1979-02-19

ROUTINE PROCEEDINGS


Mr. Ray Hnatyshyn (Saskatoon-Biggar):: Mr. Speaker, 1 rise under the provisions of Standing Order 43, on a matter or urgent and pressing necessity.
In light of the decision of the government to sell five inland grain elevators in the prairie provinces and a port elevator at Prince Rupert, British Columbia, and in light of the fact that such decision has been made at a time when record utilization and profits are being experienced by the terminals in Saskatchewan and pitifully small offers have been received on the tenders for these elevators, and in the case of the government elevator in Saskatoon no bid at all was received, I move, seconded by the hon. member for Moose Jaw (Mr. Neil):
That this House directs the government to reverse its wrong-headed decision to sell or close the five inland grain elevators and the port elevator at Prince Rupert, British Columbia, as the sale for closing of the said elevators at this time can only have a negative effect on grain handling and transportation in western Canada.


Mr. Speaker:: The presentation of such a motion at this time can be done, pursuant to Standing Order 43, only with the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


HERITAGE DAY
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, I have a motion to present under Standing Order 43 and I feel sure that the Deputy Prime Minister (Mr. MacEachen) will be happy to second it.


Mr. MacEachen:: No.


Stanley Howard Knowles: If by chance he is not, my friend, the hon. member for Nanaimo-Cowichan-The Islands (Mr. Douglas), will do so. Did the Deputy Prime Minister say yes, or no?


Allan Joseph MacEachen: I said no.


Stanley Howard Knowles: Mr. Speaker, I move:
That this House (a) notes that this is National Heritage Day, (b) regrets that legislation to make this day a holiday has not yet been passed, and (c) expresses the hope that whatever government is in power later this year will support such legislation so that all Canadians can enjoy a February holiday and be reminded of the richness of our national heritage.


Mr. Speaker:: Such a motion can be introduced for debate at this time, pursuant to Standing Order 43, only with the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


POST OFFICE ACT
Hon. W. G. Dinsdale (Brandon-Souris):: Mr. Speaker, I rise, under the provisions of Standing Order 43, on an urgent matter of public importance.
On March 17, 1978, the Postmaster General admitted in the House that rural route mail carriers, in the face of continuing inflation, are suffering because of the $10,000 ceiling imposed on rural contracts, and promised that steps would be taken to amend the Post Office Act with a view to ending this discriminatory practice. Because of the government's failure to act, I move, seconded by the hon. member for Central Nova (Mr. MacKay):
That the Postmaster General introduce at the earliest possible opportunity an amendment to the Post Office Act designed to remedy this long-standing injustice, as promised by him and his predecessors over the past few years.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.

February 19, 1979


URBAN AFFAIRS
Mrs. Jean E. Pigott (Ottawa-Carleton):: Mr. Speaker, I rise, under the provisions of Standing Order 43, to move a motion of urgent and pressing necessity.
The Minister of State for Urban Affairs is in Toronto today demonstrating how worried the government is in facing the people without a policy of mortgage deductibility. Therefore, I move, seconded by the hon. member for Selkirk (Mr. Whiteway):
That this House condemns the minister for not having enough backbone to resist-


Mr. Speaker:: Order, please.


NEED FOR ALTERNATE SOURCES OF ENERGY IN EASTERN CANADA-MOTION UNDER S.O. 43
Mr. Howard Crosby (Halifax-East Hants):: Mr. Speaker, 1 rise, under the provisions of Standing Order 43, on a matter of urgent and pressing necessity.
The cutbacks in supplies of foreign crude oil to east coast refineries means the possibility of an energy crisis in Nova Scotia and eastern Canada. Accordingly, I move, seconded by the hon. member for York-Sunbury (Mr. Howie):
That this House direct the Minister of Energy, Mines and Resources to assist the newly constituted Maritime Energy Corporation to develop alternate sources of energy, particularly Nova Scotia coal and tidal power, and to improve the power transmission system in eastern Canada.


Mr. Speaker:: The presentation of such a motion for debate at this time requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


EXTERNAL AFFAIRS
Mr. Bob Corbett (Fundy-Royal):: Mr. Speaker, I rise, under the provisions of Standing Order 43, on a matter of urgent and pressing nature.
Canadians, along with all civilized peoples of the world, were stunned by the completely unprovoked and barbaric attack on a civilian Rhodesian aircraft one week ago today which resulted in the death of all 59 children, women and men aboard. This was the second such savage attack in a few months, the first resulting in the massacre of 48 innocents. I

move, seconded by the hon. member for York-Sunbury (Mr. Howie):
That this assembly join with Great Britain and the United States to unequivocally condemn this heinous crime as admitted to by Joshua Nkomo's Patriotic Front Alliance, and that we assure the citizens of Rhodesia that Canada supports and encourages their sincere efforts toward the establishment of a civilized and democratic nation where all may live without fear of recrimination or terrorism.


Mr. Speaker:: Such a motion can be introduced for discussion at this time, pursuant to Standing Order 43, only with unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


EMPLOYMENT
Mr. Bob Rae (Broadview):: Mr. Speaker, I rise on a matter of urgent and pressing necessity under the provisions of Standing Order 43.
In view of the pending review of the Department of Employment and Immigration Outreach program relating to women and youth, which review has taken place without adequate consultation with the groups involved, and in view of the fact that the Outreach project will soon be cut altogether, I move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That women and youth remain target groups for the Department of Employment and Immigration Outreach program, and that no existing projects be cut without a thorough and public investigation by the Standing Committee on Labour, Manpower and Immigration.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


RAILWAYS
Mr. Dan McKenzie (Winnipeg South Centre):: Mr. Speaker,
I rise, under the provisions of Standing Order 43, on a matter of urgent and pressing necessity.
In light of statements made by the Prime Minister last week in Brandon, Manitoba, which conflict with ones made earlier by the Minister of Transport on the availability of funds for CPR rail line relocation in Winnipeg in place of the Sher-
February 19, 1979

brook-McGregor overpass, I move, seconded by the hon. 'member for Selkirk (Mr. Whiteway):
That the Prime Minister forthwith clarify his position with reference to rail line relocation and that he make a statement on motions as to the amount of money he will make available for CPR rail line relocation in Winnipeg, rather than provide funds to build the Sherbrook-McGregor overpass.


Mr. Speaker:: Such a motion can be presented for debate only with unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


URBAN AFFAIRS
Mr. Dean Whiteway (Selkirk):: Mr. Speaker, I rise under the provisions of Standing Order 43. In true spy fiction fashion, the Minister of State for Urban Affairs is coming in from the cold by presenting Canadians with a watered-down version of our party's policy of mortgage and property tax deductibility. Therefore, I move, seconded by the hon. member for Ottawa-Carleton (Mrs. Pigott):
That the minister take the first opportunity to make a statement on motions to explain how his government's policies for a shelter allowance will achieve the same measure of economic benefit for this country that a proposal for mortgage and property tax deductibility would achieve.


Mr. Speaker:: Order, please. The hon. member for Eglinton (Mr. Parker).


MULTICULTURALISM
Mr. Rob Parker (Eglinton):: Mr. Speaker, I rise on a matter of urgent and pressing necessity. In view of the fact that Caravan, the Toronto multicultural festival, has denied permission to participate to B'Nai Brith as operators of a Jerusalem pavilion as a result of heavy Arab and Palistinian pressure, and that compliance with such pressure is opposed by the House, I move, seconded by the hon. member for Central Nova (Mr. MacKay):
That this House request that Caravan reverse its well-intentioned but racist decision to prohibit B'Nai Brith participation as sponsors of a Jerusalem pavilion.


Mr. Speaker:: Such a motion can be presented for debate only with unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.
Oral Questions HOUSE OF COMMONS


PRESENCE IN GALLERY OF MINISTER OF ECONOMICS OF THE FEDERAL REPUBLIC OF GERMANY
Mr. Speaker:: Before beginning oral question period, I ask hon. members to join with me in recognizing the presence in our gallery of a very distinguished visitor in the person of Dr. Otto Count Lambsdorff, Minister of Economics of the Federal Republic of Germany.


Some hon. Members:: Hear, hear!



ORAL QUESTION PERIOD


Mr. Sinclair Stevens (York-Simcoe):: Mr. Speaker, my initial question is directed to the right hon. Prime Minister, who undoubtedly has noted the 8.9 per cent inflation level revealed today in Statistics Canada figures.
When the Prime Minister announced his control program and anti-inflation program in October, 1975, he indicated that the inflation level would be 4 per cent by October last year. Would the Prime Minister now tell the House what, in effect, went wrong, bearing in mind that in each of the years 1976, 1977 and 1978 the Americans had consistently lower inflation than we in this country and each of the other main OECD countries, such as Great Britain, Italy and France, had consistently declining inflation levels while our inflation rate consistently went up? What went wrong?


Right Hon. P. E. Trudeau (Prime Minister):: Mr. Speaker, I am genuinely surprised that the hon. member should ask that question. He spent the major part of last week telling the government and the people that when the Canadian dollar fell, it had a very drastic effect upon the rate of inflation in Canada. He has given the answer to his own question. I think the hon. member should read over the questions which he posed last week and he will see. He indicated the degree to which inflation had gone up because of the lower dollar level, and that is true.


Sinclair McKnight Stevens: Mr. Speaker, again my question is directed to the right hon. Prime Minister who last Thursday and once again today conceded, in reply to my question, the impact of the falling dollar on inflation: he indicated that one of the effects of the falling dollar is an increase in the cost of living in Canada,
Is the government now going to correct its faulty fiscal stance which is causing the fall of the dollar and the consumer consequences we are now seeing because of rising inflation? In short, it is not enough to stand in the House and say, "Don't
3344

February 19, 1979
Oral Questions
blame us for inflation; it is the falling dollar". What will he do about the falling dollar?


Mr. Speaker:: Order, please.


Pierre Elliott Trudeau: Mr. Speaker, I understand there is only a difference of degree but not of principle between the hon. member and us. He wants a 90-cent dollar and it is an 84-cent dollar. But the effect would be the same: a 90-cent dollar would have a negative effect on the cost of living in Canada.
The hon. member wants to know what we can do. We know what they would do: they would have an increased deficit, and that is not our answer.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


PLANS FOR POST-AIB MONITORING PERIOD
Sinclair McKnight Stevens: Mr. Speaker, based on the expenditure figures which will become public later this afternoon we can see the astounding deficit the government is leading us into.
Again I direct a question to the Prime Minister. Last Thursday, he indicated that the federal government had other plans for the post-AIB monitoring period, that is, other plans than the setting up of the Centre for the Study of Inflation and Productivity. Would he reveal to the House what these other plans are, and is the government now considering instituting them in view of the fact that inflation is obviously getting out of control again?


Pierre Elliott Trudeau: Mr. Speaker, I believe the answer was given in answer to a question by the hon. member for Windsor West who was asking if we were prepared to give some stronger investigative powers to the Centre for the Study of Inflation and Productivity, and I said we were considering this.


STRATEGY TO CURB RISING FOOD PRICES
Mr. James A. McGrath (St. John's East):: Mr. Speaker, I should like to direct my question to the Prime Minister. In view of the fact that the consumer price index today identified sharp increases in food prices, confirming the prediction of the Minister of Consumer and Corporate Affairs last week wherein he predicted food prices would go up 14 per cent over the next few months, would the Prime Minister tell the House whether the government has a food strategy to deal with rising food prices as suggested by the Minister of Consumer and Corporate Affairs in Winnipeg last week and, if so, when are we going to hear about it and how far will food prices rise before the government acts?


Pierre Elliott Trudeau: Mr. Speaker, I believe the hon. member shares with us the belief that the
producers of food in Canada should be encouraged to reach the stage of stability but that they should not be controlled either during the period of controls or between periods of controls. The producer is left free and we have never attempted to control his produce at the farm gate. He sells on a free market.
In so far as what happens to the food after that is concerned, the hon. member knows that we held a study into the processors and distributors and it was not found that there were excess profits there.


James Aloysius McGrath: Mr. Speaker, I am not suggesting to the Prime Minister that we should reimpose controls, because we saw how ineffective they were. What I am asking the Prime Minister is, does the government intend to produce a coordinated food strategy, given the fact that we have at least five government departments actively involved in this area, each one acting separately and each one influencing the food component under the CPI? This needs co-ordination and obviously someone has to step in between the Minister of Consumer and Corporate Affairs and the Minister of Agriculture. Will the Prime Minister say whether or not there is going to be this kind of co-ordination within the government so we will know where we are going in terms of food policy?


Pierre Elliott Trudeau: Mr. Speaker, if the hon. member had been following this subject, he would recall that there was a meeting here in Ottawa not only with the ministers involved but also with the various producers and distributors. They discussed this matter. I would remind the hon. member that about 30 per cent of the food we consume is imported and those prices are affected, as I was telling the hon. member for York-Simcoe, by the falling dollar. That is one of the main causes of food prices having gone up.
As the hon. member knows, one of the main reasons the food index has gone up this month over last month is the importation of fresh fruits and vegetables. Naturally, if in the winter you want to import such things from southern climes, you must pay a premium because of the fall of the Canadian dollar.


CONSUMER AFFAIRS
James Aloysius McGrath: Mr. Speaker, perhaps I could direct one final supplementary question to the Minister of Consumer and Corporate Affairs, who seems to be more realistic than the Prime Minister in terms of his predictions.
In another area affecting the CPI, a non-food area, we have noticed an increase in the price of automobiles notwithstanding the fact that the government has already decreased by three points the federal sales tax on automobiles. What has the minister done to monitor this situation to ensure that this

February 19, 1979

reduction in federal sales tax on automobiles and on other hard goods is, in fact, being passed on to the consumer, as there would appear to be evidence here, with automobile prices going up, that the reduction is not being passed on?


Hon. Warren Allmand (Minister of Consumer and Corporate Affairs):: Mr. Speaker, to begin with, I want to correct the hon. member in respect of his question to the Prime Minister. I never said food prices would go up by 14 per cent in a few months; I said the increase would be from 12 per cent to 14 per cent, year over year, in the next few months and 9 per cent to 10 per cent for the total year at the end of the year. That is a very gross misrepresentation, which is not unusual for the hon. member.
It is interesting to note that the non-food part of the consumer price index in fact declined over the past month. Furniture and clothing prices declined in that particular index. The main reason for the increase in the CPI is, as the Prime Minister stated, with respect to food, electricity and gasoline. With respect to those items on which we removed the sales tax, there has been a general decline-


Sinclair McKnight Stevens: Car prices are up.


William Warren Allmand: -in the prices of those commodities. So far, the sales tax cut has been a success.


SPREAD BETWEEN PRICES PAID TO FARMERS AND THOSE PAID BY CONSUMERS
Mr. Lome Nystrom (Yorkton-Melville):: Mr. Speaker, my question is addressed to the Minister of Consumer and Corporate Affairs. The Prime Minister has talked about food prices for farmers-we agree with his remarks in that regard-about the high price of imported foods.
I would like to ask the minister about the spread between the price the farmer gets for his produce and what the consumer pays for food produced in Canada. For example, in Winnipeg in the week of February 9, the year over year price increase which farmers received for chicken and turkey was seven cents a pound, but the consumer paid an extra 49 cents a pound for chicken and 36 cents a pound for turkey.
The minister has said many times that he would investigate this matter. I would like to ask, once and for all, what does he intend to do about it? Why are the farmers and consumers being ripped-off?


William Warren Allmand: Mr. Speaker, the Minister of Finance last summer did request that the AIB do a study on price spreads or price-profit spreads in the food industry. The study was carried out by them and report was made in the fall. The report indicated that there was no exceptional profiteering and that there was really no change in the profit margins in the food industry.
Oral Questions
However, within recent months new evidence may have come to light. Anybody who has such evidence is encouraged to send it along to the director of investigations to see if there is any price-fixing or rigging of the marketplace whatever. I have referred the complaints of the hon. member to the director of investigations. But if it is something which does not come under the Combines Investigation Act, all we can do at the moment, since we are not in controls, is to try to analyse the reasons for these price increases and to bring moral pressure to bear if they are unusual.


Lorne Edmund Nystrom: Mr. Speaker, the farmer receives an extra seven cents a pound and the consumer pays an extra 49 cents a pound. Who is doing the monitoring in the minister's department? These figures are readily available to anyone.
The price of bread, as the minister must know, has gone up by about 10 cents or 12 cents a loaf, while the component cost, namely, the subsidy which the minister in charge of the Wheat Board took away from us, amounted to 3.5 cents a loaf. The minister said that he would look into this matter as well. Is the minister satisfied that the bakeries and bread companies are justified in raising the price by ten cents or more a loaf, and if he is satisfied with that increase, would he table the evidence?


William Warren Allmand: Mr. Speaker, the principal price monitoring group in the government is not within my department but under CSIP, which has replaced the AIB at the recommendation of the provinces. We refer different price increases to that group for analysis.
With respect to the price of bread, our prediction was that bread prices would increase by about six cents to seven cents a loaf as a result of the removal of the bread subsidy, and that was done in January. It is too early yet to know what companies are charging beyond that, and for what reasons.


Lorne Edmund Nystrom: Mr. Speaker, I wonder if that minister has control of anything. The input costs went up by approximately 3.5 cents. The Mallon report which was produced two or three years ago said that consumers in our country were paying up to 7 per cent more than they should because of the tremendous corporate concentration in the retail market.
Would the minister tell the House whether he is considering a policy statement or bringing a bill into the House which will break up the tremendous concentration which the retail stores enjoy in this country, particularly in western Canada?


William Warren Allmand: Mr. Speaker, this government has brought in three bills to deal with concentration, and we did not receive much support from either the hon. member's party or the official opposition.


Mr. Crosbie:: Or the Prime Minister: he chopped it.


William Warren Allmand: I brought in Bill C-13 last fall to deal with concentrations, mergers and competition policy. I cannot remember one occasion on which the hon. member's party co-operated with us in proceeding with that bill.

February 19, 1979
Oral Questions
[ Translation]


ALLEGED REDUCTIONS IN QUEBEC DELIVERIES OF HOME
Mr. Adrien Lambert (Bellechasse):: Mr. Speaker, I should like to put a question to the Minister of Energy, Mines and Resources.
Could the minister tell the House whether there is any truth behind the reports heard during the weekend in the Quebec City area about the rationing of home heating oil? Has the minister been officially advised about that possibility? This morning it was stated during a discussion on radio that Golden Eagle was reducing by 70 per cent its deliveries to independent distributors. Is the minister aware of that situation?
[English\


Hon. Alastair Gillespie (Minister of Energy, Mines and Resources and Minister of State for Science and Technology):: Mr. Speaker, I have been made aware of the situation by representations from my own party and from the independent fuel marketers.
The situation has been a tight one, is a tight one and will probably continue to be a tight, difficult one for some little while. The problem has been aggravated not just by a cold winter but by serious difficulties with some of the eastern refiners. For example, the hon. member will have noted that the Gulf refinery in Montreal had a fire last week that reduced production by close to 40,000 barrels per day. There have also been difficulties with the Imperial Oil refinery and the Shell refinery in Montreal.
Special efforts have been made by the refineries, I have been assured by them, to bring heating oil into the market. For example, some of the crude that was recently offloaded at Point Tupper will be reloaded on to a tanker and moved up to Golden Eagle, close to Quebec City, and will be processed there and then moved into the Montreal market.
A number of measures of this kind are being used by the eastern refiners right now to try to improve the situation. We are doing our best to ensure that the independent marketers are being looked after by the refiners and that the refiners, for example, are not trying to secure new customers at this time but are continuing to look after the resellers so that they can look after their traditional customers.


Joseph Adrien Henri Lambert: Given his answer, the minister is surely aware of the serious situation. Just the same I should like to ask him a supplementary question. Considering that families without central heating are more seriously affected as a result of conditions experienced by independent dealers because families that use a small furnace commonly called a space heater do not have large tanks to hold supplies for several weeks but usually a 45-gallon tank which does not last

long, will the minister consider taking other steps to make sure that retailers can have sufficient heating oil to meet the needs of families whose heating systems are such as I have just described.


Alastair William Gillespie: Mr. Speaker, we will continue to maintain our pressure on the refiners to ensure that the resellers have the oil so that they can look after the kind of situations, the difficult situations, the hardship situations, that the hon. member has referred to.


INDUSTRY
John Carnell Crosbie: Mr. Speaker, my question is for the Minister of Industry, Trade and Commerce.
As the minister knows, some 70 per cent of our exports go to the United States and we have a huge deficit of manufactured end products. The United States treasury department has just imposed a 9 per cent duty on Honeywell Limited for exporting an optical sensing system to the United States, on the grounds that this is a countervailing tariff and that Honeywell had been subsidized because they had received a PAIT research and development grant from ihe minister's department which is now included in the enterprise development program.
I want to ask the minister if the government has assisted Honeywell in their case so far. Are they going to see that the case is appealed? Is the government protesting to the United States government against this spurious countervailing duty on that ground, and if this situation is maintained by the United States government does it put the whole enterprise development assistance program for Canadian industry in danger?


Hon. Jack H. Horner (Minister of Industry, Trade and Commerce):: First of all, Mr. Speaker, it does not put the whole enterprise development program in danger. Second, we are assisting Honeywell and we are bringing as much protest against the United States government for their action in this case as possible.
Third, we have a surplus in manufactured goods of $3.5 billion; that is, over-all with the United States and the rest of the world.


John Carnell Crosbie: Mr. Speaker, we have a deficit in our balance of payments and current account of over $12 billion in manufactured end products. The minister cannot get around that.
May I put a supplementary question. The grant that the Honeywell corporation received was for research and development purposes. That has now been held to be a subsidy as contributing to assist them in introducing a commercially successful product on the market.
Will the minister tell the House whether he is going to attempt to restructure those kinds of grants to get around this

February 19, 1979

problem? Second, is the minister, or the government, in the talks at GATT, making any effort to see that if they are successful, the United States government will no longer have the power to use this countervailing duty situation without at least proof of injury? Is there likely to be a successful end to that negotiation at Geneva? That, I believe, is one of the main points in dispute.


John (Jack) Henry Horner: Mr. Speaker, we are . negotiating at Geneva what breaks down to about four different kinds of applications of non-tariff barriers and this is one of them. I believe we can look forward to a successful conclusion of that aspect of the Geneva negotiations-that there will be an agreement signed by the participants to some kind of control over the application of non-tariff barriers.


John Carnell Crosbie: Mr. Speaker, a final supplementary question. The minister seemed to indicate that he did not need to restructure the PAIT type of grant of the enterprise development assistance program. Could he indicate to the House why it does not need to be restructured, in view of this finding by the United States treasury department? Surely some action has to be taken if this decision by the United States treasury department sticks.


John (Jack) Henry Horner: I do not believe we have to restructure the PAIT form of grant, because it is the wish of this government to encourage research and development in Canada as much as possible. Research and development is really a very small portion of the manufacturing cost of the product.
If we could get Canadian companies-I think it is our ambition to get something even as small as 2 per cent or 2.5 per cent-to spend this amount on research and development, then we could see our manufacturing industry enlarged a great deal. We do not believe it is the small expenditure on research and development that the Canadian government contributes that is so injurious to our good neighbours to the south.


FINANCE
Mr. Jean-Robert Gauthier (Ottawa-Vanier):: Mr. Speaker, I wish to direct my question to the Minister of Finance. The minister has announced today that the Municipal Grants Act would be amended to increase significantly the grants in lieu of taxes. Among other things, the minister has indicated that no grant would be paid in lieu of business taxes, except in the case of Crown corporations. Could the minister advise us of the steps he will take to convince these Crown corporations to pay grants equal to commercial occupation rates?


Hon. Jean Chretien (Minister of Finance):: Mr. Speaker, we shall deal with this piece of legislation when it is introduced in
Oral Questions
the House in a few days. We shall then have a full debate on it. I suggest it is important that all federal institutions should pay real estate taxes. As to sales tax and business surtax, the problem is indeed very different and complicated, and we shall have the opportunity to deal with it when the bill comes before the House.


AIR TRANSPORT
Mr. Howard Johnston (Okanagan-Kootenay):: Mr. Speaker, my question is for the Minister of Transport. Considering that there has, as yet, been no final report from the helicopter accident north of Revelstoke in which four glacier skiers were killed a year ago, and following last week's avalanche south of Golden, British Columbia, in which seven people died, can the minister indicate whether a new inquiry has been instituted into the most recent accident?


Hon. Otto E. Lang (Minister of Transport):: Mr. Speaker, I am not sure whether that step has been taken at this point. Obviously, we will be concerned to determine the facts and I will be looking at the manner of the investigation as soon as possible.


Howard Earl Johnston: A supplementary question, Mr. Speaker. Would the minister consider, or has he considered, initiating a broader investigation involving the other federal departments that are interested, the provincial level of governments, the ski and guiding associations and the companies operating the heli-skiing industry as well as other interested groups and individuals, and that such an inquiry be a public inquiry?


Otto Emil Lang: Mr. Speaker, I will determine whether the more formal sort of consultation which the hon. member suggests would be an improvement on an informal one.


STATISTICS CANADA
Mr. Bob Wenman (Fraser Valley West):: Mr. Speaker, my question is directed to the Minister of Industry, Trade and Commerce. During the House of Commons debate on February 22, 1977, the Parliamentary Secretary to the Minister of Industry, Trade and Commerce said:
This government is not opposed in principle to the concept of making the response to certain official statistical surveys voluntary.
He said, further, that the possibility of introducing voluntary responses to some Statistics Canada surveys was under examination by officials of the department. Does the Liberal

February 19, 1979
Oral Questions
government still hold this view? If so, when will such legislation be forthcoming?


John (Jack) Henry Horner: Mr. Speaker, the government still holds that view; and it will be forthcoming soon, in this session. In fact, I hope to have that included in a piece of legislation that will be put before the House later.


CHARGES LAID UNDER SECTION 29 OF THE STATISTICS ACT
Robert Lloyd Wenman: Mr. Speaker, recently in a test case the Crown unsuccessfully prosecuted one of my constituents for violating section 29 of the Statistics Act. It is now further persecuting my constituent by appealing that very just decision of the courts.
Will the minister advise, or recommend to the Crown attorneys prosecuting Canadians accused of section 29 violations to enter a stay of proceedings or drop the charges until the strict compliance issue is resolved?


Mr. Speaker:: Order, please. I do not think the hon. member expects us to use the question period as a time for representations of that sort.


Miss Flora MacDonald (Kingston and the Islands):: Mr. Speaker, in view of the minister's response would he consider, if he has not already done so, implementing the provisions of private member's bill C-452 that I have before the House? This would amend the Statistics Act by removing the penalty provisions in section 29 which can be imposed against Canadians who refuse to answer questions on Statistics Canada surveys. I claim no pride of ownership; I will be glad to share that idea with the minister.


John (Jack) Henry Horner: Mr. Speaker, I would like to assure the hon. member that Statistics Canada has a very important purpose to serve in our country. Its statistics are widely used by many facets of Canadian industry. They are taken and collected under the strictest and most confidential methods possible.


Some hon. Members:: Oh, oh!


An hon. Member:: Just like the income tax.


John (Jack) Henry Horner: The other point I want to make is this: Statistics Canada is an independent body. It does not answer to the wishes, particularly of a political person, at any time. It wants to make an accurate study of the economic facts in Canada. If hon. members would like, I will send them a copy of this booklet put out by Statistics Canada, called "Doorstep Diplomacy"-


Some hon. Members:: Oh, oh!


John (Jack) Henry Horner: -in which the guidelines are clearly outlined. There are eight guidelines, and I would like to read one.


Some hon. Members:: Oh, oh!


An hon. Member:: Scare us.


Mr. Speaker:: Order, please.


Flora Isabel MacDonald: I appreciate the minister's lengthy explanation, but it was not in response to the question I posed. I would like to ask if he will, indeed, do something about the penalty provisions in section 29 of the Statistics Act, which only House of Commons parliamentary procedures can change, so that people who do not feel they should answer these surveys do not have fines or the penalty of imprisonment imposed on them. That is the question.


An hon. Member:: Right on.


John (Jack) Henry Horner: Mr. Speaker, one thing that I have noticed after a lengthy parliamentary career-


An hon. Member:: It will soon be over, Jack.


John (Jack) Henry Horner: -is that Statistics Canada is being taken and accepted by people of Canada as if it were the Bible.


Some hon. Members:: Oh, oh!


John (Jack) Henry Horner: If Statistics Canada print a figure, everybody believes it must be accurate. Everybody accepts the fact that it is accurate beyond a shadow of a doubt.


Some hon. Members:: Oh, oh!


John (Jack) Henry Horner: The hon. member's suggestion might seriously erode the ability of Statistics Canada to maintain the level of accuracy for which it has become so highly respected.


Some hon. Members:: Hear, hear!


POWERS OF MARITIME ENERGY CORPORATION
Mr. Maurice A. Dionne (Northumberland-Miramichi):: Mr. Speaker, my question is for the Minister of Energy, Mines and Resources. I would like to congratulate him on his signing of the Maritime Energy Corporation agreement with the maritime provinces.


John Carnell Crosbie: Author?


Ramon John Hnatyshyn: We did not know you could read.


Maurice Adrian Dionne: The opposition judges others by themselves.


Mr. Speaker:: Order, please. Does the hon. member have a question?


Some hon. Members:: Oh, oh!


Some hon. Members:: Hear, hear!
February 19, 1979


Maurice Adrian Dionne: Will this new corporation be empowered to ensure future petroleum supplies for the maritimes? Will it be able to enter into arrangements with Petro-Canada to prevent the kind of high-handed, unconscionable acts of diversion attempted by Exxon and its Canadian puppet, Imperial Oil?


Mr. MacKay:: Read the bill.


Alastair William Gillespie: Mr. Speaker, I believe the Maritime Energy Corporation will be an extremely important corporation to the maritimes and to Canada. Quite clearly, it is placing collective and joint action ahead of the earlier "go it alone" policy. I believe because the corporation will be working with the three maritime provinces and the federal government together, it will be possible to establish a secured energy source for the maritimes and increasingly build upon the indigenous energy sources of the maritimes. Therefore the maritimes will become less vulnerable and less dependent on foreign oil.
As hon. members know, foreign oil is used for some of the electrical generation in the maritimes. I believe that the Maritime Energy Corporation will, over a period of time, make the maritimes less dependent on imported oil.


Mr. Forrestall:: Mr. Speaker, a supplementary to that nonsense.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please. The hon. member for Nanai-mo-Cowichan-The Islands.


MINISTER'S KNOWLEDGE OF OIL SHIPMENT DIVERSIONS
Mr. T. C. Douglas (Nanaimo-Cowichan-The Islands):: Mr. Speaker, my question is for the minister of Energy, Mines and Resources. Last Friday, the minister told the House that he knew nothing of the diversion from Canada by Exxon of some 25,000 barrels of Venezuelan oil. Saturday's paper contains a reply from Imperial Oil Company as follows:
A company spokesman said a senior energy department official knew of the plan on January 24, as did the National Energy Board.
This is in direct contradiction of the minister's statement that he knew nothing about the matter until February 8. In view of the very serious nature of this apparent contradiction, has the minister investigated which senior departmental official received this information? If he knows who it was, has that official been removed, since it is the very height of incompetence that important information like that should have been kept from the minister for two solid weeks?


Some hon. Members:: Hear, hear!


Alastair William Gillespie: Oral Questions
Mr. Speaker, I think the hon. member may be overstating the situation by attaching more importance than it deserves to the allegation as reported in the press. I believe that there was some preliminary discussion in the sense that it was possible that a situation could develop with respect to diversionary tactics. I think that information may well have been conveyed to my department at one time.
The hon. member is right when he says that on January 24 there was a letter that went-I believe from Imperial Oil-to the National Energy Board dealing with a diversionary plan, or some words to that effect. But the hon. member also knows, of course, that the National Energy Board is an independent board. The National Energy Board makes its own decisions and takes its own counsel in these matters. There is no reason for the National Energy Board, for example, to seek my advice on this or ask me to sign or agree to any measures of this kind; nor did they.


Thomas Clement (Tommy) Douglas: Mr. Speaker, in view of the fact that the National Energy Board is not only a regulatory body, but under the terms of its act it is the minister's adviser on energy matters and therefore it is taken for granted that there is a constant and continuing liaison between the minister's office and the National Energy Board in order that the minister may be aware of what is happening, and in view of the fact that a curtailment of 25,000 barrels a day constituted a serious threat to the well-being of many Canadians, will the minister explain why it was that the information which was passed, not only to a senior official but also to the National Energy Board, was not conveyed to him? Either there has been a gross dereliction of duty or the minister has been incompetent in conducting the affairs of his department.


Some hon. Members:: Oh, oh!


An hon. Member:: Both.


Alastair William Gillespie: Mr. Speaker, the hon. member refers to information which was conveyed to the National Energy Board. It is not at all clear, as I had an opportunity just recently-within the past few hours-to read that particular information. They were not talking about 25,000 barrels a day. That does not come across at all. If one looks at that particular submission, it comes across somewhere in the order of about 10,000 barrels a day. It was not until January 8, that I have mentioned-the Thursday-that a delegation from Imperial Oil came to see me and presented to me, in my office, this plan about the 25,000 or 30,000 barrels a day. To the best of my knowledge, that was the first I ever heard of it. I told them it was quite unacceptable. The date was Thursday, February 8.


INQUIRY WHETHER DREE REPRESENTED IN MARITIME ENERGY CORPORATION
Mr. J. Robert Howie (York-Sunbury):: Mr. Speaker, my question relates to the Maritime Energy Corporation. Is DREE to be represented in the newly-formed Maritime

February 19, 1979
Oral Questions
Energy Corporation, and will the federal financial commitment be sufficient to lower or stabilize electric energy costs in the maritimes?


Alastair William Gillespie: I believe the corporation will do just that. I believe it will help stabilize electric energy costs and that it will provide more secure energy at lower cost than any alternative. As to the composition of the board of directors and whether DREE will be represented by a member of the board, that is a matter which is presently under discussion.


J. Robert Howie: Can the minister tell the House when he plans to let the provinces know the cost-sharing formula with respect to Lepreau, Fundy and similar projects which the corporation might undertake?


Alastair William Gillespie: Yes, indeed. At three o'clock I shall be tabling the memorandum of understanding reached between myself and the three maritime premiers. That memorandum sets forth the cost-sharing arrangements with respect to Lepreau.


EXTERNAL AFFAIRS
Robert Alfred Corbett: Mr. Speaker, in the absence of the Secretary of State for External Affairs, I will direct my question to the Prime Minister. In view of the fact that several members of the government refused unanimous consent to my proposed motion under Standing Order 43-


Some hon. Members:: Order!


Mr. Speaker:: The hon. member should proceed to his question.


Robert Alfred Corbett: Is this to be taken by the free nations of the world as meaning that the government condones such murder and crime?


Some hon. Members:: Oh!


MANPOWER
Mr. Jake Epp (Provencher):: Mr. Speaker, my question is for the Minister of Employment and Immigration. It arises from the fact that much of Canada's production equipment is foreign-built and that Canadian business often has to rely on quick advice or on-site repair by foreign nationals when it has to be repaired.

Has the minister instructed his officials to issue short-term permits to these foreign nationals in such circumstances, so that the economy can be kept rolling?


Hon. Bud Cullen (Minister of Employment and Immigration):: We deal with these cases on an individual basis. Sometimes we are criticized because we allow the entry of foreign nationals to operate a piece of equipment and subsequently they stay to work on the equipment and do jobs that Canadians could do.
However, when we are satisfied that the request concerns a piece of equipment covered, for example, by a patent which has to be kept secret, or in cases where there is no time to find a Canadian to work on the operation, then we issue a temporary permit and do everything we can to accommodate the business.


Arthur Jacob (Jake) Epp: That is the precise problem, Mr. Speaker. By the time the department, through its officials, has investigated whether a short-term work permit should be granted, so much production time has been wasted that Canadian employees are in danger of being laid off.
Requests have been made by various companies that a different system be introduced under which, if requests are made to local Manpower officials, quick investigation can take place and foreign nationals can be brought in should they be needed. It makes no sense whatever to wait for the bureaucratic machinery to unwind while production equipment is idle.


Jack Sydney George (Bud) Cullen: If the hon. member has specific cases in mind, we shall be happy to look at them. Nevertheless, we do have an obligation to see that Canadians are employed if there are Canadians available who can do the work required. We must be vigilant to see that such requests are not used as a dodge to secure the employment of non-Canadians, but we do our best to accommodate companies when the circumstances warrant it.


AIR TRANSPORT
Mr. Jack Murta (Lisgar):: Mr. Speaker, my question is directed to the Minister of Transport. On his own admission, Bill C-40 which he has introduced and relates to the transport accident investigation commission is not likely to be given too high a priority before the election, and even if it were given priority we would probably be looking at a lead time of about two years before an accident investigation branch could be set up.
This being the case, what does the government intend to do in the interim period, which could amount to as long as three or four years, possibly, to alleviate the concern of the Canadian flying public about violations of air safety which have occurred and which have been in the news recently?

*

February 19, 1979


Otto Emil Lang: Let me make it clear that if the House could see its way to give early passage to this bill, I would be delighted. In that sense, I think it is an important bill. It is in the context of the general delaying tactics that 1 see in the House on the part of the opposition that I am bound to conclude that it would not pass very quickly.
I am surprised, however, that the hon. member does not know that we have set up an accident review board to investigate air accidents, so we have taken the steps open to us in the absence of legislation.


Jack Burnett Murta: The accident review board has obviously not been working very well. The minister knows quite well that the proposition he mentioned a few minutes ago is totally false. He never approached anybody on this side with regard to speeding this legislation along.
What does he intend to do in the interim, given the fact that it could take up to two years before this legislation, even if it was passed, could be made effective?


Otto Emil Lang: I do not agree it would take so long. I think we could get the legislation in place fairly quickly, say before the end of 1979, and move to set up the commission rapidly.
The hon. member says I did not approach anyone on that side with regard to the bill. Perhaps not, with regard to this particular bill, but I did get word from the spokesman on transportation for the Conservative party they would not let anything through unless we let them travel first throughout the country.


STATISTICS CANADA
Mr. Allan Lawrence (Northumberland-Durham):: Mr. Speaker, my question is directed to the Minister of Industry, Trade and Commerce as the minister responsible for Statistics Canada.
Bearing in mind the concern expressed by many members of the House over many months about the Statistics Canada survey of family expenditures which may amount to a major imposition on one in every 25 Canadian families, has the hon. gentleman taken any action to ascertain whether this survey is necessary, fair and reasonable?
Hon. Jack H. Horner (Minister of Industry, Trade and
Commerce): Let me first of all correct some false impressions. The survey is not exclusively directed to those receiving family allowances. It is directed to one in every 550 people in the labour force, not one in 25. It is intended to cover some 13,000 or 14,000 households. About 14 surveys of this type have been carried out by Statistics Canada throughout the years. It is absolutely necessary, in order to keep in balance the consumer price index upon which so many people in industry, and elsewhere, depend.
Oral Questions
I have advised Statistics Canada people not to press hard on anyone who does not want to answer, but merely to let such people be dropped from the list. 1 have been assured that that is the procedure Statistics Canada has employed. Statistics Canada is getting about an 80 per cent response, with which Statistics Canada is very satisfied.


EMPLOYMENT
Mr. Yuri Shymko (Parkdale):: Mr. Speaker, I should like to direct my question to the Minister of Employment and Immigration. My question is with regard to public petitions to reconsider the recent decision by the regional review committee to stop further funding for the Outreach program in Parkdale, which now has the third highest rate of unemployment of the 23 ridings in Toronto. Could the minister state-


Mr. Speaker:: Order, please. Unless the hon. member distinguishes his question very quickly, I think he is caught in the same restriction 1 mentioned earlier in the question period to one of his colleagues. The hon. member for Nickel Belt.


INDUSTRY
Mr. John Rodriguez (Nickel Belt):: Mr. Speaker, my question is for the Minister of Industry, Trade and Commerce. In view of the fact that the recent decision by National Steel Corporation of the United States to close the Moose Mountain iron ore mine in Capreol, Ontario, will result in the loss of some 250 jobs, and in view of reports indicating that the Canadian steel industry is so busy it cannot even meet the orders it is getting, can the minister explain to the House what steps his department has taken to make sure that the decision which has been made in the boardrooms of a foreign company does not affect these 250 jobs?


John (Jack) Henry Horner: Mr. Speaker, the Moose Mountain mine at Capreol is, indeed, owned by the National Steel Corporation of the United States. That mine was producing about 650,000 tons of pelleted iron ore per year. In 1977, the National Steel Corporation of the United States increased production at its iron ore mine in the United States from something a little over two million tons of pelleted iron ore to something over five million tons.
That was a tremendous increase in production in the United States. That created a situation in which the 650,000 tons from Canada were not needed. My officials have met with the management of the mine and will be meeting shortly with

February 19, 1979
Privilege-Mr. McKinnon
Ontario government officials to try to find out whether iron ore pellets could be sent to some other steel mill in Canada.


STATISTICS ACT
Mr. Joe Clark (Leader of the Opposition):: Mr. Speaker, I have a supplementary question for the Minister of Industry, Trade and Commerce, who has now indicated that in one case he will allow Canadians who do not want to answer requests from Statistics Canada to be, in his words, dropped from the list. Is that policy going to be applied generally and, if so, why does the minister not agree to remove the penalty clauses from the law?
Hon. Jack H. Horner (Minister of Industry, Trade and
Commerce): Mr. Speaker, I dealt with that question earlier. Dealing with family expenditures, and noting the sensitivity which was expressed in the House, I spoke to the chief statistician and suggested that he might find it easier not to press charges in those cases where people were refusing to answer sensitive questions. He assured me that he was getting a very good response, practically 80 per cent or better, and in those situations where there is an 80 per cent response accuracy can be maintained.
However, if the penalty clause was dropped completely, I feel sure that the rate of response would drop down substantially below 80 per cent and then statistical inaccuracies would begin to appear.


Charles Joseph Clark: Mr. Speaker, is it, then, the position of the minister and the Government of Canada that officials of the Government of Canada are supposed to enforce the law only when enforcement of the law suits the minister?


John (Jack) Henry Horner: Mr. Speaker, the law is to be enforced. It is necessary that Statistics Canada statistics be accurate, and I have said that we will be putting before parliament a proposed change in the law so that statistics can be collected voluntarily when we want such statistics collected. In some instances the result of collecting statistics on a voluntary basis might be beneficial, but if we dealt with all statistics on that basis there would be substantial erosion with regard to accuracy.


PRIVILEGE
Mr. Allan B. McKinnon (Victoria):: Mr. Speaker, I rise to inform the Chair that I have not yet had sufficient time to prepare my reply to the remarks of the Minister of National Defence (Mr. Danson) concerning a question of privilege I raised last week. I expect to be prepared by tomorrow at 3

p.m. or any succeeding day, provided, of course, that the minister is in the House.


Hon. Barney Danson (Minister of National Defence):: Mr. Speaker, I think my schedule calls for me to be in Toronto tomorrow, but I expect to be here on Wednesday, if that will save this business of "After you, Alphonse", waiting for the other to come back from wherever he has been.


Mr. Speaker:: Order, please. The next time the two hon. members are in the House together, that question will proceed.



ROUTINE PROCEEDINGS


Alastair William Gillespie: Mr. Speaker, under the appropriate Standing Order I wish to table, in both official languages, two copies of a memorandum of understanding between Canada and New Brunswick, Nova Scotia and Prince Edward Island, signed by the premiers of the three provinces and myself, on the Maritime Energy Corporation, effective February 16.


MAIN ESTIMATES 1979-80 EXPLANATORY STATEMENT BY PRESIDENT OF THE TREASURY BOARD
[Stage Direction]
A message from His Excellency the Governor General transmitting estimates for the financial year ending March 31, 1980, was presented by the Hon. Judd Buchanan (President of the Treasury Board) and read by Mr. Speaker to the House.
Hon. Judd Buchanan (President of Treasury Board):: Mr. Speaker, the main estimates I am tabling today tell a story of determination, achievement and restraint.


Some hon. Members:: Oh, oh!


J. Judd Buchanan: They transform the announced economic intentions of last summer into irrefutable reality today.


Some hon. Members:: Oh, oh!


J. Judd Buchanan: For these reasons I feel privileged to have the honour to table before hon. members the spending plans of this government for the fiscal year 1979-80. These estimates mark the fourth consecutive year in which the government has announced in advance its spending targets for the ensuing year. In each and every year we have kept our spending within those announced target growth figures. When the public
February 19, 1979

accounts are presented to parliament, there is no question that they will show once again we have controlled spending within the expenditure ceilings set and declared well in advance of the fiscal year.


An hon. Member:: Nonsense.


J. Judd Buchanan: Let us examine the facts. For 1976-77 we forecast an increase of 16 per cent over the previous fiscal year. The real increase was only 10.4 per cent or 5.5 per cent less than expected. The same thing happened in 1977-78, when the expected rate of growth was estimated at about 10 per cent and real growth was only 7.1 per cent. Last February my predecessor announced a ceiling of 9.8 per cent for 1978-79. That limit was reduced to 9.5 per cent in August and we expect to respect that target.
Today 1 am tabling the main estimates for 1979-80. We anticipate a total increase in government expenditures of 8.9 per cent. Total expenditures, estimated at $52.6 billion, include budgetary and non-budgetary expenditures, as well as the expenditures provided for in the supplementary budgets to be presented throughout the year. Considering past performance, I can assure hon. members that the ceiling put on the grand total will be respected.
I want to stress that for the third year in a row the increase in total government expenditures has been under 10 per cent. That level of growth respects the government policy, namely that the increase in expenditures be smaller than the nominal growth of the gross national product which, according to forecasts, will be 11 per cent for 1979-80.

Achieving this goal has not been easy and I believe it is a measure of the calibre of my cabinet colleagues who have set aside their own departmental priorities in the harsh reality of spending restraint, for the common good of all Canadians.
It is because of the spirit of co-operation and restraint that I am able to table these estimates which call for total spending of $52.6 billion, compared with the 1978-79 total of $48.3 billion. They meet two very important fiscal goals. First, they carry through the spending reductions announced last August. An example of the effects of these reductions is that a total of 38 departments and agencies receive less money this year than last. The second goal was to keep growth in spending to less than the growth in the GNP. That too has been accomplished.
To prevent comparisons of apples and oranges, permit me to explain once again why spending growth is compared with nominal growth of the GNP. The government, like all purchasers of goods and services, must pay today's inflated prices. Therefore, the increases in spending must be compared with the GNP figures which reflect the influence of inflation. There has been some confusion in the past because some have made comparisons between the growth in spending and the real
Main Estimates
growth in the GNP, which is an inaccurate and improper kind of comparison.
As I indicated, Mr. Speaker, we met our fiscal goals. Another major outcome of the August expenditure reduction exercise should be noted. Our forecast at the time was that the cutbacks could lead to a reduction of 5,000 public service positions. These main estimates show a reduction of 6,685 person years, including the 1,400 person years transferred to the province for the operation of veterans' hospitals. The result is a real reduction of some 5,200 public service positions. I am happy to say this reduction will be possible with a minimum disruption of individuals in the federal public service work force.
In 1975-76, when we announced the restraint policy, growth in the public service was reduced to 4.1 per cent. The following year it was lowered dramatically to 1.3 per cent. In the 1977-78 and 1978-79 fiscal years, the growth was six-tenths of one per cent each year, about 2,000 positions. Now, after this period of stringent control, we have gone further and have actually reduced, in absolute terms, the number of authorized person years by a sizeable 2 per cent, reducing the authorized strength of the public service to the approximate level that existed four years ago.
The total authorized person years for 1979-80 is 318,435, which is just a shade higher than the 317,184 authorized in 1975-76. Compared with the current fiscal year, it reflects a decrease of 2.1 per cent. This has been a difficult achievement, particularly in light of the forecast growth of 1.9 per cent in the Canadian labour force. It should be noted that this is the fourth consecutive year when the growth in the federal public service has been less than the growth rate of the Canadian labour force. As a result, these fewer public servants are serving a larger number of Canadians. The number of public servants has not kept pace with the growth of the nation.
One object of this restraint is to reduce the role of government in the economy and leave more room for the private sector. It is clearly evident from last year's job-creation figures that the private sector responded positively and well when it created in excess of 400,000 new jobs for Canadians-


Some hon. Members:: Hear, hear!


J. Judd Buchanan: -a message that my colleague, the Minister of Finance (Mr. Chretien) has had some difficulty in getting through to hon. members opposite.
In fact, when we look at the $4,291 million increase in total budgetary main estimates for 1979-80 compared to the previous year, the effects of this government's economies become increasingly evident.


An hon. Member:: The largest dollar increase in five years.


J. Judd Buchanan: Of that increase, 57.5 per cent, more than half of the total, is accounted for by transfer payments to individuals, to other levels of government and in subsidies and other transfer payments. More than half the additional money being spent simply passes through the federal government's

February 19, 1979
Main Estimates
treasury to improve and equalize opportunities for Canadians across our nation. The other major contributor to the increase is public debt, which accounts for 43.1 per cent of the increase as a result of debt costs of $8,350 million, compared with the previous year's total of $6,500 million. Even a major portion of the money the federal government pays out in debt charges can be considered as a form of transfer payment, since it is money being paid directly to Canadians.
I readily acknowledge that the size of Canada's net debt is a worrisome matter for me, as it is for my colleagues. However, it is less worrisome when viewed in the context of Canadian history since the Second World War. Our net debt in 1979 is forecast at 22.2 per cent of the gross national product. That is up 3.3 percentage points from the previous year, but only 3.2 percentage points higher than in 1972. Ten years previously, in 1962, it was 33 per cent of the GNP, in 1952 it was 52 per cent, and in 1947, at the end of the Second World War, it was 110 per cent of the GNP. I present these figures only to place the national debt in perspective. The size of this nation's debt is not at this stage an albatross to economic development and growth.
So far I have talked about transfer payments, debt and total spending. Now 1 should like to draw hon. members' attention to one of the most significant features of these main estimates, and that is the fact that the net operating and capital expenditures of the federal government itself are holding absolutely constant in 1979-80. Not one more dollar is being spent for federal operating and capital requirements than was spent in the previous year.


Some hon. Members:: Hear, hear!


J. Judd Buchanan: In its own operations the federal government is absorbing all price and demand increases without using one more dollar than in the current fiscal year. In real terms the purchasing power of departments has decreased significantly because of the influence of inflation. Within this type of restrictive framework we have been able to introduce some new initiatives. We have not ignored the nation's pressing need for skilled workmen. We have allocated additional resources for training programs and labour market development. I am most encouraged by the creation of the Board of Economic Development Ministers headed by my predecessor, and by the impressive work already under way to aid the economic climate of the nation.
We have developed policies backed up by dollars to encourage the businessman to take advantage of opportunities. We are helping to develop the basic economic environment through research and development incentives and further incentives geared to investing in the private sector through tax and other incentives. All this was within a fiscal framework set eight months in advance of the fiscal year for the first time in history at a figure well below the anticipated growth rate of the GNP.

The $52.6 billion forecast for total spending is the total. I am confident, as in each of the last three years, that we will come in under that target figure. Our public service has decreased in size 2.1 per cent, while population, labour force and demand for service have increased. Our national debt as a percentage of the GNP is considerably lower than it was ten years ago. The amount of money being spent on government operations and capital investments expressed in absolute dollars will be exactly the same as it was in this fiscal year; not one more dollar. Is this a question of a government overtaken by events, lacking control of its fiscal policies? Can anyone say in clear conscience that federal government spending is out of control?


An hon. Member:: Put me on the list.


J. Judd Buchanan: The record clearly refutes any such illusion. Year after year we have set total spending targets which include supplementary estimates and every other expenditure to be made or anticipated, and we have not exceeded them. Not once have those targets been in jeopardy. The evidence is in the blue book and the companion publication which Treasury Board ensures reaches every member of parliament. All government expenditures are covered; 60 per cent are covered by statute and the balance is subject to appropriation by parliament. Nothing is hidden; nothing is missing.
Every dollar which passes through the federal government's treasury is accounted for in the main estimates. As I said before, the information I am placing before hon. members covers the total proposed government expenditure program, including provision for supplementary estimates, loans, grants, subsidies, budgetary and non-budgetary outlays. It is all there, whether items such as grants and contributions require approval by appropriation acts or reflect approval by other statutes.
However, we acknowledge additional detail would be helpful to hon. members. The other day I made reference to this in response to a question by the hon. member for Brome-Missis-quoi (Mr. Grafftey). We would like to improve upon the plans and presentation of the main estimates. I want to make it clear there are no omissions in the information provided in the main estimates. However, we can improve upon the form and content of the estimates to make them easier for members to read, comprehend, evaluate and use. I do not want to anticipate the contribution to be made by the Standing Committee on Public Accounts currently examining this subject; but I want to emphasize I am receptive and sympathetic to suggestions which will be forthcoming.
Also it is possible to provide supplementary information in a manner which may be more detailed without adding to the complexity. Further, we may be able to improve on the content in a way which will assist managers in carrying out the expenditure plans of the government, and in so doing provide an improved basis for comparing actual expenditures with plans for purposes of evaluation and accountability.
This spring I expect to present to hon. members my proposals on the principles and presentation concept for a new form of estimates. I trust there will be wide discussion and



siwm
February 19, 1979

consultation on them with hon. members, government departments and others. If general acceptance is evident, my proposal would be to select several departments to present pilot projects of a new estimates format in parallel with their regular presentations for 1980-1981. These pilot projects would provide the occasion for further study and discussion in parliament and its committees. Then we could move forward to introduce progressively a totally reformed estimates package which would incorporate the requirements identified by hon. members. But let us make no mistake: old form of the estimates or new, the message is the same. The government has demonstrated that its present expenditure plans meet all of its commitments. The record has shown that we not only plan to meet them but that we implement and control our expenditures accordingly.


Some hon. Members:: Hear, hear!


Mr. Harvie Andre (Calgary Centre):: Mr. Speaker, last year in reply to the then president of the treasury board and his statement, I made the observation that the minister was employing a lot of flimflam, in the manner in which he presented his data, to try and create the impression the government was doing a lot better than it was. Compared to the present President of the Treasury Board (Mr. Buchanan), his immediate predecessor was an example of openness and honesty.
This is the first time an opposition critic of the Treasury Board has not been given a copy of the minister's remarks in advance. We have not been given any copy. There was a press briefing at ten o'clock, a lock-up for the press. We asked permission to attend and we were denied such permission.


Mr. Munro (Esquimalt-Saanich):: Is that a responsible government?


Harvie Andre: Last year the then president of the treasury board invited myself and hon. members of the New Democratic and Social Credit parties to his office at 12 noon on the day he presented the estimates. He gave us a copy of the blue book, the book entitled "How Your Tax Dollar is Spent", plus a copy of his remarks and the press kit. We were asked to embargo them until three o'clock, which request we honoured. We were provided with approximately 2Vi hours to study the material in order to be able to respond in some depth, so that the public and members of the press would receive a true, balanced perspective to make their own judgment on what should be reported after being given the two points of view.
This year at 1.15 p.m. we were invited in for sandwiches. A senior official of the Treasury Board presented a half hour of cooked data and charts, selected data along with the sandwiches. At approximately 1.50 p.m. we were informed we were not allowed to take anything out of the room. We were not allowed to take copies of the blue book, the book entitled "How Your Tax Dollar is Spent" or the information on the chart.


Mr. Nowlan:: Shame.
Main Estimates


Harvie Andre: The President of the Treasury Board has the gall to stand and say that he accepts the recommendation of the Auditor General for a form of the estimates. He does not even know what the Auditor General is talking about.


J. Judd Buchanan: I did not say that. The hon. member can read what I said.


Harvie Andre: The entire purpose of the Auditor General's recommendation was to make the spending process more open, to disclose to the public and the House the government's true spending plans; not to cook things so that a lopsided view of the government's intentions are presented in a manner which precludes any criticism on the day they are presented. Flimflam is too light a word to use in this instance.


J. Judd Buchanan: The hon. member would be inarticulate without it.


Harvie Andre: For a moment I should like to deal with the global figure of $52.6 billion. How was that figure produced?


Mr. Martin:: Add up the totals of the departments.


Harvie Andre: There are the main estimates, budgetary and non-budgetary, reserves for supplementaries and some estimates of lapses. This year the government is estimating the lapses will be $1,217 million. Last year they amounted to $1 billion, so the figure is more than $200 million larger this year than last year. This year they are estimating $1,350 million as reserves for supplementaries. Last year the figure was $1,550 million, so there is another convenient $200 million change in the figures.
Using the same estimate last year that the government is using this year for lapses and supplementary reserves, the figure projected for the coming year is not $52,600 million but rather $53 billion. The projected increase in percentage terms this year, using the same basis the government used last year, is 9.7 per cent, a larger increase than last year. The claim by the minister that in fact we are doing better this year than last year is a bunch of nonsense. It is arrived at by cooking the books. It is arrived at by doing the very thing the Auditor General said should not be done if the government is to bring honesty and openness into the spending process. Obviously that is something this minister does not believe is important. Why do things honestly and openly if it is politically safer to be devious and hide things? That is the approach he has taken.
I did not receive a copy of the minister's comments, although it is the custom in this place for ministers to give the opposition critics such copies in advance. This is the first minister I am aware of to violate that tradition or practice. In his remarks the minister talks about what a good job the government is doing in terms of reducing the national debt as a percentage of gross national product. If we look at the figures as he indicated them we will see that in 1946, at the end of the war, the national debt as a percentage of gross national product was 100 per cent. Every year since then, year after

February 19, 1979
Main Estimates
year, there has been a decline in the national debt as a percentage of gross national product, until the year 1975. Since then, year after year it has been increasing. The significant thing is that since this government embarked on its so-called restraint program in 1975 the debt of this country as a percentage of gross national product has been increasing year by year. It is that trend that should be worrying the government, and it is that trend that should be worrying the minister. Comparisons between 1946 and this year are meaningless. What is meaningful is the trend of the debt to go up and up and up in the last few years.
This increase in debt is producing in the coming fiscal year a debt load of $8.38 billion. The interest expense for the next year will be higher than the entire budget of the Government of Canada when it came into power. We are to pay more for interest this year than was spent by the government in that year; more interest is being paid than the total amount spent eight years ago. That is the fact that should be concerning the people.
I sincerely hope this manipulation that has been carried out by this minister, together with the hidden and secretive way in which he has approached the disclosure of these estimates, will not fool the public, and that the public will realize that the government is planning to increase its expenditures this year at a higher rate than last year, that is, by 9.7 per cent as opposed to 9.5 per cent last year. I hope the public will realize that the global increase of $4.3 billion is the largest dollar increase since 1975. I hope that by now the public has recognized the ability the government has for cooking the books on the non-budgetary side, by transferring certain loans over to Crown corporations and, voila, they disappear from the estimates. The government claims it is cutting expenditures when all it has done is transfer them to other entities so they do not show up in the blue cook. That method has been used again this year in the projection of federal supplementaries and lapses to the tune of $400 million. These expenditures have been hidden from the public.
Let me repeat what I said in my opening remarks. This minister has not had the common courtesy of allowing members of parliament the same privileges given members of the press when they are locked up for a period of time to examine the books prior to their being made public. This minister did not provide us with an advance copy. Having withheld that courtesy from members who are spokesmen for opposition parties, it is difficult for members to comment in detail. The minister's predecessor has followed the practice of making copies of his remarks available in advance. That is a practice followed in this House by most ministers.
This is a marvellous book, and I am sure the secretariat of the Treasury Board spent a great deal of time putting together these nice little pictures of selected data designed to make this government look good. Honesty has not been a first requirement in the assembly of this data. Obviously the first requirement has been to pick out the numbers that make the government look good. This government has put these figures together in such a way that it hopes people will think it is

doing a good job. That is what the secretariat and the minister have done, and that is why the Auditor General is insisting that the Comptroller General assume responsibility in respect of the form of the estimates. Obviously the motivation of the present group is not to inform but in fact to deceive the Canadian public about the profligate spending policies of this government.
Without a copy of this material in advance it is difficult, as I have said, to go into detail at this time. However, in the days and weeks ahead the House can be sure we will fulfil our responsibilities by carrying out a double check on this government in an effort to bring some semblance of order and honesty to its approach to the spending of taxpayers' money.


Some hon. Members:: Hear, hear!


Mr. David Orlikow (Winnipeg North):: Mr. Speaker, I cannot get as excited as spokesmen for the official opposition about the failure of the minister to make copies of the documents available in advance. I do not think opposition members could get much more by having copies of the documents available at ten o'clock in the morning than by obtaining them at 1.30 or one o'clock. I suggest that what we need is not the presentation of documents one, two or three hours before the minister's statement, but weeks or months before. What we need is open government such as the Auditor General has suggested. There is no need for the kind of secrecy we have witnessed. Let me suggest to the minister that even in this country there comes a time when a government party may find itself in opposition and may regret that when in government it did not provide the opposition with more information.
According to the minister, the government is involved in a restraint program. I suggest it is limiting its expenditures in important fields such as post-secondary education, health and social services, not because needs in these fields have lessened, but simply because it seems to the government that this is the popular thing to do. The government has put a ceiling on the increases it will pay toward the cost of medicare and hospitalization, both of which programs were really pushed by the federal government and which are now to be paid increasingly by the provinces. This government has put a limit on Canada Assistance Plan expenditures for social services, again a program initiated by this federal government, the increase in the cost of which, when not to be paid by the government, will have to be paid by the provinces. It has put a limit on the amount which it will pay for the increasing cost of postsecondary education. It has cut back on employment programs, such as Outreach, which were doing a tremendous job of finding work for people who have found it difficult to find work, who did not fit into the work force in the normal way and for whom the manpower department was a complete failure. It has cut back on the amounts paid for the manpower training allowances. It has cut back on funds for housing although there are still hundreds of thousands of people in Canada who are poorly housed.
February 19, 1979

However, are the needs for these programs any less? Is that the reason the government is cutting back expenditures in these fields? No, the needs are not less and the costs are not lower. In fact, they are higher. The result of these cutbacks will inevitably be that the provinces, which have much less ability to find the money to pay for these programs, will be required to find money, and the individual citizen will be required to bear the increased burden of these programs or do without.
There are indications that this is already happening. In the Department of National Health and Welfare which group has felt the axe of these restraint programs? One would think that at least the government would be more selective and that, more properly, it would have started at the top. What the government has proposed to do is to put the blocks to the poorest people in this country, the people whose standard of living can be compared with that of people living in some of the underdeveloped countries in Africa and Asia, the native people. These are the people the government proposes to give the chop to.
The universities and community colleges are having to cut back on their programs and to increase their fees. The increase in registration fees at one of the universities in my province last year was 20 per cent, and there will probably be another increase this year. Many hospitals in cities across Canada are having to close because the provinces do not have the money. As the federal government cuts back they are required to exercise restraint within their hospitals, and all of this with hundreds of thousands of people on hospital waiting lists.
Medical research is feeling the strain of these cutbacks. Through bookkeeping devices the government tries to hide this fact, but medical researchers cannot be fooled and they know that there is restraint in this area. As a result many medical researchers are moving to the United States.
What is the reason for this government restraint? The government says: "If we do not have restraint we will have more inflation, and inflation is terrible for the poor people; therefore, we have to protect them." One way in which the government is attempting to protect the poor people is by eliminating its subsidies on bread and milk.


An hon. Member:: Shame.


David Orlikow: On the other hand, they have allowed gas and fuel oil prices to rise. The result is that inflation is up, according to the figures which were published today, by 8.9 per cent. This is almost the level inflation was at in 1975 when the government brought in the anti-inflation program. According to today's figures, food prices increased last month by 1.9 per cent, and this was in the main due to the increase in the cost of bread. That is what government restraint means.
In his remarks the minister suggested that the reduction in public servants by approximately 6,000 positions would be accomplished without too much hardship. The minister must isolate himself rather effectively in his office because I do not
Main Estimates
think there is one member of parliament in any party who has not met people who have worked for the government for years and years and are now being laid off. I recently heard of a 50 year old doctor who had worked for national health and welfare for over 20 years and had received his lay-off notice. To say that these lay-offs are being conducted without any real hardship is either nonsense or ignorance.
The minister says that the restraint program is working, the government is playing a smaller role in the economy, which is working, and the private sector is picking up the slack. The minister can juggle the figures all he wants, but I would like to refer him to a full page article that appeared in the Financial Times last week which raised some very serious questions about the claim that 400,000 some odd jobs were produced last year. No matter how many new jobs were produced last year, the fact of the matter is that we have more unemployed in this country right now than we have had since the great depression of the 1930s. There were 977,000 people unemployed last month according to the official figures. Anybody who really cares knows that there are probably another 250,000 people who have given up looking for work because there is no point in doing so if one is unemployed in Glace Bay, Come-By-Chance, Newfoundland or the Interlake area of Manitoba, because there are no jobs there. This is what the government's economic policies and restraint program have brought us.
At the same time as the government preaches restraint and pats itself on the back for how well it is doing, it continues to hand out the goodies to the favoured few.


An hon. Member:: Fat cats.


David Orlikow: The pulp and paper industry, which is one of the most efficient and profitable industries in Canada and always has been, has been using its money to invest in other countries, such as buying plants in the United States or building new plants in Brazil. These foreign plants will eventually compete for sales with Canadian companies. What did the government do for this industry just a couple of weeks ago?


An hon. Member:: Played Santa Claus.


David Orlikow: It gave this industry over $200 million without provisions for monitoring the money to ensure that it will be invested in Canada.
The automobile industry is the most profitable industry this world has ever seen, but what does the government do to get them to build a plant in Windsor? It bribes them by giving them a grant of some $80 million. This government would like to bribe GM to build a plant in Quebec. Why should we have to bribe the automobile companies? They have made hundreds of millions of dollars in this country, and they are still making hundreds of millions of dollars every year in this country. Why do we not require them to build their plants in Canada to sell automobiles in Canada? There is no reason except that this government has no industrial strategy policy.
This government goes from disaster to disaster trying to plug the leaks. This so-called Liberal government is in the

February 19, 1979
Main Estimates
process of stealing the program and platform, plank by plank, of the Conservative party. They are taking this country back to the economic policies of Herbert Hoover and R. B. Bennett. The results of that policy will have the same effect as similar policies had in the 1930s, and the present recession may well turn into a full-fledged depression.
The minister is proud of the number of jobs the government has created. I would like to conclude by reminding the minister that, according to official figures issued by Statistics Canada, some 977,000 people were unemployed last month. This figure amounts to 8.1 per cent of the labour force. We know that there were probably another 250,000 people who were looking for work but who were not counted. If the government continues its present policies of restraint coupled with its failure to come up with an industrial strategy which will put our people to work, a year from now we will not have 8.1 per cent unemployment but probably 9 per cent to 9.5 per cent of the labour force will be unemployed. Instead of 977,000 people unemployed there will probably be 1,250,000 people unemployed. That is what the government's restraint program means, and we think that the government is dead wrong.


Mr. Richard Janelle (Lotbiniere):: Mr. Speaker, my comments will be very brief and for the same reasons put forward by the hon. members for the Progressive Conservative party and the New Democratic Party. Not having received this documentation and not knowing exactly what it contains, we would rather hold our comments until later and we will study these estimates very closely.


Mr. Lloyd Francis (Ottawa West):: To follow the comments of the hon. member who has just spoken, I will simply say that I find myself in the same situation. I did not receive the documents but that does not prevent me from speaking, for I have something I want to tell the House.

The form of the estimates about which the minister said a few words has been a matter of discussion at some length by the Standing Committee on Public Accounts of which I have the honour of being the vice-chairman. The minister in his statement today has indicated-


Mr. Alexander:: A point of order, Mr. Speaker. I thought the usual procedure was that the minister delivered a statement, the official opposition replied, then the New Democratic Party had an opportunity to reply and finally the Social Credit party. I did not think there was any room at this time for a backbencher on the government side to deliver a speech. I figure that this is the time when we have the opportunity to ask questions. It usually happens when the minister has completed his speech and, therefore-


Cyril Lloyd Francis: Does the hon. member want to deprive me of my rights in this House of Commons?


Lincoln MacCauley Alexander: On that point of order, Mr. Speaker, I am not trying to deprive the hon. member of anything whatsoever. I am trying to tell him, through you, Mr. Speaker, that there is a certain sequence of events which takes place. I should like to have the opportunity of asking the minister the first question. I noticed that the minister-


Mr. Pinard:: Mr. Speaker, on that point of order, I think the hon. member for Ottawa West (Mr. Francis) had the floor. May 1 refer you to Standing Order 15(3) which reads as follows:
-a minister of the Crown may make a short factual announcement or statement of government policy. A spokesman for each of the parties in opposition to the government may comment briefly thereon and members may be permitted to address questions thereon to the minister.


An hon. Member:: That is right, questions.


Yvon Pinard: I have not finished.


The Acting Speaker (Mr. Turner):: In my opinion the hon. member for Ottawa West (Mr. Francis) was going to ask a question. That is why I recognized him.


Cyril Lloyd Francis: Mr. Speaker, I have had the honour of serving as vice-chairman of the public accounts committee-


Harvie Andre: Question.


Cyril Lloyd Francis: Hon. members on the other side -are very quick if we on this side try to cut them down. Do they not give me the same rights as they demand for themselves? Are they not prepared to say the rules are the same for all hon. members?


Harvie Andre: Ask a question.


Cyril Lloyd Francis: Mr. Speaker, I want to ask a question of the minister but I do have a preamble. In view of the problems in connection with the format of the estimates-


Some hon. Members:: Oh, oh!


Cyril Lloyd Francis: I shall take my time, Mr. Speaker, as I am sure I have the right to do. The problems have been considered at some length, not only by the Auditor General in his various reports but also by members of the public accounts committee. In view of the models which had been developed, not only for government departments but for Crown corporations, in order to render the estimates in a form which is more comprehensible to hon. members, I venture to suggest there is not a single hon. member in this place who will read every word in these documents. Very few of them have an opportunity of using the information in a way that is helpful.
My question to the minister is this: Just when does he feel it will be possible to make a more detailed statement concerning the format of the estimates following the suggestions of the Auditor General and the committee in order that they could be put in a more useful format for hon. members of this House?


J. Judd Buchanan: Mr. Speaker, as 1 indicated during the course of my remarks, I hope I will be able to do that later this
February 19, 1979

spring. I look forward to receiving comments from the public accounts committee which is doing a detailed study of this matter right now. I would, of course, wait to receive that study before making comments or suggestions.


Lincoln MacCauley Alexander: Mr. Speaker,
I still want to register my concern. There is a practice, with all due respect, that the first questions come from this side, but I will not argue with Your Honour.
I want to ask the minister to elaborate on the statement he made about pilot projects being implemented by certain departments in order to bring about what I think he implied- a better form of estimates. 1 want to know what stage this new innovative step has reached. What departments is he talking about? What is the time-frame? In other words, just stating there are some pilot projects does not mean a thing to a minister or to any member of the House. I just want to ask that question and a couple more.
Mir. Buchanan: Mr. Speaker, as 1 indicated during the course of my remarks and as I suggested to the hon. member for Ottawa West (Mr. Francis), I should very much like to receive suggestions from the public accounts committee. I hope to bring these proposals forward later this spring. If general acceptance is evident, the proposal would be to select several departments at that time to present pilot projects for the new estimates format in parallel with their regular presentation for 1980-81.


Lincoln MacCauley Alexander: In other words, what the minister is saying is that, notwithstanding the concern that the Auditor General has registered with this parliament and the people of Canada, he has done nothing other than come to the House and say he is thinking about introducing a pilot project which will affect some departments, and which may bring about a more readable or understandable form of estimates.
This matter is extremely serious. As a matter of fact, I think it borders on the chaotic. The Auditor General says it is a gamble now-not next spring or next year-for him to certify the government is spending what it says it will spend. In other words, the Auditor General cannot do his job; it is a gamble. Surely, under the responsibilities of the minister, this matter must have been discussed with the Auditor General, so I should like to hear the minister's reply to him. This is the sort of thing that would be cleared up immediately in the private sector. I want to know whether we still have to wait until the minister understands that this is a very serious matter.


Mr. Broadbent:: What are the odds of the gamble?


J. Judd Buchanan: Mr. Speaker, the hon. member is well aware that we have been addressing ourselves to this matter. To suggest that the Treasury Board secretariat and the Comptroller General have not looked at the matter is absolute nonsense; as the hon. member well knows, they have appeared before the public accounts committee. The Auditor General, the Comptroller General and the Treasury Board secretariat are looking very carefully at the form of the estimates. The
Main Estimates
Auditor General has suggested to us that he is happy with the way the arrangements are moving ahead. There is also, in parallel, the study being done by the public accounts committee.
We are certain, with all this input, that we are going to come up with improved estimates that will be of more use to members and to the public. Every bit as important, they will provide an effective means for managers within the public service to discharge their financial management responsibilities more effectively. It is totally wrong to suggest that this matter has just arisen lately and that sufficient attention is not being paid to it.


Lincoln MacCauley Alexander: All I know is that the Auditor General says right now that it is a gamble to certify the books. All I am saying is that this is a very serious matter. The fact that the Auditor General has indicated the government's spending documentation was so unclear and incomplete that he cannot do his job is further impetus for saying that this is a matter of a critical nature.
My last question is this: Will the minister kindly advise why after that delightful lunch he found that it was not possible to give the opposition parties an opportunity to read his statement? If he had done so we would have been able to look into it and have a better understanding and be better prepared to reply. Is there any excuse the minister can possibly give for that reprehensible conduct, conduct which I think is unnecessary? It is certainly not in keeping with with the precedent that was set by his predecessor; he did allow us the opportunity to look at the statement so we could have some in depth study. Is there any reason why the minister did not want us to see his statement before he gave it at three o'clock?


J. Judd Buchanan: Mr. Speaker, absolutely none. As I indicated to hon. members over lunch, I was not aware they had made representations in an endeavour to be involved in the press session earlier. I indicated at that time I would be quite prepared to organize a similar briefing for hon. members next year.


An hon. Member:: You will not be here then.


J. Judd Buchanan: The point I would like to make to the hon. member for Calgary Centre (Mr. Andre) is this. He has not learned yet that one cannot suck and blow at the same time. He spent considerable time developing the suggestion that they were cooked books, that the material was a pack of lies and it was a series of mistruths. He then went on to say that he wanted this information sooner. It seems to me that he should make up his mind. Either the material is sound, which I believe it to be, or it is not; that it is worth-while, which I believe it to be, or it is not. Hon. members are quite right in suggesting that by having access to this information earlier they could come to this question period prepared. I suggested to them when we were discussing the matter that I would be quite happy to make the arrangements. I am rather puzzled

February 19, 1979
Main Estimates
that hon. members made the points they did on this subject. Unquestionably this arrangement can be made, and I will be happy to look after it for them.


Sinclair McKnight Stevens: Mr. Speaker, my initial question to the President of the Treasury Board (Mr. Buchanan) deals with this new accounting principle which the government have adopted of revenue expenditure. I direct the minister to page 29 of his explanatory booklet in which it is stated that in the main estimates national health and welfare go up a total of $1,367 million. My question to the minister is this: Am 1 correct in stating that that in fact would be something over $1.8 billion in expenditures if they had not chosen to make the family allowance change that is reflected toward the end of that page, where it is stated that there has been a reduction of $491 million in family allowance payment? In short, have they not put into the revenue expenditure column $491 million, which has the net effect of reducing that estimate by $491 million notwithstanding the fact that more than that amount will be going out in loss of revenue?


J. Judd Buchanan: Mr. Speaker, no. Unless I misunderstood the hon. member, that does not involve the concept of revenue expenditure. That represents a deduction in family allowance of $491 million. That is a result of two things; it is partially demographic and partially the reduction from $26 or $27- whatever it is-to $20 per child, if I understand the hon. member correctly.


Sinclair McKnight Stevens: Mr. Speaker, the minister has conveniently tried to misunderstand me.


An hon. Member:: It is not hard.


Sinclair McKnight Stevens: Perhaps I will be a little more direct. The minister will recall that a $200 payment was approved in this House to be in the form of an income tax credit. That payment, which amounts to something in the neighbourhood of $700 to $800 million, must be covered some place. If it is not covered in expenditure estimates as brought forth by the minister, it will obviously be covered in the loss of revenue. Will the minister say whether it is not true that the expenditure reduction in family allowance that he shows of $491 million will be more than offset by a revenue loss when $200 per child payments are made some time in April, conveniently just before the election?


J. Judd Buchanan: Mr. Speaker, as the hon. member has made it quite clear, with the exception of those who normally would not have income tax payable, it would be in the form of a revenue reduction to the Crown. It is normally not shown as an expenditure. It will show up in the figures of my colleague the Minister of Finance as reduced revenue to the federal Crown.


Mr. Stanfield:: We never see them.


Harvie Andre: Mr. Speaker, my question is for the President of the Treasury Board. This figure of $52.6 billion which he produced today is coincidentally the same as the one that was talked about last September, which was only achieved by some

Draconian cuts to the extent of $2 billion. If those cuts are real as opposed to fictional, the minister must have in his possession detailed estimates, at least in global form, that would have been applicable if those $2 billion cuts were not made. Is the minister in a position to give those figures to hon. members and to the public at this time, namely what the estimates were before those so-called cuts were undertaken?


J. Judd Buchanan: Mr. Speaker, unless my memory is incorrect, that information was provided last September to the House of Commons by my predecessor, the President of the Board of Economic Development Ministers (Mr. Andras), and by the Minister of Finance when they gave the detailed breakdown of where the $2 billion cut was occurring in planned expenditures, the $500 million that was for the upcoming fiscal year, 1979-1980, as well as the $500 million cut that applied to the current fiscal year in taking it from $48.8 billion to $48.3 billion. All that information was provided at that time and is available.


Harvie Andre: Mr. Speaker, in order to try to get some relationship between the years so that we can make comparisons on a year to year basis that are realistic, it is necessary to ensure that one is talking about the same thing in different years. These estimates did not include CMHC figures because CMHC is going directly to the marketplace for its money rather than going to the Department of Finance, as was the previous practice. That is roughly $400 million in expenditures that are not in these books but were in previous books. The Export Development Corporation also has about $400 million of spending which had been in previous estimates but which, by a bookkeeping manoeuvre, were removed from this blue book. The Federal Business Development Bank has similar funds which have been removed from the spending estimates by this bookkeeping procedure.
My question is this: What would be the total spending of the federal government for the next fiscal year if the same basis was used this year as was used, say, four years ago? That is to say, if the same entities were included in this blue book that were included in the blue book four years ago, would the minister not agree that spending would be in the vicinity of $54 billion or $55 billion?


J. Judd Buchanan: Mr. Speaker, I would have to examine that. But whenever changes have been made I recall quite clearly that my predecessor indicated what the changes were and where they were made, the same as I did this time in identifying the 1,400 man year reductions in the transfer from the federal to the provincial governments. That has been done whenever any changes of this nature have occurred. I am sure that material can be put together in its totality. But those changes have always been identified when they have been made. To say what they would have been had conditions remained unchanged over the last four years is not a realistic thing to do. Conditions have changed. These entities are now dealing directly in the marketplace, which I believe is a healthy move and a good way for them to function. To suggest, to use the hon. member's words, that there is some flimflam or
February 19, 1979

hanky-panky here is nonsense. Whenever it has been done it has been clearly identified.


Harvie Andre: Would the minister not agree that it is meaningless to have his officials appear before the press pointing with satisfaction to increases of 8.9 per cent and 9.7 per cent and saying that since 1975 there had been only modest increases, less than increases in the gross national product? Would the minister not agree that these are meaningless numbers when in fact the programs included in the total spending have been changing year by year? The government has not disguised the fact, it has admitted there have been changes, but does the minister not agree that in these circumstances the comparisons are meaningless?


J. Judd Buchanan: I am puzzled. Maybe it just shows the Conservative nature of the hon. member's thinking. His idea is to lock things into a static, unchanging position and never change. What about the new programs which have been introduced? Are they to be eliminated so as to compare apples with apples? The situation evolves. Things change. New programs have been introduced and certain programs have been dropped. It is unrealistic to suggest things can be frozen at one point in time and shown always in the same way forever in the interest, the hon. member says, of an undistorted picture. The situation changes and will continue to do so.


Bob Rae: It always changes in your favour, though.


An hon. Member:: Well, well, where have you been?


Lorne Edmund Nystrom: I have a question in which the hon. member for Battleford-Kindersley (Mr. Mclsaac) is very interested. How does the government determine its priorities when cuts are made? I notice from the blue book that some $90 million is being cut from food production and marketing, over $1 million dollars from crop insurance and about $250,000 from animal research. The Minister of Finance (Mr. Chretien) has expressed concern about increased inflation arising from imports of food. It seems to me that if the government had a real strategy it would be promoting the production of domestic food in a move toward self-sufficiency. Such a policy would call for increased funding for programs I have mentioned. In working out its cuts, does the government seek to support through budgetary priorities the economic policies of the Minister of Finance or the general thrust of the statements made by the Prime Minister (Mr. Trudeau)? Or is it a matter of trying to pin the tail on the donkey?


J. Judd Buchanan: Not at all. The hon. member is well aware that over the last few years we have, I understand, increased in an unprecedented fashion the amount of our food exports. It is absolutely wrong to suggest that this does not enjoy a priority on the government's part. If the hon. member wishes to ask questions on various detailed aspects of this program he should obviously address himself not to me as President of the Treasury Board but to the Minister of Agriculture (Mr. Whelan).
Main Estimates


David Orlikow: I should like to ask the minister to give us more information with regard to the reduction of 5,700 in the number of public servants of which he spoke. What percentage of these will be in the national capital area and therefore engaged in administration, and what percentage will be out in the various communities engaged in the actual delivery of programs?
A second question. I am speaking from memory but I believe the hon. gentleman told us there would be a reduction in the number of post office personnel of either 1,600 or 1,800 people in the coming year. We have spent well over one billion dollars on equipment to computerize and automate the post office operation, yet the mail is moving slower than ever. It took five days for a letter mailed to me from Toronto last week to reach Ottawa.


An hon. Member:: You're lucky!


David Orlikow: A friend of mine-


Mr. Speaker:: The hon. member was about to put a question,
I believe, before he began to make a speech.


David Orlikow: I am trying to give an illustration. The mail is moving slower than ever. At the same time there are tens of thousands of people in the new urban areas who have been waiting up to four years for door to door delivery of mail and cannot get it because the government is putting a freeze on increases in service. How does the minister propose to reduce the number of post office staff unless he is prepared to destroy completely an already unsatisfactory delivery service?


J. Judd Buchanan: Questions concerning the operation of the post office should be directed to the Postmaster General (Mr. Lamontagne). As to lay-offs, the latest information we have from the Public Service Commission-these are estimates-is that by April 1 the figure should be roughly 450, of which 60 per cent will be in the national capital. These figures are obviously based on best estimates we can get from the commission and over the succeeding couple of months there could be an additional 250 to 350, for a total, nationwide, in the order of between 700 and 800 individuals.
In his comments the hon. member suggested we were insensitive to the requirements of post-secondary education, of medicare and the needs of the family. I do not know whether he was listening when I made my remarks. I stated that approximately 58 per cent of the $4.3 billion increase this year is going directly to transfer programs to individuals and to the provinces to pay for things such as old age security, the child tax credit, medicare and post-secondary education. These are precisely the areas which are receiving the highest priority.


David Orlikow: Mr. Speaker, when I said the government was reducing its contributions to the various shared-cost programs, I had this in mind: from the inception of the programs until April last year the government was paying approximately 50 per cent of the cost. As of last year the government put a cap on the increase it would pay in any year, the cap being the amount of the increase in the gross national product. If the

February 19, 1979
Main Estimates
cost of administering and paying for those programs is more than the increase in the gross national product, the provincial government, or the individual citizen, is obviously going to have to pay the difference in the short haul.
My question, then, is this. The minister just now spoke of several hundred people having been laid off. The figures I have been receiving from the Public Service Commission show that some 2,500 people have been laid off or have been given notice that their services will be terminated as of either March 1 or March 31. The minister's own figures for next year show a reduction of 5,700. There is quite a discrepancy, Mr. Speaker, between the 450 the minister spoke about a couple of minutes ago and the 2,500 who have either been laid off or have received notice, and the 5,700 which is the figure in the blue book. Perhaps the minister would be good enough to explain that discrepancy.


J. Judd Buchanan: Mr. Speaker, the figures which I gave the hon. member were ones which I received this morning. The anticipation is that the actual lay-offs nationwide will by April 1 be 450.
The answer is that by far the greatest number of these people are successful in getting relocated elsewhere in the public service in jobs which become vacant as a result of various forms of attrition, whether it be retirement, resignation, death or disability. Jobs are opening up continually as a result of the turnover within the public service. As I say, the figures I quoted to the hon. member were figures I received today.


Jean-Robert Gauthier: Mr. Speaker, I want to come back with a supplementary question. Did the minister announce a further reduction of 5,000 plus person years, or are we talking about jobs or positions? Second, over what period of time are these person years to be reduced?


J. Judd Buchanan: Mr. Speaker, these are not actual employees but public service positions which are being reduced. The bulk of these reductions, according to my understanding, will be accomplished by the end of March or within the next couple of months, so that the vast majority of the people involved with this should receive lay-off notices as we move into the next fiscal year.


Robert Lorne Stanfield: Mr. Speaker, 1 would like to follow up the point the hon. member for York-Simcoe (Mr. Stevens) was trying to clear up because it seems to me that the government sometimes has a choice between increasing expenditures and providing a tax credit, and in terms of the over-all financial position of the government-in other words, in terms of the effect of these transactions upon the size of the surplus or the size of the deficit-it comes to the same thing.
However, if one employs a revenue expenditure approach, to the extent one does that it really makes rather meaningless talk about controlling expenditures. For example, if the revenue expenditure in terms of the tax credit with respect to

family allowances had not been put out in that form but had been directly expended, it itself would have amounted to a 1 per cent increase in expenditures. What I am really asking the minister-and I would like him to comment-is whether it really means anything to say you are limiting the increase in expenditures by whatever-8.9 per cent-when you are fooling around or, to use a more polite word, making adjustments between the expenditure side and the revenue side.
It seems to me that I would not be very far out to say with some degree of firmness that the minister's assertion that escalating the increase in expenditures 8.9 per cent does not really mean anything because he is taking some things from the expenditure side and cutting down his revenues. So when one is looking at the over-all position of the government, it really does not mean anything. It really does not mean anything for the minister to insist that he is restricting expenditure increases by this amount. One has to take into account the kinds of expenditures he is making through reductions in revenues also, which is the valid point, it seems to me, which the hon. member for York-Simcoe was trying to make.


J. Judd Buchanan: Mr. Speaker, the hon. member got into what is an extremely interesting area, the whole concept of revenue expenditure which, as the hon. member is well aware, is one which has not really been utilized in Canada. It is used in the United States where each year, other than the basic exemptions in the tax system, it is my understanding that all other forms of what are termed tax expenditures, i.e., forgone revenue by the government, are shown and listed each year. The amount that is lost by registered pension plans, registered retirement savings plans, registered home ownership plans, R and D incentives all of these are shown as revenue expenditures.
To date that concept has not commended itself to us here in Canada. We have not used it. As I am sure the hon. member is aware, my responsibility is related purely to the actual expenditures which are made by the government. If we get into the question of tax policy, we are moving into the preserve of my colleague the Minister of Finance; but from my point of view of responsibility for expenditure ceilings and keeping within those expenditure ceilings, I believe we have accomplished that goal. If the hon. member is saying he does not like some of the changes which have been made in the tax structure, that is a totally different matter which should be taken up with my colleague the Minister of Finance.
I gather from the nodding of the head of the Leader of the New Democratic Party that he would like to see some system of revenue expenditures. That is another subject, the discussion of which would involve a considerable amount of time, and I think it would be an extremely interesting one.


Robert Lorne Stanfield: Mr. Speaker, without going into the ramifications of this concept, will the minister not agree that if he has been able to effect a reduction in expenditures by some tax expenditure, then when one is comparing the extent to which he is controlling his expenditures, this should be taken into account, and would it be not very difficult to produce estimates
February 19, 1979

which would go up by only 7 per cent? One could probably do this by making some further tax expenditures. That was the hon. member's point, and that is the point I am making. I am just suggesting in all sincerity that the minister's assertion that he has restricted the increase in expenditures does not mean anything except in terms of his own definition of what an expenditure increase is.


J. Judd Buchanan: Mr. Speaker, there is some validity to the hon. member's point, but where do we draw the line? Do we look at all the various tax incentives and tax concessions which are granted to Canadians, whether they be capital gains taxes or anything else, and begin to classify those as expenditures? 1 am not speaking pro or con on the subject. 1 am saying it is a new concept. To date what have been classified in this country as expenditures are those ones where the government actually gathers in revenue from the taxpayers of Canada and subsequently redistributes it, whether it be to the provinces, directly to individuals or for the purchase of its own goods and services. To date that has clearly been the concept which we have used in this nation. If the hon. member is advocating that we should move to integrate into that the concept of revenue expenditures, or tax expenditures to use his term, then that is a basic policy question we could spend considerable time debating.


Mr. Speaker:: Order, please. Bearing in mind the number of members who have been trying to get the floor and bearing in mind that I have to draw a line and limit questions at some point, a balance will have been fairly achieved and a reasonable number of members will have participated if I conclude the questions by recognizing four other members, the hon. member for Bellechasse (Mr. Lambert), the hon. member for Peace River (Mr. Baldwin), the hon. member for New Westminster (Mr. Leggatt) and the hon. member for Dauphin (Mr. Ritchie).


Joseph Adrien Henri Lambert: As always, Mr. Speaker, you are showing fairness and I thank you for that. First of all I would point out to the minister, the President of the Treasury Board (Mr. Buchanan) that once again we have been taken by surprise. As far as I am concerned, 1 have been apprised of those papers only about ten minutes ago. It might not be the minister's responsibility, but I would like to remind him that in future, whenever possible, we would like to be able to examine a little in advance the statement the minister proposes to make in the House, in order to understand the issue before making our judgement and ask a few questions. In any event, I would not like to bore the minister with that-


An hon. Member:: Agreed.


Joseph Adrien Henri Lambert: Well, you agree. Everybody agrees I think, but I would nonetheless ask a question which to me appears to be of great importance. In table No. 1 of document No. 5 on the public debt program, we find a rather
Main Estimates
spectacular increase in the 1968 net debt of Canada, which then was amounting to $39,622 billion, and which will reach an amount of $64,672 billion according to the estimates for 1980. Can the minister tell the House if he intends to consider very seriously that public debt increase, which surely has an impact on the economy of the country and the possibility to attract investors here?
Second, does he intend to make proposals to change somewhat or even a great deal the funding methods for the public sector to avoid those phenomenal increases in the public debt, automatically resulting as they do in very big servicing costs for that debt?


J. Judd Buchanan: Mr. Speaker, first of all I accept the suggestion of the hon. member that hon. members would like to examine the documents in advance, and if I am still President of the Treasury Board next year I would be very happy to make the necessary arrangements as well as for the media. Furthermore, I believe the hon. member was invited this morning-unfortunately, the hon. member was not contacted directly; perhaps he did not receive the message inviting him to lunch, I do not know. Anyway, about the amount of the public debt, and as the hon. member pointed out, it is a heavy burden for the people of Canada and we are very aware of that problem. The percentage of the gross national product has been higher in the past than what the public debt represents. However, I grant him that it is a serious problem; indeed my colleague, the Minister of Finance (Mr. Chretien), indicated that for the current fiscal year the deficit will be, I believe, roughly $12.1 billion but next year that deficit will be reduced to $10.7 billion. So, substantial progress is being made in that direction in an intelligent way, I believe. It is true that it is a very significant amount, and I hope to be able also to reduce even more the size of our deficit for the subsequent year.


Joseph Adrien Henri Lambert: I have a supplementary, Mr. Speaker.


Mr. Speaker:: The hon. member for Bellechasse on a supplementary.


Joseph Adrien Henri Lambert: Mr. Speaker, to give others an opportunity to ask questions, I will be brief.
I note very briefly that there is a reduction of $158 million for the Department of Public Works. I understand the Department of Public Works is now responsible for urban affairs and the Central Mortgage and Housing Corporation. I do not want to embarrass the minister with my questions, but 1 would like to know if that reduction of $158 million is applicable only to the housing area or if it affects housing as well as public works in general?


J. Judd Buchanan: If I remember well, Mr. Speaker, that applies particularly to public works; the other department comes under a separate vote.

February 19, 1979
Main Estimates


Mr. G. W. Baldwin (Peace River):: Mr. Speaker, I want to start off by making a comment about what the hon. member for Winnipeg North (Mr. Orlikow) said when he suggested the government was following the recommendations of the official opposition in bringing in these estimates. I want to say that this shocking statement will do a great deal to impair my political and social status in Peace River!


Some hon. Members:: Oh, oh!


Gerald William Baldwin: Having said that, I think I have to preface this question with a few preliminary words. It so happens I was chairman of the Standing Committee on Public Accounts some 15 years ago when the then secretary of the Treasury Board said that we had a scheme before us by which we could make it simple for members of the House of Commons and members of the public to understand the form of the estimates. There were so many votes at that time, and the intention was to reduce the number of estimates and make them simple and more comprehensible. After some reluctance, there was an agreement on the part of the committee. I remember at that time the Auditor General, Max Henderson, told us we were on dangerous ground because, as he said, once it happens, the dam will be opened and all hell will break loose. That is what happened and at present, to most members of the public, these estimates are incomprehensible.
Having in mind the extent to which parliamentary committees develop into legislative abattoirs when they come to consider estimates of the government, will the minister discuss with his colleagues, at least in the limited time he has to enjoy the privileges of power, and undertake that, for the purpose of having a more intelligent basis of discussion so that we can better discharge our responsibilities on behalf of the shareholders of this country, the taxpayers, the estimates of at least four or five departments will be brought into the House, where they would form the subject of discussion in the House, as used to be the case? Thus during the course of an average parliament of four or five years there will be an opportunity for the House, through the question and answer period and the very successful operation which those hon. members who were here at the time will recall, to examine the estimates, which is the only way in which we can get back to a sensible and meaningful method of discharging our duties to the taxpayers of Canada.


J. Judd Buchanan: Mr. Speaker, the hon. member is making representations. As I indicated in the course of my earlier remarks, the Standing Committee on Public Accounts is now studying this. The triumvirate of the Auditor General, the Comptroller General and the secretary of the Treasury Board are examining it as well. That will deal basically with the form. The question of procedure and how it will be handled would relate, it seems to me, more to the activities of the Standing Committee on Procedure and Organization; but I profess no expertise in this department. Certainly so far as the form is concerned, we are looking very carefully at how it should be changed. From then on the way the estimates will be

handled will not be a question for me as President of the Treasury Board to determine but rather for the House of Commons to determine.


Some hon. Members:: Hear, hear!


Gerald William Baldwin: The hon. gentleman is a good friend of mine. I like him in many respects and I would like to ask him the following simple question. Does he not consider personally, both from his experience as minister and from his recent brief experience as President of the Treasury Board, that that would be a more acceptable way, forgetting the Standing Committee on Procedure and Organization which obviously will not be called into existence before the end of this parliament? Does the hon. gentleman not consider that to be a more intelligent and sensible way to handle the estimates of this country involving some $52 billion?


J. Judd Buchanan: It may well be, but I am sure the hon. member would also admit that we are likely not to have the form of the estimates changed before the event which the hon. member seems to be very conscious of will take place, in other words, in the next few weeks. So I really think his recommendations are at sixes and sevens with each other.


Mr. Stuart Leggatt (New Westminster):: Mr. Speaker, in answer to a previous question the minister indicated that questions about specific items in the estimates should be directed to the minister involved. I can understand that he cannot have knowledge of all these questions. However, there are some changes in the estimates which deal with a variety of ministers. Surely the minister has a responsibility to co-ordinate government policy with regard to the estimates.
My question therefore is based upon cuts in the rape crisis centres, in family planning services and in the Outreach and Aware programs, all of which are under various ministers but deal with cuts in the estimates with regard to women. Has the minister a responsibility to implement government policy in co-ordinating the various requests from the various ministers, and is it the government's policy to cut back specifically services to women as reflected in these estimates?


J. Judd Buchanan: The answer to the latter part of the question is no, it is not part of the government's policy. If my memory is correct, I believe the hon. member directed a series of questions on this subject, as have other hon. members, to my colleague the Minister of Justice (Mr. Lalonde). The minister has endeavoured to respond. Whether hon. members are satisfied or not, the minister has endeavoured to respond and explain clearly that this is not government policy and that in fact there are other programs which to a degree fill the gap being created.


Stuart Malcolm Leggatt: In assessing a particular cut, is it the minister's policy to assess the impact of the cut on another department? For example, in term of the Outreach and Aware programs, a cutback in specific services to women to be placed in employment means the Canada Assistance Plan Act saves a great
February 19, 1979

deal of money. If a woman on welfare is given specific assistance and placed into employment, there is some savings to the treasury on the other side. In other words, the cut means an expense to another department. Does the minister take that into consideration when he considers the impact of these requests from ministers? Does he consider the cost to the treasury as a result of cuts?


J. Judd Buchanan: Yes, Mr. Speaker. Whenever cuts are made, there is an effort to see what the impact will be, whether it will increase, as the hon. member suggested, the costs under the Canada Assistance Plan Act or something of that nature. Generally the policy is to attempt to make some intelligent estimate as to what in fact the impact will be outside.


Stuart Malcolm Leggatt: You blew it this year.


Mr. Speaker:: As I indicated earlier, we will conclude the questioning with the hon. member for Dauphin (Mr. Ritchie).


Mr. Gordon Ritchie (Dauphin):: Mr. Speaker, the minister made much of the fact the public debt is only 22.7 per cent of the GNP. Has the minister considered that these figures are not in constant dollars? In fact, a holder of a Canada Savings Bond taken out in 1971 is losing, if it is paid this year, approximately 50 cents on the dollar. In the sale of Canada Savings Bonds, the government will be repaying in dollars with considerably less buying power at the maturity of the bond because of inflation.


J. Judd Buchanan: Mr. Speaker, the hon. member is quite correct in pointing out that the debt is not in constant dollars, but neither is the gross national product of which it is expressed as a percentage. It is not being made in terms of constant or real dollars in either case. In both cases current dollars are being used.


William Gordon Ritchie: Does the minister not agree that, in the maturing of Canada Savings Bonds and similar type debts, the government pays back very much less in buying power than what it borrowed from the individual in the first place?


J. Judd Buchanan: That may well be correct, but the hon. member conveniently overlooks the fact that bond holders receive a substantially higher return. In other words, four or five years ago the return was substantially less. Now the individual receives 9.5 per cent on Canada Savings Bonds, which rate is designed to help offset the impact of inflation.


PUBLIC WORKS
Hon.   J.-J. Blais@Solicitor General: Mr. Speaker, I wish to correct some information which I provided to the House on Friday. In reply to a question by the hon. member for Huron-Middlesex (Mr. McKinley), I indicated that land purchased
Order Paper Questions
for the construction of a penitentiary in London had been turned over to the Department of Public Works. That information was inaccurate. The land is still under the control of my own department. I have already advised the hon. member of the erroneous information.


CANADA HERALDIC COUNCIL ACT
Mr. Frank Maine (Wellington) moved: for leave to introduce Bill C-461, to establish a Canadian heraldic council.


Some hon. Members:: Explain.


Francis William (Frank) Maine: Mr. Speaker, the purpose of this bill essentially is to patriate the granting of armorial bearings. At present, if anyone in Canada wants a coat of arms, he or she must apply to the United Kingdom authorities. This bill would establish a Canadian heraldic council so that armorial bearings pertaining to Canadian entities can be granted in Canada.


Some hon. Members:: Hear, hear!


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

[Stage Direction]
On the order: Government Notices of Motions:
February 16, 1979-The Deputy Prime Minister and President of Privy Council:
That the Standing Committee on External Affairs and National Defence be authorized to consider Canada's policy with reference to defence and external affairs.
Mr. Speaker:: Pursuant to Standing Order 21(2), this notice of motion is transferred to and order for consideration under Government Orders at the next sitting of the House.


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Yvon Pinard: Mr. Speaker, the following questions will be answered today: Nos. 403, 404, 406, 639, 703, 705, 707, 715, 740 and 785.

February 19, 1979
Order Paper Questions


Mr. Roy (Laval): During the past ten years, did CMHC contribute, through the Quebec Housing Corporation, to the financing of senior citizens dwellings in the City of Laval?


Hon. Andre Ouellet (Minister of Public Works and Minister of State for Urban Affairs):: I am advised as follows by Central Mortgage and Housing Corporation:
Housing for Senior Citizens Approved Under The NHA,
Through Quebec Housing Corporation City of Laval, P.Q., 1968-77*1*
Public Housing*2*	Non-Profit Housing*2*
(Section 43)	(Section 15.1)
	Hostel				Hostel	
Year Loans Units	Beds	$000	Loans	Units	Beds	$000
1968 - -					_			
1969 - -	-	-	1970 1 72	223	2,660	1971 1 210	-	2,138	1972 - -	-	-	-	-	-	-1973 - -	_	1974 - -	-	-	-	1975 - -	-	-	i	100	1,8901976 - -	-	-	-	1977 - -	-	-	1	118	-	2,694(I) Data are gross.	(2) New Housing.


Mr. Roy (Laval): During the past ten years, did CMHC participate in the Insured Loans Assistance Programme, enabling individuals to become home owners in the City of Laval and, if so, in each case, for what amount?

Question No. 406-Mr. Roy (Laval):
During the past ten years, did CMHC (a) subsidize or participate in the financing of dwellings and residences for senior citizens (b) contribute to sewer systems and aqueduct projects in the City of Laval and, if so, what was the annual breakdown?


André Ouellet: I am advised by Central Mortgage and Housing Corporation as follows:
(a)
NHA Loans Approved for Senior Citizens' Housing11* City of Laval, P.Q., 1968-77*2*
Quebec Housing Corporation	Other
Sections 15.1,43	Section 15.1
Year	Loans	Units	Hostel Beds	$000	Loans	Units	Hostel Beds	$0001968	-	-	-	-	-	-	-	-1969	-	-	-	-	-	-	1970	1	72	223	2,660	-	1971	1	210	-	2,138	-	-	-	-1972	-	-	-	-	-	-	-	-1973	-	-	-	-	-	-	-	-1974	-	-	-	-	-	-	-	1975	1	100	-	1,890	-	-	-	1976 '	-	-	-	-	2	273	-	6,9361977	1	118	-	2,694	-	-	-	-
*'* Data are gross. *2) New housing.


André Ouellet: I am advised by Central Mortgage and Housing Corporation as follows:
NHA Insured Loans Approved for Home-Ownership*1* City of Laval, P.Q., 1968-77*2*
Approved Lenders	CMHC
(Section 6)	(Sections 34.15, 58)
Year	Loans	Units	$000	Loans	Units	$0001968	342	422	5,519	182	233	3,0541969	238	259	3,565	303	321	4,0441970	265	281	3,684	1,298	1,321	15,8391971	1,131	1,146	15,576	202	201	2,7781972	667	678	9,973	24	24	3261973	633	671	11,262	273	274	4,8571974	330	361	6,970	206	206	3,8761975	1,002	1,058	24,297	245	245	6,3111976	1,063	1,095	31,113	-	-	1977	1,263	1,308	38,261	135	135	4,009
*'* New and existing Housing.
*2* Data for 1968-75 are net; data for 1976-77 are gross. 
(b)
NHA Loans Approved for Sewage Treatment and Water Supply Projects City of Laval, P.Q., 1968-77*1*
Sewage Treatment Projects	Water Supply Projects
Loans	Loans
Year	No.	$000	Forgive- ness $000	Grants $000	No.	$0001968	-	- 41 *2*	31	-	1969	-	76<3*	1970	-	-	-	1971	-	-	-	-	1972	2	176	-	-	-	-1973	- 66*2*	27	1974	7	1,466	132	-	1975	-	-	123	-	1976	4	8,458	1,016	814	1977	7	1,837	193	-	1	659
*** Data are net.
*2* Reduction in a loan initially approved in an earlier year. *3* Increase in a loan initially approved in an earlier year.
February 19, 1979


Mr. McKinnon: 1.	Did the government agree to participate in an Airborne Warning and Control System in Europe and (a) if so, on what date was the decision taken (b) if not, will a decision be taken and, if so (i) on what date (ii) will Parliament be asked to approve participation?
2.	Did Canada participate in the development phase of AW ACS for Europe and, if so, in what amount?
3.	Has a programme cost for AWACS been agreed upon among NATO Nations and, if so (a) what is it (b) what is Canada's share as a (i) percentage of the total cost (ii) dollar figure?
4.	Does DND's capital budget contain provision for Canada's contribution to European AWACS?
5.	Will Canadian Armed Forces personnel be involved in the European AWACS programme, such as, flight crews, maintenance crews, training crews, etc?
6.	Does the government attach a higher priority to AWACS for use in Europe or in North America?
7.	Does the government propose to make any contribution towards either the capital or operating costs of the AWACS which the USA will fly in North America and, if so (a) in what amount (b) will Canada make personnel and/or bases available?
8.	Will American AWACS operate on (a) a regular (b) exceptional basis in Canadian airspace?
9.	Has the USA been urging Canada to participate in European AWACS as a matter of higher priority than North American AWACS?


Barnett Jerome Danson: 1.
Yes. (a) Dec. 6, 1978. (b) Not applicable.
2.	Canada has contributed to the initial research and development phase for a total of $250,000 over the period 1974 to 1978.
3.	Yes.
(a)	Acquisition cost-$1,826 M. (1977 U.S.); Annual cost for operation and support-104 M. (1977 U.S.) from 1985 onward.
(b)	(i) 9.8 per cent of the acquisition cost; 9.3 per cent of the operation and support cost;
(ii) $180 M. (1977 U.S.)-acquisition cost; $9.5 M. (1977 U.S.)-operation and support costs after 1985.
4.	No. However, DND is now examining appropriate arrangements to include funding of program costs in the defence services program.
5.	Yes. Canadian military personnel will be involved in the manning of the NATO AEW force headquarters and the airborne component.
6.	The question of priority does not arise because the AWACS system in Europe and in North America is considered a military requirement in support of the total deterrent and defence posture of the alliance.
7.	(a) and (b) Canada will not contribute to the capital costs. However, discussions are taking place with the U.S. to explore the possibility of some joint arrangements for training and co-manning of some U.S. AWACS aircraft within the NORAD context.
Order Paper Questions
8.	(a) and (b) It is envisaged that U.S. AWACS aircraft would operate in Canada on a regular basis during NORAD training and exercises and in times of crisis or hostilities.
9.	No. As a NATO-wide system, all members of the alliance have been encouraged to participate in European AWACS.


Mr. Jones: 1.	When was the Order of Military Merit created and why?
2.	How are candidates chosen for this Order?
3.	Is language qualification taken into account at all?
4.	Does the Governor General give routine approval to these names or does he actually make the final decision?
5.	Is it true that the list was rejected at first by the Governor General in the spring of 1977 and if so for what reason?


Barnett Jerome Danson: 1.
The Order of Military Merit was established July 1, 1972 for the purpose of according recognition to Canadians and other persons for military merit.
2.	Candidates are chosen by an advisory committee which was established in accordance with the constitution of the order and such names are submitted to the chief of the defence staff (CDS). The CDS in turn recommends to the minister those nominations which in his opinion have the greatest merit. The minister recommends a final list of nominees to the Governor General.
3.	No.
4.	The Governor General, as Chancellor of the Order, makes appointments to the Order.
5.	No.


Mr. Jones: 1.	What is the role of the Starfighter in the Canadian Forces? What is the actual intended use of the Starfighter?
2.	How old are the Canadian Starfighters? What is the total cost of their upkeep per year?
3.	How many Starfighters have crashed in Europe in the last 12 years? How many Canadians were killed or injured in these accidents, if any?
4.	How much time is required in maintenance on the Starfighter daily?
5.	Does the government intend to replace these, and if so, when and at what cost?


Barnett Jerome Danson: 1.
The role of the Starfighter in the Canadian Forces is to conduct offensive and defensive air support operations. It is currently deployed in this role and will continue to be so used.
2.	The average age is 14 years. The total operation and upkeep cost per year is $79,359,876.
3.	Thirty-six Canadian Starfighters have crashed in Europe during the past 12 years. Seventeen Canadians were killed and three were injured in the accidents.
4.	29.3 man-hours per aircraft per day.
3368

February 19, 1979
Order Paper Questions
5.	The CF-104 will be replaced by the new fighter aircraft in the $2.34 billion identified for the purchase of the total fighter aircraft fleet.


Mr. Jones: For the years 1950-1970, which regiment of Mobile Command was the most efficient? Which regiment had the highest re-enlistment rate? Are these or/is this regiment still in existence, and if not why was it or/were they disbanded?


Barnett Jerome Danson: The
relative efficiency of regiments in mobile command for the years 1950-1970 cannot be established because of the different equipments and roles assigned to the regiments. Even where equipment and roles were similar, efficiency would not be rated in relative terms, but in respect of the ability to be operationally effective in meeting the roles assigned. Records on re-engagements and re-enlistments were not maintained by unit for the period 1950-1970.


Mr. Jones: 1.	In the opinion of the Department of National Defence how many persons are required to provide Canada with a proper system of surveillance, including provision of course for time off, etc.?
2.	How many persons does the department employ in order to carry out surveillance operations in Canada?


Barnett Jerome Danson: 1 and
2. Surveillance is not the exclusive role of any command or element of the Canadian Forces. It is, however, a primary role of both maritime command and air command, the military personnel of which number approximately 9,200 and 22,700 respectively.


Mr. Howie: On what date is the next scheduled pay increase for members of the Armed Forces?


Barnett Jerome Danson: October 1, 1979 for all ranks and classifications except generals, colonels, dental and legal officers. The scheduled date for pay revision of these groups is April 1 annually to correspond with the date of compared groups in the public service.


Mr. McKinnon: How many times on (a) surveillance (b) a trans-Atlantic crossing have CF-5 aircraft had to resort to the use of one engine?


Barnett Jerome Danson: CF-5 aircraft have had to resort to the use of one engine on five separate occasions during surveillance-training and transAtlantic flights, (a) Surveillance-two; and (b) Trans-Atlantic-three. There have been a few occasions when one engine
[Mr. Danson.1
has malfunctioned then cleared rapidly, enabling the flight to continue to destination.


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


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


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


Alastair William Gillespie: that Bill C-42, to provide a means to conserve the supplies of energy within Canada during periods of national emergency caused by shortages or market disturbances affecting the national security and welfare and the economic stability of Canada, be read the second time and referred to the Standing Committee on National Resources and Public Works.
He said; Bill C-42, the energy supplies emergency bill, is a very important one designed to protect Canadians in the event of an energy emergency. In my remarks concerning Bill C-42, I propose to deal with four aspects of the situation: the general background for the need of the bill; the oil situation in Canada; our obligations under the international energy agency emergency oil sharing program; and the particular features of the bill itself.
As to the features of the background, once again we are faced with uncertainties associated with the petroleum supply disruption affecting the non-communist world. The revolution in Iran has created a major supply difficulty. Iran, the second largest OPEC oil producer, has not exported any crude oil since December 26, 1978. Roughly 20 per cent of OPEC production or six million barrels a day of Iranian production has not been available since that date. Some of that shortfall has been made up on a temporary basis by other OPEC producers. In terms of non-communist consumption, the net shortfall is approximately 5 per cent.
Our hope is that political stability in Iran will be restored quickly and that Iranian Oil will once again flow freely to world markets. We cannot be sure when that will occur. There are disturbing signs that it may be many months. Nor do we know for certain what policies other OPEC suppliers will adopt, or what other events may intervene.
February 19, 1979

If parliament were to be in continuous session there might be an argument to postpone this legislation. But given the fact that a dissolution will occur this year, the government believes it would be wise to secure the necessary authority now to deal with an energy emergency which could arise while parliament had been dissolved. Its introduction should be seen as a precautionary measure to protect Canadian energy security.
Canada is a net importer of oil. Since the 1973-74 crisis we have been able to reduce the dependence of eastern Canada on imported supplies. In 1973-74 Quebec and Atlantic Canada imported close to 800,000 barrels a day. The government took measures to have an oil pipeline built from Sarnia to Montreal. That pipeline has reduced our dependence on imported oil by roughly 300,000 barrels a day. At the present time we are importing about 500,000 barrels a day. About one-fifth of that
500.000	barrels a day had been coming from Iran before the shutdown. Another 200,000 barrels a day came from other Middle East and non-western hemisphere sources. Another
200.000	barrels a day was sourced in Venezuela. Members will be aware of my steps to ensure that, despite the action of the Exxon Corporation and Imperial Oil, this oil will be as secure to Canada as the Venezuelan and Canadian governments want it to be. Altogether our imports of 500,000 barrels a day are equivalent to about 30 per cent of our total oil requirements.
The companies affected have been able to offset their shortfalls temporarily through alternative overseas sources as well as increased production from our own domestic sources. Increased domestic supplies are reaching eastern Canadian refineries through exchange arrangements with companies in the U.S.A. I have asked the National Energy Board to authorize such exchanges to meet demonstrated shortfalls in our imports with a view to assuring oil supply for Canadian consumers and to maintaining our inventories.
We have been in touch with the provincial governments on these matters and everything is being done to ensure maximum utilization of western Canadian crude in eastern provinces which are vulnerable to this import disruption. I am particularly appreciative of the co-operation which the Alberta government and its agencies have extended.
These measures may not be enough. We may have to take further action by imposing demand restraints, and perhaps allocating crude oil and petroleum products. What we seek is to have the necessary legislative authority to take these steps if needed.
I am, therefore, proposing Bill C-42, an act to provide the means to allocate available energy within Canada during periods of supply disruptions caused by shortages or market disturbances outside our control. These measures will be necessary to fulfil our commitment under the agreement of an international energy program, or in any national energy emergency unrelated to the triggering of the international emergency oil sharing system.
As all hon. members know, in the aftermath of the 1973-74 Arab oil embargo and production cutbacks Canada, the U.S.A. and 14 other member countries of the Organization for Economic Co-operation and Development got together to see
Energy Supplies
what could be done to deal collectively with possible future crises. In November, 1974 these countries entered into an agreement on an international energy program. Three other countries subsequently joined, and the membership will soon be increased to 20 since Australia has applied to join.
A central feature of the agreement is an emergency oil sharing system which provides for the equitable distribution of available oil in an emergency. The fair sharing is based on the historical consumption and net imports of each member country. The sharing system is triggered when a formal finding is made that the group of countries has suffered a loss in its oil supply equal to 7 per cent or more of its average consumption. Members will recall that in my opening statement I mentioned that the present shortfall occasioned by the non-made-up portion of Iranian oil production amounts to 5 per cent of oil consumption already. Clearly we are within reach of that 7 per cent figure.
The agreement commits the different member countries to have in place adequate legislative authority to permit the imposition of mandatory control over the use and consumption of oil during an emergency, and to have by 1980 reserves of petroleum equal to 90 days of its net petroleum imports. Canada today more than meets this emergency oil reserve commitment to the international energy agency. This is because we import about 200,000 barrels of oil a day on a net basis. Imports of about 500,000 barrels a day are partly offset by exports of oil and natural gas liquids of nearly 300,000 barrels a day, yet our whole national oil inventory of perhaps 130 million barrels is counted toward our international energy agency commitment.
However, that 130 million barrels is equivalent to only 75 days' supply when measured against our total consumption rate rather than our net imports. We must not, therefore, plan to rely on oil stocks for an indefinite period to meet overseas supply shortfalls. For one thing, they cannot be drawn down to anything like zero days' supply without serious shortages occurring. For another, they are distributed right across our very large country, whereas supply shortfalls are likely to hit us regionally.
We must not be complacent as a result of what may in statistical terms appear to be a strong stock position. Adequate legislative authority is needed to enable us to deal with petroleum emergencies by means of allocation and, if necessary, rationing programs.
Most of you will remember that we had an energy supplies emergency act, Bill C-236, assented to on January 11, 1974, which after a two and a half year life lapsed on June 30, 1976. That bill was created in response to the Arab oil embargo and production cutbacks of late 1973 and early 1974. The present bill is essentially the same as the previous act, with some minor changes to which I shall be drawing hon. members' attention.
First let me outline the principal features of the bill. The bill would create legislation to deal with emergency shortfalls of petroleum and certain alternate fuels such as coal and natural gas. Such shortfalls could occur as a result of disruptions in supply due to shortages or market disturbances affecting the

February 19, 1979
Municipal Revenue Sharing
national security, welfare and economic stability of Canada. The actual causes of such a shortage or disturbance could be natural disasters, technical problems, strikes, embargoes, or any other kind of emergency, including, of course, events far beyond our borders and quite outside the control of the Government of Canada.
The allocation powers provided in the act would be invoked by the governor in council when in his opinion, for reason of shortage or market disturbance, the national security, wealth or economic stability of Canada is affected to the point where in the national interest it is necessary to conserve our supplies of petroleum products.
The legislation authorizes the governor in council to appoint an energy supplies allocation board composed of up to seven members including a chairman. Under the previous act there were five members including a chairman. I would envisage the appointment to the board would reflect the interests of producing and consuming provinces, the consuming public and the petroleum industry.
We are fast approaching the time, Mr. Speaker, when we will be required to adjourn this debate for private members' hour. I am about to enter an important part of my speech which deals with the duties of the board, and because I do not feel that there is enough time to fully explain, I wonder if hon. members would agree to call it five o'clock.



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mr. Turner):: 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 Moose Jaw (Mr. Neil)-Metric Conversion-Request for delay in implementation by housing industry; the hon. member for Provencher (Mr. Epp)-Canadian Broadcasting Corporation-Television coverage in southeast Manitoba; the hon. member for York-Sunbury (Mr. Howie)- Science and Technology-Guidelines for industrial research.


PRIVATE MEMBERS' MOTIONS
The Acting Speaker (Mr. Turner):: It being five o'clock p.m. the House will now proceed to consideration of private members' motions as listed on today's order paper, namely, notices
(Mr. Gillespie.]
of motions and public bills. Shall items Nos. 7, 9 and 13 stand by unanimous consent?


Some hon. Members:: Agreed.


URBAN AFFAIRS
Mr. Douglas Roche (Edmonton-Strathcona) moved:: That, in the opinion of this House, the government should consider the advisability of revising Canada's tax system in order to provide municipalities with direct access to revenue sharing so that they can meet increasing responsibilities to the expanding Canadian urban population.
He said: Mr. Speaker, Canadian cities are facing a crisis in financial management which threatens to get worse unless they gain access to an expanded source of revenue. As the number of urban citizens grows and the responsibilities toward these citizens increase, cities have become increasingly dependent on financing from outside, such as grants and borrowing. If the present trend continues, cities will no longer be able to function as self-governed units and decisions affecting urban dwellers will be made by an authority far removed from their local concerns.
Stated simply, cities are overwhelmed with the modern problem of urbanization in Canada which has increased the demand for physical and social services at the community level without an adequate tax base. This crisis has been building up for many decades and has it roots as far back as confederation. When our fathers drafted the constitution for the future dominion of Canada, they could not foresee the shift in population from the rural areas to the cities. In 1871 the urban population was a scant 722,000; in 1977 it was an overwhelming 16 million, 76 per cent of the Canadian population. Before the end of this century, 90 per cent of Canadians will be urbanized. Because such a radical shift was not foreseen, the municipalities were not considered in the division of fiscal powers.
As originally drafted, the BNA Act gave the federal government authority over all forms of taxation, while the provinces were restricted to direct taxation within the province. The provinces were also given authority over municipal institutions. With the enormous expansion of the revenue needs of the provinces, the federal government was forced to share more of its tax revenue and more taxation powers were transferred to the provinces. Municipalities gained the right to raise taxes on property.
Today municipalities find themselves in the same situation which provinces faced earlier; their revenue base is no longer adequate enought to finance the services which they provide. Grants from the federal and provincial governments and borrowing have made the shortfall, but just as the provinces could not function on the basis of additional grants from the federal government, municipalities cannot function primarily on additional grants from federal and provincial governments.
February 19, 1979

In the final report of the Special Joint Committee of the Senate and the House of Commons on the Constitution in 1972, it was recognized that municipal government "requires a new focus of attention and more effective means of presenting its point of view to the two senior levels of government." The Federation of Canadian Municipalities specifically urged at its annual conference last year that municipalities be assigned certain powers to be scheduled in the constitution, and the resources to give weight to those powers. It said:
Suggestions for enhancing the status of municipalities under any new constitutional arrangement should be based on the principle that municipalities, in the first instance ought to be assigned those powers which experience has indicated are best exercised at the local level-We call for an urgent re-examination of the roles and responsibilities of our three levels of government, as well as the sources of revenue that go along with them, so that we may reshape our Confederation into one which fits the facts and realities of our present day. We believe, that this nation's strength can be enhanced, not lessened, by a re-assessment and re-assignment of the proper roles of each level of government, including local governments.
It is strange that no mention was made of the role of the municipalities in the report of the Task Force on Canadian Unity. The federal-provincial conferences on the constitution have focused on equitable revenue-sharing between their two levels of government, ignoring the municipal problem. It appears that our modern-day version of the Fathers of Confederation, the first ministers, are repeating the error of a century ago.
The city of Edmonton illustrates the kind of change which has occurred in the urban areas in the past century. Edmonton has become the fourth largest city in Canada. Over the past five years the city has grown 15 per cent. This means that the city has a responsibility to provide services to half a million people-services like the police and fire department, libraries, parks and recreation, transportation, water and sanitation. These services are the most vital ones to city-dwellers, since they are what makes a safe and healthy community. Of all levels of government, the municipal government is the one closest to its citizens in their daily lives.
Besides servicing an expanded population, Edmonton has also had to finance the increased technological complexity of those services. The police force has moved into the computer age, a new era in public transit was started with the light rapid transit system and water quality control requires a more efficient sewage treatment process.
At the beginning of this year, Edmonton was faced with a serious dilemma as it drew up its budget for 1979. The city was not able to take account of the revenue from grants because the level of the grants will not be known until April. In order to maintain the existing level of service and keep up with the growth in population, the property tax rate would have to be increased by about 20 per cent. City council, however, had decided that property taxes would not increase beyond 6 per cent. This means a $10 million shortfall for Edmonton in 1979.
The quality of life in the community-housing, transportation, security-would be affected by any attempt to make up this shortfall. In order to save $1 million, the fire department would have to operate with 77 less men than planned. To save $150,000, 10 outdoor rinks would have to be closed by the
Municipal Revenue Sharing
parks and recreation department. A cutback of $100,000 in the social services department would mean the loss of an additional $400,000 in provincial grants.
The city cannot afford such cuts. The police department is already battling a rising rate of crime, up 62 per cent in the past ten years. In 1978, there were 16 murders in Edmonton, 37 attempted murders and 73 rapes. The number of rapes alone is so serious that Edmonton women have organized in protest.
In the area of transportation, Edmonton has had to raise bus fares by 10 cents in order to get an additional $3.86 million. Even with this increase the public service will operate with a deficit of $25.5 million this year. Telephone rates have been increased by 5 per cent to gain an additional $3 million, one-tenth of which will be taxed by the province anyway. Edmonton has had to nickel and dime itself in order to gain small increases in revenue which do not begin to meet its needs.
The money shortage has a special effect on one sector of the population-the aged. The proportion of persons over 65 years old is increasing. In Edmonton, the aged will make up 8 per cent of the population in 1986, compared to 6 per cent in 1976. The city will have to bear substantially heavier burdens for social services, health care and housing, since the aged require more of these services than any other age group. In Alberta, people over 65 need twice as much medical treatment.
Not only do the aged have special needs which are met in part by the city, but they are also on a more limited income and therefore less able to pay for what they need. Seventy-six per cent of senior citizens in Canada have an income of less than $5,000. In order to live, these people need subsidized housing, but in Edmonton this housing is limited because of the influx of migrants seeking jobs who take up the cheaper accommodation until they can afford to move. In other words, people looking for jobs across Canada, because of the high rate of unemployment in other parts of the country, flock to Alberta, specifically northern Alberta and Edmonton, and create an added factor in the housing situation. Rents have also increased with the increased demand for housing. Paradoxically, therefore, the economic boom in the west has adversely affected the aged in some respects because they are not full participants in the increased wealth. This "catch 22" situation in Edmonton reveals the modern problem of a city in the midst of a booming economy.
In order to plan for the growing proportion of senior citizens and the services they will need just to maintain their sense of dignity and independence, the Edmonton social planning section has engaged in some long-range programming. In the words of the report:
Attempts to fill unmet needs, inflation and the expected increase in demand will bring costs to a level substantially greater than would be the case if the present level and types of services were maintained.
Instead of cutbacks, the city of Edmonton needs to ensure that it has the added resources to meet these additional needs.

February 19, 1979
Municipal Revenue Sharing
It cannot do this if it has to rely on a tax base restricted to property taxes. Property taxes are not growth taxes. Local levies grow at a rate of 4 per cent to 5 per cent each year while spending responsibilities grow at a rate of 10 per cent to 12 per cent per year. At the same time, cities have had to cope with a doubling of the inflation rate in the past ten years and a decline in the Canadian dollar to its lowest level in 45 years. The declining Canadian dollar is costing Edmonton an extra $6 to $7 million this year which means that the residential taxpayer is paying $30 a year more than he should be-and getting not a bit of extra service for this amount. Meanwhile, the federal government goes merrily on its own way with an expanding source of revenue; personal income tax revenue has quintupled in the decade of the Prime Minister (Mr. Trudeau).
In order to make up the difference between tax revenues and expenditures on services, municipalities have traditionally relied on federal and provincial grants. The Alberta government announced in January a trebling of provincial support to the urban transportation requirements of its cities. This welcome measure will alleviate some of the stress on Edmonton's budget and allow the city to continue improvements to its public transportation system.
We can now look to the early extension of the light rail transit system to the south side, including the university area and eventually Mill Woods. This excellent provincial support is in contrast to the federal government's slippery evasion of support by narrowly defining interurban transportation to exclude the intraurban Edmonton system. That is a problem we have gone over many times in this House so I shall not dwell on it now.
The federal government's contribution through grants to Edmonton's revenue last year was $6.4 million. All of these grants were conditional, restricting Edmonton in the use to which the funds could be put and financing projects which were often not high on Edmonton's list of priorities but which were politically convenient for the federal government.
With my colleagues from Edmonton I was in a meeting last week with Mayor Purves and the city aldermen and personally examined their protest that the government does not consult with municipalities before starting up short-term employment or social services projects, and yet the municipal governments bear the public complaints when these programs are terminated. This kind of ad hockery does not help the city to plan rationally to meet present and future demands.
The reliance of cities on federal and provincial transfer payments for a substantial part of their revenue-32 per cent in 1974-75-is affecting their ability to govern themselves. The Canadian Federation of Mayors and Municipalities in its study of Canada's system of public finance states:
Increasing conditional grants from the provinces and Ottawa can only mean derailment for our concept of civic self-government.
Local self-government is important because of its proximity to its citizens. This closeness leads to a greater degree of democratic accountability, but only if municipal governments do not become overly dependent on outside governments.

Not only would a more decentralized system of government be attuned to the needs of its citizens, but it would also cost less. Administrative costs per capita for municipal governments are less than one-third the size of federal government administrative costs per capita. It would be hard to argue that local governments would waste tax money, when the federal government has presided over an increase in the federal public service of 44 per cent, despite the Prime Minister's promise to cut the public service by 10 per cent.
When federal and provincial grants do not meet the needs of the municipalities, they resort to borrowing. This borrowing is applied primarily to the construction of vitally important capital facilities such as roads, sewer and water systems and recreational facilities.
The recently announced $1 billion municipal debt reduction program in Alberta will provide Edmonton with $239 million to retire 90 per cent of its debt. The province of Alberta's serious concern over the debt situation in its municipalities is to be commended. The level of the program-$1 billion-and this concern expressed by Alberta are indications of the seriousness of the debt situation which municipalities face across the country. These special grants underscore the real need in municipalities for a systematic allocation of funds.
Of course, the need of municipalities in the other provinces that do not have Alberta's wealth remains as acute as ever. They cannot wait for cash surpluses. They need the revenue now to cancel their debts and they need the revenue in the future to prevent the accumulation of debts. Municipalities cannot continue to operate at a deficit with the hope that the money will eventually come from somewhere if they wait long enough. They need to have control over when that money arrives.
In the longer term, cities will have to obtain a more fixed and predictable form of revenue than property taxes, grants and borrowing. Direct access by the municipalities to revenue would not involve an increase in the level of taxation. Instead it would require a shift from one level of government to another. The Canadian public finance system is capable of raising enough tax revenue to pay for all public services provided by the three levels of government, even in the face of expanded demand. Although there is enough revenue to meet all expenditures, cities have had persistent deficits in their financing, while federal and provincial governments have shown a surplus over 20 years, even taking into consideration the deficits the federal government has run in the past couple of years.
The Canadian Federation of Mayors and Municipalities at the 1973 tri-level conference stated:
We are firmly convinced that the tax revenues of government in Canada today are more than adequate to support the costs of managing growth. In fact, the existing tax revenues should be adequate to offset the costs of many additional responsibilities, if the methods by which fiscal resources are allocated among the three governments can be rationalized. Primarily, they require substantial re-deployment downwards to the local level of government.
That statement remains valid in 1979.
February 19, 1979

If this problem were easy to solve, I suppose it would have been solved long ago. Political realism enters the picture. Local governments could be given the power to tax in areas other than property taxes. But tax power given to the municipalities would have to be taken away from the federal or provincial government.


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


Some hon. Members:: Agreed.


Douglas Roche: Mr. Speaker, I thank my colleagues for their courtesy in allowing me to continue.
The problem is how to decide how much tax power transferred from which level of government, and under what conditions, should now be brought into place. Once the local government gained the power to tax, a decision would have to be made on whether city administrations are capable of handling the collection and dispersal of the taxation revenue. Differences in rates of taxation among cities might lead to shifts in population trends as taxpayers sought to live where they paid lower taxes.
Consideration ought to be given to a more effective means of giving the municipalities a secure source of revenue through revenue sharing. In other words, the municipalities would not be given taxation powers, as with tax sharing, but would be given a fixed percentage of the revenues gathered by federal and provincial governments. Revenue sharing would presumably eliminate the need for grants, and cities could calculate with assurance their expected total revenue.
The route to a proper mechanism could be found by a tri-level task force, which could work out an effective way of implementing either revenue or tax sharing. The representatives of the Federation of Mayors and Municipalities should be present at any federal-provincial meeting, including those on the constitution, not just as guests but as participants. This is the theory behind the tri-level process begun in the early 1970s but now suspended because a few provinces refused to give up their total jurisdiction over municipalities and because Ottawa is afraid to lead the way in a new national urban policy.
I want to see tri-level meetings made regular and systematic as a form of government in Canada, because it is only in such meetings that the voice of local governments can be heard. Let us end forever the idea that local government does not belong at these high level conferences. There is no doubt in my mind that the cities can make a positive contribution to our present day constitutional debate. As has been said through the mayors and municipalities associations:
We are fully prepared to assist in setting new directions for Canada that will serve the interests of all Canadians-directions that will hopefully lead us to a stronger, more united Canada for the decades ahead.
It is long past time to streamline government in Canada and allow the municipalities to stand on their own feet. The federal government should take the initiative in finding tax room for
Municipal Revenue Sharing
local government. And the municipalities who so urgently need revenue should be directly involved in negotiations and should, of course, be held politically responsible for any new revenue sources granted.


Mr. Hugh A. Anderson (Parliamentary Secretary to Minister of Indian Affairs and Northern Development):: Mr. Speaker, I think all of us were rather amazed to listen to the hon. member for Edmonton-Strathcona (Mr. Roche) list a litany of sin and evil which the province of Alberta is guilty of, specifically in reference to the city of Edmonton. It has not provided funds or assisted the city with its police force. Edmonton is a city with a high rate of rape and other crime, and where health care is poor because the provincial government has not provided the funds.


Lincoln MacCauley Alexander: You have deliberately missed the point.


Douglas Roche: Mr. Speaker, I rise on a point of order. While I would not suggest to the House that the hon. member is deliberately misinterpreting my remarks, he is certainly inadvertently misinterpreting specifically what I said with respect to the province of Alberta having given $1 billion-


The Acting Speaker (Mr. Ethier):: Order, please. The Parliamentary Secretary to the Minister of Indian Affairs and Northern Development has the floor.


Hugh Alan Anderson: In the event the House misinterprets the hon. member's remarks, I am saying that we are all aware that municipalities are creatures of the provincial government. Do we accept that first point? If we accept that first point then the second point follows as night follows day. If there is a shortage of funds for essential services in the city of Edmonton, then I suggest the hon. member not mislead this House and say that it is the fault of the federal government. I would suggest that the hon. member has brought out a litany of sins against the province of Alberta.


Some hon. Members:: Hear, hear!


Hugh Alan Anderson: That is a province that cannot cry poor or say that it does not have the money to assist its municipalities. I have some prepared remarks but 1 must reiterate that I was amazed to hear the hon. member say that it is the fault of the federal government that we are not getting these sources of funds for the city of Edmonton. That city is surrounded by wealth unknown in other provinces. If it is not able to carry on essential services, whose fault is it? Is it the fault of the federal government, which has no jurisdiction whatosever in municipal affairs? The hon. member is less than honest if he assumes or misleads this House by saying it is the federal government which has financial responsibility for the city of Edmonton.
He knows and we know that it is the government of the province of Alberta that has total responsibility in the taxation field. If the province of Alberta wishes to give taxation responsibility to the city of Edmonton, it does not have to ask the federal government. Elected representatives do not have to ask their colleagues in Ottawa; all they have to do is to pass

February 19, 1979
Municipal Revenue Sharing
legislation in the Edmonton legislature that will give taxation authority to the city of Edmonton and to communities in the province of Alberta which are apparently suffering under a debt load that is unbearable in that province. The hon. member for Edmonton-Strathcona does not say it but he has given one of the most damaging indictments of a provincial government not assisting its municipalities.


Lincoln MacCauley Alexander: Let us have your prepared speech; time is running out.


Hugh Alan Anderson: It is strange indeed that at the present time the province of Alberta is running a provincial election and the first half of the hon. member's speech is an attack on the existing provincial government. Hon. members in this House I am sure would agree that it was a litany of omission, of greed by a provincial government that is not willing to share its resources with its municipalities. But in absolute terms, as usually happens in this august House, after reading off a litany of sins which are under the direct control of Alberta, the hon. member concludes that it is the fault of the federal government. We are the ones that are doing this.


Lincoln MacCauley Alexander: Most things are.


Hugh Alan Anderson: Let it be said in clear and absolute terms that the municipalities are the creatures of the provincial government. We in the federal government could not pass one iota of legislation which would give the municipalities a share of any legislation, provincial or federal, because we do not have that authority.


An hon. Member:: You go through the back door. Just like the airports.


Hugh Alan Anderson: Let me say it again. Some hon. members opposite are not aware of how our system operates. The municipalities are creatures of each province.


Lincoln MacCauley Alexander: We all know that.


Hugh Alan Anderson: If the hon. member wishes to get legislation changed in order that municipalities, including the city of Edmonton, can provide better service to the people in their communities, he will have to direct the speech he made to the provincial governments. That is absolutely clear. I am pleased he should have stood up in the House today, during a provincial election, and said that the government in his province is not treating the municipalities fairly in the distribution of tax revenues. That is a damning indictment of the policy of the provincial government in respect to its treatment of the municipalities and it is much more effective when coming from a Conservative member of the House, at a time when there is a Conservative government in power in Alberta. A member of the NDP or of the Liberal party might be accused of being partisan, but the hon. member for Edmonton-Strathcona (Mr. Roche) cannot, surely, be accused of being partisan.


Douglas Roche: Mr. Speaker, I thought we came here to have a serious discussion on a serious subject. The hon. member is playing cheap politics by distorting my remarks. He ought to be ashamed of himself for using such cheap shot tactics.


Some hon. Members:: Hear, hear!


Hugh Alan Anderson: Obviously we must have struck home.


Lincoln MacCauley Alexander: No, you did not.


Hugh Alan Anderson: If the hon. member was so serious, if his ideals are so lofty, if his motives are so much better than mine, why did he not put the blame where it lies, in this area of responsibility for the sharing of taxation funds, that is to say, upon the provinces, rather than use the federal government as a whipping boy though he knows the area is one over which it has no jurisdiction? If the hon. member's motives are so pure, why did he not make this clear?
It is the provincial government which is responsible for the situation involving the city of Edmonton which the hon. member so categorically put on record. I may be accused of being partisan but I listened carefully to what the hon. member said. He told us an extreme problem had arisen in Edmonton brought about by the financial policy "of that province. The government of that province is Conservative. I listened carefully to what he said because he can certainly not be called partisan being, as he is, aligned with it.
The root of the difficulty basically is that the municipalities are limited to taxing real property. This area of taxation amounts to about 85 per cent of their revenue, the other 15 per cent coming from licensing, business licences and so on. The hon. member recognizes that this tax base is extremely limited. It is not only extremely limited, but this way of raising revenue is extremely unpopular; people in these communities get a real property tax bill once a year for a lump sum and any increases are very disturbing to them. The hon. member might have considered how the federal government could possibly become involved in a tri-partite discussion of this matter when it has no jurisdiction whatever in the field. It is strictly the provinces which have the right to change pertinent legislation if they wish to do so.
If there are to be changes, those changes will have to come from the provinces. May I put it on record that the provinces at the present time derive revenue from the proceeds of personal income tax, corporate income tax, sales tax, succession duty, and returns from government enterprises as well as returns from levies imposed upon natural resources whether by way of royalties or otherwise. In fact they have access to virtually all revenues accruing to the Government of Canada except customs duties. It would be very hard for the hon. member to convince us that the federal government, which is already running into budget deficits, should take the lead in steps to equalize the distribution of money to the municipalities, especially since he comes from the province of Alberta. Day after day we are told the federal government should be more responsible financially yet the hon. member is suggesting it is our responsibility to bring about the equalization of
February 19, 1979

payments to municipalities and that somehow the provinces are completely out of the picture and can wash their hands of it.


Lincoln MacCauley Alexander: He did not say that at all.


Hugh Alan Anderson: I do not think this is the forum in which this matter should be resolved. After watching the proceedings at federal-provincial conferences I suspect the federal government would be looked upon with a jaundiced eye if we were to attempt to tell the provinces how they should equalize their payments to the municipalities. I suspect they would give the hon. member the same advice as I do, that this is in the hands of the provinces, not in the hands of the federal government.


Stanley Howard Knowles: Mr. Speaker, like the hon. member for Edmonton-Strathcona (Mr. Roche) I had hoped that in this short hour we would have benefited from a serious discussion of a very important issue instead of such partisan cheap shots as we have just heard. Instead of the hon. member for Comox-Alberni (Mr. Anderson) being the first speaker over there it would have been better had Your Honour recognized the hon. member for Westmount (Mr. Johnston), who is in his place today, because of something he said a few days ago. I notice that the hon. member for Comox-Alberni, having made his cheap political attack, has left the chamber. That is par for the course over there.


Lincoln MacCauley Alexander: For him, anyway.


Stanley Howard Knowles: The motion before us, which I support, does not talk about the sharing of funds. It talks about a revision of our taxation system. If hon. members will examine the motion put forward today and the motion which the hon. member for Westmount sought to move under Standing Order 43 on Valentine's Day, February 14, they will find a marked similarity between them.
The hon. member for Westmount made it clear, even though we all know it, that municipalities are creatures of the provinces, and in his motion he wanted the House to call on the provincial governments to invite the Canadian Federation of Mayors and Municipalities to participate in a certain process, but what was the process? It was "the ongoing process of constitutional reform with a view to entrenching powers in the constitution so as to provide municipalities with the powers and revenues necessary to permit them to effectively discharge"-why did the hon. member split that infinitive?- "their responsibilities and to provide the services expected of them by the Canadian public." I think the two members, one a Conservative and one a Liberal, have made a useful contribution to this subject by their motions. The one which was made the other day under Standing Order 43 was not allowed. Somebody said no.


Lincoln MacCauley Alexander: A Liberal.
Municipal Revenue Sharing


Stanley Howard Knowles: I suppose the motion which is before us today will be talked out, but the issue is not the simple matter which the hon. member for Comox-Alberni talks about, namely, a rich province sharing some funds it has in the bank. The issue is our tax system and the distribution of powers among the three levels of government.
Much was said by the last speaker about the provinces giving things to their municipalities. Provinces cannot give what they do not have. The hon. member for Comox-Alberni may say that the federal government have given away all sorts of taxing rights to the provinces, but the provinces certainly do not see it that way. As I say, I think what we should have had in this hour was a serious discussion along the lines of two very good motions, the one before us now and the one the hon. member for Westmount tried to move on Wednesday, February 14.
I support this motion, and I hope that even yet it might be referred to a committee, or that the subject matter might be referred to a committee. It happens once in a blue moon and- who knows-maybe the moon will be blue tonight.
There is just one other thing I would like to say before I sit down and leave time for others, and that is that one of the reasons we in this party feel very strongly about a revision of the taxation system as it affects municipalities is that we believe in taxation according to ability to pay. Property taxation is not according to ability to pay, and when we force our cities and municipalities to provide so many of the services they have to provide on the basis of that unfair system of taxation, it is just not right, it is just not modern, and it is not humane. It is in the federal field, in the provincial field, and in the field of what we can do under the constitution that we can provide for taxation to be put on the basis of ability to pay. 1 think we should move in that direction, and I say as I sit down that I welcome the motion which is before us today, as I welcomed the motion my friend across the way tried to move on February 14.


Joseph Adrien Henri Lambert: Mr. Speaker, I would like to contribute very briefly to the debate on the motion of the hon. member for Edmonton-Strathcona (Mr. Roche) which concerns a very current issue. I would like to congratulate the hon. member for having raised this subject.
During my political career, I have often been closely involved in municipal affairs. The subject of this motion therefore recalls to my mind my years in municipal affairs, and I have to say that I agree in principle with the motion.
Mr. Speaker, it has become obvious that revenue is insufficient in view of the increasing responsibilities of municipalities. We have been aware of this for a long time. This question has also been discussed for a long time, but no valid solution has ever been proposed. Every municipality in my province must provide essential public services, such as water systems, sewers, fire protection services, recreational activities, road construc-
3376

February 19, 1979
Municipal Revenue Sharing
tion and all kinds of other related services to promote building and residential development.
Rural municipalities face very difficult problems because an increasing number of urban dwellers have been settling down in rural areas, to avoid in many cases, I imagine, the extremely high tax burden brought about by the financing of these sewers and water systems. Mr. Speaker, I am well aware that municipal affairs come under provincial jurisdiction. I have known this for a long time and I hope that this will never change. However, it is time the municipalities had a greater share of the fiscal pie.
Mr. Speaker, statistics show that municipalities sunk so deep into debt that the servicing charges account for some 60 per cent of their budgets. They cannot count on the remaining 40 per cent to expand and improve the services provided their citizens. This is a situation that must be looked into. We all know the enormous costs municipalities have to pay for the design and construction of water and sewer systems, so much so that even with provincial subsidies they must face decades or even a half-century of debt repayment at excessive interest rates. This is why they are at the mercy of higher governments for further financing or additional subsidies. It must be remembered that under the current financing system, where a water and sewer system costs nearly $1 million, ratepayers will have to pay $5 million. So the current burden of municipalities is debt service.
Mr. Speaker, I would like to refer to the situation in Quebec rather than other provinces, because municipalities are under provincial jurisdiction and the laws may vary. I read last week in a Montreal area newspaper that the municipality of Sainte-Lucie, in the Laurentians, was so deep into debt it is incapable of getting out, and ratepayers refuse to pay their property taxes. There is something basically wrong and we must have a very serious look at this to find a solution. I see that my colleague from Hamilton West (Mr. Alexander) wants to contribute, so I will conclude on a suggestion. Earlier the hon. member for Winnipeg North Centre (Mr. Knowles) indicated the mover had no proposal to solve the problem. This may be, but I would like to put forward a suggestion made by the Canadian Association of Municipalities before parliament, before the cabinet, in a self-explanatory brief. In that brief cabinet was urged to amend the Bank of Canada Act so the latter could make long-term loans to provinces so that the latter in turn may extend long-term credit to municipalities, with an interest rate covering service charges only. I am here to represent these municipal governments, and I support their proposals. I would therefore call upon cabinet to consider this serious matter once more, before all our municipalities go bankrupt.


Lincoln MacCauley Alexander: Mr. Speaker,
I was not going to have too much to say-


Mr. Foster:: Mr. Speaker, I rise on a point of order. I think you have recognized three speakers from the opposition side-


Stanley Howard Knowles: Order.


The Acting Speaker (Mr. Ethier):: Order, please. The hon. member for Hamilton West (Mr. Alexander).


Lincoln MacCauley Alexander: I just want to be on the record as stating that what I heard from the hon. member for Comox-Alberni (Mr. Anderson) would indicate to me that, notwithstanding the fact that three quarters of the population of this great country of ours in the 1980s will be living in cities which are bigger than many of the provinces, the hon. member for Comox-Alberni thinks that the cities are not important, nor should they be an important participant in the constitutional debate. He indicated to the people of Canada that the cities are unwanted, not needed, are irrelevant. I will not say that he meant that deliberately, because we are not allowed to say that, but perhaps I will say that he was less than honest with regard to the thrust of the motion put forward by the hon. member for Edmonton-Strathcona (Mr. Roche). He made that statement with malice aforethought, and if that is unparliamentary I will have to think about withdrawing it.
What the hon. member was attempting to say is that the needs of the cities are increasing but that their revenues are decreasing, and that it is about time we accepted that as a fact, knowing that in reality our cities are growing into megalopolises of the size of New York. Therefore we must be concerned about their future in terms of the environmental malaise which stems from this growth.
When I talk about environmental malaise I refer to the drunkeness, the broken homes, the family squabbles, the deprivation that children are facing, the frustration of living in big cities, and so on. This is what the hon. member was talking about. He was saying that these problems which come about as a result of the growth of cities need solutions, and one of the solutions he is thinking about is that we should sincerely think about a tripartite approach. In other words, it is time now to say that cities should count. This is the opposite of what the hon. member for Comox-Alberni stated. What he wanted to do was to take advantage of the situation by throwing a few cheap shots.


Stanley Howard Knowles: And then running.


Lincoln MacCauley Alexander: And then running, because he knows there is now an election in Alberta. But I am talking about the problems of the cities in general. I become very concerned because now and again we have an election and I remember this government was talking about urban transportation during the 1974 election campaign and it spoke about pouring millions of dollars into the city of Toronto because, as it said, it understood there was a need.
What did they do after they were elected? They forgot all about the promises. I remember their promises in Hamilton where they said, "You need an expanded airport and here are
February 19, 1979

X millions of dollars with which we will do it." That was in 1971. It is now 1979 and we still do not have that expanded airport. What I am saying is that at times these people recognize there is a need in terms of the urban environment and they spare no expense and no promise in terms of trying to suck the public in, and then they leave them high and dry after they have accomplished their purpose and become elected.
What disturbs me also is the fact that the hon. member for Comox-Alberni said that the federal government has no clout or legislative authority because it is the provinces which have jurisdiction over the cities-the cities are creatures of the provinces. We all know that, but we all know as well that the Minister of Finance (Mr. Chretien) would think nothing of introducing an incentive plan in order that people can purchase homes, which results in subdivisions being built, which puts a certain amount of stress on the municipal purse. He did not mention that, but that is one way to get in through the back door.
I can also tell you the same thing with respect to airports. They can build a Mirabel or a Pickering which will upset the environment in any municipality, and at times they will do that without any consultation until they are caught, at which time they will admit that they did move a little too early and that they should have consulted. So, Mr. Speaker, do not let the hon. member for Comox-Alberni con you, as I would say back in the city of Hamilton.
A few years ago-I think the hon. member for Davenport (Mr. Caccia) was with me on the joint Senate and House of Commons Committee on the Constitution, although I am not sure-I realized what an important part of our Canadian way of life were our growing cities. I was impressed with the problems I encountered. This goes back a few years. At that time we made recommendations in terms of the constitution and what it should contain regarding cities. I found out, just as did the hon. member for Edmonton-Strathcona, that the Task Force on National Unity had nothing to say about the growth of our cities. I am surprised about that. I received our tax bill this week. I went home feeling so happy on Friday when my wife said that the first two instalments are in. But then I became unhappy. The point is, sir, that even with Bill C-60, the bill on the constitution, we have not yet heard a word about the problems which the hon. member for Edmonton-Strathcona brought forward.
We must now direct our attention to the problems of the cities, and the only way we can do this is to convince the provinces. I know they are very jealous about their rights. They say, "You cannot go over us, under us, or through us, without consultation," but what is missing, I think, is the leadership which must come from the federal government.
I notice the good doctor, the hon. member for Algoma (Mr. Foster), wants to speak this evening. I do not know whether or not I will give him an opportunity to speak. What the hon. member for Edmonton-Strathcona is asking for is leadership by this government in bringing the parties together to see how we can solve this serious situation. We do not want to get into a partisan debate in the manner of the hon. member for
Municipal Revenue Sharing
Comox-Alberni who thought that, as parliamentary secretary, this would be a marvellous chance for him to attack a member from Alberta, which he did. I was ashamed, because I have respect for that member. At times he does his job, but this time we on this side were a little disgusted to see that a parliamentary secretary would jump up in such an eager way, having forgotten that one of his leading lights, the hon. member for Westmount (Mr. Johnston), spoke only recently on October 16, I think, putting the problems of the cities before the House of Commons and his own party-


Stanley Howard Knowles: No, February 14.


Lincoln MacCauley Alexander: Yes, February 14, Valentine's Day, the day of love, understanding and compassion. The hon. member for Westmount brought in that motion, and do you know who said no, Mr. Speaker? The Liberals, as usual, said no. I suppose that is becoming a little partisan, but the fact of the matter is that the hon. member for Edmonton-Strathcona as well had the same idea in mind and his motion has come to the front. What do you find? You find a Liberal member who represents a thriving province who should know the problems, of, say, the city of Vancouver and of other big cities. These are problems beyond our immediate comprehension.
All we are trying to do at this time is to emphasize, re-emphasize, delineate and underscore the need that we as members of parliament must be ever aware of, the needs of our growing cities. You cannot call them, as did the hon. member, and I will paraphrase him, unwanted second cousins. That is what he attempted to do. You cannot imply, as did the hon. member, that they are not needed in the constitutional debate, that they should not be there. That is the height of irresponsibility.
I share the views and the initiative taken not only by the hon. member for Edmonton-Strathcona, for whom I have a great deal of respect. Also I have a great deal of respect for the hon. member for Westmount and for my good friend, the House leader of the NDP, who also seems to have the ability to put his finger on the problems. The hon. member for Bellechasse (Mr. Lambert) indicated that he had more to say but that he wanted to hear the comments of the hon. member for Hamilton West who comes from a big city, faced with problems.
The government is thinking about introducing a centre for occupational health and safety. It is another big mess. The government is talking about establishing the office in Ottawa which, in my view, is the last place it should be. We have the expertise-


The Acting Speaker (Mr. Ethier):: Order, please. The hon. member for Edmonton-Strathcona (Mr. Roche) rises on a point of order.


Douglas Roche: Mr. Speaker, I want to thank the representatives of the New Democratic Party and the Social Credit party for the responsible support they gave this motion.

February 19, 1979
Energy Supplies


Some hon. Members:: Order, order.


The Acting Speaker (Mr. Ethier):: Order, please. The hour appointed for private members' business having expired, I do now leave the chair until eight o'clock tonight.
At six o'clock the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.


[Stage Direction]
The House resumed consideration of the motion of Mr. Gillespie that Bill C-42, to provide a means to conserve the supplies of energy within Canada during periods of national emergency caused by shortages or market disturbances affecting the national security and welfare and the economic stability of Canada, be read the second time and referred to the Standing Committee on National Resources and Public Works.
Alastair William Gillespie: Mr. Speaker, before the supper hour 1 dealt with the introductory part of my remarks, but perhaps just briefly to recap I should say that I dealt with the instability of the Iranian situation. I dealt with the fact that Iran, as the second largest OPEC producer, produced in the order of six million barrels a day, and that production has not been available to OPEC consumers since late December. Even though other OPEC producers have tried to make up part of that, they have not been able to make it all up; indeed, perhaps only about half of it.
The result of that in terms of world consumption is that there has been a drop in equivalent oil production of 5 per cent. That 5 per cent is not very far off the trigger mechanism of the International Energy Agency which prescribes the 7 per cent figure. In the event that the consumption by IEA members is forced back to a 7 per cent lower level compared to a year ago, then the trigger mechanism would be activated, which would involve an allocation system throughout the IEA nations.
I also said that Canada is a net importer and that we are dependent on imports of oil. We have been able to reduce our dependence in a number of ways, partly through the extension

of the pipeline from Sarnia to Montreal which has reduced our dependence by 300,000 barrels a day, from 800,000 barrels a day down to 500,000 barrels a day. That 500,000 barrels a day figure, however, is still a significant dependency by eastern Canada and part of Quebec.
I commented on the fact that Petro-Canada has been very active in seeking additional sources of supply through arrangements with the Mexican national company and, as members know, Petro-Canada has been active in a number of other ways to ensure that Canada's dependence on foreign oil can be reduced. I refer to the activities of Petro-Canada during the past year, its acquisition of Pacific Petroleums Ltd., and the emphasis it has given to the heavy oils. There has also been a very substantial initiative by Husky in the development of heavy oil since it was taken over by the Alberta Gas Trunk Line. This ownership, this repatriation to Canada, would never have taken place had it not been for Petro-Canada.
I referred to the reason that we should act now, given the fact that the world oil situation is in an unpredictable situation and that one cannot be sure whether the Iranians will be able to repair production. Nor can one be sure of how other OPEC nations may react to the current crisis or what other events may intervene.
As the adjournment occurred, Mr. Speaker, I was introducing some of the powers of the new board. I was pointing out under the legislation before us that the allocation of powers which we are seeking would be invoked by the governor in council when, in his opinion, by reason of shortages or market disturbances, the national security, welfare, or the economic stability of Canada is affected to the point where in the national interest it is necessary to conserve our supplies of petroleum products.
I would like to deal briefly now with some of the duties of the board. In the event of an emergency being declared by the governor in council, it will be the board's job to implement a mandatory allocation program to assure sufficient supplies of oil products and their equitable distribution. This is provided in part I of the bill. This activity would include, among other things, designating the regions of Canada in which the program is to be implemented-if the whole country is not to be involved-specifying the petroleum products that are to be controlled, providing for systematic allocation of the controlled products on a priority basis, and setting up an appeal system to hear possible complaints.
Under the planning which has already been done, three degrees of priority are recognized. The first priority is category critical which deals, for example, with health services, security, and food products. The second priority is essential, which has to do with the manufacturing industry and employment. The final category is non-essential as, for example, leisure activities.
With respect to prices, this House will, of course, recognize that price control is a necessary concomitant of any allocation scheme. The board will therefore also be empowered to make regulations prescribing the price at which, or a range of prices within which, any controlled product may be sold. This author-
February 19, 1979

ity, like all other regulations made by the board, will require the approval of the governor in council.
Part II of the bill relates to the rationing of controlled products. This part will be activated when the governor in council instructs the board to extend the mandatory allocation program if it appears that the supplies of a controlled product are, or are likely to be, so short as to cause the mandatory allocation plan to fail. A rationing program for motor gasoline has already been developed under the previous act and can be implemented within a lead time ranging from three months to six months.
One change we have made in the bill from the former Energy Supplies Emergency Act relates to this rationing program. This envisages the use of chartered banks, which have agreed to assist in the administration of the program by handling coupons and coupon accounts. The banks are enabled to take part in the scheme, despite any provisions in the Bank Act that may have prevented them from doing so. The post offices will be used for the primary distribution of coupons to the public.


Mr. Paproski:: We will never get them.


Alastair William Gillespie: The emphasis in any allocation program will be on practicality and simplicity in implementation. The Emergency Supplies Allocation Board will therefore have to seek the advice of oil companies. This may involve the companies in collective discussion of such advice to the board and in co-operative action. With this in view, special provision is made in the bill in case the companies are required-and I must emphasize the term "required"-to enter into agreements, arrangements or courses of action which might involve contravention of the Combines Investigation Act. The board may in those circumstances, by order, and only after consultation with the Minister of Consumer and Corporate Affairs, exempt an applicant and such other persons as it deems necessary from the provisions of the Combines Investigation Act, but only to the extent required to enable the applicant to comply with the allocation program.
The legislation empowers the board, in order to make better use of the available supplies of a controlled product, to make special regulations providing for a temporary relaxation of certain laws that currently restrict the emission of sulphur pollutants into the atmosphere. However, this would be done upon the issue of a short-term permit and only after consultation with the responsible ministers of the federal and provincial governments, for example, the departments of environment and health and welfare.
There are also provisions in the bill to enable the National Energy Board and the Canadian Transport Commission to co-operate with ESAB which will be co-ordinating programs in order to ensure that the petroleum products may be moved as directed by the board in order to relieve anticipated shortages.
Finally, this law will require the compulsory termination of a mandatory allocation program after 12 months, unless such a program is extended by the order of the governor in council with the approval of parliament. However, no such order may
Energy Supplies
extend the mandatory allocation program for longer than 12 months at a time. The bill requires that a motion to adopt an extension order be tabled in each House of Parliament within seven days after it has been made. If the House of Commons negatives the motion the allocation program shall thereupon terminate. We believe this is a better solution than the one that was worked out and included in the previous bill involving a sunset clause in which the whole legislation self-destructed in mid-1976.
I should like to say a word or two about federal-provincial industrial consultation which is a very important area. Allocation and rationing plans have been developed since 1974 by the original Energy Supplies Allocation Board and, since its demise, by officials of my department. These plans would form the basis of programs to be implemented by a recreated ESAB. They have been evolved as a result of extensive consultation with provincial governments, the petroleum industry and representatives of petroleum-consuming interests. I would expect this process of consultation to be continued by a new board. As I already indicated, membership of the board itself would reflect provincial, private consumer, and industrial interests. I am aware that allocation programs can only work effectively with broad public support. The board will, through consultation, seek such support and provincial co-operation.
Canada's energy needs are large in order to support our high standard of living, to deal with a cold climate, and to provide the transportation links across our broad land.
Canada's energy potential is great, and this government has worked long and hard to realize that potential. Let me give a few examples of this. The oil sands development is being encouraged by the payment of international prices for this product; by appropriate fiscal terms; and by direct participation in the Syncrude project where the federal government has a significant equity holding. Other important initiatives of the government include oil and gas exploration fostered by our pricing policies and by tax reliefs which specially assist pioneer efforts in frontier areas such as the Beaufort Sea.
The Canada-United States gas pipeline treaty opens the way for pipeline access to already discovered reserves in the McKenzie Delta. Petro-Canada, the bete noire of the Leader of the Opposition (Mr. Clark), the major policy instrument in Canadian participation and government participation in industry, has become in three short years a major force in our petroleum industry, providing a stimilus to exploration, and participating in schemes for the expansion of eastern Canadian gas markets. I am referring to the gas pipeline which would move natural gas all the way to the maritimes, the bold plan to bring Arctic Islands gas to eastern Canada, liquefied natural gas from the high Arctic, using the Canadian system, and working to develop the heavy oils of western Canada.
The attitude of the Leader of the Opposition with respect to Petro-Canada was recycled last Friday, I believe, in Vancouver, when he said once again that he would dismantle Petro-Canada.

February 19, 1979
Energy Supplies


Some hon. Members:: Hear, hear!


Some hon. Members:: Shame!


Alastair William Gillespie: Hon. members opposite applaud the notion that Petro-Canada should be dismantled.


Ramon John Hnatyshyn: Because you are making such a mess of it.


Alastair William Gillespie: Some hon. members on the other side come from Atlantic Canada. Hon. members must know that if it were not for Petro-Canada there would have been no oil and gas exploration on the offshore Nova Scotia shelf in the last year.
Hon. members should know that as a result of Petro-Canada's initiatives it will be participating in the exploration and development of the coast off Labrador. Hon. members should know that Petro-Canada is stepping in because the French consortium, the EastCan group, is not prepared to go ahead. Petro-Canada is, because it is in the national interest, and because it believes there is a very good opportunity of discovering significant Findings of oil and gas.


An hon. Member:: Where?


Ramon John Hnatyshyn: Is Petro-Canada going to take over all the oil in Canada?


Alastair William Gillespie: The Leader of the Opposition said weakly in Vancouver, when he was asked about Petro-Canada, that he would use the Canadian Commercial Corporation to buy oil and natural gas. That has to be as limp and lame an approach to our national energy problem as anything he has put forward. One could ask if he might use the Canadian Commercial Corporation as well when, let us say, the Chairman of mainland China said, "I want to deal with a Canadian national oil company. I want to deal with Petro-Canada. I want Petro-Canada to come to China and help us explore, and I would like you to bring some Canadian companies as well." Has the opposition explained how that would be done? I presume they would probably turn it over to Exxon because that has been their posture up to now.
The Leader of the Opposition might also be asked how he would replace Petro-Canada in a deal with the Norwegian state oil company which wants to deal with the national oil company of Canada. It is considering it, along with a number of very interesting proposals, including drilling in offshore waters such as the Arctic waters north of 60. I suppose the opposition, in a situation like that, would turn that over to one of the internationals as well.
When the government of Venezuela says it wants to deal with the national oil companies of other countries, and says it wants to deal with the national oil company of Canada, it must wonder about the leader of an opposition that hopes to be the government, who says he would destroy the national oil company. In effect, he is saying to Venezuela, "We do not want to deal with you."


Mr. Deputy Speaker:: Order, please. Is the hon. member rising for the purpose of asking a question?


John Edward Broadbent: On a point of order, Mr. Speaker, the minister has convinced me of the virtues of Petro-Canada. I noticed the members behind him are cheering a lot, and I wonder if he would inform the House under what circumstances Petro-Canada was created.


Mr. Deputy Speaker:: The question can only be asked with the consent of the minister. The hon. member took the floor without permission of the Chair. I think it is for the minister to decide whether he wants to answer the question.


Alastair William Gillespie: Mr. Speaker, I would be pleased to answer any questions at the end of my remarks. Let it be quite clear that the Government of Canada, the Liberal government, in 1974 introduced the legislation which created Petro-Canada. It received support from the New Democratic Party but absolutely no support from the Tory opposition. Ever since then the Conservative party has been out to stick a knife in the back-to stab Petro-Canada. They would dismantle and destroy one of the most important policy instruments for energy in this country.


A. Daniel McKenzie: Call the election.


Alastair William Gillespie: Hon. members opposite you should quieten some of their friends.


A. Daniel McKenzie: Call the election.


Alastair William Gillespie: Mr. Speaker, with your assistance, I should like to carry on with my remarks.


Mr. Deputy Speaker:: Order, please. I am not sure that the use of the word by the hon. member that I just heard is parliamentary. I think the hon. member for Winnipeg South Centre (Mr. McKenzie) should be very careful, and at the same time should allow the minister to make his speech.


An hon. Member:: Tell us a little about Bill C-42.


Alastair William Gillespie: I recognize the sensitivity of some members opposite. I understand why they are embarrassed and why they are having difficulty with the decision of their leader.


Some hon. Members:: Oh, oh!


Alastair William Gillespie: It is fairly obvious from those making a noise on the other side, and from those who are not, that there is a problem on the other side.
There are a number of important measures which this government has taken to reduce our dependence on foreign oil.
I would like to refer to the measures that we have taken to stimulate electric power development with the government in Newfoundland. We have created a very important corporation named the Lower Churchill Development Corporation. This is a corporation which can bring in a massive supply of power
February 19, 1979

from the Lower Churchill development. It is power which is now going to waste. But, as a result of the joint effort of the two governments and the creation of the Lower Churchill Development Corporation, there is a chance that that power will be developed for the use of Labrador and Newfoundland, perhaps also for the use of the province of Quebec and the maritimes. This will be a very important project in the order of some billions of dollars which will provide several thousand megawatts of power.
Today I tabled in the House a memorandum of understanding which was reached through negotiations with three provincial premiers. This is also a very forward looking concept. This establishment of a maritime energy corporation will draw together the three maritime provinces in electrical energy planning with respect to transmission and generation for the first time. This system will operate with a centralized computer so that a least cost power system will be available for the maritimes. This corporation will be big enough to finance new projects in the maritimes, projects which will be too big for any one province to finance, construct, or manage by itself.
We have not neglected the important demand side of the energy equation. The government has taken a host of measures directed at increased conservation and a greater use of renewable energy to reduce requirements of conventional fuels. Hon. members opposite may wish to forget it, but members on this side remember only too well the announcement last July 4 of measures involving $380 million over five years aimed at developing renewable energy, using our forest energy and using solar technology. Those are all important measures from the point of view of reducing our dependence on foreign oil. All these measures have helped reduce our current and prospective dependence on imported energy, specifically foreign oil. But some oil import dependence will remain for the foreseeable future.
As the House knows, 1 am working hard to ensure that a major part of our oil imports is derived from secure sources and secure commercial arrangements, another area in which Petro-Canada has already started to play an active role. A degree of insecurity is, nevertheless, inevitably associated with our remaining dependence upon imported oil. This is primarily the problem this legislation addresses.
I referred earlier to the political developments in Iran and the cessation of oil exports from that country. This incident has brought home once again the fact that an interruption in the supply of offshore oil can occur with very little warning. If the current disruption continues for several more months, the total shortage of supply could cause the activation of the emergency oil sharing plan by the International Energy Agency. By participating in this agreement we are committed to being ready at all times with a program of contingent oil demand restraint measures enabling us to reduce our rate of consumption. Some international agency member countries have already publicly announced measures to deal with the oil supply disruptions to their countries. As far as we are concerned, we have the necessary plans in place. What is urgently
Energy Supplies
required now is legislative authority to move quickly, if we have to, to implement our allocation and rationing plans.
If it became necessary to declare an emergency, crude oil allocation could be implemented in seven days. The petroleum product allocation program would take 60 days to implement, and the motor gasoline rationing program would require a lead time of up to six months.
What is needed now is legislation in place to enable the government to implement these programs without delay should we face a serious shortage of supply. It is on this basis that I commend to the House Bill C-42, the Energy Supplies Emergency Act, 1979.


Some hon. Members:: Hear, hear!


Allan Frederick Lawrence: Mr. Speaker, we have just heard from the minister how all is serene, calm, and light on the horizon. He has informed us that as a result of his own particular genius and never ending overtime efforts, all is well. The minister, I must say, reminds me of that old depression days cartoon where one bum says to the other bum, "If you're so smart, why ain't we rich?" If the minister is so smart and so much has been done by this government, why are we in this energy mess and why do we have this bill before us?


Some hon. Members:: Hear, hear!


Allan Frederick Lawrence: It is as simple as that. The minister has gone through a long recital of facts, as he calls them. They may have been mainly argumentative. I would like to give my version of the chronology of what has been going on. It may be as distorted as the minister's, but I will try to wipe out the type of political argument for which the minister is getting such a reputation. I would like to make what I hope will be a fair, impartial, and completely non-political presentation of the facts.
As a result of the first OPEC crisis in 1973 this government introduced a bill which was almost identical to the one before us tonight. The 1974 bill, however, lacked, in our view, some needed guarantees that parliament be consulted. That bill in its original form was quite open-ended in that it gave the government authority to move unilaterally into certain fields which we and others considered to be clearly provincial jurisdictions. The Progressive Conservative demand in those days for a sunset provision in the bill or a self-destruct mechanism for its operation was eventually and reluctantly agreed to by the government, but not our request that parliament have the opportunity to express itself either before, during or after the decision was taken by the government to implement the procedures in that old bill. Our reason for asking that the sunset provision be inserted was to make sure that the bill would eventually die and that the government would then be forced, on the death of that bill, to re-examine the whole situation completely.
As a result of the 1974 crisis as well, Canada, along with what subsequently turned out to be 18 other nations, under the

February 19, 1979
Energy Supplies
sponsorship of the OECD entered into an agreement which, in effect, required Canada to assist the other signatory nations of the western world, as they would assist us, to make up any short form of crude oil supply that might occur. Essentially, that 1974 agreement called for the triggering of a procedure to reallocate world petroleum supplies outside of Iron Curtain countries when a shortage of at least 7 per cent of world supplies was encountered over all. A complicated formula of reallocation was designed to see that the shortfall to any nation was shared by all the others.
It is important to recognize that the situation which triggered the implementation of that treaty was one involving the sharing of the effect of the shortfall in the total consumption of petroleum products by the signatory countries. This is important. It required a shortfall of not just imported crude oil or petroleum products but a shortage in the total consumption of all petroleum products in the signatory countries. To focus on the Canadian situation, the Canadian allocation of foreign crude was based on Canada's total consumption of oil resources, domestic and foreign, not just a shortage of imports.
The government knew of these arrangements. It had signed the treaty and it understood the procedures. In fact it was a member of the executive committee. The 1974 supply crisis passed into a price crisis. Happily, there had been no need to invoke the provisions of the bill or of the treaty. The act itself died on January 30, 1976, as a result of the sunset provision we insisted the government should put in place.
Did the government consider the over-all picture? That act had died. There was the treaty of 1974. The minister told us tonight that those measures in the bill before us, and I am using his actual words, now, would be necessary for us to fulfil our commitment under the international energy program. That is the treaty I am talking about. In other words, there was the 1974 treaty to which all countries outside the communist world believed Canada had committed herself in a meaningful way. The bill which was to implement the terms of that treaty died in 1976, intentionally as far as the opposition was concerned, because we wanted to force the government into reconsidering the whole picture. What happened? The same as what had been happening in many of these economic and resource fields under the present minister. Nothing happened. He either considered the whole picture and decided that no emergency allocation bill was necessary, or he did not consider it at all.
In either event I believe the government is to be very severely criticized. Did the government replace the bill? No. Was anything done to expand the pipeline capacity of this country so that crude oil could be moved into these regional areas where, obviously, there is likely to be a disparity one day? No. Did the government take any other steps to improve the regional supply position? The answer is obviously no. Did the government do anything at all to resolve the essential ingredient in this issue?

We needed an improved delivery system for petroleum products so that Canadian resources and supply facilities could fulfil the demands upon them and reduce the effects of control by a foreign-owned industry. What we got was a half-hearted response, mainly from the minister's predecessor. The pipeline was extended to Montreal. But the bottleneck on the western side of Sarnia existed then and still exists today, so that the Montreal refineries continue to require offshore crude oil. This is the difficulty which the minister has not attempted to tackle.
No one is to blame for the bottleneck except the minister. He takes full credit for the setting up of Petro-Can though I think we shall hear argument about that later, and in any case I would point out that Petro-Can is an expensive agency; it is staffed by empire builders rather than resource finders. Between 1976, when the legislation expired, and early 1979 when a new crisis emerged to threaten Canada and the western world, instead of a decent, meaningful policy we were offered lethargy, complacency, and inaction.
To get back to the chronology. In December, 1978, the situation in Iran seriously deteriorated. On December 26, 1978, 20 per cent of Canada's offshore oil supply was stopped. British Petroleum, a state-owned trading corporation, PetroFina, partly owned by a foreign state, Gulf Canada and other companies in eastern Canada were obviously in trouble, along with other companies, because, to varying percentages, they relied on Iranian or OPEC oil. A large percentage of the crude oil used by those refineries came from Iran. But, in the minister's mind, not Imperial. Why? Because Imperial received through Exxon about 100 per cent of the crude oil used in its eastern refineries from Venezuela. Golden Eagle also buys from Venezuela, and Shell, too, uses Venezuelan oil.
Early in January, Exxon informed Imperial Oil that it was invoking the force majeure clause in its supply contracts, and diversions would have to be made on the pattern of the international energy agency's formula. This is the formula which, as I indicated earlier, was important because of the scope and proportion involved, namely, that the cutbacks to Imperial from Exxon would be on the basis of Imperial's total oil consumption and not just on the basis of its imports.
Industry people and government people tell me that there was no question at all, on reading the communications received from Exxon by Imperial, and transmitted in turn by Imperial to this government and to this minister, that this meant that we were in for some fairly serious times as a result of the cutback to Imperial, one of the major forces in the Canadian energy picture. We were in for some very serious times because these cutbacks from Exxon on Venezuelan crude were going to be serious. There was no question whatsoever. Golden Eagle, which is also supplied by Exxon, was also informed of cutbacks. This was in early January.
Immediately-obviously-Imperial moved to find an alternative supply in order to begin to replace the cutbacks imposed by its foreign parent, Exxon. On January 8 of this year, specifically to forewarn this minister, this government, and this
February 19, 1979

government's regulatory body, Imperial Oil Limited informed the National Energy Board and this minister's senior allocation officials of what was going on, why it was going on, and what Imperial intended to do to make up for those diversions. The minister now says that he himself was not informed of these diversions. Under the rules of this House we have to take the minister's word, and I do, but it seems awfully strange to me that the minister can now claim to us that on the basis of many telexes, wires, telegrams and communications flowing back and forth from the National Energy Board to the industry, from the industry to the National Energy Board, and from the minister's department to the industry about these cutbacks-the minister is shaking his head.
I have one right here. I can read to him parts of the telex, for instance, from Mr. Priddle of his department early in January informing the industry of the dangers of the Iranian situation and that the department wanted to be brought up to date on what alternative sources of supply were available. I could read the telex from the National Energy Board dated January 14 urging industry people to come forward quickly with a long series of swap arrangements which were obviously going to have to be made to make up for these cutbacks.
I could read these communications. They are available.


Alastair William Gillespie: Go ahead.


Allan Frederick Lawrence: Here is one from Mr. Priddle of the Department of Energy, Mines and Resources:
January 4th telex from Paris indicates Iranian production fell in November to 3.1 million barrels per day and in December to 2.5 million barrels per day.
This production shortfall has been compensated for by other producing countries and delaying of stockbuilds by industry.
Further on he talks about other dangers with regard to Persian Gulf producers. Then later he says:
-complete loss of Iranian production in the first quarter would result in a shortage close to 7 per cent of first quarter demand.
If and when such a point is reached, participating countries may need to reduce demand or use emergency stocks.


Alastair William Gillespie: If you read from a document, you have to table it.


Ramon John Hnatyshyn: Just ministers, Alastair.


Allan Frederick Lawrence: I have another fairly long one. I will not take up more of the time of the House, but it is signed by Mr. R. Priddle, of the Department of Energy, Mines and Resources. It is a warning to the industry of what was going on and what would have to happen as a result of the Iranian cutback. This is a serious situation. As I say, Exxon had already informed Imperial of this cutback.
I think it is inconceivable that the minister was not kept up to date by his officials, and I say in all frankness and bluntness that I believe the minister was informed by his departmental officials and by the agencies he frequently directed with regard to policy matters at that very time about the necessity of quickly approving swap arrangements. However, he says in this House that he was not informed, and if he says in this
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House that he was not informed, we have to accept that, and I do, but I say that it seems very strange to me.


Alastair William Gillespie: Mr. Speaker, I rise on a question of privilege. The hon. member cannot have it both ways. He cannot, on the one hand, say he accepts my word, and then go on in a very devious way to suggest that he does not. He ought to be honest with the House, with me, and with himself. He ought to make it quite clear that he accepts the position which I put forward. He should avoid trying to confuse the situation, which he has done. I am asking him-


Steve Eugene Paproski: Mr. Speaker, on a point of order-


Mr. Blais:: The minister is speaking about a question of privilege. Sit down.


Mr. Deputy Speaker:: Order, please. I do not think a point of order has priority over a question of privilege. I am trying to listen to the minister. There are too many people who think they should be in my place.
I must say that 1 do not agree with the point made by the minister. 1 want to say to the minister that the rules of the House forbid a member from accusing another member of lying, of being a liar, or bringing falsehoods to the House. On the other hand, a member is not forced to agree with another member. There are words, however, which cannot be used in the House.


Steve Eugene Paproski: Mr. Speaker, I rise on a point of order. When Your Honour rises, the microphone lights in front of hon. members should, in deference, go off, but not until Your Honour is up out of the chair. Only then should those microphone lights go off. However, I noticed today that the microphone light in front of the hon. member for Northumberland-Durham (Mr. Lawrence) went off before Your Honour rose. His light went off, yet the minister's light went on. I find that very hard to understand, and I wish that those who operate the switches would please take notice.


Mr. Deputy Speaker:: I am prepared to look into the matter. The point raised by the hon. member for Edmonton Centre (Mr. Paproski) is surely valid. I do not generally watch to see whether lights are on. I cannot do that easily, but I am sure the message has been heard by those responsible for the operation of the console. I am sure they do their best in any event.


Allan Frederick Lawrence: Thank you, Mr. Speaker. I appreciate the fair and impartial manner in which you have always conducted the proceedings of this House.


Some hon. Members:: Hear, hear!


Allan Frederick Lawrence: On January 8 of this year, especially for the purpose of forewarning the government, this minister and the minister's regulatory body, Imperial Oil Limited informed the National Energy Board and the minister's senior allocation official of just what it was that it was doing, and why replacement stocks were needed to take the place of the crude

February 19, 1979
Energy Supplies
oil which was being diverted. As I say, the minister may now say that he was not informed of those representations to the government. In any event, something happened on approximately that date to wake the minister from the lethargic state in which he had been. He realizes suddenly that alternative sources of crude oil are needed in this country. Why? Because he hot-tails it down to Mexico.


Some hon. Members:: Oh, oh!


Allan Frederick Lawrence: He is informed by the Mexican authorities that crude oil will not be available in any appreciable quantities, enough in any event to get over the shortage which, it turns out later, he was informed we were not going to reach until at least 1981. That certainly is no help in the short term. So then what does the minister do? The minister goes to Venezuela and the Venezuelans guarantee to the minister that they will continue to ship what they have been shipping, and to the group to which they have been shipping, namely, Exxon Incorporated of New York.
In February the minister comes into the House and tells us that when the Venezuelans first told him they were shipping to Imperial Oil in Canada only through Exxon, it was the first time he realized that the Venezuelan crude supply to Imperial was being handled through a middleman. That is what he said in the House. He shakes his head now, but on page 3301 of Hansard of February 16, the minister said that the Venezuelans:
-pointed out to me that the contractual relationship was with Exxon International-
If they did not have to point it out to the minister, if he knew ahead of time, why did he use that type of language in the House? The assumption that we can draw very fairly from the minister's words are that that was the first time the minister knew. I agree that, to me also, it is inconceivable that that was the first time the minister knew. He should have known long before, but in any event, there we are.
I believe that on that occasion all of a sudden a light lit up in the minister's brain. Suddenly, that rang some sort of bell because, at that point, the minister had a faint memory of the notice he had already received from Imperial Oil of the cut back and the diversion in the Exxon supply. So the minister then turns to the Venezuelans, "How can Canada guarantee our Venezuelan supply when there is a middleman?" "Easy," shrug the Venezuelans, "cut out the middle man." The minister then comes back and propounds this as some modern, novel, unique policy of his for the first time.
Who has been the Minister of Energy, Mines and Resources all of this time? The minister comes back from Venezuela and, in a blinding vision, realizes that what has been going on for years is now no good for this country or for this country's oil supplies. Where has he been? Either he knew about this and did nothing, or he did not know about it, in which case he is clearly incompetent.

If the minister wants another date indicating that there was some knowledge of this, let me point out that on January 19 the National Energy Board sent out a telex to the whole industry imploring them to get their applications in for the swap arrangements that had to be made. On January 24 Imperial Oil formally applied to the National Energy Board for a swap for the part of oil that has been diverted away from them. The application was for a cargo of crude to be sold to Imperial Oil and shipped to the Dartmouth docks from an independent company called the Clarke Refining Company of Chicago. Let me point it out to you-this did not come from an industry source, it is in the public domain since, as the minister knows, I received it from the National Energy Board after I requested it from them.
It is the actual formal application, accompanied by a sworn declaration dated January 24, 1979, addressed to the National Energy Board from Imperial Oil Limited formally requesting approval for an agreement with Clarke Oil and Refining Corporation to exchange Canadian crude for equivalent tanker borne foreign crude entering Canada via Portland, Maine, for Dartmouth, Nova Scotia. In actual fact, it was unloaded in Dartmouth, Nova Scotia, on February 8. Part of the documentation involved in the application to get the diverted crude supply was this document. It is fairly long and it goes through the complete statement of what was needed, what the price was going to be, what the arrangements for it were going to be, and why it was needed.
Paragraph 2(c) reads:
Our supplier, Exxon International Company, has advised us that the Iranian disruption and resulting crude shortages have caused them to establish an IEA type shortage sharing system among other affiliates.
The minister knew they were an affiliate by this application.
It goes on to read:
We-
That is Imperial Oil.
-are responding to this system.
I do not know how much clearer it can be for the minister, for his department, or for his regulatory body, that diversions have taken place and that the whole diversion allotting program was based on the International Energy Agency's program, which obviously meant the situation was serious. But again the minister comes to this House at a later date and tells us he did not know about it. That was on January 24.
On February 1, in answer to a question directed to the Secretary of State for External Affairs (Mr. Jamieson) in the House, the latter, obviously totally ignorant of the 1974 treaty to which Canada was a signatory, in grand, stentorian tones says that Canada, out of the goodness of her heart, will not allow the Americans to freeze in the dark. That received a lot of ink and a lot of play in the media across the country as an indication of the voluntary good wishes of the people and the government of this country toward our American cousins. Come hell or high water we were not going to allow the Americans to suffer one bit. Are we not grand fellows, because the minister obviously did not even know we were committed
February 19, 1979

to a program. What was the U.S. shortfall was the Canadian shortfall, and what was the U.S. problem was the Canadian problem.
We are committed to assisting the Americans whether we like it or not, and I am not trying to indicate for one moment that we would not like to, but this is another measure of the incompetence or the facade of half truths or misrepresentations that have been built up by the government in this whole sorry mess.
On February 5 the minister told the House-this is well after January 24, when the formal application was made, well after January 8, when the informal representations were made to them-the following:
I have received personal assurances from Venezuela that those supplies will continue to Canada.
On February 8 there is further documentation given to the minister, and this time it is personally handed to him by the people of this country. They have an interview with the minister and they tell him the extent of the cutback from Exxon to Imperial Oil. Just by way of coincidence, on the same day, February 8, there is the offloading at the Dartmouth jetty of the first of the crude oil diversion which has been approved some time ago by the National Energy Board to Imperial Oil. Also on that same date the minister told the House the following:
-that there might well be shortages affecting eastern refineries. The corporation which owns these refineries has been making plans-
Certainly they have been making plans. They have been making plans to the knowledge of the minister and his regulatory body, the National Energy Board, and to the specific knowledge of some of the senior officials in the minister's own department. Later the minister said that this particular occasion of February 8 was the first time he learned there had been serious cutbacks and diversion of Venezuelan crude by Exxon.
On February 13, in response to a question posed by one of my colleagues in the opposition, the minister said the following:
-I have every reason to believe that the source of Venezuelan crude will be made available to Canada, based on the undertakings which I received when I was in Venezuela.
Because of these continued misrepresentations made to the House and the public at large, on February 14 we finally decided to take the opportunity to expose to the Canadian public some of the details we had learned. It is no secret from whence we learned the details. Obviously they were learned from another government in the country. We learned of the serious cutbacks which had been taking place as far as Imperial's crude supply was concerned. We exposed it on February 14. On February 15 an Imperial Oil spokesman said they had convinced Exxon that, instead of a cutback of 22 per cent, in effect the cutback itself would be cut back to 10 per cent. Outside of the House the minister said that even the 10 per cent cutback was unacceptable to the Government of Canada.
Energy Supplies
On February 14 the Deputy Prime Minister and President of the Privy Council (Mr. MacEachen) outside the House said that the Exxon cutback was intolerable and unacceptable to the Government of Canada, even though a few minutes before the parliamentary secretary to the minister said in the House that he had been unable to confirm our allegations that Exxon was cutting back shipments by 25 per cent.
This is a long and sorry history of either ignorance by the minister of facts which he should have known, or of incompetence by the minister or someone somewhere, if not the minister, or of people who are close advisers to the minister who had been trying to pull the wool over the eyes of Canadians. Time after time we received calm, soothing assurances from the minister and his spokesmen that all was well. Why would the minister continue to do this when it was obvious that sooner or later the true facts of the situation would come to light and the truth would be out? The reason is simple. I believe honestly the minister felt that by shoving this under the carpet, hiding it and keeping it from the light of day, somehow or other the government and the minister would blunder on and blunder through until after an election, when perhaps someone else would have to clean up their mess. It is as simple as that.
As far as the public is concerned, the real crunch in both the price situation and the crude oil situation will occur late next fall or early next winter. That is when the crunch will hit the people of the country, and it will be due to the ineffective actions of the minister and perhaps some of the misleading things which have been said.
What conclusions can we draw from this rather sorry history? Of course the first has to be government policy. Collectively the government has been asleep at the power switch from 1974 to 1979. Virtually nothing has been done to take care of a very foreseeable situation in the country. Granted, the roots of the problem do not emanate in this country as far as the foreign cut-off is concerned, but this has happened before. Almost exactly the same thing happened in 1973 and 1974. At that time we were rushed into emergency legislation. We were cautioned that we had to get the bill through in a hurry because it was needed dreadfully so that the government of the day could take care of any emergency situation which might come along. Luckily we put a time limit on the bill so that it would expire, and it expired.
Instead of reconsidering the entire matter and coming along in a sane and sensible way, at a sane and sensible time to come forward with legislation such as this, the government waited until it was pushed into the very corner, facing a crude oil crisis. It is a shame. The people of the country deserve better than they have been receiving from this particular minister.


Some hon. Members:: Hear, hear!


Allan Frederick Lawrence: The issue before the people of the country today is not whether there should be an emergency oil allocation scheme. The issue before the people of the country is the very sorry record of the government respecting this entire mess. That is the issue before the people. Has the government

February 19, 1979
Energy Supplies
done anything about cleaning up the inefficient and, in some ways, wasteful distribution system in the country? We still have the bottleneck which was there in 1973 and 1974 which spokesmen on both sides of the House deprecated. The bottleneck in the pipeline is still there. It is there tonight. Because it is there, not enough Canadian crude is going into the Montreal area. Absolutely nothing has been done to clear up the very obvious deficiency for Canadian crude, or crude from no matter where it comes, in the Atlantic region.
Why have these matters not been looked at before, rather than waiting for the crisis to be upon us? As is usually the case, the government comes in with too little too late. No facilities or encouragement have been provided by the government for people in the private sector to promote or build storage and reserve facilities for crude and refined products. If the minister is sucked into the position by some of his socialist colleagues in the cabinet and in the House to the point where, God forbid, PetroCan should enter the picture, of course they will discover that PetroCan or any agency associated with the government simply does not have the required and necessary storage or reserve facilities for large amounts of crude which should have been in place long before this.
The minister knows there are geological formations, especially on or near the east coast. One major formation is located in the riding of the Deputy Prime Minister and President of the Privy Council. Another is located on an island off Newfoundland. There are many geological formations which would be suited very admirably for reserve and storage facilities on the east coast. But in the years between 1974 and 1979, the government did absolutely nothing about it.
We lack government policy and we lack government programs to rectify some of these obvious and serious deficiencies. We even have a refinery at Come-By-Chance, Newfoundland, that is in mothballs. For heaven's sake, a few months ago when there was a glut of some of this crude oil on the market, what did this government do in an attempt to free and get working some of those cobwebbed refining facilities that are in existence? Even the refineries in eastern Canada that were working were operating at much under capacity. These are matters which I think in more sane and more reasonable times this House would be able to discuss in an unemotional way. We cannot do that tonight because we are under the gun, under pressure to get something done; again under pressure to enact emergency legislation to deal with an emergency situation which we should not even be facing, but one that does exist.
The bill before us tonight is an admission in itself that we were right and the government was wrong. Look at the calm and soothing words that have come from the minister. He says no action is necessary; there is no concern; shove it all under the mat. We only start to learn the truth, and the government only starts to come forward with legislation, after a part of the real situation is exposed by the official opposition. Then we have a complete reversal. Instead of the minister saying all is
[Mr. Lawrence.)
well, we have a complete reversal which includes a very neat political dodge.
With great huffing and puffing, Lord Alastair on his white horse comes charging after all the multinationals. With great huffing and puffing he is charging not only against the multinationals but against the Canadian subsidiaries of the multinationals. The minister asks in shocked and hushed tones, why didn't Imperial deal directly with Venezuela? That is what the minister asks. I think people in this country have every right to ask why the minister did not know earlier and make his directives earlier. Who has been in power, for heaven's sake, over the last few years? If the minister did not know there was a middleman in the Venezuelan crude deal, what does the minister know and what does he do? I suggest the answer is absolutely nothing. He should have known that even had Imperial dealt directly with Venezuela that would be no guarantee that today somehow or other we still would not be in the same situation.
We are tied to the international shortfall with all the signatory countries to that 1974 treaty. Once they hit the 7 per cent triggering mechanism it does not really matter whether Imperial Oil or any of our other Canadian subsidiaries of multinationals were dealing directly.
The minister's cabinet colleagues, and his NDP colleagues in this House, argue that the government deserves some credit because Petro-Canada was set up under this government, even though at great cost to the Canadian taxpayer. They argue that if Petro-Canada had been used as the buying agent none of this would have happened. That is the theory.
Petro-Canada has been in existence for some time. If the minister or his cabinet colleagues now feel that Petro-Can is not acting correctly, or should have been the agent, or the intermediary, or the wholesale broker in some of these international deals, why did the minister not direct it in that way before this? Why does the government come along at this stage and do this? I will tell you why that is. It is simply because, underneath it all, the minister realizes that the intervention of a state oil trading company in the middle of complex, complicated negotiations and dealings between people in the private sector and people in the producing field would not add anything toward the solution of the international energy crisis of today. I suggest that would not do anything at all to help us get out of this hole this government has dug for us. 1 do not believe that the intervention of PetroCan in the Mexican transaction, or in the Venezuelan transaction, would have been any help at all.
I would ask the minister, if he is now not satisfied, why did he wait this long before making these representations? If Petro-Can should be the buyer from Mexico why is the minister telling Canadian companies to deal directly with Venezuela? Why is there this contradiction? If this is good on the one hand, why is it not good on the other hand? If it is all right for Canadian companies to deal directly with Venezuela why is it not all right for Canadian companies to deal directly with Mexico? As the minister knows-I better amend that by saying, as I hope this minister knows, there were Canadian
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companies dealing and negotiating with Mexico in respect of Mexican crude oil long before the minister and Mr. Elopper popped up in Mexico on this deal.


An hon. Member:: You mean popped down.


Allan Frederick Lawrence: Yes, you are right, popped down. I am glad to be corrected. As I hope the minister knows, some of these negotiations were well on the way to a final deal in respect of both delivery and price when the minister and his PetroCan officials turned up, or turned down, and this completely threw these negotiations and timetables out. If the minister is now advising Canadian companies to deal directly with Venezuela, why is he suggesting or, as a matter of fact, almost insisting that the state oil enterprise be inserted in the middle of the Mexican deal?
Surely to goodness now that PetroCan is diversified, has reached out and enlarged itself so that it now encompasses a very diversified corporation in the Canadian energy picture, and there is no question about that, if the minister inserts that state oil trading corporation in the middle of these complex negotiations, PetroCan itself will allocate unto itself, or there is that danger, major portions of the oil that might become available in time. If PetroCan is given the authority to act as a broker or wholesaler in respect of these negotiations, and the minister knows that brokers and wholesalers charge fees and commissions, I have no doubt that PetroCan would follow that course of action. If PetroCan did follow this useless intervention, to my mind consumers' costs would go up.


An hon. Member:: What do you think Exxon is doing?


Allan Frederick Lawrence: I have just heard an intervention from another minister, asking what I think Exxon is doing. Exxon is a perfect example of what I mean. The minister may believe that Exxon should not be in the middle of these negotiations. I might agree with him that there is no question about that, but I say to the minister that perhaps if some of us on this side of the House were clothed with his authority and were receiving the pay cheques that he has for doing some of this work he has not been doing, we would know these facts and maybe the situation would have been changed long before this.
By no stretch of the imagination do I want that minister, the hon. member for Ontario (Mr. Cafik), misinterpreting our position to the effect that we are saying the Exxon intervention is a good one, because we do not believe that. We still believe that if Exxon should not be in the middle of these deals there is no reason Petro-Canada should be in the middle of these deals either.


John Edward Broadbent: Who should?


Allan Frederick Lawrence: It is as simple as that. Certainly the companies themselves are able to contract and negotiate on their own. They were doing it in the case of Mexico before the minister came along.
Energy Supplies
The minister now says that in respect of Venezuela they should do it. The record is one of not only a lack of competence in policies and programs, but there is also a lack of credibility in the minister himself. I believe that the dates, information and references which were available in the minister's department should certainly indicate to the House and to the public at large that if this minister did not know the facts, if he did not know the dates, if he did not know the details of those diversions, then he darned well should have, and there is no question in my mind about that.
The record of this government with respect to matters such as this is not very good, especially when it comes to its record of attempting to go out of its way to raise fear, apprehension, and perhaps even confrontation with those partners in confederation, the provinces, in an area of provincial authority and jurisdiction.
Before the bill was introduced in 1974, which was rushed through this House, there had been no prior consultation with the provinces. A bill, with as far-reaching consequences as had the bill of 1974, was brought into this House without any prior consultation whatever with the provinces. That bill died in the middle of 1976. The predecessor to this particular minister was very well aware that there were large areas of doubt and strong opinions in provincial jurisdictions, some of which at that time were run by the same party as the minister and his predecessor. Very strong opinions were held by the provincial authorities that the bill of 1974 was not the way to tackle the problem of international allocation.
What has happened here today and on Friday is that the minister is introducing a duplicate bill.


Alastair William Gillespie: Are you going to vote against it?


Allan Frederick Lawrence: Once again there was no consultation whatever, prior to the introduction of this bill in the House last Friday, with any of the provincial authorities with respect to its terms or its jurisdiction of authority. I think that is despicable and, certainly, the minister well knows now that I think some of the provisions in this bill and that some of the things which have been said by his colleagues have caused a very real concern in provincial and industrial circles. Probably the comments of most concern have been the rather lighthearted but terrible implications with respect to the matters of hydro electric power, coal mining, and sources of energy alternative to petroleum products.
To put it mildly, the ham-handed operation of this particular minister coming in as he has with this particular bill has certainly made the provinces apprehensive, and quite justifiably so, about the large degree of power which this government is now attempting to saw off, in the minds of some of these provinces, from an area which is strictly of provincial jurisdiction. Certainly there may well be room for people to believe that under the guise of an almost self-inflicted domestic crisis in respect of oil supplies in this country, this minister is again following the old federal, Libera! party dictum of attempting to grab more power under the guise of attempting to solve a problem of which they themselves were the authors.

February 19, 1979
Energy Supplies
In spite of the doubts regarding this minister, and in spite of the doubts regarding the veracity and motivation of this government, we have no desire to hold up this bill. We certainly do agree, sir, and it may well be that we will be the ones who will have to utilize some of the provisions of this bill to get the country out of the mess it is in, that a federal government needs certain legislative powers to direct and supervise the allocation of foreign energy supplies on which, thanks to the negligence of this particular government, we still remain dependent.
I think it is a travesty that this country is still dependent on foreign oil supplies, but because this government has put us in this mess I am afraid that we are going to have to go along and appreciate that a federal government will require this type of emergency legislation. We will not oppose this bill on second reading, but only on the condition that there is a very clear understanding that we expect a comprehensive and searching examination of this bill in committee, with full opportunity for us to make amendments and for expert witnesses to be called so that we and the people at large, the people in the industry and the people in provincial jurisdictions, can be assured that such a measure is needed and that such a measure will be for the benefit of all Canadians.
Our policy in so far as the official opposition is concerned is that once we are in government, if and as when it happens, our efforts will be directed to the objective that Canada will be the master of its own destiny in resource matters and, specifically, in oil and gas, that Canada's needs will be met with Canada's resources. We will have no need for an emergency petroleum allocation bill of the type which is before parliament at the moment.


Some hon. Members:: Hear, hear!


John Edward Broadbent: Mr. Speaker, I listened with a great deal of care to the official spokesman on energy matters for the Conservative party. He seemed to go on some time before he got to the statement outlining his policy and, in fact, I think it was in the last sentence. I tried to write it down and I hope that I have not missed a semicolon or a comma, "that if the Conservatives formed the government that in terms of energy Canada would be the master of its own destiny." That was what he said in his conclusion.
I will come to the government in a moment because the minister, who has sat rather smugly through this crisis which he has created, is certainly not going to be ignored in my comments. We have an energy crisis which is genuine, and no one either outside this country, in this country or anywhere else, given the situation in Iran, has any illusion about this crisis, with the possible exception of our sherry-drinking minister who smiles his way through all crises.
The official spokesman for the Conservative party in dealing with the question of Imperial Oil not making sure that we got our allocation of oil on a continuing basis from Venezuela, said that he objected to a Crown corporation intervening in the process. That is the Conservative party's statement, and I listened with care, that Petro-Canada must not intervene and

that the government must not take any other steps. If we are to be masters of our own fate, as the hon. member has suggested, and given the fact that every other oil company in this country is foreign-owned, how are we to achieve that result? The Conservative party did not tell us that.
The whole argument of the hon. member, in terms of his criticism of government policy, led to the inescapable conclusion, that if the multinationals got us into this difficulty, the multinationals must get us out. What an absurd conclusion! But that is the official position of the Conservative party on this issue. I do not think there should be any illusion about that.
In spite of the fact that Venezuela and 90 per cent of countries in western Europe, have Crown corporations or state enterprises to deal with the allocation of petroleum resources because they take their obligations seriously, in this country the Conservative party says, "Leave it to the multinationals." That is not only absurd, but at this time in history it is totally irresponsible.
I want to turn now to the minister. Since September, 1975, the total period since the last energy crisis, the minister has had responsibility for energy policy. Forgetting about the broad range of energy policy and restricting my remarks to oil and gas, I would argue that there are three key components to that policy. There is the existence of Petro-Canada, there is the two-price system for oil, and there is the pipeline. Now that the pipeline has been constructed from Sarnia to Montreal to service the Quebec market and ensure that that part of our oil from western Canada goes to Quebec, it makes eastern Canada less dependent on imported oil.
Those are the three points of the policy that I would argue are devoid of content. Every one of those three was forced upon the Liberal government during the minority government of 1972-74.
When the minister waves the flag about Petro-Canada, I recall some private conversations in that period when the Liberal government of the day was by no means enthusiastic about Petro-Canada, the two-price system, or the pipeline. In order to survive a crucial vote at Christmas, 1973, and to protect their hide, however, they accepted all three items which were almost literally forced down their throats in order to survive. But that is history, Mr. Speaker. I would argue that those are the three principal elements of an otherwise vacuous energy policy. The last crisis was in 1973 at the time of the very substantial increase in price of petroleum products which was forced upon the world by the OPEC countries.
We now have another crisis, the one which gave rise to this bill even though the bill deals with it only in the most peripheral way. It came from the terrible-and they are terrible for the human beings involved-results of conflict in Iran in recent months. It is a terrible human tragedy no matter how one views the desirability or undesirability of the political outcome. At this point no one can have anything but sympathy for the people of that nation and what they are going through.
February 19, 1979

One of the consequences of that has been the severe curtailment of production of oil affecting virtually all countries outside the communist bloc.
How does that very serious event in history have a marked effect on Canada? That came about when the multinational in the Field, Imperial Oil, and its parent, Exxon, decided for their own purposes, regardless of international concern, to divert from Canada oil which was not coming from Iran, of course, because our imported oil via Imperial comes almost entirely from Venezuela, and to divert a certain percentage of the intended allocation from Canada to other parts of the world.
What has been the minister's reaction to this? In this House last week, and again today in his speech, he tried to suggest that the Government of Canada has no responsibility in this matter, none at all, that the villain of the piece is Exxon Corporation.
I want to point out that, to say the least, the relationship between the Government of Canada and Imperial Oil, the subsidiary in Canada of Exxon, has been a mixed one. One day the minister is on his feet criticizing that corporation, but he neglects to mention a few relevant facts about Imperial Oil that I should like to put on the record.
This government and the Liberal party have probably given more special treatment-and this may explain part of the wrath of the minister, feigned or otherwise, that is directed toward Imperial-more financial assistance and more handouts to Imperial than to any other corporation.
We have calculated that at the end of 1978 Imperial Oil owed the people of Canada S600 million in deferred taxes. In the past decade-and now I speak of Imperial and not Exxon-from 1968 to 1978, the life of this government, Imperial Oil accumulated $2.2 billion after tax profits earned in Canada. Out of that they paid $1 billion in dividends, of which 70 per cent went to Exxon because Exxon, of course, is a 70 per cent shareholder of Imperial Oil.
The Exxon Corporation, therefore, the parent firm that was diverting our intended oil supplies from Venezuela, received some $713 million net profit from the people of Canada in the past decade. It has not done badly.
First of all, they diverted 25,000 barrels of oil per day. That was the original decision. I am not so concerned about the timing of it. It is an important matter that the minister's officials either at the National Energy Board or in his department did not keep him informed, but I am prepared to accept his word that he did not know. I cannot accept that it absolves him of responsibility, however. If he has set up his department in such a way that decisions can be made involving a shortfall of thousands of barrels of oil and he does not know about them, then no one is responsible but himself. If he left instructions that he be kept informed on a daily basis of such transactions and these instructions were not carried out, then he should fire the official concerned or, what is more likely, if he did not set up the procedures in the first place, then he has to accept responsibility.
Energy Supplies
In any case, it was Exxon's original intent to divert 25,000 barrels of oil per day from Canada. The minister got upset and said, on the one hand, that we want full restoration of our quota and then, on the other hand, he said that to get this full restoration he wanted Imperial Oil to deal directly with Venezuela. As the minister knows, the corporation did not comply. It snubbed him completely. It said it would only restore part of the quota, and we are still 9,000 barrels a day short.
Second, Imperial Oil is insisting it will continue to deal not directly with Venezuela as Canada requested, but through Exxon, its parent corporation. Then the minister gets excited and becomes the champion of Canadian interests. The great multinational has taken a course of action which displeases him, so the minister wraps himself in the Canadian flag and says that he is going to make it toe the line.
I want to deal with the central question. It goes to the heart of the problem that we are now facing in 1979 and which should have been envisaged in 1973. Indeed, it should have been seen by the government earlier than that. However, I pose the question: Is the Exxon Corporation behaving in some way that is an aberration? Is it departing from the norm for a multinational corporation in such circumstances? In my opinion it is not.
For the minister's benefit I would like to read part of an article from the Toronto Star.
One effect of a very high degree of foreign direct investment in Canada is that strategic decisions affecting a very large proportion of Canadian business activity are taken by senior business executives resident outside of Canada-
This is not something said by an NDP premier of Canada nor an NDP federal politician. It comes from the government published "Foreign Direct Investment in Canada Review" which was done in 1972, better known as the Gray report. In 1972 that study pointed out in a very thorough and comprehensive way how multinational firms perform. It clearly documented the kinds of difficulties encountered particularly for a country like Canada, when multinationals are permitted to get control of resources. That is the crucial point on which I want to dwell. What we have is not aberrant behaviour by this particular multinational, Imperial Oil, but standard, normal behaviour.
This same situation was experienced the past year with Inco, another multinational in the resource field, which found it was better to expand in Guatemala and Indonesia while laying off workers in Thompson, Manitoba, and Sudbury, Ontario, because it would be able to maximize its profits by so acting. I could go through a whole list, not only as they affect Canada but as they affect other countries, concerning the performance of multinational corporations if they are left unregulated.
We are now experiencing in the energy field a direct consequence of allowing a multinational corporation to dictate our energy policy. The problem is not at all as the minister would have us believe, that the Exxon Corporation is some kind of villain, it is not a villain. The Exxon Corporation is a multina-

February 19, 1979
Energy Supplies
tional enterprise that is out to maximize its profits. It is phony and hypocritical of the minister to get up and pretend that it will have one standard of behaviour in Canada but another standard of behaviour elsewhere. That is not how the economic system works. I find it morally offensive when one makes moral judgments about corporate directors in these companies for acting in a way their shareholders appoint them to act. The fault is not with the Exxon Corporation. The fault is with the Government of Canada which did not have arrangements set up in the first place that would have made the crisis we are now dealing with impossible. That is the subject we should be debating tonight.
What is the correct solution? If the government, back in the minority days, had created not only Petro-Canada, as we insisted, but if it had gone further and made Petro-Canada, as we argued at that time, the exclusive purchasing agent for all offshore oil, we would not have the crisis of the last couple of weeks, about which the minister has been speaking. That is the reality. We should have done what almost every other industrial country has done, and that is to set up within our borders what we call a Crown corporation. Other countries call them state enterprises, or if it is nationally-owned in the private sector, a domestically-owned corporation. This Crown corporation should be severely regulated to ensure that it purchases all the offshore oil to meet energy needs. Other countries have done this and that is what Canada should have done.


An hon. Member:: Other countries are more effective that we are.


John Edward Broadbent: I did not hear the hon. member's interjection, but I listened to his speech with a great deal of care. I must say that for anyone to argue that the solution to our problem is to get the multinationals to come in when they are the ones who have created the situation, he will have to go a long way to persuade me of the intelligibility of any other recommendations that he makes.
Petro-Canada should have been created in 1973 as the only purchasing agent for offshore oil. That would have headed off the Venezuelan situation we now have. But what can we recommend under the present circumstances? What is the government's attitude toward Petro-Canada? This crisis is upon us because the minister wants to make a villain out of Exxon. He has his election on his mind which is coming perhaps in the next few months-


Mr. Gillies:: He has already lost.


John Edward Broadbent: The minister has that in mind. But what is the real attitude? Right now it is thought to be expedient to praise Petro-Canada and to fight Exxon. What is the government doing with Petro-Canada?


James McPhail Gillies: Nothing.


John Edward Broadbent: Instead of making it the central petroleum corporation in this land, as we argue, which would not only have control over all imported oil and then channel it out, but also deal with refining and deal directly with outlets-for

example, in Montreal today retailers are having trouble getting supplies from multinationals-if we had Petro-Canada importing oil it would ensure independents in Montreal and elsewhere of a ready supply of oil which would help to meet the needs of small businessmen. Instead of encouraging Petro-Canada this way, as the minister knows the Government of Canada is involved in taking away certain preferred rights that Petro-Canada now has for exploration on thousands of acres of land owned by the Government of Canada. Even now it is backing away from creating the kind of corporation that Petro-Canada should be. It is concentrating instead on singling out Exxon as some kind of convenient whipping boy as justification for its own failure.
I want to conclude my remarks by saying what we think should be done. We will be proposing these items at committee stage. This bill should be amended to include Petro-Canada as a member of the allocation board. Second we want the bill amended to make Petro-Canada the sole importer of offshore oil.
We recommend the following step because there is no other way of achieving it. We should pass the bill on third reading as amended-as I hope it will be amended-and then the government, by order in council, should cause the operative sections to go into effect immediately, not to impose rationing, because iet us hope we shall not need rationing but to do one simple thing which should be done immediately, that is, to make Petro-Canada the sole importer of oil into Canada. That should be done this week; it should not be put off until another oil crisis or until another pre-election period. We should pass this bill and give Petro-Canada that authority.
Almost every other country in the world has set up a nationally-controlled major oil company. The crisis we are going through will not have been totally unproductive if it forces this incompetent and irresponsible government to do what other countries have done a long time ago, that is, to make Petro-Canada the major oil company in this country serving all Canada's oil interests from the time the oil leaves the ground until it reaches the consumer.


Some hon. Members:: Ten o'clock!


BUSINESS OF THE HOUSE
Ramon John Hnatyshyn: Mr. Speaker, before we call it ten o'clock might I ask the deputy House leader to tell us the government's intentions with regard to business tomorrow?


Mr. Cafik:: It will be our intention to continue consideration of Bill C-42, the energy supplies emergency bill.


An hon. Member:: And then?
February 19, 1979


Norman Augustine Cafik: If it is anticipated by the opposition that we might conclude this stage of the bill tomorrow, we would move on the National Housing Act amendments.



PROCEEDINGS ON ADJOURNMENT MOTION

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

Mr. Doug Neil (Moose Jaw):: Mr. Speaker, on February 13 1 put a question to the Minister of Industry, Trade and Commerce (Mr. Horner) regarding the metric system. I did so for two reasons, first, my concern, and that of the general public, concerning the metrication program, and second because beginning on May 1 it will become mandatory for all applications under the National Housing Act to be in the metric system so as to conform with a directive put out by the CMHC, notwithstanding the fact that the lumber industry has not converted to metric nor is it likely to do so in the near future.
The reason is very simple. About 80 per cent of our lumber trade is done with the United States, and they have not converted. We shall therefore be faced with a situation after May 1 in which builders will be using plans and specifications in metres and centimetres while the lumber will be in inches and feet. This is metric confusion, not metric conversion. We have Celsius instead of Fahrenheit, kilopascals instead of inches of mercury, kilometres instead of miles per hour, and wind chill factors measured in numbers rather than temperature. Individuals do not know whether to put on a sweater, an overcoat, a jacket, or a hat and gloves. Radio stations give the temperature in degrees Celsius. At times they give readings in both Celsius and Fahrenheit. I understand, however, that radio stations will be fined in future if they give readings in other than Celsius. It is great to be living in a democracy!
1 did not plan to upset the minister when I asked my question on the thirteenth, but he became quite excited. He said at that time that all parties in this House had agreed by resolution to go metric but, as I understand it, it was a general motion, and speakers from all parts of the House agreed in principle. I was not a member at that time, but I am surprised that no vote was taken. Yet, based on that resolution the bureaucrats, in their quiet way and without formal authorization from this House, commenced a program of metrication which has caused confusion and which has been costly for the taxpayer. The costs to industry can never be calculated, but if
Adjournment Debate
one considers all the changes industry had to make, the cost must be in the billions of dollars.
We can determine some of the costs because some of them were recorded in the answer to a question I put in this House. I asked what the cost of metrication had been since 1971, that is, the cost of the administration of the system, not the cost industry has passed on to the consumer. The cost to date has been $24 million. In reply to a written question the Department of Industry, Trade and Commerce advised me that the setting up of the sector committees and the travel those committees did cost $1,306,625, over $1.3 million to have these sector committees travel the length and breadth of Canada. The Metric Monitor, that newspaper which extols the virtues of the metric system, a propaganda organ, cost $242,688 for printing and publishing. Distribution of that document cost some $423,736.26.
In response to my question the minister said that there had been no metric bill. I would like to direct his attention back to Bill C-23 in the fall of 1977 when the then minister of industry, trade and commerce introduced a bill entitled "An act to facilitate conversion to the metric system of measurement." Among other things it changes acres to hectares and bushels to tonnes. No one was more vocal than the present Minister of Industry, Trade and Commerce (Mr. Horner), unless it was the hon. member for Vegreville (Mr. Mazankow-ski), the hon. member for Halton-Wentworth (Mr. Kempling), the hon. member for Red Deer (Mr. Towers), or myself. The minister stood shoulder to shoulder with the rest of us and fought that bill. Could he have changed overnight? Apparently he did.
Britain went metric and is having many problems and second thoughts. The same is true for Australia. On the other hand, the United States brought in legislation making metrication not obligatory but voluntary. I would like to quote briefly from an editorial in the Hamilton Spectator of Thursday, March 28, 1978, which says:
The contrast between the United States' handling of the metric question and Canada's is the contrast between a democracy and a dictatorship ... Canada even denied public opinion a forum; metric rules were simply imposed by a bureaucracy not answerable to the people.
Americans got a choice; Canadians got their orders.
In closing I would like to say that my plea is simply this: let us put a halt to metrication until such time as we can sit down with our counterparts in the United States to discuss ramifications. The hon. minister has said, and I quote from Hansard:
The gratifying position I find myself in is that my leader now actively seeks my views on all subject matters.
I hope that the hon. minister will talk to his leader and halt metrication until such time as we can discuss it with the Americans and move hand in hand and step by step. Otherwise metrication will cost Canadian taxpayers and consumers millions and billions of dollars.


Francis William (Frank) Maine: Mr. Speaker, effective May 1,

February 19, 1979
Adjournment Debate
1979, all applications for assistance under the National Housing Act must be in metric units. This is an administrative requirement under the National Housing Act.
Sector committee-construction, 5.01, a voluntary committee composed of voluntary representatives of the construction industry, including the Housing and Urban Development Association and the Canadian Construction Association, approved a plan that set target dates for conversion to help the industry convert as rapidly and economically as possible.
There are sources of plywood in metric dimensions, and the capability of the lumber industry to produce the required plywood panels in metric dimensions has been established.
As for progress in the United States, the American National Metric Council has been co-ordinating, planning and scheduling since 1973. Now that there is a U.S. metric board in operation, further impetus has been given to metric conversion plans already under way via the American National Metric Council voluntary sector committees.
An example of progress in the U.S. metric conversion program is in the automobile manufacturing sector, this being the single largest manufactured export Canada has, representing 27 per cent of all exports to the U.S.A. The way automobile manufacturers are swiftly coverting to the metric system in the U.S. is the very kind of voluntary program that the U.S. metric board is required by Congress to encourage.
From the very beginning the Canadian metric conversion program has been and is being co-ordinated with counterpart American sector committees. In the last few days alone, six U.S. committee members, including a director of the ANMC and staff from the U.S. metric board, met with their opposite numbers in industrial sectors in Ottawa.
The white paper on metric conversion in Canada, issued in January, 1970, which called for the establishment of MCC was agreed to by the House leaders of all parties. An order in council, the metric commission order of June, 1971, established the Metric Commission with a mandate to involve voluntary participation from all sectors of the Canadian economy.
In 1975-76 a resolution debate on the program of guideline dates for metric conversion was held, including committee hearings at which industry, labour and consumer groups presented their views. The report of the Standing Committee on Finance, Trade and Economic Affairs unanimously recommended that the House consider the advisability of adopting the guideline dates, and recommended further legislation to facilitate metric conversion.
The first such legislation, the Statute Law (Metric Conversion) Amendment Act, chapter 55, was debated in the House and Senate and assented to on August 5, 1977, by the Governor General. The second Statute Law (Metric Conversion) Amendment, Bill S-10, has received Senate approval and first reading in the House of Commons on December 15, 1978.
This legislative action supports the 102 sector committees comprising over 2,000 volunteers who are currently developing

the plans and schedules for implementation of the metric system in their sectors of the economy.


CANADIAN BROADCASTING CORPORATION-TELEVISION COVERAGE IN SOUTHEAST MANITOBA
Arthur Jacob (Jake) Epp: Mr. Speaker, on January 26 I asked a question of the Secretary of State (Mr. Roberts) regarding the installation of CBC English television in southeastern Manitoba. This is the third time that I have used the adjournment debate to bring this matter before the government. I was wondering how best to get this message to the government in view of the fact that it has not lived up to its promises on this question. What I intend to do is to outline to the government once again the promises it has made in the hope that this will be one promise it will fulfil, rather than making all the promises and, once it comes to implementation, having the words prove to be empty.
In 1975 a petition was passed and signed by 346 members in the southeastern area of Manitoba requesting the then CBC president Laurent Picard for CBC English television programing. The CBC at that time, in response to the petition which I forwarded to them, said the following, and I quote from a letter of May 21 signed by Dennis Townsend, director of parliamentary services:
Under the Accelerated Coverage Plan, a UHF 50 kw transmitter with a 300-foot tower is scheduled for Sprague, Manitoba, with the expectation that an application for it will be made to the CRTC in 1978. The transmitter will provide CBC English TV service.
I protested back in 1975 that 1978 was too far in the future. Having made the protest, I Figured I would receive some favourable response. On August 14, 1975, the liaison officer for the CBC wrote as follows:
It should also be noted that we are nearing the half way point in the five-year plan. Since it takes about two years to prepare our documents, have our application heard by the CRTC and put the service into operation, it is now very difficult for us to change any of our target dates.
That letter was written in 1975 and it was referring to the target date of 1978. Hope springs eternal in the human breast, and I kept on working. The year 1978 came, and I felt it was time to approach the government once again to see whether it would do anything. I wrote to the Canadian Broadcasting Corporation once again, and I received the following reply from Mr. Dennis Townsend:
Using this and the other criteria which Anne Richens of this office explained in her August 1975 letter to you, Sprague is included in ACP Priority Group 100, and it is our expectation that we will apply to the CRTC this summer for permission to establish the Sprague transmitter.
Mr. Townsend's letter was dated February 8, 1978. I was very hopeful that we would get somewhere because the CBC was saying the same thing in 1978 as it had said in 1975. Then I thought I received the real word in a letter written by the hon. Secretary of State dated March 2, 1978, in which he said the following:
I note that you directed a copy of your letter to Mr. Townsend, and you will now have received his reply of February 8, informing you that the CBC does
February 19, 1979

indeed expect to apply to the Canadian Radio-Television and Telecommunications Commission, this summer, for permission to instal a television transmitter at Sprague, Manitoba.
I come from an area where there are very few Liberals and consequently I have a tendency to believe them. Perhaps 1 am naive. It is a mistake I made. Perhaps I should not have believed them, because on November 3, 1978, i received a letter from the president of the CBC after most of 1978 had passed, and after criticizing the CBC. They had not made an application and they had not fulfilled the promise. They simply had not done it. The letter I received from Mr. A. W. Johnson, the president of the CBC, read in part as follows:
I am indeed sorry to confirm your fear that because of the new restraints on our budget Sprague is among a number of ACP projects which must be delayed until the necessary funds become available. At this early stage of deciding how budget cuts must be allocated within the corporation it is difficult to give you a firm date for the rescheduling of the Sprague project, but at the moment since this is a transmitter project of some magnitude, it looks as though it will now be included in both our 1980-1981 and 1981-1982 capital budgets, with probable implementation during the 1981-1982 fiscal year.
That letter referred to 1979 restraints back in 1978. Even that letter does not wash. That restraint program was not in effect. The Secretary of State, the CBC spokesman for parliamentary services, the president, and the parliamentary secretaries who have answered me twice, have not given the facts. They have promised, but they have never fulfilled. Now it is 1979, and the people of that area do not have coverage. Then to top it off, the unity task force indicated that every Canadian is entitled by right to television and radio access by the CBC. This is a small area of Canada which had television coverage before it was taken away by Bill C-58 of the government. The government said that it was going to give the area some other coverage. It has taken away the television coverage that area had, and has not given them the television coverage paid for by taxpayers.
On January 26 the minister indicated that he would give me a reply. On behalf of the petitioners, the people of Sprague and the area, I am waiting not only for a positive reply but for some positive action.


Francis William (Frank) Maine: Mr. Speaker, the CBC's accelerated coverage plan is designed to ensure that CBC radio and television service will be extended to all communities where 500 or more people are unserved or inadequately served in the appropriate language.
The ACP is implemented under a strict formula system of priorities which takes into account such factors as population, capital and operating expenses, provincial equalization, and geographic and cultural isolation. Implementation is in this way as fair and equitable as it can be made. All communities identified for inclusion in the ACP are listed according to their priority under this formula, and "community" in this case also means minorities within a larger language group, such as the French-speaking population of Thunder Bay and the Englishspeaking population of Chicoutimi.
Adjournment Debate
Provision of funds for the implementation of the ACP is made within the CBC's regular capital and operating budgets. As for the plan itself, it was originally to be completed in the period 1974 to 1979. A number of factors, however, have brought about a stretching out of that period by approximately three years.
Those factors include: a sharp rise in costs-they are now approximately double the 1975 estimate-the difficulty of finding enough qualified technical personnel for the installation of the more than 600 transmitters involved in the plan; delays in the production by the electronics industry of the necessary equipment, and budget constraints in 1978-79 and
1979-	80.
Under the accelerated coverage plan it is intended to establish English television service at Sprague, Manitoba, which is included in Group 100 of the ACP priority list.
Because of the workload and budget cuts, implementation of some ACP projects has fallen behind the original timetable set out for the more than 600 transmitters involved in the plan, and it is now hoped that the Sprague transmitter project, which is one of some magnitude, will be included in the CBC's
1980-	81 and 1981-82 capital budgets, with probable implementation during the 1981-82 fiscal year.
The CBC regrets that due to these circumstances which are beyond its control it is not possible to provide the Group 100 service at the time the corporation had originally hoped and expected to do so. The hon. member for Provencher (Mr. Epp) may be assured, however, that Sprague is in the same relative position on the priority list as it has always been, and that no projects which came after it on the list have been moved ahead of it.


SCIENCE AND TECHNOLOGY-GUIDELINES FOR INDUSTRIAL RESEARCH
J. Robert Howie: Mr. Speaker, basic to an effective research and development effort in secondary manufacturing is a national industrial policy. Canada's industrial research and development effort is strangely out of step in the industrialized world in which Canadian products must compete. The business sector in Canada provides only about one third of research and development expenditures compared to figures of 40 per cent to 50 per cent for most industrialized countries. In addition, the business sector in Canada performs about 40 per cent of research and development compared to 50 per cent to 65 per cent for business sectors in most advanced countries.
In 1978 the government made some serious attempts to stimulate research and development, both through increased federal funding and through tax incentives. A major goal announced by the minister in June was an increase in gross expenditure for research and development to 1.5 per cent of gross domestic product by 1983. Critics pointed out that to attain this goal research and development expenditures in industry would have to grow by an average of 19 per cent each

February 19, 1979
Adjournment Debate
year, and government and university expenditures by 12 per cent of 13 per cent annually.
In August, 1978, however, the government launched an austerity drive and announced plans to reduce federal spending. Science and technology, including various research and development programs, were affected in many areas. Then on November 16, 1978, the Minister of Finance (Mr. Chretien) in his budget speech announced new tax incentives for industries performing research and development.
The picture that emerges over the past year is rather confusing. On the one hand the government announces increased funding and tax incentives to stimulate Canadian research and development. On the other, it abruptly terminates important government research programs.
I have some recommendations I would like to make in an effort to increase our research and development impact in Canada. The existing industrial research and development tax incentive provided by the federal government should be reformulated with a view to incorporating the following features: a conversion to a 25 per cent tax credit instead of a 50 per cent additional allowance; the introduction of a base level research and development expenditure of $1 million which would qualify for the full incentive without regard for increments; qualification of all capital expenditures for the full incentive; and all research and development must be done in Canada to qualify for the incentive.
In other words, small and medium sized firms which spend less than $1 million per year on research and development would be able to qualify for the full 25 per cent tax credit in respect of all their expenditures on research and development. This would include 99 per cent of Canadian-owned firms. The large firms that spend over $1 million per year on research and development would qualify for the tax credit in respect of any increased expenditure in research and development over the base level. In areas of slow growth the rate may be increased.
The Small Businesses Loans Act should be amended to facilitate low interest loans for research and development facilities and operating costs. We should provide financial assistance through DREE for buildings and specialized equipment to be used for scientific research and development in DREE designated areas of regional disparity.
The present federal government tax incentive program is inadequate in the following respects: the incentive is based on incremental R and D expenditures only. The consolidation of capital with current expenditures penalizes firms making substantial capital outlay for R and D purposes. The incentive discriminates severely against the smaller firms whose net cost of R and D could be 70 per cent higher than for a larger firm. The incentive is not available to firms not having a taxable income, for example, in the start up phase of new technology-based firms.
I feel also that some non-tax incentives of an industrial nature should be considered. Any review of industrial support policies should involve full participation of industry. New

incentive programs should minimize elaborate administration. For example, where applicable, self-administered tax credits are preferable to grants that require lengthy and complex applications and detailed monitoring. The contracting out of government R and D projects which has been a step in the right direction should be intensified. Both the amount and the scope of contracts should be increased. Federal procurement policies should aim to stimulate promising Canadian companies. The procurement policies of provincial and local governments, as well as of publicly supported institutions, should be similarly co-ordinated. The federal government should take the lead by making this a condition of various incentive and cost-sharing programs. We have been waiting for an announcement in this regard since last June.
International trade and technological agreements should make special provisions to strengthen Canada's industrial capability. Opportunities for co-operative activities should be sought out and supported. Fragmentation and polarization of the activities of various groups, whether in industry, government or the universities, must be overcome.
I am convinced of the importance of research and development as an essential base for economic advancement, and I feel we should encourage the advancement and transfer of scientific knowledge and technology in a co-operative effort between universities, governments and industries.
Our objective should be to increase support for basic and applied research and development in Canada over a five to seven year period to 2.5 per cent of the gross national product, which is the fraction of the gross national product now spent in the United States, the United Kingdom and West Germany. We should establish a forum which will enable parliamentarians and interested Canadians to become involved and contribute in a direct way and on a regular basis to an appreciation of the wide scope and complexity of science affairs.
The bottom line is that it is not enough to have the best tax incentive system in the western world. Our ministers, deputy ministers, assistant deputy ministers, and the department heads have got to get on their bicycles and travel to the board rooms of the parent companies of Canadian subsidiaries and sell our program. We have got to give the private sector the confidence that our government understands that research is a long-term proposition, and convince them that the incentives will remain constant for at least ten years. In the past 15'years we have witnessed a number of major, unrelated programs involving tax incentives put forward and then cancelled by the government. It is small wonder that the private sector takes no confidence from this performance and is not prepared to commit its funds to a program of long-term scientific research and innovation.


Francis William (Frank) Maine: Mr. Speaker, the hon. member for York-Sunbury (Mr. Flowie) covers a great deal of ground in his comments, and it will be impossibe for me to address all of them in the three minutes in which I have to respond. Certainly he has mentioned some very good ideas, some with which I agree and some with which I do not agree. '
February 19, 1979

I think the basic tenet of having more research and development in Canadian industry is one with which both sides of the House can agree. We have found from industry that the decisions have to be made by them, both in their timing and their framework, so that the most effective use can be made of their resources. This means that the tax method is a more effective incentive than the grant method, where government bureaucrats may become involved in a time-consuming and costly delay in decision-making.
In the last three budgets, attempts have been made to improve the performance by industry in the research and development that is needed in this country.
The hon. member said that he would like to see an increase in the target level from 1.5 per cent of the gross national product in 1983, to 2.5 per cent. In realistic economic terms,
Adjournment Debate
Mr. Speaker, we will do very well indeed if we reach the 1.5 per cent target, in so far as the amount of money that must be spent represents a 20 per cent increase in research and development each year for the next several years. The amount of money required to reach a target of 2.5 per cent over the short term would be enormous.
Whereas I agree with the general purpose of the hon. member's comments, I can in no way agree with several of the details he has outlined. I will encourage him, however, to continue bringing these points of view forward so that they can be discussed in detail and so that there can be further dialogue in this most important area.


Mr. Deputy Speaker:: The motion to adjourn the House is now deemed to have been adopted. Accordingly, this House stands adjourned until 2 p.m. tomorrow.
Motion agreed to and the House adjourned at 10.30 p.m.


END OF VOLUME III