1979-10-31

ROUTINE PROCEEDINGS


Hon. Herb Gray (Windsor West):: Mr. Speaker, I rise under the provisions of Standing Order 43. in view of yesterday's admission by the Minister of Finance (Mr. Crosbie) to the House of Commons finance committee that his government's policy of raising interest rates almost in lock-step with United States rates will have depressive effects on the Canadian economy, in view of the fact that this interest rate policy will impose additional costs on Canadian taxpayers, for example because of the higher Canada Savings Bond rates which will have to be paid, and the necessity for substantially greater unemployment insurance and welfare payments, and in view of the Conservative government's promise to bring more openness to the budget-making process, and in particular to make financial forecasts and estimates available to the public, I move, seconded by the hon. member for Notre-Dame-de-Grace (Mr. Allmand):
That this House order the Minister of Finance to issue a directive to the governor of the Bank of Canada to provide to the House the results, in detail, of the Bank of Canada's analysis of the effects of the increases in interest rates since May 22, 1979, on jobs, economic growth, housing and food costs and the number of consumer and small business bankruptcies over the coming year.


Mr. Speaker:: The presentation of such a motion for discussion at this time can be done only with unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


FREEDOM OF INFORMATION
Hon.   J.-J. Blais@Nipissing: Mr. Speaker, pursuant to Standing Order 43, I seek the unanimous consent of the House to move a motion on a matter of urgent and pressing necessity.
In view of the fact that the President of the Privy Council stated recently that Canadians would be unable to avail themselves of the provisions of the Freedom of Information Act for at least six months, which means one year; that the House has reacted positively to this bill; and taking into account the fact that these provisions are merely making compulsory what can already be made on a voluntary basis, I move, seconded by the hon. member for Kenora-Rainy River (Mr. Reid):
That the House urge the Government of Canada to direct all federal civil servants to comply with the principles of the bill and, to facilitate their task, to issue forthwith guidelines and an index system.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


CANADIAN BROADCASTING CORPORATION
Mr. Edward Broadbent (Oshawa):: Mr. Speaker, I have a motion that is appropriate to this particular date. I would like to move a motion, under the provisions of Standing Order 43, concerning an important matter of irresponsible journalism. Therefore, I move, seconded by the hon. member for Mission-Port Moody (Mr. Rose):
That, while noting that today is Halloween, this House condemns CBC radio for the frivolous Halloween hoax it indulged in when it reported this morning that the Leader of the Opposition actually wants to defeat the government at this time.


Some hon. Members:: Hear, hear!

October 31, 1979
5.0.	43


EXTERNAL AFFAIRS
[Stage Direction]
5.0.	43
Mr. Irenee Pelletier (Sherbrooke):: Mr. Speaker, under the provisions of Standing Order 43, I request the unanimous consent of the House to move a motion relating to a matter of urgent and pressing necessity.
In view of the fact that many organizations in Manitoba have already stated their opposition to the Garrison project, and that a great many citizens have already voiced their disagreement to the government of that province as well as to the federal government, in view of the fact that the International Joint Commission which is made up of representatives of the Canadian and American governments has indicated very clearly to the American government the concern of Manitobans about this project going any further, and in view of the fact that the most impartial studies have clearly demonstrated that carrying on this project would have a disastrous impact on the economy and especially on the ecology of southern Manitoba, I move, seconded by the hon. member for Winnipeg-Fort Garry (Mr. Axworthy):
That among the priority items which will be discussed with President Carter next week the Prime Minister include the serious economic and ecologic problem faced by Manitoba residents because of the Garrison project.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


NORTHERN AFFAIRS
Mr. Rod Murphy (Churchill):: Mr. Speaker, I rise, under the provisions of Standing Order 43, on a matter of urgent and pressing necessity.
In view of the fact that the Committee for Original People's Entitlement agreement should have been signed today, in view of the fact that the Treasury Board has obviously reneged on providing the financial compensation which is due under this agreement, and in view of the fact that the native people in the western Arctic are entitled to the financial compensation due under this agreement, as well as to surface and subsurface rights on the land they have lived on for generations, I would
[Mr. Broadbent.J
move, seconded by the hon. member for Oshawa (Mr. Broadbent):
That this House condemn the action of the Conservative government in reneging on the COPE agreement.


Mr. Speaker:: Is there unanimous consent to the introduction of such a motion?


Some hon. Members:: Agreed.


Some hon. Members:: No.


OFFICIAL LANGUAGES
Hon. Warren Allmand (Notre-Dame-de-Grace):: Mr. Speaker, I rise, under the provisions of Standing Order 43, to ask leave to move a motion on a matter of urgent and pressing necessity.
in light of the answer given on October 29 by the Secretary of State to the hon. member for Ottawa-Vanier (Mr. Gauthier) that the government would not require an accountability clause in its new federal-provincial agreements with respect to the use of federal funds for second language and minority language education, 1 would move:
That this House require the Secretary of State to delay the implementation of the new federal-provincial agreements on minority and second language education until there has been a complete examination of the manner in which former agreements were carried out and how the money was spent.


Mr. Gauthier (Ottawa-Vanier):: I second that motion.


Mr. Speaker:: Introduction of such a motion would require unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


FINANCE
Mr. Peter Stollery (Spadina):: Mr. Speaker, I rise, under the terms of Standing Order 43, on a matter of urgent necessity.
In view of the fact that the present administration stands for open and consultative government, and in view of complaints of unfair government competition, I move, seconded by the hon. member for Labelle (Mr. Dupras):
That the Minister of Finance meet with the president of the Canadian loan shark association.
October 31, 1979


CANADIAN BROADCASTING CORPORATION
Mr. Jim Fleming (York West):: Mr. Speaker, I rise, under the terms of Standing Order 43, on a matter of urgent and pressing necessity.
In the light of a news report on CBC national news last evening that the Secretary of State for External Afairs (Miss MacDonald) had suggested the disastrous foreign policy to move the Canadian embassy from Tel Aviv to Jerusalem might have done some good by giving Canada "such a high profile abroad", I ask leave to move, seconded by the hon. member for Windsor-Walkerville (Mr. MacGuigan):
That this House urge the Secretary of State for External Affairs to inform the House as soon as possible whether or not the next move to further enhance Canada's profile internationally will be to sell the profitable parts of Petro-Canada to Libya.


Some hon. Members:: Oh, oh!


THE ENVIRONMENT
Mr. Andy Hogan (Cape Breton-East Richmond):: Mr. Speaker, I have a motion, under Standing Order 43, on a matter of urgent and pressing necessity.
Since the owners of the Kurdistan, a British tanker which spilled 7,000 tons of its oil cargo into the Cabot Strait of Nova Scotia, are placing a bill of $7 million against the federal government, and since Nova Scotia has been the victim of both the Arrow and the Kurdistan oil spills, I would move, seconded by the hon. member for Sault Ste. Marie (Mr. Symes):
That the departments of transport and environment tighten up sharply on the administration of the regulations and the adherence of oil tankers to them, in view of the nearness of winter.


Mr. Speaker:: Introduction of such a motion for debate at this time can be done only with unanimous consent. Is there unanimous consent?


Some hon. Members:: Agreed.


An hon. Member:: No.
Oral Questions



ORAL QUESTION PERIOD


Right Hon. P. E. Trudeau (Leader of the Opposition):: Mr. Speaker-


An hon. Member:: Hold that tiger.


Pierre Elliott Trudeau: -I have a question for the Prime Minister, but first I wish to express my agreement with him when I saw him and a member of his party smell-smile-


Some hon. Members:: Oh, oh!


Pierre Elliott Trudeau: Mr. Speaker, 1 withdraw that allegation. But they did smile at the motion under Standing Order 43 of the Leader of the New Democratic Party, because it certainly is much easier for him to describe as a hoax something which otherwise would force him to take the responsibility of siding with the official opposition.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: My question to the Prime Minister has to do with the increasing concern and disarray which has been spreading across the country since Premier Lougheed's statement about the unilateral setting of oil prices. I only have to refer to Premier Buchanan of Nova Scotia who described it as absolutely disastrous, and the finance minister of Manitoba who expressed total disagreement.
Yesterday the Prime Minister told us that he had not time to read Premier Lougheed's speech. Now that he presumably has, could he assure us-an assurance he was not quite able to give us yesterday-that the policy of his government would not permit the unilateral setting of prices of petroleum products across Canada by one province?


Right Hon. Joe Clark (Prime Minister):: Mr. Speaker, we have not yet received, and I gather there was not in fact, a text of that speech. We are still trying to get-


Mr. Chretien:: Slow communications.


Charles Joseph Clark: -a copy of the transcript.


Joseph Jacques Jean Chrétien: It was on the air.


Charles Joseph Clark: My understanding is that the full speech indicated general agreement with the rate of progress which has been made in moving the country toward some agreement on an energy package. I certainly believe that we are moving toward some agreement on an energy package, so I think it is not likely that the country will have to face the prospect of an attempt by the government of Alberta or any other province to set energy prices unilaterally.


Mr. Nystrom:: Answer the question.
798

October 31, 1979
Oral Questions


Pierre Elliott Trudeau: Mr. Speaker, the Prime Minister keeps living in the hope that there is no real threat. 1 believe he was doing that when he withdrew the referendum bill which would have permitted us to answer Premier Levesque's threat.
Now the Prime Minister tells us that there is no threat from Alberta. I am asking him what his policy is. He did indicate that he would not contemplate using declaratory power or emergency power. 1 just remind him that one of his predecessors in office, Mr. Diefenbaker, used declaratory power for as simple a matter as the NCC.
The question of the energy policy of the government in the coming winter is a matter of national urgency and importance. Can the Prime Minister tell us that as against the Alberta unilateral policy of setting prices his government will, if necessary, use the tools at its disposal to prevent a unilateral setting of prices by Alberta?


Some hon. Members:: Hear, hear!


Charles Joseph Clark: Mr. Speaker, the Leader of the Opposition continues to deal in hypothetical questions-


Some hon. Members:: Oh, oh!


Charles Joseph Clark: -but I will answer his hypothesis. Naturally, if the need exists, the Government of Canada will protect the national interest; but I can express to the Leader of the Opposition and to the country my confidence that it is going to be possible to get agreement on an energy package without the Government of Canada having to use extraordinary, unilateral powers.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: Mr. Speaker, first the Prime Minister told us he had not seen Premier Lougheed's speech two days ago, nor a transcript of it. Now he describes the Alberta policy as hypothetical. It is not hypothetical; it is a statement the Prime Minister can verify.
However, more importantly, is it not the Prime Minister who is dealing in hypothetical situations? Can he not accept the fact that there is an agreement now with the government of Alberta? It was negotiated by our government when it was in office. It will last until July 1 next. Why is this government reopening the whole pricing policy? Why is it not telling the Canadian people that they can have a winter of energy peace, that the government will take a few weeks or months to get its act together, and this confrontation is absolutely unnecessary since there is an agreement in place for a $1 increase on January 1. Why does the Prime Minister not say that that is the agreement which will stay at least until July I ?


Some hon. Members:: Hear, hear!


Charles Joseph Clark: Mr. Speaker, there is no confrontation-


Some hon. Members:: Oh, oh!


Charles Joseph Clark: There is some shouting from the other side of the House from people who are perhaps having difficulty getting through to their leader in the normal way and are now shouting at him.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: It is probably the case that the former prime minister would have used a news report from Vancouver as an excuse for having the federal government invoke unilateral power arbitrarily. This government will not do that, because we believe we can achieve agreement by agreement among the provinces, and we expect to be able to make progress on that very shortly.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: The former prime minister asks why we do not delay this decision. One of the differences between this government and the government he headed is that this government does not delay tough decisions.


Some hon. Members:: Hear, hear!


An hon. Member:: Yes, such as decisions about moving the embassy to Jerusalem.


USE OF WORD &quot;CONFRONTATION&quot; IN SPEECH OF PREMIER OF ALBERTA
Hon. Allan J. MacEachen (Cape Breton Highlands-Canso):: Mr. Speaker, the Prime Minister says there is no confrontation. I would refer him to the words of the Premier of Alberta, who said recently to 900 Progressive Conservatives, referring to this problem, "you and I are in confrontation." So there is a confrontation, if the Prime Minister does not realize this.
In view of the words of the Premier of Alberta, talking about confrontation, in view of the evident dissatisfaction expressed by the Premier of Ontario, in view of the disastrous scenario painted by the Premier of Nova Scotia-all adding up to a chaotic, embittered, confused situation in federal-provincial relations-I should like to ask the Prime Minister whether this situation was carefully stage-managed by the government in order to implement the pledge made in the Speech from the Throne that "my ministers are making every effort to change the climate of federal-provincial relations".


Charles Joseph Clark: Mr. Speaker, the reason it is necessary for this government to continue to make progress before a change in the climate of federal-provincial relations is that, as the question just asked indicates, the former government took every occasion they could to engender confrontation in this country.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: 
Some hon. Members:: Hear, hear!


Allan Joseph MacEachen: Mr. Speaker, the Prime Minister is, of course, living in a dream world because he talks about hope and consensus, when the Premier of Alberta said that price increases and negotiations in 1973, 1974 and 1975 "have been like kindergarten compared to talks in 1979". So that is the analysis of the Premier of Alberta, who talks about confrontation and about the kindergarten that existed, which implies a very favourable atmosphere.
May I ask the Prime Minister, who is the key player in these negotiations: if he has refused to extend the existing agreement with the provinces for another year-which would be sensible-he must have some idea in his mind as to what kind of a proposal he is putting before the provinces. Would he tell the House, and probably relieve the anxiety expressed in the Atlantic provinces, whether the country and the Atlantic provinces can be assured at the present time that the Prime Minister is not proposing a substantial increase in oil prices which, in the words of Premier Buchanan, would be disastrous for the Atlantic provinces?


Charles Joseph Clark: 1 must say, Mr. Speaker, that the hon. member has done his best to weave together a question drawing out of context various quotations by various premiers on different subjects.


Some hon. Members:: Oh, oh!


Charles Joseph Clark: He is doing the best he can to bring some order to that kindergarten over there. Certainly 1 can give to the Premier of Nova Scotia, through this House, the assurance that there will be full consultation with that government prior to any agreement on energy prices; that there will be, as part of the package, a series of programs to help regions of the country where the increases may cause some momentary difficulty to overcome those problems; that, indeed, we are moving this country toward a position where it will be possible for the government of Nova Scotia and other governments with resource capacities to find federal government support, to find private sector support, to find the investment necessary to bring their own resources on stream and to contribute themselves to the development of energy self-sufficiency in this country.


Some hon. Members:: Oh, oh!


Some hon. Members:: Hear, hear!
INQUIRY whether prime minister has discussed with PREMIER OF ALBERTA CONTENT OF PREMIER'S REMARKS


John Edward Broadbent: Mr. Speaker, 1 have a question for the Prime Minister. Given the extraordinary nature of the statement attributed to Premier Lougheed more than 36 hours ago, in which he was asserting that his government would take unilateral action in setting prices for a fundamentally important commodity like oil, and saying to
Oral Questions
Canadians in other provinces that they can like it or lump it, can the Prime Minister explain to the House why in the last 36 hours he has not telephoned Premier Lougheed to verify the accuracy of these comments and, if they were accurate, to make it clear on behalf of the people of Canada that they were unacceptable to the Government of Canada?


Charles Joseph Clark: Mr. Speaker, let me make it clear that in my judgment-


Some hon. Members:: Oh, oh!


Charles Joseph Clark: Hon. members opposite can, if they want, try to create national panic and national concern by quoting out of context statements made by the Premier of Alberta.


Some hon. Members:: Oh, oh!


Charles Joseph Clark: I can repeat to the House of Commons my view that there is no likelihood, no danger of unilateral action by the government of Alberta. 1 can repeat to the House of Commons my assurance that if the national interest were seriously jeopardized, this government would use the instruments available to it to protect that national interest, although 1 do not think that will be necessary. 1 can indicate that I have not yet been in touch with the Premier of Alberta-


An hon. Member:: Why not?


Charles Joseph Clark: Because I want to see the transcript of what he said. I expect to be in touch with him and other premiers shortly. I expect that we will be able to make progress by agreement, not by unilateral action on either side, toward the accomplishment of an energy package for this country.


Some hon. Members:: Hear, hear!


John Edward Broadbent: Mr. Speaker, the Prime Minister said that we on this side are quoting out of context comments made by Premier Lougheed. I would like to ask him how he knows that, if he has not even found out what the premier said.


Some hon. Members:: Hear, hear!


John Edward Broadbent: How does he know we are quoting out of context? I cannot see anything other than the sheerest ignoring of responsibility on the part of the Prime Minister, to come into the House two days in a row without verifying with the crucial premier, in terms of energy resources in the country, the accuracy of some extraordinary statements which were attributed to him.
1 would ask him to answer the crucial question put by the Leader of the Official Opposition: At this point, when an agreement already exists on the pricing of oil which would take us to next July, why is this government embarking upon a course of action that will do harm in terms of jobs and harm in terms of the cost of living to every person who lives in this country?


Some hon. Members:: Hear, hear!

October 31, 1979
Oral Questions


Charles Joseph Clark: Mr. Speaker, the reason we have entered into discussions with the provinces of Canada regarding the bringing into place of an energy package is that we think it is prudent and necessary for the national government to plan ahead. If we do not plan ahead, if we do not make decisions now which will serve the future, then we will truly jeopardize the longer-run interest of this country by leaving Canada too exposed to foreign sources of petroleum.


Some hon. Members:: Hear, hear!


John Edward Broadbent: A final supplementary, Mr. Speaker. I read the Prime Minister as saying that the oil companies need more money: there cannot be any other conclusion.


Some hon. Members:: Oh, oh!


John Edward Broadbent: I want the Prime Minister to answer, because the Leader of the Opposition posed a straightforward question. I tried to repeat it and the Prime Minister simply came out with rhetoric.
Considering that the oil companies, or the majors, made a 55 per cent increase in profits this year, and considering that any oil price increase will produce-according to various government department estimates-a loss of, not hundreds but thousands of jobs in Canada, as well as boosting the cost of living, why does the Prime Minister not provide the increase in price he is aiming for but rely on Petro-Canada to do the essential job in resource development for us in the north?


Charles Joseph Clark: Mr. Speaker, it is our view that there does have to be an increase in energy prices in this country, not to yield new profits to the companies but, instead, to make it more possible for more companies-and, we would hope, more Canadian companies-to bring new Canadian supplies on stream, to make it more possible for substitution of fuel uses so we can begin to bring into practice significant conservation measures; and to make it possible for this nation, a nation which is blessed with a plenitude of resources, to move toward self-sufficiency instead of following the policies adopted by the former government, supported by the New Democratic Party, which would have had us drift into increasing dependence on unstable foreign sources.


Some hon. Members:: Hear, hear!


RESEARCH AND DEVELOPMENT
Mr. Eudore Allard (Rimouski):: Mr. Speaker, my question is for the Minister of State for Science and Technology. In view of the fact that in May, 1978, the government of the time announced a program to increase research programs from 0.9 to 1.5 per cent of the gross national product by 1983, and since

the present government has upped this objective to 2.5 per cent of the gross national product by 1985, can the minister inform the House whether he will be implementing this proposal, and since universities and research programs are feeling the squeeze due to cutbacks, can he advise the House as to his intentions regarding this new program?


Hon. Heward Grafftey (Minister of State for Science and Technology):: Yes, Mr. Speaker. I would like to take this opportunity to thank the hon. member for a very interesting question. It is true-


Some hon. Members:: Oh, oh!


William Heward Grafftey: I do not see what is so funny. I am just being polite. We have considered the matter very closely. As for the 2.5 per cent mentioned by the hon. member, it remains a challenge for this government, and we have also examined the situation within government. I want to inform the hon. member that we intend to make a very interesting announcement in the near future.


FISHERIES
Mr. William Rompkey (Grand Falls-White Bay-Labrador):: Mr. Speaker, my question is for the Minister of Fisheries and Oceans and has to do with his decision to allow vessels over 100 feet, owned by large corporations, back into certain areas of the Gulf of St. Lawrence to fish cod.
In view of the mounting protest, particularly among inshore fishermen in the maritime provinces and Quebec, but apparently shared by others-including certain Atlantic ministers and fisheries officials-and in view of the fact that the Standing Committee on Fisheries and Forestry last night adopted a motion by my colleague, the hon. member for Gloucester, to hear tomorrow from certain interest groups who have grave concerns about the effects of this decision, I want to ask the minister if he will now reconsider his decision, or at least delay it until the standing committee has had a chance to hear from the parties who are affected by the decision.
Hon. James A. McGrath (Minister of Fisheries and
Oceans): Mr. Speaker, this matter was dealt with fully in the committee last night. My decision still stands, and I am prepared to stand by that decision. My answer to the hon. member is "No".


Bill Rompkey: Mr. Speaker, in view of the story in this morning's Halifax Chronicle-Herald that a proposal will be submitted to the Atlantic Groundfish Advisory Committee calling for a phasing-out of the trawlers in the next few years, and in view of the fact that this position is apparently supported by the majority of governments in the Atlantic area, does
October 31, 1979

the minister not feel that his decision flies in the face of the direction in which most of the Atlantic provinces want to move, and will he now heed the cries for help from the inshore fishermen in that area and reconsider his decision?


Mr. McGrath:: Mr. Speaker, 1 have no such recommendation from the Atlantic Groundfish Advisory Committee. If such a recommendation did come before me, naturally I would give it the consideration it would justly deserve. But, Mr. Speaker, 1 would say again to the hon. member and to the House that the decision to allow offshore trawlers into the Gulf was one that was not taken lightly.
However, it is interesting to note that when these 100-footers were banned from the Gulf in 1976 because of the condition of the stocks, or the threat to the stocks, there was a clear understanding given to them at the time that they would be allowed back in once the stocks had fully recovered. That is now the situation, Mr. Speaker, and we are allowing the 100-footers back in the Gulf, at least for the next two months.


INQUIRY WHETHER DEPARTMENTAL OFFICIALS AWARE OF FISHERY PROBLEM IN GULF OF ST. LAWRENCE
Mr. Herb Breau (Gloucester):: Mr. Speaker, I wish to put a supplementary question to the Minister of Fisheries and Oceans.
When he says that now the situation is just about back to normal in the Gulf, he carefully avoids mentioning that most of these big trawlers belong to big corporations which will probably catch 100,000 metric tons of codfish this year outside the Gulf of St. Lawrence. So they did not really need to come back into the Gulf. Is the minister telling us, in view of the fact that last night in committee he acknowledged that he was not really aware of all facts regarding the possible damages that these big trawlers could do to the natural habitat in the Gulf, in the 4T zone of the Gulf and mainly to the crab hatcheries, that all the fishermen, all the Atlantic provinces associations which are opposed to their comeback and do not agree with these scientists, 1 repeat, is he actually telling the House that-


Mr. Speaker:: Would the hon. member put his question.


Herb Breau: Is the minister saying that these thousands of fishermen do not actually know what they are saying and that the scientists in his department know better than they do?


James Aloysius McGrath: Mr. Speaker, I want first of all to tell the hon. member that the owners of these trawlers are good corporate citizens of this country, good taxpayers employing Canadians in their fish plants. That seems to be something the hon. member tends to forget.
Certainly, the hon. member knows from the evidence presented to the committee last night that the decision to allow
Oral Questions
the 100-footers into the Gulf to fish for the 6,000 metric tons that were added to the TAC was taken after the scientific data came in, and after I had received advice that this was the way to go. We explained it last night in the committee, and it will be explained in the committee again tomorrow. I do not know what more I can do for the hon. member.


CATCH OF MATURE CODFISH-EFFECT ON FUTURE STOCKS
Mr. Alexandre Cyr (Gaspe):: Mr. Speaker, I have a question for the Minister of Fisheries and Oceans. Was the minister duly informed by experts, before taking his decision, that this year these big trawlers will catch four to five-year old cod about 15 inches long, and that in three or four years it will prevent the Quebec fishery industry from catching higher quality cod, thus preventing a better performance of the Quebec fishing industry?

Hon. James A. McGrath (Minister of Fisheries and
Oceans): Mr. Speaker, I would remind the hon. member, again, that these trawlers are now fishing in 4T zone for the same cod stock that they traditionally fished for in 4VN. He also knows, Mr. Speaker, that we have observers on these trawlers to ensure that there will be no excess juvenile fish caught. The hon. member knows full well that all precautions are being taken and will be taken to ensure that we do not, in fact, interfere with the inshore fishery either on the North Shore of Quebec, the Magdalens, or in the Gulf.


CODFISH CATCH BY LARGE TRAWLERS IN GULF-GOVERNMENT POSITION
Alexandre Cyr: Mr. Speaker, I want to put a supplementary question because the minister did not answer my question. Before deciding to let large trawlers of 100 feet or more operate in the Gulf of St. Lawrence, did his scientific advisers tell him that by June 30, 1979, those large trawlers had caught 50 per cent more cod during last season in the 200-mile fishing zone of the Atlantic Ocean?


James Aloysius McGrath: Mr. Speaker, that is the case; and the hon. member also knows that catches for inshore fishermen have also increased. As the stocks recover, catches also increase. On the basis of the recovery of the stocks, the decision was made to allow the 100-footers back in the Gulf during the months of November and December, when there is no inshore activity in the first place.

October 31, 1979
Oral Questions


ROLE OF MINISTER IN FISHERIES' DISPUTES
Hon. Romeo LeBlanc (Westmorland-Kent):: Mr. Speaker, 1 certainly gave no undertaking, when the large trawlers were removed from the Gulf of St. Lawrence, that they would be allowed to return. In fact, I made it very clear that because we had opened the 200-mile limit to them, from which they reaped great benefits-


An hon. Member:: Order.


Roméo LeBlanc: Don't you want to hear the information?


An hon. Member:: You were defeated.


Mr. Speaker:: Order. If the hon. member has a question, would he please put it.


Roméo LeBlanc: Does the minister not feel that in the absence of organizations which represent inshore fishermen, and in the presence of so many "good corporate citizens" who sit on the advisory committee, it is his responsibility as minister to represent those who have no voice on fisheries' advisory groups and to make sure their interests are protected, instead of protecting the interests of those who have already been well served by the resource?


James Aloysius McGrath: Mr. Speaker, if there was not an undertaking given, there was certainly an understanding that the 100-foot boats would be allowed back into the Gulf. I would say to the hon. member-who is a former minister of fisheries and should know better-that the inshore fishermen are represented on the AGAC committee where the decision was made.
Furthermore, 1 did, indeed, consult with the inshore fishermen. 1 went to the North Shore of New Brunswick, met with representatives of the fishermen there and we had a full airing of the subject, as we did last night in committee and as we will again tomorrow in committee when the same representatives appear before it.


Roméo LeBlanc: Mr. Speaker, the fishermen are represented, but if one looks at the names of the 15 or 20 representatives they will see that only one or two can be designated as inshore fishermen; and even at that, many of them represent 65-foot boats, not the small, 50-foot boats and under. I would like to say to the minister-


Some hon. Members:: Order.


Mr. Speaker:: Order, please. Would the hon. member put his question.


Roméo LeBlanc: May I ask the minister if he has any documents to show that there was an understanding or an undertaking that the fleet which was excluded from the Gulf would ever be allowed to return?


James Aloysius McGrath: Mr. Speaker, it is my understanding that such a commitment was made. If 1 am wrong, 1 will be the first to admit it. 1 will undertake to see if that information is
available, and it will be tabled tomorrow at committee. I remind the hon. member that there were full consultations- and he knows that-before this decision was taken.


NUCLEAR POWER
Mr. Mark Rose (Mission-Port Moody):: Mr. Speaker, my question is addressed to the Secretary of State for External Affairs. In view of the fact that a huge nuclear power plant is proposed for Sedro Woolley, in Washington's Skagit Valley, and since the site chosen is only 35 miles from population centres in British Columbia totalling almost one million people and should an accident ever take place massive environmental and evacuation problems would likely be encountered, what is the government's attitude toward the building of this nuclear power plant so close to our border? Is it one of official approval, disapproval, or indifference?


Hon. Flora MacDonald (Secretary of State for External Affairs):: Mr. Speaker, this is a concern that has been expressed to me by many members on this side of the House as well as members in the opposition parties. While it is impossible for Canada to determine where the United States, or interests in the United States, will locate their nuclear power plants, nevertheless we have raised this subject with officials of the U.S. State Department.


Mark Willson Rose: Mr. Speaker, I am pleased to hear the reply of the minister, although she was not very specific as to the type of response the government made to United States officials. Since next week there will be hearings and a referendum held in the Skagit Valley, in Skagit County, to determine whether or not to withdraw the re-zoning of this particular plant for a number of environmental reasons, and in addition there is an intervention-


Mr. Speaker:: Order. Is the hon. member intending to put a supplementary question?


Mark Willson Rose: 1 was just getting to it, Mr. Speaker. 1 am sorry, but I must have been infected by what 1 heard here earlier.
I want to ask the minister, since at this moment the only thing that is helping us at these hearings is an executive order, signed by Jimmy Carter, requiring an environmental impact study, does the government plan to be present in any official capacity at these hearings next week?


Flora Isabel MacDonald: Mr. Speaker, at the moment I cannot tell the hon. member whether or not there will be any official representation. There has not been a decision taken on that matter.

October 31, 1979____________________________COMMONS


AIRPORTS
Hon. Marcel Lambert (Edmonton West):: Mr. Speaker, in order to repair the indifference and studied neglect of the operational conditions at the Edmonton international airport, could the Minister of Transport tell us what work has been done, what work is being done, and what is being contemplated in the near future?


An hon. Member:: Put it on the order paper.


Hon. Don Mazankowski (Minister of Transport):: Mr. Speaker, the answer is that very much has been done.


Some hon. Members:: Oh, oh!


Some hon. Members:: Hear, hear!


Joseph Jacques Jean Chrétien: You found a job for Marcel.


Donald Frank Mazankowski: Since June 4 the plans have been well under way for the $20 million expansion and renovation to the existing airport facility. Air Canada has announced its intention to proceed with a new air cargo terminal. Just last Sunday I had the pleasure of opening the interim freight clearance facilities-


Some hon. Members:: Oh, oh!


Donald Frank Mazankowski: -which will go a long way-


An hon. Member:: When was it built?


Donald Frank Mazankowski: It was built last month, for the information of the hon. member. It will go a long way in providing convenience and comfort to transborder traffic. We have re-covered one of the major runways and we are in the process of putting together plans for improving the parking facilities at the Edmonton international airport.


NATIONAL UNITY
Hon. Jeanne Sauve (Laval-des-Rapides):: Mr. Speaker, my question is for the right hon. Prime Minister. Would he explain to the House what the Minister of Supply and Services meant when he said in Montreal, where he was talking about the pre-referendum campaign in Quebec, that since the position of the Tories was not exactly similar to Mr. Ryan's position, the Conservative members should avoid participating in the referendum debate under the federalist umbrella?


Charles Joseph Clark: Mr. Speaker, that is not at all what the minister said in Quebec. He said that there are diverging opinions between the Liberal party at the
DEBATES ________________ _________________ _________803
Oral Questions
provincial level in Quebec and the Progressive Conservative Party of Canada. 1 suppose there are some, as well, between the Liberal Party of Quebec and the Liberal Party of Canada. But he also said that there is an agreement between the federalists in Quebec who are under the Liberal banner at the provincial level and those in Quebec who are under the Progressive Conservative banner at the federal level as far as their participation is concerned in favour of the renewal of federalism in the province of Quebec.


QUEBEC REFERENDUM-INQUIRY RESPECTING FUTURE POSITION OF GOVERNMENT
Jeanne Sauvé: Mr. Speaker, I have a supplementary. As this statement was made a few days ago and as the situation is rather serious in the province of Quebec where we have a premier claiming now that all he wants is a new agreement on the constitution, can the Prime Minister tell us where the Progressive Conservatives will stand in that pre-referendum campaign, if they do not campaign by the side of those who are for the preservation of federalism? He does not have to consult the minister sitting next to him on this matter and he can tell me, even out of the context of the minister's statement, whether they are going to campaign on the "yes" or on the "no" side.


Charles Joseph Clark: Mr. Speaker, there will be participation. The question has a bearing on the activities of the Progressive Conservative Party which 1 lead, and I must answer that there will be a participation of the Quebec fighting wing of the Progressive Conservative Party under the umbrella of the committee which was organized to support federalism in the province of Quebec. The role of the federal government will be to show Quebeckers that after the May 22 election there is now in Ottawa a government which is open to the aspirations of the people of Quebec, a government which is not a captive of the status quo, which is prepared and able to demonstrate changes of attitude toward the provinces on the matter of lotteries, of the jurisdiction over natural resources-in short, a government which is prepared to work with the federalists of the province of Quebec to renew federalism in Canada.


Mr. Speaker:: The hon. member for Notre-Dame-de-Grace.


Jeanne Sauvé: Mr. Speaker, I would have another supplementary. As Mr. Ryan is not, as far as I know-


Mr. Speaker:: Order, please. The hon. member for N otre-Dame-de-G race.

October 31, 1979
Oral Questions


GOVERNMENT POLICY ON SOVEREIGNTY ASSOCIATION WITH QUEBEC
William Warren Allmand: Mr. Speaker, not only did the Minister for Supply and Services make such a statement, but he was supported by the minister in the Senate who is responsible for CIDA. Both of them said they did not know whether they would vote "yes" or "no" on the question put by a separatist government in Quebec.


Some hon. Members:: Shame!


Some hon. Members:: Oh, oh!


William Warren Allmand: Does this mean that the Conservative party has no position on sovereignty association, and do I understand the Prime Minister to say that the militants of his party are free to support whatever side they want on this question?


Hon. Roch La Salle (Minister of Supply and Services):: Ask
me the question and I will answer yes or no.


Some hon. Members:: Oh, oh!


Charles Joseph Clark: Mr. Speaker, first of all, I am not sure what the former minister understood.


Some hon. Members:: Oh, oh!


Charles Joseph Clark: There is a great deal of shouting from across the way on this question, as on so many. There is no question at all that the Progressive Conservative party is determined to work toward the strengthening of the federal system and to work toward a victory for federal forces in the province of Quebec.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: That will be done most concretely by a new national government demonstrating that the old attitude, the attitude in which every issue was a cause for confrontation between the government of Quebec and the Government of Canada, is over. There is a new national government in Ottawa that is prepared to treat the provinces as partners, knowing that that is the only way in a country like this in which we can ensure the security and the strengthening of our federal system.


Some hon. Members:: Hear, hear!


William Warren Allmand: Mr. Speaker, the Prime Minister has not answered the question. He has left open the possibility that Conservative party members will vote "Yes" in a referendum on a question put by a separatist government, and the minister just said that was a possibility. Will he say categorically in this House, as official policy of the Conservative Party in order to please some separatist supporters in Quebec-


Mr. Lalonde:: And his two ministers.


William Warren Allmand: Yes, and his two ministers.


Some hon. Members:: Shame!


Some hon. Members:: Oh, oh!


William Warren Allmand: -whether the Conservative party will favour a policy where their militants will be free to vote "Yes" or "No" on that referendum question?


Some hon. Members:: Hear, hear!


Charles Joseph Clark: Mr. Speaker, the representatives in this House of the Liberal party of Quebec, federal division-I emphasize that-become more desperate and irresponsible every day.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: There is no question at all that members of the Progressive Conservative Party of Canada, including ministers and including members of Parliament in the province of Quebec, will work toward the development and strengthening of federalism.


Some hon. Members:: Hear, hear!


Charles Joseph Clark: The hon. member should know, as certainly some of his colleagues from the provincial Liberal party know, that there is an open question as to the nature of the question that will be put by the government of Quebec.
It is my expectation that that question will be phrased in such a way that members of the Progressive Conservative Party will want to vote against that question. That is my expectation of what will happen-but 1 have not seen the question proposed by Mr. Levesque: perhaps the hon. member has.


AGRICULTURE
Lorne Edmund Nystrom: Mr. Speaker, if I could switch to the Minister of Agriculture and ask him a question, 1 have here a study done last summer by Alpha Laboratories, Toronto, for the Canadian Dairy Commission, released in August on the fatty acid composition of margarines. The results of the test show that over half the brands of margarine sold in this country contain trans-unsaturated fatty acids that are potentially dangerous for people who are concerned about heart disease.
The brand names of those companies have not been made public. My question is: why are the brand names not made public, as they are in the United States; and will the minister make sure that we get a list of those brand names so that people with heart concerns will know about them?


Hon. John Wise (Minister of Agriculture):: Mr. Speaker, in response to the hon. member's question, this matter was brought to my attention yesterday. The information I have to
October 31, 1979

this point in time would indicate that it would be an internal study. However, what concerns me is the fact that it was financed by public funds. Even though the results were issued previously-I believe, back in July-I am not certain whether or not it would be possible or, indeed, proper for us at the moment to release the brand names.


Some hon. Members:: Shame!


John Wise: 1 am checking that. Personally, 1 would have no objection whatsoever, but I ask for the co-operation of the hon. member in order that I may check on the legal technicalities with reference to the release of the brand names.


Lorne Edmund Nystrom: Mr. Speaker, we are supposed to have an open government, so I take the minister at his word, that he has no objection to releasing the brand names and that they will be forthcoming.


FATTY ACIDS IN FOODS-DANGER TO HEALTH-REQUEST FOR STUDY
Lorne Edmund Nystrom: Mr. Speaker, 1 now have a question for the Minister of National Health and Welfare. In view of the fact that the director of food and nutrition for the American Medical Association said a few days ago that the problem of trans-fatty acids-which are unnatural acids; that is, not in their natural state-has become one of the major problems in the United States concerning health, and in view of the fact that their consumption has gone up from four grammes per day to about ten grammes per day because of the modern human diet, would the minister of health now be prepared to commission some money so that a study can be done as to the effect of these fatty acids on the human body?


Hon. David Crombie (Minister of National Health and Welfare):: Mr. Speaker, I thank the hon. member for his question. Indeed the department is concerned about the matter which the hon. member has raised. It is not a new concern of the department. We are most pleased to be able to monitor- as we have done so far-and, in consultation with the Minister of Agriculture, we will be dealing with the particular matter raised earlier and will continue to investigate the matter as it affects the human diet.


AIRPORTS
Mr. Geoff Scott (Hamilton-Wentworth):: Mr. Speaker, my question is directed to the Minister of Transport regarding a
Oral Questions
much-too-long delayed expansion of Hamilton civic airport at Mount Hope.


Some hon. Members:: Oh, oh!


Joseph Jacques Jean Chrétien: That was asked two days ago.


An hon. Member:: That was another airport.


Geoffrey Douglas Scott: In view of concern expressed by several mayors of Hamilton and the surrounding communities on behalf of many thousands of my constituents who have been faced for years with uncertainty about whether the airport would expand and, if so, in which direction, could the minister give the Hamilton-Wentworth area a clear indication of the kind, and direction, of expansion that his ministry is looking at-and how soon will it happen?


An hon. Member:: What a set-up.


An hon. Member:: More, please.


Some hon. Members:: Oh, oh!


Donald Frank Mazankowski: Mr. Speaker, the question of improved airport facilities at the Hamilton international airport-


Some hon. Members:: Oh, oh!


An hon. Member:: Read your notes.


Donald Frank Mazankowski: The Hamilton national airport is certainly a matter that is under active consideration. I want to assure the hon. member that, unlike the former government, we will not talk about it for ten years; we will act upon it very quickly.


Some hon. Members:: Hear, hear!


Mr. Munro (Hamilton East):: You had better get in the inner cabinet very fast.

[ Translation]


INCOME TAX
Mr. Robert Gourd (Argenteuil):: Mr. Speaker, given the fact that the Minister of National Revenue will soon meet with spokesmen for the expropriated owners at Mirabel, could he tell the House whether he intends to follow the example set by his provincial counterpart and exempt from the income tax all the total compensation ex gratia payments which were made to these people?
806

October 31, 1979
Oral Questions


Hon. Walter Baker (President of the Privy Council and Minister of National Revenue):: Mr. Speaker, the hon. member, the former solicitor general, and I have had meetings with respect to this matter. I indicated at that stage that I was not prepared to do that. However, 1 did indicate that I did not think the view of the minister should settle such an important matter.
I understood we had an agreement that the matter would be referred to the Federal Court of Canada, where the very important issue for these people at Mirabel could be decided judiciously rather than ministerially and arbitrarily.


LABOUR DISPUTES
Mr. Jacques Olivier (Longueuil):: Mr. Speaker, my question is for the Minister of Labour. Yesterday in answer to a very serious question from the hon. member for Louis-Hebert he said that unfortunately, when it comes to labour relations, the dismissal or lay-off of workers or the loss of jobs by workers is like a death penalty. I want to ask him whether he is willing to support the recommendations of the Cossette report which was released to both parties and particularly whether he is willing to intervene personally to find an amicable arrangement between both parties.


Hon. Lincoln M. Alexander (Minister of Labour):: Mr. Speaker, I am pleased that the hon. member wants to get involved in this matter: I commend him for it. However, he must appreciate that the inquiry was called for by the Maritime Employers' Association as well as the International Longshoremen's Association, two locals. It was at their request that Labour Canada brought forward this inquiry.
As I indicated earlier, the report was released to the parties affected and, of course, all we can do at this time is to sit back and wait until we hear from the parties. It is not my role now to indicate to the parties what they should do; they are the ones who asked for the report; they are the ones who asked for the inquiry in order to determine what was going to happen with longshoremen and checkers as a result of the very hazy and uncertain position, in terms of employment, in the future. The report is now in their hands. As soon as I hear from them I will be able to determine just what further steps I can take, or even should take.


INQUIRY WHETHER GOVERNMENT READY TO IMPLEMENT RECOMMENDATIONS OF CARROTHERS REPORT
Joseph Mario Jacques Olivier: Mr. Speaker, I certainly understand the answer given by the Minister of Labour but I would like to remind him that the Carrothers report was tabled a month ago and to help him recall the facts-I remind him that the report dealt with surplus manpower and lay-offs at Inco in Ontario. Is the minister willing to consider the introduction of legislation which would require notice regarding the intention of an employer to lay off people before the labour representatives have had time to act upon those major steps before they are taken? The problem, Mr. Speaker, is that the employees involved learn about their lay-off at the last minute. Therefore, I ask the minister if he is prepared to implement the Carrothers report published two months ago and yet to be released by the minister, in the way he intended, because some people in Quebec City have now lost their jobs and have been laid off due to that situation?


Lincoln MacCauley Alexander: Mr. Speaker, the hon. member has brought to my attention another report. He is talking about the Carrothers report which dealt with redundancies and lay-offs. I can advise the hon. member that, after consultation with affected parties, it is this government's intention to introduce legislation which would require notice under part III regarding an intention of any employer which would perhaps lead to redundancies and lay-offs.
In answer to the hon. member's question, there is some concern by this government with regard to the report, and we intend to take action as soon as possible.

| Translation]


POINT OF ORDER
Mr. Fabien Roy (Beauce):: Mr. Speaker, I rise on a point of order. I noticed earlier that you made a wise decision in recognizing the hon. member for Rimouski (Mr. Allard)-


Mr. Speaker:: Order.


Fabien Roy: 1 understand this is the first time one of my colleagues was recognized during question period. Am I to understand this is a decision that could apply in coming days, that we might be recognized in future during question period immediately after a spokesman for the NDP? Second, I would like to ask, if that is going to be your decision, whether that includes also the attitude that is going to prevail in parliamentary committees, because just yesterday I asked to be recognized in a parliamentary committee, the Standing Committee

October 31, 1979

on Finance, Trade and Economic Affairs, and 1 was denied that right, and I even have a note to the effect that I was even refused the right to speak at the meeting as a member of the Social Credit Party of Canada. Mr. Speaker, in view of those facts, I would like to ask you today whether you can inform the House of your intentions regarding your attitude during the coming days, the coming weeks and the coming months of this Parliament with respect to our right to be heard in this House.


Mr. Speaker:: Order. The hon. member for Beauce (Mr. Roy) rose on a point of order concerning the rights and privileges of hon. members of the Social Credit Party of Canada here in the House with regard to their participation in the oral question period. The choice of who will rise is left exclusively to the discretion of the Chair. It is always my duty to guide the participation of hon. members during the oral question period in a manner that is fair to all hon. members in the House. The actual order of participation, the time of participation, the form or actual participation and the manner in which the members share the time of the House are always left to the discretion of the Chair. I have never shirked that duty. 1 have always endeavoured, to date in this Parliament, to recognize the hon. members of the party of the hon. member for Beauce who sought the floor. 1 have always tried to recognize them in a way that was fair to other hon. members in the House. I shall always continue doing exactly the same thing. With regard to the decision on recognizing an hon. member from the Social Credit Party of Canada, the party of the hon. member for Beauce, right after an hon. member from the New Democratic Party every day, that too is a matter for the Chair to decide. It is always up to me to decide. Of course, hon. members of the Social Credit Party of Canada have the right here, like all other hon. members, to take part in the oral question period. But, it is up to me always to decide whether, when allotting them a fair share of the period, 1 am to recognize them at 2.30, 2.40 or 2.50 each day. That is the situation the Chair must face each day. I shall therefore discuss the matter, as I have always done when there were difficulties in the past, with the leaders of the other parties in an attempt to come to an agreement. If there is agreement among the parties of the House on how to solve the problem, the matter is simpler. If there is no agreement, however, then it is my responsibility to settle the issue.
Committee Report



ROUTINE PROCEEDINGS


Charles Joseph Clark: Mr. Speaker, I would like to lay upon the Table in both official languages copies of the sixteenth annual review of the Economic Council of Canada.


FINANCE, TRADE AND ECONOMIC AFFAIRS CONCURRENCE IN FIRST REPORT OF STANDING COMMITTEE
Mr. Hal Herbert (Vaudreuil) moved: that the first report of the Standing Committee on Finance, Trade and Economic Affairs, presented to the House on Wednesday, October 24, 1979, be concurred in.
He said: Mr. Speaker, the motion for concurrence before the House today refers to the first report of the Standing Committee on Finance, Trade and Economic Affairs. The report was tabled in the House on October 24 by the hon. member for Vancouver Quadra (Mr. Clarke) who is chairman of the Standing Committee on Finance, Trade and Economic Affairs.
I should like to read the substance of that report.
Your Committee met on Tuesday, October 23, 1979, and agreed to express its dismay that none of the ministers or officials of the departments and agencies whose estimates were referred to this committee were able to appear before the committee at eight o'clock p.m., Tuesday, October 23 and recommends that the Flouse formally remind all ministers and their officials that they are primarily servants of Parliament and owe Parliament and its committees their priority attention in view especially of the commitment of the new government to give a greater role to Parliament and its committees.
That motion was proposed to the committee by the hon. member for Windsor West (Mr. Gray), and it was proposed because of the difficulty which had been experienced by members of the Committee on Finance, Trade and Economic Affairs in finding ministers or departmental officials who were prepared to appear before the committee on that particular evening, Tuesday, October 23.
I should say that the subcommittee had authorized the clerk to contact the various ministries, and I should name the ministers who were contacted. 1 might say also that the Standing Committee on Finance, Trade and Economic Affairs is probably one of the busiest standing committees; there is always a tremendous amount of legislation before it in addition to the estimates of three departments-Finance, Trade and Commerce, and National Revenue.
When it was found impossible to have the Minister of Finance (Mr. Crosbie) appear before the committee-hon. members will recall his stating in this House that he was not prepared to appear before the committee until after the committee had seen and questioned the governor of the Bank of Canada-the committee members looked for an alternative, bearing in mind that they had to study the estimates of three different ministries.

Committee Report
The alternatives were the minister who sits in the other place, the Minister of Industry, Trade and Commerce and Minister of State for Economic Development (Mr. de Cotret), or, if he could not attend, the Minister of State for Small Businesses and Industry (Mr. Huntington), or, if he could not attend, the Minister of State for International Trade (Mr. Wilson), or, if he could not attend, the President of the Privy Council and Minister of National Revenue (Mr. Baker). There were four ministers, if the Minister of Finance was going to continue to refuse to appear that evening, or, as the motion reads, the departmental officials of those departments.
As an individual I find it astonishing and most regrettable that in a committee which is so busy, a committee which wanted to continue to discuss very important topics, the government was not prepared so to organize itself that one of the responsible ministers could attend. 1 want to point a finger particularly at the Minister of National Revenue because he is also the leader of the government side in this House. It fell on his shoulders, therefore, to ensure that at least one of the ministers was available to appear before the committee.
In my opinion the motion is one of censure on the government for its failure to ensure that the committee was in a position to do its job. I sincerely regret that, because of the lack of time available to one of the most important committees of this House, we were unable to question the minister responsible for industry, trade and commerce or the two ministers of state allied with that ministry. This motion for concurrence has been brought before the House in order to emphasize the point that in difficult times such as we are facing today, when it is so important to question ministers on their new policies, it is most regrettable it should have been found impossible for any one of four ministers or any officials of the ministries represented by those ministers to appear before the committee. Regretfully, therefore, I bring before the House this motion for concurrence.


Mr. Speaker:: Is the House ready for the question?


Mr. Bob Rae (Broadview-Greenwood):: Mr. Speaker, 1 think the hon. member for Vaudreuil (Mr. Herbert) has raised a very important question, for two reasons, first of all because of the way in which the Standing Committee on Finance, Trade and Economic Affairs has to conduct itself because of the pressure from the cabinet on the members of the committee from the back benches of the Conservative party and, second, because of the rather extraordinary position in which we find ourselves because the Minister of Industry, Trade and Commerce and Minister of State for Economic Development (Mr. de Cotret) does not sit in this House. As his counterpart in the New Democratic Party I do not have the opportunity to ask that minister any questions with respect to government policy.
I might point out that in addition to his other responsibilities he is chairman of the economic committee of the inner cabinet and therefore the most influential member of the cabinet with respect to economic policy. In these circumstances it is extraordinary he should not be in this House. In fact I would be happy to resign my seat if he cares to come to Broadview-Greenwood and face the electorate in an election.


Some hon. Members:: Oh!


Bob Rae: It is up to him to decide whether he wishes to do so. I say that in all sincerity. Since he is not in this House he has an even greater obligation to all members of the committee, regardless of party, to make his time available to the committee and to appear in the very limited period we have in which to do our work.
I join with the hon. member for Vaudreuil in expressing my concern, and bring once again to the attention of the House the fact that the chief economic adviser to the Prime Minister (Mr. Clark) is not a member of this chamber, the difficulty in which this places members of the opposition and, in particular, members of this party which does not have any representation in the Senate.
It is high time the chief economic adviser to the government was a member of this House. The least he could do would be to make himself available when a committee is meeting and when it has a very tight schedule before it because of the workload it is carrying. He should at least have the courtesy to appear before it. We are moving in ways which are an affront not only to the committee but to democracy itself, and it is worth taking a little time to draw attention to this aspect and, once again, to underline the absurdity of the chief economic adviser to the cabinet not being a member of this House.
The present arrangement constitutes an affront to members of the House of Commons and places members of this party, in particular, in a difficult position because they are not in a position to question him to find out what his policies are, how he feels about the interest rate, how he feels about the effects on trade and development, how he feels about industrial strategy, and how he feels about the general direction the government is taking. It is ludicrous that this gentleman is not a member of this House and that he is not presenting himself for election in the by-elections which are being held. In all sincerity I offer, if he wants to come down to Broadview-Greenwood and contest that seat, I will gladly resign, contest it, and take him on.


Walter David Baker: That is a temptation.


Mr. Speaker:: Does the House adopt the motion?


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

[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. 45, 175, 179, 215, 221, 289 and 369.
I ask, Mr. Speaker, that the remaining questions be allowed to stand.
October 31, 1979


Mr. Orlikow: 1.	Who (a) is the president (b) are the vice presidents of the Medical Research Council?
2.	What is the annual salary in each case?


David Edward Crombie: In so far as the Medical Research Council is concerned:
1.	(a) Dr. Rene Simard, M.D., D. Sc., F.R.C.P. (C)
(b) One position, currently vacant.
2.	(a) $62,000-567,000 per annum, for a full time
appointment.
(b) No salary attached to the position.


Mr. Herbert: 1.	Was a study made of possible cost savings resulting from the use of generic drugs?
2.	Does the government intend to promote the use of generic drugs?
3.	Has the increased use of generic drugs affected (a) research and development in Canada (b) the proportion of drugs manufactured in Canada compared to imported drugs?


Hon. Ron Huntington (Minister of State for Small Businesses and Industry):: In so far as the Department of Industry, Trade and Commerce is concerned:
1.	The government, through the Department of Consumer and Corporate Affairs, has undertaken an internal assessment of the cost savings resulting from the use of drugs produced under compulsory licencing provisions of the Patent Act.
2.	The government is interested in making available to the consumer drugs of the highest quality at the lowest possible price. To encourage such activity, modifications to the Patent Act were enacted by parliament several years ago with the objective of increasing drug market competition to allow the consumer to benefit from lower drug prices consistent with the maintenance of quality standards.
3.	(a) No published statistics exist to indicate whether
research and development in Canada has been affected.
(b) Although no official information has been published which compares domestic drug manufacture to drug imports in finished dosage form, it is estimated that over 95 per cent of all drug products used in Canada are manufactured into dosage form here.


Mr. Herbert: For the fiscal year ended March 31 (a) 1978 (b) 1979, by province, what was the amount spent by the Medical Research Council in the form of research grants?
Order Paper Questions


David Edward Crombie: In so far as the Medical Research Council is concerned: Expenditures from Vote 60 (Grants and Scholarships) for the support of research in 1977-78 and 1978-79, by province, were:
	Year ending	Year ending
	March 31,	March 31,
Province	1978	1979British Columbia	$ 3,844,824	$ 4,434,562Alberta	4,608,129	5,015,887Saskatchewan	1,534,705	1,359,679Manitoba	3,673,523	4,735,043Ontario	20,059,593	21,701,474Quebec	18,189,234	20,342,219New Brunswick	-	-Nova Scotia	1,896,094	2,365,338Prince Edward Island	-	-Newfoundland	659,804	825,521Sub-Total	54,465,906	60,779,723National Organizations	189,893	211,896Outside Canada (training awards)	2,062,201	2,010,381Total	$56,718,000	$63,002,000


Mr. Herbert: How many (a) permanent (b) term employees were on the Ministry of State for Small Businesses and Industry's payroll on March 31, 1979?


Arthur Ronald Huntington: In so far as the Department of Industry, Trade and Commerce is concerned:
(a)	Number of permanent employees that were on the Ministry of State for Small Businesses and Industry payroll was 11 as of March 31, 1979.
(b)	Number of term employees that were on the Ministry of State for Small Businesses and Industry payroll was two as of March 31, 1979.


Mr. Caouette: Did the government invest money in the health insurance plans administered by the provinces during the fiscal years 1968-69 to 1978-79 and, if so, what was the amount in each year?


David Edward Crombie: Contributions to the provinces and territories under the Hospital Insurance and Diagnostic Services Act, the Medical Care Act, 1966-67, and the Federal-Provincial Fiscal Arrangements and Established Programs Financing Act, 1977, were as follows:
Fiscal year
1968-	69
1969-	70
1970-	71
1971-	72
In millions of dollars $	844.8
1.115.8
1.483.8
1.794.8

October 31, 1979
Order Paper Questions
1972-73	1,983.5
1973-74	2,248.4
1974-75	2,703.6
1975-76	3,282.4
1976-77	3,758.0
1977-78	4,990.8
1978-79	5,704.0


Mr. Herbert: Is the Minister of Consumer and Corporate Affairs aware of complaints that in some parking lots the entry clocks are kept from five to seven minutes slow, thus sometimes doubling the posted charge and making it difficult for the patron to contest the calculation of time at the exit station?


Hon. Allan Lawrence (Solicitor General and Minister of Consumer and Corporate Affairs):: Yes, I am aware of such complaints. My officials in weights and measures have and will continue to investigate these complaints. Recently one such complaint here, in Ottawa, led to prosecution and conviction on four charges.
Although a rather extensive survey of parking meters and parking lots showed a very high compliance rate for these services, we continue to carry out an ongoing program of surveillance on service and facilities provided on the basis of time, and this program includes clocks at parking lots.


Mr. Cossitt: L Are those persons handling telephone inquiries at the Department of National Health and Welfare's Old Age Security Office in Quebec City able to speak in both official languages?
2.	Is the government prepared to investigate a complaint by the honourable member for Leeds that on March 2, 1979, his office staff telephoned the Old Age Security Office's Main Switchboard Number in Quebec City, and could not receive any satisfactory communication in the English language without being referred to the director or his immediate staff?
3.	Is the government prepared immediately to see that the public arc in future served in both official languages at the Quebec City office?


David Edward Crombie: 1.	Yes.
2.	It is the income security programs branch policy to refer all calls originating from the offices of members of Parliament to the director's office, thereby ensuring the action required, as well as strengthening communication lines between the department and all members of Parliament. It is for this reason that the member's staff was referred to the director's office.
3.	See reply to part 1.


David Kilgour: Mr. Speaker, if question No. 183 could be made an order for return, because the answer is too lengthy to be printed in Hansard, that return would be tabled immediately.
I ask, Mr. Speaker, that the remaining questions be allowed to stand.


Mr. Speaker:: If it is the pleasure of the House that question No. 183 be deemed an order for return, the return will be tabled forthwith. Is that agreed?
Some bon. Members: Agreed.


Mr. Herbert: 1.	For the fiscal year (a) 1974-75 (b) 1975-76 (c) 1976-77 (d) 1977-78, under the Department of Industry, Trade and Commerce Program for the Advancement of Industrial Technology (PAIT), what was the number and total value of contracts (i) between $0 and $20,000 (ii) between $20,001 and $50,000 (iii) between $50,001 and 100,000 (iv) between $100,001 and 500,000 (v) $500,001 or more (vi) in total?
2.	For the same years, what were the expenditures of the Department under the Program for the Advancement of Industrial Technology (PAIT) in (a) the Textile and Consumer Products Branch (b) the Agriculture, Fisheries and Food Products Branch (c) the Chemicals Branch (d) the Electrical and Electronics Branch (e) the Machinery Branch (f) the Resource Industries Branch (g) the Construction and Consulting Services Branch (h) the Transportation Industries Branch (/') all branches?
3.	For the same years, by province and territory, what was the total in grants and contributions by the Department under the Program for the Advancement of Industrial Technology (PAIT) or any successor program under the Enterprise Development Program (EDP)?
Return tabled.


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


Some hon. Members:: Agreed.


David Kilgour: Mr. Speaker, notices of motions for the production of papers Nos. 29 and 31 are acceptable to the government. Notices of motions for the production of papers Nos. 18 and 23 are acceptable to the government subject to the authorization of the government of Quebec.
Does Your Honour wish to deal with those questions at this point?
October 31, 1979


Mr. Speaker:: Is it the pleasure of the House that notices of motions for the production of papers Nos. 29 and 31, which have been indicated as being acceptable to the government, be deemed to have been adopted?


Some hon. Members:: Agreed.


Mr. Speaker:: Subject to the reservations expressed by the parliamentary secretary is it the pleasure of the House that notices of motions Nos. 18 and 23 be deemed to have been adopted?


Some hon. Members:: Agreed.


[Stage Direction]
Motion No. 29-Mr. Herbert:
That an Order of the House do issue for copies of all regulations and instructions dealing with the publication of tender calls in the Department of Public Works, including all references to the amount and form of deposits that may accompany such tenders.
Motion agreed to.
[Stage Direction]
Motion No. 31-Miss Nicholson:
That an Order of the House do issue for copies of all form letters now used by the Department of Employment and Immigration in South East Asia when seeking to confirm family relationships in connection with sponsored immigration applications.
Motion agreed to.
LAKE OF TWO MOUNTAINS-WATER LEVELS Motion No. 18-Mr. Herbert:
That an humble Address be presented to His Excellency praying that he will cause to be laid before the House copies of the agreement signed by the government and the government of the province of Quebec relating to water levels in the Lake of Two Mountains and the participation by each government in control measures.
Motion agreed to.
[Stage Direction]
Motion No. 23-Mr. Herbert:
That an humble Address be presented to His Excellency praying that he will cause to be laid before this House copies of all minutes of meetings, documents, telegrams and letters held or dated since May 22, 1979, relating to negotiations between the Department of Transport and the government of the province of Quebec on public transportation.
Motion agreed to.
David Kilgour: Mr. Speaker, would you be so kind as to call notice of motion for the production of papers No. 13?
Income Tax Act


[Stage Direction]
Motion No. 13-Mr. Herbert:
That an order of the House do issue for a copy of the latest report on the feasibility of establishing a Crown corporation or other body to carry out forestry research.
Mr. Speaker:: Is it the pleasure of the House to adopt the motion?


Mr. Fraser:: Mr. Speaker, the document requested does not exist. I therefore ask the hon. member to withdraw his motion.


Harold Thomas Herbert: Transfer for debate.


Mr. Speaker:: Transferred for debate.


David Kilgour: Finally, Mr. Speaker, I ask that the other notices of motions for the production of papers be allowed to stand.


Mr. Speaker:: Is that agreed?


Walter David Baker: Mr. Speaker, I rise on a point of order. 1 hope it has not escaped the attention of the House that when the first four motions for the production of papers were called the motions were granted. With regard to the fifth one called, the minister said the document does not exist. I hope the importance of that approach has not escaped hon. members.


Mr. Knowles:: Keep it up.


Walter David Baker: We will do our best. Following upon that, Your Honour will recall that the hon. member for Algoma (Mr. Foster) raised a question as to who would be answering in the House for the Northern Pipeline Agency, and 1 indicated to him at that time that 1 would be doing so for the time being. I wish to inform the House that the member of the government who will be answering in the House of Commons to questions relating to the Northern Pipeling Agency will be the Minister of State for International Trade (Mr. Wilson).


Mr. Speaker:: Is it the pleasure of the House that the remaining notices of motions for the production of papers be allowed to stand?


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed from Tuesday, October 30, consideration in committee of Bill C-17, to amend the statute law
[Stage Direction]
October 31, 1979
Income Tax Act
relating to income tax and to amend the Canada Pension Plan-Mr. Crosbie-Mr. Laniel in the chair.
The Chairman:: When the committee rose last evening clause 6 of the bill was under consideration. Shall clause 6 carry?


Some hon. Members:: Agreed.


Stanley Howard Knowles: On division.
Clause 6 agreed to.
Clauses 7 and 8 agreed to.
On clause 9-


Bob Rae: Mr. Chairman, this is the first opportunity I have had to congratulate the parliamentary secretary publicly on his appointment. His riding neighbours my own, and we represent very similar districts in the east end of Toronto. I want to congratulate him on his appointment.
I want also to ask him a question with respect to clause 9. Can he explain it? We, and particularly the hon. member for Winnipeg North will be asking questions with respect to tax breaks and credits for research and scientific development. I wonder if the parliamentary secretary could tell the house the cost to revenues of the proposals contained in clauses 9 and 10, which I think should be taken together. If he could explain that to the House perhaps the hon. member for Winnipeg North will have some more detailed questions.


Mr. Ritchie (York East):: Mr. Chairman, first 1 would like to thank the hon. member for Broadview-Greenwood for his courtesy in welcoming me to this role and to the House this afternoon. 1 appreciate that very much. As he has said, we are neighbours and represent very similar ridings, but this does not prevent us from having slightly different political philosophies.
As to the nature of the amendment in clause 9, the amendment ensures that a special deduction which already exists for research and development expenses for hobby farms will be extended not only to the normal expense deduction but also to the special additional allowance for scientific research introduced last year. This permits a hobby farmer to deduct both the normal 100 per cent for research expenses and a special 50 per cent deduction for increased research expenses whether or not his farming operation is profitable.
The hon. member asked me about the cost in terms of revenue given up under clauses 9 and 10. 1 will have to inquire whether we have a figure on that. 1 am informed that for both of these two clauses the revenue effect is likely to be very small indeed. Clause 10 deals with a technical amendment and the major cost under R and D proposals in the bill is in a later clause to which we will come, which is clause 40.


Mr. Orlikow:: I understand that research and development have not been undertaken to a large extent by hobby farmers. I have been told by farmers I know that hobby farmers are usually city people who partly want to get away from the rush of living in the city and partly are looking for a way to pay less

income tax and so live on a farm but do not farm seriously. Is there a suggestion implicit in this clause that hobby farmers are involved in any serious research and development and, if so, what evidence is there of that fact?


Ronald Stuart (Ron) Ritchie: May 1 say to the hon. member that, first of all, research and development have to be real or they do not qualify, and in fact some so-called hobby farmers do extensive research in, for instance, breeding of farm animals and perhaps even of plants.


Gérald Laniel: Shall clause 9 carry?


Some hon. Members:: Agreed.


[Stage Direction]
Clause agreed to.
Clauses 10 to 13 inclusive agreed to.
On clause 14-
Bob Rae: Mr. Chairman, 1 wonder if the parliamentary secretary could explain this particular clause. 1 am not clear on it and I wonder if it could be cleared up.


Ronald Stuart (Ron) Ritchie: Mr. Chairman, this clause was designed to prevent the artificial creation of capital losses. Section 85(4) of the act stipulates that no capital loss is recognized where a taxpayer disposes of a property to a corporation which he controls. If the taxpayer owns shares of the corporation acquiring the property, the disallowed loss is added to the cost of his shares and will serve to reduce any capital gain on their ultimate disposal. Where the taxpayer does not own any shares of the corporation, the disallowed loss is added to the cost of the property to the purchaser corporation. In effect, the property in these circumstances is rolled over, that is, its cost to the corporation is equal to its cost in the hands of the taxpayer prior to the transaction. Subclause 14(1) is relieving and corrects a technical deficiency in the provision described.
Subclause 14(2) is a consequential change related to the changes to subsection 13(7.1) of the act. This change provides uniform treatment for the investment tax credit claimed by a co-operative corporation for purposes of computing capital gains on the depreciable property.


Mr.   Chairman@: Shall clause 14 carry?


Some hon. Members:: Agreed.


[Stage Direction]
Clause agreed to.
On clause 15-
Bob Rae: Mr. Chairman, I would like to hear an explanation of this clause from the parliamentary secretary. I know it has been the cause of a great deal of litigation and concern with respect to termination payments, and I wonder if he can tell us what the government is trying to do in this clause.


Ronald Stuart (Ron) Ritchie: Mr. Chairman, the amendment requires the inclusion in income of certain amounts received on the termination of employment. Such amounts are referred to,
October 31, 1979

of course, as termination payments. The definition of this expression is provided in section 248 of the act as amended by clause 65 of this bill. Generally, a termination payment is defined as the equivalent of a six months' employment income. This amount is to be included in the taxpayer's income. Damages in excess of six months income will continue to be exempt from tax. The tax-free status of damages has led to considerable abuse. Many taxpayers, on leaving employment, have sought to convert taxable salary or wage income to exempt damages for wrongful dismissal. The amendment will curtail the opportunity for abuse of this kind by requiring the inclusion in income of damages received by an employee for wrongful dismissal to the extent that they represent up to six months salary.


Bob Rae: This is a good example why I think the government party owes it to itself to explain what is happening because, as the parliamentary secretary has just described, what was going on in the marketplace was an abuse. As the parliamentary secretary knows, we had an anomalous situation where certain kinds of termination payments were regarded as income and were taxable, and in order to avoid this fact, many individuals who were being terminated were arranging to conduct litigation-there is no other way of putting it- against their employers in order to receive damages in lieu of termination payments. Damages following from certain decisions of the tax appeal board and from the federal court were exempt from taxation.
1 think this is of interest to members of Parliament and it is something of which they should be aware because this is something which has gone on in the marketplace. There has been an abuse, someone has spotted a loophole, which has become wider and wider, and now the government has chosen to close it, wisely so and I am glad they have done so. All 1 am suggesting is that it is sometimes helpful that instead of just braying our agreement with these clauses we should try to explain them to the people so that when they come to look at our debates, if they ever do, they see that some things are being explained. Certainly I do and the hon. member for Mission-Port Moody (Mr. Rose) does as well, so at least we have cleared that up.


Gérald Laniel: Is clause 15 agreed to?


Some hon. Members:: Agreed.


[Stage Direction]
Clause agreed to.
Clause 16 agreed to.
On clause 17-
Bob Rae: I would like to ask the parliamentary secretary to explain this clause, and perhaps later I will have some comments to make on it.


Ronald Stuart (Ron) Ritchie: Mr. Chairman, the hon. member will be glad to know that this is a relieving amendment. It is consequential upon the recent changes in the Unemployment Insurance Act, 1971. It applies where an individual receives unemployment insurance benefits in a year and has income for
Income Tax Act
the year in excess of a stated limit. Under the amendments affecting unemployment insurance, the recipient in these circumstances is required to make a repayment of 30 per cent of the excess portion of his unemployment insurance benefits when he files his income tax return for that year. Such a repayment has been separately defined in the Unemployment Insurance Act, 1971, as a benefit repayment to differentiate it from ordinary recoveries of overpayments of unemployment insurance benefits. Under the existing law, any repayment of a benefit is deductible only in the year in which it is repaid. The amendment permits the deduction of the benefit repayment for the year in which it relates. Ordinarily, that will be the year preceding that in which it is paid.


Bob Rae: I think that the relieving aspects of it are important, but it is also important to know that the government would not have had to bring in this piece of legislation if it had not brought in Bill C-14 which became the unemployment insurance amendments to which we in this party took such strong exception and to which so many members of the Conservative party, most notably the hon. member for St. John's East, now Minister of Fisheries and Oceans, took such exception in the House and in committee when he was one of the critics on the bill. So I think it is important for people to recognize that the reason for this is that the government has decided, and so have the Liberals, that unemployment insurance will no longer be treated as insurance, that in fact those individuals who made more than $22,000 are going to be forced to repay their unemployment insurance to the government.
Albeit that this is relieving legislation, it is important for people to be aware of the fact that were it not for the original legislation passed by the Liberal party, now concurred in by the Conservative party and by the regulations promulgated and concurred in by the Minister of Employment and Immigration, it would not have been necessary for the government to bring in this so-called relieving legislation.


Gérald Laniel: Shall clause 17 carry?


Some hon. Members:: Agreed.


[Stage Direction]
Clause agreed to.
Gérald Laniel: Shall clause 18 carry?


Some hon. Members:: Agreed.


[Stage Direction]
Clause agreed to.
On clause 19-
Bob Rae: I am simply unclear on this, Mr. Chairman. 1 wonder if this clause could be made clear. It may not be possible, but I wonder if it can be done.


Ronald Stuart (Ron) Ritchie: Mr. Chairman, as the hon. member knows, there are four parts to this particular change. Because it is a technical matter 1 think I will give the explanation in reasonably full terms.

October 31, 1979
Income Tax Act
This and the clause which follows are of interest to resource companies in the mining, oil and gas industries. Section 66 provides for the deduction of Canadian and foreign exploration and development expenses. Also the section defines a Canadian resource property, principal business corporation and shareholder corporation of a joint exploration company. This clause makes a number of amendments to section 66 of the act.
In the first place it introduces a requirement for joint elections where Canadian exploration and development expenses incurred after 1971 and before May 7, 1974, by one company called a predecessor corporation are transferred or carried over for deduction by another corporation, a successor corporation or a second successor corporation. This election is designed to avoid disputes which have arisen in the past between taxpayers as to whether these so-called succcessor corporation rules are to apply. The election ensures that both the transferor and transferee agree that these special rules are intended to apply. A similar change is proposed for the transfer of Canadian exploration expense in section 66.1 of the act and Canadian development expense in section 66.2. As I understand that, it is to ensure that two people are not claiming the same deduction for expenses.
The second change in section 66 extends the deduction with respect to the exploration and development expenses of a successor corporation. These expenses are deducted only against the income of the successor corporation from the properties transferred to it from a predecessor corporation. The change will permit these expenses to be deducted from certain reserves transferred by a predecessor corporation which arose in connection with the sale of resource property.
There are two more provisions. A third change to this section of the act will clarify that the right to store petroleum, natural gas or other related hydrocarbons is a "Canadian resource property" as defined. This change ensures that both the vendor and the purchaser of a resource property receive similar tax treatment. An amendment to Bill C-37 clarifies that this rule only applies to underground storage rights. I believe Bill C-37 was introduced after the budget of the previous Parliament. The purchaser will include the cost in his cumulative Canadian development expense, and the vendor will deduct the proceeds from the balance of his unclaimed Canadian development expense.
The final change to section 66 is to remove the references to syndicates or associations in the definition of foreign exploration and development expenses, etc. Under our tax law there is no tax status for a syndicate or association. Therefore these words are rather irrelevant.


Bob Rae: This takes us into the area which I thought we would get into. Certainly we will get into that area by the time we reach consideration of clause 20. I gave notice to the minister yesterday that we intended to debate these issues. Before getting into debate, I should like to ask the parliamentary secretary if he can tell us what underground petroleum, natural gas and other related hydrocarbon storage sites there are currently in Canada. How many are we talking about? What are we talking about here?


Ronald Stuart (Ron) Ritchie: Mr. Chairman, the number of those which exist and are in use at the moment is relatively small. They are mostly natural cave formations. As the hon. member will know, there is considerable debate about the wisdom in the future of having major storage facilities at this point, for instance, as a potential reserve for the Atlantic provinces. But at the moment there are very few in actual use.


Bob Rae: I take it that the cost to the treasury of this additional write-off would be minimal? Is that what is being said?


Ronald Stuart (Ron) Ritchie: At the present time it would be and only if there was a great need that was fulfilled in the future would it ever be of significant size.


Bob Rae: I might just take this opportunity to ask the parliamentary secretary if he can give us the cost, as we get into this clause and the next one which deals with exploration expenses, drilling allowances and so forth. Can he give us the cost not only of this particular measure but also the cost of all resource development measures contained in the budget?


Ronald Stuart (Ron) Ritchie: So far as clause 19 is concerned, the cost is negligible. As I interpret it, it is only for the underground storage which we have just been discussing. If anything, the other clauses save revenue or save disputes about revenue. I will search for an answer as to the cost in relation to clause 20. I do not have it at my fingertips at the moment.


Mr. Skelly:: I should like to ask a question referring to clause 19.(6) on page 15. Do I understand it correctly that there is a deduction available, that deductions are being provided for oil companies and other resource corporations for foreign exploration and development expenses?


Ronald Stuart (Ron) Ritchie: Mr. Chairman, that is true. Such a deduction is allowed but only to the extent of foreign income, not as a net deduction from Canadian income.


Raymond John Skelly: In this particular clause foreign income is accumulated with Canadian income. Dealing with foreign income, companies can make a deduction based on their expenses and development costs in a foreign area. It seems to be working as an incentive. We are concerned about very large earnings of oil companies within Canada at the present time. This almost provides an incentive to remove funds from this country to develop resources in other areas of the world, yet we are providing a deduction for them against income earned. No matter where it is earned, we are taxing income that a company has accumulated. We should be looking at ways of discouraging multinational oil companies working within Canada from earning windfall profits, exporting those profits to develop in more profitable areas of the world, and then providing an incentive to save through our Income Tax Act.
October 31, 1979


Ronald Stuart (Ron) Ritchie: Mr. Chairman, the first thing 1 am sure the hon. member would wish to recognize is that we are talking about Canadian taxpayers; we are not talking about non-Canadian taxpayers. Secondly, this is a normal arrangement, not just for oil companies and mining companies but for any kind of business which operates abroad. It is normal for these businesses to have their legitimate expenses deducted before taxable income is calculated. There is nothing novel, new or different about this.


Raymond John Skelly: Mr. Chairman, whether or not it is novel or new, a couple of days ago we were asked to authorize the Government of Canada to borrow $7 billion to cover, in my opinion, losses in revenues through the tax savings that these corporations and businesses in other stronger sectors of our economy, including banks and oil companies, have been able to realize. I am very concerned that this literally provides an incentive to a very important sector of our economy to invest money earned in this country in foreign markets. I feel the government's policy will make this investment even more profitable, particularly when we think of the increase in the cost of energy and things along that line. These companies are going to extract more profits from the people in this country, and the incentive in this particular paragraph will encourage foreign investment, especially in areas where it is more profitable, and we are going to allow them to deduct their expenses from income when we should be attempting to protect that capital that is generated within this country and see that it is used strictly for Canadian purposes.


Ronald Stuart (Ron) Ritchie: Mr. Speaker, it would appear that the hon. member is arguing that while Canada is host to investment from abroad it should never itself invest abroad. That is not a principle I find very attractive in terms of the Canadian economy. If we are going to permit Canadians, individuals, companies or otherwise, to invest abroad, before we tax the earnings they make as a result of that enterprise which yields tax revenues to Canada we should at least allow them to deduct their legitimate expenses. If we do not, certainly Canadians will not invest abroad.


Raymond John Skelly: Mr. Chairman, we should also protect and make sure that capital generated within this country is used to develop it. I have heard members on the opposite benches moan and groan about having to raise interest rates in this country because capital is flowing out. Instead of protecting the capital we have here, clauses such as this tend to encourage that capital to flow out. What I would suggest is possibly a re-examination of this kind of logic. We should in fact be attempting to protect capital within this country, especially in important areas such as resources and energy.
The other question the parliamentary secretary referred to relates to Canadian taxpayers. We have a long history littered with Canadian taxpaying firms that are controlled by companies in other countries which have in fact made determined efforts to drain their profits out. We know of dividend payments, interest payments, and the hiring of expensive services
Income Tax Act
outside this country. What we have now is investment capital from some of these transnational corporations going one way, with the dividends and other benefits going another, without much of it arriving in Canada to achieve this nation's goals.


Mark Willson Rose: Mr. Chairman, before the parliamentary secretary replies to my colleague perhaps I may be permitted to ask whether this paragraph allows companies, such as Inco which was on strike for many months, almost a year, to invest in such celebrated democracies as Indonesia and Guatemala through tax arrears, or overdue payments on taxes allowed by the Canadian government? This is also the clause which allows them to invest overseas and claim business expenses before paying taxes.
Since most resource companies, certainly the oil companies, are not celebrated as companies paying massive taxes, because they have so many tax breaks of this kind, would the parliamentary secretary indicate if it is possible for his assistants at the desk to tell us what kind of income Canada receives in income tax from investment in foreign corporations or foreign resource industries overseas?


Ronald Stuart (Ron) Ritchie: Mr. Chairman, it might be worth pointing out to the hon. member and his colleague that we are dealing only with technical amendments here. We are not altering anything that bears on the points being raised about foreign investment. With regard to the questions about the principle of foreign investment, I think I have already responded to them as straightforwardly as I can.


Mark Willson Rose: Be that as it may, Mr. Chairman, I realize it does tend to put the parliamentary secretary at a considerable disadvantage when questions such as this are raised, particularly when he feels they really are not relevant to the matter before us. We disagree with that. If it is possible for the hon. member to provide those answers I think some of us would be very grateful.
Whether those on the opposite side like it or not, this House is a platform for the expression of concern on the part of Canadian people regarding a great many general policy matters. While we on this side of the House do not want to prolong this unduly, we would like to have those answers. I know that our colleagues in the Liberal benches cannot be expected to ask many questions about this as it is their legislation and obviously they approved it. I note that members on the other side also approved it. We think that is rather nice because in the province I come from we do not have the problem of a minority government. We pushed the Liberals and the Conservatives into one camp a long time ago, and they are called Social Credit.
If it is possible I would like to find out the extent of these business exemptions that are offered, in order to compare them with the kind of income we get from these companies. The hon. member has said they are taxpayers, and I would like to know what kind of income we get from the these Canadian businesses investing in other countries such as Guatemala where labour is two bits an hour. Perhaps we could then see whether all this nonsense about these clauses is really worth it.

October 31, 1979
Income Tax Act


Ronald Stuart (Ron) Ritchie: Mr. Chairman, I am not certain whether it is possible to find definitive answers to that kind of question. The hon. member should be aware that life is considerably more complicated than his question suggests. For instance, much of the capital for these foreign investments may be raised abroad. I know, for instance, that when Canadian companies go to the United States they usually find it much more attractive to raise capital in the United States than here in Canada where it costs more. This is often true, so that to the extent this takes place, some of the force of the question is at least undermined. I will undertake to see what 1 can find out by way of information on the questions raised, and if I can find anything concrete and useful I will be glad to report back.


Mark Willson Rose: Mr. Chairman, 1 have one final point 1 should like to put to the parliamentary secretary. 1 say to the parliamentary secretary that nothing in life is simple, especially something as complex as the Income Tax Act. Let me share with him the view that Canadian companies often raise their money for foreign investment in the foreign country in which they operate. This is also true of U.S. companies that come here. Very often the value of investment capital coming to this country is not nearly as great as we are sometimes told, and that is because of the fact that Canadian banks and other financial institutions help American subsidiaries to grow by providing the money in this country. I am sure the hon. member, through his past role and profession, is well aware of that.


Mr. Taylor (Bow River):: Mr. Chairman, I would just like to offer a suggestion-


Gérald Laniel: Order. I have recognized the hon. member for Dauphin.


Mr. Ritchie (Dauphin):: Mr. Chairman, we have been constantly lectured by Third World countries that we are not doing enough for them. With regard to the mine in Guatemala which the hon. member just mentioned, it seems to me that we have contributed substantially to development in that country. Even though the wages may only be two bits an hour, they are still greater than what they were before. At any rate, in many cases these companies are taken over by those Third World governments, and they end up with the assets which Canada has contributed in the development of the country.


Gordon Edward Taylor: Mr. Chairman, if a Canadian company is working in a foreign country and earns certain money as a result, then certainly the Canadian government should not be taxing that company on the money earned. The company has already paid the taxes to that country in which the money was earned and, therefore, it would amount to double taxation and discourage Canadian companies from investing in other countries. I do not think that it has anything to do with the matter of money earned in Canada, but that it

does have something to do with the money earned in another country. I think that it is only proper that a Canadian company not be taxed twice.


Mr. Munro (Esquimalt-Saanich):: Mr. Chairman, the comments raised by the hon. member for Comox-Powell River suggest to me that he is under the impression that this particular clause refers to earnings or profits. On reading the clause and the notes on the opposite page, it seems to me that it refers to expenses. Could the parliamentary secretary clarify this matter? Is this clause merely adding the underground storage feature as one of the charges a Canadian company would incur in this foreign operation and saying that it would be deductible for income tax purposes, not as profits? Already they are charged with respect to right, licence or privilege to drill, and now we are dealing with the charges that would be incurred by the company for storing any of the petroleum or gas which might be discovered in the course of exploration. Could the parliamentary secretary confirm that it is really costs incurred, or am I misreading the clause myself?


Ronald Stuart (Ron) Ritchie: Yes, Mr. Chairman, it is costs incurred.


Raymond John Skelly: Mr. Speaker, I would like to address my remarks, within the context of this particular discussion, to the previous speaker. He suggested that we might be double taxing corporations which are removing investment capital from this country that we desperately need and that we are attempting to protect. Are we encouraging corporations that have developed the resource-based economy in this country and neglected the processing resource and, therefore, the income potential and the job potential within the country, to do the same thing in other countries?
What we are foisting on many other developing nations are these transnational corporations, which have not gone the full distance with the Canadian people considering the type of benefits the parliamentary secretary is continuing to bestow upon them. These companies have not gone into processing and manufacturing, thereby extending the benefits which would accrue to the people in this country. Instead, these companies are now going out into cheaper areas in the world and perpetrating the same kind of development, developing the resources and exporting them. Therefore, these countries also are not seeing the kind of development which Canada would like to see for itself.
What I am suggesting is that this is not only causing a flow of capital out of our country, but it is enhancing the kind of development which many of us would not like to see other developing nations go through. Many people would like to see their economies in a full, rounded manner and not strictly for the benefit of these transnational corporations. Through income tax and other mechanisms which we have provided, we are encouraging these companies to do just that, instead of fulfilling their social responsibilities which they have as citizens.


[Stage Direction]
Clause agreed to.
October 31, 1979
[Stage Direction]
On clause 20-
Bob Rae: Mr. Chairman, this is the clause on which we would like to hear the figures. Before I indicate to the government in full what our concerns are, because they do affect a very vital matter, 1 wonder if the parliamentary secretary could give us the figures on the cost of extending the date from 1979 to 1982.


Ronald Stuart (Ron) Ritchie: Mr. Chairman, as the hon. member has just pointed out, the principal effect of this clause is to extend the date of the 100 per cent write-off provision for Canadian exploration expenses for individual and non-principal business corporations. That provision originally applied until June 30 of this year. It was extended by the previous minister of finance by a remission order to the end of this calendar year. The provision would be extended by this bill to December 31, 1981.
The effect is to permit a 100 per cent write-off in the first year of those expenses. In that sense it is a tax deferral because what is written off in the first year cannot be written off in subsequent years. The effect, I am informed, in the first year is to postpone some $80 million of revenue.


Bob Rae: The question one must ask is, deferred until when? The parliamentary secretary knows that these things are accumulative and are continually deferred as time goes on. Therefore, there is no reckoning day that one could predict. What will happen is that it will continue to be deferred as exploration continues.
There is a very basic question here, and it relates to the question of oil prices, the question of the relationship between our manufacturing sector and our resource sector, to the survival of PetroCan, to the fact that we have subsidized-not only through this particular measure, but through other measures-the drilling allowance, and to the special shelters that have been created for wealthy investors in the frontier allowance field, all these expenditures. I am delighted that the Minister of Finance will be indicating what these expenditures are. I hope those expenditures will include deferrals because they, too, are a form of expenditure.
But all of these measures, the fast write-offs, the super depreciation, depletion and so on, are a form of public expenditure which subsidizes some forms of economic activity at the expense of others, and in which the government and the taxpayers are subsidizing particular companies and particular concerns. I think that it is worth while to point out to the government that the effective rate of taxation of the five large petroleum companies between 1974 and 1978 was 17.9 per cent and that the effective rate of taxation of medium-sized companies, including Dome Petroleum which does not pay any taxes, was 17.7 per cent.
The member for Saint-Henri-Westmount says that one cannot compare a company to an ordinary individual, that a corporation cannot be dealt with as though it were a person, but that we must recognize when talking about a corporation that we are talking about shareholders, investors, and that
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therefore we must relate it to the individual tax system. That is well and fine, but 1 would simply point out that the average income of those people who are investing in the companies with which we are concerned is far higher than the average or medium income in Canada.
We also have to recognize that this interference, and this is one more example of it, with the operation of the so-called free market in which members opposite are so proud to be believers, creates tremendous distortions.
It might be worth while if I quote what Professor Bossons, an economist at the University of Toronto, said when asked for his views on current tax allowances in the energy field. His views were reported in The Globe and Mail for October 17, 1979. He said:
I certainly don't have the feeling that the incentives are inadequate. They're extremely generous.
As he sees it, these allowances have the effect of encouraging a trend toward concentration in the industry. I do not think he is a member of my party, but I want to read what he had to say. He said:
The companies that can take advantage are mainly the large vertically integrated ones.
Mr. Bossons contended that the incentives are aimed mainly at tapping profits rather than at influencing investment. He summed up the package of existing incentives as "a lot of second-best attempts to offset byproducts of other second-best attempts."
He also suggested that allowing oil companies to reduce their effective rate of taxation limits the ability of government to provide incentives for areas of the economy that could produce more jobs. And it tends to increase taxes in real terms in other industries while lowering them in the oil industry.
Government must make a conscious choice in devising incentives, so that it doesn't overstimulate one industry at the expense of another, Mr. Bossons said. One reason for formation of Petro-Canada, he suggested, was to attempt to get a little more competition in the oil industry. Without the Crown oil company Ottawa would be "essentially at the mercy of the industry that's not far away from being a cartel."
Mr. Bossons said foreign ownership of the oil industry is actually being encouraged by the current tax rules. If the system were neutral the incentives would be "things that can be taken advantage of exactly as easily by 'domestic' companies as by the foreign-owned concerns."
These are very critical questions. Obviously the parliamentary secretary is not in a position to answer them today. I want to suggest to the parliamentary secretary, and through him to the minister, that when it comes time for the budget and for a decision on oil prices, I want him to recognize that when we talk about the 1980s and the amount of capital resources to be expended on research and development in the oil and natural gas industry, unless this is done properly and fairly two or three things will happen, although they have been happening since the 1970s.
The parliamentary secretary may recall that it was Mr. Kierans who resigned from the Liberal cabinet precisely because in 1972 he could see the writing on the wall. He could see the dramatic distortions which would be taking place in the Canadian economy if we continued to give as we did give right through the 1970s the tremendous incentives and advantages to the oil industry, whereas no incentive or advantage was

October 31, 1979
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given to the manufacturing or processing industry in Canada. As a result of that we have seen the dramatic weakening of our manufacturing base and the tragedy of an $11 billion deficit in the trade of finished goods that we have now. That is a direct result of incentive and tax policies by the Government of Canada which was initiated in the 1970s. That is one thing that will continue in the 1980s. But we will have a continued distortion and domination of our oil industry by foreign companies, subsidized by the Canadian taxpayer.
With the elimination of Petro-Canada, we are eliminating the only competition that exists in that vital industry as well as the only means we have at the moment of seeing precisely what is going on in the fields of exploration, research and development, and in other related energy fields. You cannot separate these questions. The Liberals failed to do so as we saw in the dramatic failure which occurred in the 1970s. That failure has led to an extraordinary subsidy amounting to billions of dollars to the oil industry at the expense of not just the principle of fairness-which I have spoken about earlier- but also the structure of Canadian industry and our ability to survive as an industrial nation. 1 think it is vital for the parliamentary secretary to take our concerns to the minister.
Let me say this as well, that one of the excuses which the oil industry has been using against the Canadian people for having these extraordinary-and they are extraordinary by any stretch of the imagination-subsidies of these vast multinational corporations by the taxpayer is that by keeping the price of oil down it forces us to rely on these fast write offs as a means of finding ways to finance the necessary research, development and exploration.
I have never been persuaded by that excuse. It is not borne out by the profit figures which they have been giving us. If that excuse is true, then there is one thing the Minister of Finance will be able to do in this budget provided that he has an agreement on oil pricing and a strategy for oil pricing in the 1980s.
No longer will the oil companies have the excuse of relying on a two-fold subsidy. But instead of having the one major subsidy we had in the 1970s, which subsidy was right through the tax system, in the 1980s they want an additional one. They want an addition to the tax subsidy. They want an extraordinary subsidy of price, if you like.
We are entitled to get from the parliamentary secretary- and if he cannot get it for us today I guess we will have to wait for the Conservative budget-an explanation from the minister as to the logic of this policy in terms of the relationship between the different sectors of the economy as to why we are allowing such extraordinary write-offs in one sector and not in another. I think we are also entitled from the point of view of a good deal for the Canadian people to ask ourselves why, when we are entering into an economy where the public corporation can apparently survive only with the incredible series of crutches and supports of incentives and grants of direct money and of tax expenditures from the Canadian public, we receive nothing in return?
[Mr. Rae.l
We are told by the provinces we have no right to the resources. We are told by the oil companies that we are interfering in the private enterprise system at the same time as this whole structure depends on an incredible number of incentives, grants, write-offs, and tax depreciations which result in a serious loss of taxation to the Canadian public.
I hope we will have a clear statement from the parliamentary secretary as to what he thinks the effective rate of taxation in those industries should be. If he thinks it should be down to 18, 17 or 16 per cent, then I hope the government will come clean and say that is the policy of the Government of Canada and that we expect the Canadian people to bear this price when the normal corporate rate is 46 per cent. I think the people of Canada are entitled to know what they are getting in exchange for this extraordinary expenditure.
Finally, if we move toward a world price, and we on this side of the House think that will be a disaster, and not necessary, but if the government insists on moving toward the world price-no doubt there would be no difference if the Liberal party were in power-we are then entitled to say to them, "Look, to pay one tribute is enough, and if the oil companies are determined to let the so-called world market in oil determine their price system, then do not come back to the public trough for the second time."
You cannot have the best of both worlds. You cannot move toward the world price and continue this absurd situation of subsidizing to such a great extent the takeover of our own resources and the development of our country. This tax question is profound. It relates to the industrial future. It relates to the future of the economic system and how much longer we can continue subsidizing these large corporations without having any say or influence in their policy, without having any policy to control the direction and investment, apart from using these various carrots that have been thrown in front of them since they went on strike in 1974.
We are entitled to put on the record how deep our concerns are, and how ill-advised the Liberal party was. It led to a foreign takeover of our resource industry. We are in a bad situation and the policies that are being continued by this government will only confirm our difficulties. This will confirm our status in the world as basically dependent on foreign multinational companies for the development of our own natural resources. It will confirm how our industrial structure is weakened because of this. The fairness of this tax break is also brought into question.
For all those reasons, Mr. Chairman, this measure is wrong and should be defeated. It has no place in the budget of a self-respecting people who are prepared to take the industrial and resource future into their own hands. We reject it out of hand as an approach. It is deplorable.


Mr. McKenzie:: Mr. Chairman, I do not understand some of the remarks of the NDP critic. Once again that party is up to its old tricks. The hon. member stated there will be an
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elimination of Petro-Canada. 1 would like him to produce the evidence of that. The plans are not to eliminate Petro-Canada but to strengthen it. Therefore the hon. member loses his credibility when he makes that statement, and also his credibility with regard to anything else he said in the debate this afternoon.
I wish to give some information to the Parliamentary Secretary to the Minister of Finance. 1 have here figures that have been compiled by a Winnipeg firm with regard to business and investment money that moved out of the province of Manitoba during the disastrous eight years under an NDP government there. 1 want to ask what plans there are to stop businesses and investment money leaving Canada, which left in large amouts during the last four or five years of the Liberal regime. I will place these figures on the record to let the House know what happens under different types of government.
These statistics were compiled by P. H. Jerch, head of Peter Henry Jerch & Associates in Winnipeg. He claims the trend in business and investment money leaving Manitoba and Canada has been going on for a number of years. He points out, and 1 quote:
Countries or for that matter provinces which have nationalistic, leftist or extremely strong bureaucratic tendencies make striving and successful entrepreneurs feel uncomfortable.
That was the climate that came about in Manitoba under an NDP government and the last Liberal regime in Canada. The figures were staggering on the number of businesses and the amount of money leaving Canada. Many American states established offices in Canada to assist businesses to move out of this country because of the extremely strong bureaucratic tendencies.
Mr. Jerch has given a number of figures regarding firms that moved out of Manitoba durng the NDP regime. He provided statistics for 24 Manitoba based smaller and medium-sized firms, and the amount of money which left the province of Manitoba because of the NDP government, which frightens business and investment to death. For these 24 firms, there was a loss of 4,000 jobs to the province of Manitoba.
He compiled other statistics based on actual survey, and I quote:
In a current survey by Peter Henry Jerch & Associates of 42 smaller and medium-sized active manufacturing and service enterprises, only 12 were looking for acquisitions in Canada only. Fifteen thought they would consider a further acquisition or investment in Canada as a second alternative, which suggests that reason tells them to go elsewhere but that they still tend to be an optimist despite ail their complaints. However, 30 of the 42 are either actively looking in the U.S. or have already made one or more acquisition or investment decisions there. These 42 are, incidentally, a fair and representative sample of the average successful Canadian business enterprise. Together they are likely to spend, directly and indirectly, from a low of $63,000,000 to a high of $160,000,000 in their investments and acquisitions over the next few years. Only between $7,000,000 to $19,000,000 are definitely scheduled for Canada, with the remainder going to the U.S.
It is a political climate that is conducive to attracting business and investment. To give some idea how serious the problem is, Kentucky now calls itself the eleventh province. That is because so many Canadian businesses have been driven
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out of this country by socialist groups in Manitoba and British Columbia and by the previous Liberal administration which was about as left as any group can go. Referring to these firms, he said:
They currently received about $9,000,000 annual for export sales. Which means that if they establish a subsidiary, joint venture or the like in the U.S., within the next couple of years they will expend, in investment or acquisition funds, realistically about $90,000,000. If you then consider that an additional $40,000,000 will not be coming back, the loss to Canada of even this small sample is about $ 130,000,000-
The loss of jobs with regard to these 42 Canadian firms will be between 4,300 and 13,000 jobs. The statistics I have just read are very hard to-


Gérald Laniel: Order, please. 1 am having some difficulty trying to attach the remarks of the hon. member to the clause. We are in Committee of the Whole. The clause refers to exploration expenses, not investment. The case being made by the hon. member is not in relation to this clause.
Possibly the hon. member can explain to me how this relates to the clause. I do not want to prevent him contributing to the debate, but 1 hesitate to allow him to continue along this line. He is speaking about loss of jobs and investment abroad, not to exploration expenses allowances through the Income Tax Act.


A. Daniel McKenzie: A good point, Mr. Chairman. In any event,
1 have my figures on the record. They could partially pertain to that clause. Possibly the parliamentary secretary can now tell us what plans the government has to encourage exploration, businesses and investment in this country. I know this has been the trend since this government has taken over. Perhaps he can enlighten the committee along these lines.


Ronald Stuart (Ron) Ritchie: Mr. Chairman, the hon. member has detected a difference, a difference in climate and some of the slight modifications made to the original Bill C-37 that are embodied in the bill before us. The further steps he might reasonably anticipate will no doubt come in the budget, and some of the subsequent programs of the government will be designed to get the economy of the country moving again, as we all wish it to do.
May 1 comment on some of the points raised by the hon. member for Broadview-Greenwood. He strayed, perhaps consciously, a long way from the provisions of the clause before us. In fact some of his remarks might well be construed as support for what this clause does. He spoke of what he considers to be undue benefits to the oil companies. As I am sure he knows, this particular clause might be construed as a step to ensure that other potential and actual investors in exploration are on the same basis or on a not less favourable basis than an oil company. This extension of the right to charge exploration expenses in the year made, applies to individuals and non-principal business corporations, as the unwieldy phrase goes.
Some of the hon. member's comments in a more general vein do deserve a reaction. One of the tests of any incentive

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Income Tax Act
given by way of taxes or otherwise in the market economy is whether it works. The incentive given here is really a deferral of taxes, a deferral which does not go on for ever. The first deferral is paid when there is income to tax it against and, if one looks at it logically, it is future exploration expenses which are deferred thereafter. So there may be a turn-over of deferred taxes if a company continues its exploration activities on a sufficient scale depending to some degree, of course, on the revenue eventually achieved.
I think it would be hard to say in the circumstances facing this country, that the amount of exploration for oil and gas here is excessive. Our concern is that it has not been greater. Some of the sources to which we now have to look for future reserves are, by and large, very expensive either because of exceptionally adverse weather conditions and distances involved, or because production costs are higher than we have been accustomed to. If the point is reached at which taxes on the industry and all kinds of investors in this search for energy becomes excessive, become obviously wasteful, only then will we be able to say that the tax arrangements are too attractive. That, I believe, is the test of any tax incentive or other kind of incentive given to an industry of any kind, not just to the oil industry.
The hon. member also attempted to suggest that the deterioration in manufacturing competitiveness in this country was due to the inducements given to mining and oil company exploration. 1 find that a farfetched explanation of an undoubted fact. There has, indeed, been a deterioration in the competitive position of manufacturing in this country and the situation has only been saved, and that temporarily, by the depreciation of the dollar, a depreciation which marks the failure, not the success, of economic policy.
1 doubt that the decline in the competitiveness of manufacturing industry in this country was in any way due to excessive direction of capital to mining and oil exploration activities. I believe there are much more evident and realistic causes therefor-one could look for them in levels of wages and salaries in this country which exceeded those in the United States at a time when our productivity was known to be, on average, 15 to 20 per cent lower than theirs. Whatever the causes of that situation, the effect on the declining competitiveness of Canadian manufacturing can be seen, whereas the effect the hon. member appeared to suggest cannot be seen.
I end by making two points. First, this particular clause is not addressed to the oil companies but to individuals and non-oil companies whose principal business is not in oil exploration. Its purpose is to induce investment from both sources, not, as the hon. member suggested, to add to monopoly or near cartel, as he chooses to call it, but rather the reverse-to get more people into the act. In the second place, the final test will be whether it provides the results intended. The evidence so far is that it has produced results and its extension is therefore more than warranted.


Gordon Edward Taylor: I do not want to delay the discussion, Mr. Chairman, but I believe there are definite examples which might change the mind of the hon. member from the

New Democratic Party who was speaking just a few minutes ago. I recall the time when members of the New Democratic Party and its predecessor, the CCF, made almost the same speech in the Alberta legislature. That was in the forties and fifties when Alberta was one of the "have-not" provinces and the provincial government wanted to get things going by providing a tax incentive. It was not a rip-off, it was a tax incentive.
The CCF members strongly denounced it at that time. They said it would bring ruin to the whole of the province, and so on. But that incentive created the basis for the Heritage Trust Fund which Alberta has been able to establish. It put people to work and gave them an opportunity to earn a dollar and make a profit from their industry. Today more money goes into the coffers of the government from every dollar made than goes to the oil companies which did the work. The greater profit goes to the people.
The whole story can be put in a nutshell: if you provide an incentive and do not put barnacles and shackles on free enterprise, free enterprise will produce. That is what has happened in Alberta and that is what could happen in the whole of Canada if we can get the right incentives in place. I do not consider these provisions constitute a rip-off. This is an incentive which will put people to work.
Hon. members must bear in mind that this is a high risk industry. We have to decide whether we wish to be dependent on foreign oil or whether we wish to develop our own supply. We can produce sufficient oil ourselves only if we provide incentives sufficient to induce the necessary exploration and extraction. We cannot do this with tax money because the tax burden on the population would be tremendous. It can be done, though, if we induce both small companies and large companies-and they all have their place-to go out and find the oil. Afterwards, revenues will start coming in and the people will have the advantage of the production as well as the advantage of the increased prosperity which follows that type of investment.
I have heard these prophecies of doom before from members of the party over there in that corner, and they do not make any sense to me at all. I have seen what happens when governments provide incentives. Alberta today is an example. Initiatives are still being undertaken there because the government of Alberta provides incentives. A greater amount of drilling took place in Alberta last year than that undertaken in any other place because there were better incentives, and more dollars will be made in the long run. That is exactly what can happen in Canada. We want the whole of Canada to be strong and self-sufficient so that we will not be dependent on foreign material. The free enterprise system can do it.


Mr. Blenkarn:: Mr. Chairman, when we are making a clause by clause analysis of a bill, it is essential that we deal with the bill clause by clause and not go into long harangues on philosophical subjects. We should be dealing with the clause before us. There has been diarrhoea coming from hon. members opposite.
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Mr. Evans:: And from your side.


Donald Alex Blenkarn: It is about time we started looking at this clause and not philosophies.


Mr. Guay:: What about your colleague?


Donald Alex Blenkarn: This clause is to allow people not in the oil industry either as individuals or as corporations to be induced into spending their money on a most risky thing, exploration. As a result of this provision in the act, which is about to expire, all sorts of drilling funds have been organized and sold on the public market. Those drilling funds have enabled a great many more oil rigs and other things to go into the Arctic and other places. Oil and gas have been found.
This is not a long-term extension. It is a short-term extension, and it is a benefit to induce Canadians to go into a very risky enterprise. This is not a great benefit to multinational oil companies. This is not for multinational oil companies. Oil companies can already deduct their exploration expenses. They are doing it all the time. What we are attempting to do is to make this country self-sufficient in energy. What we have to do is get more private capital into the game. If that is what we are trying to do, then surely we have to approve this short-term extension. In a sense it is a benefit. It is in a sense an immediate deferral. Let us get on with it and do something to make this country self-sufficient.


David Orlikow: Mr. Chairman, let me begin by suggesting to the hon. member for Winnipeg-Assiniboine that the place to debate what party shall form the government in Manitoba is really before the people of Manitoba in Manitoba, and not here in the House of Commons. I do not mind debating the subject with the hon. member, but if he wants to know how the people of Manitoba feel I suggest to him that he look at the results of the federal election in which the members who sit here now were elected just a few months ago.
His party went into the election in Manitoba believing, and saying openly, that it was confident that it could win 12 of Manitoba's 14 seats, that the only seat it was certain it could not win was the seat occupied by my colleague, the hon. member for Winnipeg North Centre, and that it was reasonably confident that it could defeat me and win all the other seats in Manitoba. The fact, of course, was that the Conservatives found themselves winning only seven of those 12 seats they expected to win on election night. Our party took five seats and the Liberals, who were supposed to be wiped out, took two seats. I say to the hon. member for Winnipeg-Assiniboine that we in my party, and also the Liberals, can base our success on the kinds of policies which he and his leader in Manitoba, the Premier of Manitoba, espouse.


Donald Alex Blenkarn: Mr. Chairman, I rise on a point of order. We are dealing with clause 20, an amendment to the Income Tax Act, not the election results in Manitoba, the philosophy of the Manitoba government or what happened on May 22. Surely the hon. member must stay within the clause before us, or find another forum.
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Gérald Laniel: 1 wish the hon. member had stood up when the hon. member for Winnipeg-Assiniboine was also a little off the clause before us. In any case, I am inviting the hon. member for Winnipeg North to come to the clause before us.


David Orlikow: Mr. Chairman, you are, of course, correct. Had the hon. member for Mississauga South taken the same view and for the same reason called the hon. member for Winnipeg-Assiniboine to order, I would not have said the few words I have said and which I have almost concluded, namely, that if certain of us are here, it is to a large extent because of the so-called free enterprise, right-wing, do-nothing government in Manitoba. Its policy of restraint has made it so hard for senior citizens, native people, and university students in Manitoba that they rejected the Conservatives in our province and created a situation such that the federal government did not get its majority precisely because of lack of support in Manitoba.
I want to respond for a few moments to the comments made by the hon. member for Bow River. No member of my party is opposed to people, individuals, or companies in Canada getting a fair return on their investments, provided they invest their own money. What we are dealing with here, however, is not corporations or individuals who invest their own money as do investors in other industries who are content to take a reasonable profit. We are dealing here with industries, companies, and individuals who go into the field largely because they can do so without investing their own money.
I know that the hon. member for Bow River will not believe me. He will say that I am spouting socialist dogma. I suggest to the hon. member for Bow River that he read-although sometimes 1 wonder if he can or does read-a long article which ran more than a page in the Calgary Herald. I have never known the Calgary Herald to be a very radical newspaper. I do not think it has a socialist editorial policy. I do not think it is opposed to the free enterprise system, but in August it ran a long article about the activities of Dome Petroleum in the Beaufort Sea. I will not read it all, but let me read a few excerpts from the Canadian Press summary of that article which appeared in the Montreal Gazette on August 24, as follows:
Canadian taxpayers may have paid as much as 93 per cent of the $150 million spent last year looking for oil in the Beaufort Sea.
But if oil is found and produced there, most of it will belong to privately-owned companies.
Despite the hundreds of millions of dollars provided in tax incentives for such northern exploration on federal lands, the federal government's share will be a fraction of the normal royalty share that Alberta gets for oil found in its jurisdiction.
And the companies investing in northern oil-using a little of their own money and a lot of the taxpayer's money-can sometimes make a profit on their investments through tax deductions, even if no oil is found.
That is one of our main complaints. We would not be objecting so strenuously if investors in oil companies were investing their own money, but they are not. What they are saying to the people of Canada is that they want tax concessions, write-offs, drilling allowances and all the rest of it. They are saying that if they do not find anything, the people of

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Canada will take the loss and lose 93 cents out of every dollar invested.
"But if we get a commercial find, if we can sell the oil, if we can sell the gas, we will keep the profits. So if it is heads, we, the oil companies, win, and if it is tails, you, the people of Canada, lose."
Let us look at Dome Petroleum. Dome Petroleum was established in 1950. It is best known at present for its Beaufort Sea exploration program. It is 26 per cent owned by Dome Mines, which is in turn owned 31 per cent by Dome Pete. Dome has the distinction of never having paid a cent of income tax in its history. All its income taxes have been deferred indefinitely as a result of writing off exploration and other capital expenditures for tax purposes more rapidly than are depleted for financial accounting purposes. Although the provision for deferred income taxes shows up as liability in the company's balance sheet, its own explanation of deferred taxes is very candid. Let me quote from the 1978 annual report of the corporation as follows:
Deferred taxes appearing on the company's balance sheets do not represent a liability of the company. When Dome becomes subject to paying income taxes, it will pay tax only on the income in the year incurred, not on the income of prior years as long as the company maintains a modest level of capital expenditures.


Donald Alex Blenkarn: 1 rise on a point of order. The clause we are considering deals with companies which are not in the oil business and with individuals not in the oil business. Dome Petroleum is in the oil business. This member has continued to talk on matters that are not before us. He is completely off the topic. He is making a speech on what oil companies may do with their balance sheets. This is not what we are talking about here. We are talking about a special allowance for people involved in exploration which is not their normal business. How the hon. member relates anything he has said to this clause is beyond me and, I am sure, beyond anyone else in the House. He has been called to order before and I think it is essential, if we are going to get through this income tax bill, for members to talk to the particular clause in the bill before us.


John Leslie Evans: Mr. Chairman, the hon. member for Mississauga South might wish to know that what the hon. member for Winnipeg North was referring to with regard to Dome Petroleum is exactly what is in the clause, because Dome Petroleum is a company engaging in explorations in the Beaufort Sea which has attracted private companies and individuals not in the oil industry to make investments, and is using these funds to generate tax write-offs for the individuals who have bought shares in these funds. So in fact the hon. member for Winnipeg North is right on target in his remarks.


David Orlikow: Mr. Chairman, let me just say with regard to the point which the hon. member for Mississauga South raised that, although I do not like to be personal, I am much more to the point on this subject than the hon. member has been in his frequent letters to the newspapers about matters such as the native people, about whom he knows less than nothing.
(Mr. Orlikow.]
Let me continue to quote from the 1976 annual report of Dome Petroleum. It reads as follows:
Provided the company maintains a modest oil and gas exploration and capital investment program, it is unlikely that the accumulated deferred income taxes will become payable.
As the hon. member who spoke a couple of minutes ago pointed out, that is exactly why we are concerned, because Dome is doing what so many other companies in this field have done. They are attracting capital by telling people, quite properly under our regulations, that they can get a much better net return after they pay taxes if they invest in this form of activity rather than in others. At the end of 1978, Dome's deferred taxes totalled $209 million, which was an increase of 436 per cent or $170 million since the end of 1973. In other words, between 1974 and 1978, Dome accumulated 81 per cent of its deferred taxes as a result of the federal government's tax policy largesse.
There are only a few minutes left before five o'clock, Mr. Chairman-


Stanley Howard Knowles: We are going on to six o'clock.


David Orlikow: It has been pointed out to me that we are going on to six o'clock, Mr. Chairman, so I have a few more moments.
I will conclude by saying to the parliamentary secretary that when one looks at how we treated the oil and gas companies, at how we have encouraged investment in these fields-nobody questioned the need to look for oil and gas and other energy sources which may be available in Canada-and when one looks at the real rate of taxation which individuals or corporations investing in these fields pay, and how low that tax rate is compared to the tax rate paid by people who invest in the manufacturing industry, and when you consider the fact that over the last ten or 15 years Canada has had the highest rate of increase in the labour force of any of the western industrialized countries, and when you realize that while manufacturing, which is labour intensive, pays a high rate of taxation- something over 40 per cent-and that our resource industries, which are capital intensive and which employ relatively few people, pay a very low rate of taxation, it is no wonder that Canadian and foreign funds flow into the resource industry rather than into the manufacturing industry.
What the government is proposing in this clause is a further concession, a further inducement to people to invest in this field because they will pay less taxes than in other fields and therefore their real return will be higher than in other fields. The government is doing that precisely at a time when we should be doing the exact reverse, precisely at a time when we should be marshalling all our forces, putting all our efforts into encouraging the manufacturing industry, which is declining from year to year.
Our share of the Canadian market and of the international market has been dropping, and the number of people, the percentage of the Canadian work force, employed in the manufacturing industry has declined from 26 per cent a few years ago to just under 20 per cent at present. So what we
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should have are measures to encourage the manufacturing industry. What we should have are research and development incentives, and programs to get our industries working. What we should have is concentration on developing our manufacturing industries. Instead, what we are getting from this Conservative government is just more of what we got from the former Liberal government, more concessions to the resource industry, more encouragement to go into the oil and gas field at no risk to the investor but at a great loss to the people of Canada. The loss is in the form of taxes which we forgo, in the form of higher prices which we pay, and all that at a time when we should be concentrating our efforts on getting people to work in those fields which in every other country employ 25 per cent or more of the labour force, and which we are ignoring almost completely.


Mr. Nickerson:: Mr. Chairman, may I be permitted to speak very briefly on this subject which has been well covered this afternoon. A few days ago we were treated to the spectacle of the hon. member for Oshawa telling us of his concern for the Toronto stock exchange. Today the hon. member for Broad-view-Greenwood told us of his concern about interference in the free market, in this case the free market for capital, it seems at long last they are learning something over on that side.
I should like to elaborate a little on what was said by the parliamentary secretary concerning the fact that this legislation is designed to get away from the concentration which exists in the oil industry. This legislation gives an opportunity to ordinary people like members of the House of Commons. Should an hon. member wish to invest and take advantage of the provisions of the income tax bill before us, he will be able to use his capital in order to reduce the amount of concentration which exists in these industries.
A policy of energy self-sufficiency must be adopted in Canada. This is one of the elements of such a policy. It is much better if we can work toward energy self-sufficiency through private investment rather than through organizations such as Petro-Canada which are so heavily dependent upon government support. This is the correct type of legislation through which to encourage private investment. It has been on the books for some time. If one goes to Calgary or another exploration centre in Canada, one will find out that it is working successfully. It is attracting money from Canadians in all walks of life. It has proven to be successful. As a result of this type of incentive, a lot of oil and gas and a considerable amount of minerals have been found in the country. It is legislation like this that enables and will enable all Canadians to get in on the energy boom which could hit us at any time.


Raymond John Skelly: Mr. Chairman, I should like to ask a brief question before getting into my main remarks. The parliamentary secretary suggested that this is another tax deferral. Before entering into a discussion on that, 1 should like to know what is the amount of tax deferral owed to Canadians now? If we are to make a judgment on whether it is desirable to
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continue or elaborate on this, will the parliamentary secretary tell us what is the present amount of deferred taxes owed to Canadians?


Ronald Stuart (Ron) Ritchie: Mr. Chairman, I will see if there is such a figure available, but 1 would quarrel with the words of the hon. member. So-called deferred tax is not owed to the government until income is earned, if an enterprise is not successful, that can be never. It is a very simple situation. One incurs expenses to be in a business, and one is allowed to charge them against other income not earned in the particular project for which the expenses are incurred. One will never owe tax on that project unless one subsequently earns income.
It is not owed to the government in any sense. I am not sure if there is a statistical figure available for the sum total of what are called deferred taxes by the accounting profession. It is a phrase which I have never thought was very illuminating. In fact I think it is misleading.


Stanley Howard Knowles: Try $100 million.


Ronald Stuart (Ron) Ritchie: I should think that would be small. The best 1 can do at this moment is to repeat that this particular measure is estimated to defer taxes at the rate of $80 million a year. Whether there is a figure for all deferred taxes which go far beyond the oil industry, I am not sure. It is called deferred taxes if you write off depreciation in the manufacturing business, for instance, faster than the normal life of the asset. I think such a figure might be very hard to achieve. It may exist, but I am not sure.


Bob Rae: Mr. Chairman, I have a supplementary question. When the government produces its tax expenditure figures, is it the intention of the government to give us the total cost of capital cost allowance deferrals? Will that figure be included in the accounting?


Ronald Stuart (Ron) Ritchie: I am afraid I cannot give the hon. member an answer on that because 1 just do not happen to know it. Personally 1 have some reservations about this tax expenditure concept. It seems to be based on the idea that somehow or other all revenue belongs to the government and any reduction from that is a tax expenditure. In any event we are committed to giving some information at the time of the budget on what have come to be called tax expenditures. I am not sure whether it will cover deferred taxation or not. I am not sure if I could find out that information in advance of the budget.


Bob Rae: Supplementary to that, I should like to indicate to the parliamentary secretary that he and I may disagree on the usefulness of the concept of tax expenditure. 1 assume from what the Minister of Finance has told us that he and the President of the Treasury Board have accepted the notion. I hope it will be included. If he cannot give us the figure requested by the hon. member for Comox-Powell River, perhaps he could tell us the total cost of section 66 of the Income Tax Act? Can he give us that figure, which includes oil companies, prospectors and other groups?

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Ronald Stuart (Ron) Ritchie: I am informed that there is no such estimate available at the moment. It is possible it may be included in the budget figures which will be submitted. I will make a note of it and suggest it to the minister.


Raymond John Skelly: The matter which bothers me, as I mentioned the other day, is that the tax system is a very difficult and imprecise method of governing the economy. When a tax saving is provided to people in one particular sector, we deprive others. As the hon. member for Winnipeg North said, we wind up literally forcing individual taxpayers to fund this program.
Also I am concerned with the statements of the hon. member for Bow River when he suggested that incentives created the great wealth in Alberta. It appears to me that that is not logical. The real boom in Alberta, and the program which developed therefrom, evolved more at the hands of the Ayatollah than anything done in Alberta. There are certain directions in Alberta today which will be very helpful in the future. 1 am referring to the attempt to diversify the basic economy of Alberta.
Rather than putting forward provisions such as this, perhaps we should look at using other instruments to direct the investments of this country into some of our other resource bases. We should not place this country into a resource dependent position. We should try to capitalize on some of our resource bases. If Alberta is successful in diversifying its industry, when that resource is depleted, surely we will see a much stronger province than the one which existed before the group led by the Ayatollah put Alberta in such a favourable position. In my opinion it has little to do with incentives. The fact is that the oil, gas and coal were in the ground when the dinosaurs roamed.


An hon. Member:: You mean when the Social Credit party was in power.


Raymond John Skelly: Hold it, please. Let me continue. You will have lots of time in a moment. There has been a suggestion that it was incentives such as this that helped to improve Alberta, incentives similar to the one in the act as described by the parliamentary secretary.
Let me refer to one other fact, and that is that as a result of incentives like this, or otherwise, we have now developed or found more gas than we can use. This is the result of incentives for investments such as this. That gas is now capped, and we find people before the National Energy Board attempting to export that gas across the border. This is what the taxpayers' money has done. What we have essentially done is produce an energy source we cannot use, and in fact we are now going to give the benefit of that to another country.
The suggestion is that perhaps we should, through incentives of various types, or by some mechanism, direct this investment into other industries so that we can increase employment in this country, maybe offsetting some of the problems we have as a result of importing high cost goods. Another implication

was that we should be encouraging individuals and small businesses to get into the oil business. That is almost an impossible hope, particularly in view of the way we are attempting to do that. The oil business is clearly controlled and held by the seven sisters, and to suggest anything else would be foolish.
We see on the one hand investments by small businesses and individuals being encouraged, while on the other hand they are being strangled by the fact that in order to borrow capital to make some of these investments they must pay prohibitive interest rates. Interest rates are in turn driven up and borrowing becomes even more difficult. We have contradictory efforts being made here. The one put forward in this clause should be the most appropriate one, and there should not be other government programs in direct contradiction to it.
Those are some of the things that concern me, and perhaps the parliamentary secretary can provide the answers. I am basically asking what industrial strategy affecting the total economy underpins the decision to adopt these tax savings for resource companies and other people who are encouraged to get into the resource business? What is being aimed at in the over-all picture?


Ronald Stuart (Ron) Ritchie: Mr. Chairman, I would like to comment on some of the remarks and implications by the hon. member, and also by the hon. member for Winnipeg North. It seems difficult to me to comprehend how, at a time when the whole world is energy short and Canada has the potential to be self-sufficient in energy, a situation which would be of great benefit to the economy of this country, one could question any reasonable effort to induce expenditure on exploration for the development of our energy potential. I might point out that when such expenditures are made they do not disappear into nothingness. Those expenditures in many cases are for manufactured products. The steel industry of Saskatchewan and the steel industry of Ontario are two of the areas to which that money goes. The food industry and all of the industries that supply drilling equipment, which involve a difficult logistics exercise, all share in these expenditures.
Surely it is clear that this country needs energy, that it has the potential for self-sufficiency in energy, but that will not be realized if investment is not induced, and it will not be induced if it is not attractive.
I had the privilege of seeing the oil exploration industry in this country grow from practically zero in 1947 to a very substantial industry of very great strength to the economy of this country. The industry was not built by the Ayatollah, it was built by sensible government policies that encouraged what proved to be, on balance, along with a lot of losing investments, a substantial success in discovering oil and gas reserves in this country.
It so happens that exploration success in this business, as in mining, tends to occur in jumps. You can go along for years, spend, spend, find nothing and become discouraged. Then you may have a brief period of great success. The policies followed in this country have produced gas which at the moment is
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surplus to our current needs. That is an asset which we should not deplore or question. We should congratulate ourselves. This is an asset whether we keep it in the ground, or follow the suggestion that we export some of that gas.
The hon. member talked about interest rates and asked why we have high interest rates in this country. One very powerful reason is that we are borrowing to keep alive. We are borrowing at the rate of $7 billion to $8 billion in the current year. If that were not the case and we were not under that kind of debtor's burden, we would not necessarily require these high interest rates. That natural gas surplus could help us earn our way in the world a bit better. It could contribute to ameliorating the conditions that have caused present high interest rates.
The hon. member for Winnipeg North spoke of things about which 1 am very sympathetic. He spoke of the need in this country for a more competitive, successful and dynamic manufacturing sector. He pointed to the way in which it has declined. I agree that we need to do something about the lack of dynamism in the manufacturing sector, or a large part of it in this country. We need this for purposes of employment and we need it to help pay our way in the world.
We also need this measure which is directed to something equally as important: self-sufficiency in energy in this country for the next several decades. These two needs are not competitive. In fact, as 1 mentioned a few moments earlier, the manufacturing sector can be helped through exploration and development expenditures, and by investment in pipelines and all of those things that come with success.
While I share some of the concerns of the hon. member, they really have nothing to do with taking a negative attitude toward this particular provision. 1 might also point out that this particular provision has nothing to do with some of the claims that have been made that investors can get something for nothing through tax revenues in this country. This provision is simply concerned with writing off legitimate exploration expenses. Depending on one's tax rate, which can scarcely be higher in this country than something like 62 per cent, that is all it can save you. It cannot save you 110 per cent. The hon. member is talking about something different when he is talking about that. He is talking about what is called superdepletion. That is something that is not being debated at this point. That is a debate which I suppose depends on what comes out in the budget.
This clause is not doing some of the things that remarks from the other side would suggest. It will make a substantial contribution to the promotion of self-sufficiency in energy in this country, and I can think of nothing more important for at least the next two decades.


Bob Rae: Mr. Chairman, I would like to respond to some of the things said by the parliamentary secretary, the hon. member for Winnipeg-Assiniboine, the hon. member for Mississauga South, the hon. member for the Western Arctic and others. We seem to have managed to stir some of the true believers in the Conservative party out of their doldrums.
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First of all, there is the question of relevance. This clause is an amendment to section 66 of the Income Tax Act. That section deals with the question of Canadian exploration and development expenses, and the way in which those expenses are written off. With due respect to the hon. member for Mississauga South, we are entitled, in view of that amendment, to talk about section 66, its effects, and the importance and relationship of this deduction to other deductions and, therefore, entitled to take this opportunity to ask the government to look at what is happening to our tax system, how fair it is, how effective it is, and whether it is achieving the results which we wanted it to achieve.
The member for Mississauga South reminds me of the person who was asked in an examination, "what is Moby Dick about?", and his answer was, "Moby Dick is about a whale". That is not a very imaginative or complete answer, because Moby Dick is about many things. It is about life itself. This section of the Income Tax Act is not just about the whale that is contained in clause 20, it is about the whole section 66 which deals with the very important feature of the tax system in Canada, and a very important innovation which was brought in by the Liberal party and to which my party has taken exception. We are using this as an opportunity to ask the government to look at that section again, and I think that we are perfectly entitled to do that because that is what Parliament is all about.
As for the intervention by the hon. member for Winnipeg-Assiniboine with his usual deftness, subtlety, and his concern for accuracy and fairness, I thought that he was going to talk about Shell Oil and Dome Petroleum, because the last time I spoke in this House he took such exception to my remarks he said that I was misleading the House and that he would come back and correct all the misleading information I had given to the House so that the truth would be known, because all that came forth from this party was untruth and error of fact and in interpretation.
Of course, the reason that the hon. member could not come into the House and correct the error and the untruth I was speaking is because the facts I was telling this House are correct. The interpretation of course is philosophical, and members of this House are entitled to take exception to that, but I see no reason to be abusive in taking exception to that philosophy. I happen to think that the philosophy and points of view which the member for Winnipeg-Assiniboine espouses have a disastrous effect on working people. It is terribly unfair, and it can be a vicious attack on the standard of living of the average Canadian.
The hon. member thinks that the two effects of the policies we follow are to drive business to bankruptcy and out of the country and to destroy what he refers to as the productive sector of the economy. With due respect to the hon. member for Winnipeg-Assiniboine, these discussions have been going on in industrial society since it was created. I do not see any reason for being particularly abusive about it. It is simply a difference of approach and interest, and I will leave the matter at that. We are certainly entitled to that difference without the

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kind of abuse and general derision that we always get from the hon. member for Winnipeg-Assiniboine.
The parliamentary secretary, 1 believe, said two basic things in answer to my original intervention. The first thing was that one judges the worth-while nature of a tax incentive by its success, and that if a tax incentive managed to achieve what it was designed to achieve, then it was successful. That suggestion in itself is very limited and one-dimensional.
In the early 1970s, there was a virtual strike of capital because of what the multinational oil companies felt was an unfair system of taxation in Canada. They refused to invest in frontier exploration and drilling. In some circles that would be known as a form of bargaining, that is, using their bargaining power by withdrawing their capital and refusing to invest. In other circles it would be known as economic blackmail. Members of the party opposite have taken the same view when they talk about a strike of labour. Some people refer to a strike as collective bargaining, while some extremists on the other side, such as the hon. member for Winnipeg-Assiniboine, would no doubt regard a strike as a form of blackmail.
Faced with that strike on the part of capital, the Canadian government had two choices. It could either knuckle under and give the industry what it wanted, or it could take the industry over. It could move toward public ownership. In the case of the Liberal government, and because it was a Liberal government, it did neither and it did both at the same time. It moved toward partial public ownership in the sense that it created Petro-Canada, but, of course, it did not give Petro-Canada the power that it needed. There was no public ownership or nationalization of Imperial Oil, Gulf, Shell or any of the other oil companies. The other thing which the Liberal party did was to provide this extraordinary range of incentives.
What the parliamentary secretary is telling us is, "Look, we have a problem. The problem is that we need to develop our oil and gas supplies. We have a bunch of multinational companies which are engaged in that business. How do we get them to do that business? We give them an incentive. If the incentive is sufficient and they are out developing the oil and gas, it therefore is working and is worth the price."
I suggest that this theory ignores some very important questions such as what is the price of the incentive, who pays the price of the incentive, who reaps the benefit of the incentive, and what kind of economic system functions like this? 1 am afraid that the parliamentary secretary cannot answer these questions. 1 honestly do not think that the Conservative party, with its philosophy and its commitment to this economic system under which we are now living, is able to deal with that problem.
Large multinational companies have gained control of the resources and are coming to the government and saying, "Look, this is the price of development". The Conservative party, with all respect to the hon. member for Winnipeg-Assiniboine, has as one of its major platforms and has indicated in all its public statements since the election and in the creation of the task force on Petro-Canada, that it is getting rid of Petro-Canada, that it is selling it off to the private

sector, and that the exploration and development parts will be sold to the private sector.
We do not know exactly what their plans are, but the plan in the task force report would permit the control of Petro-Canada by a group of large multinational companies with Canadian subsidiaries. If each one of those groups owned 2 per cent of the shares, five of them would own 10 per cent of these shares, and there is not any economist in Canada who would not say that if one owns 10 per cent of the shares of a large corporation one is able to control the direction of that corporation, because the rest of the shares would be sufficiently diversified that no one else would have control.
With respect to the first answer that the parliamentary secretary gave us, which was the answer of the Conservative party and the Liberal party before it, that since this is accomplishing what it was set out to accomplish, the answer is yes, the question which I was raising, and with respect I do not think the hon. member can answer it because it goes beyond the terms of reference of his party was: is it worth the price? What are the alternatives? The alternatives are philosophically unacceptable to the Conservative party, but I suggest that they are cheaper in the long run to the Canadian people and will guarantee that the benefits of research, development and exploration in oil will stay in Canada and be controlled by Canadians.
At what price do we continue to subsidize multinational and corporate development? It is like the case of Ford or General Motors deciding whether or not to go into Quebec. It is like the case of all these incentives and grants that are being talked about, whether directly or indirectly. The nature of our economic system is changing, and those true believers on the other side who do not recognize it will wake up with a shock one day.
The second question was the manufacturing one. With great respect to the parliamentary secretary, I do not think it is far-fetched to say that there are other reasons for our lack of competitiveness. The hon. member stressed the wages question, but I would stress lack of investment along with some of the structural weaknesses of Canadian industry. We cannot make much progress when we have a branch plant economy. It is impossible for that economy to expand and grow and concentrate unless there is planning and direction co-ordinated for the public good. That is the main problem, not the problem of wages, the one the hon. member brought up.
I say to the parliamentary secretary that it is not far-fetched to suggest-and this theory is not unique to me-that where you have a tax system that gives extraordinary benefits and an exceptionally low level of tax to the oil and gas industry, and where similar benefits are not given to the manufacturing sector, there will be distortions of capital investment. That is exactly what is happening.
The hon. member for Western Arctic in his intervention drew attention to himself for the second time since I have been here. The first time he had a teddy bear on his desk. The second time, in his child-like faith, he expressed the rights of
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multinational oil companies to continue to develop Canadian resources willy-nilly. In my opinion this is no longer adequate. We are looking at a set-up which is giving tremendous benefits through our tax system. Eventually the Canadian people will want to know what the cost is. The cost that I have suggested-1 think I am right but only time will tell, although 1 hope my predictions will prove wrong-will be a continued weakness in the manufacturing sector and there will be a total takeover and domination of our resource sector.
These things need to be said. Members on the other side want this to go through without any debate-I know it is in the interest of the Liberal party for it go through because it is embarrassed, it knows the measures and what they contain. The Liberals know they cannot defend them. They know they are not an opposition party but a government in exile. They never accepted the fact that they lost the election on May 22, and that they have no real basis either in philosophy, economics or politics on which to oppose this budget and these tax measures. I suggest the phantom opposition has disappeared and that the main opposition falls to members of this party. We are happy to fill that role. We intend to fill the role. We do not intend to disappear or make things easy for the government just because this is not its budget. It is a budget of "tight money's" first team instead of "tight money's" second team. We are glad to oppose it.


Mark Willson Rose: Mr. Chairman, I will speak briefly. We have heard some profound statements on where we are. As politicians, one of the reasons we disagree is that we do not share the same set of assumptions at all. We are arguing usually from a different base. It does not mean that all the righteous are over here. Sometimes we are told that only the self-righteous are over here and all the "Evel Knievels" are sitting opposite. 1 would withdraw the word "all", but certainly there are some we could disagree with.
We are not opposed to development nor to self sufficiency nor incentives. What we are concerned about is the nature of the development and the nature of the incentives. One of my colleagues mentioned, following the address by the hon. member for Bow River, that one of our problems is with the manufacturing industry, and that if we could develop a manufacturing industry from our indigenous resources, that would be all to the good of the country. We have not seen that happen. Quite the reverse, except in the case of Alberta.
The Ayatollah did not put the oil in the ground in Alberta; neither did Peter Lougheed nor Premier Manning who spent his life damning the banks as a Social Creditor and then joined the board of one of them. It is an accident, and some of us have been told that in spite of all its oil and gas, because it lacks entrepreneurial skills Alberta was once in receivership. It has not always been an affluent place. We are not opposed to incentives. If this clause was intended to give incentives to companies, whether spin-off companies of the multinationals or not, we would prefer them to be Canadian-owned, to provide secondary and tertiary manufacturing as is being discussed. I think that is the aim of Alberta's Heritage Fund. So if we listen to the "fast buck" artists who are so anxious to
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save us from our balance of payment deficit and ship all the cheap gas and oil across the border as soon as possible, I think Peter Lougheed has a right to be piling up all those royalties in his Heritage Fund. In a short while Alberta will need these funds for diversification. You can provide all the incentives you like but if there is no oil in the ground, that is it.
A number of people I have talked to are saying we ought not to believe there is a shortage. They are saying these bloody oil companies have some oil, and what they are doing is capping it until the price goes up. The parliamentary secretary has tried to clarify this for us. Under this clause we are not talking about capital cost allowances or fancy write-offs or anything, but that is irrelevant to our position in explaining the assumptions we are dealing with. It is not that we are opposed to the use of incentives per se. What we are saying is that we are not interested in being blackmailed or bribed or in providing bribes to companies that are doing very well in terms of their own profitability.
I am reminded that the premier of Newfoundland, Brian Peckford, has had some experience with oil companies. He has decided to deal with resource companies on his own terms. There was a strike, but in two years the workers were back on his terms. I suggest that we can do all the bribery we want and justify it in any way we like, but the oil companies are in the business of digging up oil and the mining companies are in the business of digging up minerals. If they are not able to do that they will not function very long as mining companies. It is not to anyone's advantage to see them disappear. What we are questioning is the need for these new incentives. At two dollars a barrel, companies were exploring all over the place, yet that was the time the major strikes occurred. The parliamentary secretary is more acquainted with the oil companies than we on this side, perhaps, but he can correct me if I am wrong.
The hon. member for Western Arctic thought these writeoffs in terms of exploration would contribute to a massive development of people's capital in this country. I would like to remind him that fewer than 10 per cent of Canadians, mainly the affluent, own any stocks at all. While we are willing to give tax breaks to the resource companies and oil companies, despite the promise of a $2 billion tax cut for low and middle-income Canadians during the last campaign we are now told by the Minister of Finance we cannot afford it. We can afford to give these tax breaks though.
One of the justifications used by the parliamentary secretary is that tax breaks do not disappear into nothing. After they are spent by companies, and they are going to be spent unless they are used as profits, banked or shipped out of the country to be invested in foreign lands, they are spent on various things that contribute to our economy. By giving these companies these breaks we do benefit and get back our taxes in other ways. There is a good deal of logic in that.
Could the same point not be made for any kind of subsidy? For example, could it not be made by a small businessman in a Newfoundland, Ontario or British Columbia town who is on

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U1C? After all, UIC funds are spent in the local community. Any kind of subsidy can be justified that way, even welfare or old age pensions.
Yesterday we were told that we cannot afford $9 billion to up the old age pension to the poverty line. However, we have a proposal which will cost precisely that, maybe not the same, but it is a similar fund for another purpose.
The parliamentary secretary, not deliberately, indulges in a bit of sophistry when he tells us that money given to any one group of people, such as resource companies, is stimulating the economy and is not going down the tube. It is not lost into nothing. However, he conveniently ignores the other forms of transfer payments of wealth which do precisely the same thing. That is a particularly important point.
There is one small item to which I wish to speak. I do not know whether the parliamentary secretary's former company has anything to do with any of the gas distributing companies that are so anxious to sell off our gas to the United States in return for lowering our balance of exchange deficit of between $7 and $9 billion a year. According to the figures I have, 13 per cent of our budget is used precisely for that purpose. I do not think anyone on this side disagrees that this is a very serious matter. Whether we can do much about it through methods such as this or selling off our cheap and accessible resources, as we have done with our oil which will force us into frontier expensive oil at tremendous risk in terms of the environment, is precisely another question. I put that before you, not because I have any final answer but merely because it is a question of concern to many Canadians. We do not necessarily think that decisions based on the profit motive, avarice, greed or whatever you want to call it, always add up to the best interests of our nation. That is where we part company with those who sit over there and with some of those who sit here.


Raymond John Skelly: Mr. Chairman, I wish to add a few comments in response to what the parliamentary secretary has said. They have been fairly well developed by the other two members who have spoken. I am concerned about the proposition that this kind of amendment to the Income Tax Act will create a situation where we will have more gas to export and therefore the exporting of that gas and other resources will provide us with a mechanism to offset the deficit in our balance of payments. That kind of logic occurred several years ago.
1 have a vague recollection of oil companies in this country suggesting there was not enough oil and that in fact we were running out. The price escalated and a lot of fright covered the land. Shortly after that the price rose. All of a sudden we were told they had underestimated the reserves and that we were in a position to export. The executives of the oil companies in this country suggested that we should start to pump the gas and oil over our borders and derive the benefit of this very vital thing that was surplus to our needs at that time.
Again today we are short. We do not have enough. We will run out in the eighties unless we make tremendous investment in the offshore expensive frontier areas. The question you have

to ask, and this is the problem in this clause, and the whole section we are dealing with, is why has no energy policy been stated by this government? We talk about self-sufficiency, but no clear direction has been set down that we can support. Leadership in the energy policy area has been put out by the energy companies. They are the ones suggesting we should be saving ourselves from a situation that sees us with a terrible balance of payments, a declining dollar, high priced imports, unemployment, and failure to diversify our industry.
I realize the benefits that accrue from that. Essentially we are back to the same old question, what is the direction? When are we going to hear from the government a clear policy direction that will justify putting in this or any other clause? What we are doing is putting in the mechanism and then developing the rationale for it.
This particular type of thing may or may not generate more oil and gas, and may or may not result in more individuals freeing up capital. Capital in this country is very scarce. What we need is a sense of direction as to where it will be invested. The people of this country should know this. Obviously Exxon, Gulf, Royal Dutch Shell and some other companies in this country do not have our goals at heart. Theirs is profit. Somehow it is expected the two will link together, our needs and theirs. That certainly has not proven to be the case in the past.
The area served by the hon. member for Cowichan-Malahat-The Islands, and my area of Comox-Powell River, are very short of energy. The kind of clause suggested here will not help us a lot unless we do not export to the United States, but ship to Vancouver Island and along the coast of British Columbia where we are energy short. We now buy energy at an extremely high rate.
We developed a cable to Vancouver Island that at one point was estimated would cost every family on the island $4,000 and there would be a continuous high price for electricity. If we are to have an energy self-sufficient policy, we must look at a variety of forms and not just extremely expensive investment.
Something else that concerns me has been stated before and is worth stating again. When you give benefits to a very small segment of the Canadian population, you provide those benefits at the expense of a lot of other people who are not so well off on the income scale. It strikes me that when people put up surplus capital and they obtain tax benefits like this, not just the profit behind it, others are in fact paying. I wonder what benefit a lot of people along the coast of British Columbia who earn modest incomes will derive from exporting gas to the United States and exporting coal to Japan when we are not providing diversity in industry, and not providing energy to places like Cowichan-Malahat-The Islands in an efficient form.
I want to come to the business of interest rates, the devalued dollar and our balance of payments. The B.C. Hydro Corporation went to New York to borrow billions upon billions to deliver energy in a form that is not necessarily the most efficient. The federal government has no suggestion on how we might provide these things in a very efficient pattern to areas
October 31, 1979

of the country that need them. Heavy concentration on high-cost areas is not what we need. Capital is scarce. We need to channel it in areas of investment which are extremely important. If this kind of tax amendments results in our exporting gas, it is not what we should be doing.


The Assistant Deputy Chairman:: Shall the clause carry?


Stanley Howard Knowles: On division!


[Stage Direction]
Clause agreed to.
Clauses 21 to 23 inclusive agreed to.
Bob Rae: On a point of order, Mr. Chairman, I have given notice to the Minister of Finance that we intend to discuss the small business tax changes in the course of this debate. Could the parliamentary secretary tell us what he considers to be the appropriate clause on which to discuss the changes in the small business tax rate?


Ronald Stuart (Ron) Ritchie: 1 think clause 38 would be the best one.
Clauses 24 to 31 inclusive agreed to.


Bob Rae: With respect, Mr. Chairman, I ask you to slow down. You are reading the numbers of clauses faster than we can find out what an individual clause is about.
Clauses 32 to 37 inclusive agreed to.
On clause 38-


Bob Rae: Thank you, Mr. Chairman. We indicated on second reading and I have indicated to the minister, that we are not happy about this particular change. There are two aspects on which I should like to hear explanations from the parliamentary secretary. Anyone who has had the misfortune to become involved with the Income Tax Act knows that the complexity of adding a third type of corporation creates an unnecessary anomaly and adds to the existing confusion. We started out with a purpose in according a particular rate, a 25 per cent rate, to small businesses earning between $150,000 and $750,000. There was a purpose behind that provision. It was to bring taxation relief to companies which were providing employment and expanding their operations in a very important sector of the economy. It is worth noting that the vast majority of Canadian workers are employed in small business. I see that the Minister of State for Small Businesses and Industry is here this afternoon, shaking his head whenever I get up, and I am sure he will have some comments to make about the positions which have been taken.
We can understand the purpose behind that differentiation in the rate but under the amendment a variety of people- journalists, hockey players, actors, doctors, lawyers, chartered accountants-are taking advantage of the small business cor-
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poration provision to incorporate themselves and reduce their effective rate of taxation. I am sorry the hon. member for Saint-Henri-Westmount is not here because I know that though he disagrees with me on many things he would agree with me on this one.
The fiction of becoming a corporation is not readily understood by the average citizen. The average citizen does not earn enough money to concern himself with whether he should be paying the private rate or the small business corporate rate or the large business corporate rate, or whatever. The vast majority of Canadians get their cheques, income tax is paid at source, they are entitled to certain deductions, and that is all there is to it. There are no capital cost allowances or capital gains or any of the other complexities of the act to be considered. For 90 per cent of the taxpayers of Canada the income tax legislation is simple-they pay their money and they get very little by way of deductions. It only becomes complicated when a taxpayer has a lot of money.
One of the anomalies I should like the parliamentary secretary to explain is this: why has the decision been made to create this third category in addition to the other two, the standard corporate rate and the small business rate? It will be difficult to establish who fits into this new category. It makes no sense from the point of view of stimulating the economy. These are not people who generate a lot of business opportunities. The amendment is simply a mechanism for allowing certain groups, mainly professionals, the advantages of corporations so that they can pay a lower rate of income tax.
I should like to hear an explanation of what the Minister of Finance meant in his statement accompanying the change when he said this would have a tax-neutral effect. I should like the parliamentary secretary to explain how that can be the case. I think I know what he means. It is not tax neutral between what he would have been paying as a private citizen, it is another form of tax neutrality, but I think it is misleading for the minister to say that this will be tax-neutral because it certainly is not; it is a reduction in the effective rate of taxation of upper middle income people. It is important to understand what is happening. It is increasing it from now, but it is reducing it from what it would be if we disallowed the incorporation provision.


An hon. Member:: Six o'clock.
Progress reported.


The Acting Speaker (Mr. Scott, Victoria-Haliburton):: It
being six o'clock, this House stands adjourned until tomorrow at two o'clock p.m., pursuant to Standing Order 2(1).
At six o'clock the House adjourned, without question put, pursuant to Standing Order.
80074-S3

Thursday, November 1, 1979