1979-11-02

ROUTINE PROCEEDINGS


Mr. Donald J. Johnston (Saint-Henri-Westmount):: Mr. Speaker, I rise, under the provisions of Standing Order 43, on a matter of urgent and pressing necessity.
Whereas the government of the province of Quebec has used substantial public funds to publish partisan propaganda in the form of a white paper supporting the Pequiste sovereignty-association option, and whereas on October 25, 1979, the Prime Minister (Mr. Clark) advised the House, in reply to a question by the hon. member for Beauce (Mr. Roy), that federal Crown corporations should not subscribe to campaigns pertaining to a referendum in the province of Quebec supporting the federal option, I move, seconded by the hon. member for Thunder Bay-Nipigon (Mr. Andras):
That the Government of Canada reverse its position with respect to the role to be played by federal agencies in the referendum and undertake to support the federal option with every means at its disposal to negate the Pequiste propaganda and ensure that the benefits of the federal option are known to every resident of the province of Quebec.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


POSSIBLE OIL PRICE INCREASE-REACTION OF CERTAIN MINISTERS OF FINANCE-MOTION UNDER S.O. 43
Hon. Marc Lalonde (Outremont):: Mr. Speaker, whereas our millionaire Minister of Finance (Mr. Crosbie) declared yesterday in Toronto that he had not heard any complaint in Canada about the possibility of the price of gasoline going to $1.30 a gallon, and whereas the Ontario minister of finance was present and said that obviously he would have to raise his
voice to be heard by the present Minister of Finance, I move, seconded by the hon. member for Lac-Saint-Jean (Mr. Lessard):
That the government provide a free medical examination in Ontario, without overbilling, to both ministers in order to assess the hearing abilities of the Minister of Finance of Canada and the voice problems the minister of finance of Ontario may have.


Mr. Speaker:: Order, please. The hon. member for Nunat-siaq (Mr. Ittinuar).


PUBLIC SERVICE
Mr. Peter Ittinuar (Nunatsiaq):: Mr. Speaker, 1 rise, under the provisions of Standing Order 43, on a matter of urgent and pressing necessity.
It has not been widely publicized that the radio operators' strike is inflicting hardships on residents of the Northwest Territories. We are concerned about safety, but on top of this is the fact that food and mail are no longer being shipped into communities whose only contact with the rest of the world during the winter months is by air. Supply shortages are impending. The backlog of freight in places like Churchill will take weeks to clear.
I therefore move, seconded by the hon. member for Comox-Powell River (Mr. Skelly):
That the President of the Treasury Board:
(1)	empower his negotiators to resume immediately negotiations with the radio operators;
(2)	assure that the negotiators are empowered to negotiate a settlement of the dispute, and;
(3)	after this has been communicated to the union, ask members of the union to return to work until a settlement has been resolved.


Mr. Speaker:: This motion can be presented for debate only with the unanimous agreement of the House. Is there unanimous agreement?


Some hon. Members:: Agreed.


Some hon. Members:: No.

November 2, 1979


UNEMPLOYMENT INSURANCE
Mr. Eymard Corbin (Madawaska-Victoria):: Mr. Speaker, under the provisions of Standing Order 43, I ask for the unanimous consent of the House to move a motion dealing with a matter of pressing and urgent necessity.
In view of the fact that hundreds of seasonal workers in New Brunswick, and especially in the economic area of Mada-waska, are being deprived of their unemployment insurance benefits; considering that the services of those individuals working for provincial minimum wages are essential to the survival of local industries, not to stress the necessity of an adequate income during the hard winter months for the families of those workers, I move, seconded by the hon. member for Grand Falls-White Bay-Labrador (Mr. Rompkey):
That the Minister of Employment and Immigration immediately investigate that situation and send on the spot one or several officials, if he does not want to go himself, and ask them to report to him in the shortest possible time.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


PUBLIC SERVICE
Mr. William Rompkey (Grand Falls-White Bay-Labrador):: Mr. Speaker, I rise, under the provisions of Standing Order 43, on a matter of urgent and pressing necessity.
As a result of the renewal of the strike by air radio operators because of the apparent change in the offer of the federal Treasury Board, Nordair has now cancelled its flights to northern Canada. Undoubtedly, the service of other airlines will be cut as well, including those in and out of Labrador.
[DOT] (mo)
As these flights are the only means of transport for people and materials, this situation will cause great economic hardship, particularly for those depending on government sources for their income. It will also mean severe personal hardship for families which are separated, for small business, and for those who depend on regular air travel to earn their living. In view of the fact that personally and collectively people in northern and rural Canada will suffer severely from this prolonged strike, I

move, seconded by the hon. member for Madawaska-Victoria (Mr. Corbin):
That this House call upon the Minister of Labour to intervene personally in this dispute and to call the parties together immediately for bargaining in good faith and in an attempt to settle this dispute now.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


NATIONAL UNITY
Mr. Dennis Dawson (Louis-Hebert):: 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.
We definitely know now what the Quebec government means by sovereignty-association. We also know that this publication presents a misleading analysis of the situation and history of Canada and will be widely distributed in Quebec at the taxpayers' expense, as emphasized by the hon. member for Saint-Henri-Westmount (Mr. Johnston). Therefore, I move, seconded by the hon. member for Charlevoix (Mr. Lapointe):
That the Minister of State for Federal-Provincial Relations and the Prime Minister take immediate steps to convene a federal-provincial conference where this proposal will be debated and where the provinces may state emphatically that they reject the association proposed by the PQ, while assuring Quebeckers that there is in Canada a will to change and that the federal system is the best to effect that change.


Mr. Speaker:: Order, please. 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.


VETERANS AFFAIRS
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, under the provisions of Standing Order 43, and seconded by the hon. member for Oshawa (Mr. Broadbent), I move:
November 2, 1979

That this House notes that Remembrance Day is only nine days away, and therefore urges the Minister of Veterans Affairs to introduce before that day his promised legislation respecting veterans, and this House expresses the hope that the proposed legislation will include prorata pensions for widows where the veteran's disability pension was below 48 per cent, necessary adjustments in the Compensation for Former Prisoners of War Act, the restoration of the basic rate of the 100 per cent disability pension to the take-home pay level of the five designated categories in the public service, and substantial improvements in the War Veterans Allowance Act, it being the view of this House that our tributes on November 11 to the fallen and to those who have died will have more meaning if we make proper and adequate provision for those who have survived.


Some hon. Members:: Hear, hear!


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


Some hon. Members:: Agreed.


Some hon. Members:: No.

[ Translation]


PUBLIC SERVICE
Mr. Jean-Robert Gauthier (Ottawa-Vanier):: Mr. Speaker, under the provisions of Standing Order 43, I request the unanimous consent of the House to present a motion dealing with an important and urgent matter.
Considering the importance of the deliberations of the standing committees of the House of Commons on the main estimates for 1979-80; considering the fact that several agencies have published and, in some cases, even tabled their reports in the House of Commons; considering the fact that those reports are of national interest and should be studied in depth by a standing committee of the House; and considering that because those standing committees of the House may not meet without a referral from the House of Commons, I move, seconded by the hon. member for Spadina (Mr. Stollery):
That an order of the House be made to the effect that the annual report of the Public Service Commission of Canada be referred immediately to the Standing Committee on Miscellaneous Estimates for study and consideration.


Mr. Speaker:: Order. The House has heard the motion of the hon. member. Under the terms of Standing Order 43, the motion requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Yes.


Mr. Speaker:: Since the House is agreed unanimously, I shall put the motion. Seconded by the hon. member for Spadina (Mr. Stollery), the hon. member for Ottawa-Vanier (Mr. Gauthier) moves;
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That an order of the House be made to the effect that the annual report of the Public Service Commission of Canada be referred immediately to the Standing Committee on Miscellaneous Estimates for study and consideration.
Is it the pleasure of the House to adopt the said motion?


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

Mr. Speaker:: Before proceeding to oral questions, I should like to signal the presence in the gallery of a distinguished visitor in the person of the Chairman of the Military Committee of the North Atlantic Treaty Organization, General Zeiner Gundersen.


Some hon. Members:: Hear, hear!



ORAL QUESTION PERIOD


Marc Lalonde: Mr. Speaker, yesterday the Quebec government released a white paper in which it clearly stated its position. In this document, the Parti Quebe-cois government reiterated that its option was in favour of an independent Quebec, with the possibility of some limited ties with the rest of Canada. The government also stated unequivocally that the referendum question would be based on this option of independence with limited ties with the rest of Canada. My question is for the right hon. Prime Minister.
Since this is an extremely important and significant development as far as the existence and the future of our country are concerned, can the Prime Minister tell us if he will advise his ministers and his Quebec ministers in particular to campaign actively under the leadership of the federalist group which the Quebec referendum legislation provided for and to answer "No" to Mr. Levesque's question?


Right Hon. Joe Clark (Prime Minister):: Mr. Speaker, I realize that since the Quebec government has now made its official position public, the situation is much clearer than before. We now have the government's official position. It is no longer simply a party's stance. This is incompatible with the

November 2, 1979
Oral Questions
idea of confederation and it is unacceptable to the Canadian government. Also, the federalists in my party's Quebec wing intend to take part in the fight against the ideas expounded in this document. But 1 do not want to limit the activities of government members to the province of Quebec or to the organization under the leadership of Mr. Ryan.
I think the main thing for the Canadian government to do is to continue to show that there is in Ottawa a government that has already initiated major and specific changes to the federalist status quo.


QUEBEC REFERENDUM-INQUIRY WHETHER QUEBEC CONSERVATIVES WILL ACTIVELY PARTICIPATE IN MR. RYAN'S GROUP
Marc Lalonde: If I understood the Prime Minister's reply correctly, he said that his supporters and his ministers, especially those from Quebec, will vote no in the referendum and will participate in the federalist group under the leadership of Mr. Ryan. If so, am I to infer that the statement made a few days ago by the Minister of Supply and Services, to the effect that it was too early to decide whether the Progressive Conservative Party would participate in the federalist group provided for in the Quebec legislation, is no longer valid, and that one may assume that the Quebec wing of his party will officially join the federalist group led by Mr. Ryan?


Charles Joseph Clark: Mr. Speaker, I am somewhat tempted to ask whether all Liberal militants will rally under Mr. Ryan's umbrella. A few have indicated that they are ready to participate. I think a rather important matter of principle is involved here, and I believe the hon. member for Outremont is well aware of it.
The question is whether it would help the cause of federalism to have a federal minister from Quebec join a somewhat limited group formed by Mr. Ryan. I think that now that we are in a position to discuss party strategies here, it would probably be better for us to let the supporters join that umbrella committee and to let the federal ministers from Quebec or elsewhere show through their actions and their activities this government's determination to bring about a truly renewed federalism.


Marc Lalonde: Mr. Speaker, I should like to ask a supplementary question.
The answer is getting more and more confused and incredible. The ministers of this government, especially those from Quebec, do not sit here only as members of the Progressive Conservative Party, but as members of the Canadian government and the government of all Canada, including Quebec. I find it incredible that the members of this government, especially those from Quebec, would be in a position where they

would not take an active part in the activities of the federalist group headed by Mr. Ryan and would not be really taking part in-


Mr. Olivier:: Roch, you don't seem to know it, but you will talk when your leader tells you to.


Marc Lalonde: I hear the Minister of Supply and Services-


Mr. Speaker:: Order, please. I think we should go on listening to the hon. member's question.


Marc Lalonde: I would like to put my question to the Prime Minister. Can he assure us that government members, especially those from Quebec, will be actively involved under the umbrella organization that will be led by Mr. Ryan during the next campaign on the referendum or should we understand that they will continue to do what they have been doing until now, that is sit and wait hoping that others will do the job for them and assume the key role of the Canadian government?


Charles Joseph Clark: Mr. Speaker, cabinet ministers will actively promote federalism in Quebec and in the other provinces. Our government will continue to make concrete proposals such as that on lotteries or that concerning jurisdiction over offshore resources, both opposed by the Liberal party. These proposals show that since the last election on May 22 the federal government in our country is not prisoner of the status quo, that it is determined to set out various approaches to the issue of federalism in Canada, and that it can, in co-operation with all provinces which it considers as partners and certainly not as enemies, demonstrate the possibility of a renewed federalism.


QUEBEC REFERENDUM-GOVERNMENT POSITION ON QUEBEC WHITE PAPER
Mr. Rod Blaker (Lachine):: Mr. Speaker, my question is a supplementary addressed to the Prime Minister. I might indicate that for those of us who are resident in the province of Quebec, we find it nearly mind-boggling that the Prime Minister of Canada indicates that his answer to the threat of separation has something to do with lotteries.
I want to ask the Prime Minister, given the publication of the Quebec white paper, and given his position as Prime Minister of Canada, what sort of response can he now offer to all the people of Canada and specifically, of course, to the people of Quebec? Is he going to cause his government to issue an answering paper or document? What mechanism can he bring to bear to reach out to the hearts and souls of Quebeckers and encourage them to remain part of Canada? Is constitutional reform one of his answers? What answer does he give?


Charles Joseph Clark: Mr. Speaker, the answer I give is that this government will continue the process we began as soon as we became the Government of Canada, to make concrete changes in the constitutional status quo of the country and, indeed, to make changes which the former gov-
November 2, 1979

ernment refused to make and, by refusing, associated the reputation of the federal system with the status quo.
We believe that it was very important indeed, on the question of the lotteries, to demonstrate that there was a willingness to work with the provinces where co-operation is possible and not simply to use this as another occasion for confrontation. We thought it was very important, on the question of jurisdiction over resources under the sea, to indicate that this was a government with an open mind toward a full future in a new confederation for all the provinces in Canada. We have taken those steps, not by talking about constitutional reform, but by acting on constitutional reform-and that is the path we will continue to take.


Some hon. Members:: Hear, hear!


Roderick Blaker: Mr. Speaker, the Prime Minister is referring to government-to-government and administration-to-administra-tion concepts. My question to him is based on the people-to-people concept. The Prime Minister is now asked to lead, in the face of possible dissolution of our country.
The Prime Minister talks about constitutional packages. 1 will put a question in that regard. The Prime Minister will be aware that the previous government provided grants to citizens or plaintiffs who wanted to check the constitutionality of minority language rights, minority education rights and religious rights. I give him, as examples, the Forest case in Manitoba and-


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


Roderick Blaker: Does the Prime Minister and his government have a policy now for the granting of moneys to support plaintiffs who choose to pursue their constitutional rights under the British North America Act?


Charles Joseph Clark: Of course we do, Mr. Speaker, and it is the policy that we have already demonstrated in regard to the Manitoba case cited by the hon. member. I should make one thing clear. I think, and it may well be, that there is a difference of opinion in the Liberal party. My view is that in the minds of the people of Quebec, as they come to a decision on the referendum campaign, the time for rhetoric is over. They do not want to have missionary leaders coming before them and making vague promises: they want to see what governments are doing.
What we are doing, as the national government, is going before the people of Canada and before the people of Quebec, whose judgment and capacity to come to decisions on the basis of what the government is doing, rather than just in terms of what the government says, we trust. We are trying to demonstrate that in Ottawa, now, there is a national government prepared to open doors which the former government had closed. I trust the people of the province of Quebec to see the effect that that will have upon renewing the federal system in
Oral Questions
this country; and we intend to give leadership by action, not leadership by rhetoric.


Some hon. Members:: Hear, hear!


QUEBEC REFERENDUM-INTENTIONS OF PRIME MINISTER IN PRE-REFERENDUM PERIOD
Mr. Edward Broadbent (Oshawa):: Mr. Speaker, I have a question for the Prime Minister. In its white paper the PQ has stated very clearly its policy about the future of our country. My question is the following: What will be his personal contribution to the important debate on the referendum in the province of Quebec?


Charles Joseph Clark: Mr. Speaker, I want to continue to have a federal government determined to respect the aspirations of Quebeckers and to find means that will make it easy for us to seek true agreements, and not only a government always seeking means or reasons for confrontation. It is this spirit that has prompted the federal government to take these initiatives on the questions I have mentioned today. In fact, it is this spirit that prompted my decision not to threaten with a federal referendum, because it was indeed considered as a threat by the people of the province of Quebec.
I am convinced that this threat did influence some Quebeckers into considering the PQ option because it was felt that the federalist option as presented by the former government was full of threats.


QUEBEC REFERENDUM-INQUIRY WHETHER GOVERNMENT WILL PARTICIPATE IN DEBATE OUTSIDE HOUSE OF COMMONS
John Edward Broadbent: Mr. Speaker, I have a supplementary question for the Prime Minister. As Prime Minister, and particularly as an English-speaking Canadian from outside Quebec, is it his intention to take part in that debate not only in the House of Commons in Ottawa, but also in Jonquiere, in Montreal and in every region of the province of Quebec, in order to explain to Quebeckers that there are people in the other provinces who want a renewed federation and who can give Quebeckers an opportunity to be both Quebeckers and Canadians?


Charles Joseph Clark: Mr. Speaker, just like the Leader of the New Democratic Party, I am an English-speaking Canadian who lives outside Quebec. Just like the Leader of the New Democratic Party, I try to be present in Quebec as frequently as possible, and it is my intention to continue to act the same way. I hope and I am sure that the Leader of the New Democratic Party will also be there. But 1 will be there as the Prime Minister of Canada, to show Quebeckers that with a Prime Minister who does not come from their province, their aspirations will be respected. I will be there as the Prime Minister of Canada to explain the way in

November 2, 1979
Oral Questions
which the federal system will be efficient for Quebeckers. I will be there as the Prime Minister of a great country, and not as a mere participant in a debate on a very important matter for that province.


John Edward Broadbent: A final supplementary question, Mr. Speaker. Earlier this week, Premier Lougheed made it clear to the people of Canada that he wanted economic sovereignty and political association with the rest of Canada, whereas Mr. Levesque wants the opposite: he has indicated that he wants economic association and political sovereignty. Both represent clear and distinct threats to the future of this country; I do not think there is any doubt about that.
Are we to understand from the Prime Minister that he intends, therefore, to participate fully in a referendum debate throughout the province of Quebec, and not only participate but make concrete suggestions for change to the people of the province of Quebec, in order to make it clear to them that we can create in this country a society for our two principal linguistic groups that is both decent and exciting?


Charles Joseph Clark: Mr. Speaker, regarding the situation in Alberta, I would suggest, with all respect, that the Leader of the New Democratic Party might find it instructive to consult with Premier Allan Blakeney regarding his interpretation.
Some bon. Members: Hear, hear!


Charles Joseph Clark: It does not appear to accord exactly with the interpretation of the Leader of the New Democratic Party in this House.
Concerning the approach that this government intends to take in the province of Quebec, we are going to continue a policy which we have begun-I think with some modest success-to demonstrate to the people of Quebec that there is a government of Canada now that holds open questions which the former government has held closed.


An hon. Member:: Which ones?


Charles Joseph Clark: A former minister asks me, "Which ones? One had to do with the co-operation on lotteries, which was an important, symbolic difference.


Some hon. Members:: Oh, oh!


An hon. Member:: Change the name.


Charles Joseph Clark: The second has to do with the question of jurisdiction over resources under the sea. The third has to do with the question of the referendum and whether it will be helpful to federalists to have the menace of a national referendum waved around by the federal government. An area in which we happen to be in accord with the former government has to do with the role of Crown corporations: we think they should not be playing an active role on one side or the other, as

agencies or emanations of the Government of Canada, in that debate.
I make the point clear that we have been acting through the past five or six months to take concrete action to demonstrate the determination of this government, not simply to sell federalism but to reform federalism. What the people of Quebec are looking for is not an exercise in salesmanship; they are looking for an exercise in reform. What they have with this national government is a national government committed to constitutional reform.


Some hon. Members:: Hear, hear!


THE CANADIAN ECONOMY
Hon. Robert K. Andras (Thunder Bay-Nipigon):: Mr. Speaker, my question is directed to the Minister of Finance. On Wednesday, The Globe and Mail quoted the Minister of Finance as confirming that his party, which very recently claimed that a stimulative deficit, an increased deficit, was the only way to get the economy moving, now is claiming that a reduced deficit is the only answer. Will the minister explain to the House this transformation, not only in his policies but in his economic theory as well?


Hon. John C. Crosbie (Minister of Finance):: Mr. Speaker, my economic theories have never changed.


Some hon. Members:: Hear, hear!


An hon. Member:: You never had any.


John Carnell Crosbie: When I observe the huge deficit which this country has borne as the results of the previous government's actions for the last two or three years, and the heavy drag that is on the country, the way that it is forcing up interest rates and the way it is competing with the private sector, then it becomes obvious to me that a stimulative deficit for this country next year will be one that is lower and lowers financial requirements for the government. We have to reverse the suicidal course we were on when the government changed last May.


Robert Knight Andras: A supplementary question, Mr. Speaker. There has been no substantial gap between the economic forecasts or the deficit as known to the hon. minister before May 22 and now. Would the minister confirm to this House that it is not changed economic circumstances, but it is the change of theories that is responsible for this amazing reversal in his policies?


John Carnell Crosbie: Mr. Speaker, it is a change in observing what the financial condition of the government is and what the results would have been, as shown in the statement that was issued by my learned colleague, the President of the Treasury Board, and myself last July. This showed the projections of
November 2, 1979

where we would be if the government's same policies and programs continued into the next three or four years. We would reach, I think, a national debt of SI04 billion in four years' time if that kind of policy was continued.
When we looked and saw the lack of stimulus that these huge deficits had been having, and have had this year, and when we looked at the forecasts in the budget of November 16 and saw how inaccurate they were, with a 6'/2 per cent inflation forecast which now turns out to be 9.6 per cent, with no mention of a deficit, and encroaching on the balance of payments in the international account in excess of $7 billion which I had to reveal for the first time on July 26-I could go on and on with the monstrous revelations we have had since we came into power.


Robert Knight Andras: A final supplementary question. The hon. minister is indulging in great-


Mr. Speaker:: Order. The hon. member for Stormont-Dun-das.


GOVERNMENT'S FINANCIAL REQUIREMENTS FOR 1978-80
Mr. Ed Lumley (Stormont-Dundas):: Mr. Speaker, my question is also for the Minister of Finance. He has again maintained that the reason his government has cancelled or postponed the campaign promises they made is as a result of the financial situation they found when they took office.
Will the minister now confirm to the House his forecast of July 26 to which he just referred, to the effect that not only are the government's financial requirements for 1978-79 $1.16 billion lower, but also the anticipated cash requirements for 1979-80 are $750 million lower than the forecast of his predecessor on November 16, 1978? Will the minister also confirm that the current figures are actually lower than our November 16 forecast, lower than the figures given by the President of the Treasury Board on July 20, and lower than the wildly inflated predictions on which his party, nevertheless, based their whole campaign platform?


John Carnell Crosbie: 1 will say this, Mr. Speaker, that last July 26 it appeared that the borrowing requirements of the government would be some $750 million less than had been forecast in the budget of November 16. That was last July 26. The latest, most up to date figures will be produced in our coming budget, which we hope will be this month. I hope that improvement continues. But, as hon. gentlemen know, we have had heavy additional expenditures, and the oil import compensation program caused by international energy price increases-


An hon. Member:: Worse.


John Carnell Crosbie: Not worse. It is a lot better than it would have been, Mr. Speaker, because of the strict economies practised by the President of the Treasury Board who has now put fear
Oral Questions
into the hearts of all those who would come forward with overruns-whereas before, nobody cared.


Some hon. Members:: Hear, hear!


Edward C. Lumley: Mr. Speaker, the minister just referred to one of the reasons why he could not implement some of these promises as being the result of the increase in international oil prices. He referred previously to the increased cost to the government of the oil import compensation payments and the consequent drag on the government's finances.
Will the minister reaffirm to this House the validity of the figures he released on July 26 which demonstrated that the increased compensation payments will be almost completely offset by increased government revenues from Canada's energy exports?


John Carnell Crosbie: Mr. Speaker, in so far as the campaign promises are concerned, one of our major promises is before the House in the form of the mortgage tax credit and interest credit bill. 1 am hoping that hon. gentlemen opposite will join with us in assuring the promise is kept before Christmas, so that the people of Canada will have benefit of the tax reduction that the home owners of Canada were promised.


Some hon. Members:: Hear, hear!


John Carnell Crosbie: Other promises will be kept as the years go on. The longer we are in power, the more we will be able to keep them, because the financial situation will be improved and because our economic situation will be improved the longer we are in power.


ELECTION PROMISES OF CONSERVATIVE PARTY
Mr. John Evans (Ottawa Centre):: Mr. Speaker, I have a question for the Minister of Finance. The Minister of Finance and the President of the Treasury Board, in their July press conference, indicated that the terrible fiscal outlook of the country at that time had forced them to curtail their election promises.
Is the minister saying directly to the people of Canada, right now, that he uncovered something in the fiscal forecast that it did not know about before the election, and was it that change in the fiscal forecast that caused him to deny the people of Canada all the election promises he had made?


John Carnell Crosbie: Mr. Speaker, I have to observe that this is a juvenile line of questioning.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


An hon. Member:: You are talking juvenile.


John Carnell Crosbie: It was the people of Canada who stopped hon. gentlemen opposite from carrying out their campaign promises-


Some hon. Members:: Hear, hear!

November 2, 1979
Oral Questions


John Carnell Crosbie: -and they are going to continue doing it. Our campaign promises are going to be carried out as economic and financial conditions permit: I can assure hon. gentlemen of that.


Some hon. Members:: Hear, hear!


John Leslie Evans: Mr. Speaker, on July 20 the two ministers to whom I just referred indicated shocked surprise that the 1982-83 financial requirements of the government were going to be $10.41 billion. Yet on February 15 of this year the President of the Treasury Board told this House, when he was in opposition, that the financial requirements would rise to $13 billion by 1981. I ask the minister, why was he paralysed into inaction by that surprise, when the forecast of what is actually happening is less than the forecast they made in February?


John Carnell Crosbie: Mr. Speaker, that is one of the most convoluted questions I have heard.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


John Carnell Crosbie: Anyone who can understand that question has to be a genius-and they are obviously on the other side!


Some hon. Members:: Oh, oh!


John Carnell Crosbie: In July, the President of the Treasury Board and I submitted certain figures to the Canadian public that showed the financial requirements would be stupendous if the present course of the government did not change, and that is what we are engaged in changing. We are going to reduce the financial requirements to give the private sector more room so we can reduce interest rates and improve the prospects for Canada and Canadians in the coming years.


ECONOMIC FORECASTS-ELECTION CAMPAIGN PROMISES
Donald James Johnston: Mr. Speaker, I would like to continue this juvenile line of questioning!


Some hon. Members:: Hear, hear!


Donald James Johnston: In terms of convolution, we are learning from the master. He has been complaining loudly and clearly about not being able to implement his election promises because forecasts have not been as they were supposed to have been. We are puzzled by that, and I would like the minister to confirm, for example, that in two very important areas we forecast unemployment, last November, for 1979 being in excess of 9 per cent. In fact, I believe it is something just over 7 per cent. In addition we forecast, very conservatively, job-creation at 250,000. I understand it is 325,000 for the current year. Would you confirm that to the House, Mr. Minister?


John Carnell Crosbie: Mr. Speaker, I will confirm to the House that this party has kept, and is keeping, its election promises. In particular, the main election

promise was to put this country on a proper sound economic course, to reduce the federal deficit, to get spending under control and to run this country properly. Just another example that I gave a couple of minutes ago is the mortgage interest tax credit plan.
As to forecasts, the budget of November 16, 1978, contained no forecast of what the unemployment rate would be. Apparently that was too tricky for the minister to include in his budget and he did not forecast what the unemployment rate would be. Luckily for us and luckily for Canada, the unemployment rate is better than any of the forecasters had predicted. I am glad of that; I am delighted with it. I do not know whether it can be ascribed to anything hon. gentlemen did. If it can be ascribed to anything they did, I congratulate them for it.


Donald James Johnston: Mr. Speaker, the minister has not put forward a scintilla of evidence that there was anything he did not know about at the time he came to office. In fact, all the forecasts, for the most part, are more favourable than those originally forecast.
I would ask the minister this question: With respect to economic growth in this country, under the Liberal budget, independent observers-as I recall-estimated between 2.2 per cent and 3.4 per cent for the current year. I understand- and I wish the minister would confirm this to the House-that last Wednesday he stated the economic growth of the GNP this year for Canada would be in the order of 3.5 per cent; and all of this under a Liberal budget!


Some hon. Members:: Hear, hear!


John Carnell Crosbie: Mr. Speaker, it is a wonder that this country is surviving Liberal budgets. What the former minister of finance forecast, the member for St. Moritz-


Some hon. Members:: Oh, oh!


John Carnell Crosbie: What the member for Saint-Maurice forecast, whose bills I am bullying through the House now and trying to get the House to adopt-


An hon. Member:: They are your bills.


John Carnell Crosbie: -was an economic growth rate of 4 per cent to 444 per cent. As it turns out, it is certainly going to be under 3 per cent. But in the budget, hopefully, later this month we will give our latest forecast for this year and for next year.


Mr. Trudeau:: Hopefully, under 3 per cent.


John Carnell Crosbie: Hopefully. It is likely to be under 3 per cent, so unfortunately the minister's economic growth rate forecast has not turned out to be accurate.
November 2, 1979


PUBLIC SERVICE
Mr. Ray Skelly (Comox-Powell River):: Mr. Speaker, would the minister explain to this House the present position of his department on bargaining with the radio operators, and explain any conditions which his negotiators have imposed as a prerequisite to bargaining? Specifically, would the minister explain and justify to this House the last offer submitted by his negotiators to the radio operations union?


Hon. Sinclair Stevens (President of the Treasury Board):: Mr. Speaker, our position in the Treasury Board, with respect to this unfortunate labour dispute, is that we are willing to meet with the radio operators' negotiators at any time. We feel it should be a condition, though, that prior to such meeting they stop breaking the law and that they ask and have their designated employees return to their proper jobs.
As far as our offer is concerned, I would assure the hon. member that there is surprisingly little difference, I understand, between the union's last demand and our offer. In short, if the union is willing to reveal its bargaining position, we are willing to reveal ours.


Raymond John Skelly: Mr. Speaker, I ask the President of the Treasury Board this question: Would it be fair to say that there are no air or coastguard radio services in Canada because the offer put forward by the negotiators could in no way be construed as a fair or serious offer, and that the offer was, in fact, a retreat from the previous government position?


Sinclair McKnight Stevens: Mr. Speaker, if I may answer that point, the simple answer is no. I will expand on that. The previous government's mandate was to offer a 7 per cent increase in the first year and to offer a further 7 per cent increase in the second year. A conciliation report recommended that in the first year the increase be 7.79 per cent, and in the second year the increase be 7.13 per cent. That conciliation report was agreed to by the union representative on the board looking into the matter. We have indicated to the union that those terms are acceptable to us, and have suggested a further settlement for a third year if the union wishes to negotiate for the third year.


TRANSPORT
Mr. Charles Mayer (Portage-Marquette):: Mr. Speaker, my question is to the Minister of Transport, who is also responsible for the Canadian Wheat Board. It has to do with the port of Churchill. I noticed recently that the shipping season was extended in the St. Lawrence Seaway from December 15 to December 18. I was wondering whether the minister has given any thought to increasing the length of the shipping season at
Oral Questions
Churchill, with an eye to increasing the utilization of the port and improving the over-all movement of grain out of the prairies.


Hon. Don Mazankowski (Minister of Transport):: As the
hon. member knows, this government is committed to expanding utilization of the port of Churchill. This is something I am personally endeavouring to undertake. With this in mind, we have been exploring a number of initiatives aimed at increasing the utilization of the port and extending the length of the shipping season.
I am pleased to announce to the House that arrangements were completed, on October 30, I believe, to move a cargo of some 24,000 tons of barley from Churchill to Poland. The mv Arctic will be contracted to do this job and will be arriving at Churchill about November 10. This is certainly a major breakthrough for the future development and utilization of the port.


UNEMPLOYMENT INSURANCE
Eymard G. Corbin: Mr. Speaker, my question is for the Minister of Employment and Immigration. In view of the very tense social climate surrounding demonstrations by hundreds of seasonal workers who have been besieging Canada Manpower centres in northwestern New Brunswick for the past ten days, could the minister tell the House when he intends to study the legitimate demands of these workers so that they be not unjustly and arbitrarily deprived of a minimum amount of unemployment insurance benefits to which they thought they were entitled through hard work last spring or last summer for the Irving or McCain companies and for tomato and tobacco producers in southern Ontario?


Hon. Ron Atkey (Minister of Employment and Immigration):: We are directing attention to the situation in Edmund-ston-the application of new amendments to the Unem-ploymemt Insurance Act to people in that region, and the allegations of unfairness which have arisen. It is a very difficult situation, and I would point out to the hon. member that this matter relates to amendments put forward very vigorously by his party, which was the government in the last Parliament. They were put forward very vigorously and were passed into law.
We are now seeing, of course, the result of those amendments and in their administration we do see some examples of unfairness. To the extent that they relate to regional consider-

November 2, 1979
Oral Questions
ations and difficulties involving boundaries, I will be looking at the situation to see if I can provide some relief.
[ Translation]


Eymard G. Corbin: Mr. Speaker, before putting my supplementary, I would like to remind the minister that the regulations were proclaimed by the government opposite. The minister does not seem to be at all aware of the urgency of the situation from the social point of view, a situation which I brought to his personal attention and that of his officials. Is he at last seriously going to turn his attention to these incidents and send an official or a team of civil servants to that area to report back to him as soon as possible before violence breaks out?


Ronald George Atkey: In answer to that, Mr. Speaker, I should say that the long-term solution to this particular problem is to find long-term employment for the people who are seeking unemployment insurance. That is what will happen under this government.

[ Translation]


FEDERAL-PROVINCIAL RELATIONS INQUIRY WHETHER AGREEMENTS REACHED WITH PROVINCES WILL APPROVE SOVEREIGNTY-ASSOCIATION
Mr. Yvon Pinard (Drummond):: My question is to the Minister of State for Federal-Provincial Relations. When being interviewed this week, he advocated a so-called new approach to federalism and the constitution and talked about bilateral agreements with terms varying from one province to the other. We know very well that similar agreements were made by the previous government not so long ago with the provinces, particularly respecting immigration. Can the minister say today what is different in the type of bilateral agreements he has in mind, and whether such agreements can go far as sanctioning sovereignty-association, for example?


Hon. Bill Jarvis (Minister of State for Federal-Provincial Relations):: Mr. Speaker, I think there are two types of bilateral arrangements. First, as in the case of offshore resources, a bilateral arrangement is a starting point for constitutional negotiations. Second, there are other things like the duplication of services, the overlapping of jurisdictions. In this area, I am not sure whether arrangements have been made with one, two or three provinces where this is more important to an area, for example. About the duplication of services, we have resumed the bilateral negotiations which began under the former government. There is now more motivation for this group in my office.


NATIONAL UNITY
Mr. Paul Dick (Lanark-Renfrew-Carleton):: Mr. Speaker, I should like to ask a question of the Prime Minister or the minister in charge of federal-provincial relations. In view of the Supreme Court decision in McKay v. The Borough of Etobicoke, argued by a former colleague, Andrew Brewin, in which it was decided that all Canadians had a civil liberty of political action in the federal field, and thus that no municipal or provincial legislative authority could derogate from the entrenched and inalienable right of Canadian citizens to participate in political affairs touching our federal government; and in view of the Quebec white paper and prior legislation forcing people to work in groups either for or against, is it the opinion of the federal government that such action is ultra vires of the Quebec legislature and that all federal people, or people interested in keeping this country together, could in fact work independently, because this touches the very essence of the federal nature of Canada being the retention of the state of Canada?


Robert Jarvis: I apologize to my hon. friend; I am not familiar with the details of that judgment, but I will undertake to make myself familiar with it at the earliest date and report to him on Monday.
What the hon. member is asking me to conclude is the opinion of the Department of Justice with respect to what might flow from that decision. I regret I cannot comment on that aspect, but I will respond to the hon. member on Monday at the latest.


THE CANADIAN ECONOMY
Mr. Fonse Faour (Humber-Port au Port-St. Barbe):: Mr. Speaker, my question is directed to the Prime Minister. Yesterday, the Minister of Finance stated in a speech to the Empire Club in Toronto that Canadians can handle a 30-cent increase in the price of gasoline.
Bearing in mind that no agreement has yet been reached with the provinces, I should like to ask the right hon. gentleman whether this is now government policy and, if so, whether the Prime Minister realizes the serious problem it presents to people in Atlantic Canada who, along with people in the north, currently pay the highest price in Canada for gasoline?


Charles Joseph Clark: The minister in his remarks yesterday made it clear that it is not government policy. In answer to the second part of the question, I may say we are certainly aware that any increase in fuel prices will
November 2, 1979

have a particularly serious impact on some regions of the country and on people with lower incomes. We shall certainly want to take account of that unfortunate consequence either in the energy package or in the budget.


Alphonsus Faour: If it is not government policy, why is the minister making these statements? The minister also said yesterday-I am paraphrasing him-that he had not heard anyone complain about a proposed price increase. Perhaps he is deaf.
I should like to ask him whether he has talked to people in the Atlantic region, particularly to people in his own riding. If he has, or if he has not, I am sure he has heard these things. Why is he misleading the people of Canada by making statements like this?


John Carnell Crosbie: Mr. Speaker, I regret that the hon. gentleman was not at the Empire Club yesterday to listen to my address.


An hon. Member:: You should have been in the House.


Mr. Fleming:: Parliament, or the Empire Club, which comes first?


John Carnell Crosbie: It was a 40-minute address enthusiastically applauded by the 1,200 who were there.


Dennis Dawson: They must have been laughing.


John Carnell Crosbie: It dealt with the serious economic problems this government is going to overcome. One of the matters dealt with was the effect of the energy situation and the possible effect of that on balance of payments deficits in the 1980s, which is a reason this problem has to be overcome. The people of Atlantic Canada and people in my district know this problem has to be overcome, and they are prepared to do their share. They trust this government which is trying to do something long term and fundamental for the people of Canada.


An hon. Member:: What an empty answer.


NATIONAL UNITY
Pierre Elliott Trudeau: Mr. Speaker, the Prime Minister told this House during the throne speech debate that being a member of Parliament from Alberta would not prevent his being the Prime Minister of all Canadians. He is reported to have said, after his meeting with Mr. Ryan last week, that, not being a citizen of Quebec-I wonder where he got that expression-he would not participate actively in the referendum debate. He is reported this
Oral Questions
morning as having said at a press conference that not only would he not participate but, and I quote:
There is a very real danger that the participation of the federal government could be seen as an interference that would be counter-productive to the federal cause.
We have all these assurances that neither the Prime Minister nor the government as such will participate in the debate, I believe a position which was confirmed by the Prime Minister's answers this morning regarding himself personally; but in so far as the government is concerned, he did say that he would stand firmly against the status quo.
Can the Prime Minister say as clearly that he is against sovereignty-association and that his ministers will be for a "No" to the sovereignty-associationists' "Yes"?


Charles Joseph Clark: Of course, Mr. Speaker, I can repeat that assurance. I perhaps should suggest to the right hon. member, whose influence in the province of Quebec 1 respect, that I hope that fairly soon he will begin to turn his attention to dealing directly with the threat that is posed in the sovereignty-association document which has now been published by the government of Quebec, and will stop trying to create doubts in the minds of Quebeckers or other Canadians as to the intentions of this government.
The right hon. member and I may differ as to the strategy involved. He followed a course which had a very active interventionist role in defending the type of federalism which he had developed over time. My view is that the very vigour of that defence in many ways caused people who might have become supporters of federalism to be driven away from a status quo which they saw as rigid. So we have removed some of the policies which were followed by the right hon. gentleman when he was Prime Minister because we believe that they were counterproductive to serving the interests of federalism.
We are not going to have an information group in the FPRO which is seen as a propaganda agency. We are not going to threaten Quebeckers with a federal referendum in the spirit of menace. We are not going to have, as I believe the right hon. gentleman did not want to have, Crown corporations making contributions which could be construed as an undue interference in the political affairs of Quebec in a way which would have given the separatists an extra weapon.
We want to take initiatives against sovereignty-association, not simply by declaration but by concrete actions of the kind we have taken, and also by removing irritants which can serve the cause of separation if those irritants persist.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: Mr. Speaker, I understand the message of the Prime Minister. It was given several times this morning. I think we would have preferred a clear answer to the question. Nobody in this House heard the Prime Minister say that his ministers would campaign for a "No" in this referendum-and that was my question.
The Prime Minister assures us that there are many things he will not do. He gave some examples. He has given two

November 2, 1979
Privilege-Mr. Penner
examples of things he would do regarding lotteries and the offshore, on which there had already been signed agreements between the federal government and the provinces. Could he tell the Elouse whether he will present to the people of Quebec and Canada his formula for a new federalism? He wants to get out of the status quo. Will he hold a federal-provincial conference on the constitution very soon, so that the people of Canada can know what this new federalism of the Prime Minister is?


Some hon. Members:: Hear, hear!


Charles Joseph Clark: Mr. Speaker, I have no intention of convening a federal-provincial conference on constitutional matters quickly, and I should suggest to the right hon. gentleman that most of the people of Canada are much more capable of understanding our approach to federalism than he is. That is probably because he is so blinded-and I hope this is an affliction he can overcome-by what he has done that he will not see the limitations in what he has done and the possibility that the stance he and his government took as the Government of Canada became an instrument capable of exploitation by the Parti Quebecois as a means of encouraging Quebeckers to move toward separation.


Pierre Elliott Trudeau: Count your members from Quebec.


Charles Joseph Clark: I understand how difficult it is for the right hon. gentleman to admit that there was some error in what he did in the past. I am quite pleased to admit, as I have done on several occasions, that several of the actions of his government contributed substantially to making French Canadians and Quebeckers feel more at home in the nation, but as his government grew older it became perceived as a government which was more rigid, and one of the major things we have to do is make it clear that that rigidity no longer prevails. That is what we intend to do as a national government.


Mr. Breau:: The Liberals got 62 per cent of the vote.


PRIVILEGE
Mr. Keith Penner (Cochrane):: Mr. Speaker, I rise on a question of privilege which arises from a question 1 asked yesterday during question period of the Minister of Indian Affairs and Northern Development. I asked the minister why he had not released to me a number of documents which I had requested of his department last Friday. These were documents pertaining to an incident which occurred at a drill site in the Beaufort Sea on October 23.
Nowhere in his reply did the minister give any reason why he would not release the documents in question. I realize that his failure to do so, however inconsistent that may be with the spirit of the freedom of information bill which the government has introduced, does not in itself constitute a question of

privilege. On the contrary, I suspect that the minister himself has not been able to obtain from his officials all the documents related to the incident, just as I suspect that the minister himself was not informed and did not approve of the order given by one of his officials to continue drilling in poor weather conditions.
What the minister did, however, was to implicate himself in an effort by senior officials here in Ottawa to conceal relevant data and issue instead an interpretative statement in place of the documents which I requested. In doing so, I contend that the minister breached the privileges of members of this House, myself in particular, by promising one thing and delivering quite another.
Mr. Speaker, you may recall that I asked the minister why he had not released documents which would show whether or not the regional conservational engineer in Yellowknife had personally visited the drill site and had confirmed the decision of the well site inspector to shut down operations due to weather conditions and would show whether or not Dome-Can-mar officials had threatened to go over the heads of well site and regional inspectors, which the minister now admits was done by a telephone call to Ottawa.
In reply to my question asking why the minister had not released the documents in question, the minister said, and 1 quote:
-I spoke to a colleague of the hon. member-
He was referring to the hon. member for Notre-Dame-de-Grace (Mr. Allmand).
-and I am willing to make the information available.
There could be no doubt on the part of anyone on this side of the House; we all believed that what the minister was going to provide were the documents which were the whole subject of my question. The minister did not say to the House that he would not provide the documents because they contained advice to him and are therefore classified confidential. Nor could he have raised such an objection because the documents requested are not, or certainly should not be, confidential. They are documents which might have been requested by any Canadian citizen with the slightest familiarity with drilling, surveillance and reporting procedures. They are documents described in a report of 1978 drilling operations in the Beaufort Sea, and they are mentioned expressly for the purpose of assuring members of Parliament and the Canadian public that an incident of the kind in question would be documented and that documents pertaining to such an incident would be produced to remove any doubt as to the propriety of the actions of officials in this matter.
In reply to my question the minister did not say he would not provide the documents because they are confidential. Nor did he say he would not provide the documents I asked for but that he would provide further information. Instead, he offered yet another explanation of the incident that was under ques-
November 2, 1979

tion, and he concluded his answer to my request for documents by saying:
In terms of information, I spoke to a colleague of the hon. member and I am willing to make the information available.
What information? The information for which I asked was documents; but the information which 1 got was a four-page statement by the minister, once more interpreting events.
I understand, as everyone now must understand, that the minister never intended to supply the documents which I had requested. When the minister said "in terms of information," he meant to qualify what otherwise would be an unequivocal promise to supply the documents which were the subject of my question.
So with that background, 1 wish now to move, seconded by the hon. member for Chateauguay (Mr. Watson):
That the Minister of Indian Affairs and Northern Development be summoned before the Standing Committee on Privileges and Elections to explain his failure to provide specific information which had been requested after having indicated he would do so.


Hon. Jake Epp (Minister of Indian Affairs and Northern Development):: Mr. Speaker, in reply to the alleged question of privilege which the hon. member has raised, I intend to describe to the House some of the aspects of this incident.
First of all, the hon. member persists in using a term regarding the incident which is simply not correct, and 1 mentioned in my answer to him yesterday that that term is not correct. Today again he used the word "drilling". The Dome-Canmar operation at the Nerlerk M-98 site was not in a drilling situation; they were not drilling into the hydrocarbon zone. What they were doing is production testing, which is quite different from the allegations that the hon. member insists on making. I suggest to the hon. member that he get his facts straight. They were not drilling. He knows it but he persists in using the term.
Further, it should be pointed out that I had made information available to the hon. member, to the hon. member for Notre-Dame-de-Grace (Mr. Allmand), the former minister of Indian affairs and northern development, and the hon. member for Nunatsiaq (Mr. Ittinuar).
The hon. member is asking now for specific documents relating to information pertaining to the decision. I made the information available, as I said 1 would. I said I would make information available regarding the incident which has been the subject of debate or questioning in the House previously.
In the spring of 1979, the former government approved the Dome-Canmar drilling program for the 1979 season. That approval provided that all deep well drilling terminate by midnight, September 25, 1979, with provision, on authority of the Minister of Indian Affairs and Northern Development or his designated official, to extend drilling and other operations in a well a further 20 days, that is until October 15; and that production testing in a cased well, where conditions at a drill site of weather, sea and ice state permit, be allowed until formation of grey-white ice at Nerlerk M-98.
Privilege-Mr. Penner
Deep well drilling and other operations at the Nerlerk well, among others, was extended for a ten-day period upon the September 25 termination date by myself based on the current and forecast weather, ice and sea state which was favourable at that time. That extension was effective until last October 5.
The chief conservation officer met in Ottawa on October 3, 1979 with his geological, geophysical and engineering experts, and then with senior officials of interested departments, namely the Department of the Environment, the Department of Energy, Mines and Resources and the Department of Transport, on October 4, to review Dome-Canmar's request to continue operation after October 5, 1979 at Nerlerk M-98, among other wells.
The consensus reached as a result of those consultations was that the "designated official" of the Department of Indian Affairs and Northern Development should assent to Dome-Canmar's request to-
-conduct in the case hole, testing, suspending or abandoning operations after October 5, 1979, and to continue, if required, any conditions made practicable, after October 15, 1979.
This consensus was reached in consideration of the following-


Mr. Speaker:: Order, please. I think the House can readily see that, on the basis of a question of privilege, we are now getting into a rather extensive discussion of the substance of the matter. If a question of privilege exists in the proposal of the hon. member for Cochrane (Mr. Penner), it must surely exist upon one premise only, and that is whether the Minister of Indian Affairs and Northern Development (Mr. Epp), in his answer to the hon. member for Cochrane yesterday, said that he would produce some documents. The minister is now indicating what the history of the matter is, what the information is. This, I am sure, is interesting to the House but we have gone beyond anything close to a question of privilege.
The only question to which I have to direct my attention is the basis for the question of privilege of the hon. member for Cochrane, which is that the minister yesterday said he would produce documents and then did not. That is the area upon which I wish to hear the minister. The minister said yesterday:
1 spoke to a colleague of the hon. member and I am willing to make the information available.
I have to know whether, by that statement, the minister said he was going to table documents or to make information available, whether he stands by that undertaking. If he has fulfilled it, then the question of privilege, it seems to me, would be terminated.


Arthur Jacob (Jake) Epp: Mr. Speaker, I spoke to the hon. member's colleague before the question period yesterday. I am referring to the hon. member for Notre-Dame-de-Grace. The information which I had in hand was the information from which I was reading and the information which I made available to the hon. member for Cochrane, to the hon. member for Notre-Dame-de-Grace and to the hon. member for Nunatsiaq. Further, what 1 undertake to do, if there are documents relative to what the hon. member for Cochrane is referring, is to check
894

November 2, 1979
Privilege-Mr. Joyal
and see if the documents are in existence, and if so then I can make those available as well.


Mr. Speaker:: Order, please. That being the case, I think the House will realize that for the moment the only basis upon which 1 could found a question of privilege-and the only basis upon which 1 have been asked to found any question of privilege-is that the minister made a specific undertaking to produce documents and did not do so. The minister says today that his undertaking was only to make information available. His language is that he will undertake to make information available. In fact, he says that not only did he make that undertaking yesterday but that he provided the information. Further, he says that if it includes documents and if they can be produced, he will endeavour to do so.
If there is a matter to be taken up further in respect of the minister's undertaking to produce documents, the matter can be raised again; but until such time as the matter is explored, it should be set aside on procedural grounds today.


MR. JOYAL-INQUIRY WHY REPORT TABLED IN HOUSE NOT AVAILABLE IN BOTH OFFICIAL LANGUAGES
Mr. Serge Joyal (Hochelaga-Maisonneuve):: Mr. Speaker, I rise on a question of privilege following the tabling in the House yesterday afternoon by yourself of an interim report by the Auditor General of Canada on the management of the administrative and financial services of the House. Unfortunately, Mr. Speaker, that report was tabled only in English, contrary to section 3 of the Canadian Official Languages Act which states clearly, and I quote:
3. Subject to this Act, all instruments in writing directed to or intended for the notice of the public, purporting to be made or issued by or under the authority of the Parliament or Government of Canada or any judicial, quasi-judicial or administrative body or Crown corporation established by or pursuant to an Act of the Parliament of Canada, shall be promulgated in both official languages.
I am all the more surprised, Mr. Speaker, that you tabled that report only in English, because for at least five consecutive years the Commissioner of Official Languages has pointed out the difficulty or faults in certain services of Parliament, the Senate or institutions as a whole to which members have access. I believe, Mr. Speaker, that in the context of a renewed federalism, the Prime Minister (Mr. Clark) said earlier today in answer to questions in the House-

-he wants leadership by action and not by words.
[ Translation]
He went on to say:

"I want to remove irritants".

Those are irritants, Mr. Speaker. When members of this House receive a document in only one of the two official

languages, they have every reason to complain that after the Official Languages Act has been in effect for 11 years, there is still some way to go. It is not only a matter of making speeches, but of taking action, and I deplore that the President of the Privy Council who spoke following the tabling of that report did not refuse to have it tabled. He sits on the government side and it is his strict responsibility to make sure the spirit and the letter of the Official Languages Act are obeyed with respect to documents tabled in this House.
Consequently, Mr. Speaker, I should like to ask you that in the future reports, documents and letters be tabled in the House in both languages and that an order be made for the parliamentary committees to follow exactly the same procedure.
Last week, in the Standing Committee on Miscellaneous Estimates, the Comptroller General of Canada, Mr. Rogers, who was appearing as witness, tabled a brief in English only. Why should it be that documents are always tabled in English and not the other way around? I would have risen also had that report been tabled in French only. I feel that when all parties in the House support the one policy and the same objectives, it is the duty of the Chair to see that they are respected.


Mr. Speaker:: The hon. member must understand, I am sure, that yesterday the document was not tabled under Standing Order 41. It was merely a matter of tabling, on a voluntary basis, the correspondence exchanged between the Speaker of the House and the Auditor General, three or four pages in all. That correspondence was exchanged in English. When I write a letter, at times 1 write in English, at others in French. I am sure the case is the same for most hon. members, and I do not always ask for my correspondence to be translated. I am sure the Auditor General does the same. He sometimes writes in English, sometimes in French, but not always in both languages.
I received a message Tuesday or Wednesday morning, and decided to table it immediately in the House.
If the hon. member means to say that I always have the obligation to translate all the communications I get as Speaker of the House before tabling them, I want him to know that this is an obligation which I do not accept. As to documents and reports tabled in the House pursuant to our Standing Orders, there is an obligation to table them in both official languages. But this is not what I did yesterday. I merely advised the House of a communication I had received. Contrary to what the hon. member indicated, this was not a report.
Yesterday I did not table any document under Standing Order 41(2). I repeat again that the Auditor General is an officer of Parliament, and so is Mr. Yalden, the Commissioner of Official Languages. We are now carrying out a study on the whole procedure of the House and all the administrative practices, and I have invited the Commissioner of Official
November 2, 1979

Languages to take part in this study to make sure that the behaviour at every level of our administration is beyond reproach as far as both our official languages are concerned; this, however, does not change anything to the communications I get. 1 am under no obligation to assume responsibility for the translation of the communications I get from the Auditor General. If the Auditor General wishes to write his communications in both French and English, that is his choice, but 1 am almost sure that all hon. members here write their communications either in French or in English, but almost never in both languages at the same time. The Chair recognizes the hon. President of the Privy Council.


Mr. Baker (Nepean-Carleton):: Mr. Speaker, I must say to hon. members that it is of utmost importance that Parliament comply with the Standing Orders of the House of Commons. Official documents of the Parliament of Canada are tabled in both official languages. 1 mention this merely for the hon. member's information, for this is the Standing Orders of the House.


BUSINESS OF THE HOUSE
Walter David Baker: Mr. Speaker, 1 want to say that yesterday following normal matters I did not designate Tuesday, November 6 as an allotted day in accordance with the schedule which we had agreed upon informally. I noticed in The Globe and Mail that November 6 was the "day of crunch", and I did not want to disappoint the official opposition with respect to the allotted day. Therefore, I want to designate Tuesday, November 6, 1979, as an allotted day. I expect we will be receiving a motion on that day, and I assume that the normal procedures with respect to consultation as to the motion, and as to whether or not there will be a vote, will be followed.


POINT OF ORDER
Mr. Armand Caouette (Abitibi):: I rise on a point of order, Mr. Speaker.


Mr. Speaker:: The hon. member for Abitibi on a point of order.


Armand Caouette: Mr. Speaker, my point of order refers to what took place this morning when you refused to recognize the hon. member for Beauce on such a fundamental and important question as the tabling of the white paper by the Parti Quebe-cois, by the government of Quebec.
Privilege-Mr. Joyal
Given those events, Mr. Speaker, I am sorry to have, on my behalf and on behalf of the people of the constituency of Abitibi I represent, to cast a judgment on your performance in your office, which is supposed to be an impartial office in the House of Commons. That is why-


Mr. Speaker:: Order, please. 1 am not prepared to accept such an intervention by the hon. member for Abitibi or by any other member, and it is the last time I agree to a discussion concerning the rights or privileges of the members of his party, the Social Credit Party of Canada which I have recognized as such. I still recognize the existence of the Social Credit Party of Canada and I accept that the hon. member for Beauce (Mr. Roy) be its leader. That party has five members and 1 have recognized it as a political party.
Yesterday I gave the floor to the hon. member for Beauce after the hon. member for Oshawa (Mr. Broadbent). Several times before when 1 was in the Chair I tried to give the floor, at a later time, to other members of the Social Credit Party of Canada during the oral questions period on the basis of their number of elected members in this House. I will continue to make a fair attribution, no more, no less.
Yesterday I recognized a member of his party, the hon. member for Beauce. Wednesday, another Social Credit member had the floor in the oral question period, the hon. member for Rimouski (Mr. Allard). So two members have been recognized on two consecutive days, and 1 suggest that the five members of the Social Credit Party of Canada are not entitled to have the floor again for a third day in a row. However, I repeat that 1 maintain carefully the right of every hon. member to participate in the question period, on a fair basis, no more, no less.


PRIVILEGE
Mr. Hal Herbert (Vaudreuil):: Mr. Speaker, 1 listened carefully to the remarks of the President of Privy Council and I think he is badly misinformed. As an example I recall the document that was tabled in English only by the Minister of Finance in the Standing Committee on Finance, Trade and Economic Affairs, as well as the Department of Agriculture press release D-50 dated October 19 that was tabled in English only and not in French, as he told us in his own terms about four minutes ago.


John Carnell Crosbie: Mr. Speaker, I would just like to make a correction. In the House of Commons Standing Committee on Finance, Trade and Economic

November 2, 1979
Order Paper Questions
Affairs on Tuesday, I was asked by the finance critic of the opposition to present some facts and figures in connection with the interest rate increases. I explained to the committee that I had some notes from my department on that subject and that if they liked I would present them to the committee. I did not have them then and there in French also, but if they wanted to accept them then in English, we would supply a French translation later. It was on that basis that the committee said yes, they would accept them then.
1 had another document later which we kept and which I tabled today in English and French. There has been no violation of either the spirit or the letter or anything to do with both official languages in the finance committee. I was pressed for something which was only a memorandum to me for my own use. Unfortunately, I am unilingual, but I was willing to make it available right then if hon. members of the committee did not object to the fact that 1 could not give them a French translation until later. I do not think it needs to be cited in this House as any breach of understanding.



ROUTINE PROCEEDINGS


[Stage Direction]
Second report of Standing Committee on Finance, Trade and Economic Affairs-Mr. Clarke (Vancouver Quadra).
[Editor's Note: For text of above report, see today's Votes and Proceedings.]

[Stage Direction]
(Questions answered orally arc 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. 67, 191, 192 and 205.
I ask, Mr. Speaker, that the remaining questions be allowed to stand.


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


Hon. Roch La Salle (Minister of Supply and Services):: 1.	(a) Yvon Gariepy, president, chief executive officer
(master)
(b) G. A. Lahaie, vice-president, administration and finance
Robert Huot, vice-president, marketing D. M. Cudahy, vice-president, manufacturing
2.	(a) Salary range: SX3: $42,700-$58,500 (b) Salary range for each: $35,000-$55,000


Mr. Herbert: How many (a) permanent (b) term employees were on the Department of Public Works' payroll on March 31, 1979?


Hon. Erik Nielsen (Minister of Public Works):: As of
March 31, 1979, Public Works Canada had on their payroll:
(a)	8,411 permanent employees (b) 605 term employees.


Mr. Herbert: How many (a) permanent (b) term employees were on the Department of Labour's payroll on March 31, 1979?


Hon. Lincoln M. Alexander (Minister of Labour):: (a) 661;
(b)	74.


Mr. Herbert: How many (a) permanent (b) term employees were on the Department of Supply and Services' payroll on March 31, 1979?


Roch La Salle: (a)
9,730 permanent employees; (b) 1,108 term employees.


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


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed from Thursday, November 1, consideration in committee of Bill C-17, to amend the statute law relating to income tax and to amend the Canada Pension Plan (Mr. Crosbie)-Mr. Scott (Victoria-Haliburton) in the chair.
November 2, 1979
The Assistant Deputy Chairman:: When the committee rose on Thursday, November 1, 1979, clause 66 of the bill was under consideration.
On clause 66-


Mr. Rae:: Mr. Chairman, there were a number of questions I had asked of the parliamentary secretary and the Minister of Finance yesterday. Before I invite them to reply I would like to clear up one figure 1 gave yesterday concerning the five majors. My calculations for the third quarter of 1979 indicate that the effective rate of taxation for all chartered banks was 10.4 per cent, and my calculations show that the rate of taxation for the five major chartered banks for that period was approximately 13 per cent.
I should just like to sum up in order to remind the parliamentary secretary of what I was trying to ask him yesterday. First of all, could he explain the way in which these income debentures work and the implications to revenue of the change to close the loophole or revise the tax treatment in respect of income debentures? Could he also explain why it is that, once the loophole was closed last November, the effective rate of taxation went down to the extent it has from, as the parliamentary secretary and 1 agreed yesterday, about 50 per cent in 1974 to 13 per cent or thereabouts this quarter? I think we are entitled to an explanation as to how long the government thinks this situation will continue before the effective rate of taxation goes back up to 50 per cent.
1 see the Minister of Finance present in the committee. I wonder if he could tell us whether he is considering any supplementary measures to bring that effective rate of tax up to 50 per cent if the present effective tax rate continues for a long period of time?
With those four questions I will leave it for the parliamentary secretary to answer. 1 think the facts at the moment speak very loudly of the need for an explanation of how this financing mechanism is working and how it resulted in such a low effective rate of taxation. Once the loophole was closed in November, 1978, how is it that the effective rate of taxation for banks still remains as low as it is? How long does the minister think this will continue and, if it is going to continue, is it the intention of the government to bring in supplementary measures to raise the level of taxation on banks up to the previous 46 per cent or 50 per cent level?


John Carnell Crosbie: Mr. Chairman, before the parliamentary secretary gives an answer to the question, I would like to say a few words. I want to thank my parliamentary secretary for the great job he has performed while 1 have been away. Yesterday I was away, and when I arrived back at the Centre Block at 4.45, I switched on the television to the House of Commons debates. All of a sudden an apparition rushed into the chamber in the form of the hon. member for Thunder Bay-Atikokan, who came into the chamber saying that shocking events had occurred, that I was not in the House, that the House of Commons finance committee was downstairs meeting on sup-
Income Tax Act
plementary estimates and neither I nor my parliamentary secretary were present. He gave the impression that every convention was being violated from haebeas corpus right on up.
1 would like to explain to the House that the finance committee had been informed that I could not appear on Thursday afternoon as I had a commitment, entered into several months ago, to speak to the Empire Club in Toronto, that I would be back later Thursday afternoon and that my parliamentary secretary would be tied up in the House in Committee of the Whole on this tax legislation. Since neither of us could appear, we assumed that some other minister would be called to deal with his supplementary estimates.
We were advised at 12 noon on Thursday that the committee wanted to go ahead with the supplementary estimates of the Department of Finance. We therefore arranged to have officials from my department go to committee to answer questions on supplementary estimates, and, in any event, all that can be asked on supplementary estimates are questions on those very estimates. It was at the request of the committee that they went ahead on supplementary estimates.
The position I am in relates to the legislation before this House. The Borrowing Authority Act has been here, and we are now on the Income Tax Act amendments. Next is the Customs Act amendments, then the Excise Tax Act amendments, all of which are from the last budget. There is also the municipal grants legislation, the Bretton-Woods amendments, the Bank Act and the legislation on tax equalization from the last Parliament to be dealt with. There is our own new legislation on the mortgage tax credit. I am hoping to have a budget ready before the end of November to bring before the House, following which, of course, we will have the resultant legislation.
The legislative program for the House for the next two or three weeks is almost all of a financial nature and dealing with my department. There is no physical way that 1 can be in the House, the committee, attend cabinet meetings or cabinet committee meetings and prepare for the upcoming budget; obviously, 1 cannot be everywhere at once, and, as I understand it, that is the purpose of the parliamentary secretaries.


Bob Rae: You should be cloned.


John Carnell Crosbie: 1 happen to have a first-class parliamentary assistant, and his job is to assist the minister in the House, which I am certainly intending to ask of him. I would ask hon. members to play the game, as we did in the past. We never insisted that the Minister of Finance had to be before the House all the time. My predecessor would introduce a bill and that would be the last time we would see him, usually until the matter was concluded, because his parliamentary assistant would carry on. I ask hon. members to understand that for the next three or four weeks there is simply no way that I can be here all the time, and my parliamentary assistant will be representing me.
For example, this afternoon I have a meeting to attend on my upcoming budget, otherwise there will be no budget. I

November 2, 1979
Income Tax Act
cannot make it here this afternoon, so my parliamentary secretary will be here. That is my response to the hon. member for Thunder Bay-Atikokan, who I thought was not playing the game when he carried on as he did here yesterday. I would certainly challenge the hon. member's inference that I am a lazy no-good who does not want to pay any attention to this House. I do not accept that, nor do I think that it is the way to play the game.


Donald James Johnston: Mr. Chairman, 1 have found the replies of the parliamentary secretary to have been most helpful and most sensible, as contrasted with the replies we receive from the minister himself during question period.


John Carnell Crosbie: There is advantage for us all.


Donald James Johnston: 1 am delighted that we will be having further participation from the parliamentary secretary during the course of this debate on these various financial bills.
I would like to raise a question which really follows on a question raised by the hon. member for Dollard yesterday with regard to the so-called loophole. I think it is important, not in defence of the loophole but simply important, that the Canadian people understand exactly what the consequences of this legislation will be in terms of the lending practices of banks and the impact this will have upon certain borrowers. The hon. member for Broadview-Greenwood has made reference to the rate that banks pay on numerous occasions. The banks have taken advantage of this provision because it permits them to receive either interest on income debentures or dividends on preferred shares, and both are treated as dividends for tax purposes which are tax exempt or are deductible in the banks' hands. Therefore, the borrower is permitted in effect to obtain funds at a rate from banks much less than would be the case were the banks to receive taxable interest in the funds, which are in substance advanced to those various borrowers.
One can borrow with this kind of financing, and one can perhaps criticize this kind of financing, but 1 think it important for the people that they understand that with the elimination of this financing these same borrowers will be placed in a position of having to pay the normal bank rate instead of a rate of approximately 50 per cent, which they are now paying and which they are able to do out of their cash flows because they do not require the deductions for tax purposes. This presumably protects their cash flows from taxes through depreciation or some other division.
I raise the point because I would like some indication from the parliamentary secretary or the minister that that indeed is the case. 1 make this point largely from memory, but it seems to me that that is the thrust of the loophole and that in substance it is not really what it is often portrayed to be, and that is that there is some kind of major rip-off here, that the banks are effectively receiving a much lower return, but that they are prepared to accept it because they are receiving it in subtance on a tax free basis. I think that this question should be explained fully by the government in the course of the passage of this bill.


Bob Rae: I would like to respond to what the minister had to say earlier. Hon. members may remember that the hon. member for Saint-Henri-Westmount should be cloned by the financial critic. Perhaps he should be cloned. I can certainly understand the minister's position, and as for the inference he drew from the remarks of the hon. member for Thunder Bay-Atikokan, that he is a lazy and no-good minister, I want to make it clear that nobody in this party thinks that the Minister of Finance is lazy.


John Carnell Crosbie: Thank you.


Miss Nicholson:: Mr. Chairman, I cannot find it in my heart to be terribly sympathetic to the dilemma the Minister of Finance presented to us. His government has been in charge since June. They have been running the country on warrants. Certainly the minister has a tight schedule right now, although I question his priorities when he puts a speech to the Empire Club ahead of his responsibilities in the House of Commons. May I point out to him that if the Prime Minister had elected to call this House earlier he, the Minister of Finance, would have had a more reasonable schedule in which to plan his work.
The Minister of Finance also seems to be complaining because we are re-examining these budget bills. I would point out to him that these are now his bills. Since the bills were not passed by the last Parliament they are now coming back under his auspices. Surely it is our duty to re-examine them from the point of view of how they will be administered and with what intent the new regulations will be written.
I trust that the Minister of Finance was not suggesting that we should simply give blanket approval to all these bills without examining them, not only for actual new clauses but also in terms of the intent of how they will be administered. For the new government to ask us to take everything on trust is something they would have been furious about if we had suggested it in the last Parliament.
Finally, Mr. Chairman, may I congratulate the minister and the Prime Minister on having discovered that parliamentary secretaries can be useful. Earlier, the Prime Minister announced that he would not appoint any parliamentary secretaries as he had not been able to see a use for them. I am glad that conversion has occurred.


Mr. Ritchie (York East):: Mr. Chairman, I would like to give a response to a question raised last evening by the hon. member for Broadview-Greenwood when he inquired about the effects of term preferred and income debentures on the banks' effective rate of taxation.
As the hon. member indicated, for the third quarter of 1979 the effective tax rate of the 11 chartered banks computed by expressing the provision for taxes as a percentage of their balance of revenue stood at 10.7 per cent. For the first nine months of 1979, the effective tax rate was 14.6 per cent, which was down from the previous year. Dividend income to the banks on these forms of after tax financing is, of course, not
November 2, 1979

taxable. However, the financial institutions on these financings turn over a significant portion of the tax savings to the issuing corporation in the form of lower interest costs. Banks thus receive a pre-tax income on these issues that is well below that of other financings. Typically, for example, if a bank received 12 per cent on traditional debt, its return both before and after tax on term preferred share financing would be in the range of 6 to 7.5 per cent. In other words, they share with the borrower in the tax advantage.
There are two major reasons for the decline in the effective tax rate of banks. The first, as I indicated yesterday, is that the full impact of income debenture and term preferred share financing entered into last year would not appear until this year. Secondly, it is apparent that the spread between borrowing and lending rates on conventional financing has fallen, resulting in less revenue from this part of the banks' operations. As a result, the mix of banks' income has shifted so that a smaller proportion is coming from fully taxable operations. The reduction in the spread can result in a decline of pre-tax balance of income and thus a loss for tax purposes which may be carried forward or backward to reduce taxes in other years.
It would be misleading to conclude from the decline in the banks' effective tax rate that they have been the major beneficiaries of income debenture and term preferred financing. As I have just indicated, banks receive a lower return on this lending.
Over all, for the first nine months of the 1979 year the balance of revenue after tax as a percentage of shareholders' equity has also declined, from 12.4 per cent in the same period a year ago to 11.9 per cent this year.
There was also a question addressed as to when we might expect this carry-over effect to alter. 1 can say that most of these agreements have a three to five-year term, so there is an automatic expiry which will begin to take effect with some almost immediately, but we will feel the effects for another three years or so at least.


Bob Rae: Mr. Chairman, I appreciate that explanation which I think makes the situation clear for those of us who are attempting to understand the nature of this device. I do not think the reason that this has been closed was made particularly clear by this government. Some reasons were expressed by the previous minister of finance in his budget speech of November, 1978 to the effect that whereas this was initially put in the Income Tax Act in the 1930s as a method of providing easier means of financing for certain small companies, it was now becoming an increasingly common device used by all corporations in their corporate financing.


John Carnell Crosbie: Not all. A few did not have taxable income.


Bob Rae: Well, by many. One of the things that would be of interest to the Canadian people would be to know what kinds of corporations are in a position to take advantage, or have been in a position to take advantage, of this break. If it is not the banks that are taking advantage of that significant tax break, it will be the corporations. If there had not been some
Income Tax Act
kind of abuse building up in the system over the past three or four years, I suggest to the parliamentary secretary and the minister that they would not have felt obliged to close this particular loophole.
I should like to ask the parliamentary secretary for something of the history of the use of this device, as I did last night, in order that we might understand how it is that what was begun as a technique for allowing smaller corporations to finance themselves has been used by other corporations.


John Carnell Crosbie: What happened, of course, is that this was a provision in the act to assist corporations that were in financial difficulty during the 1930s. That is why these provisions were originally put in. What happened, however, was that borrowers started to use them who did not have taxable income, not because they were in financial difficulties, although that could happen, but because of existing tax incentives such as fast write-off, manufacturing assets, general treatment for exploration and development expense, or where a borrower's income was tax exempt, or it might be a public holding corporation receiving dividends from other Canadian companies.
What happened in the last three or four years when this started to get really popular was that most of the companies borrowing under these arrangements were large corporations and they used this provision to refinance existing bebt. It was used for purposes entirely unconnected with its original intention.
I do not know why no steps were taken sooner than last November, but in October, 1976, the holdings of income debentures and term preferred shares by chartered banks totalled $765 million. In October, 1977, they totalled $3,037 million, and in October, 1978, $7,200 million. On November 16, 1978, they totalled $10,100 million, which shows hon. members how rapid the expansion was.
The increase in bank holdings of that kind of instrument grew $6.9 billion between October, 1977, and November, 1978. Why some action was not take sooner to put a stop to this loophole, I do not know.


Fred Alward McCain: Order. It being one o'clock, it is my duty to rise, report progress, and ask leave to sit again later this day.
Progress reported.

November 2, 1979
Administration of the House



ROUTINE PROCEEDINGS


Mr. Speaker:: Order. If I might take a moment or two, I want to return to Routine Proceedings in the House in connection with a point raised a moment ago by the hon. member for Hochelaga-Maisonneuve (Mr. Joyal), who I think quite properly raised a difficulty about the translation of correspondence that I tabled yesterday.
I made the assumption, as I think members often do, that because we translate everthing automatically as part of Hansard so members may have it in both languages immediately, the tabling of correspondence, as I did yesterday, would receive the same treatment without any further action by the House. Of course, that is not correct. Documents only receive that treatment if the House makes an order that they be appended to Hansard on that particular day. I overlooked doing that yesterday.
1 want to say to the hon. member for Hochelaga-Maisonneuve that his point in that sense is well taken. I had made the assumption that what he was referring to was the original correspondence from the Auditor General being in one language only, which is not my responsibility. I also made the assumption, as 1 think a lot of members do, that once we table documents they will be translated automatically. Documents are not translated automatically unless the House makes an order for them to be appended to Hansard. I have returned to the chair in order to ask the House io do this.
Is it agreed and ordered that my letter to the Auditor General in April and his reply of a few days ago, which 1 tabled yesterday, be appended to Hansard and translated for the benefit of members?


Some hon. Members:: Agreed.
[Editor's Note: For correspondence above referred to. see appendix.]


Mr. Speaker:: It being one o'clock, I do now leave the chair until two o'clock this afternoon.


[Stage Direction]
AFTER RECESS

The House resumed at 2.00 p.m.
[The Assistant Deputy Chairman.]


The Acting Speaker (Mr. Scott, Victoria-Haliburton):: Order. Pursuant to standing order 54, I do now leave the chair for the House to go into Committee of the Whole.
The House resumed consideration of Bill C-17, to amend the statute law relating to income tax and to amend the Canada Pension Plan-Mr. Crosbie-Mr. Scott (Victoria-Haliburton) in the chair.


Fred Alward McCain: When the committee reported progress shortly before one o'clock, clause 66 of the bill was under consideration.


Bob Rae: Mr. Chairman, the figures which were given us by the Minister of Finance were very useful and 1 appreciate the answers given by the parliamentary secretary. They clear up some of the confusion which has surrounded this issue. In my view, they point to two things. The first is the incompetence of the Liberal government with respect to the development of this expenditure. The figures given us indicate there was a quantum leap from $700 million to some $10 billion in preferred shares outstanding before the Liberal government realized what was happening and decided to put an end to the business.
This draws attention to the need for the government to maintain constant awareness of what is going on in the marketplace and of the various devices being used in the marketplace to avoid payment of tax. We are dealing here with a tax situation which has proved extremely costly to national revenue. It is important for the public to realize that the expenditure of hundreds of millions of dollars in terms of lost revenue is one of the principal reasons for the extremely high level of the deficit, a level which the government feels has prevented it from carrying out the election promises made to the people of Canada before May 22.
Another aspect, and here again the fault can be laid at the door of the government, is that the use of the income debentures was not effectively wiped out in November, 1978, but will continue, according to the parliamentary secretary, for between three and five years.
I think we are entitled to ask of the government that in the preparation of its next budget consideration be given to a special tax on banks and those corporations which have taken advantage of this particular device, and which have used this device to avoid the payment of taxes, particularly when we consider the statement made by the Minister of Finance before the lunch hour-a statement which was extremely interesting, useful and important-that a device which was intended to be used by companies in financial difficulty was now being used by companies which had no taxable income, not because they had no money but because they had taken advantage of other
November 2, 1979

government incentives, past depreciation, exploration allowances and so on, and thus avoided being in a position to have to pay any tax.
We can talk about double taxation and how terrible it is, but we have an additional principle here, and that is that we have in a sense double avoidance. Unless the government is prepared to present in its budget some special mechanisms to catch up with the revenue which has been lost as a result of the use of this particular device, we will be asking the Canadian taxpayer-not the doctor or the lawyer who has his own particular loophole to take advantage of, but the average Canadian employee-to make up the difference between what the banks and borrowing companies should have been paying and what they will be paying for the next three to five years.
So 1 say to the parliamentary secretary that while I recognize-and 1 hope the Canadian people do-that it is only the negligence and the financial incompetence of the previous administration which brought us to this sorry state with respect to the use of income debentures and their abuse, it is up to the Government of Canada to recognize now that as a result of the decline in revenue which has resulted from the use of this device there has to be some special consideration given to a tax to be fairly distributed between lender and borrower- those who have taken advantage of this scheme-in order to bring their effective rate of taxation up to the level it should be.
There is an argument here. I think the parliamentary secretary is thinking about the answer, and he may be thinking that that is a form of retroactive taxation, but it is not if it is seen as being a special tax which will be imposed in the next budget in order to take care of a future vacuum created by past income debentures and term preferred shares. So we are not asking him to tax back money which has been lost already. We are asking him to think of the possibility of an additional tax to solve the problem over the next two or three years.
I think that his figure which coincides with my own with respect to the amount of money which has been lost, is very substantial. We have a figure in terms of the rate of taxation which is being paid by banks. We do not have a figure as to how the effective rate of taxation of borrowing companies has been lowered, but one could imagine that they, too, are taking advantage of this particular measure to lower their rate of effective taxation.
I think it important for the government not just to consider what has been done and the error of what has been done. The government should also consider the possibility of making sure that the loophole is plugged and that we are compensated for the three-year to five-year period that these term preferred shares have to run so that public revenues will not be depleted and the rate of taxation of other Canadians will not be accordingly higher.


Ronald Stuart (Ron) Ritchie: Mr. Chairman, the hon. member for Broadview-Greenwood spoke of the incompetence of the previous government in not making this change sooner. It had warnings in terms of the figures concerned, and obviously it
Income Tax Act
could have made the change sooner. I have to agree with the hon. member in his use of the word "incompetent", but I would add another word-"complicity". The previous government was an accomplice in this process.
In the months between October and November of last year the total amount of term preferred share financing of this kind went up by $2.9 billion. A little more than one half of that amount, $1.5 billion, was the special financing of Petro-Canada which was brought in just to get under the wire of what the government itself knew it was going to do. In November of last year the total amount outstanding in this kind of security was just over $10 billion. If one takes into account the Petro-Canada contribution and the Canada Development Corporation contribution, which is in the same category of a government-directed corporation, the total complicity of the federal government was about 20 per cent of the total.
The hon. member suggests that retroactive tax legislation should be considered. I know he suggested a way which he feels might escape the label, but in fact it would not. It would be retroactive legislation. Apart from the fact that retroactive tax legislation is wrong in principle and that no government should get into it-and certainly this government would not want to-I think there are some other factors which should be considered. One is the difficulty of picking out the bad from the good in what has been done. As the hon. member for Saint-Henri-Westmount mentioned earlier today, some of the financing which was undertaken through this route was legitimate and did fall within the original intent of this kind of arrangement. In the latter days much of it did not, of course, but even for those with whom one might quarrel in the latter days when this was ballooning, those were companies which were not taxable at that time, otherwise they could not have taken advantage of this arrangement.
It is very difficult, therefore, to see how the hon. member's suggestion could be made effective, because I have no doubt that some of those companies will not be tax-paying companies within the next two or three years.
The other saving grace-and I think to put things into perspective we should take account of this-is the arrangement of induced fast pay-out. That is why the measure taken to kill it extends the time limit to ten years, for instance, for term preferreds. Ten years is not attractive under this arrangement, and so the arrangements entered into were basically short-term-three years, five years and some of them on demand. The on-demand ones are already eliminated. Three to five-year terms are not, and so the effect of this will be very limited in time, and with all of the concerns a government properly should have about retroactive legislation and taking the other factors into account, I think the proposal, which is the proposal made by the previous government to correct this glaring gap, is as good as one could make at this time.


Herb Breau: Mr. Chairman, I wonder if the parliamentary secretary can explain further what he meant by the word
902

November 2, 1979
Income Tax Act
"complicity". Could he elaborate on what he meant when he said that the former government was an accomplice to something?


Ronald Stuart (Ron) Ritchie: 1 would think, Mr. Chairman, that the hon. member should be aware of it; he was in the Elouse at that time and he knew what was going on, no doubt, although perhaps not as much as the responsible people concerned. But it is a well known fact that PetroCan's largest purchase was financed, in large part, through the use of term preferred shares, an action which was taken immediately before the budget of November, 1976. It was a huge amount, $1.5 billion, perhaps the largest one negotiated with term preferred shares, although I am not sure about that fact. PetroCan was then a government emanation, as it still is. PetroCan could not have done this without the government knowing about it in advance, and 1 would be very surprised if the minister of finance of that day was unaware of it.


Herb Breau: Mr. Chairman, the hon. member comes close to making accusations-


Some hon. Members:: Oh, oh!


Herb Breau: -that border on the legality of certain actions. PetroCan is indeed a corporation which was owned by the Government of Canada at that time and still is. We hope it will remain so. It is being administered by a board of directors set up by an act of this Parliament and it operates independently. The Minister of Finance does not sit on the board, so I wonder how the parliamentary secretary pretends the former minister of finance knew in what way PetroCan was being-


Some hon. Members:: Oh, oh!


Herb Breau: Mr. Chairman, I do not understand why members on the other side are so ticklish and sensitive on this matter. I am just doing my duty and asking a very simple question of a new member who, by the way, is doing pretty well in piloting this bill through the House. He mentioned the word "complicity", and I am just asking him to clarify what he means. Petro-Canada has a board of directors which operates independently of the government, but the parliamentary secretary says that the former minister of finance probably knew how PetroCan was going to finance a certain acquisition of Pacific Petroleums at that time. How does he explain that the former minister of finance knew of this since he did not sit on the board?


Ronald Stuart (Ron) Ritchie: If I am wrong in suggesting that the former minister of finance knew or should have known about this arrangement, I will gladly withdraw it, but as I understand it, one of the major arguments for the existence of PetroCan on the part of those who believe it should be continued as a government corporation is that the government of the day can direct it, can use it as an instrument. I presume that members of the former government considered that to be one of the purposes of PetroCan. In any event, I would think that when the government of the day was about to close off, and, I am sure, not without a great deal of thought, an avenue

which they considered an abuse of the then tax law, they should have made terribly sure that no arm of the federal government pursued that kind of abuse, not on a small scale but on a major scale, and not far ahead of the decision but very close to it.


Herb Breau: When the first bill on the creation of Petro-Canada was brought before the House, it was designed in such a way as to have left it more independent from the government, and it was members on that side of the House, who were then on this side, particularly the hon. member for York-Peel who was then member for York-Simcoe, who after a filibuster of five or six weeks in committee insisted that there be a mechanism for the Minister of Energy, Mines and Resources to direct the board of directors under certain circumstances. So it was not the Liberal government at first which wanted to have a close link with the board of directors of PetroCan but rather the hon. member's colleagues at that time.
PetroCan was a corporation operating as a private corporation under the laws of Canada and there was a provision in the act which permitted it to finance projects in a certain way. There was nothing wrong with that and it was not up to members of the board of directors or civil servants who are there to protect the interests of Parliament to make a judgment and say, "We think this is not an equitable tax system and therefore we should not finance ourselves in a certain way". These people are there to operate the corporation and be responsible for it on behalf of the taxpayers and all of us, and if the tax system is not equitable, it is up to Parliament to change it, not up to individuals on the board of directors of Petro-Canada.
So I resent the word "complicity" and the fact that the parliamentary secretary would imply there is something wrong in the way the government operated and in the way Petro-Canada achieved its means of financing the acquisition of Pacific Petroleums from Phillips Petroleum. There was absolutely nothing wrong with that.
The reason I am sensitive about this is that it is well known-


Bob Rae: That you want to take up time.


Herb Breau: Mr. Chairman, the hon. member to my left from Broadview-is it Greenwood?


Stanley Howard Knowles: Broadview-Greenwood. You will get to know that name before long.


Herb Breau: The hon. member says that I just want to take up time. I resent that. I have not abused my speaking time since the start of this Parliament. I have never taken up all my time. 1 have always tried to make my speeches as short as possible. 1 have never questioned anybody in the NDP when they have made speeches. I have never said they are wasting time. Sometimes I sit here and I say to myself that I will let them speak longer, and they might start to make sense and perhaps understand something after a while. So I do not think
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the hon. member should say that I am abusing the time of the House.
But let me come back to the issue. The reason I am sensitive is that there was a very good civil servant of the government on the board at that time, namely, Mr. Shoyama, who was deputy minister in the Department of Energy, Mines and Resources. If there is any shadow of doubt left as to anybody having acted wrongly in any way, I am sensitive because it might mean that that individual was doing something that might have been wrong. I do not think the hon. member wishes to sugges that sort of thing. I am glad he withdrew from his position regarding the word "complicity" because I believe that a civil servant, whether it is Mr. Shoyama or anybody else, should never be put in the position of being criticized by us in Parliament for doing something on behalf of the government of which he is a servant. I am sure the hon. member for Nepean-Carleton, the President of Privy Council, will support me, and more and more Tories will accept the fact when I say that the civil servants have made the civil service of Canada as good as it is today. This came about after years and years of Liberal government, which means we brought in good laws and good recruiting procedures, as a result of which we have a very good civil service.


Mr. Cooper:: Mr. Chairman, 1 rise on a point of order. I suggest that what the hon. member is saying is totally irrelevant to the matter under consideration. Certainly the parliamentary secretary made no statement whatever with regard to the honour and integrity of the civil service of Canada or any member of it. I should like to submit to the House that the present line of questioning that the hon. member is following is a waste of the time of the House and is not to the point.


Herb Breau: I know the parliamentary secretary did not want to impute anything to anyone and I was in the process of thanking him and recognizing that he did not do so, because I am sure he would not have wanted to imply that the deputy ministers who were on the board of Petro-Canada at that time had done anything wrong. I did not bring up the acquisition of Pacific Pete by PetroCan, it was the member for York East. I accept the parliamentary secretary's withdrawal-he did it in a very gentlemanly way-and I am glad to see that he does not suspect, nor does anyone in the House, that there was any wrongdoing in the days or weeks leading up to the acquisition of Pacific Pete by Petro-Canada.
As I said before, whether it is a public servant or somebody from the private sector sitting on the board of Petro-Canada, it is not for him or her to make a judgment and say, "We should not use the tax system in this way, as a certain means of financing". They should not substitute themselves for Parliament and say, "This is a good way to finance an acquisition" or is not. They operate under the laws of Canada, under the same Income Tax Act as everybody else. I do not think it is fair to say that the government was in complicity with anybody with regard to this acquisition.
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Robert Knight Andras: Mr. Chairman, I missed the comment by the parliamentary secretary which seems to have given rise to what I consider to be a very justified expression of concern on the part of my colleague, if in fact the word "complicity" was used. Since I was not in the House, I will reserve my judgment on that until I have had a chance to look at Hansard.


Herb Breau: He has withdrawn it.


Robert Knight Andras: If he has withdrawn it, I will accept that. In debating with my colleague in connection with this clause, I know the hon. parliamentary secretary used the word "abuse" of the tax system. In connection with the use of income debentures, I think he used the word "abuse". Is this now the doctrine of his party? It is the game that goes on; Parliament passes tax laws and clever accountants, tax consultants and tax experts peruse them and look to see what avoidance-not evasion but avoidance-of tax legitimately and legally can be implemented to save the paying of moneys to the Receiver General of Canada. One may question whether that is proper or not in the ethical sense, but is it the doctrine of this party to classify the use of a section of the Income Tax Act which permits the financing of takeovers, etc., by income debentures? Is the parliamentary secretary defining that as the doctrine of his party, that that is abuse in the sense of being illegal?


Ronald Stuart (Ron) Ritchie: Mr. Chairman, not at all. It is just and right that any taxpayer pay the taxes which the law requires him to pay. I do not think it is his business to find ways to pay more taxes than the law requires him to pay. The only abuse in this situation that I saw was not from people who used the law as it stood until the government properly decided that that was not the way the law was intended to work. I do not think any proper criticism can be made of such persons. I intended to suggest that I thought the government of the day had consciously or inadvertently-and who can tell from the record-abused the system. It is the government of the day which decided or was on the point of deciding that this system had to be changed, if it knew about it. I think in a transaction of this size that someone in authority must at least have known about it.


Walter David Baker: I hope so.


Ronald Stuart (Ron) Ritchie: If it knew about it, that constituted something approaching an abuse, only because the government had decided or was deciding that it was wrong and was about to change it. By coincidence or otherwise the government appeared to get one of its instruments in under the deadline in a major way. I would not apply the word "abuse" to any other kind of action because it is legal. For the reasons I have said, I think any taxpayer should pay the taxes the law requires of him. He is not required by law, ethics or anything else to donate money to the public purse.


Robert Knight Andras: Mr. Chairman, that takes us down another slippery slope.


Walter David Baker: You reached the bottom of the slippery slope on May 22.

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Robert Knight Andras: We are starting to climb back.


Some hon. Members:: Oh, oh!


Robert Knight Andras: All patience is virtue, the hon. member will learn, as I am learning. I think the President of Privy Council would say the same thing if he were in my place.


Walter David Baker: Mr. Chairman, 1 think the Parliamentary Secretary to the Minister of Finance put a proposition to the House and directed an answer to the hon. member for Thunder Bay-Nipigon in which he said that the government of the day must have known; either that or it was inadvertent that this occurred. 1 think that is a very serious thing. The hon. member who was on his feet and was about to speak was a member of the government of that day. Perhaps he can tell us what the facts are. We have been trying to find out for a year and a half.


Robert Knight Andras: Mr. Chairman, I will forgive the hon. President of Privy Council, for whom I personally have great respect, as he well knows, for his continuing apparent desire to have the opposition share the responsibility for governing. It seems to come up in almost every action they take or comment they make.


Walter David Baker: Just up to May 22.


Robert Knight Andras: It seems to come up when they get into a little difficulty with their new responsibilities which they have enjoyed very much as of May 22.


Walter David Baker: Just answer the question.


Robert Knight Andras: Both he and 1 have been around this House too long to fall into the little games which he is suggesting. Mine is the more serious question for exploration. If the hon. parliamentary secretary is applying this particular comment of some considerable criticism to this particular transaction, then he seems to be implying in the course of his words that Crown corporations, those corporations owned and controlled by the government, whether it be the federal government, provincial governments or what, should be treated differently than private corporations regarding the tax law. Of course the next step would be with regard to any other Crown corporation.
The whole purpose of establishing Crown corporations was to let them operate at arm's length. In the hypothetical case that there was some consideration of a change to this particular section of the act in the minds of government members and the Minister of Finance, is he seriously saying that until it was approved by Parliament, which is quite properly the only authority in this situation, all Crown corporations supposedly established with detachment at arm's length should begin to operate under a hypothetical regime which might or might not be proposed in the final analysis to Parliament, which might or might not be passed by Parliament?
If the hon. member really explores that doctrine, I think we will find that we will have one holy mess every time there is a thought in the Department of Finance, or in any other depart-

ment of the government, as to what actions or guidelines will be followed by the agencies and Crown corporations of his party's government. In other words, until such time as Parliament approves, how in goodness name will there be any clear signals, except those which are the laws of the country or the directives of the government officially endorsed by Parliament? How on earth will they go down that slippery slope and have anything but chaos in the administration of Crown corporations?


Mr. Pepin:: Resign, apologize.


Ronald Stuart (Ron) Ritchie: Mr. Chairman, this is a debate which could go on for a long time.


Mr. Prud'homme:: You started it.


Ronald Stuart (Ron) Ritchie: I have no doubt that it will, in quite another context than the one before us today. It seems to me fairly simple. No matter what is said about the independence of Crown corporations which vary in independence, this particular Crown corporation all along was argued for as an arm of government policy, as a window on the industry, as a means of controlling and influencing the industry, as a means of accomplishing things which it is claimed the private sector would not do. This particular Crown corporation is not a Crown corporation like some others. It is true, the minister is absolutely right, that there is no reason in normal circumstances for-


Herb Breau: The "former" minister.


Ronald Stuart (Ron) Ritchie: The former minister, thank you. There is no reason for a Crown corporation which operates reasonably independently even to know about changes which will be made in an immediately forthcoming budget. It may well be in this case that no one concerned knew, even the deputy minister and other officials who sat on the board. I do suggest that from the standpoint of the government of that day, which recognized a glaring deficiency in the tax act, circumstances that were not anticipated but which existed at the time and which involved an increase equivalent to nearly 33 per cent in one month, it is unfortunate that it was not anticipated and corrected and that this major step was allowed. That is all one can say. Certainly the word "complicity" does not necessarily mean something illegal, but certainly I think this was unwise.


Herb Breau: Mr. Chairman, I have just one further comment to make. When the parliamentary secretary was speaking earlier he said something to the effect that someone wanted to get under the deadline to make use of the income debenture provisions of the Income Tax Act before the change. I am sure the member did not want to leave the impression that someone knew that the Minister of Finance intended to make this change in his budget. That minister probably made the decision about what was to be in his budget a day or two before presenting it to the House. Surely the member does not want
November 2, 1979

to give the impression that the minister or one of his officials would have tipped off Petro-Canada in order that it could get in under the deadline before November 16.
It is important that we clear this up. I hope the parliamentary secretary does not want to leave the impression that somebody leaked this decision of the Minister of Finance to Petro-Canada or anyone else, or that the minister himself advised anybody about the decision he had taken in rspect of his budget. Surely he does not want to leave the impression that the Minister of Finance or anyone on the cabinet committee that made decisions regarding the budget had spoken to anybody about those decisions, particularly the decision which resulted in the change to be found in the bill we are now studying.


Fred Alward McCain: Order, please. I think we have discussed this matter long enough and I suggest we should move on with the business of the committee.


Bob Rae: On a point of order, Mr. Chairman. With great respect I agree with you, but I do think it is up to the committee itself to decide whether the parliamentary secretary should respond to the point. That is the way debate should proceed.


Fred Alward McCain: Shall clause 66 carry?


Stanley Howard Knowles: On division.
Clause 66 agreed to.
Clauses 67 to 69 inclusive agreed to.
On clause 70-Application of Income Tax Act


Stanley Howard Knowles: Mr. Chairman, every time the title of this bill has been read there has always been the inclusion of a reference to the fact that it also amends the Canada Pension Plan. I have had some of my colleagues question me whether that would give us the opportunity to debate the details of the Canada Pension Plan. Obviously that is not the case, for it is clear that all clause 70 does is to amend the Canada Pension Plan in respect of certain of its provisions for obtaining from employers moneys they have failed to remit to the Receiver General for Canada.
I should like to ask the parliamentary secretary whether my understanding of the clause is correct, and I ask that in two respects. First of all, is it clear that it applies only to employers, and that there is nothing in this clause, either before or after it is amended, that applies to employees?
As a second question I should like to ask what has made necessary this provision which gives the government the right to withhold from employers moneys it might be paying to them in order to collect remittances under the Canada Pension Plan that had not been paid? I have known of a few cases where that has occurred and employers have not sent in the money, with great difficulty resulting for an employee in collecting benefits from the pension plan. Is this a widespread practice, or what is the reason for this clause?
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1 have posed two questions: Is my understanding of the clause correct, and why is it required?


Ronald Stuart (Ron) Ritchie: Mr. Chairman, the answer to the first question is yes, and I am now inquiring about the answer to the second question. 1 am informed there is no widespread practice that is being protected against here. What is involved is chiefly a matter of uniformity of language and administrative practice.


Stanley Howard Knowles: Mr. Chairman, I am glad to hear that the practice is not widespread. Of course, if this is necessary at all to collect payments employers have not sent in it is a good clause to have included. The legislation, as I read it, provides that where an employer does not send in Canada Pension Plan contributions that should have been sent in, those moneys can be obtained by withholding money due the employer. But what happens in a case where the employer does not have any money coming from the federal government?


Mr. Taylor (Bow River):: Mr. Chairman, I would like to add one or two comments about the points raised by the hon. member for Winnipeg North Centre. I have come across two or three cases, at least one very serious one, where this has occurred. When this happens the employee is put to no end of trouble trying to prove that the money was deducted from his or her wages but not reported to the Canada Pension Plan or the income tax people. The employee is the one who is put to all the difficulty of proving the facts. Often statements made by employers, when everything is going well, are not adequate or are carelessly given. The employee does not anticipate any difficulty but when the difficulty suddenly arises that employee finds himself or herself in very difficult circumstances.
I suggest that the administration take a careful look at this, and where it does happen that the employer be prosecuted to the limit and made an example. It is not fair to an employee, because it is not the employer's money. It is money that has been deducted from the wages of the employee. I have not heard of any such prosecution, but when such an incident arises these people should be prosecuted to the limit. It is nothing more than theft of money which belongs to the Crown or to the employee.


Ronald Stuart (Ron) Ritchie: Mr. Chairman, I share the feelings expressed by the last two speakers about the position in which an employee is left. The employer has not only not sent forward the amounts deducted, but has not even reported them. I am afraid that this particular provision does not solve that problem in its entirety. Although making applicable the normal income tax penalty provisions for Canada Pension Plan deductions not sent in is a bit of a discouragement, it does not direct itself to the problem of the employee who has never had his deduction reported. I will take note of that point and mention it to the minister. Perhaps there is an alternate answer.

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Stanley Howard Knowles: Mr. Chairman, I appreciate the support of the hon. member for Bow River. I suppose that altogether, those of us who are in the House could not produce a great number of cases, but when it does happen that an employee is denied his or her Canada Pension Plan benefit because the employer has not sent in the money, it is a serious situation and the law ought to be written so as to correct it.
I would still like an answer to my question with regard to what happens when the employer does not have any money coming to him from the government from which deductions can be made. 1 hope that the parliamentary secretary will speak to his minister about the matter. I would also ask him to ask his minister to speak to the Minister of National Revenue and the Minister of National Health and Welfare, because those two ministers are responsible for the administration of the Canada Pension Plan. If there are even half a dozen cases where individual Canadians are having trouble collecting their Canada Pension Plan benefits because of a failure on the part of the employer, then that situation should be corrected.


Ronald Stuart (Ron) Ritchie: Mr. Chairman, I will pass on the request made by the hon. member for Winnipeg North Centre to the two ministers involved. It is precisely because they are involved that I am not really able to give the hon. member an answer about what happens to the employee's pension position if the employer has not only neglected to send in the contributions deducted, but there is no money for retribution after the full force of this law has been applied. This provision merely ensures that there are greater penalties for the employer who violates it. I suppose, though, that it is meaningless if he has no resources.
Clause 70 agreed to.


[Stage Direction]
Title agreed to.
Fred Alward McCain: Shall the bill carry?


Herb Breau: Mr. Chairman, the limit of time which we took to consider this bill on second reading and in Committee of the Whole indicates that my party is co-operative and interested in getting the legislative program of the government through. It proves that what the Prime Minister and the President of the Privy Council have suggested, that we are trying to frustrate the workings of the House, is not true. In a matter of only two or three days of debate a very complex bill has gone through second reading, and this proves that we are a co-operative opposition. We are waiting for the government to bring down the budget and its many good measures which will help the economy of this country.


Mr. Corbett:: Mr. Chairman, I want to speak very briefly on the passing of this bill.


Stanley Howard Knowles: Let's do it on third reading.


Robert Alfred Corbett: If you will just bear with me, Mr. Chairman, I am certain that you will endorse what I have to say. It deals particularly with clause 46. I would like to draw to the attention of the House for the record the strides forward that
this particular provision provides in a social context for Canadians. It deals with the provision that was previously brought in by the former administration in the April, 1978 budget whereby the people who were disabled-


Fred Alward McCain: Order, please. I do not think we would like to establish a precedent by having the hon. member for Fundy-Royal speak at this time. Perhaps his comments should have been made when clause 46 was being discussed.
Shall I report the bill?


Stanley Howard Knowles: On division.
Bill reported.


Mr. Deputy Speaker:: When shall the said bill be read the third time? Now or at the next sitting of the House?


Stanley Howard Knowles: By leave, now.


Mr. Deputy Speaker:: By leave, now?


Some hon. Members:: Agreed.


John Carnell Crosbie: that the bill be read the third time and do pass.


Robert Alfred Corbett: Mr. Speaker, I just want to draw to the attention of the House the co-operative spirit in which this particular bill received passage and what it does to those people who had been previously denied access to their RRSPs. I am speaking specifically of those people under the age of 60 years who have been physically deformed or disabled through stroke or some other disability.
I want to register some surprise that during the passage of this bill, this type of provision being very much in accord with the type of legislation that is normally espoused, particularly by the New Democratic Party, that there was not some mention made by them that this is progressive legislation which takes into very deep consideration the social needs and difficulties experienced by minority groups in this country.
I think it is also to the credit of the previous administration in so far as it has been recognized by them during the previous session, that there was a deficiency in the budget brought down by the former minister of finance in April, 1978. After this was brought to his attention by members of our party on November 7, 1978, I believe the current provisions were included in the bill in recognition of this very special group of people who cannot or could not otherwise fend for themselves.
As a member representing Fundy-Royal and as a supporter of the government, I want to show my appreciation that social concerns and social legislation of this nature can be brought forward by a party and a government that is dedicated to the free enterprise system.


Some hon. Members:: Hear, hear!

November 2, 1979


Robert Knight Andras: Mr. Speaker, I am glad to see my hon. friend, the Minister of Finance (Mr. Crosbie), in the House for what is probably the final stage of this bill which, as one of his colleagues just indicated, has been dealt with expeditiously and with co-operation on all sides. This is probably contrary to the expectation of the Minister of Finance as he indicated the other day, 1 think before he had even tabled the bill although I am not quite sure of that, that he could not get to his budget because of the obstructionist tactics of the opposition which were holding up this bill so he could not get on with what will be the cutting of the umbilical cord, we hope, sooner or later, when they begin to take over the responsibilities they officially assumed on June 4.
We have tried to recognize the decision of the electorate on May 22. We let this new crowd have five, beautiful, quiet undisturbed months in the backrooms of Ottawa to find out where the private bathrooms were, where the paper clips were, which was was up, and so forth. Of course for some years before this they had indicated that they had all the answers and were just waiting to take Canada into the Valhalla of Conservative glory and prosperity, and all that sort of thing.
1 note with some whimsy the furrowed brows and prison pallor that is descending upon my good friends across the way as they take on their responsibilities and find that there are no simple answers to all these things. I respect that, Mr. Speaker, because it is the truth. There are no simple answers to the problems we face in this country or around the world. They are human, I guess.


Stanley Howard Knowles: Don't be too sure.


Robert Knight Andras: Wait for it, Stanley; wait for it. One could forgive the puzzlement and fevered brows that one sees now as they weave and dodge in their answers to this House. One cannot forgive or take lightly, however, the hypocrisy with which they approach their task. I do not know how long they can continue to try to do this, especially since they are always trying to say they cannot move because of what they inherited.
We have been trying to draw out our hon. friend from down east into a frank, open, and honest admission such as he has been capable of in some other circumstances. I could probably search through Hansard and find one or two times when he may have been absolutely straightforward in his comments. We have been trying to smoke him out, as it were, to say, "Okay, we have the responsibility now. We won the election. We will take that responsibility and get on with it." That has not been the case, Mr. Speaker.
These are the tax motions of the previous budget of the previous government. The election was in May; it is now November. Perhaps they were justified in taking so long-the longest period in the history of the Canadian Parliament-to get their act together before they called Parliament. Perhaps they were justified because they had not had much experience at the job.
They cannot have it both ways, however. They cannot sit here day after day saying that we on this side are causing the
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delay in getting this bill through and that, in turn, the Minister of Finance is delayed in getting his own budget measures before the House and the country. We could pass this in a couple of days; we would have passed it in June and we would have passed it in July, so there is no problem about that. There is some other problem here as there is with a lot of the things they are doing or not doing.
Before the election, they sat on this side of the House and put alleged facts and figures on the record. It is most amusing and interesting to read through the Hansards and see what was said by my hon. friend, the Minister of Finance, by my hon. friend, the President of the Treasury Board (Mr. Stevens), and by that real guru of economics in the Conservative government who is going back to York University or Toronto University or somewhere, or maybe they have something else in mind for him, Mr. Gillies, and, of course, that absolute expert on economic affairs, who is now the Prime Minister (Mr. Clark).
It is interesting to see what they said then and what they are doing now. It is also interesting to recognize that they made statements during the election campaign such as the one that the cash or borrowing requirements in this fiscal year would be as high as $17 billion-a nice round figure. There were other guesses of 13, 14, 15, 16-take your choice. 1 even heard it expressed as $18 billion once. That is on the record.
Their forecasts of unemployment were in the double digits, 10 per cent or so, and their forecasts on inflation were double digit. In other words, the skies were going to fall down as a result of the policies of the previous government.
They still have not brought their act together since the election, even with five months of perusing all those facts and figures, and they have gone on public record as indicating that the cash deficits of the government are lower than we had forecast. They are certainly lower than they had forecast. Yet, Mr. Speaker, and this is the point of hypocrisy that I want to establish, they had forecast the cash requirements in borrowing not only for this fiscal year but they ventured into future years as well, and those figures are on the record in Hansard and in outside speeches. Those were the figures that they forecast. They were much higher than actually turned out to be the case. It was on those higher forecasts that they peddled themselves across this country, it was on the basis of those forecasts that they went out and made promises of a $2 billion tax reduction across the board. It was on those much higher expenditure forecasts that they quoted, and presumably believe in, that they went out and made promises about mortgage deductibility which, at maturity, is going to cost about $2.5 billion per year. It was on those higher expenditure forecasts that they made all sorts of promises. Some say they would cost $5 billion per year and some say the cost would be $7 billion per year.
According to the Prime Minister, that stimulative deficit was going to take two months, and according to the President of the Treasury Board it is going to take one year, but according to the Minister of Finance it would take two years to stimulate in and out and disappear-the disappearing deficit.

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My point is, Mr. Speaker, that it was their own forecasts- extravagant, wild, incorrect, inaccurate, whether deliberate or not-that were in their minds when they went out and made these extraordinary, extravagant promises which they are now having to renege on with the exception of a couple, which 1 think were the worst ones, that they should have followed through upon. On that point alone their credibility is at stake when they try to argue the reason that they cannot do things now, the things they promised and things they said to Canadians, were the reasons why they should be elected. It is absolute hypocrisy and incorrect, if not something worse than that, for them to stand in this House and say they cannot do those things because the facts as they now know them are worse than they understood them to be before May 22. They themselves campaigned on extravagant statements of those cash requirements, etc., which have turned out to be far smaller in actuality. They know that now because they have access to that information. None of it was held back from them at the time when we were in office.
One could also talk about economic indicators which give rise to a need for a new budget. As one of my colleagues attempted to put on the record during question period today, the real GNP growth forecasts ranged from about 2.3 per cent forecast to about 3.4 per cent. In fact, it is coming in at about 3.5 per cent for this year, and this is November, 1979. This comes under the Liberal budget and the anticipation of these measures going through. Because the Minister of Finance (Mr. Crosbie) has not yet presented a budget to this House, he cannot take credit for that kind of GNP growth. We all wish it were higher but they forecast it much lower, so that is an improvement that they know now.
They were anticipating 9 per cent or 10 per cent unemployment this year. It is just in excess of 7 per cent. It is still too high, but that was the basis on which they made their election promises and on which their platform was based to return prosperity. That was the basis on which their stimulative budget was based and the excessive deficit spending, which they promised, from which they are now, thank goodness, backing away. These people were wailing about double digit inflation. It is still too high at around 9 per cent, but lower then they had forecast. I am going to say this again and again and again, until somebody over there has the decency and the honesty to stand up and say, "All right, we will get off this nonsense of trying to blame it all on the past, and get on with our responsibilities." They will hear that song and see that dance for quite some time as long as they continue with this hypocritical nonsense of blaming everything on the past. It is wearing a little thin. In fact almost every economic indicator and fiscal fact of the situation as they now know it is far better than the gloom and doom prophecy which they forecast during the election campaign and during the year or so before taking office. That is documentable. I think their argument is fallacious. It is time they got on with their job.
One of the beauties or compensations of not having ministerial responsibilities any more is that there is time to do

things. There is more time to play golf, more time to think and even a little time to read. I am reading some of the strangest things these days. I am even reading some of the debates from the other place. I have a copy of the debates of the other place for Wednesday, October 24, 1979. In it I saw the name of a new chap over there by the name of Senator Murray. He is the real guru of the Conservative party. He is the real power behind the throne. He was the boy who brought these fellows into the front benches.


An hon. Member:: Keith needed company.


Robert Knight Andras: Yes, indeed he found his reward, as have others who perform well in those circumstances. This situation will probably happen again.
I understand that because he was concerned about election promises, under his instructions-I would guess to the Prime Minister from High River-and because he did not think they were performing, in about June or July he called the PMO and said, "Prime Minister, we better get these boys out to Jasper and lay down the law a little bit. It seems to me we will not fulfil any of the election promises that we made." So a little meeting was held in Jasper and Senator Murray said that this was the way it was going to be, and by gosh they jumped.


Mr. Whelan:: They were the inner house people, the outer house people were not there.


Robert Knight Andras: Yes, the inner house was there. I have not gotten that all figured out yet. I have another speech that I want to make about that some day. It should be a lot of fun.
Anyway, the guru-the Senator fellow-called the boys together and said, "Look, this is what you are going to do. None of this nonsense about keeping the deputy minister of finance despite what the Minister of Finance wants-it ain't going to happen". He said, "It does not make any difference whether he is good or bad; he has to go." The Minister of Finance is reported to have defended the incumbent deputy minister, but I guess that some afternoon their signals got switched and the Minister of Finance on going back to his office found out he had a new deputy. I guess he was told afterwards who it was.
In any event it makes one wonder. The true economic maestro in the system seems to be the chap who did not run again. He used to sit over in these benches, namely, Mr. Gillies, who operates from the Prime Minister's office.
At page 171 of the Senate debates-they do not seem to run as long as our debates-I guess in his maiden speech, in a homily and lecture to his fellow Senators to convey to them the wisdom of his years and experience, he said this:
What is at stake is the credibility of the system. It is the credibility of the system, I regret to say, that has been somewhat damaged by the cynicism and the spectacular reversals of recent years.


Mr. Deputy Speaker:: Order, please. I regret to interrupt the hon. member. I have to advise him that it has been the practice in the House, and we can find many citations in our refer-
November 2, 1979

ences, that members should not be allowed to refer to debates that are taking place in the other place.
I might read citation 314 to the hon. member. I agree that this Parliament might be found in a situation in which many of the subjects debated in this Elouse are also debated over there in a more day to day manner than normal. However I have to follow the rules of the House. I will put on the record a citation that might be useful not only for this debate but for further debates in this session of Parliament. At page 102 of Beauchesne's Parliamentary Rules and Forms, fifth edition, citation 314 reads:
The rule that allusions to debates in the other House of the current session are out of order, prevents fruitless arguments between members of two distinct bodies who are unable to reply to each other, and guards against recrimination and offensive language in the absence of the party assailed; but it is mainly founded upon the understanding that the debates of the other House are not known.


Robert Knight Andras: Mr. Speaker, 1 will limit my comments and quotations from Gideon as written by certain people who shall be from this moment on nameless.
The thought was expressed about this problem of credibility and the damage done by cynicism and spectacular reversals.
Talk about cynicism-


Jean-Luc Pepin: And reversals.


Robert Knight Andras: I will come to that, or you can do it too. To talk about cynicism, talk about their promise to move our embassy to Jerusalem; that takes absolutely top billing.
Reversals? Two billion dollars of tax cuts we were going to get, eh?


Gordon Edward Taylor: On a point of order, what has Jerusalem got to do with the income tax bill? We are talking about an income tax bill.


Robert Knight Andras: Well, many more of these incidents and they are going to have to raise their expenditure estimates to pay for Bob's expeditions, and they will have to raise the income tax accordingly! 1 have to ask the question: is that erstwhile ambassador of embarrassment off to Argentina to clean up the mess there? Will he be off next to Japan-


Mr. Kempling:: Oh, we would like you to open up your Argentina mess. We would enjoy that, I think.


Some hon. Members:: Oh, oh!


Mr. Deputy Speaker:: Order, please. I have difficulty in hearing what the hon. member is saying.


Robert Knight Andras: Mr. Speaker, I really do feel sorry for the Minister of Finance. Originally, as he took office, or shortly after, with that delightful candour of his he indicated that he was expendable. Well, ministers of finance are probably the closest to being expendable than any of the ministers of the Crown and probably should be, particularly this one. He must
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have had some serious disappointments, I would think, because on occasion he shows some glimmering of ability to add one and one and make two, though often it is two and a half it used to be two and a half but now it is one and a half because he is talking about restraint rather than stimulative deficits. He has had to reverse his position with regard to the deputy minister of finance.


Harold Thomas Herbert: He was overruled.


Robert Knight Andras: He was overruled, we do not know by whom but he was overruled, certainly. Most embarrassing. The Minister of Finance holds one of the most prestigious ministerial positions in the country and the way in which he is treated has a lot to do with the credibility of the government and so forth.
I could be disappointed in him, but 1 suspect that the Minister of Finance must have fought pretty hard against this crazy mortgage deductibility scheme he was forced to bring in when he discussed the matter in cabinet. If there is any validity whatsoever to the extravagant argument that the government is tight for fiscal room in which to move, ministers have, with that $2.5 billion a year under that program, blown one of the only options they may have for any really important stimulative measure they might have taken with regard to economic development, regional development, small business or anything else. He has only been in office ten minutes or so, but you can see him wearing down already-


Some hon. Members:: Oh!


Robert Knight Andras: -because he knows he is mouthing a lot of garbage. He cannot honour the promises to which he was party during the campaign except for those he most probably disagrees with, and he really isn't going to make his story stick with regard to many of the answers he has given to the House in which he continues to blame everything on the past. That will wear very thin. He has had to reverse himself time after time, though. Page after page of Hansard-that's for this place, not anywhere else. You should read it. It should be required reading for every Conservative member. The hon. member for St. John's West when he was brilliantly elucidating, wittily elucidated his horror at the idea of high interest rates. Really! Put those back to back with his statements now. Even my good friends over on the other side-and 1 have some-must, I am sure, be terribly embarrassed. 1 should like to have a little-I won't use the word "bug"-in their caucus because there is a nasty connotation to that, but it would be most interesting if we could listen in to the Conservative party caucus and hear what they said-and many of them are still saying it-about interest rates, as compared to what the Minister of Finance is doing about them.


Bob Rae: What do you think?


Robert Knight Andras: The hon. member over here, who is making his mark-


An hon. Member:: On Broadway. The hon. member for Broadway.

Income Tax Act


Some hon. Members:: Oh, oh!


Robert Knight Andras: He is off on his campaign to achieve his ultimate ambition and so far it might be possible, too.


An hon. Member:: Explain.


Robert Knight Andras: I can suspect. But that is not what I am going to do. I have put my own views on record elsewhere; I think interest rates are too damned high. But I am talking about the government's credibility problem, the reversal of what they said before the election, the contrast between what many of them are saying still and what the Minister of Finance is doing. I made reference to the travels of a very respected former member of this House to Bagdad and other places east. You know, Mr. Speaker, 1 am reminded of an answer given us the other day by the Minister of State for International Trade (Mr. Wilson) when he said he did not plan any new trips.
Part of the problem, of course, let us be honest with each other, is our difficulty with our current account imbalance, our trade balance. The ultimate answer to that, of course, is to increase our exports by the processing of our goods and being able to sell them, replacing imports to this country which will stimulate the economy. We all agree about that.
I want to talk about merchandising the goods we produce to improve our balance of trade picture. I was really quite relieved when the other day the minister for international trade said he didn't contemplate going on any trips over the next three or four weeks. I say this because the last few trips he made ended in disaster. He was off to Tokyo with a bunch of shiny, new ministers, and a few weeks later we heard about the cancellation of our contract there and an indication it would have been just as well if he had not gone.


Mr. Friesen:: On a point of order, I want to ask the hon. member if he is sure he is correct when he talks about cancellation of that order.


Robert Knight Andras: I recognize that it might not be verified. Perhaps I should have said that the contract was in some jeopardy. If the hon. member is giving me the happy news that he has the contract in his hot little fist, 1 would be very glad to withdraw and I would buy him a drink after five o'clock.


Some hon. Members:: Hear, hear!


Robert Knight Andras: We would be disposed, I think, to let members opposite have this bill. I think we shall have to be very patient.


Herb Breau: If they provide answers to our questions.


Robert Knight Andras: Well, that is not really the problem. The technical answers coming from over there are not bad, but when they get off the script and on to policy matters they have difficulty convincing us they know what they are doing.
I want to end on a serious note. This is the final parliamentary authority on the budget presented by the finance minister in the former government, the one on which this year's economic activity to the degree the federal government does influence it, is based. For the record, without going through all

November 2, 1979
the statistics again, I want to indicate that I have not seen any evidence which gives validity to the argument of the govern-ruent the Prime Minister, the Minister of Finance or the President of the Treasury Board-that the situation held mystery for them after they took office, that the situation was worse than they had forecast, or that the economic indicators which were left behind in terms of inflation, unemployment, unit cost of manufacturing, balance of trade, the fiscal position and so on were in fact worse than they had anticipated.
Second, I want to reiterate that they themselves, in the process of making those forecasts, which turned out to be wrong and pessimistic in the face of the facts as they are now unfolding, went out and made irresponsible promises to the Canadian people, which may have had some influence on why they are sitting in the front benches opposite today, and the sooner they get on with their responsibilities and cut that umbilical cord, that protective umbrella under which they are operating, then the sooner we will see what kind of government we really have on our hands in terms of their own initiatives and ideas.


Bob Rae: Mr. Speaker, we have been treated this afternoon to an extraordinary tour of the interior of the Liberal mind.


Benno Friesen: It didn't take long.


Bob Rae: I think it is perhaps opportune to pause briefly and remind ourselves that if it ever was unclear to us why the Liberals were defeated on May 22, it has certainly become dear, as we have watched the performance of the official opposition over the past three weeks, why they are no longer in power.
The hon. member who has just spoken referred to the hypocrisy of the Conservatives, and I think it is fair to say that the Conservative party was elected to do certain things which its members now say they are not able to do for a variety of reasons. There is no question that they have broken a number of promises and that they have made a number of mistakes. However, since we are here resident in a city where the world's worst films' festival is just coming to an end, I think we are entitled to ask ourselves who are the world's worst hypocrites.
Are the world's worst hypocrites those people who say they will do certain things and then turn around and do not do them, or those people who do not tell us what they would do at all but simply indicate to us that we can forget about the record of the past 16 years and assume that if they were in power they would not do again the things they did in the past?
In my opinion, if we look at the record, the most hypocrites in this House are in the Liberal Party of Canada.
Where has the Liberal party been on the interest rate question? The Liberals have been everywhere and nowhere at the same time. There have been several statements from that party indicating what its position would be. We heard a statement today by the hon. member for Thunder Bay-Nipigon (Mr. Andras) that he thinks interest rates are too high. He
November 2, 1979

does not say how low they should be, where he would put them, why they are too high, what has changed, or how governor Bouey's advice is somehow different now from what it was five months ago.
It is nonsense to suggest that governor Bouey's advice is any different. The hon. member knows that perfectly well, and if he was not prepared to speak up before May 22, he should hang his head in silence and shame for the next year and keep quiet about interest rates , because he has no right to speak.
The hon. member for Saint-Maurice (Mr. Chretien), the hon. member for Saint-Henri-Westmount (Mr. Johnston) and the hon. member for Stormont-Dundas (Mr. Lumley) say nothing has changed and that the governor of the Bank of Canada is right. The hon. member for Windsor West (Mr. Gray) tells us that interest rates are too high. 1 think we are entitled to know where the Liberal party stands on this issue. We know where the government stands, and I suggest that the people of Canada know where the New Democratic Party stands, but we do not have a clue as to where the Liberal party stands.


An hon. Member:: Neither do they.


Bob Rae: We do not have a clue as to where they stand because they do not know themselves. As has been said before, they are not an opposition, they are a government in exile, and that attitude is clear in the speeches which have been given on this bill.
At second reading the hon. member for Windsor West did not refer to the provisions of this bill a single time. That record was matched by the hon. member for Thunder Bay-Nipigon, the former president of the treasury board, who in his rambling tour of the Liberal mind did not touch once on a single feature of Bill C-17. Not once did he mention it, so I suggest to him that instead of reading speeches given in the other place he might be better advised to start reading the legislation which comes before the House of Commons. If he has something to say, let him say it at second reading, in the course of the debate and at third reading.
I turn now to the particular measures of the bill. I think it is a crystal clear example of how and why there is no difference at all between the Liberal party and the Conservative party. Let me just start with the small business deduction, which was thoroughly and, I think, fairly debated on both sides in the House yesterday and the night before, but where was the Liberal party when it came time to debate that particular question?
The hon. member for Spadina (Mr. Stollery) joined in the criticism of the New Democratic Party that the creation of a particular tax status for professionals and people creating management service companies was unfair. Then the hon. member for Jonquiere (Mr. Marceau) spoke on behalf of the doctors and other professionals in his riding. The hon. member for Windsor West did not speak a word throughout the entire debate. The hon. member for Saint-Henri-Westmount criticized the amendment, ant then voted for it. That is where the Liberal party stands on the question of tax fairness and of
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particular breaks which are going to be given to professionals and people with management service companies, and I think it is time the people knew.
The Liberals do not even have the courage to defend their own legislation as it was brought out last year. The hon. member for Saint-Maurice did not even have sufficient commitment to his own tax reform measures to speak on their behalf in the House in this entire debate. There was not one coherent Liberal statement in defence of one of the two major reforms, from a tax point of view.


Mr. Gourd:: Mr. Speaker, I rise on a point of order.


Mr. Deputy Speaker:: Order, please. The hon. member for Argenteuil (Mr. Gourd) on a point of order.


Robert Gourd: Mr. Speaker, 1 may be new here but I suggest that we are dealing now with an income tax bill. Therefore I do not understand why the hon. member keeps referring to what the Liberal party has or has not done. It is the duty of the government to introduce the bill, and I should ask my hon. colleague in the New Democratic Party to get moving, as the Prime Minister (Mr. Clark) said this morning, and to deal with the income tax bill and not with the progress or lack of progress of the Liberals.


Mr. Deputy Speaker:: Order, please. If I understood correctly his remarks, the hon. member for Broadview-Greenwood has dealt until now with the bill and the position of a number of hon. members during the debate on this bill. I feel, therefore, that everything is in order.


Bob Rae: Mr. Speaker, it is quite clear. I can understand why the hon. member who spoke before me found my remarks embarrassing when I referred to the different and even conflicting positions adopted by the Liberal party, but as I am dealing with this bill, I have not heard a word from his colleague the hon. member for Thunder Bay-Nipigon (Mr. Andras) about it.

Clause 38 is the matter under discussion, if the hon. member wants to have a look at it and to deal with the position his party took on it. It again has created an anomalous situation in our tax law which is bad from two points of view. First is the fact that it has created a third category of business corporation in our income tax law and has added significantly to the complexity of our income tax law, just at a time when the Minister of Finance (Mr. Crosbie) is telling us that he thinks the Income Tax Act is far too complicated and should be simplified. If that is the case, I think we are entitled to hear from the Conservative party what its plans are to make the Income Tax Act more simple and clear.
Does the government plan to present legislation to this House? Does it intend to establish a task force to make recommendations? How serious is the government? The evi-

November 2, 1979
Income Tax Act
dence clearly indicates that it is not serious. The evidence is that the government is determined to make the Income Tax Act more complex, and I think the changes with respect to small business, professional and management service companies is a good example of how this is becoming more complex at a time when we need simplicity.
The second argument is much more fundamental, and that is the fairness argument. May I say, with respect, that I do not think anything we heard from the parliamentary secretary- whom 1 am glad to compliment on his fairness and patience in dealing at length with our questions over the past couple of days-addressed the question of fairness and, I suggest, it is the philosophical difference between our parties which lies at the root of this. I think the Conservative party tends to see the tax system as a means of granting certain benefits to individual groups which they think will create wealth, and invest well. We in our party tend to look at the tax system more as a means of collecting public revenue in a way that is fair so that the problem of fairness between different taxpayers is understood and is seen to be true in the tax system.
Of course, these are legitimate arguments in our capitalist society, and it is important for the people of Canada to recognize that there is one party that is talking about fairness and that another party is talking about incentive and accumulation of wealth, and over here there is still another party which is talking about nothing.


Some hon. Members:: Oh, oh!


Bob Rae: I was referring, of course, to the Liberal Party of Canada. But there are other aspects of this bill that are equally demonstrative of the incompetence of the previous Liberal administration and the very real problems that have been caused to our public revenues because of their having been in government. I am referring, of course, to the situation which was described to us today in response to questions from me and from the hon. member for Saint-Henri-Westmount when we asked how long this abuse with respect to income debentures will last. The answer was that there was a series of quantum leaps in the amount of money that was being accumulated in term preferred shares and income debentures. We started with $700 million, we went on to $3 billion, then to $7 billion, and finally the Liberal party woke up and said, "Hey, wait a minute, something is happening. A large number of people are not paying taxes and the effective rate of taxation of banks has gone way down." Finally, the switch is hit and the light turns on those ministers who are responsible for the management of the Canadian economy.
Just as we have a government which foolishly decides to index the income system at the same time as there is a significant increase in expenditure so that our revenues are falling at the same time as expenditures are increasing-which is a recipe for disaster, a recipe originally suggested to the government by the present President of the Treasury Board (Mr. Stevens)-so too we see, in the very significant matter of

term preferred shares and income debentures, a government that fails to act when a system of tax avoidance is being created in the market place which hits at the very heart of the public Treasury, the capacity of the government to collect revenues and to monitor what is going on in the market place to see that there is no unfairness.
There was unfairness, and the Minister of Finance has admitted it today. He has admitted that the original purpose of the income debenture was to aid those companies that were in financial difficulty as a result of the great depression. Those companies which have now taken advantage of the income debenture and which took advantage of the income debenture after 1974 were not companies in great financial difficulty. They were companies which had no taxable income as a result of other giveaways, other fast write-offs and other incentives given to them by the Liberal party. So just as we hear so often complaints about double taxation, the Liberal party has created a situation and allowed it to exist, not where there was double taxation, but where there was double avoidance, or triple avoidance if you like, because there is avoidance by the banks and avoidance by corporations which take advantage of the scheme of income debenture, and there is additional avoidance that takes place as a result of fast write-offs and other depletion allowances that put companies in the position of having no taxable income.
I think the time is long past when we had to have in Canada a system of accounting for our public revenues which would allow us to ask ourselves whether it is in the interests of Canada that some of our major corporations should pay virtually no tax, whether it is in the interest of either fairness or of the long term economic future of Canada. I think it was Mr. Eric Kierans, formerly a minister in the Liberal government in the 1960s, before he could not stomach it any longer and resigned, who pointed to the very danger of the system of capital depreciation allowances and the system of investment credit which did nothing for employment and nothing to solve the basic dependence of our government on foreign resource investment. This is what lies at the heart of our taxation system and this is what lies at the heart of the policy of the Liberal government, and this is what lies at the heart of the measures that were proposed by the former minister of finance in his budget. I am sorry to say it has been accepted almost completely by the current Minister of Finance.
I think we had a good and full debate on this matter, Mr. Speaker, and we in our party have not attempted to hold the debate up. We have, however-and we make no apology for *t-attempted to raise those issues of importance to the Canadian people with respect to the fairness of our tax system, and we have attempted to improve the ability of members of Parliament to retain control of the purse.
Of course, it is not strange that members of the Liberal party did not participate in this debate to any degree because if there is one thing in which members of the Liberal party have specialized in the past few years it has been ignorance in terms of controlling the purse, and lack of interest in seeing that parliamentarians are knowledgeable and interested in the
November 2, 1979
public accounts of Canada and know where our accounts go, not only in terms of direct spending but also in terms of massive indirect spending which takes place through our tax system.
The Minister of Finance has promised us that in his next budget there will be a statement relating to the new concept of tax expenditures. It is not a new concept in the world, but it is new in Canada.
I want to close my participation in this debate, which I have enjoyed and from which I have learned a lot, with a plea to the parliamentary secretary that he come around personally to seeing the importance of the concept of tax expenditures and that the tax expenditures which are brought before Parliament reflect as broad and as generous a definition of that concept as possible. He may remember that I asked him during this debate whether it would include capital cost depreciation which, as he knows, is done at a statutory rate, which can be faster or slower depending on the decisions of Parliament, and that has nothing to do with real depreciation in an economic or accounting sense of any particular piece of capital property. Unless we have capital cost allowances as part of the tax expenditure concept, we will not get a handle on how much money we are giving away to large corporations in terms of fast write-offs.
Obviously there are a number of other areas where we are going to want change, not only those sections of the Income Tax Act to which we have referred in this debate, such as section 66, the section dealing with MURBs, but all those features of the act which grant a substantial benefit to Canadians in a form of forgiveness tax.
It is extremely important Parliament recognizes that this whole question of the deficit, with respect to hon. members on the other side, has been abused by them and their party. They have been ready and prepared to talk about the sins of public expenditure and direct government spending. They are prepared to hit away at the programs which are defended, as best he can, by the Minister of National Health and Welfare (Mr. Crombie), and the programs of foreign aid which are defended in the House by the Secretary of State for External Affairs (Miss MacDonald). These are visible forms of spending. Everyone can see if we give millions of dollars to Ghana or the Caribbean and it does not work out. This is something for everyone to see. If we send tractors to a country which does not need them, we all see it.
I suggest hon. members on the other side should look carefully at the inefficiency of tax expenditure. We give write-offs to companies over which we have no ability to control whether they spend it or whether the purposes for which they spend it are efficient. Of course they have to make the research and development or investment expenditures in order to get the credit. But we do not ask ourselves whether all that money being spent is well spent. We do not have public inquiries to find out whether there was an attempt to carry out
Income Tax Act a foolish economic plan in the Gaspe or somewhere else. We do not have the means to do that.
If my colleagues in the Conservative party are truly interested in the problem of the deficit, getting a hold on the public purse and the concept of public accounting, they will have to look not only at whether direct expenditures have been misspent-and of course there are examples where they have been-they will have to look at the indirect expenditures which are going on as well. I know it is not as popular. I know the only form of tax expenditure which springs to the lips of the President of the Treasury Board is the child tax credit. But we have had bank tax credits in the past year. I do not hear any complaints from the other side about bank tax credits. We gave Anne Murray's bank over $1 million in the second quarter of 1979. I did not hear any complaints about that in the House of Commons. These are the concepts of public spending and waste and private spending and waste subsidized by the public which are just as worthy of our concern. Certainly they are just as worthy of our scrutiny and questioning as any of the measures which apparently have been criticized in the last couple of weeks. We understand that the Tory caucus is demanding a significant cutback in foreign aid, as if it was really a major case of public expenditure, as opposed to many other examples on which we could focus.
To complete my remarks, we reject the concept that there should be a special rate of taxation, a favourable rate of taxation for lawyers, doctors, accountants and those people clever enough to avoid the normal rate of taxation for employees or self-employed persons. At least we have not abandoned the cause of tax reform. We feel extremely strongly about that. We reject the continued use of the tax system to finance our large oil companies in their exploitation of our resources. We reject our financing of foreign takeovers of the resources of Canada. That is precisely what is happening. Also we reject the new Conservative attack on public expenditure, and its failure and refusal to attack the wastes of private expenditure. These are the things we reject.
What are the things of which we are in favour? We are in favour of a tax system that is seen to be fair, that collects revenue equally from all Canadians, that treats tax dollars equally although it taxes progressively. It is a very basic principle. It is not original to this party. Yet it is a principle, like many principles and objectives, which we never manage to achieve. We made an effort to achieve it under the Carter commission but we did not manage to achieve it. Also we want to see a significant return of power to this Parliament and its ability to scrutinize not only direct expenditure but public expenditure as well. We will continue to push for the President of the Treasury Board and the Minister of Finance to produce a full accounting such as they have promised to do in the next budget.
Finally, we are in favour of a policy which provides some hope, some planning, some clear direction for Canadians, and does not rely on the multinational corporate sector of our economy to be the springboard to an industrial strategy. Let me suggest to members on the opposite side, who I know are



November 2, 1979
Income Tax Act
enthusiastic about the capacity of the multinational corporate sector to provide the springboard, that that has been tried. It has failed before. If they try it again, it will fail again. Obviously we are pessimistic because of the remarks which have been made so far by the Minister of Finance, but we look forward to a policy in the budget in terms of energy, taxation and industrial strategy based on the concepts of fairness, planning, and a vital and active public sector of which we on this side are not ashamed.


Some hon. Members:: Hear, hear!


Gordon Edward Taylor: Mr. Speaker, 1 will not delay the House very long, but there are one or two things 1 want to say about Bill C-17.
First I commend the Parliamentary Secretary to the Minister of Finance (Mr. Ritchie) and the Minister of Finance (Mr. Crosbie) for doing an excellent job in piloting this bill through the House, many parts of which are questionable but nevertheless had to be passed in order to clean up the debris.
Nobody likes taxes, but income tax is probably the fairest tax of most taxes, because one has to make the money before one is taxed. Everyone knows that there must be enough money to run the country, but taxation can ruin a country. It has been said by some people that when municipal, provincial and federal taxes start to aggregate close to 50 per cent, then the country really is in trouble. It is because too much money is being taken out of the pockets of the people. They are not being left with enough of the money which they earned themselves. Of course that is a very bad thing in any country.
The best taxation is the one which does not take place, that is, when one can avoid taxes by cutting down expenses, by avoiding waste and by making sure one gets full value out of every dollar. Some taxes kill initiatives. I refer to the capital gains tax introduced by the Liberal government. The people who pay capital gains tax, paid the taxes on every dollar they earned through the income tax system. Then when they get to the point where they want to pass on or sell the business, the government takes another bite out of their income. These people were building up funds for themselves and their families, and sometimes the entire work of people toward that end has been ruined.


Robert Gourd: Mr. Speaker, may 1 call it four o'clock?


Mr. Andre:: Mr. Speaker, I rise on a point of order. I wonder if there might be a disposition for the Speaker not to see the clock for a minute. It might enable us to take care of the November 16, 1978, legislation and to proceed with new business on Monday.


Mr. Deputy Speaker:: Order, please. There does not seem to be that disposition. It being four o'clock p.m., the House will now proceed to the consideration of private members' business

as listed on today's order paper, namely, public bills, notices of motions, and private bills.


PRIVATE MEMBERS' PUBLIC BILLS
David Kilgour: Mr. Speaker, I think that we are going to study Bill C-214 introduced by the hon. member for Win-nipeg-Assiniboine (Mr. McKenzie) and I propose that, with unanimous consent, all private members' bills listed before Bill C-214 be allowed to stand.


Mr. Deputy Speaker:: Hon. members have heard the suggestion of the hon. parliamentary secretary. Is there unanimous consent to stand items 1, 2, 4, 5, 6, 7, 8, 9, 10, 11, 12 and 13?


Harold Thomas Herbert: Mr. Speaker, I rise on a point of order, and this is not intended to be an attempt on my part to change private members' business for today. I am rising at this point because the proposed bill is the thirteenth item of business on the list of private members' public bills.
By draw at the start of every session we determine the order in which these bills are to be taken during private members' hour. 1 understand and appreciate that there is a problem at the start of every session. The problem now appears to be that we do not have bills being printed fast enough.
I am rising at this time because I have one of the bills that precedes the bill being called at this time. I am told that one of the reasons 1 have not been approached to see whether I want to proceed with my bill now is that the bill has not been printed. I am ready to proceed. I know exactly what is in my bill.
The essential point of my intervention is that the business to be discussed in private members' hour should be decided by the members themselves and not by any government office. In fairness to the office that gives assistance, let me say they do their very best under difficult circumstances. I am not criticizing their efforts to put some order into this particular hour. Nevertheless, it is essential at this time that we go on record making it quite clear that, by precedence, the items to be discussed are precisely in the order as they are listed on the order paper, and that by unanimous consent we agree, or do not agree, to leave some items for future consideration.
I want to make it quite clear by my intervention that I have been ready since the start of the session to proceed with my bill. I do accept the explanation that we are doing what we are doing today because bills are not printed. However, I would like to hear you, Mr. Speaker, reiterate the fact that no one but members shall determine what item is to be discussed in this and succeeding private members' hours.


David Kilgour: Mr. Speaker, I believe the hon. member for Vaudreuil (Mr. Herbert) is aware that members are called in
November 2, 1979

the numerical order of the bills from number one. The person who does that calls each and every member for those bills that are printed. I might stress that the reason the bills are not printed has nothing to do with that person who does the calling. This is a matter that is entirely within the jurisdiction of the Elouse of Commons, and the Speaker knows that certain bills have not been printed. The fact that the hon. member for Vaudreuil's bill is not printed has nothing whatever to do with the office of the President of Privy Council (Mr. Baker). I believe it has been pointed out to the hon. member for Vaudreuil, as he himself has indicated, that the reason he has not been called in respect of his bill is that his bill has not been printed.
I think the hon. member's quarrel is not with Mr. Lay, who does the phoning in a most efficient manner, but with the people who are printing the bills and who are part of the House of Commons. If a bill is printed, Mr. Lay, I might remind hon. members, phones members in the order in which they are listed and asks the member whether he is ready to proceed with his bill on that day. If the member is away at a funeral, or away for some other reason, then we end up in the position we have today.
1 would respectfully suggest that members might give unanimous consent to proceed with Bill C-214, which is the only one to my knowledge that is ready to be proceeded with today.


Mr. Lefebvre:: Mr. Speaker, 1 rise on the same point of order. For the information of the hon. members, I wonder if the parliamentary secretary to the government House leader could tell us why Bill C-214 would be printed before a bill which has a lower number. It seems rather odd that orders are not given to the printing department to print bills starting with number one and going up the order in that fashion. Could the parliamentary secretary enlighten the House in that regard?


David Kilgour: Mr. Speaker, 1 agree with the hon. member that it would seem logical to do them in order. The point 1 am trying to stress is that it is not an official in the House leader's office who has anything whatever to do with the order in which bills are printed.


Thomas Lefebvre: I am not questioning that.


David Kilgour: Possibly through you, Mr. Speaker, we could put the question to the people who are printing bills as to why they do not print them in numerical order. There may be a very good reason, but 1 do not think the hon. member for Pontiac-Gatineau-Labelle (Mr. Lefebvre) and the hon. member for Vaudreuil (Mr. Herbert) should direct their complaints to our office. 1 stress again that this matter is entirely within the jurisdiction of the Speaker of the House of Commons.


William James Kempling: Mr. Speaker, I believe that what happens on many occasions is that a member will submit a bill with just the title and not always the detail behind it. He does this because he does not know whether it will be drawn. Then the bill may be drawn in numerical order, and it is up to the
Order of Business
member to get the material ready for printing. I suggest that is one of the things that happens. It has happened to me. On a couple of occasions 1 have submitted the title of a bill and had it drawn before I had the back-up material or the inside portion drafted, or sent over to the drafters for the proper language. This in many cases is why they skip numbers. They print whatever is available at the time of printing.


Thomas Lefebvre: Mr. Speaker, the hon. member for Burlington (Mr. Kempling) has a very good point. Let me assure the parliamentary secretary that 1 have no intention of criticizing Mr. Lay, whom 1 know very well and who has done an excellent job in his capacity of trying to help us with private members' hour. I believe the reason given by the government whip is an appropriate one, but perhaps the final authority on this should be the Chair, and 1 hope the Speaker can enlighten us further.


Harold Thomas Herbert: Mr. Speaker, before you speak there are two additional points 1 should like to make. At least one of the bills that precedes the bill to be dealt with today was introduced at the last session and, therefore, is identical, so we should not have any difficulty in having it printed. Secondly, I would ask you directly, Mr. Speaker, whether you insist that a bill be printed before being proceeded with, and 1 appreciate the difficulty that arises? However, when a bill is called, and if the member is ready to proceed, is there any reason the member should not speak to it? He knows precisely what is in his own bill.


Mr. Gurbin:: Mr. Speaker, I think it would be helpful to the House in deciding this matter if members understood that the bill for consideration today is in fact Bill C-16 and was presented prior to this, in 1978, as Bill C-289. In fact what we are dealing with is a bill that was printed before and is now introduced as Bill C-16.


An hon. Member:: It is 216.


Thomas Lefebvre: I believe we are on 214, excuse me.


Mr. Deputy Speaker:: Order, please. The point raised by the hon. member for Vaudreuil (Mr. Herbert) illustrates many of the problems concerning the organization of private members' bills for private members' hour. The reason why the bills which were referred to are not printed was partly given by the hon. member for Burlington (Mr. Kempling), and that is that at the outset of a session bills are submitted in time for the draw but merely contain the title, and the staff is left waiting for instructions from hon. members as to what they want in their bills. The bills cannot be printed without knowing what will be in them.
Today there are only four bills, Nos. 202, 203, 209 and 213 that are printed. I am told that the four members concerned were not ready to proceed, although I am not in a position to verify that fact. From past experience-and I must pay a compliment to those who have been left with the job of organizing the workings of this matter-members are

November 2, 1979
Order of Business
approached when their bill comes due, and, if they are ready to proceed, then the Elouse proceeds with the bill.
1 would like to take hon. members back to a similar debate which took place on November 14 and November 28, 1977, and was followed by a ruling made by myself on December 5, 1977. In that ruling I suggested to the House a procedure as to workings of our Standing Orders 18(1), 19(1) and 49(1) during private members' hour. At that time I suggested a practice which we have been following since then, and that is the practice of standing bills by unanimous consent if possible without requesting the government to stand an item of business during private members' hour. This, I think, has simplified our procedure, but at the same time it has allowed members to complain about the selection of bills.
Having said that, I would like to read to hon. members a question 1 had in my mind at the conclusion of the debate on November 28, 1977. It reads:
Is the fact that the government has been co-ordinating this recent procedure which has developed, bringing about some suspicion?
At that time I was referring to the procedure whereby the Privy Council Office organized and planned the work of the private members' business on a weekly basis. I was questioning the reason which prompted the hon. member for Vaudreuil to raise the question at that time. I went on to say:
Would there be a valid objective in suggesting that such programming of private members' business ought to come under the Deputy Speakership or the Chair in general? Should there be some kind of co-ordination by the Chair or Deputy Speaker who officiates at the drawing of the order of business for private members at the beginning of the session?
That point I think was touched by the hon. member for Pontiac-Gatineau-Labelle (Mr. Lefebvre). Without insinuating that this alternative would be the solution to our problem, the Chair is often found in a situation where it does not have all the elements to a problem. It could be a problem of procedure, planning, or the workings of the House. We hear members complaining that they have not been contacted by the Privy Council office when they were ready to proceed, but then perhaps they were not in their offices.
Part of the organization of private members' business is conducted in one place, while the procedural aspects are conducted around the Chair. Perhaps this is something which our committee on procedure could explore. We are at this moment discussing the matter around the Chair. I can tell hon. members that the Clerk of the House and the Deputy Speaker's office are setting up an office for private members' business which will scrutinize all bills, and it will have an appointed officer who will specifically examine all bills to be debated in this House during private members' hour. This office will be concerned with the private members' hour, and will accept complaints with regard to it. The question could be raised as to whether this office should co-ordinate all facets of the private members' hour. I do not know, and I will leave that matter to hon. members for discussion. I am prepared to listen to any hon. members who wish to act on what I have said.


Stanley Howard Knowles: Mr. Speaker, I would like to indicate my support for the proposition you
[Mr. Deputy Speaker.)
have placed before us. It is in no way a reflection on the hon. member for Edmonton-Strathcona (Mr. Kilgour) or on the Privy Council office, but it seems to me that what we are dealing with in this private members' hour is the business of private members and the business of the House of Commons. It should not appear that it is planned or arranged by someone who is responsible to the government. As Your Honour has just pointed out, the business of the order of the bills and resolutions is determined by a draw at the start of the session. I believe it is called an exercise in balloting. It takes place in the office of either the Speaker or the Clerk. In other words, it is done on behalf of all the members and is not under the auspices of the government.
Your Honour has wondered whether this would require a reference to the Standing Committee on Procedure and Organization. I would hope not. It is not in the rules, nor is it by direction of the standing committee or anyone else that the present practice is in effect. It has simply grown up. It is being done as a service, but it does leave certain questions. I believe that the idea of the Chair being responsible, through the Deputy Speaker, for looking after the arranging of these bills is a good one. In effect, Mr. Speaker, if you are telling us that you are going ahead with this procedure, it has my approval.


David Kilgour: Mr. Speaker, certaintly what the hon. member for Winnipeg North Centre (Mr. Knowles) has said has a good deal of merit. Nobody in this House would object if that is the wish, really, of the hon. members opposite. The hon. member for Winnipeg North Centre has said that the matter now works practically. If hon. members wish to stop the practice, there is a very simple method, and that is simply to deny unanimous consent.
Your Honour has raised a very serious point from the chair. Possibly all members present or elsewhere might consider the matter. Perhaps House leaders could meet to consider the question and get back to you, if that is acceptable.
The other point is that I understand the hon. member for Pontiac-Gatineau-Labelle and the hon. member for Vaudreuil believe that Mr. Robert Lay is being scrupulously fair. I think Your Honour is concerned about the possible appearance of the matter not being fair to all members. Hon. members on this side of the House would be open to a reconsideration of the matter if that is the wish of all other hon. members.


Thomas Lefebvre: I have listened to your words very carefully, Mr. Speaker. Rather than guarantee you the full support of the official opposition today, I would sooner wait until you can make a more complete report to the House on exactly the manner in which it will be organized. I agree with the parliamentary secretary that there are some who may think-not I personally, and not the hon. member for Vaudreuil-that there may be problems with private members' hour because it is in the hands of a government office. I think members are agreed that private members' hour, especially, should be in the
November 2, 1979

hands of Parliament itself. 1 think this is what we are trying to arrange.
I would just mention again, Mr. Speaker, that I would appreciate it if you could make a full report when your study has been completed, and all members of the House could perhaps then be aware of what you intend.


William James Kempling: Mr. Speaker, it is my understanding that the plans for this office to look after private members' business are well advanced. 1 do not know whether an actual date has been set, but I understand from the Clerk that the plans are well in hand and that they are going to proceed. Things should be dealt with through that office in the very near future.
There were representatives from all parties at the drawing of private members' bills. The Speaker was in the chair at the meeting, and all hon. members know that. It was done in a very straightforward manner and I do not think there was any complaint at all. As I recall, we spent about 45 minutes on a point brought forward by a member of the New Democratic Party regarding the procedure on the subject matter. Other than that, everything was done in a very straightforward manner. There were no complaints, and it has always been this way. I do not think there was any attempt on the part of anyone to interfere in the process. We welcome entirely this concept of an office to handle private members' business, and we look forward to the day it begins.


Mr. Deputy Speaker:: Order, please. I did not want to prolong the debate but I could have referred to the concern of other members. 1 remember when we had a debate in 1977, the then hon. member for Temiscamingue and the hon. member for Nepean-Carleton (Mr. Baker) were also preoccupied with this problem. The establishment of the office is not meant for taking over what I am suggesting at this time; it is meant to help the Chair. It is needed more and more, if you consider a situation like the one we had at the beginning of the week on Bill C-217. About one minute before we went into private members' hour the Chair ended up with a bill which did not have a title that met the requirements of our Standing Orders. Sometimes the Holy Spirit works faster than others. That day things were not too bad, but we usually like to have advance notice in order to make a better judgment on the acceptability of the bill, or even to advise hon. members of improvements to it.
The remarks of all hon. members will be examined by the Chair and not only by me. I have had conversations on this matter with the government House leader, the House leader of the official opposition, with the hon. member for Winnipeg North Centre (Mr. Knowles), and with the Speaker.
I take the advice of the hon. member for Pontiac-Gatineau-Labelle (Mr. Lefebvre) not to do anything in a hurry and not to ask for a decision from the House without putting on paper some kind of document on what could be suggested.
First, however, we have to lay down properly not only the structure of the office for private members' business, that I referred to, but also the responsibility of the Assistant Clerk who will have full control of that office and the kind of services
Consumer Protection
that can be offered to members. After that, we can tackle the other problem and include it in that paper. It will then be left to hon. members to indicate whether they want us to pursue our research in order to give better service to the House and to all hon. members.


David Kilgour: Mr. Speaker, may we then have unanimous consent to deal with the bill of the hon. member for Winnipeg Assiniboine (Mr. McKenzie)?


Mr. Deputy Speaker:: Is there unanimous consent to proceed with Bill C-214 and to stand, by unanimous consent, all the bills that precede Bill C-214?


Some hon. Members:: Agreed.


CONSUMER PRODUCTS WARRANTIES ACT
Mr. Dan McKenzie (Winnipeg-Assiniboine) moved: that Bill C-214, to amend the Combines Investigation Act to provide for the standardization of warranties and to define the minimum provisions thereof, be read the second time and referred to the Standing Committee on Finance, Trade and Economic Affairs.
He said: Mr. Speaker, I do not think it is of any benefit to remind the general public that this debate is carried on so many times in private members' hour. I know the government has plans to strengthen the private members' hour and I hope those plans are put into effect shortly.
We have seen a classic example this afternoon of the determination of some people to destroy the private members hour in every possible way they can devise. It does not matter to me whether I speak on my private member's bill today or on Monday or next Tuesday. I am quite sure that with the co-operation I have received from the different offices during the years, these things can be straightened out in a matter of hours through a visit to some official in the House and so not take up the time of private members' hour year after year after year.
It is the same member who raises these issues all the time. All the rest of us can work our motions, our production of papers and private members' bills, but the member for-


Thomas Lefebvre: On a point of order, Mr. Speaker, I should like the hon. member to be more specific about who he is referring to.


A. Daniel McKenzie: It is the hon. member for Vaudreuil (Mr. Herbert). He has raised this matter time and time again. He has been in the government for a long time so I do not know why he cannot work with his colleagues to get these problems straightened out.

November 2, 1979
Consumer Protection


Harold Thomas Herbert: May I suggest that if I have raised the matter time and time again it is because it has not been resolved. Now, for the first time, we see a possible resolution.


A. Daniel McKenzie: Thank you, Mr. Speaker. I might come in next week when there are some other private members' bills coming up to continue this debate.
The intention of Bill C-214 is to amend the Combines Investigation Act and to provide for clearer warranties. The intent of the bill is to amend the Combines Investigation Act to provide for the standardization of warranties and define the minimum provisions thereof of such warranties so that consumers will know precisely what they are going to receive. As many consumers have all too painfully learned, legal gob-bledygook pervades most warranties. As a result, persons seeking redress get a great deal less than they expect. Sadly, there is little protective legislation in this field. The legislation that has been developed in Saskatchewan, New Brunswick and Quebec seems to be different for different jurisdictions. I believe that my bill will fill this void and ensure standardization.
I expect this bill will be talked out, Mr. Speaker, but 1 hope the government will refer it to the federal provincial task force on consumer legislation programs for further discussion at the next federal-provincial meeting. Warranties are mainly a provincial concern, but if the provinces do not take some concrete action toward improving warranty legislation, then the federal government is going to have to step in.
In the United States, bills are being introduced to improve warranties. They are more commonly referred to as the "anti-lemonaid" bills.
I should like to refer hon. members to a story in a recent edition of Economics and Business, which reads in part as follows:
The story is all too familiar. A shopper buys a refrigerator, handsaw or any of hundreds of thousands of other products covered by a warranty only to have the product quickly break down. When the consumer reads the warranty's fine print, he discovers that the document is so filled with exceptions and qualifications as to make the manufacturer's promise to fix or replace the item almost useless. That situation is likely to become far less common in the years ahead because of the first of a series of strict new warranty regulations issued recently by the Federal Trade Commission under the Warranty Act of 1975.
I would like now to refer to a few bizarre cases. These concern individuals who have purchased automobiles. I will read one example into the record. The situation occurred in the United States. An architect purchased a cream coloured station wagon with wood grain moulding on October 1, 1979. He said:
"It was a real pretty car."
However, it had a habit of stopping dead in traffic because the motor gave out. And the dealer had trouble fixing it.
Ten weeks after purchasing his car the gentleman returned it to the dealer along with a list of 14 complaints. Besides the motor problem the car was supposed to get 15 miles per gallon but was only getting 5 miles per gallon. When he got the car

back four months later, he said that the engine died in traffic before he had driven ten miles. Consequently, he took it back to the dealer. When it was still not fixed by May 18 he decided he wanted his money back.
That is just one example, and I am sure anyone listening to me today will be reminded of similar cases.
Rachel Miller, a federal trade commission staffer working on warranty problems, said the American bill would eliminate costly court disputes over just how many unsuccessful repair attempts it takes before a car is judged a "lemon". She said that sometimes it takes 28 or 30 repair attempts before a car owner can get satisfaction. That is a sad situation, Mr. Speaker.
Consumer advocate, Phil Edmonston, stated that auto manufacturers have defrauded car buyers of millions of dollars in the last 25 years by selling cars as new that have actually been manufactured in the previous model year.
I hope my bill will protect citizens from these sorts of things.
We have even seen situations where people have to turn to their daily newspapers. They run help columns to assist automobile and truck buyers in getting their lemons fixed by dealers and car manufacturers. The Ottawa Journal runs such a column, called "Square Deal". It is absolutely ridiculous that people have to turn to newspapers in order to get some action. Nevertheless, this is an excellent service, provided by newspapers.
We all remember the Firenza automobile and its accompanying problem. It was many years before owners received settlements. There were parades, court costs and various petitions before any lemons were fixed.
In general, warranty rights are contractual rights. That means that a buyer can only enforce his rights against the seller. Only in special circumstances can he enforce them against the manufacturer, although we are always led to believe that the warranty right is one that is enforced against the manufacturer.
In early 1979, the Supreme Court of Canada decided the case of Kravitz and General Motors. That case established that in the province of Quebec a Quebec consumer can recover compensation from the manufacturer for various defects. But it took Mr. Kravitz almost ten years-a whole decade-to prove his point and recover his money.
There is no way that any individual purchasing a car, or any other product, should have to take on any of the big three, or any car manufacturer when he has received a lemon.
There has been a great deal of activity in the United States on this subject ever since the well-known Magnuson-Moss Warranty Act which forces sellers to label their warranty as a full or limited warranty depending on what it offers.
In addition, three Canadian provinces have acted in this area. Saskatchewan and Quebec have actually dealt specifically with the issue addressed by my bill. In Quebec, this is covered in section 45 of the new Consumer Protection Act, and in Saskatchewan, it is covered in section 17 of their Consumer
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Product Warranties Act. It is about time something was done about this on a national basis. It is for that reason, Mr. Speaker, that I table this bill and urge the provinces or the federal government to get on with the job because what is happening in the market place is criminal.
That is all I have to say, as 1 understand there are other members who wish to make a contribution on this subject.


John Leslie Evans: Mr. Speaker, I am very interested in this particular piece of legislation. I was one of the members of the federal-provincial task force on legislative programs to which the hon. member for Winnipeg-Assiniboine (Mr. McKenzie) referred. 1 was also one of the people who established the subcommittee looking at the whole question of products liability into which the question of warranties falls.
One of the problems this particular piece of legislation overlooks is the jurisdictional problem that exists in Canada in this area. It is essential that that be recognized, and it is essential that this piece of legislation be taken back and rethought. The whole area of contract law lies within the purview of the provincial governments. That is why the provinces of Saskatchewan, Quebec and New Brunswick have passed legislation in this area and why the federal government has refrained from doing so.
When I was with the federal Department of Consumer and Corporate Affairs is was the intention to move ahead with the area of products liability, not only with regard to products and performance of them but also with regard to product safety matters as we now have covered them under the Hazardous Products Act. It was the intention to move ahead to incorporate the Hazardous Products Act as well as product performance standards within one piece of legislation. The immediate reaction from the provinces was one of "Keep your hands off, it belongs to us". There was no question in any of our minds that the provinces were not going to allow the federal government to pass legislation in this area without a great deal of difficulty.
It seems to be rather peculiar that a government which prides itself on consultation with the provinces does not know what the provinces' positions are on federal intervention in this area. It is all also peculiar that we would be talking about putting a piece of legislation forward which does not even cover the major problems of products liability but does it through an amendment in the Combines Investigation Act which is an inappropriate piece of legislation in the first place.
The part of the Combines Investigation Act to which this bill refers is section 36. This is the misleading advertising portion. If we were talking about a piece of legislation that is going to change disclosure that is one thing, but this bill goes much further than just changing the disclosure requirements on consumer product warranties.
First, if you look at proposed section 36.01(3), it says that:
The governor in council may make regulations prescribing, with respect to any class of consumer product, minimum standards which qualify a warranty as a "full warranty" in relation to products of that class.
Consumer Protection
Effectively the bill would be asking the federal government or agencies of the federal government, such as the Department of Consumer and Corporate Affairs or the Standards Council of Canada, to establish test methods for evaluating products and to set standards. The time and the cost associated with setting standards in these particular areas, given that there are well in excess of 30,000 to 40,000 consumer products on the market, are obvious even to the slowest mind.
The second area is proposed subsection 4 of 36.01 which reads:
Where a warranty made in connection with the sale of a consumer product does not qualify under subsection (3) as a "full warranty" in relation to that product, the words "limited warranty" shall appear conspicuously upon the product or its packaging.
What this says is that if a product is produced and a manufacturer does not comply with all of these disclosure items (a) through (k), then the manufacturer has to put the term "limited warranty" on the product. The question arises, what if a manufacturer fails to meet any of the conditions in the warranty legislation? He still has to put "limited . This means that every product, whether it bears a warranty or not, is going to have "limited warranty" put on it. As a matter of federal law, does it make sense that every product, whether or not it carries a warranty, will be forced to say that it does carry a warranty, even though it is a limited one?
A number of factors have to be considered here and the bill does not seem to me to be one which understands the massive complexity and technicalities involved in the warranty field. It certainly overlooks the important area of federal-provincial harmony and federal provincial jurisdiction. It is beyond my understanding how a government which says it is so concerned about putting a new face on federalism and establishing a new co-operative relationship with the provinces could put forward a piece of legislation like this which flies in the face of everything the Department of Consumer and Corporate Affairs has been working on for the last four years in an effort to develop harmony in the field of consumer protection by setting up the task force on legislative programs, by setting up the federal-provincial task force of deputy ministers which meets once a year to talk about all these issues. The whole subject of warranties and liability was, in fact, referred back to the officials.
I agree with the hon. member that the area of warranties is a serious problem. In Canada, right now, a large number of products are inadequately guaranteed. I agree with the hon. member that disclosure is the key. But disclosure also happens to be an area which falls within the provincial domain which is why, as I have said before, the provinces have already moved in there.
At this point I would not recommend any policy if I were not able to go back through all the work which has been done in this field by the Department of Consumer and Corporate Affairs. I would suggest that a good place to start, though, would be with the disclosure provision. The simple language provision in the bill which says you have to understand what is

Consumer Protection
going on is extremely useful, and it's nice to see it coming from a lawyer because one of the most difficult areas for consumers is understanding exactly what the warranty says. New York State has a simple language clause, but before implementing anything of the kind in Canada I would be very careful to go to New York to talk to the people there and find out all the difficulties which have been caused by that simple, readable-language clause in their legislation.
Another way of handling this problem would be to require full disclosure, and some of the proposals made in the hon. member's bill constitute a good start. That seems to follow very closely from the Magnuson-Moss act in the United States, if I am not mistaken. Possibly, also, it derives from some of the provincial legislation. It is a good start to provide for some disclosure, but not, then, to require that the federal government through its regulatory agencies should become involved in setting minimum standards for what is and what is not a full warranty or a limited warranty, but to police through legislation the validity of the claims by putting the onus on the manufacturer to substantiate his claims in advertising, to substantiate his claims in the warranty itself. The validity of those claims will be decided in the courts of law-by the way they would be handled in civil courts which, once again, are outside federal jurisdiction.
Disclosure itself gives rise to certain problems because of circumstances surrounding the recourse which is available in Canada to consumers within the domain of provincial jurisdiction. There are many serious problems in the area of liability which need to be handled by way of joint federal-provincial agreement and interprovincial agreement. For example, in the products liability area of hazardous products, if I buy a product in Ontario and the product was manufactured in Manitoba and 1 get injured in British Columbia, I face a serious string of problems in trying to lay claim against the manufacturer or the seller. Where do I bring my case? Can I lay a claim against a Manitoba manufacturer? All these questions have to be resolved by way of extensive interprovincial and federal-provincial agreement. The bill before us will not serve that purpose. It seems to me a broader approach to the whole area of product liability is needed, of which disclosure and warranties will form one part.
Another problem I see with this piece of legislation is that it depends very heavily upon the precedent which was set in the Magnuson-Moss warranties bill in the United States, and I do not think it recognizes sufficiently the rather substantial differences between the law in the United States and the law in Canada. So I would suggest, if I may, from experience in working in this field and dealing with product liability as well as consumer warranties and disclosure legislation, that before we approve private members' bills or pieces of legislation from private members or members of the government, or from the opposition members for that matter, we should do a lot more homework on the background, the subject matter and make sure we are actually covering an area, first of all, which is under federal jurisdiction, and, second, that we are acting in a way which will actually improve the information flow to the

November 2, 1979
consumer and not make it potentially even less than it is now. I agree with the hon. member that at the present time it is not good. I agree with him, also, that there is a need in this area. Thank you, Mr. Speaker.


Bob Rae: Mr. Speaker, I want to join with the hon. member for Winnipeg-Assiniboine (Mr. McKenzie) in his attack on the free enterprise system.


Some hon. Members:: Oh!


Bob Rae: That is what we are talking about here. We are talking about a breakdown in consumer protection which the forces of the market place have proven unable to present. I am glad this is recognized by the hon. member, though I am sure there are free market theorists on the other side of the House who will tell us that all consumer legislation is yet another example of government interference in the free working of the market place and something which should be stopped.
Although I applaud the objectives of the bill I, too, have some doubt as to whether this is the best way in which to proceed. I think I am a little more sympathetic to letting this bill go to committee than the hon. member for Ottawa Centre (Mr. Evans). It certainly is not my intention to talk the bill out.
I simply suggest to the hon. member for Winnipeg-Assinib-oine that the problem of consumer protection, of which this is one aspect-and product liability is one aspect of the question of consumer protection-is mixed jurisdiction. As the hon. member knows, the basic law of consumer protection, warranty and liability is a matter of commercial contract law which is covered by provincial law and is subject to provincial jurisdiction. One of the difficulties we have is that each province has its own way of protecting consumers or of not protecting consumers. There is a whole variety of acts in each province which reflect differing philosophies. Some are more advanced than others in the whole field of consumer legislation and consumer protection, but I am sympathetic to the notion that the federal government, within its own jurisdiction, might study the possibility of bringing in its own legislation to serve as a model for other jurisdictions, and with a number of amendments I think the hon. member's bill could serve as a basis for that kind of legislation. It is for that reason that I think it should go to committee.
The hon. member for Ottawa Centre said that the problem is basically one of disclosure and that disclosure is the key. I disagree. I think the key to consumer protection is not disclosure. The key is enforcement. The key is access to the law. As the hon. member for Winnipeg-Assiniboine and the hon. member for Ottawa Centre know, when the private individual has the get up and go to take advantage of our court system in consumer actions, by and large he wins. It is one of the ironies of our common law that the common law as it has been interpreted-certainly in the province of Ontario-is beginning to move well beyond the protections of statute.
November 2, 1979

1 think the hon. member for Winnipeg-Assiniboine referred to saws breaking down and the problem of new cars which break down. If the hon. member for Winnipeg-Assiniboine is interested, he can read many cases in Ontario law where courts recognize that there have been fundamental breaches of contract-fundamental breaches of implied warranties-and that this demands compensation.
For example, if I buy a new saw and it breaks down within a given period of time, even though the warranty may not exist or even though the warranty may be worded to the contrary, it still happens, if the individual has the get up and go, the means, the intelligence and the ability to use our court system-both financial and otherwise-that that individual will often win. However, the problem is partly consumer information and partly consumer awareness that a consumer can do this. The other part of the problem is enforcement, and I suggest to the hon. member that that is an area where just as the free market system breaks down in the field of consumer protection, so too it breaks down in relation to legal services.
It is a harsh fact that most people fear the courts and are afraid of lawyers and cannot afford to take the risk of legal actions which might not be successful. Therefore, the critical question becomes one of enforcement, and one of the reasons I would like to see this legislation sent to committee and studied further is that I think there is much that the federal government can do both through the Department of Consumer and Corporate Affairs, and the Department of Justice through its funding of community legal clinics and its provision of community legal education.
There is a great deal a federal government can do in the field of consumer information and consumer protection. That takes money, which the hon. member for Winnipeg-Assiniboine does not want to spend in other areas. I hope he will agree that it is worth the expenditure in this area.
With those exceptions, riders, and concerns, I join with the hon. member in his condemnation of the abuses of the capitalist system. I am glad to have him on my side where he is welcome to join with me in this debate in this attack. I am glad we can agree on something for a change, even if it is at 4.55 p.m. on a Friday. However, there are some amendments we would like to see. We would like to see the bill strengthened to deal with the broader problems which the hon. member has gladly and rightly brought to the attention of this House.


Gary Michael Gurbin: Mr. Speaker, I am thankful for this opportunity to speak on behalf of the Department of Consumer and Corporate Affairs and my minister regarding this very important bill. I thank the hon. member for Winnipeg-Assiniboine (Mr. McKenzie) for bringing this bill forward. I would like to apologize for the number which I had in one of my documents which indicated that this is Bill C-14. It clearly is not. It is Bill C-214.
The comments made by the hon. member for Ottawa Centre (Mr. Evans) bring quickly to mind the difficulties which are implicit in the Combines Investigation Act, and I would like to call to his attention the fact that he has lived with those for a
Consumer Protection
number of years now, and if he has worked closely with them before I regret that he has not been able to effect a bill which would be better able to serve consumer needs and to serve the purposes of consumers. I think that the effort which has been made by the hon. member for Winnipeg-Assiniboine has attempted to address that problem, and as an effort it at least deserves some attention.
As was the hon. member for Broadview-Greenwood (Mr. Rae), I am reminded of a bumper sticker which reads, "Re-call Ralph Nader". I think the point here is that we would support the type of thing Ralph Nader has been forced to do, and that is to give responsible consumers, producers and retailers the ability to understand each other and, through disclosure, to effect a more reasonable attitude and a better ability to serve consumer needs.
This disclosure, as it would be improved by the measures put forward in the bill introduced by the hon. member for Winnipeg-Assiniboine, would do a number of things. It would help to show the consumer where to turn. It would help show what steps the consumer might take to get proper warranty service.
It would help indicate who can turn to the warrantor. Would it be the consumer's spouse, his girlfriend, her boyfriend, her children or her grandchildren? Who can use this warranty? It might help to show what parts of the product are not covered by the warranty, and which parts are. It might help tell us what the duration of the warranty is, among other things.
I would like to state clearly that the Department of Consumer and Corporate Affairs supports this bill, while at the same time appreciating that its purview is under the domain of the provincial governments and that several provincial governments have brought forward legislation which covers this. As the hon. member for Ottawa Centre mentioned, he was involved in these negotiations. These negotiations are ongoing, and with the permission of the hon. member for Winnipeg-Assiniboine this government intends to bring forward this bill to the task force which is now in process in the hope that it will in fact develop, on the basis of this proposed measure and others, a more reasonable consumer bill and a more reasonable ability for the consumer to achieve some satisfaction in terms of his warranty.
There was one other point-


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


Stanley Howard Knowles: Mr. Speaker, I rise on a point of order. On behalf of the Friday afternoon club may I say it is not often that we have in our midst such a distinguished member as we have this afternoon. We should like to welcome the Prime Minister (Mr. Clark) to the club, and wish him a very happy weekend.


Some hon. Members:: Hear, hear!


The Acting Speaker (Mr. McCain):: The hour provided for the consideration of private members' business has now expired.
It being 5 p.m. this House stands adjourned until Monday next at 2 p.m., pursuant to Standing Order 2(1).
At 5 p.m. the House adjourned, without question put, pursuant to Standing Order.

November 2, 1979


APPENDIX
[Stage Direction]
(See p. 900)
OTTAWA K1A0A6, April 4, 1979.
Mr. James J. Macdonell,
Auditor General of Canada,
240 Sparks Street,
Ottawa, Ontario.

[Stage Direction]
Dear Mr. Macdonell:
Last summer, shortly after the announcement of intended spending cuts in the public service, I was asked by the President of the Treasury Board whether similar economies were possible in the operation of Parliament. My response, of course, was that the ultimate decision must rest with Parliament itself, but that 1 would certainly provide an opportunity for members to pronounce themselves on the suggestion.
We therefore prepared a preliminary set of the Speaker's spending estimates and I asked our senior officials to identify areas in which substantial cutbacks might be affected if members so desired and, of course, consequential alterations to members' services. I appeared before the Management and Members' Services Committee to advise them that I had taken these steps and to invite them to consider carefully any possible savings so that when our estimates were before them in midwinter, they could give me their final advice. We met again in February and I learned that the committee had directed its attention to these matters in a number of meetings at which our officials testified. They were, however, reluctant to commit future Parliaments to substantial adjustments in members' services or other operational features of Parliament without a comprehensive review, and so, it was their strong suggestion that I authorize an independent study of parliamentary administration.
You will recall that at the Committee's suggestion, I discussed this matter with you in a preliminary way and it was your opinion that as a first step, in place of your regular annual audit, you conduct a somewhat more comprehensive study, which would include the value for money concept which 1 know you are competent to examine. It was your view that such a study would require about three to four months and that it would assist in identification of problem areas if they do exist, and likely suggest a number of solutions; furthermore, if
outside consultations were considered necessary to solve any remaining problems, your study would assist us in drawing appropriate terms of reference. A few days ago, when I appeared before the Committee for final approval of my estimates, I took the occasion in a brief session in camera, to inform the Committee of your opinion and I am pleased to say that they support me entirely in my intention to proceed.
This letter is therefore to formally request you to begin at your earliest convenience, the more comprehensive review which you described to me at our earlier meeting. I understand we can expect such a study to be finalized about the end of the summer so that the Speaker of the next Parliament would be in a position to consult with you and, in turn, with the reconstituted Committee at the commencement of the next Parliament before taking any further steps. I have, of course, advised Mr. Alistair Fraser, the Clerk of the House, General Gus Cloutier, the Sergeant-at-Arms, Mr. Georges St-Jacques, the Director of Administration and Personnel and Mr. Ed Thomas, the Director of Legislative Services, fully about these steps throughout, and by copy of this letter, I am asking all of them to be at your disposal to facilitate your work.
I need not add, I am sure, that the Parliament of Canada is an absolutely singular institution, which operates under entirely unique administrative requirements and pressures and after five years as Speaker, I must say that 1 have the highest respect for everyone responsible for our administration here. I am confident that you will find a thoroughly professional attitude and competence in every area and that chiefs of services will be of great assistance to you. On the other hand, I am conscious of the fact that the last organizational study of Parliament was made several years ago and that in size and complexity, our entire operation has multiplied several times in the recent years. I am especially pleased that all parties represented in the House and all the senior officials of the administration have expressed great interest in this kind of organizational review for which your audit may form the corner stone, and I thank you for your counsel and co-operation in this very important endeavour.
Yours sincerely,
James A. Jerome, Q.C., M.P.
November 2, 1979
[Stage Direction]
240 Sparks Street, Ottawa, Ontario.
K1A0G6 October 31, 1979
The Honourable James A. Jerome, Q.C., M.P.,
Speaker of the House of Commons,
House of Commons,
Ottawa, Ontario.
K1A 0A6 Dear Mr. Speaker,
On March 23, 1979, you informed me of your concerns and those of the Management and Members' Services Committee as to whether the general and financial administrative organization and systems of the House of Commons were appropriate for its needs and operating economically and efficiently. I suggested that you might wish to consider a comprehensive audit of the type recently introduced in my office which is broad in scope, and includes considerations of economy, efficiency and effectiveness-colloquially described as value-for-money auditing. On April 4, 1979, you advised me that this proposal was acceptable and requested that we proceed with the work.
To identify specific areas in which detailed examination would be justified, we made a preliminary survey of the following aspects of House administration:
[DOT] financial administration;
[DOT]	personnel administration;
[DOT]	services to committees;
[DOT]	services to members;
[DOT]	printing and publication;
[DOT]	maintenance and cleaning;
[DOT]	procurement;
[DOT]	security and protection; and
[DOT]	restaurant and cafeterias.
We did not, however, review the procedural aspects of the House except to the extent required to obtain an understanding of their relationship to the administrative practices. As Parliament was not in session during our preliminary survey, there has been no opportunity to meet with members to obtain the benefit of their comments and suggestions as users of the service provided by the administrative staff.
On October 4 we discussed with you the findings and key organizational recommendations arising from our preliminary survey and agreed then to provide you with this summary. Future reports will contain our detailed findings and recommendations in other areas included within the scope of our comprehensive audit.
Summary of Findings
Since the organization and administrative practices of the House were last examined during 1964, there has been a threefold increase in the number of staff and a ninefold
increase in expenditures. These increases reflect growth in the size of the House and in the complexity of and requirement for support services. There are now close to 3,000 people and a budget that approaches $84 million.
The services provided to members appear to be of a high quality, as do the services to the House itself. However, we are of the opinion that the quality of general and financial administration is significantly below a minimum acceptable standard. In summary, our more significant findings are as follows:
Operating budgets are rudimentary for all areas of
administration in the House. Procedures have not been developed to determine objectives and priorities, or to ensure that there is a methodology for determining the costs of activities and programs and for measuring operating performance, in practice, budgets are prepared by the senior managers on an incremental basis from the preceding year; however, they are not developed in sufficient detail to identify all costs by responsibility centres. Consequently, these budgets are not useful as a means of exercising control or ensuring accountability.
Financial and management reporting is inadequate in all
areas of administration. Expenditures are reported against budgets only at the director level, the broadest level of responsibility. Moreover, detailed analyses of variances from budget are not prepared, and the costs of various services are not reported. Without this kind of information it is difficult for managers to exercise informed judgment with respect to value for money.
A manual of financial and administrative policies and
procedures has not been developed. Thus, there is no assurance that practices, like procurement, are uniformly applied in a manner consistent with accepted government procedures.
A clear separation of duties is lacking between those who
exercise spending authority and those who exercise payment authority. This increases the risk of fraudulent practices and other irregularities.
The responsibilities and authorities of the Personnel Division have not been well defined or documented. As a consequence, staff may not be recruited or promoted in a manner consistent with practices that ensure due regard for merit.
Position descriptions documenting responsibilities, authorities and relationships of managers and subordinate staff are not generally available. Salary structures are said to relate to those of the public service; however, direct comparisons are difficult because of the lack of position descriptions.
Security procedures have not been formalized or subjected
to review by an independent authority. Contingency plans are not in place to deal with emergencies.
Standards of maintenance and cleaning have not been
agreed upon or documented. Thus, procedures are not in place to measure productivity or to assess priorities with respect to cleaning and building maintenance.
[Stage Direction]
November 2, 1979
Organization of the General and Financial Administration of the House of Commons
The lack of plans, policies, documented procedures and adequate reports, coupled with the growth of expenditures to $84 million and a requirement to improve significantly the co-ordination of all administrative functions of the House, led us to place before you at our meeting of October 4 the following two key recommendations:
Establish the position of Administrator to co-ordinate and
direct the administrative functions of the House of Commons. The Administrator should be of equivalent rank to a deputy minister and should report directly to the Speaker of the House of Commons.
Establish the position of Comptroller of the House of
Commons to develop, co-ordinate and maintain all activities relating to accounting and financial administration and controls of the House of Commons and its members. The Comptroller should report directly to the Administrator.
It should be emphasized here that we understand the respect with which members regard the traditional relationships between the Speaker, the Clerk, the Sergeant-at-Arms and the House of Commons. We also accept your admonition that any final description of responsibilities of such an Administrator, including relationships with existing officers of Parliament, must come only after members have had a proper opportunity for study and comment.
At the same time, it is our earnest recommendation that the actual work of the Administrator begin as soon as possible, and that the Administrator work together with the Clerk and the Sergeant-at-Arms as a Management Committee. In this latter regard, we are encouraged by your view that such a Management Committee would constitute a very natural continuation of regular consultations which took place during the last Parliament and that you would not only support such a concept, but would serve as chairman. In the light of your other responsibilities, this is more than we had intended to suggest, but it certainly in our opinion constitutes the best possible arrangement.
We feel that the interim solution which concludes this letter accommodates the need for both comment and expediency and so, in conjunction with that proposal, we have appended capsule position descriptions, outlining the principal responsibilities and relationships respecting these two positions, together with an illustrative, functional chart of organization. The chart illustrates the proposed separation between professional (chamber and procedural) activities and administrative functions. We believe that the direction of the administrative services of the House is a complex and full-time job, and that there is an immediate need to:
[DOT]	oversee the development and implementation of effective
financial, personnel and operating practices;
[DOT]	establish performance indicators, and cost and reporting
mechanisms to provide for accountability; and
[DOT]	create a co-ordinated and integrated administrative
organization.
The chart of organization identifies a number of responsibilities now assigned to the Sergeant-at-Arms that we feel should be directed eventually by the Administrator. These
responsibilities, including the Parliamentary Restaurant and cafeterias, building maintenance and cleaning, and messenger services, are highlighted by footnote 1 in the accompanying chart. The rationale for these proposed changes in responsibilities stems from our view that they are more clearly aligned with the role of the Administrator in ensuring economy and efficiency. In the period of transition, close co-ordination would be required between the Sergeant-at-Arms and the Aministrator to ensure a smooth transfer of responsibilities.
* *
You indicated the desirability of proceeding with all reasonable dispatch to fill the two key positions, with first priority being given to the position of Administrator, and asked me to assist you in this connection. Appreciating the need to proceed promptly, but recognizing also that identifying suitable candidates for such a unique and important position as that of Administrator of the House of Commons would likely require several months, I proposed a possible interim arrangement. Briefly, I suggested that, if you so desired, arrangements could be made for the Senior Deputy Auditor General, Mr. Rheal Chatelain, F.C.A., to assume, on an interim and acting basis, the responsibilities of Administrator, through secondment to the House of Commons reporting directly to you. It seemed that Mr. Chatelain's background and experience is particularly relevant in helping to set up the position of Administrator. Prior to returning to Ottawa from Quebec City in 1974 to accept his present position, Mr. Chatelain held several senior positions with the Government of Quebec, having been successively Comptroller of the Treasury, Comptroller of Finance and Deputy Minister of the Civil Service Department.
You responded positively to this suggestion, and on October 18 you convened a meeting attended by yourself, Dr. Koester, the Clerk of the House of Commons, General Cloutier, the Sergeant-at-Arms, Mr. Chatelain, two of my other associates, and myself. At this meeting the proposed arrangement was discussed and it was agreed that it was a practical and workable arrangement which should be proceeded with as soon as possible. Tentatively, November 19 was selected as the date on which Mr. Chatelain could commence this special temporary assignment.
In accordance with your suggestion it was agreed that, in due time, I would initiate enquiries through the Secretary to the Cabinet and the Chairman of the Public Service Commission to identify for your consideration potential candidates for the position of Administrator.
It was further agreed that I would provide you with this letter to place on record the substance of the principal matters covered in our several discussions.
We are proceeding with other phases of the comprehensive audit and will be directing our attention next to the personnel management aspects of the administration.
My colleagues and I appreciate this opportunity to be of service to the House of Commons.
Yours sincerely,
J. J. Macdonell Auditor General of Canada
November 2, 1979
[Stage Direction]


POSITION DESCRIPTION Administrator, House of Commons General Accountability
The Administrator is responsible to the Speaker of the House of Commons for ensuring that all financial, personnel and administrative services to the House of Commons and its members are developed and carried out with proper regard for economy, efficiency and operational effectiveness.
Nature and Scope
Because of the rapid growth of the House of Commons staff there is a need for the review and development of new policies, procedures and systems with respect to all administrative services functions including finance, personnel and general administration services. This will include implementing the recommendations of the recent comprehensive audit of the Office of the Auditor General and establishing organizations with the sensitivity and judgment to carry out these changes in an environment where close consultation with the Management and Members' Services Committee, the Commissioners of Internal Economy, the Management Committee and members of the House is essential. Consultations and negotiations may also be necessary with other organizations such as the Treasury Board and Public Service Commission where some form of new relationship may be of value in creating a more structured and controllable administrative environment.
Specific Responsibilities
Obtain a comprehensive understanding of the services needs of the members and, keeping in mind operational efficiency, develop plans for achieving Branch objectives through consultation with the Speaker and other members of the Management Committee.
Ensure that appropriate senior staff is in place and that the organizations necessary to carry out the mandate of the Administrator are quickly established, staffed and made aware of their program objectives.
Prepare a plan for the development of policies, procedures and systems in all areas under the jurisdiction of the Administrator.
Develop a financial and manpower budget and ensure that proper accounting and control systems are in effect.
Establish liaison with the heads of central agencies and other organizations to facilitate the establishment of appropriate relationships or in cases such as with the Public Service Commission and Treasury Board the possible negotiation of administrative arrangements.
Ensure that performance indicators are established wherever possible so that progress in achieving objectives can be monitored.
Provide guidance and advice to the Speaker, Clerk, Sergeant-At-Arms and Members in respect to personnel, financial and administrative matters.
Ensure that studies are carried out on economy, efficiency and operational effectiveness in any part of the House of Commons organization where appropriate and as agreed to by the Speaker.
Recruit and ensure the quality of senior personnel, both Contract and Permanent, for employment by the House.
Supervise directly the Comptroller and heads of Personnel, Members' Services and Publication Services.
[Stage Direction]
POSITION DESCRIPTION Comptroller, House of Commons General Accountability
The Comptroller is accountable to the Administrator of the House of Commons for ensuring that financial and management policies, programs and systems are properly developed and implemented to support and control the activities of the House.
Nature and Scope
The need to improve financial control and accountability will necessitate the introduction of a complete program of policies, systems and procedures for financial planning, budgeting, reporting and controls. This may include discussions with central agencies such as the Treasury Board or Comptroller General where the possibility of working arrangements could be explored. The successful implementation of this program in the complex environment of the House of Commons will require a highly competent, creative and sensitive professional staff capable of establishing a model management and financial control organization.
Specific Responsibilities
Develop an appropriate organizational structure for his Branch and obtain the financial and human resources necessary for its successful operation.
Develop financial management policies and establish and promulgate procedures and systems to implement a complete and effective financial and management control system.
Plan and supervise the preparation and integration of program forecasts, main and supplementary estimates and budgets.
Establish effective systems for the monitoring, reporting and control of financial activities including a strong basic accounting system.
Provide statistical and cost and benefit analysis information in respect to major activities and operations.
Carry out studies of economy, efficiency and operational effectiveness in the Branch and in any area under the jurisdiction of the Speaker as directed by the Administrator.
Develop and maintain effective relationship with senior staff of the House of Commons and provide sound professional advice on financial management problems.
Participate in committee meetings to contribute to policy decisions on financial and other matters and represent the House of Commons with other organizations.
Supervises directly the Chief of Financial Planning and Analysis, Chief Accounting, Chief Systems and Procedures and Internal Auditor.

[Stage Direction]
November I, 1979
COMMONS DEBATES	November 2, 1979
[Stage Direction]
Monday, November 5, 1979