1978-11-21

ROUTINE PROCEEDINGS


Mr. Frank Hamilton (Swift Current-Maple Creek):: Mr. Speaker, I rise, under the provisions of Standing Order 43, to move a motion of urgent and pressing necessity. As the $1 billion loss in Canada's grain export program so far this year is seen by many producers as a deliberate attempt by the government to hold down inflation and economic activity in the prairies, I move, seconded by the hon. member for Moose Jaw (Mr. Neil):
That the government bring in new and innovative measures to increase exports before grain producers are killed off economically and told by the responsible minister that it is all for their own good.


Mr. Speaker:: Presentation of such a motion for debate can be done only with unanimous consent, pursuant to the provisions of Standing Order 43. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.
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EXTERNAL AFFAIRS
Mr. Bob Brisco (Kootenay West):: Mr. Speaker, I rise, under the provisions of Standing Order 43, on a matter of urgent necessity. In light of the recent tragic events in a so-called religious community in Jonestown, Guyana; in light of the fact that the Scientology cult has operated in a clandestine fashion, including the theft of government documents within the federal government of the United States; in light of the fact that the Children of God cult has influenced young Canadian women in Europe to serve as "hookers for Jesus" to raise funds for the cult; and, finally, in light of the fact that some of these cults have destroyed the family unit, creating untold heartbreak for the parents, I move, seconded by the hon. member for Pembina (Mr. Elzinga):
That the government, bearing in mind the rights of individuals to religious freedom, give consideration to the necessity of inquiring into the activities of these so-called religious cults.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.
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IMMIGRATION
Mr. Armand Caouette (Villeneuve):: Mr. Speaker, under the provisions of Standing Order 43, I ask for the unanimous consent of the House to introduce a motion dealing with an urgent question of pressing necessity.
Considering that the Government of Canada wishes to offer political asylum to 600 refugees aboard the Hai Hong who will be entirely dependent on Canadians; considering that the government denies political asylum to three Yugoslavian refugees who are prepared to invest $675,000 in a lumber company in the Val-d'Or area; and considering that the Minister of Employment and Immigration (Mr. Cullen) has shown inconsistency by rejecting individuals who are anxious to serve the country while he accepts refugees who will be on social welfare, I move, seconded by the hon. member for Roberval (Mr. Gauthier):
That the House condemn the decision of the Minister of Employment and Immigration about the three Yugoslavian refugees and immediately enjoin the minister to review his decision and encourage immigrants who can really help our country.


Mr. Speaker:: Pursuant to the provisions of Standing Order 43, the introduction of such a motion for discussion can be done only with unanimous agreement. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.
80067-12'A

November 21, 1978


TRANSPORT
Mr. Fonse Faour (Humber-St. George's-St. Barbe):: Mr. Speaker, I rise, under the provisions of Standing Order 43, on an urgent and pressing matter. In light of the information I received this morning, that a supply ship operated by Canadian National and serving communities on the northern coast of Labrador, left the community of Nain in Labrador without unloading, due to ice conditions, I move, seconded by the hon. member for Nickel Belt (Mr. Rodriguez):
That this House instruct the Minister of Transport to make immediate arrangements to have these supplies delivered in some other manner so that the community will not suffer undue hardship this winter.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.
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FORESTRY
Mr. Jack Hare (St. Boniface):: Mr. Speaker, I rise, under the provisions of Standing Order 43, to ask the unanimous consent of the House to move a motion relating to a matter of urgent and pressing necessity. In view of the fact that the Winnipeg office of the Canadian Forestry Service may be closed because of the government's restraint program, since Dutch elm disease now is well established in Manitoba, particularly along the banks of the Red River, and since the Canadian Forestry Service was the only agency acting against the spread of Dutch elm disease, I move, seconded by the hon. member for Selkirk (Mr. Whiteway):
That this House instructs the Department of the Environment to establish immediately an alternative and active program to combat Dutch elm disease in order to prevent complete desecration of the Red River treeline.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


PUBLIC SERVICE
[Stage Direction]
Citizen yesterday and today in which the plans by the opposition, if they come to power, to fire public servants and increase the size and salaries of ministers' staffs are currently revealed. I move, seconded by the hon. member for Vaudreuil (Mr. Herbert):
That this House orders that the hon. member for Grenville-Carleton be provided with full medical assistance every time that he listens to a speech by the Leader of the Opposition or the hon. member for York-Simcoe in case he really does have a heart attack.

Mr. Lome Nystrom (Yorkton-Melville):: Mr. Speaker, yesterday in the House, the Minister of Consumer and Corporate Affairs (Mr. Allmand) promised to investigate the possibility that there is turkey price-fixing in Canada. Pending the results of this investigation, I move, seconded by the hon. member for Nickel Belt (Mr. Rodriguez):
That this House instruct the Minister of Consumer and Corporate Affairs to persuade turkey processors and retailers to roll back excessive prices and to supply the domestic market immediately with turkeys presently held in artificial storage in this country.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.



ORAL QUESTION PERIOD


Hon. W. G. Dinsdale (Brandon-Souris):: Mr. Speaker, my question is for the Postmaster General but in his absence perhaps I could direct it to the right hon. Prime Minister, who once declared that everybody knows that the postal service is lousy. In light of this comment and the fact that every time postal rates increase, deficits also increase and postal volumes go down, I wonder if the Prime Minister would indicate whether the government has undertaken to study the effect of the latest increase on the volume of mail handled by the Post Office and on the efficiency of the postal service.


Mr. Jean-Robert Gauthier (Ottawa-Vanier):: Mr. Speaker, I rise on a matter of urgent and pressing necessity resulting from the columns by Frank Howard appearing in the Ottawa


Mr. D. M. Collenette (Parliamentary Secretary to Postmaster General):: Mr. Speaker, the Postmaster General is absent from the House today, but will be back tomorrow. He
November 21, 1978

will be pleased to answer the hon. gentleman's question, and I will bring it to his attention.


Walter Gilbert Dinsdale: Mr. Speaker, I regret that the Prime Minister would not give us the benefit of his advice. Perhaps he would answer a supplementary question. In view of the fact that the cost of mechanization and modernization of the Post Office in the past decade that the right hon. gentleman has been in office has amounted to some $900 million, and that the authorized man-years have increased from 36,000 to 61,500 employees-which is an increase of 70 per cent-will he indicate to the House that the whole matter will be turned over to a parliamentary committee so that they can get at the root causes of the difficulties and come up with some constructive recommendations to end this farce?


Right Hon. P. E. Trudeau (Prime Minister):: Mr. Speaker, I would be very happy to have this whole matter discussed with the hon. member who has shown such an interest in the Post Office. He will note, of course, that in these ten years the number of households has increased at a very rapid rate. The government has the best record in housing starts at any period of our history which, of course, means much greater delivery to households; that is the reason the Post Office has had to grow. As a matter of fact, Mr. Speaker, in our expenditurecutting exercise that we began three years ago and which has been proceeding apace, while we have seen the civil service grow at less than 1 per cent in the past three years, the hon. member will be aware that this means that in the Post Office growth has been rather more rapid than in any other department, which means that other departments have even had negative growth because of increased service to the Canadian public.


Walter Gilbert Dinsdale: A final supplementary question, Mr. Speaker. I am sure the Prime Minister is aware that one of the great protests from the Letter Carriers Union of Canada is the freeze on the expansion of letter carrier service. In view of the fact that this freeze has now been in effect for at least three years and has deprived at least 400 Canadians of jobs which would otherwise have been available had the service been increased to provide door to door delivery to the burgeoning suburbs to which the Prime Minister has referred, would he not now take seriously-because this is a serious issue-the decline in postal service and the mess in the Post Office and refer the matter to a parliamentary committee for detailed examination?


Pierre Elliott Trudeau: Mr. Speaker, in the second last question the hon. member complained that we had increased the number of postal workers by 70 per cent. Now he is pleading that we increase them more in order to serve more people. I do not see how this kind of contribution would really be helpful even if it came from a parliamentary committee.
Oral Questions PUBLISHERS POSTAL RATES


Mr. David MacDonald (Egmont):: Mr. Speaker, I have a question for the Secretary of State. I am delighted to see him here today. I am sure he has heard about the discussion yesterday following the presentation on motions by the Postmaster General and the reference to a new memorandum of agreement between himself and the Postmaster General which would basically transfer responsibility for losses incurred through publishers postal rates to the Secretary of State.
Since this document has not yet been tabled-I assume it will be, following the question period-could the minister inform the House of the date of implementation of this agreement? In particular, could he tell us whether there will be a separate parliamentary allocation, or if the existing postal subsidy will be subsumed in existing votes such as the one for arts and culture? Perhaps he could also give us some idea of the actual cost of this new arrangement.


Hon. John Roberts (Secretary of State):: Mr. Speaker, I am afraid I will not be able to oblige the hon. gentleman by tabling the document today.


An hon. Member:: Why not?


John (Moody) Roberts: The hon. gentleman asks, why not? The reason is I should like to table one signed by both ministers. The copy in my office has only been signed by me. I will undertake to table the agreement. The agreement between the two ministers has both our signatures, and I am trying to track down the appropriate copy for the hon. member. I hope to be able to do that tomorrow.
The hon. member asked how this would be presented in the estimates. It will be within a vote of the Department of Secretary of State. I am not exactly sure how that will be presented or what form it will take. In terms of a rough, over-all estimate of the transfer, the tentative figure is something like $135 million or $136 million.


David Samuel Horne MacDonald: Mr. Speaker, a supplementary question. I have to assume the reason the minister has not received a document with both signatures is that it must have gone through the mail. I presume we will receive a copy of it for tabling within the year.
In view of the fact that, according to our information, there has been no consultation with those who will be directly affected by this significant change in postal rates for periodicals, may I ask the minister if he will be establishing some formal, consultative committee with industry representatives to, first of all, review their criteria and prepare guidelines and, second, to establish a fair form of postal rates? What mechanisms have already been put in place with respect to what is obviously a need for consultation-something that, interestingly enough, did not occur during the last postal rate increase?


John (Moody) Roberts: Mr. Speaker, I believe there has been consultation by the Post Office Department in the past with people to be affected by changes. It will certainly be my intention to continue that kind of consultation. It may be that, as a result

November 21, 1978
Oral Questions
of a review, we will even find improved mechanisms for such consultation. It is certainly our intention to continue consultations with groups that will be affected by postal rate changes.


David Samuel Horne MacDonald: A final supplementary question, Mr. Speaker. I am quite surprised that the minister has not indicated the nature of any consultative mechanism he is planning to put in place.
In view of the real fears expressed here yesterday about the possibility of censorship, or the use of some form of discretionary power by the minister which would be very much against the purposes of free and open information which the minister discussed a few weeks ago at UNESCO, I wonder what assurance he can give that criteria for postal subsidies for periodicals and publications will be contained in a public set of guidelines which do not allow for unilateral power by the minister or any of his officials.


John (Moody) Roberts: Mr. Speaker, I am quite prepared and, indeed, would welcome any suggestions about how the processes of consultation could be improved, including those coming from hon. members opposite. I would hesitate to stand before the House and say that, having just received this responsibility, I have decided in exact detail how these matters should be handled. I would welcome constructive advice which the hon. member may provide.
In terms of the reference to censorship-and I am not sure I exactly seized the purport of the hon. member's comment- there is no intention to change the mechanism which has been established. As has been the case in the past, we will be dealing with postal subsidies related to the various categories of users. We will not be singling out, say, one periodical rather than another for assistance or not. The mechanism will be exactly as it has been in the past, and I do not think that mechanism is one which has aroused cries of censorship from the other side. What has happened is that there was a transfer of responsibility for formulating, for government decision, the recommendations as to what the rates in those categories should be.


An hon. Member:: Why?


John (Moody) Roberts: An hon. member asks, why? I think the answer to that question is clear. We believe the extent of postal subsidies is a key element in cultural strategy of the federal government. That strategy, basically, relates to how taxpayers' funds are to be expended in the desirable objective of establishing a context favourable to the development of the arts and the other aspects of culture in the country. It was, therefore, felt appropriate-and I think it is appropriate-that that responsibility of recommendation in the development of policy ideas should rest with the Secretary of State, whose general responsibility that is.


INDUSTRY
Mr. Edward Broadbent (Oshawa-Whitby):: Mr. Speaker, I have a question for the Minister of Industry, Trade and Commerce. As the minister knows, Secretary of State Cyrus Vance will be meeting with the Prime Minister and a number of ministers of the Crown, presumably tomorrow, to discuss important matters.
Since the U.S. ambassador to Canada said yesterday in Windsor presumably with a straight face, that Canada was getting more than its share of jobs under the Canada-U.S. automotive agreement, a statement which flies in the face of an Ontario government study which shows that for years we have had fewer jobs than would warrant in our share of the market, could the minister tell the House whether he or the Prime Minister will be putting before Mr. Vance specific proposals to ensure that we at long last, will get a fair deal from the auto pact?
Hon. Jack H. Horner (Minister of Industry, Trade and
Commerce): Mr. Speaker, I am certain that if Mr. Vance wants to discuss the auto pact with the Prime Minister or myself we are prepared to discuss it. We do not accept the figures that the Ontario government gave with regard to employment. I can say to the House that employment in the automobile industry is up substantially this year over what it was last year. Our deficit with the United States in auto parts and automobiles is down considerably from what it was last year.


John Edward Broadbent: Mr. Speaker, it is down all right-down to a $500 million deficit, which is hardly something in which the government can take any pride.


Some hon. Members:: Hear, hear!


John Edward Broadbent: Considering that the American ambassador did concede, in his speech yesterday in Windsor, that precisely because the government in 1965 got letters of commitment from the Big Three in the industry and for the three-year period after the pact came into being we got our share of investment, and since it worked in 1965, is the Canadian government now prepared to suggest to Mr. Vance that they intend to get new letters of commitment from the Big Three to make sure the pact's stated principle about fair share of growth is lived up to on this side of the border?


Mr. Horner:: Mr. Speaker, I intend to make public the Simon Reisman report on the automobile industry and then the hon. member will be able to check his figures. In the auto pact, our deficit with the United States was about $600 million last year. This is under the auto pact, not in total auto trade. One has to be clear about what one means. That is a fact.


Some hon. Members:: Oh, oh!


John (Jack) Henry Horner: In the auto pact, our deficit this year will be half of what it was last year. So hon. members can readily see
November 21, 1978

that it should be in the neighbourhood of around $300 million. Considering it is an industry which is in the billions of dollars, and can be balanced that closely, it is not doing that badly. However, I am not satisfied with it and I want to improve it, but we are not doing that badly.


Some hon. Members:: Hear, hear!


John Edward Broadbent: Mr. Speaker, the Minister of Industry, Trade and Commerce knows that his own department produced one of the most able studies that this government has ever done just a couple of years ago on the pact. It was done by Mr. Arthur. He showed that with the present process of deficit continuing, we will be losing in excess of $10 billion, a net deficit loss, by 1985. That is $300 million a year, which may not be much to the minister but I can assure him that it is a lot to Canadians and a lot to those who are looking for jobs.
When the government releases the report the minister has referred to, will it announce specific proposals in terms of its course of action to improve the job situation in Canada?


John (Jack) Henry Horner: Mr. Speaker, we have announced a number of things which have improved the automobile industry and the job capabilities of Canadians in that industry. The Ford plant was one; the remission duty on Volkswagen parts was another. A number of other measures have been taken which substantially increased employment in the automobile industry this year over last year.


AGRICULTURE
Mr. Lionel Beaudoin (Richmond):: Mr. Speaker, I should like to direct a question to the Minister of Agriculture. We read in the papers and we heard in the news yesterday that the governments of Quebec and British Columbia no longer want the federal government to be involved in the marketing of farm produce, especially between the provinces. Could the minister tell us why?


Hon. E. F. Whelan (Minister of Agriculture):: Mr. Speaker, that was not my impression from chairing the meeting. Only two provinces voiced some concern about harmonizing stabilization in Canada for those named commodities under the present Agricultural Stabilization Act, and said that they were going to give up some of their programs. It would be that kind of program with the farm producer and the federal government participating. They would want time to make sure they were phased in carefully and that their producers do not lose anything by it.
Oral Questions
I do understand, that the minister from Quebec said he was against this kind of program, because Quebec now enjoys a federal stabilizing program. I do not know what their farmers would do without it. That is under the Canadian Dairy Commission for industrial milk products. It is one that is used nationwide at the present time. I do not understand the Quebec minister saying he is against this, because there was one topic on the agenda which we did not get to and he was complaining about the fact that stabilization payments or announcements for sugar beets were not made soon enough. Therefore, he did not say he did not want it; he said he wanted it sooner.


Léonel Beaudoin: Mr. Speaker, could the minister advise us whether Quebec appeared to be the most unwilling to co-operate, and whether it meant to indicate this way its intention to assume responsibility, with the federal government's assent, for distributing the subsidies to dairy producers and controlling the export of our surpluses?


Eugene Whelan: Mr. Speaker, I do not remember them suggesting anything such as that at the meeting. He did not suggest that we withdraw from any of the regionally produced products under the Agricultural Stabilization Act as it is at the present time. He has said in the past that he is willing to participate in any program that will be beneficial to Quebec farmers. I gather, from his contribution to the meeting yesterday, that it is still his opinion that with regard to named commodities in the act which are produced across Canada, he is still going to participate in those programs. However, he would like to be able to participate by having us give the money to him so that he can give it to the farmers: in that way, he can be Santa Claus instead of the federal Minister of Agriculture.


COST OF STABILIZATION PROGRAM
Mr. John Wise (Elgin):: Mr. Speaker, I have a question for the Minister of Agriculture on the same subject. Has the minister had any discussion with Canadian producers and the respective farm organizations with regard to his proposal to require a one-third contribution to operate the cost of the plan?


Eugene Whelan: Yes, Mr. Speaker. This is nothing new: it is similar to what is under the western grain stabilization act. All provinces except British Columbia and Quebec are in favour of that kind of program. The farm producers, although they want more details of the program, have endorsed it. They said they wanted this kind of program and that it was less costly because it would mean less duplication with this kind of stabilization program.

November 21, 1978
Oral Questions AIR TRANSPORT


INCREASE IN AIRPORT TAX-EFFECT ON TOURIST INDUSTRY
Mr. Don Mazankowski (Vegreville):: Mr. Speaker, my question is directed to the Minister of Transport. In light of the announcement last week of the increase in air transportation tax from $8 to $15 in the case of domestic flights, and $8 to $12 in the case of international flights, and the fact that the domestic increase will take place in April while the international increase will take effect in July, can the minister explain the apparent discrimination against the domestic air traveller? Does he agree with this particular concept? Can he outline, in particular, his position with regard to this increase relative to the increase in our tourist trade deficit?


Hon. Otto E. Lang (Minister of Transport and Minister of Justice):: Mr. Speaker, I certainly would not agree that there is any discrimination against travellers in Canada as compared to travellers abroad. The apparent discrimination in this airport tax is explained by the fact that there is already a very heavy discrimination, if you like, against the traveller abroad, in the sense that the fees now charged against that kind of travel are significantly higher than the domestic fees, landing fees and the like. There was not room, in our view, within the cost to us of international air travel, to increase those fees more than the $12 in the initial stages, as indicated. In other words, the lower international transportation tax really reflects the fact that the domestic user charges are much lower than the international user charges.


Donald Frank Mazankowski: Is the minister concerned about the apparent discrimination which will affect regional and third-level carriers and passengers using those carriers, inasmuch as the manner in which the tax is to be applied will be disproportionately more severe on those using third-level and regional air carriers, or is this part of an over-all strategy to rationalize the regional air carrier industry? Could the minister tell us whether he still intends to go ahead with this planned sixfold increase in airport user fees and other user fees associated with airports?


Otto Emil Lang: It is very much our policy to encourage the development of the regional and third-level carriers. It might not be possible to contain special provisions for these carriers in an air transportation tax, but I can assure the hon. member that on the question of increases in any user charges we shall be looking very seriously at the question whether or not we can give special consideration to the third-level carriers and to the regionals in order to lighten the load upon them.


REDUCTION IN UNITED STATES TOURISTS
Mr. John C. Crosbie (St. John's West):: Mr. Speaker, my question is directed to the Minister of Industry, Trade and Commerce. On February 2 of this year the minister reported to the House that there was general agreement, at a meeting of tourism ministers on January 31, that present costs impede

our country when it comes to the successful balancing of tourist accounts. In June, Statistics Canada reported that travel costs for Canadians rose 71.5 per cent between 1971 and 1977, much faster than the 50 per cent gain shown in the United States. This year, the number of American tourists coming to Canada is down by 1 per cent so far.
In view of these facts, why did the minister permit the Minister of Finance and the Minister of Transport to impose an almost doubling of the air transportation tax? Will the minister now have this reversed and, therefore, have the government practice what it preaches in trying to control costs in connection with tourism?
Hon. Jack H. Horner (Minister of Industry, Trade and
Commerce): As I said the other day in answer to the same question, I, as a tourist, would like to feel I am paying my way in whatever host country I decide to visit. Certainly, as a Canadian taxpayer who may decide to stay at home, I believe tourists who come to this country should pay whatever costs are incurred by our government and our taxpayers. It is that simple, really. If the costs are justified, the tourist should pay them.


John Carnell Crosbie: That's it. They are not.


John (Jack) Henry Horner: The hon. member says, "That's it. They are not." Certainly, I believe air transportation is becoming very reasonable to Canadians. We have brought in a number of measures. Something like 314 more ABC flights within Canada were used last summer to convince Canadians to travel far cheaper in their own country.


John Carnell Crosbie: The minister's replies are balderdash, which means "nonsense", as the Deputy Prime Minister may know. On September 1, at a Toronto press conference, the minister said:
Canadians traditionally have the idea that tourists are somebody we can rip off when they are going through-charge them all we can and then let them go.
The minister went on to say we have a lot to learn about hospitality when treating strangers. How does he square that criticism of the Canadian tourist industry and the hotels and motels of this country with the government's action in ripping off tourists, both Canadian and foreign, in this manner? How does the minister justify that rip-off? Or is there some difference?


John (Jack) Henry Horner: I do not accept the fact that there is a rip-off at all. I believe the costs are justified and that the tourists should pay them. I could point out that tourism from Japan is up 28 per cent and that tourism from Europe this year is up 20 per cent, so the tourism deficit is not growing at all.
November 21, 1978


EXTERNAL AFFAIRS
Mr. Bob Kaplan (York Centre):: Mr. Speaker, my question is directed to the Secretary of State for External Affairs. In view of the lack of success of the Maryasin family, living in my riding, in their years of efforts to be reunited in Canada with their relatives from Riga, Latvia, in spite of the fact that Canadian visas have already been issued, will the minister take a further initiative on their behalf with Soviet authorities?


Hon. Donald C. Jamieson (Secretary of State for External Affairs):: My answer must be the same as I give on all occasions when such questions are asked. If there is a Canadian linkage, as there obviously is in this case, we shall certainly see to it that representations are made to the Soviet authorities-I suspect they have been made already in this case-and we shall make certain that this family's name is included in the next list and make special representations as well.


PRESENCE IN GALLERY OF CZECHOSLOVAK DEPUTY MINISTER OF FOREIGN AFFAIRS
Mr. Speaker:: Before continuing with the question period, may I ask hon. members to join with me in welcoming a distinguished visitor from Czechoslovakia, the Deputy Minister of Foreign Affairs, Mr. Mercislav Jablonsky who is here on an official visit.


Some hon. Members:: Hear, hear!


AIR TRANSPORT
Mr. James A. McGrath (St. John's East):: Mr. Speaker, my question is supplementary to the question asked by my hon. friend from Vegreville. In response to the change in the air transport tax, Quebecair, which has as its president a former minister of transport in the government's Liberal predecessor, said:
The tax will place a disproportionate burden on travellers on short hops and lighten the load on long-haul passengers.
They went on to say that the tax would place the regional carriers in the position of being tax collectors for the government to help pay for prestige and money-losing facilities such as Mirabel.
I ask the minister if he is serious in suggesting in his reply to my hon. friend that he wants to encourage and develop the use of regional carriers and third-level carriers in this country. Since that statement by Quebecair really represents the feelings of the regional air carriers about this tax, is the minister
Oral Questions
prepared to meet with the regional carriers to discuss with them ways and means of lightening the burden, in view of the fact that the tax, coming as it does on top of the increase in landing fees already announced by the minister, will place a disproportionate burden on the short-haul, intraregional traveller in this country, especially in the Atlantic provinces and Quebec?


Otto Emil Lang: Mr. Speaker, I notice that the report to which the hon. member referred bore no indication that it was in any way an official Quebecair position. In any case, I would tell the hon. member that we are meeting constantly with the regionals and other carriers concerning the provision of airport and other facilities, and are gaining their agreement before going forward with major expenditures or, indeed, significant expenditures. I think that is a very sensible policy arising out of a change in making sure that every expenditure is meaningful.
I can assure the hon. member, as well, that there is no way in which the short-haul carrier is being made to subsidize the long-haul traveller. In fact, a few years ago the reverse was true and it seemed to me it stepped over the bounds of reason in the way in which it was true. If in recent years some slight adjustments have been made so there is a relatively fairer burden being borne as between short-haul and long-haul carriers, I think that is all to the good.


James Aloysius McGrath: If the minister is serious about developing the use of the regionals and helping the regionals, as I believe he is, is he prepared to recommend to his colleague, the Minister of Finance, that this tax, essential though it may be to pay for colossal blunders like Mirabel, be spread evenly between long-haul, overseas passengers and short-haul intraregional passengers? Such is not the case at the present time, and the minister knows it is patently unfair and unjust to the regional carriers.


Otto Emil Lang: Mr. Speaker, the short-haul traveller, of course, pays a percentage under the proposed tax of 15 per cent of his ticket tax, reflecting a certain portion of the costs which go with that kind of travel. In the case of a longer haul traveller, because the costs are less proportionate to the dollars of travel charged therefor, the limit of $15 has been put in place. That also recognizes the fact that a few years ago it was the long-distance traveller who was, in fact, paying more than it cost and thereby subsidizing the short-distance traveller in this country. That was not a desirable situation, in my view, and we are gradually correcting it.

November 21, 1978
Oral Questions INDUSTRY


PATENTS FOR SUGAR CANE PROCESSING TECHNOLOGY
Mr. Bob Rae (Broadview):: Mr. Speaker, I have some questions for the Minister of Industry, Trade and Commerce concerning the activities of Canadian Patents and Development Limited and the use of patents for sugar cane processing technology.
As the minister knows, in late 1976 patents for the development of this technology were awarded by CPDL to Hawker Siddeley, a large multinational company, rather than to the Canadian company that had actually developed the technology in Canada. As the minister also knows, an independent study-


Some hon. Members:: Order.


Bob Rae: My question to the minister is: can he give us some assurance that he is taking steps to see that the patents for this development will be awarded to a Canadian firm, rather than to an international firm?


John (Jack) Henry Horner: Mr. Speaker, it is not a question of whether they be awarded to a Canadian firm or whether or not Hawker Siddeley is a Canadian firm or can be registered as such; the question is to get the patent problem cleared up so that Canada can benefit from the new method of harvesting sugar cane.


Bob Rae: Mr. Speaker, with the greatest respect, I am not sure that the minister fully understood the import of the question. Perhaps I could rephrase it. The minister knows perfectly well that an independent study, commissioned by the minister himself, suggested very strongly that the awarding of the patents in 1976 was misguided and incorrect, and he also knows that certain aspects of the invention dealing with lumber and trade have yet to be awarded.
Can the minister assure this House that he is taking steps to see that future development for this key technology is granted to Canadian firms, guaranteeing Canadian jobs, Canadian scientific and trade development, rather than to a foreign company? That is a very simple question.


John (Jack) Henry Horner: Mr. Speaker, I can assure the House that I have personally looked into this problem in depth and hope to have a solution very soon.

[ Translation]


PUBLIC WORKS
[Stage Direction]
fair compensation for tenants and a 5 per cent interest payment, as well as recognition of the principle of reasonable equivalence. In front of the group the minister promised to give an answer within two weeks. I believe he also met the representatives of that group today, although I am not sure of it. Is the minister now in a position to make his answer public and, if so, does he also intend to make a statement on the matter?
Hon. Judd Buchanan (Minister of Public Works and Minister of State for Science and Technology):: Mr. Speaker, indeed the representatives of the Mirabel expropriation are, at this very moment, discussing in my office with my assistant and the hon. member for Argenteuil-Deux-Montagnes. We have settled a few points but there still remain a few others which I trust can be settled this afternoon.


Mr. La Salle:: Mr. Speaker, on a supplementary. I wonder why some hon. members are getting excited on the other side. I am very happy with the answer of the Minister of Public Works on the matter of the Sainte-Scholastique expropriation. That is nothing new. My supplementary is this: The hon. member for Argenteuil-Deux-Montagnes, speaking as an individual, has said that he would favour the idea of selling back to the province of Quebec the 70,000 acres of land which are not being used. The hon. member for Argenteuil-Deux-Montagnes made the statement as a private member. Can the minister say whether he intends to discuss with the province of Quebec the matter of the purchase of those 70,000 acres of land that are not now being used?


J. Judd Buchanan: At the present time, no, Mr. Speaker. I must say I know nothing about that proposal, but I shall look into it.


CONFLICT OF INTEREST
Mr. Walter Baker (Grenville-Carleton):: Mr. Speaker, I have a question for the Prime Minister dealing with the frequent practice by the government of putting deputy ministers on the boards of Crown corporations.
Can the Prime Minister tell the House whether there are in existence guidelines with respect to preventing a conflict of interest arising from the conflict that exists, or might exist, where a deputy minister on a board is acting within a certain market and, as deputy minister in his department, may be promulgating and advising his ministers with respect to the regulations that govern the market in which the Crown corporation exists and operates? Are there such guidelines in existence?


Roch La Salle: Mr. Speaker, my question is directed to the Minister of Public Works. Exactly two weeks ago 600 Sainte-Scholastique residents demanded payment of a


Pierre Elliott Trudeau: Mr. Speaker, there are no specific guidelines, but there is certainly a difference of approach between the government and the opposition

November 21, 1978

party. We believe that Crown corporations are set up for the beneficial advantage of the people of Canada to pursue a purpose which is in the general interest.
The reason we put civil servants on boards of many agencies or Crown corporations is precisely in order that they represent the interests of the government and that they report to the government any knowledge which could be useful to the pursuance of the government's objectives in the interests of the common good of Canadians.


Walter David Baker: Mr. Speaker, the Prime Minister has indicated that, in his judgment, no guidelines exist. The Prime Minister will recall that he wrote the government Elouse leader on October 18, 1976, in which he dealt with the principles regarding the activities of holders of public office, At that time he wrote:
Current and former holders of public office must ensure by their actions that the objectivity and impartiality of government service are not cast in doubt and that the people of Canada are given no cause to believe that preferential treatment is being or will be unduly accorded to any person or organization.
Does the Prime Minister not believe that that guideline- which I take it he put forward seriously-does not apply to deputy ministers who are members of the boards of Crown corporations? If he does not believe that that applies, will the Prime Minister consider the preparing of guidelines that would apply to the case of deputy ministers who serve on the boards of Crown corporations, so that deputy ministers, such as the Deputy Minister of Finance, are not placed by the government in the invidious position of at least there appearing to be, whether it is there or not, a conflict of interest?


Pierre Elliott Trudeau: Mr. Speaker, of course the guidelines as I stated them apply to deputy ministers and other senior officials. I fail to see how the hon. member can make a case from those guidelines relating to the particular case he is referring to now.
These guidelines were made to prevent a public servant acting in a way which would be in his own self-interest, as opposed to the government's interests or to the advantage of some third party corporation independent of the government. In our philosophy, we set up Crown corporations and agencies in order to serve a public purpose, we do not see this as conflicting with any guidelines. I know that this is not the philosophy of the Tory party.


PRICE OF CRUDE OIL
Mr. Maurice Foster (Algoma):: Mr. Speaker, my question is to the Minister of Energy, Mines and Resources. In view of the fact that an increase of $1 in the price of crude oil on January 1 would completely wipe out the anti-inflationary effect of the federal budget's 25 per cent reduction in the manufacturers' sales tax, and in view of the fact that the Ontario minister of energy now seems to be opposed to an increase in the price of
Oral Questions
crude oil, I wonder if, armed with this support, the minister will press ahead with his action to stop this increase in the price of crude oil which the Alberta government is demanding.
[DOT] (U52)


Hon. Alastair Gillespie (Minister of Energy, Mines and Resources):: Mr. Speaker, if the Ontario minister of energy now is claiming that he supports the federal government initiative, that there be a pause respecting the price of oil come January 1, it comes as a great surprise to me. Also, it will come as a very great surprise to the other energy ministers who were present at that meeting, particularly since they too supported in the strongest way the continuation of the oil price increase come January 1.


HEALTH AND WELFARE
Mr. Heward Grafftey (Brome-Missisquoi):: Mr. Speaker, my question is directed to the right hon. Prime Minister. Today, the Minister of National Health and Welfare is in Toronto explaining the inexplicable to her counterparts in the provinces, namely, why the Minister of Finance unilaterally cancelled the block funding agreement for social services. Last week, the Prime Minister stated before the House that in his view there was no agreement between the provinces and the federal government relating to the block funding of social services.
If that is the case, why did the Minister of National Health and Welfare prepare a bill based on these discussions and present it before the House of Commons, if there was no agreement with the provinces?


Pierre Elliott Trudeau: Mr. Speaker, if the hon. member refers to his question to me last week, I think he will see that he was talking about the signed agreement and such things. Of course, there were negotiations over a period of several weeks, perhaps months, between federal and provincial ministers. We were leading up to the presentation of this bill. The Minister of National Health and Welfare was taking the lead in this very forward-looking piece of legislation. But that particular piece of legislation costs a lot of money. The Minister of Finance and the President of the Treasury Board went to the provinces indicating that, since transfers to them were growing at the rate of 13 per cent a year, it was too high and therefore it would be important to attempt to reduce that rate of growth.
We looked for various areas where there is agreement with the provinces to see if we could multilaterally, not unilaterally, reduce that rate of growth. It was in face of the refusal of the provinces to co-operate in having the federal government cut that rate of growth of some 13 per cent per year that we decided projects, enterprises and programs which had not yet taken effect in law would not be proceeded with. This is the position the minister has taken. We still think it is a good

November 21, 1978
Oral Questions
program. We would like to move forward with that bill, if the provinces and the opposition would co-operate with us in making sure that in other areas the rate of growth can be reduced.


Some hon. Members:: Hear, hear!


William Heward Grafftey: Mr. Speaker, it is nice to know this week that the Prime Minister agrees that there was an agreement but it involved more than just restraint; it was a whole new system of funding with the provinces. How can the right hon. Prime Minister justify the government becoming indebted for close to $1 billion in the buying of Nordair and Pacific Petroleums, while simultaneously cutting back on health care and social services with the provinces?


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please. The hon. member for Churchill.


LABOUR CONDITIONS
Mr. Cecil Smith (Churchill):: Mr. Speaker, my question is directed to the minister responsible for Statistics Canada. Are status Indians included in the unemployment figures compiled by Statistics Canada?


John (Jack) Henry Horner: Mr. Speaker, status Indians on the reservations are not included in Statistics Canada figures.


Cecil Morris Smith: Mr. Speaker, my supplementary question is directed to the same minister. Bill C-14, dealing with amendments to the Unemployment Insurance Act, uses Statistics Canada figures to determine the unemployment rates in 48 regions across the country. Are the figures for status Indians actually extended to determine the number of unemployed status Indians in those particular regions?


John (Jack) Henry Horner: Mr. Speaker, perhaps the Minister of Employment and Immigration could better answer the question, but I think there will be a special provision for Indian populations regarding the Unemployment Insurance Act.


URBAN AFFAIRS
Mrs. Jean E. Pigott (Ottawa-Carleton):: Mr. Speaker, last week, in the document which the Minister of State for Urban Affairs was so gracious to table, there was mention of 438,000 households paying over 30 per cent of income for shelter. Since the Minister of State for Urban Affairs is not present, I should like to direct my question to his parliamentary secretary. Why

is Central Mortgage and Housing Corporation attempting to divest itself of all its major low-income properties in the province of Quebec, some 62 so far this year? In particular, I am asking about the Cloverdale complex which is the largest CMHC complex in Canada. That complex has been appraised at $10 million and is being sold for $4 million.
For the benefit of the hundreds of families involved in this matter can the parliamentary secretary inform the House as to the state of the negotiations between CMHC and Grado Developments? Also, could he inform us as to who Grado Developments are?


Mr. Hal Herbert (Parliamentary Secretary to Minister of State for Urban Affairs):: Mr. Speaker, at this stage I am unable to report on the developments, but I will ask the minister to let me have more information and pass it on to the hon. member. At the present time, the thrust of the government is to assist low-income Canadians in obtaining better housing. In particular, in programs such as AHOP which the opposition has criticized, obviously there will be some increase in the risk, and possibly some small increase in the default. Rather than continue, as in the past, with the emphasis on housing for persons who can well afford it and who would be assisted by the suggestion of the opposition to make interest on mortgages deductible-


Jean Elizabeth Pigott: That is not my question.


Mr. Speaker:: Order, please. The hon. member for Nanai-mo-Cowichan-The Islands.


EXTERNAL AFFAIRS
Mr. T. C. Douglas (Nanaimo-Cowichan-The Islands):: Mr. Speaker, last Thursday I asked the Secretary of State for External Affairs a question regarding a comment attributed to Admiral Madero, the national atomic energy commissioner of Argentina. The statement was to the effect that his country was planning to build a reprocessing plant which could produce a nuclear weapon. Since that time, Admiral Madero has been quoted as saying that the statement was misconstrued by the reporter for the Washington Post.
In view of the fact that usually the Washington Post is a reliable source, with a very competent staff, can the minister tell the House whether the government of Argentina has assured him that it has no intention whatsoever of putting up a reprocessing plant with a view to making nuclear weapons?


Donald Campbell Jamieson: Mr. Speaker, I thank the hon. member for his patience in waiting for a reply to this question. We made some inquiries and I think it can be said that the government of Argentina has taken the position which the hon. member articulated, namely, that it has no intention of going into
November 21, 1978

reprocessing. There appears to be some confusion as to the status of those who are speaking. In other words, the gentleman concerned is related to atomic energy development but may not be necessarily a formal spokesman for the government. I am still trying to clarify that particular point. There does not appear to be any substance to the report in terms of Argentinian government policy.
As well, I can say that I have checked on the question which the hon. member asked me regarding the use of Canadian materials and the like under existing agreements. I find that Canada has the right of prior consent over the reprocessing of any nuclear material supplied by Canada and any nuclear material produced in the Canadian-supplied reactor. In that sense, we would have a veto, in effect, over the use of Canadian materials for any reprocessing undertaking.


Thomas Clement (Tommy) Douglas: Mr. Speaker, I should like to ask the minister one point which I am sure concerns all members of the House. How are the safeguards being monitored? It is rather significant that this statement appeared in the Washington Post and the Latin American Economic Report, yet apparently the department knew nothing about it. Who is monitoring the situation to ensure that the countries we supply with a Candu reactor and technology are not building plutonium reprocessing plants? What machinery and mechanism is in place for monitoring this situation, or should we wait until someone raises the matter by accident?


Donald Campbell Jamieson: No, Mr. Speaker, it is more comprehensive by far than simply waiting until the matter is raised. The ultimate responsibility obviously rests with IAEA, the International Atomic Energy Agency, by common consent of the signatory countries. In addition to that, the Atomic Energy Control Board of Canada, on which my colleague, the Minister of Energy, Mines and Resources can, I am sure, report more fully, also has a capability for certain on-site inspections and the like.
We are satisfied that the controls in place are as good as exist in the world community. I would not, however, want to leave it at that, because I think both my colleague and I have indicated on many occasions that we would hope, and indeed are arguing, that the IAEA safeguards ought to be strengthened, and that is the direction in which Canadian policy is heading.


PRIVILEGE
Alastair William Gillespie: Mr. Speaker, I rise on a question of privilege. A question was put today by the hon. member for Brome-Missis-quoi (Mr. Grafftey) which seemed to me to be part of a pattern of distortion which the opposition are using to discredit
Privilege-Mr. Friesen
the financial transactions with respect to the Petro-Canada acquisition of Pacific Petroleums shares. I say a pattern of distortion, and therefore a program aimed at misleading the House and misleading the Canadian people. That was the burden of his remarks today, Mr. Speaker.
Last evening his leader, as reported at page 1288 of Hansard, also made a similar point when he referred to the government. He said:
-it could have found better use for $1.5 billion than buying an oil company and an airline it does not need.
The Leader of the Opposition (Mr. Clark) knows, as we all know, that the government did not raise $1.5 billion to buy Pacific Pete. The opposition quite clearly know from the information that has been given to them that Petro-Canada used its own credit, raising the money in a commercial transaction-


Mr. Stevens:: Through a subsidiary.


Alastair William Gillespie: -raised the funds from the banking system. It was not taxpayers' funds but a commercial transaction. I can be left with no other impression, Mr. Speaker, as I am sure other Canadians are, that the opposition are trying to distort and trying to mislead.


Some hon. Members:: Hear, hear!


Mr. Speaker:: The hon. minister and other members who now feel themselves sensitive about this particular point, I am sure will avail themselves of the opportunity to participate in the budget debate which is carrying on this afternoon.


MR. FRIESEN-BROADCASTING OF CBC LICENCE RENEWAL APPLICATION PROCEEDINGS
John (Moody) Roberts: Mr. Speaker, I rise on a question of privilege. Last October 23 the hon. member for Surrey-White Rock (Mr. Friesen) raised a question of privilege in the House, and since I was not present at that time you deferred the matter until you had a chance to have me reply to him. Since both the hon. member and I are in the House this afternoon, I thought I might reply to him.
His question of privilege essentially was that the Canadian Broadcasting Corporation had not covered his remarks to the CRTC at the CRTC hearing. I have the information which the CBC has presented to me on the matter, which is relatively brief, and I would be happy to explain to the House its position at the present time in relation to the hon. member's question of privilege.
The Canadian Broadcasting Corporation rents four satellite channels for transmission of its television programming. One of these, Channel D, is used for closed circuit purposes, for gathering and distributing news items, for the exchange of regional programs and inserts, and for multi-point live productions. The CBC decided to make coverage of the CRTC hearings on its network licence renewal applications widely available, and made arrangements with a number of cable companies to carry the coverage across the country. Although

November 21, 1978
Privilege-Mr. Friesen
it was intended that as much of the hearings as possible should be covered, there were technical limitations because of the necessity of continuing to distribute the items normally carried on Channel D. For this purpose, 1 p.m. to shortly after 2 p.m. each day was set aside for such distribution.
The CRTC was aware of this limitation and mentioned the 1 p.m. satellite cut-off time several times during the hearing. Indeed, the chairman, Dr. Camu, reminded the hearing of it immediately before the hon. member began his intervention at approximately 12.57 p.m. on October 6. The only area of the country not affected by the cut-off was Ottawa, where coverage was by direct cable service.
The hon. member's presentation lasted until about 1.16 p.m., and while the CBC regrets that his intervention was not received by those cable services outside Ottawa which had agreed to take the CRTC coverage, it would emphasize that, in accordance with the exigencies of broadcasting the prearranged schedule, it was necessary to provide its network stations with the other programming items they were then set up to receive.


Mr. Benno Friesen (Surrey-White Rock):: Mr. Speaker, I think the CBC must be speaking with tongue in cheek when they said they regretted that I had been cut off. I am sure they shed many a tear about that.
I do not want to carry on the argument interminably, sir, but I have looked at this matter for some time now and if, as the minister says, I was admitted to the table at about three minutes to one and it was customary for the CRTC to call the lunch break at one o'clock-and far be it for them to postpone the lunch hour, either for them or for the intervenors-then it seems to me a blatant piece of disorganization to have, as the chairman said, the only member of parliament to appear before the committee appear at three minutes to one, just before it was time to break. Either that was a very sloppy piece of organization or it was a very deliberate attempt, but I cannot imagine that the chairman of the CRTC is the kind of person who would deliberately ask the only member of parliament to come to appear at three minutes before cut-off time to make his presentation. Since it did happen, Mr. Speaker, I wonder whether he did receive any kind of instructions.
I would add to that, Mr. Speaker, that I did check with people in the industry in the intervening days and I have found that it was not, as the minister said, at three minutes to one but considerably before that. While it may be that I could not have made my full presentation at that time, I could have made a considerable part of it. I still contend, Mr. Speaker, that there seems to be a deliberate decision made somewhere to make certain that my entire presentation would not be carried across Canada under the previous arrangements that were made available to all the other members who appeared.


Mr. Speaker:: Order, please. In any case, the hon. member for Surrey- White Rock (Mr. Friesen) has what is, I think, because of other precedents that he may examine in relation to the activities of members appearing before various federal boards and tribunals, essentially a grievance and not a ques-

tion of privilege, and I think it would have to be proceeded with in that way.


POINT OF ORDER
[Stage Direction]
mr. Macdonald (cardigan)-statement made by member FOR SELKIRK
Hon. Daniel J. MacDonald (Minister of Veterans Affairs):: Mr. Speaker, I am compelled to rise on a point of order in reply to a remark made by the hon. member for Selkirk (Mr. Whiteway), as reported at page 1233 of Hansard for Friday of last week. I wish to inform the House that at no time did I agree with the hon. member that the issue he wished to discuss should be dealt with under Standing Order 43. I merely indicated to him that I would be happy to answer a question on the subject.


Mr. Dean Whiteway (Selkirk):: Mr. Speaker, I rise on the same point of order. I feel I should say something on the point of order just raised by the minister because it implies that in my response to the point of order raised last Friday by the Minister of National Defence (Mr. Danson) I misrepresented the discussions I had with the Minister of Veterans Affairs (Mr. MacDonald).
The minister will recall that I discussed the matter concerning one Mrs. Dali, of the Ladies Auxiliary of branch 81 of the Prince Edward Legion in Winnipeg, having been ordered out of a Canada Manpower office building on the Henderson highway while she was attempting to sell poppies for Remembrance Day. I discussed this with the minister because there was a sense of urgency. The lady involved, Mrs. Dali, was somewhat embarrassed, as you can imagine, Mr. Speaker.


Mr. Speaker:: Surely the only thing at issue in this point of order at the present time is whether or not in fact the hon. member for Selkirk (Mr. Whiteway) said that he had discussed it with the Minister of Veterans Affairs (Mr. MacDonald). I believe he was either aware or that he had some knowledge or understanding that it was going to be proceeded with by way of a motion pursuant to Standing Order 43. That is the only issue that is relevant to this point of order.


Dean Waldon Whiteway: Mr. Speaker, the fact was that in that discussion I outlined to the minister the two possibilities that I had to raise this matter. One was through a question. The minister will remember that I also discussed with him the problems a backbencher has in being recognized and seen by Your Honour. That is exactly what happened. I also told the minister at that time that my second choice would be to raise the matter under Standing Order 43. The minister will recall that.
On Friday, sir, I had no choice, because it was the last day of the week, but to raise it by way of Standing Order 43. At no time in my discussion with the minister did he object. He
November 21, 1978

thought it was important and ought to be raised. If he did not agree that it should be raised by way of Standing Order 43, that was the time to object. But quite the contrary, he encouraged me to raise it. To say now that he disagreed with Standing Order 43-that was the time to raise it, not after the fact.


Daniel Joseph MacDonald: Mr. Speaker, I will answer this because I am trying to be very fair with the hon. member. The hon. member is quite conscious of the fact that I have no control over Your Honour or motions made under Standing Order 43, or questions either. He implies in his remarks that on Friday I agreed to the motion under Standing Order 43, and that is what I wanted to straighten out for the House. I did not agree. I did not say, "You cannot do this." Through you, sir, I say to the hon. member: you can do as you like, as far as I am concerned. Okay. Is that understood?


Mr. Speaker:: Order, please. It certainly is well understood by the Chair.


Some hon. Members:: Oh, oh!


PRIVILEGE
Sinclair McKnight Stevens: Mr. Speaker, my question of privilege arises from something that certainly is not well understood in this House. I simply wish to give notice of a question of privilege that I hope to raise tomorrow arising out of the unfortunate statement made by the Minister of Energy, Mines and Resources (Mr. Gillespie) a few moments ago. Once again, he has misrepresented the true nature of the Petro-Can-Pacific Petroleums transaction. It is in truth intolerable that this government persists in misleading the Canadian public concerning their transaction involving Pacific Petroleums Ltd.


Hon. A. C. Abbott (Minister of State (Small Business)):: On
the same question of privilege, Mr. Speaker, I think the hon. member for York-Simcoe (Mr. Stevens) is exactly reversing the whole element of truth. He, his leader, and all subsequent speakers have attempted in the last few days to distort the truth so as to try to convince the Canadian people that somehow tax money is being used inappropriately, and that moneys that would otherwise have gone into public works, etc. have gone into the acquisition of an oil company. He should either stop misleading this House or stop accusing the Minister of Energy, Mines and Resources of doing so.


Some hon. Members:: Hear, hear!


Mr. Speaker:: Order, please. From the procedural point of view I think it would be salutary if hon. members would stop accusing each other of attempting to mislead the House. Members on both sides of the House have accused their
Privilege-Mr. Towers
opposite numbers several times of attempting to distort the real picture in connection with the transaction whereby Petro-Can acquired Pacific Petroleums Ltd. Surely the very nature of discussions again today by the minister, by the hon. member for York-Simcoe (Mr. Stevens), and now by the Minister of State (Small Business) (Mr. Abbott), and by all who have participated, bring to this the essence of debate. The debate is what is before the House in terms of the budget. That has given everyone an opportunity, with the usual freedom that exists in a budget debate, to argue the very nature of these financial transactions.
This is essentially a point of debate and I do not propose to entertain it now, tomorrow, or any other time, under the guise of a question of privilege.


MR. TOWERS-CANADIAN PRESS REPORT ON AUDITOR GENERAL'S ANNUAL REPORT
Mr. Gordon Towers (Red Deer):: Mr. Speaker, thank you for granting me time to raise this question of privilege today to refute incorrect statements made by the hon. member for Ottawa West (Mr. Francis) in his November 10 question of privilege at page 1014 of Hansard in my absence, which related to the tabling date of the report of the Auditor General. As you know, I had intended to let this matter stand until later, but a third dimension has been brought to my attention and I feel I must set the record straight now.
The remarks of the hon. member for Ottawa West not only aggrieved me but reflect on the performance and integrity of a member of the press gallery, if, in fact, they are not an attempt to muzzle the press.
Sir, in this democratic institution, honesty should not be ridiculed, for political expediency, or, indeed, for any reason. Often in this House press reporters are criticized for misinterpreting or misquoting members of parliament. My question of privilege today is in defence of a Canadian Press reporter who wrote a factual article, referred to by the hon. member for Ottawa West as "distortion of the facts". The statement attributed to me in the Canada Press story, and I quote: "I don't think we should be tinkering around with the report or with the date after it has already been announced" is exactly what I said in the public accounts committee.
The words included in that press account and quoted by the hon. member for Ottawa West in his question of privilege as, "It is clear the government does not want any criticism of its finances to come to light during the budget debate" were said by me outside committee and I stand behind them.
I do not condone placing blame on anyone else for anything I have said, and I certainly will not remain silent when the work of a member of the press gallery is unjustly placed in doubt, even if that writing happens to be inconvenient for the government or for any member of parliament.
My colleague, the hon. member for York-Simcoe (Mr. Stevens) said in the House on November 10, and I quote: "I would point out to Your Honour that the steering committee meetings are generally looked on as confidential matter." I

November 21, 1978
Point of Order-Mr. Abbott
agree with him. Under ordinary circumstances I would strictly adhere to that practice but, because the hon. member for Ottawa West made an incorrect statement in this House with reference to a steering committee meeting, I am compelled to refer to what actually transpired there.
This is the false statement of the hon. member for Ottawa West, in reference to the tabling of the Auditor General's report:
It was then unanimously agreed at the steering committee, at which the hon. member for Red Deer was present, that a more appropriate day might be Thursday, November 23.
That, Mr. Speaker, is a distortion of fact.
At the steering committee meeting I asked that the word "unanimous" not be used because I was not in agreement with postponing the tabling date of the report of the Auditor General to November 23.
In my opinion, Mr. Speaker, the hon. member for Ottawa West should admit he misrepresented the facts as I have outlined, and should apologize to the member of the press gallery whose report did not "distort the facts." I might add that I abhor this type of attack in the House of Commons on anyone who does not have the opportunity to defend his or her position, which only adversely affects parliament and its members.


Mr. Speaker:: Order, please. When the point was raised by the hon. member for Ottawa West (Mr. Francis) 1 indicated I would await a proper opportunity for all members who had been included in the discussion to make their remarks. I will now examine the record carefully to see if in fact a question of privilege is involved.


POINT OF ORDER
Anthony Chisholm Abbott: Mr. Speaker, I rise on a point of order. I am in some difficulty about the point you last made about raising substantive questions. The hon. member for Brome-Missisquoi (Mr. Grafftey) raised a matter in a question which the Minister of Energy, Mines and Resources (Mr. Gillespie) took to be a distortion of the truth and, therefore, leading to some criticism of himself. He rose on this with a question of privilege.
I am trying to fathom either your forbidding questions of privilege arising out of distortions that might take place in the form of a question or, indeed, whether any member during the budget debate is able to smear and distort the government's motives and get away with it simply as a matter of honest debate.
I would simply ask Your Honour if it is not possible for members on this side to rise and correct the distortions and misstatements of fact that might originate in the debate.


Mr. Speaker:: Order, please. That question is no more necessary now than it was before I intervened a moment ago. Of course, any member during debate at any time, this afternoon or any day hereafter, is entitled to intervene if he feels that the House has been misled or that, on any of the precedents, there is any irregularity or question of privilege involved. I have simply indicated to the House that if the substance of any question is to be the continuation of a disagreement as to the real nature of the transaction involving the Petro-Can acquisition of Pacific Petroleums Ltd., that remains, in my opinion, and has been since the very beginning, a disagreement on the facts of the matter. That matter has been gone into several times now, and I have indicated to the House several times that it remains an essential dispute, a matter of debate and not a matter of procedure.
If that is all that is involved in any of these points that are going to be raised, that is the same resolution that I will have to make, and I do not think I should have to make it again.


PRIVILEGE
Mr. Thomas H. Lefebvre (Parliamentary Secretary to President of Treasury Board):: Mr. Speaker, concerning the question of privilege brought up in regard to the article which appeared in the Globe and Mail, if you recall, Mr. Speaker, this matter was brought up last Friday morning in this House of Commons, the same day this article appeared. The hon. member for Ottawa West (Mr. Francis) made his point and I made my intervention. I stand by it. Your Honour said there was no question of privilege at that time. I wonder why it can also be brought up today, some four or five days after the original article appeared. I would like to add that there has been no mention made of the reply given by the hon. member for Ottawa West or myself in the Globe and Mail since.


Walter David Baker: Tell him to write a column.


Mr. Speaker:: If the hon. member consults the record he will see that my impression was to the effect there was probably a grievance about the quality of reporting, but there was not a question of privilege. In any case, since it involved two other members on the opposition side I wanted to give them an opportunity to balance the intervention of the hon. member, if that was their desire, and that is the opportunity the hon. member for Red Deer (Mr. Towers) took advantage of today. I say again that I will examine the record to see if there is any procedural significance.


Mr. Malone:: Mr. Speaker, I rise on a point of order to seek your clarification in relation to responses to questions that are placed on the order paper.
November 21, 1978


Mr. Speaker:: I wonder if the hon. member could wait for the calling of questions on the order paper, and we will deal with it at that time. We are coming to that point very shortly.



ROUTINE PROCEEDINGS


Otto Emil Lang: for leave to introduce Bill C-21, to amend the Criminal Code, the Canada Evidence Act and the Parole Act.


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

Hon. Robert K. Andras (President of the Treasury Board) moved: for leave to introduce Bill C-22, to amend the Public Service Staff Relations Act and to establish the National Pay Research Board.


Mr. Speaker:: Is it the pleasure of the House that the hon. minister shall have leave to introduce the bill?


Mr. Knowles (Winnipeg North Centre):: No.


[Stage Direction]
Motion agreed to, bill read the first time and ordered to be printed.
Mr. Speaker:: When shall this bill be read the second time? At the next sitting of the House?


Stanley Howard Knowles: Never.


PETITIONS
Mr. Speaker:: I have the honour to inform the House that the Clerk of the House has laid on the Table the second report of the Clerk of Petitions stating that he has examined the petition presented by the hon. member for St. John's East (Mr. McGrath) and finds that it meets the requirements of the standing orders as to form.
Committee Reports



REGULATIONS AND OTHER STATUTORY INSTRUMENTS


Mr. W. Kenneth Robinson (Toronto-Lakeshore) moved: that the first report of the Standing Joint Committee on Regulations and Other Statutory Instruments presented to the House on Thursday, November 16, be concurred in.


[Stage Direction]
Motion agreed to.

['Agreed.']
William Kenneth Robinson: that the second report of the Standing Joint Committee on Regulations and Other Statutory Instruments presented to the House on Thursday, November 16, be concurred in.


Mr. Speaker:: Is it the pleasure of the House to adopt the said motion?


William Kenneth Robinson: Mr. Speaker, I understand the hon. member for Peace River (Mr. Baldwin) has some comments to make with regard to this concurrence.


Mr. G. W. Baldwin (Peace River):: Mr. Speaker, I am grateful to the hon. member for Toronto-Lakeshore (Mr. Robinson) for seeking concurrence. Very briefly, this second report is a statement of the criteria which the joint committee adopts when it comes to examine the thousands of statutory instruments which are laid before it, and to decide whether or not they meet that criteria, should be challenged, or sent back for further consideration. Included in the criteria, for example, are such statements that we consider whether or not the statutory regulation makes some unusual or unexpected use of the powers conferred by the enabling statute or by the prerogative, that trespasses unduly on the rights and liberties of the subject, or appears for any reason to infringe the rule or rules of natural justice.
What I was hoping to do was to see if the House would give its consent to having these rules appended to Hansard so that they could be given wider circulation, particularly among those members of the public service who are charged with the responsibility of drafting regulations. Hopefully consideration of them would take place at the time of drafting. I ask this because I see the Parliamentary Secretary to the President of Privy Council (Mr. Pinard) is here. This would be a preferable method than having to come here session after session to ask the House for concurrence. As this same procedure takes place in the Senate as well, perhaps the government might give consideration to having these statements of criteria made a condition and attached to the standing orders, having in mind the jurisdiction of this particular joint committee. Therefore by doing so it would be unnecessary to come back each session and seek this particular concurrence.
As I say, we have had three or four sessions where this House and the other place have agreed to the criteria. They

November 21, 1978
Order Paper Questions
are very useful and they have been most helpful in our attempts to try to bring some order to the way in which statutory instruments are drafted. I ask that the parliamentary secretary give some consideration to bringing this to the attention of the President of the Privy Council (Mr. Mac-Eachen), and maybe something might be done about it.
I ask the House to give its consent to having these criteria attached as an appendix to today's Hansard.


Mr. Speaker:: The House has heard the suggestion about the possible appendix to today's Hansard. Is the House agreed?


Some hon. Members:: Agreed.


Mr. Speaker:: Agreed and so ordered.
[Editor's Note: For criteria above mentioned, see appendix.}


Mr. Speaker:: The motion is for concurrence in the second report of the Standing Joint Committee on Regulations and Other Statutory Instruments presented to the House on Thursday, November 16, 1978. Is it the pleasure of the House to adopt the said motion?


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

[ Translation]

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. Yvon Pinard (Parliamentary Secretary to President of Privy Council):: Mr. Speaker, the following questions will be answered today: Nos. 71, 326 and 419.
I ask, Mr. Speaker, that the remaining questions be allowed to stand.
[ Text]


Mr. Jones: 1.	Is the government aware of a letter to the editor in L'Evangeline, a French language daily newspaper in Moncton, New Brunswick on December 5, 1977, stating that an active FLQ cell was operating at the University of Moncton and, if so, has the Solicitor General or the RCMP investigated the matter?
2.	To the knowledge of the government, has there been any police surveillance or investigation of such an alleged group?
3.	Is the government aware of the names of the persons who call themselves the Front for the Movement of Quebec Youth in Moncton and, if so, what are they?


Hon.   J.-J. Blais@Solicitor General: 1. Yes. The RCMP has investigated the matter.
2. See answer to question 1.

3. It has not been the policy of this government nor that of previous governments to comment on individual police and security investigations.


Mr. McKinnon: For what reason was it necessary in this late stage of the CF-101 Voodoo aircraft's life to order technical publications at a cost of $867,231 ?


Hon. Barney Danson (Minister of National Defence):: The
requirement for rewriting and publishing revised technical publications for the CF-101 Voodoo was established in the CF-101 Voodoo Life Extension Study which was completed in 1976, and the reasons for this requirement are as follows: (a) The increasingly greater complexity to maintain the aircraft in its last phase of life until phase out in the mid 1980s was not foreseen in the original publication and hence a complete revision of this original publication had to be implemented to provide efficient and safe maintenance of the Voodoo, (b) Problems associated with the aging weapons system were not foreseen when the original publications were written and hence had to be incorporated in the revised version.


Mr. Bawden: 1.	How many persons were employed at the Edmonton Office of Crown Assets Disposal Corporation on (a) January 1, 1978 (b) September 30, 1978?
2.	How many on September 30, 1978, were also employed on January 1, 1978 at the Edmonton office and if the turn-over is significant, what is the reason?


Hon. Jean-Pierre Goyer (Minister of Supply and Services):: l.(a) 7. (b) 5.
2. (a) 2. (b) Highly competitive labour market and office location.


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


Some hon. Members:: Agreed.



POINTS OF ORDER


Arnold John Malone: Mr. Speaker, as I mentioned earlier, I am seeking your clarification in relation to the nature in which responses are given to questions that are placed on the order paper. I placed question No. 376 on the order paper, which I deem important. I am sure in every case when a member places a question on the order paper, it is deemed to have considerable importance. While this is not a direct quotation, the substantive response was that essentially it would take either too much time or too much labour to answer the question. I simply ask whether or not there is any
is!'

November 21, 1978

recourse when the member feels the question is important and ought to be looked at and that kind of response is made. Must we simply accept it? I note that often when responses are given the government says that it is answering about 90 per cent, but one can read into that that in effect what it is saying is that at least there is some percentage of those questions it will not answer.
To summarize, may I ask that when an answer is given which is viewed by a member to be important but in effect the member is given a non-answer, with the government taking the position that it does not want to take time or make the effort, is there any appeal by which we can have the question asked again and an answer given?



MR. ELZINGA-DELAY IN ANSWERING QUESTION NO. 223

Mr. Peter Elzinga (Pembina):: Mr. Speaker, I rise on a point of order relating to question No. 223 on the order paper.
I have shared with the House before the fact that this is the third session in a period of over two years that it has been on the order paper. I am simply asking a question with regard to special or annual passes in the year 1976 which were granted to various chairmen and presidents of Crown corporations and government commissions, and how often they have been used.
The parliamentary secretary has stated to me in the past that this question has proved to be quite expensive to answer. I should share with the parliamentary secretary that in excess of one year ago, somebody from the department contacted my office to receive further clarification dealing with this question. I should also share with the parliamentary secretary that to answer this question is going to prove a great deal less expensive that the cost has been to the Canadian taxpayer for those individuals who fly around on these annual passes.



MR. JONES-DELAY IN ANSWERING QUESTION NO. 69

Mr. Leonard C. Jones (Moncton):: Mr. Speaker, I again rise on starred question No. 69. This question was also put down as a starred question in the previous session, and in the session previous to that. To date there has not been an answer. With all the efficient and inefficient bureaucrats in the public service, there has been plenty of time to give me an answer. I have asked the parliamentary secretary about this on several occasions. He has replied that he would look into it and that he expected an answer. One time, about a year and a half ago, the answer was that it would be a few days. Several "few days" have passed since then.


Mr. Speaker:: Order, please. With regard to the point raised by the hon. member for Battle River (Mr. Malone), I hope he realizes there are in any given situation a number of courses open to him. It would be very difficult for me to advise him from the chair as to what those courses might be. In fact it may be difficult for me to advise him at all on what the courses might be because ultimately I might have to sit in judgment on my own advice. If he were to consult the officers
The Budget-Mr. McKinnon
at the table, he might find some help in determining some of the ways.
If in fact part of the question is, for example, of such a nature as to require a detailed and expensive sort of response to that part, it may be useful for the hon. member to think of severing his question into several parts, or of returning the question to the order paper without that part. At any rate, I suggest to him that he consult with the Table for some assistance on it.


Yvon Pinard: Mr. Speaker, there were three statements. The first one contained some comments and some criticism even if it was under the form of a question directed to Your Honour. All I can say to the hon. member for Battle River (Mr. Malone) is that when answering questions we are always concerned about informing parliamentarians and the public as fully as possible. At the same time, we want to please the hon. member who asks the question and also, if possible, alleviate his frustrations. But we are not forced to do that, and we must give the most objective and useful answers possible in order to inform the public properly. As far as the second statement is concerned, namely question No. 223 for which the hon. member requests an answer, it is very fair to say, Mr. Speaker, that this answer requires a lot of research and that all the work involved in trying to answer that question costs a tremendous amount of money to the Canadian public. But I want to assure him that we are making representations to try to obtain an answer as quickly as possible, but we have not been given the details which are necessary to draft a complete answer by all the departments and agencies. Finally, as regards the hon. member for Moncton (Mr. Jones), who requires an answer to question No. 69 marked by an asterisk, I urge him to be patient and to read in the meantime the answer to question No. 71 which was given to him today.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Monday, November 20, consideration of the motion of Mr. Chretien that this House approves in general the budgetary policy of the government, and the revised amendment of Mr. Stevens (page 1249).
Mr. Allan B. McKinnon (Victoria):: Mr. Speaker, it is of course a privilege to participate in the budget speech debate, although in this one it is difficult to do so with pleasure. That is because it is rather unusual to have a government bring in a

November 21, 1978
The Budget-Mr. McKinnon
budget in which it congratulates itself on making things worse next year than they are this year.
Job creation, which was 362,000 this year, and not enough at that, will be 250,000 next year. The government also seemed proud of its deficit and intends to increase next year's deficit to a considerably higher level than this year's. It is rather reminiscent of the horse racing addict who made his way to the track saying, "I hope I do not lose too much today because I sure need the money!"
If I may be permitted to say a kind word about the unfortunate Minister of Finance (Mr. Chretien), I would point out that he seemed to be more comfortable when he was the Minister of Industry, Trade and Commerce. The Prime Minister (Mr. Trudeau) then began to move around his chessmen in order to make room for his acquisition from Crowfoot. I hope the word "acquisition" is parliamentary. I would not want to get into the semantic argument as to whether the hon. member for Crowfoot was bought, purchased, acquired, given away, was obtained on waivers, or played out his option. The fact is the Prime Minister was acting as godfather of the family opposite and made him an offer he could not refuse.
In any case, the shifting around did a disservice to both those portfolios. We now have cabinet ministers in both Industry, Trade and Commerce and Finance who seem to be in difficulty. The self-confessed street fighter is beginning to look a little punchy, I am afraid.
A few days ago Mr. Speaker suggested to the splinter party on our left that if they wished to discuss defence they should not do so courtesy of Standing Order 26, but should take advantage of the opportunity of the budget debate. I welcome the Speaker's interest in defence. I hope we will hear from the party on the left in this debate. As well, I hope that at long last we will hear a few words from the minister about defence, defence being rather consistently underplayed in this House. There has been no mention whatsoever of defence in the last three throne speeches. The Minister of National Defence (Mr. Danson) does not seem to care to address this House very often on this subject. The last policy statement on defence by the government was in 1971 with the issuance of the so-called white paper.
Neither the country nor parliament at the present time has any idea of exactly what the government plans to do in the immediate and long-term future. I realize this particular lot of Liberals will mercifully be removed from guidance of national affairs before the medium future arrives. Even so, one would hope they would have done some planning during their too long regime.
This lack of planning is important, because the minister spends a significant amount of time addressing audiences outside of parliament, speaking about fantastic re-equipment programs which he and his predecessor have announced, as well as spurious versions of the amounts of money that this government is actually providing to National Defence, to buy equipment. The fact is that because of the deliberate downgrading of defence by the Prime Minister ever since he took over as leader of the Liberal party in 1968, we not only have a

crisis of obsolescence in nearly every field of the Armed Forces' equipment, but also an acute shortage of manpower, plus a vacuum in policy.
The fault for this situation lies entirely with successive Liberal governments, and the Ministers of National Defence who let both the equipment and the manpower of the forces run down so far that the over-all effectiveness of the forces is now at a disturbingly low level.
It is worth remembering that in 1963 the Armed Forces had
123,000	men. By 1968, when the present Prime Minister took power, there were 101,000, and today there are only 79,000, despite the promise made by the minister about a year ago that he was increasing the armed forces by 4,500. I suppose a lot of people in this country believed him. However, the increase so far has been in the order of 400.
In terms of equipment, the worst damage caused by the decade of neglect under the Liberals is still to come. Major weapons systems, like ships, fighters and tanks, have a useful life of 20 to 25 years, and they are extremely expensive. For this reason any responsible government ensures that it has a proper investment cycle whereby it replaces each year a portion of its heavy capital equipment. In this respect National Defence should not be any different from a large business organization. However, for eight years under the present Prime Minister, from 1968 to 1976, Canada did not place a single contract for a major weapon system, thereby distorting the investment cycle for capital requirements in the future.
Canadian taxpayers and the Armed Forces are going to have to pay for this long period of neglect, the Canadian taxpayers because they must foot the bill for buying 20 years of equipment over the next ten or 12 years, and the Canadian Armed Forces because they must suffer the effects of operating old and obsolete equipment. For the forces, though, the worst is still to come in some respects since there is no evidence the present minister intends to take action, as opposed to making endless promises, to ensure that enough new equipment will be delivered in time to maintain the effectiveness of the forces at even minimal levels.
Let us take a look at all three services, starting with the navy. At the present time we have a navy of 23 surface ships. If we exclude ships over 25 years old, by the time the six new frigates arrive in service we shall have only ten ships in our surface fleet, including the frigates-four left over from the present fleet and six new ships, for a ten-ship navy! How can Canada possibly carry out its commitments in ten years' time with only half the number of ships it has today? The question has particular relevance because the expansion of Canadian sovereignty into the 200-mile economic zone would certainly mean more, not fewer, tasks for the navy.
The Air Force is confronted by a more acute crisis involving timing, since decisions with regard to the acquisition of a new fighter which should have been taken before now have still not been taken by the government. At present the Air Force operates three different types of fighter aircraft. When first
November 21, 1978

bought by Canada they numbered over 400 planes in total. The most modern of our existing planes, the CF-5, is also the least capable, reflecting the fact that it was one of our poorest defence equipment choices since the war. Evidence of how little the Air Force thinks of this plane is shown by its wish to relegate it to an advanced trainer role as soon as the government provides the new fighter plane. The choice of the CF-5 in the sixties has, of course, made the present situation much worse because we are having to replace three types of fighter at once instead of just the much older CF-101 Voodoos and CF-104 Starfighters.
Let us turn to consider the current problem, the purchase of the new fighter aircraft. About a year ago the Minister of National Defence announced that tenders were being called to provide Canada with between 130 and 150 planes, and that six companies were being invited to participate. The date by which bids were to be entered-the government stressed it was to be the final date-was February 1, 1978. Five of the six companies put in their bids at that time; partly due to a technicality, the French company, Dussault, was not able to comply with the requirements and withdrew.
The project office proceeded to work on the mass of detail which had been given it in the way of bids, and under the policy direction of the cabinet selected a short list in the course of the following three and a half months. Flowever, during this period, partly due to the lack of credibility the government suffers in international circles-people were not certain the government meant what it said it meant-some of the aircraft companies sweetened their offers. Operating within the constraints placed upon it, the project office came up with a short list in June. The government, though, for some strange reason known only to its own paranoic circle, refused to admit, deny, or explain the presence of the short list.
I put a question to the Prime Minister on this subject at the time-it can be found on page 6716 of Hansard for June 26 last and might bear repeating at this point:
Mr. Speaker, in the absence of the Minister of National Defence I will direct my question to the Prime Minister. Can the right hon. gentleman confirm that the new fighter project management office has recommended that a short list of three planes be considered for the impending fighter contract, the F-16, the F-18A and the F-18L?
To which the Prime Minister replied:
I am not sure what the hon. member is quoting from and it is certainly not government policy.
The exchange continued:


Allan Bruce McKinnon: I was not quoting from anything at that point except my own question, Mr. Speaker. Perhaps the Prime Minister has noted the following quotation from a Canadian Press release-"One of the options the cabinet is considering is the so-called short list, dropping some of the competing firms", Danson said.
Could the Prime Minister tell the House whether the choice is being dictated entirely by the fact that these three planes are the cheapest of those under consideration and that since only a fixed sum of money is available, S2.3 billion in 1977 dollars, other important factors such as air superiority qualities, range and target acquisition capability all have to be sacrificed in favour of financial considerations?


Pierre Elliott Trudeau: The question is truly hypothetical. However, I can tell the hon. member that we want to try to get the best plane for the least money.
The Budget-Mr. McKinnon
Now, Mr. Speaker, here we are, five months later, once again discussing the short list. And once again it appears that the same three planes are under consideration.
What has caused this five months' delay? The Prime Minister told a press conference the other day that he had been requested by Mr. Schmidt of Germany to allow the company concerned a further opportunity to sweeten its offer in connection with the Panavia Tornado. I have nothing in particular against the extension which was granted on that occasion, though it did indicate a lack of managerial competence on the part of the government to the extent that it was not able, apparently, to convince prospective plane manufacturers that it was serious when it talked about the February 1 bids being final. Also, it indicated a lack of confidence in the government's own ability during the contract negotiation stage. As hon. members know, the companies were right and the government was wrong.
Be that as it may, August 1 was set as the date for the second and final bid. All plane manufacturing companies complied, although some of their second bids were almost identical to their first. But what has been the cause of the delay since August 1 ? We saw the unedifying spectable of the Minister of National Defence stating on September 6 that he would be presenting the short list to the cabinet committee on September 14 and to the full cabinet the following week, only to find that two months later he still has not done so. This raises several questions in the minds of parliamentarians, in the minds of the general public and, indeed, in the minds of those who manage the plane companies.
What is the purpose of this delay heaped on top of delay? There is one scenario, if I may use a phrase favoured by the Department of National Defence, which would provide all the answers to these repeated postponements. It is that the government intends to announce the new fighter aircraft at a time which would best serve the purposes of the Liberal party, that is, at a time close to a federal election. They will then announce the final selection, indicating to the forces that they are serious about this plane purchase, and, as they did so misleadingly in the case of the long-range patrol aircraft, they will indicate to all sectors of the country that all concerned are going to reap the benefits of increased employment resulting from the offset work. Speaking parenthetically on this aspect I might point out that the offset benefits accruing to British Columbia from the long-range patrol aircraft are now at the giddy height of one half of one per cent, up from one third of one per cent.
While the government still refuses formally to commit itself to a short list, the leaks coming out from cabinet meetings and from the minister's office indicate that the people influencing the choice of plane are a very odd lot indeed. It must be a little difficult for those members of the armed forces directly concerned with this plane to realize that the timing of the selection is being stage managed by Keith Davey, the rain maker who tells the Liberal party when to hold elections and what to do for months before the election, and that the final selection would depend largely on the Minister of Industry,

November 21, 1978
The Budget-Mr. McKinnon
Trade and Commerce (Mr. Horner) and the Minister of Public Works (Mr. Buchanan).
If I might, I would like to suggest to the Minister of National Defence that partisan advantages should be dropped at this time. The selection of this plane and the provision of this plane are a very, very important matter for the Armed Forces and for Canada. The most important factor that should be considered is the military requirement, not whether it will gain votes in the area of Malton, and not whether it is the cheapest which we can get. I have already heard disturbing rumours that the next phase of this plane selection, that is, the contract phase, is not due to start until the middle of January. I ask the minister if he cannot wring a decision out of the cabinet to approve the short list and get on with the next stage now, rather than two months from now. It is my understanding that this would enable the final choice and final contract to be signed some four to five months from the start of the contract phase. If this is correct, and I am not certain that it is, that would enable the final decision and the final contract to be signed in the very early spring, perhaps as early as March.
I make this suggestion in the hope that the matter of partisan politics can be kept out of this, and, of course, it will be impossible if the final selection is to be made during the election campaign. Only the Prime Minister knows when the election campaign will be, but we know the date by which we are certainly going to have one. It seems to me that it would be politically immoral for this decision to be postponed for partisan political advantage and then brought up in the middle of a political campaign, to say nothing of the fact that it is also considered politically immoral to make a major commitment just before an election. I make this suggestion in all sincerity, that the government should attempt very hard to make a decision and have the contract signed by the end of March, because it would then avoid being accused of doing it for political purposes. If it cannot come to a decision by that time, it should guarantee that it will put the matter on the shelf and have it dropped during the campaign period. This would at least give us the hope of coming up with the best, plane most suited for Canadian needs.
I would like to move now to the situation in what used to be known as the Canadian army. The present situation of the land forces, or the army, is compounded by shortages of both manpower and equipment. It has suffered most from the cuts in defence since the present Prime Minister took office. For example, in 1965 the army had 48,000 personnel, and it has
27,000	today, of which only 17,000 are assigned to Mobile Command. No element within the army has been harder hit than the infantry. Even within the last four years the infantry has been cut back from 7,500 to approximately 6,500. No army in the world can retain high morale or remain efficient if there is such a continuous loss of manpower, especially in what is referred to as the teeth arms.
However, the loss in manpower is matched by the fact that the army has very little modern equipment when compared

with either our allies or our potential adversaries. For example, the government has ordered new tanks, but has bought the Leopard one, a tank whose basic design is now 13 years old. The reason that this is significant is that all other countries which operate tanks are moving very rapidly to a new generation of tanks, with bigger guns, improved engines, and the new "Chobham" armour which protects them from the anti-tank missiles with which most Warsaw pact infantry units are now equipped. It is rather daft to ignore the fact that a new generation of tanks will have new guns, new engines, and new armour. If you take those three things away you do not have much tank left.
The other disturbing aspect of the tank purchase is the very small quantity involved. We are replacing more than twice the number of old Centurion tanks with a total of 128 Leopard ones. Under present plans we will have only 78 based in Europe, of which a third are to be held in reserve. This will be our total contribution to NATO's tank forces, which face some
27,000	Warsaw pact tanks on the central front of Europe alone.
Another example is that when Canadian forces are committed to peacekeeping operations, they frequently find that either or both the parties they are trying to keep apart, as well as other elements of the peacekeeping force, carry personal weapons or small arms which are more modern and sophisticated than any possessed by Canadian troops. It should be a sobering thought to realize that our fellow peacekeepers in the Middle East, Ghanaian or Nigerian troops, now have better small arms than the Canadian Armed Forces.
I would now like to talk about the financial support that this government has promised but not delivered to the Armed Forces. The present minister inherited from his predecessor a commitment by the government to, at long last, begin re-equipping the forces. This was the "Richardson formula" whereby the capital budget would be increased by 12 per cent per year in real terms for five years, and the whole of the defence budget would be inflation proofed. The former minister achieved this in 1977-78.
After only one year the present minister voluntarily gave up almost 80 per cent of the promised real growth in the capital budget, and now under the government's restraint program the minister has apparently forgone another $150 million out of his budget. Whichever part of it he has surrendered, he will either be losing the inflation proofing, or yet more from his capital budget. In either case we have had more slippage away from the Richardson formula, which was the minimum necessary to maintain the viability of the forces in the long run.
Just the other day the minister took great umbrage in reply to a question of mine, when I said that they had not increased the budget by 12 per cent. I would like to read to hon. members a few words from the minutes of the Standing Committee on External Affairs and National Defence on March 12, 1978, when we were studying the estimates for the Department of National Defence. I asked the associate deputy minister of finance in the Department of National Defence, Mr. Davies:
November 21, 1978

-tell us exactly how much the percentage increased, the real growth percentage increased, in the capital budget this year after you had deducted the $60 million?
Mr. Davies replied:
Mr. Chairman, I believe that worked out... to 2.8 per cent.
I said:
What a come-down from the 12 per cent that everybody expected. So it was actually the inflation rate plus 2.8 per cent.
Mr. Davies replied:
That is the way it worked out, sir.
Notwithstanding the fact that they had just broken the promise to increase the capital budget by 12 per cent in real terms, the minister and the Prime Minister attended a NATO meeting at which they made a second pledge, that they would increase the Canadian defence budget by 3 per cent in real terms per annum overall, so that the alliance's long-term defence program for the next decade could be meaningful, since the alliance pledged itself to do more than just maintain existing levels of spending. This promise, too, they had no sooner made than, in effect, they broke it. Already our annual increase for NATO purposes is down to 2 per cent, and this is only the first year of the program.
In both cases the present minister has used the device of pretending that his formulae are intact, money that he has not got, or he has agreed to give up, he insists is still there-in some heavenly treasury board no doubt, and he goes around the country claiming 12 per cent real growth for the capital budget. The particular ministerial fantasy which permits him to offer this piece of double talk is the so-called, and infinitely flexible, capital envelope. It is a concept which allows a minister to convert a 12 per cent real growth each year into 2 per cent or perhaps 5 per cent, and then at some future date- no doubt when the lions of the Treasury Board lie down with the ministerial lamb of National Defence-the minister of defence says he will get what is owing to him.
This talk of an envelope is simply a cheap political way of changing a definite commitment in the estimates into a political promise. If the minister is allowed to get away with this and the Prime Minister in his backing of it, no doubt we will soon be hearing that the redevelopment of Toronto harbour is still in the envelope, and that the replacement of the weather ship Estevan on the west coast is still in an envelope, although, I believe, the promise is now more than eight years old. We might even hear that the Prince Edward Island causeway is still in some envelope in some remote corner of some department. We are supposed to be happy with these and other statements of the minister.
With his characteristic urge to please, the minister does neither the forces nor the country any service when he continually makes promises which he knows he cannot keep. As well he has a penchant for slight exaggeration. For example, as recently as October 5, 1978, the minister addressed the Men's Canadian Club of Winnipeg. He said the following:
The Budget-Mr. McKinnon
We will spend another $700 million this year on orders to replace equipment grown obsolete during years of austerity.
I should like to refer to page 15-12 of the 1978-79 estimates of the Department of National Defence. Under capital of the department, there is a grand total of $685,207,000. Of this amount, construction and acquisition of land, buildings and equipment totals $94,026,000; utilities, materials and supplies, $7 million; professional and special services, $19 million. Clearly the grand total is approximately $150 million less than the minister said would be spent on equipment this year.
With each year that the defence budget fails to get funds promised to it, which are the foundation for buying equipment for the next 15 years, the prospects of the new fighter and ship programs become grimmer. The compounding effect is completely lost, if the defence budget does not get the 12 per cent each year. One does not need more than a basic grasp of arithmetic to see that, unless increases come through now, the necessary base for later expansion will not exist. Without an expansion, obviously it is impossible to buy $2.3 billion worth of fighters, which the minister promised, and $1.5 billion worth of ships, expressed in 1977 dollars, just to name the two largest purchases, unless one stretches the programs and the envelope to the turn of the century. If these programs are delayed that long, it will be impossible for the Armed Forces to meet their existing commitments, simply because long before then the forces will lack basic equipment to do the job.
It is hard news to have to tell the people of the country the situation regarding the re-equipment program. This kind of factual reporting would come better from the minister, but if he is unwilling to come clean with Canadians about the financial jiggery-pokery which is going on with the estimates and budgets of the Department of National Defence, then someone has to do it. As I said earlier in my speech, the bitter truth is that we went for ten years without giving our forces the support which was absolutely necessary for them if they were to carry out the roles assigned to them. Now we must pay. During the next ten years we will have to pay for 20 years of defence expenditures, yet the government indicates its clear unwillingness to tackle the job.
I should like to compare the present situation with the past one in this regard. If we take the figures of the Maritime Command, the Mobile Command and the Air Command, and then add the unallotted troops on a prorated basis, we find that in 1965 the navy had 19,613 men and women and in 1978 it had 16,994; the Mobile Command has gone from 46,000 down to 27,000; and Air Command has gone down from 48,000 to
35,000.	Since 1965 the navy has lost 14 per cent, the army 42 per cent, and the air force 27 per cent.
I hope the minister will take my suggestion about moving on as quickly as possible with the selection of a new fighter aircraft. Last week I was surprised to note that along with the discord which has existed always in the government, the Prime Minister talked about defence equipment at his press conference. He made a very curious comment which did not seem to be noticed by too many people. He referred to the selection of

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The Budget-Mrs. Holt
fighter aircraft and whether it would be cheap or expensive. He said the following:
Well, that's a trade-off that DND will have to advise us on. There are cheaper aircraft of which you can get a greater number for the same price. But, obviously, they are not as good as the more expensive aircraft. And, what they are doing now is the same kind of operation they did when we bought a billion dollars worth of long-range patrol aircraft a couple of years ago. They had to choose between the Boeing which in terms of number of hours flight and so on was a bit better but so much more costly than the Lockheed that they could get more of the Lockheed to do the job and they chose the latter.
Clearly this implies that the Prime Minister thought the Boeing 707 would make a better long-range patrol aircraft. This is totally at variance with what the previous minister of national defence told us, as well as everyone else in the services.
In closing, I suggest the government should get its act together. It should move ahead quickly with this new fighter purchase. We should get it out of the way before the election campaign starts. Let us give the forces the support they richly deserve. Our party believes that they deserve this new fighter aircraft. Our party is in favour and has supported the government in its re-equipment program. We believe that the forces need to be a bit larger. We hope to have the support of other parties in this respect when we are in government.


Mrs. Simma Holt (Vancouver-Kingsway):: Mr. Speaker, I appreciate the opportunity to support the Minister of Finance (Mr. Chretien), a sensitive, responsive Canadian whom I respect very much.


Some hon. Members:: Hear, hear!


Simma Holt: I respect him not only for what he is today, but for his great record of service to Canada since he came here from St. Maurice in 1963. I recall talking to him about Canada, and as no other Canadian he made me understand the depth of love of Canada by French Canadians. He told me his story, and I passed it on to my constituents on the opposite edge of Canada, 4,000 miles from his home, in order to explain the richness and love which bind us as a nation.
The minister's family settled in Lower Canada 325 years ago. The Chretiens fought beside the English in the battle of Chateau Gai in October, 1813, when the Americans invaded Canada. In a private conversation with me, the minister said this:
That is the way it will be today if Rene Levesque tries to break us apart; we French and English will be together.
When he came here in 1963 from his riding of St. Maurice, he was unable to speak a word of English. He had no choice; he had to learn English. It is characteristic of this great and spiritually rich Canadian that he did not resent it. He said it simply: "That was the way it was".
To think that today, in this most complex of duties in Canadian affairs, he is so competent in both languages that he can handle himself articulately, and courteously, in responding to an English member in English and a French member in French!
He is a true federalist. I recall one day when were talking about possible separation, he said:
This is all my Canada. I worked for the north for six years.
He was referring to the time when he was Minister of Indian Affairs and Northern Development.
He continued, saying:
Nobody is going to say that is not my north or your north. Nobody is going to split it away or any part of my Canada away and turn the north into a Kuwait for about 60,000 people. My kids and every Canadian's kids ha^e a right to everything that is Canadian.
Let us hope that there will be a spread throughout Canada of this example. It must have been a difficult decision, one of compelling duty, which convinced him to take on his present job. Of course his present job is one that only can cause him grief and be a political nightmare because of the economic crisis and social turmoil throughout the world. He took the job when others quit. Let us hope this love and duty to Canada in the hearts of the Chretiens, many Anglophones and others of many cultures-a mix which makes Canada such a magnificent nation-will shame and quiet the hatemongers, those few who spew out their intolerance and irrational hate.
It is love and mutual respect between people which will keep us strong against all divisive forces, some of which are right in the House and up in "yon Fourth Estate."
1 want to speak of the need of excellence in communication, the importance of the media as a responsible public utility, although in private hands, and the importance of an informed and wise electorate as fundamental to a healthy democracy. Conversely, if there is a dearth of responsible and fair reporting, as seems to be the case in Canada, democracy will fail and the first victims always will be the symbol of all freedoms, the free press.
Tragically, communication lines across the land have become warped and distorted. In fact there seems to be a concerted effort to keep honest and fair communication down to a minimum. It seems, as Thomas I. Emerson in his book "The System of Freedom of Expression" has stated, that the most formidable threat to freedom of the press comes less from government than from the media itself. Professor Emerson, who was a law professor at Yale, put it this way:
-that it is no longer to protect the freedom of the press from government interference in order to guarantee freedom of expression. Today, "the overpowering monopoly over the means of communication acquired by the mass media" constitutes the "most significant threat" to our system of freedom of expression.
This country has been well managed. The results are discussed internationally with respect and with admiration. We should all be proud of the international recognition that we are receiving right now.


Some hon. Members:: Hear, hear!


Simma Holt: This government-it is recognized throughout the industrial world-has given us the highest standard of living in the world, but few in the media are telling it. Praise in the international economic community for Canada's leader-

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ship, compared to the carping at home, proves the old truism-the prophet is without honour in his own country. Canada's economic record is excellent according to an independent assessment made by the Organization for Economic Co-operation and Development, which is composed of 15 of the most industrialized nations in the world, of which Canada is one. These are countries with which we do 90 per cent of our trade.
Another independent voice that recognized Canada's position objectively is that of Earle McLaughlin, chief executive of the Royal Bank of Canada. He claims that in the past seven years Canada has outperformed the Americans by almost any economic yardstick. In that period, real personal incomes in Canada increased 38 per cent, even taking into account the weakened dollar. Compare that to our great neighbour to the south, which had an increase of 17 per cent. Mr. McLaughlin said that Canada's material standard of living increased more than that of the United States, and despite unemployment he notes that Canada has led the world in creating new jobs. We have done better than the second best, which is the United States, having created 50 per cent more jobs than the Americans.


Some hon. Members:: Hear, hear!


Simma Holt: Total investment spending in Canada also rose, according to Mr. McLaughlin. He would be interested in that fact, and so should the Conservatives because he is their man. It rose by 168 per cent, compared with 107 per cent in the United States.
Dr. Carl Beigie, the highly respected economist, author, teacher of managerial economics at McGill University, and president of the C. D. Howe Institute, which like himself is proudly non-partisan and objective, analysed the Canadian economic record at a breakfast meeting I attended, along with others, sponsored by Reader's Digest, on October 31. He said that Canada has as sound a medium-term economic strategy in terms of its fundamentals as any industrialized nation in the world. He goes on to say that there have been tactical errors but that this is virtually inevitable in the real world of political economy. Anyone who imagines that we who live in a narrow belt stretching 4,000 miles across this land can solve all of the world's problems is a dreamer and not very realistic.
We in Canada did very well despite a decade in which there was a shocking upheaval in world economies, where the wealth and control of energy resources shifted from the traditional power areas into the hands of a few sheiks and dictators via a third world cartel. It was a transfer of economic power that set off a tidal wave of inflation in 1973 through the OPEC cartel's fabricating of an energy crisis and then overnight quadrupling the price of oil, and thus energy prices.
But despite all this the record from OECD shows that we survived and came out of it at the top of the economic scale. Our standard of living improved continuously. A recent OECD study ranked Canada second in quality of life among the 15 most industrialized countries. Our GNP increased 32 per cent in real terms. Personal disposable income grew 118 per cent.
The Budget-Mrs. Holt
Average family income went up 35 per cent in real terms. Our 1973-76 growth rate of 9.9 per cent ranked us third in the western world. Our job creation rate of 8.8 per cent-that is,
250,000	jobs a year-between 1973 and 1976 was the highest in the world. Our export trade grew dramatically, with a record trade surplus of close to $3 billion in 1977. Private sector capital investment has run at about 22 per cent a year, compared to 14 per cent in the United States. Second quarter corporate earnings for 1978 are up 20 per cent over 1977. There are now 36 companies with sales of over $1 billion, six more than in 1977.
The whole world has been struck by spiralling inflation with economic stagnation. High unemployment has resulted as long used economic procedures failed to produce expected solutions. Who would be so childlike in the adult world here and in the media as to expect Canada to remain immune to the ailments of the entire world? Here we had virtually economic primitives controlling and manipulating the sophisticated industrialized nations, and the adolescents in the media-yes, even here in the highest institution in the nation-expect classic, old style results from old style procedures.
Listening to some members here and seeing the messages going out throughout Canada, one would think that 264 people, members of parliament, representing 22 million constituents living in a narrow band stretched across 4,000 miles along the 49th parallel, as I mentioned, would alone be able to solve the problems that beset the world. It is less than genius to pretend that Canada alone can solve these problems. One can only assume that the critics are either dishonest or stupid. To be charitable, one might suggest they are sincere but naive-a terribly dangerous combination.
One has to wonder if contemporary rules of journalism proscribe that positive news must never be reported, that the public must be harangued into an intense anxiety state by the unending barrage of cliches and verbiage that threaten the end of the good life. Sometimes we who sit here have the feeling that the news is bringing us to the edge of the world. But it is all too often that this brand of reportage as projected, not the reality or the facts, provides the basis for public anger, unrest, frustration and terrible anxiety. We members of parliament, regardless of our politics, must share in this and possibly in the destruction of our own parliament.
One must wonder if the reasoning behind this is so superficial and selfishly petty as to be ludicrous. Is it fear by media "stars" that their personal status as pundits will be threatened? The Fourth Estate, as we call it here, though it hardly deserves that name until it returns to the style by which it earned that magnificent title-


Thomas Lefebvre: What would you call it, then?


Simma Holt: My colleague asks me what I would call it. It is still the Fourth Estate in world affairs. If the Fourth Estate were doing its job it would have a right to claim its status as the fourth and greatest estate in a free society. But do some members of this Fourth Estate fear that their personal status as pundits is threatened? If their predictions of disaster and
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tragedy fail to materialize, it would be a personal blow to their small egos. They would find themselves going nowhere. What an irresponsible influence on Canadian democracy-on the need for a well informed electorate to select an excellent parliament and to structure a healthy nation.
I want to say that there are still high calibre reporters here. I could name them, but time does not permit it. Surely it is to the critical and large public utility that we must direct our attention. The monopoly owners must certainly look to what is happening here before it gets even further out of hand. The owners are fourteen men-all men, and maybe that is the problem. There are fourteen owners of the major communication media in this country. Montreal and West, the English media of every major city is controlled by three companies, Southam's, F.P. Publications, and the Thomson group. These three companies unify to tell us and tell Canada what is happening. They do not have to be honest, they do not have to face the checks of competition; they do not have to do anything but manipulate and control this country.


Mr. Dionne (Northumberland-Miramichi):: It is the same thing in New Brunswick.


Simma Holt: That is just what I was going to say. East of Montreal it is the K.C. Irving group. It should be cause for fear for all of us. If they can divide this House they can conquer this House. They-those 14-will be the people who will be running Canada, if they are not already.
I say that the media has the most important duty of any profession in any free country. It is truly the most crucial agency for strength or for destruction.
For democracy to flourish it must have a free, responsible, fair, balanced and, most important, an accurate press.
The right of the public to know is the highest principle of a free society. The people who tout this the loudest today on this hill are the very people who use self-serving censorship-the media. Those of us who despise the secrecy that allows bullies and sadists to flourish within the public service feel that it is essential to have openness and that the public has a right to know. But it seems that this right to know in Canada gets mixed with the right of some journalists here to use their own so-called discretion as to what the public should be told. The distortion and censorship that are flourishing in this country have been described as one of the most "formidable threats" to society today. That is by Emerson and by other great leaders in both the United States and in Canada. It is as though the right to know must be submerged to the right to keep good news secret. It is as though the truth may spoil the fiction.
I recall following the appearance of the RCMP before our justice committee, about a year ago, when many accusations and so-called scandals were explained, even explained away by the RCMP commissioner on a morning show. It was a national network but I will not name it. The commissioner gave the answers to our committee. The interviewer, noted as much for his accusative style of telling facts as for questioning, got

responses he obviously did not like. They answered the charges and exploded media scandal stories. The answers left the interviewer with egg on his face. He whined on the air publicly, "But that spoiled my story."
Recently, on this same show the Solicitor General (Mr. Blais), being interviewed regarding cabinet ministers' appearances before the McDonald inquiry into the RCMP, said the ministers want to be heard in public. Minutes later, on the news, the story was sent across Canada that the Solicitor General wanted to appear in camera. I could not believe this was possible in a free and open society.
Another trick that hon. members opposite will know as well as we do is the "voice-over" technique. If the speaker is telling something and saying it well, making a forceful argument- whether it is the Leader of the Opposition (Mr. Clark) or the Prime Minister (Mr. Trudeau)-they use voice-over and translate it the way they want, not necessarily telling what was said.
During the federal-provincial conference it was remarkable that the two pinch-hitters for CBC told of an end to the conference of discord between the first ministers of the provinces and the Prime Minister. People who watched it live saw the conference as it really ended. They also heard B.C. premier Bill Bennett and other first ministers talk of it as a successful up-beat conference. These realities inspired one caller to an open line show, in which I participated in Vancouver, to ask, "Does the CBC executive censor truth?"


Maurice Adrian Dionne: What does Allan Fotheringham know about Canada anyway?


Simma Holt: He reports from Vancouver about Ottawa-a
3,000	mile perspective of Ottawa.
Donald McDonald, editor of the respected Centre Magazine, November-December, 1976, pages 15 to 35, sets out the duty of the media this way:
The premise of democracy is that a people can govern themselves. The condition for this audacious assumption is that the people will have the information they need to make wise political decisions. Democracy, the philosopher Richard McKeon has pointed out, is a community based on communication. Judge Learned Hand has said that we have staked our all on the rational dialogue of an informed electorate.
Mr. McDonald said, and I agree, that the press, that is, broadcasting and print, as the chief medium of communication among people and for people, remains the most effective way to relay what is happening. He says that they have betrayed the greatest duty of one of the most important professions for a strong nation.
These are such exciting and challenging times for great communicators, not only because of the subject matter that changes so quickly, but because of the availability of the tiniest and most colorful events in every corner of the world through jet travel and space communication. Today we have spectacular devices for instant communication and for visual experiences in every home-not just television but satellite, bringing instantaneous information from all corners of the earth. The public that has invested so much in this, and has a right to
November 21, 1978

expect so much, is being cheated. It is a critical, distrustful public, frustrated, betrayed, resenting the fact that it cannot rely on the printed word or even the voices on radio or pictures on their television screens.
The people are seeking information but cannot find an information source they can trust. The public today is not what the media were told 30 or 40 years ago-of an average mentality of fourteen years; the public today is educated and wise, perhaps much, much wiser than those in the media who are not classed, by law, as professionals.
We hear talk of paranoia. When the media is told that there is something wrong, something out of joint in the composition of its membership, they cannot think or talk about anything else but their hurt feelings. Their minds blot out everything else, all real news that affects the people of Canada. All their energy and thought are focussed on their own insult. Many know it is true. But nothing else matters, it is their ox that is gored. They become angry and dangerous, typical of paranoia. The killer instinct is the result of much paranoia. I would not be surprised if it is paranoia-schizophrenia, because many of them do not know what they are yet. I want to say that there are great exceptions.
The Prime Minister said that the media is the enemy. It is regrettable that they do not give equal attention to the Prime Minister's general statements, for example, that of October 12 in this House which was an important report to the people of Canada on the positive state of the nation.
Unfortunately the group, in the media, engaging in this paranoid-killer journalism, too lazy to do any investigative work, are wallowing in their own ego trips and giving a bad name to a great profession. The behaviour of this group ruins the responsible, fair job of reporting being done by others. It is tragic that this is happening, and nobody regrets it more than those of us who want to see a competitive press, a press that is rich and objective.
There is no doubt that the government must look into the whole business-another aspect of the press-of monopoly, and move toward an anti-trust type of legislation to restore healthy competition, to allow comparisons and force the industry out of sloth into the high standards that such comparison and competition impose.
It is also essential for the government to look into the power broking within its own agency, the CRTC, that has abused its mandate and is usurping power of parliament, diminishing competition in the electronic media and, worst of all, bullying the public and depriving the citizens of freedom of choice and freedom to have the best and most varied choices on which to base their knowledge and information.
The government must also review the CBC role as it lives off the public purse. It is costing the taxpayers more than a half a billion dollars a year to get distorted, biased, irresponsible information, in the name of national culture. The CBC had four cameras in the rotunda on budget night with which to
The Budget-Mrs. Holt
do a poorer job than the other two networks-CTV and Global-did with one camera each.
Incidentally, the waste to Canadian taxpayers by an Ottawa bureau chief, who may have a serious conflict of interest in pushing his personal political interests on the Canadian public, must also be checked. I am surprised that the media never write about this type of thing. I would also like to know why we had all that equipment out on the hill for three weeks pushing for an election. Maybe someone should look into that. I notice the whip on the other side knows what I am talking about. And one member of the Fourth Estate in the press gallery, now. Congratulations to that member-


An hon. Member:: Everybody is watching it on TV.


Simma Holt: As I said, it is the lazy way of doing it. They cannot see all the great things that you people are doing across the room or here if they sit and watch it on television.
Referring to responsible journalists, they are more important than the media charlatans in Canadian democratic life. None are more worried about the situation than the responsible journalists in Canada and the United States. Wherever these people meet, they talk of their fears and of what is happening to their profession and to the country because of the cretins.
Concerning the media's self-serving censorship, I would refer to a statement made by law professor Stephen R. Barnett of the University of California in Berkley, which appeared in 1973 in an article in The Nation. It reads:
The media tend to look the other way on important issues in which they-and perforce the public-are involved.
"One hears much about reporters' subpoenas and the threat they pose to the public's right to know, but considerably less about other controversies involving the media, the government, and the First Amendment. . . The whole subject of media concentration somehow eludes the nation's newspapers and TV stations. Two years ago, for example, when Congress made its own contribution to newspaper monopoly by passing the Newspaper Preservation Act, the publishers' lobbying campaign was backed up by studied blandness in the nation's press ... Last summer, when the industry took another major step toward monopoly by killing major newspapers in Boston, Washington, and Newark, the help provided by the justice department was overlooked in the media. At present, the leading nonstory is the proposal of the Federal Communications Commission to break up common ownership of newspapers and broadcast stations in cities throughout the country-an uncommonly important and controversial issue that may be unrivaled for the thoroughness with which the media have blacked it out."
We have the same mergers, we have the same monopoly development, we have the same control, and we have the same irresponsibility of which Professor Barnett speaks. Is anyone reporting these developments? What about the takeover of newspapers by management groups, for example, F.P. Publications? The Globe and Mail was taken over by F.P. Publications and it deteriorated. Nobody has written about why that happened. It is essential now for Canada to halt and reverse this dangerous concentration of ownership by fewer and fewer people. The media character of the 1970s-neither technologically or structurally-could have been foreseen by the Fathers of Confederation when they planned this great democracy. They could not have foreseen what it would mean to a self-governing society spread across this massive land, that
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The Budget-Mrs. Holt
could not hear or know what was happening in its capitals, both provincial and federal, and even in municipal councils, because of deliberate distortion and evasion of truth.
McDonald in the Centre Magazine also notes two characteristics that bear most heavily on the performance of working journalists and the quality of public reporting. First is the big business nature of the media; and second is the increasing concentration of their ownership in fewer and fewer hands. Both jeopardize the freedom and diversity of expression.
Therefore they make problematic the possibility of realsitic and wise decision-making by the Canadian people. That is why Canadians are only listening to the stories of crepe hanging, the stories of doom, the stories of fear and the hate that have spread across this land from parliament. It affects not just the Government of Canada but everyone.


Mr. Deputy Speaker:: Order, please. I regret to inform the hon. lady that her allotted time has expired. She may continue with unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


Simma Holt: I think we all have to worry about the division and contempt that the whole of this parliament is feeling.
In an American Press interview 13 years ago Walter Lipp-man said:
A free press exists only where newspapers, which are competitive and rivals, exist, so that editorial comment and news reports can-regularly and promptly-be compared, verified and validated. A press monopoly is incompatible with a free press.
Nobody wants great journalism, great reporting, and great Canadiana more than great journalists want it. All who are confident in their own ability and have integrity want to compete in the largest markets.
Most good writers and artists try for the best and do not want to succeed in sheltered workshops. Only mediocrity and incompetence seek protection from competition. This hardly makes the nation better or provides an informed electorate. The one thing we must all worry about is an informed public. It affects everyone and democracy itself.
When the election was called in 1974, the monopoly press of Vancouver, which exists in every major city of Canada, called a meeting of the top executives of the Vancouver Province and the Vancouver Sun. These papers did not have to compete, so their representatives decided how to do the job on the cheap. A think tank was organized to decide how they would cover the election. Only the leaders got coverage, which meant the electorate of British Columbia went to the polls without knowing the strengths, weaknesses or the positions of the candidates for whom they had to vote.
If parliament is to have strength, and democracy is to survive, there must be an informed public and a responsible media.


Some hon. Members:: Hear, hear!


Jack Hare: Mr. Speaker, it is a great pleasure for the new member for St. Boniface to deliver his first speech in the House and that it should be about the budget. Allow me to say, Mr. Speaker, that the fact that I have remained quiet for days while the other new members have already delivered their speech does not mean that I will remain so in the future. It must be remembered, Mr. Speaker, that my predecessor is the senator from St. Boniface, Mr. Joseph-Phillippe Guay, and my performance must be better than his own. However, at this time I want to pay him a tribute and say that during my two election campaigns, I have noted how well known and admired he was by every resident of St. Boniface.
Mr. Speaker, it is quite obvious that I am older than the other new members in the House. Indeed, I belong to the generation of the hon. member for Winnipeg North Centre (Mr. Knowles). I am also a grandfather.


Stanley Howard Knowles: Hear, hear. And my neighbour too.


Jack Hare: Yes, that is right. I would also like to tell you a very short story to explain why I speak like the member from-

-"the safest Liberal seat in the west".
My background has been primarily in the food and agricultural industry. Although I began many years ago in the academic and scientific research field, most of my 20 years in business has been in management, particularly in the budgetary and sales aspects of marketing.
After many years in the pharmaceutical, food and grain industry, I started my own business in agribusiness consulting. Our offices have been in the Winnipeg Grain Exchange for the past eight years. Our clientele has included food processing, chemical, and agricultural supply companies.
I represent a very small company. The employees are nonunion. Although much of our work is in consulting, we are involved in sales of ingredients and inputs for the feed and farm industry.
Early in the 1970s when I started my own business we were going along rather smoothly, but shortly I found there was a rapid increase of government intervention. This involvement appeared to increase from year to year. We had more and more forms to fill out. There were more taxes to pay. It reached the point where our little company had the honour of having our own financial inspection of the books by government accountants, and that was a two week stint.
We noted a growing number of government offices surrounding us in the Grain Exchange. There were two floors of
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Manpower offices. Ministry of Transport people appeared on all sides. None of these people appeared to be working very hard with their long coffee breaks and long lunch hours. We noticed this as we were hurrying from one appointment to the other.
At the same time, the government was encroaching into individuals' lives more and more. The very size of government increased all around us. Taxes kept going up to the point where I felt I was carrying the whole load of government on my shoulders.
At this time, in the early days of his mandate, the Prime Minister (Mr. Trudeau) philosophized that if a person did not want to work, we really ought not force him to do so against his will, and so was born the costly social programs of the late sixties and early seventies such as LIP, YIP and other giveaway programs. The role of unemployment insurance was no longer insurance as we know it, but in fact high level welfare. Young persons were given to feel that the money tree was there for the picking. My own sons, growing through their teens, told me of schemes whereby they could detour around work and still live rather well. Hon. members can rest assured that they were given short shrift by me with those ideas.
Along with this government intervention, other aspects of the economy were making me queasy. There appeared to be little forward planning by government, and the Auditor General inferred that the government was losing control over its spending. Inflation and unemployment seemed to rocket upwards.
At about that stage, with all those indicators giving me strong nudges, an otherwise apolitical businessman became fed up to the teeth. I felt that the younger generation was quickly losing the finer spirit that our forefathers needed to hew out their livelihood in the Canadian wilds, yet Canada possessed unlimited undeveloped resources, resources that would require a heavy dose of the old pioneer spirit, both physically and mentally, to bring them to market stages.
Here was a country with a paucity of population relative to size, lands as yet unexplored, and it was regressing into a country that within a short while would be unable to carry out its own development, all because of the application of artificial socialistic strategy. We needed that pioneer spirit and the rugged determined character in our young folks in order to maximize our potential. It was my feeling that as the character of the young people went, so would go our country.
I well knew that one person could not make much impression on the total process, so the next step was taken, involvement in the political process. To keep the story short, we did not make much headway in the 1974 election. However, in 1978 with tremendous effort by a lot of people and a fast running campaign, we presented the viable alternative to the citizens of federal St. Boniface in the hastily called six weeks by-election.
Such an upset as was achieved, along with the other nine by-election wins, I believe justified my position as a candidate for the past five years. At least I know that the voice of the
The Budget-Mr. Hare
people is truly being heard throughout the land. Come next summer, the final awakening of the Canadian public will occur.
Since my background is in business, particularly business management, I state here that the present management practices of government as shown in the recent budget are deplorable.

Mr. Speaker, the reason for my intervention is that I think sound and generally accepted management principals should be applied in a country such as Canada. Without sound management, a company cannot be viable nor progress. Any profitable company establishes its objectives and a plan for action well before proceeding with each phase of both shortterm and long-term development. Its marketing plan is complete and is prepared with all details including time and financial indicators. That is the practical application of the concept of marketing. This concept does not relate only to products for sale but to the whole process of production, transformation, transportation, promotion and to the economic factors or, in other words, to the planning process as a whole. The idea is to direct the various products towards the appropriate markets. It implies the analysis of potential markets as well as the internal movement of all information.

The budget brought down this week again illustrates the poor management abilities of the present government. As a businessman I can say there are many key problems under our present economic conditions that the budget did not touch. I would like to relate these briefly and present some of the reasons why they have not been taken care of now.
The first is the high cost of money. As a small businessman, this affects the development of my company and my ability to obtain working capital. Second is the impact of unemployment insurance and its effect on the high turnover rate of labour at the lower levels. It is almost impossible to get and maintain working people. Third, there is a lack of high quality and skilled labour. Fourth, there is a lack of incentives for entrepreneurial action. There is very little reason for me, as a small businessman, to keep on going, encourage larger growth, and continue to pay taxes, when I could do almost as well by taking a government job or going on welfare.
The whole thing has resulted in lack of confidence in the government because of its short-term, band-aid, month to month policies. All these things are adding to the cost of production and limiting our ability to produce low cost products allowing us to compete in the domestic and international marketplace.
Let me apply some of my thinking to an area with which I am more familiar-the food and agricultural sector. There are many things wrong in this area in Canada and I would like to point out a few items, and perhaps in future debates get down to detail. One of the greatest impacts on our cost of living is

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the price of food. Everyone is hit hard when food prices rise. Thus the optimization of our food industry is essential if we are to have any aptitude in the maintenance of low food prices. The fact that Canada is so large makes the transportation of our food products an important aspect of cost. Yet I see many things which make me shudder when I review the food policies in effect at this time. This is particularly true of my own location, the prairies and western Canada. I wish to refer briefly to a few instances but I shall not take the time to go into detail.
I refer to improprieties which relate to our high cost of food. Optimum management would not allow such things to occur resulting in the poor situation which exists in our economy. First, I would turn to the grain movement process. In the normal elevators of western Canada we have almost no cleaning operations in the prairies. Only in the newer and larger elevators do we find grain cleaning facilities. Thus the dockage or screenings which in some cases amount to some 15 or 20 per cent of crops such as rapeseed is shipped from the prairies to storage elevators in Vancouver, Thunder Bay, Prince Rupert or Churchill, where the grain is cleaned to international specifications. This represents a waste of transportation capacity at a time when railway cars are in short supply, and adds substantially to costs.
As to livestock production, I find that when I speak about agriculture in western Canada people in the east are astonished by how things progress. First we grow calves in B.C., Alberta, Saskatchewan and Manitoba, and ship them to the eastern provinces. Then we grow feed grains-barley, wheat, etc.-on the prairies and then ship these crops to eastern locations. Farmers in eastern locations then raise calves for beef production using western grain. When one considers the shortage of transportation and the high cost of transportation, this is certainly not an economical process to follow.
I briefly mention the quota aspect of grain production. Under our Canadian system the average increase in wheat yield per acre has only been fractional over the past 25 to 50 years. On the other hand, corn production in the United States under the open market system has increased by four times. The potential for grain production in western Canada has only started. If we were able to optimize productivity by more intensive farming, our production could increase by a factor of two, three or four.
Another area in which the economy has gone awry is in the export of our commodities. Canada over many years has been an exporter of commodities. Why is this so? We ship raw grain, minerals, coal etc. out of Canada when we should be doing the processing and developing our industries, particularly secondary industries, on the prairies.
I would like now to pay attention to my own constituency of St. Boniface where there are many problems, some of which have to do with its particular relationship to the city of Winnipeg. It is also true, as I have heard stated here, that where there are problems there are opportunities. St. Boniface is one of the largest feed and livestock manufacturing areas of western Canada. Why then are we losing some of our meat

packing industry to the east? Why is it that although we have some of the cheapest land in Canada for the production of agricultural products, our livestock production is not increasing in the way it should? Why is food production going out of the west where it can be produced at the least cost? The marketing programs required for increased sales and production and getting the food industry in the west progressing the way it should are not in place.
I would like to point to the downtown St. Boniface area which, as many hon. members know, is very close to the downtown area of Winnipeg, joined only by one or two bridges. In the downtown centre of Winnipeg the excavation work for the joining of the four corners of Portage and Main will be completed in but a few weeks. About three or four blocks to the east, in St. Boniface, you cross the bridge and enter into what is almost a slum area. The money which has been put into development has been expended on the west side of the Red River. The St. Boniface area is in great need of development if it is to be brought up to standards of manufacturing which it can attain.
The fact that St. Boniface has historically been the site of the greatest French-Canadian culture of western Canada is not being utilized to the best advantage. The old cathedral of St. Boniface, which was burned a few years ago, has been restored to some extent, but the whole area of St. Boniface, with its French flavour, has not reached the potential of which it is capable. There has to be some development to make St. Boniface truly the centre of French Canadian culture in western Canada.
There are two or three industries in my riding to which I should like to pay attention. One of them has been the object of some interest over the past few years. It is the Freshwater Fish Marketing Corporation. I believe all hon. members know there have been many problems in the management of this operation in the past few years. There has been a good deal of fish spoilage in the accumulation process by the Fish Marketing Corporation, resulting in the loss of many hundreds of thousands of dollars. The fishermen are very unhappy at the prices they are receiving, to the extent that some of them are going around the Fish Marketing Corporation and bringing their fish directly into the city of Winnipeg to sell their product. Pickerell is fetching only $1 per pound, whereas on the open market it is selling at $3 and $4 a pound.
I turn now to an important part of western Canada's income earning capacity-the grain industry. Over the past five or six years we have produced many large railway hopper cars to handle grain transportation in western Canada. When I was involved in the 1974 election campaign the government was in the process of looking at this question of hopper cars, and at that time we made a strong point to utilize the CN yards in Transcona as a location for the manufacture of some of these cars. After all, the grain industry is in the west. The locations of these manufacturers of the grain hopper cars, however, are in Ontario, Quebec, and the maritimes. There should be a manufacturing location in western Canada, such as Transcona, which has all of the facilities. There would certainly be some
November 21, 1978

capital involvement, but it would be an ideal site for such an industry to develop, and would establish a firmer base for the CN railway repair program.
In conclusion, I have presented several aspects of the Canadian economy that require better management. There are many others that I have not brought up, but the budget of last week will not solve many of these problems. This budget, like all the recent budgets, is not based on sane, sensible, business oriented decisions. It is more of an after-the-fact budget with all of its band-aid approaches, when major surgery is required. How much longer can the Canadian people endure the arrogance of the present government? How much longer can we stand the flip-flop thinking, as it primarily relates to maintaining the Liberals in power?


Mr. Claude-Andre Lachance (Parliamentary Secretary to Minister of Justice):: By way of an introduction to my remarks, Mr. Speaker, I wish to extend my congratulations to the Minister of Finance (Mr. Chretien) for introducing a budget which, contrary to what some expected and others feared, is a responsible document which reflects the difficult times we are facing, the long term preoccupations in the mind of a minister who does not intend to play tricks on Canadians or make rash promises, the concerns which are based on the extensive consultations which the minister has held with the various levels of activities in Canada, whether with his provincial counterparts, his colleagues in cabinet, the representatives of the money market, the business community, the unions and labour force.
In short, Mr. Speaker, the Minister of Finance has again taken steps to consult every productive sector within our society with a view to coming up with a document not only outlining the structural and conjunctural problems faced by our Canadian economy, but also guiding the economy and the economic agents in order that they take a better orientation for the better days which could not but come during the next few months and the next few years. Now, Mr. Speaker, I think the minister must be commended heartily for this budget which, as every commentator pointed out, is an honest and responsible budget showing on the part of the government its intention to accomplish serious things with the economy and also its long term concerns, and in that respect I think the minister must be commended for his budget.
Having said that, I should like to transcend the detailed provisions in the budget, although I will refer to them a little later, to deal with a tremendous problem which is of great concern to me as a member from the province of Quebec; it is the endemic difficulties faced by the Quebec economy over the last fifteen years or so as shown by the gradual but persistent decline of Quebec's share in the Canadian economy and particularly in the manufacturing sector. That situation particular to Quebec, even though it can result from more general
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problems and from the over-all situation of the Canadian economy, might be more difficult to resolve. It will be difficult to remedy those structural deficiencies only through indicative actions, tax legislation or even monetary policies that can be provided in a budget. Indeed, the government, which is well aware of those problems, has undertaken consultations with all levels of economic activity in an attempt to find solutions to those structural problems, and I will return to that point later.
Coming back to the budget itself, I would simply like to say that, contrarily to what some defenders of extreme expansion or some defenders of extreme restrictions say, the economists, those people who were already watching the economic indicators, were fully aware, even before the budget was tabled, that the Minister of Finance was facing a dilemma. On the one hand, his margin was obviously very narrow; and on the other hand, the Economic Council of Canada and other organizations directly involved in economic issues strongly suggested that the government should continue to emphasize expansion through tax legislation.
I should like to refer to the monthly business review published by the Bank of Montreal for the month of October 1978 in which were pointed out the difficulties which the Minister of Finance met magnificently. I quote:
The government therefore faces a dilemma: a huge dificit, and the need to contain the growth of the money supply in order to resist inflationary pressures, make tax reductions untimely; on the other hand, reducing the tax burden would be desirable to stimulate the economy.
All that to say, Mr. Speaker, that once again the two main opposition parties missed the boat. On the one hand, serving some sort of "pudding" to which we are starting to get used, though I hope Canadians never do, the spokesmen for the official opposition, through an alchemy the recipe for which we have yet to get-and again, I hope they give it to us some day-would like us to both contain expenditures and reduce revenues while stimulating the economy and giving back to private enterprise the role of leader it did not manage to assume in the past; in short, they serve some sort of "pudding" which really defies analysis. Anyway, economic commentators, after the speech of their leader, pointed out all sorts of incongruities which I leave to others the care of analyzing in detail.
On the other hand, we have the spokesmen for the New Democratic Party who, through a turn of mind I cannot fathom either, would have us-and Canadians believe that by stimulating the Canadian economy to death, and in particular, by increasing even more our current budgetary deficit, we could, even over the short term, reduce that deficit within two or three years while at the same time creating employment.
Mr. Speaker, I should like to point out to you, though you surely are aware of it as well as I am, that this government is concerned about the creation of jobs. It has allocated hundreds

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of millions of dollars to this end, and I fail to see how a policy such as the one advocated by the NDP could cure the cyclical problems on the one hand, since these are often beyond our means of action, and on the other hand, and what's more important, cure the structural problems facing the Canadian economy.
Moreover, I would like once again to point out to members of the opposition that they who are changing their tune according to the fashion of the day and especially according to editorials of the day before, should perhaps take a look at the publication prepared by the Economic Council of Canada and entitled Horizon 1982. This document pointed out a number of objectives the government should examine closely in order to find a remedy to these problems they enumerated and that I mentioned before. In particular, it said, and I quote:
In general, we propose that governments should move rather carefully to maintain adequate growth in aggregate demand, while moving more vigorously to encourage needed structural change through incentives and improved mechanisms for consultation on basic economic issues.
The council then gave some recommendations, concerning in particular international competitiveness, which made the government put a lot of emphasis on the promotion of Canadian products in foreign countries, either by the government itself or through trade missions, sometimes under the chairmanship of government officials but also, as in the case of the recent trade mission to China, under the chairmanship and leadership of Canadian industrialists.
I am surprised that some opposition members have denounced this intensive action undertaken, for example, by the Export Development Corporation, whose role is precisely to encourage the development of foreign markets. This recommendation came from the Economic Council of Canada and I think that the government has followed up well on it.
Industrial adaptation, which was the second recommendation formulated by the council is a problem which, once again, is of concern to many Canadians; it concerns industrial markets and the government, I should say governments, since this issue was the subject of two federal-provincial conferences in less than a year, the one in February and the one held last week, and, as I said, I will come back to this problem which is the main topic of my speech today.
Unemployment was the subject of the third recommendation. While the Economic Council itself recognized that it would be extremely difficult to solve this problem unless we completely mess up the economic equilibrium and promote or create galloping inflation by instituting oversized job-creation mechanisms, this very Economic Council however mentioned some regional unemployment disparities which have to be dealt with. In this regard, I quote again its report:
The problem is rendered more difficult by the uneven pace of regional economic growth and the persistence of chronically high unemployment and underemployment in many areas of the Atlantic provinces and Quebec and in the rural and northern regions of Canada.

Mr. Speaker, I simply want to indicate that the budget presented by the Minister of Finance contains a provision which should allow us to correct some of the deficiencies identified by the Economic Council, particularly regarding the investment tax credit. I would like to congratulate the minister for having done away with that unhealthy attitude which prevented us from basing our fiscal policies on regional disparities and for having at last allowed for an investment tax credit taking into account the needs of the various areas of the country. These new investments eligible for tax credit generate jobs, and they do; according to the recommendations of the Economic Council this new tax credit will be raised from its present 10 per cent to 20 per cent in the Atlantic provinces and in the Gaspe Peninsula and, under the Regional Development Incentives subsidies will rise from 7.5 per cent to 10 per cent in other designated areas and from 5 per cent to 7 per cent in the other regions.
Mr. Speaker, I think this measure will have very important repercussions on the expansion in those regions that in the past for various reasons did not enjoy the same growth rate as other regions of the country.
I could go on enumerating the recommendations made by the Economic Council of Canada in the publication Horizon 1982 and we would come to the conclusion that, although this council is of course only one adviser to the federal government among many others, it took into consideration views from experts, and without indulging into the excesses suggested on the opposition side whether by the New Democratic Party or by the Progressive Conservative party, succeeded in giving the Canadian economy this growth rate, which, while being clearly slower than expected, brought along an increase in employment which was not sufficient but which was greater than in any other OECD country and could partly dampen the rate of inflation. Members on the opposition side always convey the bad news. I shall simply refer once again to the businesses review of the Bank of Montreal, the document I quoted from earlier which gives the good news for the last few months and which stated in particular that while the rate of unemployment is relatively stable because of the constant increase in inputs, there was a job creation rate of more than 3.5 per cent, which is a very high increase. There was a drop of 1 per cent in the price of food, the over-all index has remained stable since October, the number of housing starts increased to a yearly rate of 225,000, industrial production went up by 1.1 per cent in July, a very high yearly rate of 14 per cent, which brought the index up by at least 5.4 per cent, and so on.
Is this the example of a government announcing the failure of our economy, or rather is this the result of the progressive and reasonable initiatives taken by the government in the last several years to try to make the best out of a situation which is very difficult since it affects the whole world, and more particularly all the industrialized countries? To illustrate this
November 21, 1978

point, I shall simply say that it is not for nothing that the prime ministers of all these countries have gone through the trouble of meeting three times now to attempt to find solutions to these problems, which are not national in scope, but rather international.
Having said this, I would now like to talk about the economic situation in Quebec. As an introduction, I would like to quote a very short article by Michel Belanger, the president and chief executive of the Provincial Bank of Canada, which was published in February 1978 in the publication Commerce. Here is what he said:
The Quebec economy is vulnerable.
The Quebec economy, which is an integral part of the Canadian economy, has evolved more or less at the same pace and its over-all growth this year will probably be about the same as the national average. Of course, we have the same problems as every other area of Canada and our weaknesses are more of a structural nature. The important role of labour intensive consumer goods industries, which are particularly sensitive to wage increases, makes the Quebec economy vulnerable to international market conditions, because to the pressures exerted by labour costs must be added the effect of the lowering of customs duties in accordance with the liberalization of exchange. This is why there have been many layoffs in these sectors.
Mr. Speaker, this problem is very serious, because when we refer to the soft sectors about which there has been a lot of talk recently, especially in view of the problems caused by the provincial sales tax reduction, we are speaking about those sectors which are directly affected on the one hand by the tariff barriers, and on the other hand by the increase in production unit costs, and I am thinking about the textile, clothing, footwear and furniture industries, which play such an important role in the economy of Quebec that if they disappear, hundreds of thousands of jobs will be directly affected.
Mr. Speaker, you will certainly remember that recently, in June 1978, the Economic Council of Canada published a study entitled: Study of Canada relations with developing countries with the following subtitle: For a common future. This is a very disturbing document as it predicts for our future, and not really in the short term but rather in the long term, that those same sectors I just mentioned might soon, in a quickly developed economy like Canada, become a burden that we shall have to carry everywhere in our exchanges with our partners, in multilateral negotiations, in the distribution of investment incentives for Canadian purposes, at the research and development level, and that because of the very nature of those labour intensive industries and also the fact that in developing countries those industries are given the priority as the cost of labour, the production factor, is lower there than in Canada, those industries might considerably suffer from a general industrial development policy on a world wide or Canadian scale and, particularly, in the general context of tariff barriers and tariff reductions.
The Council recommended in that study that:
The federal government should inject a large amount in an industrial adjustment program undertaken in cooperation with concerned provinces, particularly Quebec and Ontario.
Secondly, upon the improvement of the economic situation that might be defined for instance on the basis of an established national unemployment rate
The Budget-Mr. Lachance
level-Canada would phase out the special protection (special quotas and other quantitative restraints on importations) given to vulnerable industries.
Under these two simple recommendations lies a structural revolution of Quebec's economy which has not been matched in recent Canadian history and in that province itself. We are in fact talking about more than 150,000 jobs and the council spoke then about a fund of more than $3 billion which represents a considerable amount of money which had probably prompted the Economic Council to speak then of a healthier economic situation. Without necessarily sharing the views of the council which was taking as its underlying philosophy that in a world scale developmental context more chances would have to be given to the developing countries to build their own economy and to take their place under the sun and that consequently Canada had to give these countries that opportunity by gradually withdrawing from this market in order to concentrate rather on high technology industries, without necessarily completely sharing this philosophy, I repeat, I still consider that very soon, in spite of the fact that preliminary studies have been carried out, and I will come back on that topic, Canada will have to tackle the issue of progressive transfer of resources and means of production of those industries to high technology industries. In order to do so, there will have to be a very strong political will behind this move and there will have to be an understanding on the part of all parties concerned, be they the federal government, the provincial governments and obviously the industry itself. The other Canadian provinces which are less concerned by this problem will have to accept that considerable Canadian resources be rechannelled in order to help in the progressive transfer of the means of production of these industries toward higher technology oriented industries. In short there will have to be a national effort which will require a great resolve on the part of governments concerned.
That moment is getting nearer and nearer. In fact, under the GATT agreement negotiations have taken place to review the whole tariff structure. We have succeeded, Mr. Speaker, in protecting this time again the soft sectors of our industry. The question is whether we will be able to do it in the future when the pressure will become greater on the part of the developing nations on one side and on the other side mainly on the part of the high technology oriented Canadian industries which are now witnessing a drain in their resources and have to face a tariff burden a lot heavier because of these various industries which are asking for a tariff protection which is already very high. I am therefore only raising this issue in order now to deal with what is beginning to happen, what is becoming a common understanding of the different levels of government and what will soon become a more articulated policy.
At the federal-provincial conference in February last, the premiers agreed to ask the federal government to undertake sectoral studies dealing with the main economic activities in Canada. Those 23 studies have enabled us to publish a recent report dated October 15, the so-called Second Tier Report. I would like to point out, Mr. Speaker, that we find in those 23
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studies 850 recommendations directed either to the federal government or the provinces and even private entreprise and what is still more interesting, those studies are not merely administrative analyses made by officials, but rather serious concerted efforts of all economic agencies. When the government is accused of doing nothing for the Canadian economy, I am rather shocked that such falsehoods are scattered everywhere.
When we know the government in less than eight or nine months set up 23 multidisciplinary task forces, Mr. Speaker, forced the 23 task forces to submit a report, the recommendations in that report were studied by an over-all committee which submitted a report, when we know that since then there has been a second federal-provincial conference of ministers of industry, is that the mark of a government that is dragging its feet? I cannot believe that! It is rather the mark of a government striving to try and solve the structural problems faced by our Canadian economy.
And we will have to go further that way. Some 450 recommendations were aimed at the national government. A number of them have already been implemented, after a mere few weeks. For example, announcements were made concerning the reduction of red tape. Recommendations concerning research and development are already included in the budget put forward by the Minister of Finance. Fiscal measures were implemented in the same budget concerning both pulp and paper industry and mining. All those recommendations stem from the 23 sectoral studies.
At the same federal-provincial conference, whose thrust was reporting progress, the provinces received the mandate of implementing 200 recommendations in their own jurisdiction. Finally, and perhaps most importantly, private industry itself now has a guideline, because its representatives on the committees developed nearly 200 recommendations to improve productivity and efficiency. And over and above that, Mr. Speaker, I believe we must now to some degree address ourselves to the long term.
If this is a serious effort at restructuring the admittedly ailing Canadian economy, because we never stopped to examine it during the last decades, and my contention is that for the first time a serious effort was made last year to make a general diagnosis of the economy, if we are serious we will have to set up a super-ministry of the economy. We will have to do as the Europeans did after World War II when, faced with the ruins of a devastating war and the prospect of seeing the old pre-war habits set foot again, people with vision like Jean Monnet and others decided it was time for a new departure in the European economy. We have seen that in France, for example, the planning board and other similar bodies have established a system where consultation with various economic agents has been institutionalized in order to modernize the European economy. This is what we need in Canada, Mr. Speaker. Of course, we are not in the same case as Europeans in 1945, 1946 and 1947 who were left in the midst of ruins and rubble.
We have an economy which still works relatively well. But must we wait for this economy to crumble down before taking action or should it not be wiser to detect immediately the cracks, and indeed if we find some faults in this economy why not consolidate immediately the foundations of our industry? I think we should rather follow the second path, Mr. Speaker, as we have seen in the work which has already been done by the Department of Industry, Trade and Commerce during the federal-provincial conferences which have taken place in February and November, with its various task forces and particularly at all levels of economic activity, at first and second levels. What we need is to carry on acting together and aim at a common goal, in an over-all effort of restructuration.
With this super ministry of the economy, let us call it that way, we could call it a sort of planification board, owing to this super ministry of the economy, Mr. Speaker, we would be able to give an over-all direction and to help various economic agents co-ordinate their efforts which would give our Canadian economy a sound basis for the future.


The Acting Speaker (Mr. Ethier):: Order, please. Before recognizing an other hon. member, I would like to inform the House of the questions to be raised tonight at the time of adjournment.



PROCEEDINGS ON ADJOURNMENT MOTION

[Stage Direction]
SUBJECT MATTER OF QUESTIONS TO BE DEBATED The Acting Speaker (Mr. Ethier): 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 Victoria (Mr. McKinnon)-Administration of justice-RCMP investigation of Boeing contract-Request for progress report; the hon. member for Bellechasse (Mr. Lambert)-Labour conditions-Inquiry as to financial measures taken to reduce number of unemployed; the hon. member for Broadview (Mr. Rae)-The Canadian economy-Request House be informed of reasons for raising interest rates.


[Stage Direction]
FINANCIAL STATEMENT OF THE MINISTERS OF FINANCE The House resumed consideration of the motion of Mr. Chretien that this House approves in general the budgetary policy of the government and the revised amendment of Mr. Stevens (p. 1249).
Hon. Alvin Hamilton (Qu'Appelle-Moose Mountain):: in this House, some good and a lot more not so good. Let me say that the hon. member for Lafontaine-Rosemont (Mr. Lachance) has demonstrated what should be a lesson to a good many of us. His speech showed that he had been doing some reading of the Economic Council of Canada reports, the Bank of Montreal reports, and ITC task force reports. Above all, it showed that he had done some thinking about them and reduced that thinking to some positive ideas and directions that the government should take. On behalf of the ordinary member of parliament I should like to express my appreciation. I think the hon. member is a credit to his constituency and to his father who preceded him.
I should also like to remark on the opening speech of the hon. member for St. Boniface (Mr. Hare). He is a man with considerable experience in business and trade in the west. He, too, has brought out some of the problems people there are facing. I think he is going to make a contribution to the factual input that has to go into the policies of any government. I think the country is being well served by the calibre of members who have come to this House in the last few years.
Recently, a very able and experienced man by the name of William Simon, who was secretary treasurer of the United States under President Nixon and President Ford, wrote a book called "It is Time to Tell the Truth". I should like to recommend it to everyone in Canada. It is a terrible indictment of politicians, civil servants, bankers, newspapers, the electronic media-he names names and is careful to name each one who is honest and who speaks up for the truth, just as he names those who do not. I recommend the book to all Canadians. What he describes in his own country, the United States, applies with devastating truth to the current situation in Canada.
There are people in this country who are trying to tell the truth; there are many more in high places who are not. Some of these people are genuinely, sincerely ignorant. Some are unable to remove themselves from the partisanship of their party. Some are smart and know what is happening, but are frightened to express different views from the current mythology of their profession. To me, these people are no longer intellectuals but are part of a brown-nosed pyramid seeking to ooze their way up in this pyramid, to win places of power and prestige. My parliamentary word for this latter group is "nit-wits".
Last week one more instance of this sad sickness that has such a hold on some of our senior civil servants, was demonstrated. On Friday, the Minister of Finance (Mr. Chretien) delivered his budget speech. I should like to quote from page 13 of that prepared speech as follows:
I have also concluded that it is essential to amend the Income Tax Act to change the treatment of income debentures and term preferred shares.
That means nothing to 99.9 per cent of us. What a mess it is. The quotation continues:
These securities are currently treated as equities for tax purposes, even though they are essentially debt obligations. As a result, income earned on such securities by banks and other financial institutions is tax-exempt. For the most part they are used for the financing of a relatively small number of multinational
The Budget-Mr. A. Hamilton
and large Canadian corporations. Their use has resulted in a very substantial loss of revenues to the federal and provincial governments. This has been of concern not just to me but also to my provincial colleagues.
When you think that statement through, Mr. Speaker, and realize the significance of what lies under it, you find that, in plain terms, there was an inequitable tax loophole for large corporations that the government was plugging.
The minister tells us that the government has had this under consideration for some period of time, yet, during that time a deputy minister sat on a board of directors of a large commercial company while it was arranging a massive rip-off of the public treasury. His responsibility was to sit on the board of that company and protect the public interest, yet all he did was report to the government that this scheme was being hatched and helped the minister get it approved by the government before the budget was introduced.
They even went further and put words into the minister's mouth to make absolutely sure that the new budget would not apply to this company now in the top big ten of the oil industry in Canada.
And again at page 13 of the minister's budget speech he said:
The proposed amendments will generally apply to any such securities issued after tonight. They will not apply to issues outstanding or committed. Nor will they affect the tax treatment of common and ordinary preferred shares.
What reads as an innocent statement in the budget is the amount of truth which the government is giving to the people of Canada on how long it took them to plug this rip-off of the public treasury and the taxpayers. At the same time that it was planning to stop this loophole, representatives sat down with members of a commercial company, including a high-placed official from the board of directors, and planned to hold the budget up until this plan went through. How can one find a parliamentary word to describe that type of game?


An hon. Member:: It could have been retroactive.


Mr. Martin:: Mr. Speaker, the hon. member for Qu'Appelle-Moose Mountain (Mr. Hamilton) would not want to indicate something that indeed was wrong. The minister made it quite clear that his decision regarding budget matters was finalized on Saturday morning. There are many commercial transactions going on all over the country-


Francis Alvin George Hamilton: Mr. Speaker, I am sorry that the parliamentary secretary interfered because he ties himself up with this horrible thing that has happened, this immorality. The minister is an honest man, and in this whole thing he appears as a cuckold. If you do not understand that word, look it up in the dictionary. It is parliamentary. The deputy minister was exposed by his minister as being one or more of the following: (a) incompetent; (b) disloyal to the principles of the government; or (c) carrying improper orders from the government. Which one of those things he is I do not know, but that is enough. Neither the minister nor his parliamentary secretary should insult this
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country by saying they are protecting the secrecy of the budget. Any competent civil servant knows how to delay matters if the government does not want something done when it is against the public interest. If that civil servant is protecting the public interest, he could suggest all sorts of devices, such as committee meetings, or other delays until after the budget is over.
It is time to tell the truth, Mr. Speaker. The government knew that this tax loophole was there and it was not in the public interest. It was planning to plug the loophole, and yet at the same time it was planning and working to perpetrate a scheme on hard-pressed taxpayers. It ordered that the shareholders of Pacific Petroleums be paid off at $20 a share above market price. Heaven knows that the PC party has tried for years to have Canadians own the majority of shares in all Canadian companies.
We have our policies ready, but never, never did we plan to ask Canadians to pay more than the market price of any shares. We appreciated foreign investment when we needed it. But as Conservatives, we did not like foreign investors so much that we would ask Canadians to pay 50 per cent more for shares than they are worth. Phillips Petroleum, the U.S.A. company, must be laughing all the way to the bank on this one.
This type of immorality makes it difficult to show any form of charity to this government. The Minister of Finance knows that over the years some of us-and I include myself-have tried very hard to do the same thing as the hon. member for Lafontaine-Rosemont did, and that is to give him evidence that there are other sources of authority besides these nit-wits who advise the Minister of Finance to do these horrible things to our country and to the people of this land. As the minister knows, when we debated Bill C-7 about a month ago, I put on the record for the umpteenth time that we were suffering not from a demand-pull type of inflation which is sending the prices up, but from cost-push inflation. I listed the causes, as I have done many times in the House. First is the cost of government, second, the increase of the money supply. If one charts the increase it will be found that it corresponds exactly with rising prices. Third, are the interest rates. I can recall when 31k per cent and 4 per cent was looked on as high interest rate by the government. The bank rate has now risen from 7 per cent to 10.75 per cent in the last few months. Land costs around our cities are forcing up prices so that the worker has to ask for more and more money just to buy a home.
Labour-management confrontation is a tremendous cost to the country. We borrow obsolete techniques to work out difficulties between labour and management. Everybody suffers, particularly the consumer. Another example which I gave in my speech a month ago is the lack of fundamental knowledge which advisers to the government have of how to utilize this great opportunity which the financial system of the world gives to Canada at this hour, namely, the fluctuating value of the dollar. It is our system of helping a country that has gone down, for whatever reason, to get up and get going again. Instead of letting this force work, we have these nitwits in Washington and Ottawa advising their respective governments

to put up interest rates, and, in the case of Canada, to borrow abroad and join a gambling game on the value of our exchange.
I was looking at an article which appeared in the Globe and Mail the other day. This paper used to represent the business section of Canada. The headline reads "Chretien's paranoia".
I do not know whether or not that term is parliamentary. This is the minister's paranoia with regard to the exchange rate. It is not Chretien's paranoia. A lawyer from Shawinigan does not pay much attention to the exchange rate. He has been taken in by these people who look at the exchange rate as simply something that is causing bad headlines, not realizing that the exchange rate is the way the system works to help any country out of its trouble.
It means to our exporters of basic materials and finished materials that they should get out into the market and balance the international balance for us. This is the elementary truth. This country is not weak, it is strong, %ut for a group of nit-wits putting on the brakes every time the country tries to get out of its trouble, and we were coming out of our trouble these last six months.
The government did not listen to the Economic Council of Canada and all its recommendations over the last five years to move away from the type of budgeting it was following to potential budgeting. The country was still trying to get up and get going. For five years we have been at a stagnation level.
The floating dollar is the best system, under the present world financial system, to help countries like Canada out of their trouble. Instead, we are borrowing money, undertaking obligations abroad, and raising the interest rates because the Americans are raising interest rates. This is bad. First, it interferes with the forces at work that would save us. Second, it is a beautiful chance for the speculators to make money hand over fist out of the Canadian people.
Years ago we thought that an exchange fund would help us stabilize our money and help us get over these dips in our economy. However, that was when dips in the economy were only there for a few months. Now the dips have been there for four or five years.
When you have been gambling on your own exchange, you are not gambling with a few guys buying and selling your dollars. You are gambling against all the Euro dollars of the world, all the money that the multinationals have floating around looking for quick profits. You are gambling against the $100 billion to $200 billion in petro dollars. There is no way we can compete with that. We should have learned that 15 or 18 years ago when we were clobbered in 1962 with just a small sum of Euro dollars.
It is horrible to sit and watch a country make the same mistake twice, but it is the same nit-wits giving advice now as then. I wish to give hon. members some idea in figures of how large is this liability in our world trade, including tangible and intangible items. It is over $100 billion a year. In most
November 21, 1978

business transactions, the terms are for 30, 60, 90, 180 and sometimes 210 days.
The biggest racket in the world today is to live and profit on the other person's nickel. Translated into business terms, that means delaying making your payments for as long as possible and hoping the other guy will pay his debts to you as quickly as possible. Vice versa, if we pay as quickly as possible, and our debtors take as long as possible to repay us, there is a long period of liability. I wish to show how big that is.
If our total trade is $100 billion and our trade deals are on a 30-day basis, in mathematical terms you have a $10 billion liability at any given moment of buying and selling dollars. Suppose the average length of time for a transaction settlement were 90 days, the hypothetical liability would be roughly one quarter, or $25 billion. More and more people are going for 180 days. Arithmetically, the liability then is $50 billion.
Even a little country like Canada, with its trade figure of around $100 billion a year, using a hypothetical example, cannot begin, with a $5 billion or $10 billion reserve fund, to cope with these tremendous demands that might occur if you take the widest extremes in the terms of trade.
This is known to Germany. They had their currency raided, as did France and Italy. The United Kingdom had its currency raided over and over again. The United States could not stand up. Why should Canada try to get into this type of racket? Other nations have experienced the reality.
I am not going to be entirely negative. I can recommend certain corrective actions. First, all these nations are aware of our trouble. The conference at Bonn illustrated that. Why not do the practical thing and establish bilateral defensive agreements with each one of our trading partners roughly equivalent to our potential liability in trade between our two countries? If you did that with your four or five main trading partners, you would not have to worry too much if there were a shortage one way or another in the daily demand on the respective currencies.
The second proposal regards export taxes. If you do a study of the export taxes applied to Japanese, European, Canadian, American and other goods, you will find that our exports are carrying a bigger load of tax on their back going into the markets than do those of our competitors, such as Germany, for example. I suggest that we as a government should guarantee unilaterally to our exporters that our tax load on them will be no greater than the Japanese exporter has to bear, that they will at least compete equally, and thus we will destroy this temporary great imbalance in trade in our respective countries.
Third, we should keep our domestic costs down, which is similar to saying you are for motherhood.
Fourth, there should be new types of trade institutions. It is 14 years since I stood up on this side of the House and proposed a list of six different types of new trade institutions to grapple with the problem that I foresaw with the coming great increase in world trade. It would be worthwhile for serious young members of this House to read that speech made in October, 1964.
The Budget-Mr. A. Hamilton
Fifth, Canada, above all nations, should be pushing very hard for an international unit of exchange. There used to be a member in this parliament years ago, now deceased, who belonged to the New Democratic Party. He was the first person I ever heard talk about this in this House. He was talking about it 20 years ago, and he was right.
Since that time we have had the special drawing rights which are a step forward. However, until all the nations of the world accept the fact that they have to put all their business into one house, have a unit of exchange which is worldwide, get rid of the dollar exchange, sterling exchange, and other national currencies, we will be in trouble. May I call it six o'clock, Mr. Speaker.


The Acting Speaker (Mr. Ethier):: It being six o'clock, I do now leave the chair until eight o'clock.
At six o'clock the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.
Francis Alvin George Hamilton: Mr. Speaker, when we adjourned for the recess I was putting before the House a number of corrective measures which could be used in substitution for these costly and, I am afraid, fatal techniques of borrowing abroad and using the interest rate as a method of protecting our dollar.
I listed the bilateral defence arrangements between our natural trading partners and I put down as number two on my list the equality of taxes on Canadian exports as opposed to those of our trading partners. The third was the need to keep down domestic costs-and the fourth was the new type of trade institutions, which was very important and which deserves a speech by itself. Fifth, I was just starting to talk about the special drawing rights or international unit of exchange. This is not a new idea, as all the quantitative analysis of the major 20 industrial countries in the last 20 years indicates. There is no currency available to the trading nations sufficient to carry the weight of all this huge world trade, and Canada in particular and all the other trading nations in general should join together to push for an international unit of exchange in the next two or three years.
The sixth corrective action could be taken if we faced up to reality and told the people of the world the truth-that all the high hopes we had during the Geneva agreement on tariffs and trade, using the obsolete tariff techniques, have ended in failure. We have developed into a rich man's club, handing out a few crumbs to the poor countries standing at the gate. Without going into that any further at this time, I would like to say I have tried on several occasions over the last 14 years to put forward a constructive theory which I call growth rate exchange. It has been used in several instances. It was used in the steel community in Europe. It was used in the automobile

November 21, 1978
The Budget-Mr. A. Hamilton
agreement here between Canada and the United States. I think this is the technique which we should be employing in product after product so that there is real equality in bargaining power between the nations with certain resources they are trading off by growth rate exchanges.
The final point I wish to make in the last minutes remaining to me concerns interest rates. The government is paranoid on this score, believing firmly that it must protect the dollar by using the device of raising interest rates since this will be better for the country than letting the dollar float freely. They are frightened because if the dollar goes down one point-one cent-cost of living in Canada will go up one-tenth of a point. So it takes a change of ten cents in the international value of our dollar before our cost of living goes up 1 per cent. But if you look at the comparative cost with which interest burdens this country, you realize once again, under this correlative analysis approach to all capital intensive enterprises, be it buying a home or a farm or building a $2 billion enterprise, that 75 per cent of the cost at present interest rates is made up of interest charges and that if you increase those interest costs by 50 per cent, as we have done in the last eight months, you add on to the cost of producing goods in Canada much more than you add on to the cost of goods bought by consumers through a drop in the international value of our dollar. The proportions are immense and amount to many billions of dollars over the cost to this nation in a one-year period.
I cannot develop this theme at great length at this time but I am simply saying, as bluntly and as candidly as I can, that to move along the road of raising interest rates as a device to keep our dollar from dropping is going to be costly for the people of Canada over the next year or so. And please God we can get out of this suicidal mania we have for using this technique which does so much harm to the people of this country, not only with respect to their cost of living but also to their ability to compete with trade rivals all over the world.
Interest costs are going to be much greater than the cost of letting the dollar float freely. The advantages of letting the dollar float freely are that you get rid of speculators because they speculate one against the other-they do not speculate very much, they stabilize the dollar for you-and you do not interfere with the great forces which exist in a free society of correlations, helping a nation that has a currency which is below the usual level to get on its feet again. I cannot emphasize that point too much.
In conclusion, I have tried here to put forward, on top of my criticism of the government and its advisers, my view that the use of the road of interest rates and borrowing abroad is going to be very hard on our economy over the next few months.
I predict that if we get these interest rates off our back within the next year, the dollar will come to about 90 cents through the very efforts being made by our producers to sell abroad and to produce goods at home. I predict that industries such as forestry, mining and the valued added industries, will all

join in that growth. This is the way the minister could balance his budget and get rid of the deficits.
For five years now we have been in this stagnation-


The Acting Speaker (Mr. Ethier):: I regret to interrupt the hon. member, but his allotted time has expired. He may continue with the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Francis Alvin George Hamilton: I had just completed my last sentence, but I would like to repeat it loud and clear. I would predict that if we prevent interest rates from rising for another six or eight months, the economy will stage a recovery, after five years of stagnation, and that by the end of this coming year our currency will achieve an international value of 90 cents. I believe that this is about the best level for our dollar for the best operation of our system at the present time. There would be more people working, more tax revenues coming into the coffers of the government, and it would alleviate our deficits abroad and at home.
This type of proposal is not without some merit or rational support in the economic analysis which I have given in my speech. I know that it is too late now for the government to change this budget, but I do hope that in the budget they must now be preparing for next spring, the government will not push our economy too hard and will give us a chance to live and to let this country do the job for which it is well prepared and which it is willing to do.


Some hon. Members:: Hear, hear!


Mr. Ross Milne (Peel-Dufferin-Simcoe):: My first remark tonight, Mr. Speaker, is one of congratulation to my colleague, the hon. member for Westmount (Mr. Johnston). I thought that his speech yesterday in the budget debate was not only one of the best speeches by a new member, but certainly one of the better speeches I have heard in this House. He is a welcome addition to this place.
I would like to indicate now my support for the budget, for the Minister of Finance (Mr. Chretien) and the government's fiscal policy. It is an extremely responsible budget and one that will be beneficial to the economy over the medium and long term. I am one of those who are of the opinion that what is required at the present time is confidence in the economy and the business sector. I believe that this relates to the stability of the dollar, which I am pleased to see has occurred to some extent in recent days.
I do not think that the dollar would be in its present state of stability if the Minister of Finance had adopted some of the suggestions put forth by the opposite side for large spending programs resulting in a large increase to the deficit, which would have made the problem to which the previous speaker referred much worse.
The budget was consistent with what has been a relatively long period of government fiscal policy in this direction, which
November 21, 1978

started with the Macdonald budget in March, 1977, through three budgets brought down by the present Minister of Finance. It is consistent with the initiatives taken by the Prime Minister (Mr. Trudeau) on August 1, the President of the Treasury Board (Mr. Andras), the Minister of Industry, Trade and Commerce (Mr. Horner), the Minister of State for Small Business (Mr. Abbott), research and development under the Minister of Supply and Services (Mr. Goyer) and the consensus drawn from the premiers across Canada. I would also like to mention in that regard the very excellent work done by the member for Scarborough East (Mr. O'Connell) in putting together many of the initiatives which have found their way into government policy.
I would like to contrast that consistent approach to Fiscal responsibility with some of the comments we have heard from the opposite side since this debate began. I read the press, and have been in the places across this country where members from the official opposition have been speaking on the banquet circuit. They have been making comments which are really quite detrimental in terms of the kinds of cuts they would advocate. They have been talking about slashing the public service on the one hand, and on the other they come into this House and plead almost daily for more spending and that none of these programs be cut. Indeed, this afternoon, in a committee of this House which I attended, I believe all of the speakers from the opposite side wanted the ministry involved to restore all of the cuts which have taken place. I cannot understand how they can argue for significant cuts, and then as soon as they are applied, join hands and argue it should not happen.
I would like to contest some of the comments made yesterday by the Leader of the Opposition (Mr. Clark). I do not think that he intended to mislead the House, but I believe he did take some liberty in some of the viewpoints he put forward. By carefully edging around some hard facts and accusations, he may have left impressions which I think should not stand on the record. He indicated there may have been some patronage associated with the farming out to the private sector of research, and that this government may have destroyed the initiatives taken by the Diefenbaker government in research and development. He also took insupportable positions in terms of the growth of the Prime Minister's office and the Privy Council office. I would like to draw hon. members' attention to some of the remarks made by the Leader of the Opposition as reported in yesterday's Hansard at page 1287. He is talking there about patronage in terms of farming work out rather than doing the job within the public service. It reads:
First of all, there has been a very insignificant cut, certainly not as significant as is possible, in the practice of contracting out. This is a very dangerous practice, dangerous to our system of government because it allows a government that wants to, to get around the protection against patronage, to get around the protection against incompetence that is built into the Public Service Commission-
Further on he says:
It is also very, very clear that there has been an immense capacity for abuse not only of spending but of controls to ensure that there is protection against patronage. That capacity was there, and I suggest that if this was a government
The Budget-Mr. Milne
that was very seriously concerned about practising restraint we would have had some significant cuts in the practice of contracting out.
If the Leader of the Opposition is alleging that there is patronage associated with the contracting out policies of the government, then he should be very specific and bring forward instances, rather than make comments such as that. Just prior to making that comment, Hansard reports him as saying:
-proposals such as the phasing out of forestry stations, the phasing out of weather ships on the west coast, the phasing out of weather forecasting which could have meant a matter of life and death in the province of my colleague from St. John's.
The Leader of the Opposition complains about lack of restraint, and when the government restraint program does wash across some of these other areas which have been handed over to the private sector, he raises a similar type of complaint. I am surprised that he would take such a strong stand against the private sector.
He made another comment yesterday, and it may be that he did not consult the public accounts for the past year or, the supplementary estimates for 1978-79. I am referring to the ludicrous charge he made that spending on the Privy Council office increased by 86 per cent in the first six months of this year over the first six months of last year. He also stubbornly maintained that the Privy Council office and the Prime Minister's office had hired respectively 80 and 54 new people last year. When this baseless accusation was first made in this House a couple of weeks ago by, I believe, the hon. member for York-Simcoe (Mr. Stevens), the Leader of the Opposition must have either been away, not listening, or maybe both, because at that time it was explained that budgets and expenditures are compared on a yearly basis, not just a half yearly basis. That was brought to the attention of the House in the response of the Prime Minister to the question raised by the hon. member for York-Simcoe (Mr. Stevens). According to the public accounts for last year, the total expenditures for the Privy Council office, if services provided by other departments are included, amounted to approximately $26.5 million. According to the blue book of Estimates and Supplementary Estimates A, the comparable figure for this year would be approximately $28 million. That is an increase just under 6 per cent, not 86 per cent. How on earth can a person who is asking the country for confidence in him come up with 86 per cent rather than the correct figure of 6 per cent?
Perhaps I can shed some light on this matter. The cost of various bodies not in any way part of the Privy Council office are charged to the budget of PCO. These bodies include the Canadian Inter-Governmental Secretariat, the Chief Electoral Officer, the Commissioner of Official Languages, the Economic Council of Canada, and the Public Service Staff Relations Board. Surely there is no lack of understanding, on this point, for when he compared the figures for the first six months of this year to those for the first six months of last year, the hon. member for York-Simcoe indicated that he referred strictly to the day to day operating expenses of the Privy Council. A comparison of these figures-not forgetting that such compari-

on a comparative basis, we had about 146 people in Canada working in 1977 for every 100 working in 1965. That compares with 130 in Australia and 128 in the United States. However, in most other industrialized countries the size of the work force has changed very little. In fact, as I said a minute ago, in the case of West Germany, the size of the work force in 1977 was actually smaller than it was in 1965. I think we should be fairly optimistic in those terms.
I do not want to deal entirely in statistics, Mr. Speaker, but I would like to refer the House and people interested in the economy to the Toronto Star of Monday, November 20, specifically to an article in the financial section headlined "Money and markets". It contains the comment that considerably more growth in the economy is expected in 1979. Let me summarize what the author of that article indicates. Jobs in Canada will increase by at least 4 per cent, which I think is low; I feel our growth rate will be more in line with the prediction of the Minister of Finance (Mr. Chretien). That article predicts on a comparable basis that growth in the United Kingdom will be about 3.3 per cent; in the United States, 3.6 per cent; in France, 2.7 per cent; and in West Germany, 3.5 per cent. Again, when you look at those countries you will see they make up the majority of the stronger industrialized countries, yet none of them will have growth that will compare with Canada's, if these figures are accurate.
The other point I want to put on the record as strongly as I can is my support for some of the structural items in this budget. It seems to me the budget supports, as have previous budgets, efforts to become more self-sufficient in food and, more important, to become even more self-sufficient in energy, and to support and advance the position of the manufacturing sector which, if one looks at the creation of jobs, is without question the greatest creator of jobs whenever there is expansion.
It seems to me what we have is a country blessed with a tremendous number of resources. We have probably the most highly educated work force in the world. We have support policies that have come in through this government in the past two or three years, particularly in terms of support for small business and a better tax position for business in general. In fact, the president of the Canadian Federation of Independent Business now suggests that perhaps business in this country, particularly small business, has as good or a better tax position than any other country.
We have a research and development policy which I do not think many other countries can equal. Our labour rates, thanks to the kind of policy that has been followed in the past three years by this government, would indicate now that the increase in labour costs is growing much more slowly than in the United States. We have a dollar which gives us a real advantage in terms of exports.
I commend the Minister of Industry, T rade and Commerce (Mr. Horner) for giving leadership in his sectoral reports. If people have not read the consensus of those reports, I suggest it is worth their while to do so, because it really indicates for the first time that there has been a very substantive meeting of
The Budget-Mr. Milne
minds between business leaders in this country and some of the leaders of the larger unions. It is significant in this regard that when they came and sat around the table, after some initial difficulty, the business people were not asking for more support, more subsidies and higher tariffs, and labour was not asking for raises that would endanger the well-being of employers. They were looking at where the strengths of this country are and how they could best maximize them.
In terms of the energy situation, I think I should refer back to Mr. Macdonald's budget of two years ago in May by which resource exploration was allowed as a 100 per cent cost write-off. This was the beginning of a pretty important policy which has resulted in a fairly significant increase in the inventory of energy we have available to us today.
I am anxiously awaiting, as I am sure other hon. members are, the National Energy Board report, because I think it will probably show that we have improved remarkably our inventory position of natural gas and oil.
I would think the measure in this budget to allow a better tax benefit for mining development costs will have a very important effect on the tar sands. I take it, from what I have been able to understand, that this measure will apply to the tar sands. The tar sands will be defined as a mining operation, and I certainly think it should be.
As a matter of fact, the materials handling aspect of the Syncrude plant will move more material in one year than all other mines in Canada put together. This is an enormous mining operation. What we need is a good deal more development in the tar sands. Surely with this type of incentive, the private sector will be encouraged even more to participate.
It would seem that if we are to meet the kind of energy needs that we will face in this country in the future, we should be hearing the announcement of the start of a new tar sands plant every three years. When you consider that they require in the neighbourhood of a $3 billion or $4 billion investment, you will see that this will certainly require the assembling of a good deal of technology, training of manpower and money. This will be important, as indeed it will be in terms of developing new uranium mines. I think the location of them has been identified in many cases, and it will also be important in terms of having a better and more healthy coal mining operation.
With our energy needs of the future, surely oil from the heavy oil deposits, oil from the tar sands, uranium and coal from mines will be the basis on which our energy equation will operate, to a large degree.
This measure which has been granted the mining industry, as applied to the development of energy, will be one of the important incentives. I hope it is and I hope that other countries will follow the resource policy of this government. I do not suppose it is for me, standing where I am, to suggest that to other countries, but it seems to me that, in terms of the dollar, one of the difficulties in the United States results from the amount of energy they are purchasing from outside the country. That has had a somewhat weakening effect on that

November 21, 1978
The Budget-Mr. Milne
economy, and that, in turn, has not done anything to strengthen the Canadian dollar.
I congratulate this government for having the kind of policies it has had for the development of energy resources. Had we not had these policies over the past two or three years, when the tax system really responded to the needs of the industry to improve the inventory, this country would be faced with the necessity of purchasing a much larger proportion of its energy, and that would have a very weakening effect on the future prospects of our economy.
That is why I am so astounded by the position taken by the opposition, particularly the Leader of the Opposition, in response to the government's initiative in terms of Petro-Canada. Having listened to the Leader of the Opposition pontificate his viewpoint in this regard, I must observe that I have not seen very many of his supporters from Atlantic Canada or, indeed, from some areas in Ontario, applaud his approach. It seems to me that most of the applause for his position has come from one part of the country. I have been watching for some members from Atlantic Canada to get up and tell this House they feel as strongly that the Conservative party is right in condemning the government for acquiring a handle on the energy business through Petro-Canada.
It seems to me there are two or three things required in this country in respect of energy policy: One is to have a pricing structure, and another is to have a taxation structure. In addition to that, surely we need some kind of mechanism that sets a time frame within which these projects must be commenced, so that in terms of manpower, money and demand this will be synchronized.
Sometimes this will happen through the private sector and sometimes it will not. Sometimes some of these projects, which will be very important to future needs, will falter as, indeed, the Syncrude plan was in danger of doing. It just seems to me that there are so many reasons why the establishment and perpetuation of Petro-Canada, and the expansion which has taken place in the last two weeks, is a correct government decision that I have real difficulty in understanding the viewpoint of the Leader of the Opposition (Mr. Clark).
In the years I have served in this House during this term I have associated myself fairly closely with the energy question.
I have participated on the standing committee in a fairly major way in terms of looking at energy policy in Canada, and I think that if the remarks of the Leader of the Opposition are to be directed at anyone, surely they should be directed at the premier of Alberta. The Alberta Energy Corporation would not have been able to involve itself in many energy projects without the involvement and encouragement of that government. Therefore, it seems to me that when they make these disparaging remarks about their friends who sit on their left over there, they should really be directing such comments to their own province of Alberta.
The objective of Petro-Canada, of course, is different; it is to get involved in the kinds of things it would be difficult for the
[Mr. Milne.)
private sector to do. Perhaps I should not say difficult to do, but things that the private sector might not voluntarily do. I refer to continually putting millions and millions of dollars into exploration in the high Arctic islands, realizing that delivery of natural gas and oil, if they should find it, may be some years away. As a matter of fact, millions of dollars have been put into the Beaufort Sea and Mackenzie Delta, where delivery even of that resource, along with the resource of the tar sands and heavy oil, is still some time away. We certainly need this kind of corporation for that.
I am also waiting in the House to hear the hon. member for Lanark-Renfrew-Carleton (Mr. Dick) applaud when the Leader of the Opposition and the hon. member for York-Simcoe say derogatory things about Petro-Canada. I understand from something which came across my desk the other day that the hon. member for Lanark-Renfrew-Carleton is one of the directors of the Committee for an Independent Canada. I would like to know how he really feels when his leader who sits in front of him stands up and welcomes the multinational companies' operations in Canada as a good thing. You can almost hear them applauding down the street, him being a director of that organization and his leader being completely opposed to the Petro-Canada acquisition. It certainly seems odd to me.
I see, Mr. Speaker, that you are about to rise and I just want to conclude by saying that I wish I had time to talk about research and development. Since I do not have time, I will leave it to other speakers, but I categorically deny the statement the Leader of the Opposition made yesterday when he indicated-


The Acting Speaker (Mr. Ethier):: Order, please.


Donald Frank Mazankowski: Mr. Speaker, I listened with interest to the remarks of the hon. member for Peel-Duff-erin-Simcoe (Mr. Milne) who just preceded me. He made reference to the sectoral task force reports which have been published by the Department of Industry, Trade and Commerce. He recommended that all hon. members take the time to read these reports. Perhaps he would be well advised to instruct some of the members of his own cabinet to read the reports, because if they had, perhaps they would have developed a different stance with respect to some of the policy initiatives which were outlined in the budget. I refer specifically to the report by the sectoral task force of the Canadian tourist industry, wherein it states at page 28 that the airport user-pay policy makes air transportation in Canada non-competitive with that of the United States and is detrimental to Canadian tourism development. That statement was made before the increase in the air transportation tax levied as a result of the minister's budget last Thursday. If the Minister of Transport (Mr. Lang) has not read that report, perhaps he should; and if he has read it, perhaps he should pay some attention to the contents of the report.
In his opening remarks in introducing his budget last Thursday, the Minister of Finance (Mr. Chretien) stressed that it is important in this country that we create a climate-or an
November 21, 1978

atmosphere, I believe was his exact word-of stability and certainty. He also pointed out that that was a common theme which was advanced to him as he travelled throughout the country discussing the budget with various leaders in industry, with economists, provincial politicians and members of labour.
He also indicated that they felt very strongly about the fact that we must take initiatives at this time to restore some semblance of confidence and stability. That desire has been prevalent for quite a number of years. It has been known for some time that there has been a pressing desire to restore our economic climate to some state of confidence and stability. While we recognize that that is a laudable requirement, it must nevertheless not be overlooked that this confidence crisis which we seem to be facing has been caused in almost every respect by the mismanagement of this government.
The Minister of Finance in his speech also tried to lead us into believing that at long last he has mapped a course on behalf of this government which will lead us out of the economic doldrums. He stated very bravely, as reported at page 1205 of Hansard:
So tonight I have brought down a budget to build further confidence and to ensure continued competitiveness.
Those are indeed laudable objectives, objectives which I think every member of the House would support. But we have to ask ourselves whether or not these objectives are achievable by this government. Personally I doubt it, because it does not seem to be the nature of this government to be able to grapple with the things that need to be done. At the present time they are too preoccupied with an election and are addressing their priorities toward improving their electoral fortunes.
Implicit in the budget as well was a call once again to all Canadians to respond, to rally as good citizens behind the government. There is some difficulty there, Mr. Speaker, because Canadians are being asked to rally and respond to a government which is worn out, which is beleaguered and which is tired. While this kind of rally is probably necessary in the national interest, I submit it will not be forthcoming under the present circumstances because Canadians have been stung all too often by this government and simply do not have any confidence in this group. For this government, sir, has lingered on far too long. It is on borrowed time. It is stale. It is beleaguered, as I said earlier, and it has developed a kind of fortress mentality geared to survival at any cost. In the process, Canadians of every walk of life have lost their confidence and their trust in this administration. Very simply put, Canadians do not believe this government any longer and they do not trust it. That is the number one issue in this country today.
And why should they, sir? Let me review their record briefly. It was this government that said in 1974 that it would not impose wage and price controls. It did in 1975. This is the same group that promised to reduce inflation to 4 per cent by 1978. It is 1978 now, and inflation is at 9 per cent. It was this same government whose leader in 1975 all but abandoned the free market economy declaring that in the future, government would intervene more, that government would be more
The Budget-Mr. Mazankowski
authoritative. It is interesting to read some of the statements uttered by the Prime Minister (Mr. Trudeau) at that time. An article in the Ottawa Citizen of January 20, 1976, notes some of them. On the issue of big government he said:
'The state is important, the government is important. It means there's going to be not less authority in our lives, but perhaps more.'
The same article, referring to big business and big labour, quotes him again:
-the government is going to take a larger role in running institutions, as we're doing now with our anti-inflation controls, but as we'll presumably be doing even after the controls are ended-'
That was also on December 28. In fact, a great deal of uncertainty and instability was created in the Canadian economic climate.
In his television address on August 1, 1978, we see a complete flip-flop when the Prime Minister said:
We will remove the intrusions of many government policies and regulations from individuals and businesses; in some cases this will mean returning functions to the private sector, in others it will mean removing the heavy hand of government and its drag on personal initiatives.
We saw that elaborated a bit more in the Speech from the Throne when two objectives were outlined. One was to impose severe restraints on government spending and the other was to encourage vigorous expansion of the private sector. Canadians are asking themselves how these two opposite positions can be balanced. What philosophical shade of the Prime Minister are we to believe?
While this new initiative toward the private sector is being advanced, this government sanctions and, in fact, encourages the biggest coup ever staged in this country-the takeover of Pacific 66 by Petro-Canada. They have joined the big boys in the oil patch, committing the Canadian economy to an expenditure of $1.4 billion. That is a huge financial drag on the economy of Canada. There is also the purchase of Nordair for $28 million. Of course, we are going to turn that over to the private sector within a year. We all remember the commitment made by the Minister of Energy, Mines and Resources (Mr. Gillespie) when the takeover of de Havilland and Canada Air were initiated in 1974, and he said it was not the view of the government that de Havilland by itself or Canada Air should be operated as a Crown corporation. That was in 1974; the company is still intact.
We have just witnessed an unprecedented government intrusion in the private sector on the most massive scale ever witnessed in this country. There is no question about that.
This is the same government that made an oil pricing agreement with the province of Alberta and before the ink was dry, tried to break the agreement.
This is the same government that, in its commitment to the private sector, has unilaterally set out to withdraw the Public Utilities Income Tax Transfer Act. That is clearly a very regressive measure. In response to that action, the Edmonton Chamber of Commerce wrote to the Prime Minister on October 4, 1978, as follows:

November 21, 1978
The Budget-Mr. Mazankowski
The Edmonton Chamber of Commerce views the repeal of this act as retrogressive and such repeal would place the private sector of the utilities, electrical and natural gas industries in an unequal position with the tax free municipal and provincially owned utilities.
Later in the same letter they wrote:
This is another illustration of the lack of permanence and stability so vital for a viable and effective private sector.
Who has created the uncertainty, Mr. Speaker? Who has created the instability? Who has undermined confidence in this country? These are the very actions that serve this purpose.
This is the same government that promised in 1974 to revamp the grain handling system from the granary to the ship in the harbour. I am glad the Minister of Transport (Mr. Lang) is here tonight. He used that expression time and time again in the west. Today our system does not have the capability to move to export in excess of 21 million tons of grain, the figure we achieved in 1972-73. The situation in this country today is nothing short of chaotic-a paralysis in the grain handling industry with sales lost, deferred, and the system plugged. In spite of the minister's efforts to "strain the system" as he puts it so glowingly from time to time, we are not able to achieve the level of 21.4 million tons that we achieved in 1972-73.
This is the same government that promised that not one rail line would be abandoned against the wishes of producers. I should like to quote the Minister of Transport in regard to that, as reported in the Winnipeg Free Press on June 11, 1974, as follows:
Otto Lang said 'as long as the Liberal party forms the government and as long as producers wish to continue to deliver to the elevator of their choice, not one rail line will be abandoned.'
But what happened, Mr. Speaker? I should invite the Minister of Transport to visit the constituency of the hon. member for Marquette (Mr. Stewart). He would witness a very sorry scene there. The farmers in that area are hostile and are reacting. I understand they are burning an effigy of the president of the Manitoba pool, they are so unhappy with the decision brought down by the Prairie Rail Action Committee. This is outright hostility toward those hollow promises.
The chairman of the Prairie Rail Action Committee is a professor of economics in Regina. An article in the Manitoba Co-Operator reports as follows:
Anderson said the basic rail network, originally laid out and guaranteed by the federal government to the year 2000, 'is itself an irrational collection of lines derived from a series of politically expedient decisions.'
He said that events show that there is still too much mileage in the basic network and this means continued high rail costs.
If we are to believe the advice the minister is receiving from the chairman of the Prairie Rail Action Committee, we can assume that many more rail lines will be abandoned before this minister and the chairman of the Prairie Rail Action Committee are through in western Canada.
I could go on to talk about inaccuracies with respect ot budgetary deficits and growth targets, the inaccuracy in projections with respect to unemployment, but I think I have said
enough to show there is a very, very marked credibility gap with this government.
Why should Canadians trust the government? The illustrations I have advanced simply mean one thing, they prove that this government does not keep its word. It is a government which has tinkered with the economy, it has tinkered with the books and it has tinkered with parliament. It is a government which shifts from left to right in its policies. It is a government which has lost control. These are the facts and the realities of the situation. I submit that confidence will not be restored by this budget. Confidence in this country can only come from a new government. I know the members opposite are very sensitive. They must be sensitive because we have been pointing out the waste, the extravagance and the mismanagement of this particular group. We are not the only ones. Yes, now there is the press. The press are the bad guys. The press and the opposition are the ones who have caused all the problems. They are the preachers of gloom and doom. And then we come to the provinces. Everybody seems to be against this government. The Toronto Sun says this about the government and the Prime Minister.


An hon. Member:: The Toronto Sunt


Donald Frank Mazankowski: Yes, it is a fairly popular newspaper and its circulation is increasing all the time. Here again the Prime Minister is blaming everybody but himself. The Toronto Sun says this:
Trudeau and his policies have divided, undermined and alienated Canada. Few have started out with the trust and goodwill he had ten years ago; few have misused power and responsibility more crassly. Trudeau has been a one-man wrecking crew-
Trudeau insists he is "the best man" for Canada. Untrue. The record indicates he is the 'worst' man for Canada-and possibly the 'worst' Prime Minister in our history. The sooner Clark gets his job, the sooner Canada will recover.


Some hon. Members:: Hear, hear!


Donald Frank Mazankowski: I want to deal with one aspect of the budget which will create and cause a great deal of consternation-


An hon. Member:: Constipation.


Donald Frank Mazankowski: Consternation, sir. Maybe you have never heard of the word before. I know that there are a few afflicted with that other word which you have just used.


Some hon. Members:: Oh, oh!


Donald Frank Mazankowski: This has to do with the reduction in the manufacturers' sales tax from 12 per cent to 9 per cent. It concerns a statement made by the Minister of Finance which points out that the Minister of National Revenue will not entertain any applications for refunds of that tax-that is the difference between the 12 per cent and the 9 per cent-in respect of goods on which the 12 per cent tax has been paid.

November 21, 1978

This government is supposed to be the saviour, the friend of the small business community. There is certainly a lack of common sense and a blatant disregard for the small business community in the application and the manner in which that tax will be administered. I can assure you of that, sir. The minister is asking that all those involved ensure that this saving is passed on to the consumer, yet at the same time he is asking the retail dealers in this country to absorb that 3 per cent. I have to say this in all sincerity and I make it in the form of a representation. I ask the Minister of Finance and this government to reconsider that position because it will represent a huge loss on the larger commodities in the hands of the small private entrepreneurs. I have had a number of phone calls today in this regard, and I suspect there will be many more.
I have a wire in my hand which I will put on the record. I think it summarizes a view that is probably widely held in this country. This telegram comes from the general manager and principal dealer of Parkland Chrysler Ltd. in Lloydminster, Alberta. It states as follows:
Regarding the federal budget announcement of the reduction in federal sales tax from 12 per cent to 9 per cent on Thursday, November 16 we join with FADA-
FADA means the Federation of the Automobile Dealers Association. The telegram goes on to say:
-in protesting the lack of rebate to dealers. This decision alone will cost our small dealership approximately $18,000.
I implore the minister to reconsider his decision, which would be only just and fair, and to entertain applications for refund of that 3 per cent tax differential. It will serve as a very serious blow and hardship on many small dealers.
We have talked about the importance of stability and certainty. We have talked about the necessity of having a coordinated approach to the administration of federal government programs. I want to deal now with the application of the new airport tax. I believe this is a clear, classic example where we have an unco-ordinated, disjointed approach by the federal government in its attempts to pursue an objective, and the objective is to improve Canada's tourist industry. This particular measure imposes a disproportionate burden upon the regional and third level air carriers. The percentage, in terms of the application of this tax, will be roughly in the area of 3 per cent on a transcontinental flight, while it will be 15 per cent on a small third level or regional flight. I think it is grossly unfair and simply flies in the face of the recommendations that have been advanced by the task force on tourism.
The air transport association of Canada has clearly outlined its position which, I believe, puts the whole question in perspective. I quote from a message by the Air Transport Association which was sent to the Minister of Finance (Mr. Chretien), the Minister of Transport and the Minister of Industry, Trade and Commerce (Mr. Horner) from the president and chief executive officer of the Air Transport Association of Canada.
We believe the extension of the air transportation tax to be contrary to the thrust of other budget measures aimed at providing tax relief and encouraging industrial effort. Not only is the increased tax contrary to the general thrust of your
The Budget-Mr. Mazankowski
budget, it is also contrary to the strong recommendations of the government's own task force on tourism which advocated tax relief in the interest of lower prices in transportation and tourism. The increase in the air transportation tax will add to the difficulty of Canadian carriers to compete with American carriers, and could lead to some diversion of travel to departure points located in the U.S.A. We see no evidence of real effort to reduce Transport Canada expenditures and regret that your efforts to reduce government spending did not find $72 million there.
We also view with concern the announced intention to convert the air transportation tax at a later date to a user charge as this will remove it from public view and the close scrutiny of parliament and allow the imposition of charges involving large arbitrary sums at the discretion of the Minister of Transport and his officials which is questionable in principle.


Mr. Hnatyshyn:: That said it all.


Donald Frank Mazankowski: As my hon. colleague, has suggested, it said it all.
There are a number of other matters on which I would like to have touched. I wanted to develop the matter of the Public Utilities Income Tax Transfer Act. I wanted to talk about the uncertainty that is created by the enlargement of the bureaucratic web, which has created uncertainty, confusion, and downright hostility in many areas. However, time does not permit.
I do want to conclude by saying a few words about the grain industry and our inability to pursue the market potential that is available to us, and the impact that it does have upon our economy. The hon. member for York-Simcoe (Mr. Stevens) pointed out very capably last Friday that there are many areas where we have missed golden opportunities as a resut of the misguided priorities of this government. One is in the field of pursuing our potential in the world grain export market.
On the prairies today there is frustration, hardship and downright anger as a result of our inability to deliver. We are losing sales every day. This is hurting Canada's reputation. We are losing our prominence as a renowned supplier of grain on the export market. It is costing each and every Canadian a lot of money.
If we look at the grains industry in terms of what it means to the Canadian economy, we find that traditionally our grain exports have been in the order of $2.5 billion. They constitute in excess of 60 per cent of our total agricultural exports. Hence, this is a major contributor to Canada's trade picture, particularly with regard to our balance of payments.
Directly related to the $2.5 billion of world exports we make annually, for every $1 of grain that is exported, $2 is generated directly through expenditures on inputs such as machinery, fertilizer, fuel, oil and the various input supplies that go to produce that product. When that $2 filters through the economy, it creates an induced multiplier impact of $5.5. That creates jobs, builds plants, builds homes for factory workers, gives them the capacity to buy cars and improves our technology. It stimulates investment, and we need stimulation at this time, particularly with our plants running at about 85 per cent capacity.

November 21, 1978
The Budget-Mr. McRae
In addition, this original $1 for the sale of export grain ultimately generates $1 to $1.50 worth of revenue to the federal government in the form of taxes. We find that $2.5 billion worth of grain export sales adds $5 billion directly to the farm input sector, it creates $13.75 billion worth of economic activity, and it provides $2.5 billion to $3.5 billion in terms of revenue to the federal government. That is on the positive side.
In this last crop year, we missed opportunities for sales of some four million tons of grain.


Some hon. Members:: Oh, oh!


Donald Frank Mazankowski: That is true. If you can prove it is not true, stand up and give me that proof.


An hon. Member:: You give the proof.


Donald Frank Mazankowski: I have the proof. Canadian Wheat Board spokesmen-and I trust them more than I do the hon. member-have indicated that we have lost sales of four million tons of grain. That represents about $500 million which the producers have lost. In addition, the farm input sector has lost $1 billion, and the total economy has lost some $2.75 billion in economic spinoff.
We lost the sale of four million tons of grain last year. So far this year we have been told by the Canadian Wheat Board that 2.3 million tons of grain have been deferred for later delivery. That is worth $350 million. The members of the wheat board say those are potentially lost sales.
We can no longer carry on without a strategic plan to improve our capability and capacity to remove grain. It is disappointing, disturbing and unhealthy to the farm economy. It is unhealthy for the general economy.
I see my time is up. I hope I will have an opportunity at some later date to develop this further.


Mr. Paul E. McRae (Fort William):: Mr. Speaker, it is always a pleasure listening to my very good friend and respected colleague. I do not think there is anyone on that side more respected by those on this side than the hon. member for Vegreville (Mr. Mazankowski). However, we do differ on some points from time to time. Before expressing my thoughts,
I would like to deal with a couple of the points he mentioned.
The hon. member referred to the oil price agreement between Alberta and the federal government. That should be considered carefully. In that agreement it is stated that the Canadian price should not go higher than the U.S. price so that we are not put in an unfavourable competitive industrial position with the Americans because of our oil. I would have preferred the government to have priced the oil in the same way as the Americans did, with one price for new oil and another one for old oil. Under those circumstances, the province of Alberta would suffer a good deal more than it does at present.
I would like to deal briefly with Petro-Can. I cannot understand why the opposition is making such a fuss about the
[Mr. Mazankowski.)
acquisition of Pacific Petroleums. Over 95 per cent of our oil resources are foreign-owned and controlled. This is a very dangerous position, particularly in view of the fact that our conventional supply is likely to peter out over the next ten to fifteen years.


Benno Friesen: Mr. Speaker, I would like to ask the hon. member how acquiring Petro-Can has increased the oil supply in Canada.


Paul Edmund McRae: Mr. Speaker, there are many ways one can do that. I do not intend at this point-


Some hon. Members:: Oh, oh!


Paul Edmund McRae: All right, I will deal with it briefly. We need to have some holdings which we can develop. There are some heavy oil holdings which may or may not be developed. Protecting that supply is very important. As this industry is almost totally controlled outside our boundaries, it is time we started moving in this direction.
There is a third point that is important. Most Canadians do not believe the industry. There is a lack of credibility about the industry. Therefore, it makes sense for the government of Canada to have a piece of the action and to keep an eye on what is happening. The monitoring factor is relatively important.
I now wish to deal with specific parts of the budget. First, I will deal briefly with the Canadian economy in general and how it relates to the economies of other nations. There is a kind of negative attitude which was mentioned by the hon. member for Vegreville as well as the Prime Minister (Mr. Trudeau), although in a somewhat different way, regarding our economy. This attitude is harmful to Canadians. It is harmful to their attitude toward their government and the country. I will give an example.
The borrowing bill has been before the House for about a month, since October 20 I believe. Much has been said about the growth of the national debt. It is said it is growing at a horrendous rate and that we will be bankrupt in a short time. However, no real analysis has been made of the debt.
Debt, whether national or private, is relative to something. If I owe $5,000 today and ten years ago I owed $2,000, who is to say at what time I am better off financially? That would depend on my income, assets, and so on. These are factors which must be taken into consideration. If we look at the growth or lack of growth in our national debt, we must do that in terms of the gross national product. Let us look at this briefly in terms of the GNP. The net national debt in 1952 was
51.7	per cent of the gross national product for that year. The net national debt in 1962, the last full year in which the Conservative party was in power, was 33.4 per cent of the GNP for that year. In 1972, the net national debt was down to 19 per cent of the GNP for that year. In this portion of 1978, the national debt amounts to 18.7 per cent of the GNP. That is a meaningful way of approaching the issue. The debt has not gone up in terms of the gross national product. Indeed, it has
November 21, 1978

declined. The average for the 25-year period from 1952 to the beginning of the present year is 30 per cent. This year, next year and the year after we shall be well below the average for those years I have mentioned.
I am trying to show that the state of the Canadian economy is not nearly as bad as many members on the opposition side would have us believe. There is no doubt that all industrial countries are experiencing great difficulty at the present time. There has been a massive growth in problems of the kind all governments face. We are talking about inflation rates of 1.5 per cent or 2 per cent up to 1950. Now we see inflation rates of at least 5 per cent.
All governments are also facing massive energy problems, coupled with an unprecedented outflow of dollars to purchase or ensure supplies, and the techniques normally used in such circumstances do not work as well as they used to. To show how well Canadians are doing, we must compare ourselves with the other industrial nations with which we trade.


An hon. Member:: Such as Uganda?


Paul Edmund McRae: I am going to compare our performance with that of 15 industrial nations outside the Communist world: the United States, West Germany, The Netherlands, Australia, Norway, Belgium, France, Japan, Switzerland, Denmark, United Kingdom, Sweden and Finland. There are a series of indices we could use. It is difficult when you compare these indices at the end, totalling them, but I will deal with that when I get there. The First index I will use has to do with the rise in employment, the number of jobs created. In those 15 countries, in the years 1970-1977-I could take the years between 1974 and 1977 and obtain approximately the same result-Canada was First among the 15, with a 27 per cent growth in the number of jobs. Let us not forget that in the same period there had been a much larger growth in the size of our labour force than was experienced in any of the other countries. For every hundred people in the labour force in 1965, there are 146 today whereas the average for the other six members of the summit group is only nine. I do not have the figures for all those countries in terms of unemployment, but we would certainly be below the average in that respect. On the other hand, our problem is about 500 per cent more acute than those of the other six members of the summit group.
Take another index. The United States department of agriculture carried out a study of food prices. It chose a basket of representative types of food, and shopped in all those countries. This was the result: the least number of dollars was needed to buy this sample basket in the U.K. Canada was second, Australia third, the United States fourth, and so on. Prices were converted into U.S. dollars. It was a very significant result, in my view.
Take the over-all cost of living, again measured in U.S. dollars. Taking the U.S. dollar as 100 cents, the cost of buying the same amount of all goods was $1.02 in Canada, $1.04 in
[Mr. McRae.)
The Budget-Mr. McRae
the United Kingdom, and so on. We were second, the United States being First.
The next point has to do with inflation, that is, loss in purchasing power. It is measured on the basis of the same unit. This time it was the Canadian dollar, and of all those countries we come fourth in this period from 1970 to 1977. Our dollar is worth 60 cents, in West Germany the figure is 68 cents, in the United States, 64 cents and in Switzerland, 67 cents. Canada is fourth, with 60 cents. That is the way the purchasing power of the dollar is shrinking.
Take an index where we do not fare very well, that is, the balance of payments. In this group we come tenth out of 15. West Germany is first, followed by Japan. United States is eighth, very close to us. We do have a balance of payments problem. On the other hand, on the commodity trade side, the balance between exports and imports, Canada is third. We come out with $4.60 per capita, West Germany with $12.54, Australia with $7.31 and Canada was third.
In terms of housing starts, using 1970 and a base of 100, Canada is second with 126, Belgium is First with 152 and the United States third with 116.
Now take a very large item, the gross national product. Taking these 15 major countries, Japan is first with an average rise in the GNP per year of 7.36 per cent; France is second with 4.75 per cent; and Canada is third with 4.55 per cent. In the last year, (1977-78) Canada would be second with only Japan ahead of us.
In another area, hon. members on the other side are constantly going after the Minister of Industry, Trade and Commerce (Mr. Horner). He is defending himself ably, though. There is a reason: our industrial production has shown a larger increase than any of those countries. The country that is First, Norway, does not appear high up on any of the other lists. The second country is Canada, and the third is the United States. The increase for Canada is 32 per cent; Norway, 38 per cent; and the United States, 27 per cent.
United labour costs have declined for the period 1970 to 1977 in Canada by 5.6 per cent, and in the United States by 18.5 per cent. Canada is second, and the other 13 countries have done worse than we have, because their unit labour costs have risen faster than ours. Another point is the rise in real disposable income, the amount of income left after taxes. Here Canada is first. The graph is a little obscure, but it deals with a 2 per cent increase over this period. Japan was second.
If we put all these things together and if we give 15 points for each index to the country which has the most and then range down the list with one point going to the country with the least, when we total the points, we find that Canada gets 144 and comes first. This is not an accurate way of doing it, but it is the only way I know that can be done. The United States is second with 125 points. I am sure that if we were to do this, including the unemployment figure as one of the indices, Canada would still be well ahead of the other countries. During the period from the Arab boycott in 1974, to the

November 21, 1978
The Budget-Mr. McRae
end of 1977, Canada would still be first. This is all plotted, but I do not have time to go through it.
Once again, the total points for each country are Canada, 144; the United States, 125; West Germany, 121; the Netherlands, fourth; Australia, fifth; Norway, sixth; Belgium, seventh; France, eighth; Finland, ninth; Japan, tenth; Italy, eleventh; Swizerland, twelfth; Denmark, thirteenth; United Kingdom, fourteenth; and Sweden, fifteenth.
There is something wrong when the bulk of the Canadian public believes that we are in such a terrible state, because if these OECD figures are true, then the rest of the world must be in unbelievable shape. This is the kind of misunderstanding that is fostered by the opposition. To some extent it is understandable because their purpose here is to oppose, but it is also taken up by the press. The press should be more aware in looking at this situation. But we on this side are also at fault because we have not explained the situation. We have not explained the relative position of Canada with the rest of the world in a careful way.
I am pleased to have this opportunity to put these facts before the House, and I hope that at least some Canadians will begin to see that our relative position has been very good and that we have fared rather well relative to other industrial countries. Canada is still the best country in which to live, and our economy has moved better than any other economy among these countries.
Very briefly, I would like to deal with some of the points in the budget. Many good economists today are saying that we are probably doing the best we can. Considering the general direction of the economy, the budget steps are probably as good as one can expect. I know that the other side will give me an argument, and legitimately so, about job creation. However, I do not think that there is any human way, short of doubling the deficit, that we can create a more substantial number of jobs than this government has created in the past seven or eight years. Canada is still ahead of everybody else, and we still have the problem of massive growth in the labour force-a problem that is unique to Canada-amounting to 500 per cent greater than any other country in the summit group. I do not have the figures for all 15 countries, but I do for the top seven, and we have a 500 per cent tougher job than the others.
The figure put out by the Economic Council of Canada that Canada's growth rate of 5 per cent-which is what everybody on the other side says we should have, even though the rest of the world will not achieve more than a 3 per cent or 3.5 per cent growth rate next year, except for Canada-will bring the unemployment rate down to 8 per cent. If the growth rate were to rise to 6 per cent, it would only reduce unemployment to 7.6 per cent.
There are answers, and redistribution of work is one of them. However, I do not think that we will solve the problem by dropping another $2 billion into the demand side, which is one of the alternatives proposed by Her Majesty's Loyal Opposition. This is the same $2 billion we talked about back in the 1960s when we had a gross national product of $45 billion. Now we have a G.N.P. of $120 billion, and we are still using the
same $2 billion, which amounts to less than 1 per cent in its effect on unemployment today, and was about 4 per cent in the 1960s. I think that this kind of stimulus would only have a marginal effect.
The minister has rightly assumed that there will not likely be more than a 4 per cent to a 4.5 per cent growth in the economy next year. We are not likely to achieve a much higher rate of inflation next year than 6.5 per cent, perhaps 6 per cent toward the end of the year. The assumption is that we have done relatively well in all areas except in food, in spite of the condemnation of controls, and the food index should show an improvement.
The opposition has ignored some of the things in the budget. At one time we had a budget which would indicate a certain tax cut or increased exemptions. This is now automatic, and each year there are several billions of dollars going to the demand side. This year the exemption will be 9 per cent. If one looks at the revenue curve and the expenditure curve, one sees that they have paralleled each other over many years until 1974 when the government brought in this indexing system. Since that time the revenue curve has almost levelled off, and the expenditure curve has continued to rise. This is a problem with which the government must wrestle.
One thing in the budget which is rather important to me, and, I am sure, to all the members from northern Ontario, the Atlantic provinces and Gaspe, is the increase in the investment tax credit. This is a fundamental change which occurred last year. Also it is being brought into the Unemployment Insurance Act. Instead of devolving power to the provinces, as the hon. Leader of the Opposition (Mr. Clark) would do if his party were in power, we decentralized some of the power. Not only do we decentralize people, we decentralize policy.
We have told the people of northern Ontario that they will receive an investment tax credit of up to 10 per cent, and up to 20 per cent in the Atlantic provinces. It is a change in the operation of government. Also, it applies to the regionalization of the Unemployment Insurance Act. These are answers to some of the problems articulated by hon. members on the other side. We are not turning the government of the country over to the provinces. We are attempting to make it work better as a national government.
I should like to refer to another aspect which affects northern Ontario. Because of the present value of our dollar at 85 or 86 cents, the woods industry, pulp and paper, logging, timber, and so on, is in very good shape at present. Most of the communities in northern Ontario dependent upon the lumber industry are doing well. In fact, Thunder Bay has the lowest unemployment rate of any Canadian city. That has been the case for over a year. This fact is attributed directly to the state of the dollar and the fact that this industry is involved in the export business.
Communities involved in the mining industry have not had the same success. I am pleased that the budget contained a write-off increase from 30 per cent to 100 per cent for mining

November 21, 1978

development. Also there were increased write-offs for town sites, social purposes and so on. Because of depressed prices of various minerals on world markets, the mining industry is depressed. These extra write-offs certainly will help communities in northern Ontario.
In conclusion, given the state of the Canadian economy, the relative good performance of our economy, the best of all industrial nations in the world, and the difficulties faced by all 15 industrial countries, the budget is extremely appropriate to the nature of the country and the nature of our times.


Some hon. Members:: Hear, hear!


Mr. J. Robert Howie (York-Sunbury):: Mr. Speaker, it is a privilege to take part in this budget debate because it gives me an opportunity to commend the minister for some measures he has taken, to offer constructive criticism, and to express my disappointment at some measures which have not been included.
I like the $500 employee expense deduction which will confer upon working Canadians some of the tax benefits already enjoyed by professional and business people. The decrease in the manufacturers' sales tax will help to stimulate the economy to the extent it is passed on to consumers. The increased tax incentives for research and development and the increase in the investment tax credit will be beneficial to Canadian business, particularly small business. The improvement in resource taxes is long overdue.
However, the over-all impact of the budget falls far short of Canada's needs. The Minister of Finance (Mr. Chretien) seems to be telling us in many ways to expect another year of economic stagnation, as well as a further deterioration in the federal government's fiscal position. Of the $1.3 billion loss to the federal treasury, it would seem that only $300 million will be returned in increased tax revenues. Clearly the economy needs greater stimulus.
I am disappointed the federal government did not choose to adopt our proposal for deductibility of mortgage interest and property taxes from personal income taxes. This proposal in itself would have given the Canadian economy a bigger boost than the entire budget.
There are over 7 million households in Canada and 4.6 million home owners. This reflects the strong desire of Canadians to own their own homes. But in 1975, the last year for which income figures are available, only 9 per cent of Canadians could afford to buy the average new house which was then priced at $42,800. It is socially desirable that Canadians who wish to own their own homes have a reasonable opportunity to do so. These measures would make the Canadian income tax system at least as attractive as that in the United States.
A key difference between the two systems is that the Americans are able to deduct both mortgage interest and property taxes from their annual income. This results in a major reduction in the financing of home ownership for Americans. While the American system allows for mortgage interest and property tax deductibility in all residences, the
The Budget-Mr. Howie
plan which we propose would allow deductibility on principal residences only. This program would provide a major stimulus to the economy by returning significant amounts of after tax dollars to Canadian consumers on a permanent basis.
The depressed rate of consumer spending is a critical weakness in the Canadian economy at present. In fact, a recovery in consumer spending, a stimulus to the building industry, and an increased accumulation of private pools of capital are central to a revitalized economic growth. Clearly these measures would allow more Canadians to purchase their own homes by returning significant amounts of money to them. The effect of increased home purchases will be a major stimulus both to the Canadian home furnishings and construction industries which are almost wholly domestic.
On November 14 of last year, I placed a question on the order paper concerning the revenue loss of tax deductions of interest payable on mortgages on residences. The answer from the Department of Finance indicated that the department had analysed this proposal. The revenue loss would depend upon the structure of the measure and what sort of limits were applied. It could be as high as $1.5 billion per year. On the question of permitting income tax deductions of municipal property taxes, again the Department of Finance indicated that it had analysed the proposal, that the revenue loss would depend upon the structure of the measure and what sort of limitations were applied. It could be well over $500 billion. Thus, we have an indication of the cost of these measures from the government. One measure to reduce the cost is to phase the program over a four-year period. Another restriction measure is to place a limit of $5,000 per year on the allowable interest deduction and a ceiling of $1,000 a year in respect of property taxes.
The benefit to an average Canadian can be measured by taking as an example a family of four with one working spouse, two children, a home with a $30,000 mortgage and annual property taxes of $500. This is not an unusual Canadian situation. It is a good example. This family would gain $197 in reduced taxes in the first year of the program, and $756 when the program is fully in place. This would be a real stimulus to consumer purchasing. It would put more Canadians to work in the building trades and sell more Canadian materials. It would create more Canadian taxpayers. It would help our economy to move forward again. It would help renew consumer and investor confidence.
This program of mortgage interest and property tax deductions, like the programs the minister proposed, can be financed by increases in the gross domestic product and hence our revenues, without increasing taxes, or by identifying programs of a lower priority where expenditures can be eliminated. The government has announced a restraint program. We will be watching to see if it continues restraint in a meaningful manner. The projected deficit of 34 per cent in federal revenues is a record for Canada and one of the highest in the western world. It is a record which is not really wanted. But like the ghost of Christmas past, it has come back to haunt the current Minister of Finance and to restrict severely the area in

November 21, 1978
The Budget-Mr. Howie
which he can manoeuvre in his very serious battle against both inflation and high employment.
I would like to leave some thoughts with the minister in his search for restraint. I suggest that he take another look at the $1.4 billion we pay out to consultants, in an attempt to determine if some of these services could be supplied by other departments of government. Information advertising expenditures have increased remarkably over the years to somewhere around $ 180 million.
I know that Crown corporations have a necessary role to play in the structure of government, but I do believe that periodically they should justify their continued existence as government agencies. That is not to suggest that they have to go out of business, but once their role exceeds the necessary function of the government, it seems to me the government would be quite justified in giving the private sector of our economy an opportunity to assume the risk of owning and operating the business by purchasing it from the government. We have long debated the merits of Petro-Can, Eldorado Nuclear, Canadair and Northern Transportation Limited. Without repeating the arguments pro and con, I would be inclined to add to the list the Canadian Commercial Corporation.
One feature of the budget I find highly commendable is the special provisions to encourage research and development by small Canadian businesses. Such businesses qualify for the low rate of corporation tax and will get an investment tax credit of 25 per cent of their research and development expenditures, irrespective of their location in Canada. This measure, coupled with the proposal to double the basic rate of investment tax credit for research and development from 5 per cent to 10 per cent, which is set at 20 per cent in the Atlantic provinces and the Gaspe, is a good measure.
I thought the 25 per cent tax credit for research and development was an excellent idea, and I said so in this House on June 21 last when I spoke in respect of Bill C-56. I would like to say so again today. My colleague, the hon. member for Capilano (Mr. Huntington), was one of several members who did considerable work on research and development issues which were debated in the last budget debate and under Clause 6 of Bill C-56. With background help, various substantive amendments were made which would have improved all industrial aspects of research and development in Canada, and would have put in place very real incentives which would have worked to smooth out this area of need in the Canadian economy. These amendments were passed on to the government during committee of the whole debate on that bill, and they were suggested as being superior to the measures which the government had proposed at that time.
One other measure which was proposed by my colleagues and myself at that time, and which I would like to recommend for the consideration of the minister now, is that in arriving at the definition of a small business in order to stimulate research and development, we consider the amount of research and
development carried out by a small business. I suggest that for purposes of this tax credit, any business in Canada which does less than $1 million worth in research and development in a fiscal year should be considered a small business.
The present federal government tax incentive program is inadequate in the following respects: The incentive is based on incremental research and development expenditures only; the consolidation of capital with current expenditures penalizes firms making substantial capital outlay for R and D purposes; the incentive discriminates severely against the smaller firms whose net cost of R and D could be 70 per cent higher than for larger firms, and the incentive is not available to firms not having a taxable income, for example in the start-up phase of new technology-based firms.
When the minister has an opportunity to refer back to the debate I have mentioned, as reported at pages 6626 to 6632 of Hansard, he will find some very helpful suggestions along these lines made by colleagues.
I would like to suggest that any review of industrial support policies should involve the full participation of industry. New incentive programs should minimize elaborate administration. For example, where applicable, self-administered tax credits are preferable to grants which require lengthy and complex applications and detailed monitoring. The contracting out of government R and D projects, which have been a step in the right direction, should be intensified.
Federal procurement policy should aim to stimulate promising Canadian companies. The procurement policies of local and provincial governments, as well as publicly supported institutions, should be similarly co-ordinated. The federal government should take the lead by making this a condition of various incentives and cost-sharing programs. International trade and technological agreements should make special provisions to strengthen Canada's industrial capacity. Opportunities for co-operative activities should be sought out and supported. Fragmentation and polarization of the activities of various groups, whether in industry, government or universities, must be overcome. Eventually, incentive programs and other related activities that are designed to affect industry should be developed in the context of a comprehensive industrial strategy which would support the emergence of strong, stable Canadian companies and rationalize Canadian industrial capacities to meet industrial competition. This latter thought has been expressed and underscored by Dr. Kates and the Science Council.
It is imperative that we create a more attractive climate for technological innovation in Canada, if the research and development performed by a parent company in respect of the output of Canadian subsidiaries is to be expanded in Canada.
Our tax incentives must be strong enough to make it attractive and profitable to perform the research and development in Canada, and as a precondition to receiving any such incentive, R and D must in fact be done in Canada.
The bottom line is that it is not enough to have the best tax incentive system in the western world. Our ministers, deputy


ministers, assistant deputy ministers and department heads have to get on their bicycles and travel to the board rooms of the parent companies of Canadian subsidiaries and sell our program. We have to give the private sector the confidence that our government understands that research is a long-term proposition, and convince them that the incentives will remain in position and be constant for at least ten years.
In the past 15 years we have witnessed a number of major unrelated programs involving tax incentives put forward and then cancelled by the present government. It is small wonder that the private sector takes no confidence in this performance and is not prepared to commit its funds to a program of long-term scientific research and innovation.
Prior to 1962, Canadian firms could deduct 100 per cent of their current capital expenditures for tax purposes. In 1962, an amendment to the Income Tax Act added a new section, section 72(a), which provided an additional tax deduction of 50 per cent of the increase in research and development expenditures for capital and current costs over the 1961 level. This special allowance was replaced about five years later by the Industrial Research and Development Incentives Act, and late in 1975 this program too came to a grinding halt, but it was not immediately replaced. The make or buy policy was then in force and the PAIT program was also in place, but neither of these could be classified as a tax incentive.
Last year the tax investment credit was announced. Earlier this year the government moved the clock back to 1962 by returning to the special tax deduction allowance feature for income tax purposes. Now the government has had the wisdom to take a step in the right direction with the current proposal of a 25 per cent tax credit.


The Acting Speaker (Mr. Turner):: Order, please. In accordance with Standing Order 40, a motion to adjourn the House is deemed to have been made and seconded at this time. Therefore, the question is that this House do now adjourn.



PROCEEDINGS ON ADJOURNMENT MOTION

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

Allan Bruce McKinnon: Mr. Speaker, I rise tonight because of an unsatisfactory answer I received yesterday to a question I put to the Solicitor General (Mr. Blais). I asked the Solicitor General, as recorded at page 1263 of Hansard, what progress had been made with the investigation into kickbacks that were paid in Canada by the Boeing Air-
Adjournment Debate
craft Company concerning deals whereby Canada bought aircraft from Boeing.
There were five companies in Canada that did buy aircraft from Boeing, and this might have happened to any one of them. These included the Department of Supply and Services of the Canadian government, Air Canada, Eastern Provincial Airways, Nordair and Transair.
Somewhere in Canada there is a crook who has gypped Canada. Some 20 months after the first clear indication, and four months after absolute declaration that there is a crook in our midst, nothing seems to be happening. Progress is far too slow. India has out-distanced us in this. I would like tonight to point out why we should have moved considerably faster.
First of all I would like to read from a complaint by the Securities Exchange Commission of the United States which commenced a suit against the Boeing aircraft company requiring it to conduct its business so it was no longer fraudulent. On examination of the documents provided by Boeing we find the following stated:
In some instances, Boeing used dual consulting contracts with identical terms except for the compensation payable to the consultant. One contract provided for nominal compensation to the consultant while the second contract specified payments of additional compensation to the consultant-
I suggest there is no way that the Securities and Exchange Commission could look at these dual contracts without realizing that they were made out to the same person. There is no way they could make that statement unless the same person's name appeared on both contracts. If it did, the Securities and Exchange Commission of the United States must know the person to whom those dual contracts were made out.
Further on in the same complaint the Securities and Exchange Commission had this to say:
Certain of these disbursements were improperly described as commissions on the books and records of Boeing. All of such payments were made to nominee and conduit accounts in Switzerland.
Once again, if they knew to what consultant they were made out, they must have had the consultant's name.
If I have established that the Securities and Exchange Commission knew the name of the consultant who took double payments, then why should Canada not have made faster progress than it has? I refer to a news release dated March 15, 1977 when Canada signed an agreement with the United States. In the news release which accompanied the agreement issued by the then Minister of Justice and Attorney General of Canada (Mr. Basford) this passage appears:
The agreement provides that following requests for assistance, the United States Department of Justice and the Department of Justice of Canada will assist each other in making available relevant information and material pertaining to the sales activities in Canada of The Boeing Company-
In the first paragraph of the agreement itself appears the words "with respect to alleged illicit acts pertaining to the sales activities in Canada of The Boeing Company." This quite clearly establishes that illegal acts had been taking place as

November 21, 1978
Adjournment Debate
early as 20 months ago. Paragraph 2 of the agreement goes on to state:
-the parties shall use their best efforts to make available to each other relevant and material information, such as statements, depositions, documents, business records, correspondence or other materials-
I submit that should include the name of the culprit.
I should like to point out that during this time Canada has asked the United States department of justice about this and has received co-operation, at least according to the Minister of Justice who answered me on this matter about a month ago. I therefore cannot understand the delay in laying charges against the culprits.
I particularly want to point out that it is quite clear from the evidence before us that these complaints were filed by the SEC before the United States district court for the District of Columbia. The district court of the District of Columbia records are available to the United States department of justice. Since they are made available to the department of justice of the United States, according to our agreement they should be delivered to us if we ask for them. If we have not asked for them, we should do so immediately. If we have asked for them, then the name should be in the hands of our government. I want to know from the minister why nothing has been done and why we cannot seem to make any progress whatever.
A month ago the Solicitor General's parliamentary secretary said that we would have the information soon. Yesterday, he was not as promising. He gave no date and said that he could not guarantee when the final report of the RCMP would be in his hands. I should like those two questions answered tonight, Mr. Speaker.


Mr. Roger Young (Parliamentary Secretary to Solicitor General):: Mr. Speaker, yesterday the hon. member for Victoria (Mr. McKinnon) asked a question of the Solicitor General (Mr. Blais) concerning an ongoing RCM Police investigation into the Boeing Company's contract transactions. As the hon. member is very well aware, it is not now, nor has it been, the practice of the government to divulge detailed particulars of the results of ongoing criminal investigations in the House of Commons. This is necessarily so, as all hon. members will know, because of the danger of impairing these investigations.
I can state for the benefit of the hon. member that the RCMP investigation has been going on for a considerable period of time and that the Solicitor General (Mr. Blais) is optimistic that it will be completed soon.
[ Translation]


LABOUR CONDITIONS-INQUIRY AS TO FINANCIAL MEASURES TAKEN TO REDUCE NUMBER OF UNEMPLOYED
Mr. Adrien Lambert (Bellechasse):: Mr. Speaker, on November 7 I asked the Minister of Finance a question

concerning the measures he intended to submit to the House in order to reduce the number of unemployed.
Mr. Speaker, this question as reported on page 866 of Hansard was the following:
According to a recent article Canada is in the leading position on the world wide level as far as unemployment is concerned. This is not in accordance with the statements made by the Minister of Finance. The article says that Canada has a record 8.5 per cent of unemployed.
I asked the minister what he intended to propose in his budget to try to further develop the use of our manpower in order to increase our gross national product to become as prosperous as the other industrial countries in the western world. The minister said that he required a complete budget to give a thorough answer to my serious question and that he regretted that our unemployment level was so high. He added that in that last 12 months we had created 362,000 new jobs in Canada and that our performance as far as job creation was concerned was not equalled by any country in the world.
Mr. Speaker, it is not a pleasure for me to tackle this question nor is it my intention to embarrass the government. We hear so many complaints that there is no point in raising questions likely to put the government in trouble. What we want in this parliament is that the government face up to its responsibilities and solve the situation in a clever and efficient way.
Mr. Speaker, I would like very briefly to prove the seriousness of my question, with some figures on the level of unemployment in eastern Quebec. Especially in my own area of Bellechasse. Unemployment in Bellechasse is not due to its having a Social Credit MP, because there is just as much in any other constituency in the province of Quebec and the rest of Canada. It is because we have the same system as everywhere else.
The head of Montmagny's Manpower Centre, Mr. Claude Boileau, whose photograph appeared in the local newspaper Peuple Courrier, was quoted as saying in July that the level of unemployment is nearly a quarter of the work force. Later, figures were published concerning communities under the jurisdiction of the Montmagny Manpower Centre. The total population is 23,401, the labour force is 7,090 and the number of unemployed 1,663. The number of unemployed female is 492, on a total 2,155. This is becoming serious when there is a 7,090 work force. Another table shows there are 1,346 men receiving unemployment benefits and 317 people receiving other help, for a total 1,663 people out of 7,090 capable of working. This means there are a number of other people that are without revenue or live off welfare.
The situation is therefore, disquieting, and we must absolutely see to it that the number of people looking for work be reduced. Some will say, and perhaps they are right, that there may be some people who have not worked for such a long time
November 21, 1978

that they have lost the desire to work and no longer understand that work is normal and that it is a tool which must be used to earn a living and to transform in detail what God has given us to meet the needs of men. God could have created everything ready for consumption, but He wanted men to join Him in His work of creation. This is why He has given us this tool of work. The public authorities, the governments, must find the means to close the gap when the private sector cannot absorb all the manpower available. This is the role of the government, to intervene through public works to absorb this manpower, to maintain this desire to work and to give those who want to work the possibility of supporting themselves honourably.
Mr. Speaker, the federal government has established various programs, including Canada Works, within its field of responsibility. Some projects submitted under this program may not be very good and some may be quite bad. However, I believe that the quality of projects has improved a lot in the last few years, and I want to pay tribute to the people of my constituency who go to the trouble of submitting useful projects. However, when these projects are implemented, they should not cause us problems such as that which occurred last week with a project in my constituency when the mayor offered his services free of charge to help the residents of the municipality. He was provided with the funds required to implement a project which would have enabled him to build sidewalks and repair his municipal workshop. And three days after the work started an inspector from the Quebec Construction Office came and ordered him to stop the works and told him he would be penalized and fined unless he had a good member of parliament to defend him. So the mayor, a very intelligent man, told him: It is incredible, you set the fire and then you say: If you have a good member, he will put it out.
Mr. Speaker, that kind of situation is not acceptable in a Christian and civilized society. I think that an agreement should be possible between federal and provincial authorities so that we can really work and ensure public services and employment opportunities for the people.
Mr. Speaker, I brought that matter to the attention of the Minister of Employment and Immigration (Mr. Cullen) who committed himself to communicate with the Quebec labour minister. So I hope that consultations have begun and that they will have positive results so that such situations will not reoccur.
Mr. Speaker, here is the most efficient measure that the government can take to lighten the unemployment burden: public works. As recently as last week, I received representations from municipalities asking that retaining walls be built along the St. Lawrence River because every year the water eats away part of the riverside properties.


The Acting Speaker (Mr. Turner):: Order, please. I regret to inform the hon. member that his allotted time has expired.
Adjournment Debate


Alan Gray Martin: Mr. Speaker, I am somewhat embarrassed in answering my friend, my colleague from Bellechasse (Mr. Lambert), as I have before me an answer written in the other official language, so I must answer in that language and I hope he will excuse me for that.

As the hon. member has indicated, unemployment in Canada has recently been at a level of 8.5 per cent of the labour force. However, it should be noted that in October the unemployment rate dropped to a seasonally adjusted rate of 8.2 per cent, the lowest rate registered in over a year.
Because our labour force has been growing much more rapidly than in other industrialized countries-since 1970 about 3'/2 per cent a year, compared to 2 per cent for the U.S., under 1 per cent for the U.K., France and Japan, and a decline for Germany-unemployment has reached very high levels, despite the rapid increase in the number of Canadians who are working. Employment increased by more than 3.6 per cent in the last year, and 362,000 more Canadians are working today than one year ago.
One of the main reasons for the fast growth of the labour force is the rapidly growing participation of Canadian women in the labour force.
Another important reason for the growth of the labour force has been a surge of young people coming into the labour market. This surge is not expected to last. The population in the 15 to 19-year-old age group is expected to decline after 1979. However, the immediate challenge has been to create enough jobs for all our young people and to alleviate other structural unemployment problems.
In the field of manpower-training and job creation, the government has recently announced an employment strategy for 1979-80 which continues the key objective of increasing the employment and employability of all Canadians, while shifting the emphasis to helping industry train and employ Canadians, and particularly young job seekers.
A main feature of the 1979-80 employment strategy is the development of a strategy to increase youth employment, particularly in the private sector, at a cost of $225 million. The summer youth employment program will be expanded, which includes programs such as Young Canada Works, Summer Job Corps, and so on. Expenditures will be increased on year round youth employment and employability programs, Youth Job Corps-a new program-job experience training, and so on, from $14.5 million this fiscal year to nearly $110 million in 1979-80. It is expected that the JET program alone will provide private sector employment and experience to over 63,000 youth in 1979-80.


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

November 21, 1978
Adjournment Debate


THE CANADIAN ECONOMY-REQUEST HOUSE BE INFORMED OF REASONS FOR RAISING INTEREST RATES
Bob Rae: Mr. Speaker, my questions arise out of questions I asked in the House on November 6 concerning the rise in the interest rate announced the day previous to my questions. In asking my questions, I brought to the minister's attention the fact that the rise in the interest rate represented something far more serious than the government appreciated at that time.
In considering the financial measures brought in by this government, we have to take all things in context. For example, we have to take the budget in context, not only of the cutbacks announced on August 1 by the government, but also in the context of the rise in the rate of interest which has taken place since January of this year.
This rise brings us to the unprecedented point where our interest rate is at 10% per cent. Our concern is that the impact of this increase and the effect it will have right through the economy has not been sufficiently appreciated by the government in bringing down its budget.
In his evidence on November 6, the main rationale expressed by Governor Bouey was that he was preoccupied with the concern that unless we did something about our interest rates to keep them at a higher percentage than the American rate, Canada's dollar would decline and we would be in a very dangerous position. He described it as depreciating our way into inflation. The governor referred to the British disease. Members of the official opposition referred to the danger of Canada catching the British disease. That disease manifests itself if a currency depreciates too quickly and the cost of imports go way up. That will have an effect on inflation right through the economy.
In attempting to avoid catching the British disease, we are subject to another disease which can be called the Canadian disease. The Canadian disease in respect of the economy and high interest rates is our dependence on the U.S. If the Americans take a decision with regard to American interest rates, that decision is based on a set of decisions which apply in the United States. However, the same concern as would lead to a decision being taken in the United States with respect to its economy, may have nothing to do with the decision taken with respect to our economy. So in effect we are taking a decision over which we have no genuine control as a result of a decision made in the United States. I do not say this out of any knee-jerk anti-Americanism or anything of that kind. That is not the case on my part. My concern is that in responding to what basically it sees as external requirements, the need to guarantee that the Canadian dollar does not fall below 85 cents, the government is tying itself to a high rate of interest for a considerable time-I suggest it has no idea when interest rates will go down in the United States.
Answering my question, the minister said he would take into account the problems of the interest rate when he brought down his budget. I see no evidence whatever that the budget
[The Acting Speaker (Mr. Turner).]
will be able to provide an antidote to these serious inflationary measures affecting the economy. Therefore, without being a prophet of gloom or doom, the question I direct to the parliamentary secretary is this: if the government intends to carry out a policy of high interest rates, can he not tell us what policies it intends to carry out at the same time to make sure we do not sacrifice our internal strength, our industrial strength and our economic health to the need to protect our foreign exchange markets?
This is a dilemma. It is one which the government has not faced straight on. It seems to me we are sacrificing much of our industrial health to maintain the standard of the dollar and in following this policy, in attempting to avoid the British disease, we are in danger of getting the Canadian disease. Many military men are accused of fighting wars that are already over, instead of addressing themselves to the circumstances of today. In the same way, economists would be well advised to fight the current war instead of seeking to apply solutions which are now outmoded. I fear there will be serious deflation as a result of the government's determination, I would say blind determination, to keep our interest rates one point ahead of rates in America.


Alan Gray Martin: Mr. Speaker, in beginning my response I should repeat the comment made by the minister at the time he replied to the hon. member for Broadview (Mr. Rae). He stated clearly that it is the Governor of the Bank of Canada who establishes the interest rate. It is not the Minister of Finance (Mr. Chretien) who makes that decision.
The decision to raise interest rates required a balancing of judgments of the consequences of raising them against the consequences of not raising them.
The bank and the government would have preferred not to have been faced with the need to make this difficult decision, but the move by the U.S. authorities forced us to consider the consequences for Canada of higher interest rates in the U.S.
If the higher interest rates in the U.S. were likely to lead to an outflow of capital from Canada, a resumption of the decline in the value of our currency and an increase in the cost of imports and domestic production, this would be damaging to domestic stability and our capacity to employ Canadians. These consequences would develop quickly but linger to plague our economic performance for some time. In arriving at a decision they are to be compared with the restraining effects of higher interest rates. It is not possible to predict when circumstances may change, but when they do, we can contemplate lower interest rates again.
Higher interest rates are certainly an element of increased cost to business. The risk was that without an increase in interest rates we might get other costs rising and built more permanently into the cost structure of Canadian industry.
The policy of the government continues to be to seek to establish the conditions for further declines in our prices and
November 21, 1978

costs so as to consolidate our improved competitive position in order that we may, with renewed confidence, increase our share of world markets and our ability to satisfy our own needs. That is the surest way to increase the employment of our growing labour force. It is our judgment that the action taken on Sunday night-to which the hon. member has referred-in the face of the U.S. move, is much more con-
Adjournment Debate
sistent with this objective than a policy of no action would have been.


The Acting Speaker (Mr. Turner):: The motion to adjourn this House is now deemed to have been adopted. Accordingly, this House stands adjourned until two o'clock p.m. tomorrow.
Motion agreed to and the House adjourned at 10.28 p.m., without question put, pursuant to Standing Order.

November 21, 1978


APPENDIX
[Stage Direction]
{See p. 1324)

[Stage Direction]
Your Committee submits again to both Houses of Parliament the criteria it will use for the review and scrutiny of Statutory Instruments:
Whether any Regulation or other Statutory Instruments within its terms of reference, in the judgement of the Committee:
1.	(a) is not authorized by the terms of the enabling statute, or, if it is made pursuant to the prerogative, its terms are not in conformity with the common law; or
(b) does not clearly state therein the precise authority for the making of the Instrument;
2.	has not complied with the provisions of the Statutory Instruments Act with respect to transmittal, recording, numbering or publication;
3.	(a) has not complied with any tabling provision or other condition set forth in the enabling statute; or
(b) does not clearly state therein the time and manner of compliance with any such condition;
4.	makes some unusual or unexpected use of the powers conferred by the enabling statute or by the prerogative;
5.	trespasses unduly on the rights and liberties of the subject;
6.	(a) tends directly or indirectly to exclude the jurisdiction of the Courts without explicit authorization therefor in the enabling statute; or
(b) makes the rights and liberties of the subject dependent on administrative discretion rather than on the judicial process;
7.	purports to have retroactive effect where the enabling statute confers no express authority so to provide or, where
such authority is so provided, the retroactive effect appears to be oppressive, harsh or unnecessary;
8.	appears for any reason to infringe the rule of law or the rules of natural justice;
9.	provides without good and sufficient reason that it shall come into force before registration by the Clerk of the Privy Council;
10.	in the absence of express authority to that effect in the enabling statute or prerogative, appears to amount to the exercise of a substantive legislative power properly the subject of direct parliamentary enactment, and not merely to the formulation of subordinate provisions of a technical or administrative character properly the subject of delegated legislation;
11.	without express provision to the effect having been made in the enabling statute or prerogative, impose a fine, imprisonment or other penalty, or shifts the onus of proof of innocence to the person accused of an offence;
12.	imposes a charge on the public revenues or contains provisions requiring payment to be made to the Crown or to any other authority in consideration of any license or service to be rendered, or prescribes the amount of any such charge or payment, without express authority to that effect having been provided in the enabling statute or prerogative;
13.	is not in conformity with the Canadian Bill of Rights;
14.	is unclear in its meaning or otherwise defective in its drafting;
15.	for any other reason requires elucidation as to its form or purport.
A copy of the relevant Minutes of Proceedings and Evidence {Issue No. 1) is tabled.
[Stage Direction]
Wednesday, November 22, 1978