1978-06-12

Mr. John C. Crosbie (St. John's West):: Mr. Speaker, I rise on a matter of urgent and pressing necessity under the provisions of Standing Order 43. In view of the fact that radio station VOWR of St. John's, Newfoundland, owned and operated by Wesley United Church since the year 1924 as a non-profit service, today is appearing before the CRTC on an application to increase the power of the station from 1,000 watts to 5,000 watts which application, if successful, will not cause interference with other radio signals in Newfoundland, and in view of the fact that this application has the support of the VOCM network and all public spirited citizens, but is opposed by radio CJYQ 930 Limited of St. John's, a company beneficially owned by the Secretary of State for External Affairs (Mr. Jamieson) and managed by Mr. Colin Jamieson, I move, seconded by the hon. member for St. John's East (Mr. McGrath):
That this House supports the application of Wesley United Church radio station VOWR for an increase in power from 1,000 watts to 5,000 watts and requests the Minister of Communications to pass on to the CRTC and her colleague the support of members of the House for this application, and to radio CJYQ 930 Limited the request that it cease and desist from opposition to this most worthy application.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


PROPOSED TAKEOVER OF HUSKY OIL BY PETRO-CANADA- MOTION UNDER S O. 43
Mr. Harvie Andre (Calgary Centre):: Mr. Speaker, I should like to move a motion of urgent and pressing necessity under the provisions of Standing Order 43. My motion concerns the
pending purchase by Petro-Canada of Husky Oil. This takeover will not add one barrel to Canada's present reserves of oil. It will probably not result in any increased processing of heavy oil which the present owners of Husky Oil would not have undertaken. But it will allow a foreign-owned company to liquidate its Canadian assets and, in the process, make a healthy profit. Husky Oil will not have to reinvest these funds in Canada but will be free to move them out of the country. Therefore, I move, seconded by the hon. member for Hamilton West (Mr. Alexander):
That this House deplores this misuse of taxpayer's money by Petro-Canada and urges that the government prohibit it from carrying forward its proposed purchase of Husky Oil.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


AIRPORTS
Mr. Bob Brisco (Kootenay West):: Mr. Speaker, I rise under the provisions of Standing Order 43 to move a motion of urgent and pressing necessity. In light of the fact that the Minister of Transport (Mr. Lang) attempted to assuage some of the concerns of the users of Castlegar airport who may have taken seriously the statements of the minister regarding five suppression standards at that airport, I move, seconded by the hon. member for Pembina (Mr. Elzinga):
That the minister come clean and admit, contrary to his statement that the airport has a jeep, two fire extinguishers, an axe and two pairs of rubber boots, that there are, in fact, three pairs of rubber boots and a rubber ducky for the minister.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


Mr. Speaker:: Oral questions.

June 12, 1978
Oral Questions



ORAL QUESTION PERIOD

['Hear, hear!']
Mr. G. W. Baldwin (Peace River):: Mr. Speaker, I had intended to ask questions of the Prime Minister, the Minister of Justice and the Minister of Supply and Services on a very important issue touching upon the liberty of the subject. In the appalling absence of those ministers, and if it were not too late-probably it is-I would like to move a motion under Standing Order 43 to the effect that the Sergeant-at-Arms be instructed to go out and have those members attend the service of the House.


Some hon. Members:: Agreed.


Some hon. Members:: Oh, oh!


Gerald William Baldwin: I will postpone asking these questions until these ministers return.


Mr. Baker (Grenville-Carleton):: Mr. Speaker, I will postpone my questions until these ministers return.


Mr. Broadbent:: Mr. Speaker, I, too, will have to hold my questions until the Prime Minister gets here.



[Stage Direction]
minister whether it might be possible to do something in such cases?
Mr. Cullen:: Mr. Speaker, I believe that, with the present regulations, it is impossible.


PROPOSED TAKEOVER OF HUSKY OIL BY PETRO-CANADA
Harvie Andre: Mr. Speaker, my question is directed to the Minister of Energy, Mines and Resources and concerns the Petro-Canada takeover bid of Husky Oil at a price rumoured to be 50 per cent higher than the market considers Husky shares to be worth. Given that when Petro-Canada was established, we were told its purpose was to explore, either alone or jointly with other Canadian companies, for new oil and gas reserves, can the minister tell the House why Petro-Canada is using taxpayers' money to buy out an existing oil company, rather than pursuing its original mandate of aggressively exploring for new oil and gas reserves?


Hon. Alastair Gillespie (Minister of Energy, Mines and Resources):: Mr. Speaker, I believe, if the hon. member were to reflect on the objects of the Crown corporation and review the various statements of government ministers of the day in respect of the purpose of the Crown corporation, Petro-Canada, he would realize that the activities, including acquisition by Petro-Canada, are very much in the national interest and very much in conformity with the mandate as laid down by the House of Commons.


Mr. C. A. Gauthier (Roberval):: Mr. Speaker, my question is directed to the Minister of Employment and Immigration. It deals with section 57 of the unemployment insurance regulations, namely, that which stipulates that whoever works for a farmer is not entitled to unemployment insurance stamps unless he has worked during 25 work days. This is discrimination because in industry the employer must pay those stamps for the first full week of employment. I therefore ask the minister whether he intends to change that rule to do justice to farm workers.


Jack Sydney George (Bud) Cullen: Mr. Speaker, I thank the hon. member for his representations. From time to time, that rule has posed problems and we will have to examine it. I believe my advisory council will look into it in the near future.


Charles-Arthur Gauthier: Mr. Speaker, I should like to point out to the minister, before he goes ahead with that study, that there are cases of real hardship such as the one that recently occurred in my riding. After one year, a person was declared non-insurable and had to reimburse $2,400; civil servants had said the person could be insured. I ask the


Harvie Andre: Mr. Speaker, given that Petro-Canada has yet to discover any new oil and gas reserves, and in view of the fact that at least one other consortium of Canadian-owned and controlled companies, of which I am aware, as I am sure is the minister, was on the verge of making a takeover bid for Husky when upstaged by Petro-Canada, would the minister not agree that in terms of Canada's over-all interests it would be better to allow these private Canadian companies to take over Husky Oil and direct Petro-Canada to fulfil its original mandate, namely, going out and trying to find the new oil and gas reserves which Canada is supposed to need in the future?


Alastair William Gillespie: Mr. Speaker, I believe the hon. member has misread the situation and is trying to mislead public opinion with respect to the situation. The board of directors of Petro-Canada or, more particularly, the president, has issued a statement today indicating that they have communicated their interest in acquiring all of the common shares of Husky Oil. To my knowledge, no other group of Canadian companies has made a similar declaration.


Harvie Andre: Mr. Speaker, I hope the minister did not say that I deliberately misled the House.
June 12, 1978

Mir. Alexander: It was close.


Harvie Andre: My remarks were that there is another consortium of Canadian companies on the verge of making a takeover bid. My supplementary question is: Given that Husky shares rose from $28.75 to $35.75 in the last week of trading and, indeed, $4 of that was in the last day, within a few hours, could the minister indicate whether the government has taken any steps to investigate allegations that insiders who are privy to Petro-Canada's plans may have profited from this inside knowledge?


Alastair William Gillespie: Mr. Speaker, I think that is a red-herring. The hon. member probably realizes that the directors of the stock exchange have already indicated that they will initiate an investigation to see whether there had been any insider knowledge and whether that insider knowledge had been used improperly.
*
* *


NATIONAL CAPITAL COMMISSION
Mr. Elmer M. MacKay (Central Nova):: Mr. Speaker, all the ministers that I wish to direct my questions to are absent, but perhaps I could proceed and see how well the system of acting ministers works. I had intended to ask the minister of urban affairs or the Prime Minister if either of those gentlemen would tell the House whether, while the current ministers of justice, defence and the treasury board were ministers responsible for the National Capital Commission, it was the practice to clear politically major contracts awarded by that agency in Quebec with the Quebec campaign chairman of the Liberal party, who at that time was Senator Marchand and whose post is now held, I believe, by the minister for federal-provincial relations.
[ Translation]


Hon. Jean Chretien (Minister of Finance):: Mr. Speaker, I am going to take note of this question. In all matters pertaining to government administration, the ministers are advised of projects the moment such projects are submitted to the cabinet, but I do not quite see to what the hon. member is referring. When an hon. member is appointed minister, he or she is advised of what is going on inside the government.


Elmer MacIntosh MacKay: My supplementary to the Minister of Finance is this: Could he indicate as Acting Prime Minister, whether it is still the practice of the government to require political clearance for major contracts of the NCC as it was in September of 1975 when, in minutes of a meeting between the then minister of urban affairs, the now Minister of National Defence, and the then chairman of the NCC, Mr. Edgar Gallant, when matters were being discussed such as the Rideau Centre, the International Women's Year workshop and
Oral Questions
the Right Hon. Louis St. Laurent statue, the following appeared on page 2 of the minutes under paragraph 9:
The minister wants to make sure that the firms chosen for major contracts of this sort are cleared politically with the Ministers responsible, through his office.
These minutes were taken by Helen Tomlinson who, according to the government directory, is now special assistant to the Minister of Supply and Services.


Joseph Jacques Jean Chrétien: Mr. Speaker, I do not see anything wrong with that statement. Whenever projects are considered for this or that part of the country, we must make sure that everybody has been consulted. It is quite normal for inter-regional consultations to be held in a cabinet such as we have in Canada.


Elmer MacIntosh MacKay: Mr. Speaker, consultation is one thing and political clearance is another. I wanted to ask the Minister of National Defence a question but I will ask the acting minister, now that the minister is in his new portfolio as opposed to the one he occupied when these minutes were taken, has he issued a directive in his new portfolio that all major contracts are to be cleared politically through his office with the ministers responsible? I am thinking of some very major defence contracts.


Joseph Jacques Jean Chrétien: Mr. Speaker, I shall take note of the hon. member's question. As I said, it is certainly important that, under any circumstances, each and every minister be aware of what the government is doing.


HOUSING
Mr. Dean Whiteway (Selkirk):: Mr. Speaker, in the absence of the Prime Minister I will address my question to the Acting Prime Minister. It has to do with the CMHC, AHOP default in mortgages' statistics for the last several years. A few weeks ago I contacted CMHC for these figures and they informed me they had to be cleared by the Minister of State for Urban Affairs. The Minister of State for Urban Affairs has yet to authorize release of these figures from CMHC. Would the Acting Prime Minister tell the House whether or not it is cabinet policy to withhold this kind of information?


Joseph Jacques Jean Chrétien: Mr. Speaker, I think it is absolutely normal that an agency of the Crown consult the minister responsible on things that happen in different organizations. I see absolutely nothing wrong in the question of the hon. member: I think when a minister wants to be responsible in his department, he should be lauded for it.

June 12, 1978
Oral Questions


MORTGAGE DEFAULTS UNDER AHOP-STUDY COMMISSIONED BY TREASURY BOARD
Dean Waldon Whiteway: Mr. Speaker, a supplementary question for the President of the Treasury Board concerning a study of which he is, of course, aware as it was commissioned by Treasury Board and relates to AHOP defaults. The study was done on the urging of several major lending institutions in the country.
Could the minister tell the House why this study on AHOP defaults, commissioned by Treasury Board, is classified as a national security document and therefore cannot be released to the Canadian public?


Hon. Robert K. Andras (President of the Treasury Board):: Mr. Speaker, I will inquire as to the accuracy of the hon. member's description of the document and report back.


POSSIBLE RENT INCREASE OF 50 PER CENT FOR ELDERLY AND LOW INCOME PERSONS IN TORONTO
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, in the absence of the Minister of State for Urban Affairs, I shall put my question to the Minister of Finance; possibly it is more appropriate for it to be put to him in any case.
In view of reports to the effect that if a certain agreement is reached in Toronto today among provincial and federal ministers of housing, the result will be that 150,000 elderly persons and low income families will face rent increases of up to 50 per cent, which for such persons is a very serious situation, will the Minister of Finance interest himself in this matter and see if he cannot make some proposal to his colleague, the Minister of State for Urban Affairs, to avoid putting this kind of burden on these people?


Joseph Jacques Jean Chrétien: Mr. Speaker, I will look into the question. I am not aware of this problem.


Stanley Howard Knowles: Mr. Speaker, a supplementary question. In view of the fact that the minister's colleague, the Minister of National Health and Welfare, is having a good deal to say these days about the need for the Minister of Finance to concern himself with the incomes of older people, tax credits, housing, and so on, will the minister look into this matter, not just by way of consulting the Minister of State for Urban Affairs but from his own responsibility as Minister of Finance to make sure that this suffering is not imposed?


Joseph Jacques Jean Chrétien: Mr. Speaker, concerning the payments we are making to the needy in Canada, I suggest that the official documents are self-explanatory. Spending in social areas has increased to such an extent in Canada over the past five years that the question, generally speaking, is not whether we should give more. The opinion is that we are giving too much already. I shall therefore find out if there is a special problem in this case, but I want to indicate to the hon. member that all our

social programs in Canada are indexed, and that we should not be ashamed of our social policies.


FISHERIES
John Carnell Crosbie: Mr. Speaker, my question was for the Minister of Industry, Trade and Commerce, or it could be for the Minister of Fisheries, but they are not here. It could be for the Deputy Prime Minister, but he is not here. The Prime Minister could have answered, but he is not here either. The Secretary of State for External Affairs is relevant, but he is not here. So I should like to ask my question of the Minister of Finance.
As the minister should be aware, the export of Canadian fishery products is heavily dependent on the United States market. There is now the possibility of countervailing duty being imposed there, and there is already duty on semi-processed fish products from Canada of 2'A cents per pound.
In view of these facts, can the minister tell the House whether the government is making any special effort-and, if so, what-to negotiate the lowering of the 15 per cent tariff of the European Common Market on the export of Canadian fish products? Is there a special effort under way to achieve this, in view of the fact that we are dependent on one market primarily and that market may be in danger?


Joseph Jacques Jean Chrétien: Mr. Speaker, this is exactly what the Canadian government is doing at the GATT negotiations in Geneva at this time. We are trying to get better access for Canadian products all over the world, including the European market.


John Carnell Crosbie: Mr. Speaker, I thought that might be the minister's reply. He is not blustering like his colleague, the Secretary of State for External Affairs, with his crocodile tears. If that is the case, could the minister tell the House why the minister has to wait for the GATT negotiations? Why were Norway and Iceland both successful in negotiating the tariff down to 3 per cent for Icelandic and Norwegian fishery products into the EEC, when Canada apparently can get nowhere and has to wait for GATT? We have been hearing about GATT, GATT, GATT all year. Why is it that Norway and Iceland did not have to wait for GATT? Will the minister take some action to follow this up as an emergency?


Joseph Jacques Jean Chrétien: Mr. Speaker, if the hon. member was aware of the situation, he would know that the GATT negotiations are proceeding very well. We hope they will be completed this year. So I think the hon. member should make an effort to know the facts before asking that kind of a question.
June 12, 1978


John Carnell Crosbie: Mr. Speaker, would the minister undertake to the Elouse to investigate how Norway and Iceland-apart from GATT altogether; forget GATT; forget Geneva; forget the excuses-were successful in negotiating lower tariffs on fish products; and when the minister can, would he find out how they did it? I know they have better governments, but would he find out whether there are any other reasons?


Some hon. Members:: Hear, hear!


CONTINGENCY PLANS IN EVENT U.S. IMPOSE COUNTERVAILING DUTIES
Mr. Lloyd R. Crouse (South Shore):: Mr. Speaker, I would like to direct my question to the Minister of Finance in the absence of the Minister of Fisheries and the Minister of External Affairs. In view of the importance of the fishing industry to Atlantic Canada, is the minister aware of any discussions that may have been held by the government with the premiers of Atlantic Canada concerning the government's contingency plans in the event the Americans proceed with countervailing duties on exports of Canadian groundfish products to the United States? If so, what steps will be taken so that Canadian fish products can remain competitive in the United States or sold to other markets? Is the minister aware of any response to this matter by the premiers of Atlantic Canada?


Joseph Jacques Jean Chrétien: Mr. Speaker, I know that the Minister of Fisheries and the Environment had several conversations with the premiers of the Atlantic provinces who are interested in fisheries matters. I do not know whether they had particular disussions at this time. Of course, in spite of some threats which were allegedly made yesterday, namely by certain American people, on the situation of fisheries in Canada, I think that commercial relations between Canada and the United States are very good, and I do not think that the problem of fisheries interferes with the problem of trade negotiations between Canada and the United States.


ADMINISTRATION OF JUSTICE
Mr. Bill Jarvis (Perth-Wilmot):: Mr. Speaker, my question is for the Solicitor General. It relates to the long-awaited legislation dealing with young offenders, an issue which has been kicking around here a good number of years in the Solicitor General's department, either aging like old wine or having long since turned to vinegar; we do not know because we have not heard anything. Have consultations with the provinces been completed? Has consensus been reached with each province in terms of this legislation and, if not, is there any target date by which the Solicitor General expects such consensus?
Oral Questions


Hon.   J.-J. Blais@Solicitor General: Mr. Speaker, I fully agree with the hon. gentleman that this legislation has been in the mill for more than ten years and, indeed, it has come forward in one form or another several times. Hopefully, it will reach fruition within a short period of time.


An hon. Member:: Another ten years.


Mr. Blais:: The reason for the delay is exactly that which the hon. gentleman has identified, namely, that we have not yet completed our consultations with the provinces. Consultations with my counterparts, namely, those individuals in the provincial areas who are involved with justice, with corrections or young offenders, have taken place and their concurrence has generally been obtained. However, there is another area of interest; that is the area of provincial social services. Consultations in that area are not complete. I hope to receive the response of all ministers by June 30.


William Herbert Jarvis: Mr. Speaker, in connection with the final outcome of the consultative process, is it the Solicitor General's intention to proceed by way of legislation, or by way of a discussion paper, such as occurred seven or eight years ago, acknowledging that there are a number of individuals and groups within society other than governmental groups which have a direct interest and concern in this legislation?


Jean-Jacques Blais: Mr. Speaker, I will be addressing a meeting of judges who are involved with juvenile justice, I believe on July 18, in Montreal. At that time I will be making a policy declaration of some interest to the hon. gentleman. If he has not been invited, I will make sure that an invitation is sent to him.


EXTERNAL AFFAIRS
Mr. Ian Watson (Laprairie):: Mr. Speaker, my question is for the Parliamentary Secretary to Secretary of State for External Affairs. It relates to the alleged kidnapping of Dalila Maschino. Has the department made representations? If it has, does it intend to continue making representations to the government of Algeria, expressing Canadian concern, as well as requesting a meeting of the parties on some neutral, third ground?


Mr. Maurice Dupras (Parliamentary Secretary to Secretary of State for External Affairs):: Mr. Speaker, the Montreal police has apparently completed its investigation on the matter. It is now up to the justice department of the province of Quebec to start the proceedings concerning this case. On the other hand, I would like to add that the civil servants of the department and of the Canadian embassy in Algiers put

June 12, 1978
Oral Questions
themselves at the disposal of the police to complete the investigation on this case.


TRANSPORT
Right Hon. J. G. Diefenbaker (Prince Albert):: Mr. Speaker, in the serried ranks of Tuscany-


Some hon. Members:: Hear, hear!


John George Diefenbaker: -with only 11 per cent out of 32 of 34 cabinet ministers-something I have never seen before in my years in the House-I will have to direct my question to the Acting Prime Minister. It has to do with the general question respecting the Crowsnest pass rates. Is any consideration being given by the government to applying these rates to other grains, so that farmers in general will be able to secure a fair and reasonable price, which is being denied them today?


Hon. Otto E. Lang (Minister of Transport):: Mr. Speaker, we have, as hon. members know, extended special benefits to the movers of rapeseed oil and meal in assuring that those processed products are not at an increasing disadvantage. I have recently had representations from the producers of alfalfa pellets along similar lines. Of course, we have to take that into very serious consideration along with the major recommendations of the Hall commission report and our over-all policy position with regard to the Crow rate.


John George Diefenbaker: Mr. Speaker, the over-all regard for the Hall report is simply nil. I ask the minister this question: Is it a fact that consideration is being given-that was my question- to applying the Crownest pass rates to other grains, so that farmers producing other grains may have a reasonable opportunity of making a fair return? That was the question I asked; it was not the one answered.


Otto Emil Lang: Mr. Speaker, I did indicate in my answer two additional grains, or grain products, which are not covered and which, therefore, raise special concern. I am not sure which additional grains the right hon. gentleman may have in mind. The over-all question for the government, to which we will be giving consideration, is the timing of the implementation of the full recommendation of the Hall commission report, that the whole difference between the Crow rate and the cost of carrying grain to the railways be paid to the railways. In conjunction with any such consideration, we will be giving thought to the whole issue of rationalization of freight rates in relation to other grains and, even more important, to those products resulting from grain.


John George Diefenbaker: I ask the minister whether the law officers of the Crown have been asked for their opinion as to whether the government could apply the Crowsnest pass rates by order

in council. Has that opinion been asked for, and is consideration being given today to doing so by order in council?


Otto Emil Lang: Mr. Speaker, I have not sought that specific opinion although my understanding, as a result of opinions I have received touching on that matter, and because of the way in which previous governments have acted in passing legislation where additions to the Crow rate structure were to be made, is that legislation would be required. However, I am also fairly confident that that legislation would not take very long in this House.


ENFORCEMENT OF AUTOMOBILE SAFETY STANDARDS
Mr. Les Benjamin (Regina-Lake Centre):: Mr. Speaker, I have two questions for the Minister of Transport on another matter. In view of the recent decision of Ford Motor Company to issue a safety-related recall of 1.6 million automobiles in the United States and Canada under the threat of a possible U.S. transportation department order, can the minister advise why the safety of Canadian motorists is left to the enforcement of United States laws or the head offices of U.S. auto manufacturers, while the minister is merely advised of their decisions and the Canadian government is relatively immobile?


Otto Emil Lang: Mr. Speaker, the hon. member has it quite wrong. We were in full consultation with the company prior to the recall. We had discussions about it and the enforcement of Canadian law. Therefore, we were not simply advised about it but were, rather, very active participants in the decision that the recall take place.


Leslie Gordon Benjamin: Mr. Speaker, in the minister's own press release he says he has "been advised" by the Ford Motor Company. In view of the fact that safety-related automobile recalls increased by 537 per cent in the 12 months ending March 31 compared to the previous year, which is about one in every six vehicles travelling Canada's highways, when will the minister and the government set up an effective Canadian monitoring, testing and enforcement capability on safety standards for automobiles sold in Canada, instead of leaving it to the laws of another country?


Otto Emil Lang: Mr. Speaker, we certainly do not leave it to the laws of another country. We have an inspection and safety team. We are developing our testing facilities day by day to a higher standard. Indeed, the very fact that there is such a large number of recalls is evidence of a system that is working.


LABOUR RELATIONS
Mr. Gordon Ritchie (Dauphin):: Mr. Speaker, my question is to the Minister of Labour. After almost a year of negotiation between the grain handlers' union and the Manitoba and
June 12, 1978

Saskatchewan wheat pools, with a government conciliator, without any settlement with regard to the country elevator agents, and as wages are not at issue, will the minister move to declare the country elevator agents permanently exempt from the hours of work regulations?


Hon. John C. Munro (Minister of Labour):: Mr. Speaker, I do not think there is any assurance that that will restore harmony to this particular situation, in view of the fact that negotiations are going on, however unsuccessfully at the moment, with a view to resolving this particular dispute.


William Gordon Ritchie: As the long dispute is seriously impairing the efficiency of the wheat pools and putting in doubt their competitive position, does the minister intend to impose a settlement on these companies? If so, how does he propose to deal with the rest of the grain handling companies which have no union for their country elevator agents?


John Carr Munro: Mr. Speaker, without agreeing with the preface to the hon. member's remarks, no, I am not thinking of imposing a settlement in this particular dispute at this time. Therefore, any answer to the second part of the hon. member's question is unnecessary.


GATT NEGOTIATIONS ON TEXTILES
Mr. Paul Dick (Lanark-Renfrew-Carleton):: Mr. Speaker, unfortunately, the ministers responsible and secondarily responsible are not in the House today, as we see only 11 out of 33 here. Perhaps I could direct my question to the Minister of Finance as Acting Prime Minister and as one who may have some knowledge about textiles and GATT negotiations.
Two weeks ago the Deputy Prime Minister said there would be no change in the tariff barriers on textiles this summer. I understand from other sources that there is an indication Canada has negotiated and that our textile tariffs will be cut this fall. Is that the understanding of the Acting Prime Minister, the Minister of Finance, or is he prepared to say there will be no change in our textile tariffs until at least into the new year?


Joseph Jacques Jean Chrétien: Mr. Speaker, as we have already stated, it is not likely there will be a final agreement on those items before the end of the year. Of course, there could be a general agreement on the tariffs at the negotiations in July, but there will be no specific cuts before the end of the year. Moreover, any agreement at Geneva will be implemented over an eight-year period, so when the hon. member says there will be cuts effective in the next few months, I do not think his information is correct.
Oral Questions


UNEMPLOYMENT INSURANCE
Mr. Bill Clarke (Vancouver Quadra):: Mr. Speaker, my question is for the Minister of Employment and Immigration. I want to ask him about the unemployment insurance fraud featured recently in a story which appeared in the Vancouver Sun and, in particular, about an investigation started there which has revealed at least one prosecution and a loss of up to $5 million. Can the minister tell us the status of the investigation and whether rulings on disentitlement which have been made in the Fraser Valley have been overruled by officials in Ottawa?


Jack Sydney George (Bud) Cullen: I asked for a full report following the appearance of that story. I should like to be in possession of the background in order to be in a position to give a more comprehensive response to the hon. member.


William Hillary (Bill) Clarke: Will the hon. gentleman's reply include information as to the number of charges laid and the losses which have been incurred by taxpayers as a result of this scheme?


Jack Sydney George (Bud) Cullen: Until we have all the information, I think the hon. member is jumping the gun.


LOTO CANADA
Mr. Otto Jelinek (High Park-Humber Valley):: Mr. Speaker, I have a question for the Minister of State for Fitness and Amateur Sport. In view of reports that Loto Canada is to be extended to include a new, computerized $1 betting program to supplement the present operation, and since, based on legislation passed by this House, the Loto corporation is due to terminate by the end of 1979 unless parliament approves an extension, can it be assumed that plans are under way not only to extend Loto but to extend it beyond 1979 despite the opposition of nine provinces?


Hon. Iona Campagnolo (Minister of State (Fitness and Amateur Sport)):: I can confirm that we shall be initiating a new game. I believe the hon. member was a member of the miscellaneous estimates committee which studied this matter back in 1976. It was never spelled out that the corporation would necessarily end, though it was contemplated that the present sharing agreement would terminate.


Otto John Jelinek: In 1976, the Prime Minister made a firm commitment to this House and to the country that Loto Canada would terminate at the end of 1979 unless all the provinces and the House of Commons approved an extension under a new formula. I take it that it was to this new formula, the cost-sharing formula, that the hon. lady referred. Is the

June 12, 1978
Oral Questions
minister now prepared to stand behind that undertaking given by the Prime Minister in 1976 and phase out Loto Canada unless the provinces and this House, which is now being bypassed, approve an extension?


Iona Campagnolo: We have some 18 months to go before termination of this sharing agreement. I would refer the hon. member to a motion put by the hon. member for Vegreville in the miscellaneous estimates committee which clearly outlined the understanding held by the Conservative opposition of the deadline as being one which simply terminated the sharing agreement. As I said to the hon. member for Prince George-Peace River a few days ago, I will indeed bring this matter before the committee or before the House in line with the undertaking of the Prime Minister.


PROVINCES OPPOSED TO EXTENSION OF PROGRAM
Mr. Joe Clark (Leader of the Opposition):: On this day, when we are discussing federal-provincial co-operation in the absence of the Prime Minister and most of his cabinet, might I ask the minister whether on Thursday last, when she met with her counterparts from the provinces, she received a request by nine of the ten provinces represented there that the federal government get out of Loto Canada by the end of 1979? Did she reply by saying that, regardless of the wishes of the provinces in this field of provincial jurisdiction, the Government of Canada was determined to go ahead on its own? Would she confirm those two facts?


Iona Campagnolo: I can definitely confirm that nine of the provinces did, indeed, present an ultimatum to me at a federal-provincial conference which was called as an occasion for co-operation between the federal government and the provinces concerned. I fail to see what is co-operative about a unilateral declaration requesting the federal government to leave a field with respect to which it was understood that any future plans would be referred to the House of Commons in line with undertakings given both by the Prime Minister and by the minister formerly responsible for this area.
I find it strange that the Leader of the Opposition should have a set of standards different from those of a member of his party who stated clearly in committee that what we were talking about, in his view, was the termination of the present sharing agreement as of December 31, 1979.


Charles Joseph Clark: What the Prime Minister and the then minister were talking about was a process of consultation. What we saw last week was an ultimatum given by the government to provinces which have traditionally drawn on this source of revenue, in breach of a commitment given to this House by the Prime Minister.
May I ask whoever in this remnant of a cabinet is Acting Prime Minister, whether the Prime Minister has yet replied to the telex he received on Thursday expressing the strong opposition of the provinces to this breaking of an understanding in relation to the lottery?


Iona Campagnolo: There is no breaking of any understanding. I find it surprising that on this day when the constitution is in the minds of many, we should be talking as if there are ten separate and sovereign states in this country.


Some hon. Members:: Oh, oh!


Iona Campagnolo: Canada is not a Ruritania in which the provinces find it necessary to act as though any funds going to the federal government will not end up in their own treasuries, as does every penny at the present time. Where else would they go? There is nothing but Canada.


Mr. Gillies:: Preposterous!


Charles Joseph Clark: This, indeed, is not Ruritania, but it is a federal system and one which will only survive if there is mutual respect among the federal government and the provinces who make up that system.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: What we saw the other day was one more breach by the federal government of that atmosphere of co-operation. My question to the Acting Prime Minister, whoever that being may be, is this: Has the Prime Minister replied to the telex sent by nine of the ten provinces protesting this breach of an agreement on the part of the federal government and, if so, what has been the nature of the reply?


Joseph Jacques Jean Chrétien: I will take note of that question, Mr. Speaker. I do not know whether a telegram was, in fact, sent to the Prime Minister. What the Prime Minister said-and I was the minister at the time-was that we would come back to the House by the fall of 1979 to determine what kind of mandate Loto Canada would receive. However, it is misleading to create an impression that this is a field which belongs to the provinces. I would point out that we had to pass a law amending the Criminal Code in order to allow the provinces into that field. It is this parliament which gave them permission to enter it. The Leader of the Opposition does not know much about the Canadian constitution.


Some hon. Members:: Hear, hear!


REGIONAL ECONOMIC EXPANSION
Mr. Maurice A. Dionne (Northumberland-Miramichi):: Mr. Speaker, my question is addressed to the Minister of Regional Economic Expansion. The minister recently held discussions with the Premier of New Brunswick concerning the general development agreement with that province under which falls the subsidiary agreement concerning highways. Will he tell us whether or not he impressed upon the premier that all referrals for employment on highway projects funded by DREE are
June 12, 1978

made through the Department of Manpower and not by Tory party bagmen as has been the usual practice?


Hon. Marcel Lessard (Minister of Regional Economic Expansion):: Yes, indeed, Mr. Speaker. I met recently with the Premier of New Brunswick and on that occasion we reviewed our programming throughout the province. This is one matter which I brought to his attention, because I think it is very important that hiring practices be kept in line with the agreement we have signed.


AIRPORTS
Robert Hylton Brisco: Mr. Speaker, my question is for the Minister of Transport. When the minister was in Vancouver recently, he spoke to the Board of Trade there and expressed concern about the firefighting equipment at Castle-gar. He said he considered it to be a distinct risk. May I ask the minister what he has done in order to alleviate the situation at Castlegar, where they have one Jeep, two fire extinguishers, three pairs of rubber boots, and an axe?


Otto Emil Lang: First of all, I think the hon. member is not referring accurately to what 1 said about Castlegar when I was in Vancouver. I asked for a complete report on all our airports and their firefighting capability and also the standards which are ordinarily expected to be complied with. I will be looking at what further action must be taken. We are constantly acquiring new equipment and attempting to ensure that airports have the appropriate equipment for the number of flights which will arrive.
In the past year we experienced some delivery delays with regard to certain firefighting equipment, which postponed our ability to move the equipment into place and to move other equipment from major airports to smaller ones as we ordinarily do as we proceed to re-equip.


Robert Hylton Brisco: Mr. Speaker, the comments I made are not my own but are, rather, Canadian Press comments taken from the Trail Times of June 1, so 1 hope the minister will not consider my comments to have been out of order.
In light of the fact that his department has decided to provide a foam truck for Castlegar, and in light of the fact that the temperatures there during the winter months frequently drop to below zero and there is no provision for winter storage of that vehicle, is the department prepared to cancel the order for the foam truck, or provide winter storage for it?


Otto Emil Lang: In the same way as provision of equipment is important in our over-all planning, so is the provision of adequate facilities for housing the equipment. There are times when before we are able to build the housing facilities we have
Oral Questions
to find temporary locations for the equipment, and that is what we would ordinarily do.


SHORTAGE OF BOXCARS AT CHURCHILL, MAN.
Mr. Cecil Smith (Churchill):: Mr. Speaker, my question is to the minister responsible for the Wheat Board. It is my understanding that the Canadian Wheat Board has committed some 30 million bushels to the port of Churchill. The shortage of boxcars could have a serious effect on the movement of grain to the port. Due to the short shipping season of less than 100 days, what assurance can the minister give the House that boxcars will be available to fulfil the Canadian Wheat Board commitment?


Otto Emil Lang: Mr. Speaker, I have no reason to believe that there will be any problem with boxcars for this movement. I am glad the hon. member has at least recognized that we are likely, indeed, to set another record at Churchill.


Cecil Morris Smith: I appreciate the fact that the record is going to be set, but it was at my insistence that this was brought to the attention of the minister.


Some hon. Members:: Hear, hear!


Cecil Morris Smith: I should like to ask the minister if any commitment of CIDA grain has been made through the port of Churchill, and if the cars that will be used in Churchill will have to be taken off the Thunder Bay and Vancouver routes.


Otto Emil Lang: I do not have the details of the Wheat Board's shipping program here, but I have known for many months that they have succeeded in allocating grain to set the record. I kept telling the hon. member that, but he seemed either unwilling to believe it or preferred to continue expressing his negative thoughts. Every year when boxcars are required for the movement to Churchill, obviously those boxcars cannot be used the same day for Thunder Bay and Vancouver. When they are no longer needed for Churchill, they are used for Vancouver and Thunder Bay. In that sense, those that go to Churchill will not go the same day to Thunder Bay.


INCREASE IN PRICE OF DOMESTIC WHEAT SUGGESTED BY ALBERTA
Mr. Peter Elzinga (Pembina):: Mr. Speaker, my question is to the minister responsible for the Canadian Wheat Board. In view of the fact that Canadian producers are producing wheat for domestic consumption at well below the cost of production, has the minister given any consideration to the proposal put forward by the minister of agriculture from Alberta that the price for domestic wheat be raised to $6 per bushel?

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Oral Questions


Otto Emil Lang: Mr. Speaker, the two-price wheat arrangement which was entered into in 1973 does have another two years to run until 1980. It provided for a range of returns to the producer from a floor of $3.25 to $5. In fact, that floor was raised by government action only six months ago.
I should say to the hon. member, in addition, that the $3.25 which the miller pays for wheat is not all that the Wheat Board receives for domestic consumption, because the treasury pays to the Wheat Board the difference between that level and whatever the world price may be at any given time. Right now, those prices have been in the area of $4.15 to $4.25.


NATIONAL SECURITY
Gerald William Baldwin: Mr. Speaker, I welcome the late Prime Minister. I hope that this time next year I will be welcoming him as the former prime minister.
I should like to ask this question of the right hon. gentleman. In view of what appears to be a thoroughly researched article into the facts, appearing in the news item written by George Bain in the Saturday Sun of June 11, in connection with Dr. Alexander Peter Treu, taking into account the facts set out in the judgment at the time of sentencing by the trial judge in that case-I am sure the Prime Minister read them with great anxiety over the weekend; they are appended to Friday's Hansard-and because this is the only chance we have had to look closely at this particular trial, all of which raises a strong circumstantial case of presumption that Dr. Treu might have been charged and sent to jail to prevent the probable disclosure of bungling, ineptness and stupidity on the part of the government and government officials, will the Prime Minister not overrule his Minister of Justice and stay further proceedings until there has been a thorough investigation by the House, as the ultimate court of this land?


Right Hon. P. E. Trudeau (Prime Minister):: I do not know if I can add much to what was said in the debate on Friday. However, let me remind the hon. member, who does not seem to have noticed it, that the trial was a secret one, indeed, but it was so at the demand of both parties.


Some hon. Members:: No.


Pierre Elliott Trudeau: I think it is established that both parties agreed to have a secret trial.


Some hon. Members:: Oh, oh!


Pierre Elliott Trudeau: The second point is that the case is under appeal, and it is not customary for parliament to intervene in a case which is under appeal and I do not propose to do so.


Gerald William Baldwin: I do not know what is customary for this government, but this is not a customary case and I hope the

Prime Minister realizes that. Here is the Prime Minister telling the House that he is quite prepared to stay silent and let this injustice continue.


Paul Wyatt Dick: This is the first time there has been a secret trial in Canada.


NATURE OF SECURITY RISK POSED BY MR. TREU
John Edward Broadbent: Mr. Speaker, my question is on the same subject matter. Could the Prime Minister explain to the House how Mr. Treu, while facing charges under Canada's Official Secrets Act for allegedly mishandling NATO technical documents, could continue to be the recipient of confidential material from NATO during the precise period of this secret trial? Does this fact not mean that NATO, at least, did not regard him as some kind of security risk?


Pierre Elliott Trudeau: It may be that NATO wants to give him the benefit of the doubt. Since he has the right to appeal, and this appeal has not been exhausted, I am sure that members on both sides of the House will consider him innocent until proven guilty.


Mr. Speaker:: Tabling of documents.


POINT OF ORDER
Walter David Baker: Mr. Speaker, I rise on a point of order. We have been treated today to what was a charade of the question period by the Prime Minister (Mr. Trudeau) and members of the government. There are in excess of 30 members of the government today, and until the Prime Minister came to the House at about six minutes to three o'clock there were only 11 government ministers in the House of Commons.


Robert Knight Andras: Fourteen.


Walter David Baker: The President of the Treasury Board (Mr. Andras) says there were 14. That may be so, but whether there are 11 or 14, I say that this parliament cannot act properly unless ministers of the Crown are here to answer questions. That is what they are here for.
In order for Your Honour to understand the significance of it, there were questions for the Prime Minister (Mr. Trudeau) at the outset today. He came in just at the last minute. I was one of the members who was recognized by Your Honour, but the passage of time made it impossible for me to be recognized later. There were questions for the Deputy Prime Minister and President of Privy Council (Mr. MacEachen), the Minister of State for Urban Affairs (Mr. Ouellet), the Minister of Public
June 12, 1978

Works (Mr. Buchanan), the Minister of Industry, Trade and Commerce (Mr. Horner), the Minister of Justice (Mr. Bas-ford), the Minister of National Health and Welfare (Miss Begin), and the Minister of Agriculture (Mr. Whelan). These are the ones which I know about. The only minister of the ones I have listed who indicated that he would not be here, because he would be away on legitimate government business, was the Minister of Justice. On Friday I was advised that he would be away, and again today I was advised of his absence.
Ministers of the Crown do not have to answer questions, but surely there is more to question period than the Minister of Finance (Mr. Chretien), who is misinformed as to detail in respect of other portfolios, standing in for a Prime Minister who continually refers questions to other ministers, and ministers not being present in the House in order to answer questions.
The right hon. member for Prince Albert (Mr. Diefenbaker) indicated that in his over 30 years in parliament he had never seen an occasion such as this, when there were so few ministers of the Crown present.


Some hon. Members:: Oh, oh!


Some hon. Members:: Hear, hear!


Walter David Baker: It is time for Canadians to understand how directionless and rudderless the government is.


Some hon. Members:: Order, order!


Walter David Baker: Their absence today indicates that.


Some hon. Members:: Hear, hear!


Mr. Speaker:: The right hon. Prime Minister (Mr. Trudeau) on the point of order.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: Mr. Speaker, on the point of order, if indeed there is one, I should like to make two brief comments. The first is that several ministers are absent because they are in the process of informing the premiers of what is going to be tabled today. We thought it proper that there should be some measure of consultation, since I was to table this document.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


Miss MacDonald:: Today!


James McPhail Gillies: There are only ten provinces.


Pierre Elliott Trudeau: The second is: we have indicated before, and we indicate again, that we would be happy to sit down with the opposition to work out some system whereby the time of ministers could be allocated in such a way that they could be
Tabling of Documents
here to answer all relevant questions of the opposition. Your Honour will recall that we looked into this matter a few years ago. It is apparent from actual count that something like six to ten ministers, on an average, receive questions every day. It seems somewhat pointless to have every one of the 33 ministers present every day of the week in order to assist at questions which are never asked of them.
If the opposition were prepared to sit down and discuss this matter reasonably with us, as is done in other parliamentary systems, gladly we would work out with them a way in which they could be assured that on given days given ministers are here. One must realize that we cannot always foresee with certainty when a given question will arise. That is why we have first acting ministers, second acting ministers, and parliamentary secretaries. In this way the government does its best to attempt to answer the questions which come up every day in the House of Commons, while at the same time maintaining a federal presence and the existence of the federal government not only in every part of this country but sometimes in other parts of the world where ministers have to be present.


Some hon. Members:: Hear, hear!


Mr. Speaker:: Order, please. The hon. member for Grenville-Carleton (Mr. Baker), as House leader for the official opposition, has raised this matter, which is a matter of criticism. As I am sure he is aware, it does not constitute a point of order in the circumstances. It has been replied to at equal length and, in fairness, I think the matter ought to stop there.
Tabling of documents. The right hon. Prime Minister (Mr. Trudeau).


Some hon. Members:: Hear, hear!



ROUTINE PROCEEDINGS


Pierre Elliott Trudeau: Mr. Speaker, under the provisions of Standing Order 41(2) I should like to table a copy, in both official languages, of the sixth report of the Advisory Group on Executive Compensation in the public service.

June 12, 1978
The Constitution


THE CANADIAN CONSTITUTION
Pierre Elliott Trudeau: Mr. Speaker, under the provisions of Standing Order 41(2), I should like to table a copy, in both official languages, of a document which proposes the principles for the renewal of the Canadian federation.


STATEMENT BY PRIME MINISTER
Pierre Elliott Trudeau: Mr. Speaker, the document I have just tabled before the House of Commons constitutes the first segment of the formal proposals the government wishes to present to parliament and the Canadian people with a view of beginning the renewal of the federation.
The last few months have been a time of deep thought for all Canadians. Within political parties, interest groups, and professional associations, before the Pepin-Robarts Task Force, and in the press, we have attempted to take a new look at our country and its institutions. We have rediscovered its past, sought to understand its present, and tried to envisage its future. We have not yet reached agreement on what Canada should be, but at least we have all agreed that a significant renewal is necessary and that we must sit down to business. [Translation)
The federalism instituted in 1867 and modified to meet our needs over the years has served our country very well. It has involved a largely successful attempt to set up a balanced system based on reason and flexibility and thereby join our communities and regions together in a country blessed with both variety and vigour. Between two orders of loyalty and two levels of government it has established a dynamic equilibrium in which each Canadian could and still can belong in a real and profound way to both his province and his country. It has given Canada the spiritual and physcial strength needed to carve out a place in the world and in history of which we may all feel justly proud.
But Canadian society is still developing. Fortified by the contributions of people from all over the world, it has lost none of its instinctive desire for the new, for the unexplored and for a better life. As a result it now feels cramped within a legal framework devised over one hundred years ago and in an administrative system built piecemeal over the years, and this in turn has given rise to the desire for renewal that is being felt in the country.

The time has come to respond to this desire for renewal among the Canadian people, and it is up to parliament, the federal government, the provincial governments, and all those who hold authority in our society, to ensure that this renewal is carried out promptly, explicitly, and with the greatest respect

for our democratic tradition. Our present uncertainty is not helping the country; it is drawing strength required elsewhere, jeopardizing our economic progress, and eating away at the world community's much-needed confidence in Canada. The federal government therefore urges all Canadians to join it in settling this question without further delay by renewing our federal pact and our sense of belonging to this country. Through this renewal will come the other changes-economic, social, and cultural-to which we are entitled. It is time for action.
The objective of the document I have just tabled is, precisely, to start this process. It sets out the principles of this renewal and their application to the workings of our federal system and the institutions provided for in the constitution. It is no coincidence that it is entitled "A time for Action". It is our firm intention to take concrete measures according to a very specific timetable.
The renewal of the Canadian federation is not the issue of any one political party. It is an issue for all parties to address and to resolve, and the government intends to deal with it in a non-partisan, open-minded manner. We know, Mr. Speaker, that the other parties represented in this House have already done a great deal of work on this issue. Their conclusions regarding the terms and conditions of this renewal may sometimes differ from ours, but their ultimate objectives are probably much the same as ours. We hope, therefore, that we can count on their co-operation in speeding up the process. Let us agree upon the objectives, then we can deal with the terms and conditions, instruments and texts.
We have set ourselves a tight schedule. We therefore urge this parliament, the provincial legislatures and governments, and all Canadians, to begin working with us as soon as possible.

We are placing only two conditions on our proposals for renewal. The first is that Canada continue to be a real federation-that is, a country in which the federal Parliament possesses real powers and the provincial legislative assemblies have powers that are just as real. The second condition is that basic human rights and freedoms be entrenched in the constitution and thus be protected against interference from either order of government. Apart from these prerequisites, we wish to be guided by the will of the citizens who elected us. Our proposals are there to be examined, debated and refined. We are counting on a national consensus to launch the renewal, and we hope that a national consensus will emerge on the nature of this renewal.
"A Time for Action" was not written as an attack on anyone. It was written in support of a cause-that of a renewed Canada geared to our needs. It invites all Canadians from the Atlantic to the Pacific to define the terms of the Canadian identity, bring our federal system up to date and reshape our constitution in the image of Canada today. As for
June 12, 1978

those who do not share our profound belief that so fundamental a renewal of the Canadian federation is possible, I ask simply that they open their eyes and hearts in all honesty to the desire for change which the great majority of Canadians feel and which "A Time for Action" endeavours to express as faithfully as possible.

Today we are embarking on an important stage in our development, one that will perhaps determine the course of Canada's history. I invite all Canadians to summon their most positive qualities and enter this new stage with enthusiasm, drawing confidence from the very sources of our history. We cannot allow ourselves to miss this unique opportunity to make a collective decision on our future as a country.


Charles Joseph Clark: Mr. Speaker, I want at the outset to express my appreciation to the Prime Minister (Mr. Trudeau) for making a copy of both his statement today and the document he has tabled available to me earlier in the day. I must at the same time express a very real concern in that it was only today he sent ministers of his government to communicate the contents of this document directly to the premiers of the provinces, who are the other partners in this confederation. I think that kind of last minute notification of a document of very real importance to the premiers is an indication of the kind of thing that has gone wrong during the last ten years when the federal government, instead of treating the provinces as partners, has treated them as people to be communicated with on matters of real concern to them, only at the last minute.


Some hon. Members:: Hear, hear!
[ Translation]


Charles Joseph Clark: Mr. Speaker, some of the proposals contained in this document look strangely familiar. Upon reflection, the Prime Minister will certainly recognize that he is exaggerating when he insists today that we are entering a new era in our development. We believe that that era has started some while ago, and it is high time for the government to catch up. The leader of the government urges all Canadians to think and act. But judging by his proposals, he seems quite content with the appearance of action. We are not much ahead on his true intentions regarding, for instance, certain basic problems such as the distribution of power between the two levels of government.

As I was saying, sir, the Prime Minister calls his document "A Time for Action". I think it would be far more appropriate, judging by its contents, if he called it "A Time for the Appearance of Action". Some of the proposals, I must say, are as interesting now as they were when we first made them.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: But, sir, the significance of this document is not the presence or the absence of imaginative proposals. What is
The Constitution
significant here is the tone. This document anticipates unilateral changes in a partnership. It distinguishes between two categories of constitutional change: those characterized as phase 1, where there is "full capacity for parliament to act alone", and those characterized as phase II, which "the federal government and the provinces must discuss together . That might be the way to treat an ordinary law, but it is no way at all to approach a constitution. The intention here is quite clear. Where the federal government is obliged to get agreement from the provinces, it will aceept that obligation. Where it has a narrow legal competence to act alone, then it will act alone.
Of course, it pledges consultation in this document in one sentence, but in the next sentence it pledges a deadline thirteen months from now.

The Prime Minister is prompt to praise the virtues of federalism, but he is behaving like the leader of a single type of government. In a federation where the central power and the provinces are to be true partners, the leader of the government has no qualms whatsoever about saying that he intends to proceed unilaterally with some constitutional amendments which are of vital concern to the provinces.

The reason that is particularly alarming is that it has been this very tone, this refusal to regard confederation as a partnership where partners co-operate even when they are not required to, that has done so much damage to our country in this last ten years, on questions ranging last week alone from sales tax to the lottery. That, sir, of course, is a source of partisan disagreement in this House. I do not raise it in a partisan way. There are other times and other topics for partisan division.
I agree with the Prime Minister that this fundamental question is more important than parties, but the fact is that this document fails to reflect, as perhaps sadly its authors failed to recognize, that the paternalistic tone of this proposal is itself a major modern cause for distrust and disunity in Canada. This process, sir, will come to nothing unless that is recognized. Indeed, it may come to worse than nothing because it may deepen the divisions that exist among Canadians. That is particularly true since the reaction of the separatist government of one province is already predictable. That makes it all the more essential that every step is taken to secure a consensus among the other provinces, and that, sir, will happen only if they are treated as full partners in this process and are not faced with deadlines or with declarations that may turn out to impede agreement.
These last two years have shown us all that there is a great deal of agreement in this country about the necessity for constitutional and administrative reform. There is also, as we found as a nation in earlier times of challenge and of crisis, a great deal of good will in Canada that will result in concrete agreement. I found this in Kingston last September when I met with four premiers from one party from very different p: ovinces and secured agreements on important constitutional,

June 12, 1978
The Constitution
administrative, and economic changes. I make the point in passing, sir, that it would be tragic for the unity of this country if we were to deflect attention from the fundamental requirement of this parliament to address ourselves to economic growth over the next six to eight months. I found that kind of agreement also when I discussed those changes arrived at in Kingston with other party leaders in the other provinces in subsequent discussions.
We came to Kingston as partners and we found agreement because there was a basis of mutual respect. The Fathers of Confederation came together as partners, and they found agreement. We can do that again today providing we recognize that confederation is a partnership and not a system where one government can adopt a paternalistic and domineering attitude toward all the others.
There is one other matter of procedure that concerns me in relation to the document that has been tabled here today and the proposal that I understand the Prime Minister is making as to how we proceed with it. That is the role of this parliament. We have demonstrated before in this House of Commons a capacity to secure progress and to secure a consensus on constitutional questions when parliament is given the chance to address those questions. I would hope, sir, that there will be the widest possible role for parliament, not just the government, in considering constitutional and administrative reforms that we must contemplate as a country.


Some hon. Members:: Hear, hear!


John Edward Broadbent: Mr. Speaker, as the Prime Minister (Mr. Trudeau) suggested in his statement today, in recent years Canadians have, indeed, been giving more thought than usual to the problems and prospects of our country. At every level there has been concern that the traditional Canadian dream for a united Canada, committed to a just and exciting society based on liberty and equality for all our people-French-speaking, English-speaking, other ethnic groups, the Inuit, and the Indian-was falling short of realization.

It is ironic and historically sad that this anxiety regarding the future of the country should appear when the Canadians of my generation, whether they are French or English-speaking, have succeeded in gaining unprecedented recognition in the cultural field, and this at the national and international levels. [English]
Beyond this level of creative excitement, Mr. Speaker, as we all know, there have been disturbing and unsettling signs of discontent. It is important that we understand the origins of this discontent. They are to be found in the inequality as it exists between and within our regions. They are to be found in the absence of strong federal leadership which ought to have been positively identifying itself with the cultural excitement of French and English-speaking Canada in recent decades. They are to be found in the absence of federal leadership

which recognizes that the independence of the Canadian economy and all that depends on it are threatened at least as much today by our vigorous neighbours to the south as they were more than 100 years ago, and finally they are to be found in the lack of a specific Canadian constitution which contains in one document guarantees for individual and cultural rights of Canadians as well as a division of responsibilities between federal and provincial authorities.

We must get involved in the political life of our country, show leadership in each of the fields that have a bearing on the country's future, like regional disparities, recognition of fundamental rights or political determination to achieve Canada's economic independence. It is in that perspective that I want to answer today to the Prime Minister's statement.

The highest priority we must set for ourselves is to establish at this time in the hearts and minds of Canadians that we are now embarking upon the development of a future that is both just and exciting, and that deals with all of these questions. Our priority must be to pledge ourselves, not simply to constitutional reform, but, more basically, to the removal of inequalities and the establishment of a viable, healthy, industrial country in this part of North America.
In the broad sense of what our country is about, the document which the Prime Minister has tabled, I regret to say, fails. It is totally devoid of a broad scale of imagination. Regrettably, it deals only with the most general proposals on the constitution and the establishment of linguistic and other rights. As important as these are, they are not new. We all assumed that proposals would be made concerning these areas at some point during this year, and in this sense we accept and support them.
It is worse than regrettable that a document entitled "A Time for Action" is exclusively legalistic in its proposals for the future of our country and of our people. Economic inequalities within our country and the deeply serious matter of the economic viability of our future on the North American continent are virtually ignored. A statement of purpose so narrow in its focus and so devoid of concern for matters beyond a legal framework for our nationhood is totally inadequate to meet our needs as a people at this time.
It is, indeed, time for action. A central concern in the confederation debates more than 100 years ago was the state of the economy of the various provinces. Where is that concern in the document that has been tabled today? The economic position of Atlantic Canada compared to Ontario has worsened since confederation, not improved. We still have millions of people at the poverty level, while the rich still get richer in our country. We have a manufacturing sector which is weaker today than it was a decade ago, and we have more than one million people unemployed. And, as Sir John A. Macdonald would well understand, we cannot stand idly by while our vigorous neighbours to the south daily make inroads on our economic independence as a people. Canadians want action.
June 12, 1978

They want imagination and leadership which will reverse our inequalities and reshape our economy for the requirements of the twentieth century. Legal pedantry of the kind we have today is no substitute for leadership.


Charles-Arthur Gauthier: Mr. Speaker, I am grateful to the right hon. Prime Minister (Mr. Trudeau) for having provided us with a copy of his statement a few minutes before the opening of this sitting. As usual, we were able to read the statements of principles in the newspapers, but we could not be sure if this was improvisation on the part of the reporters or a leak that the government obviously wanted.
The title "A Time for Action" is well chosen because it shows at least that the right hon. Prime Minister has backed down in finally deciding to make an appeal for a real constitution. It should be noted, Mr. Speaker, that I did not say a renewed constitution, as the right hon. Prime Minister calls it, because I have always thought that the British North America Act is simply a royal order of the British Crown for its Canadian colony that we have used up to this day. Since it was written in England by the parliament in London, it could not reflect the aspirations of the Fathers of Confederation who had certainly spent many months preparing a thick memorandum for the British government, and this memorandum, which favoured a confederation in which the provinces would have priority, was probably put aside to be replaced by this little private bill which was entitled the British North America Act and which has been the basis for our constitution since 1867.
This is why I agree with the right hon. Prime Minister when he lists certain defects of the present constitution, including the following, and I quote:
It is based largely on acts of the British parliament and has not yet been properly rooted in Canada.
Its provisions are scattered through a large number of statutes, many of which are unknown to the general public.
It has not preamble or statement of principles; its language is obscure, its style plodding and uninspiring.
It has little educative value and Canadians find in it little which inspires patriotism.
It makes no mention of basic rights or freedoms, and it is inadequate to protect language rights.
Its division of legislative powers between the federal and provincial governments is neither as precise nor as functional as might be wished.
And he goes on to enumerate the shortcomings that he finds in the British North America Act. For example, Mr. Speaker, I have always thought that its greatest shortcoming was to have made the federal government the architect with a certain measure of supremacy over the provinces. We reason that very often that is why the federal government instructs the provinces instead of consulting them. Of course, compared to previous agreements the 1867 confederation represented one more step toward Canadian unity, but for many years all the provinces and all Canadians have been hoping for new agreements and their greatest desire would be to see the provinces
The Constitution
initiate consultations within their borders so as to come up with strictly interprovincial conferences, through which they could tell the central government what they expect from it.
We are still convinced that only a confederation including all provinces will bring back harmony in Canada. As long as the federal government interferes in interprovincial conferences to rouse their suspicion and pit them against each other we shall witness the same confusion that has prevailed in the last 110 years in federal-provincial conferences. We should recognize once for all that the provinces will have the final veto.
So, if the federal government really wants to do something useful for Canada it should encourage the provinces to get together and agree on a constitution. Shall we have a true confederation under our new constitution? This is the first question. Or will it be a federation as the present government sees it, that is to say a profitable federalism with a strong central government and in which the provinces will be nothing more than administrative districts.
I think the Minister of Industry, Trade and Commerce (Mr. Horner) best expressed the thoughts of the government when he declared in the House recently that the ideal solution for Canada would be a single government! With such statements, Mr. Speaker, this is something we will have to consider because if we are to judge someone through his actions, the ten years of administration of the present government are not very favourable to provincial autonomy. The many intrusions into provincial jurisdictions and the Quebec jurisdiction particularly make Quebeckers wonder about their future.
This is why I ask the government to avoid any confrontation at least with Quebec, end personal conflicts and try negotiation. We must absolutely avoid the unfortunate mistake of 1867. We must absolutely avoid it and judging from the orientation of this issue, I think that we are going towards even more centralization in which the federal government will have almost all powers and will leave only secondary powers to the provinces. I sound a warning note to the right hon. Prime Minister and all government members and I hope we will change our orientation so as to favour the provinces.


Mr. Stanfield:: Mr. Speaker, I rise on a point of order. I have been trying to obtain a copy of this document. It has gone to my office. This has not been very helpful to me in posing any questions I might have to the Prime Minister (Mr. Trudeau)-


An hon. Member:: We are all in the same boat.


Robert Lorne Stanfield: I do not know why my friend over there is so sensitive. I understand what the Prime Minister said in his comments. This document is of some importance, and I understand he will accept questions in relation to it. It is perhaps a good time to get enlightenment-

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An hon. Member:: There it is!


Robert Lorne Stanfield: Thank you very much.


David Samuel Horne MacDonald: Mr. Speaker, I should like to direct several questions to the Prime Minister (Mr. Trudeau) with regard to this document which is long on generalizations and pretty short on specifics.
I should like to ask the Prime Minister, for example, some specific questions with regard to certain proposals which are included. He said in his statement and in the document that he would like to invite all Canadians to participate in the discussion on constitutional change-constitutional renewal. I am interested in the forum that would be provided for this. The Prime Minister will remember that last year about this time we on this side of the House proposed that a joint parliamentary committee be set up to provide that forum wherein all Canadians could participate and make their views known with regard to constitutional review. That suggestion was not accepted at that time; it was bypassed by the Pepin-Robarts commission. I know that later this year with the constitutional conference, by necessity parliament will again be bypassed.
I make a special plea to the Prime Minister this afternoon to consider referring this document immediately-and he might inform us on this point-and I would ask him how detailed proposals will be presented. Will they be presented to parliament by way of legislation? If so, will he refer this document with any legislation forthcoming before the end of this session to a special joint parliamentary committee which would sit throughout the summer months to study these proposals and allow Canadians to appear before it to make their views known, so that parliament indeed can have a role in the renewal of our constitution?


Pierre Elliott Trudeau: Mr. Speaker, it would be our intention to propose the setting up of such a joint parliamentary committee. Before the end of the month we would like to find a day, or perhaps two, on which to have a debate on the government proposals, with a view to setting up such a committee at the end of the debate. I am sure that all parties in the House will be discussing an appropriate committee and appropriate timing for such a debate.


David Samuel Horne MacDonald: I take it by that that the Prime Minister will also consider the suggestion that a special parliamentary committee be appointed at least before the end of the month to sit through the summer and have input into these proposals later in the year.
I would like to ask the Prime Minister to tell us as well the status of the Pepin-Robarts commission in relation to the proposals being put forward. Would the Prime Minister say whether these proposals are coming forward by way of legislation before the end of the month, and would he also indicate the particular status of the Pepin-Robarts commission at this point, a commission which was appointed on July 5 last year with a mandate initially for one year, which was to provide a

source of advice to the government on unity issues? That commission has not yet issued a report and it is not anticipated that its report will be forthcoming for some months. What is going to happen to that report? Will it be superseded by proposals that the government puts forward, and where does it stand in relation to the government's proposals?


Pierre Elliott Trudeau: Mr. Speaker, when the Pepin-Robarts commission was set up, as the hon. lady reminds us correctly, it was intended to report within a year. Then when it was apparent the number of presentations on the task of the commission was such that it would not be able to report finally before the end of the year, it was expected that perhaps there might be an interim report which the government could have consulted before bringing down this particular white paper. We understand that that has not been possible. Therefore, we had to proceed with this white paper without the benefit of the Pepin-Robarts commission report.
I would point out that the proposals of the government at this stage, though they are a white paper and do represent government policy, are in front of parliament and the country for the purposes of discussion. As it is stated in this particular paper, Mr. Speaker, we do expect a federal-provincial conference on the constitution early in the fall. We hope that there too there will be a possibility of input from the provinces. So we would have many sources of input, the standing committee, which the hon. lady mentioned, the Pepin-Robarts committee, reactions from the country of course, and finally the federal-provincial conference of first ministers. As a result of all that, after having heard from everyone, the provincial governments, the House of Commons, and the people of Canada, we would then propose to proceed in the House of Commons in the next session with a bill for adoption, as it is said in the white paper, before July 1, 1979.


David Samuel Horne MacDonald: Mr. Speaker, I am not sure from what the Prime Minister has said and what this document states that they are one and the same thing, for example, "the government will soon be informing parliament and all Canadians of its details." I still do not know whether or not the Prime Minister intends to introduce those details by way of legislation or by way of a further white paper, because there is very little in the way of detail here as to the specifics of any of the proposals. Surely we would need more to go on than this? The government goes on to say, "There is no expectation that these proposals will be passed by parliament without change." So, unless we know something of the detail of the proposals, it is very difficult to formulate any views on them or to suggest changes. These are very broad measures indeed. I would like to know whether it is the government's intention to introduce those details before the end of the month.


Pierre Elliott Trudeau: Mr. Speaker, the government intends to proceed in two stages on the white paper tabled today, and which is the object of today's discussion. It intends to put forward the general principles on Canadian identity, and the principles for renewal, the way in which we want to renew the practice of federalism. We did hope that this would cause some reflection
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in parliament, and outside, on the principles which inspire government's actions. This will be followed before the end of the month by a bill which will be given first reading in this Elouse. It is on that bill that we intend to have the House leaders look for the possibility of debate for the setting up of a standing committee, a special committee of the House of Commons and of the Senate, or two special committees, if this is what is preferred by members of parliament of both Houses, so that they will be able to take cognizance of the bill, not after second reading; the bill itself, or the subject matter will be referred to the committees, Mr. Speaker.
I must say the first reading of that bill does give me some concern now. Having heard from the Leader of the Opposition (Mr. Clark) that we must first consult with the provinces before doing anything here, I am wonderig if we should show the bill to the premiers before showing it to the House of Commons. This would cause me some concern, but if that is the view of the Leader of the Opposition, of course we would be prepared to do that.


Mr. Hnatyshyn:: Shallow and wrong again.


John Edward Broadbent: Mr. Speaker, I have a question for the Prime Minister concerning some detail. I have read in the white paper, and I have heard the Prime Minister say, that we will get some details later on. One particular matter of interest to me and on which perhaps he could shed some light concerns the Senate, to be renamed the House of Federation. Could the Prime Minister tell us now what the government has in mind in terms of appointment by the provinces? Just what kind of detail has the government already worked out on that subject matter?


Pierre Elliott Trudeau: Mr. Speaker, this would be spelled out in very considerable detail in the bill which will be given first reading in the House. In this white paper, I repeat, we have intended to state the principles, the general lines of action, but the details will be contained in the bill.


John Edward Broadbent: Mr. Speaker, just on the question of principle which is outlined in the white paper, the stated intention of the government is by means of reforming the Senate to give the provinces a greater and more effective say in Ottawa. I would like to ask the Prime Minister, considering there is no talk about changing the power of the Senate-thank God- will this whole operation not be a bit hollow because what is being proposed is to give the provinces authority in a body that quite appropriately has no power in Ottawa?


Pierre Elliott Trudeau: Mr. Speaker, we hope that is the very subject which will be discussed by the country and by the joint committee of the House of Commons and of the Senate. The hon. member, without benefit of seeing the proposals, suggested that it might be quite hollow. I hope that we will benefit from his intellectual resources when we come to discuss this proposition. He realizes, of course, that in a parliamentary system there is a choice to be made by those who are writing the constitution between having a second chmber which is truly representative of the people of the regions or provinces,-
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which presumably would be elected with all the attendent problems of cabinet and responsible government,-or having some other form of representation. We come down on one side of the choice, but I am sure we will benefit from the insight of the hon. member into this problem.


John Edward Broadbent: Mr. Speaker, would the Prime Minister confirm for us that when the bill is brought forward, pertaining to the Senate particularly, the government will not be imposing an increase in the powers of the Senate?


Pierre Elliott Trudeau: Mr. Speaker, I think in order to avoid answering in detail any of these questions, I must ask the hon. member to be patient and to wait until the bill comes forward. He will see what powers we propose for the Senate.


Charles Joseph Clark: Mr. Speaker, on page 11 of the document there is a phrase which reads as follows:
The courts... .conferred on the federal authority most of the powers necessary for the government of the federation as a whole.
That referred to a process. I am wondering if it is an accurate interpretation of that particular section. It is on page 11, about two-thirds of the way down. I am sorry, I do not have the original copy. I will give the quotation again.


Pierre Elliott Trudeau: I have it.


Charles Joseph Clark: Does the government intend by that to indicate its view that the federal government does not now have all of the authority that it requires, and all of the powers necessary for the government of the federation as a whole? If that is the case, can the Prime Minister indicate to us what kinds of new powers he thinks are necessary to be added to the central authority?


Pierre Elliott Trudeau: Mr. Speaker, this paragraph in reality refers to the historical evolution. 1 think it is generally recognized that the Canadian federation today is less centralized in practice than it was 110 years ago, although there has been that great redistribution of powers. That is all this particular paragraph intends.
In so far as the distribution of powers in a new federation is concerned, which seems to be of interest to the Leader of the Opposition, we do intend and do say that this is open for discussion. We are ready for a re-examination of the functions of both levels of government and a redistribution of powers in whatever way is of greatest utility to the citizen. However, no suggestion is made that it should result in a greater decentralization or, indeed, in a greater centralization. We think there should be some shifts of power in both directions.
I would certainly incur the wrath of the Leader of the Opposition if I were to indicate now without the benefit of consultation, what we would like to see become federal jurisdiction which is now provincial jurisdiction.


Some hon. Members:: Oh, oh!
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Pierre Elliott Trudeau: I am quite sincere. The Leader of the Opposition does present me with a dilemma. I repeat it to him. Would he like us to show the premiers the bill before we show it to the House of Commons? I am in his hands and will do whatever he suggests is best.


Charles Joseph Clark: Mr. Speaker, I rather think the Prime Minister is anticipating himself by four or five months by putting questions to me, but I will be delighted to answer them. I think it would be very profitable for the system if the Prime Minister were to get together with his counterparts in the provinces and have some kind of discussion now which might serve as the basis for proposals that might come from the federal government or from the provinces. This business of people issuing manifestos from behind their jurisdictional barricades will not take us very far. I hope the Prime Minister might follow the example that I set for him, since he has raised this question, when I met with the premiers at Kingston. I wonder if I might now ask the Prime Minister this, just for the purpose of clarification. On page 23 the document states that the government will therefore be putting forward proposals regarding constitutional provisions for certain institutions of the executive of the central government. Can the Prime Minister tell me in a general way what that phrase means?


Pierre Elliott Trudeau: Mr. Speaker, in his comments on consultation the Leader of the Opposition makes bold that he met four premiers. I must remind him that throughout the months of November and December I met every one of the premiers and we had lengthy discussions on the constitution and economic matters. In those discussions I spoke at great length about the subject matter of this white paper. I indicated to them that we were proceeding with phase I and phase II, and asked what they thought about it. I indicated in phase I what it was our intention to discuss.
I not only had these discussions with the premiers, but the hon. member will know that there were many speeches and comments made by the premiers either resulting from or following upon those discussions, and we do have the benefit of the views of many, if not all, of those premiers on the constitution.
I will be tabling later this week, when my letters have been received by the premiers, a lengthy letter which is in their hands at this moment on the white paper, and commenting on some of the proposals which they have made on constitutional change in the past months.
We must consider that for something like 52 years this subject of constitutional renewal has been debated in parliament after parliament. It was debated during several provincial conferences between 1968 and 1971, and was the subject of consultation time and time again since then at meetings of the premiers and with myself on the constitution.
I think the House will recognize that at some point it is not only natural but desirable for the government to give leadership and to say that, after all these consultations, this is what we think. However, we are of course anxious to know what the opposition thinks and what the premiers think. That is why

this very day and in the following days of this week there will be meetings with the premiers on the basis of this paper and on the basis of the general content of the bill.
When we do table the bill in this House, before the end of the month, I hope we will not hear from the Leader of the Opposition that it is full of platitudes and, to use his expression, deja vu, a lot of things that have just been rehashed and, on the other hand, objecting that it has not been shown to the provinces in advance. This is just a general comment which I mean to be helpful to the hon. Leader of the Opposition.


Charles Joseph Clark: Mr. Speaker, I think the Prime Minister was so overcome by the privilege of putting a question that he forgot to answer the one I put. I am sure he would like to redirect his attention to the meaning of the proposal for certain institutions. To save the time of the House, will he also indicate just how firm is the timetable of July 1, 1979?


Pierre Elliott Trudeau: Mr. Speaker, the reason why I made a lengthy answer is because the Leader of the Opposition always brings in preambles when he makes suggestions. I think it is normal that I make some comment on them.
In terms of his particular question on the executive, Mr. Speaker, the Leader of the Opposition probably knows that in the present BNA Act the function of the executive and its composition are not spelled out in any detail. It would be our intention in the bill presented to the House of Commons to spell them out in quite a bit of detail.
On the second question, Mr. Speaker, that of the dealine, we think that within the next 12 months and 19 days it is reasonable for the country and parliament to be able to make up their mind on what the federal government, acting alone under the constitution, can do.
I repeat what I said in my statement some minutes ago. We hope this will be approached in a non-partisan spirit. Many of the proposals we have made and will make find their echo in proposls made on the other side of the House in their policy paper on the constitution. Indeed, many of the provincial premiers have been saying things which will find an echo in our bill.
In having the benefit of the bill very soon, and having it before them until the federal-provincial conference in the fall, we hope the premiers will be able to express some concrete response to this in so far as we are anxious to have their opinions, even in areas where the federal government and parliament can act alone. We hope this will be true of the Leader of the Opposition, and his party as well, and that between now and the next four months he will be able to arrive at some view on what the federal institutions and federal parliament are, and how the federal institutions and parliament should be composed in order to respond more accurately to the aspirations of the Canadian people and the principles set out in this white paper, assuming that these principles of renewal are some with which the opposition can agree. If they are not, we are once again prepared to discuss these principles and modify them for the better.
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Mr. Speaker:: Order, please. There are some ten or more members standing to put questions at this time. The Chair is expected to exercise a discretion about the duration of this kind of question period. It is certainly far too soon now to consider stopping it. I do not mean that. Neither do I think it is intended that these question periods after a statement afford the opportunity for an exhaustive discussion on any subject on any particular day. Perhaps I could recognize a few more hon. members, but I shall have to ask that the questions be kept brief.


Mr. McGrath:: I know Your Honour will not lose sight of the fact that we are dealing with an important document in the history of our country and one which conceivably has implications for the future. The background to my question is a study taking place in Toronto today at which provincial ministers of urban affairs and housing are meeting with the federal minister to discuss his clumsy intrusion into provincial affairs. The Prime Minister (Mr. Trudeau) has already dissociated himself from the remarks made by the Minister of State for Urban Affairs (Mr. Ouellett) who stated at the conference of the Canadian Federation of Mayors in Edmonton last week that the role of the municipalities must be fully enshrined in the constitution as an additional level of government on its own. As I say, the Prime Minister has dissociated himself from that statement, but perhaps he will explain what the intentions of the government are in this area. The right hon. gentleman talks about the trend to urbanization and growth of our cities; he suggests the population of some of them might be greater than that of certain provinces, and talks about Canadian cities as being a new problem which will require attention. When considering such cities, is he thinking about bringing in mayors and municipalities within a constitutional context?


Pierre Elliott Trudeau: Mr. Speaker, I suggest the hon. gentleman is confusing two areas of discussion. To the extent that the quotation he gave refers to something said in this debate, what we are saying is that when Canada was founded 110 years ago the Fathers of Confederation were dealing with a largely rural society, whereas today the majority of Canadians live in cities. This has created not only a new power relationship but a great many new problems, and it is necessary to deal with them. As to the principles which the government has in mind, I would refer to chapter IV on renewing the practice of federalism, and particularly to page 17 where a certain number of proposals for action are set out.
We have made two proposals in particular-I shall not take up the time of the House reading them but they are there on page 17 and their intention is, to eliminate wasteful duplication where it exists by attempting, along with the provinces, to define more accurately the areas where the provinces and the federal government should be acting each in its own sphere. We will be making special proposals to the provinces for action in this area. When problems, by their very nature, come under shared or joint jurisdictin we will also make proposals to ensure that this joint jurisdiction is exercised jointly and in
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consultation. I commend page 17 to the attention of the hon. member.


James Aloysius McGrath: I refer again to the statement made by the Minister of State for Urban Affairs at the meeting of the Canadian Association of Mayors in Edmonton when according to newspaper reports:
. .. Mr. Ouellet assured the delegates their municipalities would be full and equal partners with the other levels of government in current discussions on constitutional reforms.
Given the constitutional fact of life that the cities are creatures of the provinces, an aspect of jurisdiction which the provinces jealously guard, would the Prime Minister tell the House how the government intends to go about bringing the municipalities in on this so-called constitutional reform? Does he envisage, for example, a constitutional conference which would include the provinces and the municiaplities?


Pierre Elliott Trudeau: We think, Mr. Speaker, that the municipalities do have a role in being a voice of the people at the administrative level where they exist and we hope that many of them will be heard not only by the government but by the joint parliamentary committee which we propose to set up. Indeed, I believe the Pepin-Robarts committee has heard from many representatives of municipalities who have their views on the constitution. We would not propose by any narrow legalism- to borrow a phrase from the Leader of the New Democratic Party (Mr. Broadbent)-to silence them and say they should not express views on a new constitution.


James Aloysius McGrath: Will they be at the constitutional conference or not? That is the question. The Minister of State for Urban Affairs has indicated clearly that they would be consulted.


Pierre Elliott Trudeau: Well, Mr. Speaker, I repeat: they will be consulted.


Mr. Douglas (Nanaimo-Cowichan-The Islands):: Mr. Speaker, it is apparent that the government intends to move in two stages. I would like to ask a short question about each stage. I understand that in the first stage legislation will be brought down shortly to deal with those matters which come solely under the jurisdiction of the federal parliament. I want to ask the Prime Minister (Mr. Trudeau) if that includes the basic human rights to which he referred in his statement a short time ago or, in view of the fact that provincial governments have some voice in certain matters pertaining to human rights, whether this will be left until the second stage? Can we expect, in the legislation which is to be introduced later this month, clarification of the government's position with respect to basic human rights?


Pierre Elliott Trudeau: Yes, I think the question is very important and I shall attempt to answer it, first in general and then in particular. In general, Mr. Speaker, we all know there are some areas under the BNA Act-the Constitution of Canada-in which the federal government can act alone. There are other areas where the provinces can act alone. Then there are areas where the two levels must act together and, again, there
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are areas where they can act together but each in their own sphere. The bill of rights is in this fourth category. We intend bringing in a bill of rights indicating that parliament would be bound by it as a constitutional document. We realize that certain applications of a bill of rights cannot be binding on the provinces in the sense that they raise the matter of provincial jurisdiction. In these particular areas we hope that the provinces would want to be bound by the bill of rights. In other words, there would be a provision for opting in by the provinces, by concurrent legislation, by joint resolution or whatever the formula might be, into a bill of rights which we hope would eventually bind all Canadians.


Thomas Clement (Tommy) Douglas: I thank the Prime Minister for that answer. The second question I want to ask is with respect to phase II, which involves discussions between the federal and provincial governments. Having regard to the division of powers, particularly with respect to Sections 91 and 92 of the British North America Act and the amending formula, which is probably the most difficult part of all, and was certainly the rock upon which the Victoria charter foundered, I ask the Prime Minister this: what is to be the modus operandi which the government has in mind? Is a white paper to be prepared which will be submitted to the provinces, following which meetings will be held? Or will meetings be held first? Is the government intending to have some discussion in parliament or by a committee of parliament with regard to what the government has in mind, always recognizing that there might be changes as a result of negotiations with the provinces? Just what are the procedures which the government has in mind?


Pierre Elliott Trudeau: Mr. Speaker, with respect, might I slightly correct the preamble to the hon. member's question? It was not on the amending formula that the Victoria conference foundered, to use his expression. It was on something else. I believe there was general agreement at the Victoria conference, including the province of Quebec, on the amending formula. As I said in my letters to the premiers over the past years, we would hope that this formula would still serve us as a basis for patriating the constitution. What we intend to do in the course of the summer is to publish a document which would bring this subject to the attention of Canadians at large, as this white paper has done, and which would go into the various possibilities of amending formulas which historically have made some progress in Canada, and give rise to discussion among Canadians, in this House, in the legislatures and elsewhere, on this subject.
At the federal-provincial conference in the fall we would like to deal with the matter of patriation and amendment but we do realize that, strictly speaking, this could be considered outside the area of what we call phase I, since it does call for provincial consent. We do hope, however, that enough progress will be made on this matter so that we would be able to proceed by July 1 of next year not only with matters of federal jurisdiction but perhaps in a certain number of areas such as the bill of rights and the amending formula on which progress

could also be made. But we realize that on this we cannot act unilaterally and we hope there will be co-operation from provincial governments, which we think will be forthcoming if the opposition parties share our views on some of these matters, and that is why we intend to present it to parliament in as non-partisan a fashion as possible.


Mr. Claude-Andre Lachance (Lafontaine-Rosemont):: Mr. Speaker, following up on the questions put by the hon. member for Nanaimo-Cowichan-The Islands (Mr. Douglas), the paper tabled today by the right hon. Prime Minister (Mr. Trudeau) announces, for the implementation of the proposals contemplated in phase two of the constitutional reform, the promulgation of a new constitution for July 1, 1981. However, the paper does not seem to provide for any specific mechanism for federal-provincial negotiations such as that, for example, which was established to pave the way for the Victoria conference. It does not provide either for any process of popular identification with that effort to Canadianize our institutions. Nor does it specify whether a popular sanction is being contemplated by way of a referendum on that new constitution. Has the Prime Minister made provisions for a way of breaking the vicious circle of distrust and disillusionment that has set in the minds of Canadians since the failure of the Victoria conference with respect to the federal or provincial governments claiming the monopoly on good intentions in the area of constitutional proposals and what does he intend to do to associate as many Canadians as possible to that long awaited reform so it will best reflect the Canadian reality and that consensus the Prime Minister was referring to in his remarks will not be an illusory one and will not feed the frustration felt by many Canadians?


Mr. Speaker:: Order.


Pierre Elliott Trudeau: Mr. Speaker, the hon. member is perfectly right. That mechanism is not provided for in the white paper that we just tabled before the House but we intend to take precisely that problem before the House of Commons, before that joint committee of the House and the Senate and also at the premiers' meeting in the fall. There are certainly several sections under which the government could approach that problem, and the hon. member referred to some of those means. Before setting the final form we prefer to take the matter before the House and before the premiers.


David Samuel Horne MacDonald: Mr. Speaker, with respect to the statement in the document that the draft bill, which 1 assume will be introduced later this month, will obviously not be an item which will be passed directly without change, and the subsequent consultation that will take place this fall with the provinces, I wonder if the Prime Minister (Mr. Trudeau) can indicate if there is to be some sort of deadline to be applied to
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the provinces with respect to the consultation that will take place on phase I. In what way will the recommendations which come forward from some kind of meeting between the Prime Minister and his provincial counterparts come before this special joint committee so that they can be fully considered before a final bill is presented to parliament, particularly given the deadline that the Prime Minister has enunciated?


Pierre Elliott Trudeau: What we will table before the House of Commons is a bill for first reading. This is frequently done, as the House knows, so that there can be discussion on the basis of that bill. I have indicated that, following the committee report and following the federal-provincial conference, the government will be prepared in the next session of parliament to introduce a bill for first reading and adoption by the House. It is precisely because we want to make sure that we will meet the deadline of July 1 next year that we will attempt in the bill before the House to meet, as much as possible, the concerns expressed by the provinces, by the many parties in the House, and by the Canadian people, as regards the precise reforms that we are putting before the House. It is possible that on some of the proposals we are making we will find a better formula, and although the bill represents government policy to which we are all bound, we make it quite clear in the white paper that changes can be made to the bill between the form in which it is first presented and its form in the next session.


David Samuel Horne MacDonald: It is difficult to talk about a bill which is not before us, but I wonder to what degree the provinces will be able to make suggestions, perhaps fundamental suggestions, about the nature of the specifics that are in this draft bill, because I think that to some degree it circumscribes the fundamental consultation which takes place with the provinces. I suppose that the subsequent question then is: when those recommendations come to the committee and the committee makes its own recommendations, will there be any further consultations with the provinces before the government brings forward, as the Prime Minister said, its final bill for first reading in the next parliament?


Pierre Elliott Trudeau: The hon. member asks to what degree there will be consultation with the provinces.


David Samuel Horne MacDonald: No, the extent of change.


Pierre Elliott Trudeau: They will be given the bill and they will be present at the first ministers' conference in the autumn. We are anxious to improve the bill in any way that can be suggested by the provinces or by the parliamentary committee. I would just remind the hon. member that the very nature of this bill-subject of course to the provisions which I pointed out to the Leader of the Opposition (Mr. Clark), some of which will call for provincial consent if they are going to be bound by it-will be to act in areas under federal jurisdiction.
We believe that after weeks and months of consultation parliament must make up its mind at some point. I am not saying that should be in November, December, January or March; I am just saying that at some point we hope that the bill, presented in the next session of parliament, will reflect the
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collective wisdom of the government, of the opposition parties, and of the premiers of every province. But we are all realistic enough to know that it is unlikely that we will get every province to agree with the proposals for change that we are making. We already know from a press conference on Friday that at least one province, without having even seen the white paper, has decided that it is no good. So I cannot say that we will only proceed with the bill when everybody is agreed. 1 do hope that we will have established a large measure of consensus across the country, and particularly on all sides of the House.


Mr. Grafftey:: Mr. Speaker, the right hon. Prime Minister (Mr. Trudeau) has already alluded to the fact that a constitutional document is a political document in the best sense of the word and will require all parliamentary co-operation between the parties. I realize that there are two sides to every coin, but considering the fact that most of the members from the province of Quebec are sitting on the government side and, as everybody knows, most members from the west are on this side of the House, would it not have been wiser to constitute an all-party committee of the House before a bill of any kind was presented? I put that forward as a proposition. For example, I feel I might go to a committee where a bill has been presented and, although the government says it has read our party's proposals, where I will not feel there has been individual input. Would it not be wiser, I ask the Prime Minister, in view of what I said, to constitute an all-party parliamentary committee before we are faced with bills of any kind, even though we are only dealing with exclusively federal jurisdiction?


Pierre Elliott Trudeau: 1 must point out to the hon. member that this debate has been going on for quite a number of years, and I think that by now most of us have made up our minds generally on the way in which we think a new constitution should be oriented. The opposition party has published a policy paper indicating how they think the constitution should be reformed. As I said earlier, the government has benefited from this policy paper, much as we have benefited from the policy paper put out by the government of Ontario, from the western policy conference, and from statements made by various premiers across the land. 1 would remind the hon. member that there was such a committee which sat and which reported in 1972. The conclusions of that committee inspired us in drafting this document and in drafting the bill which will be put before the House.
At some point the hon. member must realize that it is up to someone to make up his mind and say, "This is what we think corresponds to the best interests of the country at this time and for a long period to come". This is what the bill will be. I know the hon. member for Brome-Missisquoi (Mr. Grafftey) well enough to know that he will not be inhibited merely because a bill is there for first reading only. I am sure he will continue to ensure that the government benefits from his wise thoughts in constitutional matters.

June 12, 1978
The Constitution


Ramon John Hnatyshyn: Mr. Speaker, I should like to refer the Prime Minister (Mr. Trudeau) to the statement of principle entitled: "Pre-eminence of citizens and of their freedoms". In part the principle reads:
The renewal of the federation must confirm the pre-eminence of citizens over institutions, guarantee their rights and freedoms, and ensure that these rights and freedoms are inalienable.
On a number of occasions this afternoon the Prime Minister spoke about leadership on the part of the federal government which he now leads. Is it his intention, in a non-partisan way, to bring forward amendments in respect of more odious provisions of such legislation, bills, and acts, as the Official Secrets Act and the War Measures Act? Some time ago the Prime Minister promised drastic changes in this regard. I wonder if he can give the leadership which he talks about in the area over which he and his government have exclusive jurisdiction, and indicate that immediate and dramatic steps will be taken to show where the government stands on this very important principle.


Pierre Elliott Trudeau: Mr. Speaker. I think the answer is contained in the knowledge we all have now of the present Canadian Bill of Rights. As we know, it is an act of federal parliament which is variously interpreted by the courts. I remind the hon. member that the Bill of Rights, brought in by the former leader of the Conservative party, makes an exception for the War Measures Act, and has provisions for the War Measures Act overriding normal acts of parliament. In the bill we bring forward, it is our intention to make sure that the Bill of Rights, as stated in the constitution, will have precedence over every and all bills of the House of Commons. That can apply to any bill to which the hon. member wants to refer.


Ramon John Hnatyshyn: Mr. Speaker, I accept the answer of the Prime Minister as far as it goes, but he has avoided and or neglected answering my specific question concerning his intentions in respect of the Official Secrets Act and the War Measures Act. Will he in fact demonstrate the good faith and the position the government takes in that connection?
The final part of my supplementary question is in respect of the entire question of freedom of information which is receiving some consideration now. In that regard, according to the Secretary of State (Mr. Roberts) and the government, the question which is causing concern within cabinet is whether the government will accept the proposition, as far as freedom of information is concerned, that the arbitration of the rights of Canadians will be one which is binding upon the government, notwithstanding the fact that the argument often used is that our parliamentary system is based on British tradition. Will he give us the assurance he is committed to the idea that whoever is to be the final arbiter, judicial or otherwise, the final arbiter will have the power to bind the institution of government and the cabinet in particular?


Pierre Elliott Trudeau: Mr. Speaker, with respect, 1 think we are beginning to deviate from the subject matter of this white paper. I want to assure the hon. member that legislation will be before his eyes very soon, before the end of the month. He

can read the sections on the Bill of Rights and fundamental guarantees. If he wants to propose some amendment, assuming the thought is not already there, to make the constitution supreme over the War Measures Act, or over the practices of cabinet secrecy and other such practices, I hope he feels free to move such an amendment.
[ Translation]


Mr. Charles Lapointe (Parliamentary Secretary to Minister of Transport):: Mr. Speaker, I should like to ask the right hon. Prime Minister whether according to the white paper, it is considered that the guarantee of linguistic equality suffices to establish the equality of the two founding nations. For instance, if we want to go further in that field, will the reform of the Supreme Court allow for the addition of a court, which might be called constitutional, where the Anglophones and Francophones of Canada would be represented equally? Finally, Mr. Speaker, still with a view to Canadianizing our institutions, is the government at this point willing to call in question again, or at the very least to reassess, our ties with the British Crown?


Pierre Elliott Trudeau: Mr. Speaker, in reply to the first question 1 must, regretfully, give the hon. member the same type of answer that I gave hon. members on all sides of the House, namely that at this stage I do not want to give the details of the specific provisions dealing with the supreme court in the bill we shall soon introduce in the House. As for the second question, Mr. Speaker, I can say to the hon. member that we intend to reaffirm the fact that the Canadian Constitution is a constitution that sets up a constitutional monarchy.


Mr. Speaker:: Order, please. I note there are other hon. members who wish to ask questions. Certainly I think time ought to be taken for them. In light of the time already spent, I think questions should be confined to those members who have been present throughout the discussion and have sought the floor to ask questions. As I have noted, those members are: the hon. member for Halifax (Mr. Stanfield), the hon. member for Esquimalt-Saanich (Mr. Munro), the hon. member for Yorkton-Melville (Mr. Nystrom), the hon. member for Joliette (Mr. La Salle), and the hon. member for Lapointe (Mr. Marceau).


Robert Lorne Stanfield: Mr. Speaker, perhaps my question will appear to be somewhat naive, but perhaps the Prime Minister (Mr. Trudeau) can indicate his views on this. Is it his intention to have this parliament deal with the first phase of this program?


Pierre Elliott Trudeau: Yes, Mr. Speaker.


Mr. Munro (Esquimalt-Saanich):: Mr. Speaker, my question is closely related to the one just asked. On page 25 of the white paper I notice the government pledges itself to seek passage of such constitutional legislation before July 1, 1979. Specifically I notice the following words: "pledges itself to seek passage".
June 12, 1978

Given the life of this parliament which, according to my understanding, will end on July 8 or 9, 1979, this particular legislation will have had to pass this House by May 8 or 9, 1979. In other words, some 11 months hence. Is that the understanding of the Prime Minister (Mr. Trudeau)?


Pierre Elliott Trudeau: Mr. Speaker, certainly the hon. member is mistaken when he talks about a date in May. Hopefully the date in July will permit us to proceed before the House of Commons well into the spring. I am sure there are other constitutional experts, but I hope we will not have to do this on the eve of July 1. I hope that well before winter is out parties will have made up their minds on what is best in terms of constitutional reform, and that they would be prepared to vote on it.


Donald W. Munro: Mr. Speaker, I think the Prime Minister deliberately misunderstood my question.
My other derives from comments which appear on page 24 of the white paper. I am referring to the amending procedure and the patriation. Recognizing as the white paper does that many of the propositions will have to be passed by the House of Commons in London, I come down to the form. The Prime Minister has talked about a bill. In effect, is he talking about bills or resolutions which will be forwarded to London for passage, including such things as the amending process and certain other features? Even the division of powers under our existing constitution, prior to the constitution being patriated, might well have to be approved, at least in substance, in London. How does the Prime Minister plan to proceed in this particular matter? Will it be by bill which would be something we would enact in this House? Will it be by resolution which would be forwarded to Westminster for sanction?


Pierre Elliott Trudeau: In the case of the measure that will be presented to the House before the end of the month, it is quite clearly a bill in the normal and regular form. Other steps such as patriation can and might be taken by way of joint resolution of both Houses, but that is not for debate at this particular phase now. We are talking of a bill which will be tabled before this House before the end of the month.


Mr. Nystrom:: Mr. Speaker, I have a brief question which I think is of importance to the Prime Minister (Mr. Trudeau). Recently I had the opportunity of meeting with the National Indian Brotherhood and with the Indian chiefs of Saskatchewan. They were concerned that the treaty rights of the Indian people be enshrined in any new constitution. I am wondering whether the Prime Minister is contemplating enshrining the treaty rights of the Indians in the constitution, as well as the rights of the Inuit people of Canada?


Pierre Elliott Trudeau: Mr. Speaker, we will make quite sure in the bill we want to present, and in any further action, that any rights enjoyed by the Indian and native people, the Inuit, will not be taken from them but, on the contrary, will be protected.
The Constitution


Lorne Edmund Nystrom: Mr. Speaker, I assume it can also be taken that the Indian people will be consulted before the bill is finally passed?


Pierre Elliott Trudeau: Yes, Mr. Speaker, and I would hope that the parliamentary committee would see its way clear, particularly in that area, to consult these groups.


Mr. Gilles Marceau (Lapointe):: During the weekend, it has been said that, according to the white paper which has been tabled, the federal government was not thinking of dropping any of its powers. Would the Prime Minister specify that this allegation is false and that the federal government intends to consider the abandonment of some of its powers, and perhaps to reshuffle the federal powers in a way which would be favourable to the federal government? Also, in this redistribution of powers, is the Prime Minister considering only a transfer of powers from the federal government to the provincial governments or vice versa or does he intend to give some importance to regional governments?


Pierre Elliott Trudeau: Mr. Speaker, the government's proposal to that effect is clear. On the basis of the two basic principles, which consist in the preservation of a true federation and in the protection of individual rights, we say that everything can be a matter of negotiation. So it is clear that in the area of the sharing of powers, we are prepared to discuss the transfer of powers in one way or the other so that the result would be more appropriate, functionally speaking, to the necessity of a better government.
In answer to the second question, Mr. Speaker, I would say that at the present stage of our proposals, we have not yet entered the area of the detailed distribution of powers and consequently, we cannot answer the hon. member's question immediately, but we wish to have in-depth discussions with the provinces in order to have their points of view on that issue.


Mr. Roch La Salle (Joliette):: Mr. Speaker, I noted some remarks made by the right hon. Prime Minister a moment ago, and what worries me a little is the importance that was given to the Pepin-Robarts commission. Last year, the Prime Minister had announced with much emphasis the creation of that commission and I think that all Canadians expected a lot from that group of experts. We realize that the commission may not have been able to make its report within the prescribed delay, but how can the right hon. gentleman explain to the Canadian people that, given those delays, he has decided himself to write this document which in fact repeats many comments he has already made to us, with the only difference that he put them on paper? I think that the Canadian people expected very much from that report and we had reason to believe that it would help parliament make the new legislation that the Prime Minister intends to submit. Does the Prime Minister really

June 12, 1978
The Constitution
intend to present his draft legislation before the report of the commission?


Pierre Elliott Trudeau: Mr. Speaker, as many other hon. members, the hon. member pestered me with questions to know when we were going to table our constitutional proposals. We have just tabled them. I indicated earlier, in answer to his leader, that of course we would have liked to have the views of the Pepin-Robarts commission before tabling this first project, but I explained that it was not possible. The Pepin-Robarts commission had too much work, many more consultations than expected at first; this session will close at the end of the month and we think that the country and the opposition in particular would have a right to complain if we had not tabled our proposals before the Pepin-Robarts commission tabled their own, either in late fall or in midwinter. So we decided to go ahead on our own but, as I explained earlier, during the next session of parliament we will introduce a new bill which will take into consideration not only the views of all hon. members, but also resolutions from the Pepin-Robarts commission.


Roch La Salle: Mr. Speaker, does the right hon. Prime Minister understand my question? He must recognize that his statement is extremely serious as concerns the cost of this commission for Canadians. I think that, like all members of the House, he recognizes the great value of the members of the commission and the importance that it has had. Now, the right hon. Prime Minister finds it very easy to say: Well, they did not have time to submit their report so I have decided to write a book which should be entitled "The Future Canadian Constitution".
I am sorry, Mr. Speaker, that my colleagues have comments to make on this issue, but Canadians have given great importance to this report, Mr. Robarts and Mr. Pepin have stated how important it is to submit their report, we await with great anticipation the report of this commission, and I do not think that the right hon. Prime Minister can ignore this report to introduce constitutional reforms. I would be very insulted if I were a member of this commission. I therefore ask the right hon. Prime Minister to at least attempt to obtain the report of the commission so that the House of Commons can discuss this issue on the basis of the very valuable information that the commission should normally be able to provide us with after the hearings that it held throughout the country.


Pierre Elliott Trudeau: Mr. Speaker, the hon. member has enough experience in this House to know that the government does not control royal inquiry commissions and does not decide when they should submit their reports. We were placed before the fact that the session was coming to an end before we had received the report from the royal inquiry commission. What I am trying to explain to the hon. member is that the government is meeting its responsibilities by expressing its point of view while being careful to say that this is the policy of the government and that we are prepared to consider the opinions

of the opposition parties. The hon. member says that the country will pay for the commission. The country also pays him to sit in the House, but as we know the hon. member would have been the first to complain if the government had waited until November or December to bring in constitutional proposals. I seem to recall that the hon. member has been among those who have asked me most often to take a position in this regard and to submit proposals. Now that we have done so, of course, he is blaming us for having done precisely what he asked us to do.


BUSINESS OF THE HOUSE
Joseph Jacques Jean Chrétien: Mr. Speaker, I wish to inform the House that it has not been possible for the party representatives to reach an agreement pursuant to Standing Order 75A or 75B with regard to the allocation of time for study in committee of the whole of Bill C-56, to amend the statute law relating to income tax and to authorize payments related to provincial sales tax reductions. [Translation]
For this reason, pursuant to Stading Order 75C, 1 give notice that at the next sitting I will be proposing that two additional days be allocated to the study of the bill in committee of the whole.


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. Roger Young (Parliamentary Secretary to Minister of Justice):: Mr. Speaker, the following questions will be answered today: Nos. 1,172, 1,511 and 1,554 to 1,585 inclusive.


Mr. Andre: 1.	What is the Crown's precise financial interest in Metropolitan Area Growth Investments Limited as administered by the Department of Regional Economic Expansion and on what date was such interest acquired, at what cost and for what reason?
2.	What was the book value of the Crown's equity on the date of acquisition and what is its latest estimated book value?
3.	To date, what is the Crown's total investment, including equity costs, contributions to operating funds, debt forgiveness and what is the Crown's total realized profit from such investment?
4.	In what manner is the Crown's interest represented (a) on the board of directors (b) in its senior management?
June 12, 1978

5.	Did the government make a policy decision in regard to the future disposition of its interest?


Mr. Donald Wood (Parliamentary Secretary to Minister of Regional Economic Expansion):: 1. (a) Crown's financial interest-Please refer to question No. 5356 answered June 2, 1976. (b) Date interest required-Please refer to question No. 5356 answered June 2, 1976. (c) Cost-Please refer to question No. 5356 answered June 2, 1976. (d) Reason-The company was established for the purpose of identifying industrial and commercial business opportunities in Halifax-Dartmouth area and establishing business operations to pursue these opportunities.
2.	(a) Book value of Crown's equity-Please refer to question No. 5356 answered June 2, 1976. (b) Crown's latest estimated book value-As of March 31, 1977 the Crown's estimated book value was $5.8 million.
3.	(a) Crown's total investment-See part 1 above, (b) Equity cost-See part 1 above, (c) Contribution to operation funds-None, (d) Debt forgiveness-None, (e) Crown's realized profit-None, corporation profits returned to earned surplus.
4.	(a) Two board members, (d) None.
5.	No.


Mr. Forrestall: Has the government conducted a study on the impact which the proposed reduction in rates on containers transitive through the Montreal/Lake Ontario section of the St. Lawrence Seaway may have on the ports of Halifax and Saint John and (a) if not, for what reason (b) if so, in the government's best estimate, will the proposed reduction help shipping lines such as Ernst Russ (Great Lakes European Line) in competing with shipping lines serving Halifax and/or Saint John, for cargo originating in or destined to Toronto?


Otto Emil Lang: (a) Modifications to the structure of tolls have been based on extensive discussions both in Canada and the United States and many studies in the two countries have assessed the sensitivity of seaway traffic to tolls, (b) A net reduction of less than 20 cents per ton in the Montreal-Lake Ontario section will only affect the containers consigned to Lake Ontario ports. This amount is almost insignificant in the overall cost of bringing containers to the mid-continent and the new rates are not expected to affect one way or the other the competitive position of Great Lakes ports vis-a-vis Atlantic ports.


[Stage Direction]
Questions Nos. 1,554 to 1,585-Mr. Jones:
No. 1,554
1.	How many persons in the office of the Prime Minister are non-Canadians? What are their names, salaries and respective citizenships?
2.	How long have these persons been in Canada and how long have they been employed by the Government of Canada?
3.	Do the non-Canadians in the office of the Prime Minister intend on taking Canadian citizenship and if so, when? If not, why?
4.	How many persons in the office of the Prime Minister were once citizens of France?
Order Paper Questions
5.	How many persons in the office of the Prime Minister were once citizens of England?
No. 1,555
1.	How many persons in the Department of the Secretary of State for the Environment are non-Canadians? What are their names, salaries and respective citizenships?
2.	How long have these persons been in Canada and how long have they been employed with this department?
3.	Do the non-Canadians in the Department of the Secretary of State for the Environment intend on taking Canadian citizenship and if so, when? If not, why?
4.	How many persons in the Department of the Secretary of State for the Environment were once citizens of France?
5.	How many persons in the Department of the Secretary of State for the Environment were once citizens of England?
No. 1,556
1.	How many persons in the office of the Deputy Prime Minister are non-Canadians? What are their names, salaries and respective citizenships?
2.	How long have these persons been in Canada and how long have they been employed by the Government of Canada?
3.	Do the non-Canadians in the office of the Deputy Prime Minister intend on taking Canadian citizenship and if so, when? If not, why?
4.	How many persons in the office of the Deputy Prime Minister were once citizens of France?
5.	How many persons in the office of the Deputy Prime Minister were once citizens of England?
No. 1,557
1.	How many persons in the Department of the Secretary of State are non-Canadians? What are their names, salaries and respective citizenships?
2.	How long have these persons been in Canada and how long have they been employed by this department?
3.	Do the non-Canadians in the Department of the Secretary of State intend on taking Canadian citizenship and if so, when? If not, why?
4.	How many persons in the Department of the Secretary of State were once citizens of France?
5.	How many persons in the Department of the Secretary of State were once citizens of England?
No. 1,558
1.	How many persons in the Department of Health and Welfare are non-Canadians? What are their names, salaries and respective citizenships?
2.	How long have these persons been in Canada and how long have they been employed by this department?
3.	Do the non-Canadians in the Department of Health and Welfare intend on taking Canadian citizenship and if so, when? If not, why?
4.	How many persons in the Department of Health and Welfare were once citizens of France?
5.	How many persons in the Department of Health and Welfare were once citizens of England?
No. 1,559
1.	How many persons in the Department of the Postmaster General are non-Canadians? What are their names, salaries and respective citizenships?
2.	How long have these persons been in Canada and how long have they been employed by the Government of Canada?
3.	Do the non-Canadians in the Department of the Postmaster General intend on taking Canadian citizenship and if so, when? If not why?
4.	How many persons in the Department of the Postmaster General were once citizens of France?
5.	How many persons in the Department of the Postmaster General were once citizens of England?
6300
[Stage Direction]
June 12, 1978
Order Paper Questions
No. 1,560
1.	How many persons in the Department of the Solicitor General are non-Canadians? What are their salaries, names and citizenships?
2.	How long have these persons been in Canada and how long have they been employed by this department?
3.	Do the non-Canadians in the Department of the Solicitor General intend on taking Canadian citizenship and if so, when? If not, why?
4.	How many persons in the Department of the Solicitor General were once citizens of France?
5.	How many persons in the Department of the Solicitor General were once citizens of England?
No. 1,561
1.	How many persons in the Department of the Secretary of State for Small Business are non-Canadians? What are their names, citizenships, and salaries?
2.	How long have these persons been in Canada and how long have they been employed by this department?
3.	Do the non-Canadians in the Department of the Secretary of State for Small Business intend on taking Canadian citizenship and if so, when? If not, why?
4.	How many persons in the Department of the Secretary of State for Small Business were once citizens of France?
5.	How many persons in the Department of the Secretary of State for Small Business were once citizens of England?
No. 1,562
1.	How many persons in the Department of the Secretary of State for Fitness and Amateur Sport are non-Canadians? What are their names, salaries and citizenships?
2.	How long have these persons been in Canada and how long have they been employed by the Government of Canada?
3.	Do the non-Canadians in the Department of the Secretary of State for Fitness and Amateur Sport intend on taking Canadian citizenship and if so, when? If not, why?
4.	How many persons in the Department of the Secretary of State for Fitness and Amateur Sport were once citizens of France?
5.	How many persons in the Department of the Secretary of State for Fitness and Amateur Sport were once citizens of England?
No. 1,563
1.	How many persons in the Department of National Revenue are non-Canadians? What are their names, salaries and citizenships?
2.	How long have these persons been in Canada and how long have they been employed by the Canadian government?
3.	Do the non-Canadians in the Department of National Revenue intend on taking Canadian citizenship and if so, when? If not, why?
4.	How many persons in the Department of National Revenue were once citizens of France?
5.	How many persons in the Department of National Revenue were once citizens of England?
No. 1,564
1.	How many persons in the Department of Industry, Trade and Commerce are non-Canadians? What are their names, salaries and citizenships?
2.	How long have these persons been employed by the Government of Canada and how long have they been in Canada?
3.	Do the non-Canadians in the Department of Industry, Trade and Commerce intend on taking Canadian citizenship and if so, when? If not, why?
4.	How many persons in the Department of Industry, Trade and Commerce were once citizens of France?
5.	How many persons in the Department of Industry, Trade and Commerce were once citizens of England?

No. 1,565
1.	How many persons in the office of the Commissioner of Official Languages are non-Canadians? What are their names, salaries, and citizenships?
2.	How long have these persons been in Canada and how long have they been employed by the Government of Canada?
3.	Do the non-Canadians in the office of the Commissioner of Official Languages intend on taking Canadian citizenship and if so, when? If not, why?
4.	How many persons in the office of the Commissioner of Official Languages were once citizens of France?
5.	How many persons in the office of the Commissioner of Official Languages were once citizens of England?
No. 1,566
1.	How many persons in the Department of Finance are non-Canadians? What are their respective citizenships? What are their names?
2.	What are the salaries of the non-Canadians, if any, of the Department of Finance, and how long have they been employed in this department?
3.	Do the non-Canadians in the Department of Finance intend on taking citizenship in Canada and if not why?
4.	How many persons in the Department of Finance were once citizens of France?
5.	How many persons in the Department of Finance were once citizens of England?
No. 1,567
1.	How many persons in the Department of Labour are non-Canadians? What are their respective citizenships? What are their names?
2.	What are the salaries of the non-Canadians, if any, of the Department of Labour, and how long have they been employed in this department?
3.	Do the non-Canadians in the Department of Labour intend on taking citizenship in Canada and if not why?
4.	How many persons in the Department of Labour were once citizens of France?
5.	How many persons in the Department of Labour were once citizens of England?
No. 1,568
1.	How many persons in the Department of Justice are non-Canadians? What are their respective citizenships? What are their names?
2.	What are the salaries of the non-Canadians, if any, of the Department of Justice, and how long have they been employed in this department?
3.	Do the non-Canadians in the Department of Justice intend on taking citizenship in Canada and if not why?
4.	How many persons in the Department of Justice were once citizens of France?
5.	How many persons in the Department of Justice were once citizens of England?
No. 1,569
1.	How many persons in the Department of External Affairs are non-Canadians? What are their respective citizenships? What are their names?
2.	What are the salaries of the non-Canadians, if any, of the Department of External Affairs, and how long have they been employed in this department?
3.	Do the non-Canadians in the Department of External Affairs intend on taking citizenship in Canada and if not why?
4.	How many persons in the Department of External Affairs were once citizens of France?
5.	How many persons in the Department of External Affairs were once citizens of England?
No. 1,570
1.	How many persons in the office of the Treasury Board are non-Canadians? What are their names, citizenships and salaries?
June 12, 1978
[Stage Direction]
2.	How long have these persons been in Canada and how long have they been employed in this department?
3.	Do the non-Canadians in the Treasury Board department intend on taking Canadian citizenship and if so when?
4.	How many persons in the office of the Treasury Board were once citizens of France?
5.	How many persons in the office of the Treasury Board were once citizens of England?
No. 1,571
1.	How many persons in the Department of Transport are non-Canadians? What are their respective citizenships? What are their names?
2.	What are the salaries of the non-Canadians, if any, of the Department of Transport, and how long have they been employed in this department?
3.	Do the non-Canadians in the Department of Transport intend on taking citizenship in Canada and if not, why?
4.	How many persons in the Department of Transport were once citizens of France?
5.	How many persons in the Department of Transport were once citizens of England?
No. 1,572
1.	How many persons in the Department of Supply and Services are non-Canadians? What are their respective citizenships? Give names.
2.	What are the salaries of the non-Canadians, if any, of the Department of Supply and Services, and how long have they been employed in this department?
3.	Do the non-Canadians in the Department of Supply and Services intend on taking citizenship in Canada and if not, why?
4.	How many persons in the Department of Supply and Services were once citizens of France?
5.	How many persons in the Department of Supply and Services were once citizens of England?
No. 1,573
1.	How many persons in the Department of Energy, Mines and Resources are non-Canadians? What are their respective names, citizenships and salaries?
2.	How long have these persons been in Canada and how long have they been employed by the Government of Canada?
3.	Do the non-Canadians in the Department of Energy, Mines and Resources intend on taking citizenship in Canada and if not, why?
4.	How many persons in the Department of Energy, Mines and Resources were once citizens of France?
5.	How many persons in the Department of Energy, Mines and Resources were once citizens of England?
No. 1,574
1.	How many persons in the Department of Agriculture are non-Canadians? What are their respective citizenships? What are their names?
2.	What are the salaries of the non-Canadians, if any, in the Department of Agriculture, and how long have they been employed in this department?
3.	Do the non-Canadians in the Department of Agriculture intend on taking citizenship and if not, why?
4.	How many persons in the Department of Agriculture were once citizens of France?
5.	How many persons in the Department of Agriculture were once citizens of England?
No. 1,575
1.	How many persons in the Department of Consumer and Corporate Affairs are non-Canadians? What are their respective citizenships? Give names.
2.	What are the salaries of the non-Canadians, if any, in the Department of Consumer and Corporate Affairs, and how long have they been employed in this department?
3.	Do the non-Canadians in the Department of Consumer and Corporate Affairs intend on taking Canadian citizenship and if not, why?
Order Paper Questions
4.	How many persons in the Department of Consumer and Corporate Affairs were once citizens of France?
5.	How many persons in the Department of Consumer and Corporate Affairs were once citizens of England?
No. 1,576
1.	How many persons in the Department of Indian Affairs and Northern Development are non-Canadians? What are their respective citizenships? Give names.
2.	What are the salaries of the non-Canadians, if any, in the Department of Indian Affairs and Northern Development, and how long have they been employed in this department?
3.	Do the non-Canadians in the Department of Indian Affairs and Northern Development intend on taking citizenship and if not, why?
4.	How many persons in the Department of Indian Affairs and Northern Development were once citizens of France?
5.	How many persons in the Department of Indian Affairs and Northern Development were once citizens of England?
No. 1,577
1.	How many persons in the Department of Urban Affairs are non-Canadians? What are their respective citizenships? Give names.
2.	What are the salaries of the non-Canadians, if any, in the Department of Urban Affairs, and how long have they been employed in this department?
3.	Do the non-Canadians in the Department of Urban Affairs intend on taking citizenship in Canada and if not, why?
4.	How many persons in the Department of Urban Affairs were once citizens of France?
5.	How many persons in the Department of Urban Affairs were once citizens of England?
No. 1,578
1.	How many persons in the Department of Veterans Affairs are non-Canadians? What are their respective citizenships? What are their names?
2.	What are the salaries of the non-Canadians, if any, in the Department of Veterans Affairs, and how long have they been employed in this department?
3.	Do the non-Canadians in the Department of Veterans Affairs intend on taking citizenship in Canada and if not, why?
4.	How many persons in the Department of Veterans Affairs were once citizens of France?
5.	How many persons in the Department of Veterans Affairs were once citizens of England?
No. 1,579
1.	How many persons in the Department of Federal-Provincial Relations are non-Canadians? What are their respective citizenships? What are their names?
2.	What are the salaries of the non-Canadians, if any, in the Department of Federal-Provincial Relations, and how long have they been employed in this department?
3.	Do the non-Canadians in the Department of Federal-Provincial Relations intend on taking citizenship and if not, why?
4.	How many persons in the Department of Federal-Provincial Relations were once citizens of France?
5.	How many persons in the Department of Federal-Provincial Relations were once citizens of England?
No. 1,580
1.	How many persons in the Department of Communications are non-Canadians? What are their respective citizenships? What are their names?
2.	What are the salaries of the non-Canadians, if any, in the Department of Communications, and how long have they been employed in this department?
3.	Do the non-Canadians in the Department of Communications intend on taking citizenship and if not, why?
80045-32/2
[Stage Direction]
June 12, 1978
Order Paper Questions
4.	How many persons in the Department of Communications were once citizens of France?
5.	How many persons in the Department of Communications were once citizens of England?
No. 1,581
1.	How many persons in the Department of National Defence are non-Canadians? What are their respective citizenships? What are their names?
2.	What are the salaries of the non-Canadians, if any, in the Department of National Defence, and how long have they been employed in this department?
3.	Do the non-Canadians in the Department of National Defence intend on taking citizenship and if not, why?
4.	How many persons in the Department of National Defence were once citizens of France?
5.	How many persons in the Department of National Defence were once citizens of England?
No. 1,582
1.	How many persons in the Department of Public Works and Science and Technology are non-Canadians? What are their respective citizenships?
2.	What are the salaries of the non-Canadians, if any, in the Department of Public Works and Science and Technology, and how long have they been employed in this department?
3.	Do the non-Canadians in the Department of Public Works and Science and Technology intend on taking citizenship and if not, why?
4.	How many persons in the Department of Public Works and Science and Technology were once citizens of France?
5.	How many persons in the Department of Public Works and Science and Technology were once citizens of England?
No. 1,583
1.	How many persons in the Department of Fisheries and the Environment are non-Canadians? What are their respective citizenships?
2.	What are the salaries of the non-Canadians, if any, in the Department of Fisheries and the Environment, and how long have they been employed in this department?
3.	Do the non-Canadians in the Department of Fisheries and the Environment intend on taking citizenship and if not, why?
4.	How many persons in the Department of Fisheries and the Environment were once citizens of France?
5.	How many persons in the Department of Fisheries and the Environment were once citizens of England?
No. 1,584
1.	How many persons in the Department of Regional Economic Expansion are non-Canadians? What are their respective citizenships?
2.	What are the salaries of the non-Canadians, if any, in the Department of Regional Economic Expansion, and how long have they been employed in this department?
3.	Do the non-Canadians in the Department of Regional Economic Expansion intend on taking citizenship and if not, why?
4.	How many persons in the Department of Regional Economic Expansion were once citizens of France?
5.	How many persons in the Department of Regional Economic Expansion were once citizens of England?
No. 1,585
1.	How many persons in the Department of Employment and Immigration are non-Canadians? What are their names, citizenships, and salaries?
2.	How long have these persons been in Canada and how long have they been employed by this department?
3.	Do the non-Canadians in the Department of Employment and Immigration intend on taking Canadian citizenship and if not, why?

4.	How many persons in the Department of Employment and Immigration were once citizens of France?
5.	How many persons in the Department of Employment and Immigration were once citizens of England?
Hon. John Roberts (Secretary of State):: l am informed by the Public Service Commission as follows: records are not kept in such a way as to enable the Public Service Commission to answer parts 3, 4 and 5 of these questions. In addition, the necessary data to endeavour to answer parts 1 and 2 would be incomplete, unreliable and prohibitively costly to provide.


Roger Carl Young: 1 would ask, Mr. Speaker, that the remaining questions be allowed to stand.


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


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House proceeded to the consideration of a ways and means motion to amend the Income Tax Act.
Joseph Jacques Jean Chrétien: That a ways and means motion to amend the Income Tax Act laid upon the table on Thursday, June 8, 1978, be concurred in.


[Stage Direction]
Motion agreed to.


Mr. Speaker:: Order. It is my duty, pursuant to Standing Order 40, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Victoria (Mr. McKinnon)-Transport-Coast guard building in Victoria Harbour, B.C.; the hon. member for Selkirk (Mr. Whiteway)-Urban Affairs-Possible conflict of interest respecting deputy minister of urban affairs; the hon. member for Kootenay West (Mr. Brisco)-Airports-Safety facilities at Cranbrook, B.C.
June 12, 1978



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Thursday, June 8, consideration in committee of the whole of Bill C-56, to amend the statute law relating to income tax and to authorize payments related to provincial sales tax reductions-Mr. Chretien-Mr. Turner in the chair.
On clause 1.
Ramon John Hnatyshyn: Mr. Chairman, we have just now heard the motion put forward by the Minister of Finance in respect to another closure. If there is any sense of outrage on the part of those people who are watching this proceeding, this must certainly fuel that sense. The fact of the matter is that we have now had one day in committee of the whole to consider this bill clause by clause. Within one hour's time of starting this consideration, the people on the other side supporting the government were yelling and screaming, "filibuster" and "time for closure." They did not even give us a chance to get our preliminary remarks out in connection with this bill and the Minister of Finance is now standing up at this point in time informing us of closure.
I know how much he hates committee of the whole and hates to answer questions. If members will recall, the last time we considered this piece of legislation the minister actually refused to answer questions. He sat in his place, he walked out of the chamber, and he refused to answer any questions. There were legitimate questions put to him in accordance with the ruling of the Chairman by people on this side of the House. He either did not know or was afraid to give the answers. It is no wonder-


Joseph Jacques Jean Chrétien: Mr. Chairman, a question of privilege-


The Assistant Deputy Chairman:: The Minister of Finance on a question of privilege.


Joseph Jacques Jean Chrétien: Mr. Chairman, the hon. member has stated something that is not true. I would like to answer the questions, but according to the ruling of the Chairman on clause 1 there is no obligation on me to reply to any of the questions. I would like to state very categorically that we have had a full day on clause 1 already, and not one single question has been asked of me. If the hon. member wishes to proceed clause by clause, I am waiting and eager. I have not imposed closure, but have given time allocation which means that there are three days available to discuss this bill.
After 19 days, Mr. Chairman, we have not finished clause 1 as yet, and any observer would realize what is going on. The opposition merely wishes to score some political points which they are losing because they are in bed with the PQ and they do not feel comfortable with it.
Income Tax Act


Ramon John Hnatyshyn: Mr. Chairman, the fact is that this is the kind of pathetic rhetoric the minister raises, ostensibly on a point of privilege, when he knows full well that he has absolutely nothing upon which to base his point. I take particular umbrage at the Minister of Finance questioning your ruling, because it was clear last week that clause 1 was an opportunity to discuss this particular legislation in a general way and an opportunity to obtain information fundamental to the bill. However, when we put the question to the minister dealing with his intentions with respect to the particular provisions of this bill, he refused to answer and left the chamber. We know how uncomfortable he is because he has no answers, and for him to come forward with the very boring response that we are somehow in bed with one person or another is an insult, not only to his leader in Quebec, but to every western provincial premier, most political observers, and the people in his own party. I would hope that he would at least desist from insulting his own colleagues in his own party if he insists on insulting the opposition.
At the close of proceedings last day, Mr. Chairman, I put a question to the minister's parliamentary secretary, as he was not there, in the hope that he would break new ground and perhaps answer a question. If the minister refuses to answer or is afraid to answer, then that is fine, but I pointed out that I thought it was a legitimate and fundamental question. The minister has brought in the ways and means motion, and he has tabled it at the last moment. They way in which he has handled this whole bill has been with a sense of incompetence, and one wonders how long he is going to be in this portfolio let alone an election, and whether or not the Prime Minister can tolerate having him refusing to answer questions on a very important bill.
There is provision in the amendments put forward under clause 13(b) of the ways and means motion which states:
-no interest be payable on the portion of any refund arising by virtue of such reduction.
Would the minister tell the House, in view of the contents of the bill, what the purpose is of having that particular provision in the ways and means motion?


Joseph Jacques Jean Chrétien: Mr. Chairman, it was by way of reply to a ruling of the Chair that we amended the ways and means motion to have a similarity between it and clauses 30(a) and 30(b). It was done to ensure that the ways and means motion was in parity, if I may use that term, with the bill.


Ramon John Hnatyshyn: If my recollection is correct, Mr. Chairman, that particular aspect of it is not contained in the bill with respect to the interest division. I would ask him again if he can now tell us why that particular phrase was used in terms of the ways and means motion, as to why reference is made that "no interest be payable on the portion of any refund arising by virtue of such a reduction."


Joseph Jacques Jean Chrétien: Mr. Chairman, according to clause 30(b) the refund will be $85, payable to the taxpayers of Quebec in compensation for the $186 million that was left on the table by

June 12, 1978
Income Tax Act
the Quebec government. The refund under clause 30(b) will be made to the individual, and it will be made as soon as possible, but the government does not intend to pay any interest.


Ramon John Hnatyshyn: The minister has now raised, in the course of his response, the fact that his government intends to pay back the $85 to the individual taxpayers in Quebec. I would ask him when it is the intention of his government to make that payment, having regard to the provision of the ways and means motion provision with respect to interest. Will this be an immediate payment, or is the minister intending to pay it in August so that there would be no suggestion, for example, that the minister would be so crass as to pay it out before an election campaign? Will the minister commit himself now as to when that money is going to be paid? It is a fundamental question, and I know that the minister would not want to be accused of playing petty, crass politics, but on the other hand perhaps he could give us an apolitical answer right now.


Joseph Jacques Jean Chrétien: Mr. Chairman, I explained what it was about clause 30(b). I hope members of the committee will pass clauses 1 to 29 and then we will be in a very good position to discuss clauses 30 and 30(b).


Ramon John Hnatyshyn: Mr. Chairman, I take it from that response that the minister is trying to weasel out of answering certain questions. He started off on a proper basis. We are considering a fundamental amendment by way of a ways and means motion-


An hon. Member:: Get to clause 30.


Ramon John Hnatyshyn: The parliamentary secretary may think we should accommodate the government. Maybe he has a concept of the way the government should work and the way members of the opposition should ask their questions. I do not believe any thinking person subscribes to that point of view.
The minister brought in an amendment to the ways and means motion because of his own ineptitude. Before we progress with clause by clause consideration of the bill I want to find out how this will affect the operation of the bill as a whole. A substantial amount is going to be paid out of the consolidation fund, and before we carry on I think we are entitled to find out from the minister when he is going to pay $85 having regard to the interest provision he has included in the ways and means motion.
[ Translation]


Joseph Jacques Jean Chrétien: I will answer with great pleasure when we discuss clause 30(a) or 30(b). At this point, according to the rules, I am not compelled to answer these questions. Following the ruling given by the Chair the other day, government members can make some observations if they want to, but I am not obliged to answer questions, except if I am dealing with a precise clause, and now this precise clause is clause 1. I must draw the Chair's attention to the fact that we have been discussing this matter for 19 or 20 days now; moreover, I think

that today is the twelfth or thirteenth day of debate on the bill and, believe it or not, Mr. Chairman, we have not dealt with one single question relating to clause 1. Hence, if the hon. member wishes to ask me questions on clause 1, it will be my pleasure to answer them and, in accordance with the desire of the committee, we shall listen to the comments of hon. members but I will answer precise questions only when I get to precise clauses.


Ramon John Hnatyshyn: Mr. Chairman, the minister is completely wrong in two respects. First of all he is wrong about your ruling. We all understand that. Of course, the minister is not obliged to answer any questions and there is no way that you, as Chairman, can compel him to-not by bringing in the Sergeant at Arms or by using the mace-over his head, probably-to force him to answer questions. He refuses to answer any questions, so I can only draw the conclusion that he does not know anything. He does not understand the bill and he does not understand the motion so he brings in closure-he may call it time allocation-because he is quite uncomfortable here. He squirms in his seat and says we should wait until we get to clause 30 and then he will answer.
We are quite within our rights to ask questions. If the minister persists in not answering he will have to live with the reputation of being incompetent and unable to deal with them. The second point on which he has misled the House-probably unwittingly due to his lack of knowledge-is that he implies the world will stop if we do not pass this bill tomorrow or the day after. Anyone with an interest in budgetary matters recognizes this as a misstatement of fact. The budget tax cut and each and every piece of legislation set out in the terms of the budget can come into effect whether we pass them now, after another session of parliament, or even after an election. What we are trying to do in committee of the whole is to assist the minister so that he will not make any serious blunders. He cannot understand that.
We are trying to ask questions to bring out precisely what he intends to do so that he will not end up with egg on his face. If he is trying to suggest that these items have to be passed by tomorrow, he should remember that this government has developed the unfortunate practice of bringing down legislation arising out of a budget sometimes almost a year after the budget. We have just finished discussing a bill relating to the budget brought down on March 31, 1977. The minister should not try to impress his own people in Shawinigan with how knowledgeable he is.
I deal with one simple, fundamental proposition, and the Chairman has ruled that we can ask questions. He has implied by the fact that we can ask those questions that the minister, if he knew what he was about, should answer them. That is the interpretation we put on this ruling-not that he is not obliged to answer until we reach clause 30.
Will the minister tell the House when he intends to pay the $85 to the taxpayers in the province of Quebec? That is fundamental to this whole issue.
June 12, 1978


Mr. Railton:: Clause 30.


Ramon John Hnatyshyn: The hon. member for Welland understands this. He is an expert in financial matters and understands that the ways and means motion was changed by the minister at the last minute to cover up his ineptitude. I want to find out when the payment will be made out of the federal fund.


Joseph Jacques Jean Chrétien: Mr. Chairman, I have amended the ways and means motion but that has not affected the bill at all. The bill is the same and it has been in front of the House for more than a month. I have not put forward any amendment on clauses 30 and 30(6). If the hon. member reads the bill he will see that the payment will be made as soon as possible after the bill is passed.


Ramon John Hnatyshyn: I do not know why the minister cannot give us an indication-


Joseph Jacques Jean Chrétien: As soon as possible.


Ramon John Hnatyshyn: I do not hold myself up as an expert on government financing, but even I know that the provisions of the bill go forward. The effective dates go forward. If the minister wants to demonstrate that he knows anything about his portfolio he should tell the House what the plans of his department are in regard to making that payment. If he does not know I will accept that, but let him say so now.


Charles Robert Turner: Order, please. I have to inform the hon. member that his time has expired, but I will allow the minister to answer the question.


Joseph Jacques Jean Chrétien: Mr. Chairman, I should like to quote to the hon. member the decision of the Chairman on June 8 as reported at page 6193 of Hansard-.
-when considering clause 1 of the bill in committee of the whole, to allow members to express opinions or ask questions of a general nature.
I think the questions of the hon. member are of a very precise nature. I say if the bill is passed the government intends to proceed with the payments as soon as possible. We have to do the processing, and it is up to the Minister of National Revenue to make the final decision. "As soon as possible" is as soon as possible.


Cecil Morris Smith: Dealing with clause 1, Mr. Chairman, I have a few questions. I should like a definition of "remote location" referred to in clause 1.


Joseph Jacques Jean Chrétien: Mr. Chairman, it is the same as the decision we gave when we had the bill as the income tax bill, Bill C-ll, which we debated last fall. Incidentally, I should like to congratulate the hon. member for Churchill because, after 19 days, at last we have a precise question on one clause, according to the rules.
The definition of remote location is as follows:
(ii) a location at which, by virtue of its remoteness from any established
community, the taxpayer could not reasonably be expected to establish and
maintain a self-contained domestic establishment,
Income Tax Act


Cecil Morris Smith: Mr. Chairman, maybe I asked the first question, but I did not get the first answer I can tell you.


Some hon. Members:: Oh, oh!


Cecil Morris Smith: That is not a definition of a remote location. Is it north of the 52nd parallel or north of the 53rd parallel, or where is the remote location? I would like a definition of just where that applies.


An hon. Member:: West of Ottawa.


Cecil Morris Smith: Does it apply to Churchill, or does it apply to some place in Newfoundland? Does it apply to somewhere in Ontario? I think we should have something definite, whether it is north of the 52nd parallel, the 53rd or the 60th, or wherever it is.


Joseph Jacques Jean Chrétien: Mr. Chairman, it is not related to a zone in Canada, it is related to a locality. For example, there are some people who work quite south in the forests, I am thinking of my own area of Montmorency or north of Joliette, where they are staying in camps away from their houses. Also, there are those who work on ships. These people could be south of the Churchill area. If a person is in a ship travelling under the Canadian flag and covered by federal income taxes, and he is in the middle of an ocean, he cannot have a house. So the expenses paid for that person on board a ship qualify under this provision of the act. It is not in relation to any place in Canada, it is in relation to a location where a person cannot have a residence.


Cecil Morris Smith: Mr. Chairman, that is still not too clear to me. If, for example, someone lived here in Ottawa and maintained a home and that person went to work at a site 60 miles out of Ottawa where he paid his own room and board, then he would qualify for a deduction on his income tax for, and it says here "not in excess of a reasonable amount". Does that mean that that person would qualify?


Joseph Jacques Jean Chrétien: Mr. Chairman, if he is required to be away from his home to work for a certain period of time and he cannot expect to be moving back home and say his company is paying his room and board-for example if a person lives in Ottawa and goes to work for a construction company in Churchill, Manitoba, it will be quite remote. If the company pays room and board for that person, and he cannot be expected to establish his residence there, that person would qualify under the provision, as I understand it.


Cecil Morris Smith: Mr. Chairman, it would pertain to anyone in Canada no matter where they are, as long as they are away from their main residence where they maintain a family? Whether that person is ten miles or five miles away from their main residence, they will qualify for this exemption and can claim his room and board. The confusion arose over the words "remote location". As stipulated by the federal government, remote location is a location where people would

June 12, 1978
Income Tax Act
receive isolation pay because they live in a remote location of Canada. 1 find that is confusing. Then this pertains to anyone who is not residing in his own home where his job takes him away. For example, if he lives in Ottawa and is working ten miles away or whatever the government may decide?


Joseph Jacques Jean Chrétien: Mr. Chairman, perhaps my description was a bit confusing. It is any area where there is no established community. It could be in the south or it could be in the north. As I was explaining earlier, it could be in some parts of Ontario where there is no established community. When I used the example of Churchill I was confused because Churchill is an established community. But if a person lives in Ottawa and goes to the bush to work in a camp at a site 60 or 80 miles from Ottawa, in the Gatineau for instance where there is no established community, that person will qualify.
If a person is working in an established community and away from home, that person will not qualify. By that I mean if a person goes from Ottawa to Montreal, or perhaps to North Bay, he will not qualify under the provision because Montreal and North Bay are established communities.


Cecil Morris Smith: Mr. Chairman, what about a fairly large diamond drilling camp which may be located in the bush, does it qualify as an established community even though it could have been in that location for ten or 15 years? What would the definition be in that case?


Joseph Jacques Jean Chrétien: Mr. Chairman, we passed a law. The interpretation is given by the Department of National Revenue. They look at the circumstances. If there is a site which has been at a location for a long time and the department comes to the conclusion it is no longer a remote area in that traditional sense, it could decide to disqualify those people who work there. I cannot be expected to forecast all the interpretations which the Minister of National Revenue will draw from the present act. What we mean by that is a location remote from an established community. If these camps are at remote sites and have been established ten or 15 years at the same place, one day the department will consider them in a sense as established communities.


Cecil Morris Smith: Mr. Chairman, this particular section, a remote location, would apply to a diamond driller who might be working out in a remote area. It would probably apply to a prospector who is also away from his main residence. But how does it affect a trapper? I see in here where a person is away from home on a sort of temporary basis, and whereas trapping is not a full-time job, it is a seasonal job, then that trapper should be able to claim for board and room on his income tax when he is on his trap line away from his main residence. Is this correct?


Joseph Jacques Jean Chrétien: Mr. Chairman, the deduction we are talking about in this bill at the moment-there are other deductions- is for an employee, and I do not know of any trapper who works for an employer. Usually a trapper is on his own and his expenses are deductible from his income.


Cecil Morris Smith: Mr. Chairman, no, there are trappers who do hire helpers to go out with them. So these people, under this section, should qualify for a deduction if they are helpers. This would also apply to commercial fishermen who are fishing away from their own home. In many areas there is one licence issued and a fisherman could have five, six, or ten hired men. Those people will qualify for this board and room deduction, or are they able to claim it on their income tax?


Joseph Jacques Jean Chrétien: Mr. Chairman, of course if they are employees and are working for an employer and the employer gives these people those benefits, I think those benefits could be exempt, if there is a relationship between the employer and employees-say between an owner of a ship and his employees, etc. In my judgment that would qualify. However, it is not the minister of finance who passes those judgments. It is up to the ministry of national revenue to make the final resolution if there is any problem.


Cecil Morris Smith: Mr. Chairman, this is the problem we have. It is fine to sit here and say, yes, but somebody will give a different interpretation on this, or will give the final interpretation. However, for someone who is living in a remote part of the country and who possibly does not have the sophisticated media that we do here and who wants a clear definition of exactly where he stands, it is confusing. It says here:
a special work site at which the duty performed by him were of a temporary nature-
The temporary nature can mean that a trapper or a commercial fisherman can qualify because he is only there on a temporary basis to take the limit off of a particular lake and he is away from his residence. I take it that if he is a hired man, working as a commercial fisherman, then he could qualify because he pays room and board to the fellow who holds the licence. He would then qualify for the income tax reduction for room and board.


Joseph Jacques Jean Chrétien: I do not think I have to add to what 1 have said. I think the hon. member can come to a conclusion. If there is a relation between employer and employees and they were working in remote sites, they would qualify.


Cecil Morris Smith: This would also pertain to catswings, to freighthaulers who haul freight into remote areas of the north and are away from their residences for considerable periods of time in various parts of the country. These people are hired by the day or by the month as freight haulers. Would this also apply to trcuk haulers who haul freight over winter ice-roads into remote parts of Canada? I refer to the Northwest Territories, northern Manitoba, and so on.


Joseph Jacques Jean Chrétien: If they receive free board and allowances for that, as far as the allowance is concerned, there is a relation between employer and employees. If they have to be located in remote sites, they would qualify according to the law.
June 12, 1978


Cecil Morris Smith: This would also apply to railway workers. I would like it clarified whether it would apply to railway workers, Mr. Chairman. During the grain shipping season to Churchill, additional trains are put on. The workers are moved to remote locations along that 500 miles of rail. They may only be temporary employees of CN. Would they qualify for this?


Joseph Jacques Jean Chrétien: If they have an allowance. If they are in a remote location and if there is a relation between employer and employees, they would qualify.


Cecil Morris Smith: Seeing that we are discussing sales tax or a tax bill, not too long ago under the provisions of Standing Order 43 I recommended that the federal sales tax be taken off smoke detectors. We now see that smoke detectors will be required in all new dwellings under soon to be published revisions to the National Building Code. H. Brian Dickens, a National Research Council official, said so on Wednesday. Dickens, head of the Research Council's codes and standards group, building research division of the NRC, was speaking to about 150 delegates at the annual Canadian Building Officials Association convention in Winnipeg's Holiday Inn. Now that it will be compulsory under the National Building Code, is any consideration being given to removing the federal sales tax from smoke detection equipment?


Joseph Jacques Jean Chrétien: Mr. Chairman, that is not related to the bill before the committee, but I can answer. There are all sorts of compulsory products in Canada on which there is some tax. I do not know whether a special case should be made in the case of safety by the use of smoke detectors.
In the construction of houses, and indeed in the construction of automobiles, there are many items which are compulsory and on which there is some sales tax. I find the principle unacceptable that everything which is compulsory by regulation should have the sales tax removed. That would be a bad principle to adopt. Even if one could make a special case because this is related to safety, there are all sorts of other instruments used for safety purposes on which there is a tax. If you exempt one, you would be bound to exempt the others. It is always difficult to pass judgment.


Cecil Morris Smith: Mr. Chairman, the reason I raised this is because we were talking of remote locating. I am sure the minister will appreciate that the remote locations to which I am referring are in northern Canada, northern Manitoba in particular. There is no fire protection equipment on the Indian reserves and in the small communities. As this will be compulsory under the National Housing Code, and as these remote locations do not have any fire fighting protection whatsoever, I would appreciate if the minister would take this into consideration.


Joseph Jacques Jean Chrétien: I will take notice of the hon. member's representation, Mr. Chairman.


Mr. Reid:: Mr. Chairman, I have a question on the same point of the tax concession for people working in remote areas.
Income Tax Act
I understand clearly from the remarks made by the hon. member for Churchill, and also the minister's remarks, that it would apply to lumber workers working in the bush away from their homes, and construction workers working away from their homes. What about the employees of tourist camps who work in fly-in camps, and room and board is provided by the employer in the normal way? Would they also qualify for this?


Joseph Jacques Jean Chrétien: Yes, Mr. Chairman. If they receive allowances when they are in a remote location and there is a relation between employer and employees, they would qualify.


William Heward Grafftey: Mr. Chairman, I understand that vis-a-vis the sales tax issue the minister wants to answer questions very generally. I propose to ask him very general questions. Considering that the sales tax is within the provincial jurisdiction-


Mr. Lumley:: Which is not true.


William Heward Grafftey: The parliamentary secretary says "which is not true". The provinces would be very interested to know that a member of the federal government-


Joseph Jacques Jean Chrétien: The Constitution. It is not a question of feeling.


William Heward Grafftey: I am talking about direct tax. I think the minister knows that. We have gone through a period of time which the minister says is a waste of time of parliament. It has also hurt national unity and wasted the time of the country.
Considering what I have alreay said, in preparing his budget why did the Minister of Finance not say to himself that he has a certain amount of money to distribute from coast to coast and, in relation to the population of each province, have a certain amount of money to cut sales tax according to their priorities? Once the minister started negotiating, before he presented the budget, it was obvious that he had to be flexible with British Columbia, Saskatchewan, the Atlantic provinces, and the others. Why did he enter into this area with such detailed proposals when, in the view of those on this side, he could have obtained the same result by saying we have a global amount of money, a certain amount to each province, within the general-
[Translation)
-as we say in French, by implementing the main features of our policy any province could choose to cut its sales tax according to its own priorities. Why not?


Joseph Jacques Jean Chrétien: Mr. Chairman, I would like to answer that question, because I want to say again that during three weeks I had consultations with all finance ministers. We talked about that in October, that is a sales tax cut being, in the circumstances, the best incentive to stimulate our economy. We had talked about it in October, we had talked about it in January, and when time came for me to prepare a new budget, I did not want to do it without consulting all ministers of finance on that matter.


William Heward Grafftey: Not all of them.

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Income Tax Act


Joseph Jacques Jean Chrétien: Not all? Yes, all! If the hon. member is suggesting that I did not consult Mr. Parizeau, I should like him to know that I consulted Mr. Parizeau and Mr. McKeough, from Ontario, more than anybody else. And during the three weeks the discussions lasted, everybody came up with suggestions and we made the necessary changes. I had an understanding with the other ministers of finance to the effect that on the day of the introduction of the budget, because I would be stuck with the traditional secret concerning the preparation of the budget, they were going to tell me either "yes" or "no". We considered then a possible sales tax cut. A number of them asked for flexibility and we made the necessary changes.
It had been agreed, however, because this consultation process was entirely new, that people would assume their responsibilities on the day of the introduction of the budget. Then, on the day I introduced the budget, following three weeks of consultations, I called everybody, having made the necessary changes to meet their requirements, and indicated to them the changes I had made, and they agreed. Never, during those three weeks, did Mr. Parizeau refer to selective cuts. No other finance minister was or would have been interested. [English]
I gave my word to all ministers of finance that I would call them the day of the budget. I did call them. Everyone accepted the responsibility, lived up to the gentlemen's agreement, said yes or no, except Mr. Parizeau who said, "I will give you an answer 48 hours later". The problem was this: it was too late, two days after the budget, to offer that deal to the others. Already British Columbia and Manitoba had put out their budgets. Otherwise, it would have been so easy.
What amazed me was this: at no time did the officials from Quebec make any reference to the question of the Constitution. I want to point out there is absolutely no problem involved here in terms of the Constitution. I spoke with the ministers of finance and said I wanted to help them cut provincial sales taxes and was ready to negotiate with them on the matter. They were completely free to tell me that they were not interested. But they all told me they were extremely happy that for the first time in Canadian history a federal Minister of Finance was willing to discuss his budget with them. I discussed not only the sales tax but monetary and fiscal policy. I tried to include them in the process. As I say, everyone left with the understanding we had to come to a solution the day of the budget. Mr. Parizeau did not.
He has done in his field what he wanted to do. I never tried to stop him. I simply said that if he did not comply with the national plan he would not qualify for the same total as the others.
As I say, we did not wish to penalize the people of Quebec because no agreement had been reached between the federal government and that province. If Mr. Parizeau or any other of the ministers had said to me before the budget that they would

not go along with my proposal, this issue would never have arisen. But I felt I had enough of a national program, and my plan was to offer to residents the possibility of an income tax deduction as I am proposing under 30(b). Nevertheless, that was not my favourite route. I would have preferred an agreement on sales tax.
I have done nothing to prevent any province from refusing the proposition. They were all completely free. Mr. Parizeau decided to cut his own tax the way he wanted to do so, just as two years ago Mr. McKeough decided to cut his own sales tax on automobiles for six months. But he paid for it from his own revenue sources. He did not come to me for money to pay for it. Mr. Parizeau has done it, but as there was no possibility of reaching agreement he qualified for only $40 million, leaving $180 million on the table inside the national plan. We have decided to compensate taxpayers in Quebec to the extent of $85 per taxpayer, and that is what we are doing in this bill.
What I would emphasize is this: never during the three weeks of negotiations did the Quebec minister of finance attempt to have his idea discussed with me or with the other ministers. It was only after we had closed the deal with everyone else, only after I had given my word to the other ministers, that he put me in an impossible situation after the fact. But even then I tried. I called three of the other ministers to learn if there was a possibility of agreement.


William Heward Grafftey: Too late!


Joseph Jacques Jean Chrétien: Of course it was too late, because Mr. Parizeau had said no only after the agreement was in effect. Mr. Chairman, if I had made a special agreement with Quebec, after the others had signed, the hon. member for Brome-Missisquoi would have been the first to give me hell for pulling the wool over the eyes of the other ministers of finance. I acted in good faith, and they all acted in good faith with me. I cannot say that, unfortunately, about the Quebec minister of finance who did not say yes or no until the day of the budget. If he had said no earlier I would have announced I was compensating the people of that province through tax provisions.


William Heward Grafftey: It is all very well for the Minister of Finance to say it was too late. It was too late because the fat was already in the fire. Supposing at the very beginning of the negotiations he had simply said; "Here is a certain sum of money depending on the formula used by each province to cut sales taxes according to your priorities," what would the difference have been? I am not griping about Ontario. Ontario did not object, but the proposal suited very well the needs of the automobile industry in that province. The minister had to make an adjustment for British Columbia and for Saskatchewan-

-did you argue the case before presenting the budget in the House? I can appreciate that you are Minister of Finance for all of Canada, but during your negotiations, did you really argue the case for Quebec, where secondary industry is not as
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well planned as in Ontario, in textiles, furniture, footwear and clothing?

I ask the minister what would the difference have been in terms of general stimulation from coast to coast had the provinces been given greater freedom in this regard, had the minister said to them:

You can cut according to your own priorities, depending on what you did before. What is the difference?


Joseph Jacques Jean Chrétien: Never in three weeks of negotiation did the Quebec government raise the possibility of select sales tax cuts. How could I express the desire of Quebec when Quebec itself had not chosen to express one? Selective sales tax cuts cause all kinds of difficulty. That is why it was desirable to have a national scheme. For example, what specific manufactured products would Saskatchewan turn to, to suit the best interests of their province, when they have no manufacturing industry at all? What about the position of the maritime provinces? If you follow that route, spending federal money just to favour local special interests, you run into problems. But on top of that-

This is the important point, never during the three weeks of negotiations did Quebec raise the problem of intrusion into a provincial field, never during those three weeks did Quebec mention the possibility of a selective tax cut, never did they tell me about it. Indeed, Mr. Speaker, it was only at three o'clock on Wednesday afternoon that I was told that at six o'clock the same day, that is three hours later, Quebec would cut its sales tax as it saw fit. I told him: "At you own expense, much as Ontario did two years ago". There was no consultation on his part. I tried during three weeks to get information. The hon. member does not understand what is vital in that debate-
I treated the Quebec government knowing in the back of my mind that they were trying to destroy any federal scheme. That is their main objective, but I treated them like any normal provincial government which is dedicated to the best interest of its citizens. But, of course, at no time did they raise the question of a possible selective tax cut. When I called some ministers of finance afterwards, they all said it was too late for them and they could not agree to my making a special deal for Quebec.


William Heward Grafftey: That is what you are doing now.


Joseph Jacques Jean Chrétien: No, I am not making any deal with the Quebec government. I am reducing the income tax of the Quebec residents-there is a big difference. The Quebec government has qualified for $40 million, that is all. What I am doing within my jurisdiction with the money left over from the
Income Tax Act
Quebec government is to reduce the income tax of the Quebec citizens.


William Heward Grafftey: And Quebec will collect it all back.


Joseph Jacques Jean Chrétien: Perhaps so. I know they are in a hell of a mess financially and they will have to collect a lot of money in the next few years, no doubt, because of the way they operate things, because of the way they run the province, which is not in the best interests of the province, because of the crazy legislation they are putting forward which pushes thousands of people out of Quebec every year and which pushes investments out of Quebec, and because of the language legislation which creates a climate which will reduce the tax base of Quebeckers ever further. However, it is up to the Quebec people to decide in the next provincial election.
Quebec did not wish to participate in the national scheme but since they qualified partially under the program, I recognized that. Since the Quebec government wanted to have its own way outside of the national program and I did not wish to penalize the Quebec citizens, I have decided to give the money directly to them. Of course, Mr. Parizeau said in his letter that he will have to collect it back, and perhaps even more than that amount. 1 know that last year he had a deficit of $600 million, and this year he is forecasting a deficit of $1.2 billion. He has not forecast in his budget the $250 million which he will need perhaps for the nationalization of asbestos. I know he will have to raise taxes, but that is his own responsibility. The Quebec citizens will know that in the present federal budget we have put aside some money to reduce their taxes so as to stimulate the economy there. After I have sent the money to Quebeckers, if Mr. Parizeau decides to raise that amount of money or more, he is free to do so; but he will have to deal with the taxpayers in the next provincial election.


William Heward Grafftey: I would like to put a question to the Minister of Finance.
Did the minister figure out the expenses to pay out the rebate of the federal government directly to Quebec taxpayers paying federal taxes?


Joseph Jacques Jean Chrétien: We have an organization called Revenue Canada which has thousands of employees who will have to do that work. Of course, that is going to cost money. It is difficult to measure that exactly because that will be additional work for the staff of the department. That brings me to the question that there is no tax collection agreement between the federal government and Quebec. I am very happy now that the government of Quebec should use the argument that because I am making that tax cut in Quebec they must go out and collect taxes and that is costing them about $150 million a year because they collect their personal income taxes instead of signing an agreement with the federal government which would cost them nothing. We collect income tax for Ontario, New Brunswick, Manitoba and Saskatchewan. Those provinces do not have a provincial department of revenue and we

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Income Tax Act
collect their income taxes for them. It means only one form, one tax inspector for the citizen in Ontario or British Columbia but there have been two forms, two tax inspectors in Quebec since 1954 and, of course, that is costing them a lot more. That is what they called in 1954 an essential element of Quebec autonomy.
Recently, when I saw Mr. Parizeau he asked me to sign a collection agreement for him, that was really ridiculous. It was a complete denial of the policy established in Quebec by Mr. Maurice Duplessis. I am pretty sure that Maurice must have flipped over in his coffin because do not forget no other premier had dared ask such a thing of the government. But it is well known that we federalists in Quebec have been saying for a long time that it is a useless duplication of service and a pain in the backside for a large number of taxpayers to have to fill out two tax returns, to have two inspectors, to have two sets of books just because of that when it would be easier to have only one form every month for Quebec as for the other provinces. The federal government could send them the amount of money they have coming. But that is what they called in 1954 an essential element of Quebec autonomy. I do not have to make a judgment but I find that is costing them a lot for very little.


Donald W. Munro: Mr. Chairman, the hon. member for Red Deer has some questions to ask of the minister but he has a committee meeting to attend this evening. I am prepared to have him use my time now, and I will ask my questions later.


Mr. Towers:: Mr. Chairman, I rise to seek advice on how the minister intends to handle the farm rollover situation; I believe it is under clause 14. The minister in charge of the Canadian Wheat Board suggested the other night that this would complete the required legislation so far as the family corporation rollover is concerned. I believe I am correct in saying that there is still an anomaly with regard to regulations concerning family corporations which is not covered in this piece of legislation. I would like the minister to tell the House whether he is prepared to bring in an amendment to it or whether he would expect an amendment from this side of the House.
The anomaly consists of the fact that farm property is not always included in the shares of the corporation. Sometimes the owner keeps the farm property outside the corporation and then the corporation rents the property. It is my understanding that this legislation and the legislation which was passed earlier do not provide for the rollover of the property to the next generation simply because it is not the farmer who is the operator of the property but the corporation, as soon as the corporation enters into an arrangement with the owner of the property either to lease it or rent it. There is an anomaly here which needs to be corrected, and I would like the advice of the minister on how it can be corrected if my assumption is correct.


Joseph Jacques Jean Chrétien: The hon. member is talking about leasing land. If the owner wishes to do that, he can transfer the land to the corporation tax free before the rollover. That is the way in which the provision is understood by my officials, and there is no need for any change in the law.


Thomas Gordon Towers: I would like it firmly established so that the statement of the minister today will stand up in a court of law and will be understood by the Department of National Revenue, because at present accountants dealing with the Department of National Revenue find that this is not the case. If the statement of the minister will stand up in court and will be interpreted in this way by the Department of National Revenue, that is all I can expect, but certainly this should be a clear and established fact.


Joseph Jacques Jean Chrétien: I have explained the law, Mr. Chairman. I understand what the intention is, but I cannot guarantee what a court will rule. We have a system for passing laws here. The text is there, and from what I can understand, it is somewhat irrelevant to the judge. He can read the text and conclude one way or another. I cannot guarantee what the courts will decide on any piece of legislation. A separation exists between the legislature and the judiciary in Canada. We read the laws as they are passed.
According to my understanding of the legislation, a person can transfer anything he has to his corporation, and from there on there is a rollover. He has to transfer it from his private ownership to his corporation ownership, and after that there is a rollover. There is no rollover if it is not transferred within the corporation.


Thomas Gordon Towers: Mr. Chairman, I should like to make this matter clear. Can a farmer who owns land that is being leased to a corporation which is the operator transfer that land without being subject to capital gains tax? Can it be sold or transferred to the corporation?


Joseph Jacques Jean Chrétien: The questions asked by the hon. member are covered by the rollover provisions in the act. I feel I have been quite fair to the hon. member, but he is dealing with clause 14. It is difficult for my officials and I to follow the debate, if we are moving from one clause to the other. We are still on clause 1 and questions are of a general nature. I do not know when questions will be of a specific nature.


Thomas Gordon Towers: I thought I clarified my reason for adopting this approach earlier. If there is an anomaly, we are prepared to bring in an amendment. We would like to have our amendment ready by the time we reach consideration of that clause. If the minister will have his legal advisers look at that aspect before we reach consideration of that clause, fine and dandy. We cannot afford to allow this legislation to pass and leave any anomaly in existence. I raise this issue in order to expedite the matter and have it clarified. I hope the minister will have his legal advisers take a look at it to ensure that we are on

June 12, 1978

sound ground. Perhaps the hon. member for Moose Jaw will add to that, Mr. Chairman.


Mr. Neil:: Mr. Chairman, 1 am very interested in this particular clause. I realize it is clause 14, but before we reach that clause, I wonder if the officials of the minister's department could have a look at this aspect. At this point in time, if a farmer, who owns land and leases it to a corporation, transfers or sells that land to a corporation, that sale would be subject to capital gains tax because it is not being transferred to a son or daughter and he is not transferring shares. What the minister has said is not correct. I think his officials should look into this aspect so that when we arrive at clause 14 we can have a full discussion.


Joseph Jacques Jean Chrétien: If a farmer is making a transfer to another entity, a third person, and not a corporation which he owns, he is required to pay capital gains. 1 was speaking about the transfer of lands to his own corporation. The transfer of farm lands has not been exempted completely from any capital gain. That is not what is meant. My officials are making notes of the hon. member's comments. They will read Hansard tomorrow and attempt to arrive at some clarification, if need be. As we have taken 19 days to reach clause 1, I do not know when we will reach clause 14.


Douglas Charles Neil: There are a number of members on this side who are interested in this particular clause. I am referring to people who are involved in either the practice of law or have constituents who are farmers. The minister can expect a fairly lengthy discussion and a lot of questions on clause 14. If the minister will examine the record, he will find that government members have taken up almost as much time as opposition members.


Joseph Jacques Jean Chrétien: A lot of government members are complaining because they have not had a chance to ask questions on clause 14. It is not only on the other side of the House that there is interest in that regard. The hon. member for Assiniboia constantly raised in caucus the problem of the transfer of family farms. A great deal of interest has been expressed both on this side as well as the other side of the House. As we do not have much time for clause by clause discussion, I know a lot of hon. members are very frustrated that we have not reached clause 14 or other clauses of real interest because of the filibuster by members of the Conservative party.


Douglas Charles Neil: Perhaps the hon. member for Assiniboia has pressed this matter in caucus. If the hon. minister will examine the record from 1972 to the present time, he will find that members on this side have pressed for changes repeatedly, and that the changes which have taken place up to this time are a result of that pressure.


Donald W. Munro: Mr. Chairman, I think the minister should stop referring to the 19 days. Perhaps he should have a look at the number of hours his party has participated in the debate, as compared to hon. members on this side of the House.
Income Tax Act
Dealing with clause 1, particularly as it affects fishermen and employees of the coast guard who may be on assignment of sea duty, there are two particular aspects I wish to have clarified for the record. I agree with the minister when he says that it is not up to him to decide here and now how the law is going to be interpreted by the Minister of National Revenue. The officials of the Department of National Revenue have their own ways of interpreting, and I hope there are appeal procedures.
In the circumstances envisaged in clause 1, let us say a fisherman, a member of the coast guard service, or a public servant is at sea in Canada and receives an allowance for his food and lodging, and then is charged for that food and lodging. Would those be self-cancelling? Are they declarable as income, revenue or expenses? How are these envisaged under the provisions of that particular section?


Joseph Jacques Jean Chrétien: If he receives an allowance for room and board on ship, according to the interpretation of the law and the changes provided, it will not be taxable income.


Donald W. Munro: Mr. Chairman, that is in reply to the first part of my question. If his salary is adjusted and he is required to pay for his food while at sea working, for example, in a commercial fishing operation, may he deduct that as a legitimate expense on his income tax form?


Joseph Jacques Jean Chrétien: Mr. Chairman, there is no special provision. If the owner of the ship charges him a certain amount of money for food and lodging while at sea, this is not a legitimate expense to be deducted from his income, aside from the S250 provided for in the act.


Donald W. Munro: There is a $250 limit. Of course, this is an amendment simply and does not cover the $250?


Joseph Jacques Jean Chrétien: It is a general provision that applies to everyone who is an employee, and it covers 3 per cent or up to $250.


Donald W. Munro: It is basically an amendment under clause 1 and provides for the non-declarability of an allowance, the non-requirement of declaration of an allowance in respect of food and board only, and does not provide for an ability to deduct as a legitimate expense charges incurred for food and board?


Joseph Jacques Jean Chrétien: I understand the interpretation of the hon. member is correct.


Donald W. Munro: I want to get into a somewhat related matter. I understand that one is permitted under clause 1 to discuss general matters in the income tax field. This is very closely related to paragraph (1) and that part of the clause which appears at page 2 in relation to transportation charges. As I understand the reference to transportation charges here, a taxpayer would be allowed to deduct

June 12, 1978
Income Tax Act
reasonable costs of transportation to and from work. Perhaps I should establish that before I go on with my further inquiry.


Joseph Jacques Jean Chrétien: Transportation in this area is similar to the allowance for room and board. It applies only if the transportation is provided to the taxpayer, or he receives an allowance for transportation. In that event the allowance is not taxable. We do not permit the taxpayer employee to deduct the cost of transportation incurred by himself. We simply do not tax an allowance, but we do not permit a deduction from income.


Donald W. Munro: Perhaps it is not as closely related as I had thought to the matter I had in mind. In an earlier income tax provision there was an allowance made for a deduction by disabled people, or there was a refund when a person incurred expenses in the operation of their own vehicles. There was a provision through which such disabled persons could obtain a refund from tax to the extent of the cost of the gasoline.
I am wondering whether the minister would during these discussions entertain an amendment I would be prepared to draft in order to obtain a deduction or an allowance for persons who had to transport handicapped people. I have in mind those who transport these handicapped people for some distance, and under circumstances where the handicapped individual may be required to stay away from home for some period of time. I have a particular case in mind which I brought to the attention of the Minister of National Revenue. It involves a child who unfortunately cannot obtain the necessary training in Victoria and has to travel to Vancouver on Monday morning and return on Friday night. This involves a cost to the family of that child of something in the order of $2,000 a year, in addition to the fee for the education of that handicapped individual.
Would the minister entertain an amendment during the discussion of this particular bill to cover a case of that sort? I could generalize in respect of the amendment, but it would cover handicapped people who may not be able to get the education they require within the general area of their domicile or residence. Would this be a legitimate deduction from income tax for those parents?


Joseph Jacques Jean Chrétien: This is not related at all to employment at a special work site. The case the hon. member is referring to at the moment involves a problem. One has a lot of sympathy for the parents, but it is impossible under the Income Tax Act to cover all possible circumstances of this nature. I do not see how we could amend the Act to cover every such case. I am sure there are some circumstances that would not be covered where an individual might incur that type of expense in relation to a child. We have to think in terms of the general application of the law; we cannot provide in the act for specific circumstances.
With regard to the specific case referred to by the hon. member involving a disabled child who has to travel from Victoria to Vancouver for special training, my advisers tell me there is no possible way of drawing up an amendment that

would not lead to an absolutely uncontrollable situation. We cannot under the Income Tax Act look after all the individual circumstances, as painful or as difficult as those in the case mentioned by the hon. member may be.


Donald W. Munro: I was using this provision for transportation as a vehicle for posing the question whether the minister would accept such an amendment. He has not actually said he would not, but rather that his officials would have difficulty in drawing one up. Would the minister entertain an amendment that I might draw and present in the course of this debate?


Joseph Jacques Jean Chrétien: Mr. Chairman, this involves more than just difficulty on the part of my officials. I cannot under the present clause entertain an amendment which is completely unrelated to the act as it now stands. This situation is not provided for in the act and there is no room for an amendment under clause I to achieve the purposes of the hon. member.


Donald W. Munro: The minister is aware of the difficulties of a private member in bringing forth an amemdment of this sort. Private members' bills really do not satisfy the need, and I felt this bill was a vehicle, being an amendment to the Income Tax Act, through which we could make such a change. This seemed to provide an ideal opportunity, particularly tailored to the bringing forth of such an amendment. Is the minister saying he would not entertain such an amendment if I were to bring it forward?


Joseph Jacques Jean Chrétien: Under the rules of the House I could not entertain such an amendment during consideration of the present bill.


Charles Robert Turner: Order, please. It being six o'clock, 1 do now leave the chair until 8 p.m.
At six o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at 8 p.m.
William Hillary (Bill) Clarke: I have a question or two, Mr. Chairman, for the minister on clause 1, he will be happy to know. I do not recall anything in the budget speech specifically dealing with these work sites, but I have read very carefully the supplementary information, specifically page 55 where it talks about employees at remote work sites and outlines the matter the way it is now in the act. That sentence reads, "that it is now proposed to apply the exemptions to workers at remote sites". It would seem to require a fairly simple amendment to the Income Tax Act. Looking at the notice of ways and means motion on remote work sites, clause 1 reads in a straightforward manner. Paragraph (ii) refers to a site-
-at which ... the taxpayer could not reasonably be expected to maintain a self-contained domestic establishment.
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When we come to clause 1 in the bill before us, paragraph (a) makes reference to temporary duties. My first question to the minister would be: Why is it necessary apparently to introduce the temporary nature of the duties when dealing with this feature?


Joseph Jacques Jean Chrétien: It is necessary because it is the existing law.


William Hillary (Bill) Clarke: Mr. Chairman, I cannot dispute that, but I would like to ask why it is that those words are underlined as new words are when we are presented with amendments to a new bill.


Joseph Jacques Jean Chrétien: They are under subsection (7) of section 6 and they are underlined because they have been moved to subsection (6) of section 6.


William Hillary (Bill) Clarke: I thank the minister for that explanation, Mr. Chairman. I would then like to ask if he could in any way define the word "remote" or "remoteness" as envisaged by the law.


Joseph Jacques Jean Chrétien: I gave the definition earlier this afternoon, Mr. Chairman, but I can repeat it as it is in Bill C-56:
(ii) a location at which, by virtue of its remoteness from any established community, the taxpayer could not reasonably be expected to establish and maintain a self-contained domestic establishment,-


William Hillary (Bill) Clarke: I heard the minister trying to explain that to the hon. member for Churchill this afternoon. I was wondering if he could be more specific. I mean, "by virtue of its remoteness from any established community" could apply to many cases and in lots of cases be envisaged where remoteness might be the reason for a person establishing a self-contained domestic establishment.


Joseph Jacques Jean Chrétien: It applies where he or she cannot establish a self-contained domestic establishment. If he or she can, of course, the individual will not be granted an exemption. It applies when the individual has no self-contained domestic establishment in an area that is remote from a normal community that qualifies.


William Gordon Ritchie: Mr. Chairman, I have one or two questions for the minister. One question arose out of a conversation with a constituent who felt that he had been unfairly treated by the Department of National Revenue. He had been a tradesman but in the town in which he lived there were no jobs for him at the wage he could command, so he went to a community 150 miles away where he made much more. However, he felt that he had more expenses, both commuting back and forth to visit his family and also in his maintenance which he had to provide himself. I presume that this type of change in the legislation would not benefit this person in any way. Am I correct?


Joseph Jacques Jean Chrétien: According to the act, if the individual has to pay from his own pocket, those extra expenses are not deductible from his income. If on the other hand those extra expenditures are paid to him by his employer and if the occupation is of a temporary nature, he can qualify under the old act.
Income Tax Act


William Gordon Ritchie: Would I be correct in presuming, then, that if he was paid previous to this allowances for this temporary work, then it became income, but under the change it does not become income?


Joseph Jacques Jean Chrétien: As I understand it, there is no change in that respect.


Charles Robert Turner: Shall clause 1 carry?


Mr. Stevens:: On division.


[Stage Direction]
Clause agreed to, on division.
On clause 2-
Sinclair McKnight Stevens: I wonder if the minister could give a brief explanation of what he is trying to accomplish in clause 2, Mr. Chairman, in addition to the headnote?


Joseph Jacques Jean Chrétien: Mr. Chairman, this is a relieving technical amendment to the provisions of the act which deals with recapture on the disposal of depreciable business property such as buildings or machinery. When the proceeds on the sale of the property exceed its written down value for tax purposes on depreciated capital costs, the excess may give rise to a recovery of the depreciation claimed in previous years. This recovery or recapture is ordinarily required to be included in income.
Subsection 13, paragraph 4 of the act provides a roll-over. That is, the recapture is not taxable and the income is deferred to the extent that the proceeds on the sale of property are reinvested in a replacement property. At present the property qualifies as replacement property only if it acquired for the same use and for the same business as the former property.
This amendment broadens the test by qualifying a property acquired for a similar use in a similar business. As an example, the change will make it clear that the roll-over would apply where a cattle farmer sells his farm and moves to another location at which he intends to grow wheat and engage in other types of farming.
We have to provide this clarification because in the interpretation of the act by the Department of National Revenue they had a more restrictive interpretation of what we meant when we introduced the roll-over provision in the act last December.


[Stage Direction]
Clause agreed to.
On clause 3-
Sinclair McKnight Stevens: Mr. Chairman, I wonder if the minister could give us a brief explanation of clause 3.


Joseph Jacques Jean Chrétien: Mr. Chairman, this is a relieving technical amendment dealing with eligible capital property-that is, goodwill or agricultural quotas. The amendment is similar to that described in clause 2 dealing with the roll-over for depreciable property. When goodwill or other eligible capital properties are disposed of, part of the proceeds may be required to be included in income.

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Income Tax Act
Subsection 14, subparagraph 6 of the act permits a taxpayer to defer or roll-over this amount to the extent that the proceeds are used to acquire similar replacement property. At present, a property qualifies as a replacement property only if it is acquired for the same use and is to be used in the same business as the former property.
This change broadens the test by qualifying a property that is acquired for similar use in a similar business.


[Stage Direction]
Clause agreed to.
On clause 4-
Sinclair McKnight Stevens: Again, Mr. Chairman, I wonder if the minister could give us an explanation of clause 4.


Joseph Jacques Jean Chrétien: Mr. Chairman, this is a relieving amendment. Subsection 15, subparagraph (2) of the act is an anti-avoidance provision. It seeks to prevent funds of a corporation being extracted, tax-free, by shareholders in the guise of loans rather than dividends. This is accomplished by including the amount of such loan in the shareholders' income.
There are certain exceptions. For example, a share purchase loan-that is, a loan by a corporation to an employee to enable him to buy shares of the corporation-is not taxable. However, if the loan is made by one company to enable its employees to buy shares of a related company, technically the loan will not qualify for this exclusion. This is inappropriate. The amendment exempts the loans made to employees of one company in a corporate group to enable them to acquire shares of another company in the group. And, for example, an employee loan made by a subsidiary will be exempt if it is used to acquire shares of the parent company.


Sinclair McKnight Stevens: Mr. Speaker, I wonder if the minister could indicate how many corporations he anticipates will be caught with this new approach? When they bring in the affiliated company concept, how many have they anticipated they will catch?


Joseph Jacques Jean Chrétien: Mr. Chairman, under this provision, companies are indeed freer to operate and can make a loan to employees who wish to buy stock in a corporation related to the parent corporation. Under the circumstances, I think this will facilitate the operations of companies making loans to their employees and will allow employees to buy stock in companies directly related to the corporation they work for. What is the exact figure? We do not know. This will merely simplify corporate operations, that is operations to allow employees to invest or take part in the operations of subsidiaries of the corporation which employs them.


Sinclair McKnight Stevens: Perhaps I could put my question another way, Mr. Chairman. When I ask how many are going to be caught, I am trying to solicit an answer to how many are being caught in a harmful way at the present time. We are familiar with the provision which allows a corporation to lend funds to an

employee to buy stock in the company itself, but how many are now being frustrated simply because this affiliate definition is not the law?


Joseph Jacques Jean Chrétien: Mr. Chairman, I do not think 1 am in a position to give a precise answer. We have received representations to this effect and that is why we made the provision. As the provision did not exist before, it is impossible for us to know how many would benefit from it. We have received many representations on this, however, and we felt it was the right thing to do in order to make it easier for employees not only in a corporation itself but in its subsidiaries or related companies. It is impossible to tell how many people would have benefitted if the provision had been there before.


Sinclair McKnight Stevens: I wonder if the minister could indicate the significance of the date, March 31, 1977? Why is this only applicable after that date?


Joseph Jacques Jean Chrétien: That is because amendments in the act last year made it possible to specify this date. Moreover, this provision also existed in the Macdonald budget, and the date set in the legislation passed last fall was precisely March 31, 1977.


Sinclair McKnight Stevens: I wonder if the minister would agree that what he is doing, in effect, is correcting a mistake made in the Macdonald federal budget of March 31, 1977?


Joseph Jacques Jean Chrétien: Mr. Chairman, I do not think it is a mistake; I think it is a relieving measure. We introduced a good measure but we thought it could be a little bit better. We think we are quite good but we can always improve.


[Stage Direction]
Clause agreed to.
On clause 5-
Sinclair McKnight Stevens: Mr. Chairman, this is a rather important clause. Perhaps the minister would be good enough to give us a fairly full explanation as to why the government feels this provision is desirable.


Joseph Jacques Jean Chrétien: Mr. Chairman, yes, it is important and so I would like to read the explanation. Section 20 is one of the general sections of the act. It lists the various deductions which are allowed in the calculation of income from a business or from property. There are three changes to this section dealing with the new research allowance, interest on insurance policy loans and foreign taxes.
Paragraph 20(1 )(t) is strictly consequential. It has a reference to the new section 37.1 which is a special allowance for additional scientific research expenditures.
Subsection 20(2.1) deals with the interest paid on life insurance policy loans. This change does not alter the principle that such interest is either deductible by the policyholder or is
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added to the cost of his policy. The change is essentially administrative. It simply requires the insured to verify, for those policyholders who want to claim the interest as a current deduction, that the interest has not been added to the adjusted cost base of the policy.
Subsection 20(12) provides relief for certain foreign income taxes. Under the existing act, the income taxes paid to a foreign government on business profits qualify for relief only if the income on which they are imposed has a foreign source. The existing relief takes the form of a foreign tax credit-that is, a deduction from the Canadian tax. The amendment permits a deduction in calculating income for any foreign income tax imposed on income that does not have a foreign source. Thus, for example, the portion of the foreign tax imposed on a consulting contract for a foreign customer only qualifies for relief now to the extent that the services are rendered outside Canada. The amendment will allow the portion of the foreign tax that relates to services performed in Canada to be deductible as an expense.


[Stage Direction]
Clause agreed to.
On clause 6-
Miss Campbell:: Mr. Chairman, I have some concerns as to how this clause relates to the Atlantic provinces, particularly in distribution of research and development across Canada and the interpretation of processes. We all know that companies are presently able to deduct all their current operating expenditures-that is, supplies, labour and their capital expenditures as well as new facilities, equipment and expenditures-from their income before calculation of taxes. This clause proposes that a company would also be allowed to deduct an additional 50 per cent of an increase in expenditure in research and development in the taxation year above the average for the three preceding years. This research is in addition to the eligibility of research and development expenditures for the investment tax credit which at present in the Atlantic provinces is 10 per cent.
I am told that total research and development expenditures in the Atlantic provinces in 1975 was $5.4 million. I am also told that no separate figures for the fishing and forestry industries are available, but the activities of these industries are such to involve little or no research and development. However, the government spends large amounts in these areas for research. For example, the fisheries and marine service of the Department of Fisheries and the Environment will spend an estimated $37.3 million in the fiscal year 1978-79.
I wonder if this is so and why we are not encouraging the people in the Atlantic provinces to take on the benefits of this new research and development incentive in clause 6. Before going on, perhaps the minister or his officials would be good enough to advise what the total research and development in Canada was in 1975 and compare it to the $5.4 million. If they are not prepared to give me the answer at this time, I would like to have it later.
I would also like to see how this clause will work. For example, if a firm spent nothing on research and development
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during the last three years and in the first year of the budget decided to put $5,000 into research, it would, applying the 100 per cent straight write-off allowed at present, and now this 50 per cent proposed research and development write-off under this clause, total $7,500, being $5,000 plus half of the increase, $2,500. On the other hand, if a firm that spent an average of $4,000 during the past three years increases its research and development spending in the first year of the budget, it will get a total deduction of $5,500; that is, the $5,000 plus half the increase, $500.
To be eligible for the above allowances, in my opinion the expenditures have to conform to the definition of scientific research given in Regulation 2900 of the Income Tax Act. Perhaps this definition is too narrow for the Atlantic provinces. For practical purposes, this regulation means the expenditures must be made either to develop new products or processes or to make improvements to existing products processes. For instance, on the east coast we are developing the 200-mile limit. If we in the Atlantic provinces are not taking advantage of this write-off, perhaps the minister could explain why industry is not taking advantage of the write-off. Is it because the definition of "processes" is not clear, that it relates only to manufacturing in the true sense in other parts of Canada? Or if a corporate fisherman owns a fishing boat with an estimated value on the books of $250,000 and he purchases new gear, would this qualify as a process?
I would like to leave that question with the minister and see if he could give an answer. There must be a reason why only $5.4 million was spent on Rand D in 1975 in comparison to the total, which I do not have at present. If the definition is too narrow for the Atlantic provinces to come under that clause, I feel there should perhaps be a widening of Regulation 2900 of the Income Tax Act.


Joseph Jacques Jean Chrétien: Mr. Speaker, I would like to answer the hon. member who is concerned about the level of research in the maritimes, as she indicated, of $5.4 million, that it is precisely the reason why, in the last two budgets, we decided to set up new mechanisms to encourage manufacturers and their operators to do more research and development.

It is because of the particular situation in the maritime provinces that we put the investment tax credit in Bill C-ll which I put forward in this House in December. We provided for the maritimes a tax credit double the national level, from 5 to 10 per cent, so that there is an investment tax credit for research and development much more favourable in the maritimes than in central Canada.
The hon. member asks why the definition of research and development does not seem to fit into the operation in the maritimes. I really do not know why. The research and development definition applies across the land. It is exactly the same definition whether it is British Columbia, Ontario, or Nova Scotia, an area for which the hon. member has particular concern.

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Coline M. Campbell: Mr. Chairman, it is my understanding that $5.4 million is approximately one-twelfth of the total industrial research and development across the country. In other words, if 10 per cent of the population is living in the Atlantic provinces in Canada and you have $5.4 million of R and D expenditure, I would like to know the total amount spent on research and development for the year 1975.


Joseph Jacques Jean Chrétien: Mr. Chairman, I share the preoccupation of the hon. member. I am very pleased she has raised this question and shown her interest in the maritimes which only has one twelfth of the research and development in this country. If she has an interest in research and development, she will make speeches encouraging people in the Atlantic provinces to take advantage of the investment tax credit announced last year as well as what we are pushing for today.


Mr. Ellis:: Mr. Chairman, I have two brief questions on this clause. Some individuals are being left out rather brutally, as this provides for a corporation only. Much of the research and development, the finer inventions if you will, has been by individuals who are not part of a corporation. Is there anything to say that individuals should not receive the same benefits as this legislation portends?


Joseph Jacques Jean Chrétien: Mr. Chairman, I understand there could be some individuals who do research and development on an individual basis. However, the legislation refers to research done by corporations.


John Raymond Ellis: I appreciate that is what the legislation says. I know of a certain individual who has begun a year's sabbatical from his employment to begin a new project. This is on his own initiative. He does not receive any assistance in what might be a very major development.


Joseph Jacques Jean Chrétien: Mr. Chairman, 1 will take note of the hon. member's representation. I cannot add to the explanation I gave earlier.


John Raymond Ellis: The minister has admitted he cannot help individuals. I suppose if this individual were to incorporate, which would cost him $400 or $500, he could then take advantage of the research development assistance. However, this states he must have had a base for the past three years. This individual is starting out entirely on his own this year. What do we use as the base from which to project the assistance when he does not have three years' experience?


Joseph Jacques Jean Chrétien: If it is a new corporation, all the expenditures that occur as research and development from thereon will qualify with the new rules for new corporations. If he were to become incorporated at this time, the corporation could apply for the 150 per cent write-off provision in this bill.
Because we wanted to help the incremental-research and development, we had to put in that provision. There is some research and development going on under the old regime. We want to stimulate that. We do not see why we should give the

same pattern to those who could operate under the old system in past years.


John Raymond Ellis: I have a final question for the minister, if I may. About five years ago the Economic Council of Canada recommended that the IRDIA graphs of Industry, Trade and Commerce be done away with. About one and a half or two years ago IRDIA was dissolved. Does the minister feel this measure he is now introducing fulfils the second half of the paragraph of the Economic Council of Canada wherein it said that IRDIA should be dissolved, but that there should be a compensating tax incentive to industry? Does the minister feel that this really meets that recommendation?


Joseph Jacques Jean Chrétien: Yes, Mr. Chairman. We think that will fill the need according to the recommendation of the Economic Council.


Mr. Huntington:: Mr. Chairman, on Thursday evening last I had the opportunity of putting some concerns on the record relating to clause 6 of this bill. Can the minister give me some kind of explanation why he rejected the submissions of the Canadian Manufacturers' Association and others from the business community and rejected the tax credit principle? I believe the Canadian Manufacturers' Association asked for 25 per cent rather than the additional 50 per cent allowance which was put in this clause.


Joseph Jacques Jean Chrétien: Mr. Chairman, the main reason is that at the first ministers' meeting in Ottawa in February, it was agreed that there should be a joint effort of the provincial and federal levels. This is a system which involves both the federal and provincial treasuries. That is why we have chosen it, rather than an investment tax credit which would have fallen on the shoulders of the federal government only.


Arthur Ronald Huntington: I do not know if the Minister of Finance or his staff have had a chance to read the rather carefully prepared comments I put on the record the other night. Surely he must realize this 15 per cent allowance is very unfair to the small business sector which, with its closeness to entrepreneurial ability, can lift itself into new categories of opportunities. Why was a more thorough examination of the small business interests not applied to the drafting of this clause of the bill?


Joseph Jacques Jean Chrétien: Mr. Chairman, we have to segregate the question of research and development and the level of tax for small business. We provided a series of incentives for small business in the last budget and with the tax proposition I made some weeks ago to help small business. We must keep in mind that the level of taxation of a small business operating in Canada is very favourable compared to anywhere else. This proposal regarding research and development is in addition to it. We wanted to put all corporations on the same basis.


Arthur Ronald Huntington: This is where I part company with the Minister of Finance. I thought I was very careful in putting on the record Thursday night how small business is discriminated against in this whole area of research and development.
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Research costs small business in after tax terms much more than it costs large business working at the 42 per cent tax level. Did the remarks I placed on the record the other night fall on deaf ears? Has the Minister of State (Small Business) not discussed this lack of equity with the Minister of Finance?
Admittedly small business has a lower tax rate. Is the minister going to nullify that in the area of research and development? Small business is where the entrepreneurial talent is and where much of the opportunity comes from. Why give small business a much higher after tax cost than large business? I would like an answer to that question.


Joseph Jacques Jean Chrétien: I cannot add to what I have said, Mr. Chairman. I appreciate that the hon. member is putting forward a good case. I explained earlier that we treat the tax system for small business more favourably than that of the big corporations. Research and development is a different problem, if I can call it that. As it is operated on the tax system, if you pay higher taxes you benefit more.
We have to keep in mind that small businesses are presently paying only half the rate of taxes paid by big businesses. The hon. member can make his argument but we have decided that rather than put the investment tax credit up to 25 per cent we would make this research allowance, because we wanted to make a joint effort with the provinces.


Arthur Ronald Huntington: I am surprised the minister should adopt that attitude, particularly in light of the literature which the Minister of State (Small Business) has been showering on the small business community. I would remind him again that over 60 per cent of the working population in Canada is employed in the general area of small business. Government spokesmen pat themselves on the back and, indeed, other nations pat them on the back in recognition of the tax base they have afforded small business. I agree that this lower tax base has been very favourable for the small business community here, but in after tax dollar terms the minister is leaving this community with 59.38 cents cost on the dollar compared with 35.15 cents in the case of large businesses. There is a serious lack of equity here and the minister is neutralizing the tax benefit which has been put in place for the small business community.
If my remarks do not succeed in persuading the minister to change his mind, I honestly think he is making a mistake in refusing to consider certain aspects of this clause. Why not consider granting an option to small business enabling businessmen to take an immediate cash benefit in lieu of carrying the tax credit forward into future years? I know what I am speaking of because I have come through the world of small business and have spent an awful lot of money in my lifetime on research and development. I think there is a great deal we can do in this field for Canadian entrepreneurial talent in the development of new industries and spin-offs if we pay attention to this aspect. After all, that is where the entrepreneurial talent lies. This is where the big corporations come from-the development and putting into place of these ideas.
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Joseph Jacques Jean Chrétien: I can only repeat that many incentives have been given to small business. Of course, if one segregates one aspect of taxation from others, without taking the whole picture into account, one can conclude, for example, that the cost of research and development is higher for small business than for large corporations. But if one considers all aspects of taxation as they affect large and small businesses, I think we would all agree that small business has the better deal.
1 do not blame the hon. member for wanting more and 1 agree with him that small business is very important. That is why we have taken various steps to assist this sector of the economy. But since we cannot do everything at the same time in all directions, we have decided to proceed with research and development allowances in addition to the investment tax credit which was introduced last year up to 10 per cent, and also to introduce this 150 per cent write-off on the expenditure.


Arthur Ronald Huntington: Mr. Chairman, I suggest that the Minister of State (Small Business) has been very weak in failing to negotiate more successfully with the Minister of Finance. I believe the government will be obliged to consider this matter again and correct a serious inequity which it is leaving in place.
I should like to ask the minister whether he does not believe that the eligibility for the tax credit should perhaps be restricted to Canadian-owned firms so as to prevent a leakage which has followed the placing of handsome sums of money to Canadian subsidiaries of multinational firms. Does he not believe that some of the leakage which has happened in the past could be prevented by restricting this tax credit to wholly-owned Canadian firms?


Joseph Jacques Jean Chrétien: I think it would be difficult to make that sort of distinction. It would create all sorts of problems if we were to discriminate between Canadian-owned and foreign-owned corporations. I would point out that some foreign concerns have done very well in this field. Of course, we always hope that the gains achieved through Canadian operations will, first and foremost, benefit operations in Canada. Moreover, there is protection available under the Patent Act, and so on; the Patent Act covers the interest of Canada in research and development carried out in this country. To discriminate against foreign corporations as suggested could create all sorts of international difficulties for us.


Arthur Ronald Huntington: So the minister is not taking any measures at all to prevent some of the leakage which has been experienced in the past when the benefit of research carried out in Canada and subsidized through tax remissions has gone to the United States or some other country. I question whether the minister should leave this type of situation wide open.


Joseph Jacques Jean Chrétien: The hon. member is talking about leakage into the United States of information obtained from research and development in Canada. I would remind him that when the finance committee was in Washington the other day the union representatives there were complaining of the leakage of

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research and development benefits into the Canadian economy, draining some jobs from the American system into Canada. So these things work both ways.


Sinclair McKnight Stevens: They were not complaining very loudly.


Joseph Jacques Jean Chrétien: Perhaps not, but I want to point out to the hon. member that this is something which works both ways.


Arthur Ronald Huntington: I am not aware of any leakage which is flowing north of the border. If the minister has any examples I would appreciate learning about them.
Could the minister explain why, in its approach to this subject, the government saw fit to kill off IRDIA which gave a better cost benefit to small business? Why take IRDIA out of the scheme when it was beginning to work so well?


Joseph Jacques Jean Chrétien: One of the difficulties about this program was that it was too bureaucratic, in a sense. Under this arrangement, rather than make all sorts of applications and get into discussion with bureaucrats, the decisions will be made by the corporations themselves. I was President of Treasury Board when this decision was made and it was part of an effort to reduce the size of the federal administration.


Arthur Ronald Huntington: Before I ever dreamt of standing here discussing these matters with the Minister of Finance, I had occasion to come to Ottawa in connection with this program and I did find the bureaucracy pretty rough; they wanted to double my true costs in the course of giving me some assistance. The result was, I could never afford it. But if one looks down the record I would be remiss if I did not remind the minister that the small business community is paying 59.38 cents cost on the dollar compared with 35.15 for large businesses.
I think I would be remiss if I did not remind him that under the 50 per cent additional tax credit he is leaving an after tax cost with a large firm of 35.15 cents on the research dollar, whereas under IRDIA the cost was 33 cents. I think he is going the wrong way if he wants to put an incentive in place. Let me come back to the small firm. With the 50 per cent additional allowance, you have an after tax cost with $1 of research of 59.38 cents, whereas under IRDIA you had a cost of 50 cents.
I think the program is not well prepared and planned and has not been studied properly. I think the government are going backwards in that area. In actual fact, they have gone back to a program which was recommended by Glassco in 1962, was studied in 1964 and rejected. We are now in 1978 and we need some new incentives in place. The minister should really give some serious consideration to an amendment before the bill is passed in committee stage and perhaps fix up some of the areas where there is no equity.
I realize I might be on the edge of the subject matter, Mr. Chairman, but I notice that the Minister of State for Science and Technology has come out with a package of research aid

amounting to $28 million. I realize that the Prime Minister has requested all departments to cut $500 million, and I wonder if the minister could tell us where he will find this $28 million in this soft buck shuffle.


Joseph Jacques Jean Chrétien: Mr. Chairman, I did not catch the whole meaning of the question, but I will reply to it later.


Coline M. Campbell: Mr. Chairman, I would like to come back to my original point because I did not get an answer to it.


Some hon. Members:: Nothing new.


Coline M. Campbell: Perhaps I should say that I got part of the answer. I have been told that $5.4 million was spent on research and development in 1975 in the Atlantic provinces. Considering that 10 per cent of the whole population of Canada live in the Atlantic provinces, can the minister say whether we are receiving and using this portion, and will we be able to use this portion in respect of the total research and development spent in 1975? In other words, what was the total? If we are not receiving the total, is it because Regulation 2100 of the Income Tax Act is too narrow to allow the Atlantic provinces to benefit from research and development?


Joseph Jacques Jean Chrétien: Mr. Chairman, I think that because of the very nature of the industrial base in the maritimes we cannot expect their industry to use up their proportion, if I can use that expression, of research and development. Of course, since the base is very low in the maritimes the new system will apply to them earlier, because it will apply to many companies right away.
As 1 explained earlier, the investment tax credit in the maritimes is double that in Ontario, so I hope this will induce people in the maritimes to do more research and development.
If the hon. member wants my honest assessment of the situation, because of the industrial base in the maritimes I do not think that they will ever be able to use up their share of research and development. Research and development money will always be taken up in areas where industry is concentrated, and that is not the case in the maritimes.


Sinclair McKnight Stevens: Mr. Chairman, we have been told that the wording in the income tax changes suggested by the minister will help once again, as the Liberal government seems to like to help, the fat cats in the country, those who are in the high corporate income tax level. In turn, the smaller businessmen, who naturally have a much lower tax level, will not benefit from the deductibility to nearly the same extent as the fat cat, big corporations. Would the minister indicate, first, if this representation is true, and second, why he has not tried to bring better equity into the proposal?


Joseph Jacques Jean Chrétien: Mr. Chairman, I think I have replied to the same question put by the hon. member's colleague, the hon. member for Capilano extensively. We have to make a distinction between the level of taxes paid by the big and small corporations and allowances for research and development, which are of a different nature. If you segregate just that, you
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can come to the same conclusion as was reached by the hon. member for Capilano. But on the other side of the question, the level of taxes of the small corporations is half that of the big corporations. Lately we have made provision to ensure that small businesses will have more room to grow, and therefore small corporations' profit now is defined as being $150,000 a year up to $750,000 in accumulated gain.


Sinclair McKnight Stevens: The minister, as he is wont to do in these committee sessions, likes to avoid the issue when he does not feel it puts either the government or himself in a good light. Let me be specific. If a corporation increases its research and development by $300 in 1978 and its income tax is 48 per cent, what would be the total cost to that corporation of the $400 investment? Let us say they increased from $100 last year, which was their base year, to $400 in the current year, 1978, and their income tax is 48 per cent. What would be the net cost to that corporation of the $400 investement-the minister could throw in his tax credit too if he likes-and, second, what would be the cost to a corporation at the 20 per cent level? Could the minister give us those figures?


Joseph Jacques Jean Chrétien: Mr. Chairman, I will have to ask my officials to figure that out and I will provide the answer later.


Sinclair McKnight Stevens: Mr. Chairman, that is a very simple bit of arithmetic. Surely the officials, with their high-powered computers sitting on the table, could come up with an answer relatively quickly. I will go through it again for them. Take $100 for the base year, which was last year for each company. Let us assume that they go from the $100 level to $400 expenditure for research and development in 1978. All I want to know is what will be the net cost to the corporation which is paying a 48 per cent income tax in 1978, and the net cost to a corporation paying a 20 per cent income tax; and, if you like, throw in the investment tax credit in each case.


Joseph Jacques Jean Chrétien: We must make a distinction between a corporation in the maritimes, one in Quebec, one in Ontario, and what kind of corporation it is. I am entitled to ask my officials to make the calculation and give a precise answer to the hon. member.


Sinclair McKnight Stevens: I will make it a little easier for the minister. Let us say both corporations are in Ontario and both are in the manufacturing and processing business. If the minister needs any other help, 1 can even send him the answer; but first we will let him try to work it out to see what he comes up with.


Joseph Jacques Jean Chrétien: This is an argument between myself and the hon. member. The hon. member for Capilano made the case earlier that if a larger corporation is involved in research and development, because of the 150 per cent provision and because they pay higher taxes, they will get a greater benefit. You cannot separate that from the system under which the small taxpayer pays 20 per cent income tax on his profit. We have recognized this principle when we go this route rather than by way of the investment tax credit. I considered that point with the hon. member's colleague some half hour ago.
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Sinclair McKnight Stevens: Mr. Chairman, while the officials of the minister are making that calculation, perhaps I can deal with another question on the same clause. In its comments with regard to the minister's tax measures, specifically clause 6, CCH stated that it may be predicted that one of the effects of the new rules will be to cause taxpayers to bunch their scientific research expenditures so as to maximize the deduction. Given the 1975-1977 base of $100, for example, it will clearly benefit the taxpayer to expend nothing from 1978 to 1980 and $400 in 1981, giving him a deduction of $600 in that year, rather than to expend $100 in each of those years, giving him a total deduction of $400.
What is the department's reaction to the CCE1 comment? Clearly it would be undesirable to have a situation where those who might be investing in scientific and research ventures find it serves their purpose to delay any investment and to have zero investment for one or two years, because if it is bunched in in a later year they will receive a higher deduction as a result of the inept wording of this section.


Joseph Jacques Jean Chrétien: In theory, this so-called bunching can happen, but it is unlikely. Some people can stop all research and development and start three years from now in theory, but that is unlikely. I do not think corporations operate that way. That case can be made in theory.
If one wants to cover all possibilities when drafting tax laws, a lot of complexity is added to a very complex system. We realized that there was a possibility of bunching research and development, but we did not think it was advisable to draft a system which would add complexity to something which is already extremely complex.


Sinclair McKnight Stevens: Having acknowledged that this loophole or weakness exists, why does the minister presume no one will take advantage of it? If we want to trigger research and development in our present economic state in the country, which does not have the real growth we want, and if this inadvertently causes any corporation to delay its research and development in anticipation of receiving a bigger tax deduction further down the road, surely that loophole is undesirable at the present time. Why does the minister feel confident that corporations will not take advantage of that bunching?


Joseph Jacques Jean Chrétien: I do not think that will lead businessmen to close down their operations for three years and start again. They will take advantage of the new research incentives. They will not close down and fire their researchers and so on. I do not think they operate in that manner. They want to keep their personnel and keep them working. In theory it is possible, but it is not likely to happen.


Sinclair McKnight Stevens: Naively the minister assumes that there is no multinational corporate reality in this country. Has he not thought of the situation where research and development simply would be transferred to a parent company in the United States, allowing the Canadian company to have on-the-ground

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activity, but with a view to routing the activity to Canada when it is able to receive its maximum deductibility?


Joseph Jacques Jean Chrétien: We will monitor this situation. If there are some abuses, we can always cut back. There is no great incentive for any company to do that. I am glad the CCH expert suggested that possibility. We recognized it, but we could see no reason for making the law more complex than it is just in case this theory was put into practice.


Sinclair McKnight Stevens: Unfortunately, the theories of this minister have led this country into trouble. Once again through the want of a simple amendment, he will allow something to occur which perhaps will be to the disadvantage of all Canadians.
Has the government completed its arithmetic as to the relative impact of the deductibility on the basis of a 48 per cent taxpayer compared to a 20 per cent taxpayer?


Joseph Jacques Jean Chrétien: Mr. Chairman, I do not have the answer. When I have it, I will be delighted to give it to the hon. member. There are still 43 minutes remaining.


Sinclair McKnight Stevens: Can we stand clause 6 for the time being, consider clause 7 and return to clause 6?


Joseph Jacques Jean Chrétien: I have no objection to that. We can come back to clause 6, if need be.


The Chairman:: Is it agreed to stand clause 6 and proceed with clause 7 at this time?


Some hon. Members:: Agreed.
Clause 6 stood.
On clause 7-


Sinclair McKnight Stevens: Mr. Chairman, as this is the first clause of many which have a bearing on the registered retirement savings plan program, can the minister give us an explanation of all registered retirement savings plan provisions which are in the bill before us?
[ Translation]


Joseph Jacques Jean Chrétien: Mr. Chairman, I could always try to sum things up. As you know, we are proceeding in a rather complex fashion because we always have to refer to the section of the Income Tax Act that is being amended; trying to group all amendments into one would be rather complicated because of the many technicalities of the amendments, as I mentioned when I brought down the budget. I described that new system in my statement to the House on budget night, that is April 10. In short, we are providing more flexibility for those people who have assets and who want to cash in on them over a fairly long period when they retire; I think it would be better to proceed clause by clause. I could read each one of the technical clauses and by the time we have gone through the whole bill, hon. members will have had a complete description. It is very difficult for me to deal with all technical aspects at this point.


Sinclair McKnight Stevens: Mr. Chairman, if the minister wants to proceed in that manner, we will have to settle for that. Perhaps he could provide us with the technical explanation of clause 7, then.


Joseph Jacques Jean Chrétien: With pleasure, Mr. Chairman. This is a technical amendment. It is consequential on the introduction of new provisions dealing with registered retirement income funds, RRIF, one of the alternatives to life annuities introduced for persons with registered retirement savings plans. Clause 40(2)(g) denies any deduction for certain capital losses. Under the existing act, no capital loss is allowed on a transfer of property by a taxpayer to a trust governed by a registered retirement savings plan, a deferred profit-sharing plan, an employee's profit-sharing plan or a registered home ownership savings plan. This amendment adds registered retirement income funds to the list of trusts for the purpose of this capital loss room. For the clarification of the committee, it is consequential to clause 35 of the bill, wherein we will deal with the substantive amendment.


William Gordon Ritchie: Mr. Chairman, I received a letter from a constituent who feels the changes under this bill may not be altogether favourable. He indicated that he objected strenuously to the proposal to tax RRSP funds in a lump sum at death, or at latest a spouse's death. In part the letter reads:
The proposed changes eliminate the flexibility in tax options now available to those who may become entitled to RSP funds after a planholder's death.
I refer to such options as the right to purchase an income averaging annuity and the right of the recipient to pay income tax on the amount received, which is an advantage if the recipient is in a low income tax bracket. Could the minister clarify this?


Joseph Jacques Jean Chrétien: Mr. Chairman, we at the table have not caught the meaning of the question of the hon. member and it could be useful if he were to repeat it.


William Gordon Ritchie: I understand that my constituent feels the proposal to tax RRSP funds in a lump sum at death, or at latest on the spouse's death, is a change. In other words, has there been a change from the previous legislation that would create a tax on the death of the holder, or presumably on the death of his spouse? Is this a change?


Joseph Jacques Jean Chrétien: It is my understanding, Mr. Chairman, that as far as RRSPs are concerned there is no change at all. We are here devising a new scheme that is called RRIF. If someone keeps the RRSP fund as actually defined, the situation is the same. He will not be affected by this legislation.


William Gordon Ritchie: I would assume, then, there is an option to purchase an income averaging annuity, and a right for the recipient to pay income tax on the amount received in the event that the plan holder dies. I think that is what this person is looking at, a husband having the RRSP which has a value.
June 12, 1978

That person would like to know whether an income averaging annuity can be bought with the proceeds on the death, presumably, of the spouse.


Joseph Jacques Jean Chrétien: There is a period of time within which the person who owns the RRSP can transfer it; that is, by buying a life annuity or opting for this new RRIF system. If he has not done that before the time he dies, then it is too late, as we understand it.


William Gordon Ritchie: Is this a change from what was previously in effect?


Joseph Jacques Jean Chrétien: No, it is exactly the same situation as was in effect. What we are proposing in RRIF is a new method for a person to transfer his RRSP. Before he could only buy a life annuity; now he can take advantage of this new fund from which he can draw on a regular basis and pay the tax at the level of the year in which he draws the proceeds of the RRIF.


William Gordon Ritchie: Just on a point of clarification, let us say that the holder of an RRSP dies, and the amount of what is left in the fund is $10,000. The recipient of that would have to pay income tax as though it had been earned in one year. Is there no means by which the recipient could buy an annuity to spin-out the taxes?


Joseph Jacques Jean Chrétien: Mr. Chairman, I do not know if the hon. member is referring to the RRIF and what is left to the beneficiary at the time of the death of the holder of the RRIF, and whether it can be passed on to his wife. If it is not going to his wife it is taxed at the level of taxes in the year of his death.


[Stage Direction]
Clause agreed to.
On clause 8-
Sinclair McKnight Stevens: Mr. Chairman, perhaps the minister could again give us an explanation of clause 8 for the record.


Joseph Jacques Jean Chrétien: Mr. Chairman, this is a relieving technical amendment. When a capital property is disposed of a capital gain may arise, one half of which falls to be included in income. Section 44(1) of the act permits a taxpayer to defer or rollover this amount in certain circumstances to the extent that the proceeds are reinvested in a replacement property. At present a property qualifies as a replacement if it is acquired for the same use, and, where the property was used in a business, for the same business as the former property.
This amendment broadens the test by qualifying a property acquired for a similar business. One example of the effect of the change will be to permit the roll-over where land used in one type of farming was sold and the proceeds reinvested in land to be used in a different kind of farming. This change is retroactive to cover property sold after March 31, 1977, the date when this special roll-over was introduced. I think the hon. member will understand that it is consequential to what I have described in respect of earlier clauses where we tried to broaden the interpretation of the roll-over provisions.
Income Tax Act


Mr. Mclsaac:: Mr. Chairman, I have a question for the minister for further clarification of clause 8. He mentioned in reply to the hon. member opposite that it relates back to clause 2, and cited the case of farm land. Does this apply only to farm land, the sale of an acreage producing grain, let us say, where the proceeds are reinvested in acreage to be used for raising cattle? Or does it also apply to the sale, let us say, of a retail business, such as a shoe store, where the proceeds of that sale are reinvested in a clothing store or novelty store?


Joseph Jacques Jean Chrétien: Yes, it applies not only to farming but to businesses as well. If you sell your business and you reinvest the money in a similar kind of operation, that is permissible. The problem arose earlier in respect of the definition of farming operation. The definition was too narrow, and if a farmer was operating a grain business there were some rulings by the Department of National Revenue that the reinvestment had to be in grain-producing land. We broadened the definition so that if a person sells a grain-producing farm and buys a new farm to raise cattle, or some other farming operation, that is allowed, rather than the narrow interpretation by National Revenue applying.


William Gordon Ritchie: I would like to ask the minister whether there is any limit to the size of the operation we are considering in respect of this roll-over, particularly regarding business. How big might the company be that might qualify?


Joseph Jacques Jean Chrétien: In the farming area the roll-over provision does not provide for any limit.


[Stage Direction]
Clause agreed to.
On clause 9-
Joseph Jacques Jean Chrétien: I presume the opposition will want me to give the technical explanation. This is a relieving technical amendment. It applies where a partnership has received the proceeds of a life insurance policy as a result of the death of the person insured. As the act is now written, a partnership that has received a policy loan will not be able to distribute the proceeds of the life insurance policy received as a result of the death of the insured without giving rise to a tax liability for its partners. The proposed amendment will provide for more equitable treatment by permitting such proceeds to be distributed at little or no tax cost, regardless of the existence of a policy loan.


William Hillary (Bill) Clarke: Mr. Chairman, as this is the first of several clauses that deal with life insurance I was interested in getting that explanation from the minister. I would also like to know what it is that has changed in the definition of the adjusted cost base, and how this relates to the other provisions we are going to consider that deal with life insurance.


Joseph Jacques Jean Chrétien: This amendment in clause 9 in respect of life insurance proceeds received by a partnership is just a clarification consequential upon Bill C-ll that was passed by the House in December. It is just a clarification to the act. There is nothing substantial in this amendment.
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[Stage Direction]
Clause agreed to.
On clause 10-
Sinclair McKnight Stevens: Mr. Chairman, perhaps we could have the usual explanation on clause 10.


Joseph Jacques Jean Chrétien: Mr. Chairman, this particular amendment-


Sinclair McKnight Stevens: Mr. Chairman, a point of order. It might save time if the minister could deal with clauses 10, 11 and 12. They all refer to clause 35, and perhaps we could get them dealt with at one time.


Joseph Jacques Jean Chrétien: On clause 10, Mr. Chairman, this is a technical amendment consequential on the introduction of the new provision relating to the registered retirement income fund, the so-called RRIF. Paragraph 54(c) defines the disposition of property for the purposes of capital gains provisions of the act. Ordinarily, a transfer of property where there is no change in its beneficial ownership is not considered to be a disposition; for example, a transfer of shares by a person to a trust under which he is the beneficiary. Elowever, an exception to this rule is made where the trust is not taxable, as in the case of RRSPs, IPSPs, EPSPs and RHOSPs. This amendment simply adds the reference to the RRIFs.
Going to clause 11, payment from an RRIF. This is a technical amendment and is consequential on the introduction of a registered retirement income fund as an alternative to life annuities for persons with registered retirement savings plans. Section 56 of the act is a general section that requires pension benefits and similar miscellaneous receipts to be included in income for tax purposes. This amendment requires payments out of a registered retirement income fund to be included in income when received.
Section 60, clause 12, deals with payments to RRSPs and from RRIFs. Section 60 of the act permits certain miscellaneous deductions in computing income. This amendment makes two technical changes which are consequential on the introduction of the registered retirement income fund as an alternative to life annuities for persons who have a registered retirement savings plan.


Sinclair McKnight Stevens: Mr. Chairman, on this general subject the minister received a letter from an executive of one of our life insurance companies and perhaps I could read into the record certain paragraphs and ask the minister to indicate what his reply was. The communication states:
The current law provides that the annuitant under an RRSP may purchase a life annuity with guaranteed payments not exceeding 15 years. In other words, for a 71-year-old, payments are guaranteed to age 86 and for life thereafter.
The budget proposals would allow two new options under which funds could be withdrawn in a systematic fashion amortized to age 90. I regret one aspect of these proposals in that they will create a new welfare class of 91-year-old survivors of exhausted RRSP funds, but that is not the main purpose of my letter.
It would appear to me that in order to be consistent with the new options, the existing one should be amended, eliminating the 15 year guarantee maximum and substituting a maximum allowable guaranteed period to age 90. This change

would allow a prospective annuitant to properly compare the value of a level payout to age 90 under one of the new proposals to a life annuity with payments guaranteed to age 90. As the proposals now stand, the latter option is not allowed.
Perhaps the minister could indicate the government's position on that.


Joseph Jacques Jean Chrétien: Mr. Chairman, it has been extended in the bill, and I will give the hon. member the exact clause in a moment.


[Stage Direction]
Clause agreed to.
Clauses 11 and 12 agreed to.
On clause 13-
Sinclair McKnight Stevens: Perhaps we could have an explanation of this clause, Mr. Chairman.


Joseph Jacques Jean Chrétien: Mr. Chairman, this is a technical amendment. Subsection 69(6) of the act deals with dispositions of natural resource products to the federal and provincial governments, agents thereof and Crown corporations. The taxpayer who makes any such disposition must, under the present wording, include in his income the fair market value of the products so transferred. The change to subsection 69(6) restricts its application to dispositions made by virtue of an obligation imposed by statements or a contractual obligation substituted therefor. In this manner, normal commercial transactions are not interfered with.
In addition, another technical change eliminates "industrial" from the phrase "industrial minerals" used in these subsections. Both of these changes bring these subsections into conformity with the wording in other provisions of the act, in paragraphs 12(1 )(o) and 18(l)(m). The changes are applicable after April 10, 1978. This is to conform with the amendment passed in December, 1977, to make the situation consistent.


[Stage Direction]
Clause agreed to.
On clause 14-
Douglas Charles Neil: Mr. Chairman, before supper we had some discussion under clause 1 in connection with the roll-over of the family farm corporation, and in particular with the situation where a farmer did not transfer farm land to the family farm corporation. There are numerous reasons why he may not do so. For example, he may have done some estate planning and, having a large family and wishing to leave some of the land to other members who are not involved in farming, he therefore leases the land to the corporation.
The minister earlier stated that he could transfer to the corporation and then pass on the shares, but, as I say, there may be numerous reasons why he does not want to do so. The minister also suggested that if he did transfer the land to the corporation there would be no capital gains tax.
Over the supper hour I did some checking with a chartered accountant who does considerable family farm corporation work, and he advised me that there is, in fact, capital gains tax payable under certain circumstances. If the person transferring

June 12, 1978

the land is also a shareholder in the family farm corporation, there is no capital gains tax; but if there are other members of the family who are shareholders in the corporation, then there is a problem with capital gains plus other tax problems.
The matter could be solved fairly simply by bringing in an amendment which would provide a change in the regulation covering the roll-over of farm property. I am reading from the "Farmer's & Fisherman's Income Tax Guide, 1977", and the same regulations are found in the Canada Master Tax Guide:
A farmer can pass land on to his son or daughter or child, which includes grandchild, if the property was, immediately before death, used by the taxpayer, the taxpayer's spouse or any of his or her children.
In the past, in order to get around that provision, where the owner of the land leased it to a corporation accountants sometimes found it necessary to recommend to the farmer that he cancel the lease for a year and allow his son to operate the land or operate the land himself. He has then complied with this provision and is able to transfer the land by intra vires gift to a son or daughter.
I think the matter could be solved very simply by adding to that provision the following words:
-used by the taxpayer, the taxpayer's spouse or any of his or her children or by a family farm corporation, the shareholders of which one or more is a member of the particular class.
Would the minister consider bringing in such an amendment? It would solve many of the problems which exist with regard to a transfer, intra vires, from the parent to the children, which will now create problems with this new change regarding farm corporations.


Joseph Jacques Jean Chrétien: Mr. Chairman, I will certainly look at the hon. member's proposition with sympathy but I think it is quite a complex problem. There could be many members in a corporation and not necessarily all the members are of the same family. I will study the proposition and report back. I am not in a position to agree to it at the moment because in all circumstances there is always a potential for abuse. Even with the best intentions we have to be careful.


Douglas Charles Neil: Mr. Chairman, I do not think that in this particular case there is any room for abuse. I hope the minister will talk to his officials and have them consider the matter overnight or within the next day or two with a view to bringing in an amendment. I cannot see, nor could the accountants I talked to, that there would be any abuse in bringing in such an amendment. It would be of assistance to many farmers in transferring farms to sons and daughters involved in family farm corporations.


Joseph Jacques Jean Chrétien: As I said, Mr. Chairman, we are willing to entertain the possibility of change but I do not think it would be advisable to make such a change on the spot. This debate is a good occasion to receive such problems. It will be studied by my officials and if the representations of the hon. member lead to a fair amendment, we have a budget at least once a year, sometimes twice, so it could come back later on.
Income Tax Act


William Hillary (Bill) Clarke: Mr. Chairman, I should like to ask the minister what caused him to eliminate from the provisions of his budget, and therefore from this clause, the type of corporation that I might find in my riding-the ordinary small business in a city riding-when something of the sort was introduced less than six weeks later by the Minister of State (Small Business). Why were ordinary businesses not considered with farm businesses in this provision?


Joseph Jacques Jean Chrétien: At the time of the budget we considered the possibility of incorporating the whole lot but decided to have a policy for small businesses. I did not want to spread it out with part in the budget and part in the package that was to come later. We saved it for the time when we were to make representation, where we could have a broader picture of small businesses. A bill has been tabled in the House and if we can deal with this bill quickly we will get back to the bill on small businesses.


William Hillary (Bill) Clarke: Does the minister's answer mean that the incorporated farms being dealt with here are not considered to be small businesses?


Joseph Jacques Jean Chrétien: Mr. Chairman, we considered farming a different type of business. The reason we make the distinction is that the farming community thinks it is completely different from the business community, in a sense, and we have received different representations. Of course, you could argue that some farmers now are really businessmen, but there is still the tradition that a farmer is a farmer and a businessman is a businessman. With the kind of money they make on some of the big farms in the west they do pretty well compared to many of us in parliament.


Joseph Clifford McIsaac: Mr. Chairman, 1 have a brief comment for the minister. First of all, I want to commend him for bringing in this provision in clause 14-


Sinclair McKnight Stevens: Who suggested it?


Joseph Clifford McIsaac: It was suggested by the Saskatchewan Liberal Association, by the Liberal party of Canada, by a number of Liberal members of parliament and by a number of members opposite, if the hon. member wants to know. The suggestion was certainly not confined to any one source.
I want to commend the minister for this and urge him to consider the proposal put forward by my colleague, the hon. member for Moose Jaw. I think we are going quite some distance in making this amendment to include the incorporated farms in order to give relief from the capital gains tax measure. I hope the minister will look at this again overnight and see if it can be broadened.


Mr. Yewchuk:: Mr. Chairman, I wanted to ask the minister about a problem which is perhaps indirectly connected to the bill. A farmer retires, sells his farm and then buys an acreage near a city which was formerly raw land, not occupied or used for farming. Then he decides he wants to pass that along to his children. In effect, it is the same as passing on the assets of the
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June 12, 1978
Income Tax Act
farming operation he sold to the children, but at the moment that is impossible under the law; it has to be construed as a sale at fair market value and is taxed as such. He does not even have the right to set his own price if he wants to sell it to his children at lower than the market value. That is not acceptable to the tax department. Can the minister tell us why there is this Scrooge-like approach to the transfer of raw land, which is not necessarily farming land, within families?


Joseph Jacques Jean Chrétien: The act provides for the transfer of a farm within a family. This is not to help people get around the tax law and make a buck out of speculation. What we want to do is preserve the family farm concept. If a farmer sells his farm and rolls the proceeds over in another farming operation, he would qualify for exemption; but if he rolls the money into a completely different business or into a piece of land that he will use eventually for speculative purposes, of course that is not a farming operation. If he rolls over his money into a farming operation, even if it is not exactly the same type-say he goes from grain to grazing cattle or pigs or whatever-as long as it is farming he will qualify for the exemption. If he rolls it over into something completely different he will not qualify.


Paul Yewchuk: Mr. Chairman, perhaps the minister could explain the philosophy behind what he just said. Why should it be impossible for a parent to transfer property to children prior to death?


Joseph Jacques Jean Chrétien: Mr. Chairman, we introduced the concept of capital gains in this country some years ago and eliminated the federal inheritance tax to compensate. It used to be that payments were made at the time of the transfer of money after death; now it is made at the time of the capital gain. Of course, if you have assets and transfer them to the children at death, you are not obliged to pay inheritance tax. But you do pay tax on the capital gain.


Sinclair McKnight Stevens: Mr. Chairman, judging from the exchange between the minister and various members, including one of his own supporters, there seems to be a possibility that the minister might consider an amendment to clause 14 to give effect to the recommendation of the hon. member from Moose Jaw. I wonder if the clause could stand and we could go on to clause 15 in the circumstances?


Joseph Jacques Jean Chrétien: Mr. Chairman, I did not say I was entertaining the idea of an amendment at this stage. The situation is very complex although, of course, the hon. member tells me it is quite easy. We cannot just accept an amendment to the Income Tax Act without some study. I thank the member for raising the possibility of providing me with the information, but I do not think it will be possible in a matter of hours to draft an amendment and analyse all the consequences. I do not think we can operate that way.


Sinclair McKnight Stevens: Let it stand; we have the rest of the week.


William Hillary (Bill) Clarke: Mr. Chairman, I would like to ask the minister if the provisions of this section mean that shares in the family farm can be passed on through three generations without tax. In other words, could the tax be deferred anywhere from 60 to 100 years? Is that the effect of this provision?


Joseph Jacques Jean Chrétien: Yes, Mr. Chairman, if the farm remains in the family. A father can transfer his farm under the roll-over provision with no capital gain to his children, who in turn can pass it to the next generation, as long as it is from father to son. It can go on for generations and the capital gain is postponed until the time when the property or farm is transferred outside of the family.


William Hillary (Bill) Clarke: Mr. Chairman, if the farm is to be passed on for three generations, that is from father to son to grandchild to a great grandchild, which might run 100 years, and if the purpose is to preserve the family farm, why is there a limit? I understand the desirability, but if it is good for three generations, why is it not good for ten?


Joseph Jacques Jean Chrétien: Mr. Chairman, 20 generations or 50, there is no limit, but I guess that I will not be minister of finance when it comes time to change the act. I just said that there is no limit if it is transferred from father to son.


[Stage Direction]
Clause agreed to.
On clause 15-
Coline M. Campbell: Mr. Chairman, first of all I would be remiss if I did not ask for an interpretation of clause 15, and at the same time congratulate the minister on his family law reform.
This clause allows the property of the marriage to be split if the provinces pass a law that allows for some type of split, and the federal government would allow this, on the capital gains end of it, to be split 50-50. In other words, it is up to the provinces if they get into this area. For instance, in Nova Scotia we have a bill before the legislature called the married persons property act which, upon marriage breakdown, would split the property 50-50. For the purposes of the Income Tax Act the spouses would then have this property split 50-50 on the capital gain. That 50-50 split would be shared between the spouses for the purposes of future income tax liability of the two parties in respect to any capital gain when the property is disposed of by the taxpayer in the course of the marriage.
I think this is great if the provinces get into this and allow for it on marriage breakdown. But it seems to me the federal government has gone one step further and has allowed income splitting, if the provinces wish to get into it. Section 73(1) (a) provides:
For the purposes of this Part, where at any time after 1977 any particular capital property of a taxpayer has been transferred to
(a) his spouse,
I go now to the interpretation section, which provides as follows:
(1.1) For greater certainty, where, by the operation of prescribed provisions of the law of a province ... a person referred to in subsection (1)
(a) acquires or is deemed to have acquired-
June 12, 1978

I will not read the rest of that provision, but the property would become vested in the individual. In other words, property within the marriage can be split. It is my understanding that the province of Manitoba under former premier Schreyer passed an act which split the property of the marriage. This act was proclaimed but later revoked by Premier Lyon.
Am I right in interpreting this section as applying to capital gains within a marriage, if there was a law within a province on property? Property is under provincial jurisdiction. In other words, all the provinces should be asked, for the benefit of spouses, to pass such an act, if I interpret this correctly.


Edward C. Lumley: Mr. Chairman, the hon. member's interpretation is correct. Elowever, there is one aspect of her comments which is not totally correct. She indicates the federal government now agrees to income splitting. This is not the case. This clause basically deals with transfers during life.
It might serve hon. members well if we perhaps mention a few specific technical changes with respect to this clause. Section 73 of the act provides that the tax liability that would otherwise arise on certain inter vivos transfers of property is deferred until the time of disposition by the transferee. In general terms, the section currently provides for such roll-over treatment where a taxpayer transfers property to his spouse or to a spouse trust and where farm land, farm buildings or equipment are transferred to a taxpayer's child.
This clause makes the following important relieving amendments to section 73: first, a roll-over is provided for property transferred to a spouse under provincial legislation relating to marital property; second, a roll-over is provided on the transfer of agricultural quota and similar farm property to a child; and third, a new rule is added to provide a roll-over on the transfer to a child of an interest in a family farm partnership or of shares in a family farm corporation.


Coline M. Campbell: Mr. Chairman, I would like to get this straight. The way I read that, if a province passed an act pertaining to capital gains, or property acquired during a marriage, and they deemed it to be owned 50-50 by both spouses within the marriage, this act would apply and the gain would be split.


Edward C. Lumley: Yes, Mr. Chairman.


Sinclair McKnight Stevens: As this clause deals in a way with the capital gains question, could the minister indicate if the government have given any further thought with respect to capital gains in the Bryce commission context of at least indexing capital gains before they are taxed or, perhaps better still, giving up the taxation of capital gains period?


Joseph Jacques Jean Chrétien: We have received the commission report prepared by the late Mr. Dickinson and Mr. Nadeau. We are studying that at this time. Of course, they make some specific recommendations on capital gains. We will study their recommendations but we are not planning to make a change at this time. This bill makes some changes in terms of capital gains
Income Tax Act
for family farms. Of course, in another bill before the House we have made some capital gains changes for small businesses.


Sinclair McKnight Stevens: Mr. Chairman, the minister has made reference to two places where they have made some concessions with regard to capital gains. Does he not feel it is a confiscation to continue the taxation of capital gains, giving no indexing effect for inflation?


Joseph Jacques Jean Chrétien: The answer is no.


[Stage Direction]
Clause agreed to.
Gérald Laniel: Shall clause 16 carry?


Some hon. Members:: Carried.


Sinclair McKnight Stevens: Mr. Chairman, I take it the clause carries on the understanding there is no change in the effect of what is being changed here as far as the French version is concerned.


[Stage Direction]
Clause agreed to.
On clause 17-
Sinclair McKnight Stevens: Mr. Chairman, this is a rather significant change. Perhaps the minister can elaborate on why they are seeking this change.


Joseph Jacques Jean Chrétien: Mr. Chairman, this relieving technical amendment concerns certain special shares of public companies that are entitled to continue to pay tax-deferred dividends after 1978. This amendment simply ensures that, provided the terms and conditions of these special shares remain unchanged, an amalgamation of the original corporation will not upset their continued entitlement to tax-deferred dividend status.


Sinclair McKnight Stevens: Mr. Chairman, I wonder if the minister can indicate which of the tax motions actually cover the proposal in clause 17.


Joseph Jacques Jean Chrétien: Mr. Chairman, perhaps we can stand clause 17 and go to clause 18 while we are trying to find out for the hon. member.


Gérald Laniel: Is it agreed that the committee stand consideration of clause 17 and proceed to clause 18?


Some hon. Members:: Agreed.
Clause stood.
On clause 18-


Sinclair McKnight Stevens: Again, Mr. Chairman, I think the committee should have an explanation from the minister with regard to this change.


Joseph Jacques Jean Chrétien: Mr. Chairman, this amendment is designed to block a technique whereby public corporations could arrange their share structures so as to pay tax-deferred cash dividends to their shareholders in the guise of reductions in capital. Any
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amount paid to a shareholder of a public corporation on a reduction of its capital after April 10, 1978-the date of the budget-is deemed to be a dividend, unless the amount was paid on the redemption, acquisition or cancellation of the share, on the winding-up of the corporation or in the course of a reorganization of the capital stock of the corporation. This simply ensures that such cash payments to shareholders are taxed as dividends as and when they are received.


Sinclair McKnight Stevens: Under this clause, Mr. Chairman, can the minister confirm or otherwise whether it will still be possible for such a public corporation to pay out taxes paid on distributed income as long as they do it prior to December 31 ? If they do pay it out, will that be a tax-free dividend as far as the shareholders of the public corporation are concerned?


Joseph Jacques Jean Chrétien: I understand the answer is yes, Mr, Chairman.


[Stage Direction]
Clause agreed to.
Joseph Jacques Jean Chrétien: Mr. Chairman, with regard to clause 17, the hon. member for York-Simcoe asked which part of the ways and means motion related to clause 17. It is right at the beginning, that it is "expedient to amend the Income Tax Act and provide, among other things". This is one of the other things. This is only a technical change and, therefore, is not described in the ways and means motion.


Sinclair McKnight Stevens: In view of that explanation, which I was a little frightened was going to be the explanation, perhaps clause 17 should continue to stand.


Gérald Laniel: It has been stood.


Joseph Jacques Jean Chrétien: Mr. Chairman, I do not know why we have to do that. I have given the explanation. However, if it is to accommodate the hon. member, we can do that and move on to clause 19. I hope we will not end up with too many clauses stood.


Sinclair McKnight Stevens: The minister is not doing too badly so far. We have just stood two. In fairness, we should have a chance to check the legality of what the minister is doing here in view of the fact that he is trying to get this clause through under a kind of grandfather clause in the original tax motion. It would facilitate the activities of this committee if the minister could indicate if he anticipates any amendments with regard to clauses that we have yet to consider in the bill.


Joseph Jacques Jean Chrétien: The answer is no, Mr. Chairman.


Sinclair McKnight Stevens: To be specific, do I take it that clause 30 will not be amended, notwithstanding the various suggestions put to the minister in this House and from other sources?


Joseph Jacques Jean Chrétien: I do not intend to propose any amendments, Mr. Chairman.
On clause 19-


Sinclair McKnight Stevens: Perhaps we could have an explanation of clause 19.


Joseph Jacques Jean Chrétien: Mr. Chairman, these are important technical amendments to the anti-surplus stripping rules. The anti-surplus stripping rules are designed to ensure that taxpayers cannot artificially extract surplus on a tax-free basis.
The purpose of these amendments is to clarify the operation of these anti-avoidance rules as they apply to small groups of unrelated taxpayers who together control a corporation. The existing act is somewhat ambiguous in its application to such situations.
The new rules set out easy-to-follow tests. They basically apply to non-arm's length sales of shares by a taxpayer who is a member of a group of five or fewer unrelated persons who control the corporation, if the purchasing corporation owns more than 10 per cent of the equity shares of the corporation purchased. The general effect of this change is to restrict the rule to those situations where a surplus strip can actually take place. Since the special Part IV tax applies to intercompany dividends received where the recipient owns 10 per cent or less of the equity shares, there is no need to apply the anti-surplus stripping rule to such situations.


[Stage Direction]
Clause agreed to.
Gérald Laniel: It being ten o'clock, it is my duty to rise, report progress and request leave to consider the bill at the next sitting of the House.
Progress reported.



PROCEEDINGS ON ADJOURNMENT MOTION

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

Mr. Allan B. McKinnon (Victoria):: Mr. Speaker, I am taking part in the adjournment debate tonight because of the unsatisfactory nature of the reply given to me on Thursday last to a question concerning the coast guard building in Victoria, B.C. The minister's replies to my questioning were to the effect that, since a building permit had been obtained from the city, he saw no reason to change his decision. He also stressed somewhat the cost of providing a warehouse for the coast guard in Victoria.
Habour development in Victoria is of considerable interest to the city. The history is not common to other jurisdictions. In Victoria there is an Advisory Planning Commission composed
June 12, 1978

largely of elected officials, councillors, school board presidents and the like who consider zoning questions and make recommendations to the city council. This system alone was found to be unsatisfactory because it took account only of zoning regulations.
As a result, an advisory design panel was put in place to pay attention to the historical interests of Victoria and maintain the beauty of the city. This panel was composed mainly of architects and engineers who meet and pass judgment on the design of buildings submitted to them and decide if they are acceptable or not. In the six years or so during which this panel has been operating it is practically unheard of for any entrepreneur or contractor, including the provincial government, to put up a building which does not meet with the approval of the design panel.
Beautification of the harbour started some ten years ago and I particularly recall in this connection the case of an entrepreneur who wished to build, I think it was, a 25-storey hotel on the harbour shore. This would have been completely out of place and after a good deal of protest by civic officials and others it was decided not to grant a building permit and not to accept the building. The inevitable lawsuit followed, but the city was successful. A similar thing happened in connection with a proposal to put up another building of an equal magnitude. It has been accepted by everyone in Victoria that this is the only way in which to control the quality of the building which goes on.
In British Columbia they have what are known as design permit controlled areas-I do not know whether other provinces have them or not. In these areas the word of the design panel is law. The beauty and harmony of the surroundings is considered more important than the feelings of the entrepreneur concerned.
What happened in the case about which I questioned the minister was this: The federal government purchased some land from the Victoria Machinery depot for between $4 and $6 million and proposed to put up a building on that site. They knocked down some old shipyard buildings which were an eyesore anyway, and cleared the site. Then they built some docks and a shed to house a helicopter-I suppose it could be called a helicopter hangar. This is a concrete construction.
The minister made the case the other day that they had kept within the regulations for that zone, that the building does not exceed the height or the size permitted for the zone, but he was unable to make any progress with the advisory design panel. They have suggested several things to the department, all of them found unacceptable, it appears. The department is pulling its weight and insisting on building this metallic structure.
As was said the other day, the Minister of Transport (Mr. Lang) has a personality which would incite him to pave over Peggy's Cove to take a wrinkle out of the highway. This is what he is doing in Victoria. While the land owned by the Department of Transport does not fall within the design
Adjournment Debate
permit control area or the inner harbour, it is right next door to it, and it is in an area which the city and the provincial government are working hard to bring up to a higher standard, which we thought the federal government was doing. When they started working on this project, the Department of Public Works was in charge of it. They retained Willis, Cunliffe, Tait and Co., an engineering consultant firm, and Peterson and Lester architects.
Then there seemed to have been a falling out between the Department of Transport and the Department of Public Works and, as it was expressed, they fired the Department of Public Works and turned over the work to their own coastguard with sole authority to proceed with the project without the architects. We now have the terrible result of a decision to put up a metallic building and to make no changes to the design so that it would blend in with the community. They have been told that a cement building would be more acceptable. In the matter of cost, the firm which sent in a tender for the concrete building quoted a price which was $17,000 lower than the tender for the other building.
I ask the minister to reconsider the decision and to see whether he could reopen the subject.


Charles Lapointe: Mr. Speaker, I share the hon. member's concern for preserving by all possible means the beauty of the City of Victoria, the more so because I had the pleasure of visiting there on two occasions for over two months, and it was the first Canadian city outside the village where I was born which I was visiting; I am therefore as concerned as he is in preserving the beauty of this really outstanding area of our country.
In order to respond more specifically to the hon. member's concern, I should like to convey to him the information I was able to obtain during the day. As the hon. member already knows, for the past few years the department had been considering to move the Victoria coast guard operation from the bridge on Johnson Street to a location which would not interfere with the activities on the bridge. With the support of the City of Victoria, the department has bought the former Victoria Machinery Depot property and made elaborate development plans for some port facilities, a helicopter hangar and landing area, as well as a building to accomodate administrative offices, a supply depot and workshops. The construction of the helicopter hangar and landing area is completed and has been approved by the coast guard. We expect that the supply depot will be available by December 1978, the workshops by April 1979, and the administrative offices by June 1979. The construction program for the base, including the landscape-garden, the landing to the port and the public parking area on the roof-top of the administrative building should hopefully be ready by August 1979.

June 12, 1978
Adjournment Debate

The department has maintained the city's interest as to location and zoning requirements throughout the development of the site. The department, as a good corporate citizen, has applied to the city and received building permits for the completed hangar and for the first stage of the warehouse, the construction of which has commenced; and although not required, it is our intention to continue to apply for building permits for each stage of the complex. The metal panelling of the warehouse is a baked on enamel which will blend in with the colour and style of the present hangar and future buildings. It is our intention to have a functional yet attractive coast guard base at Victoria, bearing in mind the financial restraints with which we are faced.


AIRPORTS-SAFETY FACILITIES AT CRANBROOK, B.C.
Robert Hylton Brisco: Mr. Speaker, on May 15 I asked the minister if he could confirm the fact that there was evidence, or at the very least allegations, of four separate incidents of aircraft on final approach being greeted at four different runways across Canada with vehicles of one type or another being on the runways. In his reply, the minister indicated that he did not have that information available, he was unable to confirm it, and he implied that he would make inquiries in that regard.
On that basis, on June 8 1 asked him if he could now confirm the fact, at least in one case, the case of the Cran-brook airport, that the allegation had been confirmed, and that on or about April 20, within virtually two months of the fatal crash at Cranbrook, indeed there was another incident of a vehicle being on the runway while a Pacific Western 737 commercial jet liner was on final approach. As yet the minister has not confirmed that fact. Indeed I question whether he has bothered to make that inquiry.
When I indicated to the minister in a supplementary question that I felt he was shopping for another accident, and that he should address himself to this problem, he said that I was being unfair. As reported in Hansard, he said the following:
The hon. member is being unfair. He knows full well that the whole question of these communications is presently under investigation both as to the specific incident which occurred and at airports around the country. The inquiry is not related to one airport.
The fact remains that in February there was a fatal crash at Cranbrook which took 43 lives. The only thing unfair about my statement is that it is unfair to expect travellers to Cranbrook, expecting a very, very concerned group of individuals at the airport and an extended effort to control traffic on the runway other than aircraft, to find that simply does not prevail, and that the environment for another fatal accident is present. And a fatal accident could have occurred on April 20, had the weather conditions been similar to those back in February.
The minister indicated that he is concerned about these circumstances across Canada. Also he indicated that he is concerned about air safety. On May 15, he indicated that he

was very concerned about having and maintaining the high level of safety we have in Canada. That is simply not the fact and is far removed from the fact.
We have had this other incident in Cranbrook, yet the minister has not had the intestinal fortitude to examine that specific incident in light of the fact that just two months previously there was a fatal crash at that airport. He has not come forward in the House and indicated that he is prepared to look specifically at the obvious problem which is existent at Cranbrook.
The only unfair thing about my question is the fact that the minister seems to care little for the lives of the people flying into Cranbrook and other airports, for that matter, in Canada.
The minister also implied on May 15 and again on June 6 that all is well. Indeed, he said on May 15 that our total air navigational system, including such things as increases to our navigational aids and the like, take up a considerable portion of the federal budget. The navigational aids at Castlegar-and we have been waiting for months, for that which we have been promised for months, namely the replacement of existing navigational aids that have been described to me by one of the Ministry of Transport officials as more appropriately belonging in the Smithsonian Institute-are still there functioning. For how long will they function? There is a very serious problem in respect of getting spare parts for this ancient navigational aid system.
Today I asked the minister about fire safety. He touched upon this in his previous responses to me. The minister is reported in the press as having said that there is some concern. I really think this concern in the press is a concern as expressed in terms of the minister's attitude toward the Cranbrook crash and in terms of the minister's attitude toward air safety in Canada.
For example, the minister is referred to in an article appearing in the Vancouver Sun of May 26, which states in part:
For example, there is the inquest evidence that those-both inside and outside the ministry-who were concerned with handling Pacific Western Airlines Flight 314 on Feb. 11 did not take all care possible.
In light of the repetition about a vehicle being on the runway at Cranbrook, I would ask the minister to please examine specifically the ground-to-ground and ground-to-air control at Cranbrook. This has not been done, and in my view the minister is shirking a very serious responsibility.


Charles Lapointe: Mr. Speaker, we must have the patience of an angel to listen to such extravagant remarks and hear in the House that the minister is not interested in air safety in Canada.
Mr. Speaker, there are thousands of persons working in air communications, operating radar and not one of them is perfect because we are all human beings. I think that the hon.
June 12, 1978

member would not dream of having robots operate air communications. Since the accident at Cranbrook on February 11, 1978, it is true that four incidents implying an obstacle left on the runway have been pointed out to Transport Canada. In two of thoses cases, airport vehicles were involved and each time a thorough investigation was performed.
It is certain, Mr. Speaker, that when a question is asked of the minister in the House, he cannot say immediately if an incident has happened or not before an investigation is made. The other two incidents are attributable not to airport vehicles, but to an aircraft which took longer than expected to clear the runway. That type of incident is considered unusual.
The first incident involving a vehicle occurred in Cranbrook, B.C., on April 20, 1978. The aircraft did not have to overshoot the runway since the vehicle was able to move off in time. The investigation revealed that the mistake was made by the radio operator who did not inform the pilot about a possible danger or obstacle on the runway. Appropriate action has been taken so that such incidents will not re-occur.
Adjournment Debate
The second incident involving an airport vehicle occurred in Sault Ste. Marie, Ontario, on March 18, 1978. The situation at this airport is different than in Cranbrook as the airport in Sault Ste. Marie has a fully-equipped control tower. The pilot had been authorized to make an approach and was instructed to call the tower at the last observed point, that is the lighthouse, the last observed point of the approach.
The pilot did not call the tower, but the aircraft was sighted by the controller who asked him to re-apply power because a vehicle was obstructing the runway. The control methods used at this airport are now being reviewed to prevent such an incident from occurring again. Once again, Mr. Speaker, I would like to note that the whole matter of control communications in airports is being studied in Cranbrook and everywhere else in Canada.


Mr. Deputy Speaker:: Order, please. A motion to adjourn the House is now deemed to have been adopted. Accordingly, the House stands adjourned until tomorrow at 2 p.m.
A 10:21 p.m. the House adjourned, without question put, pursuant to Standing Order.

June 12, 1978


APPENDIX
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CANADA	COURT OF SESSIONS OF


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CASE NO: 27-003926-765
STAGE: SENTENCE
PRESIDING: LUC TRUDEL, JCSP
PARTIES:


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COUNSEL:	MR. FRANQOIS HAND-

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MR. MICHEL CHABOT and MR. PAUL MIQUELON COUNSEL FOR THE DEFENCE
DATE OF HEARING:	May 4, 1978
TAPE NO:	1904057892151177
LEGAL SECRETARY:	DIANE ROBIDOUX
LEGAL STENOGRAPHER:
TRANSCRIPTION SUBMITTED ON:MAY 16, 1978


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27-003926-765

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June 12, 1978

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Mr. Treu, I will-I'm going to render my sentence in French because I'm much more at ease in this language which is my mother tongue and since it is important in my view I would prefer to speak in French, but I understand that you can easily get a transcription of my judgment, and if you insist, we might have somebody to translate it now.
BY THE ACCUSED I think, My Lord, that won't be necessary!

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Okay, but I wish, not only I wish but I'm sure that you're going to do it, you should of course read my sentence and have it translated to you. I think so.
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On April 28, 1978, the Court convicted Mr. Treu on two counts, the first being that on or about March 29, 1974, having in his possession or control documents or information that he obtained or to which he had access as a person employed under a company who held a contract made on behalf of Her Majesty, namely Northern Electric Company Limited. Mr. Treu unlawfully retained said documents or information in his possession or control, when he had no right to do so, committing thereby an indictable offence, contrary to s 4(1 )(c) of the Official Secrets Act; and the second count being that after having unlawfully retained the said documents or information, the accused failed to take reasonable care of such documents or conducted himself in such a manner as to endanger the safety of such documents and information, again contrary to s 4(1)(</) of the Official Secrets Act. I would like to assure the accused as well as counsel that before rendering my judgment, I went over all the evidence-as I am bound to do by law and my oath of office, I went over all the evidence and exhibits and understood-I believe I understood-all the evidence presented as a whole, except of course for certain technical, very technical parts, which were beyond my knowledge-at least the part which required really specialized knowledge which only the accused and other experts possess. I do however feel that from a legal viewpoint-from the point of view of the law and the facts in this case-I fulfilled my oath of office to the best of my capabilities under the circumstances, after having gone over the facts and taken as much time as was required in the circumstances. I am clearly not saying this for personal reasons.
On the contrary, I am saying this to reassure the accused that, as required by my functions and oath of office, I went over all the evidence, and my judgment was based solely on such evidence and on nothing but the evidence presented in this Court at the trial. In addition, since I rendered my judgement, I spent the whole time between handing down the decision and your appearance today trying to think of
the sentence to impose, without of course preconceiving the arguments which would be presented in Court and without making a final decision, since I have no right to do so before hearing your counsel and the evidence they might present or before hearing the arguments of the Crown. I was however aware of the facts in the case and of the law, and it was my duty all the same to start to give the question mature thought and to think of a sentence which I could impose after having convicted you. As you see, neither my judgment nor my sentence are last-minute decisions, and I honestly feel that both are based solely on the facts, the evidence, the law and the precedents, after having-and I repeat-after having studied the file and heard the arguments of both your counsel, and this judgment and sentence are clearly rendered with a clear conscience and in accordance with the way in which I see the facts, law and precedents. I would like to say, Mr. Treu, that in my opinion your trial was fair and in keeping with the laws of Canada as they exist. The Official Secrets Act is obviously a Canadian law with which we are all bound to comply-myself, counsel, newspapers and journalists included. Moreoever, we are all, as citizens-and judges and people in high positions even more so-we are all bound by the laws of this country and I personally believe that the law is above men, above personalities, above all citizens, whether individual or corporate. I admit that the trial was held under exceptional circumstances, as you well know, but it was nevertheless in accordance with the Official Secrets Act. In this respect, Mr. Treu, I would like to quickly review the proceedings in this case for the record. You first appeared before a Judge of the Court of Sessions of the Peace; you were released by this Judge, in accordance with the law, under certain conditions. Your counsel, as was their right and yours too, filed a Petition in Superior Court asking that the conditions imposed by the Judge of the Court of Sessions of the Peace be reviewed. Without going into detail, I believe that, after examining the information and the facts presented, as well as your sworn petition, the Superior Court Judge decided to change some conditions of your release, by obliging you to report to the RCMP once a month instead of twice a month, and other minor changes in the conditions but, essentially, the Superior Court Judge maintained the conditions imposed by the Judge of the Court of Sessions of the Peace. You then appeared before various other judges to remand the case and for other administrative formalities, and then finally the date of the preliminary inquiry was set. The preliminary inquiry was held, and at the beginning of the inquiry, the Crown requested that the trial be held in camera for certain reasons then given. Counsel for the defence, your two lawyers-whom, by the way, I consider competent and honest; I feel they made use of every possible means to defend you-agreed to the closed session. At the
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preliminary enquiry, and I won't go over all the evidence, but most of the exhibits, or documents, filed at the trial were also filed at the preliminary inquiry, and among other things, the inventory list was filed at the preliminary inquiry, and I later learned, when presiding at the trial, that there had been some correspondence between your counsel and counsel for the Crown concerning the documents which might eventually be filed, although there was a difference of opinion between the counsel as to the documents as a whole. What I am trying to say is that from the beginning of the trial, the Crown which is obviously representing the Justice Department-the federal Justice Department in this case- and in passing, I must add, since it is part of the case, that an authorization from the Minister of Justice was filed-I have it here-in accordance with s. 12. The text is in English, but in accordance with s. 12 of the Official Secrets Act, the Attorney General of Canada, Mr. Basford, has authorized all the proceedings against you in accordance with our laws here in this country. I do not have to tell you-everyone knows-that the Attorney General of Canada holds the highest positions, at least as regards the administration of justice in this country, and no action under the Official Secrets Act can be brought against anyone without the approval or consent of the Attorney General.
Counsel for the Crown informed the court of the intentions and reasons for requesting that the trial be held under such exceptional conditions. As I was saying, he represents the highest authorities of the country and the Court, and in view of the seriousness of the offence and the fact that your counsel was acquainted with the record and the documents and that you yourself were acquainted with all the documents filed at the preliminary inquiry, I believe that in the circumstances, the Court having exercised its jurisdiction in a discretionary way, I believe that in the circumstances it was justified-and I am not saying this to in any way defend (since counsel understand our system) any judicial decision at the trial level, except in certain cases, with respect to its discretion-I don't wish to give a course on law here-they can always be appealed, and I believe that this is good. In fact, not only is it good, it is imperative in our system of law and essential if democracy is to work. I say this so that it will be perfectly clear in my mind that my judgment was rendered within the framework of Canadian law-that I have not departed from it, did not intend to depart from it, and will not depart from it in my sentence either. In my opinion, my judgment in your case was rendered in accordance with the evidence presented in Court, and I will not depart from this evidence and the facts in the case-and it was important and it was important to me to establish this position of the Court since, as you know, much publicity has been given to this case, often confused, inaccurate publicity-certain facts concerning this were brought to my attention from various sources-and there were perhaps a few poor interpretations which were haphazardly made, by people who had something to gain from acting in this manner-You yourself, Mr. Treu were, as I said, represented by competent and honest counsel. You have obviously seen from the beginning how the case developed, you have been warned by the Court on some occasions, you know that a closed session had been ordered, you know that at or near the beginning of the trial, your counsel pointed out to the Court that a Toronto newpaper-I don't remember the name of it and it isn't really important-had failed to comply with the closed session ordered by the Court. 1 warned Mr. Chabot at that time, and this is of course in the reasons, that I regarded this as a very serious matter and that in my own opinion no one is above the law, neither you nor, as I said earlier, the newspapers, nor, in short, anyone at all. You may not be aware of this but there is such a thing as contempt of Court in the presence of the Court and there is also contempt of Court outside the presence of the Court. In the case of contempt of Court in the presence of the Court, the law give me authority to act immediately; in the case of contempt of court outside the presence of the Court, I have no juridiction. All I can do, or all I could do under the circumstances, or all your counsel could do, was obviously to submit the whole matter to the Crown in charge of these proceedings under the Criminal Code, and in this case the Crown in right of the province. As for me, I pointed out immediately that your counsel should, if he wished to do so institute proceedings immediately or make a report to the proper person-I don't know whether or not he did so-as for me, I did not wish to take any action at that time and I feel that this was justified because I did not wish to becloud my mind in any way; I wished to remain, as I felt it was my duty to do, as objective as possible in the circumstances, and I did not wish to be in any way disturbed, either intellectually or legally, by anything other than the facts, the evidence, as it was revealed in the Court. So I simply kept it all in mind, therefore, until the end of the trial, but I intend nevertheless to clarify the matter and I think that it was understood by counsel and should, reasonably speaking, have been understood by you, because your counsel did after all advise you throughout the trial and before the proceedings and I think you should, reasonably speaking, have understood that the order for a closed session has to be complied with. The personalities involved are of absolutely no importance in my opinion. As I told you Mr. Treu, it is the law that must be respected; it is the law that is most important in our society and it is the only rempart that society has, that we all have. The last rampart that can really protect us is the law and respect of the Courts. I know that this has been said in much more elaborate and learned ways by a great many writers, scholars and jurists but the
June 12, 1978
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fact remains that in very simple terms it seems to me that everyone understands that in the long run the only protection that every citizen has is the law and respect for the law and for the Courts. Every time that you or I or a corporate citizen or any other citizen, a journalist or a newspaper for example, in short anyone at all, fails in such a flagrant fashion to respect the law and obey the order of the Court I think we all suffer as a result, the society in which we live and for the benefit of which man has fought for centuries in many cases to gain certain judicial safeguards, a measure of independence for the Courts; people have fought for this and I feel that we should give it our wholehearted respect. What I intend to do therefore, though I can't be sure of what the Courts or the Crown will do about it, but now that the trial will soon be finished as far as I am concerned, in another half or three-quarters of an hour, after my sentence is imposed-because it must be stated quite clearly that you are under my jurisdiction until my sentence is imposed and that you have obviously been under my jurisdiction since the beginning of the trial, which was not over as long as the sentence was not imposed-I therefore intend to make a report to the Crown of what I have read in the newspapers and also of the remarks made by Mr. Chabot since that time and the Crown will take whatever action it considers necessary on the matter. It is not up to me to decide whether or not there was contempt of Court and I am not going to say one way or the other. I will make my report on what I found myself by reading the newspapers. I remember that even before Mr. Handfield mentioned it this morning that after the evidence of both sides had been heard, you gave an interview to the Montreal Star in which you explained your whole defence right in the middle of the trial, which was not finished - the evidence was finished but the trial as such was not finished, there is the sub judice rule, which must obviously be respected and the Courts must not be influenced by any external factors-whatever. I took no action because I did not want to be influenced and in any event the case was subsequently postponed and a fairly long period of time elapsed so that, in my opinion, I did not take all of this into account. I wanted you to understand, however, that for you, as for me, the best defence was the Court and your rights could best have been exercised within the system, within the Courts, either by means of an action for damages or in the presentation of your defence at this trial or in the Court of Appeal, if it was your intention to appeal my judgement to that Court, or to go even further and to exhaust all the remedies to which you were entitled and for which I have the greatest respect. If you think that you reputation was sullied however, or if you think for any reason that the original information that was sworn was in bad faith, I tell you again because I regard this as a special type of case and your counsel could give you more information, but it is quite
clear that every citizen is entitled to bring an action for libel, every citizen is entitled to bring a suit for damages, either before the proceedings or, if the informant was acting in bad faith, from the time when the information was laid the right to sue for libel exists from that moment. No one has the right to do harm to another person. And it is at that point that you have your best protection and from the time the information was laid, from the time the proceedings began, for one reason or another, if you could prove the bad faith of the informant, that informant could be ordered, on the basis of the evidence, to pay damages, and could certainly be sued for libel. You have the right, like any citizen, to exercise your remedies, there is also no doubt that although this was said to be a secret trial, there were nevertheless from the outset, as I told you, statements that were made, the newspapers reported the charges, the newspapers reported what was normal in the circumstances, the newspapers also reported what you were tried on and what you were convicted on. What you were convicted on, which I read to you a while ago, were offences under s 4, and I shall not make any further comment, but it is quite clear that the law is public and that everyone is presumed to be familiar with the law. In s 3 of the said Official Secrets Act, the French heading of which is given at the side as "spying" - in French rather as "espionnage" and in English as "spying", it is under s 3 that the draftsman decided to describe the offence of "espionnage" or "spying" in English, and not under s 4. So if anyone has done harm to your reputation or has given an inaccurate report in good faith or in bad faith, but through ignorance, gross negligence or bad faith, which would be worse, I would beg you to exercise all the remedies you may have. You were charged under s 4 and you were found guilty under s 4 and the Act speaks for itself in this regard. All of which is to say, Mr Treu, that there is no, it was not the journalists who convicted you or who would have acquitted you, it is not the journalists who are going to sentence you otherwise, nor is it the journalists who are going to argue your case on appeal, that is not how the system works, nor is it-your reputation, the best protection, at the risk of repeating myself, your own protection and the exercise of your rights must take place within the legal system, since it is still there, despite the imperfections in the system, that you will obtain the best justice, and it is still there that-you must beware yourself, your reactions, and perhaps your friends in some cases. Your lawyer, Mr. Chabot, emphasized to the Court that you were merely defending yourself, but I have not-I shall not repeat what I have been saying for at least ten, fifteen minutes, because it is quite obvious, as I have told you, that it is not-a Member of Parliament is subject to the law, a Minister is subject to the law, everyone, and one does not defend oneself, one is not allowed to take the law into one's own hands and do whatever one wishes
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with it, no one is above the law, whereas these people-it is no answer that because one sees someone kill another person to say "I have the right to kill him". That is not how it works. Or "If anyone does harm to my property I'll do harm to him". I do not need to give you any more examples, but at any rate everyone knows what I mean, I think. One has only to look at what goes on in the world to realize that the more responsibilities a citizen has, the more he must respect and submit to the law. One has only to look at what happened in the United States when the Attorney General was convicted because he had not obeyed the law to understand that it is important in a society. I come now to the actual sentencing. I do not need to tell you, Mr. Treu, that I have been working in criminal law for some time, whether as a judge or in other capacities, and I think that this is the part-it is often said but perhaps judges feel the need to say it more often because they are the ones that impose these sentences-there is no doubt that this is the most difficult part. It is relatively easy, even if it takes a great deal of work, it is relatively easy, because we have specialized legal knowledge, to study a record and analyse the evidence and end up by reaching certain legal conclusions and, after we have done everything, at least in human terms, with our knowledge, we feel we have performed our duty in the manner in which it should be performed. But when we come to the sentencing part, even if it is governed in the same way by the law and the precedent, the fact remains that the judge is a human being; it is exceedingly difficult for a human being to try another human being or to sentence him, if only because of this human part. That is a task that is almost humanly impossible, and I do not know any judges-and he would not be a good judge, moreover, and would not deserve to be on the bench, in my opinion-who derive any pleasure from sentencing one of their fellow men. That is exceedingly difficult. But this part cannot, of course, any more than the judgment, be based on feelings; the judge must rely solely on the law and on the precedent and on the facts, as well as on the criteria the appellate courts give us, and even then I think that the judge has no choice, whether for a very light sentence or for a harsher one the judge is bound by the law, and here again I think that this is the best protection. In your case it is even more difficult because your lawyers are right, you are an exceptional person, you are certainly not, in my opinion, a criminal; you have committed a criminal act but you are not what one would call an individual with a criminal career, far from it, you are a person who has had a most respectable life, who has great intellectual qualities, who as a human being is likeable, at least in my opinion, who has a family, who has children. You are not an individual-this makes it more complicated and makes sentencing more difficult in such cases. In your duties and in the onerous responsibilities you had you committed a criminal act, in my opinion, since I have found you guilty, but you are not, and I have never considered you to be, a criminal because I have never had any evidence of this, and I do not have any more, so in my opinion you are not one. I must try you, I must sentence you, taking into account, as mentioned this morning, the objective nature of crime, the protection of society, the setting of an example, deterrence and, of course, subjective factors as well: who committed this crime, your age, your personality, your family situation, your previous record-in this case there is none-your possible rehabilitation, your attitude at the time of the crime or immediately after the crime, your degree of premeditation and the circumstances surrounding the crime. Like any court I must weigh all these factors, at least I must select certain of these factors, certain criteria, and weigh them in some kind of balance, and this is what results in the sentence. In some case the rehabilitation factor is more important than in others; in other cases it is the protection of society; in other cases we must take into account personality, which has an even greater influence, which tips the scales in certain cases, with respect to the individual himself. Thus one must take into account both the objective and the subjective criteria, and after weighing, putting all this in the two pans of the balance, try to do justice to the accused in accordance with the law and precedents. And it is this part of course which should guide the judge, it is all these factors which should guide the judge in arriving at his sentence. I do not need to repeat myself, from the subjective point of view I have no doubt at all, Mr. Treu, that you are a respectable person in my view-you were, you still are-and I do not think, as I said, that you are a criminal. Your lawyer drew my attention to certain circumstances-that the documents for which I have convicted you were your work tools, your intellectual property, that the company or NATO, in certain cases, or the Nadgeco company-and that it continued to promote you in your work, that you continued to work, in effect.
I studied all the circumstances surrounding the crime in my judgment, so I do not intend to go over them all in detail because the circumstances of the crime were that-I analysed and studied them all and I recall analyzing Exhibit P-10, I remember analyzing everything that retained your, or rather everything that led to your retaining these documents and keeping them for a fairly long time after you stopped working at Northern Electric. To summarize, Mr. Treu, after thinking about this case and weighing the pros and cons it is my opinion that of the sentences I could hand down, the maximum was fourteen years-this fact has been emphasized. For the purpose of the record, I would simply like to repeat the cases I was given: Lemire and Gosselin, (1948), 5 FC, 181 and following, 92 CCC, 201; the case of Pierre Tanguay, QC, Court of Appeal, No A-4962; the case
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of Pierre Taillon, QC, Court of Appeal, No A-4963; and R v Wilmott, (1967), 1 CCC, 171, Court of Appeal of Ontario. In addition there is a case which may help you understand the basis of my decision: R v Morrissette, (1970), 1 CCC, (2nd), 307, the principles of which are outlined at page 207 of the second edition of Canadian Criminal Procedure, Salhamy. So I clearly could have-the maximum sentence is fourteen years imprisonment. The minimum under the circumstances would be a suspended sentence, to which I could of course attach a probation order and a fine, at least according to the cases that I see here and that are reported in Martin's under s 663. However, I could not impose only a fine on you and it is up to me to choose to exercise my discretion, and select something between these two extremes. So, to summarize everything I have said as far as I am concerned, I am keeping to the principal factor by, as I said a moment ago, weighing your subjective personality and certain other factors such as setting a good example and deterrence, in view of the context in which you obtained the documents in question because essentially, in your case as in the case of any other citizen who would obtain possession of such documents, within the context of the Official Secrets Act, with very strict and limiting conditions, in my opinion, deterrence and setting a good example should be given more weight than the subjective factor that I mentioned and that your counsel mentioned. It is quite apparent that we cannot-your lawyer asked the following questions many times: "Setting a good example for whom?" or "Deterrence for whom?". This is a very unusual crime-I definitely do not believe it is one for the average person. But I do not think, although I may be wrong, I for one would respect not only would I respect, but with regard to the basis of the judgment or the sentence, I-you should of course exercise all your legal rights, if you think you should. Thus I think more importance should be attached to deterrence, not so much for Mr. "X", the average person but rather to deter people in the same position as you were in, with your responsibilities in view of the possible consequences of such an act and also in view of the confidence placed in you. Even if I took it for granted that it was a question of your responsibility or rather your intellectual property, in part (moreover I mention this in my judgment as well) the fact remains that this intellectual property or your knowledge as a scientist or engineer or... At a certain time you made this knowledge available to the government, within the framework of our security regulations, to perform a contract in which the security regulations were to be observed. In this respect you were in fact fortunate-to have all this knowledge-and this intellectual knowledge, this intellectual property that was made available to the company in the performance of a contract in which Canada had an interest-as I mentioned in my judgment-this intellectual knowledge and property
were to be observed and protected by security regulations established by the government, and the government-rightly or wrongly-is the absolute master where these security regulations are concerned. Of course the government receives its mandate from society, at least in the present state of the law, and if the government makes a mistake, well the law should be changed. However, within this very specific context, you had enormous, clear-cut responsibilities, and your intellectual property was to have been used within this very restricted context, and was surrendered to the government for good. Once the contract has been fulfilled-as I interpret it in any event-you were no longer entitled to keep these documents and either they were to be destroyed or you were to obtain permission to keep them. This was not done, and this is why I found you guilty and why from that point on the matter presented a danger to state security, at least as I saw it in the judgment. In Morrissette, the following is cited in the second paragraph, or at least on page 207:
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"Deterrence is also an important factor. The problem is different if the purpose of a sentence is to deter the offender from repeating the offence, from that if the purpose is to deter others who may be inclined to commit the same offence, in neither case does it necessarily follow that a long sentence is required to achieve the purpose. Deterrence should be considered from an objective view, if the purpose is to deter others who may be inclined to commit the same offence. In such cases, the gravity of the offence, the incidence of the crime in the community, the harm caused by it either to the individual or the community and the public attitude toward it are some of the matters to be considered."
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So the deterrence factor-crime prevention-should definitely be considered objectively, if the goal is to prevent others from committing the same crime, others who could be inclined or have a tendency to commit the same crime in the same circumstances. In other words, the objective seriousness of the crime, the incidence of the crime in the commu-unity, the harm caused by it either to the individual or to the community and the public attitude toward it should be matters that could be considered. Of course, if the concept of deterrence is applied to the person who commits the crime, if the idea is to prevent him from committing the same crime again, we should pay more attention to the subjective factors, because if for example an individual had a tendency to commit robbery to prevent him from committing more robberies, we could in that case consider the subjective factor. In addition, if he does not tend to repeat his crime, we should consider his age and the subjective
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factor would be more important than the objective factor. But where it is not a question of preventing another individual, or rather the accused, from committing the same crime, but rather of preventing other individuals in the same circumstances from being tempted to commit the same crime, in that case the objective factors must be considered. And I think that in your case in any event-I do not have the whole case in front of me, I have only a summary-but as I interpret it, and in any case, I feel that I must give more weight to the objective factor than to all the subjective criteria. In other words I must consider the deterence factor and that of setting a good example so that anyone in the same situation who would be required to have access to such important military documents, according to the evidence presented before me-this factor must take precedence over all the other factors, and I am referring solely to the evidence. And evidence was presented before me that these
were extremely important documents at least according to the expert evidence I heard.
Consequently, Mr. Treu, I must sentence you to a prison term, and I am sentencing you to two years' imprisonment on the first count and to one year's imprisonment on the second count, concurrently. That is all.

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I, the undersigned, a legal secretary, certify on my oath of office that the preceding pages are a transcription of the words recorded mechanically on tape No. 1904057802151177.
(sgd) Diane Robidoux Legal Secretary
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Tuesday, June 13, 1978