1978-05-29

HOUSE OF COMMONS DEBATES


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UtRARY OF PARUAM8NT CANADA
BBUOTHtQ'JI DU PARIIMENT
THIRD SESSION-THIRTIETH PARLIAMENT 27 Elizabeth II

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Published under authority of the Speaker of the House of Commons by the Queen's Printer for Canada Available from Canadian Government Publishing Centre, Supply and Services Canada, Hull, Quebec, Canada K1A 0S9, at 5 cents per copy or $3.00 per session
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Monday, May 29, 1978


Mr. James A. McGrath (St. John's East):: Mr. Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. In view of the findings of the Toronto Social Planning Council, in the study just released on old age security for the metropolitan Toronto area, that people were living in poverty and that widows and single females were especially hard hit, confirming a survey by Statistics Canada that 61.7 per cent unattached pensioners were living below the poverty line as of 1976, I wish to move, seconded by the hon. member for Hamilton West (Mr. Alexander):
That this House directs the Minister of National Health and Welfare to bring in legislation before the summer adjournment to provide for a continuation of the spouses' allowance after the death of the older spouse and, further, that the legislation provide for an adjustment in the guaranteed income supplements which would more adequately reflect real increases in the cost of living since the last increase was made prior to indexing.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


POST OFFICE
Mr. Edward Broadbent (Oshawa-Whitby):: Mr. Speaker, I rise under the provisions of Standing Order 43. Considering that until the past weekend the Post Office had not made a single proposal which goes beyond the old contract with the Canadian Union of Postal Workers since that contract expired almost a year ago, and considering that such an attitude is most likely to produce a strike which neither the people of Canada nor the workers involved desire, I move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That this House instructs the Postmaster General to assume his responsibilities and ensure that positive proposals are presented soon by the Post Office in its negotiations with CUPW.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


PUBLIC SERVICE COMMISSION
Mr. Walter Baker (Grenville-Carleton):: Mr. Speaker, I rise pursuant to the provisions of Standing Order 43. On April 20 there were press reports that the Public Service Commission had decided not to make public its submission to the D'Avig-non committee on personnel management and the merit principle in the public service because the impending election might turn the submission into a political football. Since the Prime Minister subsequently revealed that an election was not impending at all, I ask leave to move, seconded by the hon. member for Okanagan Boundary (Mr. Whittaker):
That this House requests the Public Service Commission to publish forthwith its submission to the D'Avignon committee so that the public and members of parliament may have the opportunity to examine its proposals respecting the public service of Canada.


Mr. Speaker:: Presentation of such a motion for debate at this time would require unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


NATIONAL DEFENCE
Mr. Donald W. Munro (Esquimalt-Saanich):: Mr. Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity arising from the meeting of NATO in Washington this week. In light of the commitment Canada has made to its NATO allies and the dangers still facing the west from the Warsaw pact, and because of the evidence that the Warsaw pact nations have not ceased to

May 29, 1978
upgrade their military stance in Europe and, either directly or using Cuba as a cat's paw, are threatening stability in Africa as well, I move, seconded by the hon. member for Parry Sound-Muskoka (Mr. Darling):
That the Prime Minister stop posturing before an international audience and come forward with concrete and positive proposals as to the way Canada is prepared to improve NATO's conventional force posture, including improvements in Canada's back-up in both permanent and reserve forces.


Mr. Speaker:: Introduction of such a motion for debate at this time would require the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


AIR TRANSPORT
Mr. Elmer M. MacKay (Central Nova):: Mr. Speaker, I rise on a matter of urgent and pressing necessity pursuant to Standing Order 43. In view of growing concern in Atlantic Canada that Eastern Provincial Airways, a major employer and regional air carrier, is experiencing difficulties because of inappropriate subsidy levels and other factors which have caused the airline to experience financial losses in recent years, I move, seconded by the hon. member for St. John's East (Mr. McGrath):
That the Department of Transport and the Department of Industry, Trade and Commerce jointly take appropriate steps to provide realistic, greater subsidies and equitable financial arrangements for the purchase of Dash-7 equipment to expedite and improve the service capability and the financial position of Eastern Provincial Airways.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


PRESENCE IN GALLERY OF FEDERAL REPUBLIC OF GERMANY MINISTER OF INTERNATIONAL CULTURAL RELATIONS
Mr. Speaker:: Before beginning the question period, I know hon. members would want to join me in recognizing the presence in our gallery of a very distinguished visitor from the Bundestag of the Federal Republic of Germany in her official capacity as one of two ministers of state responsible for international cultural relations. Dr. Hildegard Hamm-Bruech-er is here on an official visit in that capacity.


Some hon. Members:: Hear, hear!



ORAL QUESTION PERIOD


Donald W. Munro: Mr. Speaker, in the absence of the Prime Minister, who is in Washington on other business today and tomorrow, I direct my question to the Deputy Prime Minister. On the basis of the evidence available to him, does the Deputy Prime Minister believe that proposals such as those made by the Prime Minister in New York last week will evoke a positive response from the U.S.S.R., that the U.S.S.R. will, in consequence, in order to promote detente, abandon its aggressive designs in Europe, Africa and Asia or make some other gesture, for example in the SALT talks, and that in the long run the prospects of peace and security in the world are being forwarded by these proposals?


Hon. Allan J. MacEachen (Deputy Prime Minister and President of Privy Council):: Mr. Speaker, the hon. member will have read the text of the Prime Minister's speech at the United Nations' conference in New York in which he made a number of concrete proposals in respect of the general question of disarmament. The hon. member refers specifically to what response might be expected from the Soviet Union. I hope the support the Prime Minister gave to President Carter in respect of nuclear weapons, particularly battlefield nuclear weapons, might evoke a positive response from the Soviet Union and that they might realize the ball is now in their court. It is up to them to follow President Carter in deferring the production of this particular weapon.


Donald W. Munro: Mr. Speaker, in his usual way, I think the Deputy Prime Minister has stepped aside from the question I put to him. Therefore, can he explain to the House exactly what the government expects in the way of positive response from these proposals? Does he see any positive results at all? Is it simply a matter of the Prime Minister lecturing sanctimoniously to the rest of the world as to how the world should behave, delivering that lecture from the sheltered nuclear haven which has been provided to Canada by our close, friendly and concerned neighbour?


Allan Joseph MacEachen: Mr. Speaker, I am surprised the hon. member would have picked up the rather irresponsible criticism which was directed by certain elements of the press.


Mr. Gillies:: The government of Great Britain?


Some hon. Members:: Oh, oh!


Allan Joseph MacEachen: This was directed by certain elements of the press to the substance of the Prime Minister's speech. The Prime Minister has declared the position of Canada in respect of its renunciation of nuclear weapons. Even though at an early stage this country had the capacity to become a nuclear power, we have chosen consistently another route. It seems
May 29, 1978

passing strange that that particular decision should be regarded as hypocrisy.


Mr. Fraser:: You have forgotten about 1963.


Donald W. Munro: Mr. Speaker, my supplementary question is also directed to the Deputy Prime Minister. Would he be prepared to comment on the notion that there is a distinction which ought to be made between posturing and practising in the awesome arena of international peace and security, and that in today's world and its realities, with the U.S.S.R.. expanding its sphere of interest and military strength around the world, particularly into the unsettled areas of Africa, posturing could be more dangerous than practising readiness coupled with adequate response?


Allan Joseph MacEachen: Mr. Speaker, the hon. member has referred to posturing as if the setting forward by the Prime Minister of Canada's position before the United Nations' disarmament conference its well known position on nuclear disarmament-


Mr. Diefenbaker:: What about 1963 and the Liberal party?


Allan Joseph MacEachen: -is posturing. It seems to me that he ought to describe statements made by other world leaders at the UN conference in precisely the same terms, because each of those who went to the podium in New York took the opportunity to put forward views on the question of disarmament.
There is no justification for the hon. member to slight Canada's contribution to our collective defence. We have continued our adherence to NATO, and 2Vi years ago we restated that adherence by very substantial improvements in our contribution to NATO and NATO financing.


NATIONAL DEFENCE
Mr. Stan Darling (Parry Sound-Muskoka):: Mr. Speaker, I should like to direct my question to the Deputy Prime Minister. As the Deputy Prime Minister is aware, NATO's longterm defence program calls for improvement in ten areas, including reinforcement machinery and reserve mobilization, that is, improving the quality, quantity and availability of reserve units.
Would the Deputy Prime Minister explain how a decision to forgo $60 million in this year's defence budget at a time when Canada's reserves, especially militia units, are grossly underequipped is in any way compatible with the obvious need for all NATO members to make improvements in their commitments to the alliance's conventional forces?


Allan Joseph MacEachen: Mr. Speaker, as hon. members
Oral Questions
know, two or three years ago there was a very extensive discussion within NATO itself in respect of Canada's continued adherence and continued contribution to NATO. At the NATO summit at that time, the Prime Minister stated that Canada would make an effective contribution that would be seen to be effective by our allies.
As a result of consultations with our allies within NATO, we took certain decisions in respect of replacement of aircraft and in respect of the selection of a tank. All of these decisions were taken in consultation with and the support of our allies in NATO. I believe our over-all financial contribution in that alliance, and our forward defence planning and defence budgeting, are very clear indications of our determination in that respect.


Stan Darling: Mr. Speaker, after ten months, a statement on the very important question of the neutron bomb has finally been made, not to this House but last Friday to the United Nations' special session on disarmament. Members of parliament were denied the opportunity of participating in a discussion of this non-partisan subject affecting all Canadians and our stand in the international community.
The Prime Minister referred to President Carter's "farsighted postponement of a decision to produce" the weapon. Now that all danger of upstaging the Prime Minister has past, will the Deputy Prime Minister explain to the House what that statement means in respect of Canadian policy on the desirability of ever deploying such a weapon in Europe? In other words, is the government irrevocably opposed to the use of this weapon, or is it merely temporizing?


Allan Joseph MacEachen: Mr. Speaker, the Prime Minister stated in his speech that the President of the United States had shown the way in recent weeks with his farsighted postponement of the decision to produce a special battlefield nuclear weapon. Of course, the Prime Minister went on to say that we all hope the response of the Soviet Union will be such as to make it possible to extend that postponement indefinitely.
As I said earlier in the question period, the ball is now clearly in the court of the Soviet Union, which in fact has been challenged by President Carter to exercise equivalent restraint with regard to its own deployment and force level. It seems to me it was highly constructive at this particular time for the Prime Minister to support the stance taken by the President of the United States.


POST OFFICE
John Edward Broadbent: Mr. Speaker, I have a question for the Postmaster General. Will the Postmaster General confirm a report that was made on the weekend, that since the termination of their contract with the members of CUPW, which was almost a year ago today, the Post Office

May 29, 1978
Oral Questions
has not made, at least up to the weekend, a single new proposal in its negotiations with CUPW?


Hon. J.-Gilles Lamontagne (Postmaster General):: Mr. Speaker, it is very easy to say that we have not made any propositions to CUPW up to now, but our situation and our stand was very clearly made at the opening of the discussions with the conciliation board in the form of a 30-page document which was also made public. Our position was made very clear on that occasion. Since then, conciliation has been going on, and as far as I am concerned it is progressing satisfactorily, considering that we are still discussing matters on which we have taken a firm stand. These are items of which I am sure hon. members would approve and would want us to stand behind. On other items, we are open for discussion while in the conciliation process.
For the hon. member's information, we are also carrying on discussions at the same time with the LCUC. These negotiations are progressing well and on time and there is a very good understanding between the union and the Post Office. As far as CUPW is concerned, I cannot say more: we are still in conciliation, which is going well, and I hope we will reach an agreement sooner or later.


John Edward Broadbent: Mr. Speaker, I will give the minister the benefit of the doubt if my first question was not perfectly clear to him. I will now repeat it in the hope of clarifying it. the position, as I understand it, of CUPW is that the proposition which the Post Office is now putting before them does not improve by one iota the working conditions which they have in terms of the existing contract which expired a year ago. In fact, among the new proposals in the government's package are those which, in the view of the union, take away certain benefits that they have.
Will the minister confirm that that is the case in terms of the proposals they are putting forward, that there are no new improvements at all for CUPW and, if so, does he think this is a responsible attitude for management to take, and is it likely to head off an anticipated postal strike?


Mr. Lamontagne:: Mr. Speaker, I think that in these conditions the Post Office Department must be responsible enough in such negotiations to take the interests of Canadians as regards the working conditions of its employees. I must say that the working conditions of postal employees can be favourably compared with those of most Canadian workers. 1 think that we are not ashamed to suggest how the new negotiations should be undertaken. There are four principles, for example, on which we are not prepared to negotiate and I think that Canadians would not accept it, if we did so; among others- [English]
We intend to proceed with technological change. We want to have freedom to contract out some of our work. We want our casual and temporary employees to meet peak demands, and we want to be able to measure quantity and quality of employee output, which we do not have at the moment. The

workers previously acquired certain rights and, with those rights, certain responsibilities: we would like to negotiate in that area.


John Edward Broadbent: Mr. Speaker, the minister, in his answer, has confirmed the accusation that was made on the weekend by CUPW. He has, indeed, provided a list of new areas that the Post Office would like to get agreement on; but the minister should know that any trade union representing any body of workers and taking on the points that he has raised would not concede to themselves that these are concessions. What they are saying is that in terms of improvement, as the minister indicated in dealing with that part of my question, there has been no improvement over the existing circumstances; there is no new offer from the government at all: no new offer was made by the Post Office, which seems to confirm the fact that in the last dozen years there have been 18 studies showing the management of the Post Office is at fault. So if he wants to hold off a postal strike in July, surely the government must come up with positive proposals in addition to coming up with some changes that the workers will see are to their advantage.


Maurice Lamontagne: Mr. Speaker, since we are now in the process of conciliation, I think it does not rest with me to disclose the terms of the conciliation to the House of Commons. I would like to let the conciliation board perform its work and we will see later on.


SMALL BUSINESS
Mr. C. A. Gauthier (Roberval):: Mr. Speaker, my question is to the Minister of Employment and Immigration even though it relates to the policy announced by the Minister of State (Small Business) concerning a program of assistance to trainees in small businesses. This program will cost $5,400,000. I would like to know if the choice of trainees eligible for that assistance will be made by the Department of Employment.


Hon. Bud Cullen (Minister of Employment and Immigration):: What we will probably do, Mr. Speaker, is work in close co-operation with the Minister of State (Small Business); but at the same time, because training and education is in provincial jurisdiction, we will probably have to work under our Adult Occupational Training Act or one of the ongoing programs that we have with the various provinces.
May 29, 1978


Charles-Arthur Gauthier: Mr. Speaker, I have a supplementary question. Would it be right to say that the public servants in our regional offices are not aware of the existence of that program, as they have stated themselves, and that they do not think they will be able to help those trainees who have already been accepted in small businesses?


Jack Sydney George (Bud) Cullen: Mr. Speaker, I believe the minister announced the program just this past week. I am surprised that has not filtered down to individuals at the level of responsibility for administering it. Most assuredly they are working on the employment tax credit program. This is going well now and there is an opportunity here for the small businessman, in addition to the announcements that my colleague made, to work in that particular arena. There are many opportunities for people who want to become new members of the work force or to take training under the new programs or the old ones under the Adult Occupational Training Act.


TRANSPORT
John George Diefenbaker: Mr. Speaker, my question is directed to the Minister of Transport and concerns the recent announcement by the Canadian Grain Commission of increases in maximum service charges allowed for the grain industry. These changes could generate millions of dollars in new revenue for the grain companies, according to a report in the Western Producer of May 11, 1978. The article states that under the provisions, the companies may now levy against producers who deliver to country elevators, 9 per cent. It goes on to say:
Maximum elevation charges at terminal elevators will increase by close to 80 per cent and companies will be able to increase drying charges by 10 per cent.
I would ask the minister, what stand did the government take when the commission sat, relative to this matter? According to the same article in the Western Producer, the reason for the increase was that the grain companies needed higher revenues to fund upgrading and expansion of the grain handling system. Would the minister tell the House how much it is estimated will be taken from the farmer during the coming year by reason of these increases? That is the first question.


Hon. Otto E. Lang (Minister of Transport):: Mr. Speaker, I should make it clear to the right hon. gentleman that the Grain Commission is the primary responsibility of the Minister of Agriculture although, of course, my interest in it lies in the fact that the Wheat Board and grain farmers are very much affected by any such decision.
The Grain Commission made its decision after hearing representations in public forum from the grain companies
Oral Questions
about their increased costs and their future financial problems, as well as hearing from others representing farmers and farm organizations. It is important to note that these are maximum rates and that, in fact, the elevator companies have not been charging the maximum in recent time. The question of whether they will now is one involving their relative needs and perhaps the possibility of real competition among the elevator companies in order to keep the rates as low as possible. That is a good thing for the Grain Commission. On the other hand, the elevator companies, including the pools and others, will have to look at their over-all needs and costs to determine what their charges should be.


John George Diefenbaker: Mr. Speaker, I would need a microscope to understand that answer.


Some hon. Members:: Oh, oh!


John George Diefenbaker: These increases will run into many millions of dollars which will come out of the pockets of western farmers in particular who produce wheat. In view of the fact that the reason for the increases is, as already stated, that the companies are allowed to make these maximum charges so that they may be able to upgrade and expand the grain handling system, why should expenditures such as that for the benefit of all of Canada come out of the hide of the western farmers?
Will the minister recommend a suspension for the coming year? In addition, will he give the assurance that expenditures such as those for which this increase is required will come out of the pockets of all Canadians, and not out of the pockets of the western farmer who too often to the hon. gentleman is a forgotten man?


Otto Emil Lang: Mr. Speaker, the right hon. gentleman refers to these as increases. Again I emphasize, as I did in my earlier answer, that they are increases in the maximums which the elevator companies may charge. The question of what it will cost the farmer really depends on what the individual elevator companies, including the pools and others, decide is required for their own elevator operations, including their elevator construction. That is a simple answer.
It is clear that the costs of upgrading the system, referred to by the right hon. gentleman, are the costs of building new and additional elevators, part of the ongoing elevator system which traditionally, under his regime, as at all times, have been part of the ongoing costs of operating the elevator system. I hope the right hon. gentleman is not trying to mislead the public into thinking that in any way any of these moneys cover the very important injections of cash by the Government of Canada into the rehabilitation and rebuilding of the rail system. That is totally falling upon the Government of Canada, the people of Canada and the taxpayer, and in no way is part of any of these cost increases. I hope he also would agree that this rebuilding program for rail lines is a most important advance and an important contribution by the people of Canada.
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May 29, 1978
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John George Diefenbaker: Mr. Speaker, the hon. gentleman speaks of misleading. I am not going to try to compete with him in that regard.


Some hon. Members:: Oh, oh!


John George Diefenbaker: I simply ask him this question. What justification is there to take out of the pockets of the western farmer, at a time when the farmer is having great difficulty to carry on, in many cases, more money to fund upgrading and expansion of the grain handling system? Is that not something that should fall on the people of Canada as a whole, and not on the western farmer?


Otto Emil Lang: Mr. Speaker, again I emphasize that any increase in charges will be an increase by the individual elevator companies including, for instance, the Saskatchewan Wheat Pool. The right hon. gentleman may make his representations to these companies if he thinks they should do with less money than they believe they need for the ongoing maintenance of the elevator system. These costs are designed to cover those very things which have always been covered by the charges of grain companies for grain handling facilities.
The right hon. gentleman made no different policy in that regard while he was prime minister. These things have always been part of the costs covered by the grain companies, and that is the situation today as well. The difference is that unlike the do-nothing approach during his regime, we are now buying hopper cars and rebuilding rail lines.


Mr. Paproski:: Chippy!


FISHERIES
Mr. Alex Patterson (Fraser Valley East):: Mr. Speaker, my question is directed to the Minister of Fisheries and the Environment. In view of the fact that no agreement was reached with the United States fisheries officials on Friday, the deadline given by the minister regarding the opening of the Washington coast to Canadian fishermen, will the minister follow through with his threat given in the House on May 8 that "if the American side does not live up to the agreement, the Canadian side would not be bound to it either?


Hon. Rom6o LeBlanc (Minister of Fisheries and the Environment):: Mr. Speaker, the negotiators met on Friday; they exchanged messages during the weekend, and I met with our team just before coming into the House. The Canadian negotiators will be meeting with the committee of advisers involving fishermen and processors, etc., tomorrow and I will probably also meet with them. We are keeping this matter under constant review, but at the moment I am unable to make a definitive statement on this subject.


Alexander Bell Patterson: Mr. Speaker, I would like to ask the minister how long he expects the Swiftsure Bank to be closed to

Canadian fishermen. Will any compensation be forthcoming from the federal government to Canadian fishermen affected by the needless closure of this bank? I would point out that this bank is entirely within Canadian waters, and the United States demanded that it be closed to further fishing despite the fact that Canadian conservationists have stated that it need not be closed.


Mr. LeBlanc (Westmorland-Kent):: Mr. Speaker, the hon. gentleman, who is very familiar with these matters, will recognize that the problem of Swiftsure is mainly the interception of salmon either of American origin or heading for American rivers. Obviously, if the temporary agreement cannot be held together and if it cannot survive the present difficulties, then we will obviously reassess that closure.


AIR TRANSPORT
Elmer MacIntosh MacKay: Mr. Speaker, my question is for the Minister of Transport: it follows on questions put last week by the hon. member for Madawaska-Vic-toria and the hon. member for Cape Breton-The Sydneys. It concerns the future of Eastern Provincial Airways, the major regional air carrier in Atlantic Canada.
Can the minister tell the House whether he has under review the present subsidy arrangements which appear to be inappropriate and are causing Eastern Provincial Airways to sustain yearly losses and menacing its ability to service Atlantic Canada?


Otto Emil Lang: Mr. Speaker, if the hon. member will refer to the answers given to questions in the House, he will know that we have under consideration and discussion between Transport Canada and the several regional airlines the whole question of the various regional groups and the possibility of acquiring the Dash-7 aircraft and what the potential financial involvement of the government may be in any such solution. We are interested in providing good air service and in helping the regionals to give that service in some circumstances where they may find it difficult to do so on their own.


Elmer MacIntosh MacKay: Mr. Speaker, I appreciate the minister's answer, but could he go a little further and give the House some assurance that he has under immediate review the question of subsidies, which topic he did not answer? Is he also giving consideration to changes in the routes which could be utilized, provided Eastern Provincial Airways were given equitable consideration for the purchase of Dash-7 aircraft, which is something I believe will be of benefit not only to de Havilland corporation but to Eastern Provincial Airways as well? Is he giving consideration to serving the Halifax-Bangor run, something which has been a matter of concern for some time in eastern Canada?
May 29, 1978


Otto Emil Lang: Mr. Speaker, obviously, when I referred to the possible involvement of the government, it was very clear that I would include the possibility of subsidies which may be either in relation to the acquiring of aircraft or in relation to ongoing operations. I would not specify that one is better than the other, necessarily. Indeed, I would not say that either of those is necessary. The point of our discussions at this time is to determine whether any such help is required or, instead, whether good utilization of aircraft by a sensible arrangement of routes can provide all that is needed. That is what our discussions are about.


APPLICATION BY EPA FOR INCREASED SUBSIDIES
Mr. Maurice A. Dionne (Northumberland-Miramichi):: Mr. Speaker, my supplementary question is directed to the Minister of Transport. Would the minister advise the House whether Eastern Provincial Airways has recently made application to the department for increased operating subsidies? If so, will these subsidies be used to provide the additional intraAtlantic service which the hon. member was referring to in his question?


Otto Emil Lang: Mr. Speaker, in the course of the discussions we have been having, the airlines, including EPA, have indicated their requirements in their view. We are analysing some of these requirements. We could label it as a request for increase, but we want to be sure of the over-all picture of requirement, knowing how many routes are involved.
I may say, in answer to the earlier question, that while we are looking at specific routes, I would not want, today, to particularly touch on one or another because very often applications to the Canadian Transport Commission are also involved.


SOCIAL SECURITY
Mr. Stanley Knowles (Winnipeg North Centre):: 
Stanley Howard Knowles: Mr. Speaker, I noted the statement by the minister that if we would propose cuts in some other areas, that money could be available. I can tell her that there are places, especially in some other departments, where cuts would be highly desirable.


James McPhail Gillies: Name them.


Stanley Howard Knowles: National Defence.


Some hon. Members:: Oh, oh!


Stanley Howard Knowles: In view of her suggestion that a study is being made of a possible rearrangement of fiscal planning such as income tax credits, may I ask whether a serious attempt will be made to do something in this area in this parliament, bearing in mind it is not just those between 60 and 65 to whom she referred who are in trouble, but all senior citizens, particularly unattached women.


Miss Begin:: Mr. Speaker, the hon. member knows that questions touching fundamental changes in fiscal policy should be directed to the Minister of Finance. He also knows, because 1 have informed the House on a few occasions, of the research work being done in my department, exploring all tools that can eventually be used for redistribution and income supplementation program development. That, of course, touches upon the fiscal dimension of allowances to older people.


FINANCE
Miss Flora MacDonald (Kingston and the Islands):: Mr. Speaker, my question is to the Minister of Finance. At his press conference last week, the Prime Minister indicated that he would be willing to meet with the premier of the province of Quebec to try and resolve the sales tax impasse, provided the government of Quebec put forward a proposal for discussion.
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May 29, 1978
Oral Questions
Now that the Quebec minister of finance, Mr. Parizeau, has put forward such a proposal, one similar to that put forward earlier in the week by Claude Ryan, the Liberal leader of the province of Quebec, is it the intention of the Prime Minister or the Minister of Finance to modify their rigid position regarding the provincial sales tax and to meet with their counterparts in the province of Quebec to discuss the Parizeau proposal?
[ Translation]


Hon. Jean Chretien (Minister of Finance):: Mr. Speaker, the right hon. Prime Minister has repeatedly stated that we were prepared to discuss with the provincial government. This is the first time it gives us any sign of life, and it did so through a press conference rather than through direct channels. We are still willing to meet with its representatives. This is the first time since budget night, that they have given us any sign of life; if they want to meet with us we will wait for their call or their communication. I read, like the hon. member, Mr. Parizeau's position and I am happy to see that people now realize that it was our right and prerogative to act as we did, that is to reduce the federal tax to compensate for the money which Quebec did not want to accept. Whether that would be in 1977 or 1978, as I said two weeks ago, it is a question of terms and we are quite ready to discuss them with anybody. In any event, our intention is to reduce federal income tax for Quebec taxpayers.


Flora Isabel MacDonald: Perhaps the minister would use the forum of the House of Commons to indicate whether he would be prepared to meet with his counterpart from the province of Quebec. Since the Parizeau proposal recognizes the provincial right to set its own priorities with regard to reductions in provincial sales tax, has the Minister of Finance contacted any of the provincial ministers of finance, particularly the minister of finance of the province of Manitoba to offer this same course of action rather than the one which was dictated to them on the night the budget was brought down?


Joseph Jacques Jean Chrétien: Mr. Speaker, that is a very bad misrepresentation of the situation. For three weeks before the budget I had discussions with the ministers of finance. I told them I would like to hear from them, yes or no, the day of the budget. All of them complied. Every one of them had the plan approved by their own cabinet before calling me back. Only Quebec refused to go along with the gentlemen's agreement whereby we were to be contacted the night of the budget.
As far as talking with Quebec is concerned I said in French a minute ago that I have been waiting since April for the Quebec government to show some compromise. I have made three propositions to them. Never have they made any counter-proposition. All along I have respected the right of the provinces to do what they want in their budgets, just as I have kept the right to do what I want in my budget, and that is to cut federal income tax.


REQUESTED WITHDRAWAL OF BILL C-56
[Stage Direction]
Mr. Heward Grafftey (Brome-Missisquoi) Mr. Speaker, at the risk of being labelled an unrepentant separatist bent on the whole destruction of my country-
[Stage Direction]
-I should like to put a supplementary to the Minister of Finance. In view of the statement Mr. Ryan made last week, and that of Mr. Parizeau over the weekend, and the questions put in the House of Commons this afternoon by the hon. member for Kingston and the Islands, I should like to know whether the Minister of Finance is now willing to withdraw Bill C-56, on the sales tax, for a month, and accept the amendment suggested by the opposition in order to renegotiate a sales tax agreement with the province of Quebec?
Joseph Jacques Jean Chrétien: Mr. Speaker, I can see how embarrassed the hon. member is, since on Thursday last, when the Progressive Conservative party said it was willing to send a cheque directly to the Quebec government, on the very same day the proposal made by Mr. Ryan said nothing of the kind. His proposal was to the effect that we were completely entitled to reduce our income tax, which is what we are now doing. The provincial government is perfectly entitled to do what it wishes with its sales tax, as Quebec did when it acted unilaterally according to its own priorities.
At this point, we want to reduce income tax, as we did in the other provinces; it is strictly a matter of ways of achieving this. But I can understand the embarrassment of the hon. member who made a proposal to the Parti Quebecois. He cozied up to that party and on the same day they are told it is no longer a cheque they want, for they are willing to increase their own taxes, and that we have been saying for several weeks.


PUBLIC SERVICE
Mr. Lincoln M. Alexander (Hamilton West):: Mr. Speaker, I would like to direct a question to the President of the Treasury Board based on a memo in his department dated November 17, 1977. It reads as follows:
The recent audit of personnel administration position classifications showed 262 positions of 1,176 positions reviewed were mis-classified, for an error rate of 22 per cent. This situation is serious as the relativity is threatened throughout the PE group if no corrective action is taken. Such action must be effective and immediate if the group is to retain its credibility within the public service.
What effective action has the President of the Treasury Board taken with respect to this very unacceptable situation? I ask this question because apparently many within this group who were overclassified, to the tune of 19.3 per cent, are responsible for classifications in the public service. What action has the minister taken in this regard?
May 29, 1978


Hon. Robert K. Andras (President of the Treasury Board):: Mr. Speaker, there will have to be further action taken with respect to the establishment of the accuracy of the figures. I fully agree with the comments of the hon. member as far as they go. We are conscious of this situation. The diagnostic approach to that particular occupational group was the subject of a separate study. The overclassification is approximately as the hon. member has indicated. We want to do what we call a desk audit, which includes interviewing the people concerned, before we take final action in correcting the overclassification.


Lincoln MacCauley Alexander: Mr. Speaker, the only figure the minister questioned is the 19.3 per cent. Is it the intention of the minister to rewrite the standards to make all those who were wrongly classified appear correctly classified? I ask this question because this, as well, is a procedure which is spelled out in the memo, which states:
Phase VI, Implementation of change-amendment of manual as required.
This is supposed to be in effect from May 15 until October
1.	Is the minister contemplating rewriting the standards so that what looked bad at one time will now appear to look good? Is this where we are heading?


Robert Knight Andras: No, Mr. Speaker.


AIR TRANSPORT
Hon. Alvin Hamilton (Qu'Appelle-Moose Mountain):: Mr. Speaker, my question is directed to the Minister of Transport: it relates to the tragic air crash at Cranbrook, British Columbia, which we were discussing in the House last week.
The Ministry of Transport has regulations in effect which make every commercial air carrier carry insurance on the lives of all passengers. Now that the Cranbrook air crash hearings are over and it is very clear that no passenger was to blame, would the minister follow up the regulations of his department and direct the insurance companies, which have been paid for this insurance, to make payments to all passengers so as to honour their contracts which the passengers paid for when buying their tickets?


Otto Emil Lang: Mr. Speaker, I would require a legal opinion as to whether the regulations and my powers go as far as the hon. member seems to indicate. I know that the matter is under very serious discussion at the moment among the various parties involved, and I am not at all sure that I have a right to interfere with those discussions at this point in time.


Francis Alvin George Hamilton: Mr. Speaker, in view of the minister's statement of government policy that the government has no responsibility to see that its regulations are carried out, I would like to ask a supplementary question. In view of the fact that the lawyers in this case are advocating that the passengers be paid, in order to take the
Oral Questions
responsibility from the insurance companies, would the minister now reconsider the policy of the government and go back to the original purpose of the policy, which was that the insurance companies should meet their contractual obligations and pay the passengers when death, not negligence, is proved?


Otto Emil Lang: Mr. Speaker, obviously, I did not say that we had no responsibility with regard to our regulations. There can be no doubt about that. But the question is what those regulations require. That may well raise certain legal questions as to responsibility which are not answered by the existence of the regulations. I must have that legal opinion before I can take any further position.


HEALTH AND WELFARE
Mr. Lome Nystrom (Yorkton-Melville):: Mr. Speaker, my question is for the Minister of National Health and Welfare. It concerns the recent announcement in the United States that the government there is going to move to lower the amount of sodium nitrite in bacon because of the possible connection of nitrites with cancer in laboratory testing.
I would like to ask the minister whether she is aware of the move in the United States and, if she is, why is the Canadian government not following suit by putting restrictions on the amount of sodium nitrite in bacon in this country?


Monique Bégin: Mr. Speaker, I did not hear of any recent development in the United States on that question. The Americans do have a different approach from ours, and if the hon. member would permit, I would like to inquire and give a full answer in the coming days.


Lorne Edmund Nystrom: Mr. Speaker, the United States will be moving to reduce the amount of sodium nitrite to 120 parts per million by June 15, and to 40 parts per million by next year. Meanwhile, in Canada the legislation allows 150 parts per million. I would like to know whether the minister will undertake to check with her officials to see whether Canadian officials can look into the issue in this country with a view to making the same move the Americans have already made, which is very important.


Monique Bégin: Mr. Speaker, we do not develop Canadian policy simply by copying the moves made by the United States. I would like to stress that, and also to speak of the particularly good work done by the health protection branch of my department. As I said in my first answer, I would want to look at the recent developments in the United States and to see if there is any need for change in Canada.

May 29, 1978
Business of the House ENERGY


FUNDING OF MARITIME ENERGY CORPORATION
Mr. J. P. Nowlan (Annapolis Valley):: Mr. Speaker, my question is directed to the Minister of Energy, Mines and Resources. I would like to know if there has been a resolution of the previously unresolved question of a federal commitment to the Maritime Energy Corporation in terms of financing and funding. The premiers met in Annapolis Valley over the weekend. They enjoyed the apple blossoms and other natural beauties. I wonder, also, if they have requested a meeting with the minister so that this question can be resolved and so that Fundy tidal power or Pointe le Preau will not be held up?


Hon. Alastair Gillespie (Minister of Energy, Mines and Resources):: Mr. Speaker, I have not yet received any communication from the premiers asking for a meeting. In reply to the pitch for tourism in the maritime provinces by the hon. member, I would be very pleased, however, to receive an invitation to join them down there and to try to advance the Maritime Energy Corporation and, of course, phase two of the Fundy tidal power project.


John Patrick (Pat) Nowlan: Mr. Speaker, I have a supplementary question for the Minister of Finance. Relatively well-substantiated reports indicate that, while at some time in January the minister made a statement of principle regarding a federal commitment to the funding of this energy corporation, the Department of Finance now feels that this is not the time to make any further financial commitments.
Has this question been resolved between the Department of Finance and the Department of Energy, Mines and Resources so that the premiers can have a meaningful meeting and come here and/or hear from one of the ministers regarding a fundamental commitment along the lines promised by the minister last January?


Alastair William Gillespie: Mr. Speaker, the hon. member may be alluding to a press report which I believe was carried in some of the newspapers over the weekend. I have not seen this press report but I have been told about it. I am not sure on what it was based, because the Maritime Energy Corporation is moving forward. The articles of association in principle, in outline terms, were agreed among the three premiers and myself earlier this year. We agreed that we should form the corporation. Once the corporation is formed, then the money can be put in. But I am sure the hon. member would agree that the corporation should not be funded until it is set up.


BUSINESS OF THE HOUSE
Walter David Baker: Mr. Speaker, I would like to raise a point of order with respect to the business of the House concerning an exchange which took place on Friday dealing with the bill which was introduced that day by the
[Miss B^gin.l
Minister of Veterans Affairs, Bill C-58, which would increase pension benefits for veterans.
Just so the government House leader will have an opportunity to consider his position with respect to that bill, I want to inform him that the official opposition would be prepared, if this were acceptable to the government House leader, to allow that bill to proceed through all stages within a period of one hour. If that is not acceptable to the government House leader, let me point out to him that we would be prepared to deal with second reading in very short order this afternoon, or this evening, in order that it could go to the Standing Committee on Veterans Affairs which, I understand, is sitting tomorrow.
In any event, I want to assure him that it is not the intention of the official opposition to impede the proceedings with respect to that bill and the passage of that bill in any way that would impede the House in dealing with the tax bill about which my hon. friend is anxious. I am sure it is important for him to know that it is our intention to allow the government and the House to deal with this bill without in any way impeding the passage of the tax bill.


Stanley Howard Knowles: Mr. Speaker, I rise on the same point of order. May I say that I suggested a couple of times that we could deal with that bill in half an hour, so I am certainly prepared to agree to deal with it in an hour. As the hon. member for Grenville-Carleton (Mr. Baker) has said, perhaps we could put it through all stages at that time, but if there is any desire to send it to the standing committee let us give it second reading soon, because the committee meets tomorrow night. If the government House leader is not prepared to respond in the affirmative on that point right away, perhaps we could have an inter-party discussion about it some time in the next half hour.


Allan Joseph MacEachen: Mr. Speaker, I appreciate the comments that have been made with respect to the veterans legislation. It would be difficult to call the bill today in the absence of the Minister of Veterans Affairs (Mr. MacDonald), but I will be pleased to discuss the matter with my friends in the opposition, and I hope that in dealing with that bill I will be able to secure some understanding on how we can deal with other major measures that I have put before the House with the view to terminating this part of the session by the end of June. I can understand the readiness with which my hon. friends will deal with the veterans legislation, but there is other legislation, including the tax bill, which must be dealt with.


Some hon. Members:: Oh, oh!


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
May 29, 1978
Mr. Yvon Pinard (Parliamentary Secretary to President of Privy Council):: Mr. Speaker, the following questions will be answered today: Nos. 167, 349, 792, 1,279 and 1,307.


Mr. Friesen: 1.	What is the average salary level of all employees in the Public Service?
2.	What is the average salary level for employees in each Crown corporation?


Yvon Pinard: 1. The average salary of all active employees in the public service under schedule 1, part 1 of the Public Service Staff Relations Act, as of December 31, 1977 is $14,774.
2.	Air Canada, $17,700; Atomic Energy Control Board, $19,506; Atomic Energy of Canada Limited, $17,892; Atlantic Pilotage Authority, $23,022; Canada Deposit Insurance Corporation, $14,000; Canadian Arsenals Limited, $15,968; Canadian Broadcasting Corporation, $17,011; Canadian Film Development Corporation, $14,955; Canadian National Railway, $15,606; Canadian Saltfish Corporation, $16,397; Canadian Wheat Board, $13,094; Cape Breton Development Corporation, $15,560; Central Mortgage and Housing Corporation, $15,656; Crown Assets Disposal Corporation, $14,061; Defence Construction (1951) Ltd., $17,280; Economic Council of Canada, $19,113; Eldorado Nuclear Limited and Eldorado Aviation Limited, $17,275; Export Development Corporation: By tradition and as a matter of commercial principle Crown corporations have not been required by parliament to answer detailed questions on their administration and operation, and in the case of Export Development Corporation, the Export Development Act places the responsibility for such matters on its board of directors. Farm Credit Corporation, $17,572; Federal Business Development Bank, $14,262; Freshwater Fish Marketing Corporation, $13,950; Great Lakes Pilotage Authority Ltd., $30,852; Laurentian Pilotage Authority, $18,491; Loto Canada, $16,610; Medical Research Council, $18,200; National Battlefields Commission-Administrative Staff, $14,151; General Labour and Trade, $5.98/hr.; National Capital Commission, $15,061; National Harbours Board, $12,237; National Research Council of Canada, $20,136; Northern Canada Power Commission, $15,510; Northern Transportation Company Limited, $16,400; Pacific Pilotage Authority, $18,561; Petro-Canada, $19,000; Royal Canadian Mint, $14,000; St-Lawrence Seaway Authority, $15,650; Science Council of Canada, $22,000; Seaway International Bridge Corporation Ltd., $15,845; Teleglobe Canada, $16,125.


Mr. Caouette (Temiscamingue): 1.	Did the RCMP pay witnesses to provide testimony in court cases during the period 1967 to 1977 and, if so, how many?
2.	What was the total amount spent by the RCMP on payments for testimony?
Order Paper Questions
3.	Were such payments made with the knowledge and consent of the respective Ministers of Justice?
4.	Were the presiding judges in the relevant court cases aware that witnesses were being paid by the RCMP to testify?


Hon.   J.-J. Blais@Solicitor General: 1. The RCMP does not "pay witnesses to provide testimony in court cases" per se. Witnesses are paid witness fees in accordance with statutory provisions with such payments normally being handled by clerks of the court. On occasion, however, these payments are made by the RCMP and the moneys recouped from the applicable level of government. In exceptional cases, where in the interests of the witness it is deemed necessary to do so, the RCMP has paid for relocation and living expenses in order to protect him and/or his family from recrimination. The RCMP does, of course, pay awards to informants for services rendered in the course of investigations which can and often do culminate in charges being laid. In some cases, although not the usual practice, the informant may be called upon to testify in court.
2,	3 and 4. Not applicable.


Mr. Caouette (Temiscamingue): 1.	Does the RCMP relocate its witnesses and is it normal practice to promise them the downpayment on a house and, if so, in what amount?
2.	(a) Is it common or normal practice to give witnesses cash to relocate themselves (b) is their safety guaranteed and (i) if so, in what way (ii) if not, is the cash for relocation a payment for services?


Hon.   J.-J. Blais@Solicitor General: 1. Yes, on occasion and as required, (a) No. (b) Not applicable.
2.	(a) No. (b) Yes, if considered necessary; (i) the procedures taken to ensure safety would be rendered less effective by public disclosure; (ii) not applicable.


Mr. Cossitt: 1.	What amount was spent by the government in each of the past five years for the construction of government owned buildings, structures of any kind whatsoever, highways, etc., in the Province of Quebec and what was the total for the five years?
2.	What is the budgeted or estimated amount that will be spent for such things in the fiscal year (a) 1978-79 (b) 1979-80?
3.	What was the figure in each of the past five years for buildings, structures of any kind whatsoever, etc., rented by the government on a lease-back basis within the Province of Quebec and what was the total for the past five years?
4.	What is the budgeted or estimated amount that will be spent for such things in the fiscal year (a) 1978-79 (b) 1979-80?


Hon. Judd Buchanan (Minister of Public Works and Minister of State for Science and Technology):: 1. 1973-74, $36,405,000; 1974-75, 55,913,000; 1975-76, 97,695,000; 197677, 117,682,000; 1977-78, 173,241,000 (estimated); total, $480,936,000 (estimated).
2.	(a) 1978-79 An estimated amount of $190 million will be spent on construction of government owned buildings, structures, highways, bridges, etc. This amount includes all new construction/acquisition costs including consultants costs and the cost of land purchases, (b) 1979-80 Figures not available at present time.

May 29, 1978
Order Paper Questions
3.	Public Works Canada is not involved in lease-back projects in the province of Quebec. The department has two lease purchase projects in the province of Quebec-Les Ter-rasses de la Chaudiere and Place du Centre-and expenditures for these are as follows: Prior to 1976-77, nil; 1976-77, $2 million; 1977-78, $12 million (estimated); Total, $14 million (estimated).
4.	The budgeted amount for the above projects for 1978-79 is $35 million; no budget has yet been established for 1979-80.


Mr. Jones: 1.	Is the Canadian government aware that the Soviet Union's breeding of killer viruses and microbes, and if so, what are the specific names of these? What are the details of their effects?
2.	Is the Canadian government aware that the Soviet Union stocks several kinds of chemical warfare agents, and if so, what do they include? What are the details of their effects?
3.	How well prepared is Canada for any serious influx of dangerous diseases? What are the details of our operations in this regard?


Hon.   Monique@: 1. Various bacteria and viruses are propagated in specialized laboratories in a number of countries. Some of these agents cause severe and frequently fatal disease in humans, as for example, smallpox (variola virus), viral encephalitis (western equine encephalitis, eastern equine encephalitis, St. Louis encephalitis), plague (Yersinia pestis), and viral hemorrhagic fevers (ebola and marburg viruses). One purpose of such laboratory propagation is in attempts to isolate and identify, from clinical specimens, the causative agent of disease in a human; another reason is for the preparation of the reagents required for the laboratory serological diagnosis of such diseases. We have no information that the Soviet Union is propagating these or similar agents for other purposes. The symptoms of these different diseases are varied but the clinical manifestations of some such as smallpox, viral encephalitis and plague are well known. The hemorrhagic fevers are associated with a variety of symptoms, predominantly severe headache, sore throat, muscle pain and internal bleeding.
2.	It is probable that a number of countries have experimented with different kinds of chemical warfare agents. These range from agents such as lacrimators (tear gases), to those causing skin blisters and burns (vesicants), to those causing rapid death (nerve gases based on organo-phosphated).
3.	It has been recognized that with increasing international travel there is also an increased risk of importation of dangerous diseases previously unknown in this country. A working party set up by the Department of National Health and Welfare has prepared a Canadian contingency plan for a co-ordinated response to national communicable disease emergencies. It is also known that the control of dangerous imported and domestic diseases depends upon the availability of a laboratory with facilities which permit accurate early diagnosis under conditions which provide maximum protection to the laboratory staff and to the general public and a hospital isolation facility. The federal government is committed to the

construction of such a hospital isolation unit and a maximum security laboratory. In addition, there is extensive contact between federal and provincial governments to assure the required acquisition of associated portable isolation equipment.


Yvon Pinard: Mr. Speaker, if question No. 751 could be made an order for return, this return would be tabled immediately.


Mr. Howie: Since January 1, 1977, what amount was spent on interior landscaping by the Department of Public Works and on what projects?
Return tabled.


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


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed from Friday, May 26, consideration of the motion of Mr. Chretien that Bill C-56, to amend the statute law relating to income tax and to authorize payments related to provincial sales tax reductions, be read the second time and referred to the committee of the whole, and of the amendment (Mr. Broadbent) (p. 5548).
Mr. Jake Epp (Provencher):: Mr. Speaker, in its editorial on May 20 the Winnipeg Free Press said the following of the federal budget:
It is now starkly clear that the federal government has bungled the sales tax announced in the April 10 budget.
That editorial comment is not exclusive to the Winnipeg Free Press or is it a viewpoint exclusive to western Canada. That viewpoint is one that is generally held by Canadians who have studied the debacle which has resulted from the April 10 budget, and the only defenders of the position and the counter-
May 29, 1978

positions taken by the federal government have been the Minister of Finance (Mr. Chretien) and his government.
It has become clear that the budget was rushed. Now the government, 1 think quite justifiably, might say that the opposition and the various critics asked for a budget especially in view of the fact that we were approaching a spring or early summer election, and in order to overcome the fact that there was no economic package on the order paper the government came forward with a budget. I, as one member of the House, do not criticize that fact, but I believe that the government, in attempting to bring in the budget and to keep its options open so that an election could be called by the Prime Minister (Mr. Trudeau) by the end of June or the beginning of July, looked upon the budget as election bait. The Minister of Finance has gone to great lengths to explain that the budget was a responsible budget and that he had avoided the obvious attempt which might have been made to bring in election goodies on the eve of the calling of a federal election.
When one looks at the budget, and the machinations of the government subsequent to bringing in the budget, one comes to the conclusion that in fact it was election bait. I do not think so only because of the Quebec situation. I say that because of what happened in the province of Manitoba and also in the province of B.C. A point that has been lost in the public debate is that the province of Manitoba had scheduled its budget for the evening of April 10. Because of the time zone in which Manitoba finds itself, that province is one hour behind Ottawa, and the minister of finance of Manitoba when he was rising to make his budget address was not 100 per cent certain that the proposal which had been made to him by the federal finance minister was going to appear in the federal budget. Obviously, the tax room, and the economic activity which is generated in Manitoba with its population of one million people, must be husbanded very carefully by the minister of finance of that province. So when he rose to his feet in the Manitoba legislature that evening he was not 100 per cent sure how his budget would be affected by the federal budget, and I will speak about that a little later.
Things have gone so badly since the April 10 budget that the following article appeared in the Montreal Star of Wednesday, May 17, written by W. A. Wilson. I understand that in the past Mr. Wilson has written some favourable comments about the Liberal government. He wrote:
Mr. Chretien goes from political naivete to inconsistency. This has become theatre of the absurd.
I imagine that a fair amount of theatre always surrounds the House of Commons, but I suggest the Minister of Finance has taken the leading role and he is probably waiting for an Oscar award for the role he has played in further dividing this country.
There are positive points in this budget, and I want to mention some of them. One is the matter of capital gains. Let us go back to the budget of March, 1977. After representations from both sides of the House, and from farm groups and organizations concerned with small business in Canada, pressure was applied on the government to remove the capital
Income Tax Act
gains tax so that when a farm or small business is sold, the money could be rolled over for the purchase of a larger unit, either a farming unit or a small business.
After listening to the former minister of Finance, who was gone to his just reward in Toronto, at the time of the March, 1977, budget we came away with the understanding that what had been proposed was that a farmer could sell his farm and roll over the return of that farm into a larger unit and not pay capital gains. In fact he would be deferring capital gains until such time as that farm would be disposed of ultimately by him or his heirs. During the debate on the March, 1977, budget, at no time was it suggested that it was in any way different than I have just explained.
Then what happened? A regulation was drafted in the Department of National Revenue. It was approved by the only member which Manitoba had in the cabinet, who also went to his reward. The drafted regulation in fact made an absolute mess of the proposal. What the regulation said was this: for example, if a farmer was selling his dairy operation and buying a grain farm with the proceeds from that sale, in fact he was not involved in the same farming operation any longer.
Anyone who has lived on a farm, or anyone who represents a rural riding, especially those with mixed farming backgrounds, knows that farmers might sell their egg operations and buy more land with the proceeds. This government, in its wisdom, and to make sure no Canadian makes a profit from the farmers' hard work, brought in the regulation. The hon. member for Battle River (Mr. Malone) brought cases to the attention of the government, as well as myself. Those cases involved farmers who had sold their farms, bought larger units, and were assessed for capital gains. The government has a total and absolute misunderstanding of the farming community.
Thank goodness we now see the March, 1977, budget reflected in the April, 1978, budget in the manner in which it was presented a year ago. That is a breakthrough. Why it had to take another year I do not know. I implore the government to inform those farmers and small businessmen, who were assessed capital gains during the intervening months, that those capital gains will not be assessed.
Another positive proposal in the budget is in the area of research and development. Research and development have been a pet project of mine in the House for some time. I have talked about the tantalum mine in eastern Manitoba where tantalum, lithium and cesium are located. In fact the largest known supply of cesium is located there. A week or ten days ago the major shareholders in that mine sold their shares to Hudson Bay Mining and Smelting. Hudson Bay Mining and Smelting is a corporate citizen in Manitoba which we all respect. Its history in that province is a long standing one. Its corporate awareness of the needs and the services provided to people in its employ is second to none.
Hudson Bay Mining and Smelting has now bought that mine, and that sale must go before FIRA. I will be making

May 29, 1978
Income Tax Act
representations this week to that agency in the hope that it will approve the sale and transfer of those shares. When the former minister of mines and resources in Manitoba, the honourable Sid Green, heard about Hudson Bay Mining and Smelting purchasing this mine, becoming involved in its operations, and creating new jobs, he said that the minute the NDP came back into power in Manitoba it would be nationalized.
We have the example of the potash industry in Saskatchewan and the flight of capital which resulted there. Frankly, we are deeply concerned that outbursts such as that should not affect us adversely, that the mine will operate once again, and that employment will be forthcoming. The Cesium operation needs much more than research and development.
The focal point of the budget is the federal government's proposal for reducing provincial sales tax and reimbursing the provinces for their lost revenues during that period of time. As every hon. member knows, generally the proposal was a 2 per cent reduction, to be reimbursed by the federal government, contingent upon the proviso that the provinces would reduce their sales tax by an additional 1 per cent for six months. This was modified in Saskatchewan and British Columbia to a 2 per cent over-all sales tax reduction which extended over a period of nine months rather than six months.
An interesting thing developed with this plan. Manitoba proposed to reduce its sales tax by 2 per cent. Then it would take an additional 1 per cent, which would amount to between $20 million and $21 million, and use that amount of revenue for the creation of direct jobs. That province has been greatly concerned, as a change of administration took place, about getting the productive capacity of Manitoba moving once again, bringing about the encouragement of industry and permanent job creation. As everyone knows, that 1 per cent was totally provincial revenue. It was a provincial contribution. There was to be no reimbursement from the federal government.
Last week the hon. member for Kingston and the Islands (Miss MacDonald) and myself directed questions to the Minister of Finance. We found out that the Minister of Finance accepted a number of counter proposals from various provinces, and at least asked the other partners in Confederation whether these counter proposals would be acceptable. What did he do with Manitoba? He rejected it out of hand. This program was totally provincially funded. It was a program for job creation. Every person, regardless of political stripe, would admit that program was totally within provincial jurisdiction. He rejected it out of hand. He did not even have the decency to ask the other partners in Confederation whether that program would be acceptable.
Obviously the first difficulty is the encroachment on provincial jurisdiction. The hon. member for Kingston and the Islands brought this point out clearly in the House. I do not believe it is necessary for me to repeat it, even though with this government perhaps I should change that view. The encroachment on provincial jurisdiction is another step toward dismantling Confederation as we know it. It was a blackmail of the provinces, especially the province of Manitoba which has only

one million people. Manitoba is attempting to regenerate growth and investment confidence. This was a serious blow. If Manitoba, for example, did not accept the proposal, the taxpayers of that province would have been put in a position where they would have been paying federal taxes to reimburse other provinces for the proposal. I have referred to the taxpayers of Manitoba. I do not make a distinction between federal and provincial taxpayers because they are the same persons.
The Minister of Finance knew he had the provincial governments over the proverbial barrel. The proposal did not treat the provinces equally. I have already said that he rejected the Manitoba proposal out of hand. The Alberta case has been well documented, and I do not have to speak for the Alberta members here. They have done an excellent job of representing the wishes of their province, even though I must admit, after hearing the Minister of Industry, Trade and Commerce (Mr. Horner) last week, I am not so sure any more.
Alberta went along with the proposal as long as it was a provincial sales tax rebate proposal. In the negotiations between the federal government and the government of Quebec this became a federal income tax rebate proposal. What is the difference between an Albertan and a Quebecer who are earning the same amount of money, have the same expenses, and the same needs to provide for and educate their families? Why should the Alberta family not get the same benefits? I do not see any reason why the Alberta family with the same income and needs should not be equally entitled to the rebate which the Quebec family will receive.
The Minister of Industry, Trade and Commerce attempted to defend the proposal in the House last week. He mentioned, for example, that other provinces had much higher tax rates than does the province of Alberta. In fact he pointed out that Alberta's provincial income tax rate was only 38 per cent of the federal rate, which is less than in other provinces. The only conclusion I can draw from his speech, and Albertans will, I am sure, correct me if I am wrong, is that Albertans can in fact afford to pay more. He was putting forward the proposition that they were not paying their equal share.
I understand, after speaking with Albertans, that there is a former member of this House who went to his reward in the other place. For a while he was the minister of agriculture for the Trudeau administration. He said to Albertans, before he crossed the floor, that he was going to Ottawa to present Alberta problems to the federal government. Before long he was not presenting Alberta problems to the federal government, but rather he was going back to Alberta telling Albertans how good the federal government was for them. Being the shrewd people they are, Albertans did not buy that and did not elect any Liberals. This gentleman, of whom I speak, received his reward in that other place.
What is needed in the budget is a return to an equitable position for all Canadians. Just to illustrate the inequity which has in fact taken place on an individual basis, the budget presented on April 10 would allow someone who was resident
May 29, 1978

in the province of Quebec in 1977 a federal income tax rebate of $85 maximum, providing he paid income tax. If that person had moved to another province in 1978 he would also receive the benefit of the 3 per cent sales tax reduction in the province to which he or she had moved. However, the Albertan who might have moved since 1977 to the province of Quebec would not get the benefit of that rebate. That is just one of the inequities, and there are others.
I have already pointed out that everyone in Alberta is not rich. Not everyone in Alberta has an oil well in their backyard next to the swimming pool. That is just not realistic. They are ordinary Canadians like the rest of us. The Minister of Finance has created a special status for some people, and once you give special status to any group you give less than equal status to someone else.
Let me return to the Manitoba situation by reading from the budget statement of the hon. Don Craik. It was made approximately one hour after the federal budget was brought down in Ottawa. Perhaps this will clarify some of the questions in relation to consultation. Mr. Craik stated:
It has been barely two weeks since the provinces were first advised that the federal government might be prepared to underwrite a portion of a provincial sales tax reduction ... and confirmation that the plan would proceed only came late last week. As members will appreciate, negotiations were quite intense during that period, and, in fact, further discussions will have to take place to resolve a number of outstanding details. We would have preferred more time to negotiate possible variations in the size, term and selective application of the abatement.
I think that is very clear, and it comes from a province that accepted the proposal.
This is a federal country, a partnership of equals, so let us begin treating them like equals and not like individuals we can browbeat, blackmail, and put over the proverbial barrel. This type of victory is a hollow paper tiger, but the losers are the Canadian people.
What should have been in the budget? I for one would favour tax cuts, and in that sense I think the Minister of Finance took the right approach. However, in our tax cuts we must provide more room for the provinces. This would not be a dismantling of central government. Some critic of that statement might immediately suggest that we are trying to dismantle the central authority, but that is not what I am suggesting.
In my brief experience in municipal affairs I discovered that municipalities are being required to deliver more and more services to the local residents within their jurisdictions, but they do not have the ability to increase land taxes because such increases add to the cost of housing and the cost of doing business, so that enterprises become non-competitive. Municipalities receive per capita grants in aid from the provinces. The provincial governments have been strapped in respect of getting sufficient revenue to pass on to the municipalities while at the same time carrying on the provincial obligations of each province. What is needed is more tax room available to the provinces in order that money can be spent for projects of local concern.
One of our difficulties today stems from the fact that the average taxpayer does not identify with some of the grandiose
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programs that emanate from Ottawa. However, he does identify with local projects that improve the quality of life.
What has happened in the last ten years is that both the provinces and the municipalities have not had the tax room in which to provide and deliver services needed locally. The budget did not do anything to address itself to the deficit. This year the government projects a deficit of $11.5 billion, to be added to the deficit of roughly $8.5 billion of a year ago.
The federal government has said that it will reimburse the provinces with the lost revenue they would have received if the sales tax proposal had not taken effect. The fallacy here is that in dividing taxpayers into provincial taxpayers and federal taxpayers, when I pay my federal taxes the province does not say to me, "Look, you have already paid your federal taxes, you do not have to pay your provincial taxes." Municipalities also want their share, and here we are speaking about the same taxpayer.
If the federal government had reduced its amount of spending by the total amount of money it was reimbursing to the provinces, the program would have had more credibility. I notice that the parliamentary secretary thinks that that is passing strange, and in fact he thinks it is funny. However, we cannot continue with the amount of deficit spending this government is piling upon future generations. It cannot continue, because the cost of servicing the debt is becoming a major component in our federal public spending.
The nature of the beast is that governments do not want to cut back for they fear the wrath of the taxpayer. But what is our alternative? We can go back to the money markets and obtain money through foreign borrowing, which in turn increases the amount of servicing the debt, thus putting additional pressure on the dollar. This is where we are right now, and every Canadian is paying for the legacy of this government at this point in time.
I say to the government: rhetoric is no longer needed, show us action. Where is the government willing to cut back, or does it suggest that an $11.5 billion deficit for this year, on top of an $8.5 billion deficit last year, is keeping a good account of Canada's fiscal position? For too long the federal government has thought that it could spend money ad infinitum and reap the rewards politically. Now Canadians, not the government, are reaping the results of a government that has never put its financial house in order.
A lot of words have poured forth about the tax proposals in this budget, but there is another area of federal intrusion into provincial jurisdiction, and I would like to mention that briefly. That is the carrot in federal-provincial relations or negotiations, which has been that when the federal government puts forth a proposal to the provinces, the provinces can not reject it because the government is going to pay half the cost, or what is sometimes described as "the province is only going to pay 50 cent dollars." If one uses that criterion, then the proposal of the Minister of Finance is even better for the western provinces because he is giving 66 2/3-cent dollars instead of the

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traditional 50-cent dollar. In the Atlantic provinces, of course, it is a 100 per cent rebate.
What this situation has done is to allow the federal government further encroachment into the provincial field, because the provinces first have to meet priorities established by the federal government, and only after that can they consider their own. I ask the government today, whatever happened to cooperative federalism? Was it also just a myth?
Another situation that happens is that when the federal government has established a cost sharing plan, as we are seeing now, for instance, in medicare and post-secondary education, the federal government either threatens or, in fact, does cap the federal contribution, that is, it places a limit on the amount it will contribute. In speaking about the delivery of health care services or education, the ultimate bodies responsible are the provinces. They have made plans and given commitments on the basis of federal involvement, and when the federal government caps a program or threatens withdrawal, the provinces receive the political reaction. As I have already mentioned, the provinces have too little tax room in which to operate, and this is simply another intrusion into provincial jurisdictions.
There has been one other attitude to come forward in the debate on Bill C-56. I am speaking as an individual Canadian, but I hope my view is shared by many Canadians, and it refers to the term which the Prime Minister used in answering questions in this House. The Prime Minister used the phrase "the Canadian common market". I moved a motion under the terms of Standing Order 43 in which I pointed out that Canada is not a common market but a united country, with a national government for all Canadians, with ten equal provincial partners. It has been a partnership since the day the Fathers of Confederation formed and founded this country. In fact their negotiations would never have come to fruition had it been anything less. Anyone who has studied Canadian history can see, jumping at them from out of those pages of history, the attitude of the Fathers of Confederation to bring about a country based on cooperation and equal partnership. This is much more so than in the history of the United States.
My motion read:
That this House affirm that Canada is a federal state comprising of a national government for all Canadians and ten equal provincial partners.
The response, Mr. Speaker, which I thought would be an obvious, resounding yes in affirmation of ourselves, was a meek and lonely no from the government benches. A common market is an association of sovereign states which have joined together for reasons of trade or whatever to advance their common cause. The fact must be stressed that they remain as sovereign states, and the European Common Market is such an example. The provinces are not sovereign states, but equal partners in this federal Confederation making up our country. I hope that the Prime Minister will clarify that statement and, if unity is to prevail in this country, that he will cease and desist from using that phrase. I hope also that the Prime Minister will take my plea to heart.

Lastly, the budget of April 10 brought out one other factor, and that is that when the Prime Minister, his cabinet, and supporters have no other argument, they wrap themselves in the Canadian flag and say that if we disagree with them we are against unity. Are the views of the Prime Minister-[DOT] especially when he says we are a common market-the views that are to prevail? If we disagree, does that mean we are not Canadians? Just think of it, Mr. Speaker-if we do not agree with the government suddenly we become Canadians with dubious credentials.
When all is said and done the legacy of the budget of April 10 will not be the sales tax and who got what from whom; it will be that we had an inflexible federal government that rammed its way through, rather than a government interested in maintaining the unity of this country and building up its economic fibre.


Some hon. Members:: Hear, hear!


Mr. Peter Stollery (Spadina):: Mr. Speaker, I would just like to point out to my friend, the hon. member from Pro-vencher (Mr. Epp), that I was a little late in arriving and so did not catch the beginning of his speech, but I understand that he quoted rather selectively from the Winnipeg Free Press. When that was brought to my attention I said that my friend from Provencher would not do a thing like that.
As I listened to his speech, however, I heard him explain that he was in favour of tax cuts and that if he were putting a budget together he would cut taxes. But then he said he opposed any form of deficit. It was as though he felt that a tax cut did not actually represent a cost to the treasury. He went on to say that the provinces have less room fiscally, yet we know that between them the provinces and the municipalities represent 60 per cent of the tax base in Canada.
1 still thought the hon. member would not distort what appeared in the Winnipeg Free Press, but then he went on to explain about the federal-provincial partnership that was developed in 1867. I would recommend to my hon. friend that he read the Confederation debates that took place in Quebec city in 1865. They would give him a broader grasp of the concept of 1867. Hon. members from Upper Canada and Lower Canada debated long and hard, and I think the hon. member for Provencher would learn a great deal if he took the time to read this little volume put out by the New Canadian Library, published by McClelland and Stewart in Toronto.
At any rate, he was quoting somewhat selectively from the Winnipeg Free Press which, I understand, has taken a rather strong position in support of the government and recommends that we not make any more concessions on the sales tax question to Quebec or any other province. I believe three or four provinces are involved at this point.
It is a curious thing that in this Chamber as soon as you touch a raw nerve you get a reaction from the other side. They do not want to hear anything that might remotely resemble
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facts, but as long as you go off on a fictional tangent they will listen.
I should now like to make a few brief comments about the positive proposals in the budget as set out in the bill. I think it is important to explain to Canadians what is being done and what problem is being attacked by the budget measure to decrease sales tax. I often think that we are rather cut off from the rest of Canada as we sit here in Ottawa, particularly the manufacturing areas of Canada. Some hon. members are not as familiar with the manufacturing sector as those of us who come from central Canada and areas like Toronto which has a very active, efficient, and competitive manufacturing sector.
After World War II you could sell anything you could make. Now that the third world countries such as Taiwan, Korea, and Singapore have entered the market, with between one and two billion new industrial workers since 1965, our manufacturing sector finds itself in some difficulty. Of course the problem is not unique to Canada.
I always enjoy listening to members tell about the highly efficient performance of West Germany's industry. Statistics show, however, that since 1970 there is one per cent less people working in that fabulous economy. That is because they face the same difficulties that beset all the countries that developed the older manufacturing sectors, such as textiles.
I read an interesting item at the week end about the zipper market and its complexities. The Japanese have built about 400 zipper factories which now compete with the United States, as the zippers are sold there and not in Japan. The United States is trying to get the Japanese zipper manufacturers to accept voluntary controls, because if the Americans impose some kind of tariff or restraint on Japanese zippers it would also affect the Canadian manufacturers who export specialty zippers to the United States. To add another complication, the United States actually sells us more zippers in dollar terms than we sell to them. That is the kind of thing that the opposition not only over simplifies but sometimes does not even understand.
If we take steps to restrain trade in one area, it will affect trade in another area. Our representatives sit around, as they are doing in Geneva for most of this year, trying to work out this very complicated business. Just think of the complexities involved in such a small area of manufacturing as zippers when Japan has over 400 factories that sell only to the United States.
The Minister of Finance (Mr. Chretien) has been trying to solve one of our problems in Canada which we always face. It concerns economies of scale. Here we are in a country that has a small population in terms of density. In southern British Columbia, southern Ontario and southern Quebec, where there is the greatest density, we have to develop a manufacturing sector which can compete with countries such as Japan which not only has a large population, but has traditionally sold to South America, as well as the Far East. These countries have
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tremendous advantages over us in economies of scale; countries like Japan, the U.S., Germany, etc.
I was talking to one of my constituents the other day who works in a factory making steel pipe in Toronto. We were discussing the fact that we import different kinds of pipe and yet we only export two kinds of pipe. He explained to me the reason that we do not make 30 different kinds of steel pipe with certain stress characteristics is because we do not have a market for these 30 different sizes of steel pipe with certain stress factors so we make two kinds of steel pipe, and we undercut the opposition outside of Canada. We have a large export market in that particular type of pipe because we have a use for it in Canada and we have developed the expertise. If we try to manufacture 30 different types of steel pipe, with various stress factors, all of them will suffer and all of them will lose money. That particular sector that we have developed and are competitive in will just go down the drain, as well as the jobs that go with it. What do we have to do? We have tried a variety of things over the last year.
The hon. member for Provencher spoke previously about tax cuts. Not just my friend from Provencher but other hon. members in this House talk about tax cuts every three months or so. As soon as we have any tax cuts the opposition tell us that we have created too much of a deficit. If we do not have any tax cuts we are told there are no tax cuts, so therefore the government is no good. Whatever happens, the government is wrong.


An hon. Member:: Right on.


Peter A. Stollery: That is one of the great things about a democracy. Of course those members conveniently do not mention the fact that with a small population and tremendous obstacles, under this government our country has developed into one of the very sophisticated manufacturing economies in the world. That is the phenomenal thing. Canada's achievements with its small population and the difficulties of transportation; sending goods across an empty country; distances as far as from here to Europe-it's a Canadian miracle.
Then we turn to job creation. Imagine a country like Canada, with all of these problems, and yet for every year for the past ten years, except one I believe, we created more jobs in Canada than any country in the western world.


Some hon. Members:: Hear, hear!


Peter A. Stollery: That is an achievement. It is not something which should be treated as insignificant and that it does not matter. It is a positive thing.
The kinds of remarks we hear from across the way only cause Canadians to lose confidence in themselves. That is probably our national problem. We lose confidence in ourselves in spite of the fact that we do so well. We have two languages and, with all of the complexities hon. members on the other side would not understand-


Lincoln MacCauley Alexander: Go back to Toronto.

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Peter A. Stollery: -we have these achievements. I do not mind going back to Toronto. I like Toronto. It is a terrific place. I would rather be there right now than here.


Lincoln MacCauley Alexander: We will fix that up.


Peter A. Stollery: I am trying to explain a few things to you that you obviously do not understand. We all know about Hamilton. Most of us would rather be home on this side than here in this House. But we have business to do, and so we are here.
As I say, we have the difficulties of trying to shift some of our manufacturing emphasis into the high technology area.
Over the past two or three budgets, ministers of finance have made tax cuts. I forget myself just exactly what they are and I have to look through the statistics to see how many tax cuts there have been. When the former member for Rosedale was minister of finance I believe there was $1 billion in economic stimulus given to business and consumers. Then there was another $1 billion given in additional purchasing power provided by the automatic indexing of family allowances and income tax and other social assistance measures, at the beginning of 1977. Automatic indexing did the same thing this year in January, and that was in excess of $1 billion, I believe. Right after the new year, when I was trying to get information from the Department of National Revenue on the base rates for 1978, they were not calculated at that time. They have to do their computation of the indexing and it takes them some time to do that.
In 1977 there was another $1 billion which went to consumers in the form of personal income tax, of up to $100 for low and middle income tax payers. This was directed to consumers in January and February, the most difficult months. It took the government five weeks to get that bill through parliament because of the opposition and filibustering that went on. I believe we have to apply time limits in order to give people $100 tax cuts-


An hon. Member:: Same old speech.


Peter A. Stollery: Here we have an hon. member saying we should have tax cuts. When we do propose tax cuts, there is a filibuster. When we propose sales tax cuts, there is a filibuster. This is the sort of so-called responsible opposition. Every time something is attempted to be done for the citizens of the country which is positive and will assist the economy, there is a filibuster. That is the opposition's set response around here.


Some hon. Members:: Shame!


An hon. Member:: You are misleading the Canadian people. You are less than honest.


Peter A. Stollery: This is the way they carry on.
I would like to talk about the research and development aspect which is addressed in this bill and in this budget. Sometimes Canadians say that we are not doing any research and development. The first Canadair jet rolled off the assembly line last week. We sold 110 of those before the first

one even came off the assembly line. This involved the highest technology there is, aerospace technology. It created 4,000 jobs. In spite of this, some Canadians say we are not doing enough research and development. And this is a government owned operation, as my friends explain.
We really have quite a large research and development sector in this country, despite the extraordinary problems this country faces with two languages, tremendous distances, and a small population. We are not only into the manufacturing high technology sector. A few moments ago, I spoke of economies of scale. If you have economies of scale and a large base, you dispense with a great many of the problems we have in Canada.
In the areas of fisheries, we are a world leader in technology and scientific research. As the Minister of Agriculture (Mr. Whelan) pointed out when he made his speech on the budget, we are a world leader in agricultural research. I see the hon. member here who represents Guelph. The Guelph agricultural school is renowned for its agricultural research, having developed famous strains of wheat. I am not a specialist in agriculture. However, when I was a child I remember hearing about No. 1 winter wheat being developed in Canada in order to extend the growing season in the northern latitudes of this country. I did not want that to go by without comment.
As I stated earlier, the Minister of Finance has tried several ways to get Canadians to part with their cash. He has been modestly successful. Bank savings have never been so high. One problem with tax cuts is that instead of spending the money and thereby encouraging demand, some people have the tendency to put that money in the bank.
The average Canadian understands that various ways have been tried. There have been tax cuts which give Canadians a greater take home pay. In this regard, from 1968 to 1976, personal income in this country, that is to say wages, salaries, fringe benefits, pensions, investment incomes and so on, increased by 72.6 per cent, including inflation. There was a 72.6 per cent increase in personal average income.


Mr. Peters:: For those who work.


Peter A. Stollery: That is an across-the-board figure taking all factors into consideration, including unemployment. Average family income in Canada went from $7,688 in 1969 to $19,110 in 1976, a true increase of 35.2 per cent, including inflation. That takes in all of the members of the family.
Personal disposable income per capita advanced at an average rate of 13 per cent per year from 1970 to 1976. That is a rather enviable record in a time of severe economic world difficulties with the new industrial workers, the energy question, and the food shortages of the early seventies.
I remember listening to the Prime Minister of Jamaica, Mr. Manley, when he was addressing a group of Jamaican Canadians in Toronto. He stated that Canadians were upset about energy costs. He told them that about 1973, every time he
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went to bed at night, the price of wheat increased another few cents a bushel before he woke up in the morning. The price of bread increased in a country that has very little hard currency and is not able to grow wheat. Those are the kinds of problems that have overtaken the world. Therefore the figures I have quoted speak well of Canada over the past decade.
Canadians are putting money in the bank. Canadian bank accounts have never been so high. Therefore the Minister of Finance has tried the tack of making goods cheaper. By cutting the sales tax a couple of percentage points he felt that Canadians would be encouraged to buy more.
With ten provinces and ten provincial governments, we have many difficulties in this country. The provincial governments are not elected to take on the federal government. However, after being elected, they somehow adopt a mantle never given to them. Therefore, the Minister of Finance courageously-


Lincoln MacCauley Alexander: Leave that word out.


Peter A. Stollery: -courageously decided to make goods cheaper for the constituents of the hon. member for Hamilton West (Mr. Alexander). The hon. member may be opposed to that, but the Ontario minister of finance is one of those who proposed it. Therefore, I do not know why he is complaining. If the hon. member wants goods to be 2 per cent or 3 per cent cheaper in Ontario, he had better think again about that. When buying a shirt or the various other goods they buy, hopefully my constituents will get them a little cheaper. I hope they will benefit by this courageous move by the Minister of Finance.
If I have a reservation, it is in the manufacturing sector. There have been different incentives. More money is available for research and development. There have been sales tax cuts as well as personal tax cuts. The announcement this past week to reduce the difficulties with regard to the capital gains tax on family businesses being passed on to the second generation is another incentive.
All of these are positive moves and should assist the manufacturing sector, the medium sized businesses and small businesses. I do not know how small is small any more. It is difficult to define.
Management now has a responsibility. A year ago some corporate tax cuts were announced. I hope that management puts these incentives to good use. I hope they are not used as an excuse to be inefficient, to not go ahead and look for areas in which they can be more competitive.
In Toronto we have a very aggressive small manufacturing sector which manufactures neckties, sportshirts and items like that. They usually are made in small quantities, and in the Spadina district, which I have the honour to represent, this is an extremely efficient business. It does well. It has adapted when it has had to.
I often wonder about the shoe business. People talk about the problems of the shoe business, and there are problems. On
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the other hand, I see signs advertising Roots shoes. I know very little about shoes, but I understand that the Roots Company was developed by young Toronto entrepreneurs. That company is not closing up. It seems to be opening new stores. If I am not mistaken, I think it has a store in New York.
I am concerned, however, because the management of business does not take some of the steps it should be taking. Management has a practice of starting a business and taking an unduly high salary, instead of putting more money into market research where it should be going. I have seen this happen time and time again.
My family in Toronto has been very successful in small business, but not by taking large salaries. I think we operated for 70 years. We weathered two depressions. The depression of 1922 was the one which really hit small business in this country. There was the depression in the thirties. My family was successful because it did not take too much out of the company. We did not form associations to restrict competition and trade. I have seen much of that in Canada. Instead of looking into market research individually and finding out how better to compete, companies spend too much time forming associations. Then, of course, they complain when the inevitable disaster overtakes them. However, the inevitable disaster does not overtake a business which takes proper steps.
I would like to finish by suggesting that when hon. members opposite go to Toronto, they should go to the industrial areas of North York and Mississauga. In those places they will see hundreds of small manufacturing and warehousing companies which are doing well. Seeing that makes one feel good. The trouble with hon. members opposite is that they spend too much time in the editorial offices of the Toronto Star. All they see there is Lake Ontario. Fellows, that is not the city; you have to look the other way.


William Arnold Peters: Mr. Speaker, I was not sure I would be speaking until the hon. member who just spoke made a number of comments. I do not want to participate along the same line as that used by many others because I think that problem will iron itself out. It was touched on briefly by the hon. member for Spadina (Mr. Stollery). The problem I refer to is the sales tax argument between Quebec and the federal government. There will probably be an argument put up by some of the other provinces which did not realize that there was a possibility of negotiation. They are now learning about that. That problem will be solved, but it is one of the problems we have in this country.
Many of us sometimes think of the infallibility of the Liberal party in the province of Quebec. The Liberals were of the opinion that they would win a large number of seats in that province. I am sure most people did not think the Liberals could screw that up, but the Minister of Finance (Mr. Chretien) has gone a long way toward that, and now we have all the provincial parties in the province of Quebec on one side, and the federal government on the other. It reminds me very much of the days of Duplessis. Mr. Duplessis was in power for a long time, and he was very successful. I suppose most of us agree that this kind of bickering between the federal and provincial

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governments, and between the federal government and the people of the provinces, is not to our advantage because all it does is aggravate the problems we are facing.
When discussing Bill C-56 we should be concentrating on what we can do to end the problems we have. When the hon. member for Spadina spoke he, like many others, spoke about how good things are. Elon. members opposite never talk about the one million who are unemployed. They talk about the people who have been added to the work force. Canada is growing. It has not reached a zero population growth yet, so I presume the number joining the work force will continue to increase each year. Perhaps Quebec has a negative population growth, but that is not true of the country in general, and I think anyone can use figures to show that things are good.
The hon. member for Spadina also said that we have increased returns to the individual, but he did not mention that we have a 12 per cent per annum increase in the cost of living. For probably the last ten years that has been the rate. That makes an increase of 120 per cent, so it is to be expected that people will need more money to make ends meet. Even people on welfare need more money. Our unemployment rate is considerably higher than our welfare rate was ten years ago, but all that is really not important. What is important is that we are in serious trouble, and things are not getting any better. They are getting worse.
I will soon be facing my ninth election, and in all my years here I have never experienced the build-up to an election we saw this year. It was engineered with all the finesse the backroom boys could muster. Everything was built up, and then all of a sudden the polls said "no dice". The polls said that the Liberals could not win. Being an animal of power, the Liberal party decided not to go, and everything has been geared down. Perhaps this House should have been geared down. Perhaps we should have taken a recess and started fresh on a new session. However, that did not happen. The Gallup poll found out what many members of parliament already knew, that the country was in serious difficulty.
The average person feels offended and insecure when he finds himself out of a job, and when he finds his neighbour and two or three others on his street looking for work which is not available. When his children are educated and try to enter the labour force but cannot get jobs, the average person feels insecure.
I think one of the things which really upset the Canadian taxpayer was that the government decided to let our money find its own level in relation to United States currency. As the American dollar dropped-which it did drastically in relation to international currencies-the Canadian dollar dropped along with it. Then suddenly the Canadian dollar started dropping even lower than the American dollar. The government did the same stupid thing the Diefenbaker regime did a number of years ago. It started putting out money in dribs and drabs. Most of the people who had that experience were aware of the fact that the problem of the falling dollar cannot be solved by investing relatively small amounts of money.

If the Minister of Finance had said, "We are willing to go through the whole works, whatever we have in foreign exchange, and to put it into that fund", maybe the investors would have said, "That may stop it, so we better get out", and they would have stopped playing around with the dollar. I am not aware of who made any money on our dropping dollar-it may have been Liberals or it may have been Conservatives.


An hon. Member:: How about the NDP?


William Arnold Peters: I do not think it was anyone in the NDP. I was one of those who was interested in the fluctuating value of the dollar and in the relationship of the dollar to mining, particularly to gold, and I watched the dollar very carefully. I came to the conclusion that if one is playing around with one tenth of a cent in the Canadian dollar and one wishes to protect one's money by buying or selling futures in the dollar, one will have to invest somewhere in the neighbourhood of $1 million to get a return. I do not think any of my colleagues have that kind of money.
I play the market as if it were a game of Monopoly. It is make-believe playing on the market. In my limited experience, even with Monopoly money, I would not have been able to make much money on the Canadian dollar. One has to have a lot of money to pay the margin on the dollar, whether it goes up or down. But I am sure people did, and I am sure some money was made in this country on the Canadian dollar because, if people had not been buying or selling it, obviously its value would not have been fluctuating that much; it would have been more stable. I think that influenced very greatly the ordinary Canadian. I notice that at auctions in particular. If you go to an auction and you watch people bid, you find that money is of no value to some of them. They bid more money on used articles than they would spend in the local store on the same brand new article. When people get to the point where they almost throw away their money, they see no value to it, they will meet with disappointment. I think that that as well had a great effect on the Canadian public.
Where do we go from here? How do we handle the problem? The government in its budget did somewhat the same thing as it has always done. True, it added two or three other useful measures in the tax field. But what were most of the tax changes? They were mostly in development and exploration and, in a small way, in research and development.
The government has never really decided what it wants the economy to do, and it has never decided what area it wants to develop. If you want to see a true lack of planning, just look at how we apply our tariff laws when we are trying to develop an industry which perhaps should not exist in Canada in the first place. We have done this with textiles and with a number of other industries which will probably not be able to compete.
There are many other industries which are capable of competing, and one of them is communications. Fortunately there has been development in this country, much of it as a result of the work done by the National Research Council, and
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the government itself has promoted research. This reminds me of the difficulties which we encountered in the last war when we found that the Germans were controlling the patents on optical lenses. Research in that area in Canada developed in a short period of time by a totally different method which was better and cheaper. After the war we gave it to the German I.K. Faben Corporation which held the original patent.
We have also been innovative in the field of communications and have developed new technology which is now being sold to other countries. High speed urban transportation is another field which we should develop. We should develop it in our own interest since it is highly saleable in other countries. We have to pick a number of fields where we can become expert. We should probably develop forest product machinery.
Also, we are probably experts in diamond drilling. In fact two or three companies in my riding are supplying much of the diamond drilling equipment that is sold in many countries in Africa and in the Far East and in almost every drilling operation around the world. This is a field which we have been able to develop and where more money should be invested.
Sooner or later the government will have to make a decision as to where it wishes research and development to concentrate, and it will have to reward people for their work in that particular field. This can be done by several methods which are now being used in the tax field. It should only be done if some conclusive development is achieved by a company which will be beneficial to the industry and to the whole country. We should specifiy which industries we wish to develop, and then we should then put money into those developments.
What is being done now? I know some of my friends on the other side are very interested in financial matters. It is interesting to note what we have done in terms of tax concessions for development in various fields. It makes one wonder just what we are doing in the field of development, and the write-offs which we allow for development in such areas as oil and gas, for example. Surely all Canadians are confused about this. We have had a barometer in that respect that moves as if a major storm were to erupt every other day.
One day one reads in the financial pages that a number of natural gas companies are petitioning the general public and making propaganda so as to get contracts to sell the surplus gas they have, and a couple of weeks later the same thing is happening with oil companies. After the immense scare we had two or three years ago, there have been five or six applications for the sale of crude oil to the United States to export an additional amount because a company has suddenly found that it has more oil than it can use, and the same is true of gas. We think naively that when we need it we will get it back. In a pig's ear we will get it back! If the Americans need it, they will surely not give it back, and they will certainly not honour a contract which we allow some company to enter into.
We gave concessions in northern development and northern exploration, and we allow them a 100 per cent write-off. If it is frontier development, we add another sixty three and two thirds per cent to that. The result is the creation of such companies as the Beaufort Exploration Company, which is
Income Tax Act
backed to some extent by Dome Petroleum. They have agreed to write off the liabilities, to carry the insurance, and to do the exploration for Beaufort Exploration Limited. What is Beaufort Exploration Limited? It is a company which is set up as a tax haven, a tax dodge. It is interesting to read what they say will happen under certain circumstances to people who invest a certain amount of money. We are not referring here to the guy with a minimal salary.
Anyone who is well off can become involved in investments. Members of parliament are getting into the category of the well off. The degree to which a person is well off depends on where he lives. He can be faced with a tax level of 50 per cent. In Manitoba the basic tax level of a person who is well off is 54 per cent, whereas in Ontario it is 43 per cent. A person in Manitoba with some money to spend could buy shares, for example, in Beaufort Exploration. These shares are being offered in units of 100 at $10,000, plus a $400 handling charge. Through certain arrangements a person can also purchase another $10,000 worth of preferred stock.
I should like to refer to a man in Manitoba who has an income of approximately $30,000 per annum. With that income he is required to pay income tax on approximately $24,000 of his income, amounting to $8,134. If he purchased one unit at $10,000 of Beaufort Exploration, with its tax exemptions and havens, he would experience a reduction in his tax payable of over $6,500. If he bought two units for $20,000, he would experience a reduction in his tax payable of over $8,000.
The person who has an income of $100,000 per annum is required to pay taxes on approximately $94,000, which would amount to $50,000. If he purchased one unit of Beaufort Exploration, his tax payable would be reduced to $39,000. For an investment of $10,000, and with an income of $100,000, that person would receive a reduction of approximately $11,000 in his tax payable. The after tax cost saving by the purchase of one unit of Beaufort Exploration would be $494. That $494 would come directly from other taxpayers. That is what is done for the rich of this country. If they make investments which cost $10,000, they receive almost $500 in their pockets.
If a person has a $200,000 income, it is projected that on an investment in one unit costing $10,000 he will receive from taxpayers almost $1,500. The other taxpayers pay for the full cost of the stock. With the present tax structure, he is allowed to write off the total investment and also benefit by receiving $1,500.
Much has been said about what is being done for the little guy by the reduction of sales taxes, but we must remember what is being done for the big guy as well. We must remember what the person who is making a fairly healthy income is allowed to write off, especially when he purchases $10,000 worth of Beaufort Exploration stock. Also he has the option to purchase another $10,000 or 100 units of preferred stock, as well as the rebate of $1,500 from the taxpayers because of his

May 29, 1978
Income Tax Act
$200,000 income. This is what is being done with our present tax structure. It would be wise to scrap the whole thing.
At the present time we require development in the Arctic. That development should take place where, when, and how it is needed. The government went a little way toward encouraging development. It set up Panarctic and the Canada Development Corporation. It has gone into development in a limited way, sometimes more, sometimes less. The government has not decided that the end product is jobs and that incentive must be provided to industries for that purpose. The government has attempted to provide jobs with a shotgun approach in order to make everyone a little bit happy, the result of which is that nothing has been done for most people.
I am reminded of what the former hon. member for Sudbury talked about in the House years ago. He was referring to insurance companies. He called them parasites, he called us parasites, and he went on to say that people who live off the workers are parasites.
Not long ago I listened to a speech by Mr. Doug Fisher, a former colleague. He pointed out that, according to Statistics Canada, there are 700,000 people in Canada working for a living, producing the wealth of this nation. These figures refer to miners, forest product workers, fishermen and farmers. He went on to point out that we have 2.5 million sales people in Canada. There are only 700,000 workers, but there are 2.5 million listed as sales persons, as well as over one million clerks. It makes one wonder, if we have that few people doing all the work and the rest of us living off them. Are teachers, politicians, salesmen, and advertisers living off the workers because they are not producing our nation's basic wealth? If we are to go ahead in this country, it must be in highly modernized and technical fields. At the present time one farmer can farm 1,000 acres, whereas before his father was hard pressed to farm more than 160 acres. We are highly mechanized and can outproduce other countries in most of our basic resources.
If we are to develop jobs for people, they should be in the manufacturing field. We must make a choice of a limited number of areas in which we should concentrate our research and development. The entire direction of the government should be toward that end. Perhaps the government will make a mistake in the choice of industries requiring research and development, but we will have to bear with it. It will be necessary to choose what industries should be developed, and hopefully some of the natural assets of this country will be used. The industries will have to be developed to a point where they can compete with anyone in the world who is involved in those fields. We need a government which is prepared to market our products, form trading blocs to negotiate with other countries, and use that system so that we have an opportunity to sell.
When I was in Cuba a year ago I was shocked by the number of small Ford Cortina automobiles on the streets. I asked why those automobiles bore a Spanish name. One official pointed out that Cuba had approximately 20,000 of those cars. They had attempted to order those cars in Canada,
(Mr. Peters.]
but Canadian Ford indicated that they could not be sold to Cuba because of a law in the United States. Thus, those 20,000 cars were purchased from Argentina instead. In any event Ford receives the money, but because of different arrangements in Argentina it was necessary for Cuba to purchase the 20,000 Ford Cortina automobiles there rather than in Canada. Perhaps it was not such a good deal, but if Argentina did not lose on it, why should Canada be prevented from becoming involved?
I am sure it was a shock for all hon. members, particularly cabinet ministers who realize that it is necessary for Canada to move goods, to learn that we had expertise in fields at one time which we no longer have. Canada is a very large country with the largest coastline in the world. We have to move goods. I remember that during the war we had one of the largest fleets in the world. We had developed a very large merchant navy. We put it together with haywire and tin cans, and all the rest of it. It may not have been so good, and the government was sure as hell interested in getting rid of it after the war. Do not forget that a lot of those ships, Fiberty ships in particular, went to Onassis. That is how Onassis built his fortune. That is how he got his multimillion dollar enterprise controlling a large part of the shipping world. He started it with our Fiberty ships which he bought for almost nothing because we wanted to get rid of them.
I was interested in attending at NATO. I am not really interested in NATO. They are carrying out a paper war. They move papers around like we do here, I suppose. They have tanks and all those other things. They were suggesting that if we had difficulty in Europe and the Russian overran us, we would be able to hold them off for two weeks and by then reinforcements would arrive. How will those reinforcements get there? Will they get there by aircraft? We do not have any transport planes that will carry a sizeable number of troops, and certainly will not carry equipment. We do not have any ships. At NATO they suggested we will use United States ships. Hell, the Americans will be there and will be using every bottom they can find, rent or borrow across the country to move the stuff they have to move. They will not be lending ships to Canada.
We were the experts at building ships. We had a reputation which had been built up over three or four hundred years of shipbuilding in this country, building everything from tea clipper ships to Fiberty ships. We were recognized and renowned as shipbuilders, the builders of fast, useful ships with good utility. We can build them, but the government got out of this enterprise because it decided we are not in that business. We were not interested in a merchant navy.
Norway did not say that. Norway did not have any ships. It decided it better get some because its people lived on the sea. Norway now has one of the largest merchant navies in the world. It seems to me if Canadians are going to move troops overseas, and everybody is talking about defence, then we better obtain some long range contracts with Norway in order
May 29, 1978

that we can rent some of their ships, because we do not have any. We could build ships that would sell in other countries.
Canada is a real big country. What are we doing playing around with airplanes? We have played around with the Twin Otter, The Beaver, and now the Dash-7, of which we have not sold any. Perhaps we have done better with the Lear jet. I presume that is the one that Canadair has, or a modification of that Lear jet. We may have done better with it because there is a market elsewhere.
We had probably the best team of aeronautical engineers in the world. We had a team in the aeronautical field that you would not believe could be built up by a country like Canada. We did not raise those people; we brought them in from elsewhere. Most Most of them came from Europe. They are not here now because they left and went to NASA. They really are the basis of the whole NASSAU operation. They were the areonautical brains of the world. We had more than our share. We did not steal many from Germany, but we sure got a lot from the British when they decided to go out of the airplane business. We lost all that, not because of anything those people did, but because of the fiasco of the government in relation to our air program.
We could have developed one of the best aircraft industries in the world. It is my honest opinion we could have built a transport plane that would have been useful to Canada in meeting Canadian needs. This likely would have had a spin-off in the military field. We did not move in that direction because we really did not make up our minds what field we wanted to move in. We really did not decide what industry we wanted to develop. We developed a branch plant economy related to the United States. In many ways this was not a bad economy as long as things were going up. When they started to go down, the parent companies weighed jobs against transportation costs and found it easier to ship things in than to develop them here and sell them. They pulled back on development in our country. This has happened in respect of many industries, particularly those which have an up and down attitude in relation to the economy.
We could go on with a discussion about what we are doing in respect of transportation. We could develop in a number of other fields in which we are obviously competent. We could develop a car in this country to meet the northern parts of a number of countries. Our needs are not unlike those of Sweden, Norway, Finland, the north part of England and parts of Japan. We could develop a car, just as other countries have done, if we concentrated on one or two cars and put an industry together, saying, to hell with the Americans, if they want to take their industries back to the United States we will build our own." I do not think we have much of a future in the automobile industry, because every time I listen to people talking about that industry I learn of another truck or automobile plant that is moving back to the United States. Perhaps we should not eliminate those branch plants, but we should start to develop a Canadian industry of our own. We have to be selective, and this must be a government supported effort with the co-operation of the provinces and the people.
Income Tax Act
We have to make war on unemployment in this country. There are many highly trained young workers in this country who have never worked. Often girls come to the office looking for jobs. They are just out of school, and hold degrees. We want people with typing skills and experience. We need people who have dealt with people on a one to one basis, and who know how people react, and how to talk to them. These people have had no experience. This is a very limited field, but this situation is true in many areas.
I heard farmers talking the other day about having young people come to work on the farm in the summer. After a while one farmer allowed a young lad to drive his tractor. He said he had two loads of hay on the wagon behind the tractor. He also had one of those little four wheel drive jimmies. He asked the 17 or 18 year old lad from town whether he could drive it. The lad said that he could, and the farmer told him to stay behind the tractor and wagon. He did stay behind for a short distance, but as soon as they reached a wider part of the road he drove by and down the road like crazy. He had obsolutely no sense when driving it, not understanding how it worked. He was lucky to arrive at his destination. The lad told his mother he would not mind working there for nothing because the farmer let him drive this vehicle.
It is not the boy's fault he has no experience. He is no dumber than anyone else, but he has had no opportunity to be around machinery or to operate it. He has no living experience. There are many young people today in this category.
If things get much tougher we will soon see gangs of these young people on the street, and they will eventually start the type of activity that is occurring in other countries of the world. We certainly do not need that sort of thing in Canada. This will not be entirely the fault of these young people, it will be the result of our own failures.
There is one other field where the government must implement a national strategy, and that is for industrial development. We have to get the people in the civil service working instead of pushing paper. I was speaking to a man on the plane this morning who described a situation to me. The government had established an extra district office and the people in the district office felt they were doing things about which they had no knowledge. He went on to outline a situation where he had bid on a tender for a garbage pail pad in this particular community. The pad was to be approximately eight feet long and four feet wide. His bid was $184. The government insisted that he get an architect and drawings. He told them to use their own people and build it themselves because he was not going to do that. The cost would have been around $2,000, where his bid had only been $184, to pour a couple of yards of concrete and to put a small amount of aggregate under it. This kind of situation illustrates what is occurring all over the country because all we are doing is moving paper.
I feel that where people are competent and well trained, we should be giving them an opportunity to develop an industrial strategy. We are better at these things than a lot of people

May 29, 1978
Adjournment Motion
across the world. We are more competent, we have more initiative, and we certainly live in a colder climate where we have to do something at least to keep warm. We cannot just lie under the banana tree and get our food. We have shown our ability in the past, and we should give our young people an opportunity to participate in the future. This can only happen if the government puts forth an industrial strategy.
Recently I, along with other members, had discussions with the representative on tariffs who had returned from Geneva. Much of industry in Canada is involved with tariff protection, concessions, and subsidies. In listening to our representative, and I am sure the other members would come to the same conclusion, we are "babes in the woods". We do not know what we are doing and therefore we are obviously going to be taken advantage of by others. We are going to accept restrictions that we should not accept, and we are-


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


Steve Eugene Paproski: Mr. Speaker, he is doing such a great job, and since it is only three or four minutes before private members' hour, we would like him to carry on.


The Acting Speaker (Mr. Turner):: Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mr. Turner):: Order. 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 Dartmouth-Halifax East (Mr. Forrestall)-Transport-Replacement for S.S. "Carson"- Location of shipyard undertaking construction; the hon. member for Saskatoon-Biggar (Mr. Hnatyshyn)-Transport-Hall Report-Request minister consult Mr. Justice Hall on recommendations.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Chretien that Bill C-56, to amend the statute law relating to income tax and to authorize payments related to provincial sales tax reductions, be read the second time and referred to the committee of the whole, and of the amendment (Mr. Broadbent) (p. 5548).
Donald W. Munro: Mr. Speaker, it is becoming a pattern where my comments on matters of this sort are being interrupted by the bell to call it five o'clock or four o'clock. However, I must say that I sat back and wondered at the verbosity, articulateness, and inventiveness of the hon. member for Timiskaming (Mr. Peters) in skirting around this bill. In fact I do not know if he is even aware of the number of the bill we are discussing because he dealt with such matters as national strategy for industrial development, a need to develop the aircraft industry more fully, and the merchant marine.
The merchant marine is an area in which the hon. member and I see eye to eye, and we deplore its loss. He went on in that particular stream very, very effectively. Then he jumped to productivity in the public service. Finally, before you called him to order, Mr. Speaker, because his time had run out, he was on GATT and the discussions in Geneva.
I would like to draw to the attention of the hon. member that the bill before us today, aside from being numbered C-56, is described as:
An act to amend the statute law relating to income tax-
It refers to income tax, Mr. Speaker, and he may have overlooked that because I do not think income tax was mentioned. It goes on:
-and to authorize payments related to provincial sales tax reductions-
We have to congratulate the hon. member on his enormous ingenuity in being able to talk as though it were either a debate on the Speech from the Throne or on the budget, and his ability to cover all those areas and to avoid the two principal matters before the House, namely, income tax and sales tax reductions.
I see the hour is approaching five o'clock, Mr. Speaker, and I would like to call it five o'clock so that I might begin my comments at eight o'clock.


The Acting Speaker (Mr. Turner):: It being five o'clock, the House will now proceed to the consideration of private members' business as listed on today's order paper, namely, notices of motions, public bills.

May 29, 1978



PRIVATE MEMBERS' MOTIONS


[Stage Direction]
The House resumed from Monday, November 14, 1977, consideration of the motion of Mr. Knowles (Winnipeg North Centre):
That, in the opinion of this House, the government should give consideration to the advisability of amending the Old Age Security Act and the Canada Pension Plan to provide for the pensions payable under these two acts to be available at age 60 to all persons who meet the other requirements of the said acts and who are not in or are prepared to withdraw from the labour market, and also to provide for the basic amount of the pension payable under the Old Age Security Act, at age 60 for those not in the labour market and to everyone at age 65, to be increased to $300 per month, for this basic amount to be escalated each year by an amount that will enable pensioners not only to keep up with rising living costs but to share in rising living standards, and also to provide for the elimination of any means or income test from the Old Age Security Act, so that the full pension thereunder will be recognized as the established right of all our people.
The Acting Speaker (Mr. Turner):: Is the House ready for the question?


Stanley Howard Knowles: Question. [Translation]


Yvon Pinard: Mr. Speaker, at five o'clock I failed to ask for leave to proceed with the continuation of this debate of item 14. I just wanted to tell the Chair that since this is the first notice of motion on the order paper, that request, as I usually make it, was not needed today. Under the circumstances, Mr. Speaker, we are ready to proceed with the consideration of that motion and I think the hon. member is prepared to rise.


Mr.   Chas. L. Caccia@Davenport: Mr. Speaker, it is an honour to participate in this debate on the motion by the hon. member for Winnipeg North Centre (Mr. Knowles), who has demonstrated his keen understanding and sensitivity on the issue of pensions. His concern is shared on this side of the House by Liberal members who have expressed their support for this particular issue, in caucus and in their own ridings. It was the thinking of this government back in the sixties, which has allowed Canada to have perhaps one of the finest social security systems that exist in the world today.
One goes back to the Pearson years when this was possible. It was a Liberal administration that introduced the Canada Pension Plan as we know it, as well as the Medicare system. These were two very important steps taken on a long road of Liberal measures which included the Old Age Security Pension, the Guaranteed Income Supplement, and Hospital Insurance back in the 1950s. It would be quite correct to say that Canadians today look to parliament for social security protection as a continuation of these fine traditions established by Liberal governments.
Old Age Security
The motion recommends that the old age pension be increased to $300 per month. There are arguments that could be made about the effect of such an increase on retirement savings. I am sure every member of the House would be in favour of it, particularly if it did not cost the taxpayer anything. At this point the debate becomes somewhat controversial because we all have different notions about whether the taxpayer can stand an additional load. We hear the Conservative party say that government spending should be reduced, and that taxes should be reduced. It would therefore be consistent that anything pertaining to an increase in benefit payments would require a substantial change in the policies of the official opposition. On this side of the House we like to think that as wealth is created and generated in the country it will be distributed properly and find its way to those members of society who need basic protection, either because of age or disability.
While I support the basic thrust of the hon. member's motion which is to make the pension available at a lower age, I would prefer that rather than fixing an age-the hon. member recommends 60-the qualifying age for old age security be made flexible. I think of people working in industries that are physically demanding and which wear out the worker sooner than other industries. People working in mines or construction, for instance, often have to do heavy lifting. The jobs are demanding from a physical point of view, and there is often a desire to retire sooner than people engaged in activities not so physically demanding. Perhaps it should be left to the individual to decide on his retirement age. If someone wished to retire sooner, conceivably he could draw a smaller pension than the person who wished to retire later.
In a democracy, we could surely develop a system that would leave options open to the individual. A pension system seems to be a logical place to provide for this flexibility and these options. There may be those who would wish or would need to retire at age 49, 11 years earlier than the age of 60 provided in the motion. And, of course, there may be people who would wish to retire later than 60. There is a trend in certain occupations and professions these days for later retirement. I would link this trend to the kind of work an individual performs.
As we move into the eighties-and perhaps even sooner-we should conceive a system to allow the individual to make a decision on his own, depending on his personal circumstances and the conditions that prevail in his profession or occupation. A system of nailing future legislation to a fixed age level is not as desirable as a system that would allow individuals to retire sooner if they wished but, of course, at a lower level of pension.
I should like to deal also with one aspect of the Canada Pension Plan which deserves to be given consideration in this debate and I commend the hon. member for Winnipeg North Centre for having put forward this comprehensive motion that permits us to debate this matter in its entirety.
In the past, some people have not qualified for a disability pension under the Canada Pension Plan because they had not

May 29, 1978
Old Age Security
made the necessary five years of contributions. A situation could conceivably arise where someone contributed for four years and nine months but was denied a disability pension because the magic figure of five years had not been reached. I can understand the need for certain minimum contributions, but I suggest a change should be made. At times we may come across a situation that is very serious where, as a result of a highway or other accident that is not compensated by provincial legislation such as workmen's compensation, a person does not qualify for disability pension. We should make a change so that such person would receive a disability pension in proportion to the number of years he contributed to the scheme. For instance, if he had contributed for three years instead of the prescribed five, he ought to be allowed to draw a partial or reduced pension. The same would apply to a contribution that would reflect a shorter period of time.
Even if this were very modest in substance, it would still be better than the complete denial that a contributor has to accept under the present legislation when the contribution falls short, even by one day, of the prescribed five years.
The Canada Pension Plan could also be a vehicle for new approaches to the whole idea of a basic social security system. It seems to me there are a number of occupations which are not covered right now but deserve at least the benefit of a study to determine how they could be covered. For instance, there are a number of individuals in this country who would be glad to contribute the employee's contribution plus the employer's contribution to the Canada Pension Plan. I suspect they would be willing to make the total contribution, namely, the employer-employee portions, even a larger monthly contribution than the present one if they were allowed to do so if eventually this would lead to qualifying under the Canada Pension Plan for retirement and other coverages that are envisaged under this plan.
At the present time women raising their children are not allowed to contribute to the Canada Pension Plan. In other words, if a spouse is raising children and is not in the labour force, this leads to an exclusion which one can perhaps understand within the narrow confines of the law. But in broader social terms I cannot understand why a citizen who is willing to make a full contribution, namely, that of an employee plus that of the employer, at his or her own expense, ought not to be allowed to do so and then be allowed eventually to draw some benefits.
Although I cannot prove it because I have not had an opportunity to do the necessary research, I suspect that the number of people wishing to enter the labour force would be lower, namely, the so-called participation rate. People entering the labour force would not be doing so quite so dramatically as they have done these past few years if they were allowed to contribute as do those presently in the labour force. It stands to reason that if a person is at home and wondering about his future and his retirement income and not in the labour force, that person would not be contributing to the Canada Pension
[Mr. Caccia.l
Plan as it stands now. Then that person would begin to wonder if he or she should not enter the labour force-to contribute to the family income in the first place-but at the same time as a thought and as a possibility one must anticipate the time of retirement, and that thought goes together with the thought of being in the system and of being allowed to contribute among other things to the Canada Pension Plan. Otherwise this cannot be done and that person cannot qualify, let's say in this case, for the provision of the old age pension that comes from this particular plan which, added to the old age security pension, gives a greater degree of assurance about the time when one retires and has to depend on a fixed income for retirement years.
It seems to me that in a society as we know it in Canada there ought to be, in the total scheme of things having to do with pensions and social security, a greater degree of flexibility. This flexibility ought to be coupled with a greater number of options which can be given to the individual. Perhaps I will sum it up in this form.
If one wants to receive a pension earlier in life, one could choose that route, excepting of course that one would receive a smaller pension by drawing it sooner. Secondly, as to the possibility of being a contributor to an important scheme, such as Canada Pension Plan, one should be allowed to contribute and be part of the system even when one is not an employee and therefore not in the labour force. This could be done by creating a special category, or a category that simply permits one to make a full contribution, namely, the employer's plus that of the employee. This would allow a person to continue whatever important role that person performs in the home, which we all recognize.
Others are perhaps more qualified to make a better speech on this subject. People not in the labour force would get this sense of security when permitted to be part of the system, and allowed to contribute to it, enabling them to make plans for the future and for that day which will inevitably come of having to live on a fixed income.
I am grateful, Mr. Speaker, to the hon. member for Winnipeg South Centre-


Stanley Howard Knowles: Winnipeg North Centre.


An hon. Member:: I do not blame you for reacting to that.


Mr. Caccia:: I apologize, the hon. member for Winnipeg North Centre. It is an important distinction. I am grateful to him for having put forward his thoughts on this measure. We do perhaps disagree on the technicalities and on the ways of achieving the ends, but we on the Liberal side are certainly as sensitive and concerned as he is.


Mr. Heward Grafftey (Brome-Missisquoi):: Mr. Speaker, I would like to join with the hon. member opposite in commending the hon. member who has put forward this motion. As is so often the case, he has taken an advanced position on many
May 29, 1978

social measures and has earned a rightful reputation in this House for doing so.
At the outset I would like to state that from this side of the House we find much that is commendable in the motion put forward. Like the hon. member who has just spoken, and the hon. member who has proposed this motion, I am sure that every member in this House has had representations, generally and particularly from time to time, especially during the last two or three years of difficult economic conditions involving the younger segment of the population. Like hon. members on both sides of the House on many occasions I have received representations that it is too bad that so many older people are working when they really do not have to, and when there is such a high unemployment rate among young people. I agree with the proposition that there is an incredibly high unemployment rate among younger people, but I am not sure that this is a good argument in itself per se for reducing the pensionable age to, let us say, 60 years of age.
Let me repeat what I said. Based on the argument that it is the younger breadwinner who should be given precedence in terms of employment as against the older worker, I wish to put forward my opinion that this, per se, is not an entirely valid argument.
I agree with the hon. member who put forward this proposition vis-a-vis the means test. I had hoped and thought many years ago that in relation to most social policy, especially in the area of pensions, we had gotten away from most if not every consideration relating to the means test.
I listened with great interest to the hon. member who put forward his ideas in a very constructive way. He asked for flexibility as we approach this subject, especially in relation to the age of 60. I think we are going to need that kind of flexibility.
I am not sure that I have the answer. I certainly do not want to go back to the means test, and I am not sure the computer has the answer in terms of finding us some middle ground between universality and the means test in terms of selecting those who, at the age of 60, by need and by desire, as the hon. member who just spoke said, should be drawing a pension at that age. While I want to get away entirely from any consideration of a means test, especially in the area of pensions, I think we have to look at this age of 60 on another basis than universality.
I approach this whole debate with one thing in mind especially. At the turn of the century we had not developed a sophisticated pattern of humane and decent delivery of medical and health care services. In this part of the western world, largely because of infant mortality, and the international definition of infant mortality being the death of a child between birth and one year, the average life expectancy of both males and females in North America was somewhere around 43 years of age. Today, largely because of the advances in humane, decent, and civilized medical and health care services, we now have a life expectancy of somewhere around
Old Age Security
70 for males and 76 for females. I could be wrong in terms of exact years, but I believe it is generally around 70 for males and 76 for females.
The life expectancy was somewhat higher during the sixties and possibly the early seventies. However, because we have not come to grips in terms of cleaning up our environment-soil, water and air-in the last 12 years life expectancy for both males an females has gone down somewhere in the neighbourhood of one year.
In approaching this general subject, all members on both sides of the House should stop, look, and listen. It is my firm conviction that between now and the twenty-first century, based on my optimistic presumption, we will continue to make large advances in the delivery of decent and humane medical and health care services.
I join with the hon. member who made this proposition. There are members of that party who are largely responsible for many of our advances to date. I obviously think of the ex-leader of that party who had a lot to do with medicare in Saskatchewan. There is no excuse why we in Canada should not be able to say why we are not delivering the most decent, civilized, and humane social welfare and medical and health care services. However, in this case we must stop, look, and listen.
This is the most important point I can put forward in debate today. I realize there has been a lag in the last two years, but if we continue to finance medical health care and research properly, not only in terms of pure research but in terms of delivering medical and health care services at the community level, we will continue to make large advances. Between now and the turn of the century, there will be great advances in the area of cardiovascular disease treatment. I do not say that between now and nine o'clock tomorrow morning we will come up with an over-all cure for cancer. However, in terms of treatment and cures for certain aspects of cancer, notably breast cancer, great advances will be made.
We must come to terms with the greatest killer of our youth under the age of 35. I refer to highway and automobile deaths and injuries. While cancer may be the biggest killer, and cardiovascular disease second, or it could be the other way around, the biggest killer of our youth under the age of 35 is in or by automobiles. It is our third biggest killer in our country. Dr. Wilder Penfield and many other neurosurgeons in the western world call this an uncontrolled epidemic which is compounding itself by 8 per cent every year.
It is my belief that between now and the beginning of the twenty-first century we are going to come to terms with cardiovascular disease, many aspects of cancer, and we are going to get a handle on highway and automobile deaths and injuries.
Without getting into the crystal ball and tossing irresponsible figures into the air, I believe that while life expectancy has gone from 43 to over 70 up until now, by the turn of the century it will be somewhere around 86 years of age. I know a

May 29, 1978
Old Age Security
lot of people joke and say they do not want to live that long, but the facts are that.
A bill like this should be analysed in terms of broad, social policy, realizing the advances that will be made in environmental medicine and preventive medicine, with a dramatic increase in life expectancy between now and the turn of the century.
I know the hon. member who put forward this bill is deeply sincere about it. He is very concerned about social and medical and health care policy. However, the bill should not only be analysed in terms of the fact that this government has messed up the economy of the country, that we have terrible youth unemployment and therefore terrible pressure is put on older Canadians to get out of the labour market. I sympathize with the decent spirit of the hon. member when he put forward this proposition, but it would be irresponsible for us to block ourselves rigidly into such a policy at this time without considering the long terms prospects of our aging population.
There are many charges on the treasury-federal, provincial and municipal-in terms of education costs. We are now educating a lot of our population past the age of 30. We are going to pension these same people off at age 60. In all fairness, without being ultra-conservative about it, I would ask the hon. member whether he has costed putting the retirement age of 60 under a universal program, because in terms of other priorities in the social and health field, one wonders where this priority would fit.
Because of the economic mess we are in at the present time, is there any money in the treasury for this kind of social thrust? I am not going to say that because this government has messed up the economy we should not take positive, creative and constructive steps in the social welfare and medical health care fields, but in terms of other priorities-preventive medicine, community medicine and all those things we should be doing in the social services bill which is soon to be brought before parliament in terms of day care centres, crisis intervention and that kind of thing-I wonder if the hon. member who proposed this measure has really thought about where this very costly measure should fit in the scheme of priorities. I wonder if he has thought about my deep conviction that, by the turn of the century, as I have said, the average Canadian and the average individual in the western world will be living to his or her mid-eighties. I reiterate that I quite agree with the hon. member that in many cases people could and should for many reasons retire at 60, but should this be a rigid, universal program? And I am not satisfied that we should go to a means test.
I would have preferred to have heard from the hon. member who proposed this measure debate about where he fits this measure in with the scheme of priorities I mentioned. I would have preferred if he had given us some detailed costing of the measure. When we are talking about proposals in the social, medical and health care sectors, I think it is very responsible to cost them out not only for our own use but-


Stanley Howard Knowles: That is what the senators said about S20 a month 50 years ago.


William Heward Grafftey: The hon. member is often the conscience of the House.


Mr. Muir:: As many others are.


William Heward Grafftey: He oftens feels he is the conscience of the House, but I put forward the proposition that when we are talking about billions of dollars, it is probably a good thing to cost these things out and consider priorities.
I say with firm and deep conviction that my party is dedicated-largely because members on both sides of the House have worked along these lines in a bipartisan spirit-to the proposition that many people in our society should not be getting an undeserved shafting through the system; and because there are hard working members in all parties in this House, there is no excuse for this. We have the infrastructure. There is no excuse for the fact that in Canada we should not be leading the world in terms of delivering at the community level decent, humane and civilized social services and medical and health care services.


Mr. Mclsaac:: We are.


William Heward Grafftey: I think a proposal such as this needs costing, but it also needs analysis in terms of other priorities in the social welfare and health fields. It needs to be seriously considered in terms of the proposition I put forward a few minutes ago relating to my firm conviction about life expectancy at the beginning of the 21st century. Today we are talking about universal pensions at 60 when life expectancy is 71 to 75. If we add ten years to that 20 years hence because of constructive advances in the delivery of medical and health care services, I think we owe it to future generations to stop, look and listen.
If we do talk about pensions at 60 while not going back to a means test, perhaps we should still not be talking about universality. Perhaps much of this is hypothetical now because of the state of the treasury.


Stanley Howard Knowles: Mr. Speaker, would the hon. member permit a question?


William Heward Grafftey: Yes, Mr. Speaker.


Stanley Howard Knowles: Since the hon. member so generously, out of the goodness of his heart, is raising life expectancy in the year 2000 to 86, I wonder if he would be good to me and raise it to 92. I would like to see that year too, and to see it right here.


William Heward Grafftey: Mr. Speaker, I am not sure whether the hon. member is being facetious or not.


Stanley Howard Knowles: I am serious.


William Heward Grafftey: I base my projections on some pretty solid research work. I base my projection of a life expectancy at the
May 29, 1978

turn of the century of 85 on the firm conviction that somewhere along the line we are going to recommence our major intervention in the delivery of medical and health care services.
Let us think of what is going on in the area of bacteriology and control of diseases which heretofore killed. We know that biologically man can live to be 120 years of age. That is an ideal, and there are many problems which intervene and which make it an ideal; but I bring these matters forward because I think they deserve discussion now. I know that the hon. member has a deserved reputation for being ahead of his time, but given contemporary conditions and the points I have brought out I think this proposition deserves further and more detailed discussion.
[ Translation]


Mr. Gerard Laprise (Abitibi):: Mr. Speaker, first of all I would of course like to congratulate the hon. member for Winnipeg North Centre (Mr. Knowles) whose motion is presented for the second time during the present session. On May 19, the Social Credit Party introduced a supply motion which contained a similar item, that is the lowering of the retirement age to age 60-


An hon. Member:: Voluntary lowering.


Gérard Laprise: -the lowering of the voluntary retirement age to age 60, yes. This shows, Mr. Speaker, the importance of this matter not only for members of the New Democratic Party and the hon. member for Winnipeg North Centre who, for many years, has kept hammering the nail on the head, and I congratulate him for his perseverance and determination. He will certainly win his point. We of the Social Credit Party of Canada have taken all the opportunities made available to us to defend this argument and we have introduced numerous motions on the issue.
My colleague from Bellechasse, my colleague from Roberval, myself as well as others, have often asked that the voluntary retirement age be lowered to 60 not only for wives or women, but also for men. As early as in 1966, I presented a motion for the spouse, who is not entitled to a pension when his wife or her husband gets it to be recognized as a pensioner of the state. Now, since that time, part of that has been recognized by our legislation. The latter does not, by far, meet the requirements I had made and which were supported by many hon. members in this House. But the fact remains that a step has been made in improving the law.
But today, bearing in mind the production facilities of the Canadian industry, and the needs of the people, I would not say the aging population but as the number of older persons increases constantly, I believe it is important to allow those who reach 60 to retire if they wish to do so. We all know that some people who are in very good health or who have a job where they can continue to work may find it difficult to leave the work force at 60. They should have the right to work if they want to. However, we know that for many people, it is
Old Age Security
difficult to continue working at 60 in a plant or in the woods of northern Abitibi and northern Quebec, or in the mines of Matagami, Joutel or the Noranda area. After 60, it is difficult for someone to continue to work if he has lost his health because of his work.
Mr. Speaker, we believe that we are right in saying that those people should be entitled to retire at 60 if they wish to do so and also to have a sufficient income to live comfortably. This is precisely the purpose of motion No. 14 proposed by the hon. member for Winnipeg North Centre (Mr. Knowles).
Mr. Speaker, when such innovations or motions are discussed, members on the other side of the House, on your right, Mr. Speaker, on the side of the majority, always ask: "Where shall we take the money?" They are always concerned about money and not about needs. A while ago, the hon. member for Brome-Missisquoi (Mr. Grafftey) was still concerned and nervous and was not ready to take a position on the issue because he was wondering if he should place money before people. For him, the dollar sign is even more important than the Canadian citizen who has worked from the age of 14 or 15 until 60 to develop Canada. For him, the dollar sign is even more important than the Canadian citizen.
Mr. Speaker, I felt sorry the other day when I read in Hansard for April 14 statements made by the Minister of National Health and Welfare (Miss Begin) in answer to the hon. member for Bellechasse who had requested in his speech on the budget a more substantial pension for our senior citizens and I quote:
Mr. Speaker, if I have correctly understood the speeches and remarks of the two parties of the opposition I have heard so far during the budget debate, Canadians did and won almost nothing . . .
But, Mr. Speaker, Canadians-but we know and we recognized that they have done much to develop their country. We want it to be recognized in a legislation which will bring down the retirement age to 60. We do not want to be given it as a charity but as a right that would be recognized once and for all as a right should be. That is what we ask for when we propose or support such motions.
The funny Minister of Health and Welfare (Miss Begin) said about the hon. member for Bellechasse (Mr. Lambert) that he blamed the government for an alleged terrible loss of money he called the debt system. Of course, our national debt amounts to $38 billion but we should not worry about it. If we worry about that debt they call us timid. Mr. Speaker, last year that debt cost us $5,350 billion in interests and will cost us this year $6,500 billion. For those who worship the golden calf and who would do anything for the owners of the golden calf it is alright to pay out $5.5 billion or $6.5 billion in interests, but when we ask for $2 billion more to allow senior citizens who built our country to have a more decent living they cry shame and ask where is the money coming from.
Mr. Speaker I think we should make a distinction between paying interest and paying tribute to the owners of the golden
5844

May 29, 1978
Old Age Security
calf who did not raise a finger to develop Canada, we should make a distinction and allow those who developed their country to get a decent pension at the age of 60. I am shocked by this situation. What are the needs of older people? They need food like everybody, they need clothing like everybody and decent dwellings and they should have leisure activities like everybody. They are like other people. They have a right to those things. This is what we demand for them.
Mr. Speaker, is it not the desire of Canada to continue giving them those things they require and they need? I think that Canadian industry and Canadian agriculture, transportation means can move goods from one place to another. I think the services can meet the needs of all those people without depriving others since we have one million unemployed who only ask to replace those people who will be leaving their jobs. Those are the things we want to set in order.
Many young people join the labour market. We have teachers who do not know how to go about it right now. Young people come out of junior colleges and universities with degrees but cannot find work. They offer to do any kind of work. I know a young man in Ottawa who is now in the north working in the forest making fascine. It is a job for a labourer not a professional. You are not going to tell me that this is a young man who does not want to work. He is there with the flies at the risk of burning in the forest or faced with any other peril. But he wants to work, he needs money to continue his studies.
You have 60, 62, 63 or 64 year old people in that same forest at the same site who have to continue to work in the same conditions to earn their living because they cannot do anything else. I think it is in those things we want to put some order. I raised specific points to make sure the minister understood them well. If she is not here, I imagine she surely has serious reasons for being absent but she will have an opportunity of reading tonight's debate and to understand that the system in which we live needs to be changed also.
I was just handed a news appearing in today's Le Droit in which the Minister of National Health and Welfare stated in Longford Mills, Ontario, and I quote:
Two million children live in poverty.
That is brand new, very recent. The minister just understood and realized that. She said, and I quote:
The economic system must be amended to promote and not discourage work.
It looks like she has finally understood the situation and I hope that the measures she will take following tonight's debate will really be effective and bring about the necessary amendments to the Old Age Security Act so that the motion of the hon. member for Winnipeg North Centre as well as all the recommendations that have been made from both sides of the House will be considered and that at last senior citizens will be allowed to retire a little bit sooner if they wish to and will be

able to live a decent life since the country can provide them with that possibility.
[DOT]	(H42)


Mr. Hugh A. Anderson (Parliamentary Secretary to Minister of Fisheries and the Environment):: Mr. Speaker, 1 am becoming very intrigued-and I hope other members of the House are also becoming interested-with the motions being presented to the House on the subject of retirement. It is very clear that every member who has addressed the House recently on the subject of retirement has expressed different opinions. What is becoming increasingly important is that, while we are all striving to reach a common goal, namely, the well-being of Canadians, the objective is being approached by a great variety of seemingly contradictory routes.
It was recently that the House was debating the motion to consider the advisability of enacting legislation to raise the compulsory retirement age from 65 to 70 for any person aged 65 or more who does not wish to retire and is prepared to give up his or her entitlement to any private pension plan or annuity. Today we are asked in part to give consideration to the advisability of amending the Old Age Security Act and the Canada Pension Plan to provide for pensions payable under these two acts to be available at age 60 to all persons who meet the requirements of the said acts and who are not in, or are prepared to withdraw from the labour market.
[DOT]	0752)
The hon. member for Brome-Missisquoi (Mr. Grafftey) asked a pertinent question about the cost of the program envisaged by the hon. member for Winnipeg North Centre (Mr. Knowles). In the time remaining in the hour allotted for private members' business, I think that is a good point for discussion.
Let us look at the proposed increase in old age security benefits. The old age security program expended close to $4.5 billion in the 1976-77 fiscal year, roughly $3.3 billion of which was spent on the basis OAS benefit program, $1 billion on the guaranteed income supplement and $0.1 billion on the spouse's allowance.
Since there are at present just over two million old age security recipients in Canada, a $1 increase in the OAS pension implies a cost increase of more than $24 million annually. The member's motion proposes that the Old Age Security basic benefit be raised to $300 per month from its present amount of $156.66, almost doubling the current rate. It was easy to calculate that two million pensioners each receiving $300 per month or $3,600 per year would be paid $7.2 billion per year altogether. It was noted that this would represent a rise in total program expenditures of roughly $3.8 billion, or 84 per cent greater than the present cost.
As well, the member proposes that the income test currently applied to the guaranteed income supplement be removed. It is not entirely clear from the motion whether the benefit would be incorporated in the $300 he proposes, or tacked on to this
May 29, 1978

amount. If we make the latter assumption, all OAS pensioners over 65 would be entitled to the full GIS benefit in addition to the $300 per month basic pension. This was worked out to a total expenditure of roughly $2.4 billion at present rates, or $1.4 billion more than current GIS expenditures. The total OAS program expenditures would therefore rise by about $5.2 billion per year at current rates, if the benefit increases suggested by the hon. member for Winnipeg North Centre are applied to the over 65 population, bringing the total program cost to $9.7 billion.
The hon. member suggests also that benefits under both the old age security program and the Canada Pension Plan should be made available at age 60 to those not in the labour market. This is, in effect, the reinstatement of the retirement test which the Canada Pension Plan formerly applied at age 65. However, it would apply at age 60. It is estimated that this measure alone would increase old age security costs by another $4 billion annually, making the total cost for this program $13.7 billion per year, or nearly treble the present total annual cost of the OAS program.
If legislation were introduced to allow CPP retirement pensions to be payable at age 60 in 1979, and if we assume that only half the eligible population takes advantage of early CPP retirement, we find that benefit payments would rise by $40 million in 1979 and would cost the Canada Pension Plan fund an extra $640 million by 1985.
If cost calculations are to reflect with any degree of accuracy the potential effect of these measures on the Canadian economy, they must go beyond a simple counting of increases in numbers of pensions and the dollar amount of benefits paid. We must bear in mind the rather obvious fact that an increase in the number of pensions means a corresponding decrease in the number of people in the labour force who must pay the taxes and contribute to support the larger population of pensioners. That is to say, we are not simply increasing by five the number of years for which the eventual pension must be paid; also we are lowering by five the number of years in which the individual contributes toward the benefits of others.
Then there are other hidden costs associated with lowering retirement ages and increasing benefits on which we can only speculate at this time. If income security benefits such as old age security are drastically increased, will this encourage people to be more dependent on public pensions and to decrease their personal retirement savings? Certainly the average private pension benefit will have to be smaller or the contribution rate much higher if we lower the average working career by five years and increase the average payment period by the same amount.
As far as they can be reasonably estimated, the costs of the hon. member's suggestions to change CPP and OAS benefits would require at least $7.7 billion extra in the first year after implementation. As was carefully detailed in an earlier speech, the annual amount to be expended only could be expected to increase rather than decrease over the long term.
I hardly think it is necessary to provide more details at this time on this particular proposal. It is abundantly evident that
Income Tax Act
we are being asked to consider literally an increase of billions of taxpayers' dollars in very general and respected government expenditure terms. These figures force one to conclude that the hon. member's motion, however well motivated, is not very realistic in terms of what the country can afford. I do not reflect upon the motivation of the hon. member, but I must say it is not very realistic at this particular time.


Stanley Howard Knowles: That has been the argument for 50 years. It has been the same argument from the beginning.


Hugh Alan Anderson: As far as I am aware, the hon. member has not come to the House of Commons and said that we have $7 billion, $10 billion or $13 billion extra. As I have said, the hon. member is well motivated, but at this particular time when we are carrying a deficit in the expenditures of the federal government of Canada it would not be fair or realistic to ask Canadians whether retirement ages should be lowered or raised.


The Acting Speaker (Mr. Turner):: It being six o'clock, the hour provided for the consideration of private members' business has now expired. 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.


[Stage Direction]
The House resumed consideration of the motion of Mr. Chretien that Bill C-56, to amend the statute law relating to income tax and to authorize payments related to provincial sales tax reductions, be read the second time and referred to the committee of the whole, and of the amendment (Mr. Broadbent) (p. 5548).
Donald W. Munro: Mr. Speaker, when I called it five o'clock this afternoon I was expressing my wonderment over the facility with which my colleague, the hon. member for Timiskaming (Mr. Peters), could talk about the bill yet avoid its subject matter. I assure you I am going to talk about Bill C-56 which deals with income tax and provincial sales tax reductions.
80045-3)4

May 29, 1978
Income Tax Act
I have been waiting for some time now to comment on the constitutional morass into which the government has stumbled, if, indeed, it has stumbled and not gone there of its own free will by design and where, as a matter of fact, it seems likely to sink or at least get itself frightfully mired down as a result of cooking up the $85 Quebec taxpayers deal that has so enraged not only Quebec but all the provinces of Canada. I will deal at length with this further blunder, the consequences of which can only be to drive a wedge more deeply between the federal government and the provinces.
It is tempting, Mr. Speaker, to ridicule the government for its apparent insensitivity in this area, a government made up of a party which has claimed for ten years now to be the only party capable of dealing with Quebec. Canada as a whole, however, is the principal casualty. Therefore, ridicule is just not the response that is called for by this particular issue.
Indeed, my approach is one of sorrow for Canada because of what this government is doing and seems bent on doing. The truth of the matter, of course, is that the vast majority of those making up this government are too close to Quebec to be in a position to take an unimpassioned approach to the problems contemporary Quebec has raised in Canada as a whole. This is not only in general constitutional terms but even in terms of this tax deal, which has become such an issue. They have convinced themselves that the proposal they have advanced in this legislation is compensatory in the sense that if, in a somewhat different way, it is doing in Quebec and for Quebeckers what it has already done for the other provinces and the inhabitants of those provinces, then it is right. There is no comparison. It is a completely new approach to the problem. It has to be, otherwise this legislation would not contain clause 59, which is the first subject of my comments.
This is a money raising bill with a clause providing for the outlay of funds. This matter has already been raised in the House, but it is a strange procedure that in a bill, primarily concerned with raising money, there is a provision, the last one, dealing with the spending of money. For all other provinces it was a matter of vacating part of the income tax field for each taxpayer, $100 worth to be exact, so that the province could occupy it. The taxpayer, of course, gains nothing out of that particular shift from one payee to another. This book transfer has been done in most of the provinces.
However, we must recall that the federal tax collecting agency, Revenue Canada, which at the moment is not represented in the House by a minister, does not collect income tax for the province of Quebec. Quebec assesses and collects its own income tax, and that is a distinguishing feature which we have to bear in mind. The federal government, however, was not going to allow the provinces to replenish their treasuries, generally speaking, leaving Quebec aside for the moment, without some quid pro quo on the part of the provinces that benefited thereby. The provinces were expected in return for that extra revenue which they were going to get to cut provincial sales tax levies by 3 per cent for six months. My

own province of British Columbia opted to cut the levy by 2 per cent for nine months.
The provinces gain revenue, on the one hand, by getting into the income tax room vacated by the federal government, but they lose revenue on the other by collecting less in the way of sales tax. It looks pretty fair and sounds like a good deal, and it probably was until the "feds" started fiddling around with the Quebec situation because Quebec had said, "Not on your life" to the proposition put forward by the federal government. They did so on the ground that the sales tax was provincial jurisdiction and the "feds" had no right whatever to suggest how the province can impose or collect its sales tax, a simple constitutional reply. I would say it is fair constitutional ball. I remind the House that the federal income tax collecting agency, Revenue Canada, does not collect the provincial income tax assessed in Quebec.
Thus, we had on the one hand several provinces agreeing to lower their sale tax and, on the other hand, Quebec refusing to do so in the across the board manner as proposed by the federal government. Instead, Quebec eventually decided in its own budget and within its own jurisdiction to drop the sales tax entirely but only on certain classes of goods that are manufactured in Quebec so as to benefit the manufacturers in that province-shoes, clothing, textiles and furniture. Their object was to preserve employment in those industries. Having done this, the Quebec tax authority asked for its prorated portion of the income tax deduction from which the other provinces had benefited, a sum amounting to approximately $186 million.
By this time the situation had become really complicated. The federal government refused the Quebec counter-proposition and claimed that the province had failed to co-operate. Things went ding-dong from it, and then the federal government hit on the novel idea that is set forth in this bill-to return as direct payments to Quebec taxpayers the amount they might have otherwise had returned to them had the provincial government played ball like the other provinces.
To get the picture properly into perspective, Mr. Speaker, I would like to read into the record an excerpt from a letter which was sent by the federal Minister of Finance (Mr. Chretien) to the provincial minister of finance in Quebec. The Minister of Finance in his paragraph three starts out:
In your letter of April 27, you indicated that you did not accept the federal counter-proposal . .. The federal government has therefore decided to pay the Government of Quebec, as it undertook to do on April 21, an amount equivalent to two percentage points of the selective eliminations of the sales tax that you announced, that is, about $40 million. In order to rebate the remaining $186 million, the federal government will temporarily withdraw from the personal income tax field by reducing the tax paid by Quebec taxpayers by a corresponding amount.
For the Quebec taxpayer, this reduction will be equal to the lesser of $85 or the tax otherwise payable. The purpose of the rebate is to compensate Quebec taxpayers for the provincial sales tax which they will have to pay on all items not subject to a reduction from 8 to 6 per cent for six months.
This was the proposal made to the other provinces. Going to the next paragraph:
The sum of the $40 million to be paid to the Quebec Treasury for the selective eliminations of the sales tax and the $186 million to be rebated to Quebec
May 29, 1978

taxpayers corresponds to the $226 million allocated to Quebec in the Budget speech.
There we see the arrangements that were proposed, counter-proposed and finally laid down by the federal Minister of Finance.
There are several interesting features arising from this unusual proposal and they deserve mention. First of all, it provides a tax rebate to Quebeckers that was not provided to the citizens of the other provinces, $186 million worth if I read this correspondence correctly. In the case of the other provinces, hon. members will remember that the federal government vacated an area of income tax that was immediately reoccupied by the provinces. No citizens from the other provinces gained by this process; they were merely being taxed by a different authority at a different rate, sometimes higher, sometimes lower.
Second, the 3 per cent reduction of sales tax on purchases within a province benefits all citizens buying items subject to sales tax, from cars to stereos to building supplies to drug items. The elimination of the sales tax in Quebec benefits only those who buy shoes, clothing, furniture and textiles. But that is Quebec's decision and if Quebeckers do not like it as a long term thing they know what they can do-they can vote on it at the next general election in Quebec.
Third, the federal proposal will extend up to an $85 rebate to income tax payers only in Quebec. The Quebecker who pays no income tax will not benefit. That is an important point. It is favouritism of the worst sort. The revenue collected in other provinces as a result of the federal government vacating part of the income tax field will become part of the province's general revenue and as such will go to pay citizens in those provinces. No amount of casuistry can produce arguments to convince me that what is being done for Quebeckers is the same as was done under the tax vacating process for other provinces.
There are two jokers in this pack, Mr. Speaker. There are a lot more jokers than that with all the government members who are not over there! The first one is that on October 15, when the tax vacating deal plus the sales tax reduction notion comes to an end, the provinces will have to decide whether to continue with the sales tax reduction or suffer the political consequences of reimposing it. That is a nice way to deal with the provinces; it is a neat political trick to go through the motions of producing what looks like a favourable deal for the provinces with the full knowledge that the unfavourable consequences when the concession comes to an end will be borne by the provinces.
Is this the way to run a federation? Is this the way to treat federal-provincial relations-through Machiavellian trickery? Does the six-month deal and the October termination deal have anything to do with a general election? I think it is enough to make one wonder. One has every reason to ask why, if this government really wanted to do something positive to stimulate consumer buying, which presumably was at the bottom of this whole operation-the assumed reason for luring
Income Tax Act
the provinces into dropping their sales tax-it did not reduce the federal sales tax. They are losing $100 per taxpayer to the provinces as a general thing, at no gain to the taxpayer. Federal revenue, therefore, has dropped. Could it not have dropped by the same amount by reducing the federal sales tax? What mischief is this government about, what tortuous reasoning takes place within its councils, are questions the Canadian people have to ask.
I said there were two jokers in the pack. The second one may take a few words of explanation but it produces a surprising result. Quebeckers are to receive an income tax rebate of up to $85 because it proved impossible for the federal government to work out an income tax and sales tax deal with Quebec similar to the one worked out with the other provinces. That is, $85 on a six month deal that in most provinces produced a reduction of 3 per cent in sales tax across the board. It means, for those who get the $85, that they would have to purchase $2,833 worth of taxable goods in six months,
3 per cent of $2,833 being $85. Are income tax paying Quebeckers likely to buy that amount of taxable goods in six months aside from clothes, textiles, shoes and furniture? Is anyone? On top of that, Quebeckers get the benefit of total sales tax exemption when buying those items on which the Quebec government decided to eliminate the sales tax. It is a great deal-a great way to promote harmony in a federation!
The distressing conclusion to be drawn from this sorry mess in which we find ourselves is that this government seems determined to look always for political profit in its dealings with Quebec, and this time has failed utterly. The approach of the provincial legislature, voting unanimously to reject the proposal, is evidence of that.
We are bound to ask ourselves, as we have asked often and will ask as long as this government is in power, is this any way to hold a federation together-by exploiting a national crisis for political advantage? The answer obviously is no, it is not. Error heaped on error heaped on error: that is the record of this government. Once again I ask, how long are we to endure this "reign of error"?
Enough, however, of criticism. Surely there is something commendable in the bill before us. There is, even if it is not wholly commendable. I want to turn to clause 34 of the bill which has 19 long and tortuous subsections, all dealing with RRSPs and all arising out of paragraph 16 of the ways and means motion tabled by the Minister of Finance on April 10, 1978.
The first thing I want to say about this is that the motion broadens considerably the options open to those who have decided to make provisions for their retirement years by investing in RRSPs. I think this is a good thing. Prior to the tabling of the motion those who followed this route had only one option open to them aside from cashing in the savings in one fell swoop and facing the income tax consequences of doing so. Those consequences could be fairly heavy. That option was to convert those savings at any time between ages 60 and 71 into an annuity on which, of course, the annual levy of income tax would be paid.

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It is worth recalling for a moment or two what the RRSP is all about. When originally conceived about 20 years ago the plan was designed to provide the self-employed person-the small business operator, the doctor, the garage owner, the lawyer-with an advantage already within reach of the salaried worker and the daily wage earner, namely, a tax exempt reduction in take home pay in order to build up a pension fund that could be drawn on upon retirement. Self-employed entrepreneurs were unable at that time to make provision for their retiring years and get a tax benefit as well. The RRSP provided that facility.
Over the years the emphasis on RRSPs seems to have shifted somewhat, just as the principle underlying the unemployment insurance scheme has shifted under this government. Whereas unemployment insurance was originally devised as an insurance to provide against the day when a salaried worker or daily wage earner found he was temporarily out of work, it has since become a means of collecting welfare entitlements that contributors are more and more coming to feel are their due. Having paid, they have to collect, just as the man who has paid fire insurance on his house for, say, 20 years decides in the 21st year that he is going to get his money back and sets fire to his house.
Something of the same sort has happened to the RRSP facility. Whereas it was originally designed as a pension planning scheme-a temporary relief from income tax on the funds being put aside-it is now tending to become a tax shelter with an incidental pension benefit. Everybody is getting into the act because the tax shelter benefit is there, even those who already have pension plans prepared for them by their employers under salary or wage deduction schemes.
The reasons for this shift from the pension scheme idea to the tax shelter notion are easy enough to understand. First of all, inflation has gripped most of us with its long entwining finger and threatens to throttle us, meaning fear for economic security in the years ahead which in turn dictates additional pension revenue than that provided by employers. Furthermore, the income tax cut by the government has been biting deeper and deeper into current income. So why not run for the nearest tax shelter, that of the RRSP?
RRSPs have become a way of saving for the future as well as saving oneself from the full burden of current taxes, with special emphasis on the latter advantage.
In his budget provisions in April the Minister of Finance responded in a sort of way to many of the representations that had been made to him to broaden the options open to the owner of an RRSP. These representations, so far as I can make out, were made by individuals but also by trust companies who, until that time, were unable to retain the use of the RRSP funds that may have drifted their way during the savings period of a working man's life. All annuities up until now had to be provided by the insurance companies. Individuals could save in a trust company but when it came time to roll that money over into an annuity, it had to go into an insurance

company. The April budget now opens the door for a type of annuity payment that can be handled by trust companies who will in future be offering competition to the insurance companies. I am assured by those to whom I have spoken that the insurance companies welcome this particular competition.
This broadening of the investment horizons comes about largely because of a new vehicle proposed in the budget that may be used by the retiree any time between age 60 and 71. This is the RRIF, the registered retirement income fund, into which the RRSP owner may roll his savings.
The options now open to the RRSP owner are as follows: Firstly, he may cash in his RRSP and meet his income tax obligations at one fell swoop if he wants to. That is option number one and it is not new.
Secondly, he may buy an annuity for life, a straight life annuity, or a term certain, say a 15-year or 20-year annuity. These he must still buy through an insurance company. That is option number two and it is not new.
Thirdly, he may buy an annuity equal to the number of years remaining between the age when he buys it and age 90. For example, if he buys it at age 60 he buys a 30-year fixed term annuity and it will be paid for as long as the annuitant lives. It will be paid certainly for 30 years, and if he should die, then it expires. That is option number three which extends the fixed term feature of annuities and it is new.
Fourthly, he may roll over his RRSP into a registered retirement investment fund which he himself can manage, if he so desires, or which he can have managed for him by any trust company, even the one in which he had invested the RRSP. The payments from that fund may be drawn down annually until age 90 in quantities determined in the law. It is an ingenious scheme that gradually works up in such a way to a good deal more at the end than at the beginning and finally sees the total extinction of the fund in the pensioner's 90th year. That is option number four and it is totally new.
One thing worth nothing about these options is that whichever option is selected it cannot be acted upon before the age of 60 and must be acted on by age 71. Comments on these limitations would appear to be in order. There is a third age at issue here and that is the age of 90 which deserves some comment.
In connection with age 60 the following remarks are warranted. Why is it not possible to get the RRSP, without loss, before 60 with the same options? Suppose a self-employed entrepreneur, the owner of a plumbing fitments business or of a garage, or a doctor or a lawyer, wants to retire at 55, or even 50 if he has made a good thing of it. Perhaps an individual has had an illness and had to retire earlier than age 60. If he has been laying RRSPs aside regularly during his working life, why should he be denied access to them except under penalty-that is, with some considerable loss? Is it because public servants who have devised these schemes are unwilling to see anyone retire before they do and set age 60 down as the earliest age at which contributors may gain access to their funds?
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I think the arbitrary age of 60 is nonsense and that that limit might well be removed. The size of the fund will obviously be less because it will not have been invested as long. I can see no reason whatever why, with notice, the funds should not be available with the same or even more options whenever the investor wants it, whether it is before 60 or after.
At the other end of that 60 to 71 time limit why should anyone have to roll over his savings at age 71? 1 see no reason at all. Maybe an investor finds himself comfortable financially at age 71 and is prepared to let his money go on growing. Why should he not be able to do so? Why should he be obliged to roll over his RRSP into an annuity? At 75 he may feel like a world cruise or decide to cash in his RRSP. Why shouldn't he? Perhaps some of his other investments have not panned out as expected and at 75 or 78 he needs extra support. Maybe inflation has caught up with him. It could happen. In other words, why should he not be able to defer the roll over of his RRSP until he wishes? Or, as in the case of the lower end of that age bracket, why should he not get those funds without penalty when he wants them at age 55, 58 or even 50?
My other comment concerns age 71 and the fourth option, which is a self-managed fund. It is a pretty ridiculous proposal when you look at it. In 99 cases out of 100, who at 71 and over that age until reaching the age of 90 will be able to manage his own investment fund? It takes a very long life of studying the markets in order to be able to make a fund grow. If he does, can his trust company know with any certainty what the annual pay-outs will be? As one commentator in the Financial Post said on April 15:
This is going to turn the industry on its ear. Can you imagine the absolute chaos caused by an RRIF owner being able to run his own account but the trustee (i.e. the Trust Company) having at the same time to liquidate the fund according to a strict formula year by year?
Self-administered RRIFs at any age sound to me to be self-defeating. At age 71 they would probably be self-liquidating in the majority of cases.
Now, this age 90 limit brings me to my final comment. Many people live beyond 90. Life expectancy at 71 is nearer 85, true. But some die before 85, and some obviously live to 90 and beyond. Figures available to me indicate that in 1976, for example, there were 52,160 Canadians living over the age of 90.
These options nearly all close at age 90. The only one that does not, of course, is the life annuity option. This is the first one, the payment of an annuity for the life of the annuitant, be that for one or for 40 years. But even under this option presumably-at least this is the way I read the bill-an individual can contract with an insurance company for a period certain plus a life annuity which could carry the annuitant beyond age 90 should he live beyond that age.
Options three and four, however, foreclose at age 90. Why? Not only why, but what happens after age 90, for those who live that long? Who chose the mystic 90 figure and what does it represent? At age 91 an annuitant could feel way out on a
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limb if he had opted for either plan three or plan four, because both terminate at 90. The choice of that age baffles me.
I would far rather see the 90, if it has to appear at all, as a "for example." Let the annuitant decide the length of time he wants to enjoy his RRSP, but he should have explained to him all the options open to him. This is basically the role the insurance companies play-life only, fixed term only, term certain plus life, and the terms can be ten, 15, 20 or even 30 years, of course, with corresponding changes in the size of the annuity payments. As variations on these, there are joint life and term certain plus joint life when man and wife are deciding on working out their annuity as a joint operation.
I say again, in conclusion, that the RRSP owner ought to be able to get his RRSP without penalty, at least after leaving it invested for five or ten years, whenever he wants. He should be allowed to defer if he so chooses, even beyond 71, He should not be limited by the mystic age 90 either, only to find at 91 he is completely dependent on others for his everyday care.
Besides the individual criticisms, I find the broadening choice offered by the RRSP in this bill commendable. For that reason, I suppose we must commend the Minister of Finance for having such a brilliant group of public servants to bring forth these items for him, because I am sure it would not be on his own volition.


Mr. Bruce Halliday (Oxford):: Mr. Speaker, during the past ten days we have had two special debates in the House when two opposition parties, first the Creditistes and second the Progressive Conservatives, choose a subject having to do with the economy to be debated for the day. It illustrates the importance which the opposition parties place on the fact that the economy of Canada is indeed in difficulty. The present government is doing very little to correct it and shows little concern about doing much in the future.
We have before us tonight, and have had for a number of days and, I suppose, a number of weeks, Bill C-56 which in a sense deals with the economy. This bill deals with amendments to income tax law, and sales tax in particular.
For the past several days we have heard a lot in this debate about the ridiculous proposal encompassed in this amendment involving the sales tax. I do not want to spend more time tonight on that aspect of this bill. Rather, I would like to summarize what in my view has been the general feeling around the country as to the effectiveness of Bill C-56. In particular, I want to discuss it in relation to the aspect dealing with the amendment of the sales tax.
People across this country realize that the government has shown itself to be very incompetent in the way it presented this particular cut in tax via the sales tax. Further, people realize that the government has once again shown a special status for one or more parts of this country which most of us feel is unwise. Third, there is no question but that the way they have implemented the tax with the province of Quebec is an attack on the poor which, again, the people of Canada do not appreciate seeing. Fourth, but not a bit surprising, this bill has

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shown itself to be an encroachment upon the provincial rights of one or more provinces in this country. Again, we abhor that.
In summary, most Canadians disapprove of those four aspects of this bill intensely. When the next election comes, the government will realize that is the feeling of the people of Canada with regard to this bill.
I do not want to devote more time to that aspect. I would rather talk about an income tax component of this bill which I think is largely missing. What I want to say about it has to do with what might be called new thoughts or ideas on income tax and corporation tax. They are not new, but certainly are new as far as implementation of them in Canada is concerned.
I would like to put in a little brief tonight mainly on my behalf and not necessarily that of my party, because we have not discussed it at length as party policy.
It is incumbent upon all of us as legislators to play a more active role in looking at the income tax system in Canada, both at the personal and corporate level. We must try and find in that area of the economy a solution to a problem which is probably very basic to the troubles we now have with inflation, low productivity, low trade and so on. It will be found that a lot of those problems stem from our ineffective tax system.
As one looks at the total problem of taxation, one has to go back in perspective a bit. When taxes first became popular, and that is not too far back, they were levied to pay for essential services. Those taxes were levied against both corporations and individuals. As far as the individuals were concerned, the taxes were levied primarily to support functions of government such as immigration, national defence, foreign policy and other such areas where it was necessary to have a corporate body such as government look after them on behalf of the citizens.
We have gone a long way from there. We now have a government, particularly the one across the way in this House, which is no longer content with assuming that kind of control of power. They want to increase that power. They have extended their power into all sorts of other areas of involvement, into the personal life of yourself, Mr. Speaker, and that of every Canadian.
The government has shown its intense desire to take over the control and responsiblity that should reside in 90 to 95 per cent of Canadians who are quite capable of looking after themselves and do not have to be told by government how their money will be spent. We should be able to decide for ourselves rather than have a government do it.
This increasing encroachment is not only at the federal level. Many provincial and municipal governments are encroaching further and further into the power that they have to raise taxes and spend money. I want to express my personal disapproval of this and suggest, as I go along, how it can be corrected. The real role of government in this day and age should be to provide a climate for businesses which operate in this country, not to provide a very detailed, controlling influence over the Canadian people.
[Mr. Halliday.l
What is the current status of taxation in Canada? I have alluded to the fact that it is a real mess. We have all kinds of problems. I do not have to give a lot of quotations to convince hon. members of that. However, there are two or three I would like to refer to which will be supporting evidence of the difficulty we are in now as a country vis-a-vis our tax system.
Something that came out recently-and this will not be new to the parliamentary secretary whom I am pleased to see here this evening-is the report of the Royal Commission on Corporate Concentration. In its 400 pages, they do not deal mainly with taxation. However, on pages 274 and 275 the report of the Royal Commission on Corporate Concentration discusses taxation. I want to read just a few sentences to illustrate how this royal commission felt about our present tax situation.
It is abundantly clear from what we have said in this chapter that savings over the next few years will be inadequate to finance the necessary business investment and that current and expected risk-return ratios will be inadequate to induce risk capital investment. This and the other serious problems of the Canadian economy which we reviewed briefly in Chapter I concern us deeply.
The royal commission is concerned about investment in the future and that there might not be risk capital available, and I think we can supply a solution to that problem through a different tax system. The report continues as follows:
We think there must be more questioning of things that have heretofore been accepted as unchangeable. If the problems we face are as deep-seated as we think, then their solutions probably require equally fundamental changes in some of our economic arrangements. Mere tinkering with effects will not come to grips with basic underlying causes. All of us must be prepared to think about the unthinkable.
I suggest that this has been our problem with respect to taxation. We do not have any committee on either side of the House which is really concerned about taxation. We do not have any committee whose title has the word "tax" in it. I do not think any party in the House has that, which shows what little importance we attach to taxation. Nevertheless, it affects all of us in this country. The report of this royal commission says that we are going to have to have very fundamental and radical changes if we are going to get anywhere with our economy, and those changes have to be in our taxation system.
I want to read two or three more sentences which are very important because they deal directly with taxation.
It is appropriate to discuss the tax system in this chapter because a healthy, small business sector is one of the most realistic antidotes to the economic concentration that is inevitable in the Canadian economy, and which is a constant threat to competition.
I wish the Minister of State (Small Business) (Mr. Abbott) was here tonight so that he could see some of the real challenges which exist for small business and how he might do something about them. The report continues:
The health of small business depends, more than anything else, on a vigorous economy. In addition, the measurement of taxable income and the system to collect tax on it are particularly severe problems for smaller businesses. A tax on profits is disproportionately burdensome-
I want to emphasize this because this will be the crux of my argument.
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-on a small business because retained earnings are often its principal source of capital. Finally, the complexity of the tax system creates a compliance cost that the small business is least able to afford.
I do not suggest that I agree with everything in that report, but there are comments on taxation as it exists today which are indeed very apropos.
Let me quote from a speech made only two or three days ago by the hon. member for Vancouver Quadra (Mr. Clarke). His remarks are recorded at page 5807 of Hansard.
-I am a chartered accountant who understands, probably better than most in the House who are not chartered accountants, some of the complications in the income tax and accounting laws and I have an idea of the huge costs involved in the legal advice needed in dealing with the income tax laws.
The hon. member for Vancouver Quadra was suggesting that we have indeed a very complicated tax system which is causing everybody difficulty. He was implying, 1 am sure, that there need to be some changes in that.
Finally, in support of my argument that we have a very unwieldy tax system I want to quote two very short quotations from a Mr. Peter Drucker. I understand that Mr. Drucker is a world renowned expert in management consulting, and he writes on business matters. In the appendix of a book written about Mr. Drucker there are two quotations from his work. The first is: "The corporate income tax is the most asinine of taxes". The other quotation is the following: "We are dedicated to the preservation and strengthening of small business, and our tax policy is designated to destroy small business." I hope the Minister of State (Small Business) will read these little quotations because they are very apropos. This quotation continues: "Small businesses are selling out because of tax laws designed for IT & T"; that is, International Telephone and Telegraph. Here again is another quotation illustrating how ridiculous our present tax system is and the very urgent need there is to do something about it.
What is the history of taxation in Canada, and how did we get into the mess we are in now? A year or two ago the Prime Minister (Mr. Trudeau) said that the free market system was not working. He seemed to think, for one reason or another, that the economic mess we were in then was due to the fact that the free market system did not work. He did not attempt to analyze whether it was because there was too little government involvement in the free market system or perhaps too much, but I suggest that if he had chosen to be honest with us and with everybody else, he would have told us in addition that the reason it did not work was because there had been too much government interference.
I think something has to be done along that line. The Prime Minister did his usual trick. Within a few months of his making that statement he saw fit to take the most reactionary Conservative on this side of the House over to his side of the House in order to give the impression that he was having a second thought and that perhaps the private sector needed to be encouraged a little. He brought the hon. member for Crowfoot (Mr. Horner) to his side to give the impression that an arch small "c", reactionary conservative could be part of the Liberal Party of Canada.
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We know that the hon. member, who is now the Minister of Industry, Trade and Commerce, has no weight over there at all and that he is not having any effect. I suppose he will find that out too when the next election comes around.
If we are to look at what has happened in our tax system, we should start back at the end of the second world war. At about that time there was a great need for fresh capital to start our industry moving again. There seemed to be a need for industry to get working more and to become more effective, and there was an apparent need for capital. A former minister who is now deceased, the Right Hon. C. D. Howe, saw that in the United Kingdom there was a system known as accelerated depreciation which seemed to have an effective result as far as getting industry going again after the war. He brought this back to Canada and integrated it into our tax system. Accelerated depreciation is a form of tax relief which is nothing more than a manipulation of the tax system. As a result of that manipulation we soon developed a system in which savings were being accumulated by industry and by business because of so-called "tax incentives", and I put those words in quotation marks because there is no such thing as a tax incentive. A tax, by its very definition, is a disincentive. In any event, it was called a tax incentive, and I suppose we will have to accept that.
However, it soon became evident that companies were able to accumulate a lot of money in the way of savings, so much so that the time soon came that in its search for money to spend the government was able to auction off treasury bills and get its supply of money from what the private sector was accumulating by way of these accelerated depreciations and other tax incentives.
It was at this stage that we had the beginning of the decline in the role of profits in our basic economic system, which had functioned relatively well up until then. There was a decline in the role of the functioning of profits due to the fact that no longer did business have to borrow on the money markets, because money was then available through various types of tax incentives, accelerated depreciations, write-offs, and so forth.
One could arbitrarily say that there are two economic systems. One is based on a profit incentive. Under that type of system success in business in determined by reducing costs and by increasing productivity. I submit that it would be very difficult to find a system better than that.
Unfortunately, we have moved out of that system because of what C. D. Howe did back in the late forties or early fifties. We moved away from the profit motive being the incentive to produce and manufacture products. We got into the so-called tax incentive, which is the other type of economic system. However, under the tax incentive system the incentives do not encourage production or efficiency. Incentives are there to inflate costs. The greater the costs, the more successful a business can be.
We have the anomalous situation in our economy where presumably we are trying to produce more, put more people to
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work, have more goods to trade and thereby increase our economic effectiveness, and as a result our success depends upon increasing our costs, not upon increasing our efficiency. As a result of that, business becomes subservient to government, and I suggest that the present government-and, I suspect, other governments in this country-enjoys the feeling of power it has over the corporate sector. That is what they have been able to achieve by interfering more and more in the tax structure in the country by introducing more so-called tax incentives.
It is by no means only experts who think this is the thing to do. By 1975-76 the then president of the Institute of Chartered Accountants, Mr. Marcel Belanger, came out very strongly against this type of incentive system based on tax incentives to inflate costs. That was the way you succeeded, not by becoming more efficient or by trying to make a profit. There are still many economists in Canada and the U.S. who seem to think that that is the way our economy should be growing, with greater and greater incentives and more interference by the government.
That is one of the examples of further intrusion into the economy, but there are two or three others. We see now a real demand by companies, as they do their accounting, to allow depreciation on the replacement value with our inflation, which has been aggravated by our change in the tax structure. We now find that it is unrealistic to have depreciation on a provisional cost basis, so companies are trying for depreciation on the replacement value basis because we have shifted from what was originally a healthy tax system to the unhealthy one we are now supporting. We also have a demand for accounting inventories on a last-in-first-out basis for much the same reason owing to inflation. All these are designed to increase the cost of a company's operation rather than to increase its efficiency or productivity.
When we have a system which cries out for more and more inflation of costs, we have to hire two types of individuals who are non-productive: we hire more tax lawyers and we hire more tax accountants, both of whom are non-productive, and thus we aggravate our inflationary spiral.
What are some of the results of this type of change which we have seen in our tax system? What we have seen happening in the last 25 years in this country is a shift in taxation from the corporate sector to the private personal income tax sector. This has had a serious effect on our economy, and, if I may, 1 want to document the extent of this shift in taxation.
A recent publication of the Economic Council of Canada entitled "The Tax Structure and Canadian Trade" written by J. R. Melvin has some interesting figures. He compares 1951, shortly after the change in concept introduced by C. D. Howe, with 1971. In 1951 corporation taxes were greater than personal income taxes so far as total tax revenue was concerned. Corporation taxes were more than 50 per cent of total government tax revenue. In 1971, just 20 years later, corporation taxes were about one quarter of personal income taxes. We can put this in another way. In 1951, corporation taxes were 6.6 per cent of the g.n.p., and in 1971, 20 years later, they had

dropped down to being 3.7 per cent of the g.n.p. They dropped from 6.6 per cent to 3.7 per cent of the g.n.p.
What happened to personal income taxes? In 1951, they were 5.9 per cent of the g.n.p; 20 years later they had climbed to 13.9 per cent, almost two and a half times as much. There is a third way of looking at what happened in the period of roughly 20 or 25 years. The Canadian Tax Foundation in its annual publication entitled "The National Finances" had some interesting figures. They took the financial year 1950-51 and compared it to the year 1976-77, a 26 year difference. In 1950-51, the personal income tax revenue of the Government of Canada was $652.3 million. By 1976, 26 years later, that had jumped to over $16 billion for an annual rate of increase of 13.1 per cent. What happened to corporation taxes in the same 26 year period? They climbed from $809 million to $5,860 million. That was an annual increase of 7.9 per cent. So there, Mr. Speaker, you have an illustration of what happened to our taxation structure. In 26 years there was an annual increase in personal taxes of 13.1 per cent, and in corporation taxes of only 7.9 per cent.
Are there any examples of what this has meant in dollars and cents in Canada? There is one large U.S. oil company operating in Canada-I will not mention its name but it is no secret. In the ten years between the early 60s and the early 70s, that big company did not pay one cent in Canadian corporation tax. Can you imagine a large U.S. oil company operating in Canada not paying one cent of corporation tax for ten consecutive years? That same oil company turned around a very few years later and bought out the remaining existing Canadian oil company, the one that used to go under the white rose banner. It was bought out by the very company that paid not one cent of corporation tax in Canada in ten years of very active business in this country.
How do we stack up as a country vis-a-vis other countries? In the last few months some interesting figures came out from the U.K. statistical office. They compared a number of countries with reference to the amount of taxes that were raised in the country in relation to the g.n.p. in that country. I used to think that Great Britain was a country where you had to pay a lot in taxes, but I suppose that we in Canada have taken over that role. Those figures show the following results. If you take the total taxes raised at all levels in Canada, you find they represent 40.5 per cent of the g.n.p. In the United Kingdom it is only 40.3 per cent. But what is more remarkable is that other countries which are much better off economically than we are, such as the United States, have taxes totalling 31.4 per cent of the g.n.p. What is even more interesting is Japan, which is one of the booming countries at present. Their taxes are one half of Canada's. The taxes raised in Japan are 21.1 per cent of their g.n.p., while ours in Canada are 40.5 per cent.
This brings to my mind a comment I heard recently when I had occasion to be in Japan a month or two ago. We were talking about the unemployment situation here and in Japan and they told us that over there they were having some tough times with their industry keeping the workers busy. We mentioned our unemployment rate being somewhere around 8.5
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per cent, but to our astonishment we learned that their rate of unemployment is only 2 per cent. We could not understand how they maintain such a low rate of unemployment, but they told us they had a philosophy in Japan according to which if you want to eat you must work. We seem to have lost track of that here in Canada. The concept certainly seems to be paying off in Japan, and they do not seem to have that requirement for taxation. As I said, they raise about half the taxes we raise in proportion to our g.n.p.
There are people here in Canada who think that the high taxation from which we suffer is a good idea. Only last week, on May 23, the hon. member for Waterloo-Cambridge (Mr. Saltsman), speaking on behalf of the NDP, agreed wholeheartedly with the government that our high taxes are quite justified. Ele thought they should be encouraged and that we in the Conservative party were out of our minds to think that taxes should come down. The hon. member thought it good that they should be so high. This is hard to believe.
The idea of heavy taxation is not only this government's idea, I do not want to give credit to this government for being the source of this concept of high taxation. We have to go back to the time of Marx, Lenin and Engels when they wrote the communist manifesto. All three men argued very strongly that, if a government wanted to destroy private property and the private enterprise system, it would be necessary to tax it. That is what this government is doing. We have not been told by the government that it wants to destroy the private enterprise system, but it is embarked on that. Certainly I cannot accuse the government of being communist, but it is implementing the communist system as far as taxation is concerned. There is no more powerful a method for destroying the economy of a private enterprise system than a system of very high taxation.
What is the solution? The Carter commission was set up in 1966 by the present government to look at taxation and see if it could come up with a more rational approach to it. The commission had enough insight to recognize the fact that there are two basic concepts of taxation as it applies to the corporate sector. One approach is the benefits approach and the other approach is the ability to pay approach. It remains unexplained why our lifelong system in Canada has been to tax corporations and people on their ability to pay. Obviously that does not work. There are various examples to show that it has not worked. The mess we are in now is proof of its being an inefficient system.
There are people in Canada who realize that the system of taxation based on the ability to pay is a lot of nonsense, just does not work, and that there are systems which work better. The system which works better is the benefits approach. If one wants to look at it from the point of view of corporations, it can be called a tax based on net business costs. The person in Canada who has done the most to push and propagate this concept is Mr. John R. Ferguson of Ottawa. Unfortunately he has not been listened to by the present government. The
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government does not seem to be interested in a more reasonable approach to taxation, which approach is available.
In the time remaining, it is difficult to go into a lot of detail explaining exactly what the benefits approach to taxation is as opposed to the ability to pay approach. In essence, if one wants a successful economy, profit and productivity must be encouraged. As soon as the approach to taxation is based on ability to pay, those two areas are being condemned. In the ability to pay system, the more one makes, the more tax he is required to pay. That discourages any kind of incentive, productivity and efficiency.
It has been well known that if something is not liked, it is taxed. The British found that if they wanted to tax chimneys, the result would be fewer chimneys. When they started to tax windows, people would start doing away with windows. Canadians cover up windows because if their windows are boarded up they pay less tax. In the last year or so, the government decided that it was necessary to conserve fuel and gasoline. By increasing the tax on gasoline, the government thought that would discourage its use. It is a well known fact that if the government wants to discourage something, it is taxed. We want to encourage efficiency, productivity and profits. Yet, the government turns around and taxes profits which discourages productivity and efficiency. It is hard to believe.
What are some of the differences between the ability to pay and the benefits approaches to taxation? Without going into great detail, I should like to mention the 11 different contrasts between these two types of taxation. These differences were enunciated by Mr. John Ferguson of Ottawa. I think they deserve a lot of consideration by the government, as well as all members of the House, if we want a real turnaround in our economy.
The first contrast is this: a tax on profit penalizes efficient companies and subsidizes marginal and inefficient companies. If the tax is based on net business costs, it will bear evenly on all businesses and thus would not penalize efficient nor subsidize inefficient companies, as does the current tax on profits.
A second harmful effect of the tax on business profits is: it results in many marginal expenditures being made for tax reasons rather than for sound business reasons. For instance, if a company decides that it has $10,000 to spend on advertising, $5,000 of it will be paid by the taxpayers of Canada because the companies are not required to pay any tax on that amount. It means Canadian taxpayers are subsidizing that inefficient component of the cost structure of that particular company. If the tax on net business costs system is implemented, the tax on costs would result in reducing or eliminating those expenditures, which are often made for tax reasons rather than for normal business reasons.
The third contrast is: it results in many businesses being tempted to inflate their non-cash charges in order to reduce their taxes. Of course, these are the harmful effects. A tax on net business costs would result in businesses being encouraged to reduce their costs in order to increase their profits and reduce their taxes.
80045-4Vi

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Income Tax Act
The fourth harmful effect is: it has not provided an adequate source of government revenues mainly because of the provision by the government of tax concessions. The contrast of that is that a tax on costs would permit the government to eliminate the many tax concessions and reduce the effectiveness of the profits tax as a source of government revenue.
The fifth harmful effect is: it has resulted in the larger capital intensive corporations becoming relatively independent of the financial markets for the financing of their expansion projects and thus has inhibited the development of the financial markets. On the other hand, if there was a tax on net business costs, the result would be that the largest businesses in Canada would once again become more dependent on the financial markets for financing their expansion projects. At the same time, the removal of the tax on corporate profits would facilitate such market financing.
The sixth harmful effect is: by inhibiting the efficiency of the financial markets, it has reduced the effectiveness of monetary policy. On the contrary, with major businesses becoming more dependent, as they would under a tax on net business costs system, the financial markets and the monetary policy, through its influence on costs and the availability of credit, would become a more effective tool for combating inflation.
The seventh harmful effect is: it has resulted in pressure on accountants to stray from sound accounting principles in order to permit costs to be inflated for tax reduction purposes. If a tax on net business costs were implemented, it would permit accountants to spend more time on ways and means of assisting businesses in the reduction of their costs, rather than in the minimization of their taxes.
The eighth harmful effect is: it has led to inaccurate profit and loss statements and has generally clouded the economic picture of many corporations. On the other hand, the implementation of a tax on net business costs would lead to greater accuracy in profit and loss statements and present a clearer picture of business results.
The ninth adverse effect is: because of its complexity, it has resulted in an excessive administrative burden at both government and business levels. If a tax on net business costs were put into effect, it would eliminate the complexity of the present profits tax, and it could reduce considerably the administrative costs at both government and business levels.
The tenth adverse effect is: it has resulted in businessmen devoting an excessive amount of time and effort to the minimization of taxes, rather than the lowering of costs and the maximization of business profits. With a tax based on net business costs, the temptation for many businesses to spend time attempting to obtain from the government the maximum tax concessions possible would be reduced, and they would be permitted to concentrate on the maximization of profits.
Finally, Mr. Speaker, in number 11 the contrast here is that the tax on business profits has resulted in a misallocation of financial and other economic resources in Canada, and has

contributed to a higher cost economy. You could avoid that through the tax on net business cost, because this would result in a better allocation of economic resources and, therefore, would result in a more efficient and lower cost economy.
There are many arguments there as to why we should reconsider in a very serious manner our taxation system both at the corporate and at the personal income tax levels. Taxation has now reached a very high degree. The level of personal income taxes now has reached the point that those of us who should have money to spend no longer do so because the money is being taken away from us. Corporations are no longer in the position of being able to provide money to the government for the kind of services they obtain from the government.
One could go through all the arguments which bring one to the natural conclusion that if we are to have an upturn in our economy we will require to take a very serious look at our whole tax structure, a look that was not taken adequately by the Carter commission. That commission acknowledged that there were two kinds of taxation. It identified the two kinds, tax on profits and the ability to pay approach, and pointed out that there was a tax on net business costs; but it completely omitted to consider the latter. It dealt only with the tax and the ability to pay. We have ended up some twelve years later with the kind of mess in which we now find ourselves.
As I indicated in my earlier remarks, there are enough real experts in the field of economics and taxation who now agree that, if we are going to have an economy which will begin to flourish, we must adopt a different taxation structure. I recommend that this government, in its attempt to create an upturn in the economy, take a serious look at taxation, particularly at the corporate and personal levels, to determine if there is a way around the impasse which we now face, and in this way hopefully lead this country out of this present morass.


Mr. G. H. Whittaker (Okanagan Boundary):: Mr. Speaker, I welcome this opportunity to speak on Bill C-56, that allinclusive bill covering many tax measures. Most of these measures are welcomed by this party as they are proposals which, over the past few months and years, we have put forward as changes that should be made in our tax structure. My main intervention will be in respect of the clause in this bill which deals once again with the rollover of capital gains.
On December 13 last we passed a tax bill which included this rollover on capital gains. It meant that you could sell one farm and buy another without having to pay capital gains tax. When we discussed that measure, Bill C-ll, we felt we were really doing something concrete and conclusive in this field. Elowever, because of an interpretation by the Department of National Revenue we discovered that we really had not done what we thought we were doing. The spirit of the discussion about the legislation was such that we felt we had put this feature into place. We now find that the Department of National Revenue has changed the whole concept, and in effect has ruled or interpreted that a farm is not a farm.
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This sort of thing has been going on for the fair length of time I have been in Ottawa. We have bills before us, we discuss them and we think we have done something, only to find that because of some interpretation we really have not done anything at all. The people of Canada become disenchanted with this sort of thing. They believe they have something in place which is really not in place at all. They blame the politicians when the politicians are not really at fault. It is the bureaucrats in the departments, usually supported by the ministers, who cause all this trouble. What I am referring to is real and not imagined.
On December 13 we passed this bill which stated that if you sold a farm you could buy another without having to pay capital gains tax because there was a rollover feature. At that time we were considering how this would help those farmers around cities who were being squeezed off their land for the purpose of establishing subdivisions. When the land was sold they obtained large capital gains, but if they were being squeezed off in this way and purchased replacement farm land they would not have to pay the capital gains tax.
Let me point out what happened to one of my constituents. He sold his orchard, having been squeezed out by a developer for the purpose of subdividing. He went to Alberta where he found a grain farm he wanted to buy. He wanted to take advantage of this rollover provision in order to buy this grain farm, but it was interpreted by the Department of National Revenue as being not the same kind of business. In other words, the orchard was not a farm, or the grain farm was not a farm. That was the interpretation in this particular case. The man was told he could not take advantage of the rollover provision. When I questioned the minister about this at the committee he said they had obtained a legal opinion from their lawyers to the effect that grain farming was not the same type of business. I just wonder how many different types of lawyers there are, and how they can justify splitting hairs in this way.
I referred to the interpretation section of the Income Tax Act to find out what the interpretation of a farm was in so far as that act is concerned. That act states that farming includes tillage of the soil, livestock raising or exhibiting, the maintaining of horses for racing, the raising of poultry, fur farming, dairy farming, fruit growing and the keeping of bees, but does not include an office or employment under a person engaged in the business of farming.
Why is that interpretation not sufficient? Why do we require a different interpretation by the Department of Revenue in respect of another bill? I suggest this only confuses the people and the issue, and this is exactly what has happened. I know that the Department of Finance is embarrassed because of this interpretation. The government brought in Bill C-56 with a clause that is supposed to fix this interpretation up. Can you imagine, Mr. Speaker, what is going on in this government that, almost immediately after they have put one bill down, they come back with another clause in another bill to correct an interpretation by the Department of National Revenue, which in my opinion is a legal interpretation that is splitting hairs.
Income Tax Act
We know that there are a lot of things done by this government through regulations and orders in council after we pass a bill. Here is an example of where the cabinet should have come down and said to the department of revenue, "Take a look at what the Income Tax Act says; take a look at the interpretation of farms; what is going on here; why are we causing more confusion; why is it costing more money and why isn't it more timely?"
We are lucky to have this Bill C-56 so soon afterwards in one sense, but in another sense we do not know whether it is going to be passed or not. It certainly would never have been talked about if the Prime Minister (Mr. Trudeau) had not picked up a case of cold feet and put his running shoes on. We are lucky in the sense that he did get cold feet and did not call an election because this situation would have taken years to be straightened out, and as I say we do not know whether Bill C-56 will be passed or not.
My main argument this evening is that this government does not need to bring in an act with these clauses to straighten out what has occurred in an interpretation by the department of revenue. All they need do is tell those "legal beagles" to take a good look at it and get with it. I wonder what their interpretation of a lawyer would be and how many different types of interpretations they would have.
In the clause which the government has brought in to straighten out this error and embarrassment to the Department of Finance, they use two words, "or similar". Here we are speaking on this bill and we do not know the interpretation the Department of National Revenue is going to put on "or similar". I asked the question in committee, and what the minister told me was that he backed up his people in the department for what they had done and in the interpretation they had made. He did not tell me, however, and neither are they telling us, what the interpretation is going to be of "or similar". Is it going to mean an orchard or a farm raising grain? A farm is a farm is a farm, and I do not believe that the people who made this interpretation know what they are talking about.
I was raised on a grain farm in the late thirties before I went into the armed services, and for two years I operated my father's grain farm, a section of land in Alberta. I now own an orchard, and have owned one for the last 28 years. It is farming and I call myself a farmer. When I came to this place I was asked about my occupation and I said it is farming. That is my occupation as a member of this House.
However, look at the kind of interpretation these people are putting on this because we had a simple little bill to do something. We as parliamentarians and legislators never dreamt that we were going to have these kinds of interpretations. My argument is that these should not be in the bill, and neither does it need to be there. With all the regulations, interpretations and orders in council that we have coming out of this place and that are never brought to this House, the cabinet could have told these people exactly the kind of interpretation that we should have.

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A farm is a farm. When you are tilling the soil or growing trees in an orchard it is farming, and there is no other interpretation for it. I still do not know what is going to happen when this or similar legislation comes down. I only hope that there is some measure of reality in the interpretation and that what we are talking about here is going to happen. I hope that some bureaucrat, somebody on the staff of national revenue, does not upset the meaning of what we are really talking about.
I come now to the main thrust of Bill C-56, which of course in the sales tax clause. We find that we now have a double standard in Canada as a result of this situation. It is really a clouding of issues. What we have is a confrontation between the provinces and the government, a divide and conquer situation which this government seems to enjoy. If this government wishes to do something concrete without getting involved in somebody else's business, they should be looking at this old, outmoded outdated federal sales tax. This is their field. It is the most outdated and outmoded tax that we have and ever will have. It is not fair. It hits the poor harder than any other sector, and it hits the business people, causing confusion and paperwork. In fact, in some instances it has been one of the highest costs of doing business that they have.
When I first came to this House I started to talk about this 12 per cent tax, and one of my arguments was with regard to the situation that if you manufactured $3,000 worth of business, you did not have to pay the federal sales tax. Well, $3,000 worth of business might have been all right 50 years ago or even 30 years ago when they dreamt this innocuous tax up, but it is not good today. It is absolutely no good, and it was no good to the former minister of finance twice removed. He did not think that it was an area to change, but we finally convinced him to change the figure from $3,000 to $10,000. At the time I spoke in this House I pleaded with him to make it more realistic, even as high as $15,000. We now know that this government is beginning to see the light, and it is mainly because of the opposition pointing out what should be done. They are now going to $50,000, a more realistic figure. But we still have a 12 per cent sales tax. This is where they should have been cutting-not getting into the provincial jurisdiction, not dividing Canada, not giving a different deal to Quebec.
We hear hon. members opposite trying to justify this tax. By giving this $85 rebate to taxpayers in Quebec they are not doing anything for the poor or the people who pay the sales tax in Quebec. The government was trying to buy time for an election. Thank goodness the province of Quebec extended that period to two years. I think they were going to drop it anyway. They did not buy this concept just because they thought they were going to get six months' help from the federal government-and that would be another plum for them. But they did not drop it for six months, they have dropped it for two years, and I would not be surprised if it is dropped for longer than that and perhaps by even more than the 2 or 3 per cent. These are not the kind of taxes that are good for growth in Canada. The 12 per cent federal sales tax has caused more trouble and

has done more to inhibit growth than any tax system in the country. They do not have it in the United States or in any other country.
A manufacturer of pipes told me that his biggest cost was the 12 per cent sales tax. He showed me letters asking him to set up his pipe manufacturing company in the United States. If he did that he could export his pipes to Canada and make more money, as he would not have to pay the 12 per cent federal sales tax. This is the area the government should be working on.
We hear hon. members opposite talk about employment. They claim that because the opposition talk about unemployment they cause more unemployment. They should look at natural growth, which is going to create employment. Members of the opposition talking about unemployment is not what creates the biggest unemployment record we have had in Canada. That was done by the Prime Minister years ago when he told the people of Canada: "Do your own thing; you don't have to work if you don't want to. You can go on welfare or unemployment insurance." That is where the basic problem is.
Instead of coming to this House and doing something about our tax system that would give the people in the private sector an opportunity to work and create jobs, this is the sort of thing we have had. What we need is for this government to get out of provincial fields and do something that will create employment for this country.


Francis Alvin George Hamilton: Mr. Speaker, I listened very carefully to the hon. member for Okanagan Boundary (Mr. Whittaker). In this own way he described the illness of this democratic system to a "T".
The basic problem faced by any party that becomes the government in this country is the question of how to bring some common sense into the decisions taken by cabinet ministers and their staff. He gave the example of a simple act passed in good faith by all parties last December which was abrogated by a legal decision emanating, I suppose, not only from the Department of National Revenue but the Department of Justice and which made a farce of what we are doing here.
Now the government has brought forward this new section to correct it. I think the hon. member deserves congratulations for bringing this practical, earthy story to the House as a reminder that what Canada expects is a little bit of common sense on the part of the elected representatives who sit in cabinet and who should take control of this nonsense.
I had many experiences when I was a minister. Horrible recommendations would come forward and when you questioned them you would find it was the legal interpretation of the law officers of the Crown of what parliament intended years ago with a particular statute. A minister with common sense would say "phooey" to such recommendations. That is what ministers are for-to put in an interpretation that makes sense.
Many years have passed since I held a portfolio but some civil servants still remind me of incidents that happened where
May 29, 1978

common sense was applied. We have a cabinet that for two or three parliaments now has degenerated into a group of yes men to their civil servants. When you consider the frustrations of honest, hardworking civil servants who bring forward proposals that are ruled out by this group of nit-wits, you see that is the real test of democracy in Canada. Conservatives are not prefect but the great majority that I see in this House are determined that, when we take possession of the benches opposite, that will be one of our major objectives.
Earlier in this debate the hon. member for Esquimalt-Saanich (Mr. Munro) brought to the attention of the House the section of the bill dealing with registered retirement savings plans. He did a thoughtful job of analysing the history of the plan and the various options available now in the act. There are positive things in this act and he pointed them out.
I should like to make a few comments on his remarks. He could not understand why the people who drafted this legislation were so careful to say that you had not the right to take your money out of an RRSP until you reached the age of 60. He could not understand why the government chose the age of 60 and not 55 or even 50. After all, the money belongs to the person who saved it. What the hon. gentleman should have known, with his long experience of the civil service, is that the civil service has grown up with the mentality at the top level that they have to show the people of Canada that they are not free. They do not honestly believe that the citizens of this country, whether working men or self-employed, have the native wit to make their own decisions and are willing to bear the consequences of their mistakes.
The belief that there is a lack of ability in the ordinary person to cope with problems is one of the weaknesses that has developed in the civil service in all countries over the last 30 or 40 years. This concept of elitism-that only those who get into the civil service know what God wants-faces the civil service in all countries. It also exists in large corporations, in large groups of people like the church, and so on.
When a person gets to the top level of a company or government there is a place for common sense. I think that is the lesson we learned today from the hon. member for Okanagan Boundary, and it is the answer to the mystery that the hon. member for Esquimalt-Saanich could not resolve about the age of 60. The civil service has to have the power to say this is the cut-off date. They will not accept the fact that this money does not belong to them but belongs to the guy who saved it.
The other age of 71 is simple to explain. One must take out the RRSP at age 71 for a very simple reason. Civil servants in the Department of National Revenue believe there is an article of faith that all money earned belongs to them. It is only by the grace of God and a lot of fast footwork that the taxpayer ever gets off with anything. They systematically search out every louse in this country to see if there is any fat and tallow they can skim off. That is their philosophy. They subvert the RCMP to join them in this. This attitude of the Department of
Income Tax Act
National Revenue means that they think that all the money in this country belongs to them and an individual must prove that his money is his own money. Too many times the courts of this land have accepted that doctrine.
This age 90 bit is somewhat hilarious. The insurance companies for years have always assumed that a person is dead at age 90. As a matter of fact, many of the insurance companies used to pay the full face value of the contract on ordinary life at age 90. If a guy made it to age 90 he was simply an aberration. If he had a $1,000 insurance policy, they paid him the whole thing and said "You are dead, enjoy it."


Some hon. Members:: Oh, oh!


Francis Alvin George Hamilton: The actuarial people who run these insurance companies work everything on averages. If a person is supposed to die at age 71 and lives to age 90, he is an aberration. The mathematics of insurance companies is all based on so many people dying. Then they double the figure to give themselves a little profit. They are quite happy with their actuarial approach. This bill and the RRSP has given quite a jolt to the insurance companies. It will not kill them; there will still be lots of business for them. However, under this act people can still take a life annuity and a great majority will.
The hon. member for Esquimalt-Saanich did the right thing in pointing out that the government had made positive steps forward in allowing a few more options in taking money out of savings through RRSPs. In addition to the life annuity that one could take out, he mentioned a fixed term, but the term is for no longer than up to 90 years of age. He then mentioned this new device, the registered retirement income fund, to give control of investments of the annuity. But one still must take the RRIF out in fixed payments.
There is one point I would like to make before I disagree with the hon. member for Esquimalt-Saanich. He took the view that people at age 71 should not be worrying about investing any more money. My God, does he not know what is happening? A lot of people are living beyond age 71. They do not think they have lost their marbles at all. In fact, a lot of people at age 71 are just beginning to realize that they know something. When all this experience comes at age 71, or whatever age it is that it comes, they do not believe they will die when they are 72, and they want to get out and use all that experience to make some money. These people want the right to invest their money and make their funds bigger and bigger. As far as I am concerned, I say "God bless them."
I would like now to suggest additional options to this particular piece of legislation, which I have done before. Why did they not keep it simple? Accept the fact that this money belongs to the individual. Let him put it in a bank at any age he likes when he wants to use it, or let him put it into a credit union, a caisse populaire, any place that can be trusted to look after it. If he takes out any money at any time in any amount that he likes, let him fill out a simple T-4-and send it into the Department of National Revenue. The guy then pays income tax on it. If that occurred there would not be all these fixed

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terms which must be calculated every year and which necessitates the employment of a lot of nitwits doing something which is not even necessary. Let a man or woman take the money out as they see fit at any time they like. If the individual wants to go on a spending spree in the first five years of retirement, let it be, that is his money. He will pay tax on it when he takes it out. If he wants to hold it back, thinking he will live to 150, let him do so. Let the individual choice be the common sense approach. Get rid of all these control techniques. As long as the tax collector gets his money when the guy takes his money out, that is all the tax collector has a right to.
I would like to conclude this part of my remarks by saying there is a big difference in philosophy now than when the RRSPs started. When the RRSPs started they were purely a device to help a person save until he died, to add additional money to whatever his pension or pensions were or, if he did not have pensions, to look after his own future. That was the original philosophy and it was a good philosophy.
As the years have rolled on a new philosophy has developed. The hon. member for Esquimalt-Saanich mentioned the tax-haven concept, but I go on and mention another more important philosophy. At this particular moment in Canada's history, facing as we do heavy commitments by the nation in a capital intensive enterprise for the next 20 to 30 years, one of the first functions of a good citizen is to save money not only for himself but to provide a capital pool for the benefit of all the people of Canada. Everything we can do in the tax system to encourage people to put aside what they do not need into savings builds up that capital pool, lowers interest rates and provides us with an amount of money that we need to undertake these great enterprises we have to face in the next 20 to 30 years.
I would like to see this philosophy pushed. 1 know in the last 15 years the RRSPs increased from a few hundred thousand up to two million. I would like to see that two million figure go up to six million or eight million. By age 60, 80 per cent of the work force of Canada have money of their own on top of their pensions, whether these pensions are in their business or are pensions provided by the state, but the individual is still encouraged to look after himself in his old age. This is the one thing that helps this nation and it helps the individual too.
The reason is very simple. As money circulates through the economy there is the principle of the multiplier effect. The multiplier effect means that whenever a person spends all the money he gets it goes into the system. If the multiplier is, say, three and one puts $1,000 into the system, $3,000 goes into the gross national product. Governments take out 40 per cent of that $1,000, which is about $400, and governments get their money back very quickly. So in addition to getting the $200 tax from the guy who takes the money out, the money goes through the system and they get another $400 from the tax of other people. This multiplier effect is what keeps the system going. May I call it ten o'clock, Mr. Speaker?



PROCEEDINGS ON ADJOURNMENT MOTION

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

Mr. J. M. Forrestall (Dartmouth-Halifax East):: Mr. Speaker, I rise this evening in the usual manner to pursue further a question which I raised in this chamber on February 1, virtually four months ago. I am not complaining about my order of priority among things that are important in this House, but inasmuch as it had to do with a question I asked the Minister of Transport (Mr. Lang) respecting the government's intentions for the purchase or rental, offshore, of a vessel for Canadian National Marine to carry out ferry and related services on the east coast of Canada, it seems a little bit passing strange to myself and most Canadians that it is virtually four months later that I get around to debating it.
That is not necessarily a criticism of the Chair or of the orderly conduct of the business of this House; it is just a sad comment on the capacity of this House within its present procedures to deal with matters of concern to private members and, in turn, to many thousands of Canadians.
My question to the minister on that occasion was:
Would the minister indicate whether, in fact, officials of his department are now outside Canada seeking to place an order for replacement of the CN ferry Carson which sank off the Labrador coast late last year?
The minister replied:
Mr. Speaker, no firm position has been taken at this point in time for a replacement for the Carson. Officials of my department and of CN Marine are always alert in an effort to find out which vessels may be available for additional service in the ferry systems in the eastern part of the country. I have no doubt they are interested at all times to know at what prices they might be able to acquire vessels of various configurations.
The fact is he had no answer. He did not know whether his departmental people and CN Marine were in fact offshore actively pursuing the lease of purchase of ships built in countries other than Canada for use by a government agency in the ferry system of this country.
On May 16, under the byline of Kendal Windeyer, in the Montreal Gazette, there is an article headed "Shipyards lack work but ship lines charter vessels". The ship line referred to is CN Marine. The battle is quite clearly over who should build the ships which ply Canadian waters. CN Marine, a division of Canadian National Railways, decided it would charter two Swedish vessels on five leases for service between Nova Scotia and Newfoundland earlier this year. That article was written in the middle of May. Some time between the end of March and the middle of May, the minister decided covertly to permit CN Marine and departmental officials to go offshore for the purchase or lease of two vessels.
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My question to the minister is, why does the government persist in letting this policy continue? We have had over 1,000 men laid off from the Halifax shipyards, and 800 or 900 men have been served notice by Marine Industries of Sorel, a shipyard owned by the government of Quebec. If the information I have is correct, we will see that government closing that yard. That will virtually throw these men out of work permanently. They are going offshore to France to purchase the requirements of the government of Quebec for ferry services in that province.
Canadian policy in this regard is not complicated. After deciding that you need a new ship, it takes a long time to design, award the contract, have the building take place, put the ship in the water and get it into service. You will not be ready to do that type of thing in 1983 unless you make the determination today, not in 1980 or 1981. You cannot have a ship ready in two years.
My question to the government is very serious. When is this government going publicly to indicate to the Canadian people that this policy will be for the government account, that it will identify the requirements, do the design work and build the ships in Canada, and put them to sea in Canada under Canadian registry? The ships must be built to Canadian standards with regard to pollution, operations north of 60 degrees or whatever else. They should be operated by Canadians, be subject to Canadian laws and pay Canadian income tax.
The leasing of two Swedish vessels returns nothing to our coffers whatsoever. It is immoral for this government to continue to posture with respect to Canadian shipbuilding policy in the way it has done in recent years. It has made no conscious effort to enunciate a clear policy. It has waffled, beat around the bush and avoided its responsibility.
The minister says that it is a good idea. He says, "By golly, that is something we have to get around to doing." What he should be doing is standing up and saying to Canadians and to the men who work in the shipyards of this country that we will build our requirements in our own shipyards using our own men and, to the extent possible, using our own material. We should not go offshore unless there is an extreme emergency, and there is no such emergency.
However, for CN marine not to have identified a continuing and ongoing need for ferry services in eastern Canada and to leave the matter in such a state that we had to go offshore to meet immediate needs is simply not acceptable. It is unjustified, and now is the time for the government to correct that. In responding this evening I hope the parliamentary secretary will be prepared to do something other than read a document prepared for him earlier today. I hope the parliamentary secretary will stand up as an easterner and address himself to the question.


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


Mr. Maurice Harquail (Parliamentary Secretary to Minister of State for Urban Affairs):: Mr. Speaker, I am delighted to respond to this question. I want to comment first, however, that it is more than passing strange-it is astonishing-that the hon. member for Dartmouth-Halifax East (Mr. Forrestall) should be bringing questions to the late show when earlier this very evening he refused to give unanimous consent to allow the Minister of Transport (Mr. Lang) to answer questions about the main estimates.


J. Michael Forrestall: You are deliberately misleading the House.


Maurice James Harquail: I am pleased that the hon. member consistently raises matters which show the government's continuing high priority regarding the needs of Atlantic transportation.
With regard to the replacement of the m. v. William Carson the Minister of Transport announced on April 26, 1978 that the 443 foot long stern loading vessel Sir Robert Bond will be converted for Labrador service this summer. The Sir Robert Bond is being converted at a cost of $3.6 million by Davie Shipbuilding, and it is expected that the vessel will be ready for service early this summer. The Sir Robert Bond will be modified to carry passengers, including cabin accommodation, but will retain its capability to haul substantial freight.
All Newfoundlanders realize that the vagaries of the sea from time to time result in tragic losses such as that of the William Carson, but I am sure that all hon. members are grateful that, while the ship was lost, all 128 persons on board were rescued due to the brave efforts of the ship's crew and the efforts of land-based search and rescue forces.
After the sinking of the Carson the government moved swiftly by reconfiguring the fleet so that Labradorians had service last summer despite the loss of the Carson.
By taking these immediate interim measures which were followed by the decision of the Minister of Transport to convert the Sir Robert Bond for Labrador service this summer, the government has acted in a decisive and positive way.


J. Michael Forrestall: We will deal with that tomorrow afternoon at three o'clock.


TRANSPORT-HALL REPORT-REQUEST MINISTER CONSULT MR. JUSTICE HALL ON RECOMMENDATIONS
Mr. Ray Hnatyshyn (Saskatoon-Biggar):: Mr. Speaker, I am moved to point out at the outset of my remarks that it has occurred to me that the Prime Minister (Mr. Trudeau) must be wondering day after day why he did not go to the people. It seems to me that ever since he made that fateful decision a few weeks ago everything he and the government has tried to do has turned to dust.
The question I want to raise tonight is another example of the bumbling, fumbling and incompetence demonstrated not only by the Prime Minister and his cabinet but now by the rank and file of the Liberal party as well.
I was going to raise this evening a question which I thought was one with which the Minister of Transport (Mr. Lang)

May 29, 1978
Adjournment Debate
dealt in a very unusual and peremptory way on May 15. Your Honour will recall, as all hon. members of this House assembled tonight will recall, that on that day, 1 raised with the Minister of Transport the very simple proposition that, knowing his strong feelings about transportation policy and about western grain transportation, just possibly he would consult the chief architect of the royal commission appointed by him, Mr. Justice Emmett Hall.
The minister was mortified that I should make the radical suggestion to him that somehow a man who had spent two years as the head of a very worth-while study group on which something like $1.8 million has been spent should be consulted with respect to the implementation of the report. The minister at that time said that he was really surprised because he thought the report was quite clear and there was really nothing much to discuss with Mr. Justice Hall. I suppose that Mr. Justice Hall heard this kind of reaction on the part of the minister, this inflexible, unflinching attitude that the minister took with respect to the reasonable request put forward by myself and other members on this side, and is reported to have said in Regina on May 24, according to a CP story, that:
Lip service has been given to the report rather than being implemented.
The article points out the following:
One year after the release of his report on the prairie grain handling and transportation system, former Chief Justice Hall is a disappointed man.
The federal government has virtually ignored the recommendations in the report, Hall said in an interview.
This flies diametrically in the face of what the minister has said, and it seems to me, therefore, that we should have the expertise of Mr. Justice Hall before the committee. My colleagues and I have fought the good fight, but lo and behold, what has happened tonight is that a motion has been brought forward that Mr. Justice Hall and Mr. Fred Anderson, the chairman of the Prairie Rail Action Committee, be brought before the Standing Committee on Transport and Communications. This was fought tooth and nail by the Liberal members of that committee. They thought it was heresy and the worst thing that could be suggested, except for one backbencher, the hon. member for Kitchener (Mr. Flynn), who at the time of the vote screwed up his courage and stood together with the opposition members. 1 should point out that this man is not held in very high regard by his own party. He has been edged out of his seat, so no wonder he is thinking independently.
So we were able to carry this motion tonight by nine votes to eight. The parliamentary secretary might want to report on what happened at that meeting because he must be chagrined at the fact that the very worth-while suggestion of the opposition members was accepted by the committee. That committee, with only one member from western Canada on the Liberal side, fought tooth and nail to prevent Mr. Justice Hall from appearing before the committee. I say it is not acceptable that this government should move in an area which is so important to western Canada when it does not take every
[Mr. Hnatyshyn.l
opportunity of utilizing the expertise that Mr. Justice Hall brings to the particular topic of grain transportation; and second, that when the government does act, its actions fly in the face of the many recommendations contained in the Hall commission report, while the government is saying that it is accepting the recommendations in the report.
It will be interesting to cross-examine Mr. Fred Anderson of the new Prairie Rail Action Committee to find out what is the rationale for their decision. It seems to me that one of the problems in determining whether certain rail lines will be brought into the permanent network and others abandoned is that we do not as yet know what will be the position of the grain and elevator companies with respect to their own plans. I say we are opening a very large can of worms in western Canada when the grain companies have not yet decided what they will do as far as elevators are concerned, and we are making decisions as to which lines should be abandoned and which should not.
I will be interested to hear the parliamentary secretary try to justify the rather insane attitude taken by the government in refusing to discuss matters with Mr. Justice Hall and fighting tooth and nail to prevent him from coming before the committee.


Maurice James Harquail: Mr. Speaker, since the hon. member has invited me to report my observations about the meeting of the Standing Committee on Transport and Communications this evening, let me tell the House and the country of the obstructionist tactics of the official opposition, which were also clearly observed at the previous meeting of the committee when the opposition members refused to allow the Minister of Transport (Mr. Lang) to answer questions and thus we were unable to question the minister on the main estimates. They followed the same negative tack this evening in not allowing him to answer questions in respect of the Hall commission report. We witnessed this for many days when we were considering Bill C-17 for the recapitalization of Canadian National.
To anyone who pays attention to the meetings of the Standing Committee on Transport and Communications, the strategy of the official opposition is not a surprise. I should like to indicate to the hon. member that I deferred my time in order to answer these questions.
The hon. member for Battleford-Kindersley (Mr. Mclsaac) was able to put some very good questions to the Minister of Transport. The minister was able to enlighten the committee at length about the position of the government regarding the Hall report. Also the minister has had meetings with farm groups and individual farmers about the Hall commission report. Hon. members opposite should not lose sight of the fact that it was the Minister of Transport who instituted this commission and who has stated repeatedly that it is his intention to implement the main recommendations of the report. The Hall commission report is clearly written. The
May 29, 1978

Government of Canada has had no difficulty in understanding its intent, which can readily be determined from the actions we have taken during the past year to implement its recommendations.
The actions the federal government has taken are well recognized in western Canada, but it would be useful to outline them again here. Eleven days after the Hall commission report was tabled in the House of Commons, the most important recommendation in the Hall report was implemented when some 1,800 miles of prairie rail line was added to the basic network guaranteed to the year 2000. This increased the total guaranteed package to 14,226 miles, which now make up three-quarters of all prairie trackage.
The creation of the Prairie Rail Action Committee is another extremely important initiative by the government. It distresses me that certain parties choose to downgrade the time and effort that four westerners are putting into the work of this committee. It has already made a valuable contribution to the evolution of our grain handling system by quickly relieving the uncertainty in several communities concerning the future of their rail lines, and promises to do the same for many more communities before its term is up.
But perhaps the most beneficial program the Government of Canada has implemented is its program to upgrade prairie
Adjournment Debate
branch lines. This process began last fall and its effect is visible for all to see on the Conquest subdivision. The government has committed $175 million for the first three years of what will be a ten-year program. When it is completed, all branch lines will be capable of carrying hopper cars at higher speeds than is generally the case now. This will sharply increase the volume of grain which can be moved by our transportation system. Due to the rapid deterioration of the system, we had to move quickly to prevent it from breaking down completely, and this the Government of Canada has done.
The recent decision to invest in improvements in Prince Rupert is yet another example of carrying out a Hall report recommendation.
If I had more time, I would be able to tell the House more about transportation, Mr. Speaker.


The Acting Speaker (Mr. Turner):: Order, please. The motion to adjourn the House is now deemed to have been adopted. Accordingly, the House stands adjourned until tomorrow at two o'clock.
Motion agreed to and the House adjourned at 10.20 p.m.

Tuesday, May 30, 1978