1979-02-13

ROUTINE PROCEEDINGS


Mr. G. W. Baldwin (Peace River):: Mr. Speaker, I wish to bring forward a motion under the circumstances set out in Standing Order 43, the facts of which will appear.
Given the fact that three legislatures operating under the Westminster system have passed or are dealing with freedom of information laws, that the Council of Europe, representing some 20 European countries, is giving favourable consideration to similar proposals, and that the Canadian government stated nearly three years ago that it was giving priority to drafting legislation, and noting with concern the reluctance of the government to produce facts in response to requests during question period, or at all, I move:
That this House requests the government to forthwith table a bill to provide for open government and bring to an end the secret society which it has developed.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


ESTABLISHMENT OF COMMITTEE TO REVIEW RIGHTS AND IMMUNITIES OF MEMBERS-MOTION UNDER S.O. 43
Right Hon. J. G. Diefenbaker (Prince Albert):: Mr. Speaker, under the provisions of Standing Order 43, I rise on a matter of urgent and pressing necessity arising from the judgment of the Ontario Court of Appeal that members of the legislature of Ontario-and it applies equally to members of the House of Commons-must disclose the source of information that comes to them as confidential.
Most, if not all, hon. members have had the experience of individuals being prepared to give information that would
throw light on wrongdoing or some matter of public interest provided that they have the assurance that their names will not be revealed. If this court decision is upheld, it means that the wells of confidential information will be closed and information which would have been furnished will remain unrevealed. Therefore, I move, seconded by the hon. member for Vegre-ville (Mr. Mazankowski):
That a special committee of the House of Commons, to consist of Mr. Speaker and seven other members to be named later, be appointed forthwith to review the rights and immunities of members of the House of Commons, and that the subject of confidentiality of information given to members of parliament shall receive the fullest consideration;
That the committee have power to sit during sittings and adjournments of the House of Commons;
That the committee have power to report from time to time, to send for persons, papers and records, and to print such papers and evidence from day to day as may be ordered by the committee; and
That the papers and evidence received and taken on the subject in the first, second and third sessions of the thirtieth parliament be referred to the committee.


Mr. Speaker:: In accordance with the provisions of Standing Order 43, such a motion can be presented at this time only with the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


John George Diefenbaker: Government members are afraid of what might have been revealed.


IMMIGRATION
Mr. Andrew Brewin (Greenwood):: Mr. Speaker, I rise, under the provisions of Standing Order 43, on a matter of urgent and pressing necessity. It appears that a number of persons from Chile who have presently applied for convention refugee status in Canada will be deported to Chile, a country which the Department of Employment and Immigration has removed from the category of countries to which previously a person would not be forced to return.
Whereas the ad hoc committee of the United Nations Committee on Human Rights reports that Chile is still severely limited with respect to basic human rights and people continue to be arrested and tortured for political reasons, I

February 13, 1979
move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That the Minister of Employment and Immigration be requested to reinstate Chile's status as a country of exception to ensure that no one will be deported from Canada in the face of the lack of human rights still prevailing in Chile.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


PENSIONS
Mr.   C.-A. Gauthier@Roberval: Mr. Speaker, pursuant to Standing Order 43, T request the unanimous consent of the House to present a motion dealing with an important and urgent matter.
Whereas Quebec annuities are pensions paid to senior citizens in the province of Quebec; whereas the contributions and the payments themselves are in no way related to the pension and the federal old age supplement; whereas when the plan was first set up, the annuities were not considered as income; whereas since this government has come to power those annuities have been decreed to be income, the federal government thus taking over 50 per cent of the Quebec annuity cheques reducing by as much their benefits from the federal pension supplement, I move, seconded by the hon. member for Richmond (Mr. Beaudoin):
That the government discontinue that practice of pumping Quebeckers dry and come back to the initial act under which Quebec annuities were not considered as income with regard to the federal pension supplement.


Mr. Speaker:: Order. Pursuant to the terms of Standing Order 43, presentation of this motion requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.



AGRICULTURE


Mr. Gordon Towers (Red Deer):: Mr. Speaker, I rise, under the provisions of Standing Order 43, on a matter of urgency.

In view of the fact that the Canadian Grain Commission is the policing body of the grain industry in western Canada and has evidenced its dissatisfaction with the Canadian Wheat Board's handling of hopper cars by setting up a hopper car committee, I move, seconded by the hon. member for Moose Jaw (Mr. Neil):
That the Minister of Agriculture immediately refer this whole matter to the Standing Committee on Agriculture with authorization to that committee to summon officials of the Canadian Grain Commission and the Canadian Wheat Board to appear as witnesses.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


Mr. Alexander:: The Liberals said no, as usual.



BROADCASTING


Mr. Ross Milne (Peel-Dufferin-Simcoe):: Mr. Speaker, in the spirit of a number of Standing Order 43s raised recently in the House, I rise under the provisions of that Standing Order.
In view of statements reported this past weekend and the resulting fears of the Canadian public about their free access to television facilities, I move, seconded by the hon. member for Restigouche (Mr. Harquail):
That this House congratulates the right hon. member for Prince Albert (Mr. Diefenbaker) for referring to the hon. member for Egmont's (Mr. MacDonald) idea of charging 25 cents to every Canadian for every television program watched as "the height in asininity" and recommends that this description be equally applied to the Tory idea of doubling cable-


Mr. Speaker:: Order, please.



ORAL QUESTION PERIOD


Mr. John Wise (Elgin):: Mr. Speaker, if I could have the attention of the Minister of Consumer and Corporate Affairs, I would like to direct a question to him. My question relates to the progress of the government's national food strategy or national food policy.
Is the minister satisfied with the progress to date with such a policy and such a strategy? If not, why not? If he is, would he give some indication as to what progress has been made and
February 13, 1979

what recommendations have been implemented as a result of the food strategy talks that took place some 12 months ago?


Hon. Warren Allmand (Minister of Consumer and Corporate Affairs):: Mr. Speaker, progress is being made. It is slow, but it is steady. Changes have been made as a result of the three conferences which took place in the food strategy area. Some changes have been announced recently, including new guidelines for the National Farm Products Marketing Council and some appointments have been made to some marketing boards. Decisions are being implemented as it is appropriate to do so.


John Wise: I have a supplementary for the same minister. Surely the minister should know that the continuing high levels of inflation, high interest rates and the 83-cent dollar, all products of this government, are adversely affecting the food price issue and food price increases. The minister said some kind of action would be taken. He has denied the return of wage and price controls. Is he referring to food price controls, or just what action does the minister have in mind?


William Warren Allmand: Mr. Speaker, the government is considering further action with respect to food prices. Once it has made its decision, it will announce it in the House.


John Wise: I put this question yesterday to the Minister of Agriculture and received no response whatsoever. I now ask the minister, can he give me one simple example?


William Warren Allmand: That would be rather foolish, Mr. Speaker. When the decision on policy is made, it will be announced in its entirety.


GOVERNMENT ACTION TO HOLD DOWN FOOD PRICE INCREASES
Mr. James A. McGrath (St. John's East):: Mr. Speaker, my question is also for the Minister of Consumer and Corporate Affairs. In a speech yesterday in Winnipeg, the minister expressed his concern over the fact that food prices in the next few months will increase anywhere from 12 to 14 per cent. I would like the minister to express his concern in some tangible way. Perhaps he can tell us why he agreed to the removal of the subsidy on domestically consumed wheat in Canada which meant an immediate 15 per cent increase in the price of a loaf of bread.
What co-ordinating activity is he taking within his department, given the responsibility that is his under the statute to make sure that various government activities which could have an impact on food prices are co-ordinated within the context of some kind of strategy? Perhaps the minister would like to address himself to that.


William Warren Allmand: Yes, Mr. Speaker. As was stated on several occasions in this House, we agreed to remove the subsidy on bread because it was a subsidy which went to all levels of the
Oral Questions
population. We wanted to make sure that our scarce sources of public money went to those who needed it most. We increased the guaranteed income supplement to old age pensioners and we introduced the tax credit for children. That will put the money where it is most needed. That was one of our policies to deal with this situation.


James Aloysius McGrath: Perhaps the minister will take the House into his confidence and tell us why he expects food prices to rise from 12 to 14 per cent in the next few months. If he has already, as he said in his speech yesterday, expressed his concern to cabinet about this and expects action to be taken, why cannot that action be taken now before food prices go up even further?


William Warren Allmand: Mr. Speaker, the predictions for this entire year are between 9 per cent and 10 per cent over the year. However, the forecasts that were given to us by different sources are that in the next five or six months food prices are likely to increase between 12 and 14 per cent. In other words, as the year goes on there will be a levelling off in the rate of increase. I and many ministers have shown our concern. The cabinet has been considering for the last couple of weeks several measures which will deal with this problem.


James Aloysius McGrath: Perhaps the minister will tell the House who in the House is responsible for co-ordinating food policy or food strategy. Is it the Minister of Agriculture, the Minister of Consumer and Corporate Affairs, or some other minister we do not know about? We know about the DM-10 study which the minister likes to forget about. Will he tell us who has the ultimate responsibility for this question which is causing so much concern to the people in this country?


William Warren Allmand: Mr. Speaker, there are several interdepartmental committees and committees of officials dealing with food policy. The five principal departments involved have been agriculture, fisheries, consumer affairs, trade and commerce, and health and welfare. The Minister of Agriculture and I have been acting as co-chairmen in this area.


MEASURES TO PREVENT PROFITEERING IN LUMBER INDUSTRY
Mr. Cyril Symes (Sault Ste. Marie):: Mr. Speaker, I have a number of questions for the Minister of Consumer and Corporate Affairs. Since the wholeasale price of rough spruce plywood rose from $185 per 1,000 board feet in January, 1978, to $245 in January, 1979, two by fours in the same period went from $195 to $265, and the wood products industry had an 87 per cent profit increase last year, will the minister report what action he is taking to stop this profiteering and thereby protect home builders and consumers generally?


William Warren Allmand: Mr. Speaker, that question was asked last week. I responded that I would refer the matter to the director of investigations under the Combines Investigation Act, to see whether there was any infraction under that act, and that I would explore other possibilities as well. 1 cannot accept as

February 13, 1979
Oral Questions
being right or wrong the allegations made by the hon. member businesses, we have done that before and we will do it again if until I make sure that some of these matters are correct.	it is necessary.


Reginald Cyril Symes: Mr. Speaker, this price increase was brought to the minister's attention last November. He said then that he would investigate it. We followed it up in January. All the minister can assure us is that he is investigating. Meanwhile, prices are going up. Over the last two years, the wholesale price of two by fours has risen by 70 per cent, and only last week a further 10 per cent increase was announced with regard to both two by fours and plywood sheets.
Since the minister told the Consumers' Association of Canada yesterday that he expected companies with increased profits to practice price moderation, and that if they failed to do so he would have to take action, will he now call in the heads of the lumber industry and demand price rollbacks for domestic lumber?


William Warren Allmand: Mr. Speaker, I do not recall the hon. member or anybody else bringing this to my attention before Christmas, but the matter was brought to my attention last week.
I never said at any time that 1 would do the investigating, because I do not have the powers under the Inquiries Act that the director of investigations possesses under that statute. He has the right to use certain powers of search and seizure which I do not have, and he will carry out his responsibilities and report to me and to the public.


Reginald Cyril Symes: For the information of the minister, my hon. friend from Winnipeg North raised this matter with the minister on November 27 and my leader followed it up in January. Though the minister may not have precise legislative authority to take action, he certainly has the power to call in the heads of the industry and try to exercise moral suasion if the government is too timid to bring in legislation.
I should like to put another aspect of this question to him. Again, surely, it relates to something he can investigate with a view to taking action. I understand that upon conversion to metric measurement, plywood is one-sixteenth of an inch less in thickness than under the old Imperial measurement; in other words, there is 10 per cent less wood in an ordinary plywood sheet. We were assured when we passed the metrication bill that there would be no rip-off, as far as consumers were concerned, as a result of the conversion process. This being the case, will the minister now investigate this particular application of metric conversion and take up the matter with the company heads as well?


William Warren Allmand: Yes, Mr. Speaker, we have a team in the field already helping consumers adjust to the metric system.


Some hon. Members:: Oh!


William Warren Allmand: We have already provided a great deal of help across the country and we will be glad to follow up that particular matter. With respect to calling in the heads of


UNEMPLOYMENT INSURANCE
Mr.   C.-A. Gauthier@Roberval: Mr. Speaker, my question is to the Minister of Employment and Immigration and concerns the three weeks of unemployment insurance benefits paid to anyone who reaches 65. Can the minister tell us whether, in view of the recent amendments to the unemployment insurance regulations, this payment will continue to be made, or if it will be cancelled?


Hon. Bud Cullen (Minister of Employment and Immigration):: Mr. Speaker, the same thing applies under the new legislation.


Mr. Gauthier (Roberval):: Mr. Speaker, I have a supplementary question. Could the minister try and find out why some government employees are phoning to tell us, as was the case this morning, that the three weeks of benefits would be discontinued. Could he enquire to find out if somebody is mistaken?


Jack Sydney George (Bud) Cullen: Mr. Speaker, parliament makes the law, not the civil servants.


POST OFFICE
Mr. Eldon M. Woolliams (Calgary North):: Mr. Speaker, I would like to put a question to the Postmaster General. On Friday, January 26 last I asked some questions with reference to Post Office inefficiency and gross misconduct which has taken place at the post office in the city of Calgary. The minister agreed to send an investigating team to Calgary.
Has the minister set up this team, in light of the fact that he has received a petition containing 241 signatures and complaining about post office service. The post office to which I refer is open only between eight in the morning and four in the afternoon. Weekly newspapers-for example, the Calgary North News-are sometimes delivered three weeks late. Would the minister tell the House what the team is doing? Has it made an investigation? There has been no improvement in the situation.


Hon. J. Gilles Lamontagne (Postmaster General):: Mr. Speaker, I think that Calgary Area post office service is as
F ebruary 13, 1979

good as it can be in the present situation. The regional manager came to Ottawa to discuss with us ways to improve service. I know that the part of the country to which the hon. member refers has been growing tremendously in the last few months, but I can guarantee the hon. member that everything is planned at this moment to give the Calgary area better service than it has had, and within the next few months the area will get that better service.


Eldon Mattison Woolliams: Mr. Speaker, 1 plead with the minister to set up an independent investigation. 1 was informed at the weekend that some of the staff of the post office play hockey with fragile parcels. It is no wonder there is 60 per cent breakage. If that is the efficiency about which the minister is talking, I ask him to set up an independent investigating team to look into the whole postal mess not just in Calgary but throughout Canada.


Mr. Lamontagne:: Mr. Speaker, 1 do not think I should answer such a question, but I can tell the hon. member that everything possible is being done to see that the Post Office is run efficiently and conveniently. I think the question of the hon. member greatly exaggerates the situation.


IMMIGRATION
Mr. David MacDonald (Egmont):: Mr. Speaker, my question is for the Minister of Employment and Immigration. I believe the minister received a telegram yesterday from an interchurch committee with respect to serious charges concerning a number of refugees from Chile, and in particular the case of Mr. Ignace Munoz and his family. Apparently there is a real danger, if they are deported this Friday as announced by the department last week, that Mr. Munoz will again face possible torture, imprisonment and, this time, death.
Since this deportation is the result of failure to provide adequate translation, interviews and appeal procedures to those applying for refugee status, I wonder if the minister will indicate what action he will take directly to ensure that justice is done and human life is not endangered. This comes directly under his responsibility.


Jack Sydney George (Bud) Cullen: Mr. Speaker, in so far as Chilean refugees are concerned, Canada does not need to be ashamed of the efforts it has made. Second, I think the hon. member should recognize that this government took the initiative of saying we would take political prisoners. In fact, we went right into jails and said we would take 100 families. We reached that quota, we exceeded it, and then we doubled it to 200. Our record in this regard is good, and there is a tendency to bad-mouth it all the time. I think that discredits the service Canada has done in helping these unfortunate people.
Oral Questions
Not being satisfied with the appeal procedure under the new Immigration Act, we set up an independent refugee status advisory committee. After an individual claims refugee status, he is interviewed. He can be interviewed in the presence of counsel, if that is what he wants. The refugee status advisory committee considers the interview and determines whether the individual is, in fact, a refugee. It also makes recommendations regarding humanitarian matters. If the committee finds that an individual is not a refugee, the matter is still considered by the department as a second appeal tribunal.
So I do not think it is a good idea to be bad-mouthing constantly what we have endeavoured to do in this particular case. We are attempting to be fair and careful with the lives of these people.


David Samuel Horne MacDonald: Mr. Speaker, as the minister well knows, there have been numerous complaints about interview, translation and appeal procedures. The minister did not address himself to that.
In view of the serious charges made by a very responsible group representing the major Canadian churches, and the further representations today by a representative of the United Nations Commissioner for Refugees who indicates the danger which will confront Mr. Munoz and others if they are deported to Chile, will the minister review the specific case which has been brought to his attention?
In addition, will he promise to meet the church officials who raised serious questions about the present refugee procedures as well as the United Nations Commissioner for Refugees who is concerned about this specific case?


Jack Sydney George (Bud) Cullen: As a lawyer who has practiced for some 12 years, I am satisfied that when an individual loses an appeal there is always something wrong with the procedures. That is a known approach which is used constantly. But the fact of the matter is that my deputy minister has met with the church leaders. I am quite prepared to meet with them to hear their representations. I am also prepared to have a look at the case which the hon. member has mentioned, because it is of concern.
It is not an easy decision to have to make in cases such as these, but in an attempt to be as fair and as objective as we can, and recognizing that these people have a concern, we are trying to make a decision that takes into consideration the concerns expressed not only by the individuals who are launching the appeals but by others who are involved in the appeal procedures.


EXTERNAL AFFAIRS
Mr. Douglas Roche (Edmonton-Strathcona):: Mr. Speaker, my question is directed to the Secretary of State for External

February 13, 1979
Oral Questions
Affairs. In light of the announcement that the United Kingdom government intends to recognize the new government of Iran, and President Carter's statement that the United States stands ready to work with the new government of Ayatollah Khomeini, can the minister inform the House whether Canada intends to recognize the new regime, what criteria will be applied in this decision and what instructions have been sent to the Canadian diplomatic personnel in Iran?


Hon. Donald C. Jamieson (Secretary of State for External Affairs):: Mr. Speaker, may I say, with respect, that I do not want to answer that question orally this afternoon in terms of the type of instructions and the like that have been sent. I will be glad, obviously, to inform the House in a formal way as to what is being done.
I have every expectation that we will be extending recognition to the government of Iran in the normal and routine way in which it is accorded to established regimes, but since the situation is evolving so quickly, I would prefer not to make any more direct statements at this time.


STEPS TO ENSURE ADEQUATE SUPPLY OF OIL TO EAST COAST REFINERIES
Mr. Howard Crosby (Halifax-East Hants):: Mr. Speaker, I have a question for the Minister of Energy, Mines and Resources. Having regard to the minister's earlier remarks concerning a secured oil supply for Canadian refineries, and in light of the announced cutbacks in deliveries of crude oil to some east coast refineries, will the minister indicate whether his contingency plan has now been put into operation and whether this will restore the level of oil supplies to the east coast refineries?


Hon. Alastair Gillespie (Minister of Energy, Mines and Resources and Minister of State for Science and Technology):: Mr. Speaker, the contingency plan to which I referred a short time ago had to do with the situation which would be created if the international energy agency emergency oil sharing program were put into place. That contingency plan deals with the allocation of crude, the allocation of products and even, possibly, the necessity for a rationing program. That was the contingency plan to which I was referring.
As regards the reallocation problems which have been created for eastern refineries, in Quebec and Atlantic Canada, I believe that the arrangements we presently have in place, the submissions by the industry to the National Energy Board for exchanges using western crude displacing crude at Chicago, should tide us through at least for the present.


Howard Edward Crosby: In light of the actual cutbacks to certain east coast refineries, I should like to ask the minister whether he can give the House an indication of who exactly is responsible for the maintenance of adequate oil supplies for east coast

refineries, and whether he has any indication that those supplies will be continued in the future.


Alastair William Gillespie: As I have indicated in the House, 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. The Mexican crude will not be available to us until the end of the year, but it will help us to reduce our dependence on Middle Eastern crude over a period of time and, therefore, to increase our take from western hemisphere sources, therefore reducing our dependence on the Middle East, an area which is unstable so far as oil supplies are concerned.
I believe that the arrangements, which are still very much of an ad hoc, temporary nature, even though they are of an emergency nature in the sense that western crude is being displaced in Chicago to provide for the shortfall in Atlantic Canada and in Quebec, should, as I indicated a moment ago, tide us over for the time being.
[ Translation]


INQUIRY AS TO MEASURES GOVERNMENT INTENDS TO TAKE TO AVOID ENERGY SHORTAGE, ESPECIALLY IN EASTERN CANADA
Mr. Herb Breau (Gloucester):: Mr. Speaker, I should like to direct a supplementary to the Minister of Energy, Mines and Resources. Could the minister tell us whether he did receive the report requested by his department on the future of Canada in the energy field? If so, could he tell the House what measures his department is taking to face both the immediate and the long term situation which is critical when it comes to the independence of Canada and particularly of the eastern provinces in the energy field? Could he also tell us whether the government is still supporting the natural gas pipeline project between Montreal and Halifax because such a pipeline could be an alternative in such areas as energy supply in such cases.


Alastair William Gillespie: Mr. Speaker, the hon. member has raised the question of a natural gas pipeline to the maritimes. That particular proposal has been submitted to the National Energy Board, which will be dealing with it during the course of this year. That submission, along with the extension of the pipeline from Montreal to Quebec City and points in between, could have a significant impact on reducing Canadian dependence on foreign oil. Figures which I have seen indicate that the extension of the gas pipeline to the maritimes could displace as much as 100,000 barrels a day of otherwise imported crude oil.
February 13, 1979


PRESENCE IN GALLERY OF MINISTER RESPONSIBLE FOR BUILDING AND URBAN DEVELOPMENT IN HUNGARY, HON. KALMAN ABRAHAM
Mr. Speaker:: Order, please. Before proceeding with the question period, may I ask hon. members to join me in signalling the presence in our gallery of a distinguished visitor, together with a delegation of his ministers here on official business. 1 refer to the presence in our gallery of the minister responsible for bulding and urban development in Hungary, the Hon. Kalman Abraham.


Some hon. Members:: Hear, hear!


REGIONAL ECONOMIC EXPANSION
Mr. Andy Hogan (Cape Breton-East Richmond):: Mr. Speaker, on Tuesday, November 28, 1978, during the minister's visit to Cape Breton, he was quoted in the Cape Breton Post as saying:
A decision will be made before the end of the year on whether Sydney Steel will get funds for modernization needed to carry out a ten-year sales contract crucial to its future.
We are now in the middle of February and no such decision has been announced. Can the minister tell us why the delay on this decision, and whether we can expect early action on this crucial matter for Cape Breton and Nova Scotia?


Hon. Marcel Lessard (Minister of Regional Economic Expansion):: Indeed, Mr. Speaker, I remember quite well mentioning the possibility and the hope I had at the time of concluding these negotiations. But since November, following discussions we had with the New Brunswick premier, we had to set up a small task force which has reviewed the existing proposals and which has started a new round of negotiations not only on a certain contract which had been already negotiated, but on other projected contracts with other possible purchasers of the goods. We hope that within the next few days-and I repeat, within the next few days-they will make their findings available to me. 1 shall then be able to recommend to my cabinet colleagues the course of action the government should take concerning this proposal.


Andrew Hogan: Mr. Speaker, I want to thank the minister for that information and ask him if this confirms the suspicion at this stage that if an agreement is not reached in the next few weeks between Sysco of Nova Scotia and Tisco of British Columbia, the whole Sysco plant could fall on its face?
Oral Questions ENERGY


IMPORTATION OF MEXICAN CRUDE OIL THIS YEAR
Mr. Allan Lawrence (Northumberland-Durham):: Mr. Speaker, my question is for the Minister of Energy, Mines and Resources. Yesterday, and again today, he indicated that the negotiations with the Mexican state oil company might mean that Mexican crude would be available in Canada by the end of this year. Because our earlier information from both Mexico and the industry here in Canada indicated that this would not be available until at least the second quarter of 1980, I wonder if the minister could inform the House how much we are negotiating for this year and how much Mexican crude is expected under these negotiations this year, that is, 1979.


Alastair William Gillespie: Mr. Speaker, the arrangement which I discussed and which was agreed to when I was in Mexico early in January was that Canada would guarantee to the Mexicans a market for 100,000 barrels a day, and the Mexicans would guarantee to us a supply of 100,000 barrels a day.
The Mexican government indicated that it would be able to start deliveries in the order of 15,000 to 20,000 barrels a day before the end of this year, but very much toward the end of this year. Also, it expected we should be able to get the full volume of 100,000 barrels a day by late 1980 or early 1981.


Allan Frederick Lawrence: What is the expected shortfall that will have to be made up respecting the Iranian cutoff?


Alastair William Gillespie: Mr. Speaker, at the moment it is impossible to give any precise answer to that question, if for only one reason, that it would be impossible to estimate how long the crisis in Iran will go on and how soon they may be able to start production. At the present time, part of the shortfall is made up by increases in production by other OPEC nations, particularly Saudi Arabia. As I indicated in the House as well, part of it also is being made up by a drawdown on inventories. I am confident, if there is a relatively early increase in production by Iran, that the measures already taken should see Canada through.
We may come out rather better than most other countries because we have an option most other countries do not have. That is to say, we have some surplus producing capacity, some surplus oil in the ground rather than in storage above ground, which we can call on at the present time during what I hope is just a temporary period.

February 13, 1979
Oral Questions METRIC CONVERSION


REQUEST FOR DELAY IN IMPLEMENTATION BY HOUSING INDUSTRY
Mr. Doug Neil (Moose Jaw):: Mr. Speaker, my question is directed to the Minister of Industry, Trade and Commerce who is also the minister in charge of metric conversion. No doubt the minister is aware of the arbitrary decision of Central Mortgage and Housing Corporation requiring all applications for assistance under the National Housing Act to be in metric after May 1, 1979. Also, the minister must be aware that some building products are available in metric, but basically plywood and dimension lumber are manufactured only in Imperial measurements due to the fact that Americans are our chief purchasers.
Because metric converion has become metric confusion to the majority of Canadians, will the minister meet with the minister in charge of CMHC and discuss the possibility of delaying the implementation of metrification into housing until such time as the lumber industry has made that conversion?


Some hon. Members:: Hear, hear!
Hon. Jack H. Horner (Minister of Industry, Trade and
Commerce): Mr. Speaker, some time ago-in fact, in 1970, if my memory serves me correctly-all parties in the House unanimously agreed to set up a metric commission.


Some hon. Members:: Hear, hear!


Mr. Horner:: All parties in the House agreed to setting up a metric commission.


An hon. Member:: Answer the question.


An hon. Member:: Where were you, Jack?


An hon. Member:: You must have been away, Jack.


John (Jack) Henry Horner: Then the metric commission took it upon itself to form sectors to study-


An hon. Member:: Did you approve it?


John (Jack) Henry Horner: At that time my leader did not even ask for my approval, nor did my leader at that time seek the advice of caucus.


Some hon. Members:: Shame.


John (Jack) Henry Horner: I, like the hon. member, was not considered important by him at that time.


Some hon. Members:: Oh, oh!


John (Jack) Henry Horner: Then the metric commission set up sector studies in each sector. In this case, it went to the construction industry and asked for their co-operation in determining when the construction industry could foreseeabiy make the move to convert to metric. It was with the full co-operation of the construction industry that the metric commission set up the deadlines for that particular sector of the economy.

If the construction industry now wants to ask for a major delay, I would hope they would come at least to the metric commission or myself; neither has been done yet.


Some hon. Members:: Hear, hear!


Douglas Charles Neil: Mr. Speaker, I have never known the hon. member to be backward in telling his leader what he thought about various points.


Some hon. Members:: Hear, hear!


Douglas Charles Neil: The minister must be aware of the attitude of the American government toward metrification and the fact Australia and Great Britain are taking a second look at metrification. In view of the fact metrification is costing Canadian taxpayers millions of dollars, and Canadian consumers unknown millions of dollars, will the minister, as one who stood shoulder to shoulder with the troops on this side objecting to the metric bill, give an undertaking that he will meet with his counterparts in the United States in order to discuss metric conversion, so that we can move in concert with the United States?


John (Jack) Henry Horner: Mr. Speaker, let me first put the House straight. There was no metric bill; there was a resolution.


An hon. Member:: That is right.


John (Jack) Henry Horner: It was a resolution which had the complete approval of all parties, as I said.


An hon. Member:: Just to set up the commission.


An hon. Member:: Except you. Jack.


John (Jack) Henry Horner: That does not mean to say that it had the consent of all members of the House. I never said that at any time.


Some hon. Members:: Oh, oh!


John (Jack) Henry Horner: I want to assure hon. members and the House generally that my leader consistently hears my views.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


John (Jack) Henry Horner: The gratifying position I find myself in-


An hon. Member:: And he rejects you.


Some hon. Members:: Oh, oh!


John (Jack) Henry Horner: The gratifying position I find myself in is that my leader now actively seeks my views on all subject matters.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


Mr. Baker (Grenville-Carleton):: And consistently rejects them.
February 13, 1979


Mr. Hnatyshyn:: Now we know what is wrong with the Liberal party.


Lincoln MacCauley Alexander: That is why you cannot get ahead in the polls.


Mr. Speaker:: Order, please.


TIMETABLE FOR MINTING OF METRIC COINAGE
Mr. Bill Kempling (Halton-Wentworth):: Mr. Speaker, my question is directed to the Minister of Supply and Services. I raise this question with the minister because he is also the Receiver General for Canada and the minister to whom the Master of the Mint reports.
Will the minister advise if the government is proceeding with its plan to produce metric coinage? As I understand it, coins have been designed and samples approved in the 20-cent, 40-cent and 80-cent denominations. Would the minister advise if a timetable for the release of these coins has been determined?
[ Translation]


Hon. Pierre De Bane (Minister of Supply and Services):: Mr. Speaker, I am not in a position to provide detailed information concerning these issues. It is clear, however, that in view of the rising costs of metals, we shall have to come to a decision concerning for instance the 1 and 5 cent coins, whose nominal values are less than the costs of production. I hope I shall be very shortly in a position to announce the necessary decisions.


William James Kempling: Mr. Speaker, while the minister is looking into that, could he advise what consultation has taken place with the vending machine industry and the manufacturers of cash registers? We now understand that it will cost $100 million to convert scales. What will be the cost of converting cash registers to metric coinage? What consultation has taken place with the telephone companies and the vending machine industry of the country? Could the minister find those matters out at the same time?


Pierre De Bané: Mr. Speaker, I can say to the hon. member that the Canadian Automatic Merchandising Association already is on record as not opposing any of those plans. It goes without saying that no decision will be taken without having full consultation with the vending associations.
Oral Questions


ADMINISTRATION OF JUSTICE
Mr. Gilles Marceau (Lapointe):: Mr. Speaker, my question is for the Minister of Justice.
For the past couple of years several Quebec groups, and in particular the Quebec Women's Federation, have been calling for the establishment of a family court. In view of the results of the latest federal-provincial conference at which there was unanimous consensus on the transfer of family rights, could the minister say whether he intends to introduce shortly a bill to amend the constitution so as to set up those family courts, and does the minister, as this will undoubtedly necessitate rather extensive delays, have an alternative which might be immediately applicable to Quebec which could rapidly establish a family court?


Hon. Marc Lalonde (Minister of Justice):: Mr. Speaker, in co-operation with several provinces we have already managed to establish family tribunals by going ahead with the joint appointment of judges who are particularly knowledgeable in the area of family relationships. I do not have a similar agreement with Quebec yet but such an arrangement is available to the Quebec authorities if they want to use it, just as a few other provinces have already used that technique.
With respect to the constitutional amendment that would be required to ensure the transfer of marriage and divorce to provincial jurisdiction, the government indicated it agreed with such a constitutional amendment and no decision has been made yet as to the date when parliament will be called upon to consider that specific amendment.


TRANSPORT
Mr. Gordon Ritchie (Dauphin):: Mr. Speaker, my question is to the minister in charge of the Wheat Board. In response to farmers' concerns over the recent media report that the CNR only would get the new hopper cars which the Wheat Board has ordered, when presumably the farmers collectively will pay for them, would the minister explain why farmers who are on CPR lines will apparently not be able to have the use of the hopper cars?


Hon. Otto E. Lang (Minister of Transport):: Mr. Speaker, there was a point in time when both the Wheat Board and 1 had the distinct impression that the Canadian Pacific Railway were telling us that they would have enough cars for the handling of grain next year. That, incidentally, was part of

February 13, 1979
Oral Questions
their reason for not entering into the boxcar repair program, even though we were offering to pay half the costs and even though I had drawn to their attention the requirement under the statute that they provide equipment for the carriage of goods. They later changed their view and entered into that car repair program. Also, they have now indicated that they do, in fact, require some new cars.
As a result, while the Canadian Wheat Board-I suppose fairly logically-had decided to allocate the cars to Canadian National, which clearly said they needed them, now that Canadian Pacific has indicated likewise I am sure further consideration is being given to the question of whether it would be fair to farmers in the areas served by CPR not to have the advantage of the cars as well.


William Gordon Ritchie: Mr. Speaker, in that event, will the minister give his unqualified endorsement that he will make certain that the Wheat Board is fair in the allocation of these cars, as all farmers, presumably, will have to pay for them collectively?


Otto Emil Lang: Mr. Speaker, to this point I have indicated to the Wheat Board my view that it would be wise for them to have these cars divided between the two railroads. I have not considered whether I would take any further action if the Wheat Board continued in the judgment that it was best for them to have the cars allocated to Canadian National. I have also conveyed to them the strong feelings of farmers whom 1 have met through my travels in southern areas of the prairies, where Canadian Pacific lines predominate, about the fact that the cars ought to be shared.


INQUIRY WHETHER PUBLIC HEARINGS WILL BE HELD ON RAIL LINE ABANDONMENT
Mr. Bert Cadieu (Meadow Lake):: Mr. Speaker, my question is to the Minister of Transport. Will there be any provision made for public hearings concerning the abandonment and destruction of the Amiens subdivision from Spiritwood to Shellbrook in Saskatchewan?


Otto Emil Lang: Mr. Speaker, as the hon. member knows, that area was fortunate enough to have one of the first recommendations of the Prairie Rail Action Committee confirmed by government action, and as a result the lines to Spiritwood and to Glaslyn have been transferred into the basic rail network. Other recommendations of the Prairie Rail Action Committee go before the Canadian Transport Commission. In this particular case it is a recommendation of the Hall commission which created the first question about that line.
Under the current law, the Canadian Transport Commission can arrive at its own decision as to when it ought to hold hearings. Therefore, it may follow one practice or another, depending upon the extent of submissions to it in regard to the line. I have been suggesting to communities which have concern about saving their line and want to be heard that they not only make their views known to the Canadian Transport Commission at an early date, but do so in the form of a brief

setting out their views, so that the commission has an analysis of their reasons in deciding even the preliminary question of holding a hearing.


INDUSTRY
Mr. John C. Crosbie (St. John's West):: Mr. Speaker, my question is to the Minister of Industry, Trade and Commerce. Statistics Canada statistics show that the "Made in Canada" colour television sets manufactured in December total only 11,900, as compared to 21,000 the year before-a decline of 81 per cent-and that on a year-to-year basis the sales of Canadian-made colour television sets were down 114 per cent and, as compared to 1975, they were down 219 per cent.
The Canadian TV manufacturing industry is disappearing and our electronics industry is in very bad shape. If Statistics Canada intends to do away with statistics on this industry this year, it will save money. Apart from Statistics Canada saving money as our industries disappear, has the government got any programs that will assist the electronics industry and the TV manufacturing industry during the present year, 1979? What action does the government intend to take?


John (Jack) Henry Horner: Mr. Speaker, I want to thank the hon. member for asking this question because it gives me pleasure to put on the record that the Department of Industry, Trade and Commerce, under the enterprise development program, has specifically helped one of the major television manufacturers in Canada, namely, Electrohome, and helped to put that company back on its feet. In fact, we were out of production of colour television sets for some time, but now Electrohome has gone into production because of the advantages due to the present value of the Canadian dollar. We are now enlarging our production of colour television sets. The increased production may not have shown up in the statistics for December, 1978, but I am confident it will show up in the 1979 figures.


Mr. Speaker:: Order, please. I overlooked a supplementary question by the hon. member for Meadow Lake.


John Carnell Crosbie: Mr. Speaker, a supplementary.


TRANSPORT
Albert C. (Bert) Cadieu: Mr. Speaker, my supplementary is to the Minister of Transport. Is the minister aware that in the 1920s Canadian National set up a colonization board in Saskatoon to encourage development of this area by promising settlers a rail line, and that the decision to abandon
February 13, 1979

the Amiens subdivision means that people who settled this area in good faith are now being betrayed because of the lack of co-operation between the railways and the government?


Otto Emil Lang: Mr. Speaker, 1 am sure that that is the kind of comment the hon. member will want to put in his submission to the Canadian Transport Commission.


John Carnell Crosbie: Mr. Speaker, a supplementary.


EXTERNAL AFFAIRS
Mr. F. A. Philbrook (Halton):: Mr. Speaker, my question is to the Minister of Industry, Trade and Commerce or, if it is more appropriate, to the Secretary of State for External Affairs.
Recently an announcement was made about a trade and economic co-operation agreement between the governments of the Caribbean common market and Canada. In that regard, could the relevant minister inform the House what benefits will be available for Canada?


Donald Campbell Jamieson: Mr. Speaker, there are many different benefits to come from it, but I do not think that I would be permitted to go into detail at this time. I will be glad to provide a copy of the agreement and of the statements made at the time it was signed.


FISHERIES-NEGOTIATIONS WITH UNITED STATES ON TERRITORIAL BOUNDARIES
Mr. Stuart Leggatt (New Westminster):: Mr. Speaker, my question is directed to the Secretary of State for External Affairs: it concerns the present state of boundary negotiations in terms of the west coast.
Could the Secretary of State for External Affairs advise the House if the Canadian delegation is now actively considering a proposal to move the territorial boundary at the Dixon Entrance south, in exchange for some territory in the 200-mile zone? Is that presently under consideration by the Canadian delegation?


Donald Campbell Jamieson: Mr. Speaker, without attempting to be evasive, I think the hon. member knows that it is not customary to reveal the details of negotiating positions; but I think that I can tell him that there is nothing that has been in any sense firmed up with regard to the west coast. A number of proposals have been put forward by both sides, but beyond that I do not think that it would be appropriate for me to comment.
OraI Questions


Stuart Malcolm Leggatt: I wonder if the minister could give me some assurance that the Government of Canada does not intend to move that boundary south? If he could give the House that assurance, he might be able to satisfy many of the people who live in the north.
Could he also tell us whether these negotiations, which have been going on for a long time, have an internal time limit, set by the minister? Has there been some agreement in terms of an international forum to ultimately settle the dispute between this country and the United States both on fisheries and on boundaries?


Donald Campbell Jamieson: Mr. Speaker, on the first part of the question I can give the hon. member the assurance-and I repeat to him what I said earlier-that there is no offer from Canada. A number of proposals have been put forward in one way or the other, but as of this moment it is merely a matter of negotiation.
On the broader question, quite frankly, I do not know what the outcome is going to be on the west coast. We have had extreme difficulty as to any kind of basis on which an agreement might be formulated not only with our own Canadian fishing community but also with that community as it relates to the fishing community in Alaska and the United States. I think the hon. member knows that we have been involving all of the parties. I believe, incidentally, that our Canadian negotiators are in Alaska-if not today, they will be tomorrow-talking about halibut, for example.
It is exceedingly difficult to get an arrangement with regard to a species which affects one group of fishermen when the trade-off may be another species which is of interest to another group of fishermen. It is extremely complicated, I repeat. On the question of whether it is going to go to third party arbitration, no decision on that has been arrived at on the west coast, but I think the hon. member knows that within a short time, perhaps within 24 hours, we will be announcing a decision in that regard for the east coast.


NEGOTIATIONS ON CANADIAN TERRITORIAL WATERS
Mr. Erik Nielsen (Yukon):: Mr. Speaker, I have a supplementary question. I was trying to catch your eye to put it to the Minister of Indian Affairs and Northern Development, but perhaps it would be more appropriate to put it to the Secretary of State for External Affairs. It concerns Canada's north coast and the same negotiations.
Reports are fairly positive that at the fisheries negotiations the United States is laying claim to a considerable area of Canada's territorial waters east of the Yukon-Alaska boundary on the basis that the sector theory does not apply. Can the minister tell us whether such a claim is being made by the United States to Canadian territorial waters and, if so, can he assure the House that the Government of Canada is taking a firm stance that in no way will any portion of Canada's

February 13, 1979
Point of Order-Mr. MacEachen
territorial waters as recognized by the sector theory be bartered away?


Donald Campbell Jamieson: Mr. Speaker, I think I can assure the hon. member that we have taken a particularly firm stand. We want to get the absolute maximum that we can for this country.
In so far as formal claims by the United States are concerned, for obvious reasons I would want to check and see what has been laid down as a formal claim as distinct from certain positions proposed in negotiations. I will try to get that information for the hon. member.
Perhaps a more general answer would suffice at the present time, in that Canada has recognized no claims by the United States for any boundary lines or any other proposal that they have put forward on the west coast. As I told the hon. member a few moments ago, the whole thing is very much a matter of negotiation, with no final decision made as to how it will be disposed of, whether by bilateral negotiation or third party arbitration.


POINTS OF ORDER
[Stage Direction]
MR. MacEACHEN-OPERATION OF STANDING ORDER 43-RULING BY MR. SPEAKER
Mr. Speaker:: A point of order under Standing Order 43 has long been outstanding before the House. I am conscious of the fact that today is an allotted day for the opposition but I should like to dispose of this ruling at this time. I have given it very careful consideration and I do not think the House will find that it will take an undue length of time, bearing in mind our desire to start proceedings on the opposition motion.
This point of order came up in respect to difficulty with proceedings pursuant to Standing Order 43 but obviously, through the very extensive discussion, it touched on long standing concerns on both sides of the House about the proceedings pursuant to this Standing Order which we have now organized as our first item of business every day and which proceedings have given us a rather troubled history.
The Standing Order began, innocently enough, simply as the written expression, perhaps even unnecessary, that with unanimous consent we could free ourselves from the shackles of our own rules. In due time it found its way into the hands of all members as a rather regularly used device during motions which in the previous arrangement of our business followed questions each day.
Early in this parliament we re-arranged our order of business in a way which I feel, and which I think other hon. members feel, greatly improved not only our question period but which consecrated our opening few minutes to applications pursuant to this Standing Order every day. I think it cannot be overlooked that this represented a clear confirmation of support in the House for the practice.

It also introduced an element of self-discipline, since the time not taken up with these motions would be available for additional questions and, as a result, I believe I became more lenient in my own interpretation of Standing Order-perhaps as discussion on all sides of the House indicated, a little too lenient. In any case, I certainly welcomed this point of order when it was raised late last year.
I want to say at the outset that the extensive discussion, containing a number of very reasoned contributions, has in itself done a great deal to reduce the difficulty, especially in the consensus which I felt was evident, that the practice, however imperfect, fills an important purpose and must be preserved, and that I must exercise my authority to check obvious abuses.
Drawing upon this consensus, I hope members have noticed that since the day of this discussion I have intervened on several occasions to reject applications from both sides of the House which contained inflammatory preambles which are of a purely partisan nature, which lack urgency, and which are frivolous; and even today I set aside one of those applications which came from the government side of the House. As I say, I have tried to do that on both sides of the House and to draw upon the consensus raised in the discussion that I ought to do so in order to preserve this practice. Equally, I have refused to put the application to the House where the motion endeavours to express congratulatory messages or relates to procedural problems.
I want to stress to the House that I have taken this approach as a direct response to contributions from all sides-from the government side, of course, but equally from the hon. member for Hamilton West (Mr. Alexander), the hon. member for St. John's East (Mr. McGrath) and the hon. member for Winnipeg North Centre (Mr. Knowles).
Among the contributions I received I stress those members because in each case the member stressed that it was hoped I would find a way to reduce the misuse of the rule in order to safeguard it. I, therefore, say I was drawing upon a consensus. With the support of the House I will continue to do so in order to ensure that access to this procedure remains available every day to those who seek to bring to the attention of the House matters which are worthy of urgent consideration.
I also want to resolve the point of order related to the conflict with our schedule when consent is given, the motion is put and debate begins. I am convinced that the committee which recommended the excellent pre-arrangement of our routine proceedings did not anticipate this problem, and so we are without specific guidance.
I am faced with some very clear language in Standing Order 15(2), which protects the hours of question period each day, and Standing Order 45(2), which transfers to government orders any interrupted or adjourned debate. I have therefore followed the practice of transferring to government orders any debate under Standing Order 43 which is interrupted by the question period. It seems to me that to do otherwise I would have to ignore these Standing Orders and give motions pursuant to Standing Order 43 a priority over all other business,
February 13, 1979

which is really in effect giving to it the priority heretofore enjoyed by motions referring to matters of privilege. Finally, it seems to me that if the effect of consent to put a motion pursuant to Standing Order 43 is to give it that kind of priority, I think members realize I would only be increasing the difficulty of securing consent instead of easing it, which might be more desirable.
A future procedure committee will, I am sure, endeavour to clarify this problem for the House. In the interim, I will continue to treat these debates, once interrupted by question period, as having been transferred to government orders pursuant to Standing Order 45(2).
These two decisions about attempting to reduce those abuses which I cited earlier in my ruling, and this ruling about attempting to transfer the debate to government orders if interrupted by question period, may clarify situations which press upon us for the moment, but still do not touch on many of the elements given very extensive consideration in the discussion, including a number of suggested improvements. I think I should deal with those briefly.
I think all sides of the House recognize that this procedure is the best substitute we have for a grievance procedure, but that it fails fundamentally as a grievance procedure because it is not in any way designed to evoke a direct, reasoned response at the time the grievance is aired.
We dealt rather extensively as well with the difficulty that members who withhold their consent for the introduction of this motion ought in some way to be identified, perhaps by rising in their place. This was a very strong point raised over a long period of time by the right hon. member for Prince Albert (Mr. Diefenbaker) and was also referred to on several occasions by the hon. member for Bellechasse (Mr. Lambert).
One of the most basic concerns relates to the rather widespread misunderstanding of the very nature of the proceeding itself. That is, that what is being sought is actual passage or approval of the motion and therefore that the withholding of consent by the other side somehow constitutes opposition to the motion. Both of these notions are rather widely held and both of them are totally incorrect. For very good reasons members of this House are entitled to notice in advance before being asked to debate a matter of some importance.
The effect of Standing Order 43 is solely to introduce into the House a motion without prior notice. Approval or passage is an entirely separate question once the motion is put. On the other hand, the withholding of consent ought to be related in some way to the introduction without notice of a motion, and I am sure it often has nothing to do with the substance of the motion.
There is not much that I can do to bring about a more accurate understanding of these procedures from the Chair. However, I want to return to one proposal that seemed to receive support from all sides of the House, and that is the matter of a member refusing consent and doing so with identification. Obviously that carries with it a counter-balanc-
Point of Order-Mr. MacEachen
ing change in our practices. Presumably if a member is to be identified when withholding his consent to the introduction of a motion, then we would have to give to that member the opportunity to explain the reason that he is withholding his consent.
Let me try to point out the difficulties that we face by the example which is so recent, namely the motion now put a second time within about a week by the right hon. member for Prince Albert (Mr. Diefenbaker). Many suggestions were put that that abuse of the rule might be eliminated by prior notice being given to the Chair so that I could choose between motions. Alternatively, I could take a tight line on abuses when listening to the preamble of the motion.
The motion put by the right hon. member for Prince Albert touches a matter which seems to me, in any Speaker's decision, would qualify as far as urgency is concerned because it follows upon a court decision. It is important because it affects the rights and privileges of members of the House of Commons with respect to the confidentiality of their sources of information. Even if advance notice had been given to the Chair, a method which has been suggested by some hon. members, and even if I take the tightest possible line on preambles, any Speaker would surely see that this is a motion that qualifies pursuant to the rules.
The difficulty arises when the withholding of consent is considered as opposition to that kind of a motion. Whether it is or not, leaving aside political differences for the moment and taking a serious approach to the dilemma for both sides of the House, I would say this is a motion that most would consider could quite properly be put under this procedure. On the other side of the coin the question is: Is it desirable that that kind of motion be debated without any advance notice? It is a very serious question. Would the House be satisfied with a debate that did not include in that subject a contribution, for example, by the minister of justice of the day? Surely not. Therefore, the withholding of consent in these circumstances is related to the fact that notice should be given, and a matter of this sort ought not to be sprung on the House without such notice. Later in the question period of that particular day, in response to a question put by the right hon. member, the Deputy Prime Minister (Mr. MacEachen) gave some reasoning. But that does not happen every day.
Then the question arises: Is this the direction in which we should move? Should members withholding consent be prepared to identify themselves by rising in their places? If they do this, should they be given the opportunity to make a brief statement about the reason for withholding consent? Immediately the House will realize that we have fundamentally changed the proceeding if we do that. Also we will have entirely altered the use of that brief period of time which now exists.
Another of the useful suggestions that has come forward and which also gets my approval in principle concerns the development of a grievance procedure. We are striving to use this proceeding in order to replace what I have said many times in the past is significantly missing from our practices,

February 13, 1979
Point of Order-Mr. Crosbie
and that is the right of members on all sides of the Elouse to have access to the proceedings of the House to air grievances that cannot be aired satisfactorily in the question period, at least not always.
It cannot be done satisfactorily under the provisions of Standing Order 43 because there is no response permitted and there is not sufficient time. The adjournment debate is the closest thing we have to it, but it is not satisfactory either. It has a tremendous backlog and in order to get to the adjournment debate one must first have access to the question period. Therefore it is hoped that the House could develop some proceeding at six o'clock, as specifically suggested, 1 think, by the hon. member for St. John's East. Perhaps we could use that period of time, but I do not know and I certainly would not want to think through the details without an examination by a committee.
It seems to me the following are two possibilities and worth-while suggestions. First, regarding withholding of consent under our present proceeding, that the one withholding consent might have a brief moment to give his reason. Second, that a grievance procedure be established which would replace the attempt now being used under Standing Order 43 to air a grievance in a more adequate and direct way. Both of these suggestions should be examined.
I say in conclusion that these suggestions have my support in principle. The House will know that at this stage of our parliament it would not be timely even to attempt these rather important and substantial changes. In any event, these changes ought not to come from the Chair. They have to be as a result of consensus in the House carefully distilled through committee proceedings which will examine all of the consequences and make recommendations to the House.
I indicate that these are two suggested improvements that ought to be given careful consideration, probably early in the next parliament. A report should be made to the House so the House can draw upon that consensus. I will continue, as I say, with the support of the House to enforce the rules as strictly as I can, bearing in mind the ad hoc nature of the proceeding, the preambles and the content of motions, in order to ensure that we will continue in the balance of this parliament to have this procedure available for those who wish each day to bring important and urgent matters to the attention of this House.


MR. CROSBIE-BROADCASTING-NON-RECOGNITION OF SUPPLEMENTARY QUESTION
John Carnell Crosbie: Mr. Speaker, my point of order has to do with the question period. Your Honour recognized me so that I could ask a question, which was not unimportant, in connection with the television manufacturing industry of Canada. You did not permit me to ask a supplementary; you went back to my hon. friend from Meadow Lake (Mr. Cadieu) to permit him to ask a supplementary, which I certainly agreed with. But, Mr. Speaker, as you know, the original question is not always the most important one.

I asked a question about the television manufacturing industry. My supplementary was going to be: Why were the government purchasing TV monitors specifying foreign equipment when it calls for tenders? Why do they not assist the industry by giving some preference to purchasing, rather than discriminating against Canadian manufactured equipment? So obviously the important part of my question was the supplementary. Yet for some reason unknown to me, Your Honour did not permit the supplementary. Just because Your Honour wished to permit the hon. member for Meadow Lake to have a supplementary was no reason for Your Honour not to allow me to have a supplementary, unless the question I was asking was completely inconsequential in the first place.


Mr. Speaker:: Order, please. The hon. member will realize that he has no point of order. The matter is discretionary. I have to exercise this kind of discretion every day. Regrettably we were coming to the conclusion of the question period and I had some very difficult choices. About three members had supplementary questions and I could not recognize all three of them. Perhaps the next time it will be the hon. member at the expense of one of his colleagues.


MR. McGRATH-CMHC OFFICIALS-ALLEGATIONS OF WRONGDOING-STATEMENT BY MINISTER
Hon. Andre Ouellet (Minister of Public Works and Minister of State for Urban Affairs):: Mr. Speaker, yesterday the hon. member for St. John's East (Mr. McGrath) rose on a point of order and asked that I withdraw some of the comments I made in answering one of his questions. I then agreed to check Hansard. I must say that indeed the hon. member for St. John's East did not accuse the civil servants of the Central Mortgage and Housing Corporation but that he merely alluded to allegations of wrongdoing. I therefore take this opportunity to straighten out the record, and correct Hansard.


James Aloysius McGrath: Mr. Speaker, I would say that is a demonstration of good parliamentary manners.



ROUTINE PROCEEDINGS


Gerald William Baldwin: Mr. Speaker, I have the honour to present the fourth report of the Standing Joint Committee on Regulations and Other Statutory Instruments
February 13, 1979

which deals with the concern of the committee over the absence of any ascertainable rules in relation to import quotas on footwear and other goods.
[Editor's Note: For text of above report see today's Votes and Proceedings.]


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. Yvon Pinard (Parliamentary Secretary to Deputy Prime Minister and President of the Privy Council):: Mr. Speaker, the following questions will be answered today: 211 and 654 to 661 inclusive.


Mr. Jones: 1.	Have there been any reports of outbreaks or diseases that are unusual for the Canadian environment or climate by doctors or hospitals within the last eight years? If so, what were they?
2.	Have there been any reports of tropical disease breaking out in Canada since 1970? If so, please specify.
3.	Have the number of tropical or unusual disease cases been on the rise in Canada since 1970? Please give statistical figures for outbreaks of tropical or unusual diseases since 1970.
4.	Have these cases been reported to the Health authorities or to the public to warn them of these dangers? If so, list the authorities to whom these cases were reported. If not, why?
5.	What steps have been taken by the Department of Health and Welfare to protect the people of Canada from the spread or attack of tropical or unusual diseases?
6.	Is immunization against tropical or unusual disease available to all Canadians upon demand. If not, why?


Hon. Monique Begin (Minister of National Health and Welfare):: In so far as the Department of National Health and Welfare is concerned: 1. There have been few reports of outbreaks or diseases in the last eight years that are unusual for the Canadian environment or climate. A visitor to Canada was diagnosed as a case of cholera in 1974, and a second diagnosis was made in 1977 in a Canadian who acquired the infection while overseas. No spread occurred in Canada. The recently described legionnaires' disease was confirmed in two patients in 1977, and in approximately 20 in 1978. Poliomyelitis which, through aggressive immunization programs, has become a rare disease in Canada, was diagnosed in nine patients during the past summer. All occurred in unimmunized individuals who had rejected vaccination on religious grounds. Over the past eight years the average incidence has been three cases.
2.	No outbreak of tropical disease has been reported in Canada during the last eight years. Epidemics of these diseases are unlikely to occur nowadays because of the ecological environment and improved hygienic conditions. As shown in
Order Paper Questions
the response to question No. 3, malaria is being diagnosed in an increasing number of patients. However, all cases have occurred among travellers returning from the tropics and spread within Canada does not occur.
3.	The following table shows the number of cases of tropical or unusual diseases reported in Canada since 1970. As already noted, the increasing volume of Canadian travellers to tropical countries where the disease is still endemic.
Reported Cases of Rare Diseases-Canada, 1970-1977
1970	1971	1972	1973	1974	1975	1976	1977Amoebiasis	118	134	253	491	584	650	870	746Brucellosis	31	8	16	8	27	30	38	39Cholera	-	-	-	-	1	-	-	1Leprosy	6	9	10	15	10	11	18	16Malaria	5	7	7	25	24	52	91	96Poliomyelitis	2	6	2	4	3	2	-	2Psittacosis	9	3	6	2	2	1	-	6Tetanus	11	6	3	3	8	1	7	8Trichinosis	6	3	16	14	49	7	41	23Tularemia	1	1	-	1	8	2	35	54.	Tropical and unusual diseases are reported by the physician making the diagnosis-either to the local medical officer of health-or directly to the respective provincial epidemiologist. Action is then taken for location and examination of contacts, if this is necessary. Provincial health authorities in turn alert Department of National Health and Welfare officials if further interprovincial or international action is indicated for control of the disease in question.5.	With Department of National Health and Welfare support, a special committee was formed to develop a "Canadian Contingency Plan" dealing with the principles and management of exotic dangerous communicable diseases. This was published in March 1978, and since then approximately 3,500 copies have been distributed to federal, provincial and municipal health authorities. In addition, pamphlets are produced to alert travellers of disease risks in foreign countries. Travel agency associations are informed of special vaccination requirements and ongoing training is maintained in biosafety practices for quarantine officers at ports of entry.6.	Immunization is readily available, although the number of vaccines of proven safety and efficacy is greatly overshadowed by the number of diseases for which no adequate prevention exists. In general, family physicians can provide most immunizations, and many local health departments provide special clinics for traveller vaccinations. Yellow fever vaccine is supplied free of charge in National Health and Welfare designated clinics.


Mr. Crosbie: 1.	(a) With respect to Mr. John Christopher Doyle and his reassessments for income tax for the (i) 1950 (ii) 1954 taxation year, what is the total amount of income tax, interest, penalties and court costs due to the government by Mr. Doyle and the amount owing with respect to each category (b) what part of the amount owing to the government was collected?

February 13, 1979
Order Paper Questions
2.	Did the government enter into any arrangement with the taxpayer providing for payment of the amount due and, if so, in each case, what was the nature of the arrangement and on what date will the monies due be paid in full provided the terms of the arrangements are observed?


Hon. A. C. Abbott (Minister of National Revenue and Minister of State (Small Business)):: l.(a) Judgments issued in 1977 and 1978 by the Supreme Court of Canada and in 1978 by the Federal Court of Canada in respect of the appeals before them determined the taxes payable by Mr. John C. Doyle to be as follows:
Tax Court Costs
(i)	1950
(ii)	1954


[Stage Direction]
Interest for these years to October 1978 totalled $2,177,909.
(b) Further details of Mr. Doyle's account cannot be given because of the confidentiality provisions of the Income Tax Act.
2. Discussions have been ongoing with a view to obtaining an arrangement for payment of the outstanding taxes and interest. Details of the arrangement cannot be given because of the confidentiality provisions of the Income Tax Act.
Mr. Crosbie: 1.	With respect to the 1953 and 1954 taxation years and income taxes claimed from Mr. John Christopher Doyle, were the other appeals by Mr. Doyle with reference to those matters disposed of and if so, what was the result of any settlement arrived at in such appeals including the amount of income tax now agreed as owing by Mr. Doyle with reference to those periods, any amount owing for interest or penalties or court costs and the total now agreed to be owing to the government?
2.	Were all or any of the amounts now agreed to be owing paid by the taxpayer and, if so, in what amount?
3.	If any amounts are still owing by the taxpayer, has any arrangement or agreement been entered into providing for payment of such amounts and, if so (a) under what terms and conditions (b) on what date will they be paid?


Anthony Chisholm Abbott: 1.
Judgments issued by the Supreme Court of Canada and the Federal Court of Canada in 1978 in respect of the appeals before them determined the taxes payable by Mr. John C. Doyle to be as follows:
Tax Court Costs
1953	$39,657 Nil
1954	See written question 654 answered this day Interest for 1953 to October 1978 totalled $57,354.
2.	Further details of Mr. Doyle's account cannot be given because of the confidentiality provisions of the Income Tax Act.
3.	Discussions have been ongoing with a view to obtaining an arrangement for payment of the outstanding taxes and interest. Details of the arrangement cannot be given because of the confidentiality provisions of the Income Tax Act.
[Mr. Crosbie.)


Mr. Crosbie: 1.	With respect to the 1953 taxation year and the appeal instituted by Javelin Foundries and Machine Works Limited from tax assessments, was the appeal of the taxpayer under court number T-419-71 dismissed with costs and, if so, what is the amount of the tax now due to the government or the amount of any interest, penalties or court costs due?
2.	Did Javelin pay all or any of the income tax and other amounts due to the government and, if so, in what amount?
3.	If any amountof tax or other payment now due from Javelin was not received by the government, was an arrangement or agreement entered into with the taxpayer for payment and, if so (a) on what terms (b) on what date will all the amounts be paid?


Anthony Chisholm Abbott: 1. Yes. The judgment issued by the Federal Court of Canada in 1978 in respect of the appeal before the court for the 1953 taxation year determined the tax and penalty payable by the company to be 5153,247 and $500 respectively. Court costs are to be determined by the court. Interest for the 1953 taxation year to October 1978 totalled $227,387.
2.	Further details of the company's account cannot be given because of the confidentiality provisions of the Income Tax Act.
3.	Discussions have been ongoing with a view to obtaining an arrangement for payment of the outstanding taxes and interest. Details of the arrangement cannot be given because of the confidentiality provisions of the Income Tax Act.


Mr. Crosbie: 1.	With respect to the 1954 taxation year and the appeal instituted by Javelin Foundries and Machine Works Limited from tax assessments, was the appeal of the taxpayer under court number T-420-71 dismissed with costs and, if so, what is the amount of the tax now due to the government or the amount of any interest, penalties or court costs due?
2.	Did Javelin pay all or any of the income tax and other amounts due to the government and, if so, in what amount?
3.	If any amount of tax or other payment now due from Javelin was not received by the government, was an arrangement or agreement entered into with the taxpayer for payment and, if so (a) on what terms (b) on what date will all the amounts be paid?


Anthony Chisholm Abbott: 1. Yes. The judgment issued by the Federal Court of Canada in 1978 in respect of the appeal before the court for the 1954 taxation year determined the tax and penalty by the company to be $105,757 and $500 respectively. Court costs are to be determined by the court. Interest for the 1954 taxation year to October 1978 totalled $152,539.
2.	Further details of the company's account cannot be given because of the confidentiality provisions of the Income Tax Act.
3.	Discussions have been ongoing with a view to obtaining an arrangement for payment of the outstanding taxes and interest. Details of the arrangement cannot be given because of the confidentiality provisions of the Income Tax Act.


Mr. Crosbie: 1.	With respect to the 1955 taxation year and the appeal instituted by Javelin Foundries and Machine Works Limited from tax assessments, was the appeal of

the taxpayer under court number T-421-71 dismissed with costs and, if so, what is the amount of the tax now due to the government or the amount of any interest, penalties or court costs due?
2.	Did Javelin pay all or any of the income tax and other amounts due to the government and, if so, in what amount?
3.	If any amount of tax or other payment now due from Javelin was not received by the government, was an arrangement or agreement entered into with the taxpayer for payment and, if so (a) on what terms (b) on what date will all the amounts be paid?


Anthony Chisholm Abbott: 1. Yes. The judgment issued by the Federal Court of Canada in 1978 in respect of the appeal before the court for the 1955 taxation year determined the tax and penalty payable by the company to be $167,624 and $500 respectively. Court costs are to be determined by the court. Interest to October 1978 totalled $230,218.
2.	Further details of the company's account cannot be given because of the confidentiality provisions of the Income Tax Act.
3.	Discussions have been ongoing with a view to obtaining an arrangement for payment of the outstanding taxes and interest. Details of the arrangement cannot be given because of the confidentiality provisions of the Income Tax Act.


Mr. Crosbie: 1.	With respect to the 1955 taxation year and the appeal instituted by Javelin Foundries and Machine Works Limited from tax assessments, was the appeal of the taxpayer under court number T-422-71 dismissed with costs and, if so, what is the amount of the tax now due to the government or the amount of any interest, penalties or court costs due?
2.	Did Javelin pay all or any of the income tax and other amounts due to the government and, if so, in what amount?
3.	If any amount of tax or other payment now due from Javelin was not received by the government, was an arrangement or agreement entered into with the taxpayer for payment and, if so (a) on what terms (b) on what date will all the amounts be paid?


Anthony Chisholm Abbott: 1. Yes. The judgment issued by the Federal Court of Canada in 1978 in respect of the appeal before the court for the 1955 taxation year determined the penalty payable by the company to be $28,334. Court costs are to be determined by the court. Interest to October 1978 totalled $64,616.
2.	Further details of the company's account cannot be given because of the confidentiality provisions of the Income Tax Act.
3.	Discussions have been ongoing with a view to obtaining an arrangement for payment of the outstanding taxes and interest. Details of the arrangement cannot be given because of the confidentiality provisions of the Income Tax Act.


Mr. Crosbie: 1.	With respect to Javelin Foundries and Machine Works Limited and two reassessments relating to the 1956 taxation year, what was the result of the appeal instituted by the Minister of National Revenue from a decision of the Tax Review Board which had allowed an appeal from the taxpayer?
2.	Was the appeal of the Minister of National Revenue allowed and, if so, what is the amount of tax, interest, penalties or court costs due to the Crown by
Order Paper Questions
the taxpayer and, of the amount due, have all been paid or has any part thereof been paid and, if so, in what amount?
3.	If all of the amount now due are not paid,' has any arrangement or agreement been entered into with the taxpayer for payment and, if so (a) what are the terms of the agreement or arrangement (b) on what date will the full amount be paid?


Anthony Chisholm Abbott: 1. The judgment issued by the Federal Court of Canada in 1978 allowed the appeal of the Minister of National Revenue and determined the tax and penalty by the company for the 1956 taxation year to be $972,759 and $15,354 respectively. Court costs are to be determined by the court. Interest for the 1956 taxation year to October 1978 totalled $1,352,605.
2.	Further details of the company's account cannot be given because of the confidentiality provisions of the Income Tax Act.
3.	Discussions have been ongoing with a view to obtaining an arrangement for payment of the outstanding taxes and interest. Details of the arrangement cannot be given because of the confidentiality provisions of the Income Tax Act.


Mr. Crosbie: What is the full amount of income tax (a) owing (b) paid to date to the Crown by Mr. John Christopher Doyle and Javelin Foundries and Machine Works Limited with respect to the taxation years 1953 to 1956 and under the various court cases throughout these years?


Anthony Chisholm Abbott: The amount of taxes determined by judgments of the courts in respect of the issues before them for John C. Doyle was $1,605,197. For Javelin Foundries and Machine Works Limited the amount of taxes and penalties was $1,444,575. Further details of the accounts cannot be given because of the confidentiality provisions of the Income Tax Act.


Yvon Pinard: Mr. Speaker, if question No. 16 could be made an order for return, that return would be tabled immediately.


Mr. Speaker:: The questions enumerated by the hon. parliamentary secretary have been answered. Is it the pleasure of the House that question No. 16 be deemed to have been made an order for return?


Some hon. Members:: Agreed.

February 13, 1979
Currency Devaluation


Mr. Cossitt: 1.	What are the names and addresses of all (a) Canadian (b) Russian professors, scientists, etc. who have been on exchange programmes of any kind with the (i) Soviet Union (ii) Canada since 1970?
2.	In all the cases mentioned above, did any individual have access to the facilities of the National Research Council and, if so, which ones, on what date and in what capacity?
Return tabled.


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


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


Mr. Joe Clark (Leader of the Opposition) moved:: That this House regrets the government's refusal to give parliament a meaningful opportunity to investigate the loss of confidence in the Canadian dollar and the government policies which have reduced our currency to its lowest level in 40 years.
He said: Mr. Speaker, as you and the House will know, this is the first day available to the official opposition to discuss a matter of our choosing in the House of Commons since parliament has resumed after Christmas in the fifth and, we trust, final year of the life of this discredited and limping government.
We have chosen to direct attention today to a question of substance and a question of procedure relating to the ability of the House of Commons of Canada and the ability of the people of Canada to have revealed to them the facts and the forecasts that are available to the government regarding the state of the Canadian dollar. We would like an opportunity to hear witnesses, including some of the most credible Canadians in the land who are concerned that the policies now being pursued by this government in relation to the Canadian dollar are policies that are pushing the dollar down, adding to inflation in this country and very seriously damaging our economic prospects.
We know that today the dollar was up infinitesimally; it is now at 83.79 cents U.S. We know also that in the past two years the value of the Canadian dollar has dropped almost 20 per cent, from $1.02 U.S. to less than 84 cents U.S.


Mrs. Holt:: It's good for trade.


Charles Joseph Clark: One of the Liberal members who is departing from this House and, when the election comes, from this parliament shouted from behind the curtains that it is good for trade.


An hon. Member:: It was simply Simma.


Charles Joseph Clark: One of the Liberal members said it was simply Simma. I understand their problem. She has now turned her attention to the whole government and is no longer simply criticizing the Minister of Communications (Mrs. Sauve).
The result of the drop in the value of the Canadian dollar has affected the daily life of every Canadian. Food, clothes and imported components necessary for production in this country cost much more money. Some of the investment houses based here and operating outside this country estimate that the value of the Canadian dollar, which has already fallen almost 20 per cent in two years, could fall as low as 79 cents U.S.
The government claims that we have a floating dollar when it knows that this is not a floating dollar at all. They know that it is very close to being dishonest to claim that the policy now being followed is a policy of allowing the Canadian dollar to float.
The government has spent $5 billion of our exchange reserves. It has borrowed almost $6 billion and has increased interest charges seven times. The governor of the Bank of Canada says that he has done everything he can on the monetary side. When asked what he is going to do on the fiscal side, the Minister of Finance (Mr. Chretien) says he is not going to do anything at all.

I would now like to talk about what happened to the Canadian dollar and why, more important, the present situation has developed. The fact that our currency's value went down on monetary markets in the fall of 1977 was not surprising given the performance of our economy in relation to that of our main commercial partners. It was not realistic to have our Canadian dollar equal or even surpass the U.S. dollar. The economic reality required a downward readjustment and most experts were agreeing to have the level fixed at between 88 and 92 cents. But there has not been an adjustment of that kind. Our dollar has literally dropped down to 83 cents, a level never before reached since the 30s, and it dropped despite massive interventions by this government on money markets through the Bank of Canada. The economic reality does not warrant a dollar worth only 83 cents. The only explanation lies in this government's incredible incompetence in economic matters. Mr. Speaker, the 83 cent dollar is nothing else than an absolute no confidence vote in this government by the international community.

This government has earned that vote of no confidence by the international community by failing to meet three basic tests of economic leadership. First, its management of the dollar has raised questions about the honesty and in fact the
February 13, 1979

intelligence of this government. Either it does not know what it is doing, or it is not going to tell the truth to the people of Canada and the international community about what it is doing.
The Minister of Finance says day after day that the dollar is floating, yet while he says the dollar is floating he empties out our exchange reserves of $5 billion. He borrows almost $6 billion abroad and pushes through seven increases in the bank rate, all of them for the precise purpose of ensuring that the dollar does not float. Watching this contradiction unfold, the money traders in Toronto, in New York or in Zurich can only conclude that the Government of Canada is either dishonest or incompetent, or both.


Lincoln MacCauley Alexander: I like that last.


Charles Joseph Clark: Second, the government has completely failed to deal with our basic weaknesses in our dealings with the rest of the world. Our weak dollar is only a symptom of much more fundamental problems-a $12 billion deficit in manufacturing trade, a deficit of more than $1 billion on our tourist account, and an even larger imbalance in the flow of interest and dividend payments to other countries. These problems require action by the Government of Canada. They cannot be solved by the Bank of Canada. All the bank can do is finance our current account deficit by ever larger borrowing from abroad. This compounds the problem. In fact, we shall have to add $1 billion more to our merchandise trade surplus this year just to offset the widening gap in non-merchandise accounts.
The government has not brought forward a single major policy initiative to deal with these problems except for the false pretence that a devalued dollar is, in itself, an answer. Surely the experiences of countries like Britain and Italy make it clear that a weak currency is no answer to anything. Our problems are much deeper than the level of our dollar and they have to be faced.
The third major failure lies in the area of growth. The government has kept the economy well below its potential. If one were to score the government, its recent economic box score could be summed up this way: budgets, 5; task forces, 22; direction, 0.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: It might well be the most telling commentary on the approach taken by this government to say that the only important development in the economy has been the drop in the Canadian dollar. Having amassed the largest spending deficits in our history, the government have absolutely no plan to bring the budget into better balance. They have what is called a restraint target. What does that mean? It means that government spending would double in seven years and even that, in the words of the Minister of Finance, would only be a pause before they get on with bigger and bigger spending.
Ours is a country of enormous potential, a potential unparalleled elsewhere in the world. Yet we are heading into our
Currency Devaluation
third straight year of inadequate growth, with unemployment over one million and inflation of 8 per cent or more. And the response of the government is to tell Canadians to lower their sights, to get used to unemployment and higher prices. That is a recipe for disaster and it is a response which can no long be accepted.
It is well known that there is deep disagreement between the parties in this House about national economic policy. The Prime Minister (Mr. Trudeau) claims everything is just fine- there are no problems and there is no need for any major change. We in this party believe fundamental changes are needed. We have to reduce the size of government and reduce the burden the government places upon the private and productive sectors of this country.
We believe we have to put money back into the hands of individual Canadian citizens by tax cuts, tax incentives and other means which will get the country growing in line with its potential. That is the fundamental difference which exists in economic policy. It is well known. It is known to the House and it is known to the people. The lines are drawn. There will be an election. The election will be fought on that question and as a result of that election, as a result of that issue being decided, there will be a new government. And there will be an opportunity to bring some growth back into the economy.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: The disagreement which exists about the fundamentals of economic policy is well known. But what we are dealing with today is a different and, because of its urgency, a more serious problem. I say this because the disagreement on the question of the Canadian dollar is not a disagreement between political parties alone. Disagreement has now become public among the small group of people in this country who are privy to the policy which is actually being followed to defend the Canadian dollar. The chairman of the board of directors of the Royal Bank of Canada, Mr. McLaughlin, deliberately made his concern public on January 11 when he dealt directly with the pretence that the Canadian dollar is floating. I will quote briefly from his remarks.


Herb Breau: He has been replaced-


Charles Joseph Clark: One of the hon. members opposite who specializes in talking from his seat has talked about people being replaced. He should look forward to that.


Some hon. Members:: Oh, oh!


Charles Joseph Clark: I shall quote only two passages from the words of Mr. McLaughlin:
It is true that we officially have a floating rate for the Canadian dollar, but during the past year the float became a rather dirty one. Ottawa maintained that the Canadian dollar was being left to find its own level on the market. That is the essence of a clean float, with intervention only to prevent too great a movement either way, over a very short period. But what Ottawa said and what Ottawa did seemed to be two quite different things. In my view, this has been part of the reason for the fall in the Canadian dollar.

February 13, 1979
Currency Devaluation
In other words, to make it clear, part of the reason that the Canadian dollar has fallen has been inconsistency between what the government said it was doing and what it has in fact been doing. It is the policy and the duplicity of the government which have driven the value of the Canadian dollar down.
Again, Mr. McLaughlin said:
But surely the experience of governments around the world has shown that any currency defended at a level other than what the market says it should be must inevitably end up at the market level anyway. Government support is not only ineffective but frequently counter-productive.
Certainly last year the defensive efforts of the govenment had, in my view, a reverse effect. This support probably pushed the Canadian dollar down.
That is the view of the chairman of the Royal Bank. That was his public testimony and, as we in the House of Commons know, he was saying publicly what countless other Canadians expert in this field have been saying privately. There is direct and widespread disagreement with the policy being followed by the government to support the Canadian dollar. There is a widespread view that this policy is, in Mr. McLaughlin's words, "probably pushing the Canadian dollar down."
We know that the dollar continues to drop. We know that every drop in its value adds to inflation in this country. We have a right to know why the government is pursuing a course which has so obviously failed. We have a right to know what forecasts, what expertise in possession of the government, can justify a policy which, on all the evidence, is failing miserably. But this information is not available to parliament and to the people of Canada. Questions put in this House are evaded or else they are not understood.
When the governor of the Bank of Canada appeared before the standing committee, his answer to Mr. McLaughlin's charge was simply: "Mr. McLaughlin is wrong." Nothing more. There was no explanation, no defence. When the minister appears before that committee he is deliberately protected from questioning by Liberal members who ask about everything else, and then he is further protected by a Liberal deputy chairman who tries to deny the official opposition their right to ask questions.


Some hon. Members:: Hear, hear!


Mr. Martin:: Mr. Speaker, I rise on a point of order. Reference has been made to proceedings before a committee of this House at which the Leader of the Opposition (Mr. Clark) was not present, and it seems to me there should be an opportunity for the chairman of that committee or someone on his behalf to make a response. Incorrect information is being placed on the record.


Mr. Speaker:: Order, please. The contributions to the debate which ensue this afternoon can take the form of any intervention which may be desired. The Leader of the Opposition (Mr. Clark) has the floor.


Charles Joseph Clark: Thank you, Mr. Speaker. If the deputy chairman wants to have an opportunity to participate in this debate, perhaps he should consult his superiors in his party to see if he
[Mr. Clark.)
can get on the list of speakers. Or perhaps the view of the Liberal party in relation to members of that committee is that none of them should be heard on any circumstance at all. Perhaps that view will prevail and this deputy chairman will be denied his right to make a point, just as members of my party were denied their right to put questions in the standing committee.


Mr. Leblanc (Laurier):: You are not being fair, Joe.


Some hon. Members:: Oh, oh!


Charles Joseph Clark: There is a parliamentary secretary opposite who is very nervous. I am not surprised about that. Anyone who has to serve as parliamentary secretary to this Minister of Finance, when we have an economic policy which has driven the dollar down and the rate of inflation up and which is driving the unemployment rate up, deserves to be nervous.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: What is clear to all the world and even to the very nervous parliamentary secretary is that the present government policy is not working at all.


Alan Gray Martin: Nonsense.


Charles Joseph Clark: The hon. parliamentary secretary says "nonsense" because the dollar is up to 83.79 cents today. It has dropped 20 per cent in two years.


Alan Gray Martin: Nonsense.


Charles Joseph Clark: The parliamentary secretary continues to speak from his seat. Is he arguing that the Government of Canada has deliberately driven the dollar down, or has it simply fallen down because of the inadvertence of this government? Is he arguing that it is the deliberate policy of this government to allow more than a million people to be out of work in this country? Is the parliamentary secretary arguing that it is the deliberate policy of this government to have the dollar drop in such a way as to increase inflation?


Walter David Baker: It is no wonder he speaks from his seat.


Charles Joseph Clark: There is a very real question as to whether the policy being followed is deliberate or accidental. Most of us think this government does not know what it is doing. Most of us think that is the reason the government refuses to let evidence be public, that that is the reason it put a gag on the standing committee and that is the reason it keeps forecasts secret and refuses to allow witnesses to come before committees so that they can be examined and we can have the benefit of their expert testimony. We think this government does not know what it is doing. We think that the international community, whose decisions affect the value of the Canadian dollar, has also come to the conclusion that this government has no idea what it is doing, and that is adding significantly to the uncertainty which exists both in the international community and here at home. That is another factor which is reducing the
February 13, 1979

value of the Canadian dollar month after month and day after day.
This question of confidence is very important because if the government continues to pretend that there is no problem and everything is fine when the dollar drops month by month, and if the government continues to pretend that we have a floating dollar when that float has to be supported with billions of dollars, confidence in the Canadian economy will be reduced even more than it has been.
Part of the enemy is a failure of policy, and I intend to come back to that later in this debate. But part of the enemy also is uncertainty about what this government is going to do. The government should surely understand by now that secrecy creates uncertainty, that a pretence of a float creates uncertainty, that a failure to explain policy or a refusal to answer legitimate criticisms all create deep uncertainty, and that that kind of uncertainty will drag down the Canadian dollar deeper and deeper.
That is precisely why we have been seeking a full-scale parliamentary inquiry into this situation. An inquiry would allow us not only to hear from the governor of the Bank of Canada and the Minister of Finance, when Liberal members allow questions to be put, but it would also allow us to examine the testimony of Mr. McLaughlin and other experts and representatives of investment houses and banks.
We need an opportunity to make public some of the evidence which exists in relation to the effectiveness or the failure of the policy which is being followed. As a parliament and as a people we must also examine publicly some of the other policy options which are open to us. Perhaps we should be considering special export mechanisms like the DISC program introduced in the United States when its balance of payment deficit proportionately was only one third as large as ours. We certainly should be reviewing sectors where our own domestic economy is very heavily dependent on imports to see whether there are ways-whether through special "buy Canadian" programs, temporary import surcharges or other mechanisms-by which we can encourage more substitution of imports by Canadian-made products. We should also be examining ways to improve our tourist account, offer new incentives to attract foreigners to Canada, more effective packaging of Canadian travel for Canadians and perhaps examine some existing proposals to allow Canadians to spend their own money while winter vacationing in the sun.
Unfortunately, this government refuses to face up to the problem, and so it does not want parliament to examine policy options. Canadians are left to suffer the price of the weakest dollar in more than 40 years and the risk that it will drop deeper, dragged down by the uncertainty this government's attitude engenders.
I want to deal with some of the substance of the problem we face now. I think it is agreed by people who know the situation Canada faces that the Canadian dollar will remain vulnerable to downward pressure as long as there is a large current account balance of payments deficit. Canada has suffered current account deficits averaging $4 billion in each year from
Currency Devaluation
1975 to 1978 inclusive. Since 1976 the trend has been upward. Forecasters expect a larger current account deficit in 1979 than in 1978. The problem is not getting cured, it is getting worse, and the reasons are clear. The deficit on trade in services has been growing by an average of $1.1 billion a year for the last four years. Even under the most optimistic of assumptions, the growth of that deficit will continue to be very significant in the future.
As I said earlier, just to keep the current account deficit from increasing the merchandise surplus must grow by $1 billion per year. Despite devaluation, the surplus did not achieve that growth in 1978. Most private sector forecasters do not see a $1 billion improvement in the surplus in 1979. Even though Canada is achieving record merchandise surpluses, these surpluses are simply not adequate to stop the current account deficit from rising, let alone reduce it.
The government has offered no forecast which indicates that the current account deficit can be reduced in the medium term. 1 understand that the Minister of Transport (Mr. Lang) will be replying later. Perhaps he will give us that and other forecasts. Thus the government can provide no evidence which suggests a more stable dollar in the future, and even if Canada were to achieve a series of quite remarkable improvements in merchandise trade over the next five years, we have no indication at all whether our trading partners will tolerate sustained large Canadian merchandise surpluses.

The devaluation of our Canadian dollar these last 27 months had a greater impact on the Canadian economic performance, for better or for worse, than any budget put forward over the last four years. Although a number of exporters praised the admittedly stimulating nature of devaluation, both importers and consumers suffered from a lower dollar. When we realize the scope of the devaluation, we are amazed at the lack of discussion of the consequences.
The Minister of Finance usually supplies forecasts of the impact of his proposals. The minister for instance did forecast that the sales tax reduction at the retail level would lower somewhat unemployment. He predicted the reduction in the manufacturers' sales tax would reduce inflation by 0.5 per cent. These programs had minor impact relative to devaluation, but there is no government member who is not ready to give details on the pros and cons of devaluation. What is the actual and forecasted share of devaluation in the inflation rate? In terms of stimulation, what is the Canadian dollar devaluation worth? Would a still lower dollar generate sufficient merchandise trade surplus to reduce the current deficit in the current accounts?
Those are some of the questions that have to be asked but which the government refuses to answer. When one looks at the strategy that has been followed by the government to defend the dollar, one finds there are three main elements:

February 13, 1979
Currency Devaluation
first-my colleagues will be discussing this later-there have been higher domestic interest rates; second, there have been immense federal borrowings abroad; and third, there has been the utilization of large amounts of foreign exchange reserves.
These three do not represent by any means all the tools available to defend the dollar. There are others available, and the parliament and the people of Canada have a right to know whether the others are being considered, and if they are not, why not. And if they are being considered, is there an intention to introduce them and to modify them?
There are a number of other measures available. Let me enumerate some of them that should be considered by a government that is serious about maintaining the strength of the Canadian dollar. Is consideration being given to currency swaps with central banks of other governments? Is consideration being given to borrowing from the International Monetary Fund? Is consideration being given to the revaluation of Canada's gold reserves? Is the government considering reductions in the rate of monetary expansion which we have seen in this country? Is any consideration being given to raising the chartered bank secondary reserve ratio? Is consideration being given to seriously reducing the growth rate of federal spending? Is the government giving any consideration to placing temporary import quotas on non-essential goods? Is there any consideration being given to reducing the duty-free exemption for returning Canadian travellers?
Those are only some questions, and the list is by no means inclusive. Many of these mechanisms may be completely unacceptable to the government. All of them involve costs to the Canadian economy. But let us be clear about this: so does the current interest rate policy involve costs to the Canadian economy; so does the current falling of the Canadian dollar; and so does the current rate of inflation, fed so much by the devaluation of the dollar.
What this parliament has the right to know and what the government has an obligation to set forward is what are the relative costs to the other instruments that might be available, and why is there no serious public consideration of other means that might prove more effective than the means that have clearly failed to support the Canadian dollar? [Translation]
Mr. Speaker, I referred to the matter of interest rates and although this government seldom does anything sensible, there is nothing less sensible than their determination to increase interest rates to record levels. That idea of theirs has led to the most expensive monetary policy in this country's history.
We are told the government has no choice, they must maintain interest rates above those in the United States. In suggesting this the government forget there were times in history when interest rates were in lower Canada than in the United States, without undue harm to this country. But more important still, this government admits Canada has no choice and must be a follower rather than a leader, whatever the consequences for Canadians and our own economy.
(Mr. Clark.)

These alternatives that I have listed have to be considered. Will the Minister of Transport, when he rises in his place today, explain to the people of Canada and to parliament why these alternatives I have listed are not acceptable, whether they are being considered, and if so, whether there is any intention to follow any of them?
In his appearance last week before the standing committee, the governor of the Bank of Canada said that he would not recommend them. That is his judgment, and his judgment, of course, has credibility. But there has been no explanation as to why all other alternatives to a policy that has failed are unacceptable.
[ Translation]
Mr. Speaker, it is essential in my view that we obtain either here in this Flouse or in our parliamentary committees a much more in-depth and precise explanation than we have been provided with up to now.

That, Mr. Speaker, is the problem of policy, but there is also the very serious problem of secrecy. Secrecy has become a way of life with this government. It is the most secretive government in the western world-


Mr. Speaker:: I regret to interrupt the Leader of the Opposition (Mr. Clark) but I think he will observe that his time has come to an end. I thought perhaps he was concluding, but then I realized he was opening another subject. I do not think he can carry on now without the consent of the House. It is the usual 30 minutes time limit. It expired a minute or two ago but I did not want to interrupt him at that time. Perhaps he could indicate now whether he proposes to conclude or whether he wishes to seek the consent of the House to continue.


Charles Joseph Clark: Mr. Speaker, I would propose to conclude, if I might be given a minute to do so, and I will try to take no more than that.
I had intended to elaborate somewhat more the problems of secrecy posed for this process by the government, particularly in light of the fact that eight years ago we had a recommendation by a committee of the other place that would have led to a much more extensive public discussion of economic questions.
I wager to say that had the advice of the other place been accepted, had there been a tradition of openness for the last eight years instead of the tradition of secrecy which we have seen here, we would not be facing a problem with the value of the Canadian dollar as acute as the one we now face.
While it is fundamentally important that the government change a policy that is leading us to deeper and deeper trouble with the Canadian dollar, it is also fundamental that this government abandon its practice of secrecy, that it stop putting obstacles in the path of inquiries by committees of the House of Commons and allow witnesses to come and be examined; that it allow all the truth to be told about the state of the Canadian dollar and the options that are available to the government and the governor of the Bank of Canada that
February 13, 1979

could reverse the sinking trend that has marked the Canadian dollar for the last two years.


Some hon. Members:: Hear, hear!


Otto Emil Lang: Mr. Speaker, I should say, first of all, that I am rising to speak in the absence of the Minister of Finance (Mr. Chretien) who accepted some time ago an engagement to speak at the prestigious Council of Foreign Relations in New York. I regret that he is absent and I regret particularly that the opposition has rushed to put this motion on the order paper in his absence when he could not confront the Leader of the Opposition (Mr. Clark) in the appropriate way.


Some hon. Members:: Oh, oh!


Otto Emil Lang: I know they were saying that of course they had to do it because it is such an important question to put before the House, but then I know they did not put a votable motion before the House but simply one for debate. I suppose that in view of the fact that, as the Leader of the Opposition said, they have one matter of substance and one matter of procedure in their motion-and they are wrong in both of them-they might have expected to lack the support of the House if a vote had come about.
There was some rumour that the Leader of the Opposition was not going to be here. When I saw that he was absent during the question period and beyond it, I thought that was true, but I gathered what was happening was that the Leader of the Opposition and the hon. member for York-Simcoe (Mr. Stevens) were trying to decide whether to deliver a long deficit speech or a short deficit speech.


Some hon. Members:: Hear, hear!


Otto Emil Lang: I am sure the Leader of the Opposition will have heard of the Book of the Month Club. Obviously there are no economic books in that club and he has not read many others, but the Book of the Month Club is well known. However, the "deficit for a month club" created by the hon. member for York-Simcoe is something new.
1 notice that the Leader of the Opposition is here and I am delighted. I also notice he did not go into the question of deficits and left us wondering what his policy is in that regard, even though 1 should have thought that in his spirit of openness he would have revealed to the country at this important stage what his thinking really is so that we get a view of what this self-styled prime minister-in-waiting would do as the leader.


An hon. Member:: Now you are getting the message.


Otto Emil Lang: I am not sure that that self-styled leader would have set many minds at ease by telling us what his policy is because, after the Leader of the Opposition spoke about the fact that he would go for an even higher deficit for two or three years, that that was his method of bringing deficits under control, we had the only example I know in history when a
Currency Devaluation
senior spokesman for the party indicated on that same subject matter that his leader was not speaking for the party in giving those opinions to the people of Canada. The hon. member for York-Simcoe (Mr. Stevens) indicated that it would be only for perhaps a month or two, that they were not quite sure. Then I think the Leader of the Opposition said, "Maybe even five minutes".
1 am delighted the Leader of the Opposition read a speech which contained some economic questions. It did not contain any suggestion of answers, which of course is not surprising. At least the Leader of the Opposition was here today. He was not before the committee. He made his grandstand in the House demanding that Governor Bouey of the Bank of Canada come before the committee, but the Leader of the Opposition was not there to put his questions.


Some hon. Members:: Hear, hear!


Otto Emil Lang: The hon. Leader of the Opposition could have asked these very questions, and if he was not satisfied with the answers of the governor, he could have cross-examined. The hon. Leader of the Opposition admitted that the governor of the Bank of Canada made a telling case in support of the policies in place relating to major monetary and fiscal questions, yet he did not appear before the committee to put questions.
Also the Leader of the Opposition indicated that in the spirit of openness he would have liked other witnesses to appear before the committee. I have been told by members of the committee and the steering committee that they knew of no case where the opposition asked for certain people to be called before the committee and their request was refused. It is the lack of putting requests for witnesses which is troubling the opposition and their leader, rather than any lack of openness on our part in this regard.


Some hon. Members:: Oh, oh!


Otto Emil Lang: The Canadian dollar-


An hon. Member:: -has just fallen again.


Otto Emil Lang: Earle McLaughlin said that the Canadian dollar will in many ways reflect an international judgment about its value. Over any prolonged period of time obviously that is true. Over any short period of time obviously it reflects the moves and opinions of those who speculate in the market. One of the most serious indictments of the official opposition is the irresponsibility with which it has engaged in the debate on our currency and economy, without regard to the fact that those outside the country might make the mistake of treating the Leader of the Opposition and the hon. member for York-Simcoe as being somewhat responsible and therefore rely upon their statements and figures.
When the Minister of Finance said that the deficit would be $11 billion, the Leader of the Opposition made the bald statement that it would be $15 billion to $18 billion. The
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February 13, 1979
Currency Devaluation
Leader of the Opposition is being irresponsible when he makes such a bald, unfounded statement. The trouble is that people outside the country may not know how little attention they should pay to the Leader of the Opposition when he makes such statements.


Some hon. Members:: Hear, hear!


Lincoln MacCauley Alexander: When has the Minister of Finance (Mr. Chretien) ever been correct on any forecast?


Otto Emil Lang: The governor of the Bank of Canada told the committee what everyone in the House and the country should know concerning the question of the value of the dollar or any currency. He said that people react to every bit of news around; they react to every bit of news about possible separation or anything one would like to see. He indicated that people would react if someone irresponsibly said that there will be foreign exchange controls.
On February 3, the hon. member for York-Simcoe was quoted in the Toronto Star as having heard in Ottawa that there was a government contingency plan on controls. That was completely false, completely irresponsible. Even if the hon. member had real knowledge about such a matter, as a responsible member of the opposition he should have avoided saying so.


Some hon. Members:: Oh, oh!


Otto Emil Lang: Without the facts to support it, he made a statement which had impact upon the Canadian dollar.


Some hon. Members:: Oh, oh!


Otto Emil Lang: At the present time many Canadians believe that the Canadian dollar is undervalued. At the time prior to the election of the separatist government in Quebec, many Canadians felt that it was overvalued. At that time we were going though a series of fairly high wage settlements, and we were deeply concerned about the impact upon our productivity and competitiveness. We reacted with a program of wage and price controls which turned the corner on that inflationary spiral. As we emerge from controls and are moving into lower figures of inflation, we know we must continue restraint in wages and prices to keep competitiveness under way.
One of the serious matters faced by the country which has an impact upon the value of the dollar and the confidence of investors is the existence in Canada of a separatist government espousing policies to change the entire economic framework of the country. The uncertainty surrounding that fact was not improved when the Leader of the Opposition indicated that he would negotiate a sovereignty association with the government of the province of Quebec; the Parti Quebecois were dancing in the streets of Quebec. Perhaps later the hon. Leader of the Opposition was not sure whether that was what he said, but he did not deny saying it. The hon. member for Rosedale (Mr. Crombie) knew that his leader [*.. said it and repeated it until it was clear to every Conservat. member that such a policy was unacceptable; then it was rejected. What I am highlight-

ing is the irresponsibility and complete lack of control by the leader of the Conservative party over what he says, over his partners in specific areas of responsibility in that party, and the damage it can do.
The Leader of the Opposition did not speak about his deficit. Once again he talked against the federal deficit. He pretends to see a way of cutting 60,000 public servants which he thinks will save some money. However, he talks about a bigger deficit to stimulate the economy. Why did the Leader of the Opposition put himself in that position? It was because it was put to him that he had, in his various perambulations and speeches, promised income tax cuts of $2 billion immediately and a mortgage deductibility plan of $4 billion over three year. Incidentally, that plan can be dressed up as an attractive tax reduction, but it will benefit the rich more than the poor. It is pure fraud and deceit if it is not accompanied by some word concerning from where the money will come to make up the $4 billion in mortgage deductibility. Were will the money come from?
The hon. Leader of the Opposition likened his program to the American one. Canadians should take note of a warning concerning his proposed program: in the American program a capital gains tax on homes is in place. Perhaps that is where the hon. Leader of the Opposition has in mind getting the funds. The government would not support that policy in any circumstances.


Mr. Gillies:: That is not a fact.


Otto Emil Lang: On January 8 the hon. Leader of the Opposition appeared on a CTV program. He was asked the following question:
You talk about $4 billion over three years on a mortgage deductibility with $6 billion in other tax cuts. How are you going to get over this deficit?
The Leader of the Opposition answered as follows:
The basic question is: how do we get over the deficit? You get over a deficit two or three years from now by having a slightly larger deficit now. There is no way around that.
That is what started the business of who said what.


Mr. MacEachen:: Then we heard from Darcy McKeough.


Otto Emil Lang: As the Deputy Prime Minister and President of the Privy Council (Mr. MacEachen) said, the well known Conservative, Darcy McKeough, the former treasurer of Ontario, said:
I sincerely trust and hope that my national leader, Mr. Clark, and his advisers have been misquoted when they talk about the possibility or desirability of bigger deficits.
The hon. member for York-Simcoe did not wait. He told the press immediately that what the hon. Leader of the Opposition (Mr. Clark) meant was that there would be a deficit for maybe two or three months, and we have not been told how it is going to work. In all this openness which they want there is this phantom deficit with no information as to how it will work.
February 13, 1979

The Leader of the Opposition asked a few questions about possible measures which he, presumably, might put in place. I do not know why he would ask if he did not mean to say that he would put them in place. He has some possible measures to remedy the situation. He says, "Maybe we should look at special export programs". Does the Leader of the Opposition not realize that the dollar at its current level is one of the greatest spurs to the export of Canadian goods? We are seeing that in terms of the improvement in practically every sector of our economy, and as a result we have a $3.5 billion surplus in trade for this country.


Some hon. Members:: Hear, hear!


Otto Emil Lang: The Leader of the Opposition insists on referring to a deficit of $11 billion in what he calls manufactured products. He insists on referring only to the end product figure and ignoring, as my colleague the Minister of Industry, Trade and Commerce (Mr. Horner) has pointed out, such manufactured list goods as steel, cement, paper and lumber which move out in a form that does not put them in the end product category. But when those products are taken into account we are in a surplus position of $3.5 billion rather than a deficit position of $11 billion.
I have not, nor has the Minister of Finance, ever made light of the kinds of problems which face this country in a troubled world. But I think it is fair to say that the Leader of the Opposition does a real disservice when he sounds off about a deficit under the heading of manufacturing by using an end product figure to obtain a deficit, when the figure in terms of manufactured goods as a whole shows a surplus of $3.5 billion. That is important news of the kind which the governor of the Bank of Canada, if the Leader of the Opposition had been in committee to hear him, would say might have a good impact upon the whole economy and our dollar rather than a bad effect, as do the kinds of wild statements made by members opposite and by the hon. member for York-Simcoe in particular.
The Leader of the Opposition in this case follows the hon. member for York-Simcoe. I thought when I heard the hon. member for York-Simcoe say that that he would have a different view from the Leader of the Opposition, in keeping with their current practice, but I guess, as somebody phrased it, it is tweedledum and tweedledummer. I would have thought that when I heard the hon. member for York-Simcoe suggest that we go for a temporary import surcharge or some form of import duty, we would at least have heard a westerner, who should remember something about what tariffs do to our whole economy, rebuke his colleague for saying such a thing. But he would actually suggest temporary import charges at a time when our dollar value has made it easier for our goods to compete at home and abroad. He would do so in the face of some worrisome words in our friendly country to the south that they may think of a similar measure when they have as serious problems or more serious problems than ours in terms of balance of payments.


An hon. Member:: They are thinking about it.
Currency Devaluation


Otto Emil Lang: If they are thinking about it, then surely it is in our Canadian interest to resist that, as the Prime Minister (Mr. Trudeau) will do in the highest circles of the world in keeping with an agreement made by the leaders of the seven countries that they would do everything they could to keep away from restraint measures and attempts simply to back the unemployment or developmental problems of one area into another. We want an open world with freer and freer trade and no temporary measures which would restrict that trade either within our country or outside it.
The hon. Leader of the Opposition and the hon. member for York-Simcoe are also guilty of misleading language when they use the expression that money is spent in connection with the defence of the Canadian dollar or action in relation to the Canadian dollar. It is transformed from one form of dollar to another-from American dollars in our hands to Canadian dollars-traditionally when we are guarding against uneven movements in a downward direction, and back the other way-from Canadian dollars into American dollars-when we are guarding against uneven movements in an upward direction. That policy of trying to use the currency exchange reserves in order to even flows and avoid fast movements is clearly very important.
This country is by and large in excellent economic shape.


Some hon. Members:: Hear, hear!


James McPhail Gillies: Let's go to the people on that one.


Lincoln MacCauley Alexander: When is the election, Otto?


Otto Emil Lang: We continue to have a serious challenge on the employment front where we are trying to spur the economy as much as possible to provide jobs, and we are providing jobs now at a year over year rate of 450,000, a rate which outdistances any other country in the world.
One might ask what does 450,000 jobs mean? Is it a large figure or is it a small figure? If one compares it to the actual growth in our population of 205,000 over that same 12-month period, it is quite significant. As a result Canadians are on average and individually-


Lincoln MacCauley Alexander: -getting sick of this government.


Otto Emil Lang: -better off in their standard of living day by day, week by week and year by year, even in the challenges we face in this economy of ours in a difficult world. That is why we see more Canadians travelling generally, but particularly travelling abroad, and that is why it contributes to our balance of payments problems as well. It has not been the policy of this government, and we would avoid such a policy, to restrict Canadians in how they invest or travel. We do encourage them to travel in Canada and to buy in Canada. The hon. Leader of the Opposition has said that perhaps we ought to do that. Perhaps he has not noticed that we have designed to do that, that we have a tourist program specifically designed to attract more and more Canadians to travel in this country.


John Carnell Crosbie: Like Trudeau to Colorado.

February 13, 1979
Currency Devaluation


Otto Emil Lang: We believe in doing these things on the basis of encouraging Canadians to take a certain course of action and not on the basis of falling back on restrictionist controls and power devices such as the Clark Tories suggest. That is not our policy. Our Liberal policy is to be as free and open in our society and our economic endeavours as it is possible to be.


John Carnell Crosbie: Like freedom of information in Saskatchewan.


An hon. Member:: Get an injunction, Otto.


Otto Emil Lang: Hon. members opposite, Mr. Speaker, were glad to hear the Leader of the Opposition quote Mr. Earle McLaughlin, although I am sure they did not like what he said a few weeks or months ago when he also indicated how firm his belief was in the basic soundness of our economy. Perhaps they would like to hear the last group of quotes which have come into my hands. Mr. Powis, president of Noranda Mines, said:
One of the most striking things about the meeting-
He was referring to a meeting of businessmen.
-was the degree of optimism, more than most of the forecasts.
The Financial Post said:
Canadians rank remarkably high in affluence in a world more troubled than we. The time has come in other words to count blessings.
Mr. Laurent Thibault of the Canadian Manufacturers' Association said:
You talk to any company you want to, they're growing, markets are good, inventories are lean, profitability is improving, they can compete.
The president of the Hudson's Bay Company, Donald McGiverin, said:
The economy is pretty darn good really.
Canadian Business Magazine wrote:
The fact is we're still operating one of the most successful economies on earth.
The facts are there, Mr. Speaker. In the face of those facts the Leader of the Opposition is not sure today whether he wants a stronger dollar, a higher dollar or a lower dollar. His colleague, the hon. member for York-Simcoe has given us some advice about what level he thinks is right. The truth of the matter is that the dollar will reflect in part the judgment of the day of traders in currency and traders generally in this country.
1 pointed out earlier that in that complex of figures in relation to trade and in relation to the balance of accounts it is also true that wild statements and rumours made by spokesmen in the opposition can have their impact as well. They cannot have lasting impact because they will be exposed, but they can have that impact which is the most serious-which causes a sudden surge up or down in the currency. A stable currency is obviously relatively to be desired at whatever level it may appropriately be.
Where ought our Canadian dollar to be? I said earlier it was generally agreed that prior to the November 15, 1976 election of the Parti Quebecois it was overvalued. It is generally agreed

now that on all terms, and related at least to that very fact of a separatist government, it is undervalued.


Lincoln MacCauley Alexander: I was told that separatism was dead.


Otto Emil Lang: The most important thing is for us to confirm what the hon. member for Hamilton West (Mr. Alexander) has just said about separatism being dead-


Lincoln MacCauley Alexander: That is what the Prime Minister (Mr. Trudeau) said.


Otto Emil Lang: -in the sense that it is in hand and under control.
Hon. members opposite and the Leader of the Opposition smile. They do not realize that the Parti Quebecois was not elected because it said it was going to separate from this country and was determined to do so. It could only get elected because of the strong feeling of federalism in the province of Quebec. It was only elected after it gave up that plank and turned instead to a referendum on independence. That was changed to a referendum on sovereignty association because Rene Levesque hoped that people in Quebec might be sucked in by those words; but the only person he seemed to suck in was the Leader of the Opposition who did not know how serious those words were.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


The Acting Speaker (Mr. Turner):: Order, please, order. The Minister of Transport (Mr. Lang) has the floor.


Otto Emil Lang: Why can one say with confidence that separatism will not succeed in this country?


James McPhail Gillies: Because we are going to have a new government.


Otto Emil Lang: There are some who would say it in terms of a question of the force of power, but that is not the way we talk. The reason one can say that the strength of federalism exists and is strong in the province of Quebec and other provinces is because of the long, determined efforts by this government to lead a right thinking majority of Canadians along the path of understanding the needs of the minority, whether it be in regard to their culture, in regard to Atlantic regional development, or whatever. That is what will sustain our federalism and this great Canada of ours.
It is only this continued understanding, this continued searching out of the rights and needs of the minorities and the sensitive understanding of their needs, which will prevent the cause of any kind of separatism from growing. It is that kind of understanding which we have seen in the governments of this country, particularly after the challenge became visible and real from the province of Quebec, the kind that we saw in the leadership given by Prime Minister Pearson in searching out the causes and the answers to the problem. We have seen it
February 13, 1979

in the sensitivity of the programs of this government under the leadership of the Prime Minister.
Liberals throughout this country promote the view that minority interests must be respected and put in place in terms of our laws and our structures. That is what in the end will win over any threat of separatism in this country. That is what in the end will restore confidence on this vulnerable question of separatism, without having in the short run a great deal to do about it in terms of convincing those abroad that the threat is in hand.


Lincoln MacCauley Alexander: You had ten years to do all of this.


Otto Emil Lang: Mr. Speaker, what the Leader of the Opposition ignores is the exact value of a dollar to those who export, because exports reflect higher costs which may have been built into our wage and price structures. Certainly the fishermen of this country should bless the Minister of Fisheries and the Environment (Mr. LeBlanc) for the 200-mile limit and for prosperity in their industry.


Some hon. Members:: Hear, hear!


Otto Emil Lang: They are benefiting by the price they get for their fish today compared to other costs they have to incur in Canada. The Saskatchewan farmer and those throughout the prairies and other regions of this country benefit when they export agricultural products and receive 45 to 50 cents more per bushel of wheat because of the change in the value of the dollar.
Those, Mr. Speaker, are real reflections of the need there was in Canada for an adjustment to the dollar, having regard to our wage and price levels which have gone too high. Those were the needs which were faced with wage and price controls and which are now being faced with ongoing programs to try to ensure that restraint by those who would take too much out of the economy is the order of the day.
Many spokesmen in the real world have said how well our economy is doing when compared to other countries. In the years to come when the separatist threat is put behind us that fact will stand us in good stead in the kinds of jobs we continue to promote and in the continued growth of the economy.
No motion lacking in substance and wrong on the procedural issue which may be put forward by the Leader of the Opposition can conceal the fact that a great deal has been going right with the economy of this country when considered against the background of a world which has been and is troubled. This government will continue to move toward policies which are free and liberal and which give people as much freedom as possible in the management of their own affairs, their decision to travel, that give as much freedom-


The Acting Speaker (Mr. Turner):: Order, please. I regret to interrupt the Minister of Transport but his allotted time has expired. He may continue with the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.
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Some hon. Members:: No.


Mr. Edward Broadbent (Oshawa-Whitby):: Mr. Speaker, we have just had a walking and talking illustration of what is wrong with this country by the minister of almost everything- the Minister of Transport (Mr. Lang), the minister of the wheat board, the minister of justice, the minister of manpower, employment and immigration. He is minister of everything but master of nothing. The minister has just lectured us and I will try to put what he said in reasonable terms. I followed with great care the brilliant, sophisticated reasoning just presented to us. Apparently the fact that hamburger costs $2 per pound, that interest rates stand at 11.25 per cent, that the dollar is down to 83 cents, and that gasoline costs over $1 per gallon has absolutely nothing to do with this government. This is to be blamed, on the one hand, on the opposition or, on the other, on Rene Levesque.


Some hon. Members:: Hear, hear!


John Edward Broadbent: It was a real tour de force, a put up job by a former dean of law. In my view, the reason for the election of the PQ government was because the people of Quebec, like the people of Canada, got sick and tired of a Liberal government.


Some hon. Members:: Hear, hear!


John Edward Broadbent: That is the reason. A few years ago a man named Bourassa from the province of Quebec took the same attitude that this government is now taking with Canada as a whole, specifically that everything they do is right. Whatever problems emerged, Mr. Bourassa blamed the provincial separatists for them, he did not blame his own government. This is the same attitude that the federal Liberals are now taking by putting the blame on the opposition. I notice the minister, with his characteristic modesty and consideration of the opposition, has just left the chamber.


Some hon. Members:: Shame!


John Edward Broadbent: If there is anything that a Liberal cannot stand to hear, it is the truth.


Some hon. Members:: Hear, hear!


John Edward Broadbent: Whenever it hits them in the face they leave.
His was an incredible performance. I want to say to the minister that he has convinced his backbenchers if no one else in the country.


Mr. Paproski:: They have gone also.


John Edward Broadbent: The subject matter of the motion I thought we were debating was associated directly with the problems of the Canadian dollar. I had hoped to hear, particularly from the minister who was filling in for the Minister of Finance (Mr. Chretien), some solid defence of the principal instruments that the government has seized upon to prop up the

February 13, 1979
Currency Devaluation
dollar. There are two of them and I will come to them in a moment. They are serious in the financial and real world that Canadians are living in now. But we heard nothing. We heard noting in defence of the government's policy. All we got was a little forerunner of the Liberal party's election campaign which suggests that all of the country's problems are to be blamed on everyone else instead of upon themselves.
The Leader of the Opposition (Mr. Clark) at one point in his comments today-and on this I agree with him; anything I do not agree will 1 will come to later in my remarks-said very correctly that the real problem of the Canadian dollar is not to be attributed to interest rates or some other minor aspect in an over-all monetary or financial policy, but to the performance of the Canadian economy as a whole. That is the problem.
The reason we have a strong Japanese yen, a strong West German mark and a strong Swiss franc is that we have strong Japanese, Swiss and German economies. In these countries and others there are governments which are seriously committed to national economic performance. Canada is in trouble today and has a weak Canadian dollar because we have a weak Canadian government, that has no sense of purpose.


Some hon. Members:: Hear, hear!


John Edward Broadbent: That is the reality.
There are two principal instruments in dealing with this 83 cent dollar that have been applied, on the one hand, by the Minister of Finance and, on the other, by the Bank of Canada. I want to deal with them because every now and then it is appropriate for a politician in Canada to deal with a matter of substance and say where he and his party stand on the issue. The two instruments that the government has seized upon are interest rate tinkering and borrowing money abroad.
In a matter of months we have gone from an interest rate structure of 7.5 per cent to 11.25 per cent. One direct result of this policy has not been a good one. What impact has occurred as a result of jacking up the interest rate in this way? If I remember correctly, seven times in the last year we have had an interest rate increase. This was effected by the Bank of Canada with the full support, policy, and I am sure direction, of the Government of Canada. The negative effect has caused interest rates to increase and Canadian businessmen have been affected. This meant Canadian businesses could not expand and provide more jobs which are badly needed.
Second, mortgage rates have increased. This meant that Canadian families who wanted to buy homes have not been able to get a home at all or have had to pay much more for it. This has resulted in restricting consumer credit. Consumer credit costs were increased along with the bank rate. In each one of these instances, either interest rates for businessmen, consumer credit or mortgage rates, the effect has been negative, not positive, on the Canadian economy. The effect has been a generation, not a reduction, of the pressures of internal inflation.
I doubt whether the Minister of Finance-although I am stretching a point here-the minister who has just spoken

would deny these negative effects, but they would say, however, there have also been positive effects. They would say the interest rate upward pressure, which we think is a fundamentally faulty policy and ought not to have been embarked upon, was needed. Why? To attract investment into Canada and to make up for the outflow of capital.
What has happened during the period we have had this upward pressure on interest rates? In 1978 it did not work. That is a simple reality. In the past year, not coming in but going out of this country, there was some $2 billion of investment capital by Canadian firms. What were these firms investing in? Most of the money was going to the United States. It was going to the country which for most of that period had lower interest rates. If interest rates were a prime consideration in terms of attracting capital, then obviously it would not have been going in that direction. And why does a country like Switzerland, which had much lower interest rates than Canada throughout this period, get all the foreign investment it wants?
I will come to the different question of whether we want it in a moment, but first I want to deal with the argument that it has been effective. It is the government's position and that of the Bank of Canada that we needed to have these higher interest rates-admitting it was harmful in terms of domestic inflation-because we had to get this investment capital. In Canada we are now experiencing a net outflow of capital; it is not coming in. Countries that wanted investment, like Switzerland and the United States, have had lower interest rates than we have, yet they have been attracting and getting investment capital for what I regard as the central economic reason that investors had more over-all confidence in the performance of their economies. That is the reality.
The other method of propping up the dollar used by the government and the Bank of Canada has been to borrow directly abroad and to issue new bonds. The reality of this in terms of its effects has been even more alarming as an illustration of faulty economic policy. The Bank of Canada borrowed a total of $3.5 billion abroad last year, $2 billion in loans and $1.5 billion in bond issues. We estimate that the direct cost to the Canadian taxpayer of borrowing this money abroad last year was $268 million. That money has gone; it has gone forever. In addition to that cost, as a result of the additional $1.4 billion which was borrowed in Canada by the Canadian banks the total outlay for Canadians for this faulty policy is some $378 million. That is more than $1 million a day which this government has spent in propping up the dollar. This is more than $1 million a day which my party would argue could have been much more sensibly spent in restructuring and rebuilding a manufacturing sector in Canada that could be generating more jobs.


Some hon. Members:: Hear, hear!


John Edward Broadbent: There are two brief but cogent arguments against the central pillars of this financial policy, the interest rate approach on the one hand, and borrowing abroad on the other. I will not elaborate further upon them.
February 13, 1979

As I said at the opening of my remarks, my party and 1 believe that the serious problems of the Canadian dollar, and they are serious, are attributed to the over-all malfunctioning of the Canadian economy. To paraphrase what the Leader of the Opposition said, something more serious and fundamental is required than tinkering around with interest rates. However,
1 am not just going to comment on the government's disastrous performance in this regard. I agree with the Leader of the Opposition that something more fundamental is required. When he said that, my ears perked up. I thought I might hear from the Conservatives the fundamental policy that is required. I regret to say that I did not hear anything fundamental.


Steve Eugene Paproski: He did not get to it.


John Edward Broadbent: One of the Conservatives says he did not get to it. He made some suggestions. I will not comment on those;
1 thought they were illustrations of fundamental Conservative thought, if that is not a contradiction in terms. The suggestions that were made were exactly of the same kind of tinkering nature that we have had from the Liberals.
On the other hand, he suggested some restrictions should be put on tourists with regard to what they bring into the country. That is one idea. On the other hand, there was the suggestion of imposing for a brief period of time some tariffs, thereby holding out some prospect that jobs will not be lost by keeping out certain products. That is a clear violation of an international agreement. Those were the two principal suggestions from the Conservatives. It is entirely the same kind of tinkering as that proposed by the Liberal party. There is no difference at all.


Some hon. Members:: Hear, hear!


John Carnell Crosbie: Give us a chance. Wait until we are in a couple of years.


John Edward Broadbent: The Conservatives say give us a chance. I have experienced 20 years of disaster with the guys over there. I do not want to put up with another 20 years of those on my right.


John Carnell Crosbie: What about ten?


John Edward Broadbent: Neither the government nor the official opposition is offering any serious solution to our problem. On behalf of my party I want to state briefly what I think is the problem and to make some very specific suggestions.
The real problem we face in Canada is not just an international problem as the Liberals like to tell us. The Germans, Japanese, Swiss, Belgians and Swedes do not have it. In a different context, the Americans do not have it. The real problem is that this country does not have a viable industrial manufacturing sector of world class standing. The reason is that just over 20 years ago a decision was made by a Liberal government, supported by a series of governments, including
Currency Devaluation
one term in office of the Tories consisting of two principal points.
After the war it was decided that we were a rich resource country. From Newfoundland on the east coast to British Columbia on the west coast, it was recognized that we indeed were blessed on a per capita basis with the richest supply of resources in the world. It was argued by the Liberals of the day and supported by subsequent Tory governments that because we had a small population spread across the continent, we should sell off our resources to other countries that were industrialized. That was the argument that was made. Not long ago the hon. member for Don Valley (Mr. Gillies) said in a speech in Toronto that we should remain hewers of wood and drawers of water.
It was further argued that because of our small market, we could only have an industrial base that would serve the Canadian market and that it would have to be promoted behind high tariff barriers.
The chickens are coming home to roost at the end of the seventies. That is the real reason we are having problems with the Canadian dollar. We are Finding that we are not the only country with resources. Countries such as Guatemala, Indonesia, Panama and Mexico also have resources which they are selling. As a result, we are seeing lay-offs in northern British Columbia, Thompson, Manitoba and Sudbury, Ontario, our once thought totally immune resource parts of this country. However, that is what is happening in Canada.
Our manufacturing sector was set up on a branch plant basis. Not only is it not doing research and development, but it is not going after export markets. It is not even competing behind tariff walls to serve the Canadian market. Therefore, we are having lay-offs in our manufacturing sector. On the one hand, we run into international competition with third world countries in selling off resources. On the other hand, we cannot compete at home with the manufacturing sector, which not exclusively but in the main is incompetent in world terms. That is the result of decisions made by a series of Liberal prime ministers and maintained by the right hon. member for Prince Albert (Mr. Diefenbaker) when he was prime minister of Canada.


Eldon Mattison Woolliams: That is not true.


John Edward Broadbent: The hon. member says it is not true. I hope he joins in the debate.
I want to place on record the relationship between these general statements and the current difficulty we are having with the dollar. In 1950 we exported 15 per cent of our mineral production in raw form. By last year that percentage had climbed to 40 per cent. We are just stripping it off and exporting it. In 1950, 25 per cent of Canadian jobs were in the manufacturing sector as opposed to 20 per cent in 1978. We are becoming less of a manufacturing country than we were ten or 20 years ago and becoming more of an exporter of relatively unprocessed raw materials.

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These data show that we are continuing to sell off our resources. In terms of our share of the world market, however, we are selling fewer because of competition from the third world.


James McPhail Gillies: Look at the figures.


John Edward Broadbent: The hon. member for Don Valley will have an opportunity to join in the debate. I hope he will. I would like to hear him reiterate and justify his view that the people of Saskatchewan, British Columbia, Ontario and the east should be hewers of wood and drawers of water.
That is the current statistical data on the resource sector. The data for the manufacturing sector is even more alarming. The growth of the fully manufactured goods deficit in the balance of payments account grew from around $3 billion in 1970 to over $12 billion in 1978, an increase of 400 per cent in eight years. Meanwhile the penetration of our domestic market by imported manufacturing goods increased in 17 out of 20 categories of secondary industry products in our country. The process started after the war of being an exporter of raw materials and importer of manufactured goods, or at least not a sophisticated manufacturer of secondary goods, has worsened, not improved. That is the real reason for the problems we are having today with the Canadian dollar.
My time today is relatively brief; I only have a few minutes remaining. In that time I would like not only to state the problem, as I have done, but to suggest an alternative approach, something that does not involve the tinkering we have heard about from both of the old line parties.


The Acting Speaker (Mr. Turner):: Order, please. I regret to interrupt the hon. member but his time has expired. Does the hon. member have unanimous consent to continue?


Some hon. Members:: Agreed.


John Edward Broadbent: A central approach has to be taken now in order to come to grips with the problem of the Canadian dollar. We must deal with the broader question of providing jobs for all Canadians who need and want to work, and with driving down the cost of living. This is all connected with restructuring the Canadian economy. It is all connected with the issue of ceasing to be what we have become, namely, industrial tenants in our own land.
We should begin with the assumption that the central duty of the Government of Canada is to see that Canadian resources are owned by Canadians, controlled by Canadians and turned into manufactured goods by Canadians for export all over the world. That should be the assumption. To achieve this end we have laid out, on other occasions, certain specific recommendations. But today, in the context of this important debate on the Canadian dollar, I will set out certain definite proposals for the consideration of the House.
First, we should stop propping up the dollar at the cost of many millions of dollars for the sake of a policy which is not

working. Instead of spending more than a million dollars a day to maintain a dirty float, we should invest that money directly in restructuring the Canadian economy and bringing about a greater degree of Canadian ownership in commercial sectors.
Then instead of raising the bank rate, the prime rate should be lowered by a whole percentage point. This should be done immediately because, in our view, it is essential to stimulate economic growth and make up the 14 per cent of unused capacity in the economy.
Third, over half of the jobs under the control of the Canadian Development Corporation which was set up in 1971 exist in other lands. My party says that all future CDC investment should take place in Canada alone unless a specific investment project can be shown to have a long-range Canadian benefit.
Finally, immediate steps must be taken to redirect the current rate of Canadian investment abroad. Intelligent use of planning agreements, investment incentives and joint ventures in energy, mining, pulp and paper, transportation, fishing and manufacturing could keep large sums of this money in Canada. Before large Canadian firms are permitted to invest significant sums abroad, they must be required to show a net Canadian benefit.
This approach, Mr. Speaker, is not something drawn out of a hat. It is not the magical product of academic economists working in a closet. These four proposals I have listed have already been put into effect in Norway, Sweden, Denmark, France, West Germany and Japan. The point I am making is that these are practical measures which are not new, they are workable, and the general conclusion Canadians should draw from them is that the problem of the Canadian dollar is not to be put in one corner, so to speak, while inflation and unemployment are put in other corners. They are all related as every economist and every thinking person knows. The means of dealing with them are also known.
What is lacking, therefore, is not the knowledge but political leadership, and it is time we got the leadership which would move the country in the required direction, leadership which will rest on the assumption that Canadian resources belong to Canadians and that the time is long overdue for us to start using those resources to develop a first rate manufacturing base in this country.



PROCEEDINGS ON ADJOURNMENT MOTION

['Order, please. Before I recognize the hon. member for Rimouski (Mr. Allard), 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']
Mr. Deputy Speaker:: Order, please. Before I recognize the hon. member for Rimouski (Mr. Allard), 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



[Stage Direction]
February 13, 1979
[Stage Direction]
as follows: the hon. member for Vegreville (Mr. Mazankow-ski)-Air Transport-Criticism of enforcement of air safety regulations-Call for minister's resignation; the hon. member for Egmont (Mr. MacDonald)-Status of women-Employment strategy of government; the hon. member for Cape Breton-East Richmond (Mr. Hogan)-Regional economic expansion-Decision on financial assistance for Sysco to modernize plant.


[Stage Direction]
The House resumed consideration of the motion of Mr. Clark:
That this House regrets the government's refusal to give parliament a meaningful opportunity to investigate the loss of confidence in the Canadian dollar and the government policies which have reduced our currency to its lowest level in forty years.
Mr. Eudore Allard (Rimouski):: Mr. Speaker, I am pleased to participate in the debate on the motion of the Leader of the Official Opposition (Mr. Clark). Like the hon. member 1 think that the Canadian dollar has reached a critical point. The Minister of Finance (Mr. Chretien) can go on repeating that an 85-cent dollar will be profitable for our external trade, but in fact the weakness of the Canadian dollar results from the weakness of our economy.
In fact, foreign investors and financial circles have lost confidence in the economic policy of Canada, an ad hoc and unforeseeable economic policy. We have no continuous plan, no real orientation. We take band-aid measures when we have our backs to the wall. The proof that the Minister of Finance does not want a dollar worth 83 or 84 cents any more than we do is that the Bank of Canada has continuously intervened on the foreign exchange market to prevent the drop of our dollar. Indeed the Bank of Canada has used up its foreign currency reserves to support our dollar, and recently the government had to borrow again on foreign markets.
Furthermore, the Bank of Canada had to juggle with discount rates so that the interest rates of chartered banks rose to record levels and those banks will continue to make excessive profits, at our expense naturally, as they have been doing since 1968. Much to the amazement and surprise of the government the report published last week by the Economic Council of Canada proves it. In the beginning, the drop of the dollar to 90 cents was an unavoidable adjustment resulting from the loss of competitiveness of Canada as concerns price and cost, and the
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lack of economic leadership of our political authorities. I should rather, Mr. Speaker, talk about the absence of leadership. That would be more in line with the present situation.
When the Minister of Finance says that an 85-cent dollar stimulates imports, he forgets of course to talk about the adverse effects we are beginning to feel as a result of our depreciated dollar. That drop was too rapid not to have negative effects, quite simply because of the strong upward pressure on food prices and our massive imports-particularly during winter-of agricultural products which indeed we cannot slow down and without which we cannot do. So we are unable to slow down inflation.
Indeed, workers with a family spend the greater part of their budgets on food, meaning that most of their expenses go for food. So the depreciated Canadian dollar represents an additional increase in the domestic prices of goods purchased abroad. As a result of that workers today are beginning to cry out loud. Unemployment insurance benefits are being reduced by 66 per cent to 60 per cent, so our family allowances and inflation continues to gallop. So, as I was saying earlier, inflation is far from being checked and even the minister must have realized his predictions. In this post-control period, we see there are ever-increasing potential confrontations between management and unions which of course are going to ask for big salary increases. Indeed, the government is beginning to be concerned about that tendency, as the right hon. Prime Minister (M. Trudeau) pointed out recently.
In spite of last minute interventions the dollar has not yet stabilized and its drop is constantly being reported in the media where every day we are told about a loss of a few points or a very insignificant temporary recovery. But in the last several months the defence of the dollar has been very costly. We borrowed astronomical amounts to replenish our run-down reserves.
So what is the logic, Mr. Speaker, behind all that inconsistency in government measures? Opposition critics have asked for clarifications on the government policy on a daily basis. Naturally, we did not get a clear answer. And yet we represent the people and they have a right to know how their money is being used because they ultimately suffer from the continuing depreciation of our dollar.
In his address to the annual meeting of the shareholders of the Royal Bank, which according to its latest annual report made profits of up to 40 per cent, the Chairman of the Board of Directors of the bank, Mr. McLaughlin, accused the government of being irresponsible and of having caused the dollar to fall. Here is what he declared last month on January 11, and I quote:
It is true that we officially have a floating rate for the Canadian dollar, but during the past year the float became a rather dirty one. Ottawa maintained that the Canadian dollar was being left to find its own level on the market. That is the essence of a clean float, with intervention only to prevent too great a movement either way, over a very short period. But what Ottawa said and what
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February 13, 1979
Currency Devaluation
Ottawa did seemed to be two quite different things. In my view, this has been part of the reason for the fall in the Canadian dollar.
Mr. Speaker, that accusation against the government comes from the head of the Royal Bank. We in our party, as members of the opposition, were right to show our concern about these last minute interventions which never did succeed in supporting the dollar anyway. The motion we are dealing with today stems directly from that fact. Of course, other factors have contributed to the fall of the Canadian dollar. I said earlier that our lack of competitiveness and the fact that our costs were no longer competitive had weakened our economy and therefore our currency. Obviously, having to rebuild our reserves and to borrow outside the country to do so has placed us in a very unfavourable position.
I would like here to quote again from the comments of Mr. McLaughlin, still on the subject of government interventions on the exchange markets. He said the following:
However, the experience of other countries has shown that whatever supportive action was taken, the currencies always ended up by falling back to the level where the market placed them.
And Mr. McLaughlin concludes his assessment of the present situation in these terms:
Government interventions are not only ineffective, but often harmful.
In support of this assessment, I would like to recall the effects of the numerous and unsuccessful interventions of the Bank of Canada on the exchange markets. On October 17, 1978 the Minister of Finance (Mr. Chretien) introduced a bill in this House to ask that the borrowing power of the government be increased by $7 billion for this financial year and set at $10 billion for the year 1979-80. There was a reason for this sudden thirst for money: an increase in the borrowing power had become necessary because of the borrowings made outside the country.
The future does not look very encouraging for our dollar. Where and when will this decline finally stop? We would all have a hard time predicting this. For all Canadians who import more than 25 per cent of the goods they consume, the immediate effects of the situation are not pleasant. The government seems to hope that this decline will bring immediate advantages in the export sector, that our economy will bounce back and that this will result directly in lower unemployment. However, the demand for our products, which are mostly raw materials from the mining and forest industries, will not increase overnight. Besides those two sectors are closely linked to the fluctuations of the market and must face a very strong competition. Furthermore, the international economic outlook is quite discouraging. Experts are even forecasting a recession in the United States in 1979. If a strong demand for our products fails to materialize, we will have to lower our interest rates in order to stimulate new investments. Mr. Speaker, this government is presently preparing its next electoral campaign. Naturally it talks a lot about separatism and national unity in order to make Canadians forget its failure at solving an

economic crisis which is worsening month by month. It is quite obvious that it is once again preparing itself to mystify the people of this country.
Mr. Speaker, why speak about unity in such a large country as ours, divided as it is into very different regions? In the first place, we are divided when it comes to politics and religion yet the government ignores completely the only element likely to bring harmony within this country from the Atlantic to the Pacific, from north to south. That element, Mr. Speaker, is our economy. Our Canadian dollar is indeed the same coast to coast. It is just about all we have in common from one province to the next.
This government fails to assume control over the monetary system to allow each region and each individual to feel certain that in his country, whatever his origin or his language, he will enjoy fairness and understanding and will be able, according to his abilities, to benefit from the enormous riches of Canada without hurting anybody. In my opinion, Mr. Speaker, that is one of the few solutions we have before us to restore confidence within our people who will be best able to judge for themselves and realize their privilege of living in a beautiful and great country such as ours, where harmony and peace will be based on our dollar as a common denominator. There is an urgent need to determine where we find ourselves now and where we are headed with the haphazard policies of this government.


James McPhail Gillies: Mr. Speaker, I am really pleased to participate in the debate this afternoon. I have never seen, since I have come to parliament, a greater indication of why we must have an election right away. If the quality of the speech we heard from this government today is an indication of their thinking on the economic problems of this nation, then certainly the country is in serious trouble and needs a change of government as soon as possible.
How incredible it is, when the Canadian dollar is at an over 35-year low, or at a 110 year low if you take the annual average, for the Minister of Finance (Mr. Chretien) not to be here, for the Prime Minister (Mr. Trudeau) not to be here, for the new super minister of the board of economic development not to be here! What is parliament for? Why are we here? Are we not interested? Is this not a significant enough problem to be debated by the leaders of the government? Can we not have a serious debate on economic policy in the parliament of Canada? Does the government have no one to put up to speak on these issues except the Minister of Transport (Mr. Lang)? Everything that this minister has touched has gone wrong. This is the Minister of Transport who could not run an airport policy, the minister who could not run a wheat policy, the minister who practically created a constitutional crisis in his handling of the airport controllers situation, a minister who rises here and makes some sort of second rate, high school quality political speech, at a time when the official opposition
February 13, 1979

has used the first possible day available to it to put forward a motion in this parliament dealing with the major issue facing the Canadian people. Yet there is apparently no one in the government who is capable or competent to get up and speak on this issue and to defend the government's program.
I say this so often but parliamentarians wonder over and over again why the people of Canada are holding parliament in such low repute. The answer is clear: parliament is irrelevant. How irrelevant it can be is shown by the fact that when we have a day set aside to discuss the most important and the most serious economic situation, potentially the most dangerous economic situation that the country has faced in generations, there is nobody here from the government to debate it.


An hon. Member:: Where are all the Tories?


James McPhail Gillies: Let me tell you, Mr. Speaker, that if we are going to make parliament work, if we are going to make parliament relevant, we must have important debates.


An hon. Member:: There are only eight of you Tories here.


James McPhail Gillies: We cannot do our job as parliamentarians if we cannot debate these important issues. On top of that, we could not get from this government a reference to the standing committee so that we could really examine these issues in that extension of parliament. What we are doing now in that committee is smuggling in, under a reference of the Bank Act, a discussion on this matter, debating and wrangling about who should be there. Should we not have a debate with the best experts, the best people we can find on these issues? Is that not what it is all about? Are we not trying to solve the problems for the sake of the Canadian people? Yet here we are unable to get a debate of any relevance going in the House of Commons because the government once again-presumably they are afraid to talk about their policies-has no one to put up to talk on the issues that are in front of us at present.
I noted with interest some of the comments made by the Minister of Transport. Most of them were irrelevant, and those that were not irrelevant were incorrect. He discussed the fact that the Canadian economy may be in difficulty because of some of the things that are being said by the Leader of the Opposition (Mr. Clark) and members of the opposition party in spite of the fact that we have the most incredible Minister of Finance this country has ever had, a Minister of Finance who rises in the House of Commons and says the government is not supporting the dollar at the same time as he goes out and borrows over $5 billion to support the dollar; who says the dollar is moving up with slight market fluctuations at the same time as he is using more money in defence of the dollar than has ever been used in Canadian history. The Minister of Transport has the unmitigated gall-I hate to use that word, but lacks common sense-to question the credibility of the Leader of the Opposition, when there has never been-and I challenge anybody on the government side to dispute this statement-a minister of finance with as little credibility as the current Minister of Finance. Everywhere you go, Mr. Speaker, if you ever leave the Hill and talk to people engaged
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in investment activities, you find that the minister has little credibility.
One of the reasons the Canadian dollar is in trouble is that the government has no credibility. How can this government talk about credibility, a government that campaigns against wage and price controls and then, when it gets elected, puts them in? We will not have any reasonable, hopeful economic policy in this country until we change the government. What is wrong with our economic management and has caused the feeling by people around the world about our economy is that the government have made so many disastrous errors; they speak from both sides of the mouth, and no one knows what their policy is, if there is any policy. They show inability and unwillingness to give to the committee the power to permit members of parliament to fulfil their function by discussing the economic issues with the best experts and getting the best advice they can get. It is disgraceful in the extreme and shows how bankrupt the government are, how frightened they are of exposing what is going on in this country.
Compare our situation with the way in which economic policy is debated in any country in the western world. The other night the President of the United States made a report to Congress on the state of the American economy. Why did he do that? He did it because by the full employment act of 1946 he is required to do so by law and to make a forecast on how the American economy will operate so that people can evaluate it. The Congress holds hearings with witnesses, members of Congress can get an evaluation of what policy should be put in place, and Americans are informed of what the issues are.
It seems that would never do for Canada; it would never do for the Liberals. They do not want people to know. They do not want to solve the problems. That is the only conclusion one can reach from the way in which they operate. Today on the first allotted day to the opposition which is devoted to the most important problem in Canada, to have no minister in the economic area in the House of Commons to defend government policy is utterly disgraceful and shows the lack of ability there is in the government. They cannot find anybody. One person is out of town so they cannot find anybody else to speak on economic problems for the government on this particular day.


Mr. Knowles (Winnipeg North Centre):: There is the Minister of National Defence (Mr. Danson).


Alan Gray Martin: Mr. Speaker, I rise on a point of order. This is an aspersion cast against the Minister of Finance (Mr. Chretien). As was explained quite clearly, he is in New York, in answer to a long standing invitation, to address the Council of Foreign Relations. The minister who spoke in his place is Acting Minister of Finance, and he handled the subject quite capably on behalf of the minister.


Some hon. Members:: Hear, hear!


Stanley Howard Knowles: That is not a point of order.


James McPhail Gillies: I would have thought the Minister of Finance-

February 13, 1979
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Some hon. Members:: Sit down.


Mr. Deputy Speaker:: This is not a recognized point of order.


James McPhail Gillies: I would have thought the Minister of Finance would have felt that his place today was in the parliament of Canada. That is where he should be. Where is the President of the Board of Economic Development Ministers (Mr. Andras)? Where is the Minister of Industry, Trade and Commerce (Mr. Horner)? Where is the Minister of Consumer and Corporate Affairs (Mr. Allmand)? The government has no one capable of speaking; it had to put up the Minister of Transport, who proved there was no one capable of speaking on this issue. The government was unable to put up anyone who was capable of defending its policy. The government is desperate, but it is even more desperate when the Minister of Finance is in town. The point remains: The government does not want to discuss economic policy because it cannot. The government does not have anyone capable of discussing economic policy.


Some hon. Members:: Hear, hear!


James McPhail Gillies: Where are the ministers of the government? Indeed, the Minister of Finance thought he had to leave the country rather than face up to speaking in the House of Commons on the first available day. It is very simple to see how the government feels about parliament. This is where the debate should take place, but where is the Minister of Finance? Where are the ministers of the government?


An hon. Member:: Where is your leader?


James McPhail Gillies: The ministers of the government should be here to discuss this issue. If they cared about parliament, they would be here.


Mr. Deputy Speaker:: Order, please. The Minister of National Revenue and Minister of State for Small Business (Mr. Abbott) rises on a point of order.


Anthony Chisholm Abbott: Mr. Speaker, the hon. member repeatedly asks his question. Perhaps he does not mean it rhetorically, but as the hon. member was told, the Minister of Finance (Mr. Chretien) is in New York addressing an important audience. The minister made that commitment a good deal of time ago. Notice of this debate only came down late yesterday afternoon. The hon. member accused the Minister of Transport (Mr. Lang) of speaking politically, yet he has given us nothing but political claptrap for the last five minutes. When will we hear the hon. member's speech?


James McPhail Gillies: Mr. Speaker, I am sorry but 1 do not recall the portfolio of the hon. minister who just spoke, but even with a real cutting edge he failed to make his point. The point which must be made repeatedly is that either we care about parliament or we do not. If we care about parliament, we will have important debates in parliament. If we do not care about parliament, we will put our first priority on speeches made outside of the country instead of being here and speaking
(Mr. Gillies.)
about important problems. Obviously parliament is not able to work when the government has no one capable of defending its policies or capable of putting forward a policy concerning a very important issue.
It was refreshing to listen to the hon. leader of the New Democratic Party (Mr. Broadbent) who attempted to put forth propositions concerning the issues faced in the country today. I thought his comments were relevant, but he was quite wrong in many of his assertions. At least the hon. leader of the New Democratic Party attempted to address the problem and participate in a debate on economic policy. The hon. leader of the New Democratic Party commented upon some of my remarks concerning hewers of wood and drawers of water. I hope the hon. member will read my speech on that matter. If he does so, he will see my argument was that we should use the foundation of our resources as a basis for the industrial strategy of the nation.
It is a shame that we should be a country rich in mining, I think the fourth richest in the world, and yet import 66 per cent of our mining equipment. It is a shame that we should be a country with huge markets in pulp and paper, and yet import well over half of our papermaking machinery. It is a shame that we should be a country rich in fishing, and yet have no refrigerated ships to go out on the sea. The essence of my remarks was that we should use our resources as the base for the development of an industrial strategy. That is exactly the direction in which the country must move.
Canadians will be very confused after hearing some of the statements made in the House. The Minister of Finance rose the other day and indicated that 440,000 jobs have been created. Then someone else rose and said: "Yes, but 8 per cent of the total labour force is unemployed." Then someone else said: "But the inflation rate is only 8 per cent". Then another hon. member said: "But the inflation rate in the United States is 9 per cent, so we are better". Then an opposition member said: "Yes, but in terms of Switzerland the inflation rate is only about 2 per cent, so we are worse." We go on and on with this type of nonsense.
There is only one sensible way of looking at economic performance. It is not in terms of international comparisons; it is in terms of potential. The reality is that the rate of real growth in the economy is less than 3 per cent. During the period of 1946 to 1966, the rate of real growth averaged almost 6 per cent. When there is growth of that dimension, unemployment is reduced, and inflation problems are handled. Is there a set of monetary and fiscal economic policies which can be put in place which will fulfil the potential of the country? That is what Canadians are concerned about.
The evidence is clear that such policies are not in place now. Anyone who argues that the real optimum rate of growth for the Canadian economy is less than 3 per cent belies our history. On the average for many years our growth rate was approximately 6 per cent. For many years during the post-war period, we were able to maintain unemployment rates of 6 per cent and less, and an inflation rate of approximately 2 per cent. What has gone wrong? Of course, it is the government
February 13, 1979

which has gone wrong, as have its policies which have been put in place.
Apparently there is the view that our present economic situation was created by chance. It was because of mistakes, the mistaken policies which were put in place. The situation would not be such if there had been better economic policies. Canadians are suffering seriously because of the policies of the government. Today the Minister of Transport said that it was all a mistake. I forget who the government blamed today; perhaps it was Mr. Levesque. In 1968 when the present federal government came into power, it is interesting to note that there was just a whisper of separatism in Quebec. Now ten years later the separatist government is in power. The Liberal government is in power in Ottawa today and it must take some responsibility for the situation we are facing. It must take responsibility for the economic situation, rather than just blaming Mr. Levesque and the opposition.
A few years ago the then minister of finance, Mr. Turner, who is now in the business of writing newsletters, blamed all the problems in the Canadian economy on international situations. The federal deficit cannot be blamed on anyone else; it happened domestically.
An hon. Mlember: Tell us about that.
Mir. Gillies: I will tell hon. members about the deficit. In Canada the federal deficit created by the government is presumably running at $12 billion. The government will not tell us for sure because it really does not know. It is similar to the situation with Crown corporations; the government does not know how many Crown corporations it has. The current deficit in the country is four times higher than that in the United States. The Liberals do not seem to understand that the deficit had to be financed and was financed by increasing the rate of money supply through the Bank of Canada.


Mr. Railton:: Oh, oh!


James McPhail Gillies: The inflation in the country was created by the government.


Samuel Victor Railton: Oh, oh!


James McPhail Gillies: Perhaps the hon. member for Welland (Mr. Railton) does not care about poor people, old people or those affected by inflation. Perhaps he thinks inflation is a joke.


Some hon. Members:: Oh, oh!


James McPhail Gillies: It is interesting to see the hon. member's attitude. The government created inflation by its policies. It did not care what effect inflation had on Canadians.


Mr. Deputy Speaker:: Order, please. The hon. member for Welland (Mr. Railton) rises on a point of order.


Samuel Victor Railton: Mr. Speaker, if the hon. member for Don Valley (Mr. Gillies) was talking about my not caring, he should be reminded that he is talking about someone who cares a great deal about Canada and its poor people, someone who
Currency Devaluation
has devoted a great deal of his time to looking after such people.


Some hon. Members:: Hear, hear!


James McPhail Gillies: I would be glad to hear the hon. member for Welland join in this debate because I do not think I have ever heard him speak in the House before. I would love to hear him speak in this debate-


An hon. Member:: Cheap shot.


Lincoln MacCauley Alexander: What do you mean, cheap shot? This is no kindergarten session here.


James McPhail Gillies: -and hear him say how he supports a government that creates inflation of this sort which does so much to hurt the old and poor people, and whether he thinks it is a good idea to have an 8 per cent inflation rate in Canada. This government has created inflation by creating the deficit. It is one of the most irresponsible activities of a government in the western world, to allow a deficit to take place which is four times greater than the deficit of the United States.


An hon. Member:: Tell us about your deficit.


James McPhail Gillies: What has happened as a result of that? It has been financed by an increase in the money supply, and the net result is the balance of payments deficit which we have at the present time and in association with it a decline in the value of the dollar.


Lincoln MacCauley Alexander: The Toronto boys are worried.


James McPhail Gillies: Hon. members attended the committee as a result of the current situation. But what is the question which is really relevant? The relevant question before parliament is: what is the proper level of the dollar for the Canadian economy and what are the sort of economic monetary and fiscal policies which should be put into effect that will result in the dollar reaching a level where inflation can be managed and unemployment is kept at a reasonable level? Nobody on the government side has been able to tell us, even though they are making the policy. Many experts think that the proper level for the dollar is somewhere between 88 cents and 92 cents, and I suspect that that is reasonably close. The proper course of action would be to get experts before the committee and find out.
I do not happen to believe that it is significant to be a member of parliament and not care about these things and not be concerned about what sort of economic policies this country ought to have. That is what the real issue is, the inflation, the high prices and the unemployment which hurts the people. We cannot find out what the government thinks the real policies are.


An hon. Member:: They don't know.

February 13, 1979
Currency Devaluation


James McPhail Gillies: They don't know. I can inform the hon. member for Welland that if we were to go to committee and ask such a question, they would not give us an answer. The reason is because they probably do not know or do not have any views on the matter. One view that is very clear is that of the governor of the Bank of Canada when he went before the Senate and said that if the dollar drops any more the inflationary forces that it will unleash will be harmful to this nation.


An hon. Member:: Who said that?


James McPhail Gillies: The governor of the Bank of Canada. We all know that every time the dollar drops we get more inflation. It is important to determine what we can do to alleviate the situation. I do not think that the government expected the dollar to go under 90 cents, but it did. Nor do they expect it to break 80 cents, but it may or it may not. The current account deficit is very high, and as a result the dollar may go that low.
The government in its position of defending the dollar has taken two approaches. The first position is to borrow abroad, as it has done to the tune of $5 billion unlike any government in Canadian history. The cost, incidentally, to the Canadian people due to the differences in exchange rates alone is well over $170 million. In other words, the amount Canadians will have to repay because of the exchange rate differentials which have taken place since the borrowing is estimated today at about $170 million. The tragic thing is that even by following that policy it does not seem to have stopped the slide in the value of the dollar, but this seems to be the only policy the government has been able to come up with.
The foreign exchange equalization account had approximately $6 billion in reserves two years ago, and the government has almost depleted it. It has replaced it by borrowing abroad with expensive money and we are now faced with the necessity of having to repay those funds and the accrued interest. The government which is best known for following this sort of policy is the British government during the period 1960 to 1965. Essentially, it bankrupted the country. The declining value of the pound created more inflation and the inflation caused costs to rise which nullified trade advantages, and they were soon back in the same cycle. Canada is desperately approaching that same situation, and for a rich country like this to be getting into such a situation is fairly desperate indeed.
The second thing which the government has done is to raise interest rates. Presumably it does not care about high interest rates, high consumer borrowing costs, high mortgage costs, or high costs for starting business. Every economist in this country and, indeed, the governor of the Bank of Canada, have said that a high interest rate policy, given the high domestic economic situation in the nation today, is wrong. The last thing Canada needs right now is a high interest rate policy, yet since the beginning of 1978 the bank rate has gone up 50 per cent, from 7.5 per cent in the beginning of 1978 to the current level of 11.25 per cent. Every time interest rates go up mortgage rates and rates in general go up. It is inflationary.
(Mr. Gillies.)
Why has the government taken the direction that it has on interest rates? Incidentally, it is interesting to compare the bank interest rates of other countries around the world with Canada's interest rates. Elere are some interest rates: West Germany, 3 per cent; Switzerland, 1 per cent; Japan, 3.5 per cent, and U.S.A., 10 per cent. The reality is that the countries with strong economies have the low interest rate structures and a strong balance of payments. We are going in the other direction, because the government argues that we have to keep capital flowing into the country or the dollar will fall even further. If one looks at the figures, which some people never presume to do, the rise in interest rates has really not caused a change in the rate of the flow of funds. We have the peculiar situation that even though we have moved the interest rate up seven times, it really has not done anything for the net flow of capital.
Let us look at the argument of not raising interest rates. If interest rates had not been raised, it is argued the net flows would be much greater. But is that true? Another argument which needs to be examined is that in today's world slight differentials in interest rates are not as important to reinforce the international movement of capital as the assessment on the part of investors with regard to the strength of the economy itself. This is a bottom line question on economic policy. If we have moved to a high interest rate policy at a time of high inflation and high unemployment, it is a terrible price for Canadians to pay if it was not necessary to make such a move.
Describing the situation in terms used by lawyers, "there is enough evidence to suggest that it should be investigated". There is enough evidence that interest rate differentials are not that important to the movement of capital right now and that we did not necessarily have to follow this policy. The Canadian people have a right to know whether this is the right policy or not. It is not good enough for the Minister of Finance to assert that he had to do it to keep the differential between the rates of the United States and Canada at their levels. Recently there was a period in Canadian history where our rates were higher than those in the United States. There was also a period when they were lower. The period when Canadian rates were lower than the rates in the United States did not seem to have a deleterious effect on the strength of the current account balance.


Mr. Danson:: When was that?


James McPhail Gillies: Roughly 1971 to 1974. What is the right policy? What we are trying to get across today is that on issues which are as important and as fundamentally significant to every single Canadian as this one is, we must have the best advice, input, debate, analysis-


Lincoln MacCauley Alexander: And honesty.


James McPhail Gillies: -and openness and honesty possible, because it is too important to proceed otherwise. If we do not need in Canada a high interest rate policy because of our foreign exchange situation, how desperate that we should be taken down that road.
February 13, 1979

It is very seldom that issues are so clearcut in the making of an economic policy-where decisions can be made so clearly one way or the other. But this is one of those occasions. We are at a crossroads in the sense that the government is dedicated to the proposition that in order to hold the dollar at its present level it has to go to high interest rates. Some people who are highly thought of have suggested that we could hold the dollar where it is without the high interest rate costs. That proposition should be examined.
Much is made of the point that the falling dollar has helped our exports and, of course, it has. But the fundamental question of how much more our exports are helped by an 83-cent dollar than by a 90-cent dollar has not been answered, and that is another very important question. Would exports be helped even more by a 70-cent dollar? The choice is between inflation from devaluation and the trade gains made from it. Clearly, if going from 90 cents to 83 cents hardly expands exports at all, it is not worth while because it brings too much inflation. There has to be an optimum rate at which the dollar will float given an appropriate monetary and fiscal policy. We have to find that out, and that is why we must have a reference to a committee and a proper debate.


Some hon. Members:: Hear, hear!


Alan Gray Martin: Mr. Speaker, the motion that is before the House today by the Leader of the Opposition (Mr. Clark) should perhaps have the subtitle, "Another Request for a Fishing Expedition." I think we are all aware that there have been enough Tory fishing expeditions on this subject in recent months and they have all been scuttled.
The Minister of Finance (Mr. Chretien) and the governor of the Bank of Canada have both appeared before the Standing Committee on Finance, Trade and Economic Affairs whenever asked by that committee and by the steering committee to appear. The official opposition has been trying to make a story out of this by insinuating that there has been resistance or objection to having the governor of the Bank of Canada appear before that committee. There has never been any such resistance. As soon as the steering committee made the request last week, arrangements were made within 24 hours for the governor of the Bank of Canada to appear. When the hon. member for Don Valley (Mr. Gillies) indicates that there has not been proper testimony before that committee, then 1 think the things that the governor of the Bank of Canada said that day should be restated.
I might say that all five financial critics of the opposition were present that day. It was a prestigious occasion. It was the first time that all five critics had turned up at one meeting together.


Lincoln MacCauley Alexander: We have five; you have none.


Alan Gray Martin: In diversity, I suppose there is sometimes strength. They are the "variety club."
Currency Devaluation
I think some of the things that the governor of the Bank of Canada said that day were very important. I should like to quote one or two comments from his opening statement when he said:
The substantial depreciation of the Canadian dollar that has now occurred, together with an improved performance to date in controlling our domestic costs, has re-established Canada's competitive position at least for the time being.
I think that was an important statement and, if anything, it supports the kind of government policies that have been in place.


An hon. Member:: Read the rest of it.


Alan Gray Martin: I do not have time to read it all. The hon. member was there. He is one of the financial critics. The hon. member for St. John's West (Mr. Crosbie) has joined the variety club.
On that day the governor of the Bank of Canada also said:
-more exports, more import replacement, a lower current account deficit, less dependence on foreign capital, more output, more jobs, even higher government revenues and lower government deficits than we would otherwise have. I cannot think of a more attractive way to move our economy forward.
That is not a statement of this government per se but is a statement by the governor of the Bank of Canada made before the committee within the last week.
I could go on and on, Mr. Speaker. The hon. member for St. John's West would like me to read the entire statement of the governor, but I think that would just further deflate any points members of the opposition might want to bring forward in this debate. I will simply quote one or two other points. He said: Conversely, anyone who feels that the objective of monetary policy should have been to halt or reverse the decline in the exchange rate before it had gone nearly so far as it has is advocating that we should have pushed up interest rates a good deal further and faster.
I am not sure if the hon. member for Don Valley or other members of the club over there are in favour of further, higher interest rates than we now have, but the governor of the Bank of Canada has made it abundantly clear that were we to halt artificially the decline of the dollar if that is the direction it happens to be going in at a particular time, it would mean much higher interest rates than currently prevail.
The governor went on to say:
It would be a mistake, however, to suppose that the effect on expectations of a 'hands off policy would not be more serious, since such a policy would create the impression that the authorities do not care about the exchange rate and this in turn would arouse widespread fear and concern.
A couple of lines later, he said:
I might add that a similar view is shared by the authorities of other nations as a result of their experiences in recent years.
That shows what the governor of the Bank of Canada has been proposing and government policies have been very supportive of this course of action, and the experience of other industrialized nations has led them to follow the same route when faced with similar problems.
I should like to deal with a point made by the hon. member for Oshawa-Whitby (Mr. Broadbent) who continues to put before the people of Canada what he put before the finance

February 13, 1979
Currency Devaluation
committee-the insinuation that every time borrowings are made to bolster the exchange reserves, it means a net cost to the Canada taxpayer. This is not necessarily the case. In many cases when borrowing to buy another currency the money can be invested, and perhaps in some cases an even higher return can be earned than the cost of borrowing the money. The governor of the Bank of Canada referred to that when he said:
The total amount of government borrowing and the total interest cost to the government is not necessarily increased. And for the country as a whole the net external debt burden is not necessarily increased.
In his concluding remarks before the committee the governor of the Bank of Canada said:
-we should not exaggerate the difficulties or be frightened of the future. There is much to reassure us. The Canadian economy is now very competitive with the rest of the world. It will take time for us to reap the full benefits although I think they are already in evidence to some degree.
I might interject that the 477,000 new jobs are perhaps some indication of what he was trying to get at. He did not use that figure; it is mine. He went on to say:
One promising sign is the remarkably strong growth in employment that we have been experiencing recently. The main point is that we still have a reasonably good chance of emerging from our present difficulties in a strongly competitive position, with lower rates of inflation, and in time with lower interest rates.
The government is being criticized by the hon. member for Don Valley, the Leader of the Opposition and others who are trying to make an issue of this exchange rate. Let us be realistic. The issue they are trying to make is to see through constant bickering and putting the item in front of the public that possibly it can go a little lower because they feel that politically that might be of some use to them.


Some hon. Members:: Oh, oh!


Alan Gray Martin: Mr. Speaker, I think that is exactly what is happening, otherwise they would be listening to the view that positive information-


James McPhail Gillies: Mr. Speaker, a point of order, I want the hon. member to withdraw that statement right now. It is dishonest, it is inappropriate, it is absolutely incorrect, and is not worthy of being spoken in this House of Commons. To suggest for a moment that when members of parliament are trying to debate important economic issues they are trying to embarrass the government instead of getting things going in a proper way, is outrageous.


Mr. Deputy Speaker:: Order, please. The hon. member for Don Valley (Mr. Gillies) will agree with me that he has just got a point of debate. These remarks are definitely not unparliamentary.


Some hon. Members:: Oh, oh!


James McPhail Gillies: It is not a point of debate, it is a point of order-a point of privilege. It is not a point of debate. The speaker opposite said that the Leader of the Opposition (Mr. Clark) and myself were trying to make an issue out of the Canadian dollar to send it down. We are trying-we have said

over and over the problems that are created by this dollar going down-we are trying to get it up.


Mr. Deputy Speaker:: Order, please. Order, please.


Some hon. Members:: Oh, oh!


James McPhail Gillies: I want you to ask that man to withdraw that statement.


Mr. Deputy Speaker:: Order, please. The hon. member has a point of disagreement and nothing else. There is definitely no point of order in what he is saying. He may have a different opinion. The remarks of the hon. member are not a reflection on the hon. member. It is a question of interpretation of facts, policies and remarks.


James McPhail Gillies: Mr. Speaker, I rise on a point of privilege.


Mr. Deputy Speaker:: Order, please. I have rendered my decision. There is no question of privilege on the assumption made by the hon. member.


James McPhail Gillies: Mr. Speaker, he said that I was trying to force the Canadian dollar down. That is privilege. That is not debate.


Mr. Deputy Speaker:: Order, please. That is the hon. member's point of view. I am not here to judge what is one member's point of view in comparison to another member's point of view. I am sure the hon. member's remarks might not have satisfied the parliamentary secretary when he made his speech-


James McPhail Gillies: The parliamentary secretary is a liar.


An hon. Member:: Withdraw that statement.


Mr. Deputy Speaker:: Order, please. What the hon. member for Don Valley just said is unparliamentary and I think he should withdraw that statement.


James McPhail Gillies: Mr. Speaker, that man said the reason we are debating this dollar problem is because we are trying to force it down.


John Carnell Crosbie: He is a liar.


James McPhail Gillies: That is not true, Mr. Speaker. That is absolutely not true. He lied when he said that.


An hon. Member:: Order!


Mr. Deputy Speaker:: Order, please. I ask the co-operation of the hon. member. I cannot allow the hon. member's last remark in any way, especially aS he said it as directly as he did. He has a point of disagreement. He can say that the statement is untrue but I cannot allow this last remark unquestioned by the Chair. By the rules of the House the hon. member must withdraw it.
February 13, 1979


James McPhail Gillies: Mr. Speaker, he is so ridiculous I will withdraw it.
I must say that I find that sort of remark in the capital markets we are living in today, and the problems we are experiencing, totally unworthy of anyone who seeks to sit in this Parliament of Canada-


An hon. Member:: Right on.


Alan Gray Martin: Mr. Speaker, obviously I was not directing any specific aspersions on individuals-


An hon. Member:: Of course you did; you said so.


Alan Gray Martin: The point I was trying to make was that the whole thrust of the opposition party, led by those who are presumably the financial critics, and the Leader of the Opposition, is to get excessive debate on this subject of the exchange rate. That is the point I am trying to make. In the process I might say-


Lincoln MacCauley Alexander: Mr. Speaker, I have a point of order.


Mr. Deputy Speaker:: Order, please. The hon. member for Hamilton West (Mr. Alexander) is rising on a point of order.


Lincoln MacCauley Alexander: Mr. Speaker, 1 have listened to the parliamentary secretary. He was wrong in what he said in the first instance regarding what the hon. member for Don Valley had brought to your attention. However, it amazes me now to hear the parliamentary secretary suggest that in light of this crisis with which we are faced at this time we are to stand or sit mute. If that is what the parliamentary secretary is projecting, indicating or implying, then he better check his thoughts and let me know what I am supposed to do. Under no circumstances whatsoever-


An hon. Member:: Order.


Lincoln MacCauley Alexander: -are we going to sit here on this side and watch these people destroy the country in terms of its fiscal and monetary policies. Are we supposed to sit here and be mute?


An hon. Member:: Order.


Mr. Deputy Speaker:: Order, please.


Lincoln MacCauley Alexander: 1 want the parliamentary secretary to tell me if that is what he is saying and I am to sit and listen to all this nonsense.


Mr. Deputy Speaker:: Order, please. The hon. member for Hamilton West knows that he has only a point of disagreement. He can seek the floor in due time and make these remarks and still be within the confines of the rules of the House. This is definitely not a point of order. If I am to permit hon. members to answer each other as we go along, no one will be able to make a speech or put his ideas in front of the House and the Canadian people, and we will not be able to have an
Currency Devaluation
orderly debate. The parliamentary secretary should be permitted to complete his speech.


Lincoln MacCauley Alexander: Mr. Speaker, with all due respect, will the parliamentary secretary allow a question?


Some hon. Members:: Come on!


Lincoln MacCauley Alexander: It was all right for the parliamentary secretary to jump up every five minutes on points of order. Will the parliamentary secretary allow me one question?


Alan Gray Martin: Mr. Speaker, in view of all these interruptions and I do not know how you will rule on this, but I would prefer the hon. gentleman to wait until the end of my remarks.


Lincoln MacCauley Alexander: Typical.


Alan Gray Martin: At that time I would certainly be pleased-


Some hon. Members:: Hear, hear!


Alan Gray Martin: I might say in the process that the hon. member for Hamilton West (Mr. Alexander) has been around this House longer than I have. I am not sure whether it is one of my functions to instruct him as to what his function is in this House. Perhaps privately we could get together and I could give him some suggestions-


Lincoln MacCauley Alexander: I want you to tell me now.


Alan Gray Martin: Obviously there have been many and valid opportunities for members of the opposition to question witnesses in the finance committee on this issue. We are having another debate here today. What I am seeking, and what I am sure members on this side of the House are seeking, is for people in the official opposition who are deigning or wishing or hoping some day-a fond hope they might have of some day holding power-is for them to take a more serious responsibility on some of these issues, for instance, the proposal of increased deficits. The governor of the Bank of Canada made it very clear that if we were to follow the proposals suggested by the Leader of the Opposition and others over there to increase the deficit by about 50 per cent, which is what the total of all the various proposals would amount to-


An hon. Member:: You are misleading the people of Canada.


Alan Gray Martin: I think the hon. member for Don Valley would have to admit that this would have a disastrous effect on the exchange rate-


John Carnell Crosbie: Mr. Speaker, a point of order-


Mr. Deputy Speaker:: The hon. member for St. John's West (Mr. Crosbie) on a point of order.


John Carnell Crosbie: Mr. Speaker, I was at this committee hearing and the governor of the Bank of Canada refused to give any opinion of what a higher deficit might do to anything. He said it would all depend on the circumstances, the rest of the economy, and he gave no answer to us. The hon. gentleman

February 13, 1979
Currency Devaluation
comes in here and tells the Elouse that he made an answer, that it would be thus and so. Ele refused to answer that question. This is a deliberate attempt to mislead members of the House-


An hon. Member:: Order.


Alan Gray Martin: Mr. Speaker, I did not realize that we were in sort of a committee of the whole procedure-


James McPhail Gillies: You started it.


Alan Gray Martin: I did not realize 1 was the one who interrupted-


Lincoln MacCauley Alexander: You made the mistake.


Alan Gray Martin: I touched a nerve, Mr. Speaker, and there was all kinds of response-


John Carnell Crosbie: By not letting us speak.


Alan Gray Martin: I want to come back to the point raised by the hon. member for St. John's West. The governor did say in his opening remarks, and I have quoted this on the record, but I will do it again:
-more exports, more import replacement, a lower current account deficit, less dependence on foreign capital, more output, more jobs, even higher government revenues and lower government deficits than we would otherwise have.
This was a clear indication that what has happened has helped keep government deficits down-


Lincoln MacCauley Alexander: Let us call it six o'clock.


Alan Gray Martin: Obviously we are touching a nervous point in the opposition-


An hon. Member:: We are always nervous when you speak.


Alan Gray Martin: -in connection with this whole exchange rate area. The facts speak for themselves. In the course of my remarks I will put more facts on the table.
The economy of Canada is behaving extremely well in most sectors. We do have certain problems. We do have regional unemployment problems. We recognize those. Not everything is perfect. There is no country in the world where everything is perfect. Nevertheless the statistics have been put on the record, and will be put again, that internationally as compared with seven other industrialized nations which the Leader of the Opposition named during the throne speech debate last fall, we placed either first or second in most important economic sectors-


An hon. Member:: Six o'clock.


Alan Gray Martin: Those are facts. A lot of this has resulted from a lower exchange rate. I am not saying whether 83 cents or 85 cents or any particular rate is perfect. I do not know what is perfect-


An hon. Member:: Right.


Alan Gray Martin: But the point is that the lower exchange rate has helped achieve some of these favourable results-


Mr. Deputy Speaker:: Order, please. I have to inform the hon. member that it being six o'clock 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.
Alan Gray Martin: Mr. Speaker, before continuing my remarks I wish to raise a very brief question of privilege. On two separate occasions during the course of my comments prior to the supper hour I was distinctly referred to as a liar, by two members of the opposition. One was good enough to withdraw that unparliamentary comment, the other was not. I wonder if the hon. member for St. John's West (Mr. Crosbie) could be given the opportunity to do so before I continue my remarks.


The Acting Speaker (Mr. Turner):: Order, please. The Chair will take it under advisement and the hon. member can raise this again tomorrow after we have had an opportunity to look at the blues.


Alan Gray Martin: Mr. Speaker, I examined the blues over the supper hour. That is how I know the comment is in there.
I had indicated in my comments some of the supporting evidence that abounds across the country as to how well the economy of Canada is doing. I pointed out certain exceptions and problem areas to which the government is addressing itself. It is not at all unusual for a country to have specific problem areas.
I want to review for the record some of the very positive aspects of the past ten years in which this government has been in power. In the latest ten-year period for which figures are available, 1968 through 1977, Canada had an average annual real growth in gross national product of 4.6 per cent. Contrary to what the hon. member for Don Valley said, it is important to examine our progress in an international context. We do not live in a vacuum. During that same period, real growth on an annual basis in the United States was 2.9 per cent. Only Japan had a rate of growth higher than ours.
Perhaps a more significant figure is the increase in real personal disposable income during that period. For Canadians, real disposable income per capita increased by 51.9 per cent. The comparable figure for Americans was 24 per cent, less than half.
The growth in employment in Canada has also been strong. Since 1970 the number of jobs in the country has increased by 23 per cent, or more than two million. At the same time the
February 13, 1979

U.S. had an increase in employment of 15 per cent, Japan 5 per cent, and in Germany the number employed fell by 6 per cent.
Since the OPEC shock of 1973 only one industrialized nation in the world has had a gain in employment every year. That was Canada.
What about the current state of the economy? Last year real growth in Canada was about 1'h per cent. Admittedly, it did not measure up to expectations. But that was largely due to the increase in food prices and the rise in the prices of things we import caused by the lower exchange value of the dollar, both of which were difficult to forecast. But at the same time our competitive position in the world improved as a result of a much better cost performance and the important trade benefits flowing from devaluation. These contributed to a recovery of profits, the replenishment of corporate liquidity, and a general firming of the stock market.
It might be appropriate at this point to interject one of two comments by people who presumably would not necessarily be labelled as Liberals but who are independent surveyors of the Canadian economic scene. The first is John McCallum. He indicated that the 85-cent dollar is a bright spot in the otherwise dismal prospects for the recovery of the Canadian economy. That is an important point to mention:
If devaluation is thought to be permanent it may be profitable for a company to switch from foreign to Canadian suppliers; it might be profitable to expand sales in the United States; it might be profitable to expand capacity in order to increase export sales or to compete with imports on the home market.
I could go on to quote other comments. I will mention one or two. Jack McArthur, another well-known financial columnist, posed the question: "Does Canada teeter between boom and bust?". He indicated that wage gains were shrinking and employers' expenses per item were falling. Manufacturers were planning to invest more money in their production capacity, a very positive sign, quite contrary to the kind of information the hon. member for Don Valley was putting before us. He indicated that the decreased value of the dollar was the most drastic thing that had ever happened to the country. The lower dollar makes Canadian products more competitive. Again, I am quoting Jack McArthur.
Vincent Egan, another business writer, said surplus predictions are positive and that exports are good because of the dollar's decline. Foreign exchange reserves have been rising, he says.
Wood Gundy anticipates a slower rate of inflation in Canada and a very significant decline in interest rates. This is very positive stuff.
The Chairman of the Toronto Stock Exchange, Mr. Michael Curry, said the substantial drop in the Canadian dollar would help restore the international competitiveness of Canadian goods. I would match the chairman of the Toronto Stock Exchange against the hon. member for Don Valley at any time. Both are from the Toronto area. The former is positive and the latter is negative. Says Mr. Curry, Canadians will switch to lower-priced Canadian goods; however, we must keep
Currency Devaluation
wage settlements down and concentrate upon our economic strengths.
The Toronto Star, a paper which is not always favourable to the Liberal government, said in an editorial recently that an 85-cent dollar should help jobs. Again in the Toronto Star we read the heading "Silver Lining Seen in Sliding Dollar". In another article recently headed "Drop in Dollar is Bad, Right? No, It Means More Jobs" the paper discusses examples of companies which have been given a big boost as a result of the lower dollar. Among them we find Airbone-Arconas which produces contemporary furniture, Westeel-Rosco which manufactures sheet metal construction products, Dominion Textile which today employs 675 more workers than it did a year ago, and Noranda Mines-every drop of one cent in the dollar leads to $5 million in profits after tax.
The list continues. Savage Shoes have hired about a hundred new workers, fish sales are up, the packing industry has benefited, pulp and paper earnings have risen as have those of electrical manufacturing companies. The steel industry and cement producers are benefiting. Mr. Speaker, I could spend an hour quoting these excerpts.


Some hon. Members:: Go on!


Alan Gray Martin: The hon. member for Don Valley and I both come from Toronto area ridings. For whatever reason, he is not standing for re-election. The point I want to make is that his stories of gloom and doom will gain a good deal of press attention. I just hope that some of our positive information will gain equal attention. According to Eric Nilsson, economics chief for the Canadian Manufacturers' Association, the sick dollar may be the best medicine. That is a rather prestigious organization. He is quoted as saying our competitive position has been fully restored. Even tonight, before representatives of the Canadian Chambers of Commerce, there was reference to government spending.
The opposition proposes to increase the deficit by 50 per cent-just for a few months, so they say. I quote from one of the Chamber's releases:
The government's commitment to extreme restraint must be continued and intensified. We are encouraged by the emerging national consensus to restrain public spending.
This is something of prime importance to the Minister of Finance, a man the hon. member for Don Valley had the nerve to say had been the worst Minister of Finance to come before parliament-I don't know whether he said since confederation. The policies which the minister and government have adopted are policies which all sectors of the economy today are endorsing as being the right and positive course to take at this time.
I should like to quote again from a study document issued by the C. D. Howe Institute. Discussing the dollar, the report stated:
In summary, an exchange-rate realignment may bring about fundamental changes in a country's competitive position that can lead, over the longer term, to important changes in its industrial structure. The depreciation of the Canadian dollar over the past two years opens the door for major new investments in a broad spectrum of exporting and import-competing industries. What is more, the

February 13, 1979
Currency Devaluation
response of workers and firms so far has been to accept the initial price and cost disadvantages arising from a depreciation. This significantly improves the probability that the depreciation of the Canadian dollar will be the foundation for new industrial activity rather than the source of a new wave of inflation.
Again, Mr. Speaker, this is far from the doom and gloom kind of news that this debate was intended to purvey to the Canadian public.
We are already witnessing renewed strength in business investment. Contract awards, industrial and commercial building permits and new orders for machinery and equipment all point upwards. During the last year inventories have gone down while shipments have started rising rapidly. The result is a demand for increased production to rebuild stocks.
Despite a general slack in the economy, some industries are already running into supply constraints. Steel, pulp and paper, lumber, shoes and textiles are running at or close to full production.
Our manufacturing sector has become a source of real strength in the economy during the last 12 months. Capacity utilization, which was at 83.6 per cent in 1977, expanded to 87.4 per cent by the fourth quarter of 1978. Output is up 9 per cent over a year ago and manufacturing employment is up by nearly 7 per cent, or 125,000 jobs. How can we relate that kind of information with the information put on the record by the Leader of the Opposition and his five financial critics who are members of the financial variety club opposite? I just do not understand it, and I think there comes a point at which the Canadian people do not understand it either.


An hon. Member:: Try us.


Alan Gray Martin: Earlier this afternoon the Leader of the Opposition quoted from a speech by Mr. McLaughlin, but he just quoted one of the negative parts of it. Mr. McLaughlin and the governor of the Bank of Canada disagree on the benefits of the lower exchange rate. That is fair enough. They are both knowledgeable and able people. On balance, however, the governor of the Bank of Canada probably has a heavier and broader responsibility than Mr. McLaughlin. After all, he is protecting the interests of Canadians at all income levels whether they be bank shareholders or ordinary workers on assembly lines. His responsibility is much more complex than that of Mr. McLaughlin.
In his speech to the 110th annual meeting of shareholders on January 11 Mr. McLaughlin stated:
From a world perspective, the standard of living and the quality of life for virtually all Canadians remain very, very high. Our land is at peace. We walk the streets safely. Our institutions are increasingly responsive to local concerns. Governments are remarkably free from corruption. We have freedom of speech and a level of political liberty unrivalled anywhere. We may judge the level of governmental expenditure to be excessive, but we have reason to be proud of our care and concern for the disadvantaged in society.
I might interject that government expenditure is not nearly as excessive now as it would be if the official opposition took over.
He went on to say:
We have fine educational institutions. We have a business community which has high standards of honesty and social responsibility, as well as vigour and efficiency. We are rich in natural resources, have a skilled work-force, and are one of the world's major trading nations. Our growth continues to outperform most other countries around the world.


Some hon. Members:: Hear, hear!


Alan Gray Martin: I cannot find any strong background to support the doom and gloom information being put forward by the so-called experts opposite, the finance variety club of five. I just do not know where they find information to show that the lower exchange rate is doing us so much harm. One hon. member wants higher deficits, and another wants lower deficits.
I suppose in diversity hon. members opposite find some strange strength. They are all over the map. They do not know where they are going. They have no policies to put forward, so they take a day of this parliament to debate the exchange rate. One of them suggested-I think it was the hon. member for York-Simcoe (Mr. Stevens)-that the rate should go to 90 cents. Last year he was not in favour of a rate of 90 cents. I do not have quotations here, but he was asking questions in the House and indicating that it was a disaster that the Canadian dollar should go to 90 cents. Now he thinks it should be 90 cents. What does he want?
How does the hon. member for York-Simcoe propose to bring the dollar up to 90 cents? Does he propose artificial mechanisms to move it immediately to 90 cents? Does he propose a fixed rate of exchange? Let us hear from hon. members opposite. What are their proposals regarding the Canadian dollar? All they are doing now is criticizing, and their criticism falls on deaf ears more and more across the country because Canadians, by and large, know that they are benefiting at this time from a strong Canadian economy. They know they are benefiting from the strong leadership of the Minister of Finance and of this government.


Some hon. Members:: Hear, hear!


John Carnell Crosbie: Mr. Speaker, let me start by clearing up one matter. I think the hon. parliamentary assistant said that I called him a liar earlier today. If I called him a liar, what I meant was that he was a Liberal trying to stay in power. That is what I really meant. I know there is very little difference, but I will withdraw the statement he was a liar. He is a Liberal desperate to stay in power, and he will twist and squirm as they all do and as they are doing today to do that.


Mr. Gauthier (Ottawa-Vanier):: Who are you, Crosbie?


John Carnell Crosbie: This is a motion that is being treated with the utmost contempt by the government. It is a motion that deals with a serious subject, asking the government to give parliament an opportunity to investigate the loss of confidence in the Canadian dollar and the government policies that have reduced our currency to its lowest level in 40 years.

February 13, 1979

There is no way that the gentlemen opposite can tell the Canadian public that they have not been in power since 1963 because they have, and they bear the responsibility, and they are the people who have to bring forward the solutions until another group takes power, and when we take power we will bring forward solutions.


Jean-Robert Gauthier: You will probably switch by that time.


John Carnell Crosbie: This afternoon we heard the Liberal line, and the Liberal line was from the Minister of Transport (Mr. Lang). The Minister of Finance (Mr. Chretien) would have been ashamed to say it. The Minister of Industry, Trade and Commerce (Mr. Horner) would have been ashamed to say it. The Minister of State (Small Business) (Mr. Abbott) would not even have attempted it, but the Minister of Transport in his brazen way came into this House, and I quote his exact words, "this country is in excellent economic shape". Tell that to the one million unemployed. Tell that to the millions suffering from the high food prices and the inflation of last year, the 9 per cent of last year that wasn't supposed to be there. Tell that to the people who are suffering the 15 per cent increase in food prices in the last 12 months. Tell that to the people who are not investing. Tell it to the people who are taking their money out of Canada and investing in the United States and everywhere but Canada. Tell those people that this country is in excellent economic shape. This is exactly the same tack they took in 1972.
In 1972 they went to the people of Canada and they said, "The land is strong." Well, the land might be strong, but it is not Maurice Strong. He has fled the land. That is one Strong that has fled this country, and the people of Canada are not going to believe, the Liberals are not going to be able to persuade them that this country is in excellent economic shape. That is what I call the emperor's new clothes policy of the Liberal party. Remember the old fairy tale of the emperor? The tailor told him that he was putting on a magnificent suit of clothes for him, and the emperor walked down the streets naked because he believed the tailor who told him he had on a fantastic suit of clothes. The people of Canada are walking naked while this crowd tries to persuade them that the country is in excellent economic shape and they have on wonderful economic clothes. Well, they are not going to believe it. They are not so simple-minded as to believe it.
There is another saying, that in the valley of the blind the one-eyed man is king, and the one-eyed man in this conglomeration is Mr. Bouey. He has one eye. He has the monetary eye, and the parliamentary assistant was hiding behind Mr. Bouey today, Mr. Gerald Bouey, governor of the Bank of Canada. He is the one-eyed man, and in this government he is king because the rest of them are blind. They cannot see. They do not know what to do about the economy.
At least Mr. Bouey had the guts to come before the finance committee and stand up for his monetary policy, his monetary policy which he is responsible for, and the government is only part of the story. Whenever we wanted to question him about
Currency Devaluation
the government's fiscal policy, about what had led to this concatenation of disastrous economic events, he had to say, "I can't tell you, gentlemen. I can only advise the government. I can't advise you and the people of Canada." The only one that these gentlemen have had the guts enough to push forward is Mr. Bouey. Why doesn't Prime Minister Trudeau come before the committee and give his testimony as to what he has done in the last 15 years?


Mr. Foster:: How come Joe wasn't there?


John Carnell Crosbie: There is no confidence in the Canadian dollar, no confidence in Canada. Why? How can we have confidence in this Minister of Finance? You ask him a question in the House, you ask the Minister of Finance why the Canadian dollar has fallen to 83 cents, and his answer will be, "Oh, but your leader lost his baggage on his trip around the world." That is what the Minister of Finance of Canada answers serious questions asked him in this House. He comes back with cheap political claptrap. The Minister of Finance is a fine human being, a warm politician. I like him as a politician, but as a Minister of Finance he is a disaster. No one could have confidence in him. He does not answer seriously in this House. Asked serious questions, he comes back with political rigmarole.
Investors read Hansard, they watch TV, they read the newspapers, and when they see the incredible lack of answers we get from the Prime Minister (Mr. Trudeau) and the Minister of Finance, the Canadian dollar sinks lower and lower. At least his predecessors treated the job seriously. "Thumper" Macdonald thumped the hell out of the Canadian economy, and John Turner fled to Toronto after his disastrous stint. They did treat themselves seriously. They did not come in here and just give political answers when they were asked questions, but this Minister of Finance acts as a parish pump politician when he is asked questions.
I want to give another quotation, "A disordered currency is one of the greatest political evils"-Daniel Webster. They might take that to heart across the House, and that goes back to the early 1840s. That is true here in Canada. This disordered currency has been caused by the gentlemen opposite. Another quotation which they might remember is a little poem, "Money talks, I'll not deny; I heard it once, it said goodbye". That is the poem that every Liberal minister of finance has practised since he has been in office. On the way coming in and on the way going out, it said goodbye-the huge deficits that these gentlemen have run up.
Now let us just look at why we are in the shape in which we are. I want to quote governor Bouey from his statement of February 6. He is the only one of all the government apparatus who had the courage to come to the House of Commons Standing Committee on Finance, Trade and Economic Affairs. Even there our hands are tied with the ten-minute rule. You cannot question officials for more than ten minutes. When we have the Minister of Finance, he acts like a poltroon. When

February 13, 1979
Currency Devaluation
you ask him a question for one minute, he answers for nine minutes with this claptrap about "le baggage". He cannot talk about the Canadian economy; he is too ashamed.
Mr. Bouey said in his statement:
A substantial decline in the value of the Canadian dollar relative to the United States dollar had become inevitable because of the higher rate of price and cost inflation in Canada than in the United States earlier in the 1970s.
What government was in power when that happened? It was the gentlemen opposite who were in power in the early 1970s. It was they who presided over the disastrous inflation we had from 1970 to 1975. Our troubles now with the low Canadian dollar were caused by their lack of courage, their lack of policy, their lack of gumption and their lack of guts, just as we are observing now. When those gentlemen have a chance, they will not tell the Canadian people what their policies are driving this country toward. There is an election coming up so they do not want to talk about the policies. They do not have a minute to get up in the House and tell us which of these alternatives the financial experts say they should adopt, because they hope to get to the election before the ass goes out of the Canadian dollar altogether and they have to act again.
Which of these alternatives will they take? Will they export additional energy to the United States? Will they put on temporary tariff surcharges and quotas on imports considered non-essential? Some analysts think this should be done. Will they reduce the duty free exemptions for tourists? Will they eliminate the 15 per cent holding tax on corporate securities issued for a term of under five years? Will they do any of those things, or do they hope to get to the election like a bunch of cowards before they have to face the Canadian people with the consequences of their sick treatment of the Canadian economy for the last ten years?


Some hon. Members:: Hear, hear!


John Carnell Crosbie: They know that the only way we can come out of this crisis in Canada is by asking the Canadian people to tighten their belts, to sacrifice, and they are afraid to do that before the election. The Chretien notch is under way now, the increase in food prices. Everyone in Canada is struck now by the Chretien belt tightening, the 15 per cent increase in food prices because of the devaluation of the dollar. Will these gentlemen declare a moratorium on any further purchases of foreign-controlled Canadian companies by such government owned Crown corporations as the Canada Development Corporation and Petro-Can? What effect on the dollar did Petro-Can's huge purchase of Pacific Petroleum have on our exchange rate? Why was that permitted? These are the questions they should be answering for the Canadian people. Because they are not and because the financial community as well as the investment community know they are not, we have this tremendous pressure on the Canadian dollar, because there is no confidence in the group opposite. The only thing that will change that is a change in government. When we get in, that will be changed.
We do not have enough time here tonight to expand on anything, but if we want to look at a neutral comment let us

take a look at what is put out by McLeod Young Weir Limited, the economics department, which sums it all up in the document which they put out on November 17, in which they point out what our trouble is at pages 8 to 15. They say there is a longer-term structural problem-the very large deficit on end products which includes manufactured goods. The government opposite scoffs when we mention the $12 billion deficit in the manufactured end products; it pretends there is no problem at all. The Minister of Industry, Trade and Commerce tried to pretend we are much better off than we were 12 or 15 years ago.
McLeod Young Weir go on to say:
The conclusion then is that our trade balance is constantly engaging in a tug of war between the ongoing surplus for raw materials and the deficit for end products.
They say we have to have a huge surplus of raw and semi-fabricated materials to cover the larger and rising deficit on end products. But the gentlemen opposite will not even recognize the problem, or will not admit that there is a problem.
The document goes on to read:
This, in turn, continues to suggest that Canada has not yet been able to break its foreign trade dependence on its raw material base-a situation which does not bode well for Canada over the longer term.
You, gentlemen opposite, have been in office for the last 15 or 16 years. What have you done about the these long-term problems? You have done nothing. We have always had their short-term political excuses. There has always been the constant desire on their part to stay in power, to do the easy thing, but try to keep themselves in power. This has been illustrated by the parliamentary secretary in the ridiculous speech he made here today.
The document goes on to read:
Where Canada has developed its most visible problems is on the non-merchandise trade balance . . . over-all, Canada's service account deficit increased substantially. .. to $5.7 billion in 1976 and $7.4 billion last year. The erosion is evident in all areas of the service sector but is most pronounced in the interest and dividends section and the travel section.
We have a $4.5 billion deficit on our current account. That is why the Canadian dollar is down to 83 cents, that is why the pressure is on, because there is no confidence in this government which may drive it down further. It is also caused by the fact that we have a huge deficit on the tourist account and a huge deficit on the interest and divident account. The situation is summed up in the following way in this document:
-Canada has run a current account deficit of $3.8-$4.8 billion since 1975 compared to a current account which was in basic balance between 1971 and 1973. In 1977, these deficits were essentially the product of four specific problems.
This is still true, even more so. It goes on to read:
An $11 billion dollar deficit on end products in the trade account, a $3.5 billion interest service deficit, $2.2 billion "other service" deficit, a $1.6 billion foreign travel deficit.
All of these have worsened in 1978, not improved. Then they go on to deal with the outflow of investment from Canada, which is also extremely dangerous.
February 13, 1979

That is the problem we have, a problem which the government is not facing. What did we hear from the Minister of Finance when he was asked a question about the fact that he is doing all the borrowing abroad? He said, "We are doing this because the provinces are not borrowing abroad as much as they were." In other words, he encouraged the provinces and municipalities to borrow outside Canada. When I was minister of finance in Newfoundland, they were advising the exact opposite-


Some hon. Members:: Oh, oh!


John Carnell Crosbie: I remember when the gentlemen up here were telling the Newfoundland government, "Do not borrow abroad, it is too dangerous. My God, you have a $200 million deficit, do not borrow any further." Here they are with a $12 billion deficit, they are the worst managers of the Canadian economy ever, giving us this advice. Now they are advising the Canadian provinces. "Borrow abroad all you can. Save our bacon for God's sake. Do not borrow in Canada, go outside, never mind the exchange rate."
Here is one of their own documents by Mr. Fullerton, a Liberal supporter, entitled "Quebec's Access to Financial Markets". At page 9 he shows that of the provincial debt, $70.4 billion, 43 per cent is already owed outside Canada, or $30 billion, and he points out that Quebec, which owes a total provincial debt of $17 billion, because of the part that the province borrowed outside Canada will require $19 billion to repay that debt.
Because of the exchange rate which has gone against the Canadian dollar, Quebec and the other provinces borrowed U.S. dollars years ago, they borrowed in Switzerland and they borrowed in West Germany, and because of the mismanagement of this government, it has cost them four times as much to pay off their debt now as it did when they borrowed the money. That is the danger. The government does not care about that.
In his study Mr. Fullerton points out the following:
Thus a recorded debt for Quebec of $17 billion, based on Canadian dollars received, would at current exchange rates require $19 billion Canadian to repay it. The exchange rate swing also affects interest costs, raising the nominal interest bill on Quebec's direct and guaranteed debt by some $200 million to its current level of about $1.5 billion ... but the recent experience does demonstrate the risks inherent in foreign borrowing.
These gentlemen are trumpeting that they are borrowing abroad because the provinces and municipalities are not doing so. In other words, they are saying to the provinces, "Gentlemen, go borrow abroad." Now they have a policy according to which they want Canadians to borrow abroad to save their goods. We owe $106 billion abroad, a net $53 billion. Do you know, Mr. Speaker, that up to 1977 the country's net international debt rose $18.2 billion, an amount that previously it took us 15 years to reach? Now they want us to go further with it.
When they are not borrowing abroad, they want individuals and companies and provinces and municipalities to take all the
Currency Devaluation
risks of the exchange rate, a tremendous risk which we have demonstrated, where the Canadian dollar now is depreciated 40 per cent in terms of the German mark and 40 per cent or 50 per cent in terms of the Swiss franc or whatever the Swiss currency is. If one borrowed there five years ago or ten years ago, it would cost two or three times as much to pay back the money. They are telling us today to go ahead and borrow abroad to cover up their own mistakes and errors.
We have only a short time to speak here. The board of economic refugees are not even here to speak tonight. Where are they? Where is the president of the board of economic refugees? Where is the Minister of Industry, Trade and Commerce? They are ashamed to come here. Where is the Minister of Finance? He is scouring down to Washington. Where is the Minister of National Revenue and Minister of State for Small Business? He has fled the place. Where are their economic ministers?


An hon. Member:: Where is your leader?


John Carnell Crosbie: Where is the Minister of Consumer and Corporate Affairs (Mr. Allmand)? "Allmand" is not even all there, and he is certainly not all here. What about their forecasts, their inaccurate forecasts? Who can believe the outcasts, as I call them, of the Minister of Finance? They are not forecasts, they are outcasts. He says that it is going to be a 5 per cent growth rate. Then it turns out to be 4 per cent, and then it turns out in truth to be 3 per cent. He says that we are going to have a $5 billion current account surplus on merchandise trade and then he says "$4 billion." Then it turns out to be $3.5 billion. He says that the inflation rate is going to be 6 per cent. Then he changed it to 7 per cent, and then it turned out to be 9 per cent. He said that this year it is going to be 6 per cent. Then he said it is going to be 7 per cent, and now it is going to be 7.5 per cent. That is the Minister of Finance of this country. It is a wonder the Canadian dollar has any value at all.


Some hon. Members:: Hear, hear!


John Carnell Crosbie: If they had any shame, they would go to the Governor General now and clear out. Governor Bouey can only treat the symptoms. To treat the cause of the disease, the people of Canada have to do that. They are the only ones who can do it. They can cut out this canker. They can amputate this incompetence, this mismanagement, this arrogance, this bunch who have brought Canada to its lowest economic state ever. The people of Canada can do that. If they have any guts at all, let us go to the people now, right now. While they are looking at the entrails of the land, the Gallup polls, the "Goldberg" polls, the "Goldenberg" polls or whatever polls they are looking at, they should get their courage up an go to the people so that we can start dealing with the problems which face this country. I say they should get the white feather. They should not come in here with a red rose. They should come in here with a white feather. That is what they deserve. They are afraid of the Canadian public. They are afraid of the Canadian people.

February 13, 1979
Currency Devaluation


Some hon. Members:: Hear, hear!


John Carnell Crosbie: The only thing which has gone up while this government has been in is bankruptcies. Bankruptcies have gone up 41 per cent in the last year, 5,500 bankruptcies. The prices of food have gone up tremendously. That is the only thing going up. Everything else is going down. The value of the dollar and everything else is on the way down. Now, the Canadian dollar-how will they explain to the Canadian people the $3 billion spent on importing food every year? That was the amount in 1977. The food index rose 15.5 per cent last year. Canadians on the average spent 21.5 cents out of every consumer dollar on food.
The Canadian dollar has lost eight cents worth of buying power abroad in the last year. As the dollar went down, the cost of imported food went up by that much. Where is the government's policy on this, the 15 per cent which we buy from outside, fresh and processed fruit, 650 million? Are they going to conjure up something which Canadian people can eat in the way of fresh and processed fruit to replace that? Coffee: are we going to grow coffee in Canada to save the $420 million we imported last year? Fresh and processed vegetables, $400 million; meat, $295 million; sugar, $230 million. They have put that added burden on every member of the Canadian consuming public because of their gigantic incompetence and because of the fact that clinging to political power means more to them than the good of this country. That is what they have done. They have not got the guts now to acknowledge it or go to the Canadian people. They just sit over there and smile and simper and they scug along to the end of their five-year term clinging on to power, in their desperate Liberal desire to cling on to power.
Go and test it now. Let us go and test it now to see if Canadian journalists are right or wrong, or what the Canadian people want. They want to be rid of that bunch, believe me. They are waiting for a chance to get at them, and we are waiting for a chance to get at them. They come in here and they treat our motions with contempt as if they are of no importance. We heard the Minister of Transport today and the parliamentary assistant treat with contempt our attempt to have parliament discuss the loss of confidence in the Canadian dollar and government policies which have reduced our currency to its lowest ebb ever. They treat it contemptuously. They do not even have the Prime Minister here. What are their financial and economic ministers? Nothing but second rates. The Minister of Transport is trying to shut up the mouths of the press by throwing the press out in Saskatchewan, the Regina Leader Post.


The Acting Speaker (Mr. Turner):: Order, please. I regret to inform the hon. member that his allotted time has expired.


Alastair William Gillespie: Mr. Speaker, 1 very much welcome the opportunity to participate in this debate. As I listened to the hon. member for St. John's West (Mr. Crosbie), I wondered whether we should take him seriously or whether we should take his leader

seriously. The hon. member for St. John's West claimed to be the finance minister of a previous government in Newfoundland. He claimed to have a knowledge of figures and how they should be used. But, as I looked at the figures and listened to him, I must say I did not gain any confidence. For example, he claimed the government has run up the largest public debt in this country's history. If the hon. member had looked at the figures he would have recognized that it was the former Conservative federal government which has a net public debt-


Some hon. Members:: Oh, oh!


Alastair William Gillespie: I am referring to 1962. At that time during the Diefenbaker years the debt of Canada was 33.4 per cent of the gross national product.


Some hon. Members:: Shame, shame!


Alastair William Gillespie: Today the net public debt is 18.9 per cent of GNP.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


Alastair William Gillespie: Anyone listening to the voluble member for St. John's West would have been reminded of a disoriented man. Perhaps it is not altogether surprising. After all, the hon. member had tried to be a Liberal leader in Newfoundland and failed; the door was closed in his face. Then he tried to be the leader of the Conservative government in Newfoundland, and again the door was slammed in his face. Just recently the leader of that government decided to step down, and where did the hon. member find himself? He finds himself in opposition at Ottawa. The hon. member realizes that is where he will stay, in opposition in Ottawa.


Some hon. Members:: Oh, oh!


Alastair William Gillespie: As 1 listened to the hon. Leader of the Opposition (Mr. Clark), I wondered whether he expected us to take him seriously. After all, he chose the subject, the time, and the wording of the motion. Also he chose to hold the debate when the Minister of Finance (Mr. Chretien) was not in the country, knowing perfectly well that the minister could not participate in the debate.


Some hon. Members:: Oh, oh!


Alastair William Gillespie: Canadians are entitled to ask if the Leader of the Opposition is serious about this question. Why would the Leader of the Opposition have not chosen to have the debate when the Minister of Finance was in the country?


James McPhail Gillies: Why is he not here?


Alastair William Gillespie: It is quite clear the Leader of the Opposition is not interested in any responsible approach to this important question. The Leader of the Opposition chose to avoid the substance of the debate, just as he chose to avoid the opportu-
February 13, 1979

nity of attending the hearings of the Standing Committee on Finance, Trade and Economic Affairs when the governor of the Bank of Canada appeared last week. If the Leader of the Opposition had chosen to attend that committee meeting, he might have learned something. He might have learned that there are a number of factors which affect the value of the Canadian dollar. For example, he might have been reminded that the trade balance in Canada and the competitiveness of Canadian industry are important to the value of the Canadian dollar. He might have learned that the health of the United States economy is important to the value of the Canadian dollar.
The Leader of the Opposition might have been reminded that it is the judgment of those outside Canada, of the international investors, the money market managers and those who are trading in foreign currencies-the judgment of those with respect to the political stability of Canada and the question of separation or partition-that determines the value of our currency. It is the judgment of those people with respect to what other people in Canada are saying about Canada, particularly some of those who would hope to be the leaders of Canada and some of those on the other side who I believe, quite properly, can claim to be leaders in this country. Those international judgments-


James McPhail Gillies: They have judged the government.


Alastair William Gillespie: -have an enormous effect upon the Canadian dollar and they have been judging some of the statements made by the leaders opposite. In my remarks-


The Acting Speaker (Mr. Turner):: Order. The Minister of Energy, Mines and Resources (Mr. Gillespie) has the floor, and I suggest we listen to him.


Alastair William Gillespie: The hon. member for St. John's West, for example, has referred to Petro-Canada. I would enjoy an opportunity to debate Petro-Canada with him and with the Leader of the Opposition. I cannot help but feel that many leaders outside Canada, for example, our allies and trading partners, the United Kingdom, Germany, France, Italy and Japan must wonder about this country when the Leader of the Opposition would destroy the national oil company at a time when they are trying to build national oil companies in their countries to protect the energy security of their people.
These people and also the people in banking businesses abroad are asking why would the Leader of the Opposition put himself in such a completely untenable, unthinking, irresponsible position. There is no time to debate the issues of Petro-Canada this evening, but I am sure there will be plenty of opportunity in the weeks and months to come.


James McPhail Gillies: During the election.


Alastair William Gillespie: I would like to deal briefly with the four points which I mentioned a moment ago in regard to the question of the trade balance. We have heard a lot of rhetoric
Currency Devaluation
and bombast from the other side on this issue. The trade balance, of course, is immensely important, and there is no question that we have had a growing deficit with respect to our balance of payments. There is also no doubt as to why that has occurred. Anybody who has been watching the events over the past five or six years would realize that the competitiveness of the Canadian economy and of the manufacturing industry in particular has been seriously eroded because unit labour costs have gone up and were higher on average than those in the key manufacturing sectors of the United States. Furthermore, those wage rates had been rising more rapidly than they had been in the United States.
International market forces have redressed that imbalance by judging the value of the Canadian dollar at a figure less than what it had been six years ago. The market has made the inevitable adjustment to the situation where a sector of the economy becomes non-competitive with its trading partners.
The second factor which I referred to, the health of the United States economy, is not something about which the official opposition talks. To listen to them one would think that the Canadian dollar could exist quite apart from the financial health and growth of the United States economy and that it could develop in Canada quite apart and unrelated to what is happening south of the border. Those who deal with international currency exchanges know that the Canadian economy is a dependent economy in the sense that 70 per cent of its market is with the United States and in the sense that the health of the United States financial markets are important to Canada.
These people also know, but I have not heard it from the opposition, that the United States dollar has been under great pressure for the last two and a half years. For example, if we take 1976 as the base period, the United States dollar has fallen against the yen by 35 per cent; against the Swiss franc by 34 per cent, and against the deutschemark by 29 per cent. I cite these numbers because if there is a weakness, and in theory there has been a serious weakness in the United States dollar, and if the Canadian economy is a dependent economy vis-a-vis the United States, it is not surprising that those who are making judgments about the Canadian dollar would regard the Canadian dollar as a weaker currency than that of the United States.
The official spokesmen on the other side never allude to these points. Nor do they remind Canadians that the Canadian dollar was worth one dollar and 2.86 cents American in October, 1976. They do not remind us that on November 15, 1976, the PQ party, the separatist party of Quebec, was elected to form the government of Quebec. They do not remind us that within two weeks of that event the Canadian dollar dropped to 95.88 cents, the single largest, most precipitous drop of the Canadian dollar in the last two and a half years, the period at which we are looking. I did not hear any opposition speakers in this debate today draw to the attention of the Canadian people the significance and influence of that election on the value of the Canadian dollar. That event more

February 13, 1979
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than any other reflected the dramatic change of view that others had of this country.
How could anyone claim that the policies of the PQ party had no effect on our economy? How could anyone argue that the health of our economy is unrelated to unity? How could anyone offer to negotiate the division of Canada without changing the perception which others have of Canada? Yet that is precisely the position that the Leader of the Opposition and the hon. member for Rosedale (Mr. Crombie) have adopted in recent weeks, a readiness to negotiate the division of this country.


Walter David Baker: You are straying from the truth, Gillespie.


Alastair William Gillespie: Our dollar will climb back, Mr. Speaker, when confidence returns.


Walter David Baker: You wouldn't recognize the truth if you fell over it.


Alastair William Gillespie: The dollar will not climb back through gimmickry. The Tories say that they would prefer to see the dollar at 90 cents.


James McPhail Gillies: We would prefer to see it where it floats.


Alastair William Gillespie: Of course it will rise up in due course.


James McPhail Gillies: When we get a new government.


Alastair William Gillespie: The Tories, however, propose to get it there in a rather quicker fashion, by fiddling with the Bank of Canada's accounts and listing our gold assets at a higher figure. I believe that that was a proposal of the hon. member for Don Valley (Mr. Gillies). Confidence cannot be built on gimmickry, it can only be destroyed by an opposition which proposes that it would resort to such gimmickry.


Walter David Baker: Who writes your speeches, Alastair?


Alastair William Gillespie: The government has looked at the proposals of the opposition, and they are, clearly, not serious. The Tories had a chance to put their proposals to the governor of the Bank of Canada and, as the news reports noted, the Tories ran out of questions after the first 15 minutes.


James McPhail Gillies: Source? Source?


Alastair William Gillespie: The Tories claim to be ready to govern, but have they told the Canadian people through this debate that unit labour costs have helped to make Canadian products non-competitive? Have they told the people that Canadian wage costs have been higher and have been rising in Canada higher than in the United States prior to controls? Have they told the Canadian people that the Canadian dollar has helped to re-establish a cost competitive industry? Have they told the Canadian people that as a result of the Canadian dollar we had a record trade surplus last year of $3.5 billion? There is every indication that we will have a larger trade surplus this

year-a trade surplus related to the manufacturing sector, the products sector of our economy.
Have the Tories told the Canadian people that the lower dollar represents an opportunity for Canadian business? Have they told the Canadian people it represents an opportunity for the manufacturing industry, an opportunity which they and we should fully exploit for the benefit of Canada? I do not hear voices on the other side saying to Canadian businessmen, "You have an opportunity as a result of this lower dollar; get out and sell." They want to play politics with that.
In this debate I have not heard that the Tories have told the Canadian people that, as a result of the more competitive Canadian dollar, Canada created over 400,000 new jobs last year. At no time that I can recall, certainly not in the last ten years, has there been that degree of growth in a period when the Canadian labour force has increased by one third, the fastest increase of any labour force in the industrialized world.
The Tories have not come clean with the Canadian people. That is why I have welcomed this debate and the opportunity to put some of these facts on the record. They have not helped Canada at this time. I believe they have distorted the situation in Canada. I think they have emphasized the negative; they have not emphasized the performance and strength of Canada. Theirs has been an erratic voice. At one time their leader was predicting a deficit of $18 billion when he should have known better. Some of his supporters knew better. I believe he tried to correct himself, but it is not clear that he ever did. He must have known that kind of error would be noticed. I regret that he did not take the opportunity to put the record straight. Other people saw and heard that kind of error.
A short while ago the hon. member for Don Valley was arguing that the deficit in Canada was too high and should be lowered. In recent weeks his leader has been arguing the reverse-that the deficit should be greater. Others outside Canada hear these confusing statements, so is it any wonder that those who are making a judgment in respect to the Canadian dollar are confused? These are the people who would claim to be ready to govern. They have shown themselves completely inept in the economic area, and they have shown themselves to be thoroughly irresponsible. They have made knowingly untrue statements.
Not long ago one of the official spokesmen for the Tory party, the hon. member for York-Simcoe (Mr. Stevens), claimed publicly that there were Liberals who were speculating against the dollar. He knew perfectly well that those comments would be heard. I suspect that is the reason he made them. Why else would he have made them? When he was challenged he could produce no evidence, because we knew and he knew that they were untrue. It is that kind of statement made inside Canada by people who claim to be ready to govern that others outside Canada are judging. They are aware that the opposition is creating confusion and is being irresponsible.
The opposition can, of course, choose to ignore the threat of separation, as many of them have. They can choose to make
February 13, 1979

irresponsible statements, and that to a large extent is why the Minister of Finance-


The Acting Speaker (Mr. Turner):: Order, please. I regret I have to inform the hon. minister that his allotted time has expired. He may continue with unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


Hon. Alvin Hamilton (Qu'Appelle-Moose Mountain):: Mr. Speaker, before the House tonight is a very simple motion to let the Parliament of Canada have an opportunity to take a deep look at the various arguments expressed not only in this country but in other countries about the proper way to handle the economic crisis that faces us at the present time. It is not necessary for me to argue over what the parameters of that crisis are. Every person in Canada knows the extent of the rise in prices in the last four or five years, the extent of the insistent unemployment, and certainly the deficit in our budget. Serious-minded people in every country of the world are debating this fact, but here we are being denied the chance to take a deep look at it.
I thought it would be worth while to put on the record what is happening in other countries. For example, the United States has exactly the same type of policies as we have for coping with the same sort of difficulties. They, too, have a deficit; they, too, have a negative balance in international trade; they, too, have high prices. But what are they doing about these things? Are they keeping them quiet, not mentioning them? Let me read what appeared in the magazine Saturday Review on January 6 this year. I shall read it slowly because I think it is our duty to listen to this.
There is a new theory circulating around Washington these days that is riding roughshod over the existing debates of the economics profession and the political configurations of contemporary America. It has ambushed the predictions of political pundits. It has baffled the congressional leadership. It is promoting the political fortunes of its proponents while evoking turbulent reactions from economists of widely differing persuasions. Cabinet officials have been denouncing its prescriptions. And the President has been faced with major legislative challenges to a number of his initiatives-challenges based on this new concept.
What is this new concept that has the whole United States intellectual community in a furor today and has upset Congress to the extent of defeating three major portions of President Carter's budget last month? Do our media show any awareness that there is a great debate going on in the United States over the same subject we are concerned about in Canada? A deathly hush, a silence hangs over this nation. All that is being discussed in the United States is a simple, elementary truth, that for 30 years the economists who have been guiding governments in the United States, Canada and other countries, have been consistently wrong. That is what they are discussing.
Surely the quantitative evidence of the last 20 years in every western nation shows that something is desperately wrong with the theory being used by the advisers of this and other governments on economic matters. I am referring not only to
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the monetary side, but to the fiscal side which concerns us the most. I say that this subject has been put before the government, this alternative theory has been put before this parliament, as recently as three years ago-the very things they are talking about with great excitement in Washington with the whole Republican party joining in this new theory and a large number of Democrats joining with them, sufficient to defeat the administration in the House on three votes. We did not wait till 1979 to start talking about this theory.
I have the Hansard of three years ago reporting the first budget of the Minister of Finance (Mr. Chretien) when this party, in opposition, tried to give him some alternative theories to those he was getting from his own advisers. I cannot and do not intend to read the whole speech that I made on June 8, 1976, but I should like to put parts of it on the record. I started off by saying:
The hon. member for Waterloo-Cambridge put forward not a new philosophy, but one that was laid clear as an alternative by the Economic Council of Canada six or seven years ago, namely, that when you have a large number of unemployed and 15 per cent or 20 per cent of the plant capacity unused, if you put that group of people to work and put that plant capacity to use, then there is no inflation.
That theory was enunciated by the hon. member for Waterloo-Cambridge (Mr. Saltsman). It was a serious effort on his part to get this debate started. I might say that I have been trying to do so for 15 years, but I stood up and pointed it out and in my own way congratulated him on taking a serious interest in this subject. I then went on to call it by the name that was used in describing his theory by the Economic Council of Canada, the potential budgeting theory. Four or five reviews by the Economic Council of Canada, an institution set up by this parliament to give alternative advice to the Minister of Finance and, the Bank of Canada, mentioned potential budgeting as something that is used when there are unemployment and unsued plant capacity available to produce new wealth to get the country out of its difficulties.
As the hon. member for Don Valley (Mr. Gillies) said this afternoon, you measure a country's performance not against Timbuktu or Japan, you measure it against your potential to produce. If you are producing only 70 per cent or 80 per cent of potential, every dollar that you do not produce must be marked down as a loss forever; that is the human problem of the unemployed, unused plant capacity, the debts and worries of our people.
We would like to know more about this matter we are discussing. For a country in Canada's position, no one knows at what level our dollar should be when it is floating. We have to feel for that point. We would like to get some advice. When this government announced it was going to float the dollar, every party in this House supported that stand. Do not forget it. But what caused the uproar between us was when the advisers to the government got the minister to stand up and say the dollar was still floating when it was not floating. Instead the government was pouring in reserves trying to keep the dollar from going down; it was borrowing money trying to

February 13, 1979
Currency Devaluation
keep the dollar from going down. But the worst sin of all was to raise the bank rate seven times in less than a year, to raise interest rates, as if that would keep our dollar from going down. Quantitative evidence shows, as the hon. member for Don Valley mentioned this afternoon, that raising interest rates as part of the theory to hold the dollar up has had no effect. That same sort of evidence has been produced in country after country. I am thinking specifically of the United Kingdom. That country has tried raising rates and raising rates, but to no avail.
We as parliamentarians have a responsibility to the people of this country that goes beyond the winning of elections by our party against another party. You would think from the debate in the House this afternoon-from the heckling that we received when our leader was speaking, making a simple request-that this was a ball game. It is not a ball game. This is a matter of serious impact to all the people of country, and I might say to all nations of the west. No one knows the truth for sure. That is why we called for a detailed look.
We congratulate the governor of the Bank of Canada for having the courage to come forward and defend his policies. We know he is worried. We know that he knows about this theory they are debating in the United States. The Economic Council knew about this theory being debated in the United States, as if it were God's word anew. But never is it mentioned by the governor of the Bank of Canada. Never is it mentioned by the Economic Council of Canada, because the big thumb of big brother is on them. Everyone in this House should know who big brother is.
A few years ago in 1972 the battle between the Prime Minister's office and others was lost, but it has been restored in a new way. Big brother now works through a secret gestapo type of organization based on commissars. Each department of government has a commissar that goes past the minister, by the deputy minister, and reports directly back to the Privy Council office to big brother. That is why the civil servants in this city are demoralized and fearful. That is why they are determined in this capital city, where they have always voted Liberal as a matter of faith in their bosses, they are not going to vote Liberal for a long time in view of this type of commissar who is watching over every move made.


Steve Eugene Paproski: Romeo knows about it.


Francis Alvin George Hamilton: We have a right and duty in this House to be able to draw some advice from people who each have a little to offer. We suspect that the theory that has been operating behind the advisers for government for the last 30 years has been wrong. I know it is wrong because I can add and subtract. It was a Canadian by the name of Mundell who produced this alternative theory. To my knowledge only two members of parliament during the last six years have ever mentioned his name in this House, the hon. member for Don Valley and myself. I recommend to Canadians, speaking for the people of Canada, not for political parties, that they read the efforts that we made in all humility, admitting that we did not know the final answers, in speeches

made by myself on July 8 and by the hon. member for Don Valley on July 9. He dealt with the international posture and I tried to deal with the domestic posture. The speech shows four alternative courses which the new Minister of Finance should have considered. I knew in my heart that the chance of having him consider this was very small.
I knew from bitter experience of my own, in government and in opposition, that we were facing a monolithic pyramid which did not allow any difference of opinion. It refused and rejected the advice of the Economic Council of Canada, it looked askance at the Conference Board, it looked down its nose at the C. D. Howe Institute, and it looked down at this new institute of Walter Gordon's two weeks ago. They believe that God created wisdom and he put it into the hands of the 250 professionals who work in the Department of Finance, and God help any economic council or anything else. That is the situation.
We as members of parliament are responsible to the people of our constituencies and to the country as a whole. Are we going to stand by and see ourselves dominated and ruled by a group who have been proven wrong for 30 years?


Samuel Victor Railton: Prove it.


Francis Alvin George Hamilton: At least in the government that I belonged to we took it up face to face with those who approached us, and we are the only government over the last 30 years that challenged this concept of monopoly of wisdom. We went the full route and fired the governor of the Bank of Canada because he would not consider our views as being worthy.
I speak to you chaps who sit on the government benches. You should have seen what happened on this side then. You should have seen how the scenario worked out; of going to an advertising agency, of getting the cameras all set up, of having a committee of the Senate, getting certain arguments made, and then to bring out the victim who was fired by this great majority of 200 conservative members. A loyal public servant wanted to restrict this economy, stop all goods coming into Canada and raise taxes 25 per cent. They destroyed us as a political party by the techniques of public relations. However, this time the people sitting on the hot griddle are right over there. They have to face the whirlwind. They have to face the fact that they have indoctrinated the people of the big cities to believe that only the Liberals can rule, that God only speaks to the Liberal party.
More and more people are learning it is not the Liberal party that runs this country. It is a group of mandarins who seized control during the war years, and they have extended that control into a complete monopoly. The only way the Liberals can try to control is through the Prime Minister's staff in the Privy Council office, using the technique of a commissar, a gestapo. It is not working, Mr. Speaker, because you can't win unless you know something. What you need is an alternative.
February 13, 1979

I have a lot of other quotes here, but I think I have made my first point clear. There is an important issue here. I cannot stand here, nor can any other member, and say that I am right, because I do not know. All I know is what we have had from government advisers over the past 30 years has been wrong every time. Look at what happened to Walter Harris, Donald Fleming, and Mitchell Sharp. Look what happened to poor Benson.


Samuel Victor Railton: Look what happened to Joe Clark.


Francis Alvin George Hamilton: Look at what happened to Donald Macdonald and John Turner. Look at what is now happening to a very fine person, the present Minister of Finance, who comes here and says the most horrible things. The hon. member for Don Valley said that he lost credibility by saying these things. It is worse than that. The fact is that by saying one thing and doing another for ten years, the people of Canada no longer trust the Prime Minister (Mr. Trudeau). That lack of trust is in others too because they hang with the Prime Minister. He is going to leave them twisting in the wind.
Oh, those poor members from Toronto! I can see their problem. There is nothing you can do when a city turns pathological and makes up its mind that it cannot trust the Prime Minister. It will chuck out every Liberal candidate, good or bad. That is not a matter of satisfaction because, as human beings, you hate to see anybody get knocked off when it is not his fault. However, do not come into this House screaming and yelling at us because we simply ask to look at the problem to see whether we can come up with enough information to make a better decision.
We know this is a lame duck government. It is carrying on because it does not have the strength or the will to bury itself. It is a walking dead. They are too fat to fight and too frightened to run. They are paralysed with panic. If I keep this up much longer, people will think I am the hon. member for St. John's West (Mr. Crosbie).
I want to make one point clear. Early last fall the leader of the Conservative party stated in Vancouver that he thought if Canadians had to compete with Americans as individuals, our tax level should be the same. A few weeks later during the by-elections, he said that if we formed the government he would like to make the interest rate on mortgages and taxes by municipalities deductible under the Income Tax Act as it is in the United States. You should have heard the yelling in Toronto. Newspapers, pundits, civil servants and, yes, Liberal candidates all dutifully yelling this is terrible, it is the end of the world. When the votes came in, 50 per cent were Conservative. The people had gotten the message. The significance of that has not sunk in over there.
What our leader was expressing was a policy of reducing taxes to get growth. It was a policy of reducing the taxes to balance the budget. If you reduce taxes when you have unemployed and unused plant capacity, more people go out to work, more taxes are paid, and the budget is balanced. My closing words are a quote.
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Mr. Deputy Speaker:: Order, please. I must interrupt the hon. member. I have allowed him an extra minute. His time has expired. Does the House give consent to allowing the hon. member to complete his remarks?


Some hon. Members:: Agreed.


Mr. Deputy Speaker:: The hon. member for Westmount (Mr. Johnston) is seeking the floor. I have to recognize him.


Mr. Donald J. Johnston (Westmount):: Mr. Speaker, perhaps I misunderstood the purpose of the debate today. I have been waiting patiently since three o'clock in anticipation of somebody in the opposition putting forward some ideas. I attended the committee meeting when governor Bouey was questioned. In fact I questioned him myself. A number of opposition members who are here this evening also had the opportunity of questioning governor Bouey.
The policy of the government and of the governor of the Bank of Canada requires no defence here today. The policy is well known. It has been explained repeatedly. I had assumed that we would hear today even a germ of an idea as an alternative policy that could form the basis of a debate. I have heard nothing.
I listened to Mr. Gillies-


Some hon. Members:: Order.


Donald James Johnston: -a professional economist, attack the Minister of Transport (Mr. Lang) personally. I heard him attack the Minister of Finance (Mr. Chretien). He declared the Minister of Finance is the worst in the history of Canada-


James McPhail Gillies: An understatement.


Donald James Johnston: -that the economy is in a situation of crisis-


James McPhail Gillies: True.


Donald James Johnston: -and that off the Hill there is no one who believes the Minister of Finance has any credibility.


James McPhail Gillies: True.


Donald James Johnston: I am often off the Hill. It is apparent to me that the people I talk to do not feel that way at all.


James McPhail Gillies: Neither one of them?


Donald James Johnston: I think that the Tories must talk to each other and the Liberals must talk to the people.


James McPhail Gillies: The only Liberals we can find are on the Hill.


Donald James Johnston: The only ideas I heard read into the record by members of the opposition have come from

February 13, 1979
Currency Devaluation
McLeod Young Weir, and Mr. McLaughlin. Mr. Gillies did not refer to anyone specifically.


Mr. Deputy Speaker:: Order, please. I remind the hon. member that he should not refer to another member by name, but by his constituency.


Donald James Johnston: Thank you, Mr. Speaker. That is one of the problems of being a new member. The hon. member for Don Valley (Mr. Gillies) referred to those who say that the dollar should be between 88 and 90 cents. 1 do not think he suggested it was his idea. We have heard from McLeod Young Weir, Mr. McLaughlin, Saturday Review and others, but we have yet to hear from the opposition.
I am disappointed in the comments made by the hon. member for Don Valley because I had anticipated we would hear something constructive from him, an examination of different policies. Our position is on record but nothing of any substance was put forward by opposition speakers, nothing specific that we could grasp. Only one single idea was forthcoming from the Leader of the Opposition (Mr. Clark), and I will deal with that in due course.
The reasons for the fall in the value of the dollar back in 1976 are no secret. We all expected the dollar would fall at that time. It had been widely predicted that as soon as interest rates shifted and the differential between Canada and the United States disappeared, it was bound to happen. The situation was compounded by the victory of the Parti Quebe-cois, to which reference has been made on a number of occasions during this debate. In addition, it is well known that labour costs in this country rose dramatically in 1975, settlements in the first half of that year being in the neighbourhood of 18 per cent. Subsequently settlements were reached at lower levels. The competitive position of Canada was the subject of wide debate, and it was broadly felt and recommended that the dollar should find a lower level.
I, for one, see no evil in the devalued dollar. I am surprised that it seems to be an article of faith among the opposition that it should be at a higher level. Naturally, we do not want to see the dollar fall any further.


James McPhail Gillies: Why not?


Donald James Johnston: There are other factors involved. Mention has been made of the recent policy review of the C. D. Howe Institute which pointed out that a further decline in the value of the dollar could set off another round of price and wage inflation in the country. This is not something Canadians want to see. On the other hand, as one finds when addressing oneself to the business community, there are considerable benefits attached to the present level. Some quotations to this effect were read into the record by the Minister of Transport, I believe. It is perfectly clear that a large and representative cross-section of the Canadian business community is pleased that the Canadian dollar is hovering somewhere in the 83-85 cent range. The evidence is clear for all to see.

Our trade balance of $3.6 billion in 1978 bears testimony to the benefits which the lower dollar has brought.
The opposition suggests the value of the currency should rise, that we are in some kind of crisis. Perhaps it will rise. The C. D. Howe report suggests it will do so. The Minister of Energy, Mines and Resources (Mr. Gillespie) indicated this evening that the dollar would undoubtedly rise in due course. But we do not want it to rise too quickly, placing us in the same position as Japan and Germany which are fighting at the moment to deflate their currencies and expanding their monetary aggregates and money supplies in order to bring this about. This is not the answer for Canada. It seems to me it is extremely irresponsible to talk in terms of a national crisis. The hon. member for Don Valley said it was probably the most serious crisis in the economic history of this country. I say that when an economist, as he is, discusses this issue and offers no solutions then he is fully aware that there is no crisis of the proportions he describes.
There are, nevertheless, difficult policy decisions to be made. The choices are not easy. This is a very serious matter and I agree with the last speaker for the opposition that the subject is not one to be taken lightly. I certainly do not take it lightly, because I am concerned about the dollar plunging below its present level. I am equally concerned about its rising too rapidly to higher levels, which would again leave us unable to compete on world markets. The dollar, as it is, is laying the foundation for a strong industrial sector throughout the eighties and, I suggest that to follow any other policy at the moment than the one suggested by the governor of the Bank of Canada would be utter folly. In any event, the opposition has placed no other policy before us for examination, although that is what I had hoped to hear today.
The opposition has had ample opportunity to examine the governor of the Bank of Canada.


An hon. Member:: That is not true.


Donald James Johnston: There was nothing to prevent any member of the opposition holding discussions with anyone they chose. They are quite entitled to talk to the Canadian Bankers' Association, to economists, to analysts with the C. D. Howe Institute or the Economic Council. They can talk to anybody they please, and they are quite capable of putting questions to responsible ministers based on the information they obtain. But they have not done so. Basically, they are trying to create an inflammatory political situation out of a serious economic matter which the government has openly put forward for examination.
We hear charges that there is secrecy. There is no secrecy here, Mr. Speaker. There is nothing secret about the situation of the Canadian dollar. Nothing is undisclosed. The only secret, Mr. Speaker, and perhaps the best kept secret, is what the opposition's policy is with regard to the dollar, and, for that matter, with regard to other economic measures which they hope to implement, such as the stimulative deficit, about which we have heard so much, and such as laying off something in the order of 60,000 public service employees without
F ebruary 13, 1979

anyone getting hurt by such a move. There are many aspects of the policies of the opposition which really are shrouded in mystery and secrecy. But that is not the case in so far as the government is concerned in relation to the dollar.
Long term solutions are obviously necessary. We have to work together in a non-partisan way to arrive at long-term solutions which will ultimately resolve the problem of the dollar and the other attendant difficulties flowing therefrom. Low productivity presents a serious problem in this country. Reference has been made to the situation in the United States, where productivity is also a serious problem. In fact The Economist recently published material which indicated that of the seven largest OECD countries the increase in productivity in the United States was the lowest. Britain was second, and we are the third lowest. That is not a good record. And that is where we have to make a start. We need to establish long-term economic objectives, and I am sure we will do so.


James McPhail Gillies: You have had 15 years.


Donald James Johnston: I take the view, obviously not shared by members of the NDP, that we require more foreign equity in this country. We have too much debt. One reason why our foreign account balance is in such a deficit position is the tremendous interest burden we must bear. But many object to foreign equity and, as a consequence, there has been a patriation of foreign equity, something which has not helped our dollar situation either. We ought to adopt a series of sound fiscal measures to attract capital into the industrial sector.


James McPhail Gillies: Again, you have had 15 years.


Donald James Johnston: The government has introduced such programs. This is the kind of thing we should be discussing during the debate today. We also need to control the money supply carefully. I believe the Bank of Canada has done an admirable job in this respect holding the money supply within the limits of the narrowly defined Ml. Perhaps the time has come to consider larger aggregates of money supply. These are matters on which it is legitimate to submit a number of varying ideas for consideration by this chamber.
I have not heard any ideas from the opposition except one, and I would like to deal with it very briefly. This afternoon the Leader of the Opposition told us that the program of the Progressive Conservative party to stimulate the economy is to cut taxes. To my knowledge we have heard only one concrete proposal emanating from the official opposition with regard to that tax cut, and it takes the form of mortgage interest deductibility and real estate tax deductibility within certain limits. I, for one, would not say that that is a ridiculous suggestion because at one time I proposed it myself. However, careful examination of that proposal, which I would have thought would have been made by the Conservative party, indicates that it would be a tragedy to inflict it upon the Canadian people.
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In terms of the productivity this country requires, and in terms of attracting capital for us to develop the competitive industrial sector which will ultimately result in our dollar's achieving a level which would be satisfactory to all of us at some future date, I submit that that policy is sheer folly.
In the course of the last week a number of us journeyed to Washington to discuss with Americans their experience in this area. I would say that any informed observer-certainly every representative of the U.S. government and every economist of note-was virtually horrified at the prospect of our introducing such a measure in this country. They would do anything to get rid of such a measure in the United States because of the inequities it creates, the social problems inherent in it, and the variety of negative impacts it has upon the American economic scene. Those negative impacts would probably be greater here in Canada. The Americans have lived with this, not really by choice but through inheritance, since 1913, and here we are with the prospect of having it foisted upon the Canadian public by the Conservatives, should they ever attain office.
I do not propose here to review in any great detail the problems with that measure because I do not consider it to be germane to this debate except in one specific area. Specifically, the deduction of mortgage interest and real estate taxes clearly favours high income groups. This proposal would create disposable income, discretionary income for a privileged group which is less likely to invest it in the commodity sector and which might very well be tempted to invest it outside the country. In fact this proposal might encourage the acquisition of more expensive real estate, to the detriment of the industrial sector.
Reference was made to the problems with which our American friends are wrestling. This is one of them. In the United States the amount of capital devoted to the business sector as a percentage of gross national product is something like a third or less than that of Japan. I urge all to look carefully at any plan of this kind, which is the only one which has been put forward by the official opposition. It would not only have a disastrous effect on the country but also on the dollar because it would not accomplish its intended purpose, even if put forward in good faith.
I occasionally refer to a few authors, as do other hon. members. We talk about where the Canadian dollar should be. The hon. member for Don Valley has said that some people tell him it should be between 88 cents and 92 cents. We know the level of our dollar today. Many observers are inclined to use a somewhat more objective yardstick than a gut feeling, pride, or what they can buy eggs for across the border. I have before me, for example, the February edition of "The International Bank Credit Analyst". In it there is a table entitled "Unit Labor Costs", which one can find in a number of other publications as well. One can see that labour costs per unit in output in Canada, adjusted for the exchange rate, are very marginally less than those in the United States today, making us almost dead-on competitive. So, I suggest that it is no accident that the Canadian dollar is fluctuating between 83 cents and 85 cents. That is not a crisis. The only people in

February 13, 1979
Currency Devaluation
Canada who see this as a crisis and dwell upon it daily are members of the opposition.
I think an objective study would suggest that when the dollar begins to be sold at 83 cents or less, it would be undersold. On the basis of that I would be very surprised to see the dollar drop to the level of 79 cents, which 1 believe was mentioned by the Leader of the Opposition this afternoon.
1 do not think there is any reason to panic. This is a time to roll up our sleeves and get to work. It is a time to sit down and debate with members of the opposition who are quite capable of debating these issues, who are knowledgeable in these areas, like the hon. member for Don Valley-to sit down and engage in intelligent debate, not the kind of amusing comic relief we heard from the hon. member for St. John's West (Mr. Cros-bie). Admittedly, the hon. member did provide some relief to what I believe was, unfortunately, a rather dismal performance by the opposition in this debate today.


William Gordon Ritchie: Mr. Speaker, in the few
minutes at my disposal I would like to join in this debate. I am disappointed that the government feels that this motion should not have been brought forward and that discussion about what level the Canadian dollar should be at should be reserved for the financial pages and for the tourist when he buys his American or British money at the bank.
Our dollar is at its lowest level in 46 years. Forty-six years ago we were at the height of the great depression. Even then the dollar remained so low only for a few months. During the time of the depression the Canadian economy was agricultural and agrarian in nature, but then our economy was much smaller than those of other industrialized countries of the west.
I think it is significant that our dollar is devalued to 83 cents and that many knowledgeable people argue that it could drop to 79 cents. I think this is something for us to worry about or, at least, discuss. Whatever we may think, what the traders of the world think of the stability of our economy and how good it is, is important.
We have had deficits in the billions in federal budgets for the last few years. Ministers of finance have consistently underestimated their budgetary deficits and inflation rates. The Anti-Inflation Board said that inflation would be down to 4 per cent, but it is more than double that amount. I think it is nonsense to make such predictions in the first place. There does not seem to be a light at the end of the tunnel. If there were, we would be much happier.
The government has made much of the fact that our trade surplus is $3.5 billion. If we examine this, we find that that is really only the percentage increase as a result of the fall in the value of our dollar. Unless the government gets the economy in order, this surplus will soon be lost. It is no secret that we can buy Japanese and German appliances and other products at a cost of only a little more than previously. That is certainly not because the value of our dollar has decreased. Businessmen supplying our markets from outside are not necessarily at much of a disadvantage.

Now, Mr. Speaker, what is essentially wrong? Essentially, too many dollars are being printed, and they are being printed too fast so that domestic inflation is rampant. We have been keeping our interest rate high, as the government of the Bank of Canada has mentioned. He had hoped to control inflation, but it now becomes debatable whether or not the inflation can be curtailed by a high interest rate while at the same time the supply of money is being expanded too rapidly.
There is no doubt that the impetus of the present inflation was fueled by the minority government between the years 1972 and 1974 when the Liberal administration sought to stay in office by buying off, at all costs, the demands of the NDP. These expenditures were not met by borrowing in the money markets but by printing money which in those years financed some 75 per cent of the deficits of the government.
Reliable American estimates show that we have to plan for a 7 per cent inflation so far as the United States is concerned. It is suggested that almost certainly the deficit in the United States will be much bigger, in excess of $30 billion, and will end up closer to $40 billion. But the American position seems good compared with ours. The rule of thumb relating to an economy ten times our size involving $40 billion, would indicate $4 billion, but our deficit is some two and a half times the projected American deficit. Our balance of payments problem is even worse than theirs. They have some $29 billion, ours is closer to $4 billion or $5 billion, which in their terms would be $40 billion or $50 billion.
The message for all of us is clear. Governments must control their spending. It is no use borrowing huge sums of money to be paid back at a future date when we have this gigantic deficit.
Can we consider the indexing problem and the built-in outlay in government expenditures? Governments must control expenditures even when that is socially undesirable. Even when expenditures are politically very desirable, their total effect on the economy must be assessed. In periods of rapid inflation, total indexing should be brought into question. In Canada! governments at all levels are involved in vast transfer payments, not only right across our society but across all the regions of the country.
The indexing of personal income tax raises serious problems. The possibility that an indexed income tax would make a government more aware of its responsibilities and more prudent in its budget managing makes it desirable, if governments would heed warnings. It is obvious that the tax structure is out of balance. Perhaps it should be realized that decades ago we lived in a very stable economy when taxes were raised through consumption taxing.
In the last two decades the exchequer collected money largely through the income tax system. This was based on the theory that those who earn more should pay more. This was considered a fair tax. Now some 60 per cent of total federal and provincial revenues are raised through the income tax vehicle. But this has its disadvantages. A heavy tax discour-
February 13, 1979

ages productivity, and all our indices indicate that the productivity in our country is not rising as rapidly as previously. Furthermore, the income tax is inflationary in itself, and having enriched the government tax coffers it has given false signs of a healthy economy. High marginal income taxes encourage the underground economy. It operates outside the tax system and gives benefits to individuals without requiring them to pay their share of the tax.
Now, Mr. Speaker, the falling dollar is of great concern to all of us. Although we have a surplus of over $3 billion in our merchandise trade, it is still not enough to cover our foreign exchange deficits. The falling dollar makes the payments of dividends and interests to foreign borrowers expensive. The government has intervened to the extent of some $5 billion this year, and I understand the minister is now going to Japan to incur a further large loan. Furthermore, foreign borrowers cannot be paid off by debasing the currency. A $1,000 Canadian government bond of 1971 was worth $500 at the end of 1978.
There are one or two things I would suggest, in the short time I have, on the balance of payments problem. We should be looking at the short-term natural gas exports to the United States. To those who suggest we should not export energy, I would answer that energy is a commodity like any other. We are exporting a large amount of energy in the form of food and grain. Furthermore, in western Canada we have a large amount of grain on our farms. If we can get it to the ports, it can be sold, thus helping our economy.
The government might consider facilitating the inflow of money to Canada. One suggestion would be the abrogation of the 15 per cent withholding tax of short-term money, say up to five years. This action would not incur retaliation by our trading partners as might occur if foreign exchange controls were instituted. The government and the minister should be much more vehement that foreign exchange control not be put in place. Last week in Brussels we were told by bankers that the very thought of foreign exchange controls would mean that Europeans would withdraw their money.
In order to give my NDP colleague a few minutes in which to speak, Mr. Speaker, 1 will conclude my brief remarks. I appreciate very much having had the chance to put my ideas on record.


Mr. Bob Rae (Broadview):: Mr. Speaker, in the very short time remaining to us I want, first of all, to express my appreciation to the hon. member for Dauphin (Mr. Ritchie) for his courtesy in allowing me the three minutes in which to wind down the debate.
The purpose of my intervention is simply to draw attention to a couple of very important discrepancies in the case presented by the government throughout today. Of all the debates that I have had the pleasure of attending in my short time in the House, this has been one of the most painful and partisan experiences through which I have suffered. The government is saying on the one hand that the opposition and events outside its control are responsible for the fact that the dollar is in such
Currency Devaluation
a terrible state, and that we should all be good citizens and support the Minister of Transport (Mr. Lang) and the Liberal party because to speak out against the economy is to speak out against the country, and to speak out against the Liberal party is also to speak out against the country. It is all that confusion and arrogance that will be the downfall of the Liberal party in this country. Their confusion consists in thinking that the Liberal party and the state of health of the Liberal party are the same thing as the state of health of the people of Canada.
The fact of the matter is that this government has produced a policy which it cannot justify and explain to Canadians. It is a policy which it has evolved by chance and by happenstance. Now it is attempting to tell Canadians, "We did it all on purpose." They are telling us that they have a floating dollar when they have given it a pair of $5 billion water wings in order to allow it to float. That is the phoniest float I have seen.


An hon. Member:: Orderly markets.


Bob Rae: Orderly markets? That is rubbish, and you know it is rubbish. They know they have engaged in a high interest rate policy because, as the Minister of Energy, Mines and Resources (Mr. Gillespie) said, they have no choice because our economy is dependent on the U.S. and tied to the U.S. economy. This government has done nothing about that condition of our economy for 15 years.
The hon. member for Westmount (Mr. Johnston), who travelled with me to the United States, I am glad to say, gave a very accurate account of our findings there with regard to the Tory mortgage interest deduction proposal, but had the gall to come to the House and put forward certain suggestions as if this government were facing the future with a bright face when in fact it is a tired government which has produced no new ideas. The Liberal party has had 15 years in which to address itself to the structural problems which were so ably described by my leader earlier today.


An hon. Member:: We will have a further 15 years.


Bob Rae: They will have no more 15 years.
The fact of the matter is that the House has not been allowed to examine the record. We do not know the effect of the interest rates. We have been given no calculations to tell us what is the costing of the various options. The governor of the Bank of Canada came before the committee and gave us only one option. Also he paraded the horrors of doing anything else or of considering any other policy. It is time for reform, not only of the financial policies of the government but of the accounting procedures of the House. They do not allow us as members of parliament to have the facts to enable us to judge the policies which the government puts before us. I cannot go back to the people in my riding and in conscience tell them that I know exactly why the government is doing what it is doing, other than the fact the Minister of Finance (Mr. Chretien) tells us that it is the best thing for Canadians. I am
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February 13, 1979
Adjournment Debate
not satisfied with that, and I do not think the people of Broadview are.


Mr. Deputy Speaker:: Order, please. It being 10 p.m. it is my duty to inform the House that, pursuant to Standing Order 58(11), proceedings on the motion have expired.
The hon. member for Edmonton Centre (Mr. Paproski) rises on a point of order.


BUSINESS OF THE HOUSE
Steve Eugene Paproski: Mr. Speaker, I rise on a point of order. Perhaps some member opposite could tell us what the business of the House will be tomorrow. Are we carrying on with Bill C-35 or Bill C-12?


Mr. Andres:: Mr. Speaker, we will continue with the consideration of Bill C-12 tomorrow.

[ Translation]


MESSAGE FROM THE SENATE
Mr. Deputy Speaker:: I have the honour to inform the House that a message has been received from the Senate informing this House that the Senate has passed Bill S-6, an act to exempt certain shipping conference practices from the provisions of the Combines Investigation Act, to which the concurrence of this House is desired.



PROCEEDINGS ON ADJOURNMENT MOTION

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

Mr. Don Mazankowski (Vegreville):: Mr. Speaker, the issue I wish to deal with tonight arises out of questions which I directed to the Minister of Transport (Mr. Lang) last Thursday having to do with the administration and enforcement of air navigation orders and standards. It is a very important issue. It is not new. It has been around for quite some time. It has become progressively more urgent, given the disturbing reports which have emanated from time to time over the last year or so.
In order to recap briefly, back in November, 1977, the MOT conducted an in-house investigation into air navigation

in northwestern Ontario. Perhaps the results are best described in the edition of the Globe and Mail of Monday, November 28, 1977. The article was entitled "Policing of Aviation Rules Inadequate, Violations Common, 2 Investigators Say". Briefly the article reads:
Aviation safety across Canada, and particularly in northwestern Ontario, is being jeopardized by the Ministry of Transport's failure to adequately enforce air regulations and take action against companies and individuals routinely engaging in illegal and dangerous practices, says a confidential report by two investigators for the federal ministry.
Calling for a complete overhaul of procedures, the investigators said top officials in Ottawa block the attempts of regional safety officers to put a halt to the operations of aviation firms that continually break the law and endanger the lives of employees and passengers.
The article goes on to cite various examples of political interference, and continues as follows:
Some of their other findings: -Overloading, falsification of log book entries, illegal and unsafe maintenance practices, flying below legal limits in bad weather, flying with insufficient flight instruments "and other illegal and dangerous practices too numerous to list here"-
Certainly that is a damning indictment. What action did the minister take? He indicated that Canada has one of the best records of air safety in the world. He authorized the hiring of 12 aviation inspectors, and he said that he would review the situation.
If we look at the situation, there is a shortage of 60 civil aviation air inspectors at the present time. Thus, if there were any hirings, it would be applied against the aggregate shortage of 60. We have the infamous Bolduc telex, which arose out of an inspector attempting to suspend the operation, wherein he was wired asking him to consider fully the political representations, the possible embarrassment to the Minister of Transport and any other political implications.
Then there was the question of the emergency locator transmitters which the hon. member for St. John's West (Mr. Crosbie) outlined very adequately in the House just last week. Now, Mr. Speaker, we have another report which has surfaced again from within the Ministry of Transport and which again levels a very stinging indictment against the administration and the enforcement of air regulations. To quote briefly from this document:
Enforcement action is generally unco-ordinated and often haphazard.
There is no clear determination of the role inspectors are expected to play in the enforcement activity even in the case of inspectors specifically assigned to the enforcement function.
Many inspectors shy away from recommending administrative enforcement action-
Agents appointed by the Department of Justice are in the majority of cases inexperienced in aeronautics law and are afforded little support when preparing prosecutions.
The enforcement sector suffers from a severe lack of inspector resources. In some regions only a small percentage of complaints are actioned and in many cases such action is limited to conveying the information to the RCMP.
In the face of all this the Minister of Transport has the gall to say that he can reassure Canadians that the safety standards in Canada are among the highest standards of the world.
February 13, 1979

That may very well be, but these high standards are not being complied with.
We need a clear definition of the role, function and authority of our civil aviation inspectors. Clearly, we need a policy to recruit more personnel and, clearly, we must move immediately to upgrade the salary scales of these individuals to make their salaries comparable with their counterparts in the industry. The inspectors have been without a contract since 1975. The last time they had a salary adjustment was in July, 1976.1 submit that the Minister of Transport has failed to act responsibly and with despatch and that he has failed to provide Canadians with the degree of air safety which they deserve. He has been derelict in his duty, and if he does not have the courtesy to resign he should be removed from office, as far as I am concerned.
Is there any wonder why Canada's level of safety standards has slipped from seventh place to thirteenth place out of 18 nations throughout the world? That fact is not very comforting, and we must ask ourselves how many more lives must we lose before this government acts. People in this country are still shocked and horrified over the Cranbrook disaster, yet we see in the December 21 issue of the Calgary Herald this article entitled "MOT Cites Weak Rules in PWA Crash". It goes on to say in part:
Upgraded air traffic and air-worthiness regulations may prevent a recurrence of the Pacific Western Airlines crash at Cranbrook, B.C. last Feb. 11 that claimed 43 lives-
The official crash report by Ministry of Transport accident investigators cites several instances of weak regulations, primarily in regard to poor communications, that contributed to the crash-
That, sir, is not very comforting either. In fact it is very disturbing and very discomforting, and if this minister, as my colleague, the hon. member for St. John's West indicated in the House last Thursday, is not guilty of wilful and wanton misconduct, then he is pathetically incompetent and should be removed.
Mr. Robert Daudlin (Parliamentary Secretary to Secretary
of State): Mr. Speaker, I believe this issue was raised by the hon. member during the question period on February 8, and I believe they tried as well to raise something relating to this issue last Monday in the form of a motion under Standing Order 43.
What the hon. member forgets to remember is that in fact the minister responded to what was viewed as a potential difficulty in terms of trying to police what was happening in the airways by calling for and setting up the task force about which the hon. member has suggested he had some information provided to him even in advance of the results of that task force being made available to the minister. There was some suggestion at the time that, in fact, it was the report of that task force itself which was condemning what was happening in Canada. As the Minister of Transport (Mr. Lang) indicated to the House that day, the task force had not yet drafted any report, and nothing had come to his attention that was the sort of information the hon. member was trying to put forward.
Adjournment Debate
The hon. member speaks of the decline of safety in Canada and of dropping from seventh place to thirteenth place in the world. I do not know where he gets his statistics, but my information is that Canada is within the top five in the world as regards safety. That is something of which to be rather proud.
If one were to accept the hon. member's suggestion that this government and particularly this minister have done nothing, that would be to negate the fact that the minister has set up the task force, recognizing that there is some difficulty with policing. We also have to recognize that in the air as with other modes of transportation, but particularly in the air, one has to rely upon the responsibility and professionalism of the people operating in that environment.
As one who has flown in the IFR environment on a number of occasions as pilot in command, I can say from that experience, and from experience with people who operate in the industry, that the level of professionalism and competence of the pilots in Canada is something we have no reason to worry about. There may be individual instances where transgressions take place and there may be some difficulty with policing these things, but surely the hon. member would not suggest we should have a policeman in every cockpit or a monitor on all the radio waves. There are difficulties inherent with the kind of policing he seems to be suggesting in order that the minister would be able to fulfil his function that actually go beyond reasonable suggestions that could be made by any member of this House.
The hon. member spoke of the ELT question. The ELTs were required by the department after consultation with the industry, and at the request of and with the approbation of the industry. I suggest they were removed only at a time when it was evident that they were a source of potential danger as opposed to being a help. This kind of action belies the position the hon. member is taking when he suggests that the Minister of Transport has been delinquent in his duties. I see that my time has expired, Mr. Speaker.


STATUS OF WOMEN-EMPLOYMENT STRATEGY OF GOVERNMENT
David Samuel Horne MacDonald: Mr. Speaker, on January 23 I raised with the Prime Minister (Mr. Trudeau) the matter of the speech of the president of the Canadian Advisory Council on the Status of Women, delivered in Ottawa on January 10, at the regular quarterly meeting of the council. At that time the Prime Minister indicated to me that with respect to the very strong criticism brought forward by the president he had had a report, and he added:
-I can state unequivocally that either the president was not directing her remarks at the government or else she was unequivocally wrong.
There followed a day or two of fairly intensive debate with the Prime Minister about the validity of the remarks and the accuracy of the remarks. For the record 1 want to quote extensively from the remarks of the president because I think

Adjournment Debate
it is important that all hon. members realize how strong the criticism was of an advisory body appointed by this government. Mrs. Rousseau began her remarks with this paragraph:
After considerable study, consultation and discussion, I have come to a tragic conclusion: not only are Canadian women excluded from the employment strategy proposed by the Canadian government, but they are subtly evicted from the labour force. This conclusion is all the more bitter in that it questions women's right to work. After ten years of in depth studies, conclusive research and multiple recommendations, such are the facts.
At page 3 of her text she went on to say:
But when we dissect official statements made in time of economic ill-health, we are appalled to see that women are consistently held responsible for the high rate of unemployment, though they fall victims to it more than other groups. Consequently, they are used as scapegoats and as a screen for a chronic inability to redress the economy.
She then raised two questions not yet answered by the Prime Minister or by the Minister of Employment and Immigration (Mr. Cullen), as follows:
Before it was decided to exclude women from the employment strategy, why is it that the CACSW's advice was not asked? Is an advisory council a political ornament? Are there any women on the regional working groups advising Canada Employment and Immigration Commission's sector task forces?
On the next page she asked:
Why are they always ignored in policy planning?
She was referring here to the role of women. In the latter part of her remarks she said:
If government does not know its own objectives, or does not make then known, we know what our objectives are: women's right to training, to work and to employment mobility on an equal footing with men.
Then there is this further question:
Is our role as Advisory Council on the Status of Women recognized, or will the government take our advice only when faced with emergency situations?
I want to remind all hon. members that the criticism that was posed by the president of the Advisory Council did not come lightly. It follows numerous official comments and statements made in recent years. I just want to list three or four that I have before me this evening. Hon. members will recall that on April 10, 1978, the Minister of Finance (Mr. Chretien) in his budget statement said:
An important reason for the growth of our labour force has been the growing number of Canadian women who are working. Since 1970, the number of adult women in the labour force has increased from 1.9 million to 2.7 million, a rise of more than 40 per cent.
Then on September 8, 1978, detailing the announcements by the President of the Treasury Board (Mr. Andras), the so called Chretien-Andras statement of that date said:
The strong gains in employment have been matched by continued rapid increases in the labour force as a result of the continued increase in the proportion of women and young people seeking work. Thus the unemployment rate averaged 8.5 per cent over the first half of the year, although it dropped to 8.4 per cent in July.
Then the Prime Minister's comments this year, first on the program "Question Period" televised by CTV on September 8, 1978, in which he said:
There was about 36 per cent of the women working three years ago and now there is 42 per cent of them. But this phenomenon will stabilize at one time. .. 
The same thing with the youth problem . . . You know, we're creating and I think we're quite successful in creating jobs but I have to admit that we cannot create them as fast as the people come into the labour force.
Finally at the end of the year on September 28, 1978, in a conversation with Bruce Phillips broadcast by CTV, the Prime Minister said:
-the labour force is increasing because of immigration, immigration to Canada, because of what is called participation rate which really means that the percentage of young people and women who want to work now is immensely higher than it was ten or 15 or 20 years ago.
People want to enter the labour force, and they see that that is their answer, O.K., you will have eight per cent unemployed.
Then the Solicitor General (Mr. Blais) on January 29, 1979, in speaking to an international symposium on female offenders, said:
In addition, increased opportunities for women in the labour force brought increased opportunities to engage in a wider range of criminal pursuits.
If there was any doubt about the feeling of either the advisory council or its six parallel bodies, that should have been put to rest on January 29 when a letter was sent to the Minister of Employment and Immigration on behalf of the six provincial bodies and the federal body which says:
Dear Mr. Cullen:
At a special meeting of the leaders of the Advisory Councils on the Status of Women of Canada, Nova Scotia, New Brunswick, Prince Edward Island, Quebec, Ontario and Saskatchewan held in Toronto, January 26, 1979, there was unanimous endorsation of Yvette Rousseau's position that "not only are Canadian women excluded from the employment strategies proposed by the federal government, but they are subtly evicted from the labour force."
That, along with the extensive letter which indicated in detailed terms the anxieties and questions which these advisory bodies had, should let the government know in no uncertain terms the atmosphere which they have created with their subtle and sometimes not so subtle attack on the right of women to a place in the labour force.
To put the other side of the case, a recent report from the C.D. Howe Research Institute, as quoted by Don McGillivray in a recent article, suggested this:
What will it mean for the Canadian economy if women keep joining the paid work force at the rapid rate of the past couple of years?
The pessimistic answer is that it will mean more unemployment. The optimistic answer is that it will mean more economic growth.
What we need from this government is a more positive response to the right of each and every woman to her desire to a full share and an equal opportunity in the market place.


Miss Aideen Nicholson (Parliamentary Secretary to Minister of Consumer and Corporate Affairs):: Mr. Speaker, the hon. member who has just spoken and the chairman of the Advisory Committee on the Status of Women share positive and real concern about the place of women in the labour force. But perhaps what they have both done is to misunderstand some government statements. What has been said by ministers, as the hon. member has quoted, is that the participation of women in the labour force has increased very dramatically. This is a fact. It is not a matter of blame, it is a fact. It is a fact which I welcome. I certainly agree with him and with the very positive approach by the C. D. Howe people that
February 13, 1979

enhanced participation also enhances opportunities for the country. But, in the short term, the very rapid increase in the labour force, which includes young people and women, presents us with the need to create a lot more jobs very quickly.
In the last year something like 340,000 additional jobs were created in Canada, yet we still find ourselves with more unemployment than we want. This is a statement of numbers. It is by no means intended to suggest that either women or young people do not have a right to jobs or that we must not enhance our efforts to create them.
On April 18 last 1 placed some figures on the record, also in response to a question by the hon. member for Egmont (Mr. MacDonald). They were with regard to the steps being taken in the public service. Tonight I would like to mention some of the steps being taken in the Department of Employment and Immigration at the present time.
The CEIC is working in the area of affirmative action geared toward employers, unions, and women returning to the labour force as well as national women's organizations. Women are being encouraged by departmental officers to look toward training in non-traditional jobs. The over-all strategy and action plans of CEIC reflect an attitude toward encouraging employers to change attitudes that could be disadvantageous in the hiring and promoting of women and to train and accept them in non-traditional areas.
I know that the chairman of the Advisory Committee on the Status of Women whom the hon. member for Egmont quoted is perfectly sincere and indeed to be commended for her fear that women in this time of economic straits may lose what they have gained in the labour force. This is certainly not the policy of the Government of Canada. On the contrary. Far from being excluded from the employment strategy, at the present time there are particular efforts being made in the employment strategy to encourage the participation of women and to continue further this very welcome trend that has developed in recent years.
One might also mention that in 1976 the changes in measuring the labour force survey for the first time began to reflect accurately the participation of women in the labour force. This is an important measurement.


REGIONAL ECONOMIC EXPANSION-DECISION ON FINANCIAL ASSISTANCE FOR SYSCO TO MODERNIZE PLANT
Andrew Hogan: Mr. Speaker, this afternoon I quoted from the Cape Breton Post of Tuesday, November 28, 1978, in which the Minister of Regional Economic Expansion (Mr. Lessard) was quoted as saying that a decision would be made before the end of 1978 on whether Sydney Steel would get funds for modernization needed to carry out a ten-year sales contract with the Tree Island Steel Company Limited of Richmond, British Columbia.
Adjournment Debate
In answering me today, the minister gave an explanation of some of the reasons for the delay in making the decision, but in effect said, if I understood his French, that he would be taking a proposition before the cabinet in a short time. In my supplementary I tried to impress, through the minister, on the cabinet who will be receiving what is in reality the effects of combined negotiations between DREE officials in Moncton and Halifax, and Sysco management people from Sydney, which have been going on quite intensively for some time, the urgency of a favourable decision for Sysco.
I also want to make it abundantly clear that if the cabinet does not decide to go along with the modernization plan for Sysco, then there is only, in my opinion, one or two alternatives. Eight years ago there may have been three or four, but now it is a question either of modernization, of reducing Sysco to the production of rails only, or close it down. The reduction of the plant to a rail mill operation only would mean that steel blooms would have to be imported from somewhere else and turned into the rail products. This would mean that about 400 employees would remain, out of a present work force of some 3,056.
As well, it is completely unrealistic to depend on spot markets for blooms in order to keep a rail mill going. We must also remember that when Sysco is operating at near its capacity of some one million tons, some 500,000 to 600,000 tons of Cape Breton coal will be used in the plant.
The steel workers and their families in the industrial area have suffered through many crises during the years which culminated in the announcement on October 13, 1967, by the private owners of the plant that it would be closing down. That day is etched in the memories and emotions of all Cape Bretoners and, indeed, of most Nova Scotians, and has always been referred to as "Black Friday".
The provincial government of the day took over the plant. As I have said on many occasions, I think the Cape Breton Development Corporation, which was set up in 1967, should have taken over the steel plant as well as the coal industry. But the federal government failed to do so and therefore it has, in my opinion, a special moral obligation to make sure that the finances for modernization are available and that any needed advisory help is provided to the management team which will have to direct the modernization operations as they evolve.
I do not want to go into the history of the last 12 years of the Sydney Steel plant, or to be vitriolic about some of the decisions which were made. Some of us who were close to Canadian and world steel trends felt that the decision to postpone the installation of modern steel making facilities, such as oxygen furnaces, and experimenting with what is called the submerged injection process, was the most backward and the most harmful of all the decisions which were made during that period. There was, as well, in the early period of the take-over, what the auditor general of Nova Scotia referred to as the declaration of "illusory profits" by the management of Sysco. The psychological effect on the

February 13, 1979
Adjournment Debate
employees of this latter action was extremely bad; they felt that profits had risen to some $29 million in about a year and a half. I mentioned that these profits were illusory, but their declaration was a prime reason for an unnecessary and uncalled-for strike which occurred in 1972 and lasted some seven weeks.
Given the changing international steel outlook, emphasis was then placed on building a new steel plant on the Greenfield site at Gabarus, Cape Breton Island, sponsored by an international consortium of international steel producers. Time and radically changing circumstances on the international steel scene have shown that the dream of Mr. Ralph Hindson, managing director of the now defunct Cansteel Corporation, the provincial agency responsible for setting up the new plant, was passe.
Attention then returned once again to the modernization of Sysco. In the days when the plant was viable it sold its bread and butter product, namely, steel rails, in large tonnages. The private owners had for a number of years a sort of captive market for its semi-finished steel products in the finishing mills they owned in the province of Quebec. Gradually these mills in Quebec were sold by the private owners to a Quebec provincially-owned company called Sidbec. Eventually, with a growth of basic steel production by Sidbec, these markets were largely lost to Sysco.
What the management of Sysco is trying to do through its ten-year contract is to supply up to 2.4 million tons of billets to Tree Island Steel Company of Richmond, B.C. This contract would be worth about $300 million. Through this and other contracts it could lay a long-term basis for something equivalent to the captive markets for the products of Sysco. This requires basic modernization of the plant at a cost of approximately $150 million, and the restructuring of the debt load caused by the losses incurred during the bad years of 1970.
I am happy to say that the minister in charge of DREE, who told me today that in a very short while he intends to bring a proposition with regard to this matter before the cabinet, seems to be playing a helpful role in the co-operative federalism which alone can save this country. A favourable decision by the cabinet on this issue could lift the morale of both workers and management and encourage them to pursue the goal of an efficient steel plant on the east coast, giving permanent employment to thousands of workers. This, along with the commitments already made to our increasingly vital coal industry and to our reviving fishing industry, is a realistic basis for a new hope for a complete turn around and some meaningful diversification of the Cape Breton economy within the next decade.


Mr. Donald Wood (Parliamentary Secretary to Minister of Regional Economic Expansion):: Mr. Speaker, I am happy to reply to the hon. member regarding the Sydney Steel Corporation. I should like to elaborate on the statement made by the minister this afternoon. In the summer of 1978 the government of Nova Scotia made a comprehensive and costly proposal to the federal government for the rehabilitation of the Sydney Steel Corporation.
This proposal was resubmitted to the federal government by the government of Nova Scotia under the Hon. John Buchanan and was discussed between the premier and the Minister of Regional Economic Expansion (Mr. Lessard) on November 28, 1978. At that time the premier and the minister agreed that December 31, 1978, was not a critical decision date for confirmation of a ten-year billet contract between the Sydney Steel Corporation of Nova Scotia and the Tree Island Steel Company of British Columbia. Furthermore, the proposal made to the federal government envisaged a capital rehabilitation program considerably beyond that necessary to meet the requirements of the Tree Island Steel Company.
A working group consisting of officials of DREE and of the Sydney Steel Corporation has been reviewing all aspects of the Nova Scotia proposal, including production capability, markets and profitability. Results of marketing studies, carried out under the current $20 million subsidiary agreement in support of Sysco, have contributed to this evaluation. A number of production alternatives are being costed so as to determine the most viable production options for the Sydney Steel Corporation, given world market conditions for the products that Sysco can produce. At the same time, refinements to the Nova Scotia proposal have been made up to and including January of 1979, and these refinements are also being evaluated.
Mr. Speaker, I should point out to the hon. member, however, that even though the Tisco billet contract may turn out to be attractive, from the point of view of Sysco, this contract in itself would not ensure future viability or profitability for the Sydney Steel Corporation. It will be necessary for Sysco to produce other products for sale in Canada and abroad, on as viable a basis as possible.
I am well aware of the importance to Cape Breton of the Sydney Steel Corporation operation, and I am hopeful that the minister will be in a position in the very near future to propose a federal position to the province of Nova Scotia.


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 10.33 p.m.

Wednesday, February 14, 1979