mining industry. Our friend from New Westminster (Mr. Leggatt) knows his leader in British Columbia put the fear of death in business and investors in that province.
I have a very interesting quote from Mr. Neil Wood, president of Cadillac Fairview Limited. He was quoted in the Ottawa Citizen recently as saying:
We're not selling out Canadian assets, nor turning our back on good Canadian opportunities, but they are few and far between. Government delays in getting approvals continue to frustrate us in Canada compared with U.S. where development is welcome.
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May 16, 1978
Small Business
It is not welcome here with the socialist governments we have at the federal and provincial levels. Thank goodness there is only one left.
I would like to go now to some quotes from American newspapers. The Dallas Times Herald of February 19, 1978 says:
The Canadians are coming! All the battle preparations won't be necessary, but our neighbours to the north are invading-in an investment sort of way ... while the Canadians have invested in everything from mining and petroleum to merchandising and manufacturing, much of their money is being poured into real estate... The list of Canadian held properties is quite impressive. They include an ongoing $1 billion, 42 acre housing development in Homestead, Florida, the purchase of several small but profitable banks in Florida, the Peachtree Centre Tower in Atlanta, the development and purchase of shopping malls and mobile home communities in Florida and North Carolina, numerous new and old office buildings in New York, Detroit, L.A., San Francisco and many more.
There are reasons bringing Canadian investors to the States other than age old desire to make a buck. First, the political climate in the 111 year old confederation is anything but encouraging to business. Add to the political climate the fact that Canada has many more environmental and planning restrictions on development than does the U.S., and one has a picture of a nation with a governmental atmosphere that stifles growth.
This debate is nothing but an exercise in futility because the government have no intention of correcting the situation and are not going to implement one recommendation in this motion. They will merely ignore it, just like they ignored our February, 1978 motion. Their philosophy is to stifle business and to make things as awkward and as difficult as they possibly can for people, and to stick their noses into everybody's business.
Here is another comment from the Miami Herald dated March 30, 1978:
The Canadian dollar is buying up Florida in an escalating and often frenzied scramble to find a haven from political and economical uncertainty at home ... Canada's largest financial and development corporations alike are exporting their savings and surplus capital in a classic flight to find sanctuary.
In my remaining minute, 1 would like to ask the government once again to supply figures for the 41 remaining states. I have given Canadian investment figures for nine states with a total of $6.5 billion in the last couple of years. Let us put all our cards on the table and find out the exact amount that has gone into the United States in investment. I have given some examples of businesses leaving, mostly from Ontario to go to New York, but let us get it all out in the open. I would like to know exactly what this government is going to do about this situation.


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



PROCEEDINGS ON ADJOURNMENT MOTION

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

Mr. P. B. Rvnard (Simcoe North):: Mr. Speaker, I have asked the Minister of Communications (Mrs. Sauve) on two occasions to provide aid to assist persons afflicted with deafness. There are two million such in Canada. First of all, every Canadian has a right, regardless of this handicap, to an education which will allow that individual to develop and function to the maximum of his or her ability. The government has not seriously considered the needs and the welfare of the deaf. Employment of anyone handicapped rarely occurs unless there is some incentive. Manpower offers some assistance but the response is poor.
Very little money is spent on the deaf compared to what is spent on people with visible disabilities. The working deaf are taxpayers but they work in a world where, if not handicapped by the actual job, they are certainly handicapped by their surroundings which are altogether different from those of other people. They have little or no means of oral education, of hearing the conversation of others or of patronizing the things others do and getting news as you and I get it, Mr. Speaker, even though they have the same intelligence as we have. All this is beyond their means without special teachers. They do not yet have equal job opportunities and our twentieth century society does little to help them.
There are some questions that I should like to put to the parliamentary secretary who is representing the minister tonight. For instance, what education do the deaf get? Are they eligible for the $1,000 tax deduction that is available to other handicapped persons? It is rarely that we see these people rise to the level of university teaching, medicine or the other professions that are high on the pay scale. The George Brown college in Toronto draws a lot of people from all across the country and produces brilliant deaf scholars-many as brilliant as you would find here, Mr. Speaker, and maybe a little more brilliant at times. There is also a fine building for the deaf in Toronto which is being completed by the great war veteran, Con Smyth. I know him and the Reverend Roy Rumbull, Ernie Watts, and others I am not going to mention but who are also very interested in this work.
When I put my original question the minister told me that they are "researching". What are they researching, Mr. Speaker? They already have the decoder so why have they stopped? She said it costs $2,000 but I say let us spend the money. This device has been perfected and is working in the United States. Have funds been made available to Bell North-
May 16, 1978

ern Research, for instance, to go south of the border and research this system?
The decoder may be a bargain at $2,000 because it gives deaf people a chance to hear the things the rest of us hear. What more right have I, who can hear and see, to view the televised proceedings of parliament which is paid for by the taxpayers of this country, some of whom are deaf? Why can this decoder not be used so that they too can follow the proceedings? Are they not entitled to hear the hockey game that is being broadcast tonight? We are shutting these people out of many things because they are a quiet minority, and I say we have to do something about it.
Deaf people are often very innovative. Some of them took the old CN and CP teletype machines and converted them so that they could be used with the telephone. When you punch the keys a light comes on at the number you have dialed, the person there picks up the receiver and they can communicate back and forth. Why are we not pursuing this and getting ahead of the United States, instead of just waiting to copy them as we usually do?
I want to point out to the parliamentary secretary that it costs about $1 million to institutionalize a deaf person for 30 or 40 years. Yet they say the decoder only costs $2,000. Then when the unemployment rate goes up because it is hard for those persons who are a little hard of hearing to get a job, they look at them and say "no". I am not taking anything away from the government or manpower, because I know what they try to do, but look at what has been the response. Hon. members know the response as well as I do: it has been terrible. They just do not get it in this workaday world.
I want to go on a little further to say that there must be ideas and creative work for these people so long forgotten by the public purse which has poured out money on so many things that were far less deserving. Will the minister make a commitment to do something? Will she give some research funds to Bell Northern Research to make sure that the required research is done, and will she check with those in the United States? Will this invisible handicap then become one that will partially disappear?
In closing, I want to say to the parliamentary secretary for goodness sake let us stop putting things off and making excuses. Excuses only last so long. These are people who cannot speak for themselves or who cannot hear all that is going on. They are handicapped people that we all owe something to. As far as possible they try to work and do the things that they can do.


Mr. C. Douglas (Parliamentary Secretary to Minister of Communications):: Mr. Speaker, it is a pleasure for me to respond to the hon. member this evening. As we all know, he at all times expresses sincere concern for the handicapped of this country and for those less fortunate than ourselves.
I can assure the hon. member that the minister herself feels the concern, as he does, for all handicapped, whether they are
Adjournment Debate
handicapped by loss of hearing, loss of sight or by other handicaps. However, the solution is not as simple as we would like it to be.
I will deal specifically with the hon. member's concern about the captioning and use of sign language in television broadcasting. As he may or may not know, even in the use of sign language we have not as yet been able to come up with a universal type of sign language that can be used from coast to coast across Canada.
As hon. members probably know, sign language came to this country from France possibly about 100 years ago. Since then it has been developed in individual areas in the country to the point where we have a break-up of dialects even in the hand signals or in the sign language used on television. This, of course, presents a problem when we speak about a national broadcast designed to go into homes right across Canada and the United States. The mandate of the Minister of Communications (Mrs. Sauve) is such that she cannot compel the networks, to use this system. In particular this applies to the private networks and the CBC, because the CBC does not fall under the umbrella of the Minister of Communications as far as programming is concerned. She must cajole and try to persuade them. Her mandate falls into the area where she can permit the use of this system but not compel it, as the hon. member knows. She would be pleased to permit this type of broadcasting right across the country.
However, we have learned that there are problems arising in the United States with the private networks which have expressed some concern. There are two types of captioning. One is the use of the sign language itself in the corner of the picture and the other is the proposed use of line 21 for captioning, either open or closed captioning, in the television screen.
One problem with captioning is that they found in limited use in the United States, primarily at the present time by the Public Broadcasting System, that the actual captioning of a broadcast, for example a news program or an hour long program, could involve the work of people from ten to 30 times as long as the actual presentation of the broadcast in order to put it on the air.


Philip Bernard Rynard: How about the decoder?


Crawford Douglas: One has been developed at present at a cost, of, I believe, $2,000. There is still work going on with regard to the decoder. Some aspect has been looked at with cable television which would provide a special channel for the use of the decoder.
A final remark, if I may. The hon. member raised the subject of deductions. I hope he will address that at a later time to either the Minister of Finance (Mr. Chretien) or the Minister of National Revenue in order to get an answer on this specific question.

May 16, 1978
Adjournment Debate


POST OFFICE-PLANS TO PREVENT INCIDENTS LEADING TO WORKERS BEING SENT HOME
Mr. F. A. Philbrook (Halton):: Mr. Speaker, first of all I am very pleased to see the Postmaster General (Mr. Lamontagne) here to meet the concern that we have talked about. Yesterday I posed a question to him during question period about an incident that occurred last week, May 11, in Ottawa at the main postal terminal. It was an incident where some inside postal workers, through the use of such things as badges and T-shirts, instigated a rather silly, insulting and obscene gesture which was uncalled for toward management.
My question to the minister was, essentially, what can we do to prevent this kind of incident which could easily in the future, as it has in the past, develop into a much wider incident resulting in a wider disruption of postal service. The minister answered that he and his deputy minister, who it turns out is an excellent man from my constituency, and one of our colleagues, the hon. member for Ottawa West (Mr. Francis), went there and spoke to the workers. They delivered a firm ultimatum that they either remove those objects that were insulting to management or be sent home from their shift. Apparently there was a mixed reaction. Some did, and some did not. That was fine as far as it went.
I appreciated that answer. However, it really did not entirely answer my question. I was asking what we could do to prevent this from happening in the future and not just deal with it when it does happen.
This is another in a series of events involving inside postal workers in various parts of the country. It has caused the Canadian people to become intolerant of this kind of action by this particular group. If my constituency is any example, I would say the Canadian people have just about had enough. They are fed up with this kind of irresponsible behaviour.
This probably represents for inside postal workers the worst industrial relations we have in the country. I do not want entirely to incriminate the post office management, although we recognize there are troubles on that side. But there certainly is great concern about these postal workers. It is peculiar because they tend to blame the post office management for all of their troubles. However, it is not all the postal workers who behave in this way.
We do not have any trouble with the letter carriers, the outside workers. In fact, I believe one reason the letter carriers split off and developed their own union was because they felt they could no longer be associated with the inside workers.
There is a book on the subject, an excellent book from the Post Office on its industrial relations, particularly with the inside postal workers and a certain group of them which is causing all this trouble. It is quite an experience to read. I have certain excerpts of it in my hand but I do not think I have time to read them. It would be worthwhile covering outstanding instances of what has happened during relations with these people on another occasion, perhaps on an opposition day when this subject is debated.

People in my riding-I think they are fairly representative of business; they are business people by and large who rely on the mail-are puzzled about all this, as, I think, the rest of us are. They are frustrated because we do not seem to have an answer. After all, we have been at this for several years. They are angry and demanding some kind of action, a resolution of this problem and, of course, they look to the federal government for answers.
Why are we running into all this trouble? Industrial relations is a wide field. There are conflicts all the time between management and labour whether in the public or the private sector. But this type of behaviour by postal workers appears to be unmatched, unprecedented. Government and management tend to be blamed. The jobs are considered to be boring. Many jobs are very boring, Mr. Speaker. But these jobs are also very well paid.
Sometimes automation is blamed and at other times autocratic management. But surely these difficulties could be resolved peacefully. In other situations, they are. Workers blame the government, the cabinet and the various postmasters general over the years for lack of co-operation. Even the civil servants in the department are blamed. The workers, in turn, are accused of being deliberate troublemakers, in some cases of being communists, anarchists, separatists and so on. This does not seem to solve the problem. They propose certain solutions of their own-establishment of a private enterprise, a Crown corporation and so on.
The question now is: Can we get co-operation by agreement or shall we have to resort to tough measures? I believe Canadians are a reasonable people. They want to treat everyone well, including these inside postal workers. But they want these issues resolved soon. After all, this department is not a toy factory even though there are a lot of games being played. It is an essential service and the public wants some answers.


Hon. J.-Gilles Lamontagne (Postmaster General):: Mr. Speaker, I appreciate very much the speech just made by my hon. friend from Halton (Mr. Philbrook). I think he has said aloud what many people are thinking.
On May 15 the hon. member asked me whether the Post Office Department had any plans to prevent such incidents as the one which occurred at the main Ottawa terminal on May 11. On that day, some workers who were wearing an offending slogan were told by the supervisors either to remove the offending words or go home. Some stayed at work and others went home.
It just happened that on this same night my colleague from Ottawa West (Mr. Francis), the deputy postmaster general and myself went to the Alta Vista plant to see for ourselves how the plant was functioning and were informed of the situation. I agree entirely with the hon. member for Halton about the silliness and provocative behaviour of some inside postal workers toward management at the main Ottawa terminal, and I also support the positive action taken by the management on that occasion.
May 16, 1978

There are no specific plans, Mr. Speaker, to prevent similar incidents from happening. It is not really possible to formulate such plans. However, if an incident of this nature were to occur again elsewhere in Canada, we would apply the same policy as we did on that occasion. After all, there is no way to foresee such odd behaviour. But before such incidents escalate we always try, when possible, to find solutions in good faith, counting on the goodwill of all parties.
Some people have a tendency to think that we should be ruthless and more intransigent in our dealings with our unions. Others feel that we should be lenient and give in, in order to achieve peace at any cost. Mr. Speaker, experience has taught me otherwise. Nothing is achieved by extremes. Dealing with human problems requires a lot of understanding, tolerance and patience. However, one must realize that we have to accept out responsibilities towards the Canadian people who are entitled to an efficient and reliable postal service.
We have done a lot towards this goal: conciliation with CUPW is continuing; LCUC negotiations have already started; study groups to explore the possibilities of a Crown corporation status for the Post Office is proceeding; intergroup sessions are being held; full management meetings are continually taking place. Constructive, positive action is being taken by management. Mr. Speaker, we have a fine group of workers at the Post Office. We could achieve a lot more if a certain minority would agree to have a more tolerant attitude. Flexibility, tolerance, understanding, we all agree, are a must, but this does not mean we will sell out our responsibilities which are entrusted to us by the Canadian people.
The Post Office does not belong to the government, does not belong to any particular union, does not belong to management; it belongs to the Canadian people, and I intend to keep that so.


NATIONAL SECURITY-STATUS OF FORMER RCMP OFFICER
Benno Friesen: Mr. Speaker, here it is at 10.22 p.m. and it is nice to see the Postmaster General (Mr. Lamontagne) here in person at this late hour to answer the previous question. I wonder if it had anything to do with the fact that the previous questioner was a member of the government. But I see the hon. member for Bruce-Grey (Mr. Douglas) here to answer my question on behalf of the Solicitor General (Mr. Blais), and I have much regard for that member. I know he can read the answer as well as anybody.
On May 3, as recorded at page 5111 of Hansard, I asked the Solicitor General the following question:
The Solicitor General is aware that a former RCMP staff sergeant, Ed Hame-luk, has left the co-ordinating law enforcement unit in Vancouver to join John Meirs, a former associate of the late Howard Hughes. Since Mr. Hameluk was in a sensitive security position analysing intelligence and information sources and is now working for Mr. Meirs, who also had contact with CLEU, I ask the Solicitor General whether this matter is being looked into.
Adjournment Debate
Also, is he aware of the concern of other police forces in Canada about this matter, and what steps are being taken by him and, to his knowledge, by the attorney general of British Columbia to evaluate the situation?
The Solicitor General answered as follows:
I will look at the information he has provided, and if his evidence is accurate I will express the concern that he has expressed.
I am looking for that kind of information tonight. The question was first raised in the B.C. legislature on April 3 or 4 and was answered by the attorney general there on April 11, as recorded in their Hansard. I read as follows from that record:
-a couple of days ago concerning the job function of Mr. Ed Hameluk with the Co-ordinated Law Enforcement Unit. The response is: under the general supervision of the deputy director of the co-ordinated law enforcement unit, policy analysis division, Mr. Hameluk was to examine the phenomenon of organized crime in B.C.
That was one of his principal duties. He has left the service; he tendered his letter of resignation for personal reasons. An undertaking of the confidentiality of information has been received from him.
That is the point which is at the bottom of my concern, the fact that he has expressed confidentiality of information. I take heart from that, but that does not give me enough of a sense of security for the well-being of all of Canada. As 1 said earlier, Mr. Hameluk has left that organization to work with Mr. John Meirs who used to be in the employ of Mr. Howard Hughes. Mr. Meirs is now reportedly interested in funding a bank in the South Pacific in the principality of Tonga. I understand that the Bank of Hawaii is very concerned about that. It is also a matter of record that the U.S. authorities have been after Mr. Meirs regarding tax evasion charges.
It is fairly common knowledge in British Columbia that Mr. Meirs was arrested some years ago in Bellingham. He was held on $50,000 bail and then was released. He dropped that $50,000 bail in the city of Bellingham Mr. Meirs has had contact with CLEU. Mr. Ed Hameluk was a principal spokesman for CLEU in some areas. He left that organization to work for Mr. Meirs. I think that is some cause for concern. It is my suspicion, if not my understanding, that some of the other police forces in Canada are concerned also about the new union between these two men.
I should like to receive some assurance from the Solicitor General (Mr. Blais) as to what steps have been taken to ensure the security of Canada has not been risked by this new association. I do not know what can be done if Mr. Hameluk has given his word to keep confidential all the information he has received over the years. I do not know what type of security measures have been taken, but I am sure the authorities in charge of this area have means at their disposal to make sure this sensitive information, which has been at his disposal, will remain totally secure and will not be used in some manner that would be detrimental to Canada in any way in future years.


Crawford Douglas: Mr. Speaker, I should like to thank the hon. member for Surrey-White Rock (Mr. Friesen) for raising this matter, as he did with the minister as reported at page

May 16, 1978
Adjournment Debate
5111 of Hansard dated May 3, 1978. The hon. member referred to the reply which was given by the Solicitor General (Mr. Blais) at that time.
Staff Sergeant Edward Francis Hameluk loyally served in the Royal Canadian Mounted Police for 24 years. He retired on January 19, 1975. The RCMP has never had cause to doubt this man's discretion while employed in operational methods within the security services of the RCMP. As far as I know, the force has been given no reason to suspect him of anything contrary to the law since that time.
After his retirement, he obtained employment with the department of the attorney general in the province of British Columbia in the co-ordinated law enforcement unit. In the
spring of 1978, Staff Sergeant Hameluk secured employment as a security officer with a firm operated by Mr. John Herbert Meirs of British Columbia.
As a result of the question raised by the hon. member for Surrey-White Rock, inquiries were made since that time by the RCMP. 1 am pleased to inform the House that no evidence of any impropriety on the part of Mr. Hameluk has been raised at the federal level, nor by any other person since the time of the investigation, as far as I know.


Mr. Deputy Speaker:: Order, please. The motion to adjourn the House is now deemed to have been adopted. Accordingly, the House stands adjourned until tomorrow at two o'clock.
Motion agreed to and the House adjourned at 10.30 p.m.

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Wednesday, May 17, 1978