1978-06-19

ROUTINE PROCEEDINGS


Mr. Dan McKenzie (Winnipeg South Centre):: Mr. Speaker, 1 rise on a matter of urgent and pressing necessity under the provisions of Standing Order 43. In view of the fact that employees at Manitoba breweries have been on strike for several weeks, thus depriving citizens of that province of beer during a time of suffocating heat, and in view of the federal government's apparent lack of concern regarding the plight of the Manitoba drinker, particularly the working man who cannot always afford the higher-priced spirits, I move, seconded by the hon. member for Churchill (Mr. Smith):
That this House instruct the Minister of Finance to do the following: first, remove the customs duty on American beer until the strike is over, thus enabling thirsty Manitobans to bring beer back from neighbouring North Dakota and Minnesota at reasonable prices; second, to relax the import rules relating to bilingual labelling of beer until the strike is over. This, combined with the lifting of the duty, would enable American distributors to supply the Manitoba market with beer without having to alter labelling techniques.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


NATIONAL MUSEUMS
Mr. Edward Broadbent (Oshawa-Whitby):: Mr. Speaker, I would like to move a motion under Standing Order 43 on a deeply disturbing matter. In view of the fact that the government has refused to appoint Ms. Jennifer McQueen as Secretary General of the National Museums of Canada, thus providing yet another example of discrimination in senior public service appointments, following as it does a similar case involving the Anti-Dumping Tribunal, I move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That this House condemns the government's repeated failures to promote qualified women to senior government positions and urges the Prime Minister to reverse this most recent example of discrimination by appointing Ms. McQueen as the new Secretary General of the National Museums of Canada.


Mr. Speaker:: This motion can be presented for debate only with the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


FISHERIES
Mr. Donald W. Munro (Esquimalt-Saanich):: Mr. Speaker,
I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. Having regard to the meeting today being held in Ottawa to resume negotiations for a permanent Canada-United States bilateral agreement on fisheries and boundaries, 1 move, seconded by the hon. member for Surrey-White Rock (Mr. Friesen):
That this House approve an open-ended reference permitting the Standing Committee on Fisheries and Forestry to meet, as circumstances warrant, to examine matters related to these important conversations.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


TRANSPORT
Mr. Adrien Lambert (Bellechasse):: Mr. Speaker, under the provisions of Standing Order 43, I ask for the unanimous consent of the House to introduce a motion dealing with an important matter of pressing necessity.
Considering that thousands of Canadian shipyard workers are unemployed, considering that it would be in the general interest of Canada to set up a merchant marine contributing to
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the economic development of the country, I therefore move, seconded by the hon. member for Roberval (Mr. Gauthier):
That this House recommend to the Minister of Transport to order the construction of ships which would provide employment to skilled workers in that field and enable Canada to take advantage of its navigable waters as well as the sea.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


FINANCE
Mr. Gordon Towers (Red Deer):: Mr. Speaker, I rise under the provisions of Standing Order 43 on a matter of importance arising from contradictory statements made by the Minister of Finance, the Minister of National Revenue and the Minister of Transport related to the deferral of capital gains tax on rollover of family farms. The statement made by the Minister of Transport added to the confusion when he said in the House on June 6 that Bill C-56 is complete in this regard, though in fact it is not. I would therefore move, seconded by the hon. member for Moose Jaw (Mr. Neil):
That the Minister of Finance withdraw Bill C-56 for appropriate amendment as he promised in committee on April 25.


Mr. Speaker:: The unanimous consent of the House is required before such a motion can be put. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


SENIOR CITIZENS' WEEK
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, under the provisions of Standing Order 43, and seconded by the hon. member for Nanaimo-Cowichan-The Islands (Mr. Douglas), I move:
That this House notes that in many parts of Canada this is Senior Citizens' Week and expresses its appreciation of the contribution our senior citizens continue to make to the life of the nation and calls on the government to express that appreciation more substantially by taking steps to raise the basic amount of

the old age pension, to make the pension available to persons between 60 and 65 who are out of the labour market and, in particular, to improve the position of those of our older people who suffer most, namely, single, widowed and other unattached women, it being the view of this House that these steps be taken without delay, preferably in the present session of parliament.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.

[ Translation]


NATIONAL UNITY
Mr. Rene Matte (Champlain):: Mr. Speaker, pursuant to Standing Order 43, I seek the unanimous consent of the House to move a motion on a matter of urgent and pressing necessity. In view of the fact that it is important to recognize the grievances reiterated a thousand times by the Federation of Francophones outside Quebec, that the federation has clearly indicated what the situation is in its now famous report entitled "Lord Durham's Heirs", that a study was published recently comparing the situation which is made to the Englishspeaking minority inside Quebec to the situations which are made to the French-speaking minorities outside Quebec, and that this subject deserves the full attention of the House, I move, seconded by the hon. member for Temiscamingue (Mr. Caouette):
That an interdepartmental committee be set up to meet the main officials of the Federation of Francophones outside Quebec for the purpose of discussing the study entitled "Deux poids. deux mesures" and proposing solutions to correct these unfair and regressive inequalities.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.
June 19, 1978



ORAL QUESTION PERIOD


Hon. Robert L. Stanfield (Halifax):: Mr. Speaker, I should like to address a question to the Prime Minister on the subject of industrial security. It seems that the security clearance of Alexander Peter Treu was lifted by the industrial security branch of the Department of Supply and Services back in 1973, but that Treu nevertheless continued to get a very substantial number of NATO contracts-


Mr. Basford:: Not classified ones.


Robert Lorne Stanfield: 1 would like some explanation, and I am certainly seeking information as to how it could happen that he could continue to get contracts from NATO, especially since apparently the industrial security branch of the Department of Supply and Services is also the security liaison for NATO in terms of issuing these kinds of contracts in Canada.


Right Hon. P. E. Trudeau (Prime Minister):: Mr. Speaker, I am glad the hon. gentleman asks the question. I wish those who were writing abundantly on that matter had thought of asking questions too. The simple answer, as the Minister of Justice indicated, is that the contracts received from NATO during the latter period were not classified as confidential.


Robert Lorne Stanfield: Mr. Speaker, when the security clearance is lifted, as it was in these circumstances, is the person affected notified of this? Was Treu, for example, notified that the security clearance had been lifted back in 1973, or is this something which is not done?


Pierre Elliott Trudeau: Mr. Speaker, it is my understanding that the security clearance was attached to the particular function Mr. Treu was then exercising. He was working for one of the major companies in security areas and when he left the company his security clearance ceased by the very fact of his leaving.


Robert Lorne Stanfield: Mr. Speaker, was Treu informed that the security clearance had been lifted, and is there any provision for appeal in these circumstances? Is there any procedure laid down for an appeal so that a Canadian citizen who is affected in this way will know that he has been affected and will know what procedure he can follow if he considers himself to be unjustly dealt with?


Pierre Elliott Trudeau: Mr. Speaker, I would have to find out if he was actually informed, but I repeat that it is my understanding that Treu was cleared for security and for working during the period he was working for a certain company, and when he left that company where he was cleared ex officio, he was no longer cleared. I do not know if there was a positive gesture made to inform him that he was no longer cleared. I suppose
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that he concluded he no longer had the clearance of that job, but I will inform myself of that. I will do the same thing as to the appeal procedure.


CRITERIA USED TO DETERMINE SECURITY RISK
Mr. Bill Jarvis (Perth-Wilmot):: Mr. Speaker, I have a supplementary question for the Prime Minister, in the absence of the Minister of Supply and Services. My question relates to the criteria used by the industrial security branch to determine through its director, Mr. Jenkyns, who or what is a security risk. As it appears that there may not be an appeal from either a refusal to pass security clearance or a revocation of a previous security clearance, it makes the criteria doubly important. Can the Prime Minister tell the House whether these criteria are in written form and, if so, would he undertake to table them?


Pierre Elliott Trudeau: Mr. Speaker, 1 cannot answer that question. I will take it as notice.


William Herbert Jarvis: Mr. Speaker, the Prime Minister will understand that there might be concern about an inability to table. I accept his undertaking, but an inability to table would naturally and reasonably lead one to believe that the criteria may not exist.
I wonder if the Prime Minister's recollection will enable him to answer another question. Did the cabinet at any time approve security clearance criteria for use by the Department of Supply and Services through the director of this particular branch?


Pierre Elliott Trudeau: Not, to my recollection, while I was Prime Minister. There may have been some criteria established before. But I will find out. There are, of course, practices which exist and which provide for an appeal for civil servants who are not satisfied with the treatment they receive. However, to what extent these practices apply to security matters is something into which 1 will have to inquire.


ADMINISTRATION OF JUSTICE
William Herbert Jarvis: Mr. Speaker, my final supplementary is to the Minister of Justice, on the broader issue of the Treu case. Is the Minister of Justice aware of any prosecution in Canada in the last 111 years-except, of course, during wartime-under any Canadian penal statute, whether it be the Criminal Code, the Official Secrets Act, the Unemployment Insurance Act, or what have you, where the entire trial from its inception through to judgment was held in secret? An obvious exception, of course, would be the recent trial of Dr. Treu. Has there been any other case in Canadian history, except during war years, which has involved secrecy?
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June 19, 1978
Oral Questions
Elon. Ron Basford (Minister of Justice): Mr. Speaker, 1 do not know the answer to that. If there have been, the number would be extremely small because the number of prosecutions under the Official Secrets Act has been extremely small. If long ago any were held totally in camera-not in secret, but in camera-I, literally, do not know. I can inform myself of that and inform the hon. member.


DECISION OF OPEC COUNTRIES TO FREEZE OIL PRICES
John Edward Broadbent: Mr. Speaker, 1 have a question for the Minister of Energy, Mines and Resources. In view of the decision taken over the weekend by the Organization of Petroleum Exporting Countries to freeze oil prices at current levels until the end of the year, could the minister tell the House whether the Canadian government will follow this example and cancel the current Canadian policy of increasing the price of oil by $1 a barrel and the price of gas 17 cents per 1,000 cubic feet on July 1 which, if allowed to take place, would add approximately 1 per cent to the consumer price index and cause an increase in unemployment by approximately 30,000?


Hon. Alastair Gillespie (Minister of Energy, Mines and Resources):: Mr. Speaker, I, too, was very pleased to see that the Organization of Petroleum Exporting Countries decided not to increase the price of oil at this time. This is very much the position taken by the Canadian government. Representations were made to OPEC urging moderation on their part.
As to the question of Canadian oil prices, the hon. member will know that a year ago an arrangement was reached among the consuming and producing provinces to move our prices up toward world prices in orderly jumps of $1 every six months. That particular move will take place effective July 1 of this year. For the information of the hon. member, that would still keep Canadian oil prices significantly below world prices and significantly below the average price in the United States.


John Edward Broadbent: It was widely assumed among OPEC a year ago that they would probably have a further increase on July 1. They had enough sense to change their mind because, as they pointed out on the weekend, further increases in the price would only cause further deterioration in world economies and lead to more unemployment. The minister is factually wrong in terms of the comparison with the U.S. price.
I should like to ask whether, in light of this, the minister will confirm that studies undertaken by his department show that if the $1 per barrel increase is allowed to go ahead on July 1, for the first time in recent history the oil price for Canada will be almost identical to that in the United States, taking away from us the $1 competitive advantage for Canadian industry which is so central a concern and need right now, with the high unemployment levels we have?


Alastair William Gillespie: No, Mr. Speaker, I have already referred to the fact that our studies indicate that there will be a continuing and significant differential between the Canadian price and the U.S. price.


John Edward Broadbent: It will not be the first time that the minister's figures and ours have differed. Ours show that the gap is going to be almost wiped out entirely. Apart from that important fact, is he saying that the government will not reconsider its position and will cancel the intended increase in price that is coming on July 1, which will be so disastrous for the consumers of Canada and for Canadian industry which needs all the competitive advantage it can get?


Alastair William Gillespie: I have already referred to the fact that the price increase which will take place this summer was arrived at through negotiation with the producing and consuming provinces of this country, that it was supported by a majority of the consuming provinces of the country and, further, that the federal government is providing in the order of $1 billion in subsidies in order to cushion the effect of higher international prices against the Canadian price.


TRANSPORT
[Stage Direction]
FUTURE USE OF "MacLEAN"
Joseph Adrien Henri Lambert: Mr. Speaker, in the absence of the Minister of Transport and of his parliamentary secretary, may I direct my question to the right hon. Prime Minister?
Considering that the MacLean, owned by the Department of Transport, is lying abandoned in the port of Quebec, could the Prime Minister tell the House what will become of this ship which has honoured Canada for many years? Will she be turned into a national museum or sold to private enterprise?


Hon. Andre Ouellet (Minister of State for Urban Affairs):: Mr. Speaker, I am aware that this matter is of highest concern to the Minister of Transport, and he will give an answer to the hon. member when he is back in the House tomorrow.


FINANCE
Mr. Ron Huntington (Capilano):: Mr. Speaker, as the Minister of Finance is not in his place, I will direct my question, if I may, to the right hon. Prime Minister. Can he tell the House what the rate of dumping duty on wide-flange steel beams will be after June 29?
June 19, 1978


Mr. Speaker:: The hon. member might want to repeat his question. It seems to ask for a specific point of information.


Arthur Ronald Huntington: I wish to ask the Minister of Finance if he can tell the House what the rate of dumping duty on wide-flange steel beams will be after June 29.


Hon. Jean Chretien (Minister of Finance):: Mr. Speaker, we are looking into the problem, and we do not know as yet.


Some hon. Members:: Oh, oh!


Joseph Jacques Jean Chrétien: When I have a specific answer, I will be glad to inform the hon. member.


Arthur Ronald Huntington: In light of the fact that Algoma's production is at capacity, that shipments are allocated and that British Columbia fabricators cannot get their supplies within practical time limits, in addition to the fact that offshore steel is more expensive than Canadian-produced steels, will the Minister of Finance explain the need for dumping duty safeguards? 1 ask this question in view of the fact that the minister said the following as reported in Hansard of February 20, 1978:
B.C. producers will always have access to international steel as long as it is not dumped on the Canadian market.
On the same day he said:
If the steel is not dumped, there will be no special duty applied; it will be just the normal duty.


Joseph Jacques Jean Chrétien: Mr. Speaker, I repeat the same statement; we welcome steel coming from abroad as long as it is not steel dumped on the Canadian market.


Arthur Ronald Huntington: Mr. Speaker, my final supplementary question is directed to the right hon. Prime Minister. Why does he consider it bad economics to limit the safeguards for dumping on the market within Canada where safeguards are needed as a result of the threat or reality of injury, and leave other markets in Canada not facing the threat or reality of injury free of safeguards?


Pierre Elliott Trudeau: Mr. Speaker, the producers in Canada expect to be able to produce for the entire Canadian market. If they are precluded from producing for a province because it has privileged access to some overseas market, then obviously the producers in Canada will not reach their optimum size.


GOVERNMENT CONTRACTS
Mr. Elmer M. MacKay (Central Nova):: Mr. Speaker, my question is directed to the right hon. Prime Minister. Last week I read from the 1975 minutes of a meeting attended by the then minister of state for urban affairs and the then
Oral Questions
chairman of the National Capital Commission. The minutes read as follows:
The minister wants to make sure that firms chosen for major contracts of this sort are cleared politically with the ministers responsible through his office.
At the time, the Deputy Prime Minister and President of Privy Council stated that he did not see anything wrong with that statement. Does the Prime Minister see anything wrong or abnormal with that statement? Is it the practice of his government to make sure that individual firms are cleared politically before major contracts are awarded? 1 want to emphasize that I am not talking about joint projects, but firms and contracts being cleared politically.


Pierre Elliott Trudeau: Mr. Speaker, I heard the Minister of National Defence answer that very question at great length last week.


URBAN AFFAIRS
Elmer MacIntosh MacKay: Mr. Speaker, since the Prime Minister declines to answer my question, I ask the Minister of State for Urban Affairs if he can state straightforwardly who in general cleared the firms and contracts for the sewer and road network in Hull, which contracts are still continuing?


André Ouellet: Mr. Speaker, I am not too sure what the hon. member is talking about.


Some hon. Members:: Oh, oh!


Mr. Hnatyshyn:: I heard that it was Gus MacFarlane.


IMMIGRATION
Mr. Jake Epp (Provencher):: Mr. Speaker, my question is directed to the Minister of Employment and Immigration. In statements attributed to the minister last weekend, he indicated that Canada, upon the request of the United Nations commissioner on refugee matters, would be prepared to take additional refugees. Can he tell the House how many refugees he expects to land in 1978, notwithstanding that he will have to make that statement in November of this year when he gives the annual global flow? In his talks with United Nations officials, was there any discussion as to whether the definition of refugees should be expanded or modified?


Hon. Bud Cullen (Minister of Employment and Immigration):: Mr. Speaker, given the situation in Southeast Asia, first of all, Canada responded to the small boat refugees and agreed

June 19, 1978
Oral Questions
to take 50 families per month in addition to those we have already taken. 1 am not sure whether they have landed today or not, but one group will be landing very shortly: they were picked up by a Greek freighter. Second, we focused our attention on the overland refugees in Thailand. There were some 180,000; it is down to approximately 100,000 now.
Thailand has indicated that it is prepared to help with resettlement, as the United Nations has requested, on the understanding that some countries will take some of the South Vietnamese refugees. We are looking at the numbers we feel would be appropriate for us. I will make representations to my colleagues to take more in addition to the 7,000 we have taken already since 1975. Probably we will take more on a family basis, bearing in mind the reunification aspect.


Arthur Jacob (Jake) Epp: Mr. Speaker, can the minister indicate whether he had any other refugee movements in mind when he made the statement that we were aware of the boat families and the Vietnamese refugees? Specifically, in respect of groups which are now defined as displaced persons by the United Nations or by the international community, as opposed to the definition of refugee, will the minister indicate whether he is considering changing the definition of such persons from "displaced person" to "refugee"? Would he also indicate whether, as a result of his discussions with the commissioner, persons coming from behind the iron curtain could also be classified as refugees more easily than is now the case?


Jack Sydney George (Bud) Cullen: Mr. Speaker, I apologize to the hon. member in that 1 did not answer the latter part of his first question. We did not get into discussion at all about changing the United Nations' definition of "refugee". They may very well do that on their own initiative after discussions-I do not know-but that did not come up. What we are endeavouring to do, in so far as people behind the iron curtain or in eastern European countries are concerned, is find a mechanism whereby we can be of help to them when they come out of the country and have to settle in refugee camps.
They are not, technically, refugees within the meaning of the act, and we are trying to find some way to help them. We think we have done so in the sponsorship program that I announced. We shall see how that works. But so far as changing the definition of "displaced person" to "refugee" is concerned, that has not come up and has certainly not been brought to my attention.


HOUSING
Mr. Dean Whiteway (Selkirk):: Mr. Speaker, my question is for the Minister of State for Urban Affairs and has to do with AHOP defaults. In view of the fact that in respect of his new housing proposal, namely, graduated payment mortgages, there has been some reluctance on the part of major lending

institutions to participate because of problems regarding debt being greater than equity after a period of five or ten years, will the minister indicate whether he has done an assessment of AHOP, a program that has seen more defaults in the first three months of this year than was the case totally last year?


André Ouellet: Yes, Mr. Speaker, we have done a survey and, as the hon. member asked two weeks ago, we sent him statistics which indicate quite clearly that in spite of the fact that he wants to promote these defaults as being a big thing, they represent less than 1 per cent of our total loan guarantees in Canada for people buying new homes. Therefore, it is a very minimal percentage of all loans are being made in Canada. I really do not know why the hon. member is trying to make such a point of something that is not, in fact, a big factor.


Dean Waldon Whiteway: Mr. Speaker, my supplementary question has to do with AHOP defaults as well as with several studies, one of which is an interdepartmental study by his own department and the Minister of Finance and the other by Treasury Board specifically at the urging of major lending institutions and with reference to AHOP defaults. My information is that the study was classified as a national security document. Will the minister indicate whether that study is so classified and, if so, why? If it is not so classified, will the minister undertake to table it in the House this afternoon?


André Ouellet: Mr. Speaker, I think the hon. member has an obsession about whether or not studies are classified. When appearing before the standing committee of the House, we produced all the available material. We have given ample examples to the hon. member of the type of defaults. The statistics are there to be seen. I do not know what the hon. member is trying to pursue in dreaming of a so-called study that does not exist.


Dean Waldon Whiteway: Mr. Speaker, would the minister not agree that since there are four times more AHOP defaults projected for this year than was the case last year, and in view of the fact that there are as many defaults in the first three months of this year as there were in total last year, he ought to reassess the AHOP program in conjunction with a reassessment of the new graduated payment mortgage program which is similar in its dramatic, disastrous effects?


André Ouellet: Mr. Speaker, I do not know how the hon. member looks at these statistics; but if there was 1 per cent default on 100 per cent at one time, and there is now a default rate of four times that, that is only 4 out of 100, which is still a very minimal number. It was not even 1 per cent last year; it was a portion of 1 per cent. When multiplied by four, it is still less than 1 per cent. I think it is so minimal that we should not worry about it.


IMPROVEMENT OF AHOP TO ASSIST LOW INCOME EARNERS
Mr. F. Oberle (Prince George-Peace River):: Mr. Speaker, I, too, would like to direct a question to the Minister of State

June 19, 1978

for Urban Affairs in relation to the graduated mortgage scheme which he introduced as a strengthening or improvement of the AHOP program. In light of the fact that the CMHC budget has been cut by $500 million, and the fact that the government's new housing strategy rules out any form of subsidy to low income earners or to the poor, how does the minister intend to introduce this graduated payment scheme, and how does he intend to gain the support of lending institutions and the provincial governments in respect of his new scheme and new approach?


André Ouellet: Mr. Speaker, this new technique was explained to the lending institutions in Canada and to the provinces specifically at the time of the last federal-provincial conference. It is not something new; it is something that exists with relative success in the United States. It exists in British Columbia with successful experience so far.
The response we have received from lending institutions has varied from enthusiasm to prudent reservation. Indeed, the co-operative movements, the caisses populaires and the credit unions, have expressed support for the program, while the banks have expressed some reservation. At any rate, we do not intend to force any lending institution to use the new, graduated payment mortgage program. It is there as an extra tool to be used. If some lending institutions use it, we will be pleased. We have already received indications that it is being used in some areas of Canada with success.
I believe that, like any other new financial scheme, it will take some time before it is in operation. I do not expect the banks to jump for it and to be the leading financial institutions in this regard. However, as the program materializes and shows success, I am sure that all the banks in Canada will approve the system, hopefully in the not too distant future.


Frank Oberle: Mr. Speaker, in light of the fact that none of the lending institutions has so far agreed to proceed with this program, nor have any of the provinces agreed to support it, since the program is widely known among the poor as a reverse indexation of mortgage payments, and since the program does not work in the United States unless it is coupled with a write-off of the interest portion for income tax purposes, is the minister and the government prepared to bring in new measures and announce additional changes in strategy to allow middle, low income and poor people to continue to live in decent housing in this country?


André Ouellet: Mr. Speaker, the government has, indeed, brought forward a substantial number of new measures to help low income people. All our new strategy is directed toward helping through the creation of a greater number of units for low income people in Canada. What the hon. member is talking about is perpetuating federal subsidies to people with higher incomes who in fact do not need government subsidies.
When the hon. member indicated earlier that the provinces and lending institutions had not accepted the graduated payment mortgage scheme, he was wrong. In fact, lending institu-
Oral Questions
tions have accepted it and some mortgages have already been granted in Canada since the suggestion made by the federal government.


THE CANADIAN ECONOMY
Mr. F. A. Philbrook (Halton):: Mr. Speaker, my question is for the Minister of Finance. I am sure we were all pleased to learn today that "the chairman of the Anti-Inflation Board denied that he was asking for pay increases for AIB employees that would be above those allowed for other Canadian workers". The chairman was also quoted by Canadian Press as saying that he had no idea when the board would actually close its doors.
Since the Economic Council of Canada has now agreed to take on the function of monitoring inflation, I wonder if the minister could assure the House that the Anti-Inflation Board will be closed down as early as possible in order to avoid duplication, unnecessary expense, and to support the business community of Canada?


Joseph Jacques Jean Chrétien: Mr. Speaker, it will, of course, be phased out as quickly as possible. The hon. member should know that a great number of companies throughout the country will have to report at the end of the year, for the third year of compliance with the program; their books will have to be inspected in order to ensure they have not abused the system. As soon as their books have been verified and everything has been accounted for, the AIB will wind down starting in the 1979-1980 fiscal year.


ANTI-INFLATION BOARD SALARIES OF STAFF
Mr. Lincoln M. Alexander (Hamilton West):: Mr. Speaker, I would like to ask a supplementary question of the President of the Treasury Board. I am not interested in what the chairman of the Anti-Inflation Board has to say; I want to know what the government's intention is in this regard. Apparently, the Minister of Finance says that the workers of Canada shall not receive any more than 6 per cent. Even though the chairman of the Anti-Inflation Board states he is not asking for, I believe, 11.5 per cent per year, could the President of the Treasury Board advise the House the government's position in this respect? I would hope the minister would indicate that under no circumstances would he countenance the AIB seeking anything more than 6 per cent. In other words, equality shall prevail: is that the position of the government?

June 19, 1978
Oral Questions


Hon. Robert K. Andras (President of the Treasury Board):: Mr. Speaker, that is exactly the position of the government. The fact is there is no aberration of the anti-inflation guidelines. The increases proposed to the Anti-Inflation Board are completely within the guidelines. There is no special treatment and there are no extraordinary circumstances. While there is a fair degree of complexity in the calculation of the salary account, main estimates to main estimates which the question period would not permit me time to detail, I am sending all hon. members a more detailed elaboration of exactly how this takes place.
Had the reporters taken the responsibility to check out the story, this very damaging and erroneous impression would not have been left across the country. I hope that when the media receive the explanation which 1 am sending them today, they will give the same prominence-that is, headlines on the front pages of the newspapers and prominence in other media-as they gave the erroneous story on Friday.


THE CANADIAN ECONOMY
Lincoln MacCauley Alexander: Mr. Speaker, I am very pleased that matter has been cleared up. 1 will now ask the Minister of Finance a question. In light of the fact that inflation is now running at approximately 9 per cent or more, and given the fact that the Minister of Finance, in an arbitrary way, picked the figure of 6 per cent out of the air-I believe some time last year-is that figure under review at this time, in light of the hardship experienced by many Canadians suffering as a result of the incompetence of this government?


Joseph Jacques Jean Chrétien: Mr. Speaker, I am not about to review those figures. If one looks at the internal inflation figures within the Canadian economy, internal inflation last year was 6.2 per cent.


NATURAL RESOURCES
Mr. T. C. Douglas (Nanaimo-Cowichan-The Islands):: Mr. Speaker, I direct my question to the right hon. Prime Minister regarding a commitment he made during the federal election campaign of 1974. In June of that year, the Prime Minister made a commitment with respect to Canadian ownership of resource industries, in the following words:
The Liberal party of Canada sets as an objective that major new projects in the natural resource field should have at least 50 per cent, and preferably 60 per cent, Canadian equity ownership.
1 ask the Prime Minister if that commitment still stands with reference to the launching of new resource industries or the transfer of Canadian-owned industries to non-resident Canadians? Is that commitment still in operation?


Pierre Elliott Trudeau: Mr. Speaker, the commitment as it was made still stands.


Thomas Clement (Tommy) Douglas: Mr. Speaker, in view of the fact that Saturday's Toronto Star claims to have a document that was issued last January, signed by the Minister of Industry, Trade and Commerce, in which he outlines four options with respect to Canadian ownership-one of which is that the 50 per cent to 60 per cent Canadian ownership clause be dropped, with the stipulation that no public statement be made regarding it unless the public should think that the government had made a retreat-I ask the Prime Minister if he can assure the House that before there is any change with respect to this ownership commitment, the government will make a public announcement; and secondly, if this 50 per cent to 60 per cent provision will obtain when the matter of the acquisition of the Husky Oil Company is before FIRA and before the cabinet.


Pierre Elliott Trudeau: Mr. Speaker, the hon. member refers to a document which I do not remember seeing, and certainly which is not before me now. I am not surprised that documents follow the guidance I issued in their presentation to cabinet. In other words, it presents the government with several alternatives, rather than presenting it with a solution which is sometimes inspired by the civil service as opposed to giving the politicians a choice between several options. I am happy to see that the document to which the hon. member referred has respected these guidelines and is giving some options.


Thomas Clement (Tommy) Douglas: Mr. Speaker, the Prime Minister has done everything except answer the question.


Lincoln MacCauley Alexander: That is typical.


Thomas Clement (Tommy) Douglas: I asked him, will he assure the House, in view of the comments of the Minister of Industry, Trade and Commerce about keeping any decisions secret, that if there is to be any change with respect to the Canadian ownership provisions, a public announcement will be made and that commitment will stand when the whole question of the acquisition of Husky Oil company is before FIRA and before the cabinet.


Pierre Elliott Trudeau: Mr. Speaker, the hon. member asks me what we will do if something happens. I think that even he will recognize that that is a hypothetical question.


EXTERNAL AFFAIRS
Mr. Douglas Roche (Edmonton-Strathcona):: Mr. Speaker, my question is directed to the Prime Minister, in the absence of the Secretary of State for External Affairs. Canada has announced that it will participate in a western aid package to Zaire, a total package of $116 million, of which Canada will
June 19, 1978

contribute $7 million in emergency food aid and other humanitarian relief. May I ask the Prime Minister if assurance can be given to the House that the committee which is being set up in Kinshasa to monitor this aid will have a Canadian representative? 1 ask the question in light of the $20 million in aid which has been given to Zaire in the past seven years and the reports of corruption and black markets operating in food aid in that country.


Mr. Maurice Dupras (Parliamentary Secretary to Secretary of State for External Affairs):: Mr. Speaker, the Canadian delegation has not announced any new aid programs for Zaire, it simply announced the stepping up of the present program.
* *
*


AGRICULTURE
Mr. Alex Patterson (Fraser Valley East):: Mr. Speaker, my question is to the Minister of Agriculture. If my information that a meeting of the Canadian Dairy Commission is being held today is correct, could the minister advise the House if he has asked the commission to consider the request of the British Columbia dairy industry that measures be taken to provide, through a higher percentage of the market share quota or some other mechanism, the opportunity for the industry to expand in line with its requirements in the province of British Columbia?
Oral Questions


GOVERNMENT ADMINISTRATION
Mr. Gilles Caouette (Temiscamingue):: Mr. Speaker, my question is directed to the Secretary of State.
Is it his department's policy to decentralize its offices concerned with provincial administration, much as it is in the various other federal departments?


Hon. John Roberts (Secretary of State):: Yes, Mr. Speaker, that is our policy, and it is currently being implemented.


Gilles Caouette: Mr. Speaker, I would like to ask a supplementary question.
Since the Department of the Secretary of State has announced probable decentralization in two Ontario regions, namely Hamilton and Sudbury, can the minister explain why, contrary to what is happening in Ontario, and despite this decentralization policy, there are reports, in Quebec, of closing offices in Rouyn-Noranda, Sherbrooke and Trois-Rivieres?


John (Moody) Roberts: Mr. Speaker, I am not quite sure I understood the first part of the hon. member's question. I will take his representations as notice and answer him directly.


FINANCE
Hon. E. F. Whelan (Minister of Agriculture):: Mr. Speaker, any change in the market share quota is to be decided by the members of that committee which is made up of members from all the provinces participating in the dairy program in Canada and not just the dairy commission or the Minister of Agriculture. It would be decided by that group.


Alexander Bell Patterson: Mr. Speaker, in view of the fact that the directors of the Fraser Valley Milk Producers' Association are taking under consideration the advisability of withdrawing from the national program, would the minister make it a matter of personal concern and bring it to the attention of the committee in order that some remedy might be found for the problem?


Eugene Whelan: Mr. Speaker, I am sure the committee is very much aware of the problem, and I am sure the Fraser Valley producers are very much aware of the economic loss they would suffer if they withdrew.


Mr. Sinclair Stevens (York-Simcoe):: Mr. Speaker, my question is for the Minister of Finance and it is very simple. Could the minister indicate why the g.n.p. figures for the first quarter of this year have been delayed again? It was anticipated they would be released today. Why are they being delayed?


Joseph Jacques Jean Chrétien: Mr. Speaker, those figures are produced by Statistics Canada, which is an independent organization that does not come under my responsibility.


Sinclair McKnight Stevens: Mr. Speaker, I put the following question to the minister. Does he believe that his April 10 budget estimate of real growth in the economy of approximately 5 per cent is still on target, or is it anticipated there will be less growth, or more growth?


Joseph Jacques Jean Chrétien: Mr. Speaker, when I have a statement to make about that, I will make it. So far, 1 have not changed my estimate that the growth in the Canadian economy will be close to 5 per cent.
8004 S-46

June 19, 1978
Oral Questions FISHERIES


CANADA-U.S. AGREEMENT ON FISHERIES AND BOUNDARIES
Donald W. Munro: Mr. Speaker, my question is directed to the Minister of Fisheries: it concerns the negotiations which will resume today on the bilateral agreement. The American negotiator, in a statement which was released, said he felt the earliest feasible resumption of reciprocal fishing would improve the prospects of reaching a long-term agreement, which is what they are attempting to do. The statement goes on to say that within the next couple of days it is expected that on the American side the interim agreement will be ratified. I ask the minister whether, in those circumstances, reciprocal fishing will be resumed.


Hon. Romeo LeBlanc (Minister of Fisheries and the Environment):: Mr. Speaker, we have made it clear that local arrangements would be simplified if the agreement were ratified by the United States Congress. My colleague, the Secretary of State for External Affairs, and I have also made it clear that these current negotiations are not intended to restore the suspended 1978 agreement, but are to look at a long-term arrangement and especially at mechanisms to arbitrate interpretations or disputes of the type that led to this suspension. If the American negotiators have some proposals to make, we will examine them very carefully. The negotiations are not for resumption of the 1978 agreement, but for long-term agreements.


Donald W. Munro: Mr. Speaker, is the minister saying that continuation of the present status, where Canadian fishermen may not fish in American waters and American fishermen may not fish in Canadian waters, will assist in the conclusion of a long-term agreement?


Roméo LeBlanc: Mr. Speaker, 1 believe it might help people to reflect seriously on the need for a long-term and permanent agreement with mechanisms to arbitrate disputes.


CONSIDERATION OF MINERAL RIGHTS IN FISHERIES' NEGOTIATIONS
Mr. Lloyd R. Crouse (South Shore):: 
INDIAN AFFAIRS
Mr. Cecil Smith (Churchill):: Mr. Speaker, my question was to the Minister of Indian Affairs and Northern Development, but in his absence I will direct it to his parliamentary secretary. On June 9, the chief and council of the Oxford House band of Indians ordered the school on their reserve closed to its 370 students. This action was taken to prevent possible injury of students who travel by school bus over ungravelled roads which are in a deplorable and almost impassable condition. I ask the parliamentary secretary, what action has been taken over the past ten days to ensure that the roads will be repaired and the 370 students will be able to complete their term?


Mr. Ross Milne (Parliamentary Secretary to Minister of Indian Affairs and Northern Development):: Mr. Speaker, the House will remember that the hon. member raised this issue last Friday. Following his intervention, I asked the department for a report. I am informed that the road is not an issue. Last year, over $50,000 was allocated for the improvement of the road, and it is in very good shape.
There is a secondary issue relating to a contractor who took substantial amounts of equipment into the reserve, which is in an isolated location-as the hon. member well knows-over ice and snow, and with the difficulty of removing it he has lobbied with the band for some $750,000 for training within the reserve. We do not have this kind of money, and we do not intend to approve that kind of allocation when there is similar equipment owned by Indian people which could be used for this purpose if, indeed, there is a need. I think this matter should be concluded by an appeal from both sides of the House for the children to return to school.


Some hon. members:: Hear, hear!


Cecil Morris Smith: Mr. Speaker, I understand that $50,000 was provided, but I ask the parliamentary secretary what the people are supposed to use to repair the roads. In Oxford House, the band has only shovels and wheelbarrows for road repair. Will the department look into this matter?


William Ross Milne: Yes, Mr. Speaker, we will satisfy ourselves on that point. I was under the impression that the Indian band made representations for the $50,000 so they could work on the roads themselves. This money was to purchase and haul gravel. I thought allocation of the $50,000 was in keeping with their request.


IMMIGRATION
Mr. Andrew Brewin (Greenwood):: Mr. Speaker, my question is addressed to the Minister of Employment and Immigration. A member of the Bermudian government complained to
June 19, 1978

delegates at a Commonwealth Parliamentary Association conference that certain Bermudians coming to Canada as visitors were detained for a number of hours by immigration authorities and deported.
Quite apart from individual cases, is the minister aware that cases of discrimination are all too common at certain airports, such as Toronto, and cause deep resentment among members of the Commonwealth and Caribbean countries, contrary to the policy of parliament and the department's own policy? Will the department take active steps to ensure that immigration officials are adequately acquainted with Canadian policy against discrimination on the grounds of race?


Jack Sydney George (Bud) Cullen: Mr. Speaker, my deputy minister and 1 myself have visited the airports to indicate the government's policy in this regard. I am satisfied that there is no discrimination. That does not mean people are not going to cry discrimination every time there is a finding against them.
As far as the individual cases are concerned in which the hon. member says he is not interested, these people came in as visitors, one of them had a criminal record which he freely admitted and was put in a detention centre until transportation back to his home could be found; the other individual came here as a visitor and did not have a penny in her pocket or anyone to contact in Canada-hardly a bona fide visitor. If the individual who made the criticism had taken the time to contact our office and find out what the facts were, we would have made that particular statement.


Francis Andrew Brewin: Mr. Speaker, may I say to the minister, in passing, that 1 was not asking about individual cases; I was asking about a practice which 1 know to be common and which he should look into.
My supplementary question is this: Has the minister or the government received a request from the high commissioner of the United Nations for refugees for Canada to accept a larger quota of political refugees, as distinguished from economic refugees, a matter which I think he discussed with the hon. member for Provencher? Will the government take positive action with respect to the commissioner's request, especially in light of the rapid and substantial decline in the flow of immigrants to Canada?


Jack Sydney George (Bud) Cullen: Mr. Speaker, I want to dissociate myself from the comments made by the hon. member's saying that he is personally familiar with discrimination at various airports or any particular one. If he has specific cases, of course I want to root them out and find out about them. However, to make a blanket condemnation is a disservice to people who have a very tough job to do at our borders. When the answer sometimes comes back no and we get the criticism that it is because of race, I check into those cases. I will be happy to look into any which the hon. member has to raise.
With regard to taking prisoners, in so far as Chile is concerned we had 100 political prisoners and their families.
Privilege-Mr. Dinsdale
We doubled that quota. We have also indicated that in so far as Brazil is concerned we will do what we can in that area, taking at least 100 prisoners and their families for starters. That is being negotiated by the United Nations high commissioner for refugees in co-operation with us and other countries.


PRIVILEGE
Mr. Speaker:: I indicated last week that I would endeavour to rule today on two outstanding questions of privilege, the first raised by the hon. member for Brandon-Souris (Mr. Dinsdale) on June 8 relating to the late tabling of the Postmaster General's annual report.
At the time the hon. member raised the question, he made certain other complaints concerning the alleged illegal increases in postal rates and the lack of an adequate number of copies of the annual report for use in committee, procedures followed in committee for examining the estimates of the Post Office, and the making of an announcement outside the House concerning the creation of a committee to examine the advisability of transforming the Post Office into a Crown corporation. The hon. member made an argument that this series of complaints, taken in total, constituted a contempt of the House. The minister replied to those complaints on Wednesday, June 14, 1978.
Members will be aware, however, that in our practice the Chair has never allowed itself to be drawn into committee proceedings. Therefore, the procedures followed for examining estimates and the number of copies of documents available in committee are matters to be determined by the committee.
Similarly, there have been other occasions when members have complained that certain announcements ought to be made in the House rather than outside, and again the Chair has ruled consistently that is not a matter which can be determined by the Chair. These complaints have therefore been treated as grievances rather than as breaches of privilege.
The hon. member also alleges the government acted illegally in the manner in which postal rates have been increased. Hon. members will be aware that I have a duty to decide questions of order, not of law, and furthermore, 1 understand that this issue is now before the courts. In my opinion, therefore, it is an issue to be settled by the courts, and the Chair should not intervene.
That leaves us with the main issue of the hon. member's complaint, namely, the late tabling of the report of the Canada Post Office for the fiscal year ended March 31, 1977. Again, however, 1 feel that the hon. member is raising a grievance rather than a question of privilege. I do not see how, under the guise of privilege, the Chair can be drawn into determining a question of law. I would, in this connection, refer hon. members to a ruling of my predecessor on a related matter.
6526

June 19, 1978
The Constitution
On June 27, 1972, the then hon. member for Wellington complained of the circumstances connected with the tabling of a report prepared by the National Harbours Board. He alleged that the procedure followed did not conform with the law or the Standing Orders. The Speaker ruled that he might have a grievance, but he had not established a case for priority of debate under privilege. With respect, 1 feel that this matter cannot be accepted under the definition of privilege.


MR. ANDRE-RESEARCH AND DEVELOPMENT-MINISTER'S STATEMENT
[Stage Direction]
Mir. Speaker: Mr. Speaker, on June 8, 1978, the hon. member for Calgary Centre (Mr. Andre) raised a question of privilege in which he alleged that certain figures published in two documents tabled in the House by the Minister of State for Science and Technology (Mr. Buchanan) contained data that "are not fact and are not accurate."
He complained specifically of documents entitled "Research and Development in Canada-Discussion Paper" and "Measures to Strengthen and Encourage Research and Development in Canada."
In his reply on June 15, 1978, the minister acknowledged, and I quote:
Due to an oversight, the footnote to the table in my statement was not amended when the original data, from an August, 1977 publication, were changed to reflect the latest information available.
That having been said, however, 1 can still come to no other conclusion than that I reached initially during the course of the argument by the hon. member for Calgary Centre, that is, that the matter is not one of privilege, but clearly and fundamentally a dispute as to facts and to the interpretation of those facts and statements and, therefore, ought not to be accepted as a matter of privilege.


Pierre Elliott Trudeau: Mr. Speaker, pursuant to Standing Order 42(2), I would like to table in both officical languages, my correspondence, in fact letters that I wrote to the premiers of the various provinces concerning the implementation of the proposals made last week in the white paper tabled here last Monday.


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. Yvon Pinard (Parliamentary Secretary to President of Privy Council):: Mr. Speaker, the following questions will be answered today: 128, 707, 779, 992, 998 and 1,523.
1 request, Mr. Speaker, that the remaining questions be allowed to stand.


Mr. Herbert: Are there any persons who held positions as Deputy Ministers or Assistant Deputy Ministers in the past ten years presently working for Crown corporations and, if so (a) what are their names (b) what positions do they hold (c) on what date were they appointed?


Yvon Pinard: In so far as Atomic Energy Control Board is concerned: (a) Dr. A. T. Prince, (b) President (c) February 20, 1975.
In so far as the Canadian Wheat Board is concerned: (a) Mr. Esmond Gervais, (b) Chief commissioner, (c) October 1, 1977.
In so far as the Canadian Broadcasting Corporation is concerned: (a) Mr. A. W. Johnson, (b) President, (c) August 1, 1975. (a) Mr. Arthur C. Boughner, (b) Vice-president, finance, (c) April 1, 1977.
In so far as the Federal Business Development Bank is concerned: (a) Mr. G. A. Lavigueur, (b) Executive vice-president, (c) March 1, 1977.
In so far as Petro-Canada is concerned: (a) Mr. W. H. Hopper, (b) President and chief executive officer, (c) July 15, 1977.
In so far as Loto Canada is concerned: (a) Mr. Guy Cousineau, (b) President, (c) June 8, 1976.
In so far as the St. Lawrence Seaway Authority is concerned: (a) Mr. Paul D. Normandeau, (b) President, (c) October 25, 1973.
In so far as the Export Development Corporation is concerned: (a) John A. MacDonald, (b) Chairman and president, (c) May 1, 1975.
In so far as the other Proprietary Crown Corporations are concerned: None.


Mr. Howie: Since April 1, 1976, what amount was paid by the Department of Justice to outside lawyers practising in Fredericton, New Brunswick and to whom were such payments made?


Mr. Roger Young (Parliamentary Secretary to Minister of Justice):: In so far as the legal agents of the Minister of Justice are concerned for the period from April 1, 1976 to November
June 19, 1978

16, 1977: Name and Amount: Bryden, John, $220.00; Cochrane, Richard B. 1,308.75; Hoyt, W. L. 39,134.35; Hughes, David C. 1,072.00; Jackson, Leslie 1,764.88; Kenny, Robert
I,	339.25; McKenna, Hubert 11,315.39; McNair, John C. 6,407.97; MacVoy, J. 409.80; Malone, Brian 62,088.54; Neil,
J.	Brain 1,410.00; Olmstead, David 2,455.46; Sargeant, Charles 1,409.00.


Mr. Cossitt: 1.	What are the details of the case which the government brought against Mr. Antonio Gouveia, an employee of the Unemployment Insurance Commission in Toronto, and what are the results of any charges made?
2.	Was the matter appealed to Mr. Edward B. Jolliffe, Q.C., Deputy Chairman of the Public Service Staff Relations Board and, if so, did (a) he state that "such a cavalier attitude is not impressive" in reference to the attitude of the Crown (b) he find that Mr. Gouveia was persecuted by his superiors (c) he report that the case represented a classic example of how a disciplinary problem should not be dealt with and did he refer to "the inappropriate formulation of five charges and the inevitable failure to prove four of them" (d) his report state that Mr. Gouveia's fiance was a victim of harassment and "what can only be described as a smear campaign"?
3.	Does the case represent government policy insofar as treatment of UIC personnel is concerned and, if not, what steps will be taken to change the situation?


Jack Sydney George (Bud) Cullen: 1 and 2. See Beauchesne's Rules and Forms of the House of Commons of Canada, citation 171 (ff).
3. It was the policy of the UIC and continues to be the policy of the CEIC that its employees are responsible for administering the legislation, regulations and policies with probity, for serving the public without prejudice or preference, and for protecting public moneys. Employees who willfully contravene this policy are subject to disciplinary action and, in some cases, prosecution. Although adjudicator Jolliffe, in his decision of October 11, 1977, was critical of the handling of Mr. Gouveia's case, his imposition of a two-month suspension without pay indicates that he found Mr. Gouveia to have committed a very serious offence. Adjudicator Jolliffe's criticism, however, has prompted the CEIC to investigate the handling of the Gouveia case. The results of this investigation will determine the nature and extent of the corrective action to be taken.


Mr. MacKay: What was the total amount paid for outside legal services for the prosecution of the Irving interests under the combines act and to whom was it paid?


Hon. Warren Allmand (Minister of Consumer and Corporate Affairs):: The total amount paid for outside legal services for the prosecution of the Irving interests under the Combines Investigation Act is as follows: William L. Hoyt, Q.C. Hoyt, Mockler, Allen, Dixon & Godin, Fredericton, N.B. (Crown Counsel); Legal Fees $154,751.50; Disbursements 31,580.34; Total, $186,331.84.
Point of Order-Mr. Cossitt


Mr. Howie: Since September 1, 1976, did the Department of Consumer and Corporate Affairs pay travel or other expenses to or for non-departmental persons or firms in New Brunswick?


Mr. Alan G. Martin (Parliamentary Secretary to Minister of Consumer and Corporate Affairs):: Yes: Hoyt Mockler Allen & Dixon, Fredericton, N.B. $3,981.75; Community Planning Association of Canada, Saint John, N.B. $822.20.


Mr. Mazankowski: 1.	Has the government made any grants, loans or given any kind of assistance to the Ontario Union of Tenants, James House Crescent, Rexdalc, Ontario and, if so (a) what was the purpose of the grant, loan or assistance (b) under which legislative authority or otherwise was any grant, loan or assistance issued (c) in the case of a loan, what is the amount outstanding, if any?
2.	Has the government made any grants, loans or given any kind of assistance to the Council of Economic Development for Low Income, James House Crescent, Rexdale, Ontario and, if so (a) what was the purpose of the grant, loan or assistance (b) under which legislative authority or otherwise was any grant, loan or assistance issued (c) in the case of a loan, what is the amount outstanding, if any?
3.	What are the names and addresses of the shareholders of the (a) Ontario Union of Tenants, James House Crescent, Rexdale, Ontario (b) Council of Economic Development for Low Income, James House Crescent, Rexdale, Ontario?


John (Moody) Roberts: 1. Nil.
2	and 3. Not applicable.


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



POINTS OF ORDER


Mr. Tom Cossitt (Leeds):: Mr. Speaker, I rise on a point of order connected with my order paper question No. 347 answered by the Prime Mnister (Mr. Trudeau) on June 15, 1978 page 6442 of Hansard. In order to state my point of order clearly, the House and yourself, sir, should be aware of the nature of question No. 347 and its answer and, therefore, 1 shall read both quickly, as follows:
1.	Did the Prime Minister during a recent visit to London and the western Ontario area in the course of a speech state that Canadians were too concerned with summer homes in the country and two cars in the yard and, if so (a) what were the exact words he used (b) in what location did he make the statement and to what audience (c) is the Prime Minister aware that radio news broadcasts carried voice clips of such a statement?
2.	Has the government adopted a policy to close the Prime Minister's summer residence at Harrington Lake as a restraint and economy measure and (a) if so, on what date (b) if not, for what reason?
3.	Has the government adopted a policy to sell one of the two $85,000 Cadillacs used by the Prime Minister as a restraint and economy measure and (a) if so, on what date (b) if not, for what reason?

June 19, 1978
Point of Order-Mr. Cossitt
The answer by the Prime Minister was:
See Beauchesne's Parliamentary Rules and Forms, Fourth Edition, Citation No. 171 (a), (e), (h), (1) and (g).
It is undoubtely, it seems to me, Mr. Speaker, axiomatic that any question accepted for appearance on the order paper has been approved, and therefore bears the same standing as if it were an oral question asked in this House. All hon. members, I am sure, have experienced representations from the officers at the table declining to accept a question for the order paper on the grounds that it is in some way out of order, or advising that the wording must be changed to make it acceptable. On all such occasions, I believe I am quite correct in stating that Your Honour, as would be expected, is the final judge, so to speak, as to acceptability or otherwise of the question, if a member disagrees with the ruling from the table officials.
First, therefore, I am contending that an accepted order paper question and an accepted oral question have the same status in so far as acceptability before the House is concerned, in that the ultimate authority of the Speaker has been applied to such acceptance.
Referring specifically again to question No. 347, it was obviously accepted for the order paper in the usual manner. I quite realize the Prime Minister, by the rules of the House, is not obliged to give any answer to a question. However, in this case he has not just given an answer but he has taken it upon himself, Mr. Speaker, to rule my question out of order by using Beauchesne's citations to do so.
In taking such a step the Prime Minister has therefore usurped the powers of the Speaker of the House of Commons. The Prime Minister may be, in his opinion, many things, but he is not the Speaker of the House of Commons, and his interpretation of a Beauchesne's citation therefore has absolutely no standing whatsoever unless Your Honour confirms it after hearing argument from any members who wish to present a case.
Certainly it cannot seriously be contended that the Table officers cannot possibly examine in detail all submitted written questions, because that is the actual procedure we presently follow. Nor can it be argued that the Prime Minister, whatever views he may hold, is permitted to decide arbitrarily that a question is out of order. Only the Speaker of the House of Commons has such authority, I would think.
In my view, Mr. Speaker, I would respectfully submit that question No. 347, and any other questions ruled out of order by the Prime Minister, a minister or a parliamentary secretary in this session of parliament, on the basis of a citation in Beauchesne should be restored to the order paper forthwith, if table officials accept a question which subsequently is ruled out of order by the Prime Minister or by a member of the government, as it now stands Table officials refuse to accept the question again for the order paper because they naturally claim it is a question which has already been asked. Thus we have the ridiculous situation in which Table officials are
confirming a ruling by someone who is not entitled to make a ruling in the first place.
In no circumstances can I find any precedent for this unbelievable situation. I f it were to be accepted, then any member of the House would presumably have the same right as the Prime Minister; supposedly he would be able simply to rise and cite a quotation from Beauchesne and get it accepted as a ruling binding on all other members, on the officers of the Table, and even upon Your Honour.
In conclusion, I respectfully submit that the use of a Beauchesne citation by the government is not conclusive but is, rather, just one side of a procedural dispute. 1 submit that, as in any other procedural argument, both sides must be heard and a ruling then made by the Speaker. May I finally add that Beauchesne's citation 171 is archaic and cannot be used indiscriminately without reference to precedent and changes in rules and practices which have come into force since 1958?


Mr. Speaker:: The hon. member raises a matter which we will have to consider. He has described the practice correctly-we do examine a question for its acceptability and we do pass judgment on it. There are a great many questions on the order paper and we try to give each one a detailed examination. Possibly we may not have correctly interpreted the precedents in respect to the particular question referred to, though I do not recall it precisely. It would seem to me that in all likelihood the best way to make a test would be for the hon. member to refile the question, giving the table the opportunity to examine it and to see whether there are any procedural grounds upon which to reject it.
Even in the oral question period to which the hon. member has alluded, it is not uncommon that though the Chair may allow a question to go unchallenged, a minister may rise in his place and resort to a defence of some sort which the Chair has not called upon. This may occur particularly with respect to a matter which may be sub judice, or to areas of privileged information about which the Chair has not passed upon. In some cases-in fact this afternoon-the Prime Minister (Mr. Trudeau) made reference to a question being hypothetical in nature. Again, this might be based upon information which the Chair did not possess.
It may often happen that a minister will use this kind of answer, and since the Chair has not procedural grounds upon which to compel an answer, it is impossible for the Chair to say that an answer given on procedural grounds is not, in fact, an answer. However, if such a matter becomes an issue, as is the case now, then the right way to test it at the time, in the oral question period, would be to ask the Chair to rule whether it is hypothetical or not. In these circumstances equally, in the case of a written question, the way to test it would be to say, as the hon. member has said, I have received a reply which begs the question on procedural grounds. Are the procedural grounds correct or are they not?" Then we can make a determination and decide whether or not the question should be refiled.

June 19, 1978



DELAY IN ANSWERING QUESTION NO. 1,609

['Mr. Speaker, I rise concerning a question of privilege which I may be raising on Thursday or Friday afternoon. Your Honour will see from pages 6504 and 6505 of Hansard that the Minister of State (Small Business) (Mr. Abbott) made several comments reflecting on my ability to function as a member of parliament, and I believe 1 have a legitimate question of privilege, one I would propose to raise. I will give Your Honour due notice in the usual way should I decide to raise it on Thursday when the Minister of State for Small Business will, I am informed, be back in the House.\nIncome Tax Act']
Joseph Adrien Henri Lambert: Mr. Speaker, I rise on a point of order. As I advised the Parliamentary Secretary to President of Privy Council (Mr. Pinard), my point of order deals with question No. 1,609 which appears on page 133 of the order paper for Monday, June 19, 1978, and which was put on it on May 5. Mr. Speaker, as this question should have been replied to as quickly as possible, in view of the existing dispute with regard to transport which opposes Quebec milk producers and the federal Department of Transport, which subsidizes part of transportation costs of the producers living east of Levis in the province of Quebec; as this dispute does not seem to be close to a settlement, the producers met me again over the weekend and asked me the total amount of subsidies paid to the milk producers of that area with a view to finding an equitable solution with regard to the producers of other parts of the province of Quebec. Seeing that matter is extremely important, 1 should like to ask most sincerely and humbly if it might not be possible to get a reply as soon as possible to that question so that we can give an answer to those two categories of producers and so help them solve their problems as quickly as possible.


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


Some hon. Members:: Agreed.



Sinclair McKnight Stevens: Mr. Speaker, I rise concerning a question of privilege which I may be raising on Thursday or Friday afternoon. Your Honour will see from pages 6504 and 6505 of Hansard that the Minister of State (Small Business) (Mr. Abbott) made several comments reflecting on my ability to function as a member of parliament, and I believe 1 have a legitimate question of privilege, one I would propose to raise. I will give Your Honour due notice in the usual way should I decide to raise it on Thursday when the Minister of State for Small Business will, I am informed, be back in the House.
Income Tax Act



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Friday, June 16, consideration in committee of the whole of Bill C-56, to amend the statute law relating to income tax to authorize payments related to provincial sales tax reductions-Mr. Chretien-Mr. Laniel in the chair.
The Chairman:: When the committee rose on Friday, June 16, 1978, clauses 6, 17 and 30 were allowed to stand, and clause 32 was before the committee.
On clause 32-"Qualifying taxable dividends paid."


Gérald Laniel: Is clause 32 agreed to?


Sinclair McKnight Stevens: Mr. Chairman, I rise on a point of order. Your Honour will recall that on Friday afternoon we moved to clause 31, which we passed, and we are presently on clause 32. However, I felt that it was at least implied that clause 30 would be returned to, pending a ruling on a procedural question regarding the amendment put by my colleague, the hon. member for Edmonton West. I was wondering if that is the understanding. If we deal now with clause 32, will we be returning to clause 30 to hear Your Honour's ruling and then, presumably, to deal with clause 30 as the committee sees fit?


Stanley Howard Knowles: Mr. Chairman, may 1 say a word on the point of order which has been raised by the hon. member for York-Simcoe? When we agreed to stand clause 30 on Friday, which was done by unanimous consent, there was a request that we go back to some of the earlier clauses which had been stood. However, Your Honour ruled that we could not go back except by unanimous consent. I assume that that ruling stands.
We have gone forward to clause 32, and I think we should now go on to some of the other clauses. I say that, quite frankly, because if we go back to clause 30 we may be on it all day and never get to some of the others. I for one-and I am sure other hon. members in the House feel the same-would like to get to clause 34, which deal with registered retirement savings plans. 1 say, by way of indicating why, that there are many representations to us from credit unions about taxation at death of registered retirement savings plan funds, and 1 would like to get to that. My fear, if we go back to clause 30, is that we will be there all day, so 1 hope we will continue clause 32 and move on to clauses 33 and 34. I will not insist that we go through all 59 clauses, but I certainly want to get to clause 34 before we go back to clause 30.

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Yvon Pinard: Mr. Chairman, today there is much sense in what the hon. member for Winnipeg North Centre is saying. I agree that if we are to be consequent with the ruling you made on Friday to defer examination of certain clauses in the bill and to revert to it only with unanimous consent, unless we have examined the following clauses, if we are to be consequent with that ruling, I feel we should follow the route indicated by the hon. member for Winnipeg North Centre.


Ramon John Hnatyshyn: Mr. Chairman, 1 think you will recall the circumstances under which this matter was put over. 1 do not think there is any question but that the matter was set aside for the benefit of Your Honour so that Your Honour could have an opportunity to consider the procedural aspect of the amendment and so that we could return to this matter, which is the most important provision in the bill, before the terms of closure take effect. 1 think the implication was clear that Your Honour would have an opportunity, as Your Honour indicated, to consider the matter over the weekend, to come back to this House at the first opportunity, and to give us the basis of your decision as to whether the amendment should be allowed to go forward. In any event, eventually we would then be able to revert to that particular clause so that we could have an opportunity to discuss it.
We are in a very peculiar situation, and any other interpretation of that understanding or inference on the basis of our discussions last Friday as to the basis upon which this government and this Minister of Finance operate would put us into a most unusual situation. We would be in a situation whereby, whenever Your Honour had any problem which had to be considered at length, we simply would not be in a position to co-operate with the Chair or to allow the Chair a reasonable opportunity to carry on because we would know that because the government imposes time allocation on almost every financial bill which comes before the House, that would effectively mean that we would not get back to a particular provision.
The only point I make is that I do not think on a Monday the Minister of Finance would want to be unreasonable, but he knows that this provision is crucial and important. I agree with the hon. member for Winnipeg North Centre. I too have received many representations from credit unions and cooperative societies in my province with respect to this matter, but the minister and the parliamentary secretary should have some common sense and not preclude us from having a further discussion of this particular provision. It seems to me that the minister does a disservice to the performance of this parliament if he takes this inflexible and intransigent stand, which would deprive us of further discussion of this important and key provision. 1 know the minister feels terribly uneasy about this, but this matter should be faced by this parliament.


Joseph Jacques Jean Chrétien: Mr. Chairman, the hon. member is accusing me of doing something I have not done. According to the rules we are on clause 32. The hon. member for Winnipeg North Centre says he wants to discuss other things. It is not I who

conducts the proceedings, and I am being criticized by the hon. member for Saskatoon-Biggar. The other day on television I heard his leader telling the nation that we do not want to discuss RRSPs and other provisions in this bill. The hon. member for Winnipeg North Centre has just proposed that we do that in this House, but who do I see getting up? The hon. member for Saskatoon-Biggar! He says he does not want to talk about RRSPs and so forth, but his own leader was complaining on television last Saturday that we do not have the time to discuss those things. I would rather respect the judgment of the hon. member for Winnipeg North Centre than the judgment of a person who does not even listen to his own boss.
I will abide by the rules of this House, as I always do. I have not said anything so far, and I do not even want to comment, but I think we should respect the wish of the hon. member for Winnipeg North Centre, who wants to discuss a very important item in this bill which needs some explanation. 1 would like to give that explanation to the House and, in so doing, meet the wishes of the Leader of the Opposition, which are not the wishes of his cronies in the House of Commons.


Mr. Railton:: Mr. Chairman, I want to support the opinion of the hon. member for Winnipeg North Centre that we should discuss the provision regarding registered retirement savings plans before this bill is completed. That is very important to many of my constituents. I have one or two letters which I could show Your Honour right now, but the main thing is that this provision be discussed because I believe there is an injustice which might be corrected. 1 am sure the Minister of Finance will do so. The important thing is to discuss the bill clause by clause, and in particular clause 34.


Mr. Lambert (Edmonton West):: Mr. Chairman, I wonder why we have all that hullabaloo. It is very simple; my colleague from York-Simcoe asked you if you were ready to rule on my amendment. You did yourself ask the House to defer the debate on clause 30 in order to have time to consider my amendment. So let us come back to my amendment. That is what was deferred. Since your ruling is ready, why do you not make it known to us so we can carry on our discussion on clause 30?
The hon. member for Bonaventure-Iles-de-la-Madeleine is going on an adventure when he talks like that. So, Mr. Chairman, if possible I would like to hear your ruling on my amendment now so that we can consider it at this time.


Stanley Howard Knowles: Mr. Chairman, I wonder if I may make a suggestion which might be a bit of a compromise. I suggest that we consent to Your Honour's suggestion that you now give the ruling on the amendment to clause 30 so that we will know whether that amendment is before us, but that we then go back to clauses 32, 33, and 34. I am quite prepared, after clause 34 has been disposed of, to go back to the earlier clauses, but I remind hon. members on this
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side of the House that we are under closure, and if we go back to clause 30 now, the chances are we will be on it all day and never get to anything else. I do not think that is a responsible way to operate.


Gérald Laniel: Order, please. This is not necessarily a question of being prisoner to my decision but a question of being prisoner to our rules and precedents. I refer the hon. member to citation 401 at page 283 of Beauchesne's fourth edition, which reads as follows:
The consideration of a clause may, on motion made, be postponed, but the motion may not be made if the clause has been amended. A postponed clause is, in the absence of an order to the contrary, considered after the other clauses of the bill have been disposed of and before new clauses, if any, are brought up.
So this citation answers both points. If I were to accept the suggestion of the hon. member for Winnipeg North Centre and if my ruling were to accept the amendment, clause 30 could not be postponed, if I interpret the situation correctly. I am at the disposal of the committee. If I were in the chair and acting as Mr. Speaker, the situation would be different; I could delay orders of the day. But we are now in committee of the whole and we have before us consideration of clause 32, so my only alternative is to obtain unanimous consent of the committee to allow me to give a ruling on clause 30.
Right now we are on clause 32. My suggestion to the committee is for representatives of the parties to get together and try to seek agreement as to the time at which I could give my ruling, but at the same time hon. members will have to take into consideration whatever effect this ruling might have after it is made.

Mir. Pinard: Mr. Chairman, I want to say that there are 59 clauses in this bill, that we have studied only 31 of them, of which three are standing, so that only 28 clauses have been approved up to now. So I think the wisest way to proceed is the one suggested by Beauchesne himself, to study the following clauses, and if the opposition is really interested in going back to clause 30 which they have been discussing here for months, we will do it when the time comes, and the opposition will just have to go faster in passing the remaining clauses. We are now at clause 32 and we do want to study clauses 32, 33, 34 and so on.


Gérald Laniel: Obviously, even if this has nothing to do with the Chair, I must say that there is a constraint of limitation of the debate in committee. I hope hon. members will also keep that in mind.


Sinclair McKnight Stevens: Mr. Chairman, I was going to remind members of the committee of just what you have stated, that we are under a time allocation. 1 think there is a certain concern that we might not have sufficient time to consider other clauses, such as the ones dealing with registered retirement savings. 1
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would suggest that we take up your suggestion of trying to have the parties work out some solution to this.
1 can speak for my party when 1 say that we are not looking for further prolonged debate on clause 30. We feel basically that the amendment to it should be considered, and so should the clause itself, but probably from our standpoint not much more time than half an hour would be needed to dispose of both the amendment and clause 30, and we could then go on to clauses 31, 32, and so on. I say this because surely the committee will agree that the most controversial clause in this entire bill is clause 30, and if, because of closure, we are not even able to dispose of clause 30 in committee of the whole, it will be a most strange situation. I suggest that we not forget that when we were on clause 1 the Minister of Finance refused to answer questions on clause 30 beyond a certain point. Here we are in the ridiculous and ludicrous situation in which, on Friday, having finally reached clause 30 to which an amendment was proposed, on which a ruling is to be made as to whether or not it is admissible, the committee might well have to dispose of the bill because of closure without having at all considered clause 30.


Joseph Jacques Jean Chrétien: Mr. Chairman, I think the hon. member has said something that needs to be corrected. When we were on clause 1, 1 entertained and replied to many questions on clause 30. You might remember, Mr. Chairman, you rendered a decision that I should answer, if 1 wanted to, questions on any of the clauses even though we were on clause 1, and I answered many questions on clause 30. Some which were too specific and not confined to the ruling of the Chair I did not answer, but I took a lot of time replying to questions on clause 30, and we spent practically all day Friday considering clause 30.
If we had not come across an amendment on which the Chair was to give a ruling, we would still be on clause 30 today. Members of the opposition can only blame themselves for the situation in which they find themselves today. Today we should go on to consideration of clauses 32, 33, and 34, and the hon. member for Winnipeg North Centre stated that he had some questions on clause 34, and so does the hon. member for Welland.
I am surprised that hon. members are at last willing to collaborate with us and come to some agreement, after 22 days of trying to come to an agreement on this. We have had to impose time allocation because opposition members have not agreed to anything, but now because they find themselves in a difficult procedural situation, they want us to bail them out. If they want to, we are willing to deal with them.


Some hon. Members:: Oh, oh!


Sinclair McKnight Stevens: You bail us out?


Thomas Gordon Towers: Mr. Chairman, I rise on a point of order. First, let me say that if the hon. member for Welland wanted to make sure that he had an opportunity to speak on clause 34, the easiest thing he could have done was to ask his leader to revoke closure and thus allow ample time for discussion of the

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bill. One of the things I deeply resent, coming as I do from the province of Alberta, is the disregard by this government of the people of that province, because this point is of fundamental importance to the residents of Alberta, and for this bill to be passed not knowing whether or not the amendment is acceptable is abhorrent to people in Alberta. 1 hope, sir, that you will extend that courtesy to the residents of Alberta and at least rule on this amendment, thus affording us the opportunity of knowing exactly whether or not the amendment is acceptable.


Gérald Laniel: I appreciate the invitation of the hon. member and I am ready to give my ruling, but according to the rules I would have to go back to consideration of clause 30, which can only be done by unanimous consent, and there does not seem to be consent. Is there consent to reverting to clause 30?


Some hon. Members:: Agreed.


Some hon. Members:: No.


Gérald Laniel: There does not seem to be consent.


Mr. Ellis:: Mr. Chairman, I rise to speak on clause 32, but if there are more arguments, I will yield.


Stanley Howard Knowles: Mr. Chairman, i rise on a point of order. May I suggest that we give unanimous consent to reverting to clause 30 at five o'clock? What is wrong with that?


Lincoln MacCauley Alexander: The Liberals are sure to find something wrong with it.


Mr. Baker (Grenville-Carleton):: Mr. Chairman, in keeping with the representation that was made a few moments ago by the hon. member for York-Simcoe, and applying it to what has now been said by the hon. member for Winnipeg North Centre, I think we should ensure that the balance of the clauses are dealt with and that there be ample time also, within the limited time created by the fact that we are now under closure, to have the matter dealt with. I hope you will put the question to see whether there is unanimous consent to deal with it in that way. I think it would solve most difficulties and allow the committee to proceed with other matters as well as deal with clause 30, and also give you sufficient time with respect to your ruling, which might be helpful.


Mr. MacFarlane:: Mr. Chairman, 1 wonder whether opposition members could give us any indication of the time which we would be spending on debate of clause 30. Will we be stuck on clause 30 and have no opportunity to revert to the other clauses on which some of us wish to speak? We recognize the importance of clause 30, but there are other clauses on which some of us might want to speak, and if we revert to clause 30 at five o'clock is there any kind of agreement that we will complete consideration of that clause in time to allow us to proceed to other clauses?


Walter David Baker: Mr. Chairman, I hope the hon. member for Winnipeg North Centre agrees with what I am about to say. The suggestion of the hon. member for York-Simcoe was not an idle one. Consideration of that clause would not extend beyond 30 minutes. Perhaps we can deal with it commencing at five o'clock.


Joseph Jacques Jean Chrétien: At this time the parliamentary secretary is talking with the opposition. There is a lot of time remaining between now and five o'clock. We can proceed with the consideration of clauses 32, 33, and 34. If an agreement can be reached, we will go along with it. I cannot change the rules of the House. Hon. members on this side would like an opportunity to ask questions on clauses other than clause 30. We have been already two days in committee on clause 30. Actually 1 do not mind. I am here, in any event. It is easier for me to return to clause 30, because I have dealt with it during the last two months and know it well.


John Raymond Ellis: Mr. Chairman, on clause 32, can the Minister of Finance indicate how long the $750,000 rollup provisions were in effect prior to the April 10 budget?


Joseph Jacques Jean Chrétien: There have been changes from year to year. We started at $200,000 and moved up to $400,000. Now we are at $750,000. I can provide the hon. member with different dates, but I think $750,000 was introduced in the April, 1977, budget. In any event, I can provide the hon. member with an answer later.


John Raymond Ellis: My understanding is that the actual implementation date for the $750,000 rollup was less than a year ago. I have read the details of the debate on Friday afternoon. I notice the rather incriminating comments of the Minister of State for Small Business. Does the Minister of Finance feel that anyone could actually plan a merger when the rules change so quickly? On Friday afternoon there were some rather sarcastic comments about slick operators. I am talking about bona fide companies and firms of chartered accountants which are in excellent standing throughout the country. Are they being accused of slickness because they used rules which were less than a year old when mergers were planned?


Joseph Jacques Jean Chrétien: Dealing with this question, I should like to explain to the hon. member that the $750,000 maximum accumulated profit was granted in 1976, and not 1977. That rule is not being changed at all. In clause 32 we are attempting to block a possible loophole where people in holding companies can multiply the $750,000 by ten, and manage to get $7.5 million out of a corporation before being taxed at the higher rate. We want to prevent people from taking money out of holding companies at the small business rate, which makes no sense when the amount accumulated is up to $7.5 million. We are not changing the $750,000, which was included in the 1976 budget. It is being maintained at that level, but we are attempting to plug a possible loophole right away so that there will be no duplication of that privileged rate through holding companies.
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John Raymond Ellis: Mr. Chairman, I suggest a change is being made. Obviously that is so. This clause is not included for no reason at all. To change the $750,000 rollup on the premise that some companies might take advantage of it seems unreasonable. Why in Heaven's name was it put there in the first place, if companies were not expected to take advantage of it? If the dividend rollup is allowed, there is no suggestion that those dividends can get into the hands of individuals without tax being paid. It merely rolls into the corporation. If the corporation puts those dividends in the hands of individual shareholders, of course they are required to pay taxes on them. If the department did not intend this provision to be used, then it should not have been put in there in the first place, because it misleads any competent company which is attempting to deal with this act.


Joseph Jacques Jean Chrétien: On Friday afternoon I gave lengthy explanations, one in English and one in French. It was to ensure the $750,000 rule applies to small business. This clause is to prevent abuse by people who could form holding companies in order to get more profit at a lower rate than they are entitled to according to the act. Small businesses will have complete freedom to use this provision to the maximum. It was just an attempt to plug a possible loophole.
My explanation on Friday was rather technical. 1 suppose I could read it again, but I advise the hon. member to read it. Small businesses are entitled to have $150,000 of profit in a year at the low rate, up to an accumulated amount of $750,000. There is no problem with that. In theory, the people who invest up to 11 per cent of the shares of a corporation could get an accumulated amount up to $7.5 million at the low rate out of that company. We do not want people to use rules, established for the protection of small business, in order to pay lower rates than they should pay as big corporations.


John Raymond Ellis: 1 read the explanations of the minister in both languages. 1 am sorry the minister does not understand the problem.


Joseph Jacques Jean Chrétien: I do.


John Raymond Ellis: I would not have used the word "technical" with regard to his explanation. I would have used the word "convoluted". It sounds to me as if the minister is attempting to ensure that small companies cannot get together and become big companies. It is tremendous to have various provisions for small businessmen, but I think this is an attempt to prevent small businesses from becoming big businesses. There is nothing wrong with big business.


Joseph Jacques Jean Chrétien: Mr. Chairman, there is nothing wrong with big business, but it should not have the advantage of the same rate of taxes which small business has. That seems to be the only point of difference between the hon. member and myself. We have decided to give a preferential rate of tax to people in small business. When these people go from the small league into the big league, they are required to pay big league tax rather than small. Any company which has achieved major
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league status must abide by the rules and regulations affecting big companies and not small ones.


John Raymond Ellis: I am at a loss to understand where a distinction between big and small companies was made in the original legislation. As I clearly recall, when this $750,000 roll-up to corporations was put into effect there was no restriction as to big or small business, it was for all business. Evidence to support that it was for all businesses lies in the fact that certain varying sized corporations have taken advantage of it. Now we are being told that if a business is too big it cannot take advantage of this. It seems to me that is clearly a discrimination against small businesses growing to be big. I cannot help but think that this particular clause is one that discriminates against and is prejudicial toward the growth of Canadian companies.


Joseph Jacques Jean Chrétien: Mr. Chairman, the rule in respect of $750,000 is a rule which makes a distinction between the small and the big. When you have accumulated more than $750,000 in profit you have changed leagues. You then go to the rate that applies to big business. You can make $150,000 profit per year, up to an accumulative amount of $750,000. When you reach that level in five or ten years, you are taxed at the rate that applies to big corporations.
I think what the hon. member wants is a rate of taxation for all corporations, big or small. We have made a distinction for years between small and big. At the time you have accumulated $750,000 in profit you are no longer in the small league. At that point you are beginning to be a big guy and you have to take the responsibilities of the big guys, and that means you have to pay your share of taxes.


John Raymond Ellis: Mr. Chairman, just to conclude very briefly, the minister made a point a moment ago about trying to save taxes because of the $750,000 limit which puts you into the big league. It seems to me there was a commission report just recently which agreed that perhaps some of those corporate taxes could have been reduced. I am not making a case for that right now. I want to ask the minister one final question. He makes the point that ten companies could in fact roll-up $7.5 million. If nine companies rolling up that much is something too big, and one is too small, is there an area in between of say, two, three or four companies with which the minister might agree?


Joseph Jacques Jean Chrétien: The answer is no.


Arthur Ronald Huntington: Mr. Chairman, I have just a few questions on clause 32. I realize and understand the necessity of plugging a loophole with this clause, a loophole that would greatly extend abuses in respect of the $750,000 allowance. Is the minister aware that the amendment means that shareholders of connected corporations will have to reach an agreement in order that the 25 per cent allowance can apply on an on-going basis to the $750,000 limit? In other words, does he realize that if there is not a complete shareholder agreement that a

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small business, through the lack of ability to get that agreement, will start to lose the benefit of the $750,000 accumulative allowance? There is a definite problem here, and I hope I am explaining it properly.


Joseph Jacques Jean Chrétien: Mr. Chairman, I think that when the shareholders cannot agree, this represents a problem that they must work out among themselves. We cannot intervene at that level of their operations. There are rules and they know the rules. If there is a need for them to agree, then they have to agree. Of course, sometimes when there is a need for agreement like that, one shareholder can use that in order to bargain something for himself. That is always a possibility in what we call free enterprise.


Arthur Ronald Huntington: Mr. Chairman, in his answer the minister has explained quite capably the point I was trying to make. This amendment adds an unbelievable depth of complication to an already complicated measure. For some reason or other the minister seems to think people in small business have unlimited resources of earnings and funds with which to hire the best accountants and lawyers in the land in order to understand this legislation. I suggest that further amendments are needed on this point, and that probably when the next budget is brought forward, no matter which party is in government, it will have to contain such amendments.
I also suggest that the Minister of Finance will have to contact his colleague, the Minister of National Revenue, in order to conduct an extensive advertising campaign, because the people in the small business community will definitely not understand the rules being created by this amendment, in spite of the fact that the minister is plugging a loophole, and fully understand the necessity. I suggest it is for this reason that closure in respect of the previous budget measures and those of this budget does a great disservice to the people of Canada. Because of the limited time, we are leaving unsolved those things in respect of which some of us perhaps might have input and might help to resolve.
Right now the minister is closing the loophole, and I understand the need for that, but he is leaving open wide areas of confusion which require further explanation. These are areas which small businesses, particularly in terms of cost, are not going to be able to understand. This is one of the reasons I speak with some impatience about time allocation in respect of this debate.


Joseph Jacques Jean Chrétien: The hon. member is making a point with which I agree. I did not have to adopt a time allocation only for my own pleasure. If hon. members on the other side had agreed with this hon. member that there were some very important clauses to be dealt with in this bill they would not perhaps have taken fifteen, sixteen, or seventeen days at second reading, allowing only a few days for study in the committee. This is a problem we are now faced with, as a result. We do not have unlimited time in this House of Commons in which to pass legislation. Because it suited the political purposes of some hon. members to drag this bill out in

time, we are now faced with this problem of proceeding on a time allocation. This is not a problem of my creation.
If opposition members had agreed to two or three days debate on second reading, as is normal, we might have used the rest of the time on a clause by clause study. What frustrates me in this regard is the fact that this hon. member is one of a number of members who look at problems with the idea of finding solutions, and some of the things that he has suggested make a lot of sense. I do not have time for prolonged consideration now because I spent all my time listening to speeches at the second reading stage.
I agree with the hon. member that this is a complicated clause and is difficult to understand, but I am quite satisfied it will not create the type of problem for small businesses to which the hon. member has referred. Most small businesses are not associated with holding companies and are not trying to take advantage of this measure. I think that applies to the great majority. What we are doing here is making sure there are not big buys with holding companies who are trying to get the favourable tax rate which applies to the small business. That is the only purpose of this amendment. If this creates the kind of difficulty the hon. member envisages, I will be the first one to recognize that he had a valid point.
We have to proceed with this bill, and now we have only three and a half hours left. It is not me who has created that difficult position in which we find ourselves. It was created by the opposition members who decided to forget all about the clauses of the bill and make general political speeches. Now they are a bit embarrassed in finding themselves trying to bail out the PQ who two weeks ago agreed with me and last week did not agree with me. I am just reporting the facts. The PQ have slandered themselves so badly they are just wishing I would bail them out, but I will not.


Arthur Ronald Huntington: Mr. Chairman, that filibuster by the Minister of Finance is just about as disgusting a display as you can get in a committee that is under time allocation. 1 want to remind the Minister of Finance that in the debate on second reading of this bill the Liberal members have had all kinds of opportunity to give input to the government, opportunity that the members in the opposition, no matter in what party, do not have. This is our opportunity to question the minister's decisions and the advice the government is getting. I have never seen a tax bill in my short history in this House that has as many false statements. It still has loopholes and flaws that need to be corrected.
It is closure and not giving us the time to explain and explore the bill that causes the problem. We do not have unlimited resources, unlimited mandarins, and unlimited academics feeding us. We have to work and dig, and I lose my patience when I hear speeches like that of the Minister of Finance.


Joseph Jacques Jean Chrétien: The hon. member is being unfair to the members on this side of the House. The tax bill, according to
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the rules of this House, is not to be debated before it is tabled in this House of Commons. Some members on the other side have faulted me on that ground because 1 talked to the provincial ministers of finance before the budget. The members of my party do not have an opportunity to talk about the tax bill beforehand. The only occasion they have is when we are in committee of the whole. As in second reading, the time in committee of the whole has been taken up much more by the opposition. The members on this side of the House are very able and sometimes can make better contributions than the hon. members opposite.


Sinclair McKnight Stevens: Mr. Chairman, before I raise a couple of questions on clause 32 I hope the minister will not forget when he cites the number of days the various debates have taken with respect to this bill, that the hard truth is his own followers used up 35 per cent of the time at second reading when this bill was before the House. To say that we used up the time and that he had no alternative but to bring in closure, both at second reading and at committee of the whole, I would say is certainly not constructive, remembering that we now have only a few hours left due to the closure brought in by this minister.
Following my questions on clause 32 on Friday, I was wondering if over the weekend the Minister of Finance had any better luck in determining just how many small businesses may be caught with the new change. The thing my party is concerned about is that this provision was put in place presuming that many people would take advantage of it, and we initially felt that it was desirable. However, people have invested capital in small businesses only to find now that the ground rules are being changed and that the dividends they normally expected to get back from the small business still may flow, but if they do flow they will no longer be treated as a credit against the cumulative dividend account. In short, the small business may run over the $750,000 basic limit which they were given in the initial proposal. How many small business corporations are we likely talking about? Even a ball park figure would help.


Joseph Jacques Jean Chrétien: Mr. Chairman, I answered several times last Friday that we do not have an exact number. Moreover the intention underlying this clause is not to prevent small businesses from taking advantage of the preferential taxation level. This amendment will not prevent any small business from taking advantage of the preferential taxation level. This amendment will not prevent any small business from taking advantage of the tax rate it has to pay. What we want to do is prevent "holding companies"; there is no French equivalent, Mr. Chairman; I looked it up in the Larousse dictionary before coming into the House. This expression is an English creation, I imagine. We do not want large businesses which have larger tax responsibilities to benefit from the preferential tax rate for small businesses through holding companies. This is what we are seeking. We do not want to penalize any small business,
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and 1 think the impression created by the hon. member when he expresses himself in this manner does not reflect the truth.


Sinclair McKnight Stevens: Mr. Chairman, our concern, which 1 have already expressed, is that there are many small businesses in this country which are able to win new capital funds from corporations that felt they would like, first of all, to invest in a small business and, secondly, that that small business would be free to pay dividends upstream to the corporations as they saw fit without impairing the position that small business is in if they were, for example, to pay that dividend to an individual. What I am trying to determine, having now got various investors such as I have described locked into position, is if the government could indicate the parameters of what we are talking about. Is it simply a hypothetical theory we are speaking of, these situations as the minister has indicated where there may be ten holding companies and they are all taking dividends upstream and that, rather than have a $750,000 limit, it could well be $750 million? Does the minister know of a concrete example and, if so, how many?
It is most unfortunate that venture capital has not been facilitated by this government to a much greater extent than has happened to date where small businesses are concerned. If this provision has been working well and if small businesses have been picking up capital in the way which I have described, I think it is most unfortunate that we now have the minister saying, "Oops, we made a mistake, there is a loophole there. We didn't really realize that corporations might take advantage of this type of investment and now we are going to plug the loophole." It is most unfortunate if, in plugging the loophole, they detract from the flow of capital which might ordinarily go into small businesses.


Joseph Jacques Jean Chrétien: Mr. Chairman, the hon. member is asking me how many companies proceed that way. I do not know the exact number, but I know several companies have started using that tax evasion method. During the numerous consultations my officials have had with the community of fiscal advisers, expert counsel, accountants or consultants, they found out that tax evasion method was about to become abnormally prevalent and that is why they have decided to take immediate steps to put an end to that trend before it gives way to excessive abuses. Obviously, Mr. Chairman, we have no intention, as the hon. member for York-Simcoe would like to make believe, to prevent larger companies from investing in small businesses. They will have a right to do so and I will even say we hope they will do so increasingly. We just want to make sure they will not invest in small businesses to avoid paying the taxes they should normally pay.


Sinclair McKnight Stevens: Mr. Chairman, I would like to give the minister an opportunity to correct what I think he unintentionally put forth, which is a terrible smear on people who have taken advantage of this section. The minister said that it was a tax

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evasion. Tax evasion is a criminal offence, and I would like to give the minister an opportunity to correct his words to tax avoidance, if that is really what he meant.


Joseph Jacques Jean Chrétien: Mr. Chairman, I am extremely embarrassed because 1 do not recall my exact words in French. I understand the difference between the English meanings of evasion and avoidance. I was referring to avoidance when I was speaking French, but I do not know what the translator may have done with my comments. The word is avoidance and not evasion.


Sinclair McKnight Stevens: Mr. Chairman, I thank the minister for clearing up that particular point. I will approach my question in this way: bearing in mind that in order to preserve the special tax small businesses can enjoy under this provision, no shareholder-certainly, no public company and no corporate shareholder-can own over 49 per cent of a small business. For example, if a public corporation took 51 per cent of a corporation which no longer has small business characteristics-and bearing in mind that all of the investments we are talking about by definition must be minority investments in the sense that, even if they are corporate, they cannot hold over 49 per cent of the company that they are investing in, would the minister indicate why they have made this section operative only from April 10? I can see the effects if they feel there is a loophole and they have made an error.
1 can see some excuse to say that after April 10, if a person makes an investment in a small corporation, the dividends that are paid by that small business corporation upstream will not be eligible as far as the credits on the $750,000 cumulative dividend account are concerned. I think that would be much fairer to those who have taken advantage of the income tax provision in good faith and who are now finding the dividends that they were anticipating no longer will be payable because of the retroactive effect of the amendment the minister is proposing.


Joseph Jacques Jean Chrétien: Mr. Chairman, I am informed that under the regulations this applies only after April 10. It is not retroactive in the sense that we will not be looking back at what happened in the past.


Sinclair McKnight Stevens: Mr. Chairman, obviously we can get into a definition of what is retroactive. But let us assume that somebody has invested $100,000 on April 7 in good faith. He put that money in, anticipating that if the company makes a profit and dividends are paid, he in turn will be able to enjoy those dividends, and the small business corporations will not lose the credit they otherwise would get with respect to their $750,000 dividend account.
My understanding of this section, and I hope the minister will correct me if I am wrong, is that as of April 10 what that person on April 7 thought he was getting into has now changed. If dividends are now paid to him at any time after April 10, the small business concern no longer will be able to treat it as a credit against the cumulative dividend account. If

that is so, that is why I am saying this is retroactive, it is applying to investments made before April 10 and saying henceforth that all dividends on those investments flowing upstream to some corporate entity will not be treated the same as if the dividends were payable to individuals.


Joseph Jacques Jean Chrétien: Mr. Chairman, in my judgment this is a loophole which we are plugging. The hon. member is saying in effect, "make the loophole operative for everyone up to today so advantages taken will be made legal". This is a loophole that we are plugging. The intention of the legislation is clear when we determine that small businesses could accumulate up to $750,000 in profit. I do not understand why the hon. member wants me to unplug it, or plug it only partially. I have no choice; either I plug it or I do not. You are either pregnant or you are not.


Some hon. Members:: Oh, oh!


Sinclair McKnight Stevens: Mr. Chairman, I only wish this minister was a little more pregnant with some suitable economic policies for Canada.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


Joseph Jacques Jean Chrétien: Mr. Chairman, I rise on a point of order. The hon. member for York-Simcoe has no sense of humour.


Sinclair McKnight Stevens: Mr. Chairman, clearly the minister has no sense of humour because I meant my comment in the most humorous way.


Some hon. Members:: Oh, oh!


Sinclair McKnight Stevens: To come back to the main point, 1 believe the government and certainly this minister underestimate the lack of confidence that they generate every time they change the rules in midstream. In their wisdom if they saw fit to change the Income Tax Act to facilitate what is covered in this section, if they thought a loophole had occurred, they should have been content to say that "after April 10 we are not going to allow this to continue any longer. But if people did make an investment in good faith as a result of our provision, the government will not somehow or other retroactively kill the effect of the investment that they have made."
The minister should recognize that if the government is trying to encourage people to go into small businesses, which is a very risky investment area, the government will minimize future forms of encouragement because when people start to move and take advantage of what is a good income tax position, they then remember that back on April 10, 1978, in a similar provision they were retroactively legislated against, and the dividend structure which they thought they were getting into was changed to a less desirable one, certainly for small business. My question to the minister is: does this not concern him with today's lack of confidence in business generally, and with the crying need for more money to be invested in small businesses? Does he not feel he is treating the various people
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who have invested in small businesses in a very shoddy way by retroactively catching them, the way he is now proposing?
Mir. Chretien: Mr. Chairman, we have a bill before this House on small business that is to be dealt with soon. What the hon. member wants me to do is to help the small businesses in perpetuating loopholes, not in favour of small business but in favour of big business. There is a proposition before this House to plug loopholes that could benefit big business. It is not affecting small business.
In another bill which will come before this House after we have finished with this one, we will be discussing small business and this bill will directly help small business, not by creating loopholes but by giving incentives. Here we are plugging a loophole that could benefit big business but will not affect small business negatively. The opposition have it completely wrong. If they want to discuss the positive things that we are doing with small business, let us pass this bloody bill as quickly as we can and we can then go on to the other one. We have been discussing this one a long, long time.


Sinclair McKnight Stevens: Mr. Chairman, while we are dealing with clause 32, and it is very much an income tax consideration, would the minister indicate why he has hesitated to facilitate venture investment corporations, such as are now in place in Ontario? The minister often takes guidance from the Treasurer of Ontario, and that provincial government has passed legislation permitting investment corporations to invest in small businesses. Why does the minister see fit not to pass the suitable amendments to the federal Income Tax Act in order to make funds going into venture investment corporations comparably attractive, from an income tax standpoint, as they are in Ontario?


Joseph Jacques Jean Chrétien: Mr. Chairman, I do not think that this clause has anything to do with venture investment corporations. At this time the Minister of State for Small Business is discussing this concept within the government and outside in the private sector. The government has not yet decided exactly in which form it will be moving in that regard.


Sinclair McKnight Stevens: Mr. Chairman, when the minister says that venture investment corporations have nothing to do with this section, this is the narrow interpretation which he likes to take. After all this section will put in place a new deterrent to those who would like to invest in small businesses. If he persists in going ahead with it, and if he feels there is some loophole that he has to plug, I think it is relevant that we know to what extent they will facilitate venture investment corporations, because something is needed in Canada to ensure that more capital is generated for investment in small businesses.


Joseph Jacques Jean Chrétien: Mr. Chairman, we are doing that just to make sure that those who invest in small business are not out to milk the small business, but to help small business. That is exactly why we designed these sections. I have replied in general to this question close to 50 times. I do not know what I can add at this time.
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Sinclair McKnight Stevens: Mr. Chairman, when the minister says that he has replied to this question 50 times, that is just not true. I asked one question, plus a supplementary question, concerning venture investment corporations. That is all the questioning has amounted to at this point. I have asked all my questions. I am disappointed that the minister has not seen fit to accept at least partially some of our suggestions with regard to clause 32.
For good order, I wonder if the officials and the minister can give us the figures I requested earlier. It was on another clause. At that time they were just doing the calculations. I requested the comparative figures for research and development write-offs, comparing a 48 per cent tax corporation to a 20 per cent tax corporation. I asked that because it was my understanding that the write-offs for research and development as proposed by the minister were much more attractive for large corporations compared to small corporations.
I know the officials have the figures available. In fact I know they have completed their calculations. For the record, I think it would be a good time for us to get them into Hansard.


Joseph Jacques Jean Chrétien: Mr. Chairman, I will be very glad to provide an answer to that question when we get back to clause 6.


The Deputy Chairman:: Shall clause 32 carry?


Some hon. Members:: Agreed.


[Stage Direction]
Clause agreed to.
On clause 33.
Sinclair McKnight Stevens: Mr. Chairman, dealing with clause 33 I wonder if the minister can first indicate where this clause is covered under the income tax motions?


Joseph Jacques Jean Chrétien: In the first line of the ways and means motion where we talk about "other matters". This is one of the other matters. This is a technical amendment. Technical amendments are always handled in this way. A ruling of the Chair gave us some flexibility there. This is one of the other matters. Further, the hon. member should have wakened up a little bit earlier because this is consequential to clause 5 which has already been passed. I can read the technical explanation.
This technical amendment is consequential on the amendment adding subsection 20(12) to the act provided in subclause 5(3) of this bill, which has already been passed. It adds a subparagraph 126(7)(c)(iii) to the act effective for 1978 and subsequent taxation years. The amendment simply ensures that any foreign income tax which a taxpayer has deducted in determining the taxable income cannot also be claimed as a foreign tax credit.


Sinclair McKnight Stevens: Mr. Chairman, I do not know whether it is necessary to comment when the minister keeps making partisan remarks. However, when he says we should have wakened

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up at clause 5, I suggest that he perhaps tell his own draftsmen that they should have wakened up. He will note there is no mention in clause 33 that is consequential upon the passage of clause 5. Perhaps it is his own draftsmen, if he wants to fault somebody for being asleep at the switch.
In all seriousness, in future when we are dealing with income tax motions, if the minister is going place such reliance on quotes such as "or other matters", I wonder if he could at the time of bringing in that tax motion give us an addendum as to what he intends to include under "other matters". Frankly, it is a disgrace for an income tax motion to be brought in and the minister, under the grandfather clause of "other matters", to be able to make extensive, as he calls them, technical amendments to the Income Tax Act with really no notice to the Canadian public whatsoever.
It is well founded that the whole purpose of ways and means motions or income tax motions is to put the Canadian public on notice as to what the government has in mind with regard to legislation that will be coming down. Nobody would normally expect that clause after clause in an Income Tax Act bill would be tucked in under the guise of saying this is what we meant when we said "or other matters" in the income tax motion.
I ask the minister, in all seriousness, that if he should bring in another budget, and hopefully he will never bring in another one, to undertake to give an addendum to at least the income tax motion to make it clear that in fact they intend to cover such things as "or other matters".


Joseph Jacques Jean Chrétien: Mr. Chairman, I do not know what the hon. member is trying to achieve. This has been a common practice in this House for a long time. It has been done this way for years. I do not have to change the tradition of this House every time I bring in a new budget.
The hon. member is trying to create the impression that the public has been misled. This bill has been before the public for five weeks. We have discussed only that for five weeks. For the hon. member now to say there was no mention in the ways and means motion is ludicrous.
This bill has been before the House for five weeks. It is only after five weeks that he thinks of asking questions about this so-called procedural problem which has never existed. The draftsmen have acted in a most proper fashion. It is evident hon. members opposite want to present the hon. member for Winnipeg North Centre from asking questions on clause 34. They are filibustering. I am sorry, Stanley, but there is nothing I can do about it.


Sinclair McKnight Stevens: Mr. Chairman, when is this minister going to grow up? If he thinks that being elected to this House, certainly to this side, means that we simply rubber stamp every daft piece of legislation that he brings into this House without even questioning him, I hope somebody will teach him a lesson.
We have many questions on clause 34. It is not just hon. members to the left who will have questions. Surely the whole purpose of committee of the whole is to do exactly what we

have been doing. 1 find the more we get to the quick of this minister, the more he likes to become very indignant, trying to get the centre of attention off his own incompetence.
We are eager to get to clause 34 and many other clauses in this bill. If it had not been for closure, we certainly would have done that. To have the minister now stand up and imply that we are asking questions on clauses 32 and 33 simply to delay others asking questions on clause 34 simply is not true.


Joseph Jacques Jean Chrétien: Mr. Chairman, the hon. member speaks as though we are preventing them from doing their job while in committee of the whole. There are four members there, while we have 30 on this side. The people will know who has an interest in this legislation.


[Stage Direction]
Clause agreed to.
On clause 34-"Annuitant".
Stanley Howard Knowles: Mr. Chairman. 1 am glad we have reached clause 34. It and two or three other clauses include the changes the government is making with regard to Registered Retirement Savings Plans.
As I said earlier, and as my friend from Saskatoon-Biggar pointed out, we have had a good deal of correspondence from credit unions and co-operative trust companies across Canada about these changes. In fact I have in my hand a document which comes from my hon. friend's city, entitled "Trust Trends", published by the Co-operative Trust Company of Canada, 333 Fourth Avenue North, Saskatoon.


Ramon John Hnatyshyn: Part of my constituency.


Stanley Howard Knowles: I had hoped it was not in the other part of Saskatoon and that I would get support from our friends in the official opposition on this matter.
It is not my purpose to ask questions about the whole philosophy of RRSPs or about the philosophy of the changes the minister is making, but it seems to me that some of those who have studied the legislation since the budget speech and the introduction of the bill, have made a few points which are good, and I hope the minister will look at them. The one point on which all the correspondence I have received agrees had to do with the proposal for taxing funds which had been placed into an RRSP, at the time of the death of the planholder if he had not converted it into an annuity, or at the death of a planholder's spouse.
1 propose to read a couple of paragraphs from a document I have in my hand because I think they make the point better than my own words:
Under current rules, it is the recipient of the RRSP funds who is taxed when the planholder dies. It is now proposed to include the RRSP funds on the planholder's final income tax return.
This means taxes could be even more severe than if the planholder had withdrawn the funds in a lump sum before he died, since such items as salary, capital gains and accrued investment income must be reported on the same return.
June 19, 1978

Two or three paragraphs in which examples are given follow. I do not propose to take up the time of the committee by reading the examples but I have checked them and they seem to be valid as I understand the legislation. They make it clear that the tax on a fund the planholder might leave, say, to two children, is much greater under the new arrangement than under the old.
The whole purpose of tax legislation in connection with RRSPs was to encourage people to put money away to add to their retirement income. Along with that goes the right of such a planholder to leave any funds he may have acquired to his spouse, his children or other heirs. Now the minister is changing the taxation rules to make the tax more severe than it would have been had the planholder taken his money out before he died, which seems unfair.
The document refers to a few other matters. One is under the heading of fixed term annuities; another is in connection with the fact that rules governing the registered retirement income fund have not yet been produced. Then there is a complaint about the age at which an annuity might begin; it has been the rule that an annuity must be taken out not later than just before the planholder was 71. Now the additional rule is that no annuity can commence before age 60. I should like to have the minister's comments on these points, but the one which appears most important to me is the provision which would tax on the death of a planholder any funds he left in such a way that the value of what he leaves to his heirs in that year is seriously reduced.
It seems to me the minister has done something without thinking it through. I am sure he has received more correspondence on the subject than we have, and 1 hope that today he is in a position to offer some correction or assurance that the matter will be looked into. I might add that this is why I was anxious to arrange our business in such a way as to enable the committee to deal with this clause, clause 34, which begins on page 37. The offending parts of the clause are between lines 20 and 30 on page 42. I hope the minister will tell us what he intends to do to meet these just complaints.


Joseph Jacques Jean Chrétien: I thank the hon. gentleman for giving me occasion to say something about this clause. Earlier in this debate the hon. member for Assiniboia raised a question with regard to it, and I have received representations on the matter from many members of parliament, credit unions, and elsewhere.
There is a problem here and 1 do not think I am in a position to find the proper solution right now. This is an arrangement under which we are seeking to give more flexibility to a person who retires. Previously he had to transfer his RRSPs, either in cash or in the form of a life annuity, at age 71. We are now establishing a new system which will offer more flexibility. At the same time, there will be an accumulation of funds. We want to help the retired person and his spouse to benefit from accumulative savings through RRSPs for the rest of their lives, but we have to take into account the effect on beneficiaries.
Income Tax Act
The department has received a number of representations on this complex issue, but I have to say it is my intention to examine the subject further and, after discussion with the credit unions and others who have an interest in the matter, to find a solution. I do not believe I can correct this situation at this late stage in the bill. However, if other hon. members want to make representations to me 1 am willing to listen to them and answer their questions. But I am not in a position to provide the House with appropriate solutions in such a short time.


Stanley Howard Knowles: I appreciate the minister's recognition of the fact that there may be a problem which ought to be considered. This being the case, 1 wish he would find some way of dealing with it before the bill is passed, because once the bill is passed it will be hard to change the situation by regulation.
I agree with him that the government has to be careful to see that this means of avoiding taxation is not abused. The purpose of the RRSP set-up is not in order to enable people to save money for other purposes than retirement-to give it away, for example. But where a person puts money into an RRSP and dies before he gets the chance to put it into an annuity, he should not be considered as committing some sort of abuse. He is not trying to filch money from the treasury by dying. In such a case, it seems to me, the money he leaves should not be treated any worse as far as taxation is concerned than it would have been had he taken it out and paid the tax on it. I hope the minister will find a way to meet the pleas of the credit unions on that point.


Joseph Jacques Jean Chrétien: As 1 understand the situation, we are not making it more difficult for a planholder who dies to pay the taxes he would have been obliged to pay had he decided in the same year to withdraw his funds under his RRSP. The hon. member realizes that when a person dies he has to meet other tax liabilities associated with the winding up of his affairs. There is a question regarding capital gains which come to fruition and so forth. That is an added complication, and that is why 1 would like to study it very carefully. In fact, we have received the letters which have been circulated by credit unions, mainly in western Canada, but what the credit unions mean is not very clear.
This is a matter which needs some study and clarification, but we do not think that with the introduction of RRIFs we are compounding the problem of a person who has an RRSP and dies. Either you take it out or, when you die, you have to pay the tax in that year. We are not adding to the problem. If when a person dies he has other assets which are considered revenue that year, that is a different problem which could jack up a person's revenue and increase the amount of tax to be paid. However, the law has not changed. It was like that before.


Stanley Howard Knowles: Mr. Chairman, I would like to ask the minister one other question, and then I

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shall be glad to let others carry on. Is the Co-operative Trust Company of Canada, which has its head office in Saskatoon, not correct when it says that under current rules it is the recipient of the RRSP funds who is taxed when the planholder dies, whereas under the new rules RRSP funds will be included as part of the planholder's final tax? Is it not that which makes the difference? Let us not mix this up with RRIF's. Let us stick to RRSPs. Is that not the change which is being made by the clause on the middle of page 42, and could that not be corrected?


Joseph Jacques Jean Chrétien: Mr. Chairman, I think that the interpretation of the hon. member, generally speaking, is correct. This is a very complex issue which has been raised by credit unions, and we want to get in touch with them to try to clarify the nature of the problem. We were made aware of this only in the last few days. The credit unions are aware of the difficulties there are with interpretation and with a modification of this situation. I want the hon. member to understand that I am willing and eager to undertake that this problem will be reviewed. By the time we have another piece of budget legislation, probably within a year, I think we will change this situation, but we need to have consultations, discussions, and analysis before we can come to a fair solution to the problem raised by the hon. member and others.


Samuel Victor Railton: Mr. Chairman, I have nothing very new to add to the remarks of the hon. member for Winnipeg North Centre, but I would like to know if the change he wants, and the change which is being considered, is just for a person who has an RRSP fund and dies, but who has not converted it into an annuity because of early death. Is that the lump sum which would be taxed at death? It is my understanding that in most cases spouses share the same plans, and when one dies, the other takes on with the annuity. I do not understand how registered retirement savings plans could be made out properly in any other way. I would like to have that cleared up.
The other thing is that in a general discussion of such things as retirement savings plans, capital gains, and even in insurance investment question, which was causing so much consternation two or three months ago, it seems to me that the reason all these plans are taken out is to provide for individuals at retirement and also to provide for their immediate families who may suffer or who may not have had the good fortune of having retirement savings plans, insurance, or a chance to have capital gains. I think all those things should be looked at by the Minister of Finance because when it comes to a man's death, his immediate family should be provided for. That is really what any normal parent is concerned about, so this should also be looked at in the same way.


Joseph Jacques Jean Chrétien: Mr. Chairman, I will just take note of the remarks made by the hon. member. They will be very useful to us in the consideration of the problem.


Arthur Jacob (Jake) Epp: Mr. Chairman, I would like to question the minister on clause 34 as well. I agree with the representations made by the hon. member for Winnipeg North Centre, except

possibly for one point. I detected that the hon. member felt that it would be quite in order literally to tax away a person's inheritance. I think that inheritances should not simply be taxed away. Inheritances are accumulated assets for families.
However, before we get involved in this discussion, I point out that while other hon. members do not find tax laws complicated, I find them extremely complicated. The minister now says he wants to consult. There have now been representations from caisses populaires, credit unions, and insurance underwriters. They want to know now. This is the minister's legislation. It is not our legislation. The minister spends a lot of time telling us that we have spent a lot of time on this bill. Whether that argument is right or wrong, really is not the point. By the very fact that the minister comes into this House with legislation, he should know the answers. That is his job. He now tells us to pass this legislation, which could have far-reaching implications for people who have RRSPs and, frankly, that is not good enough because I cannot go back to caisses populaires, credit unions, and to other people who hold RRSPs and tell them that they will be taxed at a higher rate than they were before, that the minister has changed the rules of the game but that it is all right because the minister will make some changes after consultation. That is just not good enough.
If we go back to the March 31, 1977, budget, the minister will recall that his predecessor decided that the tax man would literally remove from widows the small annuities and the small RRSPs they were going to get. This minister is not reaching with a long arm into people's graves and taking this money out, but he is still going to get part of his death tax back. I ask the minister whether we are not going from fair taxation to confiscation of property and assets. I really believe we are moving more and more in that direction.
People purchase RRSPs to get tax breaks. That is tax avoidance. There is nothing wrong with that. That is good financial management of one's personal affairs. People also purchase RRSPs to make sure that their immediate families have a certain income. I suppose we could all say we should not save or prepare for the future. We could decide not to worry about our families, and let the government take over. That is not the way I want to live, and I do not believe that is the way the majority of Canadians want to live. If people want to save for the future, I believe they should be commended, and not penalized, but that is what is happening here.
RRSPs have been created. People pay into them. In other words, they defer their incomes, and now the minister is saying that he will tax them away at a higher rate than before April 10. I may be wrong, and that is why I am asking the minister about this. 1 intend to read this clause again. I want to ask if this interpretation is correct.
I will read again from the document of the Co-operative Trust Company of Canada which was used by the minister and the hon. member for Winnipeg North Centre. It reads:
June 19, 1978

Under current rules, it is the recipient of RRSP funds who is taxed when the planholder dies. It is now proposed to include the RRSP funds on the planholder's final income tax return.
I want to ask the minister whether or not that statement is true?


Joseph Jacques Jean Chrétien: I think the hon. member for Welland described very well what an RRSP is. It is not a scheme to avoid taxes but rather a scheme to ensure we have enough revenue when we retire. The creation of RRIF under this bill is to give greater flexibility to people. At present, when a person reaches the age of 71 he has two choices: he can either cash in his RRSP on which he has to pay the same level of tax as on his income that year, or he can buy a life annuity. Now we permit him to buy RRIF which will allow him to average out the money over a period of years and pay taxes accordingly.
We are not changing anything when the RRSP is in the hands of the holder or when the money goes to his spouse. The change occurs only when it goes to a third party, such as children, at which time it is taxed at the same rate as the original holder was taxed prior to his death. We recognize that there are some problems here and we are willing to consider them. However, with the permission of the committee I should like to read the technical explanation which sometimes, although not always, clarifies the problem.
The new alternatives for RRSP funds, that is, the RRIF, and the term annuities, require the government to reconsider the alternatives available to heirs of a deceased annuitant under RRSP. These two new alternatives for retirement income, and the extension of the guaranteed period for life annuities, mean that much larger amounts will be passed on to heirs than under the existing system. Now the holder has to cash it or buy a life annuity. The existing system permits only life annuities with the guaranteed term being not in excess of 15 years. Under this system the passage of RRSP funds between generations of untaxed funds was minimal.
The RRSP mechanism is to permit our citizens to provide for their retirement and the retirement of their spouses. It is not intended to encourage the creation of estates. Therefore, the decision was taken that the tax benefit enjoyed by an RRSP annuity holder during his life should be accounted for on death, except to the extent that the benefits accrue to his spouse. This is in accord with the general scheme in the Income Tax Act which allows property to be transferred on a tax free basis to a spouse, but taxes transfers of property to others.
I want to explain again what I said before and what I read. The RRSP scheme is to permit a person to accumulate funds for the time when he retires. It is not, as the hon. member for Provencher led us to believe, a way of accumulating wealth to be passed on to children or to third persons. It is a tax break which a person receives during his life so that when he retires he can cash it in and pay tax on the money, and at 71 years of age again he can either cash it in and pay tax in one shot or buy a life annuity. Now there is flexibility, but we do not want a system to develop so that RRSP will become a way to avoid taxes. It is not designed for that. It is a way of accumulating
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assets, and the tax will be paid at the time of retirement. That is why we must make a distinction between an estate and money accumulated through RRSP.


Arthur Jacob (Jake) Epp: Can the minister now answer my question?


Joseph Jacques Jean Chrétien: I think that in the very good explanation I gave I must have given an answer to the hon. member's question.


Arthur Jacob (Jake) Epp: My question was as follows: if a policyholder dies, is the amount of the policy calculated as income on the last year that that person filed income tax?


Joseph Jacques Jean Chrétien: Yes, if it is somebody other than the spouse.


Arthur Jacob (Jake) Epp: That is what 1 wanted to know. The minister was not clear about the two terms. I am wondering whether we are not simply arguing about words. On one hand the minister says it is an asset, and on the other hand it is not accumulated wealth. He cannot have it both ways because an asset is accumulated wealth.
The point I want to bring to the minister is this: he says that so long as the fund is transferred to the spouse there is no additional tax. He also says that it cannot be transferred to a third party, which I take to mean children. However, in the case of a common accident in which both the policyholder and his or her spouse are killed, and there are two dependent children left, who is the beneficiary? The minister is now saying that under his plan the dependent children are the beneficiaries but that the government will now tax them at a higher rate than when his budget was passed? Is that correct?


Joseph Jacques Jean Chrétien: In studying this problem we have come to realize that we are faced with a problem so far as dependent children are concerned. It is a problem which I would like to consider. The RRSP is so designed that it can be passed on to the spouse tax free, but if it is to go to grown, independent children, it is not an estate. If RRSP has been accumulated and there are still dependent, minor children in the family, this is an aspect which I should like to consider to see whether we should not make a distinction between dependent, minor children and independent children or third persons. This is a point that has not escaped us, but today we are not in a position to give an answer on it. Also, we have not received representations from people who are concerned about this and we would like to discuss with them some aspects of it before we come to a solution.


Arthur Jacob (Jake) Epp: Perhaps we are making some progress now. At least we have an agreement in principle. We are on the same wavelength, and it is understood that, while the spouse can be the direct beneficiary, it is minor, dependent children who are penalized very heavily. I think that it is the role of any Minister of Finance and of all of us in the House to ensure that, if a father or mother had made provisions for their minor children, the state would not tax that benefit away and make those children dependent on the state. I keep stressing this point because it is such a fundamental issue in society that a

June 19, 1978
Income Tax Act
father and mother should be responsible for their dependent children as long as they can. There are many parents who have made estate plans through the RRSP or through accumulated assets so that if their children are deprived of their parents they will have at least as many benefits to allow them to become as full contributors to society as is possible. That is why I say to the minister that I find it very difficult. 1 want to accept his assurances on good faith. I intend to do that, and I will.
With all respect, 1 find it difficult to accept the minister requesting us to leave it in his hands. Once a bill is passed, it is passed. Perhaps I sound like a doubting Thomas, but it comes from experience. Will the minister assure that his officials will re-examine the question of dependent children? Before I used the word "minor", and now I refer to "dependent". The term "minor" could create difficulties for the physically and mentally handicapped. So, I have changed it to dependent children. Will he charge his officials to come forward with a draft amendment before the bill is passed?


Joseph Jacques Jean Chrétien: Already 1 have given an undertaking to look into that in reply to the hon. member for Winnipeg North Centre. I recognize perhaps there is a problem in terms of dependent children in a family. We have to study that. There are provisions in the act where property can pass tax free from a husband to his wife, but not necessarily to his dependants. Hon. members are asking that we study all of these implications. If it is done for RRSPs, it must be done for everything. In terms of equity and revenues for the government, the consequences are great. We must look into that carefully. I cannot guarantee that this problem will be solved before ten o'clock tonight. We will complete committee of the whole stage tonight and commence third reading tomorrow. I have indicated that we are prepared to review it. It can be given consideration on the first occasion when tax measures are before the House.


Arthur Jacob (Jake) Epp: Mr. Chairman, I regret to take up the time of the House and to be so obtuse, but that is just not good enough. The day after this legislation is passed, some Canadian family will be caught in this clause.


Joseph Jacques Jean Chrétien: They are there now.


Arthur Jacob (Jake) Epp: Well, that makes it doubly bad. We still have the time and the legislative procedures to make this correction. The minister has conceded the difficulty, yet he asks us to pass it and indicates something will be done about it at the next opportunity. When will be the next opportunity? Will it be at the end of this month, the middle of next month, or whenever? When this House rises, we do not know if this parliament will return. When will the next opportunity be? What happens in the interim to people who have bought RRSP's to provide for their families? Are the beneficiaries of people who die in the interim to say, "The government tried; some day it will come up with a change"? Meanwhile dependent children will have

to pay a rate of tax which is much higher than they would be required to pay if the budget had never been passed.
I cannot speak for this side of the House, but I am sure most of the hon. members would like this matter clarified before it becomes law. With all due respect, once it becomes law, that is it. All of us have been here long enough to know, once something is enshrined in statute, that it is a long process to effect a change. The families of RRSP holders who have passed away during the interim, whether it is one day, one month or whatever, are caught. In fact they have been caught since April 10.
At the time of the previous budget, I remember the tremendous pressure we had to apply. Also I remember the number of letters we received. In fact I have my file with me today. I pulled my file out for Bill C-22, the previous one. In the representations words like "inequitable effects" were used. These were communications from small Canadians who had taken funds from their earnings to buy RRSPs. The underlying philosophy, which disturbs me deeply, is that revenue can be taken from wherever the government wants, regardless of the consequences, to pay for its profligate spending. Then the government comes before the House asking us to pass this piece of legislation, at the same time indicating that it will look into it further. I am disappointed in the Minister of Finance not being willing to go beyond indicating that he will look at it.
There are well-qualified people within the Department of Finance who can see the implications. I am not counted as a person who has the ability to break down a tax bill in order to understand its nuances and implications, but there are such people within his department. The caisse populaire of Ste. Anne, the caisse populaire of Lorette, the credit union of Niverville, Manitoba, and individuals all agree with this interpretation which the minister has confirmed.
RRSP holders, when they were looking at their estate planning, had in their minds what they were leaving to their spouses and dependent children.


Joseph Jacques Jean Chrétien: What is the question?


Arthur Jacob (Jake) Epp: Perhaps the minister thinks that I am speaking too long. I have the right to speak. I am a member, and I can speak as long as the House rules allow me. If I have a representation to make on behalf of my people, I intend to make it.


Some hon. Members:: Hear, hear!


Joseph Jacques Jean Chrétien: Mr. Chairman, I have indicated many times this afternoon that this is a problem. We are looking into it. The hon. member is attempting to dramatize the problem. It is existing now and has existed before. The same case can be made for a father who wants to pass his house or property on to his children. He can pass it to his wife, but if he dies and leaves it to his children or a third party, they are required to pay capital gains tax.
I have indicated that there is a problem and that we are willing to look into it. If the hon. member is about to cry, I will
June 19, 1978

send him a handkerchief or a soother. We have been dealing with this bill for approximately five weeks, and because he has received some letters from the credit unions in his constituency, he raises this matter now. Perhaps he wants to look like the Chevalier du Saint-Sepulcre. We must keep the problem in perspective. I recognized it before he rose in the House. I had my explanation before any hon. member raised the issue.
I had to force hon. members opposite to deal with clause 34. Otherwise, we would never have discussed this. They wanted us to stay with clause 30. If we had they would never have had the occasion to raise this. Now we hear them complaining that they should discuss and solve the problem they see with it, when less than an hour ago they were trying to prevent us from considering clause 34 at all. They wanted to stay on clause 30 for the rest of the day, and now they come and cry like babies.
I have said I will look into that and, if there is a need for an amendment, there will be an amendment put before this House when I come back with another bill on the subject. Now we have this hypocrisy being carried on when two hours ago they did not want to discuss clause 34 at all, but wanted to continue discussing clause 30. I see an hon. member over there from Alberta who was one of those who wanted to stick with clause 30. Now he wants to prevent us from discussing clause 34. This is a farce, Mr. Chairman.


Thomas Gordon Towers: Mr. Chairman, I rise on a point of order. The minister is misleading the House in respect of what I had to say. I had no reservations whatsoever about considering clause 34. All I wanted was 30 minutes for the consideration of clause 30. Certainly he is misleading the House with that statement, and I hope he will correct it the next time he is on his feet.


Ramon John Hnatyshyn: Mr. Chairman, on the same point of order let me reiterate what the hon. member for Red Deer has just pointed out. To use the Prime Minister's term, this is just sheer bunkum.


Arthur Jacob (Jake) Epp: Mr. Chairman, frankly I do not think there is any point in going back to the subject following the minister's last tirade. He has made up his mind.


An hon. Member:: He has cheapened himself.


Arthur Jacob (Jake) Epp: He has made up his mind that he wants to tax away the RRSPs of parents looking after their dependent children.


An hon. Member:: Nonsense!


Arthur Jacob (Jake) Epp: If it is nonsense or misleading, why did the minister confirm that these children would be taxed at a higher rate than was the case prior to the budget of April 10? That is what he has confirmed, and I think we better stick with that. I would suggest to the hon. member that he get up on his feet and ask questions, rather than shouting interjections. The best speeches he has ever made are those he has made while sitting down.
Income Tax Act
If the minister was so wise and knew the detrimental effects of clause 34, particularly in respect of dependent children, why did he bother to discuss it? Why did he put it in to begin with? The minister says he now recognizes the difficulty, but only became aware of it recently. I have said to the minister on a number of occasions that I do not begin to understand all tax laws, but one thing I do understand is that by this clause he is confiscating property from dependent children. That is what he is doing.


An hon. Member:: You are all wet.


Arthur Jacob (Jake) Epp: That is exactly what he is doing. Because of the minister's concession that in effect this is exactly what is going to happen, namely, that dependent children will have their property-


An hon. Member:: You are repeating yourself.


Arthur Jacob (Jake) Epp: Of course I am repeating myself. I have to repeat myself time after time with this government, and I will continue to repeat myself, asking the minister if he will withdraw this clause-


Charles Robert Turner: Order, please. I regret to inform the hon. member that his time has expired.


Joseph Jacques Jean Chrétien: I would suggest to the hon. member if he wants me to reply he should sit down.


Arthur Jacob (Jake) Epp: Will the minister withdraw the clause and reintroduce it at another time?


Joseph Jacques Jean Chrétien: No, Mr. Chairman. I am introducing new flexibility to the system for people who are retired and wish to create an RRIF. If I were to withdraw that flexibility at this time I would be penalizing those people who would no longer have that flexibility and would have to buy either a life annuity or pay the entire tax the day they are 71 years of age. That is the situation in which they are now. What I am doing today for those people is providing more flexibility so that they can reinvest their revenue. If they live only two, three or four years after age 71 they can still leave something to their children, not having to pay all the money in one shot as they would have been called upon to do.
There is a problem in that it could have an effect on the dependent children, and I recognized this some days before I came to the House. This is a problem for those children who are recipients of the RRSP. I recognize that this problem needs to be studied further. I will give it further consideration but 1 will not withdraw my proposition for the creation of the RRIF at this time, simply because there is a problem. I suggest that this problem can be cured in due course, if we have to cure it. The proposition in relation to the RRIF at this time is consistent with provisions of the Income Tax Act. One can argue that we should do something for the dependent children having regard to the RRSPs. I have recognized that. The hon. member asks me if I was aware of the problem. 1 was made aware of it some days ago but I did not have time-


Arthur Jacob (Jake) Epp: At the time you drafted the budget?

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Joseph Jacques Jean Chrétien: No, not at the time that we drafted the budget. There is nobody in this land who could draft a piece of legislation without the possibility of some difficulty or problem. No one can foresee all the possibilities. Those who are so perfect do not exist. I have said that we found a problem which 1 am willing to study. When we designed the proposition we wanted it to be consistent with provisions of the Income Tax Act.
One can always support an argument by specific circumstances. One can always dream up a hypothetical case that might make anyone cry. I am just saying that I have recognized the problem and have started to work on it. I have given the undertaking that I will look into it. With the information 1 now have 1 think there may be a problem. I will study the matter and propose an amendment on the next occasion. If I obtain additional facts that contradict my present view I will perhaps make a different judgment. However, the way I understand it today, I think it will make sense to bring forward such an amendment. It would be irresponsible for me to draft such an amendment between six and eight o'clock because we might in this way provide a loophole, creating further prejudices and additional problems.


An hon. Member:: That is more time than you spent with the provinces.


Some hon. Members:: Oh, oh!


Joseph Jacques Jean Chrétien: I think the smart aleck from Saskatoon-Big-gar-


An hon. Member:: Just leave off the "aleck".


Ramon John Hnatyshyn: I will have something to say to you later.
[ Translation]


Joseph Jacques Jean Chrétien: Mr. Chairman, I recognized that there was a problem and I am considering it. On the first occasion, if the information I have remains the same I will introduce an amendment.
There is no perfect situation and when we try to improve the lot of pensioners, to make conditions more flexible, they want us to remove everything because there is a problem. I do not intend to abolish the clauses and the risks to try to satisfy the hon. member. If necessary, we will present an amendment.


Charles Robert Turner: Order, please. 1 regret to inform the hon. member for Provencher that his time has expired.


Mr. Orlikow:: Mr. Chairman, I rise to make a few comments during this debate, and I do not apologize to the hon. minister for making representations on the basis of information and communications which 1 and other hon. members have received from our constituents.
Tax legislation is now so complicated that very few members of parliament can understand the implications of every provision. That is not surprising when we realize that the Minister
[Mr. Epp.)
of Finance, with all his senior bureaucrats backing him up, was not aware of the implications of the change being made.
Let me quote a couple of paragraphs from a letter I received from the Assiniboine Credit Union, one of the largest credit unions in the city of Winnipeg. This is just part of what is said in this letter of June 12 addressed to me:
We strongly object to tax RRSP funds in a lump sum at the time of death (or spouse's death).
We urge you to maintain the flexibility in tax options now available for members who become entitled to RRSP funds after a planholder's death. In particular the option to purchase an income averaging annuity and the right of the recipient to pay income tax on the amount received. This is of particular importance to recipients in the low income tax bracket.
These are precisely the people I am concerned about, Mr. Chairman. The minister says if we do not pass it today nothing has really been changed. If the case made in the document in which my colleague, the hon. member for Winnipeg North Centre, quoted from is correct, then there is a pretty substantial change in what will happen as compared to what the law has provided up until now. 1 refer the minister and his officials to a document entitled "Trust Trends" which, I understand, was sent either to the minister or his parliamentary secretary. I would like to quote one small paragraph from this document:
Under current rules, it is the recipient of the RRSP funds who is taxed when the planholder dies. It is now proposed to include the RRSP funds on the planholder's final income tax return.
In other words, it is going to be calulated on the planholder's final income tax instead of on the recipient's income tax. They give an illustration of a person who dies on December 31 in a year in which his salary amounts to $15,000 and who leaves an RRSP worth $25,000 to two children under 16 years of age and not working. The way the RRSP has worked up until now each child would have been left $10,100 after taxes. Under the new law as proposed in this bill each child would receive $6,873 instead of the $10,100 under the current rules. That illustration indicates the need for change.
I am happy that the minister has said he is prepared to study the situation. I am not happy with his suggestion that he will bring in an amendment at some time in the future, because I do not know when that time in the future will be. I am concerned about these people.
I was very interested in the minister's comments about how changes in this particular bill will affect the way in which we deal with income under other provisions of the Income Tax Act, and the minister's suggestion that we have to keep in mind equity in attempting to keep things fair. I would be much more prepared to listen to the minister's homilies about the need for equity if I did not know how poorly and how inequitable the present income tax system works.
I refer the minister to a publication issued by Revenue Canada, "Taxation Statistics, 1977 Edition", which deals with incomes for the year 1975, the most recent year for which figures are available. This publication tells us that there were 226 persons in the year 1975 who earned between $50,000 and $100,000 and who paid no income tax at all, 58 persons who
June 19, 1978

earned between $100,000 and $200,000 who paid no income tax at all, and 21 persons who earned over $200,000 and who paid no income tax at all. We have devised an income tax system so complicated that over 300 people earning more than $50,000 in the year 1975 did not have to pay any income tax.
One day, not today, we in this House must discuss how that is possible, how we can have an income tax system, a system which is supposed to be equitable, that permits that kind of thing. Unfortunately, we do not know much about the inequities because information about an individual's income tax is secret in Canada, according to the rules of the Income Tax Act, as compared to the information available to Americans within their income tax system. A fine example is the fact that we had to go to the United States to learn that the president of the CPR had an income of over $300,000. I hope he was not one of the people who did not pay any income tax. The minister shakes his head.


Joseph Jacques Jean Chrétien: I just want to make a point.


David Orlikow: I will be finished in a moment, Mr. Chairman, and the minister can reply. What I am trying to say is we do not have an equitable income tax system. It does not treat all people the same. It does not treat every dollar of income as a dollar which should be taxed in the same way. There are hundreds of ways which people, particularly those with high incomes and who can afford accountants and lawyers familiar with income tax legislation, can avoid legally paying their income tax.
I have a good deal of sympathy for people in low and middle incomes who have put some money aside for an RRSP in the hope they can leave most of it to their children when they die. I have found this minister to be an honest man, and he has assured us that he will look into the problem and come up with a solution to the flaw which seems to have developed. I hope that he will come up with that solution before we give third reading to this bill.


Joseph Jacques Jean Chrétien: In replying to the hon. member, Mr. Chairman, this is exactly why I would like to take my time. For example, if someone were to take an RRSP, contributing $5,500 for the rest of his life, with the accumulated interest he would avoid paying the taxes. People in higher income brackets can afford to buy RRSPs for $5,500 very easily and accumulate up to $300,000 over a period of time on which they will not have paid any taxes. This money should be passed on without any tax. I wish to make sure this does not become a loophole. While it is a problem to certain persons, if you apply the principle to the people in higher income brackets, it could become even a greater problem. This is why I wish to look at all its aspects before I make up my mind, and as soon as I have arrived at a decision I will clarify the situation in the House.


Walter David Baker: Mr. Chairman, there have been some discussions on dealing with the matter of clause 30 and the fact that your ruling is to come. I believe I am indicating the consent of the House to the agreement that we would revert to clause 30 at 5.30, you would give your ruling
Income Tax Act
with respect to the amendment put forward by the hon. member for Edmonton West, and the discussion would thereafter continue on clause 30, depending on how you rule. In any event, all the questions with respect to clause 30 would be put and dealt with by six o'clock, which would take up the 30 minutes we decided to allot in our discussions earlier. I understand that that is the agreement.


Joseph Jacques Jean Chrétien: That is the agreement, Mr. Chairman, that if the amendment is agreed to we will vote on this amendment and dispose of clause 30 by six o'clock. At eight o'clock we will go back to clause 34 and finish up the bill before 9.45. If that is the agreement, I am ready to go ahead with it.


Stanley Howard Knowles: Mr. Chairman, on the understanding that there are parts (a) and (b) to that agreement, we are for it. Part (a) is that we revert now, and part (b) is that we only spend 30 minutes.


Joseph Jacques Jean Chrétien: Mr. Chairman, we have to dispose completely of clause 30 by six o'clock.


Gérald Laniel: If I understand it correctly, the committee will be ready at this time to stand clause 34 and revert back, by unanimous consent, to the consideration of clause 30, at which time I will give my ruling on the amendment moved by the hon. member for Edmonton West. Then the committee will complete consideration of clause 30 by six o'clock. Is this agreed?


Some hon. Members:: Agreed.


Gérald Laniel: Order. When the committee was considering Bill C-56 last Friday, an amendment was moved by the hon. member for Edmonton West which reads as follows, and I quote:
That Bill C-56 be amended at clause 30, at page 34, by striking out lines 14 to 35 and substituting therefor the following: (a) $100 for an individual residing in any province other than Quebec, $85 for an individual residing in Quebec, and (b) the amount that would, but for this subsection, be the tax payable by him under this Part for the year.
A point of order was then raised, and the Chair reserved its decision with respect to clause 30. The committee thus accepted to suspend consideration of that clause with the understanding that I would come back today after examining the precedents and all the rules to make an appropriate decision. The point of order rested basically on the argument that the amendment went against important provisions of the ways and means motion.
I want to make it clear, as the hon. member for Winnipeg North Centre pointed out at that time, and as I pointed out myself, that the ways and means motion does not preclude the possibility of amendments to the bill being introduced. For that matter I would remind hon. members of the provisions of citation 265(1) of Beauchesne's fourth edition, and I quote:

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No member other than a minister of the Crown may introduce a bill for the reduction of duties. The government must take full responsibility for the taxation levied to provide the revenue. But the House enjoys complete freedom to make every representation possible to the government with regard to the manner in which the ministers discharge this responsibility. This duty the members may perform by moving amendments to reduce the taxes proposed by the administration.
In this case, I even added the comment that in my own opinion the Chair's ruling did not rule out at all that possibility. Hon. members may therefore move such amendments provided, of course, they are in accordance with our rules, do not go against the provisions of the ways and means motion and are relevant to the clause to be amended. However, during the weekend, I have tried to examine and study this issue in depth, to look at the precedents and the authors at our disposal, and I am now convinced that the difficulty now facing us is not along those lines.
What concerns me especially is the fact that the amendment proposed by the hon. member for Edmonton West is in reality a substantive alternative, that is an alternative to the essential proposal contained in clause 30 of the bill.
I would like to note that the committee has every right to consider different proposals and different alternatives to a proposal contained in a clause of a bill, provided of course such proposals are otherwise acceptable. The Chair must therefore insist that before considering a substantive alternative or proposal, the committee must have had the opportunity to vote on the original proposal, that is the proposal contained in clause 30 of the bill as it was passed by the House on second reading. In this regard, I would like to refer hon. members to page 522 of the 19th edition of Erskine May, where we can see the following.

At the bottom of page 522 of "Erskine May" we find:
Furthermore, an amendment may not be moved to insert words at the beginning of a clause with a view to bringing forward an alternative scheme to that contained in the clause (s), or to leave out the whole substance of a clause in order to insert different provisions (t), or to substitute in effect a new draft for an existing clause (u). In all such cases the question that the clause stand part of the bill should be negatived and a new clause brought up at the proper time.

The logic of this procedure seems obvious. The committee must not be asked to vote on an alternative before having voted on the original proposal contained in the bill. More specifically, the committee must first vote on clause 30, and then, if this clause is rejected, an alternative such as that proposed by the hon. member for Edmonton West can be considered, not as an amendment, but as a new clause.
I must therefore rule the amendment of the hon. member out of order on the grounds that it contains a proposal which should be submitted to the committee only if the committee has first of all rejected the original proposal contained in clause 30 of the bill.

At this time 1 would add the comment that, in my opinion, the amendment moved by the hon. member for Edmonton West is not at fault procedurally as to relevancy or as to its relationship to the ways and means motion. I submit that it is relevant to the clause so it could be moved in part but not globally. It is my interpretation that by globally it is meant to replace a complete proposition instead of amending it. Second, the intent of the proposition does not offend and would not offend the ways and means motion if proposed in a proper way. As I said before, it could be accepted as a new clause if clause 30 was defeated or it remains optional to hon. members through the normal procedure by amending parts of clause 30. To do so may be to attain the same objective.
My conclusion is based on the basic procedure and practice that in committee you do not vote on an alternative clause before making a decision on the clause itself. Therefore, I canot accept the amendment moved by the hon. member for Edmonton West in the present form.


Ramon John Hnatyshyn: Mr. Chairman, I gather that, on the basis of your decision, we can carry on with clause 30. I want to point out to the minister that in essence what the Chairman has said underlines and supports the proposition put forward to the minister on many occasions, namely that his suggested plan for the province of Quebec is a dramatic departure from what he is doing for all of the other provinces in this country. It underlines that very basic proposition, if the ruling of the Chairman is to be accepted on the basis that he puts forward.
The minister has repeated over and over again during the course of our deliberations the fact that he has gone through a process of consultation with the provinces on this most important provision of the bill. 1 want to ask him some very straightforward questions. I hope we can get through them in a short period of time. Not only will it be interesting, but it will give the minister an opportunity to give us some specifics as to what kind of consultation has taken place. We can then judge how we are to deal with this particular provision.
I want to ask the minister some questions with regard to each of the provinces. They will be essentially the same questions. I will start with the province of British Columbia. In connection with this provision contained in clause 30, how long did the minister spend in consultation with that province? With what minister did he consult? What is the name of that minister? Where did the minister meet with his provincial counterpart to discuss the provisions? Would the minister be good enough to answer those questions in so far as the province of British Columbia is concerned?


Joseph Jacques Jean Chrétien: Mr. Chairman, I do not know the orientation of the hon. member's questions. However, I had occasion to meet with Mr. Wolfe, the minister of finance. I met him in his office about two weeks before the budget. He was already aware through information received by his deputy minister and
[The Chairman.)
June 19, 1978

my deputy minister of the purpose of my visit. After that visit, I had been in touch with him on the telephone many times.
1 recall that in this House the minister responsible for interprovincial relations gave the dates. I do not have them here. However, I called him many times. A week before the budget, he sent his deputy minister and other officials to Ottawa for a full day of discussion, as did every other minister of finance.
In fact, the British Columbia government decided to change the date of its budget in order to come up with its budget the same night as ours. The British Columbia minister of finance was happy to declare that he was cutting sales tax two hours before us. Of course, he did not mention the federal participation; that only came to light later. However, he was later reminded of that by the press. There was a lot of consultation. The best example of the consultation was that it was approved by his cabinet. He changed the date of his budget to be able to make the announcement a few hours before me. 1 have to be fair to him; he asked my permission to go on the air before me. I said that was all right with me, that I did not mind the political criticism that one receives.


Ramon John Hnatyshyn: 1 wonder if the minister can now turn his attention to the province of Alberta and tell us with whom he met there. How long did he spend with that minister? ! want to get through all the provinces. How long did he spend and what arrangement was finally entered into with the minister and the province of Alberta?


Joseph Jacques Jean Chrétien: Mr. Chairman, I forgot to mention that the first time I spoke about the possibility of cutting sales tax was in October. That is the first time it was raised as a possibility. 1 again raised it in January when I met the ministers of finance. There was more interest then than the first time. The first time, only Ontario and myself were interested. Eventually 1 got more support.
In the case of Alberta, the same day I visited the British Columbia minister of finance I stopped in Calgary. I talked on the phone with the Alberta minister of finance on that day. I remember the way I approached him. I said "Merv, I would like to help you cut your sales tax." He laughed because in Alberta there is no sales tax. That was just mentioned briefly on the phone so that he would be aware. Because he was not in a position to talk very much, I called him the next morning or afternoon. I again talked to him before the budget. Of course, they were not concerned about that because there was no question of cutting tax in Alberta since they are in the very privileged position that no one in that province pays any sales tax.


Ramon John Hnatyshyn: I am sure the minister and many people in Alberta are really laughing about that form of consultation. I now want to move on to Saskatchewan, my province. With whom did the minister discuss? He does not have to give us all the facts of his discussion. He has stated that he had a meeting with the finance ministers. 1 accept that as a matter of public record. I am more interested in knowing that specific consulta-
Income Tax Act
tions the minister had with each of the provincial ministers. With whom did he meet in the province of Saskatchwen? How long did he spend in consultation? What was the proposal ultimately agreed to between himself and his provincial counterpart?


Joseph Jacques Jean Chrétien: Mr. Chairman, the hon. member can drag this on for hours. I consulted with them. Later that afternoon, I stopped in Regina where I had a very pleasant discussion at the legislature. 1 remember well that when I arrived in Regina, the only person at the door of parliament was Premier Bla-keney. He wished me well. We had a nice talk about many things. He had just returned from Banff. It was a pleasant sunny afternoon. When we met with the minister of finance, I had Mr. Neufeld with me. He was born in Saskatchewan. We spent some time discussing different matters. We did not only discuss sales tax; we also discussed monetary policies, the value of the Canadian dollar, the effect on the Canadian economy and how they reacted to it.
We discussed general policies in terms of sales tax. We spent a good deal of time on that. There was no great difficulty. One problem in Saskatchewan was that they had already passed their budget. That technical problem was eventually overcome. In Saskatchewan they consulted the cabinet. They even consulted their caucus on that.
I will now resume my seat and wait until the hon. member asks about Manitoba.


Ramon John Hnatyshyn: Mr. Chairman, we may go down in history as having the first buffoon as Minister of Finance, the way this fellow is operating now. He may want to talk out the time, but I have some very straightforward questions. If the Minister of Finance is going to act like a buffoon, that is one thing. We have a limited amount of time. I think it is reasonable to expect some simple answers from the minister. These are questions he can answer. I do not want a travelogue, I want specifics.
The minister spent a lot of time and effort in consulting. I am trying to determine what happened in each province. I now want to deal with Manitoba. I would like the minister to be concise. We are interested in knowing who was with him, but we can talk about that privately. I want specific details as to what happened in each province.


Joseph Jacques Jean Chrétien: I would not ask the hon. member, who used some bad expressions, to use what we call the "cervelle d'oi-seau". When 1 arrived in Manitoba I must say, Mr. Chairman, 1 had a very pleasant meeting. It was at the airport. The minister came to meet me at the airport. The name of the minister is Mr. Craik. We discussed the matter. It took him about five minutes to understand. It took the opposition here two months.


Some hon. Members:: Oh, oh!


Joseph Jacques Jean Chrétien: After five minutes he had agreed. I recall very well because I had reserved a couple of hours for him and
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June 19, 1978
Income Tax Act
at the end of half an hour or 35 minutes we had finished our serious business; he was a very generous host and we took a more relaxed attitude for the rest of the time until I took my plane. 1 talked to Mr. Craik many times. He had some problems. He sent his bureaucrats to Ottawa, like the others, to discuss them for a full day.
There was a different situation in Manitoba. A week before the budget while I was talking on the phone with him he informed me that Premier Lyon was in town. In fact, he had come for the swearing in ceremony of the former premier, Mr. Duff Roblin, to the Senate that day. I suggested I should meet him and he said it was a good idea. He called his own first minister who then came to see me in the afternoon. He told me he had 20 minutes available. In fact, he stayed one hour and 45 minutes with me. We discussed this subject and many others in relation to fiscal and monetary topics which concern not the federal government alone but the provincial governments, too. So in the case of Manitoba 1 talked not only to the minister of finance but spent over an hour with Premier Lyon. I think it was a very good exchange. We did not agree on everything, of course, but it was a most pleasant occasion.


Some hon. Members:: Get to Ontario.


Ramon John Hnatyshyn: The minister has got the idea. Perhaps he will carry on and let us know what happened in the case of the other provinces. I want to find out what happened in the case of each of the provinces.


Joseph Jacques Jean Chrétien: I will carry on from west to east, because if I move around too much the hon. member will get confused. I will move to Ontario.
In the case of Ontario, at the first meeting with my colleagues as Minister of Finance in October I made this suggestion and discussed it privately with a number of people. Since I thought it was a good idea-it had been proposed by my bureaucrats-I discussed it with the Ontario minister of finance, Mr. McKeough. Does the hon. member know him? In fact, I asked him to submit the proposal to his colleagues himself. 1 knew he was interested in it and I did not want to be the one to make the suggestion-hon. members know that the provinces are always nervous when something is proposed by the federal government. Even though it was my idea 1 thought this was a good solution; I do not know whether he suggested it to me or 1 to him. I said to him: "You propose it to the other ministers so that no one will say it was a put-on by the federal government". We discussed the proposition many times after that during January, and Mr. McKeough was one of the first I called three weeks before the budget. The first I called was Parizeau, the second was McKeough. There was a meeting between Mr. McKeough, Mr. Parizeau and myself in Montreal on a certain date-it was in room 435, I guess, of the Bonaventure Hotel.


Some hon. Members:: Hear, hear!


Joseph Jacques Jean Chrétien: I will not go into the details of that meeting but we discussed for four hours not only the sales tax but a

whole range of fiscal and monetary policy matters, the value of the Canadian dollar, all the preoccupations we had in mind as ministers of finance. They both said they were pleased that, for the first time in history, a federal minister of finance had sat down with provincial finance ministers to discuss his own budget.


Some hon. Members:: Hear, hear!


Mr. Chr6tien:: Following that discussion I was in communication with Mr. McKeough on at least a dozen occasions because he was receiving telephone calls from other ministers of finance and he was keeping me informed of some of the problems involved, trying to work in collaboration with all the ministers of finance.


Some hon. Members:: Hear, hear!


Joseph Jacques Jean Chrétien: I have to pay credit to all the ministers of finance. They have acted in good faith and shown great form as gentlemen. Unfortunately, Quebec did not deliver a yes or no as had been agreed upon. But I want to make it clear I talked with Mr. McKeough at least a dozen times before budget night.
I turn now to Quebec.

In the case of the province of Quebec, as 1 said earlier, Mr. Jacques Parizeau, the Quebec minister of finance, was the first person I called when 1 decided to present a budget and to make my proposal concerning the sales tax cut. Then I called Mr. McKeough and we discussed it together. He was interested in that matter. He had problems, and then we met with Mr. McKeough. Some members do not seem interested because I am speaking in French. And then, we discussed several times by phone. I know he talked about it with other ministers, and he sent his officials to Ottawa like the others, on the Monday before the budget and we agreed that we were going to discuss it again and we did it during that week. I remember discussing with him on the Friday before the budget. The budget presentation was Monday night. I talked to him that Monday. Contrary to my expectations, that Monday Mr. Parizeau was to answer me yes or no like all other ministers of finance, but forty-eight hours only after the signing by all other ministers of finance of an agreement with the federal government on the sales tax cuts, Mr. Parizeau announced his unilateral cuts without any consultation with me or any other minister of finance. This is the way it happened. And if at least we had been aware of Mr. Parizeau's intentions during the negotiations, I might have been the-


Gérald Laniel: Order, please. I regret to interrupt the hon. minister.


Some hon. Members:: Six o'clock!
June 19, 1978


Gérald Laniel: The committee has already agreed that consideration of clause 30 should end at six o'clock. Shall the clause carry?


Some hon. Members:: Carried.


Some hon. Members:: No.
Clause 30 agreed to: Yeas, 66; nays, 30.


Gérald Laniel: It being six o'clock, I do now leave the chair until 8 p.m.
At 6.03 p.m. the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at 8 p.m.
Mr. Friesen:: Mr. Chairman, I guess it pays to be here on time.


Some hon. Members:: Hear, hear!


Benno Friesen: This is an outfit which likes to sneak this by you in a hurry.
I should like to draw the attention of the Minister of Finance or his parliamentary secretary, whichever one is better, to section 146 (l)(j)(i) opposite page 38 of the bill, which reads as follows:
-a contract between an individual and a person licensed or otherwise authorized under the laws of Canada or a province to carry on in Canada an annuities business, under which, in consideration of payment by the individual of any periodic or other amount as consideration under the contract, that person agrees to pay to the individual, commencing at maturity, an annuity for life-
I brought this matter to the attention of the previous minister of finance. It is a subject about which I am very concerned. When an RRSP matures, the policyholder at the age of 60 buys a life annuity in one of the presently recognized financial institutions, whether it is a life insurance company, a credit union, a bank or other such organization. 1 would like to see the government take a more liberal, with a small "1", approach to this, open that whole reservoir of funds gathered together under the RRSP and make it available to other institutions which are not at present recognized by the government as accredited institutions. I am thinking of non-profit organizations such as, for example, a university, the YMCA, the Red Cross, World Vision, Food for the Hungry, church organizations, colleges, or bible institutes, all of which are always looking for a fresh pool of ready capita! to help their organization and which have to go continually to recognized lending institutions for that reservoir of capital. It seems to me we are asking those non-profit organizations to work against themselves when they have to borrow at the highest rates possible.
Income Tax Act
Here there would be a whole new reservoir of money. We could license them through the Securities Exchange Commission or some such body, and have the government organize a licensing procedure so that these institutions would have the opportunity of tapping this new pool of capital to help them in their capital programs or operating expenses. That is my first point.
Second, it seems to me that the clientele who invest in annuities would have a new option in investing their RRSP. There is a whole clientele of taxpayers who would love to take part in an annuity program if they knew where that money was going. At present, when they go through a bank or an insurance company they know very well that the money will be reinvested but they have no control over the reinvestment program-that is the option of the credit union or bank. I am thinking of people with very strong religious convictions, for example, who do not necessarily want their money invested in liquor companies, distilleries or tobacco companies but would gladly invest their money in an RRSP if they knew that the annuity in the end could be turned over to a charitable organization, a church, a university, the YMCA, or mission programs.
If the government would liberalize this aspect of it, I think they would be doing a service to the taxpayer which has not been available up to the present time. I wonder if the minister, to whom I mentioned this a couple of years ago, would entertain this kind of flexibility for the taxpayer which would allow him to invest in this program with some knowledge of where his money is being invested, and let him live with his conscience this way.


Joseph Jacques Jean Chrétien: I think we have to keep in mind the purpose of an RRSP. It is an investment, and we are giving an opportunity to a person to put aside some of his earnings for his retirement time. We propose here the addition of the RR1F which adds flexibility to the program by allowing a person, when he reaches the age of 71, to choose either to buy a life annuity or to cash in his RRSP. What the hon. member is suggesting is that we should permit people to invest in religious organizations, the YMCA, universities, and so on. What we are trying to achieve is to make sure that the money put aside by people making those savings is guaranteed so that when their time of retirement comes the money will be there. It is always possible to give money to charitable organizations, but I do not think it would be wise to invest it in this case because it might lead to all sorts of problems.
Suppose that someone decided that his RRSP should be invested in the YMCA, but it turns out that in 20 years' time the YMCA in Ottawa goes bankrupt. The poor man, who had decided to invest in this organization, would find that it could not deliver his money at the end of the process. That is why we are asking financial institutions with a sound financial backing to guarantee that the money invested with them will be available at the time of retirement of the annuity holder.
1 share the hon. member's thought that church organizations and universities would be delighted to have that pool of money, but legislators have an obligation to ensure that sav-
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June 19, 1978
Income Tax Act
ings exempt of tax will be available to annuity holders at the time of retirement. That is one worry we have with the proposition of the hon. member. Of course, it is always subject to review. An analysis will be made of any suggestion. I can assure the hon. member that it will be noted by my officials. I have just given off the top of my head what I think are valid reasons for being hesitant to take the road suggested by the hon. member.


Benno Friesen: I agree with the minister when he indicates that the purpose of RRSPs is investment. That is just the point. I am looking for some additional options for investing money. The minister said it is necessary to secure the money to ensure, when people want to draw retirement benefits, that it is there and has not disappeared because of the crumbling of some organization. That concern is very valid.
A few years ago a financial institution named Commonwealth Trust existed in British Columbia. A good many taxpayers and investors put money into that company, and it is no more. I am sure that company was registered and recognized by the Securities Exchange Commission. Also a few years ago the Bank of Montreal lost something like $60 million in one shot in a matter of international currency exchange. The bank was far from crumbling, but the point is: highly recognized financial institutions are capable of losing money, making poor investments and even disappearing from the scene.
If the government wants to licence non-profit organizations, it can be done with the same kind of strictures, limitations and demands which are put on trust companies, insurance companies and so forth. Why should taxpayers not be given the additional opportunity of seeing where their investment dollars go? Then they would have at least the assurance and pleasure of seeing their money invested in what they think is the most positive and creative manner.


Joseph Jacques Jean Chrétien: I take the representation of the hon. member, but I have nothing to add to it.


David Orlikow: Mr. Chairman, my question concerns an area which was discussed earlier this afternoon. Has the minister been able to make any progress in solving the difficulty with regard to RRSPs? This afternoon the minister admitted that the problem exists. Has he given any consideration to the problems which will arise in terms of equity if he makes that change? I do not mean today, but can he give it consideration in the near future? Will the income tax system be made more equitable? Will the type of situation which I referred to this afternoon be eliminated? According to information released by Revenue Canada, in 1975 over 300 people had incomes of over $50,000 and paid no income tax. Those incomes are quite large by anyone's standard.


Joseph Jacques Jean Chrétien: We always look at ways and means to improve the tax system. We are attempting to avoid as many loopholes as possible. The hon. member is referring to a scheme whereby a person who makes $50,000 takes advantage of all exemptions which exist in the law. It is not a case of this

person paying no income tax. Usually it is postponed, and so on. We attempt to avoid that situation.
Everyone can make heartbreaking cases. The situation under RRSPs has been referred to where two minors can be cut and so on. We have to overcome the problem of very large accumulations of funds tax free which, at the end of the process, could be transferred with no tax. It could be a big pipeline of tax exemptions. I should like to examine all aspects rather than attempt to solve one specific problem which perhaps could create a large loophole for others to abuse.
Dealing with the situation concerning unmatured RRSPs and dependent children, I should like to look into that. I have a lot of sympathy for the situation, but at the same time it is a departure from the present tax system. In relation to assets being transferred to children within a family because of the death of an RRSP holder, if there is some capital gains and unpaid taxes on those assets, this is the occasion for the government to take its share of what has to be paid according to the law of the land.


David Orlikow: I would not want someone reading Hansard to have the impression that I was referring to hypothetical cases of people using various loopholes in the rules and regulations of the Income Tax Act as a way of avoiding the payment of income tax. I was not talking about hypothetical cases. This afternoon I quoted precisely from the annual report of Revenue Canada. It indicated exactly how many people were involved. I am not talking about people avoiding taxes by not reporting income. The report concerned people who avoided the payment of income taxes, despite the fact that over 300 of them had reported incomes of $50,000, $100,000 or $200,000.
In all seriousness, it would be much easier to say no to the people in low and middle income levels who want a bit of a break in the disposition of their RRSPs. It would be difficult to say to them that they are being asked to pay a pretty heavy tax because everyone is doing so. It is very difficult to indicate that to them when one realizes that there are large numbers of people who find ways of not paying income tax.
I urge the minister to look at the United States legislation which set up the Securities Exchange Commission. One of its provisions requires corporations which operate and sell shares in the United States to make public information with regard to the remunerations paid to their directors, officers and underwriters, as well as their contracts with the corporations, their bonus and profit-sharing arrangements, stock options and so on. It is standard for that information to be made public in the United States. Therefore, Americans know more about what corporate exectives are doing and what their incomes are than Canadians do. The information we require is much less and it is not given to the public. It is time for Canada to have that type of legislation in order for Canadians to know how the free enterprise system operates.


Joseph Jacques Jean Chrétien: Mr. Chairman, I am willing to look into that. Some of those things require review once in a while. When I tabled the Bank Act amendments, I made provision to the effect that perhaps it would not be advisable for presidents of
June 19. 1978

banks to be directors of corporations. Now I am receiving representations from corporations that do not like this provision. I am always open to suggestions and will look at new ways to open up society as much as we can and to make sure there is a minimum of conflict of interest in society, but it is not easy to achieve this.


Lincoln MacCauley Alexander: You are all heart.


Joseph Jacques Jean Chrétien: I am doing my best and I will certainly look into the suggestion of the hon. member. I do not know if it will serve any very good purpose, as the hon. member thinks it will.


Mr. Neil:: Before we recessed for supper, Mr. Chairman, the minister indicated that perhaps some of us on this side were panicking as a result of receiving correspondence from credit unions in our constituencies. I would like to associate myself with the comments of the hon. member for Winnipeg North and the hon. member for Provencher regarding the present amendments in respect of RRSPs. On June 12 the hon. member for Dauphin asked the Minister of Finance a question regarding the taxation of RRSPs and the minister said it was his understanding that, as far as RRSPs are concerned, there is no change at all.
In the course of the debate this afternoon the minister indicated that there had in fact been some changes in taxation of RRSPs. I find this very interesting because the credit unions and other organizations-


Joseph Jacques Jean Chrétien: Just for clarification, Mr. Chairman, I agree with the hon. member that I said as far as 1 knew there were no changes. I said that in reply to his colleague, the hon. member for Dauphin, on June 12. That was on the basis of what I knew at that time. It came to my memory when I had to reply in the House that there was obviously a change, in relation to when the money is transferred to what I called a third party, but just in this case.


Douglas Charles Neil: Mr. Chairman, it is interesting to note that the concern expressed in the letters we have received from credit unions is in regard to uncertainty as far as taxation is concerned. Let me read a paragraph of a letter from one of these credit unions. It is as follows:
Also, the proposals make a basic change in the conditions under which people entered this savings program.
The problem as I see it is that people make investments and participate in plans on the basis of rules and regulations set out by the taxation department, and there must be some certainty as far as taxation is concerned. A short time ago I had occasion to speak with a tax expert who said that the most important thing as far as taxation is concerned is certainty. If you have a situation in which the tax laws are changed from year to year, you cannot plan your affairs. This is the concern of the credit unions; there is no certainty. People invest in plans on the basis of the future.
Today we have some proposed changes regarding taxation, and this is what concerns me. The minister has said there has
Income Tax Act
been a difference in tax in relation to what happens at the death of a participant of the plan. I would like to ask the minister whether when a participant individual dies the present value of the plan is considered as "rights or things"? The minister is a lawyer and probably has handled numerous estates. For example, in respect of the Wheat Board there are rights and things for which you file a separate return because there are exemptions. Under these circumstances, is an individual entitled to claim the present value of a plan as "rights or things"?


Joseph Jacques Jean Chrétien: No.


Douglas Charles Neil: Am I correct in saying you have to add the present value to your income in the year of death?


Joseph Jacques Jean Chrétien: Yes.


A. Daniel McKenzie: Mr. Chairman, I hope the minister is a little more co-operative tonight after turning down my motion this afternoon calling for a little assistance with the terrible beer shortage we have in Manitoba. He would not relax his labelling practices or the excise tax and the people of Manitoba remember that sort of thing. There seems to be considerable concern on the part of quite a few credit unions across the country about this amendment. The credit unions pointed out the following in a letter I received:
Wc urge you to maintain the flexibility in tax options now available to our members who become entitled to RRSP funds after a planholder's death. In particular the option to purchase an income averaging annuity and the right of the recipient to pay income tax on the amounts received. This is of particular importance to recipients in the low income tax bracket.
I was not here this afternoon so I did not hear whether the minister gave an explanation. Perhaps he has had second thoughts since this afternoon and can now indicate whether the government has any plans or amendments.


Joseph Jacques Jean Chrétien: Yes, Mr. Chairman, I gave an explanation of that point, and I suggest that the hon. member read Hansard tomorrow.


A. Daniel McKenzie: In view of the minister's answer, is he prepared to do anything in respect of the request? I am sure he has been receiving these letters from credit unions across the country. Does he have some response to their requests? This letter points out:
Under current rules, it is the recipient of the RRSP funds who is taxed when the planholder dies. It is now proposed to include the RRSP funds on the planholder's final income tax return.
This means taxes could be even more severe than if the planholder had withdrawn the funds in a lump sum before he died, since such items as salary, capital gains and accrued investment income must be reported on the same return.
The letter goes into some detail to point out that the taxes being levied are extremely high, and then states:
Consider the case of a single parent (and tax law does not recognize common law marriages, so this may be a person who is separated or divorced but again living in a family situation) who dies on December 31 of a year in which salary amounted to $15,000. An RRSP worth $25,000 is left to two children under 16 years of age and not working.

June 19, 1978
Income Tax Act
At present, the RRSP would be divided equally and taxes of approximately $2,400 applied to each portion. This would leave each child $10,000.
If the proposed changes are accepted, the value of the RRSP would be added to the salary for the year, giving a taxable income of $40,000 on the planholder's final income tax return. At Saskatchewan rates, income tax on this amount is $13,022. From $13,022 must be deducted the income tax on the salary ($1,968) that would be collected anyway, leaving $11,054 of tax applicable to the RRSP.
So the value of a $25,000 RRSP is reduced to $13,046 by taxation.
Each child would receive $6,873 (instead of $10,100 under the current rules).
It should be noted that this example has been simplified. It does not take into account any capital gains that would be realized at death. If capital gains are realized and/or the salary and RRSP are larger, the loss to taxes would be greater.
I see the minister has walked out of the House in the middle of my representation and my asking a very, very important question. Perhaps we would get more satisfaction if the officials on the floor gave us some answers, instead of the minister walking out when we raise these issues.


Mr. Lumley:: The hon. member would have received his answer if he had been here between four o'clock and 5.30 when this point was discussed. The representation he has just made has already been made by three or four members in the House.


A. Daniel McKenzie: Obviously the answers were not very satisfactory. I was not able to be here between four o'clock and five o'clock. Was this particular example read into the record at that time?


Stanley Howard Knowles: Yes, it was.


A. Daniel McKenzie: Did the hon. member for Winnipeg North Centre get a letter from the Assiniboine Credit Union also?


Stanley Howard Knowles: Yes, and so did the
hon. member for Winnipeg North.


A. Daniel McKenzie: Obviously the answers were not satisfactory this afternoon. 1 do not know whether the hon. member for Winnipeg North Centre received a satisfactory answer. It is unfortunate that I could not be here this afternoon; however, we are still discussing clause 34 tonight. 1 wish to make representations on behalf of this credit union and I would appreciate it if the parliamentary secretary would fill me in. Perhaps their thoughts have changed since this afternoon.


Edward C. Lumley: Mr. Chairman, representations from the Assiniboine Credit Union have already been made by the hon. member for Assiniboia, and the minister acknowledged him this afternoon.


An hon. Member:: It is not the same letter.


Edward C. Lumley: The letter the hon. member has been referring to is the same letter which has been received by many members from many credit unions across Canada, so the representation has been very similar. Rather than take up the valuable time remaining, because we have approximately 20 more clauses to address ourselves to tonight, I would suggest that

the hon. member read Hansard tomorrow for the satisfactory answer which the minister gave.


A. Daniel McKenzie: I am afraid it cannot be sluffed off that easily, Mr. Chairman. We are talking about too many people. 1 do not know whether the whole letter was read into the record this afternoon.
Another concern the credit unions have is listed in this letter:
Co-operative Trust is also concerned about proposals that may mean lower interest rates and higher costs for the annuity funds that planholders buy with their RSP savings at retirement.
If the proposed changes are implemented, planholders between ages 60 and 71 could buy a term annuity providing payments to age 90. This represents a term of between 19 and 30 years.
But the planholder would have the option of basing the term on the age of his/her spouse, if that person is younger than the planholder, so the term could be much longer. For example, if the planholder is age 60 and the spouse is age 50, the term could be either 30 or 40 years. And the interest rate would have to be guaranteed for the entire term.
Interest rates on the annuities will be low because issuers will have to guarantee the rate over a long period of time without the assurance that the annuity will remain intact throughout the guarantee period.
This is because it is proposed to have all remaining funds paid out at the time of the planholder's death, whenever that may be.
1 do not know, Mr. Chairman, whether this whole letter was read into the record this afternoon, but it is one worth-while reading in a second time to get the point across to the minister and his officials. I would like the parliamentary secretary to give us some indication whether they are going to have a second look at these requests, or is the matter to remain just as it is?


Edward C. Lumley: Mr. Chairman, I want to thank the hon. member for reading the whole answer into the record. As I recall, the second part was not read previously. As the hon. minister has indicated, this is a very complex and important issue, and we are grateful to the credit unions for bringing this to our attention. As was indicated this afternoon, we will be discussing this with the credit unions and other financial institutions to attempt to arrive at a reasonable solution.


A. Daniel McKenzie: I am glad the parliamentary secretary brought to my attention the fact that the whole letter had not been read into the record. I will read another section. It is entitled, "Age to be set":
It is also important to note that it is now proposed to legislate an age at which RRSP annuities could start.
Under current rules, the annuity can start at any age. But it has been proposed that the planholder would have to be at least age 60 to mature the RRSP. If the plan was collapsed before age 60, the entire amount would be included in taxable income for that year.
These long-term disadvantages to the proposed changes to RRSP legislation have been overlooked in some public comments by other business and consumer organizations. .
The whole letter has now been read into the record. I hope the minister and his officials will give this their full and complete consideration.


Mr. Benjamin:: 1 will not read the letter again, Mr. Chairman. In fact, I will not read any of the letter again. The
June 19, 1978

parliamentary secretary knows that all hon. members have received letters from dozens of credit unions as well as Co-op Trust, Co-op Insurance, et cetera.
The parliamentary secretary said a few minutes ago that the minister would be meeting with the credit unions, and 1 think 1 heard him aright when he said, "to reach some reasonable settlement". I do not know if those were the words he used, but I think they were. Once this clause is passed, Mr. Chairman, I cannot understand how the parliamentary secretary or the minister can reach some kind of settlement with the credit unions, Co-op Trust and the Registered Retirement Savings Plan holders once this becomes law, unless the Liberal government has some unique way of making changes in the way this clause reads without amending the law.
1 would like to remind the parliamentary secretary that a predecessor of the present Minister of Finance, and I think even the first budget of this Minister of Finance, almost begged Canadians to save by registered retirement savings plans. There was great encouragement in earlier budgets of a few years ago, and a lot of Canadians did so. Many credit unions, Co-op Life, Co-op Trust, chartered banks and other financial institutions went to work with massive advertising campaigns to get everybody to buy a registered retirement savings plan.
I want to say, Mr. Chairman, that there is no conflict of interest here. I do not have one of those, and I have no intention of buying one. I will just stick with term deposits, draw my compound interest, pay my income tax on the interest and stay further ahead. I am further ahead than if I were to buy these annuities which you have to buy up as introduced by the Minister of Finance, after the government brought in earlier budgets to encourage people to buy registered retirement savings plans and gave them generous tax benefits.
Without reading the letter, Mr. Chairman, in the case of a single parent who dies leaving two children, the benefit drops from $10,100 to $6,800. Surely, that is like an umpire changing the rules in the fifth inning. I hope that the Minister of Finance and his parliamentary secretary have the authority to do one of two things: either phase this clause in over a period of four or five years so the holders of these plans can make their own assessment as to which is best for them-get out of the thing or stay in it-or, even better, withdraw clause 34 entirely from the legislation. The parliamentary secretary or the Minister of Finance could then meet with the credit unions and Co-op Trust and discuss with them what the government would like to do in terms of taxation with regard to registered retirement savings plans. But to change the rules about halfway through the ball game is not fair in terms of the tax penalty after the government has spent a few years and two budgets enticing Canadians to buy registered retirement savings plans.
Surely the minister and the parliamentary secretary must be having second thoughts about clause 34. I say they have to because mail that 1 am sure all hon. members have received
Income Tax Act
indicates that people and organizations who have written cannot all be wrong. I would like to know whether the minister is prepared to withdraw clause 34. The parliamentary secretary should quit trying to kid this House that once this becomes law somehow the minister will meet with the credit unions and credit trusts and reach some reasonable settlement-1 think those are the words he used. How the hell can a minister of finance agree to something different from what is in the law if he meets with these people after the clause has passed?
I doubt if the government and the minister will be out very much money if clause 34 were withdrawn. Later on, if he is still Minister of Finance, and after he has met with the credit unions and the Co-op Trust, if he wants to bring in another bill he is perfectly welcome to do so. But I want to remind him that it was his government that got tens of thousands of Canadians to buy these RRSPs and now the government wants to increase the tax on them by anywhere from one-third to a half, depending on the circumstances these individuals are in. Surely that is not fair.
Surely the Minister of Finance must know that. Surely he must realize that whatever his advisors told him was wrong. Surely the co-operative movement and the caisses populaires are speaking up for the tens of thousands of people who have bought these plans, on the advice of the government, with their tax incentives. And now within a matter of two or three years after these people have done that, the minister proposes to increase the tax on these plans. That is not fair ball.
Mir. Alexander: That is less than honest.


Leslie Gordon Benjamin: 1 think the minister should tell the House tonight that once we reach ten o'clock and the bill goes through, it goes through without clause 34.


Joseph Jacques Jean Chrétien: Mr. Chairman, 1 cannot give the guarantee to the hon. gentleman. I said earlier that this clause is very important because it is interrelated to the new flexibility that we are giving to the people who have bought registered retirement savings plans. We are adding via this bill a new flexibility. As 1 have said many times today, when one reaches the age of 71 only two options are available: either the individual cashed his RRSP and paid the tax in one shot at that date, using the money as he wanted, or he could buy a life annuity. With the RRIF, the program which we are introducing today, the individual will have much more flexibility. He will be able to buy another form of savings which will be called the RRIF. He will be able to spread his income over a period of years. The tax will be paid at each year's level. So this system is providing a lot of flexibility to those Canadians who bought an RRSP.
In the discussions 1 have had, from the letters 1 have received as well as from my own information, we can see some problems for holders of the unmatured RRSPs when these plans go to children or dependents. To the hon. member for Winnipeg North Centre and to the hon. member for Assiniboia who have made representations in that regard, I say

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that I am looking into that situation. I have a lot of sympathy with this problem but I want to take a look at the implications before coming to a decision. In protecting certain circumstances I do not want to create more problems.
I might add that I have been made aware of these problems only during the last few days. I hope I will be able to come up with a solution as quickly as possible. If I can, 1 will find ways and means to do so. If there is some precedent you want to correct in midstream we can always take steps to correct it subject to later legislation. I will undertake to go to work as quickly as possible and try to resolve the situation. I do not want to drop all the schemes under the RRIF which have been well received by the public and which give a lot of flexibility to the people who will reach 71 and want to plan their income but do not want to be forced just to buy an annuity. If they die a year after, there is nothing left for the survivors of the spouse. We must find a solution to cope with the problem of unmatured RRSPs and in the process not destroy the RRIF programs. That is an undertaking I have made public this afternoon in answer to the many points raised by both sides of the House.


Edward C. Lumley: Mr. Chairman, in order to ensure that there is no misunderstanding with respect to comments raised by the hon. member for Regina-Lake Centre, I would like to say that the minister made a commitment to meet with the trust companies, credit unions and other financial institutions in trying to arrive at a reasonably satisfactory solution. At the present time no official representation has been made by the credit unions. All we have are letters sent by the individual credit unions or representations made by members from both sides of the House.


Leslie Gordon Benjamin: Mr. Chairman, I am glad to have the words of the parliamentary secretary. Once this clause becomes law, unless new legislation is brought in, no matter how much one agrees with the representations of credit unions, the only solution is to amend the law. It does not say much for the advisers to the Minister of Finance and the parliamentary secretary. Since the budget was brought down it has taken that time for the Co-op Trust and the credit-unions to realize what the ramifications of the legislation will be. If the minister's advisers did not follow through on what the ramifications are, he should fire those advisers.
The Minister of Finance talks about the RRIFs, the registered retirement income funds. He is a very optimistic minister. The change proposed by the minister would allow RRSP holders to establish a registered retirement income fund which would provide payments until the planholder reaches the age of 90. Now, really, Mr. Chairman, why did he not put down age 190? The RRIFs will provide continually increasing payments as long as the fund generates a return on its investment. That will tend to offset some price increases caused by inflation. Maybe that is what the minister's advisers had in mind. I do not know if there is anyone in this place who will live to age 190, except for the hon. member for Winnipeg North Centre and the right hon. member for Prince Albert, but I just do not

accept it, and neither does the Co-op Trust and the credit unions, and I think they are probably somewhat more expert in this area than I am.
I do not think the alternative that the Minister of Finance suggests is adequate. I do not think it is sufficient to overcome or offset criticisms by the co-operative and credit union movement of what the government intends to do on this bill concerning the registered retirement savings plans. If the rules are to be changed on a long-term investment or long-term pension program, you cannot make the change and have it take effect immediately. If we are going to change the rules on something that is a long-term investment or long-term program, we cannot make the change to have effect immediately. We must not punish people who took the government's advice two or three years ago and bought these plans on the basis of long-term retirement, people who are investing for the longterm in their retirement, by three or four years later coming out with a substantially increased tax. We cannot do that once they have taken out the annuity, or if the recipient or the owner of a plan dies and the beneficiary loses as much as one third. Surely that is not fair.
I do not see how the minister or his parliamentary secretary can say that even though we pass this clause tonight, he will reach some settlement with the credit unions and the co-op trusts. The minister cannot kid me that he will meet with them one week and the next bring in a bill to amend this act. He is not kidding me or anyone else. It would save a hell of a lot of trouble if he withdrew those sections, met with those organizations and came up with some firm legislation to deal with those two matters in a way that is fair to the people who followed the advice of the government several years ago.


Joseph Jacques Jean Chrétien: The hon. member should know that very often with technical problems under the present system we make an announcement that such and such a change can be made and that it will be done in the next legislation, retroactive to a date chosen by the minister. We have to do that all the time when there are difficult problems.
If we have a problem, as I suspect we have, it would solve the problem. With regard to the comment as to why we choose age 90 as being optimistic, it is a way to spread the revenues. If you choose more years than that, the revenues will be less. Income will have to be spread over a longer period of time. We want to cover most of the people who retire and choose the plan after 71. That is why age 90 is a fair number.
If a man dies before that age, a certain amount would be received the first year and another amount the second year, according to inflation. In that way it is spread. If he dies between the ages of 71 and 91, his wife can carry on until she reaches 90. Of course, if he is alone when he dies, this is included in his estate and taxed accordingly.
This is to spread the revenue. Before that there was no option. If one did not take an annuity, one had to take the cash and pay the tax at 71. If there was a substantial amount of
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money, the tax was very high. In order to reduce that, we will permit them to spread the level of taxation over a period of years. That will reduce the level of tax a person has to pay.
A person also had the choice of taking a life annuity. The problem with a life annuity is that if he dies six months later, only the spouse qualifies. Other survivors do not get anything. The scheme we propose has a lot more flexibility for those who are retired and have saved money through RRSPs.


Ramon John Hnatyshyn: Mr. Chairman, I just want to consider momentarily what we have here now. It is a most unusual situation as far as clause 34 is concerned. I have followed with great interest the representations from this side. I sense from what has been said by such as the hon. member for Welland and others on the minister's side that there is some real apprehension about the effect of this provision. We have the minister stand in his place in a most unusual situation saying, in effect, that this clause is defective in some material respects. However, he is not prepared to do anything now except possibly give a vague undertaking to maybe consult with some of the people who have been making representations, such as the credit unions. He goes on to explain that we have an obligation and do not want to lose any tax money. That is the essence of what he is saying, that he does not want to lose any tax money.
If we made any changes, it might have the effect of not picking up some tax from that group of people who might derive benefits from some sensible and reasonable amendments brought forward at this time. We have a situation now where the Minister of Finance apparently admits openly and categorically that this clause causes some serious consequences to dependents.


Joseph Jacques Jean Chrétien: I would never admit that.


Ramon John Hnatyshyn: I do not know how else to interpret this. I do not know what to expect from this minister.
I want to bring another matter to the attention of the committee, a reference that neither I nor anyone who follows this debate would appreciate. The minister made a smart remark to the effect that, because he was speaking in French, 1 did not understand what he was talking about and therefore did not listen to him. This minister is the same as the Minister of Transport who goes across this country sowing the seeds of dissent. What kind of statement is that from the Minister of Finance? What kind of a man is that who, with a position within cabinet, continually pretends that he is wrapping himself in the flag, wanting to keep the country together, while raising great emotional debates about fighting for our country?
1 do not hold any grudge against him because his English is not perfect. I consider him as good a Canadian as I am. However, I resent these cheap, uncalled for statements that somehow, because he is speaking the other official language, 1 do not follow or care to follow what he is saying. I was going to raise a question of privilege, but I now make the point. I do not
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think that anything he says or does is worthy of any sort of question of privilege.
Getting back to the point, I want to get some information from the minister. I am speaking in one of the official languages. I think he understands that. What kind of commitment do we have from the minister? Let us get down to the bare facts of this matter with regard to the question of dependents. If we are going to extend this great undertaking of the minister, and if he is going to consult with those who find a problem with this particular clause, what kind of a firm undertaking do we have?
Does he now undertake to make the appropriate changes so that dependent children will derive the benefit of not having the fund taxable in the same way as a spouse would not have it taxable in the event of death before an option is taken with regard to the RRIF or the annuity basis? Can he now undertake that those who involve themselves in RRSPs will not have to concern themselves, in the event of their death, that dependent children will find themselves with a tax situation different from that of a spouse under this provision? If he can give that undertaking, it would be something. Even if it does not have the basis of law, we would understand that the government's intention is clear, that those people who do not pay tax or withhold money for taxes would be acting upon the minister's statement in this House. How far does this undertaking go? I want to hear the minister's statement in this regard.


Joseph Jacques Jean Chrétien: Mr. Chairman, I do not have to repeat what I have said. The hon. member is creating the impression that when an RRSP under the old provision was transfered to dependents, there was no tax paid. There was some tax paid. In some cases it was higher; in others it was lower. However, it was paid. There could have been income averaging, but there was some tax to be paid.
Under that system, it could be there are some circumstances which I said I would like to look into and come up with a solution. I undertook that I would do that as quickly as possible. If there is something wrong with this clause after I have analysed it thoroughly, I will undertake, as I said earlier tonight, to give notice that I will make a change, as I have done in many other instances. I will make a public announcement at the next occasion that there will be a tax bill which will amend the act to achieve that goal, and it will be done retroactively. The lawyers in the Department of National Revenue will be under notice that there will be a change to meet the requirement retroactive to that date. As a result, nobody will be off base. We have done this before and will do it again if need be.
However, I have to make sure we are not creating a loophole here. We are not dealing only with people who can accumulate $20,000 or $50,000 in RRSPs. There are some who over a long period can accumulate $300,000 upon which income tax has not been paid. The system could become a loophole for people who are at the high end of the income bracket and our readiness to give tax benefits under certain conditions does not
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mean we want to give a hell of a break to people who may have accumulated $300,000.
I do not think it would be responsible for a minister of finance to act without taking such matters into consideration and receiving advice on the subject. I have received letters, as have many hon. members. But I have not received briefs from those who regularly send briefs to my department asking me to make changes. As soon as 1 reach the conclusion that something ought to be done it will be done in the fashion 1 have indicated. But I will not give undertakings on the lines suggested merely because 1 am under pressure in the House. It would be irresponsible to take such a course. I must ask my officials to look into the whole question and advise me what the result has been.
The truth is, the RRIF that we are creating at this moment is a hell of a new good system enabling people to exercise greater flexibility. Members opposite do not want to talk about the good aspects; they would like me to throw the baby out with the bathwater and I will not do that.


Ramon John Hnatyshyn: It is amusing to hear the minister talking about these great new ideas. The suggestion that there should be more flexibility with regard to RRSPs has been put forward to the minister and his predecessors ever since I have been in this House. It was swept aside time and again with the same excuse that it was necessary to maintain the integrity of the system no matter how stupid the rule. 1 am not suggesting for a moment the minister is not making an effort to introduce greater flexibility, though perhaps he is not proceeding as fast or as far as I would like to see.
The minister tries to discount the question I put to him by saying there is not tax payable. That was not the point raised in my question at all. My point is this: after a legitimate point had been raised this afternoon by my hon. friend from Pro-vencher, the minister admitted dependent children were not in the same category as a spouse even under the existing clause. I thought he made a forceful presentation of the argument that a similar rule should apply in the case of dependents as in the case of spouses. The minister says no, so there is a fundamental difference.


Joseph Jacques Jean Chrétien: There is a fundamental difference.


Ramon John Hnatyshyn: The minister admits there is something wrong with this clause. He says he is prepared to enter into consultations about it. I hope those consultations will be more meaningful than the consultations with the provinces he talked about just before six o'clock. To my mind, what he said was flim-flam. On the basis of what I read in press reports and of the communique issued by the four western premiers, I would say that the hon. gentleman is not very good at consultation.
I would like to find out precisely when he proposes to amend the legislation having regard to realities about the length of this session. Nothing will really suffer if we do not give third reading to this bill before the end of June when we get out of here. We on this side of the House are prepared, as ever, to expedite good legislation, but clause 5 is a travesty, an indica-

tion of the sloppy, unprepared, unthinking and inept provision which we should be prepared to amend in committee of the whole. But debate is prematurely cut off because the minister is afraid to defend the measure clause by clause.
There have been complaints with regard to this clause and the minister has admitted it is imperfect. In answer to criticism he says: "Oh, I will consult and we can deal with it". He takes the attitude that if the government has open to it the option to err when collecting taxes at the expense of dependent children, of those who cannot defend themselves and who need help at a time of rising prices in order to maintain themselves in the event of the death of a parent, it will err on the side of continuing to collect taxes. He would prefer to maintain the integrity of the tax collection system. No social compassion is being shown by the minister.
A good case has been made by hon. members on this side of the House and, indeed, by members of the New Democratic Party. But the minister merely gives an airy-fairy promise to engage in consultations and, later, gives notice of an intention to correct any shortcomings. He gives no specific undertaking. He says he will do the best he can. "Trust in me", he says. This is not the kind of statement one would expect from a Minister of Finance with any social compassion. Will the minister undertake to engage in consultation with the parties involved to make sure he has a clause which he can defend before third reading is over? I am sure we will give unanimous consent on this side in the event of any reasonable amendment being brought forward at any stage. It is not good enough to reply to the letters we have received saying only that the minister intends to consider the problem. Will the minister assure us that the clause will be amended so as to alleviate the concern expressed by the trust companies, the caisse populaires and others across Canada, and will he hold back third reading until this has been done?


Joseph Jacques Jean Chrétien: I gave my response to that suggestion earlier in reply to the hon. member for Regina-Lake Centre. There is a difference between a retirement savings plan and an estate. An RRSP is not an estate. It is an accumulation of savings so that people can have income when they retire. We have to treat it like that. It is not a means by which to avoid taxes or to accumulate wealth to transmit to children or dependents. It is a system by which money can be put aside for savings so that there can be income at the time of retirement.
I think hon. members are trying to take the legislation away from its original purpose, which is to allow for money to be put aside for retirement purposes. It is not a tax loophole so that wealth can be accumulated for children or dependents. It is something else. It is a registered retirement savings plan. The words are very clear. This afternoon the hon. member for Provencher and tonight the hon. member for Saskatoon-Biggar have been trying to divert attention from that, and I think it has to be made very clear. All kinds of cases could be made. Some suggest that if a planholder dies, the money should go to
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this family tax-free. That is not what the plan is for. It is for retirement.
I have explained ten times that previous to now when a participant in the plan reached 71, he had only two options. He could cash his RRSP in. If he had accumulated $100,000, he paid tax on $100,000 in the year he cashed it in. His other choice would have been to buy a life annuity. If he bought a life annuity and died a week later, there might be nothing left for anyone but his spouse. We considered the wife of a man who was retiring to be part of his responsibility during retirement, but if he had two children and no wife and died at 72, there might be no asset to go to the children. It was lost completely, and the profit stayed with the insurance company. We are now allowing more flexibility so that the accumulated $100,000 over a period 20 years can be withdrawn a little every year and the tax will be paid only on the amount of money taken out each year. The level of taxation will depend on the level of income each year.
Hon. members opposite are attempting to allow accumulation of wealth for estate purposes. This program does not allow for that because, let us realize, the money put into the program during a lifetime is tax-free.
Money paid into RRSPs is not subject to income tax. That money is put aside. Tax is paid when money is withdrawn from the scheme. We have decided to bring in new programs to add flexibility, but we always had in mind that the purpose of this program is to maintain income levels for retired people. The program is not meant to allow an accumulation of wealth. We should not mix the two. This afternoon the hon. member for Provencher and tonight the hon. member for Saskatoon-Biggar have been trying to develop it that way. They argue that the plan should be tax free. Everyone in this land would like to have to pay no taxes, but we have to maintain the important principle that RRSPs and RRIFs are schemes to maintain the incomes of people. They are not meant to build estates.


Ramon John Hnatyshyn: Mr. Chairman, I am not going to carry on much longer because I know others have points to make.


Some hon. Members:: Hear, hear!


Ramon John Hnatyshyn: 1 know hon. members on the government side must be embarrassed to think about supporting the Minister of Finance in this proposition. It is a very simple proposition. The minister says that the scheme applies to spouses, but he cannot bring himself to extend it to dependent children.
If every hon. member on the government side would canvass their own personal situation-and I am not now thinking of their constituents-those who have dependent children might ask themselves why the plan should not include them. If the plan now goes as far as including spouses, why not dependent children? Perhaps the hon. member for Regina-Lake Centre is right. If this government stays in power much longer, the rate of taxation will be so high by the time we withdraw our RRSPs that it would be better to pay tax on our incomes and just let our money earn interest.
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However, I ask hon. members opposite to consider the extension of this principle and to put pressure on the minister to make a firm declaration that he will bring in an appropriate amendment to extend this plan to dependent children. That is a social aim. That will not cause the government to lose all its income, even this government with its spending habits. We have received a good lecture from the minister, but the point I want to make and the point which was made by the hon. member for Provencher this afternoon is that this would not be an overwhelming concession on the part of the government. All I am asking is that the government accept this basic principle.
I will not stand here and waste the remainder of the evening talking to unyielding ears. There are important clauses here, but the minister does not seem to have the compassion or the interest to do anything about this important proposition. I want him to understand what considerations are moving people on this side to make this kind of representation. It is not in any partisan political sense but in the interests of all those dependent children who might be in this unfortunate situation. I hope the minister will give serious thought, before this bill is read the third time, to changing his mind on this.


Douglas Charles Neil: Mr. Chairman, the minister was implying that we on this side were suggesting that we should have a tax-free situation as far as RRSPs are concerned. Up until now taxation with respect to the plan has been certain. Attempts are being made in this legislation to change the system of taxation for this plan in midstream. All we are asking is that the minister do what he said when he responded to the hon. member for Dauphin on June 12. He said there would be no changes in taxation for RRSPs because people have purchased plans over the years based on the certainty that there were certain rules and regulations.
Now, half-way through, the minister is changing the system of taxation. All we are asking is that he understand that when people entered into this plan they knew what the taxation liability would be. If at some future time we want to create a situation whereby tax liability will be different, that is fine; but let us tell people who have purchased these plans up until now that there will be no change in the law as it existed for them when they purchased their plans. If the minister wants to discuss this matter with credit unions, trust companies and other institutions with regard to the future, that is fine; but let there be some certainty with respect to the plans which exist at the present time so that there will be no misunderstandings.


Joseph Jacques Jean Chrétien: Mr. Chairman, many times I have indicated to the committee that I have sympathy for the dependents of participants in registered retirement savings plans, but I doubt very much whether the dependents of participants over 71 have very much need. Quite a lot of money can be accumulated under RRSPs. If there is a need there, I doubt it is very frequent because when you reach the age at which you benefit from an RRIF, there can be a lot of money accumulated in the fund but there are very few people with dependent children in that category. So this is not a common occurrence we would be faced with, though there could be an exceptional situation. For
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instance, when I am 71, my youngest child will be 40 and I certainly hope he will not be dependent on me at that time. The way this is presented to the House, it is as if we were taking bread away from little kids. This is an RRSP, and advantage is taken of RR1F only at the age of 71, so I do not want people to get too excited about this. I see many members here of whose curriculum vitae 1 know something and 1 find that although they were good at the beginning of their lives they seem to be less good now!


Leslie Gordon Benjamin: Mr. Chairman, 1 rise on a question of privilege. I want to remind the minister that there are many virile people in this country. In fact, I have three constituents over 80 years old who draw old age pension and family allowance at the same time.


Joseph Jacques Jean Chrétien: That is why I said I would like to help those valuable persons.


Sinclair McKnight Stevens: Mr. Chairman, I think it must be obvious to members of the House that the Minister of Finance is absolutely inflexible with respect to the requests we have been putting forth concerning an RRSP should a person die with one of those plans in force. So I propose to ask the minister a few questions about another subclause under clause 34.
I refer the minister to clause 34(9) which appears at page 40 of the bill. This is the provision in which it is proposed to limit to age 60 the starting date for life annuity payments under the matured RRSP. I recommend that the minister consider withdrawing that proposal. I say this because, before putting my direct question to the minister, I think he would agree that under the present plan there is no minimum age limit, nor has there been any such limitation since the RRSP was introduced into the Income Tax Act back in 1957. So for some 20-odd years there has been no minimum age at which a person can rollover or in some other way deal with the funds which he has in an RRSP. Would the minister consider withdrawing his proposal for a new minimum age limit so far as the RRSP is concerned?


Joseph Jacques Jean Chrétien: Perhaps, as usual, I will read the technical explanation first and following that I will deal with the points made by the hon. member.
In subparagraph 146(2)(b)(iii) the change introduced the new provision regarding the time at which payments of retirement income out of RRSP must start. Retirement income must commence at some time after the annuitant becomes 60 and before the end of the year in which he becomes 72 years of age. RRSPs were introduced as a tax assisted savings plan for the purpose of providing an income in retirement for those who did not have access to a pension plan. Too often only the short term tax saving aspects are emphasized. The age 60 provision emphasizes the essential nature of these plans without impeding their continued widespread use. Since retirement before the age of 60 is actually rare, although widely discussed, it enables the retirement nature to be emphasized with the minimum of inconvenience. For the rare case, where the

money is needed, the plan can still be used to provide retirement income before the age of 60, but the technique is somewhat different.
To answer the hon. member as to why there should be a minimum age, let me say to him that it is to illustrate the point I was making earlier with regard to the confusion that is developing in the minds of some people at this time. People seem to forget that those are tax deductions or incentives we are giving to individuals to save money for their retirement. Now it seems to be drifting into something else. People seem to think it is a way of accumulating wealth without paying taxes.
To illustrate this clearly, we are designating the age of 60 as the starting age for RRSP. 1 do not know whether 60 is too late or too early. We used to talk about retirement at age 65 and then we wanted to reduce the age of retirement. Now there are people in this land who argue that we should depart from the practice of making people retire at a certain age. My point is that we want to make it clear-because 1 detected earlier in this debate and on other occasions the danger that people may think that RRSPs are a way to accumulate wealth-that it is a retirement savings plan. That is why we put the age of 60 there, but it is not an essential provision.


Sinclair McKnight Stevens: Mr. Chairman, in view of the minister's answer, in which he said we were confused concerning the taxability of these lump sum amounts which end up in RRSPs, I would like to put three examples to the minister and ask him how he distinguishes among the deferred income plans to which I will refer in that there is no minimum age in any of the three and yet, for reasons about which 1 am not clear, he hopes to introduce the minimum age in the case of RRSPs.
The first example I put to the minister is that the current requirement under the Income Tax Act is that the maturity date for an RRSP must be on or before attainment of age 71. We agree on that. There is no minimum age limitation, nor has there been any such limitation since 1957. I ask the minister how he distinguishes between the present position with respect to an RRSP and, for example, the deferred profit sharing plans? The Income Tax Act has followed the same pattern as RRSPs; that is, it provides that benefits be paid out not later than at the age of 71 but that there be no minimum age. Why is the RRSP, if amended as the minister suggests, different from the present Income Tax Act provision with respect to deferred profit sharing plans?


Alexandre Cyr: The purpose of the profit sharing plans is not necessarily retirement income. It could serve as a retirement instrument but this is not the main purpose of the plan. The philosophy of RRSP is quite different from that of deferred profit sharing plans. That is why there is no minimum age requirement in the case of deferred profit sharing plans.


Sinclair McKnight Stevens: If that is the case, then I will be most curious to find out the minister's reason for the minimum age in my second example. The Income Tax Act does not provide any minimum age for commencement of a pension under an employee pension plan, but Revenue Canada has issued infor-
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mation circular 72-13R4 which stipulates that normal retirement age under a pension plan should not be earlier than age 60 but allows for payment of pensions at an earlier date under certain circumstances. These circumstances include retirement at age 55 after 25 years of service or retirement after 30 years of service regardless of age. Can the minister distinguish why, in the case of the information circular to which I have referred, it is permissible to have these plans with regard to people who wish to retire before age 60, but under the registered retirement savings plans arbitrarily the minimum age is 60?


Joseph Jacques Jean Chrétien: Mr. Chairman, as I said earlier about the last proposal made by the hon. member, he is alluding to the age of 60. Of course, as concerns pension plans, we have provided more flexibility to allow those who have now reached 60 to benefit from the plans in certain circumstances for various reasons. But as regards the plans called RRSPs, we have set the minimum age at 60 for the reason that I have mentioned on several occasions in committee. More and more these plans are being considered not as savings plans which provide you with money for your retirement, but as plans which enable you to avoid paying normal taxes throughout the years. You have only to read the advertisements in the newspapers or the propaganda made by those who sell pension plans. They very rarely mention pensions, and very often they talk mostly of the pension plans as a means to avoid paying income tax. This is one of the problems that we want to avoid. We must not forget the purpose of this type of plan which is to save money for one's retirement. If we let people get too far away from this purpose, one day our program will finally be considered by the public as strictly a means to avoid paying normal income taxes. This is one of the problems which we must always face in such programs. We must ensure that the main purpose is not lost in the evolution of such plans because people could finally so much abuse what is good for other purposes that the whole program would have to be eliminated in the end because it would no longer meet the original objectives.
In the circumstances, we must be very cautious, and I believe that we have been wise to choose the age of 60 in the case of RRSPs. If we discover that this is too restrictive, we can always change the program, but I cannot see why it would not be important to come back to the purpose for which this program was created and set the minimum age at 60.


Sinclair McKnight Stevens: I understand what the minister is saying, that presumably at some stage a plan should be subject to equitable tax. The minister is not consistent. In private pension plans, which have the advantage of tax deferral, Revenue Canada is willing to allow those plans to be operative, in the case of a person working for 30 years, at any age, and in the case of a person working for 25 years, at 55 years of age. Notwithstand-
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ing the fact that it is acceptable to allow those plans to be operative at ages lower than 60, why is the department arbitrarily harsh in respect of those who have participated in RRSPs?


Joseph Jacques Jean Chrétien: There is no flexibility in pension plans as there is in RRSPs. A person can withdraw any portion of his RRSP before age 60, whenever he requires the money. It is not a question of the funds being locked in.


Sinclair McKnight Stevens: At which point he is required to pay the tax.


Joseph Jacques Jean Chrétien: For example, if a person has accumulated $100,000, in RRSPs, at any time when he needs money, he can arrange to take $5,000 out of the plan if he wants. He can pay tax any year he wants at that level, and he is taxed according to his income in that year. It is normal, for we must remember that he was not taxed in the first place.
As 1 explained earlier, the purpose of this scheme was to make funds available at the time of retirement. If a person withdraws any portion of it at age 50, he must pay taxes according to his income at that time. That is fair, because at the time his money was put into the RRSP he was not required to pay tax on it.
RRSPs are designed for retirement purposes. Before the age of 60, a person has a lot of flexibility in his plan. He can withdraw the money or any portion of it. But that is not the case under pension plans.


Sinclair McKnight Stevens: Mr. Chairman, I should like to emphasize that pension plans can be discontinued. My third example is the case of employee profit-sharing plans. Revenue Canada issued Information Circular 71-1R. It requires simply that the normal retirement age for payment of benefits be defined in the plan, but that no minimum age is required. In these three very relevant examples, why is the department willing to be flexible as to the operative age, whereas under RRSPs arbitrarily the minimum age is 60?
I would like to mention a few very brief examples of genuine hardship which will result for people who are counting on the proceeds from registered retirement savings plans. They will not be able to participate because of the arbitrary 60-year figure which the minister has come up with.


Joseph Jacques Jean Chrétien: The hon. member must understand that between the ages of 60 and 71 a person can transfer his RRSP into an RRIF.


Sinclair McKnight Stevens: I am dealing with under age 60.


Joseph Jacques Jean Chrétien: Under 60 a person can withdraw any portion of his RRSP, but it cannot be transferred to an RRIF. He can use that money in order to pay his taxes or do whatever he wants. It was necessary to have a minimum age for a person wanting to transfer his RRSPs into RRIFs.
The purpose of RRIF is to ensure, when a person reaches retirement, that he is not forced to take all his RRSP savings and pay his taxes in one shot, and to ensure that he is not

June 19, 1978

Income Tax Act
forced to buy a life annuity. We want to provide some flexibility for people who have RRSP savings.
Because RRSPs will be flowing now into RRIFs, it was necessary to establish a minimum age. Otherwise, there would have been a complete confusion. We should not make the program inoperative or more difficult. We want to help people with RRSPs to save money, in order for them to have cash to add to their retirement incomes.


Sinclair McKnight Stevens: In the case of an individual who encounters a permanent impairment of health or other factors which force him to adjust to a limited work schedule and a reduced income, perhaps it would be logical for him to convert his RRSP into an immediate annuity payment in order to supplement his inadequate income. Such a person will not be able to do that, if this minimum 60-year requirement goes through, if in fact he is less than 60 years of age. Why cannot that flexibility be offered?


Joseph Jacques Jean Chrétien: That person could achieve exactly the same purpose if he withdrew a portion of his RRSP every year. If he feels he requires $3,000 more, because he has lost his capacity of earning at age 55, he can decide to withdraw that amount from his RRSP. Also he will pay the tax on this amount according to his level of tax at age 55. That is quite simple. He can do that whenever he wants. He is not penalized by this scheme.
U2)


Sinclair McKnight Stevens: Mr. Chairman, let me put the situation to the minister in which there has been a premature death. Under the present RRSP the law is flexible, and, I would suggest, well suited to emergencies of this kind, because a surviving spouse can now roll-over the deceased's RRSP into his or her own RRSP. Will that flexibility not be lost if you put the 60-year limiting factor in, bearing in mind that on the death of a person there will be taxation on the lump sum amount?


Joseph Jacques Jean Chrétien: The spouse can roll it over if desired into an RRSP of his or her own at any time. The law permits that at this moment. I do not see the problem about which the hon. member is talking.


Arthur Ronald Huntington: Mr. Chairman, in the twilight minutes of the session on Friday 1 rose on a point of order and passed a series of amendments across the floor that we on this side had prepared in respect of clause 6. The minister was courteous enough to accept them at that time. There is some reason for questioning the figures given during the budget speech, and there is obviously reason to question the figures given in the announcements by the Minister of State for Science and Technology.
In the amendments I sent over is a call for a separation of current research expenditure from capital research expenditure. I made it known to the parliamentary secretary that we personally favoured the tax credit route in respect of R and D, but in light of a potential conflict with thoughts on the government side we also sent over an amendment that would

carry on with the 50 per cent allowance but on a separated basis, separating those firms with research accounts of $1 million or less from those with accounts of $1 million or more. In other words, those large firms which make up 70 per cent of R and D expenditures in Canada would be subject to incre-mentality, and those firms with R and D expenditure accounts of less than $1 million would be subject to the full credit allowance.
I am wondering whether we might obtain unanimous consent to revert back to clause 6 for this consideration.


Joseph Jacques Jean Chrétien: Mr. Chairman, with 30 seconds left I think it would be difficult to deal with an important amendment like that. I am sorry, but I am not the one who took up the time of the committee tonight. The time of the committee was taken up with repetition after repetition by members of the opposition. I would have liked to deal with the amendment of the hon. member who I think tomorrow or perhaps Wednesday at caucus should give hell to his colleagues for taking up the time.


Sinclair McKnight Stevens: On a point of order, Mr. Chairman, I gave you notice of a matter I wished to raise at this time. It concerns remarks made during this committee on Friday afternoon, as they appear at pages 6504 and 6505 of Hansard.


Charles Robert Turner: Order, please. Notice has been given to Mr. Speaker during the day. Perhaps I may be allowed to quote from Beauchesne's citation 138(2) as follows:
If offensive words are spoken in committee, which are taken down, the House only, and not the committee, can take notice of them.
Therefore, being in committee, I cannot take notice of them. I might add that Mr. Speaker has been served notice of this matter and will deal with it.


Sinclair McKnight Stevens: Mr. Chairman, when I drew Beauchesne's citation 138(2) to your attention I did so to point out that normally the committee reports the offensive words to Mr. Speaker so he can act upon them. I hope there will be no technical imperfection when I attempt to raise the matter in the House.


Charles Robert Turner: As I mentioned earlier, Mr. Speaker has been served notice. The remarks of the hon. member have been registered in Hansard and I am certain that Mr. Speaker will make a ruling tomorrow or at a later date.

Order. It being 9.45 p.m., it is my duty, pursuant to the order made on Tuesday, June 13, 1978, to interrupt the proceedings and put forthwith, without further debate or amendment, every question necessary to dispose of the committee of the whole stage of Bill C-56, an act to amend the statute law relating to income tax and to authorize payments related to provincial sales tax reduction.
Shall clause 34 carry?


Some hon. Members:: Agreed.

June 19, 1978

Clauses 34 to 44 inclusive agreed to.


Charles Robert Turner: Shall clause 45 carry?


Some hon. Members:: On division.
Clause 45 agreed to.
Clauses 46 to 53 inclusive agreed to.
Clause 54 agreed to.
Clause 55 agreed to.
Clause 56 agreed to.


Charles Robert Turner: Shall clause 6 carry?


Some hon. Members:: On division.
Clause 6 agreed to.


Charles Robert Turner: Shall clause 17 carry?


Some hon. Members:: On division.
Clause 17 agreed to.


Stanley Howard Knowles: Mr. Chairman, I rise on a point of order to draw your attention to the fact that in the confusion which exists something might be overlooked. When you call the question, "Shall the bill carry?", we want you to put the question because we want to vote no.


Charles Robert Turner: Shall clause 57 carry?


Some hon. Members:: On division.
Clause 57 agreed to.


Charles Robert Turner: Shall clause 58 carry?


Some hon. Members:: On division.
Clause 58 agreed to.


Charles Robert Turner: Shall clause 59 carry?


Some hon. Members:: On division.
Clause 59 agreed to.


Charles Robert Turner: Shall the title carry?


Some hon. Members:: Agreed.


Some hon. Members:: No.
Title agreed to: Yeas, 100; nays, 36.


Gérald Laniel: Shall I rise and report the bill?


Some hon. Members:: Agreed.


Some hon. Members:: No.
Bill reported: Yeas, 104; nays, 38.
Income Tax Act


Mr. Deputy Speaker:: When shall the bill be read the third time?


Joseph Jacques Jean Chrétien: On a point of order, Mr. Speaker. Under Standing Order 75(14), it is provided that when a bill is reported without amendment, third reading of the bill may be moved immediately, and I so move.


Marcel Joseph Aimé Lambert: Mr. Speaker, I am more than surprised at the Minister of Finance (Mr. Chretien) now asking, after his performance this afternoon with regard to this particular bill-


An hon. Member:: Order. This is not third reading.


Marcel Joseph Aimé Lambert: This is third reading. We are into third reading at this time. There is no way that this bill is going to be read a third time tonight.


An hon. Member:: We are not on third reading yet.


Marcel Joseph Aimé Lambert: The Speaker has moved to third reading.


An hon. Member:: No, he has not.


Marcel Joseph Aimé Lambert: I am speaking on third reading of this bill.


Mr. Deputy Speaker:: Order. I recognized the hon. member on a point of order following the proposal by the hon. minister. If the hon. member for Edmonton West (Mr. Lambert) is not ready to raise the question he wanted to and which 1 believe was a point of order, 1 will recognize the hon. member for Winnipeg North Centre (Mr. Knowles) who indicated his intention to do so.


Stanley Howard Knowles: Mr. Speaker, I rise on a point of order with respect to the proposal made by the Minister of Finance (Mr. Chretien) to proceed with third reading tonight. We had a closure motion under which the committee of the whole stage was to finish today. 1 suggest that it was passed on the understanding that that was all that would happen today.


An hon. Member:: That's right.


Some hon. Members:: Oh, oh!


Stanley Howard Knowles: Just a minute. Mr. Speaker, 1 have been here and I have seen the practice of regarding a sentence or two as debate, whereupon closure was moved. The reason I do not wish to see third reading called tonight is that I believe that if the Minister of Finance debates the matter for a moment or two he will then get up on

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Income Tax Act
Wednesday and say that on the resumption of the third reading debate he has the right that day to move closure.
If by this point of order I have talked long enough that it is now ten o'clock, Mr. Speaker, I suggest that what you ought now to do is to say that third reading will be posted for the next sitting of the Elouse, but not tonight. Because we do not trust those ministers across the way.


Mr. Deputy Speaker:: It being ten o'clock I do not have to rule on the point of order.


Stanley Ronald Basford: You would think that the official opposition could have expressed it rather than having to rely on the NDP.


Mr. Deputy Speaker:: It being ten o'clock I do now leave the chair until two o'clock tomorrow afternoon.
At 10.01 the House adjourned, without question put, pursuant to Standing Order.



Tuesday, June 20, 1978