1979-11-26

ROUTINE PROCEEDINGS


Mr. Bernard Loiselle (Vercheres):: Mr. Speaker, pursuant to Standing Order 43, I ask for the unanimous consent of the House to move a motion dealing with an urgent matter of pressing necessity.
Since the American legislation on the reimbursement of convention expenses, commonly known as section 602, came into effect in January, 1979, Canada has been experiencing annual losses of some $100 million following the cancellation of many conventions of American organizations which were to be held in Canada. Since then, several private organizations, including the Tourism Industry Association of Canada have made numerous representations to the American government to have that legislation amended. However, no concession has been made by the American authorities, and this is why I move, seconded by the hon. member for Shefford (Mr. Lapierre):
That the government, through the Minister of State for International Trade and minister responsible for tourism (Mr. Wilson) and the Secretary of State for External Affairs (Miss MacDonald), undertake to carry on actively negotiations with the American authorities to have them amend this legislation.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


DECLARATION OF HUMAN RIGHTS
Mr. Duncan M. Beattie (Hamilton Mountain):: Mr. Speaker, I rise, under the provisions of Standing Order 43, on a matter of urgent and pressing necessity on a motion which I am sure ail hon. members will wish to support.
As we approach the thirty-first anniversary of the Declaration of Human Rights, I move, seconded by the hon. member for Windsor West (Mr. Gray) and the hon. member for New Westminster-Coquitlam (Miss Jewett):
That Canada reaffirms its commitment to the principles enunciated in the Third Basket of the Helsinki Accord and calls upon the Soviet Union to respect that principle which calls for reunification of families and to allow all Soviet-Jewish refuseniks to be reunited with their families in Israel or elsewhere, and to further call upon the Soviet Union to release all prisoners of conscience, specifically Anatoly Shcharansky and Ida Nudel.


Mr. Speaker:: The presentation of the motion, pursuant to Standing Order 43, can be done only upon the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Mr. Speaker:: The motion has been read to the House. Is it the pleasure of the House to adopt the said motion?


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

Mr. Bob Ogle (Saskatoon East):: Mr. Speaker, I rise, under the provisions of Standing Order 43, to bring a matter of urgent and pressing necessity before the House. On November 1 of this year, the government of the Transkei in the Republic of South Africa issued an order under its public security act banning 34 organizations, including the South Africa Council of Churches, the Dependents' Conference, the World Council of Churches, the Student Christian Movement and the Young Christian Workers.
Since the Transkei government has not been recognized by any government outside South Africa, and since this is, therefore, an illegal action demonstrating that the oppressive policy

November 26, 1979
of apartheid is still very much the policy of the South African government, I would move, seconded by the hon. member for Churchill (Mr. Murphy):
That this House deplore this vicious attack on the humanitarian programs and agencies which are trying to cushion the worst blows inflicted by the policies of apartheid, and that this House, further, direct the Government of Canada to protest officially to the government of South Africa this travesty of fundamental human rights and urge it to take immediate remedial action.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


PARLIAMENT BUILDINGS
Mr. Ian Waddell (Vancouver-Kingsway):: Mr. Speaker, today I invited to the House of Commons a group of handicapped people from British Columbia. They came in their wheelchairs and were at first unable to get into the building. Eventually they got in through a side door which had to be unlocked. For a while they were unable to enter the parliamentary dining room: we had to carry them down the stairs.
Finally, not all of them were able to get into the House of Commons, though there were only about seven or eight of them in wheelchairs. The marble staircases pose a danger. One has to carry people into the galleries. The situation is really shocking. I would move, seconded by the hon. member for Vancouver East (Mrs. Mitchell):
That this House notes the difficulties handicapped people face inside the Parliament Buildings and urges the appropriate authorities to investigate these facilities with a view to suggestions for correction.


Some hon. Members:: Hear, hear!


Mr. Speaker:: The motion read by the hon. member can be presented only with unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


Mr. Speaker:: The House has heard the terms of the motion. Is it the pleasure of the House to adopt the motion?


[Stage Direction]
Motion agreed to.

Mr. Hal Herbert (Vaudreuii):: Mr. Speaker, in view of the co-operation on the part of all members in passing the esti-

mates of the Standing Committee on Veterans Affairs, and in view of the delay on the part of the government in presenting the bill in connection with veterans pension changes and the need to discuss matters of extreme urgency to veterans, I would move, seconded by the hon. member for Glengarry-Pre-scott-Russell (Mr. Ethier):
That the government provide terms of reference to enable the Standing Committee on Veterans Affairs to meet to discuss matters of the utmost importance to our veterans and their families.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


ENVIRONMENTAL AFFAIRS
Mr. Peter Ittinuar (Nunatsiaq):: Mr. Speaker, I rise, under the provision of Standing Order 43, on a matter of urgent and pressing necessity. In view of the fact that the Labrador Brinex uranium mining and milling project is very near the final stages of assessment before the Atomic Energy Control Board issues a licence for development, and in view of the fact that the province of Newfoundland possesses environmental legislation only in draft form and that the majority of their data is being provided by Brinex, I ask leave to move, seconded by the hon. member for Skeena (Mr. Fulton):
That the federal government carry out a complete assessment of risks and benefits, including an environmental impact study and public hearings, before the Brinex project is given the go-ahead.


Some hon. Members:: Hear, hear!


Mr. Speaker:: The introduction of this motion for debate can be done, pursuant to Standing Order 43, only with the unanimous consent of the House. Is unanimous consent forthcoming?


Some hon. Members:: Agreed.


Some hon. Members:: No.



ORAL QUESTION PERIOD


Right Hon. P. E. Trudeau (Leader of the Opposition):: should like to ask the Prime Minister a question following the
November 26, 1979

exchange we had last Wednesday relative to the situation in Iran, which has deteriorated to the point at which the Secretary General of the United Nations has now convened a meeting of the Security Council.
Could the Prime Minister, within the bounds of propriety, report to the House on any of the initiatives we discussed last week and which he indicated he would attempt to follow up?


Right Hon. Joe Clark (Prime Minister):: Yes, Mr. Speaker, I can. There was a proposal from the Leader of the Opposition or the House leader of the opposition that we might want to consider consultations with the summit nations at Tokyo. We have considered that possibility, as I indicated we would, and we have come to the view that since all of the summit nations have made their position unmistakably clear in expressing concern about the implications for international law of what is occurring in Iran, there is not a further useful initiative that could be taken there.
We have, however, turned our attention to the activities which might be launched in relation to the Commonwealth, and we are giving some thought to activities which might be launched in relation to Francophone communities to ensure that, as much as possible, those organizations will express their concern about the breach of international law in a public way.
There is a meeting being convened in London at which the High Commissioner for Canada will make a recommendation to other members of the Commonwealth that the Secretary General of the Commonwealth be empowered to make a declaration reflecting the consensus of Commonwealth High Commissioners' views. We are also taking other action at the United Nations.


Pierre Elliott Trudeau: Mr. Speaker, I think the House is very grateful that these initiatives have been taken by the government following some suggestions which were made here last Wednesday.
I might indicate to the Prime Minister that in our view it is not enough that each country, singly, whether a member of the summit or not, indicate its indignation over the breach of international law. As 1 indicated last week, it seems to me that in dealing with international terrorism, as in hijacking, it is not enough that each country act alone and take its position. It is essential, as we found out when we attempted to deal with hijacking, that each undertake to do certain things concerning others so that we act as a bloc.
We in Canada have always said that we were the closest friends and allies of the United States. It seems to me that what is called for now is a collective decision and a collective announcement, perhaps by the summit leaders, that if any harm comes to any of the American hostages held by Iranian action, then we will consider it as though harm had been done to our own citizens. If each member of the summit were to say that, it would seem to me that the Iranian government and those who are indignant at this action would see the consequences of their action in terms of future peace in the world.
Oral Questions


Charles Joseph Clark: Mr. Speaker, I am certain the right hon. Leader of the Opposition shares my view that what we must do in this circumstance is to determine those actions which will be most productive for Canada to take. There is no question at all that it will be useful for Canada to bring to bear the influence of certain blocs. That is why we have proceeded with the Commonwealth; that is why we are looking at the possibility of proceeding through Francophone communities; that is why we are working at the United Nations.
It has been our judgment that it is not probable that there will be effective new action which could be taken by the seven summit nations as a bloc and which could accomplish more than the individual actions taken by Canada and the other members to the summit community on our own.
In light of the renewed representation by the right hon. Leader of the Opposition, naturally I will be prepared to review that question again to see if there is anything new and useful which could be done by the seven summit nations acting together.


Pierre Elliott Trudeau: Well, Mr. Speaker, one would assume that several of these summit nations are aware that they depend on oil supplies from Iran. The United States no longer depends on it, in the sense that they have decided not to take it. But each of the other summit nations must be tempted in some way to put its self-interests in getting oil from Iran ahead of its desire to see the United States emerge victorious from this conflict of power.
By way of a question-and perhaps not even asking the Prime Minister to answer the question today-has the Prime Minister considered and has he in effect got on the phone to talk to Helmut Schmidt, Giscard d'Estaing, Margaret Thatcher, Prime Minister Ohira or the Prime Minister of Italy, because once harm is done to these hostages there is no guarantee that the United States will not say, "Well, nobody is willing to help us in this and we must act alone"?


Charles Joseph Clark: The right hon. Leader of the Opposition will know that four of the nations represented at the summit were party to the very strong and unequivocal statement issued by the European Parliament, at which time that group of nations acting as a bloc, and a more representative group than the summit nations, indicated their concern.
As I said to the right hon. Leader of the Opposition a moment ago, in light of his renewed representation we will be prepared to see if there is any further action that might be productive for the summit nations to take, either individually or as a bloc, that would have a positive result in Iran and which cannot be achieved through other means.


LEVEL AT WHICH INDUSTRIALIZED COUNTRIES HAVE EXPRESSED OPINION
Hon. Allan J. MacEachen (Cape Breton Highlands-Canso):: Mr. Speaker, the Prime Minister in a sense answered a portion of the question which I wanted to put to him, namely, at what

November 26, 1979
Oral Questions
level have the industrialized countries expressed their opinion? It is surprising to me, if the industrialized nations have been vocal, how little attention their views have received in the international press. I have been following the situation and have found that the only western government, in addition to Canada, which has expressed a view is the government of France, but I have not seen the name of the President of France, of the Chancellor of the Federal Republic of West Germany, the names of individual leaders such as the Prime Minister of Japan or the Prime Minister of Britain.
That is the kind of political high-level solidarity that I again urge the Prime Minister to achieve, and I ask him whether he knows-because I do not-to what extent the individual leaders have come out, for example, the Chancellor of the Federal Republic Germany or the Prime Minister of Japan, and whether they have come out individually or have made representations through a lower level in their governments.


Charles Joseph Clark: In the case of the countries that have been cited by the hon. member, the positions have been stated very clearly. Whether they have been stated by the heads of government in each case, I do not know at the moment: certainly in some cases they have been. Certainly, also, the statement by the European Parliament was clear, strong and left no question in the minds of the Iranians or of anyone else as to the extent of concern on the part of the participating countries.
As 1 indicated in my earlier response, we will, naturally, review again to see if there is anything useful that can be added to a very difficult and complex situation by suggesting that heads of government become more dramatically involved as individuals.


Allan Joseph MacEachen: Mr. Speaker, I have just one brief supplementary question. Could the Prime Minister tell us whether he, himself, has been in touch with any of the heads of government of the industrialized countries? If he has not, will he consider personally calling these leaders?
Also, in view of the very grave situation-the first international crisis since 1962, in the opinion of the Secretary General-will he consider now taking a lead and at least discharging his responsibility and the responsibility of Canada by asking these leaders, personally, why they find it so difficult to become identified at that high level, with this very grave international breach of law and order?


Charles Joseph Clark: I will, first of all, determine whether or not that is the case. If it is, I would naturally be prepared, if Canada's influence would be effective in this regard, to speak to the heads of government involved. For the information of the House, of those listed by members of the opposition 1 have spoken on this matter only to President Carter.


DECISION ON OIL PRICES BEFORE DECEMBER 11 BUDGET- MULTINATIONALS NOT PASSING ON REDUCTION IN PRICE
Mr. Edward Broadbent (Oshawa):: Mr. Speaker, I have a question pertaining to oil producing countries. At the press conference prior to the first ministers' conference, the Prime Minister said that a decision on oil prices would be reached preferably at that conference because, as he said, "We can't discuss these things forever". Considering that it is now two weeks to the day since that conference took place, and considering that the oil price decision is probably the most important economic factor influencing the budget which will be brought down on December 11, will the Prime Minister assure the House that a final decision will be reached by him on oil pricing prior to the budget?


Charles Joseph Clark: Mr. Speaker, I can assure the House that the budget will reflect assumptions which were basic to the proposal put before the first ministers by this government. My hope is that it will be possible for us to have an agreement prior to presenting the budget in the House.
There have been recent exchanges of correspondence between myself and the Premier of Alberta. I expect there will be another meeting fairly soon among the Premier of Alberta, some of his ministers, myself and certain ministers of this government, which I trust will be a significant step toward resolving differences that still remain. After that meeting, naturally I would want to be in touch with the premier of Saskatchewan and the premier of British Columbia who, as representing producing provinces, are most particularly involved and concerned with the questions still at issue.


John Edward Broadbent: Mr. Speaker, I consider the short answer to my question would have been a simple no, that the Prime Minister will not assure us a decision will be reached by him by the time of the budget. I find that extraordinary. There have been discussions going on for weeks and months. The Prime Minister indicated, a month prior to the first ministers' conference, that he thought then it could not wait beyond the conference. Now he is saying that we may be into late December or January, and I find that extraordinary.


Mr. Baker (Nepean-Carleton):: He did not say that.


John Edward Broadbent: I would like to go on to another aspect of the oil concern Canadians have, and ask the Prime Minister if he has received word from Saudi Arabia, as has the American government, about their concern that the multinational oil companies have not passed on to consumers in North America a reduction in price which was given to the multinationals by Saudi Arabia.
In that context, would the Prime Minister tell the House, considering this reality, that the multinationals are acting simply as middlemen between the oil companies and Canada? Would he not agree, for this very reason, that Petro-Canada
November 26, 1979

and not the multinationals should be the exclusive importer of oil into Canada?


Charles Joseph Clark: Mr. Speaker, the Leader of the New Democratic Party, perhaps after the euphoria of the weekend, did not hear my answer to his earlier question. 1 said that there may well be an agreement before December 11.


John Edward Broadbent: Maybe.


Charles Joseph Clark: Yes, there may well be an agreement by that time. We are moving in that direction and I am hopeful that we can realize that objective. Regarding Saudi Arabia, to my knowledge we have not received the representations which, I have read in the press, have been directed to the American government. I will check, and if there is useful information to convey to the House, naturally 1 will convey it.
As to the third part of the question, again for the forty-fourth or forty-fifth time in the House, 1 indicate to the Leader of the New Democratic Party that, no, we are not reconsidering the plan to review the role of Petro-Canada.


John Edward Broadbent: Mr. Speaker, I conclude my questioning with a two-part question which arises from the Prime Minister's answers. Is he committing the government to investigating whether or not price reductions which have been passed on to the multinationals by Saudi Arabia have, indeed, been passed on to Canadian consumers? Or will the situation be like it was in the United States, where consumers are being gouged?
Second-and I do not ask this in a polemical way-would he explain briefly to the House why it is not advantageous to remove the multinationals as middlemen, when we are importing oil, because of the complications both in price and the insecurity of supply which have arisen with the multinationals acting as middlemen?


Charles Joseph Clark: Mr. Speaker, a specific question was asked about a representation from Saudi Arabia. I will investigate whether such a representation has been received. If not, we will, in any event, see if there is any cause for concern to Canadian consumers regarding the price we are paying. As the Leader of the New Democratic Party will know, we are now paying a price which in effect is a flat rate based on a weighted average.
In relation to the latter part of the question by the Leader of the New Democratic Party, it is our judgment that there is no useful substitute that could, in the real world, play the role that is advocated by the Leader of the NDP, and certainly it is our view that Petro-Canada would not be able to play that role as effectively as the Leader of the NDP believes it would be able to.
Oral Questions NATIONAL UNITY


INQUIRY WHETHER GOVERNMENT RECOGNIZES EQUALITY OF TWO FOUNDING PEOPLES-LINGUISTIC RIGHTS ENTRENCHED IN CONSTITUTION
Mr. Jean-Robert Gauthier (Ottawa-Vanier):: Mr. Speaker, my question is for the right hon. Prime Minister. On Friday in this House, in answer to a question by the hon. member for Saint-Maurice, as reported at page 1638 of Hansard the Minister of State for Federal-Provincial Relations (Mr. Jarvis) said:
I think it most accurate and most important to emphasize that our discussions continued to recognize the right of the provinces in so far as education is concerned. We then went on to say that, given that right, we would like to explore with our provincial counterparts the entrenchment of the constitution so that the right is protected.
Could the Prime Minister interpret that statement for the House, and will he tell the House whether this represents a change in policy on the part of his government from his often repeated statements that he would not entrench the rights of official language minorities? Also, will the Prime Minister confirm that he now recognizes it is a responsibility of the federal government to lead-and I say lead-the provinces in entrenching the linguistic and educational rights of the official language minorities in a revised constitution?


Charles Joseph Clark: Mr. Speaker, the statement of the Minister of State needs no interpretation. He indicated that the Government of Canada was exploring that possibility. That is exactly what we are doing. There has been no change in policy at all.
The position indicated by this government and, indeed, indicated as a result of the Kingston conference involving this party, then in opposition, and certain provincial governments less numerous then than now is that, in our judgment, the most useful route to pursue regarding minority language rights in Canada is to have the federal government encourage the provinces through an indication that we would try to move forward on the basis of agreement, rather than threatening any province with the imposition of a regime. That remains the position of this government.


POSSIBLE ENTRENCHMENT OF LINGUISTIC RIGHTS IN CONSTITUTION-GOVERNMENT POSITION
Jean-Robert Gauthier: Mr. Speaker, my supplementary is for the right hon. Prime Minister. In its recommendation No. 4, the Task Force on Canadian Unity-I think it was recommendation No. 4-said that should all provinces agree on these or any other linguistic rights, these rights should then be entrenched in the constitution. Could the right hon. Prime Minister tell the House or at least give us some assurance that if a majority of provinces indicate that they favour the entrenchment of these rights in the constitution, he would act accordingly and give Prince Edward Island, New Brunswick, Saskatchewan, Ontario and, I think, New-

November 26, 1979
Oral Questions
foundland-which indicated during last spring's federal-provincial conference their intention to accept that principle-the leadership necessary to meet the wish of the provinces, or of at least five of them, that linguistic rights be entrenched in the constitution?


Charles Joseph Clark: Mr. Speaker, the hon. member made a distinction between the positions taken in the Pepin-Robarts report, which involved all provinces, and his questions where he talks about a majority of provinces. It would be preferable for us to come to an agreement affecting all provinces. However, it is an option we are prepared to consider as valid should it be possible to come to an agreement with several provinces and not be necessary to force a position upon the other provinces which disagree.


INQUIRY WHETHER MINORITY LANGUAGE RIGHTS WILL BE ON AGENDA OF FORTHCOMING FIRST MINISTERS' CONFERENCE
Harold Thomas Herbert: Mr. Speaker, my question is also for the Prime Minister. The Prime Minister will surely recognize that the statement made by the Minister of State for Federal-Provincial Relations has at least led to the interpretation of the government's point of view that the government is in favour of entrenching minority language rights in the constitution.
This appears to be some change from previous statements of the Prime Minister. I would like to ask him if something has happened to make him change his mind on this very important issue and whether, in that case, since he is prepared to discuss it with the provinces, he is prepared to put the item on the agenda of the coming meeting of first ministers.


Charles Joseph Clark: Mr. Speaker, first of all, the Minister of State and I have indicated the interest of this government in having the entrenchment of various rights including those to which the hon. member refers. We have made that point recently and in the past.
We have also made the point very clearly that in our judgment it is preferable, in a matter of this kind, to proceed with agreement rather than creating a circumstance in which a population or a province feels it is having imposed upon it a right with which it is not comfortable. In relation to the question of the agenda, it is certainly a matter that we would hope to have on the agenda of the first ministers' meeting.


Harold Thomas Herbert: Mr. Speaker, in that case, and since he is going to put it on the agenda of the first ministers' meeting, could I ask the Prime Minister whether he has now notified the governments of the provinces that this is a subject to be discussed, has he had any indication from them as to whether they are willing to discuss the subject and, in fact, is the matter now actively with the public servants who will be preparing the position papers for the government at the first ministers' meeting?


Charles Joseph Clark: Mr. Speaker, the matter was discussed at an official level on the fifteenth and sixteenth. It will be discussed again by the Minister of State for Federal-Provincial Relations when he meets with his provincial counterparts in a week's time.


ROYAL CANADIAN MOUNTED POLICE
Mr. Terry Sargeant (Selkirk-Interlake):: Mr. Speaker, my question is for the right hon. Prime Minister. During the raid on the home of journalist JoAnn Gosselin, RCMP officers confiscated many personal papers and notes pertaining to other stories being researched by Miss Gosselin unrelated to the case being investigated.
Will the Prime Minister investigate and report to this House the justification for these papers not yet having been returned to Miss Gosselin, thus adversely affecting her ability to pursue her livelihood?


Charles Joseph Clark: Mr. Speaker, naturally I will look into the question. I am sure the hon. member would join me in understanding that it would be most improper for any member of this House to interfere with a criminal investigation that is now properly under way.


Terence James (Terry) Sargeant: I can understand that, Mr. Speaker. Last week, the Prime Minister indicated to the House that he would release the guidelines which permitted the RCMP to raid Miss Gosselin's home and seize these papers. Is he now in the position to release these guidelines, and is he prepared to indicate to this House if these guidelines also cover investigations by the RCMP of members of Parliament such as myself who have obtained similar information?


Charles Joseph Clark: Mr. Speaker, I should have been more precise in my earlier answer, in that what the government would not want to contemplate-as I am sure no member of the House would-is interference in an investigation which might involve a breach of the criminal law. To my knowledge, there has been no evidence found to this point that such a breach has, in fact, occurred; although that was the cause of the instigation of the inquiry.
In relation to the guidelines, I am now informed that the guidelines which prompted the action of the Deputy Minister of National Defence were, in fact, informal documents which had not been approved by the Government of Canada-the predecessor government or our own-and, indeed, of whose existence until this affair I did not know. We are now preparing new guidelines which will bear the imprimatur of the authority of cabinet. Since the guidelines that were followed in this instance did not have the imprimatur of this or any previous government, I think in the circumstances it would be improper for us to lay them on the Table.
November 26, 1979


NATIONAL SECURITY
Mr. John Gamble (York North):: Mr. Speaker, my question is for the Secretary of State and Minister of Communications. Is the Secretary of State and Minister of Communications aware that a certain Jean-Louis Gagnon, as a member of the CRTC, was observed while in Paris by the French security forces in the company of a known KGB agent who was apprehended transmitting missile secrets to the U.S.S.R.?
Is he further aware that the said Jean-Louis Gagnon was a card-carrying member of the communist party and, if aware of these circumstances, does he consider it appropriate that this gentleman, occupying this sensitive position moulding communications policy, should retain his present position?
* (1440)


Hon. David MlacDonald (Secretary of State and Minister of Communications):: Mr. Speaker, 1 should point out that it is not as Secretary of State, but as Minister of Communications that I will be responsible for questions related to Mr. Gagnon. Accusations similar to what the hon. member has said have been made before. As 1 understand it, there is nothing in Mr. Gagnon's career that would make him ineligible to serve on the CRTC. Indeed, he has given outstanding service on that body.


FINANCE
Hon. Herb Gray (Windsor West):: Mr. Speaker, 1 have a question for the Minister of Finance. On November 12, the Prime Minister said that officials of the government would be consulting with the oil industry with regard to the special tax on oil company profits that had been proposed. Can the minister tell us today the exact nature of the consultations that have taken place so far, the names of the companies he or his officials have spoken to, and what he has told these companies?


Hon. John C. Crosbie (Minister of Finance):: Mr. Speaker, I can confirm that during the period of the last several months there have been discussions among officials of the Department of Energy, Mines and Resources and, I believe, my department, as well with various industry associations and companies in the oil and gas business which have been in to see the government.
There is a free flow of communications both ways between the government and the industry. Discussions have been held with respect to whether the industry has sufficient, or will have sufficient cash flow to meet all its needs for investment in energy over the decade of the 1990s, and so on, and what their views are on taxation arrangements which might apply in the
Oral Questions
future. These discussions have been ongoing and will continue because we believe in trying to find out exactly what the facts are before taking action.


Herbert Eser (Herb) Gray: Mr. Speaker, the minister has been careful not to answer my question, which was with respect to the Prime Minister's words when he spoke about consultation with the industry with regard to designing "the most effective tax". Why will the minister not give the House the same information he has given the oil industry? The Prime Minister was reported as saying in an interview just a few days ago that the minister's budget would not contain the tax cut promised during the election. Why has the Minister of Finance not consulted in the same way with individuals and business as he is doing with the oil industry? Why does the minister not have the same consideration for individual Canadians as he has for the multinational oil companies?


John Carnell Crosbie: Mr. Speaker, this is a rather strained question. I have been consulting with everybody I can think of in the Dominion of Canada with reference to the coming budget: ordinary people, people I meet on the street, people in my constituency, farmers, fishermen, workers, labourers, business executives and anyone else who will communicate with me. So far they are all willing to communicate with me. There is a constant process of consultation and dialogue.


NATIONAL DEFENCE
Mr. Lloyd Axworthy (Winnipeg-Fort Garry):: Mr. Speaker, I have a question for the first minister. Recent reports show that the poverty line of the armed services has now reached a level of 50 per cent due to the exorbitant increases in rent that servicemen are being charged.
Under the circumstances of having our armed forces personnel put into this position of impoverishment, can the first minister tell the House if it is the intention of his government to transfer the authority of the armed forces from the Minister of National Defence to the ministry of health and welfare so that servicemen might receive proper support for their present dire circumstances? Failing that, 1 would ask the first minister if he will ask the Minister of National Defence to order a moratorium on these rent increases until a more equitable formula can be worked out on this rent problem.


Charles Joseph Clark: Mr. Speaker, let me deal with the flippant part of the question, which is what we have come to expect from the forty-seventh candidate.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: I can assure the hon. member that I have no such intention. The Minister of National Defence can deal with whatever substance he can find in the question.

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Oral Questions


Hon. Allan B. McKinnon (Minister of National Defence and Minister of Veterans Affairs):: Mr. Speaker, I am pleased to answer this question because there has been a great deal of misinformation going around on this matter in the last week or so. The hon. member has obviously fallen prey to it.
We put a cap on the rental raises of $20 for the first two ranks of private, $35 on the rank of corporal, and the maximum of $50 on any rank above corporal. There is another overriding cap, that no serviceman will be charged more than 25 per cent of his total pay for rent. I might go over the pay rates and point those out while I am on my feet.


Mr. Speaker:: Order. That may take more time than we can allow in the question period.


Lloyd Axworthy: Mr. Speaker, 1 will not raise my supplementary with the non-leader of the Conservative party; I will raise it with the Minister of National Defence. Under the circumstances, has the minister investigated whether, in fact, the statements made by members of the armed forces personnel, the commanders of the camps, that over 50 per cent of the lower ranks are now below the official poverty line are true? Has this matter been investigated and, if so, is the minister prepared to take action to provide some compensation in the area of rent? Also, because of the statements made about the conditions and quality of the PMQs across Canada, is the minister prepared to ask the minister responsible for housing if there can be RRAP funds established for the armed forces personnel to bring their houses up to the same standard of repair as ordinary homes across Canada?


Allan Bruce McKinnon: Mr. Speaker, 1 am rather surprised at that question, considering who put in the restrictions in budget over the last ten years.


Some hon. Members:: Hear, hear!


Allan Bruce McKinnon: Some seven or eight years ago, the government of the day decided to make the rent charges for married quarters comparable to the economy. They called in the CMHC to come up with figures for the areas in which married quarters were located. This was then found to be unacceptable in so far as the imposition of the rates went, and some three or four years went by without imposing any of these rent increases. Now they want to impose the increases all at once, and this is unacceptable.
This situation has turned into a shambles. 1 have put a cap on these raises to protect servicemen and I have asked that the matter be investigated again to determine whether or not we can go back to what the situation was before the previous government decided to bring in this scheme, which we found almost impossible to administer. I am expecting in the next couple of days a report on some suggestions with regard to what we might do for a permanent cure to this illness.
[Mr. Clark.)


EXTERNAL AFFAIRS
Mr. Ian Watson (Chateauguay):: Mr. Speaker, my question is to the Secretary of State for External Affairs. It is related to the continuing frustrations which the various aid agencies are meeting in their attempts to save hundreds of thousands of Cambodians from starvation. Whatever we may think of the method whereby the new Vietnamese-supported Cambodia regime of Heng Samrin came to power, surely we all recognize that Vietnam holds the key to any massive increase in aid to Cambodia and that the Pol Pot regime, which has been effectively replaced, was responsible for killing two million to three million of its own citizens under conditions every bit as appalling as the Nazi holocaust.
Since leverage with Vietnam will help save Cambodian lives, will not recent criticisms of Vietnam destroy any possible influence Canada might have with the one country which does have leverage, Vietnam, and why is Canada at least giving the appearance of diplomatic support to the criminal Pol Pot regime? Finally, in refusing to recognize the new Vietnamese backed government of Cambodia, are we doing so because we are afraid to offend China and, if that is the case, then are we not cynically-


Mr. Speaker:: Order, please. 1 think 1 owe it to the minister to allow him equal time in this debate.


Hon. Flora MacDonald (Secretary of State for External Affairs):: Thank you, Mr. Speaker. On a per capita basis, Canada has contributed more in the way of providing replacement settlements for victims or refugees of the Indo-China situation than any other country in the world. We have also, on a per capita basis-with the exception of Australia- provided more in the way of relief funds for refugees in Indo-China.
This situation will not be resolved by humanitarian efforts alone. It will be resolved when we tackle its political causes, and its political causes lie with Vietnam.
There is no question that in speaking out about what Vietnam has been doing, whether in Vietnam itself or in the invasion of its forces into Cambodia and Laos, the effect of that has been, in the first place, to cut down on the number of expulsions from Vietnam by way of boat people. That has become very evident since these statements have been made.


C (1450)
[Stage Direction]
Second, I have been given the assurance in recent days, by members of the international agencies which are trying to carry out relief missions through Cambodia, that it is only because some of the countries in the world dare to tackle the political issues that they are able to get on with their humanitarian efforts.
November 26, 1979

Mr.   Bob@: Mr. Speaker, my question is also for the Secretary of State for External Affairs. Recognizing her courage in tackling the true root problem, that is, the political reality, would she agree that the political problem is larger in that China, in fact, had an opportunity to reduce the murders of Pol Pot and failed to do so, and at the present time China continues to work on the side of Pol Pot; and that, similarly, the Soviet Union-


Mr. Speaker:: Order, please. Is the hon. member putting a question?


Mr. Wenman:: Specifically, has the minister approached the Soviet Union or China relative to their politics in this situation?


Flora Isabel MacDonald: Mr. Speaker, I have discussed this matter at the United Nations and at Geneva both with representatives of the Soviet Union and representatives of the government of China. Our efforts will not be limited just to speaking in this regard. Where our efforts primarily now have to be directed, if I may say so, is to providing help and relief to the government of Thailand which is having to absorb so many hundreds of thousands of people who have been expelled from both Cambodia and Laos.


THE CANADIAN ECONOMY
Miss Pauline Jewett (New Westminster-Coquitlam):: Mr. Speaker, I have a question for the Prime Minister. I should like to ask him if he is aware of the dangerous trend developing in this country, whereby Canadian businesses have their data processing increasingly handled by United States' firms, thereby undermining Canadian economic sovereignty and privacy as well as employment opportunities in Canada. If he is aware of this trend, does the government intend to introduce legislation requiring that data processing related to Canadian business operations be performed in this country by Canadian-owned firms?


Charles Joseph Clark: Mr. Speaker, 1 want to thank the hon. member for raising a question of importance and concern to the government. The Minister of Communications has already had meetings on the matter. We are, naturally, not yet at a stage where we can indicate what the result of those meetings will be, but the matter is one of concern to us and one that is being pursued by the minister.
Oral Questions


FISHERIES
Mr. Alexandre Cyr (Gaspe):: Mr. Speaker, my question is directed to the Minister of Fisheries and Oceans. In 1972, the hon. Jack Davis, the then minister of fisheries, announced the closing of commercial fishing for salmon to allow this fish to ascend the freshwater streams of the Atlantic to spawn. After seven years of this program, which has cost some $15 million to Canadians, there have been fewer salmon ascending the rivers this year than ever before. Could the minister advise the House whether he is aware of the situation, whether he or his colleague, the Secretary of State for External Affairs, have had discussions about this with the countries of the North Atlantic, especially Iceland, and whether the minister has met with provincial representatives of eastern Canada to set up a program to ensure the survival of this anadromous species?


Hon. James A. McGrath (Minister of Fisheries and Oceans):: Mr. Speaker, I am aware of the situation and, indeed, I share the hon. member's concern. In an expression of that concern, I convened a meeting in the late summer with the fisheries ministers of Quebec, New Brunswick and Newfoundland. We were unanimous in our agreement that there was great concern over the future of the Atlantic salmon part of our national heritage. To that end, I put into effect a number of consultative measures at the officials' level which will be brought out in a statement which 1 hope to make to the House in the next short while announcing a new Atlantic salmon policy.
With regard to the international aspect of the hon. member's question, I agree with him that this is an area of concern. As he knows, there was a limit placed by ICNAF on the catch off Greenland. We believe that the limit, or TAC, is still too high and, indeed, we are pursuing an international convention in that regard. I am sure the hon. member would not want me to prejudice Canada's position by going any further at this time.


EXTERNAL AFFAIRS
Mr. Charles Lapointe (Charlevoix):: Mr. Speaker, my question is directed to the Secretary of State for External Affairs. In an earlier reply, the right hon. Prime Minister indicated that he would try to find a way to convince the other Commonwealth countries and our friends among Francophone countries to assume a common front with respect to the crisis in Iran. Could the hon. minister advise the House whether she

November 26, 1979
Oral Questions
has sought the assistance of our friends to have this issue placed on the agenda of the cultural and technical organization which will hold its annual conference in Lome on December 10?


Flora Isabel MacDonald: Mr. Speaker, we have begun to discuss the matter with the Francophone countries and we are waiting for their reply.


INQUIRY WHETHER GOVERNMENT HAS MADE ASSESSMENT OF IRANIAN DEBT TO CANADA
Charles Lapointe: Mr. Speaker, 1 should like to put a supplementary question on the Iranian crisis. Since the Iranian foreign affairs minister announced Friday last that some foreign debts, were now cancelled by the new Iranian state, could the Secretary of State for External Affairs tell us today whether she has assessed the Iranian debt in Canada which Iran wishes to cancel?


Flora Isabel MacDonald: Mr. Speaker, I cannot reply specifically to the hon. member because the Iranian state secretary for foreign affairs said that this measure was taken solely against the United States. Representatives of the Iranian central bank also say that such a measure would not be taken against the United States nor any other country.


POSSIBILITY OF CONVENING SPECIAL MEETING OF COMMONWEALTH COUNTRIES-GOVERNMENT POSITION
Mr. Irenee Pelletier (Sherbrooke):: Mr. Speaker, my question is directed to the Prime Minister and it is supplementary to that of the hon. member for Cape Breton Highlands-Canso. It is indeed unusual for the Secretary General of the United Nations to convene the Security Council. Realizing that the crisis is worsening from day to day, is the Prime Minister himself prepared to ask the Commonwealth countries Secretary General to convene a special meeting of Commonwealth countries as soon as possible?


Charles Joseph Clark: Mr. Speaker, that is something we have already done. The High Commissioners of all Commonwealth countries represented in London are meeting today in that city. This meeting was convened by the Mauritian High Commissioner, but was actually suggested by Canada. During the meeting, we intend to propose, through our Secretary General, that it would be valid for all Commonwealth countries to voice their common position concerning the situation in Iran.


REGIONAL ECONOMIC EXPANSION
Mr. Remi Bujold (Bonaventure-iles-de-la-Madeleine):: Mr. Speaker, my question is for the Minister of Regional Economic Expansion and relates to a report published in last Friday's La Presse which states, and I quote:
-the Department of Regional Economic Expansion . .. will grant a subsidy of several million dollars to the Societe quebecoise d'exploration miniere-
-to develop the salt mine in the Magdalen Islands. The article also mentions that the minister was to meet this morning with his Quebec colleague, Jacques Leonard. Can the minister tell us whether this report is factual and whether his department did grant a subsidy to SOQUEM; if not, can the minister indicate whether during the morning's meeting, if it indeed took place, someone tried to convince him to grant Quebec the subsidy and, if so, when does he intend to make an announcement?


Hon. Elmer M. MacKay (Minister of Regional Economic Expansion):: Mr. Speaker, I discussed this topic today with Mr. Jacques Leonard, my Quebec counterpart.

I am still not convinced that we should make an official announcement on this matter which continues to occupy a great deal of our attention in our department. I hope that before long there will be something we can announce one way or another.


SOCIAL SECURITY
Hon. Monique Begin (Saint-Leonard-Anjou):: Mr. Speaker, since the very wise and very moderate-I would even be tempted to say "very conservative"-Economic Council of Canada released today its report on pensions for Canadians, in the absence of the Minister of National Health and Welfare I would like to ask my question of the acting minister in charge of social development.
I would like to ask him if the government intends to translate recommendation No. 1 into governmental policy, namely, that all pensions and pension income supplements should provide Canadians with an income above the poverty line.


David Samuel Horne MacDonald: As the hon. member knows, Mr. Speaker, a number of important studies have been produced. This is
November 26, 1979

one of the latest by the Economic Council of Canada. There are two or three other studies I can think of that are in need of very extensive public examination.
It is the intention of the government, as the hon. member may know, to establish a parliamentary review in order that there can be full exploration of the very important implications of this and the other studies.


FISHERIES
Mr. Jim Fulton (Skeena):: Mr. Speaker, I have a question for the Minister of Fisheries and Oceans. In light of the massive slides of logging debris in the Rennel Sound area of Queen Charlotte Islands over the past few days, which has resulted in serious damage to a major salmon and steelhead spawning river, Riley Creek, and in light of the proven inadequacy of the agreement between his department and provincial forestry officials, will the minister assure this House that he will issue immediate instructions to fisheries' field staff to exercise their powers under section 31(1) of the Fisheries Act in order to protect the fisheries' habitat before more damage is done?


James Aloysius McGrath: Mr. Speaker, earlier this fall I had an opportunity, together with the minister of the environment of British Columbia, to take a first-hand look at the situation on the Queen Charlottes. I appreciate the concern and the importance of the question raised by the hon. member. I undertake to look into it and report back to him.


ANNUAL GREY CUP COMPETITION
Hon. Steven E. Paproski (Minister of State for Fitness and Amateur Sport and Multiculturalism):: Mr. Speaker, I rise on a point of order. It is with regard to the question that the hon. member for Vaudreuil (Mr. Herbert) posed at page 1641. Can he now rise and tell us who won the Grey Cup over the weekend?


Some hon. Members:: Oh, oh!
Business of the House



ROUTINE PROCEEDINGS


Hon. Perrin Beatty (Minister of State, Treasury Board):: Mr. Speaker, I would like to table under the provisions of Standing Order 41(2) a facts sheet in both official languages on the comprehensive Crown corporations bill which is scheduled for first reading today.


MEASURE TO ESTABLISH
Charles Joseph Clark: for leave to introduce Bill C-27, respecting Crown corporations and matters relating or incidental thereto.


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

Walter David Baker: Mr. Speaker, I seek the unanimous consent of all hon. members to have an order made which has been previously agreed to by House leaders and representatives of the parties of the House of Commons in the following terms:
That at 8 p.m. this evening, Monday, November 26, the House shall proceed to the consideration of Bill C-4, to amend the Federal Business Development Bank, and that all questions necessary to dispose of the motion for second reading and reference to the Standing Committee on Finance, Trade and Economic Affairs be put not later than 10 p.m. this evening.


Allan Joseph MacEachen: On that proposal, Mr. Speaker, may I say that we are in agreement. It is expected that we will be able to put up all our speakers within that period. Can we have an understanding that we not see the clock if some members want to complete their remarks, but in any event that we complete the bill today?


Mr. Speaker:: Order, please. This raises a question before the response is made. I want to get some indication of the disposition of the House in terms of the adjournment debate, which we will announce, of course, at five o'clock. I am in the hands of hon. members of the House. However, if it is very difficult for the House to leave both options open, that of an extended debate and carrying the adjournment proceedings at the same time, I wonder if there might be some consultation to determine which of the two is more preferable, or if there is some hope that both proceedings might carry on.


Mr. Knowles:: Mr. Speaker, I suggest that we agree to the motion but that we follow your suggestion that there be consultation as to when it might be appropriate to call it ten o'clock.
1686

November 26, 1979
Business of the House


Mr. Speaker:: Hopefully the Chair will be in a position to make an announcement to the House at five o'clock when it announces whether or not there will be an adjournment debate. That might be the most convenient time for dealing with Standing Order 40, later this afternoon at five o'clock.


Walter David Baker: Mr. Speaker, I think there is general agreement to deal with the motion and with the question. I wonder if we could adopt the suggestion of the hon. member for Winnipeg North Centre that we have some consultations and perhaps advise you later on with respect to the adjournment debate. I think there is a disposition in the House to agree with the terms of the motion.


Mr. Speaker:: There is certainly no difficulty at the present time in making an order. The House could order at this time quite comfortably that it move at eight o'clock this evening to the consideration of Bill C-4 and that it continue this evening until the motion for second reading of Bill C-4 is put to the House. That much can be accomplished now. Perhaps after later consultation the rest of that can be particularized at five o'clock. It takes care of adjourning one debate and starting another and also takes care of the commitment of the House to finish the debate. If there is consultation about how to accommodate the adjournment debate or accommodate additional speeches, we can put that to the House at five o'clock. Is that agreed?


Some hon. Members:: Agreed.


Mr. Speaker:: It would therefore be with unanimous consent. Is there consent for the moving of this motion at this time?


Some hon. Members:: Agreed.


Mr. Speaker:: The President of the Privy Council has moved that at 8 p.m. this evening, Monday, November 26, the House shall proceed to the consideration of Bill C-4, to amend the Federal Business Development Bank, and that all questions necessary to dispose of the motion for second reading and reference to the Standing Committee on Finance, Trade and Economic Affairs be put not later than 10 p.m. this evening. Is it the pleasure of the House to adopt the said motion?


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.
Mr. Speaker:: It is so ordered.


Allan Joseph MacEachen: Mr. Speaker, may I on a point of order tell the President of the Privy Council that we are quite prepared now to apply the same principle to the transportation of dangerous goods bill and deal with it from eight to ten o'clock tomorrow evening.


Walter David Baker: I want to thank the hon. gentleman as well as the leaders of the other parties; I believe there is support with respect to that matter. If there is, I am

prepared to put a motion in similar terms in relation to it. Perhaps Your Honour could inquire whether there is consent.


Stanley Howard Knowles: Yes, Mr. Speaker, we are prepared to agree to the motion and what I am about to say now does not detract from that agreement. Indeed, I have had some discussion with the government House leader and I think he is willing that when we reach tomorrow evening, either we shorten all the speeches or we apportion the time among the parties. In other words, if we are allowed 40 minutes out of the two hours it could be left to us to decide whether to put up two speakers or three or four.


Mr. Speaker:: Order, please. If the House is again disposed, as it appears to be, to commit itself to two aspects, the first being that it will move at eight o'clock tomorrow evening to the consideration of a bill on the transportation of dangerous goods, and the second that the motion for second reading of that bill be put to the House later tomorrow evening, if the House will have committed itself in respect to both those aspects of the second reading debate on that bill, then it can later inform the Chair if there are details to be filled in with respect to the open part of the order about length of speeches, or accommodating the adjournment debate, extending hours, or anything of that nature.


Walter David Baker: With what you have said in mind, Mr. Speaker, I should like to move-1 know there are a number of seconders in the House:
That, at 8 p.m., on Tuesday, November 27, 1979, the House shall proceed to the consideration of C-25, an act to promote public safety in the transportation of dangerous goods; and that all questions necessary to dispose of the motion for second reading and reference to the Standing Committee on Transport and Communications be put not later than 10 p.m.
Those are the terms of the motion and I undertake to carry out the necessary consultations with respect to the other matters.


Mr. Speaker:: In order to allow full consultation perhaps I can make a slight alteration in the finalization time as I did in the earlier motion. It commits the House, it seems to me, to concluding the matter tomorrow evening but leaves it open to members to negotiate an extended hour, if that is to be the case.
With that in mind I ask whether there is consent to putting this motion at this time.


Some hon. Members:: Agreed.


Mr. Speaker:: The question is on the motion of the President of the Privy Council, seconded by the Minister of State for Fitness and Amateur Sport and Multiculturalism. Is it the pleasure of the House to adopt the said motion?
November 26, 1979


[Stage Direction]
Motion agreed to.
Mr. Speaker:: Agreed and so ordered.


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. David Kilgour (Parliamentary Secretary to President of the Privy Council):: Mr. Speaker, the following questions will be answered today: Nos. 57, 223, 256, 271, 331, 357 and 360.
I ask, Mr. Speaker, that the remaining questions be allowed to stand.


Mr. Orlikow: 1.	Who (a) is the president (b) are the vice-presidents of the Canadian Livestock Feed Board?
2.	What is the annual salary in each case?


Hon. John Wise (Minister of Agriculture):: 1.	(a) Dr. Roger Perreault (b) Gus Sonneveld
2.	(a) $38,300-$52,100
(b) Mr. Sonneveld, an order in council appointee, is paid a per diem rate of $175 for each day he is engaged on business of the board.


Mr. Caouette: Does the Post Office Department intend to build a new or renovate the current Post Office in Chibougamau and, if so, what is the (a) approximate cost (b) time limit?


Hon. John A. Fraser (Postmaster General and Minister of the Environment):: Yes, (a) Estimated cost $750,000; (b) December 1980.


Mr. Knowles: I How many retired public servants are receiving pensions, including their basic pensions and any supplement or supplements added thereto, of amounts within each of the following brackets (a) less than $20.00 per month (b) $20.00 to $29.99 per month (c) $30.00 to $39.99 per month (d) $40.00 to $49.99 per month (e) $50.00 to $59.99 per month (f) $60.00 to $69.99 per month (g) $70.00 to $79.99 per month (h) $80.00 to $89.99 per month (i) $90.00 to $99.99 per month (j) $100.00 to $149.99 per month (k) $150.00 to $199.99 per month (1) $200.00 to $249.99 per month (m) $250.00 to $299.99 per month (n) $300.00 to $399.99 per month (o) $400.00 to $499.99 per month (p) $500.00 to $599.99 per month (q) $600.00 to $699.99 per month (r) $700.00 to $799.99 per month (s) $800.00 to $899.99 per month (t) $900.00 to $999.99 per month (u) $ 1,000.00 per month and over?
2. How many widows of public servants or of retired public servants are receiving pensions, including their basic pensions and any supplement or supple-
Order Paper Questions
ments added thereto, of amounts within each of the brackets indicated in the above question?
3.	What is the number of retired public servants and also the number of widows of public servants or of retired public servants presently residing in each province?
4.	In respect of how many orphans of public servants are pensions being paid and what is the average amount thereof?


Hon. Sinclair Stevens (President of Treasury Board):: Monthly Pension	1. Annuitants	2. Widows & Widowers(a)	Less than $20.00	135	124(b)	$	20.00	-$ 29.99	156	332(c)	$	30.00	- 39.99	229	835(d)	$	40.00	- 49.99	465	1,166(e)	$	50.00	- 59.99	772	1,228(0	$	60.00	- 69.99	1,013	1,217(g)	$	70.00	- 79.99	1,166	1,264(h)	$	80.00	- 89.99	1,234	1,168(i)	$	90.00	- 99.99	1,237	1,201(j)	$	100.00	- 149.99	6,637	5,06300	$	150.00	- 199.99	6,369	4,2510)	$	200.00	- 249.99	5,875	3,259(m)	$	250.00	- 299.99	5,170	2,498(n)	$	300.00	- 399.99	8,727	2,591(o)	$	400.00	- 499.99	7,320	1,068(P)	$	500.00	- 599.99	6,374	486(q)	$	600.00	- 699.99	5,384	263(0	$	700.00	- 799.99	3,508	149(s)	$	800.00	- 899.99	2,582	103(0	$	900.00	- 999.99	1,900	61(u)	$ 1000.00 and over	6,820	85Total	73,073	28,4123. Province	Annuitants	Widows & WidowersNewfoundland	968	397Prince Edward Island	551	199Nova Scotia	4,679	1,820New Brunswick	2,538	931Quebec	11,744	5,559Ontario	30,966	11,873Manitoba	3,378	1,280Saskatchewan	2,249	777Alberta	4,323	1,528British Columbia	10,703	3,620Yukon	107	31Outside Canada	867	397Total	73,073	28,412
4. Eighty-two orphans are receiving annual pensions at an average of $266.98.


Mr. Herbert: What is the estimated cost per dollar of sales to sell postage stamps (a) over the counter (b) by vending machines?


John Allen Fraser: (a) The national average cost of selling a dollar of postage stamps over a counter in staff offices and postal stations is estimated to be 55 cents, (b) The present estimated cost of selling stamps through stamp vending machines is 30 cents for every dollar of revenue.

November 26, 1979
1688_____________________________________
Mortgage Tax Credit GOVERNMENT AIRCRAFT


Mr. McKenzie: Has the Liberal Party of Canada paid for the use of any government aircraft in the period August 16 to October 16, 1978, in connection with the by-elections held on October 16, 1978 and, if so, in what amount for each trip?


Walter David Baker: In so far as the Department of National Defence is concerned: No. In so far as Transport Canada is concerned: A departmental aircraft was used once by the former prime minister during the specific period. A cheque from the former prime minister, in the amount of $2,220.00 was received by the department.


Mr. Herbert: What instructions were issued, if any, to postmasters concerning the filling of stamp boxes prior to leaving the premises on a weekend or holiday?


John Allen Fraser: Although specific directives are not given for weekend or holiday filling of stamp boxes, part III, chapter 12, paragraph 37-1 of the Manual of Financial Procedure states that: "Stamp vending machines are to be serviced as frequently as necessary to ensure that a sufficient quantity of stamp books is always available in the machine".


Mr. Herbert: What is the approximate cost, per household, to provide letter carrier delivery service in (a) urban (b) rural areas?


John Allen Fraser: Cost per householder per annum: (a) $73.08; (b) $32.74.


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


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed from Thursday, November 22, consideration of the motion of the Minister of Finance (Mr. Crosbie) that Bill C-20, to amend the Income Tax Act to provide a tax credit in respect of mortgage interest and home

owner property tax, be read the second time and referred to Committee of the Whole.
Mr. Gordon Ritchie (Dauphin):: Mr. Speaker, at five o'clock on Thursday I was discussing the budget and the nine envelopes which are involved in the budget. They are: fiscal transfers to the provinces, $3.6 billion; public debt charges, $9.8 billion; economic development and support, $8.4 billion; social affairs, $23.5 billion; justice and legal affairs, $1.2 billion; external affairs, $1.6 billion; defence, $4.9 billion; Parliament $100 million; and government services, $3.9 billion. And if there is a rise in OPEC oil prices, there will be a further drain for oil compensation payments.
This bill will go some way to allow money to remain in local hands and allow the local authorities a wider discretion in spending at the municipal level. Critics of this bill have said it will cost the federal government some hundreds of millions to billions in lost taxes. That is so, but it will also open up for the local governments an opportunity for higher tax revenues at the local level.
Municipal politicians are the only ones left who have any fear of the voters as to the handling of financial affairs of the citizens. It has been said both here and in Washington, in the U.S. experience, that the federal mandarins do not like this system of taxation with tax rebates for taxes and interest. Of course they do not like it because it reduces the federal government and the central executive, and hence the scope of the central executive of our government, to embarking on the massive and grandiose plans that so many centralists want to have. I have always said that the local municipal authority can spend taxpayers' money three times as profitably as Ottawa and twice as profitably as the provincial administrations. There is always much more return for the dollars spent of taxpayers' money when it is spent by municipal officials than by either federal or provincial officials.
Bill C-20 will open up for municipal officials greater taxation fields, and with the close scrutiny that municipal officials are subjected to in the spending of taxpayers' money it should be a decided advantage. And, of course, Ottawa will have less money to spend on its grandiose schemes. I am sure not many Canadians would miss the CBC budget being reduced somewhat.
Mr. Speaker, this measure will encourage home ownership. It will encourage Canadians to have a stake in their community and the country. Of course, this does not go well with the opposition who would much prefer a socialized housing stock. Nearly everyone for at least a portion of his life would like to own his house and to have the sense of security that ownership brings. Inflation has heightened the fact that home ownership is one of the best methods that a modest individual can use to prevent the ravages of inflation. Home ownership is considered a savings by our economists and we cannot hold the ideal too high. Savings are necessary if our society is not to become entirely owned and operated by the state.
This bill goes a long way to promote the ideal that home ownership is a good thing and should be spread widely over the
November 26, 1979

population. We have recognized the value of home ownership in our treatment of capital gains, now ravaged by inflation. We are allowing a once in a lifetime sale of a principal residence without capital gains and are allowing rollovers from one dwelling to another where the owners must move in order to carry on their occupation. This legislation very much complements the capital gains treatment of houses already in effect. Housing was essentially exempted from capital gains as a means of encouraging savings in home ownership. This legislation only endorses this.
I should like to read into the record an extract from this week's Newsweek of November 19, a comment by Mr. Milton Friedman on what the eighties will bring for the United States; 1 think it could be applied to Canada, also. Speaking of inflation, unemployment and big government, he said that while these were important they were only manifestations of more fundamental issues-the values that will shape our society. He went on to say:
Individual rsponsibility, equality of opportunity, personal freedom, limited government-these were the values of our Founding Fathers. Their counterpart is an economy organized predominantly by free-market capitalism and a government that is small and decentralized.
These values have been giving way to a very different set: social responsibility, equality of outcome, personal welfare, paternalistic government. Their counterpart is an economy organized predominantly by central direction and a government that is large and highly centralized.
The conflict between the two sets of values was at first not evident, but is now plain. No one can fail to recognize how greatly the role of government has changed, how much of our lives it controls.
There is concern about the family. Defenders of the new values blame capitalism. Its emphasis, they say, on rational calculation, material sucess, competition, exchange, undermines traditional nonrational institutions such as the family and church. But why should these effects show up only now, when capitalism is on the decline? The growth of government has done far more to undermine the family in the past 50 years than these amorphous effects did in the preceding millennium.
The conflict affects every aspect of our life: family vs. government; private vs. communal property; free v fair in speech, employment, trade; free choice as consumers vs. government protection of ourselves from ourselves.
The key issue of the 1980s is whether we shall be able to do so, and thereby reinvigorate the human freedom and economic freedom that together have made the U.S. a magnet for the poor and oppressed people of the world-or whether we shall succumb to creeping collectivism and become a totalitarian society.
I suggest that this bill regarding home ownership goes a little way toward making it possible to allow individuals to own their own homes.
There has been a great deal of discussion and argument that this proposal puts renters at a disadvantage. I cannot follow that argument. 1 believe it is specious. After all, when the renter gives his monthly rent to the landlord, the landlord is allowed to deduct local taxes, utility costs, maintenance costs, depreciation, and interest on any mortgages he may have on his property, before declaring his net income to be taxed.
It is well recognized that rental housing must return a net return to the landlord if housing stock is to be built. As much of housing stock is financed by large institutions such as insurance companies, workers' benefit funds and registered retirement funds which are the savings of millions of Canadi-
Mortgage Tax Credit
ans, these institutions must have a return on their investments which they put into rental housing in order to provide the pensions and savings by which the millions of individual Canadians, through these institutions, expect to meet their daily necessities when they can no longer work.
So, in effect, this legislation gives to the individual home owner something which has long been available to the renter in any case. If local property taxes, interest on mortgages and utility costs were not deductible by the landlord before paying his income tax, the cost of renting would be enormously greater for the renter than it is at the present time. Obviously, by making home ownership more attractive to people who are now renting, this should have a moderating effect on rents in the next few years, until a new equilibrium is established.
Much has been made of the fact that since the election interest rates, having continued their upward climb which had started long before May 22, have cancelled out the value of this home ownership rebate plan. There is no correlation between the two. Interest rates are a response by the country to two things. The first is the set of conditions abroad, particularly in the United States where, for the first time in a decade, they are coming to grips with the inflation problem. In Canada, with the long years of Liberal government, particularly since 1968, and with deficit after deficit, particularly in the last five years, we have spent our way into inflation, which must be brought under control or we will face a catastrophe, destruction of our financial institutions and the loss of savings in our banks and other paper instruments, such as happened in Germany after two world wars.
Interest rates are high, but this only reflects the fact that inflationary expectations are also high. Long experience has shown that interest rates are a combination of the real rate of about 3 per cent and the expected inflation rate. It seems to me that the Bank of Canada was to set the rate somewhere in line with what market forces dictate. If the bank was too far out, market forces would dictate otherwise. If, for instance, the bank set a ridiculous rate of 25 per cent, on the one hand, or 5 per cent on the other, market forces would entirely disregard what the Bank of Canada had stated as the prime rate. The bulk of lending would be at rates which would totally ignore the bank. We have an example of this: certain mortgage institutions have lowered their interest rates.
Interest rates in themselves will not cure inflation unless there is a corresponding reduction through other means. One of the greatest things to reduce inflation would be for the federal government to get the federal deficit under control, and that certainly can be done.
The comment has been made that rising interest rates cancel out the home ownership rebate of taxes and interest. In fact, the two are not related in any circumstance.
When the Conservative administration took over from the Schreyer government in the province of Manitoba, provincial finances were such that almost $1 in every $3 that the provincial government was spending was being borrowed. Every year the difference between the taxes collected and the money spent by the Schreyer administration was widening,

November 26, 1979
Mortgage Tax Credit
and the increase of this was much greater than the growth of the province's economy. It is small wonder, then, that many prudent investors were having second thoughts as to the integrity of Manitoba bonds. It is an anachronism of Canadian politics that when a province pursues prudent financial courses its citizens are penalized in a tax way because the federal tax system is able to take a greater share of the tax income as the province's share diminishes.
If we are serious about fighting inflation, there are many things we can do, but they all amount to a reduction of credit in order to reduce the total spending of the country. This might be done now by the control of interest rates, by the control of new credit or by way of new directions in the economy.
It is widely said that the cure for inflation will increase unemployment. This measure will do something to stimulate house building. But it also may be said that the increase in inflation will also bring unemployment as the bad effects of inflation manifest themselves. In other words, unemployment will occur whether in the cure of inflation, in its containment, or if it is allowed to run rampant, as at present. But, as evidence in South America shows, inflation is particularly damaging to middle-class virtues and financial positions. Certainly home ownership is one method by which the middle class can to some extent guard against inflation.
I would like also to point out to those who question high interest rates that it should not be forgotten that for a long time the people of Canada have been finding that their savings are being eroded as inflation speeds up. For every borrower there must be a lender, and a sober survey would show that anyone who is in the 50 per cent income tax bracket would have to have a 20 per cent return on his investment to break even.
The government has made a start in attempting to control the financial mess of the last ten years. Through this bill it has shown that it understands the necessity of broad home ownership across the country and that a measure of fiscal elbow room will be allowed to municipal authorities so that this most efficient of the three levels of government in the spending of taxpayers' money, which it controls, can be allowed to function.


Harold Thomas Herbert: Mr. Speaker, this bill we are debating today, Bill C-20-


Steve Eugene Paproski: Who won the game, Hal?


Harold Thomas Herbert: I must admit, in reply to the interjection of the hon. member opposite, that I was devastated on Sunday!


Mr. Kempling:: How much did you lose, Hal?


Harold Thomas Herbert: Having cried all week-end, I can only look forward to better success next year.


Steve Eugene Paproski: Hear, hear! Well done, like a great sport.
(Mr. Ritchie (Dauphin).]


Harold Thomas Herbert: To get back to the serious business which might take the smiles off the faces of the members of the government party, this bill to amend the Income Tax Act to provide a tax credit in respect of mortgage interest and home owner property tax is without doubt the worst piece of discriminatory and unjust legislation which has ever been presented to this House. It is my fervent hope that the evil, the greed and the discrimination that are integral parts of the bill will never be inflicted on the Canadian people. This is a disgusting ploy for votes by the Tories and a disgraceful affront to our intelligence. It is degrading to the people of Canada.
I cannot find enough adjectives to describe my dismay that in such difficult times as we are facing today the Tories produce just one major measure, and that one is so inherently bad that it can only contribute to the serious problems in which we find ourselves as a result of worldwide inflation and recession. At a time when this country needs leadership and the wisdom of good government we are presented with a bill which cannot accomplish either of the main objectives for which it is being introduced.
Before I go any further I want to comment on some changes which have already been made in the bill in the hope that other worth-while changes can be made at the committee stage if this discriminatory piece of legislation is eventually to see the light of day. As the House will be aware, I took a very strong position against the suggestion which was made by the then leader of the opposition, the present Prime Minister (Mr. Clark), in September of 1978 when he made this ploy for votes, by immediately communicating with the media in my own region. I immediately included in my letter to my constituency my horror at the possibility of getting ourselves into the mess in which the U.S. has found itself and my view that such a bill should not be introduced in the Canadian House of Commons.
I went on to list my numerous objections to this measure. Amongst my objections, which were recorded back in the fall of 1978, were three points which the government has now taken into account. I mention them because I hope the government will continue to take into account our representations; and if we are to have a bad measure, let us at least try to get rid of the worst features of the bill.
I was very pleased that the government brought in the point that in the case of only one spouse owning the home, which might create some difficulties with the tax returns, the couple could make the choice between them. This would allow the family to decide the best way in which they could take advantage of this tax measure.
I also pointed out at great length the problem of interference in provincial jurisdiction in connection with municipal taxes, and I still emphasize that this is interference in a provincial jurisdiction by a government that has talked at length about the need to confer with the provinces and has even suggested that we have gone too far with CMHC in the housing field
November 26, 1979

because of its interference in a provincial jurisdiction. As a result, the varying methods by which the municipal governments have charged their residents taxes is now a matter of no concern because there is to be for all householders the same deductibility for municipal taxes. I would only make the point that I have already heard municipal officials saying that of course that will make it a little easier for them to raise municipal taxes and take back from the home owner the moneys he is receiving from the federal government.
The third point, and the most important point of all, was my strong objection to the marginal tax rate variation which meant that persons in the higher income brackets were receiving a much greater advantage. That has been taken care of by the tax credit.
Having apparently scored on three points, I want to go into some of the other arguments in the hope that eventually we will be able to make some sense out of this measure. The average number of dwelling units built in the last ten years was 235,000 a year. The last three-year average was 249,000 homes a year. These figures do not suggest a depressed housing market. However, a further analysis is necessary. The ten-year average of single detached dwelling units is 109,000 a year. In 1978 the figure was 110,000, and this is the category of dwelling units which is to benefit most from the Tory plan. This rate of construction has been maintained despite a sharp fall off in the construction of single detached homes in Quebec. In 1976, for example, 37,000 units were constructed, in 1977, 29,000 and in 1978, 23,000.
Continuing the analysis, one notes that the ten-year average for apartment units is 92,000, but it is in this category that one can see the major fall off in construction. Only 77,000 units were built in 1978. This category of housing construction will not benefit from the Tory plan and could possibly suffer if funds are diverted for remortgaging. Interest rates could increase because of an increased demand for money for single family homes. Competition for financing for multi-family dwellings will increase interest rates if the supply of funds for this type of construction has been depleted.
In this connection, because of rumours that are rife on the Hill, I proposed a motion to the House last week which was an attempt on my part to bring to the attention of the Minister of Finance (Mr. Crosbie) that he should not further withdraw assistance for rental accommodation. The motion, which was not approved by the government side of the House, read as follows:
That this House approves the deduction of capital cost allowance for new multiple unit residential buildings against any source of income at any time, and would view with alarm any attempt by the Minister of Finance to terminate the allowance in his budget speech.
Quite obviously what I am getting at here is that if we are going to give an even greater advantage to the home owner over the renter, then we must not at the same time take away some of the tax measures which will tend to stimulate the multiple family residence construction. I would like at this point also to emphasize that when we go ahead with a measure such as is being proposed in Bill C-20, obviously we tend to
Mortgage Tax Credit
increase the value of single family residences, and by doing so, by comparison we decrease the value of rental accommodation. Thus we are swinging the balance-which may be the Tory intention-in favour of single family residence construction and we are taking away some of the impetus for the construction of rental accommodation. As I was saying a couple of moments ago, it is in rental accommodation that we see the major fall off in construction, and that is the one sector of the economy which surely needs assistance at this time.
Few will dispute the fact that the only two major considerations for the purchaser of a single family residence are the amount of down payment and the monthly carrying charges. By requiring only a 5 per cent down payment, or by other proposals of the vendor, the amount of the down payment can generally be arranged to accommodate the serious home buyer. However, the vendor can do nothing to reduce the amount of the monthly repayment of the principal and interest, particularly when repayment terms have already been extended to a period of 30 years and sometimes longer. Thus the effective reduction in monthly payments attributable to the tax concession could stimulate sales. Any price reduction in a product is likely to stimulate sales. However, it is generally recognized that stimulation by tax reduction is temporary, and that after the initial buying splurge to take advantage of the reduction, normal market forces come back into play. This is distinct from the possible stocking up on reduced price products, because obviously one is enticed to buy only one house.
The highest figure that has been reported as additional sales resulting from the deductibility plan is 20,000 and, of course, such a stimulation in the construction industry at this time would be most beneficial. But a look at the home construction statistics previously stated indicates that such a stimulation is an improbable dream and therefore could be an expensive exercise for the amount of benefit received.
There is also the additional difficulty that the deductible tax would be a delayed benefit coming only after a tax return has been submitted, claiming as a deduction the mortgage interest paid in the previous year.
Thus, because there has been no appreciable drop in the rate of construction of single detached dwellings and because any tax benefit will not be readily apparent in the initial monthly repayment program, any increase in sales resulting from a lower monthly cost may be entirely illusory.
While the down payment as a percentage of cost of the lower to medium price house has been maintained at a low level, the increase in demand for funds that is inevitable with the Tory plan could logically result in an increase in the amount of the down payment as a means of providing additional security and reduced risk for the lender. This would have a negative effect on the rate of new construction.
One of the advantages we have had in the last few years is that it has been possible to buy houses in the lower cost bracket with a down payment in the order of 5 per cent. Thus it has been possible for persons in the suburbs of big cities such as Montreal to purchase homes with down payments in the order of $2,000 to $3,000, a figure which it has been possible

November 26, 1979
Mortgage Tax Credit
for them to realize, and therefore they have been able to become home owners.
To the present time there has been no particular incentive to mortgage one's home other than for the purpose of home purchase. Opening such a tax proposal to all home owners certainly will entice home buyers to buy with a mortgage, particularly if the home owner can use the funds for other purposes. Current bank rates on consumer loans are substantially higher than mortgage interest rates and, of course, the interest payments on consumer loans would not be deductible for tax purposes. I should like to make a comparison with the United States where all interest is deductible; therefore, there is no direct incentive to mortgage one's home if the money can be obtained from another source for the purposes of buying consumer goods.
The inevitable competition for available mortgage funds will lead the lending institutions to be more selective. A long-term or a more senior employee with his higher income security and salary level will be preferred. The marginal cases will be cut off. The older the person, the more difficult it becomes to obtain financing at competitive rates, particularly if an older person has a relatively small income. Lending institutions will not be inclined to mortgage the homes of these citizens. Thus a person who has spent most of his or her productive years paying off a mortgage will be unable to take advantage of the deductibility proposal available to other home owners, simply because mortgage funds will not be available to that person.
Few will dispute the provincial jurisdiction in the construction field. One might question whether the type of intervention perceived in this federal proposal, whilst undoubtedly within the federal sphere of influence, is not an attempt to encourage certain lifestyles with no previous agreement from the provincial governments as to the effect and acceptability of such a proposal. Is this not in direct contravention of the stated aims of the present government first to consult with the respective provincial authorities prior to an intervention which may run contra to the stated aims of some of the provinces?
I should like to make a special comment here about the Quebec case. Throughout the country 62 per cent of Canadians or 4.4 million are home owners, though I heard the Minister of Finance in his remarks refer to some figure of 3.8 million families. Anyway, give or take a few hundreds of thousands, approximately four million persons are involved. However, among Francophones only approximtely 45 per cent own their own homes, with the others living in rented accommodations.
It has been argued that the program will encourage more Quebeckers to own their own homes. This argument obviously is based on the incentive of cost reduction. The implication is that it is not because of choice of living style that fewer Quebeckers own their homes. However, if by this argument one relates the percentage of ownership to regional income levels, then one is forced to question why the highest level of home ownership is in the maritime provinces, the region of the
[Mr. Herbert.)
country that, by the same argument, has a population which should least be able to afford to own homes. Thus the rate of ownership of non-Francophones is 1.5 times greater than that of Francophones, 70 per cent compared to 45 per cent.
In addition to the considerably lower ownership rate among Francophones, there is also the average family income differential which will affect greatly the relative house values and therefore the mortgage totals for the two linguistic groups in our country. In Quebec the average family income for home owners is $19,300, compared to $21,200 in Alberta, $22,100 in British Columbia and $22,500 in Ontario. On a per capita basis, the financial benefit from the program will be as much as 60 per cent more in the provinces of Alberta, British Columbia and Ontario as compared to Quebec. This is a direct reversal of the principle inherent in the equalization payments program.
Many persons have saved to increase the equity in their homes. This has been accomplished either by increasing the amount of the down payment or by paying off part of the mortgage before maturity. These people will receive less benefit from the plan than those who have a minimum investment in their homes. The pride of ownership of a mortgage-free home would be discouraged by our tax system.
The 2.4 million Canadians who rent their homes in many cases already are benefiting from the fact that interest costs on multifamily structures are considered an expense for tax purposes. However, there are two ways in which the family that rents will be disadvantaged by the plan. First, all citizens, owners or renters, will contribute to the cost of a program in which they cannot or do not choose to participate. Second, a tenant who cannot afford or chooses not to buy a home does not have the opportunity to raise funds by mortgaging or remortgaging a home. Therefore, the tenant does not have the same capacity for raising funds and must borrow at higher interest rates, and in addition does not have the interest deductibility provision of the home owner.
Whilst talking about the cost, I re-emphasize, as I have said previously in the House, that if one spreads the total cost of this program over all taxpayers, one could compare it to an increase in tax for every single federal taxpayer in this country of something in the order of 15 per cent. If one says right away that there is not to be an increase in tax in the next budget which we will see on December 11,1 can only say that if this measure had not been brought in, then it would have been possible to have given everyone a decrease in tax to compensate. The cost to every single federal taxpayer in Canada of this program is equivalent to 15 per cent of the taxes which they presently pay. Therefore, a person presently renting accommodation will be dipping into his pocket to the extent of 15 per cent of his taxes to help his neighbour who has made the free decision to purchase a home for himself or herself.
With no capital gains tax applicable on the principal residence of a family, the appreciation in value as a percentage of invested capital has not been a tax consideration. In the United States, which already permits mortgage interest as a deductible, capital gains tax applies to a residence. One will immedi-
November 26, 1979

ately wonder if a capital gains tax on homes is being considered, inasmuch as the new program will be an encouragement to reduced equity financing with a resulting additional percentage capital gain from appreciation in value. I should like to reiterate this point. For example, if a person purchases a $50,000 home with a $5,000 down payment and a couple of years later sells the home, which has appreciated in value, for some $55,000, then in that two-year period the equity in the home has increased from $5,000 to $10,000, a 100 per cent improvement in a period of two years. This is a very common experience in Canada today. At the present time that money is not taxed because there is no capital gains tax on single family residences, or on any residence for that matter.
The record of home building on a per capita basis in the United States is worthy of comparison. Canada has always had a far superior home building rate on a per capita basis. Of course, in the United States mortage interest is deductible. In fact, the kind of home building that would benefit from this program has always been strong in Canada. This strength in the building of single detached dwellings has continued, despite the much higher mortgage interest rates that apply in this country.
One is, therefore, entitled to question whether that proposal would have any significant effect on the number of such homes to be built after any initial surge in construction has passed. It is important to point out that in the United States all interest payments are deductible, thus effectively removing any incentive to mortgage homes purely for the tax benefit.
Mr. Speaker, perhaps I could talk for a moment or two about some comments that have been made by the minister who probably has the greatest access to information. The Minister of Regional Economic Expansion (Mr. MacKay), because of his responsibility for the Canada Mortgage and Housing Corporation, has been able to put together some arguments which 1 think are worthy of repetition and should go on the record.
I have proposed, for example, a direct grant for new home builders, either as a reduction of the down payment or as a monthly payment over a limited period, that period of time when the new home owner is in the greatest financial difficulty. To that the minister has replied:
Direct cash grants to first-time purchasers can ... be regarded as an alternative to the program of mortgage interest and property tax credits. Both would facilitate access to home ownership. However, the use of direct cash grants has a number of disadvantages.
He then lists these as:
Limiting cash grants to first-time home buyers would deny existing home owners relief from the burden of mortgage payments. Limiting the grants to new housing would deprive first-time home-buying households of the opportunity to select between a new home and a more affordable existing home. Restricting grants to new housing would also have the adverse effect of artificially raising the price of new housing relative to the price of existing housing, thereby creating severe market distortions.
Mortgage Tax Credit
1 find these arguments, whilst quite logical, somewhat limited. After all, when he says limiting cash grants to first-time home buyers would deny existing home owners relief from the burden of mortgage payments, let me point out that one of the stated objectives is that an increase in construction would result from the increase in demand, and obviously this is a counter-argument to that particular point.
The point about being able to select between a new home and a more affordable existing home I do not think is worthy of too much discussion at this point in time. The affordable existing home which has been on the market for some time is probably being priced at current market prices, and I think we need concern ourselves very little indeed with the resale of older houses. We might concern ourselves with making some of those older houses better places in which to live, and there are programs for that purpose.
In the third point he talks about artificially raising the price of new housing relative to the price of existing housing. The assumption again is that if we give a grant to a person to assist him to reduce the down payment on a house, it would increase the price of the house. How illogical that is when the whole purpose of the bill is to reduce the cost to the home owner and, therefore, put the first-time home owner in a better position so that it will be easier for that individual to purchase the house. There is something illogical about the presentation of that argument.
I made a second suggestion, which was that a direct subsidy of interest rates for an initial period of from one to five years could be made. That proposal could be intended, of course, to stimulate construction. The minister answered:
-the mortgage interest tax credit will... achieve the same results as a direct interest rate subsidy, and at the same time be much simpler and cheaper to administer.
I find it somewhat hard to accept that an interest subsidy to home purchasers could itself be so difficult to administer when we are going to have such a complex proposal on the income tax return that it is going to have to be checked off by the Department of National Revenue.
The fourth proposal I made was that we should stop the practice whereby insurance is required from a private institution for non-National Housing Act mortgages, even though the lending institution increases the mortgage interest rates for these loans. Surely either the increased rate is to cover the increased risk, or if suitable insurance is obtained the regular NHA mortgage rate should apply.
My point here is that we have one company-and 1 will name it, MICC-which is doing the same thing as the Canada Mortgage and Housing Corporation. When 1 was in Winnipeg earlier this year I made a point of inquiring as to how this company was faring. It is insuring mortgages, and I will speak in a moment about what is happening to the Canada Mortgage and Housing Corporation and the funds it has.
This company insures mortgages, but in spite of the fact the mortgages are being insured by a reputable company, the mortgage rate charged by the banks and other lending institutions is one-half to 1 per cent higher than that charged when
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November 26, 1979
Mortgage Tax Credit
the mortgage is insured by the government agency, Canada Mortgage and Housing Corporation.


An hon. Member:: And they're still losing money.


Harold Thomas Herbert: Mr. Speaker, I was not going to interject at this point because my time may be running out, but I will only say this. In the Canada Mortgage and Housing Corporation fund at this time is a sum of some $650 million which has been accumulated from this insurance charge. To suggest that this money is ever going to be used-I know what the objection is going to be and I will come to that in just a moment-for the purpose that it was originally intended, which is as insurance on mortgages for single family residences, is just preposterous when you take into account the appreciation in the value of homes, plus the fact that as the years go by these mortgages are being reduced.
In fact, the only reason there is an apparent reluctance on the part of the government to talk about using this particular fund at this time to help the home owner is that a large part of these funds has presently been committed as a result of the acquisition of homes under the Assisted Home Ownership Program. I am well aware that there are persons who are not particularly happy to talk about the fact that there have been so many acquisitions under this program. All I would say at this stage is that these acquisitions represent a relatively small proportion of the total number of houses built under this program, and in each case the individual involved has had the advantage of the program for the period in which he has lived in the house.
The fact that some of these people have been unable to meet the increased payments necessary at the end of the five-year period, through no fault of their own, is a shame. Nevertheless, the 90 per cent to 95 per cent who have been able to use the program to advantage, and as a result now occupy their own homes, in my opinion makes the program extremely well worth while. In no way does it bother me that some $400 million has had to be used out of the $650 million insurance fund for the acquisition of these homes. This money is not lost. When one acquires a home for a certain sum, one must spend those dollars in order to acquire the property. But one then sells the property, and it is only the difference, if there is a difference, between the selling price and the purchase price that is the loss. The actual anticipated loss in any one year would not exceed $60 million. The maximum loss of $60 million to the Assistant Home Ownership Program in one year, if one considers the funds which are being funnelled in by continuing insurance charges year after year, is nothing at all to be ashamed of. I think one of the finest things which the previous government did was to give the opportunity to low income persons to acquire their own home.
Thus the suggestion that we cannot use this fund either to reduce to one-half of one per cent or even eliminate entirely the insurance charge but continue with the coverage, which would immediately give everybody a reduction in their month-
[Mr. Herbert.)
ly payments, and that this would have no immediate effect on the fund, is quite right. Of course, it would result in a decrease in the amount going into the fund, but it would then only be necessary to make more of an effort to sell these houses that have been acquired by Canada Mortgage and Housing Corporation. If there is a shortage of housing accommodation, then this is the route to take. It is the least expensive to the public since it involves no additional expense to the government whatsoever.
I also suggested that we eliminate the remaining federal sales tax on building materials as a one-time stimulus for construction activity. The minister's answer was:
-not all of the price reduction resulting from a cut in federal sales tax would be passed on to the consumers.
I think that it is a disgrace to make such a statement. I am ashamed of the suggestion that the market now is not sufficiently competitive, and that it would force salesmen and the companies selling building materials to reduce their prices if the government was to take off the remaining federal sales tax on building materials. Surely that is one very effective way to stimulate construction.
I also talked at some length about giving a stimulus to the building industry by proposing other deferred tax advantages to builders who at the present time are carrying very high inventories. The comment by the minister to this particular-suggestion was:
New residential construction activity has been lagging throughout 1978 and 1979.
I acknowledge the lag, but as I said earlier, this does not apply to single family residences, but mainly to rental accommodation in multiple family highrises and other types of multiple family units. He goes on:
The lower level of activity can be attributed to a number of factors. The first major factor has been the over-production in some market areas of certain types of dwellings resulting mainly from the AHOP and ARP programs. As inventories grew beyond normal levels, builders have had to reduce new production. To compound this problem, mortgage interest rates remained at high levels throughout the latter half of 1978 and in 1979.
The minister goes on to say on the following page:
The current low level of new production cannot therefore be attributed to a lack of productive capacity on the part of the builders. Rather, it is more because of a weakness in demand that housing starts are at such low levels. Thus, 1 believe there is a greater need for the mortgage interest and property tax credits to stimulate demand than there is for the granting of deferred tax advantages to builders at this point in time.
That may be so, provided there are still builders to build the houses should there be an increase in demand. The situation in which we find ourselves at the present time is that the builders have inventories and houses for sale in most parts of the country. In fact, I was reading a pamphlet of the Housing and Urban Development Association of Canada which said in part:
Much of the country reports soft markets except Newfoundland and Ontario which say that the single detached demand is buoyant.
I find it interesting that they would mention the provinces of Newfoundland and Ontario because Newfoundland is referred to as the area in this country with the highest percentage of home ownership but the fewest number of homes on mortgage.
November 26, 1979

And in Ontario there is presumably a greater capacity on the part of Ontario residents, because of their higher income levels, to purchase their own homes.
I would like to make one last point on the response from the Minister of Regional Economic Expansion to my suggestions. I suggested that there be a sunset clause so that the difficulty experienced in the United States, that it has been found impossible to close the tap on their program, will not be a Canadian experience. The minister said:
Your proposal to include a sunset clause in the program could only be justified if home ownership were to cease to be a social goal at some future time.
I do not think anyone will dispute with the minister the fact that it is a social goal, but the difficulty is that if this program is put into place it will become almost impossible to get it out again, no matter what may be said at this time. We know the experience of the present President of the United States who in one of his campaign promises said that he would get rid of the deductibility of interest on mortgages. However, when he got into office he found that the politicians would make it impossible to put such a measure through, so the United States finds that it is stuck with what everyone in that country acknowledges is a bad piece of legislation.
I would like to quote from a document in the building industry called "The Canadian Builder". In an editorial headed "Mortgage Interest Deductibility: Tinkering with a Time Bomb", it says:
Stop asking the government for free goods and services, however desirable and necessary they may seem to be. They are not free. They are simply extracted from the hides of your neighbours, and can be extracted only by force. If you would not confront your neighbour and demand his money at the point of a gun to solve every new problem that may appear in your life, you should not allow the government to do it for you.


The Acting Speaker (Mr. Scott, Victoria-Haliburton):: Order, please. I regret to inform the hon. member that his time has expired. In order for him to continue, he must have the unanimous consent of the House.


Some hon. Members:: Agreed.


Some hon. Members:: No.


Peter Ittinuar: Mr. Speaker, like many Eskimos in Canada, my hearing is quite bad. Let me preface my remarks by saying that it is perhaps appropriate I speak to a rather subdued House today because, in terms of government priority, northern housing programs have been just as subdued. I would like to illustrate that by giving hon. members a number of figures. In 26 communities in my riding there are a total of 3,353 houses, of which 37 are privately owned. That is not for a lack of desire, however. Many of these houses contain primary, secondary and tertiary families, so hon. members can imagine the need for housing programs for the north and particularly in my riding of Nunatsiaq.
My colleagues have already pointed out that Bill C-20 will benefit present-day home owners without increasing the possibility of home ownership for others, and also that developers
Mortgage Tax Credit
and lending institutions are likely to be the recipients of large financial gains.
The rationale behind Bill C-20 is supposedly to increase home ownership and lighten the financial burdens of present day home owners. These are certainly honourable goals. The mortgage interest tax credit, however, will not alleviate affordability problems for those Canadians most in need. Four out of five households that spend over 25 per cent of income on housing are renters. These are the people who have a real affordability problem. They are also the people whose needs are ignored.
Similarly, almost 99 per cent of the people in my riding are not eligible for this tax credit. In the Baffin region, which is a very large area of Canada, 0.61 per cent of housing is privately owned and operated. In the area north of the tree line as a whole, 1.1 per cent of the total housing is privately owned. Bill C-20, therefore, will benefit almost no one in the riding of Nunatsiaq nor will it increase the number of home owners in that riding in the future.
The major factor contributing to the small percentage of home owners is the high cost of fuel and utilities in the north. In light of this, and given the increased fuel costs faced by all Canadians, I should like to recommend that the government withdraw Bill C-20 and in its place institute a utility and home heating subsidy which would warm the hearts of all Canadians, especially those in the western and eastern Arctic. I see the hon. member for Western Arctic (Mr. Nickerson) smiling at this because he approves. The alternative would be to standardize these costs across the country, with an additional subsidy focused on targeted regions where the need is greater.
If Bill C-20 is passed, it will cost the government millions if not billions of dollars over the next three years. If the government is willing to spend such a large amount of money on housing, then it is only logical and fair to make this money available to those most in need, including low and middle income families who cannot afford to own a home and people who live in depressed areas, such as the Atlantic provinces and the northern regions of all provinces and the two territories.
According to 1971 census data, 53 per cent of Canadian households own their dwellings. As pointed out earlier, however, four out of five households with affordability problems are renters; therefore, the tax credit benefits those households that do not have a major affordability problem. Is this a fair allocation of money, Mr. Speaker? Most people would agree that it is not.
My colleagues have already mentioned that the mortgage interest tax credit is unlikely to increase home ownership possibilities, and in fact may prove to be a deterrent due to increasingly high housing prices and interest rates.
The Conservative government has a moral responsibility and an obligation to ensure that its policies benefit Canada and the Canadian people. Bill C-20 will not benefit the majority of Canadians. In these times of economic hardship, the effects of which are most severe in certain regions, certainly my own region, and which hit poor and middle income Canadians

November 26, 1979
Mortgage Tax Credit
particularly hard, the government cannot afford to appease one segment of the population at the expense of another. Money budgeted for the tax credit would be more wisely and fairly put to use in the form of a utility allowance. An effort to save face by following through on untimely election promises should not be a consideration, but saving Canadians from economic hardship certainly should.
The mortgage tax credit will not in any way benefit the people of Nunatsiaq, nor will it aid the many Canadian households that do not have mortgages.
I should like the House seriously to consider my suggestion of allocating money set aside for mortgage interest tax credit to cover instead a utility allowance which would have the universal and immediate effect of helping all Canadians face the winter ahead. Many people in the western Arctic would agree with that proposition, especially those in outlying communities beyond Yellowknife who do not have the same housing utilities as are provided to territorial employees in suburban areas like the suburbs of Edmonton, Yellowknife, Fort Smith and so on.
As a final point, Mr. Speaker, I should like to examine the proposed mortgage interest tax credit in the context of how it will stimulate the production and sale of housing. In the area north of the tree line this is simply not a possibility. As mentioned earlier, the high cost of utilities and home heating oil eliminated home ownership as an alternative in the north. Almost 99 per cent of the housing is heavily subsidized, either as public housing or government staff housing. Many people would like to own their own home but simply cannot afford the cost of maintaining or operating one. Government staff housing is generally considered to be on a par with southern standards but the quality and condition of public housing provided both under section 40 of the National Housing Act and under the northern territorial rental programs is not only inadequate but clearly inferior to southern standards.
Again, my colleague and the hon. member from Western Arctic and the hon. member responsible for the district of Labrador would agree with me about housing conditions which they have both seen in the communities in those regions. I am sure that other remote regions of Canada find themselves in much the same straits.
Attitudes toward people residing in subsidized housing dictate that they have little say in design and policy decisions which affect their housing, yet there are many design problems specific to northern housing and the production of new housing in no way meets present and projected demands. Some of the design problems associated with public housing are inadequate insulation, warping caused by mid-winter construction and shifting pads, drains and pipe freezing, lack of porches in early models-which is very important in hunting communities- doors freezing shut and all kinds of other problems. There are inadequate wind breaks and inadequate funds for maintenance and upkeep.
The preceding points were made, Mr. Speaker, in order to bring out the fact that Canadian housing problems are as

diverse as the many regions which make up this country. The solutions should reflect regional disparities and differing needs.
I should like to make one further point, Mr. Speaker. While housing programs in the north have been subdued, industrial development in extracting non-renewable resources has been given an attitude of laissez-faire. The government is always saying how beneficial to the north the extractive industry can be, yet out of 3,353 houses, 15 houses were provided by one mining company for the whole region. That is just ludicrous.
On that note I complete my remarks, Mr. Speaker. The figures speak for themselves.


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


Mr.   C.-A. Gauthier@Roberval: Mr. Speaker, we have before us today an amendment to the Income Tax Act designed to provide a tax credit in respect of mortgage interest and property tax. These changes will allow the owner of a single family home to deduct 25 per cent of his mortgage up to $1,250 per year and grant him a $250 property tax credit. Mr. Speaker, I think that Bill C-22 introduced in the House includes another commitment made by the Progressive Conservatives during the last election campaign. It also represents a minimal portion of the principles advocated by the Social Credit Party of Canada for years and to which the previous government has never paid heed. On the contrary, it has poked fun at them at every opportunity, but to resort to ridicule is always a proof of weakness.
Mr. Speaker, it has always seemed impossible for the Liberals, who were elected with the millions of financiers, banks and multinational companies, to grant the same advantages to the small home owners as to the owners of large apartment buildings. 1 have spoken on several occasions in the House to denounce that intolerable unfairness to the small wage-earner who is anxious to own his house and who must pay five times the amount to become an owner at the end of his life.
If you figure out a 20 or 30-year mortgage at the present rate, you realize that a house assessed at $30,000 or $40,000 costs over $100,000, without any deduction possible. This is the drama and a real shame in this country. For years, all builders and owners of MURBs can deduct for income tax purposes 66 per cent of the interests paid during a year, as well as property taxes, maintenance, heating, electricity and insurance costs in addition to a 10 per cent or 15 per cent depreciation on rental housing. Needless to say that those who invest millions of dollars in these MURBs get all these advantages to such an extent that businessmen do not invest their own capital, they lend it at rates of 12 per cent to 14 per cent. No, Mr. Speaker! They borrow the money needed since they know at the outset that they may deduct 66 per cent of the interest which provides them with millions of dollars borrowed at a very low interest rate if the deduction is taken into
November 26, 1979

account. I will even say that this borrowed capital yields further interest. That must be told and explained to the people.
Mind you, Mr. Speaker, I am not against financing multiple rental units in this manner. On the contrary, we have been demanding for years that owners of multifamily dwellings get the same advantages as the owners of multiple rental units. A young head of family who wants to buy his own home could then deduct 66 per cent of his mortgage interests from his property taxes, maintenance costs and insurance premium as well as 66 per cent depreciation. Do you know, Mr. Speaker, that under these conditions, a head of family would pay for his house only once instead of five times over as is the case today, that is, four times to the finance company and once to the contractor. Were we to reach this objective, Mr. Speaker, 90 per cent of all couples could become home owners. I can hear people saying that I am exaggerating. I have been told many times in the House not to forget the owners of multiple family dwellings who did not build for themselves. Of course not, but to provide shelter for other families which otherwise could not find any. That is the reason they give for granting tax credits to big contractors only, Mr. Speaker. That is the only reason, claiming that these big contractors are working for the common good. They are social benefactors. I refute this childish argument by saying that the head of a family does not build a house for himself either. No! If he were single he would rent a room, period. He builds a house for his family, for his wife and his children. I think that his case is also important, even more than that of the big contractor who builds houses for others, because I do not know of any big contractor who is in this business for reasons other than to make money.
Profitability, that is their objective. In other words, Mr. Speaker, we are not asking for favours in the name of heads of family but we seek the most elementary justice, which has been refused to us by all former governments. 1 do not pretend that in its present form Bill C-20 will meet this objective because, in my opinion, it is but a small step toward the solution we have been advocating for twenty years. In fact, this measure will affect a very limited number of average home owners who have a mortgage on their house and moreover, though the maximum deduction of $250 for property taxes will reach a greater number of people, it is clearly insufficient.
During consideration of this bill in committee, we shall certainly have amendments to suggest to the government, but we immediately ask the government to take the initiative of moving these amendments so as not to lose face. Good intentions are no longer enough, Mr. Speaker; the population wants action. We have seen this in the last two byelections. The introduction of Bill C-20 is a step in the right direction, we must admit. The government has taken a step forward; it has at least broken the ice, as we say in Quebec. We feel that this government is trying to get out of the same old ruts, and we shall help it along, if necessary. We know that holding the balance of power is a heavy burden, but I hope that we shall be
Mortgage Tax Credit
up to it. Future single family home owners will regain confidence. One day, they will be able to own their home without having to pay the equivalent of four times the price to finance companies, as I said earlier.
As concerns senior citizens, single parent families and all tenants, we ask the minister to grant them, in the same spirit, tax credits on rental taxes, on heating, electricity and other costs, and if necessary, to help in the case of housing handed over to the former owners on the order of the previous government.
What are we doing and what have we done in the past to help tenants? Grants have been given to MURB owners.
Mr. Speaker, 1 cannot help but refer to an article published in Le Devoir of November 20, 1979, and entitled: "Opposition proposes housing assistance program." This is great reading material.
The Liberals are proposing a five point housing assistance program-
I agree with them on that.
-which would help Canadians three times more and cost twice less than the Tory mortgage interest and property tax deduction scheme. In the second reading debate of Bill C-20 Liberal housing critic Lloyd Axworthy set out the five-point Liberal program as follows:
Imagine! Five points. I am going to say a word on each of them.
A housing allowance program for older people and single parent families. With $100 million, Mr. Axworthy suggests, it would be possible to help 36 per cent of older people and half of single parent families in need;
A special assistance program for needy families to offset inreases in heating and electricity prices. That kind of program would cost $500 million to $700 million and would benefit three-fifths of Canadian families;
A temporary reduction in mortgage rates for owners who renegotiate their mortgages. The Liberals feel it would be possible to reduce mortgage rates from 14 per cent to 10 per cent with $220 million;
Fantastic!
The Liberals are also proposing an assistance program to new home owners to stimulate the residential construction industry. A reduction in current mortgage rates could be made with $150 million to $180 million-
-per year. They have millions galore!
Finally, the Liberal housing assistance program includes grants for rental housing construction in metropolitan areas where the rate of occupancy is particularly low.
Mr. Speaker, after 11 years in power, the Liberals should at least have the common sense to keep quiet. They certainly have no lessons to give to the present government which has hardly been elected and is in a nice fix trying to struggle out of the financial chasm left by the Liberals. Those defeated Liberals should at least have the common sense to remain silent.

November 26, 1979
Mortgage Tax Credit
During the last 11 years of Liberal power, Mr. Speaker, the housing bills they introduced were all designed to help their friends or big owners fill their pockets. The help given by the Liberals to small owners was only designed to guarantee interest rates for the benefit of big money lenders. Imagine that in order to help tenants-now, listen to this-the best the Liberals could find was to give them from $50 to $100 on their rents. That is what they propose now. But what did they do before, Mr. Speaker? They gave big owners from $50 or $100 per month to protect those poor tenants, Mr. Speaker. Why did they not give the $50 to $100 per month directly to the tenants to lower their rents as they recommend today? This is logical but what is illogical is what they did before. Had they lost confidence in the tenants to that extent? What did they do to help elderly people, the single parent families? Nothing at all!
They are now coming back to life. They are waking up from a long period of lethargy. Now that they are in opposition, they are the most powerful group in the country. After only six months in opposition, they can solve all the problems that they left to stagnate during 11 years of apathy. In these 11 years, the former prime minister only had time to fight against Quebec authorities to establish a federal dictatorship camouflaged under the label of renewed federalism.
The former government tried to get involved in all areas exclusively under the jurisidction of Quebec by doubling its departments and agencies in this province and by creating an urban affairs department. Finally, they got scared and abolished this department because too many people objected. The same happened for Loto Canada when they knew that Quebec and all the other provinces had their own lottery. These lotteries were going well and making money. The federal government then came onto the scene to compete against the provinces and in so doing neglected all the areas where it should have been active on a national level.
Western Canada realized to what extent it was being invaded by a strong federal power. This is why the western provinces gave a lesson to the Liberals, because they also want to keep jurisdiction over their natural resources. Let us hope that Quebec will wake up before it is too late and that the mistake made in my province on May 22, 1979, will not be repeated because Quebeckers, like Westerners, must know that owning their own economy is a guarantee of their autonomy. We therefore hope, Mr. Speaker, that this bill be referred to the committee for further study and be amended to reach the goal that we have always had and for which we have been fighting for 20 years. I can assure you that if the Progressive Conservatives do this and continue in the path that they have chosen, they will remain in power for a long time and that we shall keep the Liberals in the opposition since they seem to be doing well there.


Mr. Rene Cousineau (Gatineau):: Mr. Speaker, from the comments of the hon. member for Roberval (Mr. Gauthier), it would seem that he has forgotten the results of May 22.

The government is not Liberal but Progressive Conservative. His criticisms should therefore have been addressed to the other side of the House.
Mr. Speaker, before speaking about Bill C-20 itself, I would like to make a short retrospective-


Mr. Gauthier (Roberval):: Mr. Speaker, I rise on a point of order.
It is because I have just been told, I think, that the meaning of my remarks about last May 22 have not been quite understood. The member who has the floor just told me that they were the Progressive Conservatives. I understand but I was referring to the province of Quebec and saying that Quebeckers should refrain from doing again what they did on May 22 when they elected mostly Liberal candidates.


René Cousineau: 1 am sorry, Mr. Speaker, but even with my short experience as a member since last May 22, I know that his intervention has nothing to do with a point of order. It did not take me long to learn that. I will therefore go on with my speech, Mr. Speaker. I would like to go back a little and refer to the pre-electoral period and the campaign period. The Progressive Conservative Party had promised this mortgage and property tax deduction on taxable income to facilitate access to home ownership and especially help young couples buy a house. This was a very attractive proposal since Canadians attach a great deal of value to owning their home. The average Canadian has always dreamed of owning his home in his community.
Yet, what has been said in April 1979 about this commitment? What were the comments? It has been said that it was socially unfair because home owners would get benefits that tenants could not claim, the program would accelerate the ownership race and favour middle and upper classes rather than the underprivileged. The program would have a very different impact in some provinces and thus be unfair, inefficient and dangerous for the whole Canadian economy.
In the Financial Post of September 30, 1978, Mr. Arthur Drache said and I quote:

Clark's idea makes no sense.
He criticized the plan as being irresponsible because it encourages debt, and added that in an era where consumers are being driven to the brink by debt and carrying charges it is doubtful whether a wise government-I repeat, a wise government-would introduce a provision which would make going into debt good tax planning. Well, the wise men got together and have now spoken, and we have Bill C-20. However, let me continue with those comments of 1978. According to The Globe and Mail of September 26, this measure deliberately discriminates; it benefits those who own houses rather than those who do not, and it benefits those with high incomes far more than those with low incomes.
November 26, 1979

On October 3, 1978, in the same newspaper it was pointed out that the flaws of the plan of the Prime Minister (Mr. Clark) are so substantial that the implementation of this proposal could be quite harmful to the Canadian economy, that the ultimate consequences would be to reduce industrial and commercial development and weaken the long-run rate of growth and ultimately our standard of living.

This was in 1978, Mr. Speaker, and it was also said at the time that once this progam had been established it would become almost impossible to get rid of it, and my Liberal colleagues also emphasized this danger in the event this measure was passed. Nothwithstanding such advice and warnings, the Tories took power and according to the remarks and post mortem since last May 22, Mr. Speaker, this promise alone was responsible for the victory of the Conservative party plus the brilliant idea of moving our embassy to Jerusalem. We know what happened with the embassy issue and, this in spite of all the adverse opinions and warnings that this move would be bad for the Canadian economy.
Mr. Speaker, I join my Liberal colleagues in this debate in blaming government members for the discriminatory aspects of Bill C-20 in its present form. I join my Liberal colleagues in regretting that lack of common sense, Mr. Speaker, which completely ignores tenants and senior citizens. I also regret, Mr. Speaker, that the minister has excluded those who have no mortgage and who pay little or no tax except, of course, from the benefit of property tax deduction.
The Progressive Conservative Party, Mr. Speaker, divides Canadians into two classes, a society of tenants and a society of home owners. I said, Mr. Speaker, that tenants are excluded, they are completely ignored. However that group accounts for 37 per cent to 40 per cent of Canadian people. Even if the minister says that this deduction will encourage them to buy a house, it was demonstrated-everybody recognized it-that residential construction has decreased by almost 30 per cent this year compared to last year. The hope that this program would encourage tenants to buy a house did not materialize. I also mentioned that some Canadians have no mortgage, no debt at all; they represent 27 per cent of the population. These people will benefit only from the property tax credit. There are nine million families in Canada, Mr. Speaker; 4.1 million families live in rented facilities, 1.1 million are old age people who do not earn enough to pay any income tax, which means that 3.8 million families will be eligible for the tax credit. So this legislation is for a minority. I would like to point out that if the bill is passed in its present form, I will be happy for those who will benefit from it. However I owe it to myself to try to protect the rights of the poor in my province and in my country. I must speak up in order to have the bill amended or withdrawn.
We now have a deficit and government members frequently refer to it. It is the favourite subject of the Minister of Finance
Mortgage Tax Credit
(Mr. Crosbie) who repeats every time he has the floor that this deficit is the former government's fault; however, the Minister of Finance and his colleagues will never admit that this accumulated deficit is due to a number of social measures introduced by a Liberal government for all Canadians without distinction, without asking whether they were home owners or renters; family allowances, medicare, old age pensions, survivors' benefits, pension supplements, indexing of veterans pensions, all sorts of benefits for young and old alike, for men and women.
Since October 9, 1979, the Minister of Finance has been saying that his aim is not to increase but to decrease the deficit. But he will have to find $2.3 billion, maybe even $3 billion. Where, Mr. Speaker? There are not 25 answers, there are only two answers, two solutions: either by raising taxes or by cutting back services. Some members are saying that taxes will not increase, so that means only one thing: cutbacks in services. We have been assured that family allowances will remain in effect for 1980, but there is no guarantee as far as 1981 is concerned. Selective medical services are often talked about, we hear that medicare will no longer be universal, and that has been shown by some Conservative provincial governments. Mr. Speaker, is that how the minister will get his $2.3 or $3 billion?
Other government members are saying that there will be no cutbacks in services in the field of social security and no tax increases. But what about this increase in oil from $4 to $4.50 or even $5 a barrel and gasoline to $1.30 or even $2 a gallon in a year or two? Who will pay the increase in heating oil? Who will have to bear higher food costs? It is a fact that food will go up because of higher heating and refrigeration costs. Not only home owners but also renters and senior citizens should benefit from the tax credit.

Mr. Speaker, the minister has stated many times that he would be most receptive to suggestions, that he had no immediate solutions to our problems and that in social security the government had the obligation to utilize the products of the economy in order to protect the poor, the sick and the old. These are the words of the Minister of Finance. Is that what he is doing now? What guarantees do we have that family allowances will not be cut at one time or another? What guarantees do the Canadian people have that universal medicare will remain? Will the aged be assured that they will continue receiving month after month what is now being paid without getting a cut? Will the minister make statements guaranteeing that social programs will not be reduced in any way? The minister-and he has said this many, many times- with reluctance has brought to this House a bill so as not to be accused of not keeping the electoral promises of the Conservative party and in order to maintain a little bit of credibility with the people of Canada.

November 26, 1979
Mortgage Tax Credit

Mr. Speaker, I would also like to point that the distribution of benefits under that plan is far from being fair. Ontario with 36 per cent of population will get 44 per cent to 45 per cent of the benefits. Quebec with 27 per cent of the Canadian population will get 17 per cent to 19 per cent of the benefits. In the Atlantic area, only 26.3 per cent of owners have mortgages. It can therefore be concluded that the percentage of benefits will be still less.
Remember these words, Mr. Speaker? I think the minister does. A tax credit does more for Canadians. A tax credit provides substantial benefits. A tax credit eases the burden of purchasing and meeting the costs of the home. Is that not the main reason behind the tax credit? Is not the purchasing of a house the main reason for this program? Did the Prime Minister during the election campaign not speak frequently of encouraging Canadians to acquire a personal stake in this country, which begins with what is most basic, and that is the ownership of one's own home? The Prime Minister wanted more people to realize that dream.
Is this what happened? Did more people buy homes? No, they did not. Why is that? They did not because of the high interest rate. The high interest rate is not the subject of this bill, but the fact remains that the main objective of this tax credit is not attained because of the high interest rate. What the Conservative party had in mind was: let us help those who do not have a home. Let us help those who, without some help, will never own a home. Is this not also a motto of the Conservative party, to help those who need the most? We hope to get some answers and Bill C-20 is not the answer at this time.

Mr. Speaker, the minister said in his speech last Monday evening that the program was meant above all to lessen the burden which the purchase and the maintenance of a house represents and to promote the Canadian construction industry and that such a program would create employment for those working in the construction field and related industries.
The Minister of Public Works (Mr. Nielsen) also chipped in but not in the same way. He feels that there is nothing wrong with lessening the tax burden of almost four million Canadian taxpayers. But this is not the way the Progressive Conservative Party introduced its program.
Mr. Speaker, it is shameful to hear the responsible and even well respected minister who comes to the House and begs hon. members of the opposition not to deprive the Canadian people of their Christmas gift. He is doing some blackmail before the introduction of the budget, accusing opposition members of a filibuster. However, it is our duty to warn and inform the population. If he seriously meant what he said, Mr. Speaker, we have to conclude that the election on May 22 was not earned but bought with that unfair and discriminatory pro-

gram. Mr. Speaker, Bill C-20 would bring no gifts, as I say, because every Canadian will be paying one way or the other for the program.
In conclusion, let me summarize. This legislation is unfair because too many Canadians will get no benefits. The program falls short of its objectives of allowing home ownership and stimulating residential construction. Under current economic conditions, it will never fulfil the hopes of our colleagues opposite. If the minister does not want to withdraw it, if he has money to spare, could he not add such things as assistance to people who pay rent especially those in the lower income group-assistance to lower income owners who have already paid their mortgages and who pay little or no income tax. Could there be no tax incentive to energy conservation, a subsidy allowing home ownership? They could consider establishing other programs similar to the Registered Home Ownership Savings Plans introduced by the previous government. They could also consider offering some assistance to bridge the difference between the current astronomical interest rates of 14% per cent and a normal 10 per cent.
At home in my constituency, and especially in the city of Gatineau, the number of building permits is down 200 from last year. In terms of monetary value building permits totalled $21 million in 1978, but were down to $19 million at the end of October. This is not what we call economic stimulation at home in Gatineau.
I recognize with the Minister of Finance that although higher interest rates have had and will have an extremely unfavourable impact on Canada's economic growth, we must live with them.

Before I conclude, Mr. Speaker

I see some smiles opposite-let me repeat these words which have been said so many times: the plan to allow income tax credits for mortgage interest and municipal property taxes is a bad plan; it is regressive and discriminates against the renters, but is meant to please the bulk of the middle class. I wonder if the bulk of the middle class is pleased at this time, if the bulk of the middle class is not disappointed by the actions of this government. Let me just refer to the high interest rate, the reduction of powers of the federal government, the matter of the embassy, PetroCan, the possible policy of cutting family allowances in many cases by 1981, the silence of the Prime Minister in the referendum battle, and the absence of any guarantee of universal medicare.
If this bill goes through as it is now presented in the House, rest assured that I will not be unhappy because middle class Canadians will have obtained something from the government. Good for them, I say. But I will be very unhappy for the millions of Canadians who are set aside and forgotten, and I think this government should feel very uneasy because of this fact. Remember that the renters and the old also vote on election day.
November 26, 1979


Jean-Robert Gauthier: Mr. Speaker, unless some of the members opposite object, 1 will utilize my time convincing my constituents and all Canadians to whom I am addressing myself of the validity of some of the arguments that I will put forward, and 1 invite hon. members opposite to listen before they disagree.
Bill C-20 is the most inequitable, inefficient and expensive package of tax credits that I have ever had to discuss here or to see, and I want to make it clear in my remarks that although, as my colleague, the hon. member for Gatineau (Mr. Cousi-neau) said, it addresses certain Canadians and certain problems of ownership, it certainly does not address itself to the problem of the affordability of homes, nor does it address itself in any shape or form to helping those who today have the problem of paying for their shelter and meeting expenses which sometimes go through the roof.
I find that the arguments put forward on the other side are incredibly difficult to understand. First, we were told by the Minister of Finance (Mr. Crosbie) that if we do not pass this bill, an election will be called. I say to the minister: If you want to do that, try it. But I ask the minister in all honesty how he can expect Canadians and members of parliament to vote for a measure which proposes to expend over the next few years hundreds of millions of dollars, even billions of dollars, without at the same time accounting for it in a responsible manner. Who is paying for this? Who will give the minister that flexibility in his budget to expend this money? I find it totally unacceptable that we in this House-1 hear laughter on the other side-should be told not to worry about that because the government will see to it that the money is found to pay for this. It begs the question: where exactly will the money come from? Will it come from my left pocket to the right one because I am a home owner and have a mortgage? Will services suffer or will taxes be added in an already difficult economic situation? Will the government tax Canadians who will receive this money through the tax credit, or will the government cut services?


The Acting Speaker (Mr. McCain):: Order, please.



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mr. McCain):: It is my duty, pursuant to Standing Order 40, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Scarborough East (Mr. Gilchrist)- Small Loans Act-Amendments to protect borrowers against high interest rates; the hon. member for Winnipeg-Birds Hill (Mr. Blaikie)-Social security-Request family allowance
Cash Assurance Program
program retain principle of universality; the hon. member for Laval (Mr. Roy)-Industry-Status of Canadair after sale.
It being five o'clock, the House will now proceed to the consideration of private members' business as listed on today's order paper, namely, notices of motions, public bills.



PRIVATE MEMBERS' MOTIONS


Mr. S. J. Korchinski (Mackenzie) moved:: That, in the opinion of this House, the government should consider the advisability of implementing a cash assurance program (CAP) which would provide stability of income in the agriculture and other food industries (fish), make payouts on an individual basis, provide cash in the year of low income, replace or complement certain other programs, minimize the requirements for capital borrowing from institutions, provide equity for contributors, reinforce the family farm and minimize the exodus from the agriculture and other food industries, and avoid erratic pricing of food to the consumers.
He said: Mr. Speaker, in rising to explain the resolution, I should like first to mention that I was one of those members who was fortunate enough to sit in the House when the original grain stabilization act was presented. Over the years I have witnessed the many different approaches which have been taken to meet the requirements not only of the farm community but the primary producer as well. Primarily 1 will deal with the problem as it affects the grain producer, but for the purpose of explanation I should like to indicate that my plan envisages the incorporation or addition of other producers, such as cattlemen, horticultural and vegetable producers. I have acquired knowledge of the fishing industry in my own constituency. There are many shortcomings, and the cash requirement of that industry parallels that of the agricultural industry.
Because I have witnessed in certain years an abrupt drop in cash income, I have applied myself to the problem and have seen different programs spring up from time to time. 1 am referring to programs such as crop insurance. Also I remember the cash advance program which was initiated. At that time the argument was presented that the Wheat Board would resign, and so on and so forth. There were many arguments as to why some of these programs should not be brought forward. In 1976 we witnessed the western grain stabilization program. That is only in recent years. I felt that there were many shortfalls in the grain stabilization program. It did not necessarily meet the requirements of the producer, as I saw it at the time. Even though we have had the benefit of a few years of experience with the plan, I am convinced that we still have not met those requirements.
As most people believe, I also believe people would like some measure of security. The family wants security and employees

November 26, 1979
Cash Assurance Program
want security, so they group together under different unemployment schemes and so on. The primary producer wants to be able to tide himself over the lean years. In recent years the requirement for cash has been growing immensely. It does not make very much sense to provide the cash on one hand through programs such as farm loans, and then all of a sudden one day find that there is a shortfall or income shortage, and that producers are facing bankruptcy.
I have noticed it is the young, energetic producer who provides income stability and good economics for the country in the future. Not only does this provide a difficulty for that individual, but it creates problems for the government. It creates problems because there is no realized income. Over the years programs have been subsidized from time to time, which was a quick solution. Since we are indoctrinated with the idea that a subsidy is necessary, it is somewhat abrupt to change our thinking overnight and say that we will cut off all subsidies and move into a system which provides no subsidy at all. If that were done, an adjustment in attitude would be necessary. Since so many programs are in existence which incorporate the idea of subsidy, I would like to move away from the subsidy plan, at the same time providing a measure which incorporates a businesslike approach. This is not necessarily the only solution, but the primary producer could make a considerable amount of contribution into what could be regarded as an insurance plan.
I think the arguments in support of the program which 1 am about to explain are abundant. In order to provide an explanation as to how the plan would work, I should like to deal with the first proposal, the funding of such a scheme. Under existing proposals in western Canada such as the western grain stabilization program, the producer pays 2 per cent and the government contributes double that amount. 1 would envisage that the contribution by the producer would be increased from 2 per cent of his total sales to 3 per cent, and the government contribution in this case would be 6 per cent. All producer sales would have to be entered into a producer book, similar to the one that is in existence for grain.
Also my plan would envisage the incorporation of farm to farm sales. It would be to the benefit of the producer to indicate that he has a higher return for a given year. I say that because in a year when no payout would be necessary, his productivity and realized income would increase. I have in mind a plan which would take into account a five-year average. As anyone involved in the farming industry realizes, incomes can be quite erratic, and this is the case in the fishing industry as well. For that purpose the five-year averaging could be taken into account. In fact, for purposes of income tax that argument has been accepted already. In every year that his income increases, his five-year average is brought up; but we must remember, for example, that last year there were problems with loss of sales or inadequate sales. He can be faced with the results of poor farming practices, weather and other factors. We could have a situation where the quota in one area was 2.9 bushels and in other areas 7 bushels. The sales may be there and the price for grain may be increasing,
IMr. Korchinski.]
but because the quota in a particular area was small the farmers would not have the benefit of an increase in realized income.
As I see this plan, it would provide an incentive for farmers to attain maximum production because as production increased so would income increase. For the purposes of this plan such a farmer would then be able to draw from the plan in times of need at the higher amount.
The Canadian Cattlemen's Association presented a plan in April, 1979, but after reading it briefly I came to the conclusion that it was a plan which was based on the creation of an equity fund. They would pay into the fund in better years and draw from it in bad years. That may be a good approach, but unfortunately it does not take into consideration those producers who are in their infancy, so to speak, during the early years when their cash requirements are high and they are unable to put aside funds from which they can draw in bad years. They need all the cash available immediately.
Because of the limited time available to me I will explain my plan by using examples. My plan is based on a five-year average in relation to prime producers. I think in terms of something like a maximum of $50,000, or an average of $10,000 per year. I do not think the 80 per cent or 90 per cent idea enters into this situation any more because of the inflation factor. I think we must deal with 100 per cent of the ten-year average.
Such a producer would be able to draw up to 9 per cent; that is, his 3 per cent contribution and the 6 per cent contribution by the government, or a total of 9 per cent. The forgiveable amount in this case would be $900, and that is the only portion that 1 suggest takes any from of subsidy. In this case if a farmer had no income at all in one year and had to fall back on this plan, he would be able to obtain a loan in the amount of $9,100. The total amount of the loan would be repayable during the production year. If the loan was not paid at the end of the production year it would immediately go into default and interest would be applied at approximately the farm credit rate.
I do not envisage a plan under which the amount that could be withdrawn would always be the $900 forgiveable and $9,100 repayable. Using the same average of $10,000, if sales in a particular year amounted to $9,800, the shortfall would be $200. In that case the amount that would be forgiveable would be $200, making up the $10,000 average.
The third example I would use in relation to the five-year average of $10,000 would be a year in which there was a shortfall of $5,000. The amount of the forgiveable portion would be $900. The loan a farmer would be eligible to take out from the fund would be $4,100. That $4,100 would be repayable in the course of the year interest free, but at the end of that production year interest would be applied to the unpaid remainder. Repayment could be made as a percentage of total deliveries or 100 per cent of deliveries. If, for example, a man took in a load of cattle on which he realized $2,000, he could
November 26, 1979

apply that total amount immediately, thereby reducing the $4,100 in the example I have given.
What are some of the features of the plan that I envisage? I suggest we could eliminate the need for crop insurance because there would be an insurance factor. We could eliminate the need for cash advances, or perhaps incorporate them into the plan. The plan could be expanded to include all grains, cattle and other products, and 1 think I have mentioned fish and vegetables. It would depend on the area where the plan was put into effect.
I mentioned a five-year average of $50,000 in relation to grain, but a different amount could be applied in respect of different commodities after consultation with a particular commodity group.
Under this plan an incentive would be provided to the producer to continue maximum production, because when production increases his average would increase, and rather than a five-year average of $10,000, as in the cases I cited, the average would become $ 11,000 and so on. In this event the farmer would be eligible to draw even more from the fund in years of need. However, if a farmer sat back and depended on this scheme, his average would drop to the point where he would realize nothing from the program.
Another advantage is that each producer would know the precise amount he could draw from the plan. He would not have to wait until the following year to make the calculation, as is now the case under the stabilization program. The individual farmer would not have to depend on the entire industry having a shortfall, as is now the case in the grain industry. The individual producer would not have to receive payments in the following year, as he does now under the stabilization program; he would receive the money immediately there was a shortfall.
If in a year following a shortfall a farmer had $6 a bushel wheat, under the stabilization program the combination of the $6 wheat and a payment would put him in a higher income bracket and he would have to turn the extra back in the form of income tax. In the meantime he would have a production year in which he could not meet expenses. In fact, in the case of a young producer this would often mean bankruptcy. As I see it, this plan would cover those contingencies, contingencies which up to date have not been met.
For those'producers who make contributions over a ten-year period and do not require to draw from the plan, there should be provision to allow them to withdraw up to the amount of their contribution by way of premiums in the first year. After the plan has been in existence for ten years, each producer who has not drawn from the plan could in the 11th year withdraw the amount of his contribution in the first year. Anyone who had not drawn from the plan because he did not want to be a burden to the plan, or who was so established that he did not require the assistance, could then draw an amount equivalent to that paid normally on government bonds. If such an individual left his money in the fund he would be eligible for that kind of dividend. This would be an incentive for those who are in a position to do so to leave their money in the fund.
Cash Assurance Program
They would receive an amount equivalent to dividends payable on a bond issue, if you like, and this would help fulfil the financing of the plan.
When I first introduced my plan on January 26, 1976, I welcomed suggestions from all co-ordinates. I had hoped that not only those people involved in the industry but accountants as well would come forward and either tear my plan apart and tell me why it is not possible, or add to the plan in such a way that it would meet the requirements, particularly the primary requirement for those who in the first ten years find that their cash requirement is so great. A good example of such a situation exists today with interest rates approaching between 15 per cent and 17 per cent, and I suppose that you could find an even higher interest rate. I am sure that there are those who would pay that amount. If this plan were in existence, that young producer could use this plan without having to go hat in hand to the banks for money to tide him over.
While I have briefly outlined this plan as I see it, I hope that others will make their contribution in such a way that ideas may be added and deletions made, if necessary to the plan. But in the end I hope that the government will see fit to come forward with such a plan, because I feel it is essential for the industry as it is today.


Mr. Denis Ethier (Glengarry-Prescott-Russell):: Mr. Speaker, I welcome the opportunity to speak on this motion, and I commend the hon. member for Mackenzie (Mr. Korchinski) for introducing it. I say that with all sincerity. The motion reads:
That, in the opinion of the House, the government should consider the advisability of implementing a cash assurance program (CAP) which would provide stability of income in the agriculture and other food industries (fish), make payouts on an individual basis, provide cash in the year of low income, replace or complement certain other programs, minimize the requirements for capital borrowing from institutions, provide equity for contributors, reinforce the family farm and minimize the exodus from the agriculture and other food industries, and avoid erratic pricing of food to the consumers.
This motion is almost a complete replica of the program which the previous minister of agriculture, the hon. member for Essex-Windsor (Mr. Whelan), was in the process of implementing prior to the May 22 election. Although I strongly support in principle this motion, I wish to say that I reserve my comments as to the details of the implementation of such a program.
1 would commend the mover of this motion for two reasons. The first is that it is a very worth-while motion. It should attract the attention particularly of the hon. member's caucus and especially the Minister of Agriculture (Mr. Wise). As far as we on this side of the House are concerned, it has always been our preoccupation to ensure that our producers receive a just and fair return for the countless hours of hard work they devote to the production of the best food in the world.
I did say that I wanted to reserve my comments as to the implementation of this program. The motion mentions a cash assurance program which would provide stability of income in the agricultural industry. This could be interpreted in different

November 26, 1979
Cash Assurance Program
ways. For example, the French text refers to the "assurance of revenue". From what the hon. member has said, however, I gather that it is an insurance program.
The motion also recommends that payouts be made on an individual basis. How would they monitor the return of each individual producer in order to make these payouts on an individual basis? What mechanics would the hon. member put in place to ensure that the producers are all treated fairly, regardless of their field of production? What mechanics, for example, would be in place to ensure that the dairy producers in eastern Canada would indeed receive the same treatment as the grain producers in western Canada?
I say this because it has been rumoured that the present government would like to change the status of the Canadian Dairy Commission which, in my view, would render it almost useless. Yet it has not been rumoured that this government would reduce the powers of the Canadian Wheat Board.

Mr. Speaker, that is one of the reasons why I say I have reservations with respect to the implementation of the terms of this motion.
As I just pointed out, if this government wants to restrict the powers of the Canadian Dairy Commission, there is no talk of restricting the powers of the Canadian Wheat Board, and this, 1 think, is a double standard system of this government that must be viewed with distrust. If the hon. member has any influence in his caucus, he should make sure first that such is not the case.

Could it be that the hon. member did not or could not convince the members of his caucus nor the Minister of Agriculture of the importance of equal treatment to all producers in Canada? Or could it be that out of sheer frustration the hon. member for Mackenzie introduced this proposal by way of a private member's motion? If that is so, then that is the second reason I commend the hon. member for the presentation of this motion.
When one considers the total mess in which the Minister of Agriculture has placed the chicken producers, I can understand why the members of his own party feel frustrated today. The present Minister of Agriculture has said on numerous occasions that import quotas are too high. 1 would like to quote from a farm journal called Farm and Country:
Import quotas for both beef and chicken are too high.
The article goes on to say:
-John Wise said bluntly. He explained that trade department officials convinced him our negotiators got the best chicken import deal they could from the U.S.
If that was the best deal that we could get, Mr. Speaker, then what would happen to our chicken producers had they received a raw deal? This is not the end of the nightmare for our producers. It is not enough that our producers got what I call a raw and rotten deal, but we are informed that the two large importers of chicken in this country, after the minister
[Mr. Ethier.J
had said that chicken and beef imports were way too high, had the gall to go back to the minister and ask for additional import quotas which, by the way, were granted.


An hon. Member:: Oh, oh!


Denis Éthier: I would like to remind the hon. member that his own minister has said that import quotas are too high. They cannot be too high if there are none. The hon. member cannot have it both ways-that when facing the producers he says it is too high, and when he is somewhere else he says there are no quotas. So far the minister has not been consistent, and that is why the hon. member for Mackenzie had to introduce the matter by way of a private member's motion. I do not think he has the support of his minister on that. Supplementary import quotas of 4.5 million pounds have been issued to a Maple Lodge firm. The same firm has made application to import 5.5 million pounds of chicken in the last three weeks, after the basic quotas were imposed. If this trend is followed, it is likely the government will give them this quota. That is why we should be very careful about the implementation of the hon. member's motion.
I wonder what part the Minister of Agriculture would play in all this, or would it fall to the Minister of Industry, Trade and Commerce (Mr. de Cotret) who knows nothing about farming but who apparently will have to sell farm products? The Minister of Agriculture has already told us that he would have nothing to say in this area as it falls under the authority of the Minister of Industry, Trade and Commerce.
The hon. member has presented his motion in all sincerity, but probably out of a sense of frustration because nothing can be accomplished through the minister. I hope we will be able to get the message across to his colleagues in caucus.
This motion is a replica of what we wanted to introduce when we were the government, and that is, harmonizing of stabilization programs. Perhaps the Minister of Agriculture intends to support the motion, or could it be that he is too proud to acknowledge that his predecessor had prepared a good program on the harmonizing of stabilization programs? Would pride prevent him from following up on this program? If so, I beg him to lay his pride aside and implement the program prepared by the former minister of agriculture, the hon. member for Essex-Windsor (Mr. Whelan).
I am sure the hon. member for Mackenzie is very sincere when he presents this motion. He would seem to say that all hon. members on the government side strongly support marketing boards. If that is so, I hope the Prime Minister (Mr. Clark) and the Minister of Agriculture will say so publicly, and agree that marketing boards are here to stay or until we have a stabilized or rationalized market system in this country.
I hope they both will say that they support marketing boards.
It has been suggested that this motion should receive unanimous consent so that the subject could be studied further, and that is something I would endorse. In closing, Mr. Speaker, I want to commend the hon. member for his courage in bringing
November 26, 1979

this motion forward. Perhaps it will prod the very slow-moving Minister of Agriculture. If it achieves this, then it deserves the support of all hon. members, especially those from rural and farming communities. For this I would commend him.


Some hon. Members:: Hear, hear!


Mr. Lome Nystrom (Yorkton-Melville):: Mr. Speaker, 1 should like to say a few words on this bill as well, but I shall try to be brief.

I understand the hon. member for Bellechasse (Mr. Lambert) wants a few minutes to participate in this debate, as well as the hon. member for Medicine Hat (Mr. Hargrave). [English]
I hope we can make sure that the House has a chance to pass this resolution that is before us today. I also hope that we will see some of the principles and objectives put forward by the hon. member for Mackenzie (Mr. Korchinski) become legislation. I am not quite as optimistic as he is.
I have here a newspaper clipping from March of last year. It is a Canadian Press report dealing with the then government's proposal for a new income stabilization plan for cattle producers. It reads as follows:
Cattlemen are finding proposed changes to federal programs for stabilizing farm income 'too rich for their blood,' Progressive Conservative Bert Hargrave said Thursday.
The proposal to beef up farm incomes in times of low prices reminds the cattlemen of 1976 when they produced a record number of animals only to see low prices drop even further as 186 million pounds of imported meat flooded the country, he told the Commons agriculture committee.
As 1 said at the beginning, I should like to leave some time available so that the hon. member for Medicine Hat (Mr. Hargrave) can speak. I hope he has changed his tune and will support the intent of the resolution that is before us. Indeed, I hope the government does so as well.
The resolution covers several areas, but primarily the stabilization of farm income. I think any such plan should be based on the six principles which I will put forward.
First, payouts would be established by a cost of production figure, established once each year. It is important to have that flexibility because there are changing production costs for farmers across the country.
Second, participation should be voluntary, with federal and producer contributions.
Third, the plan should be national in scope. Various plans for different provinces could balkanize the country and make the plans less effective, as fewer farmers would be involved in each. This would make the situation worse for the producers and for the country.
Fourth, there should be limits of eligibility for each farmer. This would reduce the problem of overproduction and would encourage the maintenance of efficient family farm operations.
Cash Assurance Program
Fifth, producers would apply for assistance or registered contributions at the end of the year through an application form and proof of sale.
Sixth, stabilization plans should work closely with marketing boards and with import legislation to stabilize the entire industry. 1 do not think a farm stabilization program or an income assurance program is enough by itself.
The hon. member for Medicine Hat has done a very thorough study on beef production. I am sure he would agree that we need import legislation. We should also have marketing boards to help stabilize the production of all crops in this country. We already have national marketing boards for turkeys, eggs, broiler chickens and industrial milk, but I think we need the same kind of planning and supply management in many other areas. I should like to outline some of the reasons for this.
An article in the Ottawa Citizen of November 24 had the headline, "Starving Our Own-Loss of Prime Farm Land Hurting Canada's Food Output". This is a topic on which I have spoken many times in this House and outside. Many hon. members, particularly those from urban Canada, seem to believe that this country is the bread basket of the world and that we have an endless supply of food and an endless potential for the production for food.
The article reports that at a recent conference held in Ottawa, a number of scientists expressed concern that our country will soon not be able to feed itself unless there is a radical change in the way we produce food. I hope that the Minister of Agriculture (Mr. Wise) and the government will start the wheels turning toward a change in agricultural policy in this country.
I should like to quote a few excerpts from this article, Mr. Speaker. The first one reads as follows:
Canadians arc now dependent on foreign farmers for all foodstuff except grain, largely as a result of the mismanagement of Ontario's prime farm land, scientists attending an Ottawa conference sponsored by Agriculture Canada said Friday.
Referring to Dr. Julien Dumanski, the report quoted him as saying:
-for the first time in our history, Canada appears to be losing its (agricultural) production potential.
The actual potential to produce food now appears to be lost. It is important that the political wing of the government-the minister, the cabinet, the parliamentary secretary-and members of this House, give heed to what the public servants are saying in this country. He went on to say:
If action is not taken to preserve the quality land bases to protect the farming industry, Canada could become forever dependent on foreign foodstuffs.
We still have options which can reverse the trend, but action must be taken soon.
In 1976 alone, the combined effect of losing prime farmland and opening up marginal lands reduced the country's agricultural production potential by an equivalent of 38,000 hectares.
1 checked the figures, and 1976 is the most recent statistical year that we have. Evidence that I have seen indicates that the

November 26, 1979
Cash Assurance Program
trend has not been reversed since that time. As we know, there is not much prime agricultural land that can be developed in this country. Most of it is very marginal.
The report goes on to say that 1974 was the first time in our history that we imported more food than we sold abroad, of course excepting grain. Being a farm person yourself, Mr. Speaker, I am sure you know that crop yields in this country which had been increasing for years, indeed for generations, at an average of about 2 per cent a year, began to level off. There are many reasons for this. One reason is that good quality farmland is diminishing. Another reason is the quality of the soil. It is diminishing very rapidly in this country. I refer you to the Rennie report in Saskatchewan which talked about the decreasing quality of the soil due to erosion by wind, water, chemical fertilizer we put on the soil, improper crop use, improper crop rotation and the like.
We are producing less and less food. The quality of soil is diminishing in this country. One need only look at the province of Ontario. The Conservative government of Ontario has to be tried and found guilty for tremendous lack of foresight in planning food production. All kinds of prime farmland in the Niagara peninsula have been paved over for industrial expansion and the building of highways.
When you build a highway through prime farmland it is not only the four-lane highway but the service stations, industrialization, and housing projects that are located along that highway. There are tens of thousands of acres of farmland that are paved over that used to be prime farmland. They will never again be used for production of food for this country or other parts of the world. That is not only happening in Ontario but across the world.
I will give a statistic that is absolutely scandalous. In the province of Ontario they have lost more than one million hectares of prime agricultural land in the sixties. It has gone under pavement, concrete, subdivisions, and industrial factories in the province of Ontario. In 1976 some 3.6 per cent of the entire prime farmland of Ontario went out of production.
Despite all of this, only two provinces in Canada have tough legislation to protect and preserve farmland for the production of food. In 1975 or 1976 British Columbia passed such a piece of legislation. The province of Quebec just recently introduced legislation-

-if I remember well, during the past two or three months, to protect farm land for food production in the province of Quebec.

We should have a land use policy right across this country. I know that land use is primarily under provincial jurisdiction, but there are ways whereby the federal government could devise a cost-sharing program with the provinces. There is federal land in this country, and federal projects built on prime farmland that could be built elsewhere.
I hope the Minister of Agriculture will have a good talk with some of his officials and become concerned about land use and

food production. If not, then we as a large country with few people and immense potential will be importing food from other countries when the whole world is having a problem in food production.
I refer to a recent United Nations study by the Food and Agricultural Organization in Rome. It states that in a few years we will have an immense crisis in the world because of a shortage of food, and that this year the people of the world will consume more food then we produce. In order to do that, we will have to dip into our reserve supplies which have been set up for emergencies.
It would be scandalous and a national disgrace if a wealthy country like Canada could not feed its own people. One way of feeding our own would be to pick up some of the ideas in the resolution now before us to stabilize farm income properly. If farmers are properly paid, they will produce. We know they are very productive. However, that by itself will not be enough. We need orderly marketing.
My friend from Ontario talked about chickens being imported into this country. Prior to 1974, 99 per cent of the chickens consumed here were raised in Canada. After 1981, 6.3 per cent of our chickens will come from the United States, despite the fact that we have the potential in this country to produce all we need. That is only one example. Food scientists and experts in the Department of Agriculture could give us many more.
I make the appeal that this resolution be allowed to go through the House so that we think of the problems in the long term. I refer to food production in this country. Let us be self-sufficient. Let us be sure we have the potential in this country to help those in other lands who cannot produce enough food. A wealthy industrialized state like Canada should not be importing food from poorer countries which should be using their prime agricultural land to feed their own.
I hope members on all sides will put pressure on the government to do something about what could be a real scandal in the years ahead. It could make the energy crisis look like a Sunday school picnic by comparison. There is nothing more serious than not having enough food. To have people dying of starvation is a real disgrace when we consider our capacity, brilliance, and technology.
I apologize for taking so long, Mr. Speaker. I hope we can still hear from the two members I mentioned at the outset of my remarks.


Mr. Adrien Lambert (Bellechasse):: Mr. Speaker, I will not take more than a few minutes so that my colleague from Medicine Hat (Mr. Hargrave) will have a chance to speak and the motion will carry because it has some very important aspects. That is why I want to give my most sincere support to my colleage from Mackenzie whom I have known for many years. I have seen him, when he was on the opposition side,
November 26, 1979

courageously defend the rights of farmers. I also had the opportunity to sit with him on the agriculture committee and I admired the dedicated and competent work he did to establish a successful farming industry that could guarantee the Canadian people all the food they will need in the future. I can see the hon. member for Mackenzie (Mr. Korchinski) has not shed his convictions. Even as a government member, he now puts before us a most sensible motion, and supports it with the same arguments he used to present when he was in opposition. That is why, Mr. Speaker, when I was listening to him, I was glad to hear him express his concern about the instability of farm income. He is right that revenue is not stable. There are ups and downs.
As recently as last Friday I received the original remittance sent to a farmer in my riding. He delivered $589.85 worth of milk. He is not a big producer but he is tenacious. He is about 60 years old and he would like to stay on his farm the rest of his life and make enough money to look after his operation and his family. Instead of receiving $589.85 for his milk, he is asked to pay $700.51. What a difference it makes when one expects to be paid $589.85 but gets a bill. There was not even enough to cover the sale. So the cheque is marked "cancelled". No company, no co-operative will finance his feed purchases. It is a disastrous situation and means must absolutely be found to allow any farmer to get enough income to stay in operation.
We wonder why many farmers quit their profession, but there lies the answer. If we, members of Parliament, received at the end of the month a cheque marked "cancelled", I think there would be a great number of motions under Standing Order 43 every day to protest the fact that we are not paid. You cannot pay until you are paid.
So, Mr. Speaker, I believe it is time to come up with a real long-term policy that would enable all farm producers to do a good job. I listened closely earlier to the hon. member for Yorkton-Melville (Mr. Nystrom) who, quoting from a newspaper, expressed his great concern about the future of this country with respect to food. He is perfectly right. This is a serious matter, a matter that must be dealt with immediately, not only to preserve our farmlands but also to enable those who work them to do so in a generous way so that the people will be well fed.
Mr. Speaker, 1 would have many other reasons to add but I see time is running short, and I would not want to break my word because I have always felt that, once you give your word, you have to keep it. So, I fully support the motion of the hon. member for Mackenzie, I thank him and congratulate him on having introduced it.


Mr. Bert Hargrave (Parliamentary Secretary to Minister of Agriculture):: Mr. Speaker, first I want to thank my hon. friend from the Social Credit party for allowing me a few minutes to finish off the debate. I should like to say, as Parliamentary Secretary to the Minister of Agriculture, that I
Cash Assurance Program
will speak only briefly and in support of the very carefully worded motion put forward by the hon. member for Mackenzie (Mr. Korchinski).
The concept he proposes, or similar concepts, were proposed during the various debates on agricultural stabilization which took place in 1975 and 1976, in particular by members on the government side and proposed by them when they sat in the Thirtieth Parliament in opposition. Some of those members I recall who took part in debates similar to the one of which the hon. member for Mackenzie reminded us tonight were the hon. member for Wetaskiwin (Mr. Schellenberger), the hon. member for Swift Current-Maple Creek (Mr. Hamilton), and myself. There is some considerable similarity to various income averaging trust account proposals. One such proposal in some detail, as the hon. member for Mackenzie pointed out, has already been submitted by the Canadian Cattlemen's Association. The hon. member for Wetaskiwin had a private member's hour on this concept during the Thirtieth Parliament and I was pleased to support him at the time. Originally that concept was put forward by the government of Alberta.
I am personally aware of the years of persistent effort the hon. member for Mackenzie has spent on behalf of western agriculture, and of his special concern for northern agriculture. He has done this for many many years. He represents the whole of the northeast corner of Saskatchewan, and his dedication in these matters cannot be questioned. It has now been continuous for 21 years. I have much personal pleasure at this time in urging unanimous support for this private member's motion moved by the hon. member for Mackenzie. On behalf of the government we are prepared to accept the concept he proposes, briefly, that the government should consider the advisability of implementing a cash assurance program which would provide stability of income in agriculture and other food industries, and so on. I would therefore ask that this motion be adopted.


Some hon. Members:: Hear, hear!


[Stage Direction]
Motion agreed to.
The Acting Speaker (Mr. McCain):: Shall I call it six o'clock?


Some hon. Members:: Agreed.


The Acting Speaker (Mr. McCain):: It being six o'clock I do now leave the chair until 8 p.m.
At 5.59 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.
[Stage Direction]
November 26, 1979
Federal Business Development Bank


[Stage Direction]
The House resumed, from Wednesday, October 24, consideration of the motion of the Minister of State for Small Businesses and Industry (Mr. Huntington) that Bill C-4, to amend the Federal Business Development Bank Act, be read the second time and referred to the Standing Committee on Finance, Trade and Economic Affairs.
Hon. Ron Huntington (Minister of State for Small Businesses and Industry):: Mr. Speaker, I am very pleased that the government House leader has seen fit to bring Bill C-4 back into the House. For those hon. members who are interested in this bill, I refer them to Hansard of October 24 at page 586 where I introduced a summary of the Federal Business Development Bank, and just to get back into the mood I shall quickly run through a few highlights of that summary.
I pointed out that there were nearly 38,000 customers today with $2.1 billion outstanding, that the bank was approaching its $2.2 billion lending ceiling, and that was the reason for Bill C-4 being brought in with some priority at this time. I pointed out in those introductory remarks that we were currently lending $75 million per month on average and that the average loan was just over $50,000, representing some 1,500 Canadian businesses per month. One of the key points I was making in those remarks was that if this amendment is not passed by the end of the year, the Federal Business Development Bank will only be able to lend an amount equal to the repayment of existing loans. This would cause the bank's loan approvals to drop to about one-third of their current level, so that only 500 rather than 1,500 small and medium-size businesses would be assisted.
There were a few other comments which described the bank's growth, and I refer hon. members to Hansard at page 586 for that background on this very important government institution.
With your permission, Mr. Speaker, I will carry on with my prepared address from where I left off at page 587 of Hansard.
A sampling of urban versus rurally located businesses discloses that the focus of the bank's lending activities in the more remote areas is quite profound. In major metropolitan areas such as Toronto and Montreal the level of support provided by the Federal Business Development Bank is considerably below the national average, whereas in smaller communities as many as one-quarter to one-third of the business enterprises are clients of the bank.
The Federal Business Development Bank has succeeded in extending its services to small towns and rural and remote areas which might otherwise be deprived of investment capital. By injecting financing for start-ups and expansions and services to strengthen business management, the bank combines with private Financial institutions and other government agencies to build a business community with greater strength and
[The Acting Speaker (Mr. McCain).]
diversity all across Canada. The FBDB has thereby provided a positive federal contribution to the economies of many small areas, a contribution which is significant both in relation to private capital markets and other federal economic programs.
Hon. members should be aware that there is a changing need and role for the bank. It is entirely possible that some of its functions can be moved to chartered banks, particularly with the possibility of more competition in that field. I would therefore like to offer a few words about the bank's changing sectoral coverage and emphasis.
Up to 1961 the bank's lending activity was restricted to industrial enterprises. However, in 1961 amendments to the Industrial Development Bank Act removed all restrictions as to the type of business to which the corporation could lend. This broadening of eligible enterprises was intended to enable the bank to play an increasingly useful role in the future of assisting private enterprise to provide more employment and develop a stronger, more productive and more flexible economy.
By 1979 the bank's portfolio has evolved to a position where the manufacturing, trade and tourism sectors each receive about 25 per cent of the dollars of the new loans which the FBDB approves annually. This shifting emphasis has in no way been at the expense of manufacturing and, in fact, loans to manufacturing of some $50 million in 1970 amounted to $158 million in Fiscal 1979.
For a variety of reasons, it is not surprising that the trade and service sectors would absorb a larger share of FBDB financing. Since 1961 these sectors have accounted for almost all of the growth in employment in the Canadian economy and have consequently demanded a greater share of business financing than manufacturing. The expansion of the bank's delivery mechanism has mainly taken place in areas which do not have a strong manufacturing base and whose business enterprises are service oriented. Many of these types of businesses, because of their remote location, seasonal nature, and the character of the assets offered as security, etc., are not attractive to conventional sources of financing.
Changes in legislation and the bank's organization, combined with economic developments in recent decades, as well as the manufacturing and bricks and mortar bias of provincial agencies and institutional lenders respectively, have all contributed to the shift in the composition of FBDB's clientele.
In addition to giving equal consideration to all approaches for financing regardless of the amount, there is also implicit in the bank's role the concept of a willingness to entertain greater risks. As the bank gained experience and more conventional sources have moved into the term lending field, it was logical that the character of the FBDB's business would become more and more venturesome.
A comparison of a signiFicant sample of loans made in 1973 to those authorized in 1978 reveals the following shift in the bank's lending characteristics. In 1973, 52 per cent of loan approvals appeared to be covered dollar for dollar or better by
November 26, 1979

the value of the security pledged in support of the loan. In 1978, only 31 per cent of authorizations met this test. In addition, back in 1973, 56 per cent of the bank's borrowers did not have a proven track record, and, by 1978, the fact was that 65 per cent of the bank's borrowers did not have a proven track record.
Another survey-one which is analysing incorporated business-is under way to compare FBDB customers to all firms in the same industry. It is apparent that the greater risk-taking of the bank produces a clientele which exhibits much less profitability than the average, well established firms, which presumably satisfy their financing requirements internally or from private lenders. In most sectors, the profit margins on sales by FBDB clients are less than half the industry average.
Of course the bank must be convinced that any business proposals for which FBDB is approached for financing must have a reasonable prospect for commercial success. This is not only a requirement of the legislation, but also a moral obligation of the bank to the prospective borrower. I believe that is a very important attitude that the bank has to carry.
Dealing with losses is a matter of course for a lender. However, a loss for the majority of the bank's clients who have already invested virtually all of their savings in their business, is a major calamity. The bank, therefore, would not knowingly finance a proposal that did not have a reasonable prospect for success. This is another reason why the bank tolerates arrears and devotes extensive efforts to save businesses that encounter reversals.
Perhaps a word or two about the allegations of undue competition would be of assistance to my colleagues in the House. Upon taking office I examined this complaint with the president, and from studies given to me 1 can report that most private financial institutions are growing faster than FBDB, both in terms of lending without any government involvement and loans guaranteed under the federal Small Businesses Loans Act. FBDB provides term financing for new businesses or investment projects of existing businesses which are generally of a higher risk or a smaller size than the private lenders are prepared to accept.
Probably one of the main areas where lending is unprofitable for private financial institutions is in small size loans. These loans provide relatively little revenue compared to the administration costs, and they also carry a high risk of default arising from a failure of the small firm. If we compare FBDB with one of the private institutions which many regard as comparable because of its concentration in term loans, the differences are quite striking. For example, last year FBDB's average loan authorized was for $54,000. RoyNat's average loan was over $280,000. In addition, the industry distribution was quite different. Many bankers observe that manufacturing loans are better secured than those in the trade and service sector. RoyNat has nearly 40 per cent of its lending in manufacturing compared to 22 per cent for FBDB. RoyNat has only 15 per cent of its outstanding funds loaned to firms in wholesale and retail trade, whereas this sector receives 25 per cent of FBDB lending.
Federal Business Development Bank
From time to time there has been concern that FBDB's interest rates are overly attractive compared to private lenders. I am advised that FBDB's board of directors has always attempted to maintain the bank's rates in the mainstream of long-term interest rates, but its decision last week to increase rates significantly should allay any fears of undue competition on interest rate grounds. The bank is now charging 16 per cent on new loans up to $50,000 and at least 16.5 per cent above $50,000.
It must be borne in mind that almost all of FBDB's borrowers are also customers of chartered banks, credit unions, and other private financial institutions. FBDB's loans and equity investments provide leverage enabling the firm to get additional financing elsewhere and, particularly, in larger deals, FBDB and other lenders enter pari passu, sharing the financing requirement and the risk equally.
In some instances, FBDB receives approaches for financing packages which have been turned down by private lenders, but after FBDB's intervention and negotiation of an acceptable project plan and an offer of a loan from FBDB, the private bank may reconsider and make the loan itself. In such cases, the firm and the local economy obtain the benefit, even though these deals do not appear in FBDB's loan statistics. In other words, FBDB can act as a catalyst in getting the job done. An example of this is the Lundigram-Comstock deal.
Last year, the bank only earned $600,000 profit on $2.1 billion of outstanding paper. Its retained earnings are $46 million. The size of loans outstanding, the number of unsecured loans in the total portfolio, the extent of rural coverage and service, the venture and risk nature of loans and guarantees, the non-earning economic services delivered to the Canadian business community at large, all this has been managed by a team that has kept this Crown corporation shallowly in the black.
I proudly say to you all that this country is being well served by the president and personnel of the FBDB. In that regard, of the four major activities I would point out that three are really financed as a term lending function of the bank. The balance of their activities carries a very important social work program to the small and medium-size business enterprise sector of the country.
I urge the House to give full and prompt attention to this bill so that the vital services rendered by the bank will not have to be curtailed. I believe it is important to all of us that this bill pass through all stages well before the end of the year. The official opposition encouraged me to shorten my remarks tonight so that their speakers could get on, as they are as anxious as I am to see that this bill gets through to committee and that we not interfere with the service of this important institution to the small and medium-size enterprise sector of the country.


Some hon. Members:: Hear, hear!

November 26, 1979
Federal Business Development Bank


Mr. Arthur Phillips (Vancouver Centre):: Mr. Speaker, I should like to congratulate the hon. Minister of State for Small Businesses and Industry (Mr. Huntington) on bringing this bill back. I, too, had made representations to the government House leader asking him to bring it back because the Federal Business Development Bank is critically important to small business in this country. Unless this bill were passed, as the minister has said, it would have meant a reduction in the number of loans that the FBDB was able to give from a rate of 1,500 a month to a rate of approximately 500 a month, and great many small businesses would have suffered as a result.
These are difficult times for small businesses because of the high interest rates, high fuel prices and so on. It is no time for us to be letting down small business by failing to pass a bill such as this one. On listening to the minister's remarks this evening, I should like to congratulate him on his strong support for the Federal Business Development Bank. It has been an extremely successful institution. It has helped many thousands of small businesses. It has a very fine track record, in spite of the fact that it is not a highly profitable Crown corporation. It does not intend to be a highly profitable Crown corporation. Merely it intends to be roughly a "break even" Crown corporation performing a service for small businessmen in Canada.
There has been a very dramatic increase in some of the aspects of the Federal Business Development Bank in the last couple of years. They have a program called the "Counselling Assistance to Small Enterprise", which is commonly known as CASE. For example, the number of businesses counselled in just the last two years has risen from 1,660 in 1977 to 5,400 in
1978,	to 9,700 in the current year. That is a very dramatic growth in a very important service which helps educate small business people on how to run their businesses better. It encourages more small business people to start up in business, to expand their business, and prevents a lot of unnecessary bankruptcies due to lack of knowledge.
There has been a dramatic increase in the number of jobs provided as a result of the FBDB. They break them down into three categories: those jobs started, which in just two years have risen from 3,000 to 18,000; jobs increased, which in three years have risen from 2,500 to 14,400; and jobs maintained, which they show as rising from 690 to about 4,000. This is very commendable work by the Federal Business Development Bank. We want to see that kind of thing continued.
The great majority of small businesses in Canada are Canadian-owned. They pay taxes, they provide jobs, and they provide management know-how in future expansion. We wish to see them continue to have the services of the Federal Business Development Bank. We wish to see that done as promptly as possible.
If I may, I should like to say to the minister that in his first comments on this act, when he introduced it on October 24,
1979,	he referred to the advantage of changing the ratio, as we are doing in this bill, so as to allow more loans to be made by the Federal Business Development Bank. He said the following:

The advantage that this would have is that no additional federal budgetary expenditure for paid-in capital would be required.
He indicated that no such additional expenditure would be required and instead they could use more leverage, as it is known in the financial community. This is absolutely true and we hope that it will carry us through the balance of the fiscal year. I would urge the minister, in looking ahead, to use his influence on the Minister of Finance (Mr. Crosbie) in the coming budget to provide additional paid-in equity capital, because the future work of the Federal Business Development Bank will depend on additional budgetary outlays. To cut back on these sorts of budgetary outlays indeed would be a very false economy when we want to see the country growing, new jobs provided, and particularly to encourage small and medium-size Canadian-owned businesses.
Also in committee the minister said that he favoured continual growth in the loans of the FBDB, and we applaud that. He said that he favoured a continued growth in the CASE program, and we applaud that too. As I have said, we urge the minister to use his influence. Certainly we will back him up to the extent we can. We urge him to use his influence with the Minister of Finance in the coming budget to make sure that the Federal Business Development Bank is financed properly for both the CASE program and an adequate equity base, so that the loan program can continue as well.
These are tough times for small businesses. We want to see small business getting every break it can. One of its best friends is the Federal Business Development Bank. We urge the passage of this bill as promptly as possible and future budgetary increases for this valuable institution for small business in Canada.


James Ross Fulton: Mr. Speaker, I find it very interesting that the hon. member for Vancouver Centre (Mr. Phillips) kept his comments so brief. When I outline some of the increases in interest rates which have been effected through the Federal Business Development Bank, perhaps we might have some idea why his remarks were kept rather brief in relation to the small business community.
If we look to January 1, 1978, we find the FBDB charging roughly 9.5 per cent on loans at that time which were running around $50,000. If one calculates it out, one can see that the average per annum cost on that would be around $4,750. Under the previous administration we saw a number of rather rapid increases in the interest rate. On January 4, 1979, roughly a year later, it went up to $6,625, an increase from 9.5 per cent to 13.25 per cent. I am sure a lot of small businessmen took a look at that increase in interest costs and noted that it was a $1,875 increase in that one 12-month period.
As we know, there was a change of administration in May of this year, and by this fall-as a matter of fact today-we see that the interest rate is around 16 per cent. The costs in terms of interest rates alone on a $50,000 loan now would be about $8,000. That is an increase from January, 1978, of $4,750, to about $8,000 now. The increase from January of this year to now was roughly $1,400. That is an increase of a
November 26, 1979

considerable amount, if one looks at a small businessman and knows that that probably is not the only loan he carries.
One thing which 1 think is important in looking at a riding such as Skeena is that there were roughly 350 customers serviced by the Terrace branch of the FBDB. Their loans averaged almost exactly $50,000. Roughly $17.5 million is out at this time. If we look at the increases from January, 1978, to January, 1979, their increase in interest rates was $650,000. Their increases from January until now have been close to another $500,000, in terms of interest rates alone coming from small businesses within a large riding with a relatively small number of customers. An increase of roughly $1 million is a considerable amount to take out of a small local economy.
It is important to look at the bill itself. I notice the hon. member for Vancouver Centre has left already, but the hon. minister is still here. It increases the equity from ten times to 12 times, in terms of the aggregate liability in the first section of the act. Then I noticed the little sleeper in there, which is the authority to increase the lending factor to 15 times. Perhaps in his wind-up remarks the minister could touch on why the first section of the act only asks for it to be increased to 12 times and the little sleeper asks for it simply to come before the governor in council to be increased to 15 times, rather than coming back before the House.
One of the interesting things 1 noticed, when doing some background work before speaking tonight, was a question put to the minister as reported in last month's issue of the Financial Times. The questioner asked:
I gather that the government is considering turning the Federal Business Development Bank over to the private sector. What is your position on this?
I have run down part way in the article there, and I find the minister saying this:
If the Federal Business Development Bank was privatized it would lose some of the services it's performing to the marginal borrowing needs of the business community. If you privatized it, there would have to be a form of guarantee available to any private bottom-line operator in that area.
I am glad to note that the minister went on to say:
1 don't find a lot of complaints from the banking community on FBDB activities.
However, the questioner goes on to ask:
Why is it being considered for privatization?
The minister goes on to say:
I think everything should be considered on a sunset basis-entitled to review to find out how well that agency or that corporation is serving the objectives which caused it to be formed and put in place in the first place.
This is a question the minister will have to address himself to: exactly what is going to happen to the function of the FBDB? The same amount of capital is still in there that the government has put in, but we have seen a very dramatic request for an increase in the amount to be loaned out from ten to 12, with the possibility of it increasing to about 15.
We should look carefully at the small business community in this country. This is a vital sector of the economy. About one-third of Canadians are employed there directly, and 90 per
Federal Business Development Bank
cent of these small companies employ fewer than 200 people. The major difference between small businesses and large corporations in this country is that the small businesses, be it one or two employees, or up to 200, must respond very, very quickly to any market changes within our economy. They are extremely labour intensive, particularly as compared to large resource companies. I think there is a point to be made there when we look at the broad scale of taxation legislation, and the types of tax shelters and everything else that exist for the large resource companies which have a tendency to be much greater machinery oriented as compared to the labour intensity of the small companies.
If we look, for example, at the mining sector, which gets a 100 per cent write-off of costs, and compare that to small businesses, which run generally in the one-third taxation ratio, we see that small business does not have the same sort of opportunity to get large quantities of new machinery, even such items as a Xerox machine, in order to develop and get into the market.
If we look at bankruptcies which have taken place in the last number of years, particularly under the previous administration, we see that the greatest level of bankruptcy is among small businesses, and I suggest among the very small businesses and those that have been in operation less than six years.
Big businesses such as oil companies have been systematically eliminating small businesses. A classic example of this has been in relation to the small independent service stations and regional suppliers of energy within this country. We have seen the very large oil companies, Exxon, Imperial, Gulf, Texaco, all of them, moving very quickly to get their hands on the small gas stations.
I think we all remember not too many years ago when the gas pumps were only part of what we expected at a gas station. There was always a good mechanic on hand, and it was one of the most vigorous and competitive parts of our small business sector because there was an attempt always to have someone who was good at a number of things available on-site, as well as to pump gas. We have seen almost the complete elimination of that by the large petroleum corporations. I think that is a very sad thing, and something to which the Minister of State for Small Businesses and Industry (Mr. Huntington) has not addressed himself, to this point in this House.
The needs of small business in this country are really two. The first is money, and the second is information. As we know, and I am sure the minister knows, cash flow, particularly during the start-up period, is one of the most crucial matters from small businesses.
If we look at one of the reasons for capital intensive corporations getting the sort of tax breaks they get, we will see that the economy of this country has typically been one of advantage to them. I know speakers on that side of the House and also to my right have frequently suggested that we are hewers of wood and drawers of water. I think this is becoming even more true under the present regimes we have seen, particularly in relation to high interest rates.

November 26, 1979
Federal Business Development Bank
If we look at the FBDB in relation to the Small Businesses Loans Act, we see that it has not proven to be much more congenial to businessmen trying to start up than have been the traditional private sector lenders. I put it to the minister that the FBDB should be instructed to increase the amount it lends to small businesses and companies without the traditional forms of collateral. If the minister looks carefully at the kind of capital that is being loaned out through the FBDB to this point, and particularly in relation to the various banking institutions, he will see that the businessmen tend to use it as a lending institution of last resort. They also find it extremely difficult in terms of getting capital because of the limit of $50,000, and again the interest rate jumps another half per cent.
I trust and hope the minister in his wind-up remarks will address the Bank Act, and that he will be pushing very strongly, within either the outer or the inner cabinet, wherever he has the most voice, asking that a certain proportion of the funds under the federal Bank Act will be set aside for loans directly to small business.
Bill C-4 increases the lending authority of the Federal Business Development Bank, and is painted by the minister as being a major support for small businesses. It is the first section of any act that the minister has brought before the House, and certainly our party is supporting the increase in terms of making the capital available for small business, but I think we have to address ourselves to some of the more important questions that are facing the small business community, and certainly high interest rates are the key in that area. Let me make two points in relation to that.
First, the FBDB is only a lender of last resort and does not have that great an impact on lending to business. Second, the government's high interest policy, which is intended to restrict credit in this country, will have a much greater impact on small businesses; rather than assisting them it will have the effect of driving many of them out of business.
According to the FBDB's latest annual report for 1978-79, published in June of this year, fiscal 1979 was a good year for the bank. A total of 12,271 loans were made, providing $668 million to business. To put this in perspective, the amount of loans outstanding increased over the fiscal year by $239 million. In contrast, the Bank of Canada reports that over the same period the chartered banks increased their business loans outstanding by $5.3 billion. The FBDB makes small loans, generally under $500,000, averaging in the neighbourhood of-


The Acting Speaker (Mr. Scott, Victoria-Haliburton):: Order, please, the hon. member for Vancouver Centre (Mr. Phillips) on a point of order.


Arthur Phillips: Mr. Speaker, I understand the hon. member wished to ask me something. He indicated that I had left the room. I simply wish to say that I was answering a telephone call, but if there is some question directed to me I would be glad to answer.
[Mr. Fulton.)


James Ross Fulton: Mr. Speaker, the chartered banks increased loans under $1 million by over $2 billion, ten times the activity of the FBDB.
Three times since coming to office the Conservatives have increased interest rates. The banks' prime rate for their best customers is now at 14 per cent, with the rate for small business even higher. Only one chartered bank, the Bank of British Columbia, has a preferential small business rate half a point below the prime.
Why should there be a high interest rate policy? I suggest it is because the Bank of Canada, supported by the Minister of Finance (Mr. Crosbie), believes that excess private spending and public spending are causing inflation. In fact, as a number of economists have pointed out, it is supply problems which are causing inflation, particularly increases in the cost of food and energy. As we saw last month with the release of the September CPI figures, which recorded an increase in the inflation rate from 8.4 per cent to 9.6 per cent, it was oil, electricity, beef, dairy products, and coffee that were the main contributors to inflation.
The high interest rate policy will make it more difficult for small business to expand. For those who can afford to take out a loan, it will increase the cost of doing business. The FBDB pointed out in its annual report that many of its customers are exporters. The increased cost of producing goods for export will make our goods less competitive. The latest trade figures for August recorded a deficit of $141 million in merchandise trade, our first monthly deficit in over a year.
With high interest rates, we may see more monthly trade deficits this year. Prior to the release of the August trade figures, the Minister of Finance was predicting that our international balance of payments deficit on goods and services would total $7 billion. This is a substantial increase from last year's $4.3 billion deficit. With a continuing tight money policy, this deficit may go even higher.
The effect of high interest rates also shows up in bankruptcies. The latest Figures show a total of 1,762 bankruptcies in September, which is up 8.6 per cent from September, 1978.
In addition to its restrictive monetary policy, the government is following a restrictive fiscal policy. For example, Clark and Crosbie-


Walter David Baker: Order.


James Ross Fulton: Sorry, Mr. Speaker. The Prime Minister (Mr. Clark) and the Minister of Finance have indicated that they will not make good on their election promise of a $2 billion tax cut for Canadians. Such a move will have an adverse effect on small businesses, many of which are retailers. Statistics Canada has reported that for two years in a row, 1977 and 1978, family income in this country has fallen behind increases in inflation. Looking at statistics for this year, we see that weekly wages are continuing to decline in real terms. The effect of this erosion of income has been a decline in consumer
November 26, 1979

spending, particularly for durables such as appliances, furniture, etc. Even spending on non-durables like food is stagnating. More money is being saved, which is a prudent move for families who may be facing unemployment as a result of the government's restrictive policies.
A third policy of the federal government which will have a greater impact on small business than this increase in FBDB lending is its energy policy. It has been estimated that a $1 a barrel increase in oil prices will lead to a loss of 20,000 jobs. The Conservatives are talking of a $4 a barrel increase. Where will those 80,000 jobs be lost? While it is impossible to be precise, we can assume that energy-intensive industries will be hardest hit by the price increase. Down the line, their suppliers, including small manufacturers, will lose contracts and jobs.
The government has said that inflation is the number one problem to be overcome. Through the Bank of Canada it has said that it must increase interest rates in order to avoid the inflationary impact of a further fall in the dollar. Certainly the cost of imports increases when the dollar falls, and this causes inflation to increase. But there are other ways to combat the effects of a falling dollar than to keep raising interest rates. The government could embark on a program of import substitution. It could encourage Canadians to buy goods manufactured in this country. It could assist manufacturers, especially small businesses, struggling to compete against low cost imports. Certainly we cannot turn around Canadian buying patterns overnight, but we have to start sometime.
If the government continues its shortsighted policy of raising interest rates time and time again, we will not only lose jobs in the short run, but we will make ourselves more dependent on foreign capital to bail us out of our balance of payments difficulties. This, in turn, will tie us more closely to international interest rate trends, whether or not they are harmful to Canadian businesses. If the government wants to do something for small business in this country, it should first abandon its current interest rate policy.
I trust that the minister will turn his mind to dealing with the high interest rate problem, hopefully through the Bank Act, to encouraging his cabinet colleagues to do something in that order and, in fact, to dealing with the FBDB by other means such as, for example, in terms of collateral or in terms of dealing directly with the interest rates at their source.


Mr. Eudore Allard (Rimouski):: Mr. Speaker, I welcome this opportunity to take part in the present debate on the Federal Business Development Bank.
I am in a position to appreciate the job done by this bank since it was originally established to help small and medium-size businesses, and particularly those located in remote areas such as the one I represent, namely, the lower St. Lawrence, the Gaspe peninsula, the North Shore of the St. Lawrence and the maritimes. Many businessmen never would have prospered and developed that region were it not for the help granted by
Federal Business Development Bank
the Federal Business Development Bank. All in all the bank accomplished its task well. It is normal and logical that the provision of the act which created it be revised to allow it to continue its work and offer the same services to small business in our country.
Mr. Speaker, we support this bill because it has always been our view that the banking system should serve the people and not the other way around. The Federal Business Development Bank came into being because chartered banks refused to take their responsibilities and extend loans to small and medium-size business. Chartered banks serve big business with our money and have never been concerned with their responsibilities towards the economy in general and small business in particular. Last year, some of them increased their profits by 35 per cent over previous years.
I recall quite well having asked, a number of times, the former minister of finance in the previous government to have an inquiry made into this. The report of the bank superintendent had then been submitted to the finance minister and stated there was no abnormal situation. It certainly was not abnormal for the chartered banks which were raking in huge profits, but it was certainly totally unacceptable for those of us who have to struggle in a world that is ever more uncertain. And small enterprises are not excluded from this situation. They are the ones which are most likely to meet with difficulties in unfavourable economic circumstances since bank credit is less easily accessible to them.
That is why I welcome this new legislation which will enable the FBDB to raise the amount and the number of loans it grants to businesses. Moreover, it will probably continue to help a number of small enterprises get started and set up shop in the economic world. Our less developed regions are relying heavily on this bank for their development. As I said earlier, the chartered banks are not those which have helped us or will help us in the future.
Mr. Speaker, I dare hope that the government will persevere in its intention to present a global study which would reassess the whole financial assistance it is now offering to our small and medium-size businesses, which are the hope of our far away regions and which will make it possible for our unemployed to find a worthy and honest job. To conclude, Mr. Speaker, I should like to emphasize that if the financial requirements of the Federal Business Development Bank were to exceed the ceiling of $2.6 billion, which is the maximum the bank may lend, this bill would authorize the governor in council to allow a new increase, as follows:
On the recommendation of the Minister of Finance, the governor in council may, by order, increase the factor referred to in subsection (1) by which the aggregate of the direct and contingent liabilities of the corporation referred to in that subsection may exceed the capital of the corporation to a factor not exceeding fifteen.
Those, Mr. Speaker, were the few remarks I wanted to make concerning the Federal Business Development Bank, which

November 26, 1979
Federal Business Development Bank
makes it possible for our small businesses to develop on a level which is acceptable in our modern times.


O (2050)
Mr. Robert Gourd (Argenteuil):: Mr. Speaker, I want to join with my colleague, the hon. member from Vancouver, in congratulating the bank for the liberal philosophy it seems to be pursuing. On the other hand, I sympathize a lot with the minister who is working to improve small and medium-size businesses while his colleague, the Minister of Consumer and Corporate Affairs (Mr. Lawrence), tries to destroy certain small businesses. The bottlers are an example, Mr. Speaker. It is inconceivable that while the minister wants to develop small and medium-size businesses, the Minister of Consumer and Corporate Affairs should do everything to break up a sector of our economy which is very important and on which a great many people rely to earn a living.
Small and medium-size businesses, Mr. Speaker, benefit from the FBDB, and 1 think we should go a lot further. I think that bank should also become an instrument of regional economic expansion. Several sectors, several ridings in Canada cannot benefit from the Department of Regional Economic Expansion and must rather turn to the FBDB. It is unfortunate that the bank management should be somewhat congested and that some of our small entrepreneurs should not have the chance to avail themselves entirely of its services.
In this difficult year, Mr. Speaker, where the government has decided to raise interest rates, I think all small entrepreneurs, and certainly those in my riding, in Argenteuil, are having enormous difficulties surviving. It is very important that the minister take that into consideration and that he use his power to expand the bank's capacities to help the small entrepreneurs in Argenteuil. The small entrepreneur, Mr. Speaker, has no chance against the heavy bureaucracy and all that paperwork he must fill out to get information.
So I repeat for the information of the minister it would seem if we could bring about a stronger regionalization of the FDBD, the services the bank can make available to small entrepreneurs would be more justified. Often in Quebec we see businesses get off the ground, stay in business for a while, and then disappear. Why? In Quebec we had the recreational vehicles, like skidoos and other pleasure vehicles-we had several in the Drummondville area-and it is sad to see, Mr. Speaker, that 90 per cent of those industries have now closed their doors or have been sold to U.S. multinationals. The only one we have left which is a tribute to the country is Bombardier which also had, of course, to branch off into other fields to be able to survive.
Mr. Speaker, this was a case where ingenious people decided to create jobs and businesses and were unable to remain solvent because of a lack of capital. In my opinion, this is where the Federal Business Development Bank could play a role. It is very important for Canada to have some type of risk

capital to help the founders of industries create new businesses, especially in the secondary and tertiary sectors. We know that the primary sector has no problem in developing. Why should some group in the Federal Business Development Bank not get involved especially with industry, tourist services and hotel services, of course?
I am convinced that if the bank took this type of action, we could create many jobs in this difficult period brought about by our friends opposite. With interest rates at the present level, I believe it is important for the minister to think seriously about instructing the bank to open up its purse and provide a greater chance for small Quebec entrepreneurs, especially those in my constituency of Argenteuil who, as you know, Mr. Speaker, have great difficulty in creating job opportunities.
Unemployment has reached 33 per cent in certain areas of my constituency. The few cents that the Minister of Labour (Mr. Alexander) was good enough to grant us through the Canada Works program will not be enough to help a constituency with so much unemployment, but if we could have an even more liberal policy through the Federal Business Development Bank, as I said earlier, we could really create permanent jobs.
This is why I urge the minister to consider these sectors. Since the constituency of Argenteuil is not an area designated by the Department of Regional Economic Expansion, we must find another formula to help small and medium-size businesses of the area.
I have already spoken about a new system, perhaps for Mirabel, and about tax-free zones. Mr. Speaker, I am convinced that this would be in the same context. If a tax-free zone were created around Mirabel, and through the policies of the Federal Business Development Bank, I am convinced that we would launch new businesses and at the same time create jobs.
In concluding I would say that I agree with the amendments to this legislation. I wanted to stress those points and I hope the minister has taken notice of the few suggestions I have made, particularly on the problem of bottlers in Canada. They are all small or medium-size businesses that his colleague, the Minister of Consumer and Corporate Affairs appears bent on destroying, which would hurt consumers who would have to pay higher prices for those products. It seems to be the policy of our Tory friends to do such things.
I do sympathize with the minister because I know his duty is not easy, but I am convinced that with his good will he will find ways to help small and medium-size businesses and to enable the Federal Business Development Bank to play a greater role in that field about which we are so much concerned.


Mr. Pierre Deniger (Laprairie):: Mr. Speaker, my remarks will be short, first because I support Bill C-4 before us tonight, second because I lost my voice at the Olympic Stadium during
November 26, 1979

the fourth quarter yesterday afternoon while cheering up my poor Alouettes who did not quite make it.
Mr. Speaker, before I agreed to run as a Liberal candidate, I was secretary of the Federal Business Development Bank so, as I was listening to the minister praising the bank and particularly its staff, I felt it necessary to support it completely. At the outset it was of course the Industrial Development Bank under the umbrella of the Bank of Canada and it was only five years ago or so that it became the FBDB, a separate legal entity, and it appointed then as its president an excellent administrator, Mr. Richard Murray. During his two and a half years at the bank, during that difficult transition period, Mr. Murray was able to make it into a first-class financial institution. And after that difficult transition period he was succeeded by another excellent administrator, a former civil servant in Ottawa whom I had met in the Department of Transport, Mr. Guy Lavigueur. And hon. members will certainly recognize unanimously that Mr. Guy Lavigueur is one of the best administrators of our Crown corporations in Canada.
I must admit, Mr. Speaker, that I am pleased to say tonight that the too short period I spent with the Federal Business Development Bank was one of the best times in my life. My only regret is that I did not stay longer because today it is difficult to be a businessman, live with current interest rates and meet one's monthly payments.
The minister said in the House last Friday that in spite of the high interest rates, the bank never received so many loan requests from Canadian businessmen. Mr. Speaker, what the minister said is true because in my riding, as the former secretary of the bank, the people called me regularly to ask for my advice. To conclude, I wish to give some friendly advice to the minister. He said last Friday in the House as reported on page 1639 of Hansard:
-there is an increase in categories 3 and 4-
I would like to tell him in a friendly way that when I was working in the bank, there were also great difficulties experienced with those kinds of loans and that we must be more patient today, because times are hard. I have seen cases where loans in category 3, which are dangerous for a bank or a financial institution, were fully reimbursed and where enough trust was given to those people to grant them new loans.
In conclusion, Mr. Speaker, I would also like to mention a specific loan made by the bank, perhaps one of the historic loans where the bank intervened in the case of an almost defunct company in Peterborough, Pioneer Chain Saws, one of the main employers in the area which had closed down. The bank invested in that company and granted a loan and since then it has reopened. The company has expanded and the bank even sold its shares and made huge profits. I think that it was beneficial to all Canadians.
Federal Business Development Bank


Mr. Simon de Jong (Regina East):: Mr. Speaker, my intervention in this debate will be very brief. The measure before us is a small step in the right direction. However, as with the mortgage tax credit scheme, it does not compensate for the large difficulties faced by small business people.
I come from an immigrant family. For a number of years my parents operated a small business. I was involved in small business as well. While it is very gratifying to be a small businessman, there are major problems a small businessman faces, especially in the economic milieu. We exist in an economic system with great fluctuations of booms and busts. Every time there is a boom it is like the mushroom season. Many small businesses crop up. People invest their life savings in a small enterprise. Then by forces totally beyond their control, the season is over, and thousands of these small businesses are wiped out. Everything the family worked for and invested in is wiped off the map. No wonder we have one of the highest business failures in this country. I understand it is roughly 8 per cent.
Having a viable sector of the economy controlled and operated by small business people is essential to the well-being of this country. It is able to supply services that larger businesses and government operations often are not able to supply. It has a flexibility and a sensitivity to the needs of the particular community and neighbourhood.
In order to make a viable small business environment we, as a country, first have to stabilize our economy. We need economic planning. There must be economic certainty so that when an individual invests in a small business venture, often his life savings, he can be guaranteed that the need for that service will be there ten, 20 years down the road.
What we now see is the opposite. Large chains and multinational corporations which can withstand losses come into a community and wipe out the small entrepreneur. That has been done in many areas; food, housing construction, and retail outlets. Those are but examples. There used to be many small businesses in Regina. A number of these have disappeared over the years.


An hon. Member:: What about service stations?


Simon Leendert de Jong: My colleague mentions service stations. They have changed drastically in the last decade. Many neighbourhood grocery stores have been wiped out. We used to have different contractors building homes. Many of these have become sub-contractors, if they were lucky. Most homes are now built by large development corporations.
There may be some argument in terms of scale and efficiency, but that is a very small and narrow argument. When you take the larger perspective of the community good and social good, very often the larger corporations and chains contribute very little to the local community. They use the local community as a way of sucking out money and resources, and very often put very little back.

November 26, 1979
Federal Business Development Bank
I suggest also that in the dealings the federal government has with small entrepreneurs, the bureaucracy and the complexity of the many forms the entrepreneurs have to fill out, are obvious stumbling blocks. The Income Tax Act requires a lawyer to take advantage of all the loopholes and all the corners in that particular act, and only large corporations with corporate lawyers are able to take advantage fully of the act. Most small business people are not able to take advantage of all the sections of that act. Even with the bank itself, the application forms and the requirements are often so cumbersome that it is very hard to get loans through in a fast, efficient, and easy manner.
In addition, I urge another step that the federal government could take in encouraging small business people, and that is that the Department of Supply and Services accept as a policy that it will buy its needed goods and services from small operators, small business people and people from local communities, rather than taking a very narrow point of view in terms of what is economic. I suggest that, when the government defines what is economic, it use a larger measuring stick and determine what is economic and good for the community as a whole. I think if the government, in view of the amount of buying the government does, would use that economic power it has to help small business operators in this country, it would do much to strengthen that sector of the economy.
Contrary to what members of the two old-line parties repeatedly say, members of the New Democratic Party are not opposed to the small businessman. In fact in many ways we are indeed the champions of the small businessman. We realize that when working people have decent wages, it is the small business people who benefit. We realize that when farmers have a decent return on their investment and their labour, it is the small business people who benefit. We realize that when income falls back and does not keep up with the cost of living, it is the small business people who get mowed down first. In order to have a strong economy we need a strong small business sector. We need decent incomes, decent wages, and a decent return to farmers.


An hon. Member:: We will never get it with a high interest rate.


Simon Leendert de Jong: Of course, as my hon. colleague has mentioned, all these things are not possible with a program of high interest rates.


An hon. Member:: Just spend more.


Simon Leendert de Jong: An hon. member suggests we should spend more. Of course it is spending which allows the small business person in this economy to keep going. If we are to follow the advice of the hon. member opposite, it will be the small business people who will go down because they cannot afford to borrow the money to keep themselves afloat until the next boom in our industrial period. The system of booms and busts is the basic enemy of small business people because they do not have the power and the ability to see themselves through the

bust period into the next boom period. Ultimately it is economic planning and controlling economic forces which will benefit small business people and give them the stability they need to thrive and grow in our economy.


Mr. Gordon Taylor (Bow River):: Mr. Speaker, I want to say a word or two in connection with small business, mostly because throughout my constituency as I knock on doors and visit, people are very concerned about a number of things regarding small business.
This government is creating a climate in which people will be happy to invest their money. One of the things during the last few years was that it became very, very difficult for anyone to invest money in Canada, to the extent that many people decided to invest their money in other countries. We have become so bound up with regulations, red tape, and environmental concerns that many times small businesses get so frustrated that they just simply give up. I think one of the things we are going to have to do, if we are going to get small business to the point where it can do the job it can do in this country, is to cut some of the red tape and unshackle free enterprise so that it can have a chance to work.
I have known people who have submitted plans to planning boards for subdivisions two, three, and four times. They simply get them sent back without even any suggestion as to what is wrong with them. People become fed up when it takes two years to get a plan approved. That is too much red tape and too much regulation.
People do require money. I was very happy the other day to hear that the Alberta Opportunity Company is stabilizing its interest rate at 12 per cent and that, in smaller centres, they will go even below that. In larger cities they may go slightly above that, but that gives the businessman some stabilization factors. He knows that he is not suddenly going to be hounded by an increase because the rate in the country increases, and then finds that instead of the rate that he signed for he is going to have to pay two, three, four or five cents more on the dollar, which is enough to ruin many businesses.
I think we should endeavour to encourage our banks to stabilize bank rates and not put in contracts which, if the rate increases, then they will change the contracts. This is ruining some businesses in this country today. One motel operator told me that if there is one more increase in interest, he is ruined. He just cannot stand it.


An hon. Member:: Tell that to your finance minister.


Gordon Edward Taylor: It is due to the fact that he took his loan out at a rate of 11 per cent, and then it goes up and up every time there is an increase in the country. This is not fair to the person who takes out a loan, and I just question this banking practice.
Another thing which irritates me and many, many other people is that the International Development Bank or other banking institutions provide money only on a first refusal basis. I realize that we do not want to put commercial banks out of business, but when we do it on a first refusal basis, it
November 26, 1979

leads to all types of conniving. Banks themselves write notes of refusal simply to help the entrepreneur get a loan. But when a person makes an application and if a bank says, "Yes, we will give you the money", at some exorbitant interest rate such as 15 per cent or 18 per cent and refuses to write a first refusal, then of course the man is left in a terrible position because he does not have the refusal and therefore government banks will not even consider his application. I think there has to be something done so that if we are going to insist on a first refusal, that first refusal has to be based on a reasonable rate of interest or, if we refuse to give a refusal but say, "We will lend the money at an exorbitant rate of interest", a rate that a business could never repay, then it should be considered a first refusal.
One of the other things mentioned by an hon. member a moment or so ago is the paper work which people object to greatly, but one of the major items which has discouraged initiative in this country has been the capital gains tax. This was brought in by the former administration, and it is killing initiative throughout this country.


An hon. Member:: What are you doing about it?


Gordon Edward Taylor: When people pay their income tax on what they earn year after year, and when they finally get to the place where they want to sell their businesses, the government should not be taking another bite out of it so they do not have enough left to live on during their retirement the way they had planned.
I met a man on a street of one of the towns in my riding. He pointed to the store that he owned where he employed seven people, and he told me he also owned the lot next to that store. He said, "If there were no capital gains tax, I would expand my business and hire another five or six people. The opportunity is here and I would like to do it, but I will not build up a tremendous estate for the government to chop up when 1 want to sell the business. If they take away the capital gains tax, I will work 18 hours a day to build up an estate for my children and my children's children, but I am not prepared to do it for any government." This tax has killed initiative in this country, the initiative in all businesses, including farming. It is hurting this country and keeping investment down.
I do not know how many other hundreds of people are not expanding because they have arrived at the stage where they do not want to expand. They can sell the business but they are afraid of the big chunk, of the lump, that will be taken out in the capital gains tax, and that they will not have enough on which to live. So the capital gains tax is an excellent means of killing initiative among our entrepreneurs, farmers, and other businessmen.


Mr. Deputy Speaker:: Order, please. I have to inform the House that if the minister speaks at this time, he will be closing the debate.
Federal Business Development Bank


Arthur Ronald Huntington: Thank you, Mr. Speaker, and I thank hon. members for many of their comments tonight. My life has been an energetic one, full of hard work. I have come through the depression and I know the value of a job. I have never wanted to be without one, and I have tried to pass that desire on to my progeny. So I become very troubled when I hear people with the apperance and bearing of the hon. member for Regina East (Mr. de Jong) who lash out at large corporations and say that these large chains suck the life-blood out of communities. He startles me with that kind of lack of understanding of the present age, of the present society, with his lack of understanding of the very components of a free enterprise society.
I should like to point out to the hon. member that the large chains in this country and many of the largest businesses, from the biggest steel companies to the large grocery chain stores, provide the most opportunities and create the base for small and medium-size enterprises. It is these large corporations that create the most jobs, and it is their efficiency in the distribution and movement of goods to consumers that creates opportunities. Business after business has started, has innovated, and has supplied the exciting, vibrant type of marketplace. To say that these large organizations suck out the life-blood of communities is a statement that I never thought I would hear in this chamber.


An hon. Member:: Where have you been all this time?


Arthur Ronald Huntington: I should like to pay tribute to the hon. member for Laprairie (Mr. Deniger) who spoke earlier, who had a career in the Federal Business Development Bank, and who knows full well the qualities, the leadership, and the management skills that the incumbent president brought to that organization, the president who has built the FBDB up to be a frontier of service for the entrepreneur who is starting out, or for the one who has started out and has a cash flow need or a working capital need which is beyond the normal restrictions of chartered banks.
We have also heard tonight from a few members who want the bank to loosen up its pocket book and to let money out without proper analysis and examination. I do not agree with such a stance because the bank, particularly since it is a Crown corporation, has a responsibility to the borrower. It spends a great deal of its resources in its CASE organization, where they have retired businessmen who act as counsellors at a very low fee and who use their experience to give assistance, aid, and advice to allow an enterprise to have an opportunity to survive. A banker who lends money carelessly to a borrower is not doing that borrower a service, because there is tragedy in borrowing money and not sustaining sufficient cash flow to pay it back. That is something that no person wants to carry the rest of his life, because it takes energy out of the individual and sets him aside for almost a decade while he is recovering. I do not think a good banker wants to see that happen.
Staying power seems to be the greatest need in the Canadian business community today. What do we mean by staying power? It does not mean spending wildly, nor does it mean
1718

November 26, 1979
Federal Business Development Bank
borrowing recklessly. It means managing and conserving a cash flow resource. It means saving. It does not mean buying a big car or spending needlessly. It means protecting the working capital, it means putting some strength aside in the bank for unforeseen events, because the world of business is a very exciting world for those who have the right mentality and the courage to stay in that world. You are dealing with all of the disciplines. You are dealing with computers, engineers, accountants, and lawyers. You have all these disciplines serving the person who has developed the skill or the staying power in the business community.
1 myself come from the small business community, and I have built four or five businesses. But those businesses have survived alongside very large businesses. I learned many years ago that if I was going to survive, I would not try to do business with the giants but rather would try to match my own size and my own abilities. However, it is the large chains and department stores that offer opportunities of doing things better. What I would like to say to hon. members here tonight, particularly to those who sit with the hon. member for Regina East, is that there are tremendous opportunities in finding something that is sloppy or soft out there in our community. Any time you find something that is not being done effectively or where there is some room for productivity, hard work, a good mind, the ability to work, some dollars and the courage to borrow properly, there is an opportunity there. Let me tell you that to have created one of those opportunities, to have given it staying power, to have created jobs, is a pretty comfortable thing to carry forward through life, and I commend it to anybody with the strength to do it.
There is another aspect to the job in which I find myself, having come from that small business sector and having had a great and exciting life in it. When the former leader of the opposition in the last parliament appointed a small business critic, I wondered what it was all about. I was told that that is politics and, being a businessman, I am not credited with having too much political savvy. However, since I have been in this job I have wanted to point out how good the small business community was.
Under the previous government, the small business secretariat consisted of a team of six persons with a staff of eight, who played an advocacy role within the government and dealt with different departments of government on behalf of the small business community. They had a definition of the small business: in the manufacturing sector, 100 employees or less, and in the service sector, 50 employees or less. Then I had to scratch my head and say, "Well, here we have a department which is playing an advocacy role, and we have the Federal Business Development Bank playing a front line role in a very high calibre way, providing much social purpose to its thrust and the part it plays in the business community". But we started to find a very interesting picture in the small and medium enterprise sector in Canada.

We looked down at the United States with its small business act. They built a massive bureaucracy to feed the small business world. They have a full-time committee, the Congress, the Senate, a big bureaucracy, and definitions for small business in each of 52 sectors. They have put in regulation and legislation on top of legislation. There are probably more people working in the bureaucracy than in the small business community, for all I know. I did not want to go that route. I have rationalized the route that perhaps we should be looking at here.
I looked at a survey done by the small business secretariat on the tax returns of 1976. This was all done in a very confidential manner, but the figures which came out of it were not part of the added paper burden in another Statistics Canada study. The figures in 1976 showed that there were 1,075,000 businesses in Canada. Of those businesses, 325,000 were incorporated. That leaves unincorporated some 750,000 businesses, 429,000 of which were involved in the selfemployed professional salesmen, farmer, and fishermen categories.
It is interesting that 99 per cent of the total number of businesses in Canada had annual sales of less than $2 million. The total sales for all of those businesses in 1976 were $392.2 billion. The incorporated businesses did some $347.6 billion of that, leaving $44.6 billion for the unincorporated businesses. Those figures in themselves show some of the power which is in that community.
Another interesting statistic which came out of this study was that in 1976 total employment by business in Canada was 6.6 million people. Businesses which had sales of less than $2 million per year employed 2.5 million people. If one added the finance sector into that figure, with $2 million and less in sales a year, there were 2.8 million people employed, or 42 per cent of all business employment was in the small business category doing $2 million or less in sales per year. If one moves up into the medium sector category of $20 million or less in sales, there were 4.1 million people employed in that sector, or 66 per cent of the total employment in Canada. That shows why in Canada, France, Germany, and the United States so much emphasis is put on the small and medium sector by governments.
Over a year ago the President of France announced a whole policy for the small business sector in France. I think that is some of the awareness I would like to create as I come out of the early gestation period of this ministry in which I find myself. We should know that 25 per cent of the total sales from businesses in Canada originate with businesses doing less than $2 million a year in Canada, and that 52 per cent of the total sales done in Canada originate in the medium and small sector doing less than $20 million in sales a year.
Another interesting figure is that the business contribution to the gross national product in Canada is 42 per cent, and 30 per cent of the business contribution to the gross national product originates from firms doing less than $2 million in annual sales a year. Also 55 per cent of the business gross
November 26, 1979

national product originates from firms doing less than $20 million in annual sales a year. I am very pleased tonight to have a few minutes of the time of the House to put this perspective on the record and in place for members, to illustrate the growing importance which this part of Canadian life has, this part of life which any industrial nation has.
We have heard quite a few comments tonight about high interest rates. Nobody, believe me, nobody likes high interest rates. 1 lived through a monetary crisis back in 1956 and very nearly lost a business. There was another crisis which I and others survived in 1972, but some fell. At that time they restricted the ratio of lendings to deposits. In other words, they retrenched or restricted the supply of money. They did not increase the cost of money. They just dried up and tightened up the supply. 1 have asked bankers, "Why did you not go that route again?" The gentleman who is the president of the Federal Business Development Bank explained in some detail the problem of going that retrenchment route.
One thing we must do today is create good jobs and provide good work. When one restricts the supply of money to businesses which have a legitimate expansion going in the marketplace, one restricts the creation of legitimate work and growth. The bankers told me that that is what they did not want to repeat, and that is why they tried another route.
It does not matter what we do or what we put in place in the way of law, minds will find little angles in the wording to find a way around it. In this particular case the monetary community down in Washington, rather than restrict supply and dampen down legitimate growth in the global and domestic marketplace, decided to increase the cost of money. When they increased the cost of money, they started to put pressure on all the loose leverage, loose fringe borrowing and stock market activities going on which created and added to inflation. When they increased the cost of money, all of that had to fall out and start to wring out.
I said to an executive vice-president of a bank whom I met at a reception here in town about one or two weeks ago, "Did you really have to increase the cost of money the way you did? How serious is the drain of dollars out of the country?" He said, "Ron, if we did not match the short-term interest rates, we have in short-term deposits maturing in our bank alone today $340 million". That is one day, one bank. If that money cannot be held at home, what is the other alternative? One can retrench supply and dampen down everything, all the good creation in legitimate business.
The other alternative to high interest rates is to keep interest rates down and watch the dollar fall. We found out that we could sell more goods in the global marketplace by allowing our dollar to slip from $1.03 to 95 cents and all the way down to 85 cents. We saw hundreds of millions of dollars, even billions, being poured out into reserves to stabilize it at that place. Then those manufacturers and resource companies which could sell in the marketplace all of a sudden came up to capacity and started delivering their goods out to the world.
Federal Business Development Bank They tell me now that there is no more manufacturing capacity which can take advantage of a dollar lower in value than 85 cents, and therein lies the dilemma in which we find ourselves.
The president of the Federal Business Development Bank reports to me at least once a week. He is a most attentive person and wants his minister to be as informed as he can be on a subject as complicated as this. He and I have talked this over, rationalized it, and have asked: Can I increase the rate of the bank? As I have said several times in the House, loans of $50,000 are at 16 per cent and loans over $50,000 are at 16.5 per cent. The small business person is getting a break from the bank.
We have a bill here tonight, C-4, whereby we are widening from one to ten the ratio of lending to one to 12, the difference the bank has to go to the marketplace for, and in going from one to ten to one to 15 before we get the new act through we are increasing the cost of money to that bank, this Crown corporation, by three tenths of one per cent on what we are doing tonight.
If we change the agency status and do a few other things to the bank, each one of those moves will increase the burden of cost on that bank. At the moment the bank's cost of service is 4.25 per cent over the cost of money. I just cannot agree or go along with the hon. member for Argenteuil (Mr. Gourd) when he suggests that we loosen up, give cheaper rates and everything else. That bank is on a teeter-totter performing tremendous social services.
We have talked about category three and four loans. Those are loans that get into trouble and you need a postponement, interest has to be postponed, principal has to be postponed, or both, and then you have to put them to rest. As the hon. member for Laprairie suggests, give them a little patience, a little staying power, and sometimes you will get winners from that little group and they will go on, having learned their lesson.


An hon. Member:: Do you think you will make it until ten
o'clock.


Arthur Ronald Huntington: 1 am going to do my best. Applaud me if I do.


Some hon. Members:: Hear, hear!


Arthur Ronald Huntington: 1 am just trying to keep it interesting for you. 1 want to return to the hon. member for Regina East who was lashing and thrashing out against the large corporations and chains. I forgot about him over there for a minute or two. As I have walked through life I have seen a lot of altruism in people in the business world. They work hard. Sure, they sharp pencil and they must have some self-interest or they cannot survive. There are great sectors of our community that attack the old self-interest motive. Believe me, the self-interest motive builds things, creates things, and does create jobs.
As I have gone down through the years, coming upon one Red Cross drive after another, one big community effort after another, and as I have watched the Kiwanis Club and the

November 26, 1979
Federal Business Development Bank
Rotary Club making their efforts, and have come across campaigns for the crippled children's hospitals, I have wondered where all that effort has come from. Who supports all that effort? I have seen presidents of the large chains and corporations give half a year just to the chairing of one of these altruistic activities in the community. I really do get disturbed when that part of altruism, and that part of being part of the community are not given true justice or respect just because an individual comes out of the business community. Not all people can stand the rugged nature of the small and medium-size enterprise sector. Some would rather be working for the government or for large corporations because it is more exciting and more stable. As 1 said in Quebec City at a seminar the Federal Business Development Bank had on down there-


An hon. Member:: MacMillan Bloedel has had four presidents during the last half dozen years.


Arthur Ronald Huntington: What does that have to do with it? Look at all the jobs that MacMillan Bloedel provides. Look at all the pension schemes, the machinery, the development, the infrastructure, and look at the new pulp mill that is going up at Powell River; look at all of this growth and I will tell you something. The small and medium-size enterprise sector cannot provide the benefit package that large corporations can provide. There is a great mix out there. I guess one of the challenges 1 have is to get that small and medium-size enterprise sector of this country up to a standard of health whereby their benefit package can match that of government employees or that of the employees of MacMillan Bloedel. 1 have watched MacMillan Bloedel and other large corporations put on funding drives that made possible Simon Fraser University. Can you imagine that?


Some hon. Members:: Hear, hear!


Arthur Ronald Huntington: Can you imagine that hotbed of socialism out there on the west coast up on that beautiful mountain which was made possible by the executives of large corporations in western Canada? It was very tolerant about what happened to it, and it is a very pleasant surprise to see Simon Fraser University maturing at long last. My God, what a youth it has had; what a binge! My good friend behind me says it has had a change of management and there has been a big improvement.


Stanley Howard Knowles: Thirteen minutes to go.


Arthur Ronald Huntington: Stanley, I wish I had your staying power. While I am gathering my thoughts for the next 13 minutes, I would just like to say this. We have some great challenges ahead of us in this country. This free enterprise system can survive. A consciousness has to exist in the business community. I think I have seen in the last decade a great awareness on the part of people in that community for what we now call good corporate citizenship.
Since I have been in office for the past six months I have seen presidents of large corporations come in and very careful-

ly explain how their procurement policies and everything else assist the small and medium-size enterprise sector. We have come a long way down the road toward stabilizing a lot of the injustices and irrational decisions which have been hard on people. We are not going to get rid of it all.
Let me say this, sir. In the small business community there are behavioral problems. This is also the community that fights hard, is used to competition, and is used to eating a lot of beans. I do not know of too many people in that sector who can survive and get staying power unless they are very careful with their savings. They cannot spend all they make.
There are some major questions today that will have to be addressed. The questions which face us in respect of the economy in the 1980s include the following: will Canada be able to maintain the productivity level and the productivity growth necessary to maintain competitiveness with other countries? That is an essential thing, and it is one of the great challenges we are facing over in the Department of Industry, Trade and Commerce today.
We have in place protective mechanisms that are protecting industries which cannot compete globally. I think those industries have an obligation behind that curtain to bring themselves up to the optimum level of productivity. We need the difference in that resource in other areas whereby we can lift emerging industries up to global competing standards, and today this is a big challenge.
Another question is: will the development of entrepreneurship in the country be strengthened? That is one of the challenges which the provinces face today, and which I face in my ministry of small business. That commodity was once grown in abundance in the farming communities of Canada where people learned the value of adding to things, the value of trading something, and the value of needing a better way of doing something. Much of the innovation in our country came from these farm blacksmith shops, but as the population moved out of the farming communities into the urban centres, that natural crop of entrepreneurial ability was just not plentiful enough.
So today one of the challenges we have are the small business seminars. We find the Federal Business Development Bank needing CASE, this council advisory service that is so important in the community today. We find colleges now talking about entrepreneurial schools. All of this is part of urban life and constitutes an effort to replace that natural product which used to come from our farms.
Another question is: how can we maintain a balance of social programs so that we will help individual Canadians in need, while at the same time maintaining a strong work ethic and an incentive to work? I see that as I raise this subject my colleague, the hon. member for Hamilton West (Mr. Alexander), rises to leave.


Mr. Alexander:: I am just changing chairs, sir.
November 26, 1979


Arthur Ronald Huntington: Well I am glad to see you resting again. Here is what has happened as we try to provide for all. This country has gone through two decades of wealth distribution and it has now come to the point where we find that we are not creating enough wealth to sustain the programs which we put in place. We were told years ago that a demand economy would be inflationary. The friend of the hon. Leader of the Opposition (Mr. Trudeau) warned us that the continuation of the demand economy would be inflationary. And what are we facing today? Public enemy No. 1 is inflation. If we continue with a demand type of economy, we will not address the problems of inflation, and that is one of the reasons why we have needed high interest rates today, rather than a retrenchment of supply of credit.
If we discipline ourselves, have some staying power, and eat beans for probably six months, we will find these interest rates coming down.


William James Kempling: Beans?


Arthur Ronald Huntington: Sure, I am an optimist.
Another question is: how shall we keep the cost of social programs in government in total from becoming such a large burden to business in general and small business in particular? I have been addressing this question. The cost of government is just too great for business. It is a case of wealth creation will support wealth distribution, but I remind hon. members that today we are borrowing $1 billion a month to pay the bills. That is not wealth creation, that is just sucking the strength out of the nation. That is the challenge which this government must face, and that is the challenge with which it was left. The answers to this problem are not easy, and high interest rates is a tough answer for us to take right now.
Another question is: will we be able to produce settlements in the collective bargaining process which will avoid our country pricing itself out of international markets? I think that each segment of our community should address itself to this problem. We do need leadership in this area. There is no way that we can protect or sustain jobs if there is featherbedding underneath. If those jobs are working at a productivity level which allows us to generate wealth and take a truthful place in the domestic and global marketplace, then we can afford the programs which we have in place. If we fail to address some of those questions which I have put on the record tonight, we will miss the hour of challenge.


William James Kempling: That's enough time.


Arthur Ronald Huntington: Can I go now? I move, Mr. Speaker, that Bil C-4 be given second reading.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the Standing Committee on Finance, Trade and Economic Affairs.
Stanley Howard Knowles: Ten o'clock.


Mr. Deputy Speaker:: Is it agreed that we call it ten o'clock?


Some hon. Members:: Agreed.
Adjournment Debate



PROCEEDINGS ON ADJOURNMENT MOTION

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

Mr. Gordon Gilchrist (Scarborough East):: Mr. Speaker, this has been a fascinating evening for me, to sit and listen to philosophical arguments both pro and con respecting the business community. The Minister of State for Small Businesses and Industry (Mr. Huntington) has expounded on what I believe to be the basic truth known to every homemaker in Canada, that if you do not have enough money when you go into the supermarket, you do not come out with enough groceries.
I have listened attentively and watched the expressions on the faces of hon. members on the other side, whom, I guess, we could call the disciples of the magic poke, who feel you can put your hand in that magic poke and dispense cash right, left, and centre, and that some time in the middle of the night the magic tooth fairy will come along and replace it. I have never understood that philosophy.
I think that the minister is to be congratulated for a clear dissertation on how the economy works and how the nation's affairs turn. I hope that the minister is successful not only with this piece of legislation but with any legislation which will help overcome the staggering deficit that we have inherited, and get us back on the true trail of free enterprise.
It is on this subject that I wish to speak tonight. Another influence on the small business community is the Small Loans Act. The Small Loans Act is a responsibility which is shared by the Minister of Consumer and Corporate Affairs (Mr. Lawrence) and the Minister of Finance (Mr. Crosbie). Since mandated to do so, the Department of Consumer and Corporate Affairs has undertaken a policy review of all such legislation coming under federal jurisdiction. This, of course, includes the Small Loans Act, which has come under close scrutiny.
In the course of review, representations have been received from industry urging quick action by the government to alleviate the impossible conditions which the lending company and customer members alike must endure. In fact, 1 am not sure that endure is the correct word. In many cases it should more properly be described as, "cease to function due to the number of loans being turned down because of high cost and lack of funds".
We recognize that the Small Loans Act was not designed to help the business side of the equation directly but, rather, to help the borrower. However, considering that co-operative credit unions and caisses populaires are usually member owned and operated, if they cannot operate profitably or effectively because of the restrictions of the act, they not only suffer

November 26, 1979
Adjournment Debate
themselves but also cause their clients distress and financial loss, while not providing the public with the protection and service intended in the act. This may be a decidedly convoluted argument, Mr. Speaker, but is clear and factual, nevertheless.
The overriding feature of the Small Loans Act is the graduated limit it imposes on loans of value less than $1,500. The upper limit for such loans is about 15 per cent interest, on a graduated scale. The purpose of such a ceiling was to protect small borrowers, high risk borrowers in many cases, from higher interest rates than could be enjoyed by more regular borrowers. The act was brought in at a time when the chartered banks, for reasons of prestige or security, did not encourage or accept consumer loans of this type, and at a time when other available sources of funds were not as plentiful and as reputable as many institutions which make up the small loans industry today.
The chartered banks are exempt from the provisions of the act. Other lenders, however, such as trust companies, finance companies and, of course, the co-operative credit unions and caisses populaires, must operate under the restriction and handicap to which the chartered banks are not exposed. As a result, there is a great lessening of competition in the small loans market, and a substantial falling off in the number of loans sought and issued.
High interest rates have made it unprofitable for small loans companies to serve the small loan borrower, as the interest ceilings make it impossible for the lenders to recover the costs of lending transactions and bad debts which attend these kinds of high risk loans. Thus, while the companies are suffering, so too are the borrowers. Their request for small loans under $1,500 are being refused because there just are no sub 15 per cent funds available. The result in many cases, especially where loans of $1,200 or $1,300 are desired, is that borrowers are forced to borrow more than $1,500-more than they need or want, thus incurring an increased debt burden and still having to pay the higher than 15 per cent interest rate, the very thing from which the act was supposed to protect them.
If, on the other hand, the borrower decides to go to another lending institution, he must still pay the higher interest rates to such institutions which are not restricted by the act. An even more sinister scenario is where the borrower, being unable to qualify for a loan from institutions which do not cater to higher risk requests, is forced to resort to a loan shark, with all the ugly consequences that conjures up.
You can see, Mr. Speaker, that this is a "no win" situation. When well-intentioned government restriction interferes with the free market forces, everybody suffers. In this case, the company cannot lend, the consumer cannot borrow, the money is not cheaply available, the job does not get done, the bill cannot be paid, the recreation room is not built, the plumbing is not fixed, the economy is not stimulated, and the whole high cost recession cycle is boosted a little further on its way.
For all these reasons, the Small Loans Act is a classic example of government regulation which has outlived its use-

fulness and now harms the very element of society it was designed to protect. Any other benefits incorporated in the Small Loans Act, such as the right of the borrower to prepay loans before maturity, without penalty, or to provide an instrument for the prosecuting and penalizing of loan sharks, could and should be incorporated in the Bank Act and/or Criminal Code.
The urgency occasioned by the imported high interest rate problem of recent weeks has imposed an impossible burden on the member owned co-operatives, small loan companies, and caisses populaires. Speedy repeal of the Small Loans Act would provide the vitally needed relief which, I am certain, would be wished by ail members of this House for the benefit of the small loan borrower.


Mr. Ron Ritchie (Parliamentary Secretary to Minister of Finance):: Mr. Speaker, I am delighted to be able to bring some assurance to the hon. member which I hope he will find encouraging.
As the Minister of Finance (Mr. Crosbie) indicated in this chamber on November 14, he is well aware that the Small Loans Act is in need of revision and, in particular, that the interest rate ceilings in the act are inappropriate under today's conditions. The Minister of Consumer and Corporate Affairs (Mr. Lawrence), whose department has in recent years been charged with the responsibility for generating policy relating to consumer credit generally, is also aware of the problem. He shares the view that this is definitely an area that requires early action. Officials of his department and of the Department of Insurance, which has continued to carry out the day to day administration of the act under the direction of the Minister of Finance pending clarification of the status of the act as an element of consumer credit protection, have been actively discussing possible changes.
Legislative proposals relating to the matter will be brought forward as soon as reasonably possible. It may be determined that the act no longer serves a useful purpose in today's environment. As a minimum, it can be expected that the interest rate ceilings will be revised and that the position under the act of financial institutions such as credit unions and caisses populaires will be dealt with. There is good reason to believe that it was never intended that such financial institutions should be subject to all of the provisions of the act. When the act was last revised in 1956, credit unions and caisses populaires were not nearly as large as they are now. Moreover, until quite recently, they were limited by provincial law to a maximum interest rate of 1 per cent per month. Thus, at the last revision the act was designed primarily to deal with the activities of those financial intermediaries that were then active in the field.
A somewhat anomalous situation, as just described by the hon. member, has arisen as a result of the general upturn in interest rates in recent years, since money lenders such as credit unions and caisses populaires must now obtain licensed status under the act if they wish to charge rates greater than 1
November 26, 1979

per cent per month. The licensing of thousands of such lenders and inspection of their affairs present an enormous administrative workload for the Department of Insurance. Nevertheless, licensing is available and the department is prepared to use its best efforts in processing any such requests as quickly as possible. This would provide interim relief for such institutions pending adoption of the legislative proposals to which I have alluded.


SOCIAL SECURITY-REQUEST FAMILY ALLOWANCE PROGRAM RETAIN PRINCIPLE OF UNIVERSALITY
Mr. Bill Blaikie (Winnipeg-Birds Hill):: Mr. Speaker, following up on my question of November 5 concerning the government's intentions with regard to the universality of the family allowance program, I would like at this point to give several reasons why we believe it is so important to maintain universality, and then invite the parliamentary secretary's response to my arguments.
Universal programs such as those we now have in education, pensions, health care, and family support, that is, family allowances, are not just techniques for distributing benefits to individuals in our society. They are a statement about what kind of society we are. Universality states that, as a society, we put a high priority on some benefits such as education, health, support for our elders and family life, and that we are prepared to support these things out of the general wealth of the community because it is as important to the so-called poor that the so-called rich have their health, for example, as it is to the so-called rich that the so-called poor are looked after. This is a view which reinforces our view of Canadian society as a community and not just a collection of wealthy and needy individuals.
People should receive benefits simply because they are people, and because we belong to each other. Universal programs as such are not to be seen as welfare programs or as ways of redistributing wealth per se. This is why the government's apparent intention to de-universalize the family allowance program, or to do away with it altogether in order to make for more effective income redistribution, is such a serious, practical and conceptual error.
It is a dangerous conceptual error because it sets up all universal programs for the same criticism, although from another angle in other cases. For instance, in the case of universal education programs, these could be criticized for redistributing wealth upwards, as it is the children of the affluent who use the education system more than others. However, we still say that education should be universally available.
The fact that the gap between rich and poor has become even wider rather than narrower cannot be blamed on universal programs but, rather, on the fact that we still have not seen a fair tax system come into being in this country.
Adjournment Debate
Third, the government's apparent intention is a dangerous practical error, as in practice there would be very little likelihood that those who would supposedly benefit from these changes would see any net improvements in their general welfare. The open agenda of this government is to save money. Therefore, money received through increased child tax credits, for instance, is likely to be lost or reduced through eliminated family allowances or through some other re-shuffling of the same money. Money may simply be redistributed, for instance, from women to men, as many women depend on the family allowance program for their sole source of income.
There are those, I realize, who are hard-pressed to criticize the government's apparent move toward selectivity in social programs, as the argument about targeting money more effectively to those who need it most appeals to our charitable instincts, but this assumes that funds available for social programs have reached their limit and that the status quo is it. We in the New Democratic Party do not accept this argument.
It is the counsel of despair, and we advise the minister to count upon the good will, the generosity, and the sense of the common good which Canadians have in abundance, and seek ways of closing the gap between the rich and the poor, which actually increase government revenue in this vital area of programming, and not just play around with the limits of the budget given him by his colleagues at the Treasury Board. I challenge him-in this case the parliamentary secretary on his behalf-to commit the department to this end and to guarantee, should the government go ahead with this bad mistake, that at the very least all money saved on the one hand will be put back into social programs on the other, whatever they may be, and I do not mean expensive campaign promises.


Mr. Stan Schellenberger (Parliamentary Secretary to Minister of National Health and Welfare):: Mr. Speaker, the hon. member for Winnipeg-Birds Hill (Mr. Blaikie) has obviously researched his argument very well, and he puts forward a very interesting argument.
Hon. members from both opposition parties are often pressing the minister for a response that the minister does not really want to give at this time, because he has said a number of times that the government is interested in considering potential improvements to the child benefit system, and in that regard we are looking at all the elements: family allowance payments, the child tax credit, and income tax exemptions under the income tax system. If a decision that we want to bring legislation forward to the House is reached, then we will let the House know immediately upon that decision.
I can advise the House that the family allowance and child tax credit programs will continue in 1980 on the same basis they have been applied in 1979, and that the amounts of the benefits will be duly escalated in accordance with increases in the cost of living.
As for the longer term, the minister has already told the House that he is giving serious consideration to improving the child benefit system. Whether or not we conclude that we

November 26, 1979
Adjournment Debate
should move further along the lines agreed to in Parliament last year and give more emphasis to this approach, remains to be seen.
I would like to emphasize, however, that the minister does not regard himself as an instrument of restraint in this matter. His motivation is to ensure that we have the best possible system of social policies in effect in this country, and by "the best possible system" he means a system which makes available as much help as we can afford to those people who really need it.
As was indicated in the House the other day, the government is particularly concerned about the needs of older Canadians, single pensioners below the poverty line, most of whom are women-as the hon. member for Winnipeg North Centre (Mr. Knowles) often points out-mother-led families, the disabled, and the handicapped.
Having said that, it would be irresponsible of me or of any other member, for that matter, to suggest that we can simply ignore the difficult financial situation in which the Government of Canada currently finds itself. In such a situation it is obvious that to the extent that we can make our programs more efficient in meeting real need we must have more financial flexibility in seeking other policy improvements to meet needs which are not adequately taken care of in the country at this present time.


INDUSTRY-STATUS OF CANADAIR AFTER SALE
Mr. Marcel Roy (Laval):: Mr. Speaker, ever since the government announced before the opening of the new Parliament its intention to privatize a number of Crown corporations, I have tried to find out what will be the privatization process for these Crown corporations so that hon. members may be advised of the reasons behind and the benefits of such a process. On October 11, I moved a motion under Standing Order 43 on the future of Canadair and asked whether the new government meant to ensure that the objectives set out by the former government concerning Canadair, namely, Canadian control, technological development and job creation are maintained, and that such transaction, if it is deemed necessary, serve the interests of the present shareholders, who are the Canadian taxpayers.
On October 15, I continued this line of questioning, because Canadians are worried about the pace at which the government wants to privatize the Crown corporations, and the employees are anxious about the future status of their industry. On October 15, I asked the right hon. Prime Minister (Mr. Clark) whether, during the negotiations for the transfer of Canadair, the eventual purchaser would guarantee that the funds for research, design, development and planning would be maintained and not transferred outside Quebec in the case of Canadair. And on October 16 when I asked a question during the adjournment debate-I have no intention of going back

over this except to state that I was asking the government once more why, on the occasion of the possible sale, they would not consider establishing an avionics corporation, a joint government-industry owned corporation merging de Havilland in Toronto, now in the red, and Canadair in Montreal. Why not merge both corporations into a mixed avionics company to develop that industry in Canada?
I pursued the matter further on November 12, and I am here tonight once more to question the Minister of State for Small Businesses and Industry (Mr. Huntington), who deserves commendation for the splendid way he concluded the debate on second reading of the legislation now before the committee. I also thank him for being here tonight to comment on the concern and anxiety of Canadians in general and employees of Canadair in particular. I ask the minister whether, when that corporation is sold-because the right hon. Prime Minister suggested to me this was to the benefit of Canadians-whether a Canadian corporation will be deemed to be a corporation under the Income Tax Act, or whether it will be deemed to be a corporation made up of groups of Canadian residents or entities residing in Canada? Certainly there should be a difference between a Canadian corporation established under the Income Tax Act and a Canadian corporation made up of residents, partnerships or entities living or established in Canada.
I believe it is essential to know the intentions of the government. If it is considering selling to Canadian residents or entities, I would ask the government to take into account the fact that Canadair employees will be interested in purchasing shares in the company. I believe that this would contribute to develop pride in Canadian ownership. The Challenger has had fantastic results throughout the world. The directors and employees of Canadair are proud of this, and I believe, Mr. Speaker, that if this option is given to the Canadair employees, the same principle could apply to de Havilland. 1 believe that the employees of this company could become shareholders if a share savings plan can be created. Such plans already exist. During the budget speech in Quebec, a suggestion was made to this effect. In my opinion, such an initiative by the Canadian government on behalf of the employees of this company would continue to promote pride in Canadian ownership.
Mr. Speaker, I do not intend to speak much longer as 1 have already spoken on this subject several times. However, the Canadian people are anxious to know the intentions of the Canadian government.
When I asked this question of the minister on November 12, he said that cabinet was considering privatizing Canadair. There is therefore still a chance that this company will not be handed over to the private sector. The government may have reviewed its decision and decided to leave it as it is. I believe that this is another matter that should be cleared up.
November 26, 1979


Arthur Ronald Huntington: Mr. Speaker, may I first congratulate the hon. member for Laval (Mr. Roy) for one of the finest adjournment debate questions which I have heard. I accept his complete sincerity, and I thank him for the constructive nature of his remarks on this privatization issue concerning Canadair and de Havilland.
First may I point out that these corporations originally got into trouble under foreign ownership, which is one of the serious issues we have in Canada today. They were taken over by the Canadian government with the full intent of lifting them up to an operating status, once again giving them the infusion of capital and risk money for research, development, and innovation which was needed to stabilize them as an industry. It was even the former government's original intent that, once in a healthy condition, they should be returned to the private sector and to Canadian ownership.
I cannot always speak for the President of the Treasury Board (Mr. Stevens). I admire greatly much of the work he is doing. I should like to refer to a few quotes which I think answer in part some of the questions asked by the hon. member tonight. 1 am sure in the three minutes which I have that I cannot answer all of them, but I could do it privately. The President of the Treasury Board said:
It is not intended that control of any company be sold to foreign interests and no sale will be finalized until and unless we are satisfied that the findings of certain studies now under way are compatible with such sales.
There is no intent to jeopardize the health or the ongoing nature of those corporations.
I am not at liberty to announce a potential Canadian buyer with widely held shares in Canada, but such is in the offing. If that falls into place, I believe it will be a rather exciting and substantial move which even the hon. member for Laval will applaud.
Before my three minutes are up, I should like to compliment the hon. member on the suggestion that the employees of those corporations be allowed to buy shares as Canadian citizens,
Adjournment Debate
particularly as workers. 1 personally believe that each Canadian worker is entitled to something in addition to his take home pay package and benefits. There is a certain excitement in owning that to which he goes daily or at night with his lunch bucket, does his work, and returns home. If he can give the industry that little bit extra which can be given only through ownership or feeling a part of it, there is great wealth to be had there which dollars cannot buy.
The corporation had a debt to equity ratio of about 3.5 to one. In its present state it will not be the easiest thing in the world to privatize. However, the proper package and balance, the proper management and as suggested by the hon. member, the involvement of employees in its ownership, could make those two corporations grow from the plateau upon which they have been put.
The privatization process in the Treasury Board is a very careful one. There is a task force. Its study will be finished in February, 1980. The Comptroller General is involved, and a special appointee is in charge of the privatization sector. Any assets which is viable and can be sold to reduce the debt of the country, that is the nature of the process. The process also gives us an opportunity to review agencies and Crown corporations that are in place and say, "This one is not ready; this one is ready and there is a market for its product."
I can assure you that de Havilland and Canadair, if and when returned, will be returned in good, solid shape. In the meantime, the programs in place that are allowing them to function as viable and growing entities are not being interfered with. Let me just point out that Mr. Stevens also pointed out that the corporations involved would be treated as fully ongoing concerns in the interim period in terms of the provision of assistance through government support programs.
I know how anxious the employees are, and I know what uncertainty does to people. If they will just calm down, this could be a very solid situation for them.


Mr. Deputy Speaker:: The motion to adjourn the House is now deemed to have been adopted. Accordingly this House stands adjourned until tomorrow afternoon at two o'clock.
Motion agreed to and the House adjourned at 10.26 p.m.

Tuesday, November 27, 1979