1978-10-19

ROUTINE PROCEEDINGS


Mr. Tom Cossitt (Leeds):: Mr. Speaker, I rise on a matter of urgent necessity concerning the Department of Employment and Immigration, and particularly the data banks maintained by that department. I move, seconded by the hon. member for Parry Sound-Muskoka (Mr. Darling):
That the Minister of Employment and Immigration immediately confirm to the House that his department maintains over 60 data banks on immigrants and Canadian citizens, and that in particular data bank number 4200 contains information on immigrants and Canadian citizens living in Canada and suspected of being, or associated with terrorists, criminals and other subversive elements and, finally, can the minister confirm that data bank 4200 contains the names of at least 500 residents of Canada trained in guerrilla warfare and terrorists at Finsterwalde, in East Germany, and in Algeria and that it also contains the names of approximately twelve professional assassins or "hit men" resident in Montreal and operating under the direction of a branch of the French intelligence service.


Mr. Speaker:: Provision under Standing Order 43 permits the presentation of a motion for debate at this time only with the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


ELECTIONS
Mr. Edward Broadbent (Oshawa-Whitby):: Mr. Speaker, I rise under the provisions of Standing Order 43. I move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That this House, noting that the Prime Minister blamed the recent defeat of the government of Nova Scotia and the even more recent shellacking of the federal government in the by-elections on a general anti-government feeling, urges him to adjust his blinkers and note, following yesterday's event on the prairies:
(a) that when a government governs well it can expect an almost 10 per cent
increase in its popular vote, and
(b) that an amendment should be added to the endangered species act to
provide for the designation of the last two provincial Liberal MLAs west of
Ontario.


CALL FOR TRADE CONFERENCE IN OTTAWA-MOTION UNDER
[Stage Direction]
5.0.	43
Hon. George Hees (Prince Edward-Hastings):: Mr. Speaker, I rise to make a motion, under the provisions of Standing Order 43, on a matter of urgent and pressing necessity. As the Canadian Manufacturers' Association has recently stated that if this country can overcome its annual trade deficit of more than S12 billion a year in fully manufactured products, we could make available an additional 800,000 new jobs for Canadians to work at, and as a vital aspect of increasing our exports of these very important products is to make Canadian producers more aware of the opportunities which exist for selling their products in the many export markets which are available to them, I move, seconded by the hon. member for Hastings (Mr. Ellis):
That the government recall our trade commissioners from the principal markets of the world at an early date, for a trade conference to be held in Ottawa, where all Canadian producers who wish to investigate the possibilities of selling their products in specific markets can learn from the trade commissioners who serve those markets what the possibilities are and take advantage of them.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


ENVIRONMENTAL AFFAIRS
[Stage Direction]
5.0.	43
Mr. C. A. Gauthier (Roberval):: Mr. Speaker, under the provisions of Standing Order 43, I ask for the unanimous consent of the House to introduce a motion dealing with a vital question of pressing necessity for the people of the Saguenay area.
Considering that a report published in 1975 by Professor Loring and dealing with a concentration of mercury in the
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October 19, 1978
area between the Bay and Jonquiere containing from 6 to 12.3 parts per million-a rate of 1 part per million being considered a high rate of pollution; considering that under bacterial action, mercury changes into methyl mercury, a toxic product permanently affecting the human nervous system and causing the unfortunately well-known Minimata sickness; considering that the dredging operations now under way on the Saguenay River could very well increase such bacterial activity, 970,000 cubic yards of sediment being removed, I move, seconded by the hon. member for Richmond (Mr. Beaudoin):
That the House enjoin the Minister of Transport to put a stop to the dredging operations on the Saguenay River as long as a review assessing the ecological impact of that project and suggesting alternate dredging procedures are not put forward by Environment Canada in co-operation with the Department of Environment in Quebec.


Mr. Speaker:: Under the provisions of Standing Order 43, such a 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.
government's general restraint program and cutbacks in funding to the arts, which will result in even more professional actors and artists being unemployed, and in view of the fact that these creative people are not covered by unemployment insurance benefits as are other self-employed people, such as fishermen, I move, seconded by the hon. member for Timis-kaming (Mr. Peters):
That this House instruct the Minister of Employment and Immigration to implement forthwith the recommendations of the Disney report pertaining to unemployment insurance benefits for professionals in the arts.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.



ORAL QUESTION PERIOD

[Stage Direction]
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[Stage Direction]
LEAVE OF ABSENCE OF Wm. TERON-MOTION UNDER S O. 43
Mr. Dean Whiteway (Selkirk):: Mr. Speaker, I rise under the provisions of Standing Order 43. In view of the fact that the Ministry of State for Urban Affairs has been without a full-time deputy minister for nearly one half year, despite assurances by the Minister of State for Urban Affairs and the Prime Minister that Mr. Teron was being granted only a four-month leave of absence, I move, seconded by the hon. member for Ottawa-Carleton (Mrs. Pigott):
That the Minister of State for Urban Affairs make a statement on motions today outlining the present status of Mr. William Teron and the conditions under which the extension was granted.


Mr. Speaker:: Such a motion can be presented for debate at this time only with the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


ARTS, LETTERS AND SCIENCES REQUEST FOR IMPLEMENTATION OF DISNEY REPORT-MOTION UNDER S.O. 43
Mr. Cyril Symes (Sault Ste. Marie):: Mr. Speaker, I rise to move a motion under Standing Order 43. In view of the


POST OFFICE
Mr. Joe Clark (Leader of the Opposition):: Mr. Speaker, my question is to the Acting Minister of Labour. The minister will know there are continuing serious difficulties in getting postal services restored in the country. He indicated in the House on October 17 that he would be appointing a mediator-arbitrator within hours of passage of the bill, and he would be doing that after consultation.
Can the minister now tell us whether that mediator-arbitrator has been appointed, who it is, and whether consultation has occurred?


Hon. Andre Ouellet (Acting Minister of Labour):: Consultations are taking place, Mr. Speaker. The search for a suitable person is actively under consideration. I hope to be in a position to make such an appointment very soon.


Charles Joseph Clark: Mr. Speaker, none of us in this House wants to inflame this very difficult situation. However, it is very difficult for us to understand why the minister is encountering such difficulty and why the government is delaying so long in the identification of a mediator-arbitrator.
Can the acting minister give some indication as to when he expects such a person to be in place and, consequently, when he expects serious negotiations to begin?


André Ouellet: If the Leader of the Opposition does not want to inflame the situation, Mr. Speaker, he should take my word that I am actively working to find a suitable person who is ready to accept the job and actively carry out his responsibility in the very near future.
October 19, 1978


Charles Joseph Clark: Mr. Speaker, we will, naturally, want to inquire why the government, which has known about this problem and has, presumably, had legislation prepared for some time, was not acting more quickly even in advance of passage of the bill, considering the possibilities of those people who might be in a position to accept this matter. That is a question we can pursue at another time.
May I now ask the acting minister what action the Government of Canada is taking right now to assist those workers who are members of the Canadian Union of Postal Workers and who want to go back to work but are being harassed or threatened in their attempt to do so? What steps are being taken to ensure that those postal workers who want to go back to work can do so?


André Ouellet: Mr. Speaker, these questions are very much in the mind of the government. We do not need the Leader of the Opposition to remind us of these points. The Postmaster General is taking steps in this direction.


MEASURES TO RECALL STRIKERS
Charles Joseph Clark: Perhaps the matter is well accepted by the minister but we in the opposition need answers. What specific measure is the government taking now to ensure that the employees who want to work will be in a position to start working today?


André Ouellet: The Leader of the Opposition should put this question to the employer, namely to the Postmaster General.


JOB SECURITY OF RETURNING STRIKERS
Hon. W. G. Dinsdale (Brandon-Souris):: Mr. Speaker, perhaps I can pose a question to the Postmaster General, who has been keeping a low profile in all these recent events in the Post Office. In view of the large number of postal workers who have indicated their desire to keep the mail moving, can the Postmaster General inform the House and the people of Canada what assurance he has given that their jobs are secure, that they will be free from harassment, and that the government will move immediately to resolve the crisis of its own creation by moving expeditiously to implement the long-term solutions for labour-management relations that have been advocated by the official opposition for many months now?


Hon. J. Gilles Lamontagne (Postmaster General):: Mr. Speaker, I have been saying for several weeks that the present government would take its responsibilities in case of a crisis, and I think we did so when we passed Bill C-8 with the co-operation of the opposition. We intend to continue to take our responsibilities.
Oral Questions
Some steps have been taken in co-operation with the Minister of Justice, so that all the power of civil laws will be applied to people picketing, to ensure that everything illegal will be prosecuted and that our workers will be free to get into installations and post offices and be free and secure to work.
I should like to add that even though we are taking very definite steps as far as that area is concerned, we do not want to be unduly harsh with our postal workers, though we intend to be firm in our resolve that the law shall be obeyed. Those who feel secure in the thought that they will not be prosecuted are very much mistaken. The leaders must recognize that the full force of the law will be applied.


Some hon. Members:: Hear, hear!


Mr. Lamontagne:: Above all, those workers who wish to work must be able to do so in the secure knowledge that they will be protected from those who would intimidate them.


Walter Gilbert Dinsdale: Mr. Speaker, I have an important question to ask. Can the Postmaster General deny, or confirm, reports that instructions have gone out from management to lock out employees who are anxious to keep the mails moving? Where did these instructions come from? Is the Postmaster General aware of them, and what is he doing about it, because such action would constitute breaking of the law by management itself.


Maurice Lamontagne: I can assure the hon. member that no such order has been given. I ask him to show a great deal of understanding with regard to this matter. We are dealing with a very ticklish situation and we would like the workers to be assured that they can work in the Post Office and do so freely.


STATISTICS CANADA
John Edward Broadbent: Mr. Speaker, I have a question for the Minister of Industry, Trade and Commerce. It has been announced that Statistics Canada, when providing its annual figures next month for changes in the consumer price index, intends to downplay the role of food prices as an element of that index by some 3.5 per cent.
Since the reason for making the change has to do with patterns of consumption which are now four years old-a smaller percentage of family income was spent upon food four years ago than is the case now-will the minister prevent this change which will have a profoundly misleading impact on the price index, given the fact that food prices have risen by almost 15 per cent so far this year?


Hon. Jack H. Horner (Minister of Industry, Trade and Commerce):: Mr. Speaker, this change reflects one of the
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October 19, 1978
Oral Questions
recommendations which followed the first ministers' conference. The premiers of Ontario and Alberta felt the consumer price index was too heavily weighted as far as food is concerned, having regard to the average Canadian food basket. More Canadians were eating out and for that reason more labour was built into the satisfaction of their food requirements. The two premiers requested this updating of the consumer price index. We found there was considerable agreement with them and we have taken steps to move the index more in line with the food baskets of average householders.


John Edward Broadbent: I did not know the hon. gentleman would be following the advice of Conservative provincial premiers: maybe it has something to do with his own history.
I would like to quote from a secret cabinet document dated June 14 of this year. It is a federal cabinet document, not a provincial cabinet document, in which it is stated:
There is little evidence to suggest that the proportion of income spent on food is continuing to decline and it could even be slightly higher.
That document was prepared after consultation with the minister's seatmate and a number of departments. If that is the case, could the minister tell the House why, when food prices are actually playing a more significant role in terms of family expenditures, the government is going to downplay them as an element of the consumer price index?


John (Jack) Henry Horner: Mr. Speaker, Statistics Canada operates in the best way it knows. We could advise Statistics Canada as to what action it should take. In this case, following the first ministers' conference, we did ask Statistics Canada to take a look at the component parts of the food basket. With regard to the percentage of disposal income Canadians spend on food, that percentage has not gone up noticeably at all. In fact, it is probably the lowest percentage of any of the industrialized countries.


John Edward Broadbent: Mr. Speaker, the minister is totally ignoring the findings of his own government's interdepartmental assessment of food prices as an element of the consumer price index, which is one of the considerations at which the government itself was looking.
Considering that pension cheques and family allowance cheques are indexed according to changes in the consumer price index, and that lower income people and people on fixed incomes, such as pensioners, spend a much higher percentage of their income on food than others, does the minister not agree that the change the government is now embarking upon will be disadvantageous and unfair to the precise group of Canadians who need assistance most?


John (Jack) Henry Horner: Mr. Speaker, the hon. member's premise is quite wrong. He is referring to an interdepartmental document which was circulated among various departments. It is not a government document. The government did not accept that assertion. It was just one of a number of positions put forward.

In view of the hon. member's desire to quote figures, I would like to raise a question of privilege and deal with some figures he suggested were correct yesterday. The hon. member seems to be very anxious to read secret documents, but he will not read the public documents we put out and ask him to read.
I would like to point out to the hon. member and to the House generally that old age pensions will be raised by, I think, $20 per month starting today.


ENVIRONMENTAL AFFAIRS
Charles-Arthur Gauthier: Mr. Speaker, my question is directed to the Minister of Transport. The minister is probably aware of the complaints voiced by the people in Saguenay-Lac-Saint-Jean concerning the dredging being done in the Saguenay River and the danger caused by mercury, as was demonstrated by qualified authorities. Can the minister tell the House whether he will consider or order an extensive study on this question, and whether he will immediately take action before going further with this work, so as to preserve the environment in this area?


Hon. Otto E. Lang (Minister of Transport):: Mr. Speaker, I acknowledge the representations made by the hon. member and I will seek to give him an answer.


POST OFFICE
Mr. John A. Fraser (Vancouver South):: Mr. Speaker, my question is to the Minister of Justice. The Postmaster General referred to the minister's department as being prepared to take whatever steps are necessary to ensure that a significant number of the members of CUPW who wish to return to work can do so safely and quickly.
Can the minister tell the House, the public and members of CUPW just what those steps are and what assurances the minister can give to those who wish to return to work and to obey the law?


Otto Emil Lang: Mr. Speaker, I can assure hon. members that we are examining all the courses of action which are open and the advantages of the various courses of action. We will be taking such steps as make sense in order to assure the best possible results.
October 19, 1978

Of course, that involves enforcing the law and, above that, I hope that all members would join me in requesting that all citizens in Canada obey the law, since in a democratic state it is well known that it is not through sanctions but through willing obedience that the law is enforced and order is maintained. I think that is extremely important at this time. In that context, I would not elaborate on the specific forms of action which we will take, except to assure hon. members that we are very actively engaged in examining the choices.


John Allen Fraser: Mr. Speaker, a number of members of the Postal Workers Union, the inside workers, have indicated that they are very anxious to return to work. It is not clear how significant that number is, but there are some. It seems to me that it would be proper to urge upon the minister to say something a little more definite to assure these people that there would not be any intimidation or acts that do not fall within the law which we passed the other night, but other acts against the Criminal Code, and I say that keeping in mind the fact that the vast majority of union members in this country are law-abiding citizens and are prepared to obey the laws of Canada.


Otto Emil Lang: Mr. Speaker, I agree with that. Certainly, I would think that in the ordinary course the workers in question, having seen the law passed by parliament, would feel safe and free to return to work. Of course, if there are any suggestions of criminal activity, intimidation or threat, these are matters which will also engage the attention of my colleagues, the provincial attorneys general. In that connection, I hope that any evidence of any such occurrences would be brought to my attention or that of the provincial attorneys general at the earliest possible moment.


ALLEGED LOCK-OUT OF RETURNING STRIKERS
Mr. Perrin Beatty (Wellington-Grey-Dufferin-Waterloo):: Mr. Speaker, my question is for the Postmaster General, who should be aware of the situation in Orangeville, Ontario, where the local members of the Postal Workers Union wrote to a number of offices urging those workers to stay on the job in the national interest, and where the local workers in Orangeville reported for work on Monday and Tuesday and kept the office open, with the result that mail was delivered to some 12,000 homes in the area, only to find on Wednesday that on orders from Ottawa the postal management has decided to lock them out without pay.
I ask the Postmaster General how he can possibly justify this disgraceful betrayal of these dedicated and loyal employees.


J. Gilles Lamontagne: Mr. Speaker, the incident at Orangeville was brought to my attention so that I could look into it. I feel the example of the employees there should have been followed by many other
Oral Questions
postal workers throughout Canada. The only reason that decision was made was that, because of the strikes at other post offices, no mail was reaching Orangeville, and so they would have been given access to the building but without having any work to do. It was rather difficult for us to do so, under the circumstances; we therefore told them to go back home. It was not a matter of having what is known as a lock-out. We merely told them to return home and that we would call them back as soon as there was work to be done.


Some hon. Members:: Shame!


Henry Perrin Beatty: Mr. Speaker, in six years I have never seen a more shameful performance by a minister. Does the minister deny it was the postal management at Ottawa with the advisory committee of the Post Office, of which the Postmaster General himself is a member, who decided upon the policy that these employees would be locked out, not only in Orangeville but in other areas where the postal workers had decided to go back to work and to keep the Post Office open, without pay?
Can the minister give an assurance to the House today that these dedicated and patriotic Canadians who work to serve the people in their communities will get full pay for the day they were locked out, and that this disgraceful circumstance will never be repeated in the future?


Some hon. Members:: Hear, hear!


Maurice Lamontagne: Mr. Speaker, I can guarantee all those postal employees who want to work in our offices, where there is work to be done, that they will be welcome. We will give them work to do and they will be paid. I do not think a department or any responsible organization can be asked to pay employees when there is no work to do. Still, I feel that as time goes on, as more employees go back to work the more we shall be able to give them work to do.


Henry Perrin Beatty: Mr. Speaker, there was work for these employees to do and the Postmaster General should be aware of that. Never again can the government ask people to sacrifice in the national interest, by returning to work during a strike to provide an essential service, if they find they have been treated so shabbily.


Some hon. Members:: Hear, hear!


Henry Perrin Beatty: Can the Postmaster General give the House firm assurance that the policy of lock-out has stopped as of today and that no postal employees in the country have been locked out by postal management?


Maurice Lamontagne: Mr. Speaker, if the policy of lock-out has been existing, it will be stopped.

October 19, 1978
Oral Questions


PARLIAMENTARY COMMITTEE STUDY
Mr. Bruce Halliday (Oxford):: Mr. Speaker, my question is directed to the Postmaster General. Six days ago, as reported on page 64 of Hansard, in response to a question by the hon. member for Hamilton West with respect to the need for a parliamentary committee, the Postmaster General said the following:
Mr. Speaker, I do not think I ever said that I wanted a parliamentary inquiry, or that I ever suggested that.
How does the Postmaster General reconcile that statement with his reply to me on March 7, 1978, as reported at page 3518 of Hansard, when I asked for a parliamentary committee at that time and the Postmaster General said that such a committee was not necessary then because they knew the problems, could probably find the answers, and he concluded with the following words:
If not, I will be very happy to agree to that request.
Would the Postmaster General be happy now to agree with that request and appoint a parliamentary committee?


J. Gilles Lamontagne: Mr. Speaker, I do not think that, as things now stand in the department, there is need for a parliamentary committee. I feel we are fully aware of the problems and that, with the various studies made throughout the years that have been brought to our attention, we can take the required decisions. One very important decision was made by the Prime Minister, the cabinet and the government members, namely to set up a Crown corporation as soon as possible. Then, all hon. members will have the opportunity to express their views before a committee of the House if they so wish.


TRANSPORT
Mr. Don Mazankowski (Vegreville):: 
Donald Frank Mazankowski: Mr. Speaker, since the statements of the Minister of Transport expressing optimism are hollow, as is

usual with his statements about other matters, how many more days of optimism will we have to go through before service is resumed in a normal fashion, which service is necessary and in the public interest?


André Ouellet: Mr. Speaker, the only report I can make at this time is that discussions are continuing and that mediation is progressing at a good speed. I think it is useful for members of the House to allow the normal process of mediation to run its course, and not to intervene with any suggestions or put undue pressure on this normal process which is now taking place.


PUBLIC SERVICE
Mr. Jean-Robert Gauthier (Ottawa-Vanier):: Mr. Speaker, my question is directed to the President of the Treasury Board. It concerns the ongoing, comprehensive review which the government is carrying out on the retirement income situation of all Canadians and, more specifically, with the forthcoming amendments to the public service pension program with respect to the indexing of pensions, to changes in the cost of living.
In view of the fact that the last twenty-year Canada Savings Bonds paid 9'A per cent, that the central bank rate is now 1094 per cent, and since the minister told the House in March, 1978, that he would set the indexation rates for the next three years in the month of October, 1978, will he confirm that there is sufficient money in the superannuation funds from interest earnings which will be realized from pensioners' investments in the program to pay full indexation of these pensions?


Hon. Robert K. Andras (President of the Treasury Board):: Mr. Speaker, as the hon. member for Ottawa-Vanier has indicated, I announced to the House last March that the review of the rate at which the basic public service pension payments could be augmented, or supplemented, would be examined in light of the funds available to the basic pension fund related to the excess or additional interest paid on those funds, that portion owned by the pensioners themselves. That study is under way by the chief actuary now. I expect to have the report very shortly.
I am very hopeful to be in a position to make an announcement in October as to the proposed rates for the next three years. Also, the preparation of legislation for an amendment to that plan is almost finalized. We hope to introduce it in the House soon. I will be more explicit at that time as to the amount and degree of available supplementation. As the hon. member has noted, the bond interest rate will have its effect upon that.

October 19, 1978


ROYAL CANADIAN MOUNTED POLICE
Mr. Andrew Brewin (Greenwood):: Mr. Speaker, my question is addressed to the Solicitor General. According to the Canadian Broadcasting Corporation, a secret trial is being conducted by the Royal Canadian Mounted Police in Toronto of one, Colonel Radey, who turned over to the Laycraft commission information indicating that he and others had been bugged by RCMP officers.
Will the minister inquire into the facts of this case and inform the House the basis of the charges against Colonel Radey? Also, will he look into the question of whether he is being denied counsel, and whether the secret hearing and denial of counsel is not, in fact, a breach of individual human rights conferred by the Bill of Rights?


Hon.   J.-J. Blais@Solicitor General: Mr. Speaker, that matter was drawn to my attention immediately prior to my coming into the House. I would be pleased to make inquiries and report on those areas upon which reports can be made.


Francis Andrew Brewin: Mr. Speaker, I am told by one of my colleagues that I referred to the gentleman as Colonel Radey. 1 meant to say that he was a corporal, not a colonel. I did not intend to promote him so rapidly.


An hon. Member:: Perhaps he should be promoted.


Francis Andrew Brewin: Yes, perhaps he should be. My supplementary question is directed to the Solicitor General. It is my understanding that the former solicitor general, the hon. member for Argenteuil-Deux-Montagnes, claimed in an affidavit that the information on this entire matter affected national security. Will the minister look into the involvement of the former solicitor general in this matter and advise whether the claim that it involves national security is false, an abuse of the privileges of the solicitor general and, indeed, a sort of cover-up? Can he inform the House about that matter?


Mr. Blais:: Mr. Speaker, with reference to the alleged affidavit, as I understand the matter from very cursory information, it relates to evidence adduced before the Laycraft commission. As the hon. member recalls, the then solicitor general filed an affidavit at that time as is permitted under the Federal Court Act. Also, as the hon. member knows, there has been a complete report filed by the Laycraft commission. That report is available to the hon. member. If he wishes to have a copy of it, I will make one available to him. The matter has been disposed of in terms of the Laycraft commission itself.
With reference to the corporal, while I do not have the information requested by the hon. member in his initial question, I would point out to him that in the last session of the House we introduced Bill C-50 which dealt with amendments to the Royal Canadian Mounted Police Act as a result of the Marin inquiry dealing with the question of internal discipline affecting the RCMP. It is the full intention of the government to deal with that bill and reintroduce it at an early time.
Oral Questions
[ Translation]


POST OFFICE
Mr. Heward Grafftey (Brome-Missisquoi):: Mr. Speaker, I would also like to direct my question to the Postmaster General.
In answering several questions in the House this afternoon, the minister has given an idea of his intentions. However, I would like to know, Mr. Speaker, what the minister is actually doing, besides making statements and giving words of encouragement, to help the postal employees who want to work get back to their jobs? Besides words of encouragement and statements, what is he actually doing to help those people who want to work get back to work and to settle the situation?


J. Gilles Lamontagne: Mr. Speaker, may I take the opportunity of this question to clarify a reply I gave a few moments ago? I asked the Deputy Postmaster General if there had been lock-outs anywhere in Canada. There have been no lock-outs up to now anywhere in the country, and therefore any employee who comes to work will be received and paid.
To answer the hon. member's question, all our divisions throughout Canada have been instructed to take all the necessary legal steps to inform our employees that they are welcome to come back to work. And following the statements made by the Minister of Justice and the Minister of Labour, we are making the necessary arrangements so that, if need be, civil forces will be used to keep our entrances open. Those who may want to block the way for our employees at postal facilities will be prevented from doing so.


MINISTER'S ANSWER TO QUEBEC REGARDING PROTECTION AGAINST FLOODS
Mr. Roch La Salle (Joliette):: Mr. Speaker, my question is directed to the minister of environment.
Last week the minister of natural resources in Quebec informed the press that he had sent a telegram to the minister to make sure that he could go ahead with his flooding protection program. Since he did not receive any answer from the federal minister, would the minister inform his provincial counterpart about the program to which the federal government committed itself last year to protect the Montreal area against floods?

October 19, 1978
present time, we are something like 20 million bushels ahead of last year's movement when, in the end, we almost hit a record. That should be good news to the farmers in general.
Oral Questions


Hon. Len Marchand (Minister of State (Environment)):: Mr. Speaker, I will have to check my office and see if a reply is ready. I have been in British Columbia on government business for the last four days. Certain cuts have had to be made in the program. I will be happy to get back to the hon. member.


INQUIRY WHETHER MINISTER WILL HONOUR UNDERTAKING GIVEN TO QUEBEC
Roch La Salle: Mr. Speaker, I have a supplementary question.
Is the minister prepared to confirm that he had indeed signed an agreement with the government of the province of Quebec on that matter? If so, would be tell the House tomorrow, at the latest, if he is going to honour his undertaking or if that will pass with the constraints we have already experienced?


Len Marchand: Mr. Speaker, we have a flood protection agreement, as well, with the province of Quebec, the province of British Columbia and some other provinces. We did make cuts in that flood protection program both in the province of British Columbia and in the province of Quebec. These were some of the very difficult measures the government had to take. I will be pleased to look into the question that the hon. member refers to about Quebec's representation. I have not yet had a chance to look at that matter in my office.


MOVEMENT OF NO. 3CW
Mr. Gordon Ritchie (Dauphin):: Mr. Speaker, my question is directed to the minister in charge of the Wheat Board. In view of the large amounts of No. 3 red wheat in the eastern and northern prairies from last year, and again this year, so that some farmers are delivering grain with their deferred quotas this year, can the minister tell the House and the farmers what the chances are for significant movement of the large volume of this grade in the coming crop year?


Otto Emil Lang: Mr. Speaker, I can assure the hon. member that the Canadian Wheat Board, as always, takes note of the type of grain available and does its best to adjust its contracts and selling practices to that grain. In this particular case, some of the large contracts-including that with the Chinese-allow for an option for No. 3CW, and that is fortunate.
The over-all movement of grain will be excellent and I look forward to at least as much being moved as last year. At the


William Gordon Ritchie: A supplementary question, Mr. Speaker. Are No. 1 and No. 2 grades being given priority over the movement of No. 3, as many farmers suggest, and is this due to the fact that the transportation system just cannot handle the volume available?


Otto Emil Lang: Mr. Speaker, the Wheat Board always gives priority to the grain it needs at a particular time. That depends on the contracts they have with buyers all over the world and the dates on which they want to take delivery of a particular grain. Obviously, the Wheat Board has no alternative but to try to put into position at terminals the grain which will be needed in a given month.


POST OFFICE
Mr. J. M. Forrestall (Dartmouth-Halifax East):: Mr. Speaker, I wonder if I might put a question supplementary to those already directed to the Postmaster General. It is a two-part question. If he is certain in his own mind that there is no lock-out procedure being followed by his departmental officials in various parts of Canada, can he explain why the doors of the Dartmouth post office were locked this morning, when to my certain knowledge a number of those employees wish to return to work?
[ Translation]


J. Gilles Lamontagne: Mr. Speaker, I have just checked with my deputy minister. He told me that after having heard the question in the House, he had looked into that matter himself and that there was no lock-out in Canada as far as he knows. If, unfortunately, there was one, this will be straightened out immediately because it was by no means intended. That is all I can say. We will do everything possible to welcome back our employees in the warmest possible way so that they can resume work as soon as possible and maintain the postal services.


TESTIMONY BEFORE MCDONALD COMMISSION
Mr. Bill Jarvis (Perth-Wilmot):: Mr. Speaker, I have a question for the Solicitor General, who on Tuesday, in reply to a question from the hon. member for New Westminster, indicated that documents that he had produced within the meaning of section 41 of the Federal Court Act to the McDonald commission had in fact been produced, in the legal sense,


ROYAL CANADIAN MOUNTED POLICE
[Stage Direction]
October 19, 1978
[Stage Direction]
if I understood his response correctly. I want to make sure that I did understand his response.
Is it the minister's position that these documents requested by, and now having been delivered to, the McDonald commission have been produced within the meaning of the Federal Court Act and, therefore, are exempt from any provision of section 41(1) or section 41(2) of the act?
Hon.   J.-J. Blais@Solicitor General: Mr. Speaker, the question that was asked of me by the hon. member for New Westminster was of a more general nature than that. I will have to review specifically what the hon. gentleman advances. It requires a great deal of study and it requires a very strict legal interpretation. I will get back to the hon. member.


William Herbert Jarvis: Mr. Speaker, while the Solicitor General is conducting this in-depth study, on this side we wonder why he refuses to give the commitment that the provisions of section 41 will not be implemented against the McDonald commission. Will he determine whether these documents have, in fact, been legally produced and therefore the provisions of that section are completely inapplicable? If so, would he then give the commitment we have been seeking for days and weeks, that he will not invoke the provisions of the act? That becomes academic because the documents, legally, have already been introduced.


Jean-Jacques Blais: Mr. Speaker, I know the hon. gentleman likes to engage in academic debates. I will seek the opinion he wants from the Minister of Justice and make a copy of it available.


MOVEMENT OF NO. 3CW-POSSIBILITY OF PLACING UNDER QUOTA
Right Hon. J. G. Diefenbaker (Prince Albert):: Mr. Speaker, my question arises out of the reply given by the Minister of Transport to the hon. member for Dauphin. All over northern Saskatchewan today farmers find themselves in the position, as a result of the great rainfalls' effect on No. 3, unable to dispose of it except of course on the open market, in which case they lose the 50 cents per bushel.
Is there any possibility of the government facing this situation, to the end so that farmers with No. 3 will get on quota and be assured of at least some return in respect of the crops that they have had?


Otto Emil Lang: Mr. Speaker, the farmers have available to them a cash advance program which is interest-free and which allows them to take a very substantial portion of their final returns, or at least their returns at the elevator, without actually delivering grain and then waiting until quotas open in order to pay back that advance. I would hope that many farmers would rely
Oral Questions
on this, rather than choosing for other reasons to deliver to the open market when they would prefer to deliver to the Board.
At the same time, of course, the Wheat Board is very conscious of the quantities of No. 3CW grain available now. Obviously, they could not sell 3CW until they saw the harvest situation because farmers do not intend to grow that grade. They have to match their sales after the fact.
As I indicated to the hon. member for Dauphin, because of the quantities available even last year, some substantial sales have been made of 3CW and this should mean quotas will open. I can, however, seek further information from the board on what they may project as to any progress.


John George Diefenbaker: Mr. Speaker, that did not answer the question. There was a matter of indebtedness, and I simply asked the question because farmers everywhere are asking for a reply. Is there any probability that number 3CW will go on quota within the next week or two, otherwise they are greatly discouraged in consequence of the fact that they have this wheat on hand. They know, of course, about advances without interest, and the like, but that was not the nature of the question I asked.
I was simply asking for information, not for the purpose of doing anything to place the minister in an invidious position, but simply to be able to let the farmers know whether in the view of the Wheat Board or the government-and that seems sometimes to be an alternative way of expressing the authority over wheat-there is a probability of No. 3CW being given quota position soon?


Otto Emil Lang: Mr. Speaker, I think it was fully appropriate for me to draw attention to the cash advance, since the right hon. gentleman suggested that farmers were having to sell their grain at low prices rather than waiting for quotas to sell to the board. Obviously, the cash advance allows them to get the cash, hold their grain and deliver it to the board at a later date. So the very point the right hon. gentleman was making was baseless in view of that.
As to the question of whether an indication can be given to farmers about quotas, I will put that question to the Canadian Wheat Board to see whether they would choose to make a forecast at this point about quotas in the future.


URBAN AFFAIRS
Mr. Jacques Lavoie (Hochelaga):: Mr. Speaker, I have a question for the Minister of State for Urban Affairs.
Since the government mentions amendments to the National Housing Act in the Speech from the Throne, can the minister tell the House if he plans on introducing special legislation concerning non-profit corporations and housing co-operatives
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October 19, 1978
Oral Questions
so that they may offer cheaper apartments than they are now doing in my constituency?


André Ouellet: Yes, Mr. Speaker, as soon as the bill to amend the National Housing Act is introduced in this House, amendments to the act will be proposed to make it easier to have more low cost public housing in Canada.


ENVIRONMENTAL AFFAIRS
Reginald Cyril Symes: Mr. Speaker, my question is to the Minister of State (Environment). In view of the importance of the forest industry in Canada and the need for research and development to keep Canada ahead in world markets, how does the minister justify the $5 million reduction in expenditure which will result in the closing and privatizing of government laboratories which have been doing vital research that the industry itself has not been doing?


Len Marchand: Mr. Speaker, the Government of Canada still maintains a very good research program for the forest industry. There is an important research laboratory at Sault Ste. Marie. There are important research labs at other centres such as Edmonton, Victoria, Quebec city and in Newfoundland. These have all maintained vital research programs.
The two forest products labs that are being privatized, one in Vancouver and one in Ottawa, have been the subject of discussion for some time. The industry has been asking the Government of Canada for more participation in these labs, and it was with that in mind that the President of the Treasury Board made the recommendation that he did that these two particular labs be privatized.
The total budget for those two labs was $7.3 million. The cut covering both of them was $3.3 million. The federal government still maintains a very large contribution to these labs in the way of $4 million. I want to assure the hon. member that the discussions we have had with industry and the provincial governments have been very fruitful. Industry has given us a positive response so far. I ask the hon. member not to look at this matter negatively, but positively. We believe this participation with industry and with the provincial governments will strengthen those labs.


Reginald Cyril Symes: Mr. Speaker, the minister should examine the research figures in Canada. The amount of research done for the forest industry is one of the lowest among the various industries in Canada. Indeed, I do not think the lab at Petawawa falls within his definition of forest products labs.
My supplementary question is this: in view of the fact that Canadian and American studies show that those sectors of the economy which received comparatively higher rates of

research have had higher rates of employment and productivity, how can the minister guarantee that the private sector labs will carry out the vital research that needs to be done, when experience has shown that these labs concentrate on design of new products and marketing rather than on the vital long-range planning which we need to help our exports?


Len Marchand: Mr. Speaker, if the hon. member reads the answer I gave more carefully, he will see that there are two different parts. We will maintain the long-term, vital research that the forest industry depends upon, in the various regional forest research labs that we have. Those were untouched.
As far as Petawawa is concerned, I recently had very good representations from my colleague, the hon. member for Renfrew North-Nipissing East, along with receiving a delegation of mayors and reeves. I am looking at those representations which have been made to me. If there is some way in which we can meet those suggestions, I will be happy to do so.


URBAN AFFAIRS
Mrs. Jean E. Pigott (Ottawa-Carleton):: Mr. Speaker, my question is for the Minister of State for Urban Affairs. It is prompted in part by a recent CBC radio report which indicated that the federal government has hired the Institute for Behavioural Research at York University, in Toronto, to do an extensive survey of public opinion at a cost of $700,000.
Can the minister inform the House how the collected data and findings will be used, and when will these findings be made public?


Hon. Andr6 Ouellet (Minister of State for Urban Affairs):: Mr. Speaker, I will inquire into this matter and report to the House.


FISHERIES
Mr. Donald W. Munro (Esquimalt-Saanich):: Mr. Speaker, my question is directed to the minister-don't tell me he has gone again!


Some hon. Members:: Oh, oh!


Donald W. Munro: In any event, in his absence I will direct my question to the Prime Minister because this is a matter of serious import within the cabinet. One minister said that another minister had goofed, on Tuesday at page 166. I wonder, in view of the implication of the goof, whether the Prime Minister can tell them-


An hon. Member:: Just a regular goof.
October 19, 1978


Donald W. Munro: It was the Minister of Indian Affairs and Northern Development who goofed.


Some hon. Members:: Oh, oh!


Donald W. Munro: I will explain.


Some hon. Members:: Oh, oh!


Donald W. Munro: The problem arose at a result of the failure of the minister to inform another minister about a very serious matter. It concerned an Indian band resolution which gave Indians jurisdiction over fishing on the reserves that would have to be disallowed.
Can the Prime Minister see the long-term implications of this goof, and could explain whether disciplinary action has been taken in the ministry concerned, or against the minister, or by any chance could he explain why these things should occur? Does the disallowance have to be delivered by an order in council, or is it just done by default, by a failure to take some action?


George Harris Hees: Don't goof.


Right Hon. P. E. Trudeau (Prime Minister):: Mr. Speaker, I do not know if the hon. member was here when the Minister of Fisheries answered this question at some length the other day. It seemed quite clear from his answer that there is the fisheries legislation on one hand, and the Indian legislation on the other.
As happens every day in our society, there are conflicting laws that have to be resolved. These conflicts are resolved. They have been resolved by this government. It does not mean that because two laws are in conflict, somebody goofed. Each minister applies the law as he sees it. The importance of government is making sure any conflict is resolved, as it will be and as the Minister of Fisheries said it would.


Donald W. Munro: Mr. Speaker, I was here and I heard one minister say there had been a goof, and the only way the goof could have taken place was because his ministry had not been informed. Is the Prime Minister telling the House and this country that this matter is going to be overridden by statute law, or is it the treaty law which will supervene and take over in this case?


Pierre Elliott Trudeau: Mr. Speaker, it is quite clear the hon. member is now asking a legal question. One minister applies the statutes of his department.


An hon. Member:: It's a goofy question.


Pierre Elliott Trudeau: I agree with the colleague of the hon. member; it is a goofy question.


Some hon. Members:: Oh, oh!
Privilege-Mr. Horner



ROUTINE PROCEEDINGS


Robert Knight Andras: Mr. Speaker, pursuat to Standing Order 41(2) and in accordance with section 22 of the Auditor General Act, I have pleasure in tabling the audit report of the office of the Auditor General for the fiscal year ending on March 31, 1978, in both official languages.


PRIVILEGE
John (Jack) Henry Horner: Mr. Speaker, I rise on a question of privilege. After question period yesterday, the hon. member for Oshawa-Whitby (Mr. Broadbent) rose on a question of privilege and suggested to the House I had left an incorrect impression by the use of some figures with regard to manufactured goods and agricultural products that are exported. I then rose and suggested I did not believe I had, but that I would check the facts.
I am pleased to see the hon. member for Prince Edward-Hastings (Mr. Hees) and the hon. member for Oshawa-Whit-by in the chamber because it should be brought to the attention of both members that the Minister of Supply and Services (Mr. Goyer) is now distributing a document entitled "Canada's Trade Performance 1960-1977". Each member of parliament should have this in his office, either today or very shortly.
On page 20 of the document it can clearly be seen that food, beverages, and tobacco exports accounted for 10.4 per cent of our total exports in 1977. Inedible crude materials, including petroleum and gas, accounted for 20.3 per cent of our total exports. Inedible fabricated materials and finished manufactured goods totalled 69 per cent of our total exports in 1977.
For the information of the hon. member for Oshawa-Whit-by, I will give the figures. Exports in the automotive trade accounted for 23.8 per cent. While I am on my feet, Mr. Speaker, I wish to say, with regard to finished products, that when the hon. member for Prince Edward-Hastings was minister of trade and commerce in 1961-


Mr. Speaker:: Order, please.


John (Jack) Henry Horner: -finished products amounted to 8.8 per cent of our total trade.


Mr. Speaker:: Order, please. The minister did say yesterday that he would check these figures and bring them to the attention of the House today. The question concerns the one raised yesterday by the hon. member for Oshawa-Whitby (Mr. Broadbent). I see he is on his feet to complete the matter.
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Borrowing Authority Act


John Edward Broadbent: Mr. Speaker, I appreciate the fact the minister has brought out some figures, even if he is quoting from a source not yet available to all members of parliament. I am not concerned about that aspect. In fact I do not want any of the data he is providing.
When I rose yesterday, I did not say the minister had misled the House. I said if I understood what he said that he might have, and I asked him to clarify the situation, which he has done today. I do not want to get into that kind of quibbling game.
The issue that seems to be of real substance, and which was raised in the question period by the hon. member for Prince Edward-Hastings (Mr. Hees), really pertains to what we mean by an end product. The minister has removed the problem. I will look with interest at the data in the new book. However, I am absolutely certain at this point that the figures the minister is using to suggest we are now in a position of being a net exporter of manufactured goods or finished products is profoundly misleading. I want to say why, so that the minister can clarify-


Mr. Speaker:: Order, please. I am equally certain, with the hon. member for Oshawa-Whitby, that we have met the question of privilege and are entering the area of debate, which can be taken up at some future time. The matter of privilege is clearly closed.



GOVERNMENT ORDERS


Hon. Jean Chretien (Minister of Finance) moved:: That the ways and means motion to amend the Income Tax Act laid upon the table, Friday, October 13, 1978, be concurred in.


[Stage Direction]
Motion agreed to.

Joseph Jacques Jean Chrétien: that Bill C-7, to provide supplementary borrowing authority for the fiscal year 1978-79, to provide borrowing authority for the fiscal year 1979-80 and to amend the Financial Administration Act, be read the second time and referred to the Standing Committee on Finance, Trade and Economic Affairs.
He said: Mr. Speaker, the borrowing authority bill now before the House seeks a supplementary borrowing authority
[Mr. Speaker.)
of $7 billion for the fiscal year ending March 31, 1979, and borrowing authority of $10 billion for fiscal 1979-80. This bill also seeks explicit authorization for the government to borrow in foreign currencies as well as Canadian dollars, and amends the Financial Administration Act so as to clarify that use of borrowing authority is calculated on a "net" basis.
As hon. members will recall, the government's cash requirements, exclusive of foreign exchange transactions, amounted to $8.3 billion in fiscal 1977-78, and the current fiscal year's cash requirements, exclusive of foreign exchange requirements, will be in the order of $11.8 billion, as I have said many times in the last few months.
In total, therefore, our domestic cash requirements for fiscal years 1977-78 and 1978-79 will be about $20.1 billion.
In addition to these cash requirements arising out of our domestic operations, the government has, during the last 12 months, arranged foreign borrowings of $750 million U.S. and $1.5 billion Deutschmarks, and has already arranged standby lines of credit of $5.5 billion U.S. These financial arrangements have been undertaken in order to add to Canada's international reserves and to provide assurance that the government is in a position to supplement the net inflow of capital into Canada.
As hon. members are aware, the government is now in the process of borrowing a further $750 million through the issuance of bonds on the U.S. market.
Let me now review the borrowing authorities that have been granted from March of 1977 to date, and against which borrowings in this period have been charged.
In March, 1977, borrowing authority of $7 billion was provided to meet anticipated cash requirements for fiscal year 1977-78. A further $9 billion borrowing authority was sought and provided as part of the income tax bill passed in December, 1977. Finally, on March 22, 1978, additional borrowing authority of $5 billion was granted.
This makes a two-year total borrowing authority of $21 billion which is not sufficient to meet the combination of domestic borrowings for the $20.1 billion in cash requirements for the two fiscal years ending next March 31, and our foreign borrowings to date of about $4.5 billion. Nor does it allow a margin to bring our borrowing authority in line with the amounts available under our already negotiated stand-by credit facilities.
As to our domestic debt program to date, during fiscal 1977-78 the Government of Canada raised in the Canadian markets about $3 billion net through the issue of Treasury Bills, about $3.4 billion net through the issue of marketable bonds, and about $1.7 billion net through the issuance of Canada Savings Bonds, for a total of about $8.1 billion.
During the current fiscal year to October 11, 1978, about $1.5 billion net has been raised domestically through the issue of Treasury Bills and $2.9 billion net through the issue of bonds in the Canadian markets.
October 19, 1978

The bill now before you requests supplementary borrowing authority of $7 billion to cover the balance of the domestic debt program for the current fiscal year, including a new series of Canada Savings Bonds, and as I have said, for the possibility to provide for further requirements in our foreign exchange transactions, including the use of our stand-by lines of credit.
The bill also provides borrowing authority of $10 billion for the new fiscal year beginning next April 1. We have previously indicated that cash requirements excluding foreign exchange transactions, are expected to be $9.7 billion for fiscal 1979-80. The government's cash balances at the beginning of the next fiscal year should be sufficient to allow part of the 1979-80 requirements to be met through a rundown in cash balances. The borrowing authority now being sought will thus provide a margin for contingencies.
Canadian dollars obtained by the government through the sale of foreign exchange reserves may eventually be needed in order to repurchase foreign exchange. For this reason the government intends to raise most of its domestic cash requirements in the Canadian capital markets rather than by running down its cash balances.
I would like now to turn to the section of the bill amending the Financial Administration Act. In the act as it now exists there is some uncertainty concerning the amount to be charged against the statutory borrowing authority in any period. This arises particularly in connection with short-term borrowings under the revolving stand-by lines of credit negotiated with Canadian chartered banks and international banks. When a borrowing is first made under a revolving stand-by credit pursuant to section 37 of the FAA, it is clearly a charge against the borrowing authority. At maturity date the borrower may wish to extend the borrowing for a further period immediately. Pursuant to section 38, this would not be a charge against the borrowing authority, because the borrowing is made to repay a maturing issue. Should the option be exercised after a delay, however, because of the manner in which section 38 is worded it may constitute a further charge against the borrowing authority.
This result would clearly restrict the full use and flexibility of the revolving stand-by lines of credit. The proposed amendment to the Financial Administration Act would clarify that it is only the net increase in outstanding debt from the date of the borrowing authority to the date of calculation of use of this authority that would be charged.

Mr. Speaker, the bill we are introducing in the House today aims at clarifying certain situations concerning financial administration and at increasing for the final months of fiscal year 1978-79 the borrowing authority of the government on financial markets, as well as at obtaining for fiscal year 1979-80, the authority to borrow up to $10 billion for government operations.
Mr. Speaker, I would like to move second reading of this bill. I want it to be referred as soon as possible to the
Borrowing Authority Act
committee, where myself and officials from my department will be able to provide hon. members with all the details they may require on this bill. During the past, such bills were generally introduced at the same time as the supplementary estimates. We are now introducing a bill directly in the House, which greatly simplifies the work of opposition members. Very often in the past, these authorizations were given on the same day as the supplementary estimates were passed, and very often-and rightly so in my opinion-hon. members complained that they did not have enough time to analyse these proposals. I therefore wanted to proceed immediately to the consideration of this important bill so as to obtain the required authority as soon as possible, and also to give hon. members the opportunity during consideration of this bill in committee to ask the questions which may concern them.


The Acting Speaker (Mr. Ethier):: The hon. member for Edmonton West on a question of privilege.
[English |


Mr. Lambert (Edmonton West):: Mr. Speaker, would it be possible to get a copy of the statement which the minister has just put on the record?


Joseph Jacques Jean Chrétien: I have only one copy here. I could have it copied right away rather than send it-


Some hon. Members:: Oh, oh!


Joseph Jacques Jean Chrétien: Well, between the people and members of parliament I will give it to the people. I will have other copies later on.


Mr. Sinclair Stevens (York-Simcoe):: Mr. Speaker, the bill which is before us, though small in size, is of tremendous importance to the nation and to the people of Canada.


Mr. Peters:: You are right. It is a disaster.


Sinclair McKnight Stevens: What the minister has expressed in a ten minute speech is his wish for parliament to give him authorization to borrow a further $17 billion in the name of the people of Canada. To put things into perspective, what the minister has asked is that we agree, by passing these few simple clauses, to give him, along with his colleagues, authority to borrow an amount which is greater than the entire national debt at the conclusion of the second world war. We are asked in this one bill to grant the minister authority to borrow funds greater than the entire nation borrowed in its fight for survival against Hitler and the hordes against which we were engaged in conflict in that horrible war.
Again, to put the matter into perspective, how many of us realize that when the "emperor" first took control and became Prime Minister of Canada in 1967 the total unmatured debt amounted to $19,900 million? At that time the debt carried an average interest rate of 4.71 per cent. When the "emperor" first took power, this nation had less than $20 billion in total debt, which was costing us an average of 4.71 per cent interest. If this authority is now granted and if this government goes

October 19, 1978
Borrowing Authority Act
ahead with the borrowings, which presumably it intends to go ahead with, we will find that the total debt in Canada will jump from the $20 billion to which I referred to $74 billion. Not only will that be the total debt, and the impact on future Canadians is obvious, but the interest rate will also rise from the 4.71 per cent to which I referred to an average of approximately 8 per cent.
What I am leading up to is that this House must come to grips with the economic blackhole which liberalism has sunk us into in the last 15 years. This government casually sought and obtained authority to borrow $7 billion in March of 1977. In December of 1977 this minister sought and obtained authority to borrow an additional $9 billion. In March of 1978 he sought and obtained authority to borrow another $5 billion. He added it up for us today. He said the total came to $21 billion. That is one figure he has right. Let us add the $17 billion he is requesting today, and we find that since March of 1977 this government has sought authority to borrow $38 billion. One thing which I think is perhaps often overlooked, or perhaps misunderstood, is that the authority which has been requested is additional authority. As the minister has made clear on previous occasions, any outstanding bonds can be re-financed, so what we are being asked to approve today is additional authority for $17 billion. On the minister's own admission, since March of 1977 the government has already received authority to borrow $21 billion.
Once again the minister has said that this bill should be expedited and passed quickly. This should arouse our interest. Why is it so important to interrupt the throne speech debate in order to put before this House a measure which is not an economic measure or a budgetary measure but which is a request that we quickly approve borrowing authority amounting to a further $17 billion? The reason I ask this is that I think this question of urgency shows the ad hoc nature of the dealings this government is engaged in, month in and month out.
I know that the minister is conveniently forgetful, but he did refer to authority which was obtained in 1977 and 1978, and it is interesting to go back through Hansard to see exactly what he said at that time as to what would be the effect of those borrowings and why they were needed.
The borrowing requested by the minister on November 7, 1977, is described by him at page 646 of Hansard for that date. The minister said that the government was rapidly running out of borrowing authority and that the government needed money for various reasons. He went on to say that it was vital to avoid any unnecessary delay in proceeding with the bill at that time. He said that, to a considerable extent, the economy depended on business confidence and that the measure then before us was extremely important in order to secure that confidence. At that time the government was seeking authority to borrow about $9 billion.
After describing that bill the minister went on to say that the increase in borrowing authority sought at that time was to

cover estimated financial requirements into the next fiscal year, and to provide a substantial margin for contingencies. We granted that authority on the understanding that it was not only enough to cover that fiscal year but that it would contribute a substantial amount for the next fiscal year.
That brings me to March 16, 1978. At page 3859 of Hansard for that date we find the debate on the new request for authority to borrow $5 billion. The minister had this to say:
The authority in this bill to borrow a further $5 billion, together with the unused portion of the $16 billion authority granted in March and December of 1977, should provide the government with sufficient borrowing powers to meet all cash requirements for the fiscal year 1978-79, and provide a margin as usual for contingencies.
Surely the House must ask this minister what went wrong? Why were we told in March that if we granted borrowing authority for $5 billion that that could be sufficient for the current fiscal year, when we now find that a further $7 billion is being requested? Think of the magnitude of what this minister has done. He told us in March that in the current year he needed a further $5 billion, and now we find that he needs an additional $7 billion. In view of what I have said, asking us to give speedy passage to this bill is absolutely irresponsible and an affront to this House.
Let me clarify one thing. Certainly most of us-I know I am one-cannot comprehend billions of dollars, but let us not allow that to distract us from the hard truth of what this government is doing.
This government has allowed its spending to get so out of control in relation to its revenue that we now have an ever-mounting deficit on the budgetary account which, in turn, has to be financed in one way or another. That is the simple truth. We are being asked to authorize borrowing of $7 billion for this current year and another $10 billion for the next one, and we are not being given the slightest indication as to what the picture will be in fiscal 1980. That is something we should not tolerate.
Where are the facts and figures? Why does the minister need this blanket borrowing authority of $10 billion for fiscal 1980, which is the period from April 1 of next year to March 31, 1980? The minister slipped into a press conference here in Ottawa, misled the press and tried to mislead the Canadian public by boldly saying that the government cut back its fiscal 1980 spending to $52.6 billion, that our cash needs are $9.7 billion and that "Isn't that great?" Hon. members will note that the minister did not reveal his revenue estimates for fiscal 1980. He did not make it clear to the press or to the Canadian public that, according to his own internal figures, revenue will be less than $40 billion, resulting in a shortfall, by the government's own figures, of $13.3 billion in fiscal 1980.


Joseph Jacques Jean Chrétien: False.


Sinclair McKnight Stevens: The minister says "false". Let him do two things. Later in the debate let him put his revenue and expenditure estimates with respect to 1980 on the record. The minister says what I say is false, but an official in his own department released those figures. Let the minister argue with
October 19, 1978

his own official. Perhaps he does not understand what his officials are trying to tell him.


Mr. Lumley:: Who was the official?


Joseph Jacques Jean Chrétien: What is the name?


Mr. Paproski:: Ed Lumley.


Sinclair McKnight Stevens: Ed is as good as any.
What 1 have indicated is that we are now, thanks to 15 years of misrule by the Liberals, in a position where 75 cents of every $1 that they are spending on the current account is having to be financed in one way or another. That is what is happening; let us not kid ourselves. The money they are asking us to allow them to borrow is not going into, say, building an Alaskan pipeline, is not going into helping to solve the grain transportation problems in the Canadian west, and is not going to help the fishermen on our east or west coasts. It is literally covering the expenditures of last year's or this year's consumption. That is where they need the money. It is money that is gone.
Let us take a look at what we are being asked to finance by this government. In this regard I guess we were inadvertently helped by the government because on October 10, in its anxiety to clear many of the questions that had been on the order paper for some time, it answered some of them, and I invite hon. members to go through some of the answers because they will find some revealing statistics on how the government has been spending our money and why it is now asking us to allow it to borrow more money.
Here is the type of thing we will be financing if we approve this bill. In the 1978 fiscal year the total telegram bill incurred by the Ottawa government was $5 million. Where did they send their telegrams to? What is involved in that $5 million bill they ran up? Here is another really funny one, Mr. Speaker. In spite of the fact that we have a Post Office which is running a deficit to the tune of $700 million, guess where they spent $8 million? They spent $8 million on courier service that year.


Some hon. Members:: Oh, oh!


An hon. Member:: No confidence in the Post Office.


Sinclair McKnight Stevens: They spent $8 million on courier service on the excuse, which they gave when they were questioned, that they had to use that service because, to use their words, the Post Office does not provide similar day or overnight service.


Some hon. Members:: Oh, oh!


Sinclair McKnight Stevens: Let me put this into perspective. I indicated that they spent $5 million on telegrams and $8 million on courier service, which makes $13 million, which presumably could have been used on the Post Office to some extent.
Borrowing Authority Act
What they are really doing now is saying, "We do not have any money in the till to pay that $13 million, so would you let us put it out in the form of a debt?" However, the minister does not say-and here is the crux-when the debt will be repaid, and judging from their past record, if they find it hard to balance a budget, guess how hard this "emperor" and this crowd would find it to have a budgetary surplus! So, if there is no budgetary surplus, the debt we are being asked to approve will obviously have to be incurred for an indefinite period. Let me put it into perspective: the type of money that the government has been spending, or wasting in many cases, will now be financed.
The Canada Savings Bonds issue is now at over 9 per cent annually. Do you know that at a 9 per cent interest the cost of what we are now approving will double every eight years? That is the cumulative effect. At 9 per cent interest, within eight years you will have to repay twice the original amount. Let us not lose sight of that. The $13 billion shortfall, which the minister will have to reveal sooner or later, between his expenditures and his revenue sources in the coming year, will result in 25 cents on every $1 they are spending having to be financed some place.
Basically what the government is doing is to consume and spend today, and expecting future generations of Canadians to live with that debt. Every eight years the entire amount will have to be repaid in interest alone.
Let me give you some other examples of the amounts the government has been spending and is now asking us to authorize it to borrow to keep the till filled. In the 1978 fiscal year the government had vacant buildings, many of them right in this area, which cost $1.5 million in rent. We are now being asked to approve a $7 billion borrowing which will cover that $1.5 million in rent for vacant accommodation.
There are other such expenditures. For example, the government has spent on briefcases alone-and boy, some of their offices must be lined with briefcases-some $70,000 in one year.


An hon. Member:: That is for their bagmen.


Sinclair McKnight Stevens: Let us keep our eyes on the ball. It is great for the minister to stand up for ten minutes and say, "I am out of money, please get on with it and give me authority to borrow $7 billion, no questions asked." I think it behooves every member of the House to dig in and say, "First, before you ask us to okay your borrowings, tell us where you spent all that money." For example, not only did they have all those briefcases-


Joseph Jacques Jean Chrétien: You have approved the spending.


Sinclair McKnight Stevens: The minister says we have approved the spending. You see, there he goes; he is forgetful again. On March 16, when we approved the last $5 billion in borrowing authority, the minister-I will remind him of that-said that that would meet all cash requirements for the fiscal year 1978-1979.

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Some hon. Members:: Oh, oh!


Sinclair McKnight Stevens: That is what we approved on March 16. Now we are being asked to approve for the same year another $7 billion. I ask the minister to get his facts a little straighter.
1 am just giving a small tip of the iceberg regarding where the government has been spending money in Canada. As you know, the government has some very friendly advertising agencies on which it depends a lot. I do not want to draw any particular inference from this, but I find it very interesting that one advertising agency alone, on behalf of the Anti-Inflation Board, was paid $445,000 to tell us what inflation is all about. There is no mystery about where inflation comes from-we are dealing with it right here. It will come out of Bill C-7.
Inflation, basically, is the result of the government running too big a deficit, which in turn means it has to borrow funds, which in turn means the Bank of Canada has to borrow some of those funds, which increases the monetary system in the country and gives us the inflation. So how wonderfully odd it is that the government has spent $445,000 on McClaren Advertising which is telling us what causes inflation, without, presumably, realizing that that $445,000 will increase the government's deficit, which means it will have to borrow more money, which in turn creates more inflation in this country.
It is not only people like McClaren who have contributed to our problem. We have all heard of Goldfarb. Apparently Goldfarb did some very useful work for this government. That company told the Prime Minister (Mr. Trudeau) that the water is hot and he should not try an election or he will get clobbered. I wish Mr. Goldfarb had taken a trip to the far south or gone some place else, because the greatest thing that could have occurred, both economically and politically in this country, had Mr. Goldfarb not so instructed the Prime Minister, would have been for the Prime Minister to have tested the water some time this month or next month.


Some hon. Members:: Hear, hear!


Sinclair McKnight Stevens: I think it is interesting to take a look at where the money we are now being asked to authorize was spent. Goldfarb picked up $100,000 of it-that was his fee for one assignment alone.
As I come to the Parliament Buildings every day, month in and month out, I watch the construction of the steps going down to the Bytown Museum. Even to my untrained eyes it looked like a pretty expensive job, but I must admit that when I asked what those steps cost-and there are about 40 of them-I was flabbergasted to find they cost $410,000-just steps to go down to the Bytown Museum a few months of every year.
There are various examples of what the government has been up to, Mr. Speaker. How many of us recall the $200,000 which was spent on a study to determine how long people spent in public washrooms? Let us not lose sight of that. Because the

government is now faced with a deficit, that $200,000 must be financed at 9 per cent, and every eight years that $200,000 doubles. The silly little study will cost the Canadian public $400,000 in eight years, and $800,000 in 16 years. As a result of that study, we have knowledge as to the amount of time used by males and females in public washrooms. As far as males are concerned, it was an average of 41 seconds, and as far as females are concerned, 75 seconds. This is the fiddling around that the government has been engaged in while the nation faces one of the most serious economic crises faced by any nation in the industrial world.
Not only must the minister explain more fully why this borrowing is needed, but he should deal with some other interesting questions. One such question relates to borrowing in foreign lands. There should be no doubt that clause 4 of the bill has a very good purpose. The money lords of Wall Street told this little minister that they wanted the authority of the Parliament of Canada behind the borrowing, that they do not trust him. They want parliament to confirm that the authorization to borrow $7 billion, and eventually $10 billion, is in fact backed by the Parliament of Canada, not just by a government which will hold office for a few further months.
The minister chose not to explain why the bill included an authority to borrow $10 billion in fiscal 1980. We know nothing about fiscal 1980. The House has been furnished with no figures. We do not know what the expenditure and revenue forecasts are, or what the budgetary deficit will be for that year. Why should we be asked to hand him blindly an authority to borrow $10 billion during that year? What is the rush? We know the government is planning an election. Perhaps it would be embarrassing in April or May of next year to request that $10 billion authority. If that is the only reason, I wish the government would admit it. It is not good enough simply to ask us to okay blindly a $10 billion authority without giving the usual, expected budgetary figures before any fiscal moves are made by parliament.


Some hon. Members:: Hear, hear!


Sinclair McKnight Stevens: We must put into perspective how well or how poorly the country is doing. I could quote from many economists and analysts, but I should like to refer to the relevant quarterly report by Wood Gundy, the largest investment dealers in Canada. In September, 1978, that firm had the following to say about our economy:
Despite an official commitment by Prime Minister Trudeau to a 5 per cent real growth rate, our August Forecast looks to no more than a 3.3 per cent increase in real GNP this year, with the rate falling further to only 2.2 per cent in 1979. Some improvement is likely in 1980, largely as a result of a pickup in capital spending,... We therefore expect unemployment to worsen over the next two years, averaging 8.7 per cent in 1978 and 9.1 per cent in 1979 before moderating to 8.9 per cent in 1980.
We are being asked to give a borrowing authority for 1980, yet a reputable investment house told us that our economy will be so sluggish that there will be 9 per cent unemployment for the entire three years-1978, 1979 and 1980. We have ended up with huge deficits, huge debts and the highest unemployment since depression years. That is the culmination of this



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black hole of Liberalism. That is how far the government has pulled the nation down in the 15 years of its rule.
It is important to analyse what this vicious inflationary spiral looks like. We find that the federal government incurs deficits which must be financed by selling securities. The government has found that it can no longer sell sufficient securities in the Canadian domestic market, because obviously interest rates are driven up the more that is done. Thus the government resorts to selling securities to foreigners in foreign currencies. There are only three other countries in the world which resort to such financing to cover consumption deficits in their home economies. Those three countries are Zaire, Panama and Spain. That is the level to which our economy has been dragged by the government extending our borrowing into foreign jurisdictions.
This is a serious matter, because when a debt in foreign currency is incurred, one must speculate as to how much that debt will be currencywise when it is time for repayment. For example, the German loan which was incurred in May of this year provided a little less than $800 billion Canadian. It would cost an additional $130 million Canadian to repay that loan today. The government undertook to repay that amount of interest when it borrowed the $800 million Canadian. The more we borrow in foreign currency, the more the risk will be extended.
The minister should have come into the House requesting a $17 billion borrowing authority to put capital investments into place. What would $17 billion do? I understand that it would build 150,000 homes in Canada. Perhaps it would build two Alaska pipelines.
Now that the government basically has drained the domestic market, it is resorting to borrowing foreign funds to cover consumption deficits in the country. Deficits are being incurred which result in financing by selling securities. Then the Bank of Canada is forced to buy many of the securities to stabilize the market and to ensure a success as far as government issues are concerned. In so doing, the Bank of Canada pumps reserves into the banking system, which leads to a multiplied level of money and credit in the system. Excessive credit expansion then leads to a long trend in declining liquidity among our banks and corporations, which raises the level of risk which, together with the continuing rise in loan demand, raises the level of interest rates through the economy.
That is the cycle they are putting us through, Mr. Speaker. In our late stage of liquidity deterioration, companies have become less able to withstand business downturns; they are less resilient on the recovery. This is demonstrated by our increasing level of bankruptcies, especially among small businesses. According to Dun and Bradstreet, in the first six months of this year bankruptcies were up 40 per cent over last year. Bankruptcies in Canada have jumped to the point that today, rather than having one bankruptcy in Canada for every ten in the United States, the ratio one would normally expect, we
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have seven bankruptcies in Canada for every ten in the United States.
The problem caused by the federal government's massive federal funding is also reflected in our mortgage field. This week we have seen interest rates on mortgages go still higher. We are also faced with a rising foreclosure rate in home mortgages. Central Mortgage and Housing Corporation, for example, paid out insurance claims on 1,051 residential units to the end of August this year, against 405 for the whole of last year.
I would suggest that fiscal discipline has clearly broken down at both the cabinet and administrative levels of government. This is partly a problem of philosophies that must be changed, and it is partly a problem of structure which must also be altered. A general election will presumably rectify the problem of philosophy, but even here one important barrier to any solution is the lack of understanding by many voters of the true origins of inflation to Canada. And not only inflation, but all the other problems associated with that phenomenon.
Not only has the government misled the Canadian public concerning the causes of our inflation-high unemployment, lack of real growth, and current account deficits-but this misrepresentation has been pounded home by the New Democratic Party who have deliberately told the Canadian public that we need more of what has already made the nation so sick.
If there were a better public understanding that it is the national cumulative deficit, the public debt, which becomes our public debt, that has caused inflation, people would not be picketing supermarkets, but would be picketing the Parliament Buildings. They would not complain to their members of parliament about taxes, they would complain about the Bank of Canada building that has been a-building for five years at a cost of $53 million. They would be complaining about the mammoth spending programs launched by this government.
There is something we must not lose sight of, Mr. Speaker. Year after year we subsidize the CBC. It has cost the nation over $3 billion in total. To the degree that the government has to finance those subsidies, it is now putting us on the treadmill of not only having to pay for the initial subsidy but to pay 9 per cent interest per year. That is what it has led us into, Mr. Speaker.
We must bear in mind that higher taxes and inflation are only the symptoms; spending is the problem with this government. In the short term the government must go on a diet to avoid a severe coronary later on. In the long term, structural and philosophical changes are required.
In the United States the Legislative Reorganization Act of 1970 makes it necessary for the administrative branch in that government to price out the cost for new legislation for five years into the future. We need that approach here, not only for new legislation but for old.
In the past 15 years all governments in Canada have increased their share of the GNP by over one-third. Let me repeat that, Mr. Speaker. In the past 15 years all governments

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in Canada have increased their share of the GNP by over one third. No other industrialized nation has had that type of escalation in governments' take. One half of this spending is at the federal level. In terms of actual levels of spending, the federal government's expenditures will amount to $52.6 billion in 1980, compared to $6.4 billion in 1960, an eightfold increase in 20 years.
In a recent special study by the C. D. Howe Institute, H. V. Kroeker summarizes his suggested improvements which I think we should consider. He said:
Ultimate control of, and accountability for, the expenditures of government must be exercised by the legislature. The Canadian House of Commons is hampered, however, in effectively carrying out this role because it has not adapted quickly enough to the demands placed on modern government. To enhance and reinforce parliament's role requires a number of improvements which parallel those proposed for the internal expenditure process of the federal government. These improvements include-
He then itemizes a list of things he would like to see improved. One is a general assessment of past and future trends of government expenditures covering a span of ten years, five years into the past and five years into the future. He would also like to see the preparation of the economic basis on which future projections have been made, such as the expected rates of growth in the gross national product, rates of unemployment, inflation, wage increases and so on. He would like to see the preparation of comprehensive government overviews of programs, along with an indication of how these relate to government policy and other programs. He would like to see the introduction of the right of parliamentary committees to investigate, at their initiative, matters that fall under their mandate, and to call public servants as witnesses on technical matters or in relation to the implementation and funding of programs. He would like to see the creation of a parliamentary committee on economic and expenditure policy to review longer term projections and trends, and finally, he would like to see the introduction of the accounting-officer concept as part of the mandate of the public accounts committee. I think these things, or perhaps modifications of them, are badly needed.
This is getting out of hand. It is not a matter of trivial deficits any longer; it is a matter of the government literally being able to finance out of current revenue only 75 cents of every dollar it is spending. Yet I do not see the slightest indication by this government, and certainly not by the minister, of an attempt to facilitate the types of review I have summarized and which, presumably, have been endorsed by the C. D. Howe Institute.
In his contribution to the throne speech debate the Prime Minister (Mr. Trudeau) said that we ranked sixth or seventh behind various other countries. Presumably that was an attempt to contradict what we in this party have often said, that we have dropped from second to seventh in the world, but I think he had in mind that first, second and third were Kuwait and countries like that. Just the odd time the Prime Minister is of help. In his speech he listed the six countries that are actually ahead of us. If we take the Prime Minister's six, plus the six we were referring to-West Germany, Belgium,

the United States, Norway-we would find that we are thirteenth. Something must have got through to the Prime Minister. In fact Canada has dropped to thirteenth, if you include the countries he named, compared to second-


Mr. Martin:: Specify your six.


Sinclair McKnight Stevens: If you want, I will be glad to-Switzerland, Sweden, United States, Denmark, West Germany and Belgium. I know the parliamentary secretary is greatly pleased with his new appointment, Mr. Speaker. I wish him well in it, but I suggest that if he needs any more information he should go to the Prime Minister for it. He knows the names of the other six countries which are also ahead of us.
This is what we are faced with in this bill, Mr. Speaker. We are faced with the fact that the government only last spring told us they needed $5 billion more borrowing authority to get them out of this year. Now in October they find they need another $7 billion, and they want specific authority to borrow part of that $7 billion in a foreign currency. They have even gone further and said, "For good measure, throw in another $10 billion for fiscal 1980; we will probably need that too."
Obviously, the situation is out of control. I believe that we must, in order to put it into perspective, vote against what the government is asking us to approve. Before I sit down I intend to move a motion. My motion will be that we not now read this bill but that it be considered objectionable in principle for the mere fact that the government is requesting us to grant an authority for massive borrowing in a future fiscal year and yet we have no proper budgetary presentation to allow us to judge whether that authority should be granted or not. But, Mr. Speaker, in truth we need some figures. We need information. Why did this borrowing authority request come before the budget? Surely the proper sequence would have been to bring in the budget, let us see whatever figures the minister is willing to put before us, and let us then come to our own conclusion whether a borrowing authority of $17 billion is warranted.
We know the reason for the urgency. They are in trouble. They are in trouble in New York because they have to satisfy some legal firms in New York that they have the authority to borrow the money they would like to borrow now. That is why they want to put this bill through. Surely they owe it to us to give us a lot more detail. They owe it to us to show us, for example, what the future trends are in Canada, assuming that they allow this 9 per cent increase per year to follow up to, say, 1984, and revenues to continue to grow. If those figures are projected, it will be found they are very startling. One will find that the budgetary deficit, rather than contracting, is going to get bigger year by year. In short, if the government can only be as restrained as they indicated in their press conference, and if revenues are maintained at the level that they have been in recent years, the deficit in 1984 will be considerably bigger than it is today, and today it is totally unacceptable.
Put it again into perspective. This government have the audacity to hint or to say that they are being restrained, and
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yet they admit that the deficit is somewhere around the $10 billion level. That deficit in relation to our federal government spending is triple the deficit that the United States government is living with now. It is triple in relation to our spending compared to the American deficit in relation to their spending. The Americans are worried. But I do not sense that this government are worried about anything other than getting re-elected. That is all they are concerned about. Whether the country is economically in good shape or bad shape becomes secondary to them in their anxiety to try to win favour once again with the Canadian electorate.
In closing, perhaps Thomas Jefferson, many years ago, put this type of situation squarely. He said:
I place economy among the first and most important virtues, and public debt as the greatest of dangers ... we must make our choice between economy and liberty, or profusion and servitude. If we can prevent the government from wasting the labors of the people under the pretense of caring for them, they will be happy.


Some hon. Members:: Hear, hear!


Sinclair McKnight Stevens: Having said that, I would like to move the Amendment to which I earlier referred. I move, seconded by the hon. member for Grenville-Carleton (Mr. Baker):
That all of the words after "That" be struck out and the following substituted therefor:
"this House holds the opinion that the granting of an authority for massive borrowing in a future fiscal year, in advance of any budget presentation for that year, is objectionable in principle and this House therefore declines to give second reading to Bill C-7."


Some hon. Members:: Hear, hear!


The Acting Speaker (Mr. Ethier):: With the permission of the House I will reserve judgment as to the acceptability of this amendment and render judgment at a later date.


Mr. Max Saltsman (Waterloo-Cambridge):: Mr. Speaker, the idea of borrowing $17 billion must really do something to the imagination of the people who contemplate it. If we have to borrow that kind of money, something is seriously wrong in this society.
One has to look at the need to borrow the money. There is no question that, faced with the kind of slackness in the economy that we have, a deficit under the present circumstances is probably unavoidable, and that the alternative to not having a deficit and having a balanced budget-and I am not sure that my friends to the right are suggesting that we have a balanced budget-would be to make the unemployment rate of the thirties look like a picnic.
As a matter of public policy the borrowing has to be carried out. But it is sad to think that this is the only way it can be done.
While I was listening to the hon. member for York-Simcoe (Mr. Stevens) use the figures from Woods, Gordon, an interesting thought occurred to me. The thought did not occur to me when my own leader was using those figures the other day.
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Sinclair McKnight Stevens: I am using Wood Gundy figures. The hon. member for Oshawa-Whitby (Mr. Broadbent) was using Woods, Gordon.


Max Saltsman: Thank you. It is the same thing for Wood Gundy because Woods, Gordon is somewhat tainted with Liberal tendencies; Wood Gundy is not. Therefore, it makes it more useful to talk about Wood Gundy.
I presume Wood Gundy have been reading the polls, like everyone else, and I presume that they are making the assumption that perhaps the Liberals will not be in office in 1980 and that the Conservatives will be in office then. Yet despite that kind of possibility, Wood Gundy is saying that "we are still following the same disastrous course that we are on at present." With that in mind, I think the hon. member for York-Simcoe has one or two conclusions to reach. First, his party is not going to form the government in 1980, and Wood Gundy is making these predictions based on the Liberals remaining there and continuing their policies. Second, they are going to form the government, and it isn't going to make a damn bit of difference if they do or not, because the predictions are not going to be changed. That is really the point I want to make.
When one looks at $17 billion one has to ask and tell oneself that this is a serious problem. When you deal with the magnitude of that problem, what sort of suggestions are made as to the cause of it? We hear about a misspending of $5 million on telegrams, $17 million on courier services, and $400,000 to an advertising agency. Even when you add up all these little figures, you do not come anywhere close to $17 billion.
Even assuming there is some waste and mismanagement, as there tends to be in all large organizations, the way to correct it is not simply by being more efficient in government. As desirable as that may be, it is not going to knock out the $17 billion loan requirement.
When we talk about the economy it reminds me of a skit that sometimes appears over television. I think "The Honey-mooners" used to use it. Someone walks in and goes over to the stove. When he turns it on, instead of getting a flame, he gets a shot of water in the face. When he rushes into the bathroom and flushes the toilet he gets the triumphant march from "Aida" bursting forth in the living room. Something is not working. The whole economy is mixed up. The blue plumbers are sent for. They come with their wrenches and tinker with it. The whole system breaks down, and there is water all over the place. That is like the shape of our economy. It just is not working. Something is dramatically wrong with our economy and it will not be corrected by looking at an advertising or telegraph expenditure, or something similar.
The importance for parliament in trying to deal with this subject is to look at some of the underlying causes and some of the choices that face us with regard to what we can do with the economy. We have the blue choice, the one put forward by my

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friends on my right, that the only thing wrong is with the present government and the fact that government expenditures are out of control.
We also have a pink choice, the choice of the New Democratic Party, as to what can be done. We feel that the problem is not in government expenditures. The problem is essentially that the market system in this society has broken down. It will not be corrected by the government getting out of and not managing the economy. That would only make it worse.
We have reached the point in the development of our society where we need more government management, rather than less. To the extent that the private sector has failed, and it has failed, the public sector has to take up the slack.
In that regard I must ask my friend from York-Simcoe if he really meant what he said when he stated that if the government were borrowing $17 billion for housing, it would be a different matter. I presume he is saying he would support a $17 billion public expenditure on the part of the government. If it is for current needs, he will not support it; but if it is for investment, he will. I am not sure he meant that and, therefore, I do not know why he introduced it.
Let us look at some of the problems and how this government and, to a very large extent, my friends on the right would handle it. At the moment we have a need to bolster the Canadian dollar. There are a number of ways in which that can be done. The government has chosen to increase rates for the fifth time.
What is the consequence of increasing interest rates in order to keep money in Canada? They have come to the conclusion that much of the devaluation of the Canadian dollar is because of the outflow of capital and the importance of inflowing capital. Raising interest rates has not worked in the past and it will not work now. However, the government is going to do that in order to stop some of the outflow. The consequence will be to slow down the whole economy. Raising interest rates will slow down the housing industry, investment, and all those other things about which they are concerned. The justification will probably be they had no choice, there was nothing else for them to do.
But there is a choice in these matters. It is not an easy choice or a perfect choice. However, it is preferable to raising interest rates. 1 refer to imposing exchange controls. I think the problem is that there is too much money in this country for gainful investment. The government have been too generous to people with high incomes, to people in businesses, particularly in the large business sector, and they have more money than they know what to do with. It is leaving the country for that reason. It must be stopped. There is a responsibility on those who make their money in this country to have some response to national needs.
The figures that we have bear out where the problem is. I agree the trade deficit is important and that it has something to do with it. However, what is more important is the fact that so much money is leaving the country in large amounts. Small amounts, such as those for people going on holidays or buying

a home in Florida, are not the real cause of the problem. Rather, it is that there are large sums of money leaving the country in an attempt to find more gainful interest rates somewhere else.
If we look at the section of the quarterly estimates, the Canadian balance of equal payments, page 56, under the heading of "Interest and Dividends", we can make a comparison. In 1969 we had a deficit on that account of $915 million. In 1977 the deficit was $3,480 million, almost four times as much in eight years, leaving this country.
When I discussed this matter with the people at Statistics Canada in order to try to get an accurate picture they said they could not give an accurate picture because the statistics were not good enough. They had to lump it under various headings, and they were not sure how much was private money and how much was business money.
They have an item called "Net Errors and Omissions", a very exact thing. Under that heading is shown a deficit of $219 million in 1969, whereas, in 1977 the outflow was $2,746 million, an incredible increase.
If you look at the offsetting amount of capital coming into Canada you find that, while it has increased, and I do not want to put the figures now, it has not increased at nearly the same rate as the outflow of money from this country.
Money does not flow out of the country just because there is no confidence. Anyone who does not have confidence in this country has to be out of his mind! I cannot think of any country in the world that has a more brilliant future than Canada. Any investor who does not see that does not deserve to be called an investor.
You cannot say this money is leaving Canada because there is no confidence in this country. It is leaving for other reasons. I suggest it is leaving because of public mismanagement. There is so much money around that it is just trying to find a place to light down. It moves back and forth on a quarter per cent rise in the interest rate.
The liquidity in large corporations is so great that some of these corporations make more money by placing their money for interest than they do on their own operations. A lot of this has arisen because of the very generous capital allowances we have allowed to large corporations. It has increased the liquidity and enabled them to do this kind of thing.
This is the kind of thing we have to examine. Therefore, you impose exchange controls. The minute you say that, however, someone says, "That means that if I want to go on a holiday I cannot do it without going to a bank or agency." But you do not have to do it that way and in most countries where there are exchange controls it is not done that way.
You can impose these controls on any sum of money over $50,000 in order to ensure the large sums of money-those that are affecting these figures-are taken into account. It will be much more desirable to try to deal with the dollar problem in this way than to keep raising interest rates in a losing battle of one-upmanship with the United States. This is a battle we
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cannot win. Why is it not done? It is not done because the government does not want to manage the economy.
It is not easy to impose exchange controls. It means a government has to accept responsibility, and the present administration does not want to accept that kind of responsibility and it is this reluctance to do so that is at the heart of our economic problems.
The government has been cutting taxes over the years. One of the reasons we have borrowed to this extent is because the government has cut taxes, but they have cut them for the wrong people! The cuts have stimulated saving by those at the higher income levels. Taxes were cut for the more fortunate to such an extent that the people concerned could not spend all their money. The Minister of Finance (Mr. Chretien) himself said we were saving ourselves into a depression.
The New Democratic Party has said that cutting taxes might be necessary in the short term but, if taxes were to be cut, they should be cut for those at the lowest income levels so as to help those with consumption needs. In that way we derive a double benefit. Surplus funds are not created and the extra purchasing power stimulates the economy, putting people back to work. Revenue from taxes is greater, and the deficit is reduced at the same time. This is not only a more decent way to do things, it is a more efficient way. Why is it not being done? Because it means you have to make a decision in favour of the poor rather than the rich and at the moment there seems to be a blue tide running-the people who "have it made" are insisting on retaining their position, a position endorsed by the government.
It is not only tax benefits that are greater at higher income levels. The trend to more favoured treatment extends to such things as registered retirement savings plans and various other premiums. The Minister of Finance has, on occasion, pointed out that it is not just the rich who benefit from these programs. He tells us that some people from the middle income levels also benefit. But the benefits to the rich are disproportionate to the small amounts received by those at the lower end of the scale as a result of which the system works to increase savings at a time when we really need an increase in consumption.
The only solution proposed by hon. members to my right is that we should cut the public sector. Mr. Speaker, cutting the public sector simply exacerbates the problem. We are all familiar with examples of too much fat in the public sector, and to the extent that this is identifiable it should be cut out. But that is not the mood of those who sit on the government benches. Their idea of cutting the public sector is not to trim the fat but to make cuts across the board on principle, and this principle might be described, more or less in these words: we are going to get out of the economy, we are going to show the people we do not want to be in the economy, we are going to leave room for the private sector.
The other day my leader asked the Minister of Finance whether it was true that a recent study showed that the cuts made by the government would result in close to 100,000 being
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unemployed. The minister had to do some mental gyrations before answering that question. He attempted to demonstrate that by making 100,000 people unemployed in the public sector he would create jobs in the private sector. Yet the hon. gentleman has himself expressed disappointment with the performance of the private sector in this regard. Every time cuts were made on the assumption that the private sector would take up the slack, it did not happen. Unfortunately, the private sector increases the problem instead of diminishing it.
How could anyone in his right mind conclude that just because the government stops employing people the private sector would suddenly develop confidence and hire them? Business does not expand its operations in proportion to the number of employees the government has dismissed. The only reason business expands is because there is a market for what it is trying to sell, or the services it is providing. The actions of the government in this area are of no consequence to a businessman beyond becoming the subject, possibly, of conversation at the golf club.
We have much more compelling difficulties to face. It seems to me we are living in one kind of society, a society we think we understand, while moving rapidly into another kind of society, one we do not understand and one for which the government is not prepared. The government is attempting to manage by crisis, by election dates, and the official opposition is not being of much help in that regard though one would not expect them to be. The reason we find ourselves in this great economic difficulty is our reluctance to face the fact that the world is changing before our eyes and that the solutions we were once able to apply are no longer as useful as they were.
It seems to me that when we debate as parliamentarians we should try to understand the changes which are taking place and to listen to arguments in favour of one course of action as against other courses of action, arguments, if you like, of a philosophic nature; I recognize that philosophy is regarded as somehow unparliamentary, but I feel, nevertheless, that parliament should be a forum for philosophy. A great many things are changed in our society.
My hon. friend, the hon. member for Winnipeg North Centre (Mr. Knowles), reviewed what has happened in our society, when he spoke last week. He spoke of the changes that have taken place, many of them because of the presence of a social democratic party in Canada. There can be no comparison between the society into which he was born-and into which I was born for that matter- and the society we see today. For want of a better term, we call it the "welfare state". Nobody is going to dismantle the welfare state because, whatever faults it may possess, we are not willing to go back to the kind of jungle which existed before, in all its insensitivity. In our desire to be a more humane civilization we have removed many of the pressures which pushed civilization in a certain direction. We have removed combative presssures; pressures of poverty and pressures of illness and desperation.

October 19, 1978
Borrowing Authority Act
This is not a desperate society. It is not the world of Adam Smith, if there ever was such a world. It is not a world of small shopkeepers competing against each other. We have a different society. Because it has been gradual and because we have fought every step of the way in order to attain this society, we have not stopped to analyse and ask what the implications are for the future, now that we have this kind of society. Ours is not the only welfare state. I do not think there is a country in the western world, including the United States, which does not devote much of its resources to the field of medicine, education or pensions, all of which are associated with welfare states.
Another thing that is happening is that growth in the western world is slowing down. That is not so just in Canada, but in the whole western world. Those of us who have been travelling to Japan, Germany, France, Britain, or even Sweden, will note that the preoccupation of those countries is the same as the preoccupation here: what happened to growth? What we tend to forget is that we have come through a period of the most rapid growth in human history. The last 30 or 40 years have been a period of incredible growth. This is not usual for the world. The world did not grow at that rate before, but because we have been living in this period we think it is going to go on forever. But suppose it is not going to go on forever, and suppose we simply have to adjust to making a decent society which is not constantly being prodded and pushed into consumption? I think that is in fact what is happening.
If we look around at people today, we find that they have changed a great deal. Their attitudes toward clothing, cars, and security have changed. Out of the old society a new one is emerging. The great difficulty is that, whatever we say about the old society, it is both true and false. Whatever we say about the new society is both true and false. But a government which continues to ignore the fact that it has a double problem, how to manage the existing society, and how to make the transition to the other one, is doomed to failure.
I will give some examples of failure. The government cuts taxes. I say the cuts are being made in the wrong places. Perhaps that is part of the failure, but it is a general failure in a relatively affluent society and in a welfare state. The Keynesian idea is that if we cut taxes we stimulate demand enormously, but instead, when we turn on the stove, we get a shot of water in the face, and the government stands there wondering what happened. Governments think they are doing the right thing but then wonder what happened.


Joseph Jacques Jean Chrétien: We cut sales taxes.


Max Saltsman: Cutting sales taxes is somewhat more efficient, but that too poses a problem. Besides, that cut is going to be rescinded.


Mr. Blackburn:: It already has been.


Max Saltsman: The government still has not shown that it understands the problems sufficiently to forget about tax cuts and to initiate other things such as grants, payments, increased

old age pensions, increased family allowances, or earlier retirements, as ways to stimulate the economy.
Increases in public expenditures are positive and direct, and the outcome can be predicted. We are now entering a slow growth period. I do not want to go into all the reasons we are in a slow growth period, but I think we will have to face the fact that we will not continue to grow at the same pace as we have. To some extent we should not deplore that. We grew too fast for too long, and very often we grew at the expense of humanity and the environment, and people no longer want to do that. We are becoming a more stable society, and we have to make the necessary adjustments.
There is far less demand today for traditional goods and far more demand for services. This is becoming quite obvious, and it has an effect. Much of the inflation we experience in our society is a direct consequence of the switch from the production of goods. Productivity figures are totally misleading because they do not take this factor into account. When we switch from the production of goods to the consumption of services, we have what amounts to a productivity drop, because in providing services we cannot use labour-saving devices and inventions to the same extent as we can in the production of goods. Therefore we have what looks like a productivity drop.
As people in the goods sector increase their incomes, usually in line with productivity increases, which cannot be matched by the service sector, and the service sector wants to catch up-it is about 60 per cent of our economy now-that catchup is inflationary. That may be fair and just, but it is inflationary. A permanent inflation is built into a society which is in the process of this kind of transition. We hear very little about the consequences of that and of what needs to be done.
I am proud that my colleagues have had an important role to play in the redistribution policies of the last 30 years. Looking back now, redistribution in those years was relatively painless because people's incomes were growing very rapidly, and the gross national product was increasing enormously. This enabled our society to improve the situation of virtually everyone, not on a relative basis, but on an absolute basis. In addition, those who had some of their money taken away did not find it too painful because they were still improving their situations, and therefore we were able to effect redistribution domestically as well as internationally. But, what happens when the gross national product does not rise at the same rate? We get a right-wing conservative reaction because, in order to redistribute, something must be taken away from somebody, and people do not like that.
The money cannot come out of the surplus any more. There really must be a redistribution of existing resources. Some people must be told that they cannot become as rich as they did before, because some of the wealth has to be set aside for those who are not as well off. Then we go through this painful experience of moving to the right because people start to feel the effects of redistribution.
October 19, 1978

I think that there are now two moves taking place. We all know that there is a move to the right. Those of us who are in politics experience that, but I think the results in Saskatchewan, and the election of an NDP federal member of parliament in Newfoundland, indicate that there is also a willingness on the part of the public to look at more progressive ideas, if they are articulated. We are hoping to have the kind of debate in which there is no room in the middle, where the Liberals find themselves. They are right in the middle, trying to be all things to all people, and I do not think that is possible any more. We must take a stance on these changes which are taking place in our society, and decide which way we want to go. Should we stand in the way of these changes, or move with them and make the transition to a different kind of society?
We can call this society anything we want. We can call it the conserver society, as some people have, the post-industrial society or, as the Prime Minister (Mr. Trudeau) did, the new society. One of the few times the Prime Minister has been right in the last four years was in a speech he made a couple of years ago when he said that our society is changing. The idea of a Liberal Prime Minister finding that he is on the right side of history is enough to shock him back to reality and to go back to where he was before. The Prime Minister could not take it for very long, but our world is in fact changing. A new world is coming, and it will be a reasonably good world, as long as we adjust to it.
The reason the government seems so helpless in the face of what is happening is that it is not taking the dramatic changes into account as we become a new society. The government is still trying to deal entirely with the society which is dying away.
What is clear when we talk about this new society-it is easy to talk about a new society-is that more and more people who are looking at it are saying that the market system is breaking down. It should be obvious that we are not talking, as I said earlier, about Adam Smith's small shopkeepers; we are talking about large scale multinational corporations that can set their own prices and that, in fact, are sometimes bigger than governments and act as if they were governments. We are talking about large combinations of workers, not workers acting in isolation, workers protected by trade unions whose decisions affect hundreds of thousands of people, not just one man, two men or half a dozen men and women. This is a different kind of world.
We are talking about the welfare state where people no longer want to live by the law of an economic jungle. It operates at both levels; domestically and internationally. To some extent the only market that is left is the international market, and again some interesting things are happening there. What is happening is that, as the result of the spread of technology around the world, we are competing with everyone and nobody has a comparative advantage any more except in a very few things. We are competing internationally.
Borrowing Authority Act
What is happening when we compete internationally? The very people who talk about competition in the domestic society are saying, "Protect us internationally. We do not want to compete with Taiwan, with Korea or with Singapore. We do not want to be thrown to the winds of international competition." The fact is that most of us are not and will not be.
A new kind of co-operative arrangement has to develop. In some ways a reverse colonialism is taking place. For centuries the west derived a net benefit from trade with the third world, with underdeveloped countries. We grew richer at the expense of the underdeveloped countries. Now the shoe is on the other foot. There is a real transfer of income from the western world to the third world. This is very obvious when you come to the oil producing countries; it is less obvious when you look at other countries. While this transfer of income does not show up as a per capita increase in wealth among the populations of those countries because their birth rate is so phenomenal, there is a real transfer of wealth from the west, and it is no longer in jute bags. Because of the multinationals and because of the foreign aid we have provided, we have given technology to many countries in the world.
We do not have much in the way of comparative advantage any more, nor does any other country have it. The Swedes and the Americans complain about it. It has to be faced that not only must we reorganize our internal economies to take into account the changes that are taking place, but we also have to do it internationally, otherwise there will be serious conflicts in that area as well.
What is the answer? No one is certain what the answer is beyond knowing that what they are doing now is not worth a darn, and what is being proposed by my friends on the right is no help either. For all practical purposes it does not represent any real kind of change. It seems to me that the problem is the same as it has always been, except that it is more acute, more urgent, more compelling, and we have to seek redistribution at two levels. Not just redistribution at the level of income. Certainly that will help, it is necessary, and it should be done. Now we are faced with the problem of redistribution of jobs as well. In his book entitled "Social Limits to Growth", Fred Hirsh talks about positional goods.
There are hundreds of thousands of bright young people coming out of university for whom there are no jobs. You can tell them to go pick apples or go pick tobacco-maybe there are jobs in those areas. But is this why we sent them to school? Is this why we told them to get an education? How can we ask people to do that? We can ask them to do it for a short period of time-and certainly it does not do anyone harm to do any kind of work because all work is worth-while-but the frustration of that kind of situation is becoming very obvious.
I think that much of the problem we have in the Post Office today arises from the fact that many of the people who work in the Post Office came out of school with a good education. They are not people who came out with just grade two or

October 19, 1978
Adjournment Motion
grade three-these people are well educated. Now they are being asked to do hum-drum jobs, they are being asked not to share in decision-making. I think it is that level of personal frustration, that struggle for an assertion of the dignity to which they think they are entitled, that is creating problems in the Post Office and, I think, in many other occupations as well. That is very important.
There will have to be a sharing of power. A rise in the number of neighbourhood groups, of citizens' participation, is an indication of the fact that people want to share. They feel they need to have more than just goods alone. They need to have access to good positions, to stature, to where the power is. For instance, look at an MP's job. It is not a bad job in many ways, but it is not the greatest job in terms of how hard we have to work for the money we make in comparison with other jobs. Presumably if we did as my friend, the hon. member for Winnipeg North Centre, would have us do, that is, reduce our salaries below what they are now-


Mr. Knowles (Winnipeg North Centre):: Hear, hear!


Max Saltsman: -I am sure he would work for half of that- and I think all the rest of us would do the same thing-there would still be no shortage of candidates because, when all is said and done, we might not be as important as some of us think we are, but we are not unimportant either, and the kind of work we are called upon to do is very special. It is the kind of work that I certainly am very proud and happy to do. There are many people in this country who would be willing to do it. These are called positional goods.
I do not think there is a man or woman in this chamber today who could not make more money outside this chamber. So why do they do it? They do it because there is something more in life than just money. They do it because they feel that they are useful to society, that they make a contribution, and that they are where some of the power is, though again we might not have as much power as we think.
What this leads to is not that the government should get out of the economy, and not that they should say, "We will turn it back to the private sector", because this cannot be done. I saw my friend, Lubor Zink, earlier today in the corridor. He would say, "I told you so; you cannot have a little bit of socialism. There is no such thing as a little bit of socialism". I think he is right; we cannot go on the way we have. We need a managed economy, and we need the government in the economy rather than out.



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mr. Ethier):: Perhaps it would be appropriate at this time to inform hon. members of the proceedings on the adjournment motion tonight. So it is my duty, pursuant to Standing Order 40, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Churchill (Mr. Smith)- Transport-Grain shipments through Churchill, Man.; the hon. member for Victoria (Mr. McKinnon)-Air transport- Hiring of consultants outside Canada-Possibility of charges being laid; the hon. member for Nickel Belt (Mr. Rodriguez)-Fisheries-Proposed transfer of weather forecasting services.


BUSINESS OF THE HOUSE
The Acting Speaker (Mr. Ethier):: It is customary for the House at 5 p.m. to proceed to private members' business. However, in view of the point of order raised yesterday by the hon. member for Grenville-Carleton (Mr. Baker), the House leaders have agreed that the balloting for private members' business will take place one week from tomorrow, on Friday, October 27, 1978, at 9.30 a.m. As no private members' business is listed on today's order paper, the House will continue with government orders.


Mr. Pinard:: Therefore, Mr. Speaker, I ask for a special order of the House suspending the proceedings on private members' business until Monday, October 30, 1978.


Mr. Baker (Grenville-Carleton):: Mr. Speaker, there have been some discussions respecting that, and we agree.


Stanley Howard Knowles: Yes, Mr. Speaker, the request is in line with the agreement already reached.
[ Translation]


Charles-Arthur Gauthier: We agree, Mr. Speaker.


The Acting Speaker (Mr. Ethier):: Is it agreed and so ordered?


Some hon. Members:: Agreed.

October 19, 1978



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Chretien that Bill C-7, to provide supplementary borrowing authority for the fiscal year 1978-79, to provide borrowing authority for the fiscal year 1979-80 and to amend the Financial Administration Act, be read the second time and referred to the Standing Committee on Finance, Trade and Economic Affairs.
Charles-Arthur Gauthier: Mr. Speaker, I am pleased to take a few minutes of this House to give my opinion on Bill C-7 introduced this morning, which did not give us much time to consider it in detail. We did not take much time to consider it because it is not long. When the news was announced yesterday I thought that it was a borrowing of $7 billion. But I realize from reading the bill that borrowing authority is requested for $17 billion and when 1979 will be over the government will have borrowed a total of $28 billion, and that will increase greatly the debt of the country. Mr. Speaker, we have already made several borrowings to bolster the dollar, that famous floating dollar which has been diving like a submarine. The latest borrowings are for $750 million.
I am talking about the bond issue worth $750 million to bolster the dollar, and more recently, about another loan of $1.14 billion for the same purpose, which means that if we add up all the loans issued to prop up the dollar, we reach a total of $4.5 billion. Mr. Speaker, I find these loans enormous. Even then, our dollar has not been saved. If only the dollar had been bolstered and had regained its normal value, but this is not happening.
Mr. Speaker, this is another proof of the falseness of our debt system. For 15 years, we have been coming to this House and telling the government that it is time to get out of this system of running up debts continuously. After all, what are we now doing? We have to borrow to pay off old debts. We simply put the account in another name. The only difference will be that the interest charges will increase. Instead of paying 7 per cent or 7.5 per cent as before, we will pay 10 per cent, 10.5 per cent or 15 per cent and even more. This little game has been going on since the beginnings of Canada, to such a point that we are now saying that a debt is an asset. For my part, Mr. Speaker, I have never believed that getting into debt was becoming the owner of anything. I consider that I own something when I no longer owe anything on it and when it is no longer mortgaged.
Canada is now mortgaged for over $67 billion, and if we add the $28 billion to that, we will have reached $95 billion at the end of 1979. That is a mortgage. No one should say that we
Borrowing Authority Act
own Canada. We do not. We are living with a great many debts which we cannot repay because we will have to borrow each year if not each month to pay the interests one the old debts. We no longer have enough even to pay off the interests. We must borrow to do so. Where will all this lead us, Mr. Speaker? I suggest that it will simply lead to a crash such as occurred in the thirties, which was caused by the fact that the government had completely lost control over the Canadian money supply. I say that is what we are heading for today. The Bank of Canada controls absolutely nothing. It seems to control the amount of debts, but with all the changes made in the Bank of Canada, even though it has raised the bank rate to 1014 per cent on the reserves, that does not bother the chartered banks one bit because when they run out of money, they could not care less; they do not need the Bank of Canada: they go to the client, because today the client who borrows can create the bank reserves.
That is what is happening today. Let no one say that the Bank of Canada is going to control the chartered banks by imposing 1014 per cent on illegal reserves, when they fall below the allowed amount. In any event, the 10'A per cent applies only for three days because we know full well that after three days, the chartered banks go to their clients to borrow the $500 the latter will deposit in their savings account and on which the banks will pay 9 per cent interest.
It does not take long to build up reserves. That is how it works, Mr. Speaker, and today we try to cope with our debt. The issue should be studied in depth because there is an inconsistency in Canada. Our country is the largest borrower in the world and one of the most industrialized countries having the largest debt per capita. See if you can understand that! We have the largest debt per capita. To my mind it is because the government does not take its responsibility which is to control credit in Canada. This is the reason of the problem.
As I said earlier, we are on the path of another crisis like in the thirties. Let us remember what happened in the thirties. The government had lost all control over the issue of credit and money and at that time every chartered bank was allowed to print its own money, provided it kept gold in its vaults. Eager to make profits like others, they did not care whether or not they had gold in their vaults; even if they had no gold left they printed money, they issued credit and they granted loans. When they realized there was nothing left, they kept on lending anyway. Then, there was the crash of the thirties and who saved the situation?
Mackenzie King saved the situation by creating the Bank of Canada in 1935. In the Bank of Canada Act, it was prescribed that henceforth no chartered bank would be allowed to print money. That goes for legal currency, but our monetary system is divided into two parts: a legal currency which we call our

October 19, 1978
Borrowing Authority Act
dollar and monetary credit. But the legal currency represents only 8 per cent and the monetary credit 92 per cent of the money supply.
Mackenzie King did the right thing when he put the issue of monetary credit and legal currency under the control of the Bank of Canada. Only the Bank of Canada-and it is still the same today and it has stabilized the monetary system at that time-issues the currency, the paper money and the coinage, and if the chartered banks need some, they must buy it from them. The Bank of Canada is the sole authority and has complete control over all this. So much for the 8 per cent of the paper currency. However, he had forgotten a small detail. It may have been intentional, but he had forgotten a detail.
If he had done the same thing in the same legislation for the monetary credit, if he had instructed the Bank of Canada to control monetary credit as closely, the new credit for the new production that has to be minted by the bank each year, if the same act had been applied to monetary credit, we would not be in trouble as we are today. Indeed not, and I think several members will agree with me. It is realized today that if we are in debt up to the eyes, it is because the Bank of Canada has never controlled monetary credit, has never minted the yearly production. Never! It has left it to the chartered banks. The chartered banks are the ones that mint the production.
Let us suppose that last year we had $75 billion in gross national product and $40 billion in national revenue. This amounts to $35 billion in new products which must be minted. This is what is called minting new credit. If the Bank of Canada had any authority on that just as on legal currency, the Bank of Canada alone would issue that credit. No chartered bank would have the right to create a single dollar. The Bank of Canada would create these new credits to the benefit of the country and individual Canadian citizens and not the chartered banks to their own profit. This is what we of the Social Credit party advocate.
It is legalized theft by the chartered banks. This is why there is still misery today. So long as the government does not regain authority over monetary credit, new credits, we will be faced with this difficulty because as soon as we produce something, as soon as we declare a net production we borrow its value the day after. We have to borrow to put it on the market. How ridiculous! Goods are worth the cost of production plus 10 per cent because chartered banks do not lend without interest. This is where the evil lies because our debt which adds up to $67 billion represents only the interest on a capital which we should not have borrowed because it belonged to us in the first place. This is why we have been saying for so long that we must absolutely bring about a separation between these two things, that the public sector must be financed by public capital, by the Bank of Canada, and that the private sector must be financed by the private capital.
The fact is that the public sector these days is financed by private capital. The public sector must necessarily pay the interest charges. There is a total change of economy. Within a single economy we do not have the right to charge interest because this would unleash a galloping inflation, but between two different economies one can charge interest and that is why the chartered banks charge interest to the federal government. They charge interest on something which belonged to the federal government and which the federal government should have injected in the financial circuit. There lies the secret. It is not as complicated as it may seem. There are some people for whom money represents a mystery. They make a mystery out of it but it is not so at all. I think that as long as we fail to get back to reasonable ways of doing things we will encounter problems in bolstering the dollar. It just will be impossible to do it.
It will be still more difficult to pay our national debt because we should keep in mind that we have both a public and a private debt. Our federal debt amounts to $67 billion; we should add to that the $28 billion I already mentioned if we want to go as for as the end of 1979, which will amount to $95 billion at the end of 1979. There are also provincial debts which amount to $16,825 billion, consumer credit which represents $25 billion, corporation credit which totals $31 billion and mortgages which stand at $13 billion, which adds up to a total national debt of $152,825 billion.
Those figures do not include the debt of all Canadian municipalities. The federal deficit alone increases at the rate of $13,700 per minute-1 shall come to that later-$222,000 per hour, $20 million per day. Right now the average debt per capita in Canada, including people from all categories, children, and senior citizens, amounts to $6,900. You should add to this the interests on the $28 billion, and the debt is going to go up from $6,800 to close to $7,500 per capita, and $27,600 per family.
Interests we have to pay on the Canadian debt amount to $6.5 billion a year, on provincial debts $1,228,225,000, on consumer credit $2.5 billion, on finance company loans to corporations $3.1 billion, on mortgages $1.5 billion. In the end, total interests are in the order of $14,628,225,000. This means Canadians will be paying $1,693,000 a minute on the total debt, or $40,633,944 a day. In 1978 the interests on the total debt will be $665 per capita, and with the $28 billion they will be $1,000 per capita. I said earlier we were the most heavily taxed and most interest burdened nation in the world, well the figure is $2,660 per household.
Mr. Speaker, I would like to read more of that, but I will now turn to the deficit. I simply wanted to give an idea of how far this country is now into debt. We are wrestling with deficits and that fight is not over yet because as long as we do not get out of that "gimmick" there is no hope. We do not control our credit, we control nothing here. Our lives are

October 19, 1978

controlled by financial circles and chartered banks. I blame nobody. Whoever the minister may be, whether he is a Conservative or a Liberal, he will be doing the same thing under that "gimmick". They can do no better. The "gimmick" has to be changed. Today we are wrestling with large deficits, including the balance of payments deficit. Where do those balance of payments deficits come from? In the first place there is the merchandise trade. We export too much raw materials and not enough finished products. When I think we have to import food products, we produce some 40 per cent of our food. Imagine, in a country like Canada, 40 per cent only. When it comes to furniture and other products, it is even worse. All we export abroad is raw materials-our iron, our aluminum, our steel, all this goes abroad then comes back as finished products.
As long as governments do not care for and do not invest in secondary and tertiary industries, as long as they are content with encouraging primary industry, we will have that kind of balance of payments deficits. When it comes to encouraging small businesses, the government may suggest they must have the will to invest. My suggestion is we must give them a break so they can invest.
Here is another contradiction. Canada is practically the country with the highest savings; why then do Canadians who could venture in industry, keep their savings? Because they are afraid. They are afraid of the government. They are afraid of the tax system because if they invest today in industry thereby risking certain amounts of money already invested in fairly safe enterprises to prevent tax people from "swallowing" them up, in two or three years the taxman will eat up their capital. So they prefer to sit on it rather than break their necks.
They will not invest as long as the government does not give premiums to the industry and protect primary and secondary industries. It can very well give subsidies for two and three years and it is done. Small subsidies are paid to encourage them, to save face but after three years, taxes are levied. Tax deductions are granted for a couple years, then three years later . . . Some of my friends followed the suggestion of the government and launched some projects but in the fourth year they were ruined by taxation. The government had taken back its subsidy and at the end of five years, they were bankrupt. Is that to encourage industry? No, Mr. Speaker. Some favours are bestowed on powerful industrialists and on multionation-als. The fact is not always disclosed. It is concealed. Take for example the $40 million paid to the Ford Company. I say that those $40 million would have been more effective in our areas to develop secondary and service industries I can assure you. That is the worker's tax that went there, to a multibillionaire multinational company while they urge our small investors to invest their money and build industries which they will destroy in three or four years. Meanwhile, the government is going to protect the multinationals because they are the ones which put it in power and I suggest, Mr. Speaker, that the government will have to change its attitude towards industry.
Borrowing Authority Act
They give incentives to encourage small businesses but for one year or two only, which is not enough. They offer them money to pay for two or three years, interests on the money they are going to borrow. Let us be serious! To encourage industry means to support and assist it, as long as it is not profitable. Municipal and other levels of government, as well as big business are allowed to go tax-free for up to 20 years. Why not do the same for small businesses because, next to the farming industry, they are the ones who create steady employment for our workers. I think that point deserves some consideration. From then on, we could have finished products and exportable goods. And what about the milk industry? Even they, do not receive any help. I know some cheese producers who are forced to reduce their export orders by 50 per cent because they cannot obtain the milk they need to to meet the demand. What a joke! Milk producers who exceed their quota are fined.
I have seen some milk producers pay a $2,000 fine in a month because they had gone beyond their quota, yet there is a cheese producer desperate for milk which he cannot get and because of that his contracts are cancelled. This is what is called encouraging exportation. No wonder our balance of payment is showing a deficit. During this time, we import foreign cheese. Our milk goes down the drain and we cannot produce cheese. We see such utterly disgusting and revolting things in Canada that I wonder why the government does not react, why it does not take action to put an end to it. And now they come crying to the House, saying: "There is a deficit in our balance of payment". But they are not doing anything to boost exports in order to balance our payments.
I was referring earlier to individuals who would have risk capital to invest. It will be noted that in the province of Quebec-I have not been in other provinces-large investments-investments dealers surely know that-are safe. Municipal and school board debentures are safe investments. But people will not risk money in business or industrial ventures because they know their investments would not be guaranteed. Those are not safe investments. They witness so many bankruptcies, I do not blame them and I tell them: You are right!
Let us wait until such time as we have sensible laws that can protect us, because I took a chance myself and lost money on some industries, but never again. Yet I was confident. But income tax has ruined industry. I suppose that all other private investors are like that. They go for what is safe. Anyone who owns a business, who runs it day by day and who is careful will wait for the tax inspectors and watch them so that they will not steal too much from him. Some people think that tax inspectors will only try to catch cheats in business or industry.
I can tell you that I personally won a battle against such inspectors, because I was not the one who cheated, they were. And they thought they would get me. That is what prompts

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people to say: Well, sometimes you win, sometimes you lose. It will always be like that as long as people have such a mentality, as long as they are not honest enough to recognize the efforts made by some for society and their fellow citizens, in order to create employment. Some civil servants think that they are paid to collect taxes.
When after five years of easy-going management someone comes to a small businessman for a check and he must show the receipts for a five-year period. Imagine! That is the end and the only solution left to him is to shut down his shop and clear out his stock. This is what happens.
Mr. Speaker, once again we do not ask ourselves why private investment is lagging in Canada. As far as interests are concerned, that is another problem. We are told that the Bank of Canada and the other banks increase interest rates to avoid a flight of capital out of the country. Imagine! But they do not realize that by trying to do so they paralyse the whole market.
Money is too expensive, industries cannot operate any more, neither can businesses; they paralyse everything by trying to prevent capital from flying out of the country. I think it would be much better, as I said earlier, to throw the dice, to prevent that flight of capital, to help protect the capital invested in Canada, and so investors will not think about investing elsewhere. Let us not be afraid. They invest abroad, because they are afraid to see the government take what they have left. That is why they take their money out of the country. When the government passes legislation to protect that capital, I think we shall begin to reduce our deficits.
Once again, I should like to invite the government to separate both sectors, namely the public and the private sectors, and to have the public sector financed by public capital, by national revenue and the private sector financed by private capital.
Today I can understand why the Prime Minister (Mr Trudeau) says that there are only two ways of financing a country, taxes and income taxes. Can you imagine, Mr. Speaker! I was so surprised to hear that, it floored me. Only two ways, yet we know that Canada is a producing country, but what happens to its products? I think we should start using production like a father does with his household, and if at year end there is not enough, then you resort to taxes, if there is a deficit, but before that you have to use the product that you have.
And what is that product? Well, it is the revenue generated by each year's new production that the government, through the Bank of Canada, must transform into money, and give to the people. Really! If the country has produced 45 billion, well you have to start using that before taxing everyone for 45 billion. That is where I understand the Prime Minister's statement. He does not give a hoot about revenue. He ignores it, that belongs to the chartered banks. We are going to have to claim our goods and tell the Bank of Canada: Now, that
new production, you are going to create it, then deposit it, and register it in the books of the Bank of Canada. What is it going to be used for? For Canadian expenditures. The federal government, instead of borrowing as it does, is going to have $45 billion on hand, and if the provinces need it, they are also part of the national economy and they are going to borrow there. If they need $50 million, they will get it interest free, of course. This is an economic principle whereby if you use money within the same economy you do not even have the right to charge interest because that is going to create galloping inflation. But why are governments borrowing today? Because they have given up the goods of the people, and then they are force to borrow them and put them on the market. That is all. It is clear.
Well, listen to what an economist has to say:
Another economist looked into that problem of government financing and came to the conclusion that Social Crediters discovered long ago, namely financing public capital with new interest free credit.
Interest free, of course. Take a father within his household economy. When he goes and gets $200 from his bank account, does he think about paying interest into his own account? No, it is within the same economy. He would be making a mistake if he paid interest to himself. For a country, it is the same thing; the economy is much larger, that is all. It is the same thing. If the money is there at the Bank of Canada, it belongs to the country, the nation. The government has no business paying interest to itself if it is required for the nation. But they should be the ones and the only ones to have the right to create money, not chartered banks. All chartered banks today think they have the right to monetize the production of the people of Canada by multiplying their assets by 16; they take over the production of the people of Canada for personal purposes- chartered banks are private industries. I do not blame them for that.
When we can make people understand that that system must be corrected, chartered banks will become like caisses populaires. Caisses Populaires are doing very well, as well as chartered banks, but what is straining chartered banks today is that they have to create so much because they have to finance the public sector. But should the public sector ever manage to finance itself through the Bank of Canada, chartered banks will have only the private sector left, and that will be enough.
Everything will work out and the Canadian people will be able to benefit from the credit of their country. This is not the case now as only banks and trusts benefit from Canadian revenue. About ten big companies benefit from the national credit and everyone else is taxed. When the worker produces for a value of $1,000, for instance, he is taxed for $1,000. This has been said by an economist. This theory is explained in a volume entitled "The Challenge of Abundance", by Mr. Robert Thoebald, which can be found in the Library of Parliament. This is what Mr. Thoebald says in this regard:

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A government may use three methods to obtain the funds required to meet its commitments. First of all, it can tax-
-and this government knows what it means to tax, like all its predecessors.
First of all, it can tax the citizens and the institutions to gain control over their money. Second, it can borrow the money from the people and the institutions and pay interest on the sums borrowed. Third, it can simply create the money and use the funds generated to make its purchases.
This is what I was saying earlier, and it is very simple. You simply have to follow up on Mackenzie King, who ordered that in future all legal tender would be controlled exclusively by the Bank of Canada, and add that the same would apply to monetary credit. That is all you would have to do to set the whole thing straight. Chartered banks would remain and have the same function; they would remain commercial banks, but Canada would be in a much better situation and Canadians would stop having the product of their work stolen each year, and I say "stolen" because I believe that this is a national theft that benefits chartered banks. As long as this is not done, Mr. Speaker, we will continue to complain about deficits and borrow to pay off the interests, and ten years from now, we will not even be able to borrow to pay off these interests.


Alan Gray Martin: Mr. Speaker, in joining this debate on the motion put forth by the Minister of Finance (Mr. Chretien) for the additional borrowing authority the government is seeking I should like first to make reference to some of the points made by the hon. member for York-Simcoe (Mr. Stevens), the financial critic for the official opposition and presumably the senior financial spokesman for the Conservative party. Some of the points he made were a little surprising to me bearing in mind the importance of the position the hon. member for York-Simcoe occupies. The nation is looking at the official opposition rather carefully this week. Hon. members on that side of the House are gleeful as a result of some developments of a very temporary nature a few days ago; people are looking more closely at their senior spokesman and I think the hon. member for York-Simcoe stands out as their spokesman on matters related to finance.
The hon. member knows very well that the additional authority sought through this bill is not intended to cover additional spending by the government. In fact, as the Prime Minister (Mr. Trudeau), the Minister of Finance and the President of the Treasury Board (Mr. Andras) have repeated over and over again since the declaration of last August, it is the intention of the government to reduce substantially expenditures over the years ahead. The hon. member knows this. He knows authority is being obtained now to cover the government's needs not only for the balance of the present fiscal year but for the next fiscal year so as to avoid our having to come back to parliament time and time again for the necessary legislation if we are to meet the expenditures which he himself, along with other members of the finance committee, examined
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in detail when the estimates were before the committee last spring and supported there. If expenditures are made, they have to be paid for. That is the purpose of this authority. It is of a routine nature. It is the kind of thing which must be brought before parliament from time to time to make sure that sufficient funds are on hand to meet commitments.
The hon. member referred to briefcases and to washrooms, presumably in the course of what he considered to be mature and deliberate comments. He gave us some figures which are of small significance in relation to total government expenditures. I am not sure why he mentioned briefcases; they are used, I suppose, by a large number of the 300,000 civil servants engaged in government and agency work. But the hon. member did not refer to the full four billion or five billion which he and his leader have recommended should be spent and added to the country's deficit in the course of the recent election campaign. Add up all the goodies the Leader of the Opposition (Mr. Clark), supported by the hon. member for York-Simcoe and others across the way, indicated they would hand out if they formed the government of this country and one would be coming forward with a bill seeking authority to borrow not the amount mentioned in this measure but $4 billion or $5 billion more.


An hon. Member:: Nonsense.


Alan Gray Martin: I perused some of the literature put out by the party opposite, full of doom and gloom and references to the terrible situation we are in, but I do not recall the cost of those promises being shown as an addition to the deficit which we all agree is already too high and must be reduced. The attitude was: If you buy these goodies there is a price tag but we will tell you what it is later on. We believe the people should be told about the price tab now and I assure you, Mr. Speaker, we shall make a point of doing so.
The official critic for the Conservative party indicated we were fiddling around in foreign markets borrowing money and gave the impression that this was a very strange thing to do; I think he said only two countries had made such loans before. The point he did not bring out was that the Deutschmark loan this government made was taken out at a rate of 5 per cent. He did not mention that for the obvious reason that it was a darned good deal; it is not in the interests of members of that party to indicate to the public that anything done by this government is in the interests of the Canadian people. That loan was a good deal.


An hon. Member:: A good deal of money.


Alan Gray Martin: The hon. member also gave the impression that all the money that was being borrowed was being frittered away on day to day expenditures, that the government was borrowing these great amounts of money just to pay salaries and current expenses. He made no reference to the fact that part of the government expenditures in this two-year period is being devoted to a number of major capital projects which will bring long-term benefits. Large amounts of money are being invested in tar sands development. Money is being invested

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through CMHC in houses for senior citizens, co-operative housing and other types of housing projects involving direct financing.
Nor did he mention many other areas where capital expenditures rather than current spending is involved, among them, transfers to the provinces involving capital programs such as the building of hospitals and other facilities under shared costs arrangements with the federal government.
It is obvious we have been obliged to use some long-term funds to deal with the U.S. exchange problem, again, as the Minister of Finance has said so often, to ensure an orderly market. The hon. member made a great point of emphasizing that we were applying now for money for the next fiscal year. Mr. Speaker, the bill is presented in this form so that no more parliamentary time will be taken up than is necessary and we can get on with more positive things which need to be done. The funds will not be used until actually needed, but the authority will be there.
I would like to refer again to the comments of the hon. member for York-Simcoe who ridiculed the fact that the Prime Minister objected to comments made by the Leader of the Opposition when, in his lead speech in the throne speech debate, the Leader of the Opposition said that Canada had dropped to seventh place among the world's richest nations. The Prime Minister asked him to specify which countries were involved, but no specifics were given. The Prime Minister referred to some small countries which indeed might be ahead in terms of the riches that they have enjoyed in recent years.
When the hon. member for York-Simcoe went into that subject this afternoon, I called across the floor from where I was sitting and asked him to specify the countries he was talking about, if we are in seventh place. He did so, and I will repeat them because I want to discuss those countries and our position among them. The hon. member mentioned West Germany, Belgium, Norway, Sweden, the U.S.A., Denmark and Switzerland. He said that Canada fell behind all those countries, again conveying the notion to the public at large that Canada is in a much worse position than any of those seven countries and that we have fallen behind them.
Let us look at some of the factors involved with which I assume it would be deemed fair to deal in considering where we stand as far as economic progress in concerned. Let us talk about job-creation. I may be repeating some of the information already put on the record by the Prime Minister, but it must be done because the average Canadian is not getting this information through the media or from members of the opposition, whose plan has been for a year or more, and certainly will be for the next six months, to put before people the ideas that they are in a doom and gloom position. They will not mention any positive facts. It will be up to us to put this information forward over and over again.
Let us talk about job creation, which is a very important matter in any country which considers itself to be doing reasonably well. From 1973 to 1977 Canada outpaced the

U.S.A. and the OECD nations. We were three percentage points ahead of the United States and eight percentage points ahead of the OECD countries.
One of the countries referred to by the financial critic of the official opposition-I am not picking these countries out, he picked them out and I am merely making a comparison-was West Germany. From 1974 to 1977 job creation in West Germany went down 4.1 per cent. In the same period job creation in Switzerland went down 10 per cent. Those are two of the countries the hon. member for York-Simcoe indicated were ahead of Canada in terms of over-all economic progress.
There were 10,635,000 job holders in Canada as of the end of September, 375,000 more than in August of last year. On a seasonally adjusted basis some 279,000 new jobs were created in Canada in the first eight months of 1978. From 1950 to 1976 the labour force here grew at an annual rate of 2.7 per cent. Hon. members opposite laugh. They should be hiding their heads in shame because they are not telling people about these figures. The U.S. rate was less than half our 2.7 per cent rate; it was 1.3 per cent. Hon. members opposite do not like to hear this because it goes against what they are trying to shove down the throats of Canadians.


Mr. McKenzie:: You couldn't sell that in Scarborough.


Alan Gray Martin: Let me turn for a moment to food prices.


A. Daniel McKenzie: Tell us about the vote in Scarborough.


Alan Gray Martin: I will tell the hon. member about the vote in Scarborough after the general election.


Mr. Ellis:: No, you won't.


Alan Gray Martin: In a comparison of least costly food Canada stands in second place and, for the edification of the hon. member for York-Simcoe, not seventh. West Germany is in ninth place, Belgium in seventh place, Sweden in tenth place, the U.S.A. in fourth place and Denmark in eleventh place. The general statements made by the hon. member for York-Simcoe and originally by the Leader of the Opposition in this context have to be considered irresponsible because they simply do not coincide with the facts I am putting on the record now.
Canada stands in second place in connection with the cost of living. West Germany is in tenth place.


Donald W. Munro: What do you mean, second place?


Alan Gray Martin: In terms of lowest increases in the cost of living that is where we stand in relation to this group of 15 industrialized countries. We stand in second place. The hon. member for Esquimalt-Saanich (Mr. Munro) shakes his head, but that is because he has not been told about this. He is going by what the official critic of his party has told him. He has been given incorrect information. He should tell the peole back in Victoria that he is getting incorrect information. West Germany is in tenth place, Belgium is in thirteenth place and Norway is in fifteenth place. All these countries are supposedly doing better
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than Canada, according to the hon. member for York-Simcoe. Sweden is in eleventh place, Denmark is in ninth place and Switzerland is in twelfth place.
1 hesitate to go into any more of these statistics, but I think it is important that we do because hon. members opposite are doing so. They named the countries. They now want me to go back to what I was talking about earlier because they do not like what they are hearing.


A. Daniel McKenzie: What about Scarborough?


The Acting Speaker (Mr. Turner):: Order, please. The hon. parliamentary secretary has the floor. Hon. members will have their turns later on.


Alan Gray Martin: In the difficult years from 1974 to 1977 where did Canada stand with regard to trade balances? Canada stood in fourth place. We hear much about trade balance problems. Yes, we have some, but we were in fourth place. Belgium was in thirteenth place, Norway was in fifteenth place, Sweden was in seventh place, Denmark was in fourteenth place and Switzerland was in tenth place. I wish the hon. member for York-Simcoe was here to hear this because he has given completely wrong information to people who may read his speech, have watched or listened to it or whatever.
Unfortunately, I do not have a great deal of confidence that the media will broadcast this positive information.


John Raymond Ellis: What you are saying is that they will not read your speech.


Alan Gray Martin: I agree, and that is because my speech is not bad news, it is good news. We are going to make it a point to make sure that the Canadian people get some of the good news.
During the difficult years between 1974 and 1977 Canada was in second place with regard to housing starts, not eighth or ninth.


A. Daniel McKenzie: Seventy-two thousand unsold homes?


Alan Gray Martin: I am not talking about sales, I am talking about construction. The hon. member should listen to the information; only then will he be able to digest it properly. Sweden was in twelfth place, and the U.S.A. was in fourth place.
Let us deal with the rate of growth of real domestic product. Again I deal with the difficult years, 1974 to 1977 when all countries were having problems, and again I deal with the countries on the list used by the hon. member for York-Simcoe. Canada stood in second place, Switzerland in fifteenth place, Denmark in eleventh place and the U.S.A. in eighth place.
I do not think there is any point in carrying on with these detailed statistics. The point has been made by the Leader of the Official Opposition and the hon. member for York-Simcoe. They have called on the Canadian public, through important speeches at the beginning of this session, to support their preconceived notion of doom and gloom. That, they figure, is
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what will win them an election: talk gloom and doom, and, my gosh, people will say: "If it is really that bad, maybe we should look at those guys a little more carefully". It is just as important for the people in Scarborough as elsewhere to hear some of the real facts.


Some hon. Members:: Hear, hear!


Alan Gray Martin: I think that in our parliamentary system it is just as important for the Leader of the Opposition and his senior financial critic, for that team, to be responsible when they are putting forth economic statistics and economic facts or analyses before the Canadian public as it is for the government to do so, because the parliamentary system operates on the assumption that both sides of the House will be responsible for what attitudes they take and what things they do. We for our part are being responsible. We have shown our responsibility particularly in relation to the recent cuts announced in government expenditures in our effort to reduce the over-all deficit. Members of the official opposition are starting off this new session with speeches by the Leader of the Opposition and the financial critic of their party in which they have re-emphasized to the public-which, in their mind, is the only way they can get support-that Canada is in bad shape. "Talk your country down, fellows, and we can win an election." That is their whole concept and that is what they will try to run into as many Canadian heads as they can in the next six months. But, Mr. Speaker, they will not get away with that.


Mr. Speaker:: Order, please. Before giving the floor to the honourable member for Dauphin (Mr. Ritchie) I should like to make a brief reference to the action by the Chair earlier in the day in respect of the amendment put forward by the honourable member for York-Simcoe (Mr. Stevens). The Chair reserved the decision on that amendment at that time and simply set it aside. There was no argument raised at that time and the Chair indicated it would be held aside. No point of order had been raised on the matter and the Chair was not advised of any procedural argument that was to be raised.
However, I think it is the duty of the Chair, particularly on second reading amendments, to be on the alert and to advise the House if, in the opinion of the Chair, there is any serious procedural difficulty. Therefore, we examined the contents of the amendment as well as some precedents, notably one from 1970 concerning a ruling of my distinguished predecessor in respect of an amendment put forward at that time by the hon. member for Edmonton West (Mr. Lambert) on a grain bill. I must confess to some misgivings about the entire practice of reasoned amendments at second reading.
I have looked at the British practice, as I think most hon. members have, and found it to be much more generous than ours. In the British practice it is quite acceptable to attach to a second reading vote a motion which is by way of an amendment to the second reading motion, which seems to be nothing more than an expression of the reason for voting against the motion. We have taken a much tighter line in Canadian

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practice but, to my regret, not strong enough, because I still think that frequently in our past practice we have permitted this very kind of declaration. Certainly on the occasion of the 1970 precedent which I examined this afternoon we permitted a statement which was really a declaration that the bill somehow offended or was repugnant in principle to members of the House and to some residents of Canada and that the House declined to give second reading to the bill.
If it was permissible at that time in our practice to do that, certainly it must be permissible to do what the hon. member for York-Simcoe has done in this amendment because he introduces at least a new principle which is contrary to that of the bill, that is, the principle of granting borrowing power for future years on the basis of which he says the House declines to give second reading at this time.
I still think that at some time we should select one of these practices, and I am sure that at some time in the future a good example will be chosen and a point of order will be raised which will compel me or a future Speaker to examine all of these so-called reasoned amendments at second reading and find out which ones really are expanded negatives and which ones in fact introduce a statement of a principle declaratory of some principle contrary to the principle of a bill, or whatever the appropriate language is.
In any case, having briefly examined the precedent on this particular occasion, I looked at the amendment that was put forward and I found I really could not single this one out in the light of other precedents. Perhaps the argument will have to come at some future time. Therefore, on the face of it and in the light of the 1970 precedent of Mr. Lamoureux to which I have referred, it seems clear to me that this amendment is in order and should stand on procedural ground.


Joseph Jacques Jean Chrétien: Mr. Speaker, we have not studied this amendment. You have just invited the House to raise a question of order on that type of amendment at second reading. I suppose that the Parliamentary Secretary to President of Privy Council (Mr. Pinard) might want to put forward some argument on this point. I do not know whether you could accept an argument at this point, but we were taken by surprise. You said, sir, that you would look at the amendment without hearing any argument from the Parliamentary Secretary to the President of Privy Council. Perhaps we could reserve our stand, as you have invited us to put forward some objections to a future bill. Perhaps we could reserve the decision, look at the amendment and then make a decision on reasoned amendments right away.


Walter David Baker: Mr. Speaker, the parliamentary secretary was in the House during the speech of the hon. member for York-Simcoe (Mr. Stevens). In the middle of his speech, the hon. member for York-Simcoe made reference to the amendment he intended to move. Then he proceeded with his speech, at the end of which he moved the amendment. That is what happended a little while ago in this House.
Your Honour made reference to argument. There was an opportunity here to advance argument by the government but, for whatever reason-whether they did not really know or they did not realize what was happening, I do not know-they did not make an argument with respect to the matter. Then you dealt with the matter and gave a careful judgment based on the 1970 precedent-which I was going to argue in any event if that should have proven necessary-and you made a ruling which I think quite appropriate, and I say that with respect. Therefore, I think the matter must stand.


Mr. Speaker:: I just want to reiterate, as the Minister of Finance (Mr. Chretien) has just stated, that on this particular motion no point of order was raised. That does not in any way preclude a similar point of order being raised at some time in the future. My own disposition, as I have just said, is very critical of these kinds of motions at second reading stage. However, I did reserve my decision because, without a point of order having been raised by anyone in the House, the situation in the House this afternoon required the Chair to take the initiative, and it has to be a clear case, not one on which there is any doubt at all, that the initiative of the Chair is required. In this case I was in doubt, and on checking precedents I found I would be bound by the 1970 precedent.
It may be that the next time an amendment at second reading is raised, the government will want to take the opportunity-if it is declaratory of some principle of this sort-to raise it at that time, and then I would be pleased to hear full argument on both sides and to go into an exhaustive review of the precedents. It may also be that in respect of these amendments, if we wish our practice to depart substantially from the British practice, we might have to make a decision of that sort in our procedure committee. In any case my hands are tied with respect to this amendment and my decision is made.


Joseph Jacques Jean Chrétien: I ask for an explanation, Mr. Speaker. I think that the point made by the hon. member for Grenville-Carleton (Mr. Baker) was that when the Chair received the motion, right away the Chair reserved its decision. I have the impression that perhaps you realized there was a problem with this one, but you took the initiative, sir, and that is why we did not raise a point of order. This is not a very important motion and obviously it will be defeated. We can always come back to the same point, but because the Chair has taken the initiative, we did not want to intervene. That was the point I wanted to make.


Mr. Speaker:: Order, please. The question is on the amendment.
It being after six o'clock, I do now leave the chair until eight o'clock.
At 6.04 p.m. the House took recess.

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[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.
William Gordon Ritchie: Mr. Speaker, before I commence the main part of my speech tonight I should like to mention a few things. I listened with great interest to the hon. member for Waterloo-Cambridge (Mr. Saltsman) as he presented a significant point of view. I suggest his point of view is debatable on philosophical grounds; he suggested more government intervention. Perhaps he does not realize the underground economy is already in place. At the present time much is being written about that in the United States, where it is estimated that something like 10 per cent to 15 per cent of the GNP belongs to the underground economy which does not surface in the tax system because of people working part time as well as drawing unemployment benefits. Their employers allow this because they can be paid less. This should be taken into account when we talk about more government intervention.
Agriculture always has been the Achilles heel of the Soviet Union and its economy. Under Mr. Khrushchev a peasant was allowed an acre of land to grow his own produce for the purpose of sale. It was reduced to a half an acre of land because it was felt that having an acre of land was against the philosophy of the Soviets. Eventually it was found that the workers of half-acre parcels quit producing, and Mr. Brezhnev has been given credit for changing the half acre allotment to an acre once again. It is estimated that an acre is roughly 44 times as productive as state farms. More government intervention brings with it a whole train of intervention which we do not always think about.
During a recent airplane trip, I had occasion to speak with a missionary who had lived in South America for 25 years. He had interesting veiwpoints about inflation. I asked him how ordinary people lived in high inflation countries. He said that naturally they did not have very much money, and that they spent it each week to buy food and to pay for shelter. Thus, inflation did not affect them in a sense.
Then we must consider the wealthy, which make up a small proportion who protect themselves by the purchase of gold through the establishment of estates, and so on. I asked how the average individual could protect himself against the ravages of inflation. What he told me was very interesting. He suggested that they might buy a bicycle because not only could they use it but its value would increase as inflation increased.
The hon. member for Waterloo-Cambridge also referred to multinational corporations. There is substantial evidence that the influence brought to bear by these corporations around the world is decreasing. Third world countries are establishing their own multinational corporations and companies but the climate for these corporations is not as good as it has been. I think these multinationals have had their day and their influence is less of a factor at the present time.
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Let me say a word about savings, which are necessarily tied in with these borrowings. It is interesting to note that the present older generation is now saving money. An individual who works in the income tax field told me that he prepares the income tax returns for some 30 people, and he suggests that nearly all of them are saving money, though few of them have assets other than a house and an old age pension. These are thrifty and frugal people. The people who are aware of what is happening to the economy are likely to save as apparently those people have been able to do.
Furthermore, what is happening as a result of more and more intervention in the lives of individuals by governments of the day? Nearly every merchant, baker and butcher say that the consumer affairs people give them a bad time. One individual wondered whether it was worth operating his own business in view of the fact that many civil servants were making twice as much as he was able to make. Many of these people in small businesses are leaving business and joining the civil service because they are much better off. We have reached the stage in this sort of Ralph Nader society where everyone who makes a mousetrap or performs a service is of lesser importance, and certainly worse off financially, than those who police the making of the product or the provision of the service. The suggestion is that everyone who makes a mousetrap or performs a service is somehow ripping off the public. Those are a few of the thoughts I wanted to put on the record for the benefit of the hon. member for Waterloo-Cambridge.
Let me now turn to Bill C-7 which is, in effect, a $7 billion supplementary borrowing authority for the remainder of the current fiscal year, and authority for borrowing $10 billion for the year 1980. Imagine borrowing money for 1980 with more than a few months still remaining in this year. Since the beginning of the fiscal year 1978 the government has sought borrowing authority to a total of $38 billion. It has sought this authority in four different bills. First there was Bill C-45 for $7 billion, then there was Bill C-ll for $9 billion, followed by Bill C-31 for $5 billion, and now Bill C-7 for $17 billion.
At March 31, 1977, the unmatured debt of the Canadian government totalled $42.5 billion. If all the borrowing authority was used, by 1980 the unmatured debt would exceed $80 billion, some 100 per cent above the 1977 level. In fact, in three years we will have doubled the debt.
If we are to go by the past experience of this government it will likely seek further borrowing authority for 1980 even though the department might like to do so without coming for that authority to parliament. The request in Bill C-7 for $7 billion in borrowing authority represents the third time the borrowing ceiling has been raised for the present fiscal year. How can the experts in the minister's department be so wrong as to be required to come to the House of Commons three times to increase the borrowing ceiling?
The minister requested the $9 billion increase in Bill C-ll with the claim that it would cover the remaining cash requirements for 1978 and the cash requirements well into the new
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fiscal year. In March of this year the minister came back with Bill C-31 saying the new ceiling would provide the government with sufficient borrowing power to meet all the cash requirements for the 1978-79 fiscal year. Now he wants another $7 billion to cover foreign borrowing, the Canada Savings Bonds issue and other contingencies.
Let me turn now to the foreign exchange problem. It is obvious we are in a bad way in this regard. It is now realized that had there been no foreign exchange borrowing by the government our foreign exchange reserves would have been at zero. We are rapidly becoming as badly off as the British. Soon we will be joining those nations which lop all the zeroes off their currency. It seems the minister has to go to the New York market for a $750 million bond issue. I understand this issue commenced this morning. This bond issue is the third federal foreign currency bond issue this year. In April there was a $750 million issue in the United States. In May there was a German Deutschmark issue equivalent to $706 million in United States currency. In a seven-month period the Government of Canada will have issued $2.2 billion in foreign currency bonds.
Interest must be paid on these bond issues or borrowings just as it has to be paid on a line of credit with U.S. banks. All of this adds to the deficit of Canada's balance of payments. This is obviously going to mean some $200 million extra in interest payments. These additional interest payments are required at the very time when there is a deficit in the interest and dividends account, and it is growing by leaps and bounds.
I am reminded of the fact that some years ago a New York banker suggested to Canadians that when they borrow they should at least be friendly with their bankers. I think the reason the minister is here tonight is to obtain the agreement of parliament in respect of these borrowings.
In the first half of this year the deficit on interest dividend payments was $1.7 billion, up 17 per cent from a comparable period in 1977, and 80 per cent greater than the deficit in the first half of 1976. Just this year alone the interest on the federal issue will raise the interest and dividend deficit by a full 5 per cent.
One could ask why the minister needs $10 billion in borrowing authority for 1980, particularly when we are a long way, in a parliamentary sense, from the end of March. Perhaps the minister feels like the Minister of Agriculture (Mr. Whelan) when he complained about the breakfast served at the world hunger seminar, that this is "just the same old buns , as the minister said. He said, "I thought it was going to be like the MP's breakfast in Ottawa; we get in the cafeteria there and you get to pick out your scrambled eggs or whatever you want". The minister told a Washington audience how wealthy Canadians are despite the doom and gloom about the economy. He said, "I walk up the driveways and I see two cars in the garage, ranch-type houses, so much money in the credit union, just back from a trip to Europe or some other place". If we are so wealthy why do we have to go down to Washington every three months to borrow money?

Obviously inflation is a monetary phenomenon. There can be no inflation in a bartering economy, when in fact goods and services bear a relationship to the money supply and the costs increase proportionately. There is no doubt that deficit financing is contributing to the inflationary process that has been taking place.
What has the situation been in respect of financing requirements in the last decade? From 1966 to 1968 we experienced deficit financing to the extent of $2,578 million. In 1972-74 we required $3,271 million, and in 1975-76 we required $14,334 million. Now we have this enormous rise in deficits in the last two years. In fact, it is estimated that the deficit for 1977-78 will be increased by some $10 billion. If one can believe the statistics that are available it will be consideraby more- perhaps as high as $16 billion. The estimate for 1978 to 1979, on the best authority I have, is that it will be somewhere between $11 billion and $12 billion. The government has had a very bad habit of budgeting for a deficit considerably smaller than it ends up with. In the 1972-74 period over $2 billion of the $3 billion was amortized or monetized by the Bank of Canada, or 66 per cent of the requirements in that period. Obviously those were the days of minority government, one of the factors that set off the inflationary cycle.
There has recently been a steady progression required by the Bank of Canada as a percentage of net financing required. What stands out clearly-and this is a crucial point-is the inability or the unwillingness shown by the Government of Canada in obtaining non-inflationary financing-that is, sales to the non-banking general public-and its increasing reliance on the printing presses.
If credit demands rise faster than money supply, the competition for funds causes interest rates to rise, thus rationing out the weakest borrowers, that is, those unwilling or unable to pay the higher cost of funds. We see it happening already as the Bank of Canada raises the rate. If, however, at this stage the central bank prefers to keep interest rates from rising too quickly, either because it fears derailing the ongoing expansion or because, in its wisdom, it feels that interest rates are high enough, then it is forced to monetize the increasing credit demands.
This is exactly what happened in that ill-fated period of 1972-74 when the treasury and/or the central bank feared bidding up funds too aggressively, so as to place the entire government loan with the investing public, with the result that the Bank of Canada was forced to take up as much as 66 per cent of the government's net financing requirements. The enormous appetite of the public sector acts as a drag to the economy by crowding out the private sector; caught in this dilemma, the Bank of Canada comes to the rescue and purchases or monetizes government debt.
In the subsequent 1975-77 period, as the Canadian economy moved into a severe growth recession and private sector credit demands abated, the government was able to place an increasing proportion of financing requirement directly with the
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private saver. In those years it was a lot less. The 1975-77 period only required a total financing of some $7 billion. We are faced in two years with an enormous deficit of $20 billion which is projected for this year and next.
We have long been used, Mr. Speaker, to a foreign exchange deficit. So long as the Canadian dollar remains stable, it can be handled easily enough, particularly when foreigners have confidence in our economy and the stability of our political situation. But this has been clouded by the province of Quebec and the possibilities of serious disruption of our ability to pay our debts.
What are people who know saying about our Canada Savings Bonds? People are looking at them closely and they are described by many as a "con game". At the end of the year there will be on a $1,000 bond $85, $90 or $95 interest more or less. But in buying power this represents less money than the buyer had at the start. Furthermore, the $85 interest will be taxed at his marginal rate of income tax. In effect, a loss is guaranteed on these bonds. There is not the slightest chance of making a profit as long as inflation continues.
We distinctly hear asked the question: How low can the dollar go? It is said we are being locked into a collapsing currency. Our deficit financing has grown until there is obviously no bottom to the Canadian dollar. The Minister of Industry, Trade and Commerce (Mr. Horner) says that a depressed dollar is good for exports. But it is also inflationary because everything coming into this country from the United States is going to cost 15 per cent more than it did a year ago. We have depreciated in the past year some 30 per cent more or less against the Japanese yen, yet the price of a bushel of buckwheat for the western farmer, a product destined for Japan, is the same price this year as last-$4.75 a bushel. 1 will not use the metric system in describing the price in tonnes-a system bitterly resented by the western farmers.
The Minister of Finance (Mr. Chretien) has consistently overstated the growth rate. It has always been, he states, 5 per cent or 5.5 per cent, but it has not measured up to this during his time in that portfolio. Other people whose opinions and judgments are valued and considered have always been much less optimistic than the Minister of Finance.
Why does the minister want this borrowing authority at this moment, particularly for 1980? Does he expect a sudden run on the dollar? Perhaps he is concerned about the three-year old dividend controls which expired last week. No one knows what the impact of unmatured dividend flows will be on the shaky Canadian dollar which is now trading at a 45-year low against the U.S. dollar. This outflow, even if it is minimal, will not help our dollar. Some would suggest this outflow could be as high as $1 billion over a short period or up to $2 billion over a longer period. All in all, the situation for the Canadian economy is very clouded. The minister could well enlighten us a great deal more as to why he wants these enormous borrowings; indeed, we need an explanation.
I will close with these remarks, Mr. Speaker, but I look forward with interest to finding out from the minister why he needs to have the ceiling raised so far ahead. Is it because an
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election must come within a year? Is it that he does not want to be embarrassed at election time by a run on the Canadian dollar?


A. Daniel McKenzie: Mr. Speaker, once again we have a government bill to provide supplementary borrowing authority for the fiscal year 1978-79. It seems that all we do here is discuss bills to provide for more borrowing. If we are not borrowing more money it seems we are spending more money or printing more money, which is a clear indication that the government does not know what it is doing and does not know the first thing about running this country.
This all started ten years ago when the rules of this House were changed to reduce the number of votes. There is no proper examination of the departmental estimates by parliament; there is no control over government spending. This has been pointed out year after year by the Auditor General. Even he cannot find out where the money is going.
Having listened to the comments from the government benches today I suggest that hon. members opposite should read the Auditor General's reports to find out what is going on in the country. The government would have us believe that everything is beautiful, our accounts are in good order and there is no need to appoint a Comptroller General at an initial cost of $6 million per year. The government seems to be proud of borrowing money all the time, but that is nothing to brag about. A government or a business cannot be run by borrowing money all the time. It is a clear indication that the government does not know what it is doing.
I should like to put on the record some remarks attributed to the Comptroller General in an article in the Winnipeg Free Press on September 29, 1978, datelined Edmonton:
The federal government's system of financial planning and control is unsuitable for the current period of economic restraint, the Comptroller General of Canada said Thursday.
Harry Rogers said in a speech to the Canadian Institute of Chartered Accountants that the system evolved in a period of rapid expansion of government activities.
"Without changes in these financial and manpower planning and control systems, the government will be severely limited in its ability to implement changes in its priorities."
It is odd that tonight the parliamentary secretary, who is supposed to be an accountant, did not comment on the matters raised by the Comptroller General. He informed us that this borrowing has something to do with reducing spending in the years ahead. The government has been in office for the last 15 years and it appears now that they are getting on to this so-called restraint and reduction of spending because of the latest opinion polls. It is not in them to have a really proper accounting system, to reduce spending or to see that our tax dollars are spent properly.
We are also informed by the Minister of Finance (Mr. Chretien) and his Parliamentary Secretary (Mr. Martin) that this bill is a routine matter. He stated that we voted for this
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amount to be passed. The parliamentary secretary's comments that we voted for this will have to be investigated in some detail tomorrow, Mr. Speaker. When I was at home in my riding during the recess, I was learning about more borrowing by reading the newspaper. I was not called back here to vote for any of this borrowing. So we were completely misled tonight by the parliamentary secretary. I will have his comments researched in more detail tomorrow.
Just in passing, there was another comment made about the great progress in housing and it was said that housing starts are up again. There are 72,000 new homes in this country today that remain empty. That is a dismal record for a country like Canada. People simply cannot afford to get into these homes. We recommended a mortgage deductibility plan that has been in effect in the United States for 40 years. It has been very successful. It has been in effect in Great Britain for many years and it has been very successful there. We want to implement a plan like this in Canada to help people buy homes. In return all we receive is criticism from the Minister of Finance, the Prime Minister and all the rest of them. All they have is a lot of negative criticism to offer.
I was also interested in the comments expressed by the financial critic of the New Democratic Party tonight. He criticized our party's financial critic. He listed a lot of small items that could be curtailed. However, there is no NDP member in the House tonight to listen to my comments. That is typical.
The comments of the New Democratic Party's financial critic seem to be right in step with this government. He said, "If the government spends more, the private sector will also spend more". That is a great theory. I have some evidence that will shatter that comment.
We had a change of government in Manitoba a year ago and I will give some statistics to show what is happening there. Expenditures are being curtailed. Not only that, the government is bringing in proper management and eliminating waste. Construction has experienced the greatest gain in Manitoba this year in the commercial sector. It is up a whopping 3,542 per cent from a mere $1 million worth last year when we had an NDP socialist government in Manitoba. We are up $38.4 million in 1978 so far.
After a loss of 6,000 jobs in the manufacturing sector under the NDP government, an increase in excess of 8,000 jobs in the past year has been evidenced. Expenditures are being curtailed. The private sector has faith in responsible government and as a result they are spending more. That is the evidence. In Manitoba building permits are up 69 per cent over 1977, when there was a New Democratic Party government in power which had all spending out of control. By having a responsible government eliminating waste and mismanagement, the private sector has expressed its faith in that government, and they will now invest in that province. That discounts the argument of the critic of the NDP.
Another example of what is happening in Manitoba by bringing in proper management and eliminating waste concerns the St. Boniface General Hospital in Winnipeg. This

hospital has been able to reduce its operating expenditures for this year by $3,700,000. This has been accomplished as a result of the president of the hospital working with the staff to set up a program of eliminating wasteful things and bringing in more efficient management. This hospital is still maintaining proper quality patient care. The quality of care for the patients is not being reduced. This is one hospital, one institution. The New Democratic Party critic said that we are talking about peanuts, small amounts. However, this is a $3,700,000 saving at one hospital. Mr. Quaglia, the president of the hospital, has listed in a document how they accomplished it. It shows that it can be done. I would like to see all of the policies and programs that were adopted at this particular hospital adopted in all of the government departments in Ottawa. We are talking about reducing taxes by $2 billion. We could probably reduce them by $10 billion if we implemented a program such as the one in existence at the St. Boniface General Hospital in Winnipeg.
The parliamentary secretary accused Conservative candidates in the by-elections of using false and misleading information and said that all our statistical information is wrong. I challenge that statement, Mr. Speaker. I commented on this last Monday night. Canada's Prime Minister used a lot of selective statistical information in his speech on the Address in Reply to the Speech from the Throne. This was picked up by the news media and the Prime Minister has been challenged.
I have not heard the Liberal party challenging the statements made by Mr. Don McGillivray of Southam News. One of the things he had to say is as follows:
Most of Trudeau's statistics used 1970 as the "base year" or starting point. He was elaborately casual about it, saying that any other year would do as well. But when one looks at the resulting members, it is clear that 1970 was well chosen. It is an example of "the before-and-after trick" described in Darrell Huffs 1954 classic, "How to Lie with Statistics".
One can be sure that the Liberal party would dig up a document like that to help them along. Mr. McGillivray goes on to say:
If you compare your income this year with the one when you were out of a job and living on unemployment insurance, you have made fantastic gains. But if you compare it with the year you won the lottery, you have slipped badly.
Nineteen seventy happened to be a recession year in Canada. It was the lowest point for housing starts, for example, in the past 10 years. Only 191,000 units were started.
So when Trudeau claims a 25 per cent gain in housing starts he is measuring against a bad year. If you move the base year to 1971 when 233,000 houses were started, the gain shrinks to 5 per cent.
The Prime Minister should be completely and totally responsible and should not be using a bunch of tricky statistics.
This example of how this government operates is a clear indication that you cannot really trust them. This is why everybody is so suspicious. Look at the things which they allow to go on and how they allow taxpayers' money to be squandered. I have one other example to give. The New Democratic Party probably will not like this because it concerns $200,000 of the taxpayers' money. I have an article entitled "Why do the Gals Take so Long", and it reads:
October 19, 1978

The mandarins in Ottawa decided that an urgent question of great public concern, "how long do people spend in public washrooms", had to be settled. To that end they allotted in the neighbourhood of $200,000 to have this nagging question answered.
You will be heartened to know the results. By depositing themselves in the washrooms of Ottawa's National Arts Centre during intermission, recording arrival rates, duration and frequency of toilet traffic, researchers flushed out the fact that a man spends an average of 41 seconds at a urinal, while a woman spends 75 seconds using the cubicle.
There is a classic example. I guess I should not have raised that becaue it involves only $200,000 of the taxpayers' money and I realize it is not a large amount.
One also questions the credibility of the words of the Prime Minister (Mr. Trudeau). His word does not mean anything. On Wednesday, August 13, 1969, the Prime Minister, at a major press conference over national television, talked to the Canadian people about inflation and the country's financial future. He said this:
We would be on the way to financial disaster if nothing were done to bring spending under control. To spend vast sums on welfare, education, and other progams while allowing inflation to continue would merely place hundreds of thousands of Canadians on a treadmill they could not escape.
I never read more meaningless words in my life. He never meant one word of it. The Prime Minister also committed his government to a substantial cut in the federal public service. What has happened since August 13, 1969? Government spending has increased by over $34 billion, some 230 per cent. We now hear the parliamentary secretary trying to brush all this under the rug.
Here is something else that is driving Canadian taxpayers and the official opposition up the wall in connection with these phony programs. Although we are not opposed to sound foreign aid programs which will help our trade picture, some of them are very questionable. I quote from an excellent editorial in the Toronto Sun of October 8:
Our federal government has got to be crazy. Out of its maple syrup mind. Either that or criminally negligent. Or, horrors, both!
Here the damned country is falling apart, we're in the pits economically, and Trudeau's pledge a couple of months back (at the Bonn economic summit) of a 5 per cent growth rate has crumbled. Now Canada will be lucky if it hits 3 per cent growth.
Two years ago our dollar was worth nearly 5 per cent more than the American. Today it is worth 20 per cent less. And still fading. This year the feds have borrowed some $5 billion in futile, desperate attempts to shore up the slipping dollar. It is said to cost Canada $85,000 a day merely to keep a line of credit open. That's $85,000 a day with no tangible returns!
It sounds incredible, but it may not be beyond Trudeau's talents to bankrupt Canada.
And now the crazy part: In the midst of this chaos Canada has just borrowed $1.2 billion in order to lend it to Algeria! Unbelievable. Borrowing and paying interest in order to lend to Algeria! See what we mean when we suggest the government is nuts? Or wicked ...
Watinell is the magic hold Algeria holds over the Trudeau government anyway? One of the world's more repressive regimes, it aids and protects terrorists, it actively tries to subvert neighbouring countries it doesn't like, it tramps on its own citizens, and it is nurtured with Soviet weaponry. But it speaks French . .. And Canada borrows to lend it dough-probably forgiveable loans (the feds won't tell), which cost us 10 per cent... Yet we pay some 10 per cent interest.
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It likely costs Canada $300,000 a day in interest to loan Algeria money to buy from Canada, which will be a phony boost to our export statistics. This is called "creative accounting" and any private firm which tried it would be bankrupt or its executives jailed.
I wonder if the parliamentary secretary, who is an accountant, tells this to the firms he represents. I certainly would not want my tax form filled out by his accounting firm. The article continues:
Algeria is one of the biggest recipients of Canadian aid anyway. Now this $1.2 billion bonanza. And Algeria isn't even an ally. It is a "socialist" military dictatorship which shoots, hangs, assassinates or imprisons political opponents. It has 80 per cent illiteracy and no civil liberties. Why is Canada aiding such a regime at the expense of Canadians?
It constitutes a moral and financial outrage and those responsible should be horsewhipped. Or worse ...
That was a classic example. The government suggests that we rubber-stamp all of these bills with billions here, borrow more there and all the rest. Many government members are critical of this side of the House and our successful candidates in the by-election. It is negative criticism which is not warranted. Well, we have a lot of company on our side.
As I mentioned last Monday night, more and more responsible people are studying and analysing how this government has mismanaged our affairs over the years. This is being documented in books such as the one I have here. This is not a series of general statements and opinions; these books contain statistical information.
The book I have here is entitled "The Canadian Economy, Its Problems and Its Potential", published under the auspices of Burns Fry Limited. The author is G. Leigh Skene. I wish to highlight a few of the points it makes:
It is now clear that the explosion in government spending during the past decade has left us with intolerable unemployment, intolerable inflation, and an intolerable burden of taxation. What makes our plight even more serious is that traditional government remedies, over the short term at least, can only exacerbate our problems. More and bigger government deficits-the common political response-would only act to unduly increase the money supply. That in turn would raise unit labour costs as well as other prices. The result then would be an increased volume of imports. Increasing the gap between imports and exports means the export of jobs-
They are being exported on a daily basis. Some figures indicate that up to $18 million a day is leaving, most of it going to the United States, because there is no faith in this government or this country.
And that means lower federal revenues, higher government spending, and more massive deficits.
It goes on to ask:
Do Government Deficits Cause Inflation?
There has been an ongoing controversy in Canada as to whether government deficits cause inflation.
They certainly do. There are a number of chapters on this. There is a chart which shows what is going on in this country. In their wrap-up, they refer to the role of the electorate in avoiding the crisis. I quote:
Perhaps most important of all, none of the reforms detailed in this chapter can come about without an electorate which chooses opportunity over handouts. As long as the voter chooses the candidate who promises more giveaways rather than the one who offers realistic solutions to our problems, there will be no lasting prosperity.

October 19, 1978
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I can say without boasting that I have never stood on a platform and said: If you vote for me I will give you something for nothing. This nonsense was started by the Prime Minister in 1972 and a former minister of finance, John Turner, while parading around this country.
Can you imagine the Prime Minister trying to bribe the taxpayers with their own money, saying if you vote for me, there will be lots of goodies. We had an example of that in Winnipeg. He was going to give us a hangar. Now we have a $15 million hangar but they do not know what to do with it. Well, bribery did not work there. The parliamentary secretary is saying that we promised goodies. We did not do any such thing. I again quote:
What is lacking is will and determination. No society every received more than it earned, and this one will not be any exception to the rule. If expectations are high the level of effort must be high to achieve these expectations. If the level of effort is low, then the achievement level will be also. A continuation of the current levels of effort will bring about a very low achievement level.
In this document are a number of excellent recommendations. I will only refer to two. I quote:
Reduce the annual rate of increase in federal spending to 2 per cent to 4 per cent per annum.
Eliminate the federal budget deficit in a four to five year controlled program.
Of course, this is what we have been calling for for many years. We presented a motion on February 2 of this year calling for the strengthening of the committee system. We wanted the government to bring in sunset laws and, through the committee system, to examine every government department to find out exactly what they are doing and implement a program along the lines of that followed in Manitoba. But the New Democratic Party and the Liberal party are not interested at all in curtailing spending or conducting a proper examination of what is going on. The criticism we received was extraordinary.
We talked about a review of the tax system on May 23 of this year. There have been complaints from all over the country about our tax structure and we wanted to set down the proper committees to review that structure and attempt to improve our economic situation by encouraging investors to stay in Canada. Again we encountered blazing criticism from the New Democratic Party and from the Liberals. Now they come here again and say they are going to curtail spending. Those are meaningless words. They are not fooling me for one second.
Some excellent work has been done in the Senate. I should like to refer to a study which was completed earlier this year. It is called "Canada-United States Relations" and I am quoting from volume two which deals with Canada's trading relations with the United States. This is a document compiled by the Senate standing committee on foreign affairs; it should be required reading for all members of parliament and espa-cially for those who sit on the government benches.
I should like to refer to a few of the areas covered in this study. One of them is headed "Deterioration in the Travel Account". We know that this year there is likely to be a $2

billion tourism deficit. We hear from the Minister of Industry, Trade and Commerce (Mr. Horner) that he is holding great meetings, that he is going to cure all our tourism problems and that everyone will be coming to Canada. Those are more meaningless words.
I should like to give hon. members an example of how these matters are really handled. This is what happened in Manitoba during the summer. Northwest Air Lines, which flies from Chicago and Minneapolis to Winnipeg, was in a four-month strike. This meant that 14,000 fewer passengers were carried to northern Manitoba by Transair. A great number of Americans come up each year to fish and hunt in Manitoba but 14,000 fewer came this year; we have these statistics from Transair which picks them up in Winnipeg and takes them to the north.
While the strike was on we asked Air Canada to put on a regular flight to help us with this problem. But the corporation would do nothing about it. I telephoned the President of Air Canada and I wrote to the Minister of Transport (Mr. Lang). Air Canada has the right to fly from Winnipeg to Minneapolis and Chicago. They have had that right for almost a year but will not exercise that franchise. Nor will they give it to anyone else. This is a government airline, Mr. Speaker. Why did they not step in to help us or at least hand the franchise over to Transair so that they could have gone down to Chicago and Minneapolis and brought these 14,000 wealthy Americans up to spend money in northern Manitoba? I would venture to say that 14,000 fewer wealthy Americans getting up to northern Canada this summer cost us untold millions, because they are big spenders. That is an example of the way in which the government and its agencies are helping out with our tourism problem. There is a chapter in this study dealing with the basic cause of this tourism deficit. It goes into great detail.
One of the highlights of the document is the suggestion that Canada is no longer an attractive country in which to invest money because of the fact that the Saskatchewan government nationalized the potash industry in Saskatchewan a number of years ago. The Senate report states:
The nationalization by the Saskatchewan government of the potash industry produced a strong negative reaction from the United States. The United States is heavily dependent upon Saskatchewan as a source for potash; almost 70 per cent of its potash needs came from Canada in 1974.
That was the start of it, Mr. Speaker. A combination of this action by the NDP government in Saskatchewan and the policies of the Liberal government here has given rise to fears among investors that Canada was no longer an attractive country in which to invest.
The Senate committee also dealt with the subject of resource taxation. A number of witnesses were called and they made some extremely interesting comments. The committee set forth its views as follows:
A major problem for the Canadian resource industries and particularly the mining industry in recent years relates to the jurisdictional disputes between the federal and provincial government over the right to tax. The mining industry tax incentives structure was substantially altered in 1971 by changes in federal tax policy which removed some of the advantages which the industry had traditionally enjoyed. The impact of this change was compounded by steps taken within a
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couple of years by the provinces to tax away the profit generated in the prosperous 1973-74 period which, it is now apparent, was due to cyclical factors.
We are all aware of the potential of the mining industry in Canada. We want to do everything we possibly can to encourage it. Unfortunately, the federal government and some of the provincial governments have treated this industry very badly. The result has been extremely costly for Canada. Further in this document we read:
Mr. Alfred Powis, President of Noranda, termed as "devastating" the over-all impact of the federal government's 1971 tax reform coupled with the punitive taxes and royalties of the provinces which the federal government disallowed as expenses. In terms of competitive position, he said, Canadian taxes were more than double those in parts of the United States.
These are some of the things we wanted to discuss in committee so that we could solve these problems and get Canada going. But no co-operation was forthcoming from the NDP or from the government. The company prepared for the committee, as evidence of this, tables of comparable mining operations in B.C., Ontario and in Nevada. I am happy to say that the government of Manitoba has removed some of these restrictive taxes on mining operations in northern Manitoba so we shall certainly see an improvement in Manitoba. But Manitoba cannot cure all of Canada's economic ills on its own.
The Senate also heard a tax expert, a gentleman by the name of Mr. R. D. Brown. According to the Senate study-
-Mr. Brown considered the Canadian tax structure as inefficient. After the detailed comparative study of the tax systems in Canada, United States and northern Europe for one industry, he concluded that the Canadian system imposed more burdens on its industry than the tax systems of other countries. As to its effect on competitiveness, Mr. Brown said: "Our tax system does not help and indeed hinders the aggregate level of productivity in Canada and tends to make our products have a more difficult time in world markets".
What are we doing about these things? Absolutely nothing. All we are doing is talking about a bill to enable the government to borrow more money. Isn't that a great solution to all our problems? You borrow more money, print more money, spend more money. I should have brought along some of the speeches made in days gone by by the hon. member for Crowfoot, because they would have made an excellent contribution to this debate. I looked up some of his old speeches on the devalued dollar. Some of his comments are worth repeating.
Yesterday I asked the Minister of Finance a question about the amount of investment money currently leaving the country. The volume of investment money leaving the country has now reached record proportions. I asked what steps would be taken to encourage investors to stay in Canada. In reply we were given the typical, gobbledygook answer that the minister is reducing taxes by $2 billion. He is not even making an effort to meet with these people to Find out why they will not invest in Canada. He is taking a totally negative approach.
We have also heard detailed speeches about the socialist policies we have in this country today. This is a comment made by Mr. Rowland Frazee, President of the Royal Bank of Canada, as reported in the Free Press:
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Foreign investors are not investing in Canada because they hold a dated perception that Canada is left-leaning and unreliable, says Rowland C. Frazee, President of the Royal Bank of Canada.
Frazee said it would probably take another year for outside investors to realize Canada has now implemented orthodox economic policies in a bid to shore up the dollar and hold down inflation.
Mr. Frazee feels that everything will be straightened out in another year, but we will have to wait to see about that.
With regard to the public debt which the Minister of Finance and his parliamentary secretary made light of, I would like to give a few statistics. The wild spending habits of the government have resulted in steadily mounting deficits. When the government borrows money to pay for the deficits, the public debt increases. Gross public debt has doubled since the Prime Minister took office, rising from $32.9 billion in 1968 to $67.1 billion in 1977.
I understand that the latest figures show that it is heading toward $90 billion or $98 billion. It took the present Prime Minister and this government only ten years to double the public debt. Before the Prime Minister and this government came to office it took 23 years to double the public debt. This government has increased the public debt at a rate faster than any government in Canada's peacetime history. Gross public debt increased by $7.3 billion in 1977. That increase is greater than the total public debt of 1942.
I am sure Canadian taxpayers would be interested to know that interest payments on this debt have skyrocketed. In 1968 the federal government spent $1.3 billion to pay for accumulated debts. In the coming financial year $6.5 billion will be spent, Five times the amount of 1968. Federal debt costs were $62 for every Canadian in 1968. Now they are $278, four and one-half times greater. When does the end come? Every time we have another of these bills before us we hear a series of excuses that everything is in order and going great. The deeper the government gets into debt, the greater it says things are. What a philosophy!
When the federal government issues bonds, bills and securities to pay for its deFicits, they are bought by either private citizens and corporations or by the Bank of Canada. Sales to the private sector place a burden on capital markets by increasing the demand for funds. Federal borrowing requirements of the current size, $8.8 billion, makes it harder for the productive sectors of our economy to borrow funds to finance job-creating investment projects. Sales to the Bank of Canada are paid for by the bank by printing money. In effect, the government owes money to itself, so hon. members can see the ridiculous situation we are in. Too much money in the economic system means inflation. I could go on and on with statistics, but I do not think I have to say any more to get the message across.
There is much comment across Canada today placing the blame on one man. The Prime Minister of Canada must bear a large share of the responsibility because he has handed everyone in his cabinet a blank cheque. Cabinet ministers can do anything they want. They can fly around in JetStars and take all their friends to Grey Cup games. As soon as the Minister of State (Fitness and Amateur Sports) (Mrs. Campagnolo)

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became a cabinet minister, she took a JetStar across the Atlantic Ocean and flew around Europe at a cost to taxpayers of about $350,000. She certainly has all the necessary qualifications to be in this Liberal cabinet, and she demonstrated that in short order.
However, we cannot place all the blame on one man. All cabinet ministers are guilty, and even backbenchers who defend this government's record are guilty. They have been leaving one by one. Some have been speaking up while others have just gone off to Bay Street to make a bundle practising law. Mr. Charles Lynch of Southam News summed it up very well as follows:
When we talk about the government being tired and listless, we are talking about the unfaithful departed, like John Turner-
I will get to him in just a minute.
-and Donald Macdonald and Ron Basford, and a host of ministers who have remained on board without pulling their weight-Allan MacEachen, Don Jamieson, Otto Lang, Alastair Gillespie and the faceless ones like Hugh Faulkner, Judd Buchanan, Bud Cullen, John Roberts and Tony Abbott.
That is a great piece of theory about this cabinet, and it is right on.
It is a measure of the government's bankruptcy that Trudeau must now contemplate strengthening his cabinet for the long winter's run to the polls, and he has no place to turn for strength. There is manifestly better cabinet material on the Tory benches than on the Grit side.
It is certain that we have no shortage of talent on this side.
A column by Dennis Braithwaite appeared this week in the Toronto Star in which it is stated:
Since my political predictions are running well ahead of the regular pundits (they are saying today what I said on Aug. 8, that Trudeau's had it), I must press on with further enlightening analyses.
Many Liberals are saying that Mr. Turner must return. Mr. Turner is just as guilty as all of them. I would like to point out that under Mr. John Turner as minister of finance federal government spending increased by 99 per cent in his short term. To put it another way, it took us 105 years to reach a federal spending level of $17.4 billion. John Turner doubled that figure in 44 months, taking the level of government spending in his brief term-


Mr. Deputy Speaker:: Order, please. I must interrupt the hon. member because his time has expired. Unless he gets the unanimous consent of the House-


Some hon. Members:: No.


Mr. Deputy Speaker:: Is there unanimous consent to allow the hon. member more time?


Some hon. Members:: No.


Mr. S. Victor Railton (Welland):: Mr. Speaker, I do not know which section of the Globe and Mail some of my hon. colleagues opposite read. I do not know whether they read the first section, which is purely political, or the business section.


Mr. Friesen:: The obituaries.


Samuel Victor Railton: They may have been reading obituaries, but some of them are imaginary. They get up with their books and read many things which all of us have read and discarded. I do not really think they have been reading the second section of the Globe and Mail or any other business journals because they show that in the last year momentum has slowly been building toward an economic upturn.
This upturn has been engineered by the present government. The Progressive Conservatives are fighting hard to get in on the good times round the corner which have been prepared by us Liberals.


Some hon. Members:: Oh, oh!


Some hon. Members:: Hear, hear!


Samuel Victor Railton: I am quite serious when I say that. There is nothing like listening to the people in your own constituency to find out what is going on. I do not listen to members on the opposite side too often because they are ghost writers really. They have somebody telling them what to say, and then they get up and say it. Actually, I have spent the summer going around my constituency of Welland and I have found that there have never been such good times in Canada, despite the doom and gloom in the media and in the accusations coming from the opposition.
The hon. member for Waterloo-Cambridge (Mr. Saltsman) had a few interesting observations to make. I thought he made the most thoughtful speech today.


Some hon. Members:: Hear, hear!


Samuel Victor Railton: But nothing constructive is coming from the other side. I thought that the financial critic on the other side showed everything except a knowledge of finance. All he did was to deliver a diatribe of accusations. He referred to all sorts of things that had no substance to back up his statements.
Let me get back to speaking about my own riding, which I respect and for which I have a great affection. I have done a lot of work there, and I think they appreciate it. I have visited several manufacturing firms in my riding. We have been told that manufacturing is down to 80 per cent of its capacity. That is completely untrue; they are at full capacity, most of them running two, sometimes three shifts.
We have heard talk that the government is not sufficiently subsidizing research and development. My God, what do they want? Do they want us to supply everything? Business in Canada is just waking up to the knowledge that they have to put some effort into it too. We have been pampering them. Research and development in most Canadian firms is increasing, partly because the firms are starting to realize that they must supply 1 per cent to 3 per cent of total sales in order to become competitive. This entails some hard times for two or three years, but they are facing up to the challenge.
I have found also that exports from my riding, although they are sometimes only 10 per cent, in many cases are in the range
October 19, 1978

of 70 per cent of industrial manufacturing. Millions of dollars from these firms are going into expansion. The money is going into building and machinery. They have more faith in Canada than the other side of the House. I cannot understand the prophets over there talking about Canada going to the devil when our Canadian manufacturers are saying that things have been definitely on the upswing for the last six or 12 months and are getting better all the time.


Some hon. Members:: Hear, hear!


Samuel Victor Railton: What is more, they have competitive ability. Our firms are selling products in the United States which they could not begin to sell two or three years ago. Why is it? Is it because of this weak, sick, Canadian dollar? Ha, just think of that! What is the matter with you men over there? Do you not realize that this is what is giving us much of our competitive edge and this is what the manufacturers want? Just because people cannot go on trips to Europe or to the United States and buy everything cheaply over there like they can at home- most of it is not important to their standard of living or way of life-do you think that people do not realize that Canadian prosperity hinges on our exports?
Now that the Canadian dollar is down, our companies will continue to be prosperous. What is more, those firms tell me they do not want to see the dollar get any closer than 10 cents or 12 cents to the U.S. dollar. I wish I had not bought American currency a couple of days ago. A lot of ridiculous nonsense has been said about the dollar. It is about time we realized the exchange rate is in our favour and that we are benefiting from it. Let us hope it does not go up closer to the American dollar than 90 cents.
When I think of the different companies in my riding I am reminded of the textile industries which have had so much trouble because of the third world, and we have to expect it. Yet Canada with her negotiations in GATT has done a great deal for these textile industries. Mr. Fyfe through my efforts was able to meet with the Minister of Industry, Trade and Commerce (Mr. Horner) last spring. I think now that they feel they can make things go, it is possible they will get about 50 per cent or 60 per cent of the domestic market in Canada, which is what they must have if they are to survive. Also, there is John Deere in the Welland area. It is a U.S. firm, but it is unique in the fact that it makes millions of dollars worth of sales every year. There is no other company that does exactly that type of manufacturing in the U.S., so they can compete and export to the United States. In fact, they have sent 70 per cent of their manufactured goods to the United States, which will certainly improve our export trade balance. Every year they spend 3 per cent on research and development. They are really a great asset to Canada. In the next year or two that company will spend between $5 million and $15 million on expansion.
Another company is Union Carbide which is going to spend $5 million to $20 million next year on expansion. It exports 5 per cent to 6 per cent of its products, although it covers the Canadian market to a large degree.
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Then we have Stelco, which was a big company before the pipeline business started. They built a nine-acre plant two years ago in readiness for the pipeline, but they have not got it going yet. However, not to worry; Stelco is doing all right even selling material in the U.S., Mexico and other places. Their competitive ability is excellent. So let hon. members not talk to me about a country which is going down the drain. Stelco is ready to put out a mile of pipe a day when they get the orders.
Then we have Atlas Steel, one of the great steel companies in Welland. They wrote me a letter the other day thanking the government for all it had tried to do in the GATT negotiations and in the anti-dumping tribunals. That company feels it has been fairly treated, even though it did not get all it wanted. At least Atlas indicated that it hoped we would continue to make sure dumping did not occur. I know the Minister of Industry, Trade and Commerce is doing his best to prevent it.
We have received a lot of criticism from the other side concerning the takeover of Canadian companies by American companies. I should like to refer to the Mansfield-Denman Company in Welland which was dying by inches because its parent company in the United States did not have enough capital to enlarge, refurbish its machinery and modernize. That was the case until the Foreign Investment Review Agency took on the problem and recognized that the applicant, General Tire, had the ability and financial capacity to enlarge that plant's output for export in Welland, as well as its tire plant in Barrie, Ontario. The Welland plant exports a great deal. In fact, it manufactures canister components for gas masks for the Canadian, American and German defence forces. That firm is prospering.
The Hayes-Dana Company is situated in an area of Ontario which is shared by the hon. member for St. Catharines (Mr. Parent), the hon. member for Niagara Falls (Mr. Young), the hon. member for Lincoln (Mr. Andres) and myself. Until recently that firm employed 800 people; now it has increased its staff by another 800 people. Basically it is situated in the St. Catharines area, and Welland is the bedroom component of that industry. As well it has increased its staff by a few hundred in the new plant in Barrie.
Can one say that I have told a sad story about Canadian industry? There are small firms in Welland, many forge plants which supply the bigger plants. Recently I received a telephone call from the manager of General Forge. His firm has been successful in getting capital in order to enlarge by $2 million to build some additional plant and refurbish the existing plant because it is exporting a great deal now.
It is time for optimism in the House. I spoke tonight because I have heard so much pessimism and ridiculous accusations against the government. One would think the country is going down the drain. Canada has never had it so good. Sometimes I require loans just like everyone else, so I have had occasion to speak with bankers. It provides me with an opportunity to hear their ideas. All the bankers have told me, as well as merchants on the street, that things have never been so good.
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Perhaps there is a lot of talk about unemployment, but at least we look after our unemployed. There is no other country in the world which has been as good to its unemployed as Canada. Just because a few loose hitches are being tightened here and there, there is no reason to cry. The majority of unemployed Canadians are able to go to stores, fill their baskets, and look after the nutrition of their families just as well as anyone who is somewhat luckier and has a job. This is due to the government's good vision, commonsense, foresight and the fulfilling of its responsibilities.
This morning I had occasion to speak to someone over coffee who told me the story about that big development in St. John's, Newfoundland. Newfoundland has been known for its high unemployment, as much as 30 per cent in some places. Perhaps the people of that province do not have good times similar to the residents of the booming provinces of Alberta, Saskatchewan, Ontario and British Columbia, but the people of Newfoundland are not complaining very much. Recently a $700,000 food market was opened. That business is booming in an area where perhaps 20 per cent are unemployed. People are buying a great deal of food and are quite happy. In fact, the man in charge of the project said that he went to St. John's because he could make more money there than anywhere else because of lower costs. Also he said that there is a scarcity of money, even though some of the people are unemployed, because they are being paid by the government. There would be something to criticize the government about if it did not have a generous unemployment insurance program. The government should not be criticized for spending $4 billion on the unemployed. It should be criticized if the unemployed are not being looked after.
Many speakers today referred to provincial opinions. Just as the Prime Minister (Mr. Trudeau) said in his speech last Thursday, who stands up for Canada? Not very many people stand up for Canada now, just the Liberal government.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


Samuel Victor Railton: One should not kid oneself. The opposition has worked hard to divide the government and make it fall for the apparent good of the provinces and the local parochial people.


An hon. Member:: Where is your violin?


Samuel Victor Railton: That sounds good, but the Liberal government stands up for the country. If local parochialism becomes too strong, who will suffer? Of course nobody but Canada will suffer. There will be no chance for a strong central government. One must not think the hon. Leader of the Opposition (Mr. Clark) will provide us with a strong central government. That is quite impossible, based on what I have seen in the last year. I want to see a fair show for the government. I rose to defend the government by indicating that I do not believe a word the opposition has said.
In conclusion, I should like to point out that the government has done more for Canada in the last ten years than any other

government could have done. In the next two or three years there will be more jobs in Canada than people to fill them.


Mr. Cecil Smith (Churchill):: Mr. Speaker, the hon. member who preceded me referred to opposition parties spelling doom and gloom, and to the result of their talking about the devalued dollar and the fall of the government. I should like to refer to a few comments made by a former minister of finance, the Hon. Mitchell Sharp, back in May of 1962. He said that the Canadian dollar, once the strongest currency in the world, was in danger of becoming known as the Diefendollar in which, like the Diefenbaker government, there was less and less public confidence. He said that when the government lost control of the exchange, was forced to abandon its policies and devalue the currency, the country would be in serious peril. The dollar was at 92.5 cents at that time. What would it be like now that the dollar is worth 82.5 cents? Also he indicated that it was one thing to reduce the value of the Canadian dollar deliberately in order to assist our trading position, but it was quite another thing when the Canadian dollar is forced down because the world has lost confidence in our economy and financial policies.
Bill C-7 was given first reading in the House approximately two days ago. It seeks a $7 billion supplementary borrowing authority for the rest of the current fiscal year, and a further $10 billion borrowing authority for the fiscal year 1980. 1 could not even consider giving my consent to the borrowing of some $17 billion until I know just how the money is to be spent.
For quite some time now I have wanted to express some of my concerns and feelings about why this government is in the position that it now has to borrow more money and become involved in a hodgepodge of cutbacks. The major economic statement we heard from the Prime Minister (Mr. Trudeau) on August 1 really boils down to what I can only call a hodgepodge of cutbacks involving some $2 billion in spending and the elimination of 5,000 jobs in the public sector. It also involves the freezing of new public service hirings.
This government's attempt at restraint is certainly welcome. However, this announcement, impromptu as it was, resulted in ministers of the Crown scurrying back to Ottawa to determine just where the cuts should be made. This is no surprise to me in view of the mismanagement we have seen in respect of government spending over the past ten years. I am not surprised that there have to be cutbacks because this government's spending has been out of control, particularly for the last five years.
Let me devote my remarks to one area of the Churchill constituency which I am proud to represent. If the Liberals are really serious about restraint, why does the government not sell the empty government houses in Churchill, Manitoba, or at least make every effort to prevent a further white elephant such as the Otineka Mall and Churchill complex? I will deal specifically with this as I get further into my remarks.
October 19, 1978

What happened in the town of Churchill on the Hudson Bay coast in Manitoba is a prime example of what this government has been doing. For over three centuries Churchill has been a base for explorers, scientists and travellers. It is also one of the main grain handling ports in Canada. In the last century this community has become the subject of government whim.
Let me go back to 1969 when an agreement was reached between the NDP government of Manitoba and the federal Liberal government of Canada to embark on a 13-point plan for the redevelopment of the townsite of Churchill. At that time there were some 4,000 people living in the community of Churchill. I have never been able to pin down who the architect of this redevelopment plan was. I have tried unsuccessfully by inquiring of the Department of Public Works and of various other offices.
At the time government officials felt that a viable tax base existed in Churchill to support an estimated $32 million redevelopment plan. From 1969 to 1976 the redevelopment plan was carried out. Just two years ago a multimillion dollar recreational complex was opened in Churchill. The complex cost $13 million, $8 million of which was put up by the federal government and $5 million by the NDP government of Manitoba. It was based on a population of 4,000 at that time. Someone in government did not realize that the population of Churchill in 1976 had decreased to some 1,700 or 1,800.
Under the roof of this huge, monstrous complex there exists a paramedical and dental care facility, an arena, a gymnasium, a four-sheet curling rink with artificial ice, bowling alleys, a swimming pool, theatres, a skating rink with artificial ice, and, lo and behold, in the rotunda of this complex in the frozen tundra of Churchill we have $100,000 worth of tropical plants, along with benches and all the facilities of a park. You can walk around inside this area. As I say, at the time of completion we had exactly 1,700 people living in the community.
In addition to these facilities this huge complex housed a high school designed to facilitate the education of 300 students. In 1977 there were 100 students attending that high school, at a cost of $180,000 per year. That is what it cost to educate those 100 students. Today there are 55 high school students attending school in that complex, and it still costs something in the neighbourhood of $150,000 or $160,000 to educate those students. This complex is like an albatross or a yoke around the necks of the people who live in the Churchill community.
The population in Churchill today is 1,400. That is an example of how this federal government has done its planning, how it squanders the taxpayers' money. The government pays no attention whatever to what is going on in northern Manitoba. This is only one example of how this government squanders the taxpayers' money, in this case to the extent of $8 million in federal funds. The people of Churchill would have been happy with a $1 million building designed in such a way that it could be utilized by the local population. Today you could fire a cannon in that place and never hit anyone. This complex is so huge it costs $1,200,000 a year just to maintain it and there are only 1,400 in the community.
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When the complex was started, or shortly thereafter, this government began to reduce the armed services in Churchill. Churchill was a winter training area. Then the government pulled the National Research Council out of Churchill and moved it to Gimli, Manitoba. I asked why and was told that it was too costly to continue operations in Churchill. This was after they commenced building this $13 million recreation complex. The government has now said to the people that this complex is its gift to the people of Churchill: 'There it is, now you look after it".
In addition to pulling out the armed services and the National Research Council, the government pulled the CBC employees out of the community. This amounted to a loss of 16 jobs in that community. I could never figure out why the CBC needed 16 people to run a radio station in Churchill where there was a population of 1,400 people, but I suppose that is a pretty good ratio in order to give good radio programming. This has left the community with a recreation complex it cannot afford. The new Conservative government of Manitoba has given a grant to continue maintaining the complex for at least this year. I do not know what will happen after this year. I have in front of me a newspaper clipping with a heading "A Dream Dies at Churchill, Can't Explain Where People Went, say Planners of Facelift". The article reads in part:
"You can go up to the centre and fire a cannon and you wouldn't hit anybody," laments Jack O'Connor, vice president of the local chamber of commerce.
The desolate Hudson Bay outpost is stirring with a California-style tax revolt. In order to maintain the centre, local taxes have gone up 24 per cent in the last year.
Later, the article goes on:
Troubleshooters in the federal-provincial relations section of the Privy Council office in Ottawa have been asked to find a solution-and the solution could mean an infusion of more tax money.
The government came up with a proposal to put money in there but they have not bothered with it since. The cost of this redevelopment of Churchill has skyrocketed. It was estimated at $32 million but cost closer to $50 million.
There was also redevelopment of housing in Churchill. The federal government owns 80 per cent of these homes and it rebuilt them. I do not know where the government finds the architects for this work when it is required in remote areas of Manitoba and the Northwest Territories. They must be good Liberal supporters. The buildings are so overdesigned that it takes three or four times longer than usual to construct them.
I have the example of someone, a painter, who went to Churchill to do some contract work in one of the 20-unit apartment buildings. His experience shows that money is of no concern to the government. Indeed, if the government had any commonsense at all the $2 billion restraint program might not have been necessary. Government waste alone could probably account for $2 billion without the other cutbacks and lay-offs of public servants. This painter who went to Churchill on a contract says that a simple two-day job lasted six days because the paint was either the wrong kind, the wrong colour or was
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October 19, 1978
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not even available. Much of it had to be mixed in order to match the architect's specifications. Colours selected were difficult to apply-yellow numbers on dark orange doors required four coats to cover instead of two if dark numbers on a light background had been chosen. Twelve stripes on one wall required twelve different colours and consequently 12 quarts of paint, yet only half a quart was used in total.
There were architects' specification sheets, a fully detailed print, in scale, for every two apartment doors, indicating the actual number and its location on the door with angles and measurements in fractions of an inch-a total of 12 sheets. These are architects' blueprints of V/i feet by 3'A feet. This is what I call government waste.
This particular apartment has 20 suites and has taken almost three years to build. Initially the cost was estimated at $250,000 and ended at perhaps $750,000. This was a government cost-sharing project with the government of Manitoba and there was no concern about controlling the expenditures. Contractors and architects were allowed to spend money like water because it was taxpayers' money.
Although almost ready for occupancy, the doors were binding because the building had already moved; the roof was leaking; exterior paint was peeling because primer had not been used properly; walls were painted after carpet was installed leaving marks on the carpet and some walls were painted seven times because painting quality was rejected.
Other apartments and houses had similar problems. Cedar siding was imported thousands of miles and the protective coating that was applied was simply eaten away by the salt water air. Why not use local rocks or stones instead that would stand up against salt water air instead of shipping in cedar siding?
The government's move to restraint will mean nothing until their actual plans are monitored. If they are unable to do so themselves then it is time they considered the value of local input. While the government mouths restraint, as many as 40 government housing units stand empty in Churchill. There is a waiting list for rental accommodation there from residents who do not have proper accommodation.
I want to explain about this government housing, Mr. Speaker. I have in front of me a file entitled "Pool Housing". I know the hon. member for the Northwest Territories (Mr. Firth) has encountered exactly the same situation in his area. A 1956 Treasury Board Order No. 1301 specifies that "local hires"-meaning someone hired from the community-are not entitled to government housing. A resident of Churchill could not live in a government house if he was hired locally. If the Department of Public Works, the National Research Council or the Department of Tranport went to any other community in the country, they could hire someone there, take them to Churchill and supply them with government housing if it was available.
This redevelopment program which cost $50 million must have supplied 80 to 90 units in Churchill. When I asked what those units were for, the answer I got from Treasury Board

was that the Department of Transport pays for a certain number of units on an annual basis, so does the CBC, the Department of Indian Affairs and Northern Development, the National Research Council and three or four other departments. Ironically, even though the accommodation was being paid for, no one was living in it.
When I started inquiring into this in 1976, I got nowhere. I was told that all units were full. I contacted the CBC, DOT and NRC, and they claimed to be using these facilities. People in Churchill have told me, however, that 40 or 50 of these units are empty all the time. Taxpayers pay to heat these units and to maintain them-all for nothing. They are empty. There is not a soul living in them, yet there are people living in Churchill without a roof over their head.
Now, lo and behold, after many letters to the President of the Treasury Board (Mr. Andras), we were successful in having local hires in Churchill get government housing. That means if someone can qualify for a job in Churchill they can now qualify for government housing. This is ironic, Mr. Speaker, because since 1956 a local hire could not get a government house. This success was accomplished only by a lot of hard work, because the first letter I received from the Treasury Board said: "Here are the regulations, we must abide by them. We cannot make any changes because this is all set out by the President of the Treasury Board." My last letter was written in August. The letter I received in reply from the President of the Treasury Board says that: "The timing of your letter is most opportune. As an officer of the Treasury Board Secretariat I am presently reviewing the continuous issue of local hires. I have requested that your further concerns that federally-owned apartments are standing vacant in Churchill while public servants in the community face a general accommodation shortage be incorporated in that study."
He goes on to say that there is a study under way and local hires will have accommodation, and they are going to sell the houses they do not need now. These houses have been surplus for the last five years. No one has lived in them. But now, all of a sudden they will be sold. I tell hon. members it is evident there is an election just around the corner because some of the letters that members write to the President of the Treasury Board are now being answered. I thought I should touch briefly on the housing situation in Churchill.
As I have said before, here is a community with the best grain handling facilities in Canada which are being underutilized because this government, with their cat and mouse games, will not increase shipping through Churchill. The Hall commission report says the port of Churchill can handle 55 million bushels of grain with little or no extra expense. This government is still pussyfooting around. It is not even bothering to put that amount of grain through Churchill.
The cat and mouse game that they have been playing with Churchill leads me into my next remarks. After the Hall commission report was released, our flying minister-"Twin-Otto Lang" I call him-has to commission a report from
October 19, 1978

Bryden Development Consultants Western Limited of Winnipeg. Do you know, Mr. Speaker, who Bryden is? He used to work for the Minister of Transport (Mr. Lang). 1 believe he was a secretary or something for the minister.


An hon. Member:: A bag man.


Cecil Morris Smith: Yes, a bag man. So another report is commissioned for Churchill because the minister did not believe the Hall report, or did not want to believe it. The Saskatoon Star Phoenix reported on March 11, 1978, that the federal grains group was aware of the firm's view that the development of the Hudson Bay port was uneconomical when it commissioned the study. The study referred to is the Bryden report. They just spelled gloom and doom for Churchill. Talk about the Conservatives spelling gloom and doom! Mr. Speaker, I think I am a very positive person, but it is impossible trying to be positive with a government that is so inept. I have to be a little bit negative. They will not be around here in another seven months or so, but we do not need to dwell on that.
The Hall commission report dealt with the shipment of some 55 million bushels of grain through the port, as I mentioned before. The port of Churchill this year was strikebound for 13 days. This meant that ships that were originally destined for Churchill were diverted to Montreal, to Halifax, and some to Thunder Bay. It meant that some 7 million to 9 million bushels of grain which was supposed to be shipped out of Churchill took the route through Thunder Bay. What has this done to the port of Churchill? It has placed the port of Churchill in a cash loss position. That port must have shipment of at least 25 million bushels of grain per annum in order to break even. This year only 23 million bushels have gone through that port.
We understand the government is in a bind and because of that they do not have the grain moving in Canada. I do not know if they will ever get it moving, but they have scheduled the m.v. Arctic, which is a Canadian class II ice-breaker, to go to Churchill on November 15 to pick up a cargo of grain, and for that I compliment the government. This is the latest date that any ship has gone into Churchill because the season there closes on October 23. Incidentally the river at Churchill is now frozen and full of slob ice at this particular time.
However, in view of the fact that the lakehead is now affected by a strike, resulting in no grain movement through there, I asked the government if it would consider directing the Wheat Board, if it wants to have grain moving, to have at least four or five other ships go in with the m.v. Arctic to Churchill and move out another 4 million or 5 million bushels of grain. As well I requested that at least 4 million bushels of grain which has already been sold for next year's shipments be stored. It could be stored at Churchill. The port of Churchill has the most ideal storage conditions anywhere in Canada. It is like a permanent deep freeze in the wintertime. Humidity is not a problem.
May I call it ten o'clock, Mr. Speaker?
Adjournment Debate



PROCEEDINGS ON ADJOURNMENT MOTION

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

Cecil Morris Smith: Mr. Speaker, under Standing Order 43 and also during question period a few days ago I raised the problem of the chaotic state of Canada's grain transport system, which has caused a backlog of 4 million metric tons of grain worth $450 million still to be shipped if Canada is to meet its 1978 commitments.
Prairie grain elevators are close to overflowing. Their grain stocks are up 35 per cent from a year ago. At the same time, grain stocks at the major export terminals are down 33 per cent from last year. The problem is not that farmers have suddenly dumped their grain at the country elevator in the last few weeks as deliveries to primary elevators are also lagging behind 1977 figures. The tie-up is in rail movement of grain to export positions.
The government spent $800,000 in upgrading the port of Churchill this past summer. Rail trackage has increased and the Herchmer subdivision siding is now in service providing a passing track and lessening turnaround time for the grain cars. Moreover, Churchill has storage capacity for 4 million bushels of grain and the natural advantages of constant freezing temperatures and low humidity. Regardless of these advantages and improvements, the federal government refuses to increase grain shipments through Churchill and fully utilize the Manitoba port.
A wildcat strike by CNR yardmen and brakemen at Thunder Bay blocked grain traffic to the terminals in late September. Now, a strike by licensed seamen on the Great Lakes has left ships harboured and loaded grain cars idle. Shipowners are saying it will be too costly to reactivate ships with less than eight weeks left in the shipping season.
The government has a commitment to their overseas markets that it is failing to meet. In view of the natural advantages of the port of Churchill and the present situation in Thunder Bay, will the government redirect grain cars now standing idle at Thunder Bay to Churchill? Ships could be diverted from the St. Lawrence Seaway to follow the new Canadian icebreaker m.v. Arctic. During the 13-day strike by grainhandlers at the port of Churchill this past summer, ships were diverted to the eastern seaports. Why will the government not follow the same policy now in order to put that port on a cash saving basis?
The Hudson Bay port is down 7 million to 9 million bushels in grain shipments this year over last year and is in a cash-loss position. Does the minister responsible for the Wheat Board not have the foresight and initiative to move the loaded grain

October 19, 1978
Adjournment Debate
cars now filling the rail yard at Thunder Bay? Why not utilize the 4 million bushel storage facilities at Churchill? The Wheat Board has confirmed grain shipments through the port for next year and could store grain here ready for shipment in the spring. This would remove the port from a cash-loss position and ensure its continued operation. This is very important because, if it is in a cash-loss position, the loss must be borne by the federal government. Therefore, why not ship more grain through this port and put it in a cash saving position?
The government gives with one hand and takes with the other. After upgrading facilities, and now, assigning the m.v. Arctic to chart Hudson Bay waters as late as November 15, which will be an historic voyage, in an effort to extend the season, the government refuses to increase our throughput or use existing storage facilities.
The Hall Commission on grain handling and transportation recommended development of the port of Churchill and an increase in grain shipments to 55 million bushels. Not satisfied with the report's conclusions, the Minister of Transport (Mr. Lang) commissioned a second study, the Bryden report, which views further development as uneconomical.
This government jumps from one side of the fence to the other, never landing long enough on one side to leave even the faintest of footprints. When will the present Liberal government take a stand and commit itself to the development of this western port? There are only a few months left.


Mr.   CIaude-Andr@: Mr. Speaker, we are happy to see that the hon. member realizes the efforts the government has made to allow the port of Churchill to reach full development. I would like to point out that for 1978 alone we spent more than $5,575,000 on equipment for that port.
The Canadian Wheat Board also showed its willingness to use the port of Churchill as much as possible. Record volumes of grain were moved through that part in recent years and it is conceivable that a new record would have been set this year had it not been for last summer's unfortunate strike.
The government is pleased with the efforts that have been made to make better use of that port but we would not want, and we would think it would be inappropriate, to interfere in the operation of the Canadian Wheat Board by giving it, for example, instruction on its storage policy. Its job is to analyze the market and direct grains so as to maximize producers' profits. It does so by considering all relevant factors, including the availability of land and water means of transport at any given time. It is empowered to do so, and we do not think we should be taking its place in this area. The board is quite aware of the advantages of using the port of Churchill. We have full confidence in its judgment as far as making maximum use of that port. The fact is that the board stored 3.8 million bushels of grain in that port last winter.

If that is to its advantage the board may decide again to store grain there next winter. On the other hand, it may decide on a better use to be made of the railway rolling stock and direct the grain toward other ports where ships are also available. It is up to it to decide, and I repeat that it would be inappropriate to interfere in its affairs. Indeed, the hon. member would be the first one to complain if the minister were to give instructions to the board on a daily basis. I believe for that matter that western producers have faith in the board's judgment and they would prefer not to have us interfere in its every day business.


AIR TRANSPORT-HIRING OF CONSULTANTS OUTSIDE CANADA-POSSIBILITY OF CHARGES BEING LAID
Mr. Allan B. McKinnon (Victoria):: Mr. Speaker, I rise tonight to follow up a question I asked in the House on October 16. I put my first question to the Minister of Justice (Mr. Lang) and then addressed the supplementary to the Minister of National Defence (Mr. Danson). The subject was moneys which has been paid by Boeing to consultants in Canada as part of a practice commonly known as fraud or graft.
I considered the answers given to me to be unsatisfactory. The Minister of National Defence said a year and a half ago that if there was any evidence of impropriety he would cause an investigation to be launched. My supplementary question was as follows:
Certainly there is evidence of impropriety at the present time, which impropriety has been known for over two months since the Boeing revelations. What have the results of the investigation been? Who is in charge of it?
The minister replied:
At the time the issue was looked into and we could not find any evidence, record or indication of any impropriety involving Canadians or from Boeing itself.
I do not know where the minister has been spending his time if he sees no evidence of impropriety. The Citizen in August carried this headline: "Boeing pay-off scheme cites Canadian sales". Southam News Services said: "Canadian jet sales part of dual contract pay-offs". Further headlines said: "Boeing files on consultants"; "Selling aircraft under the table". The Vancouver Sun has the same story. There is the comment in the Victoria Daily Colonist, "Who got what from Boeing?"
Then the other day, following my question in the House the Canadian Press reported:
Defence Minister Danson says the government has uncovered no evidence of wrongdoing by Canadians in Boeing aircraft sales.
The reference was not just to the department. It was to the Canadian government generally.
I should like to quote from the original source of these revelations, form 8K which was filed in response to the civil injunction against Boeing by the securities and exchange commission in the United States. When this injunction came before the court, Boeing and the securities and exchange commission made a deal that Boeing would report on the
October 19, 1978

As you probably know, Mr. Speaker, it is not unusual for companies to use agents to promote their interests. This is a common business practice and there is nothing basically wrong about it. On the other hand, it is not basically illegal for such an agent, even if he is a Canadian as in the present case, to receive his commission or his fees outside Canada, for instance in a foreign bank account, to the extent that this agent does not do so in an attempt to evade taxes, and of course, in this case, it is the Department of Revenue which would be responsible for protecting the interests of Canada or for ensuring that the fees received by this agent are not used illegally, especially by diverting the money received from the seller to an agent of the purchaser.
Following the allegations reported in March 1977 by several Canadian media, the Canadian government examined this whole matter very thoroughly. On March 15, 1977, as the hon. member said earlier, the attorneys general of Canada and the United Stated reached an agreement to allow Canadian and American police forces to co-operate closely in an examination of this matter and in making a detailed investigation to check whether there had been illegal use of the sums in question and whether there had really been illegal payments. Following this agreement, the Royal Canadian Mounted Police carried out a thorough investigation to determine whether one or more Boeing agents had used the sums received by this company for prohibited purposes. I may say to hon. members that the

October 19, 1978
Adjournment Debate
RCMP carried out this investigation most conscientiously and that it seems to be just about ready to report its conclusions.
I must point out to the hon. member that it would be preferable to wait for the investigation to be completed and for the results to be referred to the Attorney General of Canada so that he can determine whether or not these funds have been used illegally and exonerate the people involved if there is no appearance of illegality, or, of course, if there are indications of illegal use, lay charges against those who have committee irregular actions. I therefore suggest to the hon. member that if he can be patient, he will soon be satisfied one way or another.


FISHERIES-PROPOSED TRANSFER OF WEATHER FORECASTING SERVICES
Mr. John Rodriguez (Nickel Belt):: Mr. Speaker, last Thursday I put the following question to the environment minister.
In light of the recent announcement by the Department of the Environment that there will be a cut in weather forecasting services in Newfoundland and Labrador, a decision which will seriously endanger the lives and safety of thousands of fishermen who operate off the Newfoundland coast, and in view of the minister's announcement that weather forecasting services in Newfoundland and Labrador will be transferred to Halifax, can the minister assure this House unequivocally that the weather forecasting services will not be transferred to Halifax, and can he further assure the House that there will be no cut in weather forecasting services off the Newfoundland coast?
Since the minister was not in the House, I did not receive an answer. I think that certain actions by the Department of the Environment need to be explained to the people of Newfoundland, and indeed to all the people living in Atlantic Canada. These actions include the reduction of weather forecasting from four times a day to twice a day.
The minister may not realize it, but there are 20,000 licensed fishermen in Newfoundland whose safety and livelihood depend on the accuracy and frequency of marine weather forecasts. Furthermore, search and rescue services for Newfoundland and Labrador based at Gander have publicly admitted their service would be hampered by the change. This, of course, also jeopardizes the safety of fishermen and others who ply those seas. The minister should rescind these cutbacks immediately.
Second, the Department of the Environment has announced a cutback in the ice reconnaissance program to the tune of $1.8 million. Again, surely you must recognize the importance and necessity of ice movement information for fishing and shipping in the early spring. This downgrading of the service can only be detrimental to the safety of all those who sail the seas off the Newfoundland coast. There is no alternative for the ministry but to withdraw these cutback announcements.
Also, the officials of the department announced the shifting of weather forecasting services from Gander to Halifax. It is a callous and ill-advised decision as it will disrupt lives and impair the safety of those who depend on frequent and accurate weather forecasts. Moreover, there is ample evidence that

these moves will not result in the kinds of savings which our bureaucrats envisage. I call on the minister now to withdraw that decision.
Another cutback which although not directly connected to the Department of the Environment has serious implications for Environment Canada is the laying off of dll employees at the Bonavista Ministry of Transport communications office. Approximately six Department of Transport employees with 25 'h. years of service received their lay-off notices last week, which notices are to be effective on February 24, 1979. These men supplied hourly weather reporting services on a 24-hour basis, seven days a week. The information was supplied to the Gander weather office for the compiling of marine weather forecasts.
It is true that they are declared redundant because computers can do their jobs as defined by the Department of Transport. But one must remember they provide direct contact with weather forecasters on an hourly basis. Also one must remember that the unemployment rate in that province is the highest of any part of the country. The Department of Transport indicated that it was a problem for the Department of Fisheries and the Environment, and that their jobs with the Department of Transport are finished. It is the minister's responsibility to ensure that this very valuable weather information is not lost to those who depend on knowing these conditions for their safety and livelihood.
Also I should like to refer to the fact that a weather office in Corner Brook was promised approximately one and a half years ago. Can the minister inform the House as to the status of that project? Also the environment centre which is presently under construction in St. John's was cut by $2.2 million. I hope the minister can tell us whether the project is still on schedule, and if it is, when it is to be completed.
I understand from the rumour mill and hearsay that on the evening of October 11, which was the eve of the by-election in Newfoundland, the Secretary of State for External Affairs (Mr. Jamieson) made an announcement in that province indicating that all of these decisions had been rescinded. He indicated that the weather reporting would continue and that the office would not be moved from Gander to Halifax. Perhaps that decision may have been tinged by the fact that the by-election in that province was approximately five days away. At the present time the people most concerned with these problems have not received any official word from the Department of Fisheries and the Environment. The Minister of Fisheries and the Environment (Mr. LeBlanc) should rise and tell us of the decision. He does not seem to know what is going on in his department.
As the Secretary of State for External Affairs was making his announcement in Newfoundland, the Minister of Fisheries and the Environment was travelling around western Canada in an attempt to keep Liberal Saskatchewan on the map. It is his responsibility to let us know what is the disposition of these particular matters.
October 19, 1978


Mr. Jack Pearsall (Parliamentary Secretary to Minister of Fisheries and the Environment):: Mr. Speaker, I am pleased to see the hon. member for Nickel Belt (Mr. Rodriguez) here this evening. I waited last Thursday night until 10.30 p.m., but he failed to show. I did not know whether he intended to raise his question tonight. However, he made a number of statements, and I should like to point out that his conclusions concerning statements made by people other than the Minister of Fisheries and the Environment (Mr. LeBlanc) do not pertain to this issue.
Although the Department of Fisheries and the Environment is faced with major and serious budget reductions, the minister would like to assure the House, in order to maintain the highest possible level of weather services for Newfoundland and Labrador, that he has decided weather forecasting services will not be transferred to Halifax but will continue to be
Adjournment Debate
provided, as in the past, from the Gander weather office. Despite what the hon. member said, the minister has instructed the atmospheric environment service to ensure that the
quality of weather services in Newfoundland and Labrador is maintained at current levels. Specifically he directed that there be no cutback in the number of daily weather forecasts for the province and adjacent waters.
The hon. member should give proper notice to the minister on the other matters which he raised. I am sure the minister would be prepared to answer them.


Mr. Deputy Speaker:: Order, please. A motion to adjourn the House is now deemed to have been adopted. Accordingly, the House stands adjourned until tommorrow at 11 a.m.
At 10.27 p.m. the House adjourned, without question put, pursuant to Standing Order.

Friday, October 20, 1978