1978-05-18

ROUTINE PROCEEDINGS


Mr. Joe Clark (Leader of the Opposition):: Mr. Speaker, I have a motion which I trust will receive the unanimous agreement of the House. I ask leave, on a matter of urgent and pressing necessity, to move a motion under Standing Order 43 which concerns the case of Yuri Orlov, the Russian physicist who has been tried and convicted in the Soviet Union for the so-called crime of forming a group to monitor Russia's human rights performance against the pledges made in the Helsinki agreement. I therefore move, seconded by the Deputy Prime Minister (Mr. MacEachen):
That this House deplores the trial and extremely severe sentence given Yuri Orlov by the Soviet Union for his activities with the Moscow-Helsinki group, activities which in Canada would be perfectly acceptable.


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


Some hon. Members:: Agreed.


Mr. Speaker:: The House has heard the terms of the motion. Is it the pleasure of the House to adopt the said motion?


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

Mr. R. E. McKinley (Huron-Middlesex):: Mr. Speaker, I rise on a matter of urgent and pressing necessity under the provisions of Standing Order 43. We were advised some months ago that a stabilization payment would be made to beef producers who marketed cattle for slaughter in the first quarter of 1977, the producers realizing that the Minister of Agriculture probably intended that this payment would be sent
out during an election campaign. Now that there is no immediate election coming, I move, seconded by the hon. member for Elgin (Mr. Wise):
That the Minister of Agriculture immediately announce the amount of the payment to be made and make provisions to get this payment into the producers' hands as soon as possible, because we are now well past the first quarter of 1978.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


VETERANS AFFAIRS
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, under the provisions of Standing Order 43, and seconded by the hon. member for Sault Ste. Marie (Mr. Symes), I move:
That this House warmly welcomes last week's announcement concerning an increase in the basic rate of the war disability pension and now calls on the Minister of Veterans Affairs to expedite his review of the 48 per cent rule that applies to the pensions of the widows of veterans, it being the view of this House that where the veterans' disability pension was below 48 per cent there should be a prorata pension for his widow as a matter of right.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


CANADA COUNCIL
Mr. Tom Cossitt (Leeds):: Mr. Speaker, I rise on a matter of urgent necessity concerning a matter I have raised several times recently in the House, namely, the giving of Canada Council grants by the Department of the Secretary of State to some very peculiar organizations. I refer specifically to a grant in the amount of $60,000 given to the Factory Theatre Lab of
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May 18, 1978
Toronto which has produced a play entitled "Winter Offensive".
I hope, Mr. Speaker, when I give the words of this motion they will not be offensive to anyone, because they are quoted from Hansard. I move, seconded by the hon. member for Central Nova (Mr. MacKay):
Whereas the Secretary of State has made the shocking admission in an answer to my order paper question No. 1,168 that this play includes scenes showing a character smearing his face with human excrement, a wounded man's insides spilling out on the floor, and references to the "insatiable sexual urges and sadistic drives of Mrs. Adolf Eichmann", that the House deplores the minister's refusal to furnish full information to members of parliament on the decisionmaking process used by the Canada Council for the spending of public funds, and the House demands an immediate parliamentary investigation of the Canada Council.


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


Some hon. Members:: Agreed.
view of the fact that CIDA grain shipments are under the control of the Canadian Wheat Board and the port of Churchill is capable of handling an additional five million bushels of grain this season, I move, seconded by the hon. member for Selkirk (Mr. Whiteway):
That the government take immediate action to direct the Canadian Wheat Board to ship at least a minimum of five million bushels of CIDA grain through the port of Churchill this season.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


Some hon. Members:: No.



ORAL QUESTION PERIOD


Mr. Jake Epp (Provencher):: Mr. Speaker, I rise on a matter of urgent and pressing necessity pursuant to the terms of Standing Order 43. In light of the serious consequences the discussion on taxation has to the unity of this country, considering the federal government has grievously undermined equity and fairness by not bargaining in good faith with the provinces of Canada, and considering the Prime Minister (Mr. Trudeau) is further balkanizing this country by speaking of the Canadian common market as though Canada were some loose conglomeration of sovereign nation states instead of one coherent sovereign entity, I move, seconded by the hon. member for Winnipeg South Centre (Mr. McKenzie):
That this House affirm that Canada is a federal state comprising of a national government for all Canadians, and ten equal provincial partners.


FINANCE
Miss Flora MacDonald (Kingston and the Islands):: Mr. Speaker, my question is to the Prime Minister. Yesterday the Prime Minister stated that the same deal on tax room was being offered to all the provinces. I still question that, but the point I want to clarify now is this: will the Prime Minister not concede that the effect of this proposal will be that individuals in the province of Quebec will be affected in a much different way than individuals in the provinces which have agreed to an across-the-board reduction in sales tax, and that that effect will be a sort of reverse means test so that in the province of Quebec only those individuals who have an income high enough to pay income tax will benefit, whereas in the other provinces all purchasers of goods and services will benefit?


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


CANADIAN WHEAT BOARD
Mr. Cecil Smith (Churchill):: Mr. Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. Now that grain shipments through Churchill and Prince Rupert have fallen even further behind, and in


Right Hon. P. E. Trudeau (Prime Minister):: Mr. Speaker, with respect, the hon. lady is confusing two things: the federal action and the provincial response. In so far as the federal action is concerned, it is the same in all provinces which accepted the scheme and it is the same in Quebec. We are cutting taxes and making room so the provinces can increase their income tax. So, from our point of view it is the same in all provinces.
Obviously, what the provinces are delivering is different. Eight of the provinces have said, "Yes, we will agree. We will cut the sales tax across-the-board three points." One province has said, "No, we will not agree. We will cut them in the way we want." So to the extent that they have cut them differently, the hon. lady is right. Mr. Parizeau, the same minister who was so ardently supported by her colleagues on the other side, is responsible for this type of reverse discrimination.
May 18, 1978


Flora Isabel MacDonald: The Prime Minister is once again using sophistry to cover the discrimination he practices against individuals in different parts of this country. Given that last night the Elouse leader of the Liberal party in the national assembly, Gerard D. Levesque, said over national radio, "No budget should have been tabled or no final proposal should have been tabled in the House of Commons until the government had made sure that all provincial governments were accepting the plan", will the Prime Minister explain why the federal government did not postpone bringing in its budget until after the budget of the province of Quebec had been brought down and the position of that government had been made clear so that we might have avoided this whole sorry mess?


Pierre Elliott Trudeau: Mr. Speaker, I am disappointed in the comments of the hon. lady because she is usually intelligent and would not escape an answer by saying it is sophistry. If she feels that my reasoning is wrong, surely she should follow up by a supplementary. Even if it is not written for her, she should be able to think up one and demonstrate by a question why my answer was not correct. I still maintain that her complaint is one which results from the behaviour of the province of Quebec. As far as the federal government is concerned, we behaved in the same way with regard to all provinces.
In so far as the suggestion that we should have retarded the budget-


Mr. Malone:: It was retarded.


Pierre Elliott Trudeau: The hon. member says we should have retarded the date of the budget. Under substantial pressure, for which the opposition took credit, we announced a budget date. This date was announced some two or three weeks in advance. Until the very eve of the budget the federal minister was consulting with all the provincial finance ministers. There were complaints, even by the New Democratic Party, that there had been too much consultation because there had been a leak, and as a result of this leak the Leader of the New Democratic Party-


Mr. Broadbent:: Sophistry again.


Pierre Elliott Trudeau: Take it easy. This is what he said.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: Mr. Speaker, they do not like to be reminded of their inconsequential actions. However, in this very House the Leader of the New Democratic Party moved that there had been a budget leak and that somehow we should be responsible. The leak came as a result of consultations. What we are now hearing is that we should have retarded the budget. Can you see the Minister of Finance getting up at eight o'clock on the Monday night of the budget to say, "Well, Mr. Parizeau, after three weeks, has not given me an answer, so we will have the budget some other day"? I doubt whether
Oral Questions
we would have had the support of the hon. lady if we had done that.


Flora Isabel MacDonald: What the Prime Minister is now saying, really, is that a provincial government is being denied the right to make a decision in a field of provincial jurisdiction if that decision does not happen to conform to the dictates of the federal government.
I would like to put my final supplementary to the Minister of Finance. Will the Minister of Finance explain how he proposes to transfer to the province of Quebec the $40 million of tax room which is not being rebated to individual income taxpayers in that province? Will that transfer be by means of a cheque, a method which he rejected yesterday for the other $186 million, or will he perhaps be proceeding to deliver it to Mr. Parizeau in a brown paper bag?


Hon. Jean Chretien (Minister of Finance):: Mr. Speaker, I would like to reply to the previous questions. I think that Mr. Parizeau came 48 hours later with a precise proposition that was completely different and unacceptable to the federal government and the finance ministers of this country who had accepted my proposition. I have not tried to blackmail them at all. I made a proposition. I said I would withdraw from the income tax field for them to come in. Mr. Parizeau, of course, did not want to come in. He would like me to send him a cheque.
However, in Quebec they have to collect their own money. He does not want now to collect his own income tax. I am reducing my tax and in Quebec I can only reduce it by rebating the tax to the taxpayers in Quebec. However, if Mr. Parizeau, because they have been collecting their own tax since 1954, wants to have the money, he can raise the difference. We said in a letter to Mr. Parizeau at the time of the counterproposal that for the part of the sales tax that he has conformed with the plan, we were willing to do so.


SALES TAX-INQUIRY WHETHER GOVERNMENT READY TO ACCEPT QUEBEC'S PROPOSAL
Mr. Heward Grafftey (Brome-Missisquoi):: Mr. Speaker, I should like to put a question to the Minister of Finance.
Considering that it is now obvious that implementing the reimbursement policy announced this week for Quebec would cost at least $3 million to the Canadian taxpayers and, considering that it has been announced in the Canadian press that another textile plant will be closed in Quebec, would the Minister of Finance and this government be now prepared to accept the sales tax policy presented by the Quebec legislature?


Joseph Jacques Jean Chrétien: Mr. Speaker, I do not see any relation between that problem and a textile plant closing in Quebec. In reply to the question which the hon. member is asking me, I will tell him that Mr. Parizeau

May 18, 1978
Oral Questions
stated today that he will have to spend money to collect his taxes. This is the argument which we have been putting forward since 1954. The fact that Quebec has its own revenue department compels them to pay for the duplication of that service. To avoid that, they should abolish their national revenue department and we would collect their income tax as we do for the other provinces and we are prepared to make them that proposal.


William Heward Grafftey: Mr. Speaker, I should like to put a supplementary question. It is obvious that the policy announced by the Quebec government will help the textile industry.


SALES TAX-REQUEST FOR WITHDRAWAL OF BILL C-56
William Heward Grafftey: My supplementary question is directed to the Prime Minister. Considering that during the last three days, especially since yesterday in spite of what the Prime Minister said in this House then, Canadians and provincial leaders from coast to coast have felt we now have one set of policies for Quebec and another for the rest of Canada, and considering that yesterday it was proven that the minister of finance for the province of Quebec objected clearly last March to accepting the proposals of the budget, for national unity as well as for economic reasons will the government now take Bill C-56 off the order paper and convene a federal-provincial meeting immediately to rectify this situation once and for all?


Pierre Elliott Trudeau: I would be interested in knowing why the hon. member says it is proven that Mr. Parizeau rejected this scheme, when he had repeatedly stated that he had not decided one way or another. Why would the hon. member smuggle that word in?


SALES TAX CUTS-EFFECT ON INDUSTRY
John Edward Broadbent: It is clear the Prime Minister's miasma is bothering him today, considering that yesterday he said in the House:
In the case of Quebec the sales tax has been cut in a different manner which seems to destroy the idea of a national common market and which seems to favour only jobs in the province of Quebec.
Is the Prime Minister aware that in almost all the sectors from which the Quebec sales tax has been removed, more goods are produced by other countries or by other provinces than are produced by Quebec?


Pierre Elliott Trudeau: The point I was making is made by the Parti Quebecois itself and by its members. I have a letter here from one of the members supporting the PQ. This is the propaganda they are sending around. They are bragging about the way in which they cut taxes. Rather than do it as the other provinces did it, they did it in a way which would encourage Quebec industries, not Canadian industry.

Since the Quebec government wishes to encourage Quebec industries ... we made this decision with the interests of Quebec and Quebeckers in mind, in order to protect our industries and consumers in the sectors where the needs of the people are greatest.

This may be a virtuous position for one who believes in provincial autonomy and even more in separation; but, once again, what the federal minister tried to do was put together a scheme which would apply across the country and which would not call for each province to protect its own industries as much as it could. That is why the scheme put forward by Mr. Parizeau was not put forward, as the federal minister says, during the discussions, because he knew full well that if he had said, "I will do this for four industries which are helpful to Quebeckers", Mr. McKeough of Ontario would have said, "I will have a selective tax cut, too, on things which are produced essentially in Ontario".


An hon. Member:: Automobiles?


Pierre Elliott Trudeau: Automobiles; and British Columbia would have said, "We will do the same thing for industries which produce essentially in British Columbia". Hon. members opposite should understand that this would have been contrary to the interests of the whole nation, where the tax should apply equally to everyone.


Charles Joseph Clark: Use your federal sales tax.


Pierre Elliott Trudeau: Once again, hon. members opposite think that Mr. Parizeau was right. If they think he was right, our answer is, why did he not make that suggestion when the discussions were going on directly for three weeks? The reason he did not was that he wanted to have a better deal for himself after the others had locked themselves in. I am surprised that hon. members opposite cannot yet understand this.


Charles Joseph Clark: Why did you fall into the trap?


John Edward Broadbent: Mr. Speaker, I hope we on this side of the House are given equal time to reply to these speeches. I would ask the Prime Minister to answer the question. This is the first time I have ever heard him quoting a Parti Quebecois source to support his argument.
Would the Prime Minister answer the question: it was put in straightforward terms. Is he aware that in most of the sectors where the Quebec government has cut the tax, the goods sold in that province are either produced in greater numbers outside Quebec in other provinces or in other countries and, if that is so, does that not make a complete mockery of the argument the Prime Minister has made in this House with whatever source of evidence, PQ or otherwise, he has used to support his argument?


Pierre Elliott Trudeau: No, Mr. Speaker, it does not. I recognize that some goods more than others are imported into Quebec, and I realize that Quebec could not conceivably cut the tax only on
May 18, 1978

things which are produced only in Quebec. That is not the way this country operates. Quebec could have not selected, but it is clear that the intention was to select those areas which would help Quebec in particular.
Oral Questions


TRANSPORT
John Edward Broadbent: It helps Ontario more.


Pierre Elliott Trudeau: I am admitting that they could not select those goods which are produced only in Quebec any more than, obviously, the maritimes could select goods which are produced only in the maritimes, because there are very few goods manufactured in the maritimes. However, it should be obvious even to hon. members opposite-and I refer to the letter I was quoting and, indeed, to Mr. Parizeau's own arguments-that they tried to select those industries which would help Quebeckers rather than the Canadian common market.


John Edward Broadbent: Mr. Speaker, the absurdity of the Prime Minister's arguments is revealing. For example, of all the cars purchased in Ontario, only one-fifth are produced in that province. I ask the Prime Minister to check with his colleague the Minister of Finance and get him to produce for his benefit, and then to table for all members of the House, an assessment which has been done by the federal Department of Finance on Mr. Parizeau's proposals. When he does that, will he make a statement on the fact that that assessment done by the federal Department of Finance reaches the conclusion, both in terms of equity and of job creation on a national basis, that Mr. Parizeau's proposal was better than that presented by the Government of Canada?


Pierre Elliott Trudeau: Mr. Speaker, I cannot agree with the premises of the question and, obviously, neither could the treasurer of Ontario. When he cut the tax on automobiles in the province of Ontario a year or two ago, he was obviously trying to help the auto industry in Ontario. The hon. member should know a little bit about that. He was not saying, "I am not going to cut the tax on automobiles because we also import"-


Some hon. Members:: Oh, oh!


Pierre Elliott Trudeau: Listen to the answer and maybe you will understand it. He was not saying, "I am not going to cut the tax on automobiles because we import automobiles in Ontario". He was saying, "This is my way of helping the automobile industry in Ontario". He was not trying to help the Japanese or the Swedes; he was trying to help the Ontario automobile producers. I think the hon. member should make a study of that, and he might understand it.


Mr. Adrien Lambert (Bellechasse):: Mr. Speaker, my question is for the Minister of Transport.
In view of the fact that the Minister of Finance indicated yesterday in his very elaborate speech that his administrative decisions always take into account the fact that Quebec is still part of Confederation, and I fully agree with that, could the Minister of Transport advise the House whether the negotiations between Ottawa and Quebec City concerning the transfer of certain wharves along the St. Lawrence River have progressed over the last months, or whether they have bogged down because of the discussions on the notorious sales tax issue? If negotiations are still going on, could the minister indicate what stage they have reached and whether we can at last expect to find a solution to this problem?


Hon. Otto E. Lang (Minister of Transport):: Mr. Speaker, I can say that very little progress is being made, but this is certainly not related to any recent event; it has been the state of affairs for some time. In the meantime, however, we have spent money on the improvement of a variety of wharves within our jurisdiction for the benefit of the areas concerned.


Joseph Adrien Henri Lambert: I would like to ask a supplementary question, Mr. Speaker.
I thank the minister for his answer. I know that some communication wharves have been improved. My supplementary question is this: considering that residents of lie aux Grues, which is located in the riding of Bellechasse, the most beautiful in Canada, are faced with a difficult situation because of a lack of communications with the main land and that there seems to be problems in negotiating an agreement on the improvements to be made to the wharf of lie aux Grues, would the minister tell the House whether or not his officials are really working hard to resolve this problem as quickly as possible? I suggest that in doing so he would help eliminate problems elsewhere in the province of Quebec because, all told, the entire province is conscious of this situation.


Otto Emil Lang: I will certainly ask my officials for a report on that particular case.


Joseph Adrien Henri Lambert: Mr. Speaker, I have a supplementary question. In view of the fact that the Department of Public Works-I see that the minister has left the House. I will wait to ask him my question on some other occasion.

May 18, 1978
Oral Questions


FINANCE
Arthur Jacob (Jake) Epp: Mr. Speaker, my question is directed to the Minister of Finance. Notwithstanding the fact that Manitoba is now bound and committed to going along with the sales tax proposal, could the minister explain why he, according to his own statements in the House yesterday, was willing to accept counterproposals from British Columbia and Saskatchewan and to discuss these proposals with other provinces, while he rules out the Manitoba proposal of applying part of the so-called tax room for job creation?


Joseph Jacques Jean Chrétien: Mr. Speaker, it is very simple. I had talked with all the ministers about the concept that we were discussing and I had their views. In fact, the last minister to whom I talked was the minister of finance of Manitoba when I came back from my trip out west. After the discussions I had with the other ministers I realized that the proposal, if applied, would not have been a successful one and I said to them that it was outside the proposition I was making, which was to stimulate the economy through the sales tax, which is not what Manitoba's proposal would accomplish.


Arthur Jacob (Jake) Epp: Mr. Speaker, I have a straightforward question for the minister. Did the minister, in fact, take the Manitoba proposal on tax room regarding job creation to the other provinces for consultation, or did he reject the Manitoba proposal out of hand, without any consultation?


Joseph Jacques Jean Chrétien: Mr. Speaker, my attempt was to induce all the provinces to agree to cut sales taxes altogether. Of course, the proposition for job creation was outside the mandate I had to discuss with the provinces. I discussed its pros and cons with the ministers, and I told the Manitoba minister on the spot that I did not think his proposal was relevant to the proposition I was making and I could not accept it. I was already well aware of the views of the ministers on other aspects which had been ruled unacceptable.


Charles Joseph Clark: Double-standard.


NATIONAL REVENUE
Mr. James A. McGrath (St. John's East):: Mr. Speaker, I should like to direct my question to the Minister of National Health and Welfare in her capacity as Acting Minister of National Revenue. Yesterday, in the Standing Committee on Finance, Trade and Economic Affairs, the Minister of National Revenue issued a statement supposedly clarifying the government's position on the withdrawn circular on regulations regarding political activities of charitable organizations. But the minister has only confounded and confused the issue.

I ask the acting minister whether it is the government's position that if a registered charitable organization in Canada, such as one of the churches, engages in a peaceful demonstration which is a political activity, as is their democratic right, that church or organization, under those circumstances, would be in violation of the regulations and would have its tax status withdrawn.


Hon.   Monique@: Mr. Speaker, we do not yet know if that specific type of activity would be assessed as conforming to the law or as outside the act. I hope the hon. member is not trying to play one minister against another because one of them sits in the other place and the other is a member of the House. I will want to see the record of the committee discussions which took place. What I said in the House is that circular 78-3 was withdrawn and is being studied to define what democratic political activities are permitted under the Income Tax Act.


James Aloysius McGrath: Mr. Speaker, unfortunately, I do not have the right to question in the House the Minister of National Revenue; I only have the acting minister. I am not trying to put words in her mouth; I merely want to ask her if it is the government's position, as stated yesterday in the committee by the Minister of National Revenue and the Deputy Minister of National Revenue, that if a charitable organization such as a church engages in peaceful demonstrations on Parliament Hill, at Queen's Park or at Quebec City, for any cause such as pro-life, anti-abortion or capital punishment, this activity would be designated as a political activity and it would lose its tax exempt status.
If that is the position of the government as stated by the minister, I ask the acting minister, on behalf of all reasonable Canadians, whether that ridiculous regulation will be withdrawn forthwith.


Miss B6gin:: I will attempt to answer in French this time, Mr. Speaker. Circular 78-3 has been withdrawn to give the parties involved a chance to make an in-depth study of political activities which will be acceptable with respect to charitable donations under the Income Tax Act. The hon. member is now referring to a discussion between members of a House committee, between the minister and his deputy minister where people were evidently examining certain types of activities. That is now under study and it is not up to me to answer now in the House. The moment the new circular is ready, it will be tabled and circulated as are other circulars of the Department of National Revenue.


James Aloysius McGrath: Mr. Speaker, the regulations in the circular may have been withdrawn, but as the minister himself stated, the intent obviously has not been withdrawn. I quote from the statement the minister made yesterday in the committee. He said:
May 18, 1978

-we have to draw the line somewhere and that it has been drawn at highly organized attempts to influence a government for a purpose "particular to the organization".
I ask the Minister of National Health and Welfare, if that is the policy of the government, will the government review that policy with a view to withdrawing it, or at least issue further clarification so that churches and legitimate organizations which enjoy tax exemption as charitable organizations will know where they stand?


René Bégin: Mr. Speaker, I was not present at that committee meeting yesterday, and for the third time I would ask that I be given an opportunity to read the minister's remarks. Then perhaps I will be able to answer the question.


TRANSPORT
Miss Coline Campbell (South Western Nova):: Mr. Speaker, my question is directed to the Minister of Transport. Have the minister's officials made him aware of the fact that people in the Barrington area of Nova Scotia are still experiencing severe shockwaves or sonic booms due to Concorde flights, and that an increase in supersonic flights to John F. Kennedy airport is being contemplated? If that is the case, is the minister prepared to discuss the situation with his counterpart in the United States, with a view to alleviating the problem in South Western Nova?


Otto Emil Lang: Mr. Speaker, I am aware of the problem and, indeed, my officials have examined the problem of sonic booms. At our request, ihe flightways of the Concorde have been moved a number of miles farther away from the coastal area. That, however, has not stopped the problem. In addition, it appears that some of the booms may be caused by a source other than the Concorde, and we are not exactly sure what that is. We have on its way, thanks to a loan from the American authorities, some sensitive equipment which may help us track the source of the particular booms still being experienced.


SUPPLY AND SERVICES
Mr. Dan McKenzie (Winnipeg South Centre):: Mr. Speaker, my question is to the Minister of Supply and Services: concerns the questionable tendering practices of this government. The Canadian Association of Data Processing Service Organizations has charged that more than $2 million in government contracts was awarded to a Quebec-based computer firm, not because it submitted the lowest bid but, rather, in the words of the Minister of Supply and Services, because of "socio economic considerations."
Oral Questions
In view of this, I would ask the minister why arbitrary criteria such as "socio economic considerations" have replaced the bidding procedure as the determining factor in awarding government contracts for computer-related work.


Hon. Jean-Pierre Goyer (Minister of Supply and Services):: Mr. Speaker, the hon. member starts off with an unfounded premise. In fact, the contracts were awarded after public calls for tenders were issued, either to the firm in question or to other firms across Canada. As for the contract mentioned in the Ottawa Citizen article, I want to reassure the hon. member that in this case three companies submitted the same bid, that they were all highly qualified to carry out the contract, and that in the end it was decided to award the contract to 1ST, a Quebec firm.
It is normal that we should try to even out government purchases in the country. I have sometimes tried to favour the western provinces, sometimes the maritimes, and in this particular case I favoured a Quebec firm. One must recall that in 1977-78, 78 per cent of the electronic data processing contracts were awarded to Ontario companies. I think it is fair and just that we should try to give other companies a reasonable share of the market when they are qualified, and that is what happened.


A. Daniel McKenzie: Mr. Speaker, in view of the fact that computer firms spend between $20,000 and $60,000 on their bids on government tenders, and in view of the fact that "socio economic considerations", which is apparently a new terminology for "patronage", seem to have compelled the minister to grant the contracts to the Quebec firm despite lower bids from other firms, will the minister be kind enough to advise the non-Quebec firms to refrain from bidding, thus saving them a lot of money, since they stand no chance of being successful in their bids?


Mr. Speaker:: The hon. member for Yorkton-Melville.


CONSUMER AFFAIRS
Mr. Lome Nystrom (Yorkton-Melville):: Mr. Speaker, my question is to the Minister of Consumer and Corporate Affairs. I ask the minister whether he is aware that a gift pack which is given out by most hospitals to new mothers when they leave hospital contains a glass bottle which the three companies that produce the bottle say is potentially dangerous because it is made of regular glass and tends to fragment when heated or sterilized or has warm formula put in it, thus being dangerous in that the infant might be consuming glass on drinking the formula or milk? Is the minister aware of that and, if so, what is he going to do about it?

May 18, 1978
Oral Questions
I am aware, Mr. Speaker, that the hazardous products branch yesterday, acting on information which we originally gave them, sent a telex to each of the companies expressing concern. I would like to know if the minister is going to do more than just express concern, because this may be a serious health hazard for infants.


Hon. Warren Allmand (Minister of Consumer and Corporate Affairs):: Mr. Speaker, we are aware of this situation. The information we now have indicates that these bottles should not be re-used. Our department will be working with the manufacturers of these bottles and other feeding systems to ensure that the hazards are clearly declared on the package and that other measures are taken to prevent their misuse.


Lorne Edmund Nystrom: Mr. Speaker, I have with me a letter from Ross Laboratories which reads in part:
They are designed to be used only once and then should be discarded.
They are made of regular glass which has a low resistance to heat shock.
From our survey, we found that many mothers and some hospitals use these bottles more than once. I ask the minister whether he will go further and ban this gift pack altogether from hospitals.


William Warren Allmand: Mr. Speaker, the hon. member is correct; the bottles should be used only once. But whether we should go as far as banning the gift packs has not been considered. However, we will look into that question.


Lorne Edmund Nystrom: Mr. Speaker, I wonder if the Minister of Consumer and Corporate Affairs would consult his colleague, the Minister of National Health and Welfare, about the nutritional value of the other contents of the gift pack and ask whether she thinks it is wise that hospitals should be promoting baby foods such as this, which is really junk food, rather than promoting babies being fed in the natural way, which is breast feeding.


William Warren Allmand: Mr. Speaker, I am not in a position to make a judgment about the nutritional value of the pack in comparison with breast feeding, but I would be pleased to consult my hon. colleague about this.


FISHERIES
Mr. Lloyd R. Crouse (South Shore):: Mr. Speaker, I wish to direct a question to the Minister of Fisheries and the Environment. In view of the fact that the Minister of Fisheries has now backed down from his arbitrary regulations as they apply to the scallop fishermen of Nova Scotia, and in view of the fact that a golden opportunity now exists in Atlantic Canada for catching under-utilized species such as silver hake, capelin, squid, offshore mackerel and grenadier, as stated by the processors of some 16 major companies in Nova Scotia, where they say they are convinced of the viability of freezer trawlers

which they are prepared to lease or buy without Ottawa's assistance, is the minister prepared to listen to the voice of the people within the industry and permit the licensing of a limited number of freezer trawlers as a start toward establishing a new segment of the fishing industry in Atlantic Canada?


Hon. Romeo LeBlanc (Minister of Fisheries and the Environment):: Mr. Speaker, the consultation which took place between the offshore and the inshore fishermen at which they expressed readiness to look at a new regime for the Georges Bank should not be seen as a back down, but should simply be seen as an improvement and an acceptance on the part of the Bay of Fundy fleet to keep the catch level where it was in the past and not to keep increasing it.
I will be looking at the recommendations of the fishermen, and if they are acceptable I will, of course, approve them, because it is my constant approach that the fishermen themselves should have a strong voice in regulating their own fishery.
As for the point made by the hon. member, I would remind him that I do not have on my desk applications for freezer trawler licences which do not contain clauses which would allow these vessels to have access to cod, flounder or redfish. If it is only for silver hake, round-nosed grenadier and the underutilized species, my door is open.


Lloyd Roseville Crouse: A supplementary question, Mr. Speaker. In light of the charges that have been made about lack of consultation among the minister, the provincial ministers and the industry, would the minister agree to consult the representatives of the major processors in Nova Scotia so that he will at least be informed of their views as they apply to establishing a new industry in Atlantic Canada?


Roméo LeBlanc: Mr. Speaker, the very day last week when the hon. member was participating in a special debate on the absence of consultation was the day that the offshore committee on groundfish in the Atlantic, which would cover the type of subject the hon. member talks about, was meeting. If my memory serves me correctly, it met for two days in Halifax. The provinces, the industry, the fishermen and the departments of fisheries are fully represented on that committee.


INDIAN AFFAIRS
Mr. Jack Pearsall (Coast Chilcotin):: Mr. Speaker, my question is for the Minister of Indian Affairs and Northern Development, but in his absence I will direct it to his parliamentary secretary. I have been advised that a contract entered into by the Department of Indian Affairs and Northern Development and the Toosey Indian Band in the Chilcotin part of my riding has fallen through.
May 18, 1978

Mr. Speaker, I ask the parliamentary secretary if he can explain to me why the Fish Lake complex has been delayed for many months, when the Toosey Indian council met with me and Indian Affairs officials here in Ottawa and to my knowledge a bona fide contract was agreed to.


Mr. Ross Milne (Parliamentary Secretary to Minister of Indian Affairs and Northern Development):: Mr. Speaker, it is true that the Minister of Indian Affairs and Northern Development agreed to transfer the complex of buildings at Fish Lake and gave the band the assurance it would be done very quickly. On looking into it, however, and on proceeding with the transfer we came across some legal complexities that took a great deal of time to work out. In addition, it was necessary to negotiate an agreement between two departments.
I apologize to the hon. member and, through him, to the band for the delay. It was not in keeping with the undertaking given two or three months ago, and we will make every effort to have things completed by June 1.


FINANCE
Mr. John C. Crosbie (St. John's West):: Mr. Speaker, I have a question for the Minister of Finance. The minister has said that he consulted the provinces before April 10 on his sales tax scheme, before he took his swan dive, in the sense that he sought information or advice from the provinces on that scheme.
As it relates to the province of Newfoundland, did the minister of finance of that province suggest that the reduction should be for a longer period than six months on the sales tax, and how long did it take the minister to think about that and reject the advice?


Joseph Jacques Jean Chrétien: Mr. Speaker, the ministers of finance made all kinds of suggestions during the negotiations and the minister of finance of Newfoundland, along with others, suggested the possibility of extending the period. Of course, as we pay the whole amount in the case of the maritimes, they would have preferred that the cut be in effect for more than six months. On the other hand, other ministers had to contribute. Besides, under the circumstances, the federal treasury could not apply this measure for more than six months.


John Carnell Crosbie: A supplementary question, Mr. Speaker. Is the minister saying that because the four Atlantic provinces were offered 100 per cent compensation by the federal government, anything they had to suggest or say was not taken into consideration? Is that the kind of consultation there is with the economically depressed provinces in this country, that any views they have are to be ignored because they are not making
Oral Questions
their own contribution? Is that the kind of consultation that went on?


Joseph Jacques Jean Chrétien: Mr. Speaker, that is absolutely not what we said. They made the suggestion. I have looked into that. I have only to cite the minister of finance of Ontario who was asked the same question after the budget and said he was not willing to go for more than six months. For one reason, he could not afford it.


SALES TAX-STATEMENT OF QUEBEC MINISTER OF FINANCE ON ACCEPTANCE OF PROPOSALS
Charles Joseph Clark: Mr. Speaker, I have a question for the Minister of Finance. The minister will have noted news reports from Quebec by Canadian Press which quote Mr. Parizeau as saying:
I repeat that I never accepted the Chretien plan for sales taxes; that he knew of it at that time and that he was told so again not on the eve but the very afternoon that he tabled his plan in the House.
Is it the position of the Government of Canada that Mr. Parizeau, in making that statement was, if I may employ this phrase, "deliberately misleading" the National Assembly?


Joseph Jacques Jean Chrétien: Mr. Speaker, I think if he said he has not accepted the plan, of course he has not accepted the plan. He said, "I will give you the answer after the budget" and he gave me the answer 48 hours later. What I have said is that he never rejected or accepted definitively the plans before the budget. In fact, he said so himself when he said to me-and I put it in my speech-that I was to receive an answer from him in the next few days. If he had already given me the answer, why would he have asked for two more days before replying?


Charles Joseph Clark: A supplementary question, Mr. Speaker. Coming back to the mistake on the part of the minister which caused this problem, why did the Minister of Finance proceed with a proposal that involved the movement of the Government of Canada into the jurisdiction of the province of Quebec without the agreement of the province of Quebec to that interference?


Joseph Jacques Jean Chrétien: Mr. Speaker, what we always said and always affirmed is that we were to cut our income tax and vacate the field so that the provincial government could move in. Mr. Parizeau did not want to say yes or no before that. He knew what was happening in other provinces. I had to proceed with my budget. The eight other ministers whom I consulted were in agreement with that scheme and had the approval of their cabinets. Mr. Parizeau did not want to go ahead. But I had a budget and I had to proceed with it, and that is exactly what I did.


Charles Joseph Clark: A final supplementary question. Does the minister not recognize that he could have avoided all this difficulty, all this disruption in the nation, all this discord in the Liberal party in the province of Quebec, had he simply taken the precaution of ensuring that before the Government of Canada

May 18, 1978
Oral Questions
acted on a means to invade a provincial jurisdiction, it had the absolute, firm and concrete agreement of all the provinces?


Joseph Jacques Jean Chrétien: Mr. Speaker, I gave enough notice to the government of Quebec of our plans. We were not interfering in provincial fields; we were offering them compensation. We have the right to do what we want with our taxes, because that is our jurisdiction. What we are doing is reducing the taxes in Quebec at this time; we are reducing the income tax in Quebec as we have in other provinces. If Mr. Parizeau wants to get the money back, he can raise his taxes, as all the other treasurers did and as I did when I introduced my budget.


TRANSPORT
Arnold John Malone: Mr. Speaker, my question is for the Minister of Transport. I should like to ask him if he would reverse his position of blaming the shipping companies for the slowdown in the movement of grain from the port of Vancouver and the port of Prince Rupert, in view of the fact that J.S. Maclnnes, president of the Vancouver-based North Pacific Shipping Company, says there is clearly poor communication between ships coming from China and that the fault lies in the fact that there is not enough grain in the grain elevators at those ports.


Otto Emil Lang: Mr. Speaker, once again the hon. member made a false statement in his opening remarks. I did not say that it was the ships and only the ships, but I did indicate that part of our problem with the delay on the west coast was the delay in ship arrivals during December and into January. I have the evidence of the Canadian Wheat Board's telegram in that regard.
Subsequent to that time, the fact that we had a record program, a very, very full program under way meant that it would be very difficult to catch up in the short period of time. In addition to that, we had great difficulties on the prairies with snowfalls, particularly as far as Canadian Pacific lines were concerned. We had some bridge outages which interfered with ordinary performance and stopped us catching up faster.


Arnold John Malone: A supplementary question, Mr. Speaker. If the minister is taking the position that the fault is not with the ships, how can he justify the 13 ships that are waiting, costing some $4,000 per day in demurrage charges, and the fact that berths in the ports of Vancouver and Prince Rupert are one-third empty and lack of certain grades of grain for shipment is causing this? What steps is the minister taking to rectify the movement of grain from the prairies to the ports so that these ships can be filled?


Otto Emil Lang: Mr. Speaker, any precise figure on demurrage is completely imaginary; the hon. member knows that. The position I am taking is that without doubt the Canadian Wheat
[Mr. Clark.)
Board is doing the best job possible to encourage the right kind of grain to be in Vancouver at the time the ships arrive.
The railways have been trying to put additional railway cars into the movement. I am not satisfied with their performance in total, but I recognize they are under severe pressure. This year, for instance, there is a great movement of potash; the usual movement of cars from potash to grain may not occur, so our difficulties will continue. It is important to recognize that this is all happening in the face of moving probably a record volume of grain out of the country in the course of this year.


POINT OF ORDER
Mr. Speaker:: Order, please. Yesterday the hon. member for York-Simcoe, by way of a point of order, raised a concern about the relationship between the present Bill C-56 and the ways and means motion which preceded it. We have given the matter very careful and extensive study. I regret at the moment that I am unable to finalize the ruling on the point of order. It has raised a number of considerations.
I do not think there is much difficulty in the relationship between the ways and means motion and the measure, since the measure does not propose a tax increase but a tax reduction, and the question is whether a ways and means motion is in fact required. Therefore, the whole general relationship between the two has brought into focus a matter which requires considerable study. We are doing that. I want to assure the House that we worked at it all morning. However, it will require more time before we can finalize it. I will try to do it as expeditiously as possible. If I do not do it later this day I would indicate as soon as possible to the House when I will do it, probably by tomorrow at noon.


BUSINESS OF THE HOUSE
Mr. Baker (Grenville-Carleton):: Mr. Speaker, I rise on a point of order. Could I ask the government House leader the usual business question? Perhaps I may preface it with this remark. The Prime Minister (Mr. Trudeau) in his press conference last week indicated that it was his expectation that parliament would be adjourning, or this part of the parliamentary session would end, on June 30. This was either his expectation or his hope. I assume that he was not just speaking for himself but on behalf of the government. Given that situation, and given the legislative program which is at least potentially before us on the order paper, is the minister in a position, on behalf of the government, to indicate to us if that expectation is to be met? Specifically, what pieces of legisla-

May 18, 1978

tion would the government like to see cleared from the House by June 30 which was the Prime Minister's expected date?
While he is on his feet and answering the question, could he deal with the veterans legislation promised in the speech of the hon. Minister of Veterans Affairs (Mr. MacDonald) which we have undertaken to deal with expeditiously, and would it be possible for him to designate next Tuesday as an allotted day in accordance with our understanding?


Mr. MacEachen:: Mr. Speaker, yes, I will designate Tuesday next as an opposition day.
In reply to the questions raised by the hon. member for Grenville-Carleton (Mr. Baker), I would say it is certainly my objective to have this session adjourned or prorogued by the end of June, not later than that. As the hon. member knows, there are a great number of bills on the order paper. Even an optimist like myself would hardly hope that the House would deal with them all before the end of June. Certainly I would want to deal with the income tax bill and the customs tariff bill, both emanating from the budget. There are some bills in committee to which I attach priority; the bill to provide additional funds for the Export Development Corporation is important. The bill relating to language of trial is important. Of course I have my eye on Bill C-28, relating to the Public Service Staff Relations Act. Whether it is realistic to suggest it could be completed in all its stages before the end of June is a matter of question. That is another bill to which I attach considerable priority.
I can add other bills. But these are among the bills with which I would like to have dealt. However, it would all depend on how long the House will take dealing with the income tax bill and the customs tariff bill, and as well there is the considerable number of allotted days which have to be dealt with before the end of June.


Walter David Baker: Mr. Speaker, the minister knows that there are a certain number of opposition or allotted days which are provided by standing order. There is nothing very much we can do with that. If we subtract them from the total number of parliamentary days available up to the end of June, it leaves less than 20 government days. It is useless for us to talk about a long list of legislation on the order paper.
Maybe the government House leader would like to approach it from the point of view of the bills that are not essential. I do not know. But given that expectation by the Prime Minister,- and he may not be able to do it today,-of June 30, I think the government House leader owes the House a definite statement on what legislation is considered essential by June 30 if the House is to meet the Prime Minister's date of expectation.
If there is any new legislation to go on the order paper, aside from the Bank Act which appears there today and which is an extensive piece of legislation which I do not think could be dealt with reasonably by that time, I think we should know that. If there is none, what legislation precisely does the government have to have? It would be nice to have a definite answer to that question at this time since the Prime Minister
Business of the House
has expressed a definite desire on behalf of the government, I presume, to be out by June 30.


Allan Joseph MacEachen: Mr. Speaker, I believe the request made by the hon. member is an understandable and justified one. I have attempted to provide my list at this stage which contains the budget bills, the language of trial and the Export Development Corporation bills. I have mentioned the difficulties we would experience in trying to get Bill C-28 before the House, to which I attach considerable priority. There is a measure relating to the veterans pension which has to be brought in and which, I understand, would be passed quickly. I may have another measure relating to social welfare that might be passed quickly, also in conjunction with the disability pension. That would be a matter for consultation with party representatives. That is my list.
There may be other measures that will come in. When they do, I will have to come to the House and say, "This is an item I would like to get through before the end of June." Certainly the objective is to terminate the session by the end of June. I understand the difficulties, but I cannot go beyond what I have said today, which is a reasonably candid explanation of where I think I am going.


Stanley Howard Knowles: Mr. Speaker, may I confirm what is already realized, that any attempt to proceed with Bill C-28 would play havoc with any adjournment by the end of June. May I thank the minister for his assurance that the bill regarding the basic rate of the war disability pension will be introduced. So far as we are concerned we stand by our earlier commitment to deal with that bill very quickly.
I have one other question which is a repetition of a question asked a week or so ago: will there be a bill to establish the department of fisheries and oceans separate from the Department of the Environment before the end of June?


Allan Joseph MacEachen: Mr. Speaker, there very well may be, but I cannot be absolutely certain today. I believe that if we get an understanding to do it quickly it may be possible for me to bring in that bill. There has been a severance within the department and a general agreement on the creation of a single department of fisheries which has been partially achieved by order in council. I believe the final touch has to be provided through legislation. I will try to get a definite answer for the hon. member, and tell him as soon as possible.


Stanley Howard Knowles: Mr. Speaker, perhaps we could have consultation on these matters very soon.


Joseph Adrien Henri Lambert: Mr. Speaker, on the point of order, I should like to say that as far as our party is concerned, we have always felt that we should co-operate as much as possible with the government in the introduction and adoption of priority bills.

May 18, 1978
Order Paper Questions
We have also repeatedly expressed the opinion that we should plan our sessions, set both the starting and closing dates, in order to enable the members, which I think is quite legitimate, to spend some time with their families throughout the year. We have suggested it in the past and I do so again: we should try as much as possible to plan our work so that it fits in with the school year.
To my mind, the government should make an effort towards that aim and parties could agree amongst themselves about programming our work for the session in that way. Mr. Speaker, I take this opportunity to bring up again a very interesting suggestion that would spare us a considerable waste of time in our work, that is, that general elections be held on a set date. I draw the attention of the Deputy Prime Minister and President of Privy Council (Mr. MacEachen) on that point, so that we might study it very seriously in every party. We are all here to manage as best we can the business of this country, and the suspense that always accompanies the possibility of a general election always plays havoc with the normal course of our work. I feel that we should, like intelligent people, reflect on those two matters: namely, a set date for general elections, and set dates for our sessions. If we could agree on them like intelligent people, we would give the country, I am sure, a more efficient administration, and the people would be very pleased with our decisions.



ROUTINE PROCEEDINGS

[Stage Direction]
[ Translation]

Joseph Jacques Jean Chrétien: for leave to introduce Bill C-57, to revise the Bank Act, to amend the Quebec Savings Banks Act and the Bank of Canada Act, to establish the Canadian Payments Association and to amend other Acts in consequence thereof.


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

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. Yvon Pinard (Parliamentary Secretary to President of Privy Council):: Mr. Speaker, the following questions will be answered today: 467, 1,304 and 1,469.

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


Mr. Schellenberger: 1.	Has the government awarded financial assistance to the Quebec Electroni-cians Association in the past ten years and, if so (a) in which years were funds awarded (b) for what reason (c) what was the amount awarded in each year (d) to whom was the money paid (e) under what programme was the money awarded and what is the criteria for eligibility?
2.	Is the government presently involved in allocating funds to the Quebec Electronicians Association and, if so (a) for what reason (b) in what amount?


Yvon Pinard: I am informed by the Departments of Communications, Industry, Trade and Commerce, Labour and Science and Technology as follows: no.


Mr. Leggatt: Are steps being taken by the Department of Fisheries and the Environment and/or the Department of National Health and Welfare to mitigate the problem concerning the effects of arsenic pollution on human hearing and, if so, what are such steps?


Yvon Pinard: In so far as the Department of National Health and Welfare is concerned: the Department of National Health and Welfare does not consider the effect of arsenic pollution on human hearing to be of such significance as to warrant an investigation at the present time. In so far as the Department of Fisheries and the Environment is concerned: no.


Mr. Allard: List of New Horizons Projects Approved in the Constituency of Rimouski, Quebec
Project No. Name of Organization	$ Amount
1974-	1975
4-00655 Club de 1'Agc d'Or du Bic, Bic	$ 5,200
885	"Les loisirs, les bons amis", St-Franfois-Xavier-les-Hauteurs	1,856892	Club de 1'Age d'Or St-Yves, Rimouski Est	4,400992	Les B16s d'Or de la M6t6o, St-Octave-de-M6tis	2,8581005	Les Dynamiques du Foyer de Rimouski, Rimouski Ouest	3,1181350	Club de I'Age d'Or "La belle 6quipe", St-Donat	3,5941360	Conseil Regional de 1'Age d'Or, Rimouski	3,0441401	Club "Age d'Or" St-Cleophas, St-Cleophas	2,175Total	$26,2451975-	19764-01082 Les Afn6s de Ste-Odile, Rimouski	$ 8,4751121	Club de 1'Age d'Or "du Bonheur", St-Noel	3,0401222	L'Age d'Or de Luceville, Luceville	4,6151433	Club de l'Age d'Or, Sayabec	4,5821437	Club de 1'Age d'Or, St-Val6rien	4,7851545	Club d'Age d'Or St-Gabriel, St-Gabriel	5,175
1558 Club de l'Age d'Or de Ste-Angdlc de M6rici, Ste-Angdle de
M6rici	_	1,0191564	Les Personnes du Troisidme Age, Mont-Joli	2,2021620	Cercle d'Age d'Or de l'Amitii, Rimouski	6,154Total	$40,0471976-	19774-01653 Le Club de 1'Age d'Or de Price Enrg., Price	$ 1,732
1669 L'Association de l'Age d'Or de la Paroisse de St-R6mi de Metis
Inc., Price	2,935
1703	Club de 1'Age d'Or St-Moise, St-MoYse	4,4641836	L'Age d'Or de Pointe-aux-Pires, Pointe-aux-Pdres	4,6991841	Club de l'Age_d'Or St-Pierre-du-Lac, Val-Brillant	5,8991978	Le Club del'Age d'Or, La Redemption	3,4942046	Age d'Or de Ste-Irdne, Ste-Ir^ne	4,3572108	Les Vrais Amis, Rimouski	4,0692157	Les B16s d'Or de la Metis, St-Octave de Metis	2,1992287	Club de l'Age d'Or, Rimouski	6,3732311	Le Club de 1'Age d'Or de St-Charles-Gamier, St-Charles-Garnier	7,318Total	$47,5391977-	19784-02387 L'Age d'Or de Luceville, Luceville	$ 4,2972482	Club de 1'Age d'Or de Saintc-Agnes, Rimouski	8,1602555	Le "Club de l'Amitie" Ste-Blandine, Ste-Blandine	8,0152560	Club de I'Age d'Or St-Germain de Rimouski Inc., Rimouski	5,4002595	Club de 1'Age d'Or de Les Hauteurs, Les Hauteurs	2,9202636	Le Club de l'Age d'Or de Bic, Bic	1,360
2686 L'Association de I'Age d'Or de la paroisse St-R6mi de M6tis Inc.,
Price	9,405
2695	ATn6s de Ste-Odile, Rimouski	5,9582699	Club Age d'Or "La belle fLquipe", St-Donat	2,6222804	Club de l'Age d'Or, St-Gabriel	5,843Total	$53,980


Mr. Speaker:: Shall the remaining questions be allowed to stand?


Some hon. Members:: Agreed.



POINT OF ORDER


Mr. Peter Elzinga (Pembina):: Mr. Speaker, I rise on a point of order with regard to a question I have on the order paper, No. 423. It has been on throughout this entire session
Income Tax Act
and was on the order paper in the previous session. I wonder if I might get a commitment to have an answer.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Wednesday, May 17, consideration of the motion of Mr. Chretien that Bill C-56, to amend the statute law relating to income tax and to authorize payments related to provincial sales tax reductions, be read the second time and referred to committee of the whole.
John Edward Broadbent: Mr. Speaker, the budget bill that we are debating in the House today emanates, as all members know, from the budget presented to the House about a month ago. The central purpose of the budget, according to the Minister of Finance (Mr. Chretien), was to do something about the deplorable circumstance in which we as a people find ourselves, almost half way through 1978, with more than one million unemployed. Therefore the central purpose was to generate employment. The central provision of the bill is to do this by means of a sales tax cut at the provincial level, provided by the provinces, which in turn are to be reimbursed by the federal government.
At the time this budget was introduced our response was that, at best, this was a gimmick designed by the Liberal Party of Canada to get it through an anticipated soon-to-be-held federal election. The gimmick was to provide short run tax cuts for a six month period as a means of influencing voters to vote for the Liberal party. The voters certainly were not taken in. When the Liberals read the results of the Gallup poll, the election was cancelled.
What has emerged from the budget, quite apart from its significant failure to come to grips with the problem, is that the provision to stimulate the economy and generate jobs has not only turned out to be a failure, if and when it runs its full course, but has been a major instrument in the creation of national disunity. The proposal before us, and the way it has been interpreted by the government which brought it forward, has created untold damage in the country.
By a series of misguided and arrogant strokes, the federal Liberals have managed to turn virtually everyone in this country against Ottawa on this particular measure. This is not only because of the way they treated the provincial government but also the people of the province of Quebec with regard to this measure.
Lined up against the federal government are not simply opposition members of the House of Commons. One normally anticipates that on a budgetary matter. The opposition parties are strongly united in opposition to the measure that is at the

May 18, 1978
Income Tax Act
core of this bill. In addition, there are the editorial writers, without exception, of French Canada and English Canada, the premiers of the provinces, and Liberal backbenchers. In the province of Quebec all parties in the National Assembly are expressing disagreement with this measure and, in particular, with this government's plan to implement it.
At the very time the appeal of the premier of the province of Quebec for independence had begun to wane in that province, the Liberal party at the federal level, the self proclaimed saviours of the country and, in their view, the only experts capable of dealing with the question of national unity, came to the rescue of Mr. Levesque. They have provided him with the strongest possible evidence in support of his general contention that the federal system does not work for Quebeckers, that provincial rights and jurisdictional authority are always, in the crunch, trampled upon by the federalists in Ottawa.
To use the words of one of the most distinguished citizens in the land, and I sincerely believe this, Mr. Claude Ryan, the leader of the opposition party in Quebec, this measure is a "dangerous" precedent. These are not the words of a newspaper normally opposed to the Liberal party, or of an opposition member. With this measure, particularly in the light of the means used to bring it into being, and the attitude taken by the Prime Minister (Mr. Trudeau) and by the Minister of Finance, we find blackmail replacing co-operative federalism. The tragedy is that this sad sequence of events might have been and, indeed, should have been avoided.
The quagmire in which we find ourselves at present is not inherent in the federal system, as every member of the House knows. It is, I regret to say, however, inherent in the cynical, expedient and, above all, arrogant attitude of the federal Liberal Party of Canada. The Liberal Party of Canada, particularly the leadership of its Quebec wing, combines two totally unacceptable attitudes in terms of national politics in a federal system. One is an almost congenital incapacity to admit they are wrong. That is serious in politics, and it can be monstrously serious at a time when the unity of the country is at stake.
The leadership of the Liberal Party of Canada has an arrogant streak; it is this which is causing us so much trouble. Combined with that is what I think can only be described as a pathological incapacity to find any virtue in the current government of Quebec. I make these points because they are central to the difficulty we face right now in terms of the legislation before us. On the one hand there is arrogance, and on the other there is an attitude toward the Parti Quebecois which says that even if a member of the PQ is eating breakfast he must be doing it incorrectly. That is not the attitude which can hold the country together.


Mr. Blouin:: How naive can you be?


John Edward Broadbent: A Liberal member says I am very naive. If he is satisfied with the leadership the Prime Minister is providing his caucus, he himself is naive.
In coming to grips with this issue I shall cite chapter and verse for the statement I have just made. I shall do so by dealing with two aspects of the bill. One is the aspect of co-operation. On the whole, a flexible and co-operative attitude was taken toward the other provinces in connection with this matter. I give the Minister of Finance credit for that. I give him credit for saying, as federal Minister of Finance when he is preparing a national budget in a federal state, that it does make sense to consult the premiers. I do not agree entirely with the partisan attitude which has been taken by some of the provincial leaders in response to the minister's approach. I want to give credit to the federal minister for his approach in developing the budget on this basis. In my view he demonstrated a reasonableness and an acceptance of reality vis-a-vis all the provinces-with the exception of Quebec.
Ontario liked the sales tax proposal, basically for the obvious reason that this was the province which suggested it. The reason Ontario suggested it was because it knew the plan would boost industry and produce more jobs-that throughout Canada, following these tax cuts, people would purchase goods made in Ontario. There is nothing wrong with that. I am simply saying this was the self-evident reason for supporting the proposal.
What about Atlantic Canada? The federal government recognized that there was little manufacturing in that region, that the per capita income was lower there than in the rest of Canada, and that its unemployment levels have, unfortunately, always been higher than elsewhere in the country. In these circumstances, it made the proper response. Special consideration was given to Atlantic Canada; the federal government offered to pick up the whole cost of the tax reduction in those provinces. Very appropriate!
Both Saskatchewan and British Columbia wanted an extension of time during which the cut would be applied. Once again the federal government showed a responsive attitude and introduced a flexible element in the legislation to take into account that request.
Alberta receives no benefit from this measure because right now it is the richest province in terms of per capita income. To the credit of that province its representatives graciously said they would go along with the scheme, nevertheless. So going through the list we find an attitude of flexibility on the part of the minister toward English-speaking Canada, which is commendable. But when it comes to Quebec, the record of flexibility goes out the window. The minister is shaking his head over there. Though he cannot reply at this point in the debate he will have an opportunity to speak later. If he wishes to ask a question at the end of my speech I shall be delighted to deal with it.
Consider the minister's words. He said, with regard to British Columbia and Saskatchewan, as reported in Hansard for April 13, "I even made adjustments to meet particular situations in British Columbia and Saskatchewan." On April 14 he said, with relation to provinces outside Quebec, "I changed my formula." Later, he told us, "I even made some adjustments to accommodate them." As reported at page 4501

May 18, 1978

of Hansard, the minister told us he made changes to suit the special cases of Saskatchewan and British Columbia.
However, when the minister, the Prime Minister, the Minister of State for Urban Affairs (Mr. Ouellet), and the Hon. Marc Lalonde, whose ministry I happen to forget-


An hon. Member:: Federal-provincial relations.


John Edward Broadbent: -ironically enough, federal-provincial relations-when their charming, flexible thoughts turn to the province of Quebec and to the government of that province, flexibility goes out the window, and intolerance, inflexibility, and almost blind hatred fill their place. At this time in our history that is a tragedy. It is demonstrated by the kinds of phrases used by the minister and others in this House. At page 4504 of Hansard the Minister of Finance is reported to have said about Mr. Parizeau, the Quebec minister of finance-and let us note the contrast in language and tone between the quotations he has used to describe his relationship to other governments-the following:
... he has to live with his own decision, just as I have to live with my own decision.
Unfortunately that same attitude of inflexibility is carried over not only in the thoughts and actions of the Minister of Finance but also in the thoughts and actions of all senior ministers, including the Prime Minister of Canada.
[ Translation]
Mr. Speaker, the Prime Minister and the Minister of Finance have stated that they proposed the same policy to all provinces. That is not true. The Minister of Finance did not threaten to crush the other provinces with a unilateral decision were they to refuse his sales tax reduction. He threatened the province of Quebec only. Threatening and blackmailing a province in such a way is unacceptable. In that sense, that act of the Liberal government is the most serious in ten years. It is the first time the threats of the Prime Minister go so far in threatening a province and it is ironic that he should pretend to be the great champion of national unity and then take such steps against the province of Quebec and not only against the government of Quebec.
Had the minister of finance of Ontario proposed a similar selective cut, I am sure that the federal Minister of Finance would have accepted. There is no doubt about it in my mind. But the same idea coming from Mr. Parizeau is unacceptable. I think the Minister of Finance knows it as well as I do. The selective sales tax cut in Quebec does not benefit Quebec alone, far from it. Ontario also derives enormous advantages from it. I will explain that in a few minutes. I think the current crisis we are in is due to the blind intolerance of the great federal Liberal tenors about everything the present government of Quebec does. To my mind, it is a certain fact.
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If we are going to reject the response of the Quebec government, it seems to me that we have to do so in this, the federal legislature of Canada, on the ground that it is unacceptable in principle to the thrust of this legislation. The Minister of Finance himself has indicated, as I tried to show in my earlier comments, a flexible attitude toward the other provinces. I want once again to emphasize that a flexible attitude is commendable in a major financial measure, but it is only when we come to Quebec that we do not find that flexibility. The test for us in assessing this measure is whether what Mr. Parizeau and the prime minister of the province of Quebec propose is compatible or not compatible with this federal legislation in principle and, if it is compatible but simply departs in some detail, then we should accept it because we have accepted the right of almost every other province to depart in some detail from the central principle of the legislation.
What has the province of Quebec said? First, it has asked for a transfer to it of the financial equivalent of what it would have got if it had accepted the original tax proposal of the federal government.
Second, the Quebec government has offered a complete tax reduction in five sectors of its economy, shoes, textiles, clothing, furniture, and hotel bills, and for what reason? The reason is that this is very important not only for the province of Quebec but for all other provinces. In this proposal the Quebec government is on exactly the same ground and in exactly the same constitutional position as any other province.
Mr. Parizeau and the prime minister of the province of Quebec have said that they are taking this position because it accords with their interpretation of the existing federal constitution, and on that they are dead right. They are not mistaken.
They are not acting as separatists. They are acting as good federalists, so to speak. An hon. member opposite shakes his head. He will have to convince this House that what the Quebec government is doing in this regard is contrary to the principle of federalism. Ironically in this context of Canadian history, it is the separatist government of the Parti Quebecois in Quebec which is being federalist, and the Liberal Party of Canada which is causing a separatist tendency in the province of Quebec. What Mr. Parizeau has said is that a tax area like this is within provincial jurisdiction and therefore the priorities in terms of its application should be up to a particular province to decide.
Saskatchewan could have done the same thing if it had wanted to. Ontario could have done it a different way if it had wanted to. Surely that is the point and, speaking for my party, I say that that is exactly the position we take. If I understand the position of the official opposition, that is exactly the position it is taking too. The government of the province of Quebec has said that constitutionally it should have the right to set the priorities in jurisdictions where it has authority under the federal system. The Quebec government has argued that its proposal would create more jobs. If I understand it, that is exactly the argument of the Quebec government.

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An hon. Member:: And you believe that?


John Edward Broadbent: A Liberal backbencher says he does not believe that or, at least, someone does not believe that. I ask him to check with the Minister of Finance who can get for him a study-which has not yet been published-by the Department of Finance which shows that Mr. Parizeau's proposal is right and that the federal proposal is wrong in terms of job creation.
I think I have answered the question I am about to raise rhetorically. If what the government of Quebec is doing is within its constitutional authority, and if it is saying that the provincial tax area in the sales tax field is exclusively the prerogative of the province and that therefore the province should have the right to decide whether it should apply to shoes-or cabbages, for that matter-the Quebec government is on faultless ground as a federalist. Its argument cannot be rejected. And if on a pragmatic basis the Quebec government reaches the practical conclusion that it can create more jobs in its own domain by removing taxes in the sectors it chooses, then I ask, in God's name, what really is wrong with accepting the idea of the Quebec government, and what really is wrong with being as flexible toward the government of the province of Quebec, the opposition in the province of Quebec, and the people of the province of Quebec, as the federal government has been toward every other Canadian?


Some hon. Members:: Hear, hear!


John Edward Broadbent: Indeed, a case could be made by the province of Quebec for asking for the full compensation that Atlantic Canada got. That has not even been raised. Normally, in DREE projects, in financial assistance for the development of industry, and in a whole range of transfer payment programs, the province of Quebec received not only exactly what the provinces of Ontario and British Columbia have, but something more, for the obvious reasons that in the province of Quebec per capita incomes are lower, unemployment is higher, human advantages and possibilities at this point in our economic development are less than they are in the wealthy provinces, and normally Quebec is linked with Atlantic Canada. So the province of Quebec has not, as they might have had a legitimate case to do, applied for precisely the same special consideration that Atlantic Canada got. All they want is to get the same benefits as the people in British Columbia, the same flexibility as the people in Saskatchewan, the same rights as the people in Ontario, and we think they ought to have precisely that.


Some hon. Members:: Hear, hear!


John Edward Broadbent: At this point I want to put on the record some statistical information, because the heart of the government's case against the province of Quebec is that the proposal they made was one that was aimed at creating jobs in the province of Quebec to their exclusive benefit. In my question to the Prime Minister earlier today I quoted statements he had

made. On numerous occasions in the past two weeks the Minister of Finance has said the same thing. They have talked about balkanizing Canada, that that is what would have happened had they accepted the proposal made by the province of Quebec. The proposal made by Quebec was one that was going to create jobs for Quebeckers only, to the exclusion of other Canadians, they said. Well, the best that one can say about that argument is that it is rubbish. The Minister of Finance and the Prime Minister should know that it is rubbish.
I want to put on the record some statistics drawn from 1975 about the impact that the Quebec proposal would have had in terms of stimulating different parts of this country. The source for these figures is Statistics Canada and the industry itself. The reality is that if you look at the shoe sector in the province of Quebec you find that in Quebec in 1975 some 54 per cent of the provincial market was serviced by foreign imports, that is, imports not from other provinces but from other countries. Of the remaining percentage, 22 per cent was produced by Quebec producers, but 23 per cent was produced in Ontario. In short, more jobs would be created in the shoe industry in Ontario than in the shoe industry in Quebec.
Second, if you look at furniture and other sectors selected by the Quebec government, what do you find? First of all, of the Quebec consumption in 1975 in the furniture sector, 12 per cent came from foreign sources outside of Canada, but of the remaining part of the market, 30 per cent was produced in Quebec and 44 per cent was produced you know where, in the province of Ontario. So once again the Parizeau proposal will produce more jobs in Ontario than in Quebec. Some balkanization!
The third sector-and we could not get, for statistical purposes, a separation of clothing from textiles because our figures both from Stats Canada and from the industry were combined-shows the following figures for 1975: 65 per cent of the Quebec market was serviced by foreign imports; 24 per cent by producers in the province of Quebec; and for the first time in this series only, 14 per cent by the province of Ontario. For the First time, more producers in Quebec would have been aided by the special tax cut than producers in Ontario.
The point I want to make is that the federal government's entire case in substance has to rest on the claim that what the province of Quebec was doing was to meet their own needs, to create jobs for Quebeckers only, and that this was going to balkanize Canada. First of all, we say that the province, whether it is Quebec or any other province in this country, should have the right to make that decision as to where to apply the sales tax.


Some hon. Members:: Hear, hear!


John Edward Broadbent: Second, we say that hard economic analysis of the consequence of the Quebec government's proposal shows that it does not offer a disproportionate advantage to the province of Quebec but is spread to other provinces, particularly to the province of Ontario. I say, with all due modesty, that the Prime Minister would recognize inherently that the gov-
May 18, 1978

ernment's case has to collapse in substance. I come full course in the point I am trying to make.
If the Government of Canada had shown flexibility in the details of its arrangements with the other provinces, if it could adjust the time frame for Saskatchewan and British Columbia, if it could adjust the amount of money for Atlantic Canada- all of which flexibility makes immense sense-why could it not show the same flexibility to the province of Quebec? Similarly if you look at the substance of the proposal in terms of its economic impact, if the effect of the proposal is not simply to create jobs in Quebec but to create jobs all over Canada, I say: why in God's name could the Government of Canada not accept it for that reason?
I come inescapably to the conclusion, which I asserted earlier in my comments, that the only reason the federal Liberal party has not accepted the proposal made by the province of Quebec is that it happens to be the Parti Quebe-cois. It happens to be a government for which the federal government has a pathological hatred and in which it can see no good whatsoever. I repeat to the Minister of Finance what I said earlier in French: I have not the slightest doubt that if the same proposal had been made by D'Arcy McKeough instead of by a man named Parizeau, the federal Liberals would have accepted it within five minutes.


Some hon. Members:: Hear, hear!


John Edward Broadbent: In concluding, I say in all seriousness that in my experience-and I have only been here ten years-this legislation is potentially the most harmful for federal-provincial relations that I have seen. It is coming at a time in our history which is particularly dangerous in terms of the unity of this country. I hope still that the pressure which has mounted within this country in the province of Quebec and beyond shows the unanimity among French and English-speaking Canadians in Quebec and out of Quebec in opposition to the federal Liberal leadership. This kind of united opposition could cause the federal Liberal leadership to think for once that perhaps they are wrong, that perhaps other Canadians have an insight into this measure which they do not have, that we too are good federalists, that Claude Ryan is a good federalist, that you can have a federalist in Quebec and a federalist outside of Quebec in this chamber, a federalist who is not a politician, who can say he differs with the Liberals, and yet is not a separatist.
If this virtually unanimous opinion in French-speaking and English-speaking Canada, apart from the federal cabinet, can have any impact, I hope that at least it will cause the Minister of Finance and the Prime Minister-both of whom said yesterday at certain points that they would be prepared still to negotiate, be prepared still to think about some counter proposals coming from the province of Quebec-to act on that basic decent impulse. If they do reach the conclusion that what has been just for the other provinces is just for the province of Quebec as well, and that the essence of what Quebec is
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proposing in this instance coincides with the essence of this bill, perhaps we can get this matter resolved and go on with other more important matters, particularly matters of the economy that are of central concern to Canadians wherever they may live.
To this end, Mr. Speaker, and to give the government some time to think about this, I would like to move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That all the words after the word "That" be deleted and that the following words be substituted therefor:
"Bill C-56 be not now read a second time, but that it be read a second time
this day one month hence."


Joseph Jacques Jean Chrétien: Mr. Speaker, before you take note of the motion and put it to the House, since the hon. member said to me in his speech that he would allow me a question, I wish to direct one to him which might shed some light on his speech.

I would like, Mr. Speaker, to commend the hon. member for the very positive remarks he made when he stated that I have tried to do something novel and flexible. I would like to ask him two questions, with the consent of the House.


Mr. Deputy Speaker:: Does the House give its consent?


Some hon. Members:: Agreed.


Joseph Jacques Jean Chrétien: How can the hon. member say that I am not flexible enough to Quebec when it was them that came to me with their proposition, 48 hours after the others had accepted the proposition that we agreed on? The second question I have for the hon. member is, how can he say that I am not flexible when, after receiving the proposition of Mr. Parizeau, I called my counterparts in the provinces and asked them if in their judgment I could accept the proposition put by Quebec, and they said no? How can the hon. member square that with a lack of flexibility?


John Edward Broadbent: I do not quite understand the second question.


Joseph Jacques Jean Chrétien: The second question was, how can the hon. member say I am not flexible enough when, after receiving the proposition from Mr. Parizeau, I called some ministers of finance of the provinces that were part of the deal-


John Carnell Crosbie: Some; some.


Joseph Jacques Jean Chrétien: Some, yes. And I asked them whether I could accept the proposition of Mr. Parizeau. I called three ministers of finance and all three of them said that I could not accept the proposition because it would betray the agreement that was made among all of us.


John Edward Broadbent: Mr. Speaker, I would be very happy to answer both of those questions because, if I understand them correctly, rather than confirming the minister's own view that

May 18, 1978
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he is flexible, it seems to me that the questions confirm my side of the argument. However, I will try to state the reasons why I have reached that conclusion.
On the first point the minister asked, if I understood him correctly, how can the Quebec government seem to be flexible if they did not give a final answer until two days after the budget, and then it was a negative one. Well, surely, on a very complex measure like this when the government of Quebec believes-and constitutionally it is absolutely right-that this tax area is within provincial jurisdictional authority, and the province of Quebec almost above all others in our history has been very sensitive-and I would have thought that the minister would know that-to having control of areas within its jurisdiction, obviously it had to think, perhaps longer than the other provinces.
The minister is shaking his head, but they perhaps took longer in reaching a conclusion because they wanted to come up with a counter proposal that they thought, in terms of their priorities, was more reasonable. So, I turn it around to the minister. We have passed federal legislation where some parties have come later than others. If the minister was flexible, he would have looked at the essence of the Quebec government's proposal, not at its timing-whether it was two days later or whatever-and then decided whether it was good or bad. I do not accept the minister's implied argument there. If he was flexible he would have accepted it.
The second question was that he went back to the other ministers and asked them.


An hon. Member:: Some.


John Edward Broadbent: He said some. I would like him to put it on the record as to which ones, but to me it is not relevant. They were all, within the federal constitution, autonomous within their domain. They had the right to accept or reject the federal government's proposal. As the minister knows, perhaps better than the rest of us because he dealt with it, he made flexible, different proposals to different provinces and they decided to accept. Why they did not think it agreeable to accept the Quebec government's alternative, I do not know. That is their decision. I say to the minister with all due respect, quite literally, it is none of their business. It has everything to do with the federal government's decision as it regards the government of the province of Quebec.


Mr. Deputy Speaker:: Before recognizing the hon. member for Bellechasse (Mr. Lambert), I must put to the House the amendment moved by the hon. member for Oshawa-Whitby (Mr. Broadbent).

It is moved by Mr. Broadbent, seconded by Mr. Knowles (Winnipeg North Centre):
That all the words after the word "That" be deleted and that the following words be substituted therefor:
"Bill C-56 be not now read a second time, but that it be read a second time
this day one month hence."


Joseph Adrien Henri Lambert: Mr. Speaker, when I am free to do so, I take pleasure in reading the official report of the proceedings of this House in the early days of confederation, and I must say I am impressed by their seriousness. I trust that the generations to come will take as much pleasure in reading our proceedings as I have when I read those of a century ago.
Mr. Speaker, even though the Minister of Finance (Mr. Chretien) has gone out for a few moments, I would like to congratulate him for the courage he demonstrated yesterday throughout his speech when he introduced his bill on second reading. I do not agree with all his points of view; however I must say he showed a lot of courage in arguing for his bill which is far from satisfying everybody, but at least he showed courage. He tried to convince hon. members of the House of the merits of this legislation. Mr. Speaker, it is always annoying for a member of the House to be required to take a position on an omnibus bill. We have seen that before, a bill containing many provisions, some good, some not so good and some quite bad. In order to accept the good ones, you have to accept the bad ones too. This is not really an omnibus bill; rather I would say semi-omnibus because it does have good points, but there is one which I am greatly dissatisfied with.
The bill before us today is not just a simple economic measure. Politically, it is the most consequential bill we have had since the beginning of the session, and perhaps even in the last few sessions. Of course the economic measures it contains are important and they should be debated. But any economic impact this bill might have is relegated to the background by he flagrant injustice Quebec will have to bear if this piece of legislation is passed. We of the Social Credit Party of Canada have always emphasized the significance of positive criticism in parliament. That is what I would like to continue to do with my colleagues. We should not let partisanship blind us to the point where we cannot see the good aspects of certain pieces of legislation. We should recognize that Bill C-56 does contain some good measures. Although not many, there are at least two which I would like to mention.
The one which pleases me most is the amendment dealing with capital gain exemption for farm corporations. My colleagues and I have long since been insisting on the need for such a measure. The government is finally introducing the necessary amendment, and I am sure that if it is adopted it will serve to protect our family farm corporations, a formula which is very popular these days.
I wanted also to comment on the political aspect of this bill. I am referring of course to the stand which the province of Quebec as a whole has taken against the federal Liberal party.

May 18, 1978

The motions which were adopted on two occasions by the Quebec National Assembly bear witness to this. I shall refrain from involving all government members in the House, for it appears that some of them have the courage of their convictions and the guts to oppose the centralizing option advocated by the Minister of Finance. During the debate on his budget speech, I indicated to the House how concerned I was about a possible confrontation on the sales tax issue. I was certainly worried about this. I even stated, as reported in Hansard on page 4526:
-and this is the cause of the present confrontation. It worries me so much that I warned today that we should proceed carefully and sensibly, if we want to avoid constitutional crisis.
I spoke about the same worries yesterday, Mr. Speaker, during the question period when I put some questions to the right hon. Prime Minister (Mr. Trudeau) whose answers showed that he was fully aware of the seriousness of the situation. But, Mr. Speaker, one month later we are still faced with this problem of the sales tax. We are very close indeed to getting into the worst constitutional crisis of our history and I would like to see us avoid it, as I believe we can still do. I am not saying this lightly. I am convinced that if a solution is not negotiated at the government level, the concept of Quebec sovereignty will make much more progress than it has since the Parti Quebecois came to power. The situation is serious.
Mr. Michel Roy of Le Devoir gave the following summary of the situation in an editorial, and I quote:
... by working only to maintain their prestige and save their honour, they (Mr. Chretien and his colleagues) are undermining federalism and serving the interests of the government they think they are fighting.
It is worth thinking over. And again last Tuesday the Minister of Finance accused the opposition, and 1 quote, from page 5451 of Hansard:
I am surprised that a national party wants to save the neck of the Parti Quebecois.
You have to be very shortsighted to talk like that. The Minister of Finance should get rid of the beam in his own eyes before looking for the mote in the eyes of those members who do not agree with him.
The reactions of some Quebec editorialists to the solution proposed by the Minister of Finance are worthy of being analysed. It is necessary to recall that Mr. Roy of Le Devoir and Mr. Adam of La Presse are not known to be independen-tists. However, Mr. Adam talks of politically questionable solutions and aggressive Fiscal measures. He is not afraid to saddle the federal government with the full responsibility for this serious conflict. Mr. Roy of Le Devoir talks about an unsatisfactory, unfair and regressive solution. According to him, and I quote:
By losing its temper as it did, the central government has violated the letter as well as the spirit of federalism.
And all this because of what Mr. Roy calls:
... a fine case of stubbornness and wounded pride.
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Mr. Speaker, the government is trying to trip us up by introducing its solution to the sales tax problem within a bill which contains, as I said already, some measures everybody in this House would like to see passed. But the government will not fool me, no more than it will succeed in misleading the people. I will take a stand on this legislation, I will even oppose this legislation so long as the solution proposed to the sales tax problem is not changed. The people are not taken in and will realize that the government itself has to bear the shame and the odium of the situation. For its bad solution the government deserves to be blamed by all Canadians.
Mr. Speaker, the reasons why I am opposed to that solution are very clear. Lately, the government has intervened in an area of taxation which unquestionably is of provincial jurisdiction. The right of the provinces to arrange their sales taxes according to their own needs and their priorities is a sacred right enshrined in the British North America Act. The infringement of the federal government in this provincial area is pure and simple provocation. That the government in its precarious position with the Canadian electorate should try to scare people, to use every means it can, that I can understand, but that it should do so to the detriment of the people of a province and their elected government and even so with glaring disrespect for the constitution of this country, that is of the lowest possible level of petty politics.
Mr. Speaker, I am not accustomed to using such words when speaking in this House but since the problem is extremely serious, I feel obligated to use expressions that are likely to to strike the will and the mind of those in charge, those who also have the responsibility of using all the means available to save our democracy. We love democracy but we must love it enough to take all the means necessary to save it, to preserve it but also to be able to live it.
Mr. Speaker, the contempt that the government seems to have for the Canadian constitution and the people of Quebec also affects the underprivileged. How could one interpret differently the proposed tax reimbursement to Quebec taxpayers? The formula proposed by the government penalizes those on low income and those who do not pay any or hardly any taxes. And in that respect I want to say that yesterday during the question period the right hon. Prime Minister (Mr. Trudeau) told opposition members several times that they did not understand the problem.
If we really do not understand the problem and the right hon. Prime Minister and his Minister of Finance (Mr. Chretien) are the only two people in Canada who can, it means that it is a problem which is not within everyone's grasp. So if it is such a serious problem, it is our duty to work at it for as long as it takes to understand it. We must do everything we can to understand it. Personally, if the right hon. Prime Minister and the Minister of Finance can convince me and make me see the problem the way they do I will be honest enough to say so and

May 18, 1978
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then I will join them. If it is a matter of time, let us take the time needed, the situation is very serious.
Mr. Speaker, have you ever seen a measure which, to my mind, is so unfair and discriminatory? I must admit that even coming from a government which is the servant of large financial interests-this is nothing new, everyone knows it- that surprises me. The very idea of a sales tax cut is that it should benefit everyone since everyone is a consumer. That is the way it should be. On the other hand, a tax cut benefits only those who pay taxes and the right hon. Prime Minister once again said so today.
Mr. Speaker, where is justice for senior citizens, for people on welfare and for all other underprivileged Canadians? As they do not pay taxes they will not benefit from any tax credit. They have been ignored by the government. It is a sad way to progress towards a just society. But what is insulting here is that the government assumes that the people are idiots. It is hoping that this false generosity will turn public opinion in their favour. Not only does it hope to influence the voters in its favour but it hopes to do it with that paltry $85, and that is the maximum since many people will have much less depending on the taxes they paid.
Mr. Speaker, I object to that solution for another reason relating to the very principle of democracy. As I have just said the National Assembly has, on two occasions, unanimously objected to the federal government interference in its tax jurisdiction and to the proposals made by the Minister of Finance (Mr. Chretien). I am thinking of the new leader of the provincial Liberal party which held its convention recently, in April I think, and that was well covered by the CBC. I am thinking of the comments made by the Secretary of State (Mr. Roberts) in this House last May 11 while I was not here. I did not have the opportunity to comment on them but it seems from his remarks that that Crown corporation is free to air truths and half-truths, lies and political covention of their choice and so on. I repeat, I do not agree with that method and I am anxious to know the decision of the Chair following the motion I proposed here in this House last May 8.
Mr. Speaker, the National Assembly represents the people of Quebec as legitimately as we represent here in Ottawa the people of Canada. When a sovereign assembly unanimously decides something it does so one behalf of all the people. It does not matter if the government is short-sighted, blind or deaf. What matters is that these people, who are elected by the population, have adopted a resolution requesting that members of parliament, especially those who represent ridings in the province of Quebec, oppose this measure.
I did not have to wait for this resolution to know that my party and I must oppose this measure, especially clauses 30 and 59. Mr. Speaker, I would not want the House to think that I object to the entire bill, because there are also good measures and good provisions in this piece of legislation. However, the fact that all parties and all affiliations in the National

Assembly voted unanimously in favour of the motion gives added dimension to the matter. The federal government has succeeded where the PQ government has always failed: forming a common front in the National Assembly against the central government. The fact that the concept of Quebec's sovereignty might earn new credentials because of this crisis is nothing to brag about: the federal government will have been the major force behind it. We should reflect very seriously about this.
It is easy to understand that a government can make mistakes. It can always be forgiven if it has the courage to admit it and tries to make up for its mistakes. However, a government that refuses to admit its mistakes and tries to blame others for them no longer deserves the confidence of the population. This government is on the road to political suicide and I shall certainly not be the one to stop it unless it wants to drag the whole population in its wake. In this case, I am responsible towards the population and I will fight with all my energy to protect all Canadians.
Mr. Speaker, I cannot put into words everything that is now going on in my mind. To fight effectively against this government, I want to remain in this House as long as necessary so that we may get to the bottom of this issue and find a solution likely to bring harmony to our country instead of division.
However, I admit that I am indignant, revolted and disgusted at this unfair, partisan and offensive attitude towards the whole population of Quebec. Mr. Speaker, this bill is a logical result of an improper tax system that we should no longer tolerate. Instead of helping small wage earners, the economic policy of the present government only widens the gap between the rich and the poor.
Yesterday, I was happy to hear the Minister of Finance say that he gave 15 years of his life to try to narrow this gap between the rich and the poor. I believe he is sincere, but he will certainly never attain his purpose with such formulas. Mr. Speaker, the minister also told the House that he had never been able to understand the theories of social credit. On two occasions, he replied to my questions on this subject. Yet, I am convinced that the economic situation in our country would be better than it is now if he had understood them.
This bill is the outcome of an irresponsible and excessive position taken by the federal government both in political and economic matters, as can be seen in a part of the bill. This bill is the outcome of a series of blunders which have ruined the Canadian economy in the past 15 years. Fifteen years ago, Canada was the second wealthiest country in the world. Today, we see our position is constantly declining. Qualified engineers are needed to build a strong bridge. So, we need good politicians to run the country in a sensible manner. For ten years the government has followed the advice of economists who based that advice on orthodox theories which are
May 18, 1978

obsolete and no longer meet our present needs. Mr. Speaker, the complete removal of the provincial sales tax is somewhat close to the Social Credit theory that governments should set up a system of compensated discount. Had we set up such a system, which is under federal jurisdiction, we would not have this conflict between governments about the retail sales tax.
Our position is that governments should initiate a compensated discount system to encourage the consumption of Canadian goods and, at the same time, increase the production of Canadian industries, which would create jobs for Canadians on the labour market. So, the number of unemployed would decrease. This compensated discount system is essentially oriented towards the poor within our society. The SI86 million of the Minister of Finance will certainly penalize the poor and fail to boost the production of Canadian goods.
Mr. Speaker, why does the Minister of Finance still refuse to negotiate the transfer of this money directly from government to government? If the federal government has funds to give the provinces, that is fine, but it should respect provincial jurisdictions. The sales tax area falls under provincial jurisdiction, and if the federal government wants to foster Canadian unity and set the economy in motion again, it should respect the authority of the provinces, of all the provinces, not only that of Quebec, and stop infringing all the time on their jurisdictions. This bill would have been a lot more useful if the minister had introduced a series of measures aimed at stimulating the economy.
Mr. Speaker, I see time is running out, I shall shorten my comments. I would like to say this: federal-provincial conferences have been going on for many years. Spokesmen for the provincial and the federal governments have certainly always shown a great desire to co-operate. But the same issue always pops up: the rights and the responsibilities of the federal government, the rights and the responsibilities of the provincial governments. The federal government keeps on saying that it is unable to yield any source of income to the provinces because it does not have sufficient income to face its responsibilities, its obligations, and likewise with the provinces. I have attended some conferences where I heard premiers express their desire to co-operate, but say that, in view of their responsibilities towards the people of their province, their government was not in a position to yield any more fiscal rights to the federal government, as they themselves did not have enough. Conferences always end on the same note, premiers or finance ministers return home faced with the same problems, and the same holds true for the federal government. Which means, Mr. Speaker, that the problem is one of money, of dollars, and it will never be solved as long as the federal government, which under the constitution holds the authority to legislate on monetary matters, will be dominated by financial interests, by a monopoly which through legislation can cash the credit of the nation. When we borrow money, be it from Germany, New
Income Tax Act
York or Italy, the Canadian government enters into financial agreements which are based on the credit of Canadians.
Mr. Speaker, your own work represents a credit. The hon. member for Riviere-du-Loup-Temiscouata (Mr. Gendron), who sits in front of me, creates a credit by his own work. All our activities put together constitute a credit. When industrialists produce the goods needed by the population and when farmers produce milk, butter, cheese, vegetables, all these things, they are actually creating credit. And when the government borrows abroad, it is all that credit that it is incurring in our name. That is why I suggest that the solution is not solely to be found at conferences. The solution has to do with the fact that the Canadian government and the Canadian parliament is not assuming its responsibilities in this matter.
I said earlier that our disputes are due to the fact that we do not have enough revenues to meet our responsibilities in each of the provinces and in parliament. Therefore, because of our disagreements and a lack of money, the solution is to use the means at our disposal and which rightly belong to us to cash in on our own credit at lower interest rates than those we are now paying. Mr. Speaker, why borrow from Germans, Italians, Americans at 10, 12, 15 per cent interest rates, when we could borrow from ourselves in Canada at much lower interest rates?
I see that the hon. member for Brome-Mississquoi (Mr. Graff-tey) finds this funny. I guess he has never been in need of money, but those who have been and are still short of money and have to go to finance companies to borrow at 20 and 30 per cent interest rates find it less funny, and you can be sure that those people understand what we are saying. So, it is the same with a government as with an individual.
When one borrows at nonsensical interest rates, no wonder, you end up creating uneasiness and discord in a country. That is the cause of our problems. The best proof is that a sum of $186 million has been keeping us busy in this House for the past two months and is the cause of all our wrangling. Yet this money that we so badly need comes neither from heaven nor hell. It was invented by men. It was created somewhere. And the government and all of us together should look fully into this serious problem of the creation of money which causes trouble even for the most intelligent people. It cannot be said that the Prime Minister is not inteligent. He is extremely intelligent and he knows the problem, but he is not able to find a solution to it.
I have already said this in the House, and I repeat it for the benefit of government members. Their responsibilities may be greater than ours, only the future will tell. Their responsibilities in caucus are not only to discuss sales tax and those $186 million, but also to suggest solutions to the Prime Minister and to the Minister of Finance. It is not only a matter of nationalism, it is a matter of plain common sense, not only for today but for the years to come. I believe that if only they took the trouble to heed the suggestions I want to put forward very seriously, and being completely free from any financial hin-

May 18, 1978
Income Tax Act
drance that may exist, I am convinced that I would have helped effectively to improve the social climate, the economic conditions and the political issues in this country. I am in favour, for my part, of a new constitution, a constitution in which not only the responsibilities and rights of the various levels of government will be clearly defined, their sources of revenues to meet their obligations, so that we will stop wasting so much time in useless conferences that do not solve anything.
So, Mr. Speaker, in taking part in the debate on Bill C-56,1 wanted to put forward very positive ideas and, hopefully, work with all my colleagues in this House to create a greater harmony in this country, so that Canadians in eastern, central and western Canada can be proud of having equal opportunities all across this country and we are no longer led to believe that a part of the country is giving handouts to the other out of sheer kindness. Are we living in the same country or not? If we are living in the same country, our responsibility at the national level is to provide good administration for everyone and not have part of the people believe that one part of the country is doing the other favours out of generosity.
Mr. Speaker, perhaps my words will be judged as coming from a man who has not much confidence at this point precisely because of the situation created by that issue we are now discussing and because of the $186 million, but $186 million is not much compared with the whole future of a people and a country. Let us disregard that $186 million barrier and build a real constitution, so that we may have a real prosperous country in which all Canadians today and tomorrow will be proud to live.


Mr. Hal Herbert (Vaudreuil):: Mr. Speaker, in the six years in which I have been in the House I have risen to speak on many occasions, but never have I felt as much desire to speak out as I do today. I have never felt so strongly about an issue. I have never listened so attentively to all the arguments which have been presented by members of the opposition, and by others outside this House, on the subject of this bill, Bill C-56. I have never on any issue been as convinced as I am today of the wisdom of the Minister of Finance (Mr. Chretien) in his objective, in his method, and in the presentation of the bill before us. With all my English logic I have listened to the arguments presented. I can say, frankly and honestly, that I do not understand them. I have looked at the emotional side. Perhaps I am not very emotional, but I have tried to look at the subject from an emotional point of view to see whether I could better understand the extraordinary attitude and point of view which have been put forward in opposition to the bill.
I find it extraordinary we should be discussing today what Canada is all about. We are seeking to determine, in this argument on the provincial sales tax measure, what kind of Canada we want for the future. I hope we will never write a constitution which would make it impossible to carry on a

dialogue between the provincial and federal levels of government.
When the minister presented this bill to the House he clearly outlined his objective in making the proposals he did. Economists throughout the country had almost unanimously agreed that the best way to stimulate the economy was to reduce provincial sales taxes across the land to provide immediate stimulus to purchasing which would, hopefully, result in increased investment, increased manufacturing, and greater employment opportunities.
The minister was faced with the obvious problem that provincial sales tax is under provincial jurisdiction. He has acknowledged this right from the start. The method he proposed-and really the only method available to him-was to use federal taxes as a compensation if the provincial governments were willing to accept the scheme he proposed.
After three weeks of argument the minister obtained the agreement of nine of the ten finance ministers. A couple of them decided to make alternative proposals in forms which were acceptable to the federal minister. During those three weeks the Quebec minister of finance never said a word. He did not say, "Mr. Chretien, this is provincial jurisdiction; stay out; do not touch". He kept his mouth shut because he was playing games. One could consider our Minister of Finance perhaps a little naive because he thought intelligence might override these emotional game considerations.
The timing is what I find difficult to understand. The federal budget was brought down on April 10. The Quebec provincial budget was brought down on April 18. We have talked a lot about what was understood regarding how moneys were going to be raised and how the transfer was going to be made.
In the budget of Mr. Parizeau of April 18, at the bottom of page 22 he acknowledges-and it is printed-that the method of transfer would be by a reduction in federal taxes paid by the taxpayers. I do not know how long it takes to print a document such as the document I have in my hand, but I would suggest that such a document was put together even before the federal budget of April 10. Iam not inclined to believe that there was any misunderstanding whatsoever in the mind of the Quebec Minister of Finance prior to the presentation of the federal budget on April 10.
On April 12 the Quebec Minister of Finance made a counter proposal. On April 21 the federal Minister of Finance suggested a different form for his original proposal. This, incidentally, should certainly answer one of the points raised by the hon. member for Oshawa-Whitby (Mr. Broadbent) when he spoke of the differences between Quebec and the maritime provinces. The counter proposal of the federal Minister of Finance was to provide an opportunity for Quebec to be treated in the same way as the maritimes. The federal minister was prepared, if Quebec was willing, to cut 2 per cent from the sales tax on the remainder of products to which sales tax was still applicable.
May 18, 1978

He was prepared to go along with the same proposition he made to the ministers of finance of the maritime provinces.
The minister of finance of the province of Quebec, Mr. Parizeau, insisted that the full value of the budget offer be provided toward the cost of the selective cut which he had chosen to make in Quebec. I suggest that, as it stands right now, that is exactly what is being done. By vacating an amount of $85 per taxpayer in the federal field the federal minister makes it possible for Quebec to occupy the field in the same amount-or a varying amount, if it so wishes-so that it can be compensated fully for the provincial sales tax cuts instituted. No one in the province of Quebec would suffer.
There is one point upon which I want to dwell. Many speakers have spoken about the so-called unfairness of the deduction of federal tax from the incomes of those who pay taxes. It has been said that this is not fair to the poor who do not pay taxes, or to old people. With all the logic I could muster I have tried to understand this point, but one thing I do understand is that a sales tax cut is applicable to all those who make purchases. Poor people make smaller purchases than rich people do, so by its very nature a sales tax cut aids those who have money much more than it aids those who do not. What this has to do with the transfer of tax field from the federal level to the provincial level I do not understand.
We are saying that in eight of the provinces where the scheme is applicable we are taking $100 out of one pocket and putting $100 into the other pocket. In those eight provinces where the federal government collects provincial taxes, the individual who pays taxes is not even aware that there has been a transaction.
The province of Quebec is the only province which has decided to collect its own provincial taxes. That is its right, but that costs the people of Quebec many millions of dollars. I am told the cost is $120 million. That is what the people of Quebec are paying so that the Quebec provincial government can exercise its right. However, because the Quebec government chooses to exercise that right, there is no simple solution for Quebec by which the federal government can, as it is doing in the other eight provinces, take $100 out of one pocket and put $100 into another pocket. The money must first be given to the taxpayer. In the case of Quebec the amount is $85 for the simple reason that the federal government has already agreed to reimburse two percentage points of the eight percentage points that have been eliminated from the sales tax on shoes, furniture, and clothing.
So we give the taxpayer $85, and we say to the Quebec minister of finance, "You have chosen to tax your people yourself. Now you can make a choice. You can choose to tax them the same $85". The Quebec government can choose to tax the people of Quebec on some sliding scale in order to bring in the same amount, or it can choose not to tax them, if it wishes. However, it is the Quebec government's field, and it is Quebec's decision.
There has been so much misunderstanding that I want to refer briefly-as did the hon. member for Bellechasse (Mr. Income Tax Act
Lambert)-to an editorial which appeared in Le Devoir on Tuesday of last week.
It has been called the confrontation between the two ministers of finance, and I suppose that one cannot deny that it is an emotional confrontation. I do not know why we should be surprised.
In one case we have the federal Minister of Finance who believes in a Canada with ten provinces joined together willingly, and in the other case we have the Quebec minister of finance whose avowed intention is to destroy the country as we know it today, and whose avowed intention is to separate. So it should be no surprise to anyone that, no matter what the Canadian Minister of Finance proposes, it is going to be rejected by the Quebec minister of finance. He has no reason for reaching an agreement, and I might suggest that if anybody has sat for weeks and weeks on end across the table at a bargaining session between employer and union one would know right away whether one is going to reach an agreement or whether one is entering into an exercise in futility where the intention is not to reach an agreement.
I suggest that under the present circumstances the objective of the Quebec minister of finance is not to reach an agreement, and there is no way in which he is going to reach an agreement because, if he did, he would be illustrating that federalism works, which he has no intention of doing.


Some hon. Members:: Hear, hear!


Harold Thomas Herbert: The article in Le Devoir to which I referred mentions the intervention of the Canadian Minister of Finance in a provincial jurisdiction. That is admitted. I suggest that the day that a federal minister of finance is not able to sit down with his provincial counterparts to try to reach an agreement, we might as well call it quits, give up on Canada, and start carving it up right away. He did just that, and I suggest that three weeks is a long enough time for anyone to say, "I do not like what you are doing. I am not going to accept what you are doing. Go away and don't talk to me."
It should be remembered-and I think the point has to be raised-that this federal Liberal government was dealing with ten provinces of which only two have Liberal governments. So the federal Minister of Finance had to deal with Conservative, right-wing ministers of finance, and also with socialist, leftwing ministers of finance. But these gentlemen-and I call them gentlemen advisedly-were willing to sit down, and whilst they might not have been very happy, whilst they might not have liked the deal that was being suggested, they were willing to discuss it and come to an agreement. I suggest that despite the proposal afterwards of four ministers from the west, even those four provinces, Alberta included, were willing to come to an agreement.
To suggest that the Canadian Minister of Finance, after having presented his budget and after seeing the action of the Quebec minister of finance, should play into the Parizeau track and hand over to the Quebec government the balance of
5554

May 18, 1978
Adjournment Motion
the funds allocated for specific purposes, seems to me to ignore the fact completely that there are ten provinces in Canada and that an agreement was already reached with nine.
In the new constitution, which we will obviously be discussing soon, we should consider very carefully to what degree we want to allow the power of veto to prevent any further agreement or any further change. As I have mentioned before, the extreme is if that provincial power of veto is to extend to the province of Prince Edward Island, and I am not at the moment criticizing that province for any other reason than to say that it is a province that has a population smaller than the constituency which I represent. I think we have to think very carefully about our attitude toward a constitution that will completely stymie any future progress. I suggest that if we believe that we must at all times have the full agreement of the ten provinces, then we are in effect saying that at no time are we going to be able to have any future agreements between the provincial and federal governments.
Even the point about the distribution of the funds to the Quebec federal taxpayer being inequitable I find difficult to swallow, for the simple reason that the 2.4 million taxpayers in the province of Quebec cover almost all the families in Quebec. I suggest also that the $85 which will go to every taxpayer is far more beneficial to those who are only paying $100 or $200 in federal sales taxes than would be the total of either the 8 per cent on furniture, shoes and clothing, or the 2 per cent across the board on the total purchases at that period of time.
What I am suggesting is that $85 for every taxpayer is a fairer distribution than either the 8 per cent formula or the 2 per cent formula initially proposed by the Minister of Finance. Again I find it difficult to follow the logic of the argument that even if this $85 per taxpayer is of benefit-and it is not intended to be a benefit-that it is inequitable.
I have one las. point to make, and I see it is nearly five o'clock, Mr. Speaks:.
If the minister of finance of the province of Quebec is not prepared to deal his hand while Quebec is still part of Canada, then how is he going to deal with Canada under sovereignty association?

[ Translation]



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mr. Ethier):: 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 Vancouver-Kingsway (Mrs. Holt)-Health and Welfare-Minister urged to consider ban on saccharin; the hon. member for Winnipeg South Centre (Mr. McKenzie)-Supply and Services-Criteria used in calling for tenders; the hon. member for Winnipeg North (Mr,
[Mr. Herbert.)
Orlikow)-External Affairs-Bell Canada contract with Saudi Arabia.

It being five o'clock p.m. the House will now proceed to the consideration of private members' business as listed on today's order paper, namely, private bills, notices of motions, public bills.


PRIVATE MEMBERS' MOTIONS FOR PAPERS
Yvon Pinard: Mr. Speaker, may I ask for the unanimous consent of the House to deal with the whole series of notices of motions for papers standing in the name of the hon. member for York-Simcoe (Mr. Stevens), starting with No. 7 and continuing to and including No. 43, since those motions are on the same subject, uranium cartel. I do not believe the hon. member would wish to come here every Thursday to deal with each one of them separately, and I think it is his wish that we proceed with all the motions together. I ask for the unanimous consent of the House to proceed in that order and that the other notices of motions preceding them be allowed to stand.


The Acting Speaker (Mr. Ethier):: Hon. members have heard the proposition put forward by the parliamentary secretary. Is there unanimous consent?


Some hon. Members:: 
DOCUMENTATION RESPECTING URANIUM CARTEL
Mr. Sinclair Stevens (York-Simcoe) moved: motions:
No. 7.
That an order of the House do issue for a copy of the letter dated September 1975 from Dr. O. J. C. Runnalls to Gulf Minerals Canada Ltd. advising them of the fourth quarter assessment of dues to SERU otherwise known in English as the Uranium Marketing Research Association or as the Uranium Club.
No, 8
That an order of the House do issue for a copy of the Department of Justice legal opinion referred to by the Right Honourable the Prime Minister on August 4, 1977 in the House of Commons touching on the uranium cartel.
No. 9.
That an order of the House do issue for copies of the quarterly reports prepared by Andre Petit of the Secretariat at SERU bearing on the uranium cartel.
No. 1C.
That an order of the House do issue for copies of the minutes of all meetings at which Dr. O. J. C. Runnalls attended, bearing on the uranium cartel No. 11.
That an order of the House do issue for copies of the minutes of all meetings at which Andre Petit attended bearing on the uranium cartel.
May 18, 1978

No. 12.
That an order of the House do issue for copies of all SERU Secretariat documents numbered 73.1, 73.2, 73.3 etc. for 1973, bearing on the uranium cartel.
No. 13.
That an order of the House do issue for copies of all SERU Secretariat documents numbered 74.1, 74.2, 74.3 etc. for 1974, bearing on the uranium cartel.
No. 14.
That an order of the House do issue for copies of all SERU Secretariat documents numbered 75.1, 75.2, 75.3 etc. for 1975, bearing on the uranium cartel.
No. 16.
That an order of the House do issue for a copy of the memorandum dated March 22, 1972, from I. W. Coleman, Associate General Counsel, Gulf Oil Corporation to Mr. E. B. Walker, Executive Vice-President, Gulf Oil Corporation, describing recent developments regarding proposed international uranium marketing arrangements and distributed to Mr. R. K. Allen, Counsel, Gulf Mineral Resources Company, a subsidiary of Gulf Oil Corporation; counsel, Gulf Minerals Canada, Limited; J. G. Dieter, Assistant General Counsel, Gulf Energy and Environmental Systems Co., a division of Gulf Oil Corporation; and R. D. Jackson, Attorney, Gulf Oil Corporation.
No. 17.
That an order of the House do issue for a copy of the memorandum dated April 12, 1972, from Mr. I. W. Coleman, Associate General Counsel, Gulf Oil Corporation to Mr. M. E. Minks, General Counsel, Gulf Oil Corporation, reflecting legal analysis and requesting consultation regarding the giving of legal advice to Gulf management personnel concerning a proposed international uranium marketing arrangements and distributed to Mr. E. B. Walker, Executive Vice-President, Gulf Oil Corporation; R. D. Jackson, Attorney, Gulf Oil Corporation; R. K. Allen, Counsel, Gulf Mineral Resources Company, a subsidiary of Gulf Oil Corporation, counsel, Gulf Minerals Canada, Ltd.; H. E. Hoffman, Associate General Counsel/Vice President, Gulf Energy and Environmental System Co., a division of Gulf Corporation.
No. 18.
That an order of the House do issue for a copy of the memorandum dated April 19, 1972 from M. E. Minks to file summarizing author's communication to Messrs. Zagnoli and Allen concerning proposed international arrangement, and outlining legal conclusions.
No. 19.
That an order of the House do issue for a copy of the handwritten notes dated April 24, 1972, of Gulf lawyer reflecting telephone conversation with Mr. Allen concerning a uranium producers meeting, which set forth legal opinions and conclusions from the files of Gulf's Law Department.
No. 20.
That an order of the House do issue for a copy of the memorandum dated April 28, 1972 from R. D. Jackson, Attorney, Gulf Oil Corporation to J. W. Coleman, Associate General Counsel, Gulf Oil Corporation, setting forth principal points of discussion between Messrs. Jackson, Ramsey and Zagnoli concerning proposed uranium carte; and distributed to M. E. Minks, General Counsel, Gulf Oil Corporation; M W. Ramsey, Director, Corporate Planning, Planning and Economics Department, Gulf Oil Corporation.
No. 21.
That an order of the House do issue for a copy of memorandum dated April 28, 1972, from R. D. Jackson, Attorney, Gulf Oil Corporation to I. W. Coleman, Associate General Counsel, Gulf Oil Corporation, transmitting opinion of counsel regarding proposed international producers' arrangement which sets forth legal conclusions and advice concerning Gulfs being compelled to participate by the Canadian government and distributed to M. W. Ramsey, Director, Corporate Planning, Planning and Economics Department, Gulf Oil Corporation.
No. 22.
That an order of the House do issue for a copy of memorandum dated May 1, 1972, from I. W. Coleman, Associate General Counsel, Gulf Oil Corporation, to M. E. Minks, General Counsel, Gulf Oil Corporation, reflecting discussions among Messrs. Allen, Estey and Matthews regarding application of legal principles and suggested courses of action.
Uranium Cartel
No. 23.
That an order of the House do issue for a copy of the letter dated May 1, 1972, from W. Z. Estey, Partner, Robertson, Lane, Perrett, Frankish & Estey; counsel for Gulf Minerals Canada, Limited, to I. W. Coleman, Associate General Counsel, Gulf Oil Corporation, together with an attached letter dated January 5, 1972 from W. Z. Estey to R. K. Allen, Counsel, Gulf Mineral Resources Company, a subsidiary of Gulf Oil Corporation; counsel, Gulf Minerals Canada, Limited, prepared by counsel containing legal advice and opinion concerning Canadian statutes and policies as applicable to certain of Gulfs activities.
No. 24.
That an order of the House do issue for a copy of a letter dated May 3, 1972, from O. J. C. Runnalls, Senior Advisor-Uranium, Department of Energy, Mines and Resources; Official of Uranium Canada, Limited, a Crown Corporation, to N. M. Ediger, Manager, Gulf Minerals Canada, Limited, together with an attached undated letter from O. J. C. Runnalls to J. Austin, Deputy Minister of the Department of Energy, Mines and Resources; President, Uranium Canada Limited, a Crown Corporation, attaching the Minutes of the Meeting of the International Uranium Producers in Paris, April 20-21, 1972.
No. 25.
That an order of the House do issue for a copy of a letter dated May 4, 1972, from W. Z. Estey, Partner, Robertson, Lane, Perrett, Frankish & Estey; counsel for Gulf Minerals Canada, Limited, to R. K. Allen, Counsel, Gulf Mineral Resources Company, a subsidiary of Gulf Oil Corporation; counsel, Gulf Minerals Canada, Limited, attaching revised page of the opinion of counsel, set out in a memoradum dated February 6, 1972, from R. D. Jackson, Attorney, Gulf Oil Corporation to file.
No. 26.
That an order of the House do issue for a copy of a letter dated May 11, 1972, from R. D. Jackson, Attorney, Gulf Oil Corporation, to M. E. Minks, General Counsel, Gulf Oil Corporation, together with a buckslip attaching telex dated October 5, 1972, from N. M. Ediger to R. K. Allen summarizing the Ottawa meeting of Canadian Producers, which telex contains marginal notes reflecting mental impressions and conclusions of Gulf Counsel, which writing is believed to be that of Mr. Jackson.
No. 27.
That an order of the House do issue for a copy of a letter dated May 17, 1972, from O. J. C. Runnalls, Senior Advisor-Uranium, Department of Energy, Mines and Resources; Official of Uranium Canada, Limited, a Crown Corporation, to N. M. Ediger, Manager, Gulf Minerals Canada, Limited, together with a letter dated May 16, 1972, from O. J. C. Runnalls to file, attaching minutes of Canadian Uranium Producers' Meeting of May 9, 1972.
No. 28.
That an order of the House do issue for a copy of a letter dated may 19, 1972, from R. K. Allen, Counsel, Gulf Mineral Resources Company, a subsidiary of Gulf Oil Corporation; counsel, Gulf Minerals Canada, Limited, to I. W. Coleman, Associate General Counsel, Gulf Oil Corporation, together with an undated Draft Aide Memoire re Canadian Uranium Producers' Meeting on May 19, 1972 and a letter dated May 10, 1972, from Carl to N. M. Ediger, Manager, Gulf Minerals Canada, Limited, enclosing attachments for purposes of keeping counsel advised and receiving continuing advice from counsel on matters concerning uranium producers' arrangement and which was distributed to W. Z. Estey, Partner, Robertson, Lane, Perrett, Frankish & Estey; counsel for Gulf Minerals Canada, Limited and H. E. Hoffman, Associate General Counsel/Vice President, Gulf Energy and Environmental Systems Co., a division of Gulf Oil Corporation.
No. 29.
That an order of the House do issue for a copy of the memorandum dated June 2, 1972 from R. D. Jackson, Attorney, Gulf Oil Corporation to file describing discussion between author and Mr. Allen concerning legal advice and containing counsel's advice and opinions with regard to a proposed uranium marketing organization and distributed to M. E. Minks, General Counsel, Gulf Oil Corporation; I. W. Coleman, Associate General Counsel, Gulf Oil Corporation; and R. K. Allen, Counsel, Gulf Mineral Resources Company, a subsidiary of Gulf Oil Corporation; counsel, Gulf Minerals Canada, Ltd.
No. 30.
That an order of the House do issue for a copy of the memorandum dated June 2, 1972, from R. D. Jackson, Attorney, Gulf Oil Corporation to file
80038-6IV2

May 18, 1978
Uranium Cartel
describing legal analysis and conclusions of Mr. Jackson with regard to a legal opinion which he had been requested to prepare and gives legal opinion of counsel regarding a matter communicated to him by client, and distributed to M. E. Minks, General Counsel, Gulf Oil Corporation; I.W. Coleman, Associate General Counsel, Gulf Oil Corporation; R. K. Allen, Counsel, Gulf Mineral Resources Company, a subsidiary of Gulf Oil Corporation; counsel Gulf Minerals Canada, Ltd.; and M. W. Ramsey, Director, Corporate Planning, Planning and Economics Department, Gulf Oil Corporation.
No. 31.
That an order of the House do issue for a copy of the memorandum dated June 15, 1972 from O. J. C. Runnalls, Senior Advisor-Uranium, Department of Energy, Mines and Resources; Official of Uranium Canada, Limited, a Crown corporation to J. Austin, Deputy Minister of the Department of Energy, Mines and Resources; President, Uranium Canada, Limited, a Crown corporation being a summary of Canadian Uranium Producers' Meeting in Johannesburg, May 28, 1972 (classified confidential by Canadian government) and distributed to G. M. McNabb, Assistant Deputy Minister (Energy) of the Department of Energy, Mines and Resources; Executive Vice President, Uranium Canada, Limited, a Crown corporation.
No. 32.
That an order of the House do issue for a copy of the memorandum dated June 27, 1972 from O. J. C. Runnalls, Senior Advisor-Uranium, Department of Energy, Mines and Resources; Official of Uranium Canada, Limited, a Crown corporation to J. Austin, Deputy Minister of the Department of Energy, Mines and Resources; President, Uranium Canada, Limited, a Crown corporation being a summary of meeting of Canadian Uranium Producers of June 9, 1972 (Classified confidential by Canadian government) and distributed to G. M. McNabb, Assistant Deputy Minister (Energy) of the Department of Energy, Mines and Resources; Executive Vice President, Uranium Canada, Limited, a Crown corporation.
No. 33.
That an order of the House do issue for a copy of the memorandum dated July 6, 1972 from R. D. Jackson, Attorney, Gulf Oil Corporation to I. W. Coleman, Associate General Counsel, Gulf Oil Corporation describing advice of counsel concerning a matter communicated to counsel by client and distributed to F. R. O'Hara, Attorney/Antitrust Counsel, Gulf Oil Corporation.
No. 34.
That an order of the House do issue for a copy of the memorandum dated July 10, 1972, from R. D. Jackson, Attorney, Gulf Oil Corporation, to I. W. Coleman, Associate General Counsel, Gulf Oil Corporation; F. R. O'Hara, Attorney/Antitrust Counsel, Gulf Oil Corporation; and M. W. Ramsey, Director, Corporate Planning, Planning and Economics Department, Gulf Oil Corporation describing work schedule of lawyers regarding preparation of legal opinion and subjects of upcoming meeting of counsel and client, distributed to M. E. Minks, General Counsel, Gulf Oil Corporation.
No. 35.
That an order of the House do issue for a copy of the memorandum dated July 20, 1972 from R. D. Jackson, Attorney, Gulf Oil Corporation to M. E. Minks, General Counsel, Gulf Oil Corporation containing an antitrust evaluation and counsel's opinion and advice given to Mr. Zagnoli with respect to Gulfs prospective involvement in the proposed international uranium marketing arrangement distributed to R. K. Allen, Counsel, Gulf Mineral Resources Company, a subsidiary of Gulf Oil Corporation, counsel, Gulf Minerals Canada, Ltd.; I. W. Coleman, Associate General Counsel, Gulf Oil Corporation; W. Z. Estey, Partner, Robertson, Lane, Perrett, Frankish & Estey; counsel for Gulf Minerals Canada, Limited; N. M. Ediger, Manager, Gulf Minerals Canada, Limited; F. R. O'Hara, Attorney/Antitrust Counsel, Gulf Oil Corporation; M W. Ramsey, Director, Corporate Planning, Planning and Economics Department, Gulf Oil Corporation; and S. A. Zagnoli, President, Gulf Minerals Canada, Limited.
No. 36.
That an order of the House do issue for a copy of the memorandum dated August 15, 1972 from R. D. Jackson, Attorney, Gulf Oil Corporation, to F. R. O'Hara, Attorney/Antitrust Counsel, Gulf Oil Corporation describing substance of discussions among counsel regarding proposed Canadian regulations concerning uranium marketing, distributed to I. W. Coleman, Associate General Counsel, Gulf Oil Corporation.

No. 37.
That an order of the House do issue for a copy of memorandum dated September 25, 1972 from Mr. O. J. C. Runnalls, Senior Advisor-Uranium, Department of Energy, Mines and Resources; Official of Uranium Canada, Limited a Crown corporation, to Mr. G. R. Albino, Official of Rio Algom, Ltd., a Canadian mining company; J. Kostuik, Official of Denison Mines, Ltd., a Canadian mining company; W. M. Gilchrist, Official of Eldorado Mines, Ltd., a Canadian Crown corporation; N. M. Ediger, Manager, Gulf Minerals Canada, Ltd.; K. E. Kegel, Official with Uranerz Canada, Ltd., a Canadian subsidiary of a West German company; and G. M. McNabb, Assistant Deputy Minister (Energy) of the Department of Energy, Mines and Resources; Executive Vice President, Uranium Canada, Limited, a Crown corporation.
No. 38.
That an order of the House do issue for a copy of the memorandum dated September 26, 1972 from R. K. Allen, Counsel, Gulf Mineral Resources Company, a subsidiary of Gulf Oil Corporation; counsel, Gulf Minerals Canada, Limited to I. W. Coleman, Associate General Counsel, Gulf Oil Corporation describing the letter attaching outline of a proposal prepared by counsel for possible use in the then forthcoming negotiations with joint venture partner concerning the impact of regulations adopted by Canada's Energy Control Board, requesting legal advice from co-counsel regarding the proposal.
No. 39.
That an order of the House do issue for a copy of the memorandum dated October 11, 1972 from R. D. Jackson, Attorney, Gulf Oil Corporation to F. R. O'Hara, Attorney/Antitrust Counsel, Gulf Oil Corporation describing the letter concerning earlier consultation on legal points and recommending the giving of certain legal advice to the client regarding international uranium producers' arrangement.
No. 40.
That an order of the House do issue for a copy of the memorandum dated October 12, 1972 from F. R. O'Hara, Attorney/Antitrust Counsel, Gulf Oil Corporation to R. K. Allen, Counsel, Gulf Mineral Resources Company, a subsidiary of Gulf Oil Corporation; counsel, Gulf Minerals Canada, Limited describing the letter by counsel which sets forth legal comments and brief antitrust analysis concerning a matter on which client requested legal advice.
No. 41.
That an order of the House do issue for a copy of the memorandum dated November 20, 1972 from F. R. O'Hara, Attorney/Antitrust Counsel. Gulf Oil Corporation to N. M. Ediger, Manager, Gulf Minerals Canada, Limited describing the letter setting forth counsel's analysis and legal opinion with regard to antitrust considerations and advice with regard to compliance with antitrust laws, regarding international uranium producers' arrangements and direction by Canadian government that Gulf participate therein and distributed to R. K. Allen, Counsel, Gulf Mineral Resources Company, a subsidiary of Gulf Oil Corporation; counsel, Gulf Minerals Canada, Limited; W. Z. Estey, Partner, Robertson, Lane, Perrett, Frankish & Estey; counsel for Gulf Minerals Canada, Limited; J. McAfee, President, Gulf Oil Canada, Limited; M. E. Minks, General Counsel, Gulf Oil Corporation; J. C. Phillips, Vice-President, General Counsel, Gulf Oil Canada, Limited; and S. A. Zagnoli, President, Gulf Minerals Canada, Limited.
No. 42.
That an order of the House do issue for a copy of a letter dated January 2, 1973, from R. K. Allen, Gulf Mineral Resources Company, a subsidiary of Gulf Oil Corporation; counsel, Gulf Minerals Canada, Limited, to F. R. O'Hara, Attorney/Antitrust Counsel, Gulf Oil Corporation and distributed to N. M. Ediger, Manager, Gulf Minerals Canada, Limited and attaching letters dated December 27, 1972, from N. M. Ediger to S. A. Zagnoli, President, Gulf Minerals Canada Limited, and distributed to R. K. Allen and W. Z. Estey, Partner, Robertson, Lane, Perrett, Frankish & Estey; Counsel for Gulf Minerals Canada, Limited and December 22, 1972, from J. Austin, Deputy Minister of the Department of Energy, Mines and Resources; President, Uranium Canada Limited, a Crown corporation to N. M. Ediger, setting forth legal conclusions and requesting legal opinion re client's proposed response to Canadian government's proposed directive.
No. 43.
That an order of the House do issue for a copy of an undated document being handwritten notes of a Gulf Attorney reflecting communication with client and statement of legal question in advance of preparation of formal legal opinion from the Files of Gulfs Law Department bearing on the uranium cartel.
May 18, 1978

He said: Mr. Speaker, in entering the debate on the motions, to which you have just referred, I would point out that the debate arises from the government's refusal to release documents bearing on the uranium cartel. These are remarkable documents, Mr. Speaker, the most remarkable documents I have seen in my five years in this House, because they paint an incredible picture of administration officials conspiring with uranium producers to fix prices, set quotas, and rig bids in an effort to raise the price of uranium.
Even worse, these documents tell a chilling story of how government officials coached worried uranium producers in ways of circumventing the laws of the land, in ways of "minimizing the risks under the Combines Investigation Act." These are serious matters in themselves, so serious that they would warrant the release of the documents to a concerned House.
There is another more important point; one salient fact about these documents that I ask hon. members to bear in mind during this debate; and that is that a great many of these documents are now readily available in the United States. They are available to the United States Congress, to American courts in at least three states, to two federal and state investigative bodies and, in fact, they are available to any American who wants them and requests them of his government. All in all, something like 90 per cent of the documents I have requested from this government are available right now in the United States. Yet this administration has consistently denied them to this House.
The government went even further in suppressing this information. For the first time in Canadian history, the government moved retroactively to deny these documents, or any other information about the cartel, to Canadians. It passed an order in council to make it a crime for Canadians even to discuss the cartel. That order in council has been modified somewhat, but it still applies to members of government and industry who were involved in the cartel. In other words, anyone who knows anything about the cartel is still forbidden to shed any light on the matter. Such a move by a Canadian government is an insult to us all. To state my case as simply as possible, it is ludicrous that we in this House, and the Canadian people in general, should have to turn to United States tribunals for information about the activities of our own government, information which should rightly come from Ottawa.
We will undoubtedly hear many excuses from the government tonight why this House cannot be trusted with these documents. We will be told again-just as we have been told consistently over the past eight months-that the release of these documents is detrimental to our foreign relations, and in some strange manner would assist the extra-territorial application of United States law.
The central point I urge hon. members to consider as they listen to these arguments is that most of these documents are already in the hands of those foreign tribunals. They are there now. They were there when we asked for them last August. The only thing this administration accomplishes by denying them to Canadians is to humiliate this House and the Canadi-
Uranium Cartel
an people by making us look abroad for the information which should be forthcoming right here at home.
It is a sad mistake this government is making, and I for one think it is tragic that Canadians should once again be the last to find out what their government has been up to.
The second point we hope this House will consider is that this government has attracted widespread attention around the world for its efforts in setting up this cartel. It is incumbent upon this House to ensure that Canadians too-not just Americans, but Canadians as well-are given an opportunity to scrutinize first-hand the activities which have generated so much interest elsewhere. In other words, it is incumbent upon this House to ensure Canadians access to information about the uranium cartel at a time when that cartel is the object of such controversy abroad.
This is clearly no ordinary request for routine or ordinary documents. The "harmless", "informal marketing arrangement", to use their words, described by the Minister of Energy, Mines and Resources (Mr. Gillespie), has been stripped of its respectability by recent investigations and has been revealed to be the world's first international energy cartel since the end of the second world war. It showed OPEC how to do it. It is probably one of the most successful as well.
The price of uranium has shot up 700 per cent since Ottawa began its little adventure in marketing in 1972, and concerned electricity consumers and utilities around the world are combing through these documents for an understanding of how all this came about.
In the United States the cartel has become the subject of a congressional investigation in Washington, and an investigation by the New York state assembly. Ottawa's marketing agreement has found its way into lawsuits in Illinois, Virginia, New Mexico, and Pennsylvania, where the cartel has become the cornerstone in the largest and most complex round of civil litigations in U.S. history with claims and counterclaims in excess of $10 billion. In one of these lawsuits, a utility, the Tennessee Valley Authority, has named several Canadian uranium producers in a multimillion dollar action.
More recently the cartel was the subject of an 18-month United States federal grand jury that ended in a so-called "informational" indictment against Gulf Oil Corporation, and could possibly result in a number of civil actions against other cartel participants.
In short, this government has made history, though of a somewhat dubious sort. It has set up the first energy cartel and, in the process, has become embroiled in history's largest round of lawsuits. The judiciaries of three states and no less than two arms of the U.S. federal government are currently rummaging through the dirty linen surrounding this fiasco, and this administration still feels that the parliament and people of Canada cannot be trusted with a first hand look at what all the fuss is about. "Trust me", the Prime Minister (Mr. Trudeau) says. That is the sum total of everything he has told this House about the cartel, "Trust me and I'll tell you everything you need to know. And right now the only thing

May 18, 1978
Uranium Cartel
you need to know is that the cartel is basically harmless. It didn't cause uranium prices to rise; the Arabs did. And anyway, it was the only way government could help a struggling industry."
We know from these documents that this simply is not so, Mr. Speaker. Three of the documents we requested detail very specifically how the cartel secretly conspired to take the price of uranium from $6 a pound in 1972 to over $18 a pound by the end of 1974. A 300 per cent increase in any commodity is not negligible, it is very substantial regardless of what this government says. As a result, the cartel we are discussing will have repercussions for the consumers of electricity as long as uranium is used to fuel nuclear generators.
If hon. members think my remarks are partisan in nature, then I refer them to a preliminary report on the cartel prepared by the Hon. Irwin J. Landes, chairman of the New York Committee on Corporations, Authorities and Commissions. Mr. Landes says very simply:
From the information already developed by our staff, we are now beginning to re-evaluate New York's plans for nuclear energy development.
One of the reasons the state was seriously considering nuclear options was the assumed low cost of nuclear fuel.
We believe the cartel has set in motion price increases which put in doubt whether nuclear energy will continue to be a low cost energy source.
The unique process of rate-setting allows the increased costs to flow directly through to the taxpayers.
In New York state, it is our belief that price increases set in motion by the cartel could cost consumers $1 billion in New York alone between now and 1980.
Here in Canada where ambitious plans are under way for nuclear development in Ontario, New Brunswick, and possibly Quebec, the cost to consumers could be equally as high.
In New Mexico, Judge Edwin Felter was also unimpressed with arguments that the cartel has had little effect on energy costs. In a judgment that could cost a subsidiary of a cartel participant $1.2 billion, Judge Felter ruled as follows:
The purpose and effect of the cartel was to limit the supply, control the production, allocate markets and fix the price of uranium.
He added:
The cartel agreements were carried out effectively-the world market price of uranium was fixed at artificially high levels by the cartel.
He said that, contrary to the government's claims, the cartel pursued a "policy of secrecy... that expressly included" domestic markets.
The point is, Mr. Speaker, that while I have no personal interest one way or another in the outcome of the American litigation, I think it is important for this House to remember that two different independent inquiries in the United States have taken radically different views of the cartel than that put forward by this Trudeau emperor administration. I can think of no reason why either the Moss committee, the grand jury, or Judge Felter would take a partisan interest in Canadian politics, and we must ask ourselves why-in all the serious inquiry to date about the cartel-this administration alone views the cartel as basically innocent?

At any event, whether the Americans are looking for scapegoats for high energy costs that they themselves may be responsible for, or whether this administration is simply whitewashing the whole sorry mess, I think it is important that Canadians be given an opportunity to judge this matter for themselves. It is important that Canadians be given a clear and unimpeded view of the cartel, and these documents which, I repeat, are already in most cases available in the United States, are necessary for such an understanding.
I want to turn to one final matter before summing up. We have heard before, and we will no doubt hear again tonight, attempts to equate this reasonable request for documents with some ridiculous allegations that we on this side of the House are insensitive to the needs of the Canadian uranium industry, or that we are somehow "on the side of the Americans" to the detriment of Canadian interests. Nothing could be further from the truth, and I want to set the record straight.
There is no doubt that the uranium industry in the late sixties and early seventies was in trouble. The cutbacks in the British and American arms programs, as well as protective measures taken in the United States, had the effect of depressing uranium prices. Initiating a cartel was not the only way to help our industry. The cartel records show over and over again that other options were open to government if it wanted to assist a troubled industry. At least three of the documents I have requested spell out very clearly that this government could have set up a uranium marketing board, as it has with wheat, for example. It could put legislation before this House to ensure a two-price system that would raise world prices for uranium producers while protecting domestic users against excessive prices. In other words, Mr. Speaker, there were perfectly legal and open ways of coming to the rescue of a Canadian industry, ways in which Canadians, producers and consumers alike, could be protected. What disturbs us is not that the government moved to help our uranium producers, but that it chose secret, backroom conspiracies, with little regard for the Canadian consumer or the laws of the country.
There are today many thousands of Canadian jobs in the steel, footware, textile, nickel, copper, agricultural, and furniture industries that are just as endangered as those in the uranium industry in 1972. Yet no one would suggest that that gives government, or the industries carte blanche to violate the laws of the land, especially if perfectly legal and acceptable means exist to help those industries.
The government is trying to paint this whole episode with the broad brush of respectability, but I suggest that if nothing is wrong with the government's actions in the cartel then it has nothing to fear from releasing these documents to the Canadian people.
To sum up, Mr. Speaker, it is vital to the democratic process of review of government that these documents be released. Even if all of them were heretofore undisclosed, it would be in the best interests of an open and candid government to allow public scrutiny. The insanity of the situation is that documents requested in 23 out of 36 of my motions were already released by the Moss committee when we requested them from this
May 18, 1978

government. Another eight or nine of them have come out in subsequent civil lawsuits. There is no danger to international relations or anything else in releasing to Canadians what is public knowledge around the world. Simply put, there is no need for the continuing cover-up. The cat is already out of the bag, whether the government likes it or not.
Eight months ago we first requested these documents on the basis of a promise of the Minister of Energy, Mines and Resources to consider, expeditiously, their release. Four months later-the Elouse was sitting for at least two of these months-the minister acted expeditiously in denying them. Let us look at the reasons he gave: one group we cannot have, he says, because they are not in his files. We can be forgiven our scepticism, Mr. Speaker, for questioning this because we know the minister ordered an all-inclusive roundup of cartel documents in November, 1976, from the very firm he now says owns them. If the documents are not in his files, Mr. Speaker, where are they? Are they on his farm, under his bed, or in a favourite shoe box?
There is another group of documents the minister says we cannot have because they would be damaging to international relations. But look at which documents these are. Motion No. 27, for instance, concerns the communication between an official of the Department of Energy, Mines and Resources and an officer of a Canadian firm. Since when did the memos of the Department of Energy, Mines and Resources to a domestic company become "international relations"? Perhaps the minister meant to say that the release of these documents would be harmful to public relations, not international relations.
I hope the government uses this debate tonight to end this ridiculous charade and release to Canadians what others have free access to already. We hope it will permit the Canadian people to make a candid and frank assessment of the cartel that was built secretly in the boardrooms of the Department of Energy, Mines and Resources. After all, the Canadian public will be paying for it for a long time to come.
I am pleased that the Minister of Energy, Mines and Resources is in the House this evening. I hope he will respond to my request in a positive way. There is, frankly, absolutely nothing in any document to which I have referred, or to which I refer in the motions, that should not be disclosed to the Canadian public. It is a sordid tale, Mr. Speaker, a tale of a government more concerned with cover-up and hiding facts than of levelling with the Canadian people. Perhaps the worst example of a government conspiracy to break the laws of Canada has been this instance of the uranium cartel fiasco.
In another jurisdiction we know what happened to the senior executive when they chose to break the laws of that land. In this country, unfortunately, we have a different system. In this country we would not have had a Watergate investigation, because basically if Mr. Nixon had been the Prime Minister of this country his consent would have had to be sought for the investigation. If Mr. Nixon were then to act in the way our emperor, the Prime Minister, acts in respect of the uranium cartel, the investigation would never have taken place.
Uranium Cartel


Mr. Breau:: You do not understand the parliamentary process.


Sinclair McKnight Stevens: The hon. member says that I do not understand the parliamentary process. Sitting on the opposition benches and sensing the frustration of most members of this House with the absolutely dictatorial powers of the emperor, I certainly do understand the workings of parliament.
I see my time has just about elapsed, Mr. Speaker. The Canadian people are entitled to those documents. Certainly they may be embarrassing to the government, and certain ministers have now left the government, but it is time we had a little more linen washed in public. We must know what this government is up to as a result of its very complicated and cozy relations with uranium producers in this country.


Mr. Maurice Foster (Algoma):: Mr. Speaker, I am very pleased to have the motions of the hon. member for York-Simcoe (Mr. Stevens) on the order paper because they give us a chance to talk about the so-called uranium cartel and also about the kind of commitment and effort the federal government has made in relation to the uranium mining industry in Canada.
The economic well-being of ridings like mine in Algoma, and Uranium City in north Saskatchewan, have risen and fallen with the fortunes and misfortunes of the uranium mining industry in Canada. The Elliot Lake region of Ontario first came into prominence as a potential source of uranium in 1953 when exploration drilling activity commenced to test uranium showings in Quirke, Pecors, and Elliot Lake.


Sinclair McKnight Stevens: Mr. Speaker, I wish to rise on a point of order. If the hon. member wants to choose his own time to make a speech for home consumption, I would suggest he take another time than this. He has had absolutely nothing to say so far with respect to why the various documents I have requested production of should be produced or not.


An hon. Member:: What arrogance!


Sinclair McKnight Stevens: Mr. Speaker, if he has some evidence why these documents should not be produced, let him state it-


The Acting Speaker (Mr. Ethier):: Order, please. Later in his speech the hon. member may be addressing his remarks to that and hon. members should listen to him.


Maurice Brydon Foster: Mr. Speaker, the documents which the hon. member has referred to have a great deal to do with the fortunes and misfortunes of the uranium mining industry of Canada-


Sinclair McKnight Stevens: Let's see them.


Maurice Brydon Foster: -of which Elliot Lake is one of the prime producers-


Sinclair McKnight Stevens: Let's see them.

May 18, 1978
Uranium Cartel


Maurice Brydon Foster: The hon. member sketched out a great deal of the history of the uranium mining industry when he was speaking, and I would hope he would allow the same degree of latitude on this side of the House. It seems to me that not only the hon. member for York-Simcoe but many of the members in this House have been greatly concerned with the uranium mining industry and the difficulties it experienced in the 1970s and 1960s which have led to the more favourable situation existing today.
I would like to remind the hon. member that this industry was not always as fortunate as it is today. The exact documents that he is talking about have some relationship to that difficulty-


Sinclair McKnight Stevens: Let's see them.


Maurice Brydon Foster: I was mentioning that by 1955 negotiations had been completed for the sale of uranium concentrates to the extent of $300 million for the deposits located in the various parts of Canada.
The town of Elliot Lake was created to house the people needed to extract the uranium produced from the vast low-grade ores in that area. By 1959 shipments from Ontario, mostly from Elliot Lake, had reached an annual rate of 12,746 tons of uranium concentrates valued at some $269 million. Production from Saskatchewan and the Northwest Territories brought Canadian production in that year to almost 16,000 tons with a value of some $331 million; the highest for any mineral or metal exported from Canada in that year.
Of more importance is the employment which this uranium industry provided. In 1959 Canada had 19 uranium mills and 23 mines providing direct employment for some 13,600 people. The boom in uranium production was spurred by special price incentives offered by the United States, through Eldorado Mining and Refining, to obtain uranium for its military programs.
In November, 1959, the United States Atomic Energy Commission announced it would not take up its options to purchase additional uranium, so the industry had to substantially readjust downwards its scale of operations. As early as January, 1960, the number employed by the uranium mining industry in Canada had dropped by almost 2,000 to some 11,800, of which 8,500 were employed in the Elliot Lake area alone. Throughout 1960 the layoffs accelerated, so that by the end of 1960 employment in the uranium industry in Canada had declined to 6,000, of which 4,000 were in the Elliot Lake area.
Mines continued to close, so that the Canadian government in 1963 instituted the first of a series of stockpile programs to maintain the semblance of a uranium industry. Even with these programs, only three mining operations continued operating in Canada between 1964 and 1975, Eldorado Nuclear Limited in the Beaverlodge area of northern Saskatchewan, and Rio Algom and Denison Mines in the Elliot Lake region of Ontario. By 1971 employment in the uranium industry in Canada had declined to less than 2,300 employees, about 17 per cent of the peak employment in 1959. This employment was only maintained by the stockpiling programs of the

Canadian government and those instituted by the producers themselves.
The community of Elliot Lake declined with the misfortunes of the Canadian uranium mining industry. The population in 1960, just at the start of the market crash, was some 25,000. By 1966 the population had declined to less than 6,700. Some recovery took place with the negotiation of contracts in the late 1960s with the United Kingdom Atomic Energy Authority and with Japanese utilities. A gradual return to the mining community took place so that by 1969 its population was some 9,500.
Growing concern with the limited market potential and the accumulating producer stockpiles threatened the well-being of the community again. And thus, in 1970 the government had to institute another stockpiling program. This one was a joint venture with Denison Mines to maintain a production level of 2,000 tons of yellow cake per year over the period 1971 to 1974.
Historically, about 70 per cent to 75 per cent of the world's uranium production has been in Canada and the United States, with the United States taking the major share of the production after the market collapse of the 1960s and the institution of the United States Atomic Energy Commission's restrictions on the enrichment of uranium for use in nuclear reactors within the United States.
In 1958 and 1959 for example, Canada's share of world uranium production was 37 per cent and the United States share 35 per cent to 38 per cent. By 1968 Canada's share dropped to 16 per cent while the United States share increased to 54 per cent. Canada's share would have been even less without the stockpiling policies of the Canadian government and private producers.
Not only Canadian producers were facing the dilemma of production over-capacity and the accumulation of stockpiles. Other non-U.S. uranium producers were also facing the same problems. In 1971 and 1972 the international uranium market was in a chaotic condition because of over-capacity, the accumulating stockpiles in both private industry and government warehouses, and because of the continuing efforts of some consuming utilities to play off one producer against another so as to reduce the price paid for uranium to an absolute minimum. Market deterioration was so serious in fact that some uranium sales were made at below $4 per pound of yellow cake, less than the operating costs alone for many producers in the world. Uranium policies originating in the United States served to exacerbate the difficulties being encountered by the producing industry.
Faced with the chaotic marketing conditions, the government had several options. The first of these was to let the uranium industry collapse. I assume that is what the hon. member for York-Simcoe probably would have done. The second choice was to continue with yet another expensive stockpiling program; the first three cost the Canadian taxpayer some $129 million. The third option was to try to alleviate the problem through discussions with government representatives
May 18, 1978

of consuming nations; and fourth was to explore an arrangement with government officials of producing countries.
Following the first option would have been irresponsible and would have negated the efforts which had been followed in the 1960s to protect the industry. To follow the second option, that of stockpiling, would have only exacerbated the problem by creating more stockpiles to over-hang the market and deter its eventual recovery.
While the Canadian government had no success by its interventions in the 1960s to have the United States government reconsider its policies which were damaging the Canadian uranium industry, the then minister of energy, mines and resources and his officials did discuss the problem in 1971 with government representatives of consuming nations. One of the dangers envisaged was that, in the face of both devastating competition and unprofitable operations for producers, little or no exploration was likely to be undertaken in order to prove up the enormous quantities of uranium that would be required for the 1980s and beyond. The reactions to the Canadian concern were negative or neutral.
Lacking any positive results from these discussions, the Canadian government authorized officials of two Crown corporations, Eldorado Nuclear, Limited and Uranium Canada, Limited to meet with international uranium producers to discuss possible marketing arrangements for the non-U.S. market. The government also requested private producers to attend. The discussions led to an informal marketing arrangement which excluded the domestic markets of France, South Africa, Australia and Canada, and the United States domestic market.
The Canadian government was informed of and approved the marketing arrangements negotiated by Canadian uranium producers and supported the arrangements in Canada by issuing a regulation under section 9 of the Atomic Energy Control Act controlling such aspects as the minimum selling prices and volumes of sales to export markets. In essence, the government had decided that uranium should not be sold below what was considered to be a reasonable price for this non-renewable resource, and the amount to be exported should be distributed on an equitable basis among the several producing companies in Canada. While the minimum prices acceptable to Canada were revised on several occasions as prices recovered from their distressed levels, they were almost without exception below those reported for the protected United States market, and the last minimum price schedule sent to the Atomic Energy Control Board by the then minister of energy, mines and resources, Mr. Macdonald, on March 6, 1974 were far below the prices which prevail today.
The uranium price spiral of 1975 and 1976 was not caused by the uranium marketing arrangement but by factors outside the control of either the Canadian government or those producers who participated in the arrangement. Shortly after the Arab oil embargo was imposed and the price of imported oil increased four-fold, several countries declared an intention to
Uranium Cartel
expand markedly their nuclear power programs. Soon there developed an attitude among many utilities around the world that longer term purchasing arrangements for uranium should be negotiated and that, if necessary, a stockpiling policy should be adopted.
Then the United States Atomic Energy Commission proposed to relax the embargo on utilization of foreign uranium enriched in the U.S. facilities, and it soon became apparent that there was not enough uranium to supply all those requests that suddenly appeared in the market.
Canadian producers in early 1974 quoted prices of $12.50 per pound U308, well above the then current Canadian government's minimum directed price. At about the same time, curtailment of marketing activities occurred for diverse reasons in Australia, France, South Africa and other African countries. The curtailments placed even more strain on Canadian producers to meet the rising demand. Within the next few months, future Canadian sales of 45,000 tons U3Og had been negotiated, ten times the current annual production in total. By the end of 1974, the world market price had reached about $15 per pound, essentially double that prevailing a year earlier.
The upward price spiral continued during 1975 for a variety of reasons. One reason was related to the fact that the light water reactor industry around the world, dependent as it was on U.S. enrichment, had decided from various USAEC announcements that the tails assay would probably be increased from 0.2 per cent to 0.25 per cent by 1977 and then to 0.3 per cent by 1981. Such a change would represent an increase in uranium feed requirements to the enrichment plant of some 20 per cent. Furthermore, there was a growing conviction that uranium and plutonium recycling from spent fuel was becoming less likely because of regulatory delays and actions by interveners in the United States.
Then came the announcement by U.S. Westinghouse in September 1975 that it would be unable to deliver some 32,500 tons U3Og which it had contracted to sell to various utilities in the United States and abroad. The effects of this action contributed substantially to an increasing rise in the price of uranium as utilities sought to cover their shortfall by rushing into the market. As a consequence, the price reached the $40 level in early 1976.
For the past two years the market price has remained more or less stable with some slight upward adjustment to take account of inflation. This is despite the very marked slowdown in the rate of ordering and delays in construction of nuclear capacity. Requirements for uranium have not responded to this slower growth rate because many utilities made commitments to provide uranium deliveries to the U.S. enrichment plants based on nuclear programs envisaged in the early 1970s. So far the U.S. has not relieved their customers of these obligations.
Actions taken by the Canadian government in supporting the uranium marketing arrangement have assured a sound future for Canada's uranium industry. Production in 1977 from all Canadian uranium producers was some 7,500 tons U3Og compared to the 4,100 ton level in 1971, just prior to the
5562

May 18, 1978
Uranium Cartel
events which led to the marketing arrangement. Production is expected to increase to some 16,000 tons U3Og by 1985, of which some 7,500 tons will be in the Elliot Lake area. In response to this increase in industrial activity, Elliot Lake is expected to grow from 12,000 today to 42,000 by 1985 or 1986.
Even though the marketing arrangement was not instrumental in the price increases which have taken place since 1974, Canada has benefited from the incentive it provided to companies to expand their exploration efforts. In the early 1970s when prices were abnormally low, there was essentially no incentive for uranium exploration in Canada and the level of expenditure in uranium exploration was less than $4 million per year. From 1974, exploration activity responded to the rapid rise in uranium price so that today the rate of expenditure on uranium exploration is in the order of $70 million per year. Promising new discoveries were made in 1975, 1976 and 1977 at Key Lake, Collins Bay, Midwest River and Maurice Bay in northern Saskatchewan. This can only lead to increased assurances of uranium supplies for both the domestic and export markets and the continued expansion of a sound uranium industry in Canada.
The hon. member for York-Simcoe has not been able to find many takers for his argument that the price of uranium has been pushed up by the marketing arrangement which Canada entered into with other countries of the world. For example, I have with me a letter from the chairman of the board of Denison Mines Limited, Mr. Stephen Roman, who was a political associate and was a supporter politically of the hon. member for York-Simcoe. This letter was sent to the shareholders of the company on October 19, 1977. In it he states that he ran twice as the Conservative candidate in an adjoining constituency to the hon. member. He is certainly no great supporter of the government. He points out in this letter that he not only supported the hon. member for York-Simcoe in his race for the leadership of his party but provided him with an aeroplane for his use at that time.


Stanley Howard Knowles: Another Otto Lang.


Maurice Brydon Foster: Let me just quote Mr. Roman from the letter:
The allegations made by Mr. Stevens and his friends are completely unfounded and are, in fact, an irresponsible attempt to discredit the Canadian government and the Canadian uranium industry. Not only are the allegations unjust and baseless, they impugn the integrity of our company, our employees and, by association, our shareholders.
That is the view of the chairman of Denison Mines. There are several other interesting items further on. This is a letter sent not to the government but to the shareholders, and in it he refutes-


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


Mr. J. R. Ellis (Hastings):: My intervention will be extremely brief, Mr. Speaker. Like the previous speaker, I have a

fairly heavy concentration of uranium in the northern part of my riding. I am well aware of the problems which have been evident in the industry for the last number of years and I am also aware of the efforts the government has made to be of assistance. I have talked to people who are interested in uranium in three different countries in the past week on two different continents and I know a little about the industry, having kept abreast of its affairs.
I do not disagree with three-quarters of what the hon. member for Algoma (Mr. Foster) has said. However, what the hon. member for York-Simcoe (Mr. Stevens) is asking is perfectly reasonable. He wants to look at some of these documents. If what the Canadian government has done has been so exemplary, why cannot we see the paperwork? These documents are obviously in existence; no one has denied it. They are all available to the government. There was a time, not long ago, when we were told we would not be allowed even to mention the subject-we were going to get five years in jail if we talked about it. This in the free country of Canada.
Let us see these documents. I have no personal involvement in this matter. I know the people the hon. member for Algoma has talked about. I talk to them regularly. I call them friends. But, surely, if there is nothing sinister in these documents we ought to be able to see them. What is it about them which makes it so imperative that they remain top secret? The details the hon. member for Algoma gave about pricing, production, shipments and so on may well be correct-I did not listen very closely when he read the documents which had been prepared for him by the department-but I have to make this point again: If there is nothing in these documents which does other than embarrass the government, possibly, let us see them. Why should this smokescreen be kept up?
The hon. member for York-Simcoe has asked for a number of documents-20 or 25,1 think it is. He has prepared his case well. He knows the documents are there. Let us have a look at them even though they may, possibly, be embarrassing to the government.


Hon. Alastair Gillespie (Minister of Energy, Mines and Resources):: Mr. Speaker, I should like to deal with some of the points which have been raised by the hon. member for Hastings (Mr. Ellis) and the hon. member for York-Simcoe (Mr. Stevens) in their remarks this evening. Many in this House saw the hon. member for York-Simcoe revert to character as he attacked, on a point of order, the remarks made earlier by the hon. member for Algoma (Mr. Foster): I suppose most of us on this side have come to the conclusion that the hon. member for York-Simcoe misjudged this issue a long time ago and is now trying to wriggle out of the dangerous position into which he got himself and his party.


Sinclair McKnight Stevens: Wriggle out?


Alastair William Gillespie: He came on very strong, almost as a spokesman for the Moss committee-that is the committee in the United States-which is concerned with what was perceived to be the interest of U.S. corporations in uranium marketing
May 18, 1978

during the early seventies. That committee subpoenaed a number of U.S. corporations, some of which had Canadian subsidiaries. It said, in effect: We would like to know what went on under the so-called international marketing arrangement. The reference was to the arrangement which Canada, Australia, France and South Africa, four independent sovereign countries, formed because they were threatened by the action of the United States government in closing its market and using certain other marketing practices, which the hon. member for Algoma has put on record, which we felt were in direct violation of the obligations under GATT, practices which would have spelled the end of the uranium industry in Canada if we had not reacted as a government.


Sinclair McKnight Stevens: Let us see the documents.


Alastair William Gillespie: But that is not something in which the hon. member was very interested until some of his own friends reminded him that he was on the wrong side of this issue, that a lot of Canadians had a great interest in this industry and depended upon it for their livelihood.


Sinclair McKnight Stevens: This is unbelievable. What more do you want me to do?


Alastair William Gillespie: The hon. member for York-Simcoe got on the wrong side of this issue. He is trying to say that some sort of arrangement was made which was somehow increasing the price in Canada as a result of a so-called cartel arrangement.


Sinclair McKnight Stevens: Do you deny it?


Alastair William Gillespie: If the hon. member gives me time, I will deal with that point. I am very pleased to see him smoked out. I am pleased to hear him indicate that this is really his concern.
I should also like to deal with some of the allegations he has made this evening. Not only did he show arrogance toward Canadian industries, arrogance toward a member of parliament who had been supporting the interests of his constituents in Algoma, but he showed great disdain for the Canadian people. He seems to believe they are a lot more gullible than we on this side believe them to be. He implied that the actions which were taken were taken by the Canadian government alone and not in concert with other countries, or that the Canadian government entered into an informal agreement with other countries and that, having done so, had no obligation to those other countries.


Sinclair McKnight Stevens: Informal? How can you say that?


Alastair William Gillespie: Call it a formal agreement, if you like, but we are still dealing with an informal arrangement. Let us not quibble about words. Canada was a party to an arrangement with other countries; that is my point.
The hon. member for Hastings suggested it would embarrass the government if copies of the documents were made public. When you enter into an agreement with other countries regarding the marketing of uranium and accept certain obliga-
Vranium Cartel
tions as a member of that club-and the Canadian government did that-it should be important to put on the record that other countries which were also part of the arrangement took action in their countries to ensure that the documentation associated with that so-called cartel arrangement would not be made public.
The Australian parliament passed legislation which is, I am told, in every respect just as stringent as the order in council which was passed by this government. The British government, through its attorney general, has taken the case to the House of Lords. I am sure hon. members are aware of that. The French government has taken action. Other governments which were party to this arrangement have taken action to protect their interests - yes, their sovereignty too - because their industries were also faced with survival situations.
The hon. member for York-Simcoe has not said anything about that. He suggested that Canada could forget the fact that it entered into an arrangement with other sovereign countries to protect, in a collective sense, the interests of an important industry in those sovereign countries. The hon. member for York-Simcoe would have us repudiate our arrangements with those other countries. At times I am not sure whether the hon. member is concerned about questions of honour and reputation, but when we are dealing in the international field I suggest that our partners expect us to honour the spirit and letter of agreements.


Sinclair McKnight Stevens: Mr. Speaker, I rise on a point of order. I am sure that the minister does not want to mislead this House. Would he make it clear that parliament has never condoned the actions he is asking us to observe as far as other countries are concerned?


The Acting Speaker (Mr. Ethier):: Order, please. I see no point of order.


Alastair William Gillespie: Mr. Speaker, again the hon. member is demonstrating his character. He is more interested in debate than in listening and getting information.


Sinclair McKnight Stevens: What is wrong with debate? Let us have the documents.


Alastair William Gillespie: Earlier the hon. member asked to be given reasons with respect to the combines side, and I told him that I would deal with that in my remarks.
I also pointed out that I thought the hon. member had misled the Canadian people by suggesting that somehow Canada had acted alone, had not acted in concert and therefore had no obligations, and that there would be no embarrassment whatsoever for Canada if Canada were to make public all the documents to which Canada had been party. He also implied that there was some sort of action here which could contravene the Combines Investigation Act. He did not men-
80038-62)4

May 18, 1978
Uranium Cartel
tion that the Minister of Consumer and Corporate Affairs (Mr. Allmand) took action to deal with that specific concern.


Sinclair McKnight Stevens: Whitewash.


Alastair William Gillespie: Quite wisely, the hon. member says.


Sinclair McKnight Stevens: I said whitewash.


Alastair William Gillespie: There may be some concern about this. Perhaps some of the confusion in the mind of the hon. member for York Simcoe emanates from the set of circumstances surrounding the regulation which the Canadian government passed for the purpose of protecting the sovereignty and, indeed, the confidentiality of the documents which minuted, one way or another gave effect to or reported on the arrangement of the Canadian government and preventing that information from leaving the country as a result of the extra-territorial application of the U.S. governmental or legal process.


Sinclair McKnight Stevens: But it was already there.


Alastair William Gillespie: That was the reason we took that action. The effect of that regulation was to provide an exemption from the Combines Investigation Act since the board was effectively regulating the volume of exports pursuant to an act of parliament.
The board I am referring to here is the Atomic Energy Control Board. The jurisprudence under that act holds that, in so far as the activities of an industry are effectively regulated, they cannot be in violation of the Combines Investigation Act. The regulation did not operate so as to exempt the producers from any activity which might unduly lessen competition in the domestic market, as it was the government's policy that the domestic market be excluded from the marketing arrangements. While we have no reason to believe that the arrangement did violate the Combines Investigation Act, it was because of the need to resolve allegations that it had done so that my colleague, the Minister of Consumer and Corporate Affairs, directed the director of investigation and research to conduct a formal inquiry under the Combines Investigation Act. That inquiry is now well under way and has had full access to documents and other material in respect of the marketing arrangement.
We do not believe there was any contravention of the Combines Investigation Act because the so-called cartel excluded the Canadian market, as it excluded the U.S. market and the markets of each of the member countries I have mentioned. However, just in case there was, and to meet allegations, action was taken to ensure that the Canadian public interest would be protected, and the director of combines investigations has had, as I have indicated, full access to the documents and will in due course be making his report.
I have dealt with two of the substantive points raised by the opposition. I have dealt with the question of embarrassment to the Canadian government in a situation of this kind in a way which leaves no question about embarrassment when a country enters into an international arrangement. I have also dealt

with other allegations of the hon. member for York-Simcoe about the combines side. I believe I have dealt with that conclusively. It is important to remember that if this action had not ben taken, the Canadian uranium industry, as the hon. member for Algoma made clear in his remarks, would not be in the healthy state it is in today.


Sinclair McKnight Stevens: Why not a marketing board?


Alastair William Gillespie: It would not be planning the major expansion it is planning. It would not be in a position to provide uranium fuel for our famous Candu system which is now providing about one quarter of the electric power needs of the province of Ontario.


The Acting Speaker (Mr. Ethier):: Order, please. The hour provided for the consideration of private members' business having expired, I do now leave the chair until 8 p.m.
At 6 p.m. 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 committee of the whole.
Harold Thomas Herbert: Mr. Speaker, when I stopped speaking for the summer break-


Some hon. Members:: Oh, oh!


Harold Thomas Herbert: Judging from the attendance in the House this evening, it may well be the summer break. Before the adjournment for supper, I spoke about the attitude of the Quebec finance minister, Mr. Parizeau, and I said that if Mr. Parizeau is not prepared to deal his hand when Quebec is still a part of Canada, I cannot understand how he proposes to deal with his English-speaking counterparts in a sovereignty association environment. Certainly we were told by the premier of Quebec that while Quebec was still a part of Canada he would try to abide by the rules.
The strange thing is that the finance ministers in the other nine provinces expressed concern at the attitude of Mr. Parizeau. In fact, they told the Canadian Minister of Finance (Mr. Chretien) that they would have preferred the acceptance by Quebec of the original proposal, this despite any reluctance that they expressed themselves. This is surely the name of the

May 18, 1978

game when we negotiate together in a reasonable spirit, being desirous of having some kind of an agreement.
I want to make reference to the telegrams which have been sent to Quebec members of parliament from Quebec, specifically from their counterparts in provincial ridings. I received a quite lengthy telegram quoting the same motion I have read in all the newspapers. There is one word that struck me in the motion itself, and that is the word "provocation". I would take issue with it on this ground. As far as I am concerned there is only one person who has done any provoking, and that is the finance minister, Mr. Parizeau, who stood silent for three weeks and was unable in those three weeks to talk about his jurisdiction. He stood silent for one reason only-because he intended to provoke. As I said before the supper break, there was never any intention on his part of reaching any agreement, and we should bear this in mind in any future dealings.
This telegram is rather strange because it talks about the injustice toward citizens in the province of Quebec of low revenue, particularly old age persons or senior citizens. As I mentioned earlier, I find this passing strange because the benefit that everyone gains is from the reduction in the sales tax. Am I to assume, then, from the telegram that the older people in Quebec are being discriminated against because there is an 8 per cent sales tax reduction only on shoes, on clothes and on furniture? I would assume that most old age persons are not buying furniture. If there is an injustice it is because those same old age persons are not able to benefit from any sales tax reduction on most of their purchases which fall outside the items in respect of which the Quebec finance minister has decided to remove the sales tax.
As far as provincial autonomy is concerned, let me refer to the last paragraph of the telegram. Again I find this passing strange. Everyone accepts that any province can reduce or increase sales tax as it wishes. In fact, and I can be corrected if I am wrong, there is nothing to stop any province from making further adjustments in sales tax up or down at any time in the future. Thus there is surely no interference as far as sales tax is concerned. I am left to infer, then, that the alleged lack of respect for provincial autonomy must refer to the action in respect of federal income tax, that sum being remitted to all taxpayers in the province of Quebec.
Once again I ask myself, is this not federal jurisdiction, and is not the federal government at all times free to increase or decrease federal sales tax for everyone in Canada? Thus I find it passing strange that this type of telegram should be sent to members. Is it not the pequiste party that imposed the tax on children's clothing, something that was not done in any other province except the province of Quebec? Now they have seen the error of their ways and have taken the tax off children's clothing. They think the federal government should reimburse them for their errors. I do not think so. If there is any inequity it is caused at the provincial level.
Income Tax Act
I want to pass quickly to some remarks made by the hon. member for York-Simcoe (Mr. Stevens) yesterday in his speech. If I can quote him, he said:
The government never explained why it chose to go the provincial sales tax route as opposed to the federal sales tax route which could be used as a device to increase the buying power of Canadians.
This is the type of misrepresentation and hypocrisy that comes all the time from members of the Conservative party. The reason that route was not chosen was well explained. It was because there would be no immediate impact on prices. In fact, there might have been only a partial impact on future prices because there was always the possibility, with a change in federal sales tax, which is a hidden tax, that the reduction might not necessarily be passed on to the consumer. This was fully explained and why he should make such a remark I do not understand. He also goes on to say:
If this government is now willing to listen to proposals from Quebec, why was it not willing to listen to those proposals before bringing in Bill C-56?
What happened during those three weeks? What happened to Mr. Parizeau? Was he struck dumb or what? I do not understand. I cannot for the life of me see why, because he waited until after the budget in order to come in with his preposterous proposal, we should give any more credit to them now than we did before the budget was proposed.
The hon. member for York-Simcoe then goes on to say, talking about the province of Alberta:
-if I were a resident of Alberta I would find most objectionable the fact that, by being a resident of that province, I am deemed to have more wealth than those in other areas of the country and should receive absolutely no benefit.
Once again, there is no sales tax in Alberta so there cannot be a reduction in sales tax. The Albertan loses nothing. How, under those circumstances, can we be complaining that there is no reimbursement of moneys which have not been lost? Frankly I fail to understand that argument. In the same breath we have members of the Conservative party talking about the inequality existing between the maritimes, Quebec and the other provinces. They cannot have it both ways.
The hon. member for Kingston and The Islands (Miss MacDonald) during today's question period talked about the denial of the right to make a decision in the field of provincial jurisdiction. Once again I do not really understand what the Tories are talking about. No one has interfered at any time with the provincial right to change provincial sales taxes up or down as they please, including an additional change-over and above what the Canadian Minister of Finance was proposing.
When we talk of the problem in Quebec, if there is one, it is simply that the minister of finance in Quebec has always collected his own provincial taxes. This has been going on since 1954. As I mentioned before supper, the cost of collecting provincial sales tax is over $100 million; something in the order of $120 million. That is a direct cost to the people of Quebec. That is an inequity, and that is one of the reasons the people in Quebec are paying so much higher provincial sales tax than people in any other province of Canada. As I have often said, even as a member of parliament, we pay many hundreds of dollars, some of us a thousand dollars, more in

May 18, 1978
Income Tax Act
provincial tax because we live in the province of Quebec than we would pay in the province of Ontario.
I should like to make reference also to some remarks made today by the member for Oshawa-Whitby (Mr. Broadbent). First of all, I was pleased to hear of his recognition of the fact that the Canadian Minister of Finance was consulting with the provinces. The hon. member for Oshawa-Whitby went on to talk about the fact that the people of Quebec are only getting what the people of Ontario are getting and that they should get the same as the maritimes. He forgets that the alternative proposal of the Canadian Minister of Finance was to do just exactly that and put Quebec in the same position as the maritime provinces.
Furthermore, he goes on to quote some figures, and I find those figures most interesting. I would like to repeat them, though he used them for an entirely different purpose. He says that in the province of Quebec more goods are produced by other countries and provinces, and he quotes, for example, the shoe industry, in respect of which only 22 per cent of shoes sold in Quebec are made in the province of Quebec; more than 22 per cent are made in Ontario and 54 per cent are imported. There is an 8 per cent reduction in the tax on all those items, so we are not just assisting Quebec industry but imports as well. The same thing applies in respect of furniture, with only 30 per cent of the furniture sold in Quebec being made in Quebec. In respect of textiles, 24 per cent are made in Quebec. Once again, if there is an inequity or stupidity it is in the inference that the 8 per cent tax reduction is good just for Quebec. The 8 per cent reduction in tax in Quebec is as much of assistance to provinces such as Ontario as it is to Quebec, and the Quebec people should realize that. In the meantime, because there is not a 2 per cent reduction on other products, other industries of manufacture in Quebec are not getting any benefit.
We have often talked about the fact that Quebec purchases goods from Ontario and Ontario purchases goods from Quebec. The difference is that 20 per cent of Quebec purchases are made in Ontario and only about half as many, 11 per cent, of Ontario purchases are made in Quebec. The obvious inference is that Quebec is much more dependent on Ontario than Ontario is on Quebec.
One last point I would like to make concerning figures is that whereas today the federal tax is approximately 40 per cent of the total tax take of the three levels of government- federal, provincial and municipal-some years ago the situation was reversed. Quite obviously there is less power in the hands of the federal government today to adjust various factors, to adjust the economy, as a result of this smaller portion of the taxing power that the federal government has. In addition, despite the fact the federal portion has dropped from approximately 60 per cent to today's 40 per cent, included in the federal portion today are all the programs of redistribution of incomes which are surely a direct benefit to the

provinces and particularly to the have-not provinces such as the province of Quebec.
As far as the Leader of the Official Opposition (Mr. Clark) is concerned-and I feel that everybody has been very hypocritical in their remarks on this particular bill-he talks about interference in provincial jurisdiction and yet only today he proposes a motion criticizing the government of Russia. I suggest, Mr. Speaker, that if we have a right to attempt to interfere in the jurisdictions of other countries-and bearing in mind that the same motion that was proposed today was proposed the day before by a member on this side of the House but was negatived by members on the other side of the House-then surely we have a right at least to make some suggestions in an area of provincial jurisdiction.


Sinclair McKnight Stevens: You are a commie lover.


Harold Thomas Herbert: Mr. Speaker, they can make any remarks they like. I am talking about interference in another jurisdiction. The Tory party is very quick to complain whenever there is any suggestion that the United States might be meddling in Canadian affairs.
I support the hon. member for Bellechasse (Mr. Lambert) when he said that we members here represent all Canadians. We are expected as federal members to be Canadians, but that does not stop us from representing our ridings or our province. In all the remarks I have made this afternoon, before supper and again in closing here, what I said I meant for the people in my riding first, for the province of Quebec second, and for the Canadian people third. Because it is all the same. As I said at the opening of my remarks, I have never felt so strongly about an issue. We are not talking just about Bill C-56; we are talking about what Canada is all about.
If we can have no discussions between our provinces today when we still theoretically belong together, then we might as well pack up and go home. Because if we are unfortunate enough to see a Conservative government at some future stage, with the direction in which they are moving we have de facto separation and we will not need a referendum to decide what is going to happen to Canada.


William Heward Grafftey: Mr. Speaker, I want to say at the outset that we, of the official opposition, have listened with great interest to the speech made this afternoon by the hon. member for Oshawa-Whitby, the Leader of the New Democratic Party. I want to state immediately, Mr. Speaker, that we fully support the amendment he put forward.
If the Prime Minister was serious in the remarks he made yesterday about the necessity to delay the passage of the bill another month, these remarks can be interpreted to mean that he wants to hold real and serious consultations with the provinces concerning the question we are debating tonight. We, on this side of the House, are convinced the amendment proposed by the hon. member for Oshawa-Whitby will give
May 18, 1978

this government another month during which consultations may be held with the provinces as well as private citizens on the very complex problem that is before us tonight.

I say most regretfully, Mr. Speaker, that in all my years sitting on the left side of the Chair in this House, I have never seen our federal government commit a greater series of errors than they have in the handling of the sales tax case with the provinces which we are discussing tonight. The hallmark of the Prime Minister's and the Ministers of Finance's approach to this matter has been gross incompetence, arrogance and political expediency at the price of hurting national unity.
In spite of the simplistic approach of the hon. member we just heard from, the approach of this government is inflexibly based on the proposition that Ottawa has all the answers and that the provinces are to be consulted but never listened to; that all the conventional wisdom rests here in Ottawa and the provinces can never suggest anything, because once the Prime Minister consults his federal bureaucrats nothing can change no matter how good the suggestions are from the provinces. This shows a complete disregard for the realities of contemporary Canada and its regional and provincial diversities, as well as a complete disregard for the Canadian constitution, provincial powers and provincial jurisdiction.
This matter has been handled by a tired government in complete disarray, a government without direction and without new ideas to challenge Canadians. I have got to add a proviso here. Not so many months ago the hon. member for Vaudreuil (Mr. Herbert), who has just spoken, said this was the worst government Canadians have had to put up with since the second world war. I would like to go one step further than the hon. member, who reluctantly supports this tired government: the handling of this serious matter has confirmed in the minds of all Canadians once and for all something that we in the opposition have witnessed and have known for many months, namely, that this government now sitting to the right of you, sir, is undoubtedly the worst government we have ever had in Canada since confederation. And I say this regretfully. In speaking to people from coast to coast I find they say this is the worst government, and historians will judge it so. This is the worst government that has sat in office since confederation. It must go and the sooner the better.


Mr. Penner:: Save it for the election.


William Heward Grafftey: There might not be an election because this Prime Minister hasn't got the guts. He looks at one poll, and he hasn't got the guts to face the electorate. I cannot say that for the electorate because, frankly, the Canadian people cannot put up with another few months of the worst government since confederation.
When I was a young man I joined the board of a medium sized Canadian company, and at my first session sitting on the board of directors at a directors' meeting I turned to one of my fellow directors and I said, "Is this company strong and healthy?" He said, "My good Heward, it is strong and
Income Tax Act
healthy; it has survived ten successive years of mismanagement!"
When I look at the way this sales tax was handled, I say to the Canadian people do not despair; this is a strong and healthy country because it has survived ten consecutive years of gross mismanagement. But this sort of nonsense has to stop, Mr. Speaker. I spoke to an older constituent of mine who has voted Liberal, who has voted Conservative-he has voted against me as well as for me-and he said, "I am 90 years old and in my 90 years as a Canadian citizen I have never seen a government in Ottawa bungle a single matter as much as the federal government has bungled the sales tax proposition." [Translation]
Mr. Speaker, as for the question under consideration this evening, I categorically ask: Who are the people who support this bill? The Quebec legislature, including each opposition party? No. The people and groups of concerned citizens in Quebec? No. Members of the opposition in Ottawa? No. Mr. Ryan, the great Liberal leader in Quebec? No. And since the federal government reversed its stand earlier this week, the citizens and governments of other provinces? No. The turnabout of the federal government announced this week is the most significant one that I have seen during all the years that I have been in Ottawa. And finally, Mr. Speaker, do several government members sincerely support this bill? No they don't.
Mr. Speaker, there is an amusing saying in English which goes like this: Everybody is out of step but me. The Prime Minister (Mr. Trudeau) and the Minister of Finance (Mr. Chretien) should think about it and for the sake of our country, and the well-being of our Canadian economy, they should withdraw that bill as soon as possible and ask the advice of the provinces in a spirit of understanding and good feeling. They should at least accept the amendment moved by the Leader of the New Democratic Party (Mr. Broadbent) this afternoon. And you, hon. members on the government side or rather members from the province of Quebec-I think now of the hon. members for Maisonneuve-Rosemont (Mr. Joyal) and for Compton (Mr. Tessier)-the people of Quebec are looking at you now with much interest. They want to know what is more important: you, the hon. members from the province of Quebec or the legitimate aspirations of the whole Quebec population as expressed by a unanimous vote of the National Assembly and by several private groups in the province of Quebec.
I am calling upon members from the province of Quebec tonight. What is your stand? Because on many occasions, you have talked to me in the halls and said: We are against that! The Minister of Finance is stupid and crazy! It is all nice and easy to say that in the halls of Parliament Hill, in the caucus of the Liberal party, but are you going to stand for the legitimate rights of your fellow-citizens in the province of

May 18, 1978
Income Tax Act
Quebec, and speak up on their behalf? You have a great opportunity, right now. Now is your chance, my hon. friends, hon. members from the province of Quebec, to defend the legitimate rights of your fellow-citizens.
I repeat what was said last week at the National Assembly, the population of the province of Quebec is keeping a close eye on you. I would like to know what you the government members of the province of Quebec consider most important, the interests of your own party or the interests of the population of Quebec.
I am pleading with you. Did you listen, as I did, to the opinions expressed by your fellow citizens of the province of Quebec, by the opposition parties in the National Assembly and, since the beginning of this week, by the provincial governments that have spoken against the measure we are debating tonight? I am pleading with each and every member from the province of Quebec regardless of their political party. We should work together to convince the government to withdraw this bill as soon as possible and, in order to remedy the situation, to consult the provinces in a spirit of mutual understanding. It is not too late.
I think and I hope that when the Prime Minister (Mr. Trudeau) mentioned yesterday afternoon in the House of Commons during the question period that he would probably consult the provinces in a spirit of understanding, that he will be doing so with the full support of the government and some members of the province of Quebec so as to remedy this situation as soon as possible.
On many occasions, Mr. Speaker, the Prime Minister said that we supported the Quebec separatist option because we were in favour of the resolution adopted by the National Assembly concerning the sales tax proposal. Well, let me tell the right hon. Prime Minister that I hate the kind of federalism you and your government have been imposing on Canada for the past ten years. Because of your recent confrontation with the provinces on the sales tax issue, because of you inflexibility, your arrogance, no one has done more than the current Prime Minister of Canada and his government to reinforce the two solitudes and help the separatist cause.


An hon. Member:: You are not serious!


William Heward Grafftey: I could not be more serious. How did the Parti Quebecois come to power? Was it in a spirit of goodwill or nonconfrontation as practised by this government?
What is the situation in the province of Quebec now? I was only too glad to see a federal budget with sales tax proposals that would obviously help the secondary manufacturing sector in the province of Ontario. I am glad about that. In dealing primarily with the secondary manufacturing industry in the province of Ontario, in dealing with the flexible approach to the legitimate demands of Saskatchewan and British

Columbia, I was glad of many things contained in the sales tax proposal.

During the preparation of this budget the federal government showed enough flexibility in terms of the sales tax to accommodate the needs and requirements of the provinces of British Columbia, Saskatchewan and Ontario. I ask now: Why not Quebec?

I have before me briefing notes for the consultative task force on tariff negotiations. If the textile industry in Quebec or across Canada got their hands on these there would be a fine how-do-you-do. Let me read just two paragraphs regarding the situation in the province of Quebec vis-a-vis textiles, clothing and furniture. This has nothing to do with separatism or federalism. This report cites that in the Quebec manufacturing sector the overriding issue is one of adjustment to competitive pressures on the traditional sectors of textiles, clothing, footwear and furniture. I hope members opposite will listen to what I say, including my confreres from the province of Quebec. Quebec has borne the brunt of the recent decline in Canada's manufacturing employment. Our data suggest that between October 1976 and October 1977 average manufacturing employment in Canada dropped by 34,000; about 30,000 of this net loss was in Quebec, with the great majority in the traditional sectors. Did hon. members hear that? Are they listening? Thirty thousand jobs lost in Quebec out of 34,000 across Canada in the traditional sectors of shoes, clothing, textiles and furniture. Members opposite wonder why Mr. Parizeau replied with that eminently sensible proposition. And they have the gall to support a Prime Minister (Mr. Trudeau) who wants to confront people and call them separatists for supporting this eminently sensible suggestion.
In this package of euphemisms, the last paragraph of the report states:
Some industries will, however, remain the focus for industrial adjustment. These include the traditional sectors of textiles, some clothing, footwear and furni-tu re-
For these industries the policy of the government and its objectives should be to reduce progressively the employment phase. Oh, the government has done that-through increased rationalization behind the necessary minimum of transitional protection.
This government has messed up the economy in the province of Quebec, Mr. Speaker. Let us go from the general to the particular.

In the town of Cowansville, which is in my constituency, the Bruck Mills textile plant employed more than 1,000 workers fifteen months ago. Now, there are only 500 workers left. In one town where there are 12,000 residents we have lost 1,000 jobs in the textile sector. Five years ago, Vilas, a company that
May 18, 1978

specializes in furniture, employed 500 workers. Today the plant is almost closed.
In Cowansville we have two small shoe manufacturing industries which will soon close their doors or go bankrupt as a result of the federal government's policy. The same story goes for the rest of the province of Quebec. The only thing I ask from the members of the opposition is to forget all the stupidities concerning this bill and to support the legitimate requests of the national assembly of our province.

Here is a headline in today's newspaper which states "Yarn mills to close, 200 will lose jobs". Does a headline like this not indicate to the government that we have a particular problem involving textiles, shoes, clothing and footwear?


Sinclair McKnight Stevens: They don't care.


William Heward Grafftey: Hon. members don't care? Are hon. members not listening? For the next five years, three years or four years will you just have a Pavlovian dog responsible for everything coming from the province of Quebec and saying "Separatist, separatist, separatist"? Because if you do, my friends, nobody but you and your Prime Minister will aid the cause of separatism more.


Some hon. Members:: Hear, hear!


William Heward Grafftey: I will tell you what happened, Mr. Speaker. [Translation]
Because of the traditional situation, this government thinks it automatically has the Quebec electorate in its pocket. [English]
For this reason, because the Liberals get their electoral support from the province of Quebec automatically, they think Quebec can put up with any insult and any mismanagement of their economy by this government. They think they will still vote Liberal. Wait until the next Gallup poll, Mr. Speaker. The Liberals will see what they have done to the electorate in the province of Quebec on this measure.
This particular budget regretfully was prepared not for the long-term good of Canada and Canadians, but for an election. It was the old Liberal strategy of divide and rule. It was not prepared for serious discussion in this House as we are doing tonight. But once and for all we have caught the Liberal government at their own game. Once and for all both Frenchspeaking and English-speaking Canadians have seen the game of the right hon. Prime Minister-one policy for the rest of Canada and another policy for the province of Quebec.


An hon. Member:: That is not true.


William Heward Grafftey: Once and for all, what was the Minister of Finance (Mr. Chretien) up to? What was the hon. Minister of State for Federal-Provincial Relations (Mr. Lalonde) up to, and what was the Prime Minister up to? They were trying to escalate the confrontation between Quebec and the rest of
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Canada for short-term votes for an election which the Prime Minister did not have the guts to call.


Some hon. Members:: Hear, hear!


William Heward Grafftey: The last thing that this Prime Minister and the King government expected to have to do was to come before the House of Commons and justify their chicanery to the people of Canada. Now the chickens have come home to roost and the government is caught, my friends.


Mr. Paproski:: Right on.


William Heward Grafftey: The government wanted a confrontation during an election. The Liberals wanted to go to Englishspeaking Canada and say: "Only the Liberal party can save you from this big, bad man Levesque and all those terrible separatists". The Liberals were going to confront and confront. Forget Canada, and forget why this Prime Minister makes Mackenzie King look like a statesman.


Some hon. Members:: Hear, hear!


William Heward Grafftey: The government took Quebec for granted and thought it could insult Quebec with this proposition. Then it went to the rest of the country and said: "Look how tough we can be with Quebec". Well, my friends, wait until the next Gallup poll is out; it will be seen that it was the biggest backfire in Canadian history.

Ottawa does not have a monopoly on shrewdness when it comes to economic measures. From time to time, provincial governments also have good ideas. I may be repeating myself for the second, the third or even the fourth time, but I submit it is not too late for you to withdraw this bill and to accept as soon as possible, first of all, the amendment proposed by the NDP this afternoon and, second, the proposition made by the National Assembly of Quebec.

What we are being confronted with this evening and during this week proves more than ever-and I agree with the hon. member for Vaudreuil (Mr. Herbert) on this point-that we are in dire need of constitutional revision. When I think of the wasted ten years since this Prime Minister has taken over, my heart nearly breaks in two. I remember when I greeted my friend, the right hon. Prime Minister, when he came here as a backbencher over ten years ago. I think of the number of times when I sat in the parliamentary cafeteria with him and said to him: "Mr. Trudeau, with our social, cultural and political atmosphere, but moreover because of economic duplication and waste, if there is one thing you can do it is to help bring meaningful constitutional change to Canada as quickly as possible." He said to me: "I have not come up here to do that. The present BNA Act is flexible enough for my needs." Subsequently I found out what he really meant.
I say regretfully, Mr. Speaker, that the Fathers of Confederation drafted the British North America Act feeling that it would always be, in cases of prime ministers, in the hands of

May 18, 1978
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statesmen. But in this case they were wrong. The Prime Minister has used the British North America Act as no other Prime Minister in the history of this country has used it for short-term political advantage and confrontation. Look what we have today. The chickens have come home to roost and we are divided as we have never been divided before. Do hon. members think I say this with any partisan delight? No. I say to members opposite, where are the members from the province of Quebec? Could anything be more obvious than that by supporting the Prime Minister as he sinks with his ship they are flying in the face of every single opinion, not only from the province of Quebec, but from all over Canada?
When I ran a company several years ago and I announced my position, very often my branch managers or section heads revised my opinion. They told me they thought I was wrong. I accepted their advice. Did I think I lost face? Their advice perhaps saved my company. Is it really too much to expect the Prime Minister and this government to forget their pride for a minute and accept a measure that would be good for Canada, particularly for our province? In the name of God I ask him to do this.
It has been cited time and time again-and we have a report in our hands emanating from the Department of Industry, Trade and Commerce-that the traditional sectors of textiles, clothing, footwear and furniture are very strong in Quebec.
[ Translation]
Several members have noted on many occasions that, as far as the traditional sectors are concerned, we import many goods from the other provinces. I agree with you that we do not have the exact figures-and neither have you-but I am under the very strong impression that if we adopt the proposal made by the Quebec National Assembly, this will help enormously not only the traditional sectors within the province of Quebec and low income groups, but also the economy of the other provinces, because of these imports.

What about the fact that we have discussed during this debate, that the measure of returning refunds to the province of Quebec will almost 100 per cent obliterate many of the benefits that the Minister of Finance intended in his original budget speech? When he presented his speech, he said, as reported at page 4319 of Hansard'.
Any further stimulus should obviously be fast-acting. It should encourage consumer spending, not more spending by government. It should offset some of the temporary factors which are pushing up prices. This is particularly important now, on the eve of the start of decontrol.
A reduction on retail sales taxes fits these requirements best, and has the added advantage-
He said this many times in his speech over television and outside.
-of benefitting all those who spend in Canada, even those who do not pay income tax.

About the proposal announced by the Minister of Finance this week, could you, as elected representatives of the province of Quebec, explain to me how this rebate proposal can help the people who pay the sales tax, the poor, who do not pay any income tax? Do not try, because it is impossible to explain the unexplainable!

It is clear that because of the economic mismanagement of this government, the low and middle income people of the province of Quebec are being beaten like nobody else in this country by high inflation and a staggering rate of unemployment. Now the federal government, because of its intransigence, will not budge on this measure. They are proposing a counter-proposal or another proposal that will send rembourse-ments or refunds to people who really do not need them.
I can think of thousands and thousands of people in my constituency and the constituencies of almost every member of the province of Quebec who do not pay income tax but will pay sales tax and will not be helped at all because of this measure. Hon. members opposite know it and I know it.
The Minister of Finance and the Prime Minister have created confusion in this confusing debate with all their sophistry. They do not understand and therefore have confused the difference between tax room, tax points and tax mechanism. Will the Minister of Finance and the Prime Minister get on their feet in this House and show to us that they really know the difference between tax room, tax points and tax mechanism? They do not. It is for this reason that I and all thinking Canadians realize that with this new proposal this week they have balkanized this country as it has never been balkanized before.

The right hon. Prime Minister has on numerous occasions strongly criticized the province of Quebec when they claimed that separation was already a fait accompli. And now, with such a treatment for the province of Quebec, the federal government and the right hon. Prime Minister in turn claim that with such a policy of reimbursement to Quebec taxpayers federalism is already a fait accompli. We now have the proof, Mr. Speaker. I ask another question to hon. members. Is the sales tax a provincial or federal jurisdiction?

Supposing that at nine o'clock tomorrow evening I invited myself to your house, Mr. Speaker, for dinner. Supposing I not only invited myself for dinner and accepted my own invitation, but I then walked into your house and decided to rearrange all of your furniture and your pictures. Would you not be a little annoyed? Sure you would be. That is what this arrogant, intransigent, confronting government has done with every province, one after the other.

And that is exactly what you are doing with the province of Quebec today.
[Mr. Grafftey.l
May 18, 1978



No wonder this country is divided as it never has been divided before. This government's dividing policies have brought this country almost to its knees. Most thinking Canadians now realize that you do not have to be a good Liberal to be a good Canadian.
The other day I took the Minister of Finance at his word. Yesterday we found out that in March, speaking with the minister of finance from the province of Ontario, on many occasions-

-before the Minister of Finance had introduced his budget here in the House of Commons, the Quebec minister of finance had on many occasions rejected the proposal by the federal Minister of Finance.

Let us be quite clear about it. I am basing my remarks on the fact that I know, and members opposite know, that on at least three occasions before the Minister of Finance presented his budget in the House of Commons, Mr. Parizeau objected to the proposition. Some years ago Mr. Howe said "What's a million?" This Minister of Finance is now saying "What's three million?"
[ Translation]
It is obvious that because of the arrogance of the federal government in applying the rebate formula for the sales tax in the province of Quebec, the Canadian taxpayers will waste at least $3 million.
How many times has the Prime Minister stated both in this House and outside that the federal government should never use tax leverage to force the provincial governments to do something they would not otherwise wish to do? He has said so time and time again.

Why make an exception today? How often did the Prime Minister notice that, because of the taxation powers of the federal government, he should not compel the provinces to take measures they do not want to take. You have the answers. Why make an exception today for the sales tax in the province of Quebec? I wonder why. I am going to tell you why. It is because once again the Prime Minister wants to resort to confrontation and say to the English provinces: I am the only one able to keep Quebec like this! Yes.

Why did the Minister of Finance in announcing this program not tell us how much money was available and then set out the broad lines of his policy, afterwards letting each province administer the details? The government believes all the conventional wisdom exists in Ottawa and that the provinces know nothing. But that is not the main reason they took
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the action they did. Mr. Speaker, the Prime Minister and the Minister of Finance did not want Quebec to agree to this measure. They wanted Quebec not to agree. They made it impossible for Quebec to agree with it because they thought they were going into an election and they wanted a spirit of confrontation so as to escalate the national unity debate and make Canadians forget about the economy.


Some hon. Members:: Hear, hear!


William Heward Grafftey: But I say this to members opposite: you have been caught at your own game. There is no election. The gutless Prime Minister backed away from it on the basis of one poll, and now you are in the highest forum in the land trying to explain the inexplicable, trying to explain your chicanery.


An hon. Member:: You are in bed with the pequistes.


William Heward Grafftey: We are in bed with the pequistes! That is the most slanderous remark I have heard for a long time. I am just as good a Canadian as you are. I will fight the pequistes as hard as the hon. member will fight them. But like my father before me, I will fight the Liberal government.

-one policy for the English, another policy for the French, and they wonder how come the country is as divided as it is. [English]
I am not a separatist, I am a federalist. But I detest the kind of intransigent confrontation federalism practised by the worst government since confederation which has divided this country as it has never been divided before. I will fight with my life, like my father before me, in such a cause. We have not forgotten such statements as "Conscription if necessary but not necessarily conscription". The present Prime Minister makes Mackenzie King look like a statesman.


The Acting Speaker (Mr. Turner):: I regret to interrupt the hon. member but his allotted time has expired. He may continue by unanimous consent.


An hon. Member:: No. We want Paproski!


The Acting Speaker (Mr. Turner):: Does the House give consent for the hon. member to continue?


William Heward Grafftey: I do not think hon. members really want me to carry on, but I will say this:

It is not too late. It is not too late. I really hope that the Quebec members and opposition members will remedy the situation. It is not too late. Can you tell me, without saying that I am a separatist, without saying that it is a question of separatism, of federalism. Since the entire population of Quebec and most people outside Quebec consider that the stand taken by the National Assembly is good policy, can you tell me what is wrong with that?

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Supporters of the party opposite cannot escalate this sort of thing into a debate on national unity because the whole of the Canadian population has seen that tactic for what it is. So let us get on with the business of governing this country. Let us adopt the amendment proposed by the New Democratic Party. It is not Parizeau's advice, it is the advice of the whole national assembly. I know that members over there would dearly like to resurrect the national unity debate, but they cannot do it now. That is over. So let them get on with the business of this House, withdraw this bill, consult the premiers, admit their errors and do what is good for Canada and for all Canadians, rather than what they think is good for getting votes in the short term.


Mr. Yves Demers (Parliamentary Secretary to Minister of National Revenue):: Mr. Speaker, I realize now how very crafty the previous speaker, the hon. member for Brome-Mis-sisquoi (Mr. Grafftey), and the Progressive Conservative party are being. Indeed, in supporting the proposal of the New Democratic Party to delay by a month the study of this bill, the Progressive Conservative party is being very wily, as they know full well what they are about. They have had it confirmed by the statistics. They realize very well that this sales tax cut is of great benefit to the Canadian economy. They have seen it in a decrease in unemployment and inflation. I take my hat off to them. I must say they are crafty because they do not want this government, or the Minister of Finance (Mr. Chretien) who moved those measures, to get the credit for them.
And when that same party calls for an immediate election, I have serious doubts that it is for the same reason. They do not want the recovery of the Canadian economy, and they want an election right now precisely because they do not want this bill passed. The hon. member for Brome-Missisquoi and the Progressive Conservative party are asking for an election because they have no confidence in their own party; with the Gallup poll indicating a 41 to 41, tie, they want an election because they are convinced they will never reach a higher level than those 41 points. They are convinced of that.
I would like to mention also that the Liberal members in this House, contrary to what the hon. member suggested earlier, fully support the Minister of Finance (Mr. Chretien). The hon. member mentioned statistics earlier and said that in the past year or so 34,000 jobs have been lost in the manufacturing sector in Canada, 30,000 of them in Quebec and said that it was specifically due to our budget. But those jobs were lost in past months and have nothing to do with the budget.
Furthermore, I must confess that when the hon. member recalls that fact he knows full well that it is not true and that those jobs were lost in Quebec over the past year and a half and I can give him a few reasons why those jobs were lost in his riding and more particularly in Cowansville. One of the

reasons is that the minimum wage in Quebec is much too high and the city of Cowanswille is rather close to the U.S. border, the state of Vermont, and Quebec businesses are moving to Vermont where the minimum wage is much lower. Another reason why those jobs were lost mainly in Quebec is that taxes in the province of Quebec are higher and companies are interested in paying fewer taxes and going to invest in another province like Ontario. There is also the threat of the separatist sword and the fact that those very industries moved. The hon. member for Brome-Missisquoi (Mr. Grafftey) had better not try to tell me that Sun Life moved out of Quebec because of the Minister of Finance's budget. It is not true. First, they do not pay sales tax. Second, they announced their intention to move long before this budget was introduced.
The hon. member is also misleading the House when he says that the $85 rebate to every Quebecker does not benefit people who do not pay taxes but who must however pay the sales tax. What the government is proposing is quite simply to treat the province of Quebec the same way as the other provinces. In the other provinces if the tax room is $100 and the province occupies that tax room and if poorer people do not benefit from the sales tax cut it is precisely because Mr. Parizeau did not want to give them that credit.
I would also like to ask the hon. member for Brome-Missisquoi whether he is serious when he believes that the Leader of the Opposition (Mr. Clark) is the one who is going to stop the separatist movement in the province of Quebec. I am convinced that he is not a separatist. I am convinced that he is a strong federalist. But when he states that Joe Clark is going to stop the rise of separatism in the province of Quebec he makes me laugh. In fact, he makes me laugh so much-


William Heward Grafftey: He is the Leader of the Opposition!


An hon. Member:: Do not say Joe Clark.


The Acting Speaker (Mr. Turner):: Order, please. I suggest to the hon. member that when he refers to a member of this House, he should refer to him by his riding and not by his name.
[ Translation]


Yves Demers: He makes me laugh so much that a certain number of Quebec separatists are so convinced that they are now working for the Progressive Conservative party. I could name a few whom I know personally in the constituency of Joliette. I could also name some candidates, some people who intend to run for the Progressive Conservative party and whose allegiance is very questionable indeed. Anyway, those are matters with which we will deal during the next election campaign. Mr. Speaker, there are surely many Canadians who have been wondering why the federal government has decided to reduce the sales tax by 3 per cent across the country. The government has reached that conclusion after having sought the advice of several prominent economists, and also after
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suggestions made by the Canadian Chamber of Commerce which had made a study to see how the economy could better perform and had come to the same conclusion as the one that the government accepted.
I would like now to read from the March 1978 publication entitled:
The Canadian Chamber of Commerce: Impact
This is an exact quotation:
If the federal government considers it imperative to stimulate the economy, it is the opinion of the Canadian Chamber of Commerce that this objective would be best achieved by reducing the provincial sales tax by 2 to 3 per cent.
And further on:
That it is quite obvious that the government should maintain the size of its anticipated deficit of $10.5 billion for the fiscal year 1977-78, and warns that cuts in expenditures must be emphasized now and in the future.
We can also read the following:
However, to reduce the high rate of unemployment and the serious underdevelopment of our economy anticipated for this year, the Chamber of Commerce recommends that the federal and provincial governments share on a 50-50 basis the cost of reducing provincial sales taxes.
This same bulletin also contains this paragraph:
If the federal and provincial governments cannot come to an agreement, the Chamber of Commerce suggests as an alternative that the Government of Canada reduce other taxes to obtain the same result; however this alternative will not have any immediate impact on the economy and will take longer to reduce the very visible consumer price index.
I wanted to read this to show you that by reducing sales taxes, the federal government followed the suggestion of economists, the Canadian Chamber of Commerce and other organizations specialized in this field.
Also one may wonder why these economists did come to the conclusion that a tax reduction was the most appropriate way to stimulate the economy. First, we all agree that the Canadian economy is a federal responsibility. The federal government is responsible for lessening regional disparities and for stimulating the economy. In general, the provinces do not claim that responsibility.
Statistics show that for the past several months, because they feel insecure, Canadians have been saving money as they have never done before. Reports from banks and caisses populates indicate that there is plenty of money in bank accounts. Therefore, Mr. Speaker, people are saving money instead of consuming goods and thus are not contributing to the health of our economy. As a result, we have to find a way to urge people to spend their money. When sales tax reductions were announced, people were told this: "If you buy within the next six months, you will benefit from a three per cent tax reduction. If you do not buy within these six months, you will forfeit that reduction".
That is direct motivation, actual motivation, because people can readily see on their invoices, on their accounts, that they get a three per cent rebate. By urging Canadians to buy, this legislation will help to put the manufacturing industry back on
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its feet, and, consequently, companies will hire additional people who, in turn, because they will no longer be unemployed will get larger incomes and will afford to spend more money so as to keep the wheels of the economy turning. We have to get that economic wheel turning again because it has been slow in recent years.
The government also decided to abolish this tax uniformly in all sectors so as not to create any animosity among the provinces and to help equitably and without exception all sectors of the economy. Furthermore, Mr. Speaker, it is extremely difficult to abolish the tax in a specific sector, and fraud becomes a high risk, something which the provinces would certainly not have accepted. Right now in Quebec many stoves, fridges, washers and dryers which are taxable appliances are being sold and identified as bedroom sets, living room sets and so forth so that the customer does not have to pay tax. By implementing selective tax cuts, the government of Quebec will lose several million dollars in these tax evasions.
Furthermore, if we had allowed the provinces to act selectively the province of Quebec would have acted as it did, without consulting other provinces. On the other hand the province of Ontario would have said: We wish to cut the sales tax only on products that are made here, such as cars, home appliances and so on. This would have greatly reduced the thrust of that tax act. It should be understood that if the province of Quebec eliminates its 8 per cent sales tax on clothing and furniture it is certainly a very worth-while measure which will encourage Quebeckers to spend more. Those Quebeckers who intended to buy a suit six or seven months from now will probably buy it immediately.
However, 40 per cent of the Quebec production of textiles, knitwear and furniture are sold in other Canadian provinces. It means that the 3 per cent reduction of the sales tax given to all other Canadians will encourage them to buy textiles and furniture made in the province of Quebec. If we had allowed all those provinces to reduce their taxes selectively, they would not have cut them on furniture and textiles that are produced mainly in Quebec.
The fact that this tax is not reduced on all goods in Quebec is a great disadvantage for producers and workers, construction hands, truckers who are many in my riding and who have to pay that 8 per cent tax everytime their trucks need repairs; it would also have helped manufacturing companies producing all kinds of items like chinaware, various types of trailers, tools, household articles, mobile homes, and all sorts of things.
In order to know if a 3 per cent tax cut on all goods instead of an 8 per cent reduction on some items would have been more advantageous for Quebec families, I figured out from statistics available, what proportion of their budget Canadian families with two children spend on furniture and other taxable items. According to statistics, 10 per cent of the family budget is spent on furniture and clothing while 25 per cent of that same budget is spent on taxable items like wallpaper,

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paint, cosmetics, home appliances and all sorts of items. So it means that Quebeckers would have benefited much more from a 3 per cent tax cut across the board instead of an 8 per cent cut on a few selected items.
There is also another point that I would like to clear up. I refer to the jurisdiction for provincial sales tax. It has been suggested that the federal government has interfered in a provincial field of jurisdiction. It is quite clear to me that the sales tax is exclusively a provincial matter. In my opinion, it could have been said that the federal government was infringing upon a provincial jurisdiction only if it had imposed its own retail sales tax. But that was not the case. We merely said to the provinces: If you reduce your tax by 3 per cent, the federal government will pay 2 per cent of it. The federal government of course will pay it with taxes collected in other fields which come exclusively under its jurisdiction. Moreover, the provinces did not have to accept that proposal. It was subject to one condition only. We told them: If you withdraw your sales tax, we will pay two percentage points. It was a reasonable offer and they were free to accept it or reject it. Besides, nine provinces out of ten accepted it. However, if they rejected the proposal they certainly could not expect the federal government to refund the money which would have then been owing to them.
However, during the three weeks of negotiations which took place with the Minister of Finance, Mr. Parizeau did not say anything, which seemed to imply that he accepted the proposals as did the federal government and the nine other provinces. But once the nine other provinces had accepted the deal, just after that he lets us know that he wants a special status for the state of Quebec. It is impossible for the Government of Canada to agree to such a proposal because if it did the same offer would have had to be made to the nine other provinces and the negotiations would then have been back to square one. In that line of thought, the economic measures considered would no longer be valid.
The Minister of Finance studied the situation and tried to work out a compromise which the other provinces have accepted. He proposed to Mr. Parizeau to reduce his sales tax not by three percentage points as it had been originally intended, but only by two percentage points on all items. This two percentage point sales tax would be reimbursed completedly by the federal government without any contribution of any kind from the provincial coffers. Yet out of pride Mr. Parizeau refused the offer and by refusing such an offer paid for entirely by the central government as I have mentioned he is penalizing all Quebeckers who could have benefited from this sales tax rebate of two percentage points, all Quebeckers whether they pay income taxes or not. Besides being intransigent, Mr. Parizeau has the audacity to say that he absolutely wants these $186 million to be returned to the treasury of the government of Quebec. The Canadian government cannot accept that and as I said a moment ago the other provinces would not accept

such an injustice and everything would have to be renegotiated. So there was only one solution left and that was to reduce the federal income tax of Quebeckers. As we intend to inject money right now into the Canadian economy, we have therefore decided to give each Quebecker a cheque of up to $85, depending on the income tax he has paid in 1977.
We hope this measure will prompt Quebeckers to consume more goods in order to create jobs. We are also convinced that this measure is one of last resort because there was no choice left since we have not been given that choice and we think that this measure will not bring about the expected benefits the three percentage point reduction of the sales tax on all items would have brought about. However, if by any chance there is still time, I would like the government of the Parti Quebecois to revise its positions before this bill is passed and to decide to reduce its sale tax by the two percentage points which the federal government is willing to pay and thus all Quebeckers, even those who do not pay income tax, would benefit from this measure.


John Carnell Crosbie: Mr. Speaker, in starting my remarks this evening I want to point out first that the Minister of Finance (Mr. Chretien) when speaking yesterday-he should not leave because he is going to receive some good advice if he stays-as recorded in Hansard at page 5524, said:
What I am surprised at is that the opposition, even in the Quebec assembly, make no suggestions as to how to solve this question. They just blame the government. At no point since the beginning of this debate have we received any suggestion on how to resolve this.
That is really laughable and if the minister is listening, as I hope he is, I will tell him how easy it is. I will quote to him a man of whom I had never heard before, an American named Guterman, who said something very wise, and I came across this only today. He said: "Admitting error clear as the score, proves you wiser than before." That is all the Minister of Finance has to do to cure the whole situation. The government has made a bad error and the Prime Minister (Mr. Trudeau) seems determined to lock them in the error. I think the Minister of Finance has somewhat more flexibility than the Prime Minister. All he has to do is to admit the error and say that the federal government went about this in the wrong way. He should admit that they did not really try to consult with the provinces; that they did not have it worked out with Quebec when he brought his budget down on April 10; that Quebec has outsmarted them, that Quebec has outfoxed them, that Quebec has been streets ahead of them in sagacity, intelligence, shrewdness, slyness, craftiness-far ahead of this mighty government here in Ottawa. They have been run around the ring, and Mr. Parizeau has had the old ring through the Prime Minister's nose and the Minister of Finance's nose right from the start. Just admit that. Let them admit they made an error and are destroying national unity,
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and destroying any concept of federalism in Canada if we keep on this course.
Admit that is an error and tomorrow or the next day, or within the next month, if the NDP amendment is carried, let the government withdraw what they have in this bill, pay over to the minister of finance of Quebec, to the government of Quebec or to the province of Quebec what they should pay- that is, the S226 million-participate in the reductions they are making-that is, the complete sales tax reduction on clothing, furniture, footwear, etc.-and that will be it.
It is the simplest kind of thing, Mr. Speaker, but you have to be a bit flexible. The trouble is that the government is not flexible. The Minister of Finance has delivered a ukase, they used to call it in Czarist Russia-a command, an edict, an arbitrary order. They delivered an ultimatum to Quebec which Quebec does not have to accept and which Quebec is not accepting. They made a final proposal or a statement of terms. They have tried to dictate.
I want to tell the Minister of Finance what "consulting" means so we will be on the same wavelength when we consider terms. This is the definition given in the Concise Oxford Dictionary. It stales that "consult" means to seek information or advice from; to take into consideration. Consultation means the act of consulting, deliberation. It does not mean that you call the provincial finance ministers and tell them you are going to take certain action, that you are going to do something and that they then have to agree, or if they express no reservation or no opinion you have consulted them. That is not consultation. That is not asking them for information or advice. That is not taking into consideration their views.
The minister when he called the premier of Newfoundland did not seek information or advice last Friday. He called the premier of Newfoundland when he could not get hold of the minister of finance and told him what he was going to do. He told him he was going to pay this $85 per taxpayer direct to the Quebec taxpayer. I will not say what the premier of Newfoundland told the Minister of Finance on the phone. It is confidential, but I can assure you he did not agree. He did not give him the advice that this was the right thing to do. I will not say what he did tell him. The minister did not consult with the provincial ministers.
The humiliation of the four Atlantic provinces was that before April 10 the Minister of Finance never even met physically with a finance minister from any one of those four provinces. When I asked the minister a question today about whether he had any suggestions from the minister of finance for Newfoundalnd before he brought his budget down on April 10, he said in his reply-and if you look at his reply in Hansard tomorrow you will see what he meant-that he did not have to listen to what the minister of finance for Newfoundland said. He said that they were going to bear 100 per cent of the cost of the tax reduction, so I did not have to listen to him.
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That is how Newfoundland and the four disadvantaged provinces of Canada are treated by this government here in Ottawa. That is what consultation is. That is what happens to the poor; the poor in resources and the poor in finances. That is the kind of consultation they get from this Liberal government at Ottawa. They are told what is going to happen, and because they are going to be compensated 100 per cent their suggestions are not welcome and not listened to. The minister of finance in Newfoundland did not agree with the six month hoist of this 3 per cent sales tax. He did not want it to come off in October of 1978 just when unemployment is starting to rise again to catastrophic and stratospheric heights in Newfoundland. He did not want that. He wanted it to go on at least until the spring, but he was not listened to because beggars cannot be choosers. That is the federal system we now have operating here in Canada, under Liberal domination for the last ten years. That is co-operative federalism.
Quebec, according to all the statistics, is disadvantaged also, but they are bigger and they have more of a sense of having their own homeland in Quebec. They have a history of every government and every political party in the province fighting for provincial rights in Quebec from 1867 to date. That is what they have, so they are prepared to make the financial sacrifice and make themselves heard and felt.
The minister was very incautious when he tried to consult in his usual way with Quebec, telling Quebec what he was going to do with their tax. Quebec just sat by and let him walk into his own trap, into his own arrogance. He delivered his ukase to Quebec and they told him to kiss their icons. That is what they told him, Mr. Speaker, and rightly so, and I congratulate them. I wish that Newfoundland had told him to kiss their icons also. These are Czarist edicts that come from this great monarchy here in Ottawa. The emperor Trudeau and his cohorts. They had better learn and consult. I have given the definition of consult.
"Dictate" means to prescribe, lay down authoritatively, terms, things to be done; lay down the law, give orders. What the Minister of Finance and the Prime Minister tried to do was dictate. This was dictation, not consultation. He could not lay down terms to the province of Quebec. He could not lay down the law to them. He could not prescribe. They were not ready to lie down there, and I congratulate them for it. I do not care if they are pequiste, Union Nationale, Liberal or Conservative in Quebec; they took the right attitude. They were not going to be dictated to by Ottawa. I only wish the other nine provinces had done the same.
On budget night on April 10, the Minister of Finance did not pretend, lucky for him, that the provinces had all agreed. He did not even say there was agreement with nine provinces. What he said, as appears in his speech at page 14, was what he offered to do for them. He said at the bottom of page 14 that the measure can be an outstanding example of fiscal co-ordination, and if all provinces accept the federal offer it will mean such-and-such. There was no pretence that Quebec had accepted this federal dictation, this federal edict, this federal ukase; they did not say they were accepting it. When the

May 18, 1978
Income Tax Act
Minister of Finance jumped off the diving board with his proposal on April 10 he had no right to think that Quebec was going to accept it, and the pequiste minister of finance said quite plainly they were not going to accept it. Do not let us hear any more of this nonsense we have heard here about how Quebec fooled them and did not indicate any opposition to this suggestion.
We have a federal system yet the Prime Minister goes on with nonsense about balkanizing the country. If Quebec is allowed to lower its own direct sales tax the way it likes, it is going to balkanize the country. It is going to stop the free flow of goods. Don't they realize we have a federal system and that the very fact that provinces have sales taxes means they can interfere with the flow of goods? In Newfoundland we have no retail sales tax on food, clothing or footwear. In other provinces they are taxing the people with a retail sales tax. We have an 11 per cent tax but in Newfoundland we do not tax clothing, footwear and food. Other provinces do. Other provinces have their own purchasing policies.
In Quebec they will only enter into contracts with firms headquartered in Quebec. We have all kinds of situations that interfere with the free flow of goods-whatever phraseology you want to use. Quebec is not balkanizing the country if Quebec has a sales tax and decides to exempt certain things and not exempt certain other things. It is exercising the same prerogative as Newfoundland, P.E.I., New Brunswick and others, and they have done it every year, as the federal government has done in respect of tariffs and federal sales tax. There is no balkanization involved.
If Quebec is permitted to go ahead and do what it is doing and still receive federal financial assistance, no other province can complain because it did not get the same deal. They did not stick out for the same deal. They gave in, they surrendered, they collapsed. They did not have the backbone to stand up on their hind feet because most of them were not in the financial position to do so. They did not do that, but Quebec did. Some of them tried but they did not hold out to the bitter end. Quebec did because it is more important to them to preserve their own rights in their own province than other considerations. There was no agreement so the government cannot complain that Quebec has not gone along with them. They knew there was no acceptance by them at all.
Now, if we look at May 17 Hansard again, the Prime Minister is again mixed up. Some may say it is only semantics. At page 5507 the Prime Minister said:
-The Minister of Finance reached an agreement with nine of the provinces and the provinces agreed to this after three weeks of talks.
They did not agree, Mr. Speaker. There was not an agreement with nine of the provinces. There wasn't any such agreement. Nine provinces have acquiesced, not agreed. There was no agreement from the province of Newfoundland. The province of Newfoundland never consented to this. An agreement is where two parties agree freely and voluntarily to enter into an arrangement with one another. Newfoundland, for

example, never did that. They accepted the gratuity handed to them by the Government of Canada when they made some suggestions as to how it should be done; otherwise they were ignored.
I do not believe there was a genuine agreement with any of the provinces except Ontario. It was Darcy McKeough's brainwave in the first place and naturally Ontario agreed, but not the other provinces. The Prime Minister is mixed up. He said:
So I would be very surprised if because the province of Quebec, having failed to state its position before the budget, is now coming out with a scheme which tends to balkanize the Canadian market, the other provinces would want to go in the direction of that balkanization.
Well, I do not care whether they do or do not. I see nothing wrong if the province of Ontario had reduced all tax on automobiles, if that was their choice and another province reduced all tax on something entirely different. As long as the consumer was getting the break and the economy was being stimulated, what difference does it make? The only difference is that this is an arrogant, inflexible government that wants to make the provinces bow to their will.
The greatest sin, Mr. Speaker, that the Prime Minister has committed in this connection was on April 14. You would expect the Prime Minister of this country not to be a cheap politician, or at least not to show that he is a cheap politician as easily as some other people might be. When I questioned him on April 14, Mr. Speaker, in the House of Commons in the question period, asking him why Quebec was not permitted to do what they wished to do, the Prime Minister said at page 4507 of Hansard:
I find the opposition supporting a separatist government in Quebec-
And on the same page, Mr. Speaker:
I was dealing with the support given by the Tory party to the scheme put forward by the separatist party of Quebec.
That is an attempt to paint anyone who disagreed with the Prime Minister and his policies as separatists, Mr. Speaker. But now he is painted into a corner because Claude Ryan and the Liberal members of the legislative assembly in Quebec, the Union Nationale members, the Social Credit members and all members of the Quebec national assembly are now, by that definition, painted as separatists.
Agreement does not mean, Mr. Speaker, accepting or acquiescing in ultimatums. That is why there were no agreements. On May 16 the Minister of Finance at page 5451 of Hansard said:
I am surprised that a national party wants to save the neck of the Parti Quebecois.
That was the Minister of Finance's response to questions by our spokesman on federal-provincial relations, the hon. lady for Kingston and the Islands (Miss MacDonald), "that a national party wants to save the neck of the Parti Quebecois." It is the federal government that is saving their neck. It is the federal government that has by its stupidity, by its arrogance, by its inflexibility, given this neck tremendous additional strength.
May 18, 1978

What we want to do is to save Canada, Mr. Speaker. To save Canada it is necessary to remove the Prime Minister and his government from office in this country, not save the neck of the Parti Quebecois. They can look after their own necks. As somebody once said, "some neck, some chicken". Winston Churchill said that. I tell you the Parti Quebecois has got a neck that the Prime Minister of this country cannot deal with. The people that are going to be able to deal with that neck are we on this side when we take office.


Some hon. Members:: Hear, hear!


John Carnell Crosbie: The Prime Minister's position, Mr. Speaker, was given also yesterday in Hansard, May 17. Speaking at page 5508 he said:
The minister has taken a position, and this position is supported by the government and by every member on this side of the House.
He was intimating that there was a surge of support over there. There is one "Serge" I heard is not supporting them. And further down he said:
We have taken a position and we are going to stick with it.
Well, Mr. Speaker, if the Prime Minister sticks with it then certainly he is finished as an apostle of national unity in this country. What the Prime Minister is practising is rigor mortis federalism. The Liberal party and the government are dying and they are entering into a state of rigor mortis. The old co-operative federalism is gone and it is rigor mortis federalism now. They never deviate. The Prime Minister and the Minister of Finance decide what federal-provincial relations are going to mean. They decide what the provinces will do with their sales tax; they decide what Quebec is going to do; they decide what Newfoundland is going to do; and they are able to enforce their decision because Newfoundland got complete reimbursement from the federal treasury. Quebec did not.
When somebody comes up with a better suggestion, "No, we won't budge, we won't move, we are stiff, we are rigid, we are Trudoids, we're Liberals in power in Ottawa, we have rigor mortis, we can't move a muscle, we can't respond." So co-operative federalism has now degenerated into rigor mortis federalism.


An hon. Member:: And to the death of the Liberal party.


John Carnell Crosbie: And to the death of the Liberal party, that is good. We think that that is an advantage. And from the decaying corpse of the Liberal party will spring in a few years' time perhaps some fresh flowers such as those that adorn the Prime Minister new when he speaks to us in the House in question period.
Here we are, Mr. Speaker. We can have a unitary state. If we want a unitary state-and I presume the people of Canada deserve that-we could vote to do that, do away with federalism and we won't have any problems. We could have the government in Ottawa decide everything, as they do in the United Kingdom. But since the people have not decided that yet, Mr. Speaker, we have in Canada vast inequities because we have provinces. We have in the province of Newfoundland
Income Tax Act
a gasoline tax of 25 cents a gallon; we have in Alberta no gasoline tax and in the other provinces a very small gasoline tax. Well, we are prepared to put up with our high gasoline tax if it means that we have our own local government, at least for the province of Newfoundland. If everything is not decided up here in Ottawa, we are prepared to sacrifice something. We know that if we lived in Alberta we would pay no gasoline tax at all.
The country in that sense is balkanized. We know that we are paying 11 per cent sales tax and in Alberta they are paying no sales tax. It appears to be unfair. Presumably, if we wiped out all ten provinces we would all be treated exactly the same from one end of the country to the other. But would we want that? We would no longer be a federal state. That is where this government is leading us to. If Quebec wants to make its own decision on what exemptions it is going to grant in its own direct sales tax, Mr. Speaker, and that is not permitted because it is supposed to be balkanization, then that means the end of federalism. That is where we are headed to if the Prime Minister's attitude is the one that wins the day.
Look at the statement put out by the Minister of Finance on May 15. Just look at this for arrogance, Mr. Speaker. Page 1:
I have also written to Mr. Parizeau today to explain my resolution of the dispute over the retail sales tax reduction in the province of Quebec.
How can the Minister of Finance of Canada by himself solve this dispute? He is a nice man and I genuinely like him, but he has been too long in office. Just listen again to the monumental arrogance of that statement:
I have also written to Mr. Parizeau today to explain my resolution of the dispute over the retail sales tax reduction in the province of Quebec.
The Minister of Finance of Canada has spoken. He is saying: "The dispute has been resolved. This is my ukase, I am like a Russian czar, when I speak everyone must bow". This is a statement issued by the Government of Canada. Now, Mr. Speaker, we proceed with the statement at page 2:
The federal government should not be party to an arrangement which interferes with the flow of goods in the Canadian common market.
What bourgeois! It pays Newfoundland hundreds of millions of dollars in tax equalization, and Newfoundland uses it to interfere with the free flow of goods because Newfoundland will use it to buy Newfoundland first if it can, the same as Quebec does, the same as Ontario does. The government is in a conspiracy to interfere with the flow of goods in the Canadian common market every day of the week with the money they are giving the other provinces through tax equalization and the like. So don't give us such statements as: "The government will not be a party to such an arrangement." The government in its arrogance does not even know what arrangements it is party to any more.
On page 3 the minister has this to say:
I have discussed this arrangement with my colleagues in each province. They all told me they would have preferred Quebec acceptance of the original proposal.
I do not believe it. I do not believe the statement "They all told me they would have preferred Quebec acceptance of the

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Income Tax Act
original proposal." I do not believe that for a minute. They did not all tell them that. Ele said "I have discussed this arrangement". This was a telephone call to the premier of Newfoundland: "Premier, this is what I am doing. I am going to solve this thing by paying $85 per capita back to the taxpayers in Quebec." That was the discussion. There was no discussion in any sense of "discussion" as we free people know a discussion to be-I give my views and you give yours. So that is another incorrect statement.
In his letter to the minister of finance of Quebec on April 21 there are the same kind of errors polluting the whole letter as attached to that statement. The minister laid down certain conditions. On page 2 he writes:
Third, it was necessary that the proposed measure apply uniformly in all provinces.
Why? It is only necessary because the Minister of Finance says it is necessary. There is no immutable law of the universe that says it was necessary and had to apply uniformly in every province. And it did not. In British Columbia and Saskatchewan they had a different arrangement. Who is the Minister of Finance trying to fool?
On page 3 of that same letter this appears:
However, the federal government could not envisage bilateral agreements aimed at exempting one product in one province and another in another province.
Why not? The whole sales tax arrangement provincially has that flavour, so why not? I have already made the point about tax equalization and the rest of it.
The whole thing is riddled with inconsistencies. This is a government that can no longer see. It has had so much power for so long, it has had financial power vis-a-vis the provinces for so long, that it now automatically has got itself convinced that these silly mistaken statements are correct. It is an awful shame and tragedy, Mr. Speaker.
The exception in Quebec on clothing, footwear, furniture and textiles is not just for Quebec manufactured products. That also applies to imported products. That applies to products that come in from other provinces. They have not made an exemption just for Quebec manufactured goods. To exempt clothing, surely, is a proper thing. The lower income people spend most of their income on food, clothing and shelter, so furniture and clothing are the kinds of things you would like to see a major reduction of sales tax on. There is nothing wrong with that. It is just that the federal government had not dreamed it up first. They thought they were going to apply the iron fist to a government that decided to do something they had not thought of.
This becomes the great sales tax swan dive. It is just as well for the Minister of Finance to realize that the swan has become the ugly duckling. The darling swan of the Quebec caucus is now the ugly duckling of the Quebec caucus, with his strident quack-quacks in this chamber and his quack-quacks outside of the chamber; and the Prime Minister's quack-quacks are just quack-quacks. They are ugly ducklings now. The old white feathers are gone off the old swan. The graceful swan that came into this chamber a few months ago as the new

Minister of Finance has turned into an ugly quack-quack. His statements make no more sense than a quack-quack, Mr. Speaker. I wish I knew what the French is for "quack-quack". This is the old sales tax swan dive. The sooner the minister takes that swan dive, the better.


Miss Begin:: Is he from the farm or from the zoo?


John Carnell Crosbie: What did the finance minister in Newfoundland say about this proposal to rebate taxes to the individual taxpayer in Quebec when he heard about it? I quote the minister of finance of Newfoundland. He said:
.. . certainly not an action that could be construed in any way as a unifying measure.
Even the province of Newfoundland, which has to accept federal largesse because we poor devils down there have an 11 per cent sales tax and cannot turn down the opportunity to have it go away even for six months, even we have the right to express an opinion. Our government's opinion is that it is "not an action that could be construed in any way as a unifying measure". No, it is a measure that is disunifying this nation. It is unifying the nation against the government. That may be the only good part about it. They are going to transfer and make a payment to Newfoundland and other provinces which they could not refuse.
What consultation was there with the government of Newfoundland before April 10? A telephone conversation with our minister of finance. Imagine, an important matter of federal-provincial relationships like this and the four Atlantic provinces' ministers got telephone calls to tell them what was happening!
The Minister of Finance went out west and met with the western ministers. He met with the Quebec and Ontario ministers but he didn't even bother to meet with the four maritime provinces. That is how important this was looked upon, this major excursion into the change in our whole federal-provincial relations.
When the government says, "We are not going to allow the provinces to act selectively," the government is saying, "We, the government, are not going to allow you in your own constitutional jurisdiction, with your own poor little old retail sales tax-we are not going to allow you to do what you like with it. Not with our money. We want you to reduce the tax and give stimulus to the economy, but when you want to reduce it one way that we do not agree with, we are going to tell you no, you can't do it with our money." That's the government's position.
Should the federal government not have said to Newfoundland, "Gentlemen, put back your sales tax on clothing so you will be uniform with Quebec. We are not going to allow Quebec to eliminate it. Newfoundland has got to put it back on clothing and P.E.I. has to put it back; and Newfoundland, you have got to put it back on footwear so that you will be uniform with the other provinces. P.E.I., you have to put it back on footwear. You can't exempt these any longer because if you exempt them when you are getting some help from us to
May 18, 1978

reduce it 2 or 3 per cent over all you are going to balkanize the country."
That is just as intelligent as telling us now that Quebec is not to be allowed to make selective cuts, that it is going to balkanize the country. They have the balkans on their mind over there. They are going to balkanize the electorate of this country. They have already done that.
We have come now to a position where everyone in Canada who takes any interest in these matters can see how real an attitude this government takes toward national unity. When it has an opportunity to do something constructive in a national unity sense with the province of Quebec, it tries to act like a Russian emperor and crush any opposition in that province. Then, when every other party in the province backs the Parti Quebecois government, the Prime Minister gets more rigid than ever, more inflexible than ever. Rigor mortis has set in. He is determined that he is not going to budge.
Mr. Speaker, I have given my advice to the Minister of Finance. I repeat it in ending my remarks-admitting error clears the score and proves you wiser than before. If it helps, Mr. Speaker, I will admit that I have been wrong at times, too.


Some hon. Members:: Hear, hear!



PROCEEDINGS ON ADJOURNMENT MOTION

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

Mrs. Simma Holt (Vancouver-Kingsway):: Mr. Speaker, I have repeatedly asked questions in this House on the saccharin ban and received what were patently self-serving answers from the officials of the Department of National Health and Welfare, using an excellent member of parliament-a minister who must rely on them-as their voice in parliament.
On Tuesday, May 16, I again asked the question. Now my question was based on a new revelation, one that could have been expected in this area of power brokerage in the back rooms of the department. Eight years ago the same vocal official, literally proselytizing his anti-cyclamate campaign, used the same scare tactics, based on the same type of so-called excessive research-rather comical research if it had not had such bad effects.
Without warning, without debate in parliament, without even consultation with the representatives of the people in parliament, a ban was imposed on the use of cyclamates, an artificial sweetener that had been on the market for 24 years.
Adjournment Debate
It was done then as was the saccharin ban: as though the people of Canada were irrelevant.
The question now is more serious than cyclamates or saccharin. It is-who runs Canada? Are the officials of the department or the elected representatives in charge? I have evidence of the contempt of a few officials for the members of parliament, not only in the Department of National Health and Welfare but in the shoe quota board of the Department of Industry, Trade and Commerce, the Department of Consumer and Corporate Affairs, the Department of National Revenue, the CBC and CRTC; and other members of this House can give testimony and names to this experience that I have had in this one area and in the several other departments.
On October 21, 1969, the officials of the Department of National Health and Welfare imposed their decision on parliament. It was carried into the House by a minister who then- as now-had to depend on these people. No warning, no right of the representatives of the people to comment or to argue against the ban. It is most telling, Mr. Speaker, to note the words on August 1, 1970, of this one official. Just a month before all cyclamates came off the stands, he said:
Cyclamates are a dead issue as far as food manufacturers are concerned. I have the feeling that if we were able to lift the ban on the sweetener tomorrow we would not touch it with a ten-foot pole.
This same man who has pushed his words through this House and who will no doubt do it again tonight said eight years after the ban, just eight days ago, on May 10, 1978: "In our view the great preponderance of world evidence indicates that cyclamates do not produce cancer". Then he went on to discuss the Abbott Laboratories production of an all-cycla-mate table top sweetener again, and he arrogantly said: "It is not an earth-shaking product". And not only this, Mr. Speaker, he is further quoted as saying: "We think Abbott Laboratories may be using it as a foot in the door. But in our opinion the door is still closed; we won't consider opening it a crack until we get all the information and we have time to review it."
I ask these questions, Mr. Speaker: Who does this man think he is? Who vested him with such power? Why is parliament allowing him to continue using this power? How is it that he has had the second chance to decide that Canada's diabetics, 400,000 of them, and the 13 million overweight people cannot have their sweets? Why is he still in this job? To whom does this person owe his loyalty? To the people of Canada, or some special interest group who may want to remove the competition? I also ask why does this man not order the same kind of experiments using sugar, which is believed to be dangerous and to have carcinogenic properties? If an equivalent amount of sugar was used in these experiments on rats it would amount to 40,000 teaspoons a day. I am sure the rats would strangle on it.
There is no doubt in my mind that the answer this person will give to members in this House to cover his own error will be that saccharin was in the cyclamates. It was an impurity that caused it. I want to put on record tonight the damage I

May 18, 1978
Adjournment Debate
know that has happened because of this department's gross errors on cyclamates and why I feel that senior public servants must now be held responsible before the law for damages when they act irresponsibly.
I will list some of the companies affected: Berryland Canning Company, Maple Ridge, B.C., lost $60,000. These are private companies. Canadian Cannery lost $1 million; E.D. Smith lost $400,000; Tom Steeves, Anassis Island, B.C., lost $200,000. This was a small firm and it almost caused its bankruptcy. At least 12 small independent businesses were in financial difficulty as a result of the cyclamate ban.
No one can count the number of diabetics, obese, or hypoglycemia victims who were seriously injured or who died as a result of this deprivation of sugar substitutes. I doubt whether this official will investigate that. This official sneered at me when I suggested in a private meeting that if he is concerned with cancer harming people then he should remove cigarettes from the stands. I might add as well that he might take carrots off the shelves which contain carotatoxin, a nerve poison, and an hallucinogen called myristicin.
Shrimp should be taken off the stands since it has 40 to 170 or more parts per million of arsenic, as well as olives and vegetable oil found in salad dressing which contain the carcinogenic substance benzo(a)-prene; and so should even apples, which contain phlorizin, which interferes with the enzyme system of the cells.
It is interesting that these same people who have banned saccharin are pushing to free marijuana when the experiments so far on humans show that it has carcinogenic qualities and cause other ailments. The minister and her predecessor in this portfolio echoed the laugh of this official when several members asked why they did not ban the known carcinogenic cigarettes. They said it was too much of a habit in society, yet here they are pushing for a drug not yet known to be safe and suspected to be carcinogenic with other dangerous components.


Mr. Deputy Speaker:: Order, please, I regret to interrupt the hon. member but her time has expired.


Mr. W. Kenneth Robinson (Parliamentary Secretary to Minister of National Health and Welfare):: Mr. Speaker, at the outset I wish to congratulate the hon. member for her perseverance with regard to this whole subject matter. I know her avowed concern is sincere. I would like the hon. member to appreciate, however, that the state of knowledge in that area is constantly being perfected. As a government, we must act on what we know and everyone will agree that we must take a calculated risk in order to protect the health of Canadians.
I would like to correct several statements made in the House earlier by the hon. member for Vancouver-Kingsway (Mrs. Holt) on the subject of cyclamates. Cyclamates were never totally banned; they were restricted to use in tabletop sweeteners in 1969, not 1970. The action was not arbitrary but was based on careful consideration of the scientific data then

available. Many countries, including much of Europe, took the same action as Canada. Other countries, including the United States, Japan, England, Sweden and Finland, have banned cyclamate totally. The recommendation to restrict cyclamates was made to the former minister of national health and welfare (Miss Begin) by officials of the Food and Drug Directorate. The Health Protection Branch did not exist at that time.
The then Director General of the Food and Drug Directorate has since retired. I understand he was considered highly qualified and is still in great demand as an international expert. The hon. member may be interested to know that in a 1974 decision on a court case in which a company using cyclamates brought legal action against the government for restricting the use of cyclamates, the judges ruled in favour of the government. He stated that, in his opinion, the officials of the Food and Drug Directorate, in recommending that cyclamate be restricted, "acted prudently, expeditiously, and reasonably in the public interest. To have acted otherwise... might well have exposed them to a charge of negligence or a breach of duty".
It is my understanding that, contrary to the hon. member's insinuation, the current head of the Health Protection Branch is considered highly competent both by his peers in government and by the scientific community in general. It is unfortunate that the protection of this House is used to attack the reputation of an official of the Department of National Health and Welfare.
With regard to the 1969 cyclamate decision, I would like to emphasize the statements made earlier. Toxicology is a relatively young science, and new and more sophisticated testing procedures are constantly being developed. It is logical that, as we learn more about any given substance, decisions which were made on the basis of less information may, on hindsight, appear questionable. I am satisfied that we do the best we can with the data available.


SUPPLY AND SERVICES-CRITERIA USED IN CALLING FOR TENDERS
A. Daniel McKenzie: Mr. Speaker, this afternoon I posed a question to the Minister of Supply and Services (Mr. Goyer). It concerned the questionable tendering practices of this government. The Canadian Association of Data Processing Service Organizations has charged that more than $2 million in government contracts were awarded to a Quebec based computer firm, not because it submitted the lowest bid, but rather, in the words of the Minister of Supply and Services, because of "socio-economic considerations". Part of the minister's reply to me was: "One must recall that in 1977-78, 78 per cent of the electronic data processing contracts were awarded to Ontario companies". He went on to say: "I think it is fair and just that we should try to give other companies a reasonable share of the market when they are qualified, and that is what happened."

May 18, 1978

In other words, the tendering process has gone out of the window. "Socio-economic considerations" is nothing but a new terminology for Liberal patronage. There are ten provinces and two territories and all should be treated fairly.
Here is a partial list of special patronage accorded to Quebec. Public Works for 1977 awarded a total amount of $306 million of which Quebec received $173 million or 58 per cent. The other nine provinces shared 42 per cent. DREE grants for 1969-1977 accorded 30 per cent to Quebec and 70 per cent to the other provinces. Equalization grants of 52 per cent went to Quebec over the past ten years with 48 per cent to the other nine. So now we know about this new terminology, Mr. Speaker.
The minister has unbelievable powers and is downgrading the whole democratic system of tendering by stating we should ignore the lowest bidder in Canada and give government computer business to Quebec even though they cannot compete with the lowest bid. I have information that the president of the Montreal-based firm of Industrial Life Technological Services, Mr. Philip LeMay, was a school chum of the minister responsible for housing. 1ST was the firm which was awarded computer contracts. This is probably the reason 1ST received the contract.
I would like to ask the parliamentary secretary to confirm this and to answer two other questions tonight or give the answer by letter as soon as possible. My first question is: Will tenders for federal government computer contracts from now on be publicly opened or will they be kept secret and only the firm receiving the contract be announced? My second question is: Has the above-mentioned firm, 1ST, had a complete RCMP security check of its employees and have all its employees completed the DSS form on security which is a condition of employment with firms doing computer contracts for the federal government?
This question is most important and I hope the minister will supply an answer to me by next week. The reason I mention this, Mr. Speaker, is that today it was brought to our attention that letting the contract to 1ST has caused duplication problems and the Montreal-based firm has not been as efficient as Data Crown, an Ontario-based firm, because of the fantastic growth of their service. They cannot properly cope.
This issue of security was discussed in great detail in the Standing Committee on Public Accounts in February of this year. At that time Mr. Baxter, a federal civil servant, stated:
-if programs were modified by design, that is, if someone deliberately modified the programs to subvert some of the normal control procedures, that would be a serious breach of the normal process.
You can play around with computers, Mr. Speaker, and I have information that this Montreal-based firm has not been properly scrutinized by the RCMP. I do not have time to read all the detail of that committee meeting in February of this year, but that is why I raised that question tonight.
In a news report today with respect to this Montreal firm receiving computer contracts it is pointed out that:
Adjournment Debate
In one case-$1 million for National Health and Welfare computer services awarded through the Department of Supply and Services-the contract went to Montreal-based 1ST despite the fact it did not submit the low tender-
So the low tender process has gone out of the door-we are into this new form of patronage, the socio-economic process which the Minister of Supply and Services has just recently introduced. The article goes on:
In a second instance, a contract for Industry, Trade and Commerce, formerly held by Computel Systems Ltd., also channelled through Supply and Services, went to 1ST "because of political considerations"-
That is the new socio-economic process, the new terminology for patronage. We also find some indication that the government was trying to direct business into Quebec. In the same article it says:
Everyone has to recognize that ministers of the Crown, whether you like it or not, have the final say.
So they have the final say, and it does not mean that the lowest bidder is accepted. The computer firms feel the evaluation and final award was not made on the basis stated in the tender, and they may be right. If they do not like what the ministers of the Crown say, the only recourse they have is to our democratic system, which means we have to wait until the next election and vote for another political party if we do not like the process. Is that a proper way to handle the tendering system? Ontario computer companies, upset by government contracts going to Quebec, say they are not getting full information when they bid on government jobs. This is part of the socio-economic theory which is now being presented by the minister. The Canadian Association-


Mr. Deputy Speaker:: Order, please. I have to interrupt the hon. member.


Miss Aideen Nicholson (Parliamentary Secretary to Minister of Supply and Services):: Mr. Speaker, the Minister of Supply and Services (Mr. Goyer) has had on many previous occasions the opportunity to speak in this House, as he did this afternoon, about the basic procurement policies of the government and its contracting policies according to the objective set out in the main estimates approved by parliament, which reads as follows:
To acquire and provide in the most economical manner goods and services required by departments and agencies, taking into account the contribution of procurement to the realization of national objectives.
The hon. member for Winnipeg South Centre (Mr. McKenzie) in his question this afternoon referred to two contracts awarded by the Department of Supply and Services to the firm 1ST of Montreal. The first one was for the Department of National Health and Welfare. The tender called for information to allow for an evaluation of estimated costs over a four-year period. In evaluating the bids, the dollar figure arrived at was based both on the firm rates and on the best estimate available of the anticipated work load and mix.
When the evaluation was completed, allowing for the varied nature of the pricing formulae contained in the proposals, there were three bids which were approximately equal in terms

May 18, 1978
Adjournment Debate
of price. All three firms were judged technically capable of performing the work. Since a clear winner could not be decided on the basis of estimated costs alone, there was a necessity to use other criteria, and the ability to assist in the realization of national objectives by compensating for the imbalance in the distribution of government business between the various regions of Canada was considered.
The final decision to award this contract was, of course, made in the usual way under the authority of the Treasury Board. The award of this contract was made within the
over-all objectives of the department and in conformity with government contracting regulations.
In the case of the contract awarded to 1ST for the Department of Industry, Trade and Commerce, it was awarded on April 1, 1976 for a three-year period as a result of a competitive tender, and 1ST was the lowest responsive bidder by a distinct margin.


Mr. Deputy Speaker:: The motion to adjourn the House is now deemed to have been adopted. Accordingly, this House stands adjourned until tomorrow at 11 a.m.
At 10.20 p.m. the House adjourned, without question put, pursuant to Standing Order.

Friday, May 19, 1978