1979-02-15

ROUTINE PROCEEDINGS


Mr. Eldon M. Woolliams (Calgary North):: Mr. Speaker, I rise, under the provisions of Standing Order 43, on a matter of urgent and pressing necessity.
In light of the decision in the case of The Queen v. Pink Triangle Press, whereby Provincial Judge Harris dismissed a charge of obscenity because, in his words, "Parliament has failed to define immorality clearly enough so that its courts can judge what is moral and immoral as far as it affects children". I move, seconded by the hon. member for St. John's East (Mr. McGrath):
That as the Attorney General of Canada is severing Bill C-21, the big amendment to the Code, and bringing in a separate bill by consent of the opposition in reference to the definition of "soliciting" and "public place" as to prostitution, that he therefore also produce in the same bill a new definition of "obscenity" as far as it affects children and, in particular, make it illegal for any publisher, either by photograph or by writing, to depict a child engaged in or participating in an act of masturbation, sexual intercourse, gross indecency, etc., in light of the fact that the city of Toronto has already experienced the horrible murder of a young boy by the name of Emanuel Jaques, and child obscenity in that city is still flourishing.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


SOCIAL INSURANCE
Mr. Jake Epp (Provencher):: Mr. Speaker, I rise on a matter of urgent and pressing necessity under the provisions of Standing Order 43.
In view of the fact that employees at the Canadian Grains Commission in Winnipeg were informed yesterday that they
would not receive their pay cheques today if they did not produce a social insurance number, this directive including employees with 20 to 30 years' service, I move, seconded by the hon. member for Saskatoon-Biggar (Mr. Hnatyshyn):
That the government remove the directive that pay cheques will not be issued to employees if they do not produce a social insurance number, and further, that the government cease expansion of the use of the social insurance number beyond the social assistance programs to which the government assured the Canadian public the usage of the social insurance number would be restricted.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


REQUEST THAT GRANTS BE MADE TO AMATEUR, NOT PROFESSIONAL, SPORT-MOTION UNDER S.O. 43
Mr. Stuart Leggatt (New Westminster):: Mr. Speaker, I rise under the provisions of the same Standing Order.
Not only has the Minister of State for Fitness and Amateur Sport offered some $18 million to four cities for arena construction, but she is presently offering some $29 million to the city of Vancouver for another professional complex. In the light of the result of the Soviet-NHL All-Star games, I would move, seconded by the hon. member for Broadview (Mr. Rae):
That these proposals be withdrawn and that in their place the minister provide substantial funding for hockey coaching schools and genuine amateur hockey, the study of Soviet and European hockey systems, and the integration of a good hockey program into the public and post-secondary educational system. Further, that the minister get back to her proper responsibility, which is amateur sport and Fitness and not the subsidization of professional sport.


Some hon. Members:: Hear, hear!


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


Some hon. Members:: Agreed.


Some hon. Members:: No.

February 15, 1979


S O. 43 ENERGY REQUEST FOR STATEMENT ON AVAILABILITY OF OIL SUPPLIES- MOTION UNDER S.O. 43
Mr. J. M. Forrestall (Dartmouth-Halifax East):: Mr. Speaker, 1 rise, under the provisions of Standing Order 43, to seek unanimous consent for the following motion.
Given the uncertainty of government action with respect to both immediate and future oil supplies for eastern refineries, and having regard to the discourtesy shown to this House by the Minister of Energy, Mines and Resources in calling a press conference at 1.30 p.m. today, thus precluding an opportunity for hon. members to move under the provisions of Standing Order 26, I ask leave to move, seconded by the hon. member for Halifax-East Hants (Mr. Crosby):
That the minister rise in his place on motions at 3 p.m. today and make a full report to the House and to Canadians clarifying the situation with respect to the availability of oil supplies.


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


Some hon. Members:: Agreed.


Some hon. Members:: No.


FISHERIES
[Stage Direction]
A COD'S A COD FOR A' THAT!-MOTION UNDER S.O. 43
Mr. John C. Crosbie (St. John's West):: Mr. Speaker, I rise on a matter of urgent and pressing necessity under the provisions of Standing Order 43.
In view of the fact that the voiceless codfish, long forgotten by humane societies and by the world, but now at last recognized as the noble cod, is the subject of ecological and environmental as well as humane concern by a new organization founded in St. John's, Newfoundland, by Miller H. Ayre and known as Cod-Peace, of which Ayre is the cod-ordinator, and in view of the fact that the purpose of Cod-Peace is to protect the cod, particularly against the voracious, rapacious and unprovoked attacks of the savage seal, I would move, seconded by the codfatherly member for St. John's East (Mr. McGrath):
That Cod-Peace be supported and encouraged by all cod lovers of Canada and that the chief cod of Canada, the Minister of Fisheries, make arrangements for the support and protection of Cod-Peace and for arrangements to be made for a national yum flipper feast during the festival of the Easter seal in late March, since the time is at hand for all cod lovers of the world to rise since they have nothing to lose but their cod-peaces.


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please. The hon. member for Fort William (Mr. McRae).


GOVERNMENT RESPONSIBILITY FOR ENSURING ADEQUATE SUPPLIES OF ENERGY-MOTION UNDER S.O. 43
Mr. Paul E. McRae (Fort William):: Mr. Speaker, 1 rise, under the provisions of Standing Order 43, on a matter of urgent and pressing necessity.
Given the statement of complete support by the Leader of the Opposition for the demand of Premier Lougheed for provincial control over all aspects of resources, and given that Exxon has announced the diversion of 25 per cent of Imperial Oil's supply of petroleum intended for Canada to the United States, I ask leave to move, seconded by the hon. member for Welland (Mr. Railton):
That the government reaffirms its national responsibility by ensuring that no section of this country be deprived of the benefits of the petroleum resources of the nation; also that the government, through the Minister of Energy, Mines and Resources, instruct Petro-Can to begin negotiations with its counterpart in Venezuela, as it is doing in Mexico, with a view to replacing the diverted oil.


Mr. Speaker:: Unanimous consent of the House is required before such a motion can be presented for debate. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


AIR TRANSPORT
Mr. Bob Rae (Broadview):: Mr. Speaker, I rise on a matter of urgent and pressing necessity under the provisions of Standing Order 43.
In view of the recent application by Canavia to expand the Toronto Island airport for use as a STOL port, and in view of the fact that such a STOL port would operate at a significant loss for the foreseeable future, would have a serious impact on the environment and would be used exclusively by business executives, not by the ordinary travelling public, and in view of the fact that the overwhelming majority of the population of the city of Toronto have expressed disapproval of such a STOL port through their elected representatives, I ask leave to move, seconded by the hon. member for Greenwood (Mr. Brewin):
That the Department of Transport intervene in hearings before the Canadian Transport Commission indicating its disapproval of the establishment of such a STOL port on Toronto Island.


Mr. Speaker:: Is there unanimous consent that the hon. member's motion be presented for debate?


Some hon. Members:: Agreed.


Some hon. Members:: No.
February 15, 1979



ORAL QUESTION PERIOD


Mr. Allan Lawrence (Northumberland-Durham):: Mr. Speaker, my question is for the Minister of Energy, Mines and Resources. On at least five separate occasions in this House over the last ten days the Minister of Energy, Mines and Resources has attempted to calm and soothe the fears of some of us that the Iranian disruption of crude oil supplies was serious and would bring about a worldwide shortage and that due to the lack of any meaningful policies on the part of this government, Canada is particulary vulnerable.
Because of our exposure in the House yesterday with regard to the deplorable situation of Imperial Oil, the minister has now done a complete flip-flop and agreed that the situation is serious. Because the minister is now putting the heat on Exxon of the United States and Imperial Oil of Canada because of the disruption of their offshore supplies, I wonder if he can tell us what he is going to do about a similar cutoff of offshore crude supplies to the Canadian refineries of BP, Fina, Golden Eagle and Texaco all of which are suffering because of the same type of percentage cutoff which Imperial Oil at its Montreal and Dartmouth refineries is suffering.


Hon. Alastair Gillespie (Minister of Energy, Mines and Resources and Minister of State for Science and Technology):: Mr. Speaker, the hon. member inadvertently misquoted my position: that is not a new tactic on his part. Hon. members will realize that I have repeatedly stated in this House that the situation is serious. Hansard will show that I have said it is a serious situation, but I have also said that it is a manageable situation. 1 believe it is manageable and I have indicated to the House why.
We have some excess oil producing capacity in the west which can be traded for offshore oil which would, therefore, take care of the eastern refineries. I have reported this to the House on numerous occasions in the last couple of weeks. What the hon. member for Northumberland-Durham does not realize is that Venezuela is a different kind of source of supply for Canada than is the Middle East. We have had a very long history of supply from Venezuela. Venezuela has been our major supplier; roughly 40 per cent of our imports come from Venezuela. 1 was in Venezuela about a month ago and at that time I sought the assurance of the Venezuela government and Petroleos de Venezuela, the national oil company of Venezuela, that they would continue to supply Canada. They gave me that assurance.
In the case of Exxon and Imperial Oil we are dealing with a very special situation because Imperial Oil gets all its oil from Venezuela. That is the difference between Imperial Oil and the other companies the hon. member mentioned. I think I would have been remiss if I had not insisted on the undertak-
_________________________3251
Oral Questions
ing that Imperial Oil establish a direct contracting relationship with Venezuela so that Exxon cannot siphon off supplies which should be coming directly to Canada.


Some hon. Members:: Hear, hear!


Allan Frederick Lawrence: Mr. Speaker, due to the ineptitude of this minister and this government we will have serious difficulty next autumn, at the very latest, with respect to our oil supplies. In the reversal of the minister which took place within the last hour he admitted that next fall, at the very latest, we will have serious supply difficulties. He has indicated some remedy with regard to Imperial Oil of Canada, but what is he doing about a similar situation which is affecting at least four other Canadian refineries and companies with respect to offshore oil?
Every Canadian refinery in eastern Canada will suffer under the allocation agreement, because our own pipelines may not have enough capacity to bring even Canadian western crude into eastern Canada. What is the minister doing about these other four companies? What is he doing about the other six Canadian refineries in eastern Canada?


Alastair William Gillespie: Mr. Speaker, I do not know what has distracted the hon. member or what has preoccupied him. I do not know why he has not been following the debates in this House. I have made it very clear over the last several weeks that the exchange arrangements, which have been authorized by the National Energy Board, of the companies the hon. member has mentioned will replace the shortfall these companies otherwise would have. Using western crude on a temporary basis, it is possible to make up for the shortfall of crude which would have been affecting those refineries. That is quite clear, it is on the record, but the hon. member seems only now to have realized what has been going on.


Allan Frederick Lawrence: Mr. Speaker, the minister has not only tried to pour oil on troubled waters with respect to the public of this country, but he has even lulled into lethargy some of his cabinet colleagues who should have known what the situation was yesterday. One need only go through the quotations of the minister in this House over the last ten days. I ask the minister again, very sincerely, why he has not informed the Canadian public of the seriouness of this situation. Why has he not told us the truth regarding an extremely serious situation which we are going to face because of his ineptitude?


Mr. Speaker:: I think the hon. member will recognize that that question has an element of argumentation.


CONTROL AND MONITORING OF OIL PRICES AND SUPPLIES
J. Michael Forrestall: Mr. Speaker, if the Minister of Energy, Mines and Resources and his colleagues would take eastern Canada seriously, maybe they would make some inroads and get some political support there. I have two questions for the minister. What authority does the minister believe-


An hon. Member:: Oh, oh!

February 15, 1979
Oral Questions


J. Michael Forrestall: Never mind. You have trifled with us long enough, sir. What authority does the minister believe he has, or understand he has within his competence as minister, to control allocation, to monitor that allocation, to control prices and to monitor the prices of the very high-priced oil we will get as a result of the swaps, only one of which has the approval of the National Energy Board to date?
What monitoring and what control mechanisms does he have, or does he believe he has, that he can put into place to make sure that we do not freeze in the dark in eastern Canada next winter?


Alastair William Gillespie: I do not think the hon. member understands the situation. He seems to be arguing that we should not try in any way to make up the shortages that will occur in eastern refineries as a result of actions taken by others outside Canada. That is quite clearly what he seemed to be saying.
I have been stating in the House for two weeks that we can use western Canadian oil to make up that shortage. That is why we have taken the policy position, which the National Energy Board is administering, on submissions by refineries in eastern Canada which will provide them, in effect, with the same volumes of western Canadian crude. 1 do not think the hon. member really understands the situation. He seems to be saying that we should turn it all over to the multinational corporations, we should let the multinational corporations decide what is best for Canada, and we should stand back and accept the shortages which would inevitably occur with that kind of policy.


An hon. Member:: The Pagliacci of the country.


J. Michael Forrestall: Thank God some time in the spring the people of this country will get rid of clowns like that.
The question I am putting to the minister is simply this. What assurances at this point can the minister give the House, the refineries and the people of eastern Canada that starting April 1 there will be an adequate supply for the refineries? We do not believe him when he tells us all is well. Let him tell us precisely what assurances he can give us that there will be an adequate supply of oil for eastern Canadian refineries, starting April 1.


Alastair William Gillespie: Mr. Speaker, I have told the House repeatedly that we received assurances from the head of Petroleos, the national oil company of Venezuela. I received assurances from the Venezuelan government at the highest levels that Venezuela wanted to continue the export of 200,000 barrels of oil a day to Canada. That is 40 per cent of our imports. They are our major supplier.
It is because Exxon decided, for its own purposes, to intervene and to divert something in the order of 25,000 barrels a day of that oil from Canada that I took the position with Imperial Oil. Imperial Oil accepted the first time around.

They have made certain other arrangements which may tide them through. Also, I have made it quite clear to them that the kind of exchanges we are talking about will not be available to them and that the shortages they then may face will have to be made up by the competitors.


SUGGESTION PETRO-CANADA PURCHASE VENEZUELAN OIL
Mr. Edward Broadbent (Oshawa-Whitby):: Mr. Speaker, despite the bland and misleading assurances of the minister in the past week, which were repeated today-


Some hon. Members:: Oh, oh!


John Edward Broadbent: -Canadians can now, with this oil crisis, see very clearly what it means to have our major natural resources owned and controlled by multinational corporations. That is the message.


Some hon. Members:: Hear, hear!


John Edward Broadbent: Just an hour ago, in his press conference outside the House, the minister acknowledged that the request made by Imperial Oil to its parent company to ensure we received a fair allocation had been ignored. The minister acknowledged that, but he repeated his insistence that the branch plant go back and tell its boss what to do. The minister expects us to accept that. Who does he think he is kidding?
Considering that the east coast in particular needs the assurance of supply, and considering that the parent company-in this case, Exxon-has not met the request of the Canadian subsidiary, why is the minister not taking steps to ensure that Petro-Canada be the exclusive purchaser of that Venezuelan oil about which he talked so glibly today?


Alastair William Gillespie: Mr. Speaker, Petroleos de Venezuela, the national oil company of Venezuela, indicated that it would like to do business with Petro-Canada. Indeed, they have entered into joint arrangements with respect to research and development on heavy oil. Also, they have had some discussions with respect to oil shipments. It is possible-I do not want to say more than that at the present time-that Petro-Canada may be able to obtain a shipment directly from Venezuela. The hon. member must recognize that at the present time Venezuelan production is committed fully.


John Edward Broadbent: Mr. Speaker, if Venezuelan production is committed fully, I should like to know how the minister expects to make up the shortfall with Venezuelan oil.


Miss MacDonald:: That is right.


John Edward Broadbent: Considering Imperial Oil is reducing its allocation to its Canadian subsidiary by 25 per cent, Gulf by 20 per cent, BP by 45 per cent, Petrofina by 35 per cent, and the government is so proud, or has been in the past, of these multinationals having control of our oil resources, will the

February 15, 1979
minister now give assurances that it is government policy to do in Canada what has been done in many other nations, that is, to make a publicly-owned and controlled oil company, Petro-Canada, the principal firm in that industry in this country?


Some hon. Members:: Hear, hear!


Alastair William Gillespie: Mr. Speaker, measures have been taken already by Petro-Canada to provide for the security of Canada and Canadians through the arrangements which I have indicated already vis-a-vis Venezuela. There have been discussions respecting crude oil purchases. I have indicated there may not be any crude oil available at the present time. Also, I have indicated to the House that Petro-Canada has been pursuing actively a contract with Pemex, the Mexican national oil company, for exactly the same purposes, obtaining a secure source of oil for Canadians of 100,000 barrels a day. That
100,000	barrels a day is equivalent to the production Canada has been drawing historically from Iran.


Mr. Paproski:: That is three years down the line.


Alastair William Gillespie: I am not suggesting that would be available to Canada right away, but I have suggested the negotiations with Pemex have been moving forward very well and we can expect to receive some oil from Mexico this year.


John Edward Broadbent: Mr. Speaker, on the question of assurance of supply the minister has just given the case away. He has continued to express his pious hope, with no hardrock guarantees, that Canadians on the east coast will be able to get the oil they will need in the future. He has just given the case away.
I should like to ask him a question with regard to price. Since we are not getting an assurance of supply, will he now assure Canadians that his good friends, the multinationals who are shortchanging us in respect of supply, will not in the next few weeks and months double or in any way significantly change the price they are charging Canadians for this oil to which they are entitled?


Alastair William Gillespie: Mr. Speaker, some of the producing nations have already changed the price. OPEC announced an increase of 5 per cent at the beginning of this year, and there is another one to come very shortly at the end of the first quarter. Some of them have already indicated that the extra volumes they are presently lifting to make up for the Iranian shortage will go at higher prices. There may well be higher prices worldwide, but those higher prices are not manufactured or created by trading companies or multinationals; they are higher prices created by producing countries, and there is nothing Canada can do about that.
As to the possibility of profiteering by multionational corporations or trading companies, I have already indicated to the watchdog committee of the Economic Council, CSIP, that we will be asking it to investigate any situation which comes to our notice, or any reasonable allegation of profiteering.
Oral Questions


AGRICULTURE
Mr. Adrien Lambert (Bellechasse):: Mr. Speaker, my question is directed to the Minister of Agriculture.
According to a news item published in the newspaper La Presse today, it would seem that the incidence of salmonellosis in the Levis-Bellechasse area is such as to constitute a threat of epidemic, and 150 to 300 dairy herds representing 15,000 dairy cows could be affected. Can the minister tell the House whether he has been advised of the matter and, if so, what steps have been taken by his department to prevent such an epidemic?


Hon. E. F. Whelan (Minister of Agriculture):: Yes, Mr. Speaker, we are very much aware of this. Over a period of time our inspectors have run incubation tests on feed, etc., in our laboratories in Calgary. They have confirmed the fact, in the laboratories in the province of Quebec where they have also run some of these tests, that this salmonella problem has come from the feed supplied to these people in Quebec by one of the large feed companies. Both laboratories came to the same conclusion.
There is no danger to anyone drinking the milk, as long as it is pasteurized. Anyone who consumes milk in its raw state would be taking the risk of getting salmonellosis. It is a very serious thing, and it affects approximately 10,000 to 15,000 head of cattle in that part of the province of Quebec. This is something that should not have happened, but it is something that has happened. We are very concerned that this should ever happen in the feed industry to the extent it has here, and particularly to such a developed company which is known worldwide for its efficiency.
I do not know what more we can do at this time, Mr. Speaker. We are putting new feed supplies into that area, and they are trying to decontaminate-


An hon. Member:: Oh, oh!


Eugene Whelan: -the committee, and perhaps the hon. member. Mr. Speaker, I think that the member who is yelling may have something, but I do not know what it is at the present time.


Some hon. Members:: Oh, oh!


INQUIRY WHETHER FEED QUALITY LABORATORY WILL BE ESTABLISHED IN EASTERN CANADA
Joseph Adrien Henri Lambert: Mr. Speaker, on a supplementary. According to the same news item, the general director of the inspection service of the Quebec agriculture department believes that the federal government is to blame

February 15, 1979
Oral Questions
for not having enough inspectors to ensure adequate supervision, and having to send samples to the laboratory in Calgary which naturally reduces the efficiency of what supervision there is.
Can the minister tell the House whether he plans to set up a laboratory in eastern Canada located near those producers or near the feed mills to reduce the time span between shipping out the samples for analysis, and obtaining the results?


Eugene Whelan: Mr. Speaker, the hon. member should probably know that we decontaminate the material that is used in this feed program, and that it comes from the province of Manitoba. It is not just coming from the province of Quebec: it is associated with a wide, wide area in Canada; that is the area from which the problem arises and we cannot inspect every little batch of feed that is being used-there is no way we can do that. The feed companies have that responsibility.
The suppliers should have a sense of responsibility in relation to good hygiene practices in order to make sure these inputs to the feed program, or feed rations, are handled in a much better fashion. We have one of the best records in the world for controlling animal health and feed inspection. If we had more money, we could have inspectors running up and down the road, as is the case in some socialist countries, getting in everybody's hair; but we depend on society itself for a certain amount of efficiency.
[ Translation]


Joseph Adrien Henri Lambert: Mr. Speaker, can the minister tell the House whether the multinational Purina will compensate the breeders for their losses? If not, will the federal government make an inquiry in order to protect our dairy industry, our dairy producers, and avoid aggravating the beef supply situation in our country?


Eugene Whelan: Mr. Speaker, I think the hon. member will find, if he checks the court records, that they show this is not the same virus that causes salmonella. Having regard to the overuse of different kinds of hormones in feed, I think the record will show that the courts and the companies have been very good in compensating producers for losses.


SITUATION RESPECTING NEGOTIATIONS ON INTERNATIONAL WHEAT AGREEMENT-POSITION TAKEN BY CANADIAN DELEGATION
Right Hon. J. G. Diefenbaker (Prince Albert):: Mr. Speaker, I should like to direct a question to the Minister of Industry, Trade and Commerce which has to do with a meeting that has been going on for several months, with 70 nations, at Geneva in an endeavour to obtain an International Wheat

Agreement to take the place of the agreement that has been in effect since 1971.
It has been stated today that the whole negotiation has collapsed. That being so, the result is, or could be, of momentous proportions with regard to Canada's economy and the welfare of farmers generally. I would ask the minister, what is the present position? Is it a fact that the agreement is terminated? If so, is anything being done to restore, on a temporary basis, the 1971 agreement?


Hon. Otto E. Lang (Minister of Transport):: Mr. Speaker, it is a fact that the agreement discussions in Geneva have come to an end. The countries were not able to reach agreement on price levels or on a price range that would have been adequate to cover the farmers' cost of production. There is a spirit of continuing the food aid convention and also of assuring that discussions can begin again.
I should say, Mr. Speaker, that the Canadian delegation did an extremely good job in trying to ensure that farmers were protected in regard to a fair return, and they were supported at all times by the producers' advisory group. It had been our position throughout that the producers' advisory group had to be satisfied with the kind of agreement we might achieve, or we would not want to enter one. I can say, of course, that in the absence of that agreement we will continue our work with exporters and others to achieve a fair return for our farmers on the world market.


John George Diefenbaker: Mr. Speaker, this is the first time that a minister of industry, trade and commerce has had a Charlie McCarthy in the House.


Some hon. Members:: Hear, hear!


John George Diefenbaker: Would the Minister of Industry, Trade and Commerce tell the House what stand was taken by the Canadian delegation? Why did the delegation oppose signing the agreement which on the face of it seemed to be fair and reasonable?


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


Hon. Jack H. Horner (Minister of Industry, Trade and Commerce):: Mr. Speaker, to convince the right hon. gentleman that McCarthy does know the facts, the government acted upon the advice of the advisory committee. The advisory committee was made up of Mr. Turner of the Saskatchewan Wheat Pool, Mr. Roy Atkinson of the National Farmers Union, Mr. Lome Parker of the Manitoba Farm Business Bureau-


Steve Eugene Paproski: Otto's friends.


John (Jack) Henry Horner: -Mr. Dobson Lea of Unifarm in the province of Alberta, Mr. A1 MacPherson, president of the Alberta Wheat Pool, Mr. Jim Deveson and Mr. Ivan McMillan of the
February 15, 1979

Palliser Wheat Growers in the province of Saskatchewan. All those people advised the negotiating committee not to sign the agreement; that to sign the agreement as it was proposed would be detrimental to Canadian wheat producers. The government acted on that advice and their own wisdom and decided that this would not be a good agreement; that somewhere down the road a better agreement could be signed.


John George Diefenbaker: Mr. Speaker, now that the responsibility has been taken off the back of the government and its representatives, what is being done now to bring about a temporary agreement? The Minister of Industry, Trade and Commerce, I know, is greatly interested in this matter, as he should be. Could he tell the House what is being done now to assure the wheat producer that he will not find himself in an almost impossible position?


John (Jack) Henry Horner: Mr. Speaker, the 1971 wheat agreement will be extended past June 30. We believe that the world market for wheat is expanding and that the price is on the rise, not on the decrease. It would have been detrimental to sign an agreement when prices are too low. I am deeply concerned about the wheat farmers, as the right hon. gentleman knows. My sons will sell a considerable amount of wheat this year-


An hon. Member:: Conflict of interest, Jack.


John (Jack) Henry Horner: *-and, of course, they and all the farmers are interested in obtaining the best price possible.


CORPORATE AFFAIRS
Mr. Jacques Lavoie (Hochelaga):: Thank you, Mr. Speaker. My question is for the Minister of Consumer and Corporate Affairs. In view of the fact that in the Hochelaga and Maison-neuve ridings along Ontario and Sainte-Catherine streets there is an extremely high number of finance companies, and in view of the fact there are cases like the one I have here where someone who borrowed $5,000 and repaid more than $800 but failed to make one or two payments discovered that he still owes $5,070 could the minister tell the House if he intends eventually to bring forward some legislation with a view to either lessening the power of finance companies or wiping them out completely and leaving that business to the banks?


Hon. Warren Allmand (Minister of Consumer and Corporate Affairs):: Mr. Speaker, the government did introduce legislation in 1976 to deal with borrowing, deposits and interest rates. That bill would have obliged disclosure of all costs and charges and would have dealt with the problem raised by
Oral Questions
the hon. member. But, as he knows, that bill died on the order paper at the end of last session.
However, in the meantime the Minister of Finance has published draft cost of borrowing disclosure regulations for banks which will cover borrowing, interest rates and costs and charges with respect to bank loans. I still intend to introduce amendments to the Interest Act to deal with other types of interest.


THE CANADIAN ECONOMY
Mr. Sinclair Stevens (York-Simcoe):: Mr. Speaker, my initial question is addressed to the Prime Minister. It centres on the report issued today by the Centre for the Study of Inflation and Productivity which, as we know, is a body that was established last summer at the request of the Prime Minister. This body has disclosed that 33 per cent of our inflation over the past two years is due to the falling dollar, a subject which we have debated so often in this House. That is, 6.5 per cent of our inflation is due to the simple fact that the dollar has fallen so fast and so far.
On June 29 I asked the Prime Minister if he was aware that a local commentator had said that the cost of the falling dollar on inflation was 4 per cent. The Prime Minister on that date said he had not done the calculation. Would he tell the House, now, does he agree with the body that was set up at his own request, that in fact 33 per cent of our inflation is due to his falling dollar?


Right Hon. P. E. Trudeau (Prime Minister):: Mr. Speaker, the member said twice in his question that the Centre for the Study of Inflation and Productivity was set up at my request. It was set up at the request of the provinces at a federal-provincial conference meeting. The federal government had other plans for the post-AIB monitoring period and the provinces asked us to proceed in this way through the Economic Council of Canada. That is just to set the record straight.
As far as the effect of the falling dollar on inflation is concerned, I have said, as has the Minister of Finance, that anybody who knows the situation recognizes, of course, that one of the effects of a falling dollar is to increase the cost of living in Canada, because Canada is a country which imports many things. It also has the effect of favouring our exports and, therefore, gives jobs to Canadians.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: This is so evident that I do not know why the hon. member keeps asking the question. It is conceded. If the dollar is low, it means our imports cost more and that we have to pay more for imported oil, foodstuffs and everything else.
As to its exact effect in statistical terms, calculations have been made, some of which have been given by the Minister of Finance. I do not know the exact effect in terms of the cost of

February 15, 1979
Oral Questions
living index, but I do know that it means the inflation rate is higher.
The hon. member opposite argues that we should have a 90-cent dollar. How much would the cost of living go up if we had a 90-cent dollar instead of an 84-cent dollar? It is a calculation which the hon. member can make. But it is obvious, whether it be a 90-cent dollar, an 84-cent dollar, an 85-cent dollar or an 80-cent dollar, that the cost of living is higher because of the increased cost of things imported into Canada.


Sinclair McKnight Stevens: Mr. Speaker, I would remind the Prime Minister that Sylvia Ostry, when she announced the formation of CSIP, stated that it was done at the request of the Prime Minister of Canada. The Prime Minister states that it is now conceded that there is a cost to the falling dollar, notwithstanding the fact that in December, 1978, his Minister of Finance told me, in reply to another question, that I should welcome the falling dollar.
My final question is again to the Prime Minister. As CSIP has now said that if workers and others demand income increases to match the high rate of inflation which depreciation has caused, still higher prices and more depreciation will result, what does the Prime Minister intend to do when he speaks to the workers of this country to justify the inflation which he has inflicted upon them as a result of his faulty fiscal monetary measures which have led to the fall of the dollar?


Pierre Elliott Trudeau: Mr. Speaker, I think it is quite obvious why the Leader of the Opposition has dropped the hon. member as his chief financial critic in his undertaking not to name him as his minister in a future government.


SOURCES OF FUTURE OIL SUPPLIES
Mr. T. C. Douglas (Nanaimo-Cowichan-The Islands):: Mr. Speaker, I would ask the Minister of Energy, Mines and Resources if he could be more specific with regard to the replacement of 100,000 barrels to 125,000 barrels of oil which will be necessary due to the disruption of Iranian exports of oil to Canada.
With reference to the 100,000 barrels per day from Mexico, I understood the minister to say that this oil will not be available until the end of 1980, perhaps 1981 and I understood him to say today in reference to Venezuelan oil that there is none available at the moment. Finally, with respect to swaps of western oil for offshore oil, the minister said today that this will give us about 40,000 barrels per day in this quarter.
Would the minister tell the House where we will get the
100,000	barrels or 125,000 barrels of oil per day guarantee which is necessary to meet the needs of Canada, particularly Quebec and the maritime provinces, in the next eight or ten months when it will be very crucial? The minister has given us no clear indication of where that oil is to come from.


Alastair William Gillespie: Mr. Speaker, I have indicated that I expect most of the shortage to be made up by production in western Canada which will be moved through the exchanges to which I have already alluded.
The hon. member referred to 40,000 barrels a day. When we go into the second quarter, unless the situation is normalized in Iran and production starts up again, obviously we will be faced with large amounts. I believe that excess producing capacity in western Canada can look after that shortage up to as much as
100,000	barrels a day, if that is necessary.


Thomas Clement (Tommy) Douglas: Mr. Speaker, if the minister is going to count on exchange oil from the midwest, can he tell us, first of all, what are the available oil supplies which Canada has now? In Washington, Mr. Schle-singer has said the United States has 70 days' supply, but I think generally around the world there is an 80-day oil supply reserve.
What are Canada's supplies at the present time, and to what extent are we using up or drawing down these reserves of oil? If, as the minister suggests, we step up the production of western oil, how long will we be able to continue at that rate? Will it be long enough to meet Canadian requirements until Mexican oil is available in 1980 or the beginning of 1981?


Alastair William Gillespie: Mr. Speaker, it is impossible to say at the present time whether it will be enough to make up the difference until 1980 or 1981. One cannot be sure of intervening events or whether production will be resumed in Iran. I believe that the shortages I have been referring to in eastern Canada as a result of these reallocations can be made up by western crude through the exchange route at least until the end of this year, and probably beyond that.


CRIMINAL CODE
Eldon Mattison Woolliams: Mr. Speaker, my question is for the Minister of Justice. During the week the opposition agreed that Bill C-21, amending the Code, be divided so that a separate bill dealing with the new definition of "soliciting" in reference to prostitution and redefining "public place" to help the situation in Vancouver and Toronto, can be introduced. If that is a separate bill, it will have only one section and it will be a small bill.
In light of yesterday's decision by provincial court judge Sydney Harris in acquitting Pink Triangle Press, publishers of The Body Politic newspaper which published an article dealing with men loving boys, and vice-versa, and such further immoral and degrading conduct, and in light of the recent horrible death in Toronto of Emanuel Jaques who was used

February 15, 1979

prior to his death as a human machine by men, will the Minister of Justice consider bringing in amendments to the Criminal Code to protect young children against this kind of propaganda which may lead to the most degrading abuse of children, particularly as the minister has dealt with it in the same bill dealing with prostitution?


Hon. Marc Lalonde (Minister of Justice):: Mr. Speaker, first of all, I would like to thank representatives of the opposition parties who have given their consent to divide Bill C-21 so that we can proceed speedily with the clause dealing with prostitution.


Some hon. Members:: Hear, hear!


Marc Lalonde: I will proceed as soon as possible to get the appropriate consent in this House.
As for the other problem which was raised by the hon. member, I know it is a serious problem which is of great concern to members of this House. I will certainly look into the issues he has raised. Obviously, I do not know whether the case decided by the provincial court judge will be appealed. This is a matter which the attorney general of Ontario will want to examine, I am sure.
Second, I believe hon. members have received various representations on the clause that is already in Bill C-21 which aims at strengthening the provisions dealing with obscenity. The government has decided to act on this matter pursuant to recommendations from a committee of this House. I would hope we could proceed not only with the clause on prostitution but with the rest of the bill if it is found that it is preferable to keep the obscenity clause in the first bill. 1 will take the hon. member's suggestion under very serious consideration and will advise him as to what can be done.


CORPORATE AFFAIRS
Hon. Herb Gray (Windsor West):: Mr. Speaker, I have a question for the Prime Minister. 1 understand the Minister of Energy, Mines and Resources said earlier during this question period that he was going to ask CSIP to investigate any allegations of oil industry profiteering, but CSIP has said that it has access only to ordinary publicly available information, which is often incomplete and subject to revision.
Large companies were reported yesterday to be unwilling to co-operate with that agency in providing information to it voluntarily. Will the government now give this agency full powers under the Inquiries Act so that it can get full and timely information directly from companies, including the authority to inspect or compel production of their books and records where circumstances require it?


Pierre Elliott Trudeau: Mr. Speaker, that question is not unlinked to the one I received from the
Oral Questions
hon. member for York-Simcoe. I reminded him that the government's intention in the post-control period was to set up a monitoring body which would have such powers.
It was at the federal-provincial conference of February last year that the provinces, practically unanimously, dissuaded the federal government from this approach and recommended that the Economic Council of Canada set up the Centre for the Study of Inflation and Productivity. We did that. This is all the action that has been taken to date. Any further contingency action such as that suggested by the hon. member for Windsor West is being studied by the government, but there has been no decision in that regard.


CONSUMER AFFAIRS
Mr. Rob Parker (Eglinton):: Mr. Speaker, my question is for the Minister of Consumer and Corporate Affairs. I would draw the minister's attention to an article in the Globe and Mail for Tuesday, February 13, in which one of the minister's officials is quoted as reporting errors in meters on home heating oil fuel delivery trucks. The official is quoted as saying that over an eight-month period some 44.7 per cent of the meters checked were found to be in error. Thirteen per cent of those meters were rejected entirely.
In view of the fact that home heating oil is a $1.5 billion business in Canada, and in view of the fact that the percentage of error figures indicate that it is possible throughout this winter, which has given us some of the coldest temperatures on record, that the government could have been allowing a major consumer fraud to take place, would the minister reassure the House that massive overcharging or shortage of deliveries has not taken place? I understand that legislation is pending, but can he tell us when it will be brought in and what its provisions might be?


William Warren Allmand: Mr. Speaker, the inspectors in our department are the ones who brought to light these possible frauds. We have the legislation in place now. We administer legislation which deals with that sort of thing and the inspectors are acting under that legislation. They will continue with their investigation and lay charges and pursue these matters in the courts.


EXTERNAL AFFAIRS
Mr. Lloyd R. Crouse (South Shore):: Mr. Speaker, my question is for the Prime Minister. Yesterday, the Minister of External Affairs announced outside the House that an Atlan-

February 15, 1979
Oral Questions
tic coast fisheries agreement had been reached with the United States concerning the east coast, while the boundary problem in the Gulf of Maine-Georges Bank area would be referred to a binding third party settlement procedure.
In light of the fact that the Prime Minister met recently with the Premier of France, and since there has been no recent announcement by the government concerning the ongoing fisheries boundary dispute which exists between Canada and France over France's claim to fisheries and territorial rights around the islands St. Pierre and Miquelon, will the Prime Minister tell the House whether this matter was discussed with Premier Barre and, if so, what was the result of this discussion?


Pierre Elliott Trudeau: Mr. Speaker, it was not discussed by me. I do not think it was discussed by other people. I had an update on it, and I understand that negotiations are still in progress. Our position, which is naturally of advantage to Canadians, is still being disputed by France-but we are pursuing it.


PARLIAMENT HILL
Mr. Elmer M. MacKay (Central Nova):: Mr. Speaker, I have a very brief question for the Prime Minister, who by this time is aware of the presence of Mrs. Lucille Dube. She has been waiting outside the parliament buildings for the past few months in an attempt to bring a grievance to the Prime Minister which she feels merits attention.
Can the right hon. member give an undertaking that he will take a moment to speak to this lady whose persistence has aroused a certain amount of interest and sympathy on all sides of the House.


Some hon. Members:: Hear, hear!


Pierre Elliott Trudeau: Mr. Speaker, Mrs. Dube's case is well known to the government. I inquired about her presence and I had a few people speak to her on my behalf. She has a case which has been before the Quebec courts for quite some time. I asked advice of the Department of Justice. It seems to be a clear case where she has a complaint. It should be made in the normal way, through lawyers in front of the courts.
As far as her allegations about the conduct of judges is concerned, this was looked into at the request of the chief justice of the province of Quebec. Apparently the report is that there was no miscarriage of justice or misconduct of any judge in this particular case. Therefore, I am afraid that we are in the presence of a litigant who has lost in front of the courts and who is not prepared to take that loss. If she wants to study
[Mr. Crouse.)
further recourse, the legal processes are there and she can hire lawyers to do so.


LEAKAGE FROM CONFIDENTIAL MEDICAL FILES-MINISTER'S POSITION
Mr. P. B. Rynard (Simcoe North):: Mr. Speaker, I should like to address a question to the Minister of National Health and Welfare. Since the uncovering of the leakage from confidential files on patients in the medical department at Medical Insurance and Medical Records, the finding of medical records blowing off trucks and being strewn along the roads, or information relayed along telephone wires by shady individuals purporting to represent medical personnel, can the minister state what progress on control has been made?


Hon. Monique Begin (Minister of National Health and Welfare):: Mr. Speaker, the problem described by the hon. member generally applies to provincially administered health programs. However, we all share a concern over the leaks of medical information that have occurred in past months. What I can report is that a code of practice for safeguarding health information was adopted in September, a few months ago, by the Canadian Health Records Association. That code has been distributed to insurance companies, all levels of government and every party that has an involvement in health records.
As far as the province of Ontario is concerned, there is the royal commission studying the confidentiality of health records, the report of which we will all read. Justice Horace Krever is chairing it. As far as may own department is concerned and the medical records we have due to delivery of direct health services, I am not aware of any loopholes in our system. If there is any case that the hon. member knows of, I would like to hear from him.


Mr. Speaker:: Order, please. I have two notices pertaining to questions of privilege. One is from the Minister of National Defence (Mr. Danson) with respect to a point raised yesterday by the hon. member for Victoria (Mr. McKinnon). I have a notice, as well, from the hon. member for St. John's West (Mr. Crosbie).


PRIVILEGE
Hon. Barney Danson (Minister of National Defence):: Mr. Speaker, in replying to the question of privilege raised by the hon. member for Victoria (Mr. McKinnon), who unfortunately is not in his seat today, I am sure with good reason-


Some hon. Members:: Oh, oh!
February 15, 1979


Barnett Jerome Danson: I did suggest for a good reason. I do not think it does credit to members opposite even to imply there is anything other than good thought behind that. Members of parliament frequently have good reason for being absent, and I am sure the hon. member does today. However, I did promise the House leader of the official opposition that 1 would have an answer today. Otherwise I would wait until the hon. member was back either from a committee meeting, some very important work in a department or his constituency, all of which members of parliament should do. As is my commitment to the House leader of the opposition, I am making my response to this question of privilege or alleged question of privilege which was raised yesterday by the hon. member for Victoria.
I have had an opportunity to review the various references which he cited. It appears that the hon. member for Victoria has either misunderstood or misinterpreted the actual facts. For the benefit of the hon. member when he reads this in Hansard, and for the benefit of other hon. members since it was suggested that the privileges of all members of the House were involved, I would like to review the sequence of events which he reviewed in such great detail yesterday.
First, the competitors for' the new fighter aircraft were required to submit their initial bids by February 1, 1978. That was done. However, while the evaluation process was under way, representations were received to provide additional time so that they could refine their original bids. The indication was that they would improve their original offers. Indeed, hon. members will recall that there were some unsolicited proposals at that time on this very important contract.
1 felt it was unfair to allow some to submit proposals and not give everyone the same opportunity. As a result of that and a cabinet decision of June 29, 1978, it was agreed to grant a period up to August 1, 1978 during which time competitors would have the opportunity to resubmit their proposals. This was deemed an acceptable time-frame for all competitors. All proposals were received by August 1 and no extension of time was requested or granted after that period.
The new proposals were evaluated by the government team and on November 23, 1978, cabinet reached a decision on the short list and I subsequently made a statement on motions before this House announcing that decision. The hon. member raised the question of Chancellor Schmidt raising this with the Prime Minister (Mr. Trudeau). Indeed, it was done.
I think it is the sequence of events, the dates, which has confused the hon. member. The meeting between the Prime Minister and Chancellor Schmidt was in early July when it was requested that the period be extended. There had already been an agreement to extend that period. There was no request or agreement to extend it beyond August 1.
Everything has been on schedule since then. Therefore, I do not see how the hon. member could feel that he had been misled. Indeed, if there is reason for a question of privilege, I need only refer to the hon. member's question of privilege where he used the terms "falsehood" and "untruthful replies", which while they are not the same as the four letter words that are unparliamentary, have equally the same intent. However, I
Privilege-Mr. McKinnon
do not intend to raise a question of privilege on something like that.
I believe that when the hon. member returns and sees the sequence of events, he will realize that everything has been in order and that there was a misunderstanding of the dates involved and the sequence of events. However, it grieves me that words such as this can be used for a misunderstanding and the time of the House taken up by a question of privilege requiring a lengthy reply.
I wish further to point out that at the time of answering the hon. member's question I said, and I quote from Hansard of November 7, 1978, at page 867:
I expect to have this matter before cabinet this month, hopefully with a decision on the short list before the end of the month or early in December.
We more than met that deadline. I completed my response by saying there has been some slippage because of the length of time it takes to evaluate these new proposals. I think that was a misunderstanding. I said:
-I am looking forward to the final contracts being negotiated and the final choice being made in the new year, but not before late spring of the new year.
We are in the new year, but not yet into late spring. I stand by that. It will not be before late spring.


Mr. Walter Baker (Grenville-Carleton):: Mr. Speaker, I appreciate the remarks of the Minister of National Defence (Mr. Danson) with regard to the question of privilege of the hon. member for Victoria (Mr. McKinnon). I am sure the hon. member for Victoria will want to examine the matter and the remarks that have been made by the minister. In the absence of the hon. member, it might be appropriate to have this question kept open so that the statement of the minister can be examined by that hon. member. I wonder if I might reserve the rights of the hon. member for Victoria and other members of the House with regard to this whole matter.


Mr. Speaker:: I am prepared to do so, of course; I do not think I should make a final determination of this matter in the absence of the hon. member. This is a simple courtesy we have always accorded and I have no difficulty in extending it in this case.
I would, however, stress the problem we get into when complaints of this kind are raised; that is, when there is some dispute with respect to replies which have been given. This is a political forum and a legitimate area, but it has been a long standing practice that answers given and statements made in the House of Commons are accepted by members. We therefore get on to dangerous ground when attempting to indicate that an answer has been inaccurate, misleading or false, things of that sort. And when the words "false" or "dishonest" and similar words are used, we enter into another procedural problem because these are unparliamentary terms. While I will reserve the complaint of the hon. member for Victoria (Mr. McKinnon) until he is back in the House, I think I should point out that we must be very careful when entering into matters of this sort that we do so with great caution from

February 15, 1979
Privilege-Mr. Crosbie
a procedural point of view. 1 say this because although at the outset the issue may simply be one of disagreement, if terms of this kind are used it could expand into other fields of privilege; for example, the use of unparliamentary language. That is a cautionary note I wish to enter now.
The hon. member for St. John's West (Mr. Crosbie) has given me notice of his intention to raise a particular matter.


MR. CROSBIE-TELEVISION INDUSTRY-ALLEGED FALSEHOOD IN REPLY OF MINISTER OF INDUSTRY, TRADE AND COMMERCE
John Carnell Crosbie: Mr. Speaker, I rise on a matter which I believe to be a breach of the privileges of members of this House. In answer to an oral question I put to the Minister of Industry, Trade and Commerce (Mr. Horner) on Tuesday, February 13, the hon. gentleman gave an answer which, as far as I can see, was false. For a member of the government to give a member of the House false information is certainly an interference with his privileges as a member in his attempt to do his duty. I may say, Mr. Speaker, that I have listened to the words Your Honour has just spoken. This is the first opportunity I have had to raise the matter having regard to the necessary research involved. Although I knew on Tuesday afternoon that something was wrong about the minister's answer, it was not until this morning that I was able to contact the industry concerned and find out for sure that the information was not accurate.
I asked the minister a question about colour television sets manufactured in Canada in December. I pointed out that there was a decline of 81 per cent in December, 1978 as compared with December a year earlier. I also said that on a year to year basis sales of Canadian made colour television sets were down by 114 per cent. I asked the minister, in view of the fact that the Canadian TV manufacturing industry was disappearing, whether the government had any program to assist the industry during the present year. I asked him what action does the government intend to take. In his answer the minister mentioned the pleasure it gave him to place on the record that his department, under the enterprise development program, had specifically helped one of the major television manufacturers in Canada, namely Electrohome, and helped to put that company back on its feet.
In fact, Electrohome is not manufacturing television sets, Mr. Speaker, but I will come back to that. The minister continued:
-we were out of production of colour television sets for some time, but now Electrohome has gone into production because of the advantages due to the present value of the Canadian dollar. We are now enlarging our production of colour television sets.
He added that the increased production should show up in the statistics for 1979.
We contacted Electrohome in this connection. The fact is that there is only one company in Canada which manufactures colour television sets. There were 11 in 1973 but there is now only one significant producer, RCA. Electrohome does not produce, does not manufacture, any television sets in Canada.

In December, 1978 Electrohome received a $15 million loan from the Royal Bank under the enterprise development board arrangements and it was not for the purpose of putting them into the position to produce television sets or manufacture them. There was no such connection. This assistance was given because Electrohome was seeking to reorganize due to the collapse of the consumer electronics market, TV manufacturing and the like, which was precipitated by the government's tariff policy and what is alleged to be foreign dumping. Electrohome had to get out of the business of manufacturing TV sets in Canada because of what they allege to be the failure of government policy. They then got a loan from the government to go into other activities. That is what the loan was for, not to manufacture television sets. The fact is that they are not now manufacturing television sets. Because of the devaluation of the dollar in July they plan to begin assembling 28-inch colour TV sets in Canada. They will not manufacture them and they are not manufacturing them now.
The minister laughs. The minister is careless with the truth. He is grossly negligent about the answers he gives in the House and now he chooses to laugh. The minister is asinine. We cannot trust a word he says in the House, Mr. Speaker. He says he has helped one of the major television manufacturers in Canada, namely Electrohome. He says we were out of production of colour television sets but now Electrohome has gone into production. He says we are not producing television sets. He says we are now enlarging our production. Every one of those statements is false. Yet the minister thinks it is amusing that he should get up in the House and give us information which is inaccurate, which is false. I submit-


Mr. Speaker:: Order. With respect, the hon. member has now made an allegation of falsehood against a minister and has used an unparliamentary term. If he wishes to make an allegation that the minister has deliberately misled the House, he will have to stand by that allegation and make it specific so that a charge can be identified and take its proper course. If not, the allegation that the minister has said something false to the House is unparliamentary and the hon. member cannot be permitted to use that term.


John Carnell Crosbie: On that point, Mr. Speaker, as I understand it, Beauchesne at pages 110-112 says that since 1958 it has been parliamentary to use the expressions "false" and "falsehood". These have now been found to be parliamentary. If Your Honour says they are not parliamentary expressions I can only say that in my view the minister has given the House false information. Whether he is grossly negligent in what he says or whether he did it deliberately is not for me to say. The minister will have to explain whether he is just careless with the truth or whether he was deliberately misleading the House. I do not know. After I have heard his explanation I presume I will have to accept it, but I say a blatant falsehood was expressed in this House on Tuesday.


Some hon. Members:: Withdraw!
February 15, 1979


John Carnell Crosbie: I certainly state that. The minister was careless with the truth. It is my submission that it constitutes a violation of the privilege of members of the House to be given this kind of false information when a question is answered.
If Your Honour should find there is a prima facie case, I would be prepared to move that the reply by the Minister of Industry, Trade and Commerce to the question asked by the hon. member for St. John's West, recorded in Hansard on February 13 at page 3162 and containing assertions demonstrably at variance with the facts, be referred to the Standing Committee on Privileges and Elections for investigation and report. I do not think we should be subject to these misleading and slipshod answers, even if they are not worse than that. The minister will have to say-


Mr. Speaker:: Order. I would draw again to the hon. member's attention the passage in Beauchesne to which he has referred. At page 105 of the excellent fifth edition, of which the Clerk of the House is co-editor, it says at the middle of the page:
Since 1958, it has been ruled unparliamentary to use the following expressions:
Then follows the term to which the hon. member referred. Therefore, I take it as withdrawn by him the use of the word "false", and I again caution the House that these are the kinds of dangers we get into. However, the minister is anxious to reply.


John (Jack) Henry Horner: Mr. Speaker, let us examine what is happening in the House. If members of parliament expect detailed answers to specific problems, the long standing practice has been to put them in writing on the order paper. Ministers have then taken the questions to their departments and obtained detailed answers. Many hon. members do that, but ministers should not be expected to have details at their fingertips all the time. That is quite impossible.
My answer to the hon. member is that we are helping many companies. We helped one specifically. One could have questions as to the words "manufacture" and "assemble". What is the difference? Manufacturers make component parts. An assembly plant takes component parts, whether they are made at that plant or somewhere else, and puts them into an automobile, television set or whatever. Granted, by narrow definition there is a difference between those words, but thousands of assembly plants are also manufacturing plants, and that is the interpretation I used with regard to Electrohome.
Today the hon. member admitted that the enterprise development program did help the one named company substantially. I do not think that the company will deny that. The hon. member did say today that the company is going into the business of assembling colour television sets. I said that that company is now going into the business of manufacturing colour television sets. I do not think there are many manufac-
Privilege-Mr. Crosbie
turing companies which do not reach out and obtain parts from other sources and assemble them in their own plants. The only misleading must be with regard to the difference between "assembling" and "manufacturing", and I say again that thousands of manufacturers are in a sense assemblers as well.
If the hon. member wants me to define every manufacturing plant as just an assembly plant, I do not think that is really the essence of the question. The question is whether my department helped a manufacturing plant or an assembly plant in going into the television business. Is that company going to go into the business of manufacturing or assembling colour television sets? Yes, it is, and the hon. member admits it is; so I do not know what his argument is.


Mr. Speaker:: Order, please. I think the last sentence of the minister's procedurally concludes the matter. This is in fact an argument, as almost all these cases come to eventually, an argument or disagreement. Occasionally they do result in a discovery that somehow misleading information is given to the House, and invariably when that is done the person who is responsible indicates that it was not done deliberately and gives an explanation. That is almost the invariable result.
However, I do again caution the House that taking issue in this way with answers or making argument or refutation and getting into accusations of falsehood, deliberate misleading or dishonesty in some way raises a much more serious procedural problem than it attempts to solve. I think we have to be very careful about that.


John (Jack) Henry Horner: Mr. Speaker, I rise on a question of privilege. For my sake and for the sake of the House I want to have something cleared up. In his ranting, raving and clown-like manner, the hon. member for St. John's West (Mr. Crosbie) used the expression "deliberate falsehood". I think quite correctly Your Honour stated that the use of the word "false" is unparliamentary and quoted the most recent edition of Beauchesne. Am I correct in believing that the hon. member did use those words, that you, sir, asked him to withdraw them, but that he has not withdrawn them as yet?


Mr. Speaker:: For the sake of the record-and I trust the hon. member for St. John's West will agree with this-let me point out that he indicated he had used those words after consultation with one of the editions of Beauchesne where he had seen a reference, as I am sure all hon. members have, that, typical of any word, depending on the context in which it is used, it is found to be parliamentary. So there are some precedents which lead one to the interpretation that the word has been used in a parliamentary context in the past.
On the other hand, I corrected him and said that the use of the phrase "deliberate falsehood" or "false statement" in the context in which he used it came under another set of precedents in the same volume and that it was therefore unparliamentary.
I understood the hon. member's position to be that if he was mistaken in his view of the precedents, he would withdraw that

February 15, 1979
Business of the House
expression. I took that to mean that the use of that language has been withdrawn by the hon. member.


John Carnell Crosbie: I do not mind saying that if I said that the minister uttered a deliberate falsehood, I would withdraw that. The minister is completely careless as to whether he tells the truth or not, but I do not say it is a deliberate falsehood.


BUSINESS OF THE HOUSE
Walter David Baker: Mr. Speaker, I wonder if I could direct a question to the Deputy Prime Minister (Mr. MacEachen), with respect to the business we will be dealing with for the balance of today and tomorrow and perhaps next week. It might be helpful to the House if the Deputy Prime Minister could indicate to us what he intends to call and what are the major priorities of the government in terms of legislation between now and, let us say, the Easter adjournment. Would the minister be prepared to do that?


Mr. MacEachen:: Mr. Speaker, as hon. members know, the House will continue today with debate on the budget bill. Tomorrow I would like to call a number of items. Following consultations which I have had with representatives of the various parties today, I understand that it will be possible to deal tomorrow with a number of important items not requiring extended discussion, beginning with the second reading of Bill C-28 dealing with the Northwest Territories Act and Bill C-35 dealing with government organization and relating to the proposed department of fisheries and oceans.
We want also to deal with Bill C-17 relating to dangerous goods and, finally, with a reference to a committee with respect to nuclear waste. On Monday, I would like to continue with discussion on the budget bill and on Tuesday and Wednesday the bill in the name of minister of urban affairs, Bill C-29. Thursday will be an allotted day, if that is agreeable to hon. members opposite.
1 would be prepared to attempt next week to project beyond this particular batch of bills. With reference to the budget bill 1 should mention that I also have in mind the other bill emanating from the budget dealing with the Excise Tax Act. When consideration of this batch is completed or when there is a prospect that we can complete dealing with this batch in the House, I will be able to indicate what we will try to do between then and the Easter recess.


Walter David Baker: Mr. Speaker, I understand that a representation has been made by the Parliamentary Secretary to the President of the Treasury Board (Mr. Lefebvre), that estimates would be tabled in the House on Monday.
While I am on my feet, let me indicate to the Deputy Prime Minister that consultations have taken place with respect to the reference regarding nuclear waste, and we are prepared to

allow that to go without debate, so I assume we will be making the appropriate reference tomorrow.


Mr. Knowles (Winnipeg North Centre):: Mr. Speaker, if I may refer first to the last item mentioned by the hon. member for Grenville-Carleton (Mr. Baker), we too are prepared to deal with the motion regarding the reference to a committee of matters relating to nuclear waste and we are prepared to do so without debate. As a matter of fact, we see no reason why that might not be dealt with today.
We have noted the other matters and are in general agreement as to the calling of the items. Of course, their disposition could be another matter.
There is one particular question I should like to put to the minister. It will not surprise him because I have put it to him a good many times. On Monday when I asked the Minister of Veterans Affairs (Mr. MacDonald) about the possibility of something being done with respect to one or two outstanding items affecting veterans, the Minister of Veterans Affairs said, as it is recorded at page 3110 of Hansard:
-they are all under consideration and if anything can be done within the time he has mentioned, we will be more than glad to do it.
The time I had mentioned was the time between now and the end of this parliament. I ask the Deputy Prime Minister (Mr. MacEachen) to find a way to bring an end to this business of my going to him and then to the Minister of Veterans Affairs and then back to him. Can the Deputy Prime Minister not get an agreement to provide time to the Minister of Veterans Affairs in this session so that at least one of these measures can be brought forward?
I just hope the government House leader will answer my question about veterans affairs.


An hon. Member:: Truthfully.


Allan Joseph MacEachen: Yes, Mr. Speaker, I will attempt to prolong the session in the manner indicated by the hon. member. I agree fully with the comments that were made by my colleague, the Minister of Veterans Affairs (Mr. MacDonald).


Stanley Howard Knowles: Does that mean we will get some legislation?


Mr. Kaplan:: Mr. Speaker, the government House leader made no reference to the bill dealing with international economic boycotts. I want to ask him, following an answer he recently gave in the House to a question of mine, whether in fact any progress is being made in putting that bill forward and whether any kind of agreements have been sought or worked out for the second reading of that bill.


Allan Joseph MacEachen: Mr. Speaker, in reply to the question asked earlier by the hon. member for Grenville-Carleton on the tabling of the estimates, let me say that I understand the President of the Treasury Board (Mr. Buchanan) proposes to table the estimates on Monday. He mentioned that to me and
February 15, 1979

asked whether I thought it would be possible, and I have no objection. So my friend can take it for granted that the estimates will be tabled on Monday, unless I advise him to the contrary today or tomorrow.
With respect to the question dealing with the legislation on the Arab boycott, I have not had an opportunity today to deal with it with the representatives of the other parties, but I will undertake to raise the matter at an early date with representatives of the various parties and if there is an indication that we can pass the legislation within a reasonable time, say, a sitting day, I will be glad to bring forward the legislation at an early date. Under those circumstances I would consider bringing it forward. I have had discussions with respect to the items I have announced today, and I cannot make any commitments about the Arab boycott legislation until I confer with my colleagues of the other parties, which I will do under the conditions I have mentioned.


Mr. Andre:: I would like to ask the government House leader a question with regard to the estimates. Could he confirm that the usual practice, the practice of the recent past, whereby the President of the Treasury Board (Mr. Buchanan) makes a statement on motions followed by responses from opposition members, will be the situation that will pertain on Monday?


Allan Joseph MacEachen: I do not know what the President of the Treasury Board has in mind, but I will make sure that the hon. member's representations are drawn to the attention of the President of the Treasury Board.


Walter David Baker: Mr. Speaker, I apologize to the Deputy Prime Minister but there is one point I should like to raise with respect to Bill C-35. There have been some discussions in the House that possibly part of that bill might be referred to the Standing Committee on Fisheries and Forestry. If that is agreeable to the government, we would agree to have Bill C-35 referred to that standing committee which could deal with the bulk of the subject matter quite appropriately.
While I am on my feet, may I ask the Deputy Prime Minister whether it is the intention of the government to make a reference of the commodity tax. It has been hanging around for some time and I have asked the question many times before. I think there is some concern that the matter be dealt with in the House.


Allan Joseph MacEachen: Mr. Speaker, on the reference with respect to the commodity tax, I know the matter has been raised in the past.


Walter David Baker: A commitment.


Allan Joseph MacEachen: I recollect that the action with respect to that has been delayed because the committee has been so well occupied-


Some hon. Members:: No.


Allan Joseph MacEachen: -but I will look into the matter and see whether the committee can deal with it.
Business of the House
I am quite prepared to seek consent of the House, at second reading of the bill relating to government organization, to have it sent to the Standing Committee on Fisheries and Forestry. It is quite agreeable to me and to the government but it would require the agreement of the House at that time, and I hope we can do that tomorrow.


Stanley Howard Knowles: Could we not give that agreement now?


Allan Joseph MacEachen: Yes, I would be prepared to ask for agreement that when we give second reading to the bill on government organization tomorrow, it be sent to the Standing Committee on Fisheries and Forestry.


Some hon. Members:: Agreed.


Arthur Jacob (Jake) Epp: Mr. Speaker, my question is for the President of the Privy Council (Mr. MacEachen). It concerns questions asked today by the hon. member for Calgary North (Mr. Woolliams) with regard to Bill C-21 and the response by the Minister of Justice (Mr. Lalonde) about splitting the bill, and the definition of obscenity, specifically in terms of clause 20 which makes amendments to section 166 of the Criminal Code. It flows out of a private member's bill in my name which has been discussed. At that time several spokesmen said there would be agreement by the government to that bill but that it would be incorporated in the omnibus Bill C-21. In view of the commitment given by the Minister of Justice today, can the President of the Privy Council give us any word on that?


Allan Joseph MacEachen: Mr. Speaker, I will have to make some inquiries and get further information on that. I understood the Minister of Justice (Mr. Lalonde) today to have agreed to the possibility of splitting that bill and putting one particular provision into a separate bill so that it might be dealt with more rapidly. I gather the hon. member is now asking whether an additional item could be put in that bill rather than in the over-all bill. I will raise the matter with the Minister of Justice.


BILL C-35-REFERENCE TO STANDING COMMITTEE ON FISHERIES AND FORESTRY
Mr. Pinard:: Mr. Speaker, I rise on a point of order. First may 1 ask whether you have sought the unanimous consent of the House to have Bill C-35 referred to the Standing Committee on Fisheries and Forestry, as suggested by the Deputy Prime Minister?


Mr. Speaker:: I did not understand that. 1 understood the Deputy Prime Minister to have indicated that he would ask for that consent when the bill is given second reading tomorrow. Does the House wish to pass that order now? Is consent being sought now?

February 15, 1979
Order Paper Questions


Some hon. Members:: Agreed.


Mr. Speaker:: Does the House wish to give consent to a motion now being put amending the reference of the bill on government reorganization so that Bill C-35 be sent, following second reading, to the Standing Committee on Fisheries and Forestry?


Some hon. Members:: Agreed.


Mr. Speaker:: It is so ordered.



ROUTINE PROCEEDINGS


[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Yvon Pinard: Mr. Speaker, the following questions will be answered today: Nos. 340, 697, 744, 833, 896 and 955.


Mr. Hnatyshyn: 1.	With reference to the official exchanges between Canada and China in 1977 mentioned in the annual review of the Department of External Affairs, on what date did the Canadian Potash-Utilization Seminar take place and (a) who were the participants and audience (b) what was the content of the program?
2.	Did the Department of External Affairs offer similar seminars in other countries with the goal of improving the market for potash?


Yvon Pinard: I am
informed by the Departments of External Affairs and Industry, Trade and Commerce as follows: 1. The Canadian seminar on potash utilization, which was conducted as part of the ongoing trade mission program sponsored by ITC, also included discussions on dry-land farming techniques. These took place from May 4-20, 1977 during visits to Peking, Nanking, Shanghai and Kwangchow.
(a)	The Canadian participants were led by an official of ITC, and included two representatives of the Potash Institute of Canada, a representative from the potash industry and one agricultural expert from each of the University of Saskatchewan and the Saskatchewan department of agriculture. The audience consisted of technical officials, principally from the Chinese ministry of agriculture and forestry, the academy of science and various agricultural scientific institutes.
(b)	The program covered two main areas of discussion.
(i) potash utilization-including factors influencing potash requirements, responses to potash in various soils

and crops, application rates and methods and experiences in other countries.
(ii) dry-land farming-including techniques of soil management and water conservation, tilling and seeding practices and cropping and weed control systems.
2. There were no similar seminars on potash offered in other countries.


Mr. Forrestall: 1.	Is the government currently negotiating an arrangement with Fisherman's Mutual for the transfer to the private sector of Fishing vessel insurance and (a) if so, what are the terms of the arrangement (b) if not, how does the government intend to proceed with the transfer to private underwriters?
2.	How many of those currently employed in the Fishing Vessel Insurance Programme will be laid-off or dismissed as a result of the transfer to private underwriters?


Mr. Jack Pearsall (Parliamentary Secretary to Minister of Fisheries and the Environment):: 1. The government is currently examining the possibility of establishing a fishermen's mutual or mutuals to replace the Fishing Vessel Insurance Program (the F.V.I.P.). This examination involved consultation with fishermen and their organizations to solicit their support for the mutual or mutuals which could provide them with greater benefits than the F.V.I.P. In the event that the establishment of a mutual or mutuals is not feasible the government is prepared to retain the F.V.I.P. and does not intend to transfer it to private underwriters unless the fishermen or their organizations indicate this as their preference.
2. The F.V.I.P. will continue in existence and provide services to fishermen until such time that a mutual or mutuals could be operational. This should take at least a year. As a result, there will be no lay-offs or dismissal of personnel from the F.V.I.P. during this period.


Mr. Howie: In the Fiscal year ended March 31, 1978, what amount was expended by DREE for highway construction in New Brunswick and in what locations?


Mr. Donald Wood (Parliamentary Secretary to Minister of Regional Economic Expansion):: The reply for the Department of Regional Economic Expansion is as follows:
I. Under the Highways Subsidiary Agreement 1976-77 (amounts paid in fiscal year 1977-78)
		DREE	
Project	Expenditures	Total1.	Campbellton-Dalhousie Bypass	S 107,925	2.	Belledune to Bathurst (Route 11)	4,923	3.	Chatham to Bathurst	186,745	4.	Rexton to Moncton (Route 11)	197,697	5.	Bathurst to Chatham (Coastal	Route 11)	183,504	6.	St. Leonard to St. Quentin (Route	17)	24,985	7.	Plaster Rock-Renous (Route 106)	Nil	$705,779
February 15, 1979

Income Tax
II. Under the Highways Subsidiary Agreement 1977-80 (amounts paid in fiscal year 1977-78)
Project
1.	Campbellton-Dalhousie Bypass (Rte. 11) (From Eel River to Charlo)
2.	Belledune to Bathurst (Rte. 11) (From Belledune to Beresford)
3.	Chatham to St-Margaret's (Rte. 11)
4.	Rexton to Shediac (Rte. 11) (From Rexton to McKees Mills)
5.	Coastal Route 11-Chatham to Bathurst (Upgrading sections of Coastal Rte. 11, including the construction of various bridges)
6.	Central Peninsula Access Road (Rte. 360 and Rte. 135) (Upgrading sections of Rted. 360 and 135 between Allardville and Losier Settlement)
7.	Carryover Projects from 76/77 Highways Subsidiary Agreement (for Tabusintac River Bridge; Beaver Brook to Mud Brook- Highway 17; Trans Canada Highway Airport Access Road)
8.	Other Northeast Access Roads (Rte. 8 and Rte. 17) (Upgrading sections of Rte. 8 between Doaktown and Blackville; upgrading of Rte. 17 Upsalquitch Hill towards Kedgwick, Jardine Brook and Mud Brook areas)

Expenditures	Total


[Stage Direction]
Nil
504,233
1,385,783	$10,815,000
Mr. Howie: For the fiscal year ended March 31, 1978, what amount was paid in assistance under the DREE-New Brunswick agreement under the Small Industries Financial Assistance Programme?


Donald Paul Wood: The reply for the Department of Regional Economic Expansion is as follows: In the fiscal year 1977-78, a total amount of $1,327,482 was paid under the Small Industries Financial Assistance Program in New Brunswick. DREE's share was $1,041,400.


Mr. McKenzie: 1.	What was the cost of (a) printing (b) distributing, including postage, the invitation from the Minister of State (Fitness and Amateur Sport) to the introduction of the Canada Games Commemorative Book and the unveiling of a commemorative plaque in Winnipeg, on February 2, 1979 at the Fort Garry Hotel?
2.	How many copies were (a) printed (b) distributed?


Hon. Iona Campagnolo (Minister of State (Fitness and Amateur Sport)):: In so far as the Minister of State (Fitness and Amateur Sport) is concerned: 1. (a) $300. (b) $50.
2. (a) 120. (b) 102.


Yvon Pinard: I ask, Mr. Speaker, that the remaining questions be allowed to stand.
III. Under the Saint John-Moncton Arterial Highways Subsidiary Agreement (amounts paid in fiscal year 1977-78)


Mr. Speaker:: Is that agreed?


Some hon. Members:: Agreed.

Project	Expenditures	Total1.	Saint John Throughway	$4,039,9592.	Wheeler Boulevard and ShediacHighway	2,238,499	$ 6,278,458Total Expenditures	$17,799,237


Mr. Beaudoin: 1.	Since 1968, did the Department of the Environment finance projects in the Constituency of Richmond and, if so (a) what were the projects (b) what was the (i) total amount (ii) amount in each case (c) what were the areas?
2.	Is the Department planning to do so in the near future and, if so (a) what will be the amount (b) in which areas?


Hon. Len Marchand (Minister of State (Environment)):: 1.
No.
2. No.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed from Wednesday, February 14, consideration of the motion of Mr. Chretien that Bill C-37, to amend the statute law relating to income tax, to amend the Canada Pension Plan and to provide other authority for the raising of funds, be read the second time and referred to Committee of the Whole.
Hon. Marcel Lambert (Edmonton West):: Mr. Speaker, yesterday we had a speech of about 50 minutes in length from

February 15, 1979
Income Tax
the Minister of Finance (Mr. Chretien) introducing this bill at second reading. I have now had the opportunity to re-read it. Unfortunately it confirmed my original assessment of the speech. It was more of self-congratulation to the government than one of explanation. The purpose of the complex tax bill and many of its technical amendments should have been explained. There are some improvements in certain areas, and there are features which I should like to discuss in some detail.
I wish the Minister of Finance were in his seat. I intervened when the Chair was about to cut the minister short as he was discussing the dollar situation. I felt there was plenty of scope for that under clause 70 of Bill C-37. Rather than dealing with the particular problem, the minister went off on a scurrilous diatribe with a ragtag of political jibes. The minister attempted to justify his position by taking a shot here and there. It did nothing to advance the study of the bill. I would have thought the minister would welcome the opportunity to deal with clause 70 since it is one of the principal portions of the bill. It has nothing to do with income tax but is a procedure whereby the borrowing authority is tagged on to a bill. It is a procedure which is quite acceptable.
Last year the government tripped itself up over its own ineptitude in attempting to increase a borrowing authority in an appropriation bill under a one dollar item or some similar procedure. Of course, the Chair rejected it. Last November the government had to introduce a borrowing authority bill in which it sought authority to increase its borrowing capacity by $7 billion. Approximately four months later the government is back saying, "We have to borrow another $10 billion."
This will cause considerable discussion in the House. The hon. member for York-Simcoe (Mr. Stevens) attempted to elicit a good deal of information from the Minister of Finance, and this morning we ran into a stone wall on this particular point. While we received some information to the effect that presently there is outstanding some $2 billion worth of borrowing authority under legislation which expires on March 31, 1979, there will be a further $3.8 billion worth of authority which will be valid under previous legislation. With the $7 billion sought in this bill for the fiscal year 1979-1980, there will be authority for approximately $13.8 billion. Why is this money needed?
If one looks at clause 70 of the bill, it indicates that the moneys will be required for public works and general purposes. Let us look at what may come in under public works and general purposes. Most if it will be there in case the government wants to go to the rescue of the dollar. In the past year some $5 billion has been borrowed in the foreign market. Under clause 70 the borrowings may be in foreign currencies and at various interest rates. As well they may be repayable in foreign currencies, but the loans are strictly for the purposes of the exchange fund, to maintain the Canadian dollar as a so-called floating dollar. Of course, this is a complete misnomer; it is a misrepresentation. It is not even a dirty float; it is a supported dollar. When one gets into the market to the extent

of $5 billion, there is no question that it is an active support and that the government is utilizing, in a rather vain effort to maintain the level of the Canadian dollar, whatever tools are available in a monetary sense.
The government does not have courage.
I want the Parliamentary Secretary to the Minister of Finance (Mr. Martin) to take note of that. On the eve of an election, the Minister of Finance and this administration does not have the moral courage to tell Canadians that it will have to engage in other measures of a fiscal nature. The available choices are being discussed with the governor of the Bank of Canada, yet none of them are palatable. Goodness gracious, they will be a heck of a lot more palatable than for Canadians to see the Canadian dollar go down below 83 cents, and perhaps it will go down to 79 cents. This is not doom and gloom.
I heard all the Liberal speeches in 1962 when the dollar was going down from 95 cents to 92.5 cents. Let me assure the House that they got the wind up in the Canadian public at that time on a staged and spurious situation. This time the situation is of their own creation because of their inability to maintain confidence in the Canadian dollar. The fact the dollar is down to 83.5 cents is merely a measure of the lack of confidence in the international market and on the part of Canadians themselves.


Mr. Breau:: Nonsense!


Marcel Joseph Aimé Lambert: The hon. member for Gloucester (Mr. Breau) would not know where to invest a $10 bill in the foreign money market. Why is it that Canadians since 1973 have been spending on a capital basis up to $700 million more in foreign markets than foreign moneys are being invested in Canada for capital purposes? Why is it that Canadian corporations are investing in the United States, buying buildings, building skyscrapers and shopping plazas?


Herb Breau: Because they are businessmen.


Marcel Joseph Aimé Lambert: Precisely. They are businessmen and they know they will receive a better rate of return in the United States. The tax on corporate profits in the United States is lower; their return is much quicker; the businessmen do not have to wait around for endless periods, as they do in Canada, attempting to get regulations passed by this board, this bureaucrat, this provincial or municipal office. It is a crazy situation which we have.
All hon. members opposite refuse to recognize the bottom line of the deficit in the current account of close to $5 billion. Perhaps there will be a commodity surplus this year, and perhaps there was one last year; but when there are service charges, dividends, travel accounts and a negative flow of capital, then there is a current account deficit. There is no pushing beyond that line. The Canadian government has to cover this deficit by borrowing abroad. It has actually reached the point now that it has to borrow to pay the interest on its loans abroad. This is the position of a bankrupt, and this is
February 15, 1979

what we are being asked to accept in clause 70. This is fully within the subject matter of this bill.
The minister did not say yesterday or this morning before the committee what he intends to do. He must come clean and be honest with the Canadian people. Mind you, to ask the minister in his present frame of mind to be honest with the Canadian people is perhaps asking too much and reaching too far. After all, we are on the eve of an election and these are the unsavoury details members on the government side would like to sweep under the rug. These are the unsavoury things that have accumulated over the past years as a result of this government's financial maladministration. This is the sort of thing that members on that side are trying to convince the Canadian people does not exist. They want to wave flags in our faces. As someone has said, try going to your banker with a flag in your hand to see how far you get. That is precisely what the Canadian public is being invited to do by this present administration.
Bonus issues are being blown entirely out of proportion. Let us look at this form from the point of view of taxation levels in this country, from the point of view of the value of the Canadian dollar, the degree of inflation and the level of unemployment. Let us see what progress there has been over the past four and a half years in this regard. Everything has gone up; unemployment has gone up from 5.1 per cent to 8.1 per cent, inflation has gone up, and now the rate of inflation is increasing. The hon. member for York Centre (Mr. Kaplan) should know that as the value of the Canadian dollar goes down the rate of inflation will increase. This is a fact because about 70 per cent of our imports come from the United States. We all know that it will be difficult to turn our economy around, but this fact is being played down. All these things have occurred since 1963, and those on the government side cannot duck that fact.
Yesterday the Minister of Finance talked about Canada being a great world trader. That may be; we are proud of the exports this country has managed and we are proud of the progress we have made in the way of exports. What is the situation when we take away petroleum products from that increase in exports? That is where the greatest increase has been in price and quantity.


An hon. Member:: What about pulp and paper?


Marcel Joseph Aimé Lambert: Are you suggesting an increase this year over the last couple of years? The hon. member for Comox-Alberni (Mr. Anderson) knows that three years ago the lumber business in British Columbia was not worth a nickel.


An hon. Member:: But now it is.


Mr. Anderson:: It is certainly much better now, is it not?


Marcel Joseph Aimé Lambert: It is temporarily better now, but that is not progress. As a matter of fact, petroleum
Income Tax
products are declining in quantity. Our exports of these products have declined in quantity as a result of deliberate government policy.
I often wonder about the position taken by members of the NDP, particularly the leader of that party. He wants the Canadian government to restrict the export of petroleum and natural gas. Let us talk about what the governor of the Bank of Canada said the other day that $500 million could be found immediately if we increased our exports of natural gas to the United States. The governor said he was impatiently awaiting the government's favourable decision in this regard. I am paraphrasing his words, but that certainly was his attitude. The hon. member for Oshawa-Whitby (Mr. Broadbent) says we should not export any natural gas; rather we should send it to Quebec City and the maritimes. That just shows how bankrupt he is in his idea about how long it takes to build a pipeline.
Who is going to pay for the cost of converting the heating units in the homes in Atlantic Canada from oil to gas? Who is going to pay for this conversion cost all the way along the river from Quebec City? Is it to be paid by the Canadian government, the Quebec government or the governments of the Atlantic provinces? Even with the best of intentions it would be five or six years before a gas distribution system could be developed in the maritime provinces and down river to Quebec City and beyond. In the interval the small gas producers in Alberta would be shut down. They would be shut down as a result of a lack of cash flow. The gas in Alberta at this time is not necessarily being produced by the big producers who can afford to wait. There are many small independent companies producing gas. They have been making this point all along. If hon. members on the government side would attend meetings addressed by representatives of the Independent Petroleum Association of Canada and the Canadian Petroleum Producers' Association, they would realize this fact.
In the past two years the Government of Canada, along with the governments of Alberta and Saskatchewan, have stimulated exploration for petroleum and natural gas. This has resulted in increased flows of gas. We have provisions in this bill for the same purpose. In spite of this, members of the NDP and some government members say we should not export gas at this time. They say we should not increase flows at this time, that we should shut these wells down, and perhaps in five years we will be able to get some gas into the Atlantic provinces, providing the people there want it and are able to pay for it. That just does not make sense.
The provisions the minister has included in Bill C-37 to encourage the production of petroleum and natural gas in Alberta, Saskatchewan and elsewhere will produce more gas. I am prepared to congratulate the minister in that regard as that is one of the better features of his bill. This feature was hard to come by. It was like pulling teeth to convince this administration that this had to be done. It was only because of a tough stand taken by certain provincial governments in this regard that this occurred. Whoever it is that feels he is to be con-

February 15, 1979
Income Tax
gratulated for this, let him strain his shoulders patting his own back. This was a good decision and I unreservedly support it.
The Minister of Industry, Trade and Commerce (Mr. Horner) would be the first to recognize that there is going to be an awful lot more gas available unless this industry is shut down. Many small independents are at the point of having to shut down now. No money is recovered from gas that is down a well. It may have cost $150,000 to $250,000 to drill the well, but where is the cash flow until that gas is sold? That points out the idiocy of this situation. On one side we have people saying we should shut production down and not export. No wonder they have no members in that area. They could not give away ice-cream cones to a Five year old. It makes one wonder sometimes. I know that the minister is in the House and when he closes the debate-


Mr. Chretien:: Right now!


Marcel Joseph Aimé Lambert: -there will have to be an explanation of this $10 billion. There will be available to the minister in fiscal 1979-80 $13.8 billion. There is the $2 billion which will expire on March 31, then there is $3.8 billion which will carry on into the next fiscal year, and he is now asking for another $10 billion.
From the budget speech we learned that there would be a cash requirement of $10.7 billion for this coming year, and that leaves a cushion of approximately $3 billion. What we want to know is what the minister's estimate is of how much of that will be required for foreign exchange borrowing. This is not an issue which the minister can sweep under the rug. We are down to the point where, as I said yesterday, in my adult lifetime I have never known the Canadian dollar to be as low as it is now.
It is no longer a case of saying, "Oh well, we'll be able to sell more and more at that lower price". That just does not wash because we buy too much, and as a result the cost of imports affects the cost of living and leads to higher inflationary rates, so the wheel turns once more. All we get is a recurring cycle but at a faster pace. It is a suicide course. There is no doubt that at some point the government will have to bite the bullet and take some other measures, and there are many open for consideration. The government must take the public into its confidence and explain to it what it intends to do and for what purpose. The public has not heard a thing about this tool.
Having said that, I would like to turn to other features of this bill. The one thing which bothers me about this particular bill, and I might as well touch on it at the beginning, is the redefining of small business. To me, it smacks of a dog in the manger.


Mr. Dionne (Northumberland-Miramichi):: Oh, oh!


Marcel Joseph Aimé Lambert: If the hon. member for Northumberland-Miramichi (Mr. Dionne) understood the effect of this, and if he came from a part of the country where

this provision applied, he would realize just what I am talking about.


Walter David Baker: He has trouble getting to work in the morning.


Marcel Joseph Aimé Lambert: I refer to small business, and the definition is there. If the province of Quebec had only followed the province of Alberta in this rather salutary example, the notaries would be allowed to incorporate. I am not going to go through the process of what this means, but what is significant is that a corporation pays income tax at a lower level, based upon the limitations of small business. The owner of the small business then dr^ws his salary, upon which he pays income tax at his personal rate, and what is left may be invested.
The point which some of my constituents have made is that it gives them the choice of investing this money in, for example, an RRSP, the purchase of Canadian equities, and so on. But it is an investment made by the individual concerned. There are many people on the other side who would say, "Tax everybody to the hilt, the government will take the money and spend it as it sees fit". That is what it is saying in this bill.
I would like to know what the difference is between an architect and an engineer with regard to why they should be able or not able to incorporate. Why should a qualified insurance agent be allowed to incorporate but a notary or an individual who limits his legal practice to that of a solicitor is not allowed to incorporate? Is a dentist a naughty businessman? Is a doctor a naughty businessman? They are both professionals. There are many other professionals in business who are entitled to incorporate and therefore take the benefit of the rates. They ultimately pay tax because the accumulation of money as a result of the lower tax rate must ultimately be disbursed. In the interval, however, they have been able to invest their money.


Robert Phillip Kaplan: Oh, oh!


Marcel Joseph Aimé Lambert: The hon. member for York Centre is one of those who feels that the almighty state is more intelligent and better capable of investing the funds. The idea is stupid. The hon. member is not stupid, but the idea is stupid.


Robert Phillip Kaplan: Would the hon. member permit a question?


Marcel Joseph Aimé Lambert: Certainly; I will debate this with you all day.


Robert Phillip Kaplan: The hon. member has mentioned that professionals such as doctors, lawyers, architects, dentists and so on are small businessmen too. The government also feels that these businessmen should have the benefit of this special tax incentive. Has the hon. member ever heard, in all the years he has been a member of parliament, of a doctor, lawyer, architect, or dentist risking bankruptcy in their business to build it up? Does that not indicate that the entrepreneur who takes such risks-not the doctors, lawyers, architects or dentists- needs such benefits?
February 15, 1979


Marcel Joseph Aimé Lambert: The architect has always been able to do it and will continue to do so.


An hon. Member:: Oh, oh!


Marcel Joseph Aimé Lambert: 1 know what the abuse is because it is done in the province of Alberta, and other professionals want to get the same thing. The point is that it is a question of principle as to whether the individual or the state can better invest the funds.
It also portrays something which is prevalent in government circles, and I have noticed it for a number of years, and that is that as soon as money is earned, it must be taxed, and the state has the inalienable right to a big share. Of course, it is wrong because the individual does not exist for the benefit of the state; the state exists for the benefit of the individual. That is the difference between the Liberal party and the Progressive Conservative party and, of course, the New Democratic Party is even worse. I should be able to take my own money and invest it as I see fit.


An hon. Member:: Oh, oh!


Marcel Joseph Aimé Lambert: If the hon. member could put two dimes together, I am sure he too would change his mind and say that the individual is the better judge of where his money should be invested, whether it be in Canadian industry or whatever. It is not so that the government can put money through Petro-Canada and buy Pacific Petroleums. That is fine. That is the kind of individual who would not last five seconds in Alberta or Saskatchewan, but that is where money is being made.
I am sorry the government has seen fit to take this step. Unless the government can show why it has to say to a lot of self-employed businessmen that they are going to have the benefits of the small business tax rate, many of them will never get to the top of the earnings. Remember, $750,000 is a lot of money to earn over the years. Surely if an architect is able to do that, why not an engineer?
Then we come to the insurance agent, the master plumber, the highly skilled carpenter, the tool setter; why can they not incorporate? They are all skilled men and so are the others, and that is where there should be parity. But somehow or other in the philosophy of the Canadian taxation system he who gets out and scratches is the one who will be hit hard by taxation. He is the one who will be bled. He is the one who leaves the country to go elsewhere. I have been told this by businessmen from one end of the country to the other. He who is successful is driven out because as far as the state is concerned he is the chicken to be plucked. He is the one with the guts, the ability and the persistence to get out and do something, and he is the one to be taken.
This act is a classic example of this philosophy. I suppose I could take a shot at those who would inspire this within the public service. They do not have the same opportunity as businessmen. These people are on salary. Therefore, no one
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can be any better than they can. So there is great inspiration by those people, at least I suspect there is. For example, there are accountants, doctors, dentists and lawyers in government service who are not at all averse to seeing this provision in the act which will deny to those in private practice and business the opportunity of being able to switch around and defer tax. After all, he who is in the public service has the privilege of an indexed pension. But the businessman has not. Surely he should have the opportunity to put aside something of what he has earned in a place where it can grow. II there is inflation this investment will grow with inflation; I will not deny that. Why should he be reduced to a position where he cannot avail himself of that which is given to so many others? I would like to question those who are on salary and those who would propose this particular action as to what was behind their motivation. I guarantee that many of them would admit it is because of the premise: "I cannot do it, therefore he cannot do it".
Let us go through the ways and means motion. I want to give a brief overview of the act. My colleagues, of course, will spend a good deal of time on the detail of this. Then we will be in committee of the whole where perhaps we will get more answers.
In the budget papers for November 16, 1978, in the section headed "Notice of Ways and Means Motion", No. 7 reads:
Interest and Taxes on Land
(7) That the Act be amended to permit a deduction for interest and property taxes incurred after November 16, 1978 with respect to land held primarily for the purpose of resale or development by a taxpayer in the ordinary course of his business.
Of course, this is right. It is an expense of doing business. Why should the individual be denied? After all, it was denied to him in order to try to stimulate movement of land so that it would not be held in the hands of developers. What happened was predictable. Every cent of tax and interest which the developer had to pay was merely added on to the sale price. The chap who is buying, that dear old sucker, the member of the public, the consumer, was the one who had to pay. Taxes and interest were added on to the price of the land and he was the one who had to pay. This all too often happens. It is said: "We are trying to protect the consumer; we are going to add on some costs; we are going to do this and we are going to do that." Then we hear the cry: "More controls". This is just like capital gains on the sale of land. The consumer or the ultimate purchaser is the one who pays that much more and everyone thinks he has been very smart. Instead he has been rather stupid.
There have been changes with respect to restricted farm losses and that is good. There have been changes to the research allowance. Here I must say the government has finally opened its ears and listened. It has accepted the fact that there must be inducements for expenses in research, not for the big international firms but for small firms. Unless they get this inducement, research will not be done.
The benefit of research is not only for the firm concerned or for the value of the product; research means the employment

February 15, 1979
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of hundreds and thousands of highly skilled people, young men and women-and also many not so young-who have been educated in Canada, and elsewhere often at our expense, to become highly trained in the scientific fields. There is not one nickel's worth of value in any program of scientific training unless it will be used. It must be used in research, either pure or applied. In this particular instance we are seeing attention or encouragement given to applied research. I think the Minister of Finance has to be congratulated for this hesitant step he is taking. It may be that as a result of experience over the next year or two or three allowances will have to be increased. This is something that is borne out only by experience. In any event, it is a step in the right direction.
Clause 17, which comes under the heading of unemployment insurance benefit repayments, is a rather curious provision. I do not reject the provision at all. 1 do not know why it is made a general rule, but it reads:
That for the 1979 and subsequent taxation years,
(a)	the benefit repayment of an unemployment insurance claimant be deductible in computing the taxable income of the claimant for the taxation year to which the benefit repayment relates, and
(b)	such benefit repayment not be deductible in computing the claimant's income for the taxation year in which it is paid-
In other words, if in 1977 an individual became entitled to an unemployment insurance repayment but for some reason or other it was held up and paid only in 1978, it shall not be taxable in 1978 but in 1977. I think that is correct. I would like to have seen the minister go one step further. This is of benefit to those in the public service. The negotiation of contracts in the public service is a lengthy procedure. Ultimately there may be an agreement or an award with a great deal of retroactivity. However, moneys paid on a retroactive basis are not attributable to the tax year for which they are being allowed; they fall into income at the time of payment. Many public servants are therefore doubly penalized. As a result of that retroactive amount falling into the last taxation year as a lump sum, the marginal rate will have gone up. Therefore, a good part of the retroactive benefit is lost.
We can adjust taxation back and forth. There is absolutely no reason why a retroactive salary award cannot be apportioned over the period for which it is awarded. It may go back two taxation years. It is not unknown in the public service to go into three taxation periods, and should be adjusted on that basis. I suppose it is a matter of administrative expediency that the moneys shall be collected when paid, not when they were earned.
When an award is made either by negotiation, an arbitration tribunal or someone else, surely it should be spread over the period concerned. If this is recognized with regard to unemployment insurance benefits and the allocation of premiums, it should be recognized with regard to wages and salaries and any increments arising therefrom. I again quote:
Canadian Exploration Expense 
(19) That the provisions of the Act permitting the deduction of Canadian exploration expenses incurred before July, 1979 by individuals and non-principal-business corporations be extended to expenses incurred before 1982.
Why not all the way? Why are we so hesitant about getting rid of the principal occupation rule? During the fifties and sixties it operated to the disadvantage of those in western Canada when we were at a competitive disadvantage with Americans who came into the independent oil fields and took away the whole business, just like one would take candy from a child. Canadians were halted by an old-fashioned, out of date concept with regard to oil and gas. It is finally recognized that 100 per cent of expenses in so far as Canadian exploration is concerned in petroleum and natural gas fields can be deducted by individuals and non-principal-business corporations.
Why does this only take effect in 1982? Why is the government grudging for three years? Is it because they cannot get rid of that vestige? Is it something to be begrudged? Again it is the concept of people who do not understand the value of getting out and doing something. Then there is this provision:
(21) That
(a)	the definitions of Canadian development expense and Canadian exploration expense be clarified to ensure that, for taxation years ending after May 6, 1974, they include the expense of completing an oil or gas well in Canada, and
(b)	The definition of Canadian development expense be extended to include expenses relating to the recompletion of an oil or gas well in Canada incurred after November 16, 1978.
That is of advantage. It is good.
Storage Rights
(24) That, after November 16, 1978, a right, licence or privilege to store petroleum, natural gas or other related hydrocarbons be included in the definition of Canadian resource property.
Resolution No. 25, exploration and development expenses, is certainly good. I do not like what is said about the limitations on small business. I wonder what pressures the provincial governments were able to put on the federal government to get into this field.
There are a number of other resolutions, numbering into the seventies. I will not read them all. I think I said enough to cover what should be said at this stage of the reading of this bill. My colleagues will go into other fields. Many of the points included in the ways and means motion are pure housekeeping, plugging holes and clarifying situations which regard to the Income Tax Act.
Possibly some of the most uninteresting drudgery in parliament is amending the Income Tax Act, unless there is something that will really hit us hard. There are some small amendments that are of great benefit to the Canadian public. The individual worker has his allowance increased from $250 to $500. Perhaps there is some difficulty there determining what is that working expense. In any event, it was coming to the worker. After all, there has been more than 100 per cent inflation since the provision was put into the act some years ago. Therefore, it is only a catching up to what is known as a worker expense.
There are some inequities with regard to worker expenses, moving expenses and proposals to tax some of the benefits given to workers. For example, railways, airlines and others
February 15, 1979

issue travel passes as part and parcel of salary and retirement benefits. These may be taxed as a benefit. If the government is going to get into that, 1 just wonder whether it will get into the price of meals in factory cafeterias that are sold at the break-even point. Is that not a benefit to the individual?
Are we going to tax the individual all the way through for all the benefits he receives? Some are already suggesting, as someone was last week, that travel arrangements and the issuing of passes to members of parliament and members of legislatures should be a taxable benefit. Of course, that is nonsense because it means I would be taxed twice as much as the hon. member for Winnipeg North Centre (Mr. Knowles) with regard to that part of my income; he has to travel to Winnipeg and 1 travel to Edmonton, double the distance. As far as Air Canada is concerned, this is an allowance paid by the Government of Canada for me to get to my home, which is twice as far away as that of the hon. member for Winnipeg North Centre. However, I would be taxed maybe two or three notches above him. I know he would not mind that as an individual, but I do not think that I should be taxed less than members from British Columbia or more than those members from the city of Ottawa who do not get any passes for air travel at all. It should not work out that way.
I am wondering about another area from a social point of view. It arose during consideration of Bill C-8, I think it was, with regard to family allowances and the question of taxation. There was a grouping of family income to arrive at $18,000-


Stanley Howard Knowles: Bill C-10.


Marcel Joseph Aimé Lambert: I thank the hon. member for giving me the correct number. That is a concept of joint family income. It seems to me high time that someone here, either a committee of this House or a joint committee of this House and the other place, should look into the advantages and disadvantages of a joint family income tax return. I have in mind returns by the husband and wife or in the names of a male and female who live as husband and wife. It is time to recognize such a partnership even though it does not have, shall we say, the official status of a marriage. Under the Income Tax Act there are any number of instances where there is a penalty attached to being married which does not apply to concubinage.


An hon. Member:: How?


Marcel Joseph Aimé Lambert: I know the hon. member may feel he gets all the benefits. But if he is a doctor or a lawyer, for instance, he cannot pay his wife for her work as a secretary. He could, though, if the personal corporation were continued. That is one of the advantages of the personal corporation. A bricklayer, a plumber, a truck driver, a plasterer or a carpenter working on his own cannot employ his wife to look after the office or as receptionist for his small firm. He cannot employ his wife if he is in partnership with someone else either. The firm has to be incorporated before the expendi-
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ture can be charged to the business and paid to her. The same applies to a wife working in a small restaurant operated by a husband. This is why one often finds the wife of a restaurant operator working for another restaurant operator, simply because it is more expensive under the Income Tax Act to function as legally married than it is in concubinage.
This leads to one conclusion. We ought to reconsider this aspect of the law, and it seems to me it could be put into the chapter of the pros and cons of filing general income tax returns between husband and wife. This is done in California. I know there is a great fear of income splitting, but that could be monitored just like everything else. It would remove these anomalies which exist under the Family Allowances Act or with regard to payments under the negative income tax. It would also eliminate anomalies as far as elderly persons are concerned. Here is a classic example: a special supplement is now payable to senior citizens where there is an income deficiency. If two people do not happen to be married, they can both collect a benefit; but if they happen to be married, only one of them can get it. I think this is a totally unjustified penalty imposed on those who are legally married.
In due course this bill will be given second reading. Its progress will depend on the answers we get from the Minister of Finance. I can assure him on a personal basis that I regretted that last ten minutes of his speech yesterday because it will make the passage of this bill much more difficult; his comments certainly opened up the scope of this debate far beyond the income tax issue. I do not think it was worthy of the minister and I hope he will not try dealing with a bill in that way again; it will be the last time he will put one through in any event.


Mr. David Orlikow (Winnipeg North):: Mr. Speaker, yesterday the Minister of Finance (Mr. Chretien) provided another example of the government's fundamental economic policy- do as little as possible while talking loudly about how good life is in Canada. This last budget, like those that preceded it, guarantees that our economy's weakness will continue without hope of a new direction. The same poverty of ideas and wealth of blustering was well exhibited by the Prime Minister's (Mr. Trudeau's) last August 1 pronouncement. He pledged to do all in Canada's power to achieve growth in the order of 5 per cent for 1978, yet his method offered only a warmed-over version of Tory spending restraint, restraint which has to cost the economy many thousands of jobs.
We have not achieved the Prime Minister's August growth target, nor have we achieved the finance minister's forecast of growth in 1978. The November 1978 budget was accompanied by a new set of optimistic forecasts from the minister, but other forecasters, both in Canada and elsewhere, have taken the wise step of ignoring the minister and making their own, much less optimistic and more realistic predictions about the Canadian economy in 1979.
The weakness of this government and the lack of confidence created by the government's economic record are apparent for all to see in the dollar's performance. The minister tried to deal with that aspect yesterday and I want to spend a few
3272

February 15, 1979
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minutes discussing the reasons for the present weakness of the dollar. We have to ask ourselves why the dollar is weak. It is weak because the economy is weak. We have unemployment, inflation, unused industrial capacity and unsolved constitutional problems. Other countries do not know who is going to be in charge of this country. They do not know what our tariff structure is going to be. They do not know who is going to be in charge of our resources, and they show that they do not know where we are going by marking our dollar down. Because people in Canada and in other countries believe that our economy is weak, they are speculating in Canadian dollars by selling them. This is probably reducing the value of the Canadian dollar by between six cents and seven cents.
The government has no policy with respect to unemployment or prices. The government has no plans for the future which it can announce, so people are afraid, and rumours about gimmicks such as exchange controls or temporary surtaxes on imported goods-which would be illegal under the GATT agreement-abound. Spokesmen for the Conservative party propose those kinds of gimmicks. If we want a stronger dollar, we have to convince the world that we will have full employment in the near future and that we will have an industrial strategy which will encourage a modernized and technologically efficient manufacturing industry.
The budget speech some months ago and yesterday's speech by the Minister of Finance did not even set out goals of that nature. The minister should by now realize that the economy does not change just because he says it will. However, in his speech yesterday the Minister of Finance did outline objectives which he hopes to achieve with his budget and with his bill. Upon close examination those objectives turn out to be as hollow as many of his earlier statements.
One objective which the minister proposed was, and I quote, "to maintain and accelerate growth and demand through fiscal stimulus". Consumer demand is not likely to increase substantially as long as the Prime Minister and other cabinet members successfully keep increases in wage rates lower than increases in the consumer price index, yet that is a deliberate well thought-out but wrongful policy objective of the government.
In the third quarter of 1978 real consumer spending grew only by less than 1 per cent, despite stimulative retail sales tax cuts, which the government has neither renewed nor increased. Current forecasts such as that of the Financial Post are for a consumer spending increase of about 3 per cent, no better than the last two years and much worse than the 5 per cent to 8 per cent gains of 1971 to 1976.
Another stated objective of the budget is to put downward pressure on prices and costs, yet the Minister of Finance has already abandoned his goal here. In November he predicted an inflation rate of 6.5 per cent, but this month before the Canadian Club of Toronto he changed his forecast to 7.5 per cent, undercutting the thrust of the budget and confirming the forecast of the Conference Board that inflation will remain in the 8 per cent range, if it does not go even higher. The budget
[Mr. Orlikow.J
is supposed to stimulate capital spending, but as I shall show later, it is more likely just to stimulate corporate profits.
Research and development is also supposed to be stimulated, but even the Canadian Manufacturers' Association estimates that only $50 million more industrial research and development will be produced, when increases of more than $250 million a year would be required to meet the government's own target in this field.
Another objective of the budget is stated to be assistance in overcoming the structural problems of sectors of the economy, yet the effectiveness of such measures is surely undercut by the minister's rejection of an industrial strategy for the country. Every industry and every plant gains from this tax measure, regardless of need and of who will benefit.
Similarly, the attempt to use across the board tax breaks to support regional development cannot hope to succeed as long as there is no specific industrial strategy with realistic goals and measures to tackle the structural weakness of the economy in poor regions. Every study of the Atlantic region proves conclusively that despite the hundreds of millions of dollars poured in through regional economic expansion development grants, relative earnings of people in the Atlantic provinces as compared with Ontario have not changed at all.
The minister now admits publicly that most economic forecasts of the growth rate in 1979 are, and I quote, "considerably less than 4 per cent", yet this budget adds up to zero impact on the economy at a time when the country needs economic leadership rather than another year of paralysis at the top.
The minister's November prediction of growth was between 4 per cent and 4.5 per cent. This should be compared with forecasts in the order of 2.2 per cent by Pitfield, MacKay, Ross and Wood Gundy, and 3 per cent according to the Financial Post and the Chase Manhattan Bank. The most optimistic private sector forecasts are in the order of 3.4 per cent, the optimists being Dominion Securities and the Conference Board.


Joseph Jacques Jean Chrétien: And OECD.


David Orlikow: It is little wonder, therefore, that yesterday the minister did not repeat any forecasts of economic growth in 1979. Even he must be coming to realize that the budget is having no impact on the economy. The only real tax cut in the budget, the increased deduction for employment expenses, will give the average taxpayer less than a dollar a week more to spend. This will not help meet the rising cost of living, nor will it generate the growth in consumer spending needed if we are to start creating jobs for the unemployed.
Over-all, the level of stimulus contained in the budget does not even undo the damage resulting from the August 1 cutbacks. The government admits this in the budget when it forecasts the number of new jobs in the coming year will be 200,000 less than the number claimed for 1978. I suggest that the minister study the long article in this week's Financial Times before he boasts about the supposed number of jobs
February 15, 1979

created last year. There is no question that the economy needs a major stimulus. This budget and this bill fail to provide that stimulus. The reduction in the manufacturers' sales tax would have been a positive step if the government had taken steps to ensure that the reduction was passed on quickly to consumers rather than issuing polite, begging requests for business to pass on the tax cut and endlessly promising to look into the situation.
We in this party have repeatedly urged the Prime Minister and the Minister of Finance to call in the major companies which have raised their prices so markedly, despite record profits, and to warn them that they ought not to do it or else there will be legislation to stop those practices. President Kennedy did that with success, President Johnson did that with success, but this government refuses to take even those gentle steps. Still, the major personal tax reduction and the major program of public investment which are also needed to turn the economy around are totally lacking in this government's thinking.
The lack of stimulus from the budget is seen in the continuing stream of forecasts about a slower rate of growth in 1979 than we had last year. It can be seen in the recent call by the Financial Times for a new budget only three months after the November effort which is embodied in this bill. That editorial in the Financial Times stated, and I quote:
The world is not unfolding as Finance Minister Jean Chretien expected three months ago and the finance department should be preparing a revised budget to deal with the changing situation.
After noting the signs of a new economic downturn and the irresponsible attitude of the Tory and Liberal discussion of economic issues, the editorial continues, and I quote:
The deficit is a phoney issue. The real issue ... is what they can do to get the country out of the present stagflation swamp and the seemingly endless succession of years in which growth is a meagre two or three or four percent.. . Chretien's new and higher estimate of inflation this year, with its predictable effects in reducing consumer demand and raising the personal savings rate, makes an adjustment in economic policy urgent. A budget with cuts in personal income taxes should be brought down, and it should be produced before the election.
I want to remind hon. members that that quotation is from an editorial in the Financial Times, certainly not one of the most radical journals of opinion in this country.
One group which continues to feel the brunt of the Liberal-Tory economic philosophy the most is the unemployed. This is the second winter in a row when more than a million Canadians will be out of work, according to the official statistics which omit the hundreds of thousands of hidden unemployed. Government officials may try to talk about the present seasonally adjusted unemployment rate of 8.1 per cent as being positive, but they should try talking to the people who are out of work and cannot find another job. Last month the unemployment rate, seasonally adjusted, was 17.7 per cent for young people aged 15 to 19 years. They are going through harsh experiences at the hands of the low growth fiscal policies of this government, and the experience will stay with them for the rest of their working lives. I would point out to members
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that they are among the best educated, highly trained young people we have ever had in this country, and they want to work. They do not want to be unemployed.
Another problem with which the November budget did not deal was inflation, yet across the country millions of working and unemployed Canadians are forced to watch their income being eaten away by price increases. The solution of the Minister of Finance is to ask people to put up with the high cost of food. He has suddenly realized that there is not much he can do about the cost of food and certainly very little he can do, if anything, about the cost of imported food. That is precisely what we told members of the House and members of the government when they brought forward their co-called wage and price anti-inflation program in 1975. The minister offers the people of Canada the hope of a stronger economy in the future as compensation for a shrinking food dollar. Well, the value of the minister's previous predictions of a rosy future shows that it is no compensation at all.
The dire situation of people living on low and fixed incomes was well illustrated recently in the Winnipeg Tribune. It was reported that one retired couple had to tell the gas company: "We just can't pay the high heating bill. We have to cut down on the food or cut down on heat." What a commentary that is on the way the system is working at present! In the past five years, the price of gas has increased two and a half times in Winnipeg, and it was up 16.5 per cent last year alone. Electricity just went up 15 per cent and phone rates are going to increase by 20 per cent in April. Yet rates are lower in Manitoba than in most of the other provinces.
Those basic needs of life are increasing at the same time as inflation of food prices is entering a second year of astronomical heights. The AIB reported that food prices went up an average of 19 per cent in 1978, and already there are predictions that in 1979 the price of a pound of hamburger will exceed $2. The days when the ordinary person can occasionally buy a steak are long gone. Those food prices increased no matter how often the minister last year tried to talk food prices down, and of course to blame the increases on the supposed crying on this side of the House.
His April, 1978 budget included a forecast of 7 per cent inflation. My colleague, the hon. member for Cape Breton-East Richmond (Mr. Hogan), and I told him then that inflation would be between 8 per cent and 9 per cent, yet he chose to continue making unrealistic predictions which both undermined confidence in the government's economic management and offered an excuse for the government's failure to deal seriously with inflation. His unrealistic predictions about inflation next year will have exactly the same effect.
Indeed, the government has been so preoccupied with adopting the Tory restraint philosophy measures that it contributed to the inflation of food costs by removing subsidies from bread and milk. The director of the Montreal Diet Dispensary, Agnes Higgins-incidentally, an organization which has performed yeoman's service on behalf of the ordinary citizens of Montreal-has said that the price increase of staples, particu-

February 15, 1979
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larly bread and milk, are seriously affecting low income families. She said:
There are no substitutes for these foods. Once they go up, they never come down, and they cover most of the nutrition needed by children.
Let us look at the problem of providing housing for people. Housing is a major factor in the living costs of most Canadians. The cost of purchasing a home has gone up steadily and relentlessly in recent years. On Tuesday of this week my colleague, the hon. member for Sault Ste. Marie (Mr. Symes), pointed out to the Minister of Consumer and Corporate Affairs (Mr. Allmand) that the price of rough cut spruce plywood had risen from $185 per 1,000 board feet in January of 1978 to $245 in January of 1979. In the same period, two by fours rose from $195 to $265, and that in a year when the profits of the wood products industry rose by 87 per cent.
When the minister was pressed to take some action to stop this unconscionable rip-off of the Canadian people, what was his reply? Well, he questioned the figures, which came from such reliable and disinterested publications as the Globe and Mail and the Financial Post, and he promised to refer the matter to the director of investigations under the Combines Investigation Act. This is not a criticism of the director of investigations. The government has delayed so long in bringing forward and passing serious anti-combines legislation that not only will it take him two or three years to make a finding, but when he does it, unless we have adequate legislation, he will not be able to do anything about it. So we know that the cost of housing will continue to escalate because the government simply refuses to take any real action.
The budget and this bill may ignore the plight of the low income earners, but the government's corporate friends were, as usual, taken care of. The need for that kind of friendly attention is demonstrated by the 22.8 per cent increase in corporate profits in the third quarter of 1978, which contributed to profit gains of 25.6 per cent for the full year, according to the Globe and Mail survey. That was permitted and encouraged by the same government which is trying to force working people to accept wage increases of just 6 per cent when the cost of living is going up by 8.5 per cent. Companies and the government say that this just compensates for poor profits in earlier years, yet profits fell only once in the past five years, a 5.2 per cent decrease in 1975, and that was more than compensated for in other years. Profits increased 20 per cent in 1974 and 46.4 per cent in 1973. Only one of the major banks saw its profit decrease in even one of the last five years, and large oil companies have been equally profitable. A report published by the Economic Council of Canada has documented that between 1968 and 1973 the chartered banks earned excess profits of more than $200 million, and we know that since then their profits have increased at an even faster rate.
The government's decision to keep cutting corporate taxes flies in the face of all objective evidence about the effect of such cuts. Let us just look at the record. Corporate tax concessions contained in the recent budget, which came on top of a series of corporate reductions over the past two years, have had the effect of reducing the tax load for Canadian

corporations to one of the lowest in the developed world. The background paper accompanying the budget argued that manufacturing in this country already enjoyed effective rates of 10 per cent to 12 per cent lower than those in the United States. Effective rates in the resource sector are even lower.
May I call it five o'clock, Mr. Speaker?



PROCEEDINGS ON ADJOURNMENT MOTION


Mr. Deputy Speaker:: Order, please. It is my duty, pursuant to Standing Order 40, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Winnipeg North Centre (Mr. Knowles)-Veterans Affairs-Introduction of measures to improve pensions; the hon. member for Ottawa-Vanier (Mr. Gauthier)-Official Languages-Inquiry whether budgetary cuts will affect funds for teaching official languages; the hon. member for Halifax-East Hants (Mr. Crosby)-Energy- Steps to ensure adequate supply of oil to east coast refineries.
It being five o'clock, the House will now proceed to the consideration of private members' business as listed on today's order paper, namely, private bills, notices of motions for papers and public bills.
There being no private bills on the order paper, the House will now proceed to notices of motions for papers and the consideration of motion No. 3.


PRIVATE MEMBERS' MOTIONS FOR PAPERS
[Stage Direction]
PRAIRIE FARM ASSISTANCE ACT ADMINISTRATION Mr. Gordon Towers (Red Deer) moved:
That an Order of the House do issue for a copy of the file or files in the possession of the Department of the Solicitor General and/or in the possession of the Royal Canadian Mounted Police relating to the investigation concerning Prairie Farm Assistance Act administration.
He said: Mr. Speaker, at the outset I should like to say that I am not a vindictive person; all I seek is truth and justice. Briefly I should like to outline the history of the proceedings which led to my motion for the production of papers, related to irregularities within prairie farm assistance administration during the 1974 federal election campaign.
February 15, 1979
[Stage Direction]
For hon. members who are not familiar with the Prairie Farm Assistance Act, it was established by a former minister of agriculture, the Hon. James Gardiner, to compensate farmers for crop failures due to drought, hail or otherwise. Payments were calculated according to crop yield within a specified block up to a maximum of $800 per farm. While that was the original intention of the act, the federal government has since used it to administer lower inventory for tomorrow, known as LIFT, and the grassland incentive program; the former to encourage farmers to decrease wheat production, and the latter to pay them for each acre converted from grain to grassland when the grain market was in the doldrums.
Whether or not prairie farm assistance was acceptable, the general feeling was that in some cases the administration was a political arm of the Liberal party. Prairie farm assistance employees who refused to become involved politically with the Liberal Party deserve commendation for their courage and honesty. Many who got jobs were defeated Liberal candidates or other Liberal supporters who used their positions, influence and taxpayers' money to promote the Liberal cause in western Canada. Also I was informed that in some cases applicants for positions were screened by defeated Liberal candidates, and if not approved they were not accepted. Unfortunately, some of those who passed scrutiny allowed themselves to become political tools, especially during election campaigns.
Shortly after the 1974 federal election, 1 was contacted by a prairie farm assistance field supervisor who had evidence of what he considered to be wrongdoing within that administration. My informant had instructed employees under his supervision to discontinue farm inspections during the election campaign to avoid involvement in politicking. This meant they would not be paid. An expense account submitted by a field man in my informant's territory crossed his secretary's desk. It claimed travel expenses for the period just prior to the election when he was not supposed to be on the road. The secretary noticed the sheet had been forwarded from the prairie farm assistance Regina office but had not been signed by the district supervisor. Thus she reported the error to the prairie farm assistance office in Regina. Within minutes she received a call from Regina instructing her to return the expense claim to that office immediately. In other words, the district supervisor was to be bypassed.
Even to the most naive person, such procedure would suggest something was out of order. Apparently the claimant in question was being paid for political work during the campaign out of prairie farm assistance funds made up of farmer contributions and federal tax dollars.
Had the government admitted in 1974 that in fact there was something irregular and assured the House that remedial action would be taken after an appropriate internal investigation, 1 would not have found it necessary to call in the Royal Canadian Mounted Police and this prolonged uphill fight for justice would not have developed. By covering up and denying misuse of funds, despite evidence to the contrary, Canadians are left with the justifiable impression that the government does not take seriously fraudulent acts involving tax dollars.
Prairie Farm Assistance
The government prefers to waste House time in cheap insinuations unrelated to public funds, while covering up payment of tax dollars for political gain. Is there no one in that group of nobodies who would attempt to be somebody by facing up to responsibility?
The prairie farm assistance irregularity was brought up in the House first by the hon. member for Qu'Appelle-Moose Mountain (Mr. Hamilton) and myself in December 1974, without satisfactory action on the part of the federal cabinet or the then minister of agriculture. At my request later that month, two constables from the Royal Canadian Mounted Police commercial crime branch visited my office to examine prairie farm assistance documents in my possession. Subsequently the RCMP decided there was sufficient evidence of irregularities within prairie farm assistance travel expense accounts to warrant an investigation. As a result, on May 27, 1975 an information was laid against the chief of field operations for prairie farm assistance in Regina, which read in part that he;
-did by deceit, falsehood or other fraudulent means defraud the public in general and the Government of Canada of the sum of $399.78 by making or causing to be made false and fictitious travelling expense accounts and work reports contrary to section 338(1) of the Criminal Code of Canada.
I might say that the amount is small and that the person so charged must deal with his own conscience; but principle is at stake here and my purpose in this motion is to find out who instigated the false work reports and expense claims. I do not think the accused did so on his own initiative.
At the preliminary hearing on July 17, 1975, the acting judge of the magistrates' court in Regina made an order, at the request of defense counsel, banning publication of evidence taken at the hearing. During the inquiry witnesses for the Crown were belittled, verbally abused, intimidated and subjected to tactics more in line with a dictatorship than a democracy. Following the hearing the accused was committed to stand trial. Would it not have been more humane and sensible to have handled this case responsibly within the departments concerned than to force the accused employee and witnesses into court?
1 should like to put on record portions of the transcript of that hearing. This document contains questions and answers between the Crown counsel and the witness. It reads:
Q. Do you personally belong to a political party?
A. Yes, I do.
Q. What party is that?
A. That's the Liberal party.
Q. And did you back it in 1973?
A. No answer.
Mr. Deputy Speaker:: The hon. Parliamentary Secretary to the Solicitor General of Canada (Mr. Young) rises on a point of order.


Mr. Young:: Mr. Speaker, I rise on a point of order. I hate to interrupt the hon. member, but since he is reading from a transcript of the hearing, I wonder if he would be good enough

February 15, 1979
Prairie Farm Assistance
to tell us the page and question numbers to which he is referring because they are listed in the transcript.


Mr. Towers:: Mr. Speaker, I commenced my remarks by reading question No. 37, which appears on page No. 46. It continues:
Q. Did you in 1974?
A. If there happened to be an election that year I did-
Then going on to question 42 it reads:
You have been, over the years, a member of the Liberal party?
A. Yes, I have.
Q. When did you next hear from-
The reference was to the accused and the answer was:
It was probably in May in '74.
Q. And under what circumstances?
A. He asked me if I wanted to work for, help out in the campaign.
Q. And there was a federal election held on July 9, 1974?
A. I believe there was, yes.
Then he asked how the accused contacted him and his answer was:
I believe he contacted me by phone.
Q. And what was said at that particular time?
A. Oh, I think he asked me if we had a candidate nominated and if I would help in the campaign. I don't think-I think that is just about all that it amounted to.
Q. And how did you respond to that question?
A. I think the way I responded was that I told him I would think about it and let him know.
Q. And did you in fact let him know?
A. Yes, I did.
Q. When-how did you do that?
A. Sometime after that.
Q. A matter of a few days?
A. Maybe a few days, maybe a week or something like that.
Then question 56 reads:
And what did you say, what was said on that occasion?
A. I believe I told him that I would help with the elections.
Q. And what, if anything, was said about compensation?
The answer to the question numbered 59 is:
He told me I would be compensated.
At sittings of the District Court Judges' Criminal Court at Regina on December 2, 1975, the Attorney General's agent instructed the clerk of the court to enter a stay of proceedings.
In view of the documentary evidence of misuse of PFA funds, I asked the then minister of agriculture whether or not the employee charged with fraud had acted on his own initiative or on the instructions of another. He replied that he accepted the ruling of the court, and my legitimate question was overlooked. Court or no court, a minister should be willing to accept responsibility for an employee's performance, particularly if it is a fraudulent act within his jurisdiction.
Having been stymied by irresponsible ministers at every turn, I was forced to submit a motion for the production of correspondence, expense accounts, wage claim reports, field-
[Mr. Young.J
men's work reports, etc., between PFA employees in the provinces of Alberta and Saskatchewan and PFA in Regina for the period May 8, 1974 to July 8, 1974.
On July 7, 1976 the parliamentary secretary to the agriculture minister informed the House that PFA records were transferred to the Public Archives when the Regina office had been closed and could be viewed there, but that internal correspondence had been destroyed. Is it not strange to have such correspondence done away with when there remains about $9 million in the PFA fund?
Having evidence in my possession of impropriety within the PFA administration, I do not need to review the records transferred to the Public Archives. I continue to wonder, as do many Canadians, why internal correspondence, no doubt in part related to fraudulent expense accounts, was destroyed. Can there be any doubt that those communications were conveniently removed to cover up illegal doings on the part of some person or persons other than the employee who was charged? The government leaves itself open to that suggestion.
When the hon. member for Qu'Appelle-Moose Mountain asked the minister who decided to destroy the Regina office papers, as it appears in Hansard for July 8, 1976, the minister replied that the person in charge of the office, that is, the employee accused of fraud, decided that all insignificant documents should be destroyed. This House and the general public will never know their contents.
As a last resort in my quest for clarification I presented a motion to have laid before this House a copy of the contents of the file or files in the possession of the Department of the Solicitor General or the Royal Canadian Mounted Police relating to the investigation concerning Prairie Farm Assistance Act administration. I have not mentioned every approach I have made to cabinet ministers in this House to get this matter satisfactorily cleared up, but the motion being discussed now dates back to July, 1976. I believe the RCMP would be prepared to give up the documents if it could obtain the approval of the Solicitor General's department.
Thank you very much for allowing me the privilege of bringing this matter before the House at this time, Mr. Speaker.


Roger Carl Young: Mr. Speaker, I listened with interest to the presentation this afternoon by the hon. member for Red Deer (Mr. Towers). Perhaps I should point out to the House that this is not the first time this motion has come before this parliament. It was first put on as a motion for the production of papers by the hon. member on July 13, 1976, but it did not come up for debate in the first session of this parliament.
It was again put down as a motion for the production of papers on November 17, 1976. The then parliamentary secretary to the solicitor general, my colleague the hon. member for Vancouver East (Mr. Lee), replied to the hon. member that it was not possible to produce the papers he wished to see because they related to police investigative matters conducted by the RCM Police in the province of Saskatchewan under the
4;':



February 15, 1979

direction and control of the attorney general of Saskatchewan. The hon. member was told at that time that it was the attorney general of Saskatchewan who had refused to allow the production of the papers in this House. That was explained to him quite fully at that time by those who participated on this side of the House.
Notwithstanding that, the hon. member, still not satisfied although having had a fairly thorough debate during the second session of this parliament, put the matter down for the third time as a motion for the production of papers on March 16, 1978. It did not come to a debate in the third session, but it has now been put down as a motion for the production of papers as of December 6, 1978.
I cannot really give the hon. member much more of an answer than he has already received or that has been explained to him on a number of occasions. The matter was debated fully and explained during the debate which took place at the second session.
The solicitor general of the day wrote to the attorney general of Saskatchewan. Perhaps I should be technically correct and say that it was the deputy solicitor general who wrote, and permission to table the documents was refused. That information was requested by the hon. member for Qu'Appelle-Moose Mountain (Mr. Hamilton) during the debate which took place at the second session. My colleague, the hon. member for Vancouver East, wrote him a letter back in July, 1977, confirming that in fact the deputy solicitor general had written to the attorney general of Saskatchewan and in turn had been told that the attorney general did not consent to the release of the papers.
In addition to that, in general terms it has not been the policy of this House at any time I am aware of that police files and investigative matters are ever released on a motion for the production of papers, simply because they could contain all sorts of assertions, allegations and things that may not as yet have been proven in court. Such a release could compromise the police in the effectiveness of their investigations, and it could make it very difficult for them to work. It might also compromise people who have come forward voluntarily to give the police information. That in a nutshell is the simple reason why these papers are not produced in this House.
I could make a number of points in explaining that to the hon. member. I could go back and quote, as my colleague did, from sources as far back as Lord Palmerston showing why in the British parliament and, through that system, this parliament, such papers are not produced. It is RCMP policy and long-standing police policy that police files are not disclosed to the House of Commons or made public in any way. The necessity for confidentiality of police reports was recognized many years ago in Great Britain, and that is supported by the fairly well-known statement of Lord Palmerston back as far as 1865, to which I have referred.
The production of confidential police reports in the House of Commons might seriously jeopardize the good administration
Prairie Farm Assistance
of justice and could seriously impair the success of future investigations of this nature. In this particular case an investigation was carried out by the RCM Police as a result of allegations of the misuse of funds under the prairie farm assistance administration in Saskatchewan in late 1974. The case was investigated and prosecuted under the jurisdiction of the attorney general of the province of Saskatchewan. The details of what took place are a matter of record and they are available to any member of this House. Obviously, the hon. member for Red Deer has those details in the transcript of the proceedings which can be obtained from the office of the attorney general of Saskatchewan. I am referring to the transcript of the proceedings at the preliminary hearing.
The alleged offence-and I stress "alleged" offence- although the matter comes under a federal statute, was considered to be of a criminal nature and the charges were laid under the Criminal Code by the attorney general of Saskatchewan. The prosecution was also conducted under the authority of the attorney general of Saskatchewan. As I have said, the concurrence of provincial authorities for the release of police investigative reports to the House of Commons has not been forthcoming.
The hon. member for Red Deer, in trying to make the case that there was some political hanky-panky, quoted from the transcript. He suggested that there was a possible cover-up. The hon. member was very selective in the questions and answers which he read from the transcript. The case which he attempts to make out through the transcript does not carry all the way through the transcript. Just to refresh his memory and to present the whole picture to members of the House who have not had an opportunity to read the transcript, I would refer the hon. member for Red Deer to question 28 at page 45. The Crown is examining the witness upon whom the case turned. The transcript reads:
Q. Did you talk about politics?
A. Well, I believe it came up.
Q. And in what way?
A. I really don't recall how it came about, how we started it.
Q. In any event, what was the gist of that discussion?
A. Pardon?
Q. What was the gist of, the essence of that discussion?
A. You mean what became of that discussion?
Q. What did you talk about?
A. You know, I really can't recall what we talked about. We talked about the program.
The Court: The Grassland Incentive Program.
One could go to other pages in the transcript. The hon. member quoted from page 46. Let me take him to page 48 which he conveniently overlooked. Question 64 by Crown counsel reads:
Q. Okay. And did you in fact work in the election campaign for the Liberal candidate in the area?
A. No, I didn't.
Q. Nothing at all?
A. Oh, I put up the odd poster in the evening.

February 15, 1979
Prairie Farm Assistance
Let me go to some other pages because I think that the questions and answers bear out a case which is quite different from the one which the hon. member for Red Deer was attempting to make.


Thomas Gordon Towers: You are incriminating your own man.


Roger Carl Young: We are now into cross-examination, Mr. Speaker. I am reading from page 68, question 245:
Q. In fact, you basically kept politics separate from your job, didn't you,-
A. That was our orders when we first started working for PFA.
Q. And Mr. Buchan never really changed those orders, did he?
A. Not that I know of.
Q. At least he didn't come to you and say we are now going to have a new method, we're going to mix politics with work, did he?
A. No.
Q. Never even suggested it to you at any time, did he?
A. No.
That presents a slightly different case which is coming out under cross-examination before the judge.


Thomas Gordon Towers: By a defence lawyer.


Roger Carl Young: Of course, a defence lawyer on cross-examination.


Thomas Gordon Towers: Who put words in his mouth.


Roger Carl Young: I would invite anybody, Mr. Speaker, to read the transcript, and they will see exactly how the case for the prosecution fell apart. Its own witness fell apart and as a result the testimony upon which the Crown based its case did not hold up in a court of law; and that is what a court proceeding is all about.
On reading through the transcript I would like to bring out some other interesting points. Here is question 269:
Q. Let me put it this way, Mr. Kormendy. You wouldn't be considered a truly active Liberal, would you?
A. Not really. I wasn't really that much interested in it.
This is the man to whom the hon. member for Red Deer referred in trying to make out a case that he was misusing PFA funds. Question 270 reads:
Q. And, in fact, in the past you had really not done very much campaigning for the Liberal party, had you?
A. Not since '64. No more than put up posters or nominate scrutineers and stuff like that. That's all.
Question No. 274 is also interesting:
Q. Mr. Kormendy, really, it's fair to say that there was no real great advantage to having you working for the Liberal party, was there? Looking at your past performance.
A. Not on the campaign, because 1 make a poor campaigner.


Mr. Nystrom:: Typical Liberal.


Roger Carl Young: The hon. member for Red Deer tries to make the suggestion that the accused in this case had suggested to the gentleman whose evidence broke down at the preliminary hearing that the gentleman would be compensated for doing campaign work and that the compensation would come from
[Mr. Young.J
PFA funds. That allegation did not hold up at all at the preliminary hearing. The evidence of the individual upon whom the Crown based its case broke down and the attorney general of Saskatchewan was left with no alternative but to dismiss the case.


Thomas Gordon Towers: He was still paid.


Roger Carl Young: The hon. member for Red Deer says that the gentleman was paid. His testimony in the transcript was that he was paid for work which he had been requested to do and which was in the general nature of his duties. There is a very interesting question and answer on page 83. It begins with question No. 356, which reads:
Q. Is it not also correct, Mr. Kormendy, that Mr. Buchan never told you to file
false expense accounts?
A. Well, no, he didn't tell me to file false expense accounts.
Q. He never told you to file false wage statements, did he?
A. No.
That witness went on to say that he did not file false expense accounts. Let us look at question No. 375 which reads:
Q. So really, Mr. Kormendy, you believed that you were entitled to be
compensated for the work you did in your home. Is that correct?
A. I figured I wasn't compensated enough?
Q. And you felt you should be?
A. That is right.
It turns out that the gentleman seems to have been compensated for work he felt he was told to do, not for any active politicking or campaigning.
If the hon. member for Red Deer takes issue with the fact that the case did not proceed to trial, I think he should take that up with the attorney general for Saskatchewan because the decision on whether to proceed to trial is one made by the provincial Crown who decides whether there is enough evidence. This was done notwithstanding that the magistrate at the hearing felt there might be. it is the provincial Crown's responsibility who is the agent of the attorney general of Saskatchewan and who in reviewing the case to see what he had to go on decided there was not enough evidence to proceed to trial. The evidence upon which his whole case might have stood was not there, after hearing cross-examination.
The hon. member for Red Deer said something to the effect of a court hearing that took place that would have been in the nature of something existing in a dictatorship. I find nothing of that in reading through the transcript, and I have been through all but the last few pages of it.
The transcript shows that a hearing took place, that a Crown counsel examined several witnesses, and the defence counsel cross-examined. It is an adversary system. The Crown counsel had the right and did, in a couple of cases, to re-examine witnesses. The court can only make a decision based on what witnesses say. When witnesses contradict themselves, or their testimony does not hold up, that is what a trial system is all about. Those are rights that we have fought for, not only in
February 15, 1979

this country but in others. We enjoy freedom, democracy, the right to a trial, and the right to be judged by our peers.
The examination of the witness upon whom the Crown in the preliminary hearing based its case, and the evidence which the hon. member for Red Deer seems to have adopted, broke down. It did not stand up. If the hon. member for Red Deer wanted to be fair to the people whose lives and reputations were at stake in that court case, and he wanted to be fair to all his constituents who might read the Hansard report of this debate, he might not be so selective in the questions that he pulls from the transcript. He might give those people a chance to read the whole transcript so they can then make up their minds.
Let me review the matter. An RCMP investigation was held into allegations made with respect to the possible misuse of PFAA funds. The case for the Crown consisted mainly of the evidence of one witness, a Mr. Kormendy, who worked as a field inspector for the PFAA out of Westlock, Alberta. As I have explained by reading some questions and answers from the transcript, his evidence during that preliminary hearing broke down, and in fact he extricated the accused from any criminal involvement. Notwithstanding that, the magistrate hearing the preliminary proceedings did order a commital but on review of the transcript of the preliminary hearing, agents of the attorney general for the province of Saskatchewan determined that a stay of proceedings should be entered because there was clearly insufficient evidence remaining on which to convict the accused. All the interested parties were so advised.
To conclude, I turn to the original answer which was given to the hon. member for Red Deer. "I am sorry we are not at liberty


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


Hon. Alvin Hamilton (Qu'Appelle-Moose Mountain):: Mr. Speaker, I think I can complete the sentence which the parliamentary secretary was going to deliver. It is the government's position that they cannot present these papers because the government of Saskatchewan refused to give them up on the grounds that this is a matter before the courts and it is not customary to give up evidence which the RCMP has collected when a citizen is on trial.
If I may, I would like to straighten out a few things. During the election campaign of 1974 certain farmers reported to me what was being said to them by men who they claimed and were, to their knowledge, to be employees of PFAA, which is a government agency. These people are not civil servants but are appointed by the minister, responsible to the minister, and can be fired by the minister. I did not take any action on these statements even though they were of highly improper and unethical political activity. To my knowledge they have never been mentioned in this House. This is one feature of this whole mess which has not been made clear. There are two parts to this problem. One is criminal fraud and one is political fraud.
Prairie Farm Assistance
When I sent word around to some of our people to take note in the event they had witnessed similar types of activities in their areas, several members of parliament reported to me that such was the case. One of them was the hon. member for Red Deer (Mr. Towers), and I can name one or two of the others. When immediately after the election certain things happened that were reported to us, we recognized that they were far beyond us as ordinary members of parliament fighting a political battle, because these things were now in the area of criminal fraud.
I want to make it very clear to the Parliamentary Secretary to the Solicitor General (Mr. Young) that he did not present a true statement of facts here today in relation to this case. He did not mention that every one of those employees of the PFAA had written instructions, signed by the director of PFAA, that under no circumstances were they to do anything of a business-like nature for the PFAA during the election period. They were not to do anything. When an officer is shown those instructions by his own director, that under no circumstances was any member of the PFAA to be allowed to do anything connected with PFAA work during an election period, and then to find someone doing so-called work, as the evidence quoted by the parliamentary secretary indicates and then has the nerve to submit expenses for doing something he was ordered not to do, that in itself is very close to criminal fraud. But when it is found out furthermore, and which the parliamentary secretary never reported, that supervisors immediately above the PFAA inspectors refused to sign those expense sheets because there was no authority for a person to be doing work, these people called the accused and said, "Do not worry, send it in to me and 1 will sign it." When he signed it, knowing of the existence of the director's written instructions, that is where the criminal fraud took place. He authorized the expenditure of money from the farmers' accounts to these men ostensibly doing business concerning PFA work, and when that is unauthorized, it is criminal fraud.
When the case came up for preliminary hearing the police were quite convinced the evidence they had from several witnesses-and it is very difficult to get witnesses to give evidence against themselves-was strong enough that they had a case and so took it to a preliminary hearing.
If any person reads this transcript of the preliminary hearing and reads the questions by counsel for the Crown and questions put by defence counsel, it is a wonder that the law association of that province did not disbar the bunch of them. We heard the questions by the parliamentary secretary. They were all leading questions. We have evidence of legal representations on both sides, the Crown and defence, not only being incompetent but dangerously close to something even worse, improper action.
I know what the customs are in parliament. You do not present to parliament documents that are in police custody. As the attorney general of Saskatchewan said in his letter, and I quote his words:
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February 15, 1979
Prairie Farm Assistance
-I feel that it would be a breach of a confidence for me to disclose the evidence contained in statements taken by the RCM Police investigators, as these are private communications between the citizen and the police authorities, until such time as the citizen actually testifies in court.
That is the length of the protection. Why has this citizen not made his statement in court? That is what we are asking. When we turned our information over to the attorney general's department and they went in and seized the documents and took photographs of all the ones in the criminal fraud, that was only part of what we were after. The criminal fraud was a small part of the whole fraud. The big fraud was what were they doing politically. That has never been mentioned in this House, nor should it be mentioned until we get it to the proper place, the Standing Committee on Privileges and Elections.
The first steps of the hon. member for Red Deer are obvious. As a good citizen and as a member of parliament, he turned over his information to the attorney general. He turned it over to the criminal fraud squad of the RCMP and we kept our mouths shut, all of us. When the preliminary hearing was held and all these unusually odd questions were asked by lawyers on both sides, the presiding magistrate did not state the whole case should be thrown out by the evidence of Kormendy. That is what the parliamentary secretary said today.


Roger Carl Young: I didn't say that.


Francis Alvin George Hamilton: The judge ruled there was a prima facie case and committed them to trial. There is not just one person in this who allegedly did certain things that were wrong. There are several. However, this is the first one to be tried. We are now in a situation where the police are angry because their case was not properly presented by the Crown. Who appoints the Crown prosecutor? It is the attorney general of Saskatchewan. The police are angry at the incompetence of the type of questions asked by defence counsel, and the answers. In spite of all this, the judge committed this man to trial. That answers the parliamentary secretary completely.
The judge who sat there and heard all this, if you want the ordinary layman's language of what was happening in that court, heard all these lies. He said, "There is still criminal fraud here, and I commit the man to trial."
Go back and read the papers, particularly the Regina Leader-Post. This was happening to a so-called leading citizen, one of the leading hatchet men of the Liberal party in Saskatchewan, the last dregs of the old Gardiner machine, now the new machine. There was not one mention in the Leader-Post.
When I saw mention of this in Canadian Press, the Globe and Mail, and other papers across Canada, I contacted the Leader-Post and asked why it was not covering this local story. There had been a preliminary hearing for criminal fraud and they said, "Isn't that too bad; we must get somebody on to this."


An hon. Member:: Freedom of the press.


Francis Alvin George Hamilton: Freedom of the press? It is a part of this whole mess we see across the aisle. When you are corrupt and using the people's money, the farmer's money in this case, to try and win an election, that is beyond criminal fraud. It is a much bigger crime.


Mr. Boulanger:: Speak to us about 1958.


Francis Alvin George Hamilton: I will speak to you about anything, but you speak on your feet in your own time. I know the corruption that goes on in the hon. member's riding. The hon. member for Red Deer is frustrated because he cannot even get back from the province of Saskatchewan the documents that he put into the hands of the police. It is not only the criminal fraud. It is also the question of the political fraud. Let me add a little bit of fact to that.
Why was the director of the PFAA paid $25,000 a year to be director and not allowed into his office for a whole year prior to the election, and this man who is alleged to have committed this criminal fraud ran the organization as a subordinate? He would not let his superior into the office. When this thing hit the fire and the fat began to burn in the fall of 1974, just before Christmas, why were all the girls in the office dismissed? Parliament had voted them their salaries until the end of March. The same great fear was loose out there.
These girls had been appointed to their jobs by Mr. Gardiner, then minister of agriculture, and kept on by succeeding administrations. They did their job for nearly 30 years, close to the time of their pensions, and were suddenly dismissed arbitrarily before Christmas. I would like the evidence for that. It can only be obtained by seeing the papers requested by the hon. member for Red Deer.
I asked questions in the House of the Minister of Agriculture (Mr. Whelan). I had warned his staff years before to watch out, that when the big boy from Saskatchewan moves in you will be holding the bag. I said that he may be the minister in charge of this organization, the PFAA, but he is not running it. It is their organization that is running it. The Minister of Agriculture paid no attention to my warnings. Now he is caught trying to explain in the House why somebody without any authority from his office went in and burned all the records. He said that some of the records were put into the archives, those that were valuable in the criminal fraud case. However, it was not the criminal fraud that was the big issue. It was the political fraud.
As I said earlier, no one has ever mentioned what the political fraud is. We know. The guys who were doing it know.
I am sure the government members would like to know. They would like to know what these guys were doing to earn this money for two weeks' work. This will only be cleared up when it is properly before the Standing Committee on Privileges and Elections. We recognize that we will have to wait until the government changes and we can get that committee called.
Meanwhile, let us go back to the real culprit. I was concerned about this and I wrote a letter to the attorney general of Saskatchewan. It is addressed to the Hon. Roy J. Roma-now, Q.C., MLA.
February 15, 1979


An hon. Member:: A good man.


Francis Alvin George Hamilton: Yes, he is a good man working with Otto Lang. I will just read the last paragraph of my letter:
The public is aware of the investigation and the proceedings to date. The information we as members of the opposition had in their possession was turned over to the RCMP. A reading of the transcript of the preliminary hearing and the fact that Buchan was committed for trial by the judge raises questions in our minds as to why the Crown should ask for a stay of proceedings.
When the judge has heard the evidence, you wonder why the trial is not held. Rarely in our jurisprudence does an attorney general ever ask for a stay of proceedings when a judge has ruled there is a prima facie case. You let a judge and jury decide. It only happens as far as I know as a layman when one of the main witnesses dies, or new evidence comes up which changes the whole picture. But here we find the attorney general of Saskatchewan deciding not to go on with this trial in spite of the fact that a judge has ruled there is a case. So 1 asked him why.
Here is his answer. First of all, he deals with the request for papers. He says they have to be kept private until the citizen has testified. I agree with him. Now we come down to the part where he talks about the reason:
It is the duty of the prosecutor, notwithstanding a committal for trial, to review the evidence after the preliminary hearing to determine whether or not there is in fact a proper case to place before the trial court.
That is what the parliamentary secretary was describing:
The prosecution's allegations in this case were based entirely upon certain statements made by a Mr. John Kormendy, an accomplice-
There, Mr. Speaker, is a phrase which creates a new principle in law-you can't send a man up for trial when the evidence comes from an accomplice; that would be unfair.
Again he says this, in the next paragraph:
Further, a court in trying such a case must direct itself to the legal principle that it is unsafe to convict on the uncorroborated evidence of an accomplice.
This means that if two men rob a bank and the police catch them and one of them turns state's evidence, then according to the attorney general of Saskatchewan the other man cannot be tried if that is the only evidence, because he stands to be convicted on the evidence of an accomplice. How many lawyers have ever heard of that principle? Not many. It is brand new. The attorney general of Saskatchewan is very smart, as the hon. member for Yorkton-Melville (Mr. Nystrom) has pointed out. He is so smart he has coined a new principle-you cannot convict a person if the evidence comes from an accomplice. Well, we are not going to catch and convict many bank robbers if that is to be the rule.
The point I am making is this: what really matters in this whole picture is the fact that a citizen who is alleged to have commited a criminal act, and who was committed to trial by a judge, has not had his trial and has been prevented from going to trial by the attorney general of Saskatchewan. In explanation, the attorney general has offered a new principle of law, namely, that a person cannot be convicted through the evi-
Prairie Farm Assistance
dence of an accomplice, the accomplice being the only witness. The police are angry because there are other accomplices who want to give evidence but they cannot give evidence until trials are held. So I suggest that though in all fairness we cannot, under past precedent, give the papers dealing with the criminal trial to the hon. member for Red Deer-


The Acting Speaker (Mr. Ethier):: Order. I regret to interrupt the hon. member but his allotted time has expired.


Mr. Mark MacGuigan (Windsor-Walkerville):: Mr. Speaker, we have before us this evening a motion by the hon. member for Red Deer (Mr. Towers) that an order of the House do issue for a copy of the file or files relating to the investigation concerning the Prairie Farm Assistance Act administration. Even with all the good will I bear the hon. member for Red Deer-and it is considerable since we work together on the justice committee-I have to say frankly that I consider this motion an abuse of the time of the House and an abuse of the legal process in Canada.
This matter concerns the administration of justice in the province of Saskatchewan. The hon. member for Qu'appelle-Moose Mountain (Mr. Hamilton) who has just spoken has, indeed, put the emphasis in the right place. He saw he had to contact the attorney general of Saskatchewan with respect to this matter, and he has his reply. If there is any further issue to be taken up, it should not be taken up in this House. It should be in the Saskatchewan legislature or on the hustings in Saskatchewan.
He read excerpts from a letter of reply he has had from the attorney general of that province. I found it a little difficult to tell when the hon. member was reading from the reply and when he was interpolating his own comment, but as far as I could tell what the words of the attorney general of Saskatchewan were, he was not putting the primary emphasis for not proceeding with this case on the fact that this was evidence of an accomplice.
The fact is that the evidence which was given by the witness, Mr. John Kormendy, at the trial was so full of holes that he ended up by exonerating the accused, on one view of the evidence. It was the weakness of the evidence primarily, and only secondarily the fact that he was himself an alleged accomplice, which presumably led the attorney general of Saskatchewan to come to the conclusion he did. I am not here to defend the actions of that attorney general. I think he can well do that for himself, and he should be given the opportunity to do so if this is raised in the proper forum in Saskatchewan rather than here which, I repeat, I believe to be a wholly improper forum for discussing this matter.
I can see that, as a political matter, if there were a government of the same party in Saskatchewan, there might be a suspicion that the motivation of the attorney general was political. But that is not the case here. We are dealing with an attorney general of a New Democratic government of Saskatchewan. For a number of reasons he came to his decisions, and I think there can be no reasons other than legal ones.

February 15, 1979
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Far from having coined a new principle in law, the attorney general is just following the normal practice. Where the evidence is not sufficient, a case is not proceeded with. The judge at the preliminary hearing did not, after all, convict the accused; he merely found a prima facie case which means that he thought there was enough evidence that the case could go on to be decided in full court. Responsibility, nevertheless, rests with the prosecutor to decide whether to proceed. That is a second responsibility and it is different from that of the judge. The decision has been validly made, in my view, and if it has not, it should not be challenged here, it should be challenged in the proper forum.


Steve Eugene Paproski: Question!


Mark R. MacGuigan: As to the question of the release of the papers as distinct from what the opposition is trying to do, which is to exploit this situation politically, we discover other legal implications. Elistorically, the question of the release of information to members in order to enable them to secure factual information about operations of government to carry out their parliamentary duties has been balanced against the equally important need to protect the security of the state and the rights to privacy of its citizens. The right to privacy is very important in this case, Mr. Speaker, because here we are dealing with a police investigation, with papers which were connected to that investigation, Mr. Speaker-


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


[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.


[Stage Direction]
The House resumed consideration of the motion of Mr. Chretien that Bill C-37, to amend the statute law relating to income tax, to amend the Canada Pension Plan and to provide other authority for the raising of funds, be read the second time and referred to committee of the whole.
The Acting Speaker (Mr. Turner):: Order. At five o'clock the hon. member for Winnipeg North (Mr. Orlikow) had the floor.


David Orlikow: Mr. Speaker, at five o'clock I was dealing with the effect corporate tax measures adopted in earlier years had had on our budgets.
Estimates made in 1977 indicated that since 1972 corporate tax burdens had been reduced by about $1 billion to $1.5 billion per year. The last budget reduced corporate tax burdens by about another $200 million a year.
These tax reductions have had the effect of increasing corporate profits and reducing government revenues, with the real result that the government has felt compelled to cut back on a wide range of social services. I do not have the time to enumerate those today, but members of parliament know very well what they are. There is no evidence that these tax reductions have had more than a marginal impact on capital investment or job creation. The C. D. Howe Research Institute, after examining the list of such concessions in Canada in 1976 concluded, and I quote:
Although Canada has made extensive use of business tax concessions over the years, the question of the usefulness of such measures in achieving the desired goals remains unresolved.
More direct evidence of this fact came to light in 1975 when the Department of Finance surveyed a large number of corporations to see if there had been any impact from the introduction of the accelerated two year write-off for manufacturing and processing equipment in 1972. Of those surveyed, only 32 per cent said that these concessions, estimated to be worth $2.5 billion between 1972 and 1975, had any impact on investment decisions. Only 26 per cent said they would be increasing jobs as a result of these concessions, and only 15 per cent said that they would have any impact on prices.
The most recent study, published in the November-Decem-ber issue of the Canadian Tax Journal concluded, and 1 quote:
The effectiveness of investment incentive tax policies in bringing about changes in the over-all level of investment or the timing of investment expenditures is not at all apparent.
One thing that has been apparent is the almost weekly reports of immense profit increases. Bell Canada profits in 1978 came to more than $370 million, an increase of 25 per cent over the previous year. The 1978 profits of Abitibi Paper company more than doubled their 1977 performance. This astounding increase was nearly matched by Algoma Steel, with an increase of almost 90 per cent. Consumers Glass Company did better, with an increase of about 120 per cent in its last year. Profit increases in the 20 per cent to 25 per cent range are too numerous to list here, considering that they are only average, although most workers saw their wages increase at a much slower rate of about 6.4 per cent last year.
The Prime Minister (Mr. Trudeau) said recently that he welcomes the huge profits being reported by most corporations operating in this country. He talks about how those profits can be used to create jobs, but before continuing to praise the profit picture the Prime Minister should consider some exam-

February 15, 1979

pies of how corporate profits have in fact been used in recent years. Those most favoured friends, the giant pulp and paper companies, have been either playing "Monopoly" with each other or investing in new operations outside the country. MacMillan Bloedel, Domtar, CP Investments, Abitibi, and Prince and Argus Corporation have all been involved in takeover bids for other companies instead of investing their profits in new plants and processes as the Prime Minister and the Minister of Finance (Mr. Chretien) have talked about.
Despite the high level of profits and world demand, Canadian pulp and paper corporations have refused to replace outdated plants or expand operations in Canada, while at the same time they expand abroad. For example, MacMillan Bloedel has committed itself, along with its partners, to pour some $131 million into a French pulp company over the next three years. It is also involved in a multimillion dollar project to develop Brazilian pulp properties, plus plywood and lumber mills in Malaysia. Domtar spent some $34.5 million to acquire a number of U.S. gypsum and wallboard mills last spring. And it is to these corporations that we are giving over $200 million to help them modernize.
The Prime Minister's assertions about the need for high profits to ensure Canadian investment is revealed as a sham by examination of the record of the government's Export Development Corporation, which is encouraging development elsewhere through guarantees of loans for new plants in other countries, plants which very often compete with Canadian plants and Canadian workers for business and jobs.
Inco benefited from Export Development Corporation loans to help it export jobs to Guatemala and Indonesia. The government's reliance upon across the board tax cuts let this corporation defer $368 million in federal taxes on 1976 and 1977 profits of $1.7 billion, although it eliminated 4,000 full time jobs in Sudbury, Ontario, and Thompson, Manitoba, in just one day in 1977. Indeed, Inco has been able to gather tax cuts and exemptions from the Tory government in Ontario and promises of the same from the Tory government in Manitoba, despite the sorry spectacle of Canadian operations being downgraded in favour of overseas investment.
What is true of the privately-owned corporations is now becoming the policy for publicly-owned corporations like the CDC. That corporation was created by an act passed in Parliament on June 9, 1971. Its purposes were:
(a)	. .. assist in the creation or development of business, resources, properties and industries of Canada;
(b)	... to expand, widen and develop opportunities for Canadians to participate in the economic development of Canada through the application of their skills and capital;
(c)	. .. to invest in the shares or securities of any corporation owning property or carrying on business related to the economic interests of Canada; and
(d)	. .. to invest in ventures or enterprises including the acquisition of property likely to benefit Canada.
How does this corporation act? CDC, which is owned between 66 per cent and 70 per cent by the federal government, has substantial investment in petrochemicals, mining,
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venture capital, oil, gas, and health care. CDC companies employ over 20,000 people world-wide. One of these companies, Polysar Limited employs 3,700 workers in the Sarnia, Ontario, operations, but 6,000 people world-wide. The majority of the company's manufacturing subsidies are in Europe or the United States. In 1977 Polysar acquired a 25 per cent interest in a French plastics forming business. Polysar also operates major synthetic rubber plants in both France and Belgium.
Instead of investing money and its know-how in building plants in Canada, which could not only supply the Canadian market but which could sell on the international market, Polysar is investing increasingly its efforts and its money in corporations producing in foreign lands.
Similarly, in health care 1977 saw CDC's Connlab group acquire a quality biological facility in Swiftwater, Pennsylvania. Connlab Holdings Limited also controls 75 per cent of A/S Dumex based in Copenhagen, which in turn employs 700 Danes. Dumex is particularly involved in marketing drugs in developing countries. Recently, Dumex expanded its facilities in Denmark, and the company markets in 40 countries. Dumex completed a new plant in 1977, and a second plant is scheduled for completion in 1978, both of them in Canada.
CDC Oil and Gas acquired a working interest in a major Louisiana property during 1977. Based in Calgary, with a total staff of 130, the Louisiana purchase cost $45 million U.S. and resulted in a 45 per cent interest in 27,000 acres of partially developed land located on the Gulf of Mexico, south west of Lake Charles, Louisiana. U.S. employment in the 14 wells, two drilling rigs and one completion unit, which are scheduled to continue for at least five years, will almost certainly exceed the Canadian based staff. With investment in Canadian oil research and exploration below par, CDC job creation in the United States is inconsistent with Bill C-219's mandate of developing the resources of Canada. The company has also bought a 25 per cent interest in a group evaluating prospects in the western approaches area of offshore Great Britain.
Is it any wonder that we do not get the kind of development which we need in Canada when publicly-owned corporations seem to be more concerned about developments outside Canada than they are in Canada?
That is the situation, and we continue it despite all the evidence that these kinds of policies have created personal suffering and have led to the economic decline resulting from this policy of spending restraints and of tax favours for the well-to-do.
Concern for the kind of economic policies which this government has been following has been expressed by many people, including people who are employed by the government to study the problems which we face. The vice president of the Science Council, Dr. Shepherd, in a recent speech expressed that concern when he said:
It is utterly crucial to any country aspiring to industrial health that it map out and implement a strategy designed to achieve international leadership in this new wave of technology ... In apparent defiance of its plethora of human and

February 15, 1979
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material resources, Canada has not adequately positioned itself within the new global environment and in relation to the new industrial revolution.
The kind of tinkering in which this government has involved itself will not meet the needs of the Canadian people. We believe that a central approach is essential to provide jobs for all Canadians who need and want to work, to drive down the cost of living, and to cease being, as my leader has said, industrial tenants in our own land. This party has set out definite proposals to deal with the current economic situation and set in motion a restructuring of the Canadian economy.
First, instead of spending millions of dollars each day in a futile effort to prop up the dollar, that money should be invested in gaining a greater degree of Canadian ownership in key sectors of the economy. The prime bank rate should be lowered a whole percentage point, instead of being raised seven times as it was in the last year, in order to stimulate economic growth and reduce inflationary pressures. All future CDC investment should take place in Canada unless a specific investment project can be shown to have long-range Canadian benefit.
Immediate steps must be taken to redirect the current massive Canadian investment abroad. Planning agreements, joint ventures, and specifically applied incentives could keep large sums of money in the country and keep it working for present and future economic health. Large firms must be required to show a net Canadian benefit before they are allowed to invest abroad.
People in my province of Manitoba and in all parts of Canada are feeling the disastrous results of years of the Liberal-Tory economic remedy, which is to cut government spending and cut taxes for the least needy. Their approach has brought the economy to a virtual standstill and now is keeping it there with budgets such as the one of November, 1978. The world's judgment of Liberal-Tory economics is being made daily in the exchange market, and we see the results in the 83-cent dollar. Canada deserves better. It is long overdue for us to start using the country's resources for the benefit of all Canadians by developing a first rate manufacturing base which meets the challenge of the new industrial revolution and provides jobs for Canadians who want to work.


Some hon. Members:: Hear, hear!


Paul Edmund McRae: Mr. Speaker, I am pleased to have an opportunity to speak in the debate on this budget bill, partly because of the events of the last two, three or four days. One event which bothered me considerably in the last four or five days was a poll which was produced by Gallup. It indicated that Canadians did not think the economic affairs of the country were handled as well as they could have been by the government. Therefore I should like to look at the general economy of the country and also at what is happening in the energy field because these matters are related very much to the situation we are in now.
It is interesting that many Canadians feel this way, and yet many economists feel very differently. When one looks at many of the more important economists in the country and other parts of the world, one will find that they see Canada as a country doing relatively well compared to other countries, and also as doing the correct thing at this particular point. This particular budget is based upon many of these correct things.
If we attempt to understand the position we are in at the present time, it is important to go back over the last ten or 15 years and trace some of the principal points where major changes have occurred. The years 1968-1969 to approximately
1973	was a period of almost unlimited growth for the industrial world. Growth rates of 7, 8 and 9 per cent were being registered all over the world. The feeling was that this would go on forever. Along with many other governments, this government engaged in activities which years before would not be considered acceptable.


The Acting Speaker (Mr. Turner):: Order, please. I suggest the hon. members take their conversations behind the curtains. The hon. member for Fort William (Mr. McRae) has the floor.


Steve Eugene Paproski: Right on.


Paul Edmund McRae: Thank you, Mr. Speaker. The government engaged in activities which would not have been possible before this. In other words, we instituted many social security programs and schemes of this nature because we felt unlimited growth was with us. I will deal with that matter when I talk about expenditures and revenue a little later.
An event occurred in 1973 which changed the whole picture of the economies of the industrial world. Of course that was the sudden change in oil pricing brought about by the coming together of oil-producing countries under the heading of OPEC. Within a few months there was a 400 per cent increase in the cost of oil. This single factor perhaps has had more to do with the subsequent years than any other factor in this 15 or 20-year period or since the beginning of World War II.
In the period from 1974 to 1977, immediately after the OPEC increase of 400 per cent in the cost of oil, massive amounts of dollars were drained off to the OPEC countries. Last year alone there were $50 billion from the United States, $2 billion or $3 billion from Canada, and so on. In the years
1974	to 1977 the world went into a recession which was the worst in 40 years, the worst since the big depression. A recession in any country can be considered a period when there is less than a zero growth rate or a negative growth rate. Most of the major countries of the Big Seven experienced periods of recession of at least one year. Canada was the only country among the Big Seven which did not have a single year of actual recession. In other words, it did not experience one year when the growth rate was negative in the period from 1974 to 1977.
As a matter of fact, Canada's growth rate in this crucial recession period averaged 4.1 per cent. During the same period

February 15, 1979

the U.S. growth was only 2.7 per cent, and it experienced one year of a negative growth rate. Also at that time the 24 OECD countries averaged growth rates of 2.9 per cent. With the exception of Japan, our growth rate was the best. These are factors which we must consider, and they are factors which create some problems. We did not experience the same depth of recession as other countries. Because we did not experience the same recession as the United States, we had some inflationary problems which they did not have to the same degree.
If we look to this year we can see various economic groups are predicting very moderate growth rates among all major countries, the seven summit countries. Just recently a Newsweek analyst predicted that Canada would outperform growth-wise all of the other Big Seven countries except Japan. Perhaps at some other point it would be worth while to look at the Japanese situation. We could see whether Canadians are really willing and ready to adopt the kinds of measures, policies, and social styles which are being developed by the Japanese.
There is a good deal to be said about the fine performance of our country over this period of time. There was a high growth period from 1965-1966-1967 to approximately 1973. Then there was the major crash or problem caused by the 400 per cent increase in the cost of oil on the part of OPEC countries, followed by a global recession in which Canada probably fared the best of any country. Of course during this period of time there were a couple of very serious problems. One of them was the problem of inflation. It was exacerbated considerably by the fact that we had less recession than most other countries. We had considerably higher growth rates than the United States.
As I mentioned, our growth rate averaged 4.1 per cent over this period as opposed to 2.7 per cent in the United States. This created some very definite and strong inflationary pushes. In spite of a great deal of opposition at an earlier period, this was one of the reasons why the country had to institute some kind of serious anti-inflationary program by 1975. Incidentally, the program was relatively successful. It was not so successful in that the inflation rate was not brought down a great deal-it was brought down two or three percentage points- but it was successful in the sense that the inflation rate might have been a great deal higher. With labour settlements of 22 per cent in the first half of 1975 one could expect a very much greater inflationary period in 1975 and 1976, regardless of what we did in terms of controls. I think it is relatively important to understand that.
The other factor which made it very difficult for us was unemployment, but in spite of that factor we have still experienced an increased growth rate. Perhaps that is because of the initiative this created. Here again I think we are unique as a country. In all of the non-communist world we are unique in that we have had a far larger growth in the labour force than any other country. If one looks at the summit seven, the United States, Japan, France, West Germany, Britain, Italy and Canada, one will see that for every one hundred people in
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the labour force in 1965, the average in the labour force in 1975 was 109, with the exception of Canada. There was an increase of roughly nine persons per 100 in the labour force over that ten-year period. Canada, on the other hand, had an increase of 46 people per hundred, or a 500 per cent greater increase than the average for those other countries.
Let us take a couple of those countries individually. The United States was the one closest to us with an increase of 28 people per 100 in the labour force in 1965. Countries such as West Germany had a negative increase, or a slight decrease in the labour force.
Such an increase in the labour force as we experienced, I contend, put tremendous pressure on the government to do many things that were inflationary, such as expenditures in respect of job creation and so on, creating in turn very heavy deficits.
In spite of this situation, in regard to employment we have achieved much growth in terms of the number of jobs. This last year we have had by far the largest growth in employment by population of any of the countries to which I refer, and we had an increase last year of over 400,000 new jobs in this country. That is a very remarkable increase.
In spite of that growth in the labour force we are finally getting to the point now, with the increase in the number of jobs, where the situation is beginning to turn in a slightly different direction. It now actually looks like we will have more job growth than we will have growth in the labour market. This is something I think that is just beginning to turn around. For a country that has had that kind of growth rate, larger than that of most other countries with the exception of Japan, we have done quite well. However, this has caused inflationary pressures because we have had more growth than other countries. Those countries were experiencing a recession, but this country, with that kind of growth in the number of new jobs, some 500 per cent higher than in any other country, has done relatively well. This is not a perfect performance, but it is relatively better than in other countries.
In ordinary times, times that we might call normal periods, perhaps the early 1960s or the late 1950s, one could adjust one's economy fairly rapidly. One could throw a couple of billion dollars into the demand side, raise interest rates, create more money, or reduce the money supply, and have some effect. I contend that with the problems facing the world today, with massive increases in energy costs, it is virtually impossible for a government to take simplistic Keynesian actions. Those were very popular, very good and well proven methods, although not always enacted at the right time. They were well proven methods for solving problems, but they have not been possible in this situation because they simply would not work. When the opposition, whether it be NDP or Tory, suggests it could go out and spend two or three more billion dollars and create a two or three-month higher deficit, or something of that order, with the expectation that we would see a massive growth in the economy, it is talking rubbish, given the nature of economic conditions in the world today.

February 15, 1979
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I should like to talk a little bit about government expenditures because this is an area in respect of which I think the public feels perhaps we have been inadequate in the way we have responded to some of the problems facing us. 1 think it is important to realize that in the period leading up to 1973, or early 1974, we embarked upon a whole series of social security measures, health and welfare measures and so on, which would make it easier for the public, for the poor people and for many Canadians on old age security, to solve their problems. In this way we were giving them a better deal in pensions after retirement, and so on. These were the kinds of things in which governments were engaged. These were legitimate activities, as they are now. These were legitimate measures commensurate with the growth in the economy.
If one takes a look at two curves, that is, the expenditure curve and the revenue curve, one will see that all the way through from 1965 to 1974 the curves ran along parallel. At one time there might have been a slight deficit, and then there might have been a slight surplus but basically speaking the curves were parallel. Then in 1974, and again this has to do with the OPEC situation and the general sort of decline or recession that occurred, the expenditure curve continued on up but the revenue curve went out. That is an extremely important situation, and that is where the deficit problems started.
Incidentally, it might be interesting to note that at that time Mr. Turner in his budget, at the very strong urging of a Conservative opposition, started indexing everything and also started indexing exemptions. This was a large factor in the distortion created between the slope of those curves. In other words, we were indexing old age pensions, family allowances and a whole series of things, and in the opposite direction we were also indexing the exemptions. As a result there was a loss of revenue, and greater expenditure. At this critical time with the OPEC situation, which slowed the growth rate, and a kind of double indexing in both directions, a deficit situation was created. The policies up to that particular point had been good policies, well-formed and well within the means of the country, given the growth rate that was expected. I do not think anyone predicted the kind of changes that occurred in 1973 and early 1974.
When we look at government expenditures I think it is important that we consider how the government spends its money. The largest item is known as transfers. Some 51.7 per cent of all government dollars goes out in the form of transfers, with 22 per cent to persons, 21 per cent to other governments, provincial and municipal, and 8 per cent in terms of subsidies to railways and so on, as well as various consumer subsidies. These add up to 51 per cent, over half the budget of the Government of Canada.
The next item is public debt, which relates to wars and past expenditures. It amounts to 14 per cent of government expenditures. Then we have government operations, accounting for 34 per cent. This includes 3.4 per cent for Crown corporations in the form of subsidies, etc., 8.9 per cent for national defence, and 22 per cent for the rest of the government's operations. Taking the public debt, the servicing of debt, transfers to
(Mr. McRae.)
provinces in the form of pensions, etc., along with government subsidies, we have about 65 per cent of all government expenditures going in that direction. This leaves 35 per cent that the government actually controls, and some of this is not controlled, in the sense that it includes Crown corporations.
When a government has a deficit in the order of $12 billion it has to cut back. It is very difficult unless it cuts back in this major area which takes up to 65 per cent of the expenditures. For example, in cutting back the number of beds in hospitals in cities such as Thunder Bay, the provincial government is reacting to the very large $12 billion deficit of the federal government.
I do not wish to get into this particular aspect of the issue at this point, because it is a debate in itself, but I would mention the fact that I think governments should look at their health services and various other services which they provide, including penitentiaries, and consider whether or not there are simpler and cheaper ways of providing these services. For instance, halfway houses in the area of mental health, as I understand it, cost $30 to $50 per day per patient, whereas the cost per patient in a mental hospital is $150 per day. Chronic bed hospitals, which we need more of in our community, cost about one third of what active bed hospitals cost. These are some of the things we must look at. In other words, what we need is a shift according to the needs of the people rather than many of the institutional costs which we incur.
One factor which is being grossly overlooked by the government and by Canadians in terms of how Canada is doing as an economy-and I was pleased to see the Minister of Finance (Mr. Chretien) refer to the figures in his speech yesterday-is the national debt and the fact that it has not grown in this country in terms of the gross national product. I would like to explain what I mean, because I think that it is important that Canadians understand this whole business of debt. If, for example, I owe $10,000, then in order to determine my worth and whether I can pay the debt off the person or institution loaning me the money must look at three factors. Of course there is the size of the debt, then there is the size of my assets and, thirdly, my income. It is meaningless to talk about debt unless one talks about it in these terms.
When talking about the debt of the nation, and I think that Canadians are concerned about how much debt this nation is incurring, we must talk about it in terms of these three factors-the size of the debt, the size of one's assets, and one's income. Therefore in measuring a national debt we measure in terms of net debt, as we do personal debts, that is, assets versus liabilities in terms of one's income or gross national product.
If we look at the net national debt as a fraction of the gross national product over the period of the last 20 years, we find that it fluctuates considerably. In 1952 it was in the area of 50 per cent to 51 per cent of the gross national product. In 1962, the last full year that the Conservative party was in power in this country, the gross national debt amounted to 33 per cent of the gross national product. In 1978 the gross national debt
February 15, 1979

amounted to only 18.9 per cent of the gross national product. In other words, our debt position has improved considerably since 1952. It has even improved considerably since 1962, from 33 per cent in that year to 18.9 per cent in 1978.
The fears Canadians feel for the state of the nation economically would be allayed considerably if they were made more aware of this debt ratio. Looking at the figures I have mentioned, Canadians should feel that as a nation we are doing relatively well.
Another factor which gives Canadians a great deal of concern and tends to create pessimism is the grossly undervalued Canadian dollar. This feeling tends to grow in the country as the dollar declines or stays in the area of 83 cents to 84 cents. If one is looking for a date on which events turn around-and I have referred to the period in 1973 when OPEC oil was increased by approximately 400 per cent-with regard to our devalued Canadian dollar, one must consider November 15, 1976, as the pivotal date when there was a change of government in the province of Quebec. I was in the United States just a few weeks before this event and, as I recall, we were being paid $1.02 or $1.03 for the Canadian dollar. After that date the Canadian dollar declined very rapidly. It did not fall to 85 cents, but to around 90 cents. One of the major single factors which influenced the price of the Canadian dollar on the world market, was the uncertainty as to what would happen to this country should the Levesque government prevail and should Quebec separate from the rest of Canada.
There are other factors. Some of the concerns, I believe, have been allayed considerably because of our increased productivity and our reduced unit labour costs which have been coming down at a faster rate than most of the other countries in the world. There are many factors which would actually bring the Canadian dollar back closer to 90 cents, but the single unity factor is of prime importance.
On the other hand, one of the big advantages of the lower dollar is that Canada is now able to export to other countries more competitively than it was able to, two, three or four years ago. Canada's trade has increased markedly in the last couple of years primarily due to the fact that we have an 84-cent or 85-cent dollar. Another factor which is not given the consideration I believe it should be given has to do with the Canadian entrepreneur who must sell in competition with imports. This situation has the effect, of course, of creating a 15 per cent tariff on import goods, but I do not think that we have succeeded as well as we might in competing with imports. Certainly the 85-cent dollar means that imports are that much more expensive, and Canadian entrepreneurs should be able to take advantage of that situation.
The reason why we have probably not been as successful in this area is because there is uncertainty as to how long the situation will last. Another factor may be that too many Canadian entrepreneurs are taking a larger than necessary profit instead of pushing for a larger piece of the business. This is something which should be looked into and analysed.
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We know quite a bit more about the export side of things than we do about the competition of Canadian entrepreneurs versus importers. This is one of the factors that has had a salutary effect on the region from which I come. I am speaking of Thunder Bay and northwestern Ontario. Thunder Bay has one of the lowest unemployment rates in Canada, although I am never quite sure what the rate is in Thunder Bay. We can never get a good sampling from Statistics Canada because the numbers showing are so small and so we cannot get a good picture of the situation. Northwestern Ontario has a similar situation, except for a few areas like Atikokan. These are mining communities which have different problems.
Because Thunder Bay is a major port from which grain is shipped, the area is more concerned with the export trade. Because of the forest products industry where roughly 90 per cent of the produce from areas surrounding Thunder Bay is exported to the United States, the area is in good shape at the present time. The depressed dollar has been advantageous to the area and is one of the major factors for its relative affluence.
1 was in Europe last week with a group of people. We visited with people at NATO and with representatives from the European economic community. Many of us got the impression that Canada relative to most European countries was very well off. We found out that our dollar could buy a great deal more at home than it could abroad. It leads me to believe that if our dollar buys more at home than abroad there is something wrong with the price of the dollar. Either we are not moving our goods as fast as we can, or there is something artificial which is creating some difficulties with the dollar which is not really understood. Basically, Canadians on this trip felt that we were very well off relative to other countries and that basically we are moving in the right direction as far as our economy is concerned. The government and the Minister of Finance should be given credit for this general direction in which we are going.
I would like now to turn to the economy and speak about some of the problems I foresee in the energy area. As I mentioned several times during the course of my speech, the 400 per cent increase in the price of oil since 1973 has had a tremendous effect on the Canadian economy and upon the economies of all countries in the non-communist world. It seems to me that in many ways, while we had this serious dislocation in our economy where $50 billion last year was drained off in the United States for oil and where hundreds of billions of dollars have moved from one part of the world into another part and which have not been funnelled back into the demand side, it has had a bad effect on one hand and a good effect on the other.
The OPEC nations have been telling us that we and they are running out of oil. I am looking at a publication called "Energy Futures for Canadians" which was tabled in the last week or so, which enunciates the concerns we should all feel about global and national energy problems.

February 15, 1979
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I have spoken in this House on many occasions about energy demand and supply. There is no question in my mind that between the years 1985 and 1990 Canada and the rest of the world will have serious problems with respect to oil supplies. The world will run out or have reduced this important resource within the next 20 or 25 years so that we will have to change our lifestyles considerably. Canada has some synthetic oils such as syncrude, and the heavy oils, but basically the world's oil supply, as we know it, will be reduced within the next 25 or 30 years, so we will have to depend to a much greater extent on other forms of energy.
Canada should be looking much more carefully at how we will get along without oil. We have been reminded once again by Iran, one of the OPEC countries, that this problem exists. I do not know how many reminders we must get to realize that we are going to be in trouble. With Iran supplying 10 per cent of the western nations' oil supply which is now cut off, and with yesterday's announcement by Exxon that they would divert 25 per cent of the oil from Venezuela to the United States and other markets which Imperial Oil was getting, we are reminded again of a long-term problem which is rapidly becoming short-term.
I was most upset when we had these revelations about cutbacks that the Leader of the Opposition (Mr. Clark) last night spoke about in Calgary, strongly supporting the very provincial, local views of the premier of the province of Alberta when he talked about the province of Alberta controlling almost totally the oil and energy resources of that wealthy province. The day is going to come when Alberta oil will no longer be there. We may have syncrude and so on. And the day is rapidly approaching when oil will be no longer supplied from Iran, and there will be a shortage of oil coming from Venezuela.
This is not the time for this country to become a group of balkanized provinces, with the resources of this country limited to the people in one province. I think this next election has got to be fought on the basis of whether we will be one country or nine or ten or eleven countries.


Some hon. Members:: Hear, hear!


Paul Edmund McRae: The crux of the whole matter, whether we like it or not, will be in the energy area. We have to pool all our resources as a nation. We cannot allow Alberta to control the whole thing. I worry a great deal when the Leader of the Opposition says that each province should control its own resources totally.
We have a long-term problem in this area, Mr. Speaker. All Canadians have to share the nation's wealth and its problems. This country is a cold country in the winter. Its citizens must be supplied with some form of heat for their well-being, so we must ensure that all Canadians are fairly looked after.
In conclusion I would like to say that at a time when there is no simple answer, at a time when most governments of the world face high inflation and high unemployment, problems which cannot be solved by Keynesian methods, by increasing money supply or by increasing demand, at a time when there

are massive increases in energy costs, which are prime factors in any industrial state, Canadians should look around them to see that this country has not done that badly. In spite of recession, we have had a growth rate during the last three years perhaps second only to Japan. And to compare the growth rates of Canada and the United States, these were 4.1 versus 2.7. We have done relatively well. During this period we had a 500 per cent greater increase in the labour force than any of these countries. Considering this massive problem alone, Canadians should not be disappointed in our performance. There are no simple answers like there used to be. This government has made some mistakes, as have all governments, but on balance we have done rather well.
I would like to go into the election that will be held some time in the next few months, with Canadians knowing that their economy is in relatively good hands. Their concern today should be where we are going in the future and whether we can solve some of the problems, such as the energy problem, as a total nation, or break up into ten or more countries.


Sinclair McKnight Stevens: Mr. Speaker, in joining in the debate on the bill before us tonight, Bill C-37, I will speak in relatively non-partisan terms because, the issues that 1 wish to raise are of such a serious nature that it is time that this House came to its senses. There are three matters in particular that I would like to deal with in connection with Bill C-37. Before doing so, I first want to emphasize that what my colleague from Edmonton West Mr. Lambert) said earlier today and yesterday, I reiterate.
We believe there are portions of Bill C-37 that are good, that should be commended and endorsed by the Canadian public. I refer, for example, to certain incentives that have been given to the petroleum industry in the earnest hope that that industry will once again become more and more a Canadian-owned industry. We endorse that. We endorse various other caretaking changes that have been made by the Minister of Finance (Mr. Chretien) to streamline the act and, above all, make it more equitable as far as income tax burdens are concerned.
I am not going to speak for long tonight. My first point deals with the provisions in this bill touching on the taxation of small business corporations. Frankly, we find it rather remarkable that the minister has asked us, first in his budget, then in his ways and mean motions, and now in this bill, to accept a concept where the smallest of small businesses will have to bear a higher tax load than those that are not so small. That surely is not equitable. Some of my colleagues will dwell more fully on that.
We are the First to agree that there are loopholes in the existing act. There may have been tax avoidance schemes worked out whereby those that rightfully should be paying higher taxes have been able to avoid those taxes. We on this side of the House say, identify those loopholes and plug them, but whatever you do, do not, through faulty draftsmanship or for other reasons, catch a lot of innocent small business people
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who deserve a break as far as income tax is concerned but are going to be denied that break should this bill ever see the life that the Minister of Finance suggests parliament should give it. More about that later.
The second point is that we emphasize that all members of this House should think in a serious way of the implications of what the Minister of Finance is proposing. This is perhaps the first time, certainly in Canadian history, that a minister of finance has proposed that future taxation of this country be handled by regulation. Read the provisions of this bill and you will find that the definition as to who fits in and who does not fit in as a small business is to be defined by regulation. That should be the prerogative of this parliament, not of some civil servant who decides who should be taxed and who should not. More about that later.
Probably the most alarming part of this bill is the last clause. I refer, of course, to clause 70, where the Minister of Finance is asking for power to borrow $10 billion for what he calls public works and general purposes.
I would like to dwell a little on what this government has led us into. The speaker just before me, presumably bucking for a higher role in that caucus, tried to extol the virtues of his government. He took a trip. I take it he stayed at the best hotels in Europe and came away feeling that things are not so bad after all as far as Canada is concerned.


Prosper Boulanger: It is the best in Canada.


Sinclair McKnight Stevens: I hear for the first time this year from one of the Liberals over there, speaking from his seat, who now tells us it is the best. Perhaps that member will listen to a few facts published by no less than the President of the United States in his economic report to Congress. One of the strange facts about this House is that you often find public information available in Washington concerning the performance of this government and its economy that is literally not available here in Canada.


Some hon. Members:: Hear, hear!


Sinclair McKnight Stevens: Let me point out something to my hon. friend who said he took a trip to Europe and found that things are looking pretty good. Here is what the economic report of the President, transmitted to Congress in January, 1979, has to say about Canada in relation to those European countries.
In table 33 of the report, the annual growth in gross national product per employed worker in major industrial countries is reviewed for the years 1964 to 1978. I am pleased that you are seated, Mr. Speaker, because you are going to be stunned when you hear these figures.
In Japan the real growth between 1964 and 1973 per employed worker was 8.9 per cent. Guess what it was in Canada; 2.4 per cent. In Germany in the same period it was 4.7 per cent, in France 4.5 per cent, in the United Kingdom that this government almost likes to laugh at, 3.2 per cent, and in Italy, 5.4 per cent. Every one of those European countries produced better real growth per worker than Canada.
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What about the most recent years, 1974 to 1978? In Japan the real growth was 3.2 per cent. In Canada it was .6 of 1 per cent. Is it any wonder they are a little timorous about going to the electorate because the average voter in Canada senses that his real growth, his real lot, has not gone up the way he anticipated it would. Between 1974 and 1978 the real growth in Germany was 3.3 per cent, France 3 per cent, and the United Kingdom .8 per cent, still slightly above us. Italy was above us as well with 1.1 per cent.
I put that simply as background because when we come to consider this question of borrowing we have to remember that the government's domestic borrowing and its foreign borrowing are an indication of the trouble into which it has led us.
What did the Minister of Finance have to say about these serious subjects when only yesterday he spoke on the bill before us? He took us down to Argentina. He had found in Argentina a country which, he said, was in a situation even worse than we were. He had found a land on the other side of the world, presumably he was standing upside down, where figures showed, he said, that they had done even worse than we had. Well, Mr. Speaker, I have learned to take what the Minister of Finance says with a good deal of caution especially when he speaks without notes, so I took a quick look at the statistics myself and I found, according to the United Nations Statistical Year Book, that in Argentina they have only 2.3 per cent unemployment compared with 6.9 per cent in Canada in the same year. I notice that the Minister of Finance did not deal with levels of unemployment in the two countries. What I am saying is this; he conveniently ignores the obvious figures which show the lack of progress in Canada, preferring to turn to the situation in Argentina or some other country for some small solace.
We are dealing with serious matters tonight, and rather than expressing my own view exclusively I should like to refer to the opinion expressed by a noted economist, Mr. Ralph Sultan, vice-president of the Royal Bank of Canada in Montreal. Writing in this month's Euromoney he had this to say:
Unfortunately, the services side of Canada's current account also put in a record performance in 1978-on the deficit side. The services deficit in 1978 (including interest and dividends paid to foreigners, royalty payments, travel and tourism, shopping and freight charges) went over the $8 billion mark. That left an over-all shortfall in Canada's current account of close to $5 billion.
Since 1970, the size of the merchandize surplus has fluctuated. The services deficit has just got bigger and bigger. And for good reason: Canada has been borrowing and borrowing. When provincial government utilities' financing programs slowed down some 18 months ago, the federal government merely stepped in to fill the gap with its own foreign currency borrowings. Canada's desirable and effective free float policy seems to have been forgotten.
These views are not expressed by a spokesman for my party. They are the views of the senior vice-president of the Royal Bank of Canada, Mr. Sultan, passing comment on his own country. He believes there is no need for Canada to be caught in a vicious circle as is now the case. In his words:
Canada is caught in a vicious and unnecessary circle. Capital is borrowed abroad to balance the country's international payments. The interest paid on the

February 15, 1979
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borrowed capital swells the services deficit. Canada's current account ends up deeper in the hole. And so on ...
Thus, for 1979, the Royal Bank estimates Canada's trade surplus at $3.4 billion. But the services deficit will be a whopping $9.4 billion, and Canada's required capital inflows will be well over $5 billion again.
I read that into the record because I think it is very pertinent when we realize that only last night the Minister of Finance told us of yet another foreign borrowing. Hon. members will recall that he announced what he described as further details of the plans of the Government of Canada to raise funds in the Japanese capital market. He stated:
This financing is expected to total Japanese yen 100 billion of which yen 30 billion would be realized through a public offering of five-year bonds and yen 70 billion to be realized through two syndicated loans, one of ten years and the other of 20 years to maturity. The yen proceeds received by Canada would be converted into U.S. dollars and added to Canada's official international reserves.
Let us get this into perspective. It is not long ago that the government borrowed approximately $787 million from the Germans. It was in May of last year. The reason I say it was approximately $787 million is that we actually borrowed DM 1.5 million. At that time the minister said, "Think of the low interest rate we got-it was only 5 per cent." It ranged between 4 per cent and 6 per cent, about 5 per cent on an average. The minister came back saying, "Aren't we lucky?" Do you know what it would cost us, Mr. Speaker, to repay that loan if we were called upon to do so? It would cost the Canadian public $962 million. In addition to the 5 per cent interest we would have to find another $175 million to pay off that loan. Translated into percentage terms it means that if we had to repay that money, the interest charged to Canada would be 35.7 per cent. That is the type of situation into which the government is leading us. They are plunging us increasingly into foreign currency debts without any reserve or hedge which might reflect the eventual level of our currency in relation to the currency we are borrowing.
Put it this way: if we had borrowed from Japan ten years ago the $500 million U.S. the minister announced last night, it would have meant that in 1969 we would have borrowed 166 billion yen. How much do you think it will cost us to repay that loan today, Mr. Speaker? We would need 944 billion yen. To repay that loan, without counting any interest, would represent an increase of 99 per cent over what it originally cost us. That is 99 per cent in ten years.
That is the foreign side, Mr. Speaker. As we know, the Minister of Finance last night also announced the government had begun negotiations with the syndicate of Swiss banks to raise funds in the Swiss capital market through a fixed term bank loan. We do not know the amount. We do not know the rate. The hard fact is that this government is getting desperate and doing desperate things.
Let us not forget that when we are asked to approve a $10 billion borrowing authority, as we are in clause 70 in the bill now before us, it is $10 billion in addition to the $3.8 billion the Minister of Finance told us he still has available in unused borrowing authority as of now. So what he is really requesting us to do is to okay almost $14 billion of borrowing authority.

Today in committee the minister reiterated that he anticipates the cash requirement this year will be $10.25 billion. He mentioned certain other things which I find very interesting. He said he would like to encourage corporations, municipalities and provinces to join in the foreign borrowing. He told us it would help out. In other words, the more he can involve them in whatever currency risks which follow, the more comfort he will have.
Notwithstanding the fact that the Centre for the Study of Inflation and Productivity revealed today that as a result of the minister's policy of a falling dollar we have had one third more inflation in the past two years than we otherwise would have had, the minister startled the committee by telling us that he thought a 6.5 per cent inflation rate in this country is a good record and that, if he could achieve it, he would be quite happy. This is the Minister of Finance speaking not only of the borrowing needs of the nation but also of what he regards as a good level of inflation.
Let me also mention that when the minister went to New York earlier this week he told those listening to him, and I quote; "I also recognize that a current account deficit per se is not a bad thing." How does the minister think world investors must have reacted to that statement, knowing that Canada is the only major industrial nation which has had a current account deficit for five years in succession? In addition, of course, in relation to our gross national product, our current account deficit is higher than that of any other industrialized nation in the world, and the minister has the audacity to go to New York and say that this is not a bad thing.
Having said that, let us put into perspective what we are talking about when we talk in terms of further borrowing authority of $10 billion. We are dealing with the question of debt. Boy, have they ever brainwashed the hon. member for Fort William (McRae)! It is clear that he never went into the library to read the facts. Somebody either told him or he heard somewhere that in relation to our gross national product somehow or other our debt is not high. However, if we check the facts, we find that in fiscal year 1958 debt charges in Canada were slightly under half a billion dollars and that the total budget that year was $4.8 billion. That works out to 9 per cent of the total budget in 1958 going toward debt charges. By 1968 the debt charge had risen to $1,273 billion, and the budget was then $10,284 billion. The rate then was 10 per cent, which was only slightly above the 1958 rate. Debt charges at that time amounted to 10 per cent of the budget. In the fiscal year which is just concluding 14 per cent of federal government spending goes to servicing the debt this government has already put on the books. To be specific, $6.5 billion is the anticipated amount of debt charges this year alone. Translated into average terms, that means this irresponsible government has inflicted upon the average worker in Canada a $14 per week load simply to service the debt which it has run up.
February 15, 1979

We do not have 1980 figures. All we know is that on budget night we were told that the expenditures anticipated by this government in 1980 would be $51 billion. We do not know on what the government will spend that money. We understand that the estimates will come in on Monday. Wouldn't it be fairer for parliament if the Minister of Finance allowed parliament to deal with the estimates and to see exactly what the President of the Treasury Board (Mr. Buchanan) intends to spend this money on? Would it not be fairer for the Minister of Finance at that point to tell us that he would like to borrow $10 billion? That is not what is being done. What the government is doing tonight is asking us for authority to borrow $10 billion. The government is asking us for a blank cheque and telling us that we will find out what it will spend it on later, if ever. Let there be no doubt that that is not good enough for this party.
On budget night we were told that the government not only anticipates spending $51 billion in fiscal 1980 but that it also anticipates a budgetary deficit of $12.9 billion as a result of that spending. Let us get something into perspective here. Ever since this Minister of Finance took office he has whimpered and whined about his attempts to show restraint and to reduce the deficit. That is straight misrepresentation.


Joseph Jacques Jean Chrétien: What about all the promises being made in Vancouver tonight?


Sinclair McKnight Stevens: Before the minister took office the total federal deficit was $6 billion. Then it went up to $10 billion. In April of last year we were told that the total deficit was $10.9 billion. That was the budgetary figure the minister gave us. In November we were told he had made a mistake. Oops, the minister found another $1.2 billion deficit, and by that time we found that the total deficit was $12.1 billion. Based on the first nine months' statement it looks as if the deficit of a budgetary nature will be well over $13 billion. 1 notice that the Minister of Finance cannot take the heat. Fie is now starting to leave the House. The minister anticipates a budgetary deficit of $12.9 billion next year, and he has the audacity to say that he believes in smaller deficits and restraint.


Prosper Boulanger: Even Joe Clark has had enough of you.


Sinclair McKnight Stevens: Again let us put this into perspective. My friend, the hon. member for Fort William, told us about his trip to Europe. Presumably he got to Germany. I wonder if he asked the Germans what they do about deficits. If he had, he would have found out that, by constitution, the kind of deficit this government is inflicting on the Canadian people is illegal in Germany. The government in Germany cannot borrow for non-capital purposes, but this government proposes to borrow $10 billion for non-capital purposes. Is it just coincidence that we now happen to have 9 per cent inflation and the Germans have less than 3 per cent? No way. The mounting deficits inflicted by this government on the Canadian people are the cause of our inflation.
The reason I rose to speak tonight is that when we project ahead as to where this government is taking us, we see a very
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terrifying picture. Wood Gundy, the largest investment house in Canada, in its December, 1978, forecast for the years 1978 to 1983 pointed out that based on what is already in position, without the government's changing what it has said, we will have steadily rising deficits between now and 1981. By 1981 the total deficit requirement of this government will be $13 billion. Only then does the deficit begin to drop to $10 billion and eventually to $9 billion in 1983. In short, Wood Gundy figures show that if this government is allowed to carry out its plans, it will require $55 billion of further borrowing simply to service its operations between now and 1983. That compares with $26,523 million which the government ran up in the previous five years, which was the heaviest borrowing we have ever had in Canada in any five-year period.
That is why I am alarmed, because when you translate that, as does Wood Gundy, into what is the cost of servicing that debt, you find that the $6.5 billion costs currently being incurred go up to $10 billion by 1983. That means that if the government is allowed to carry out its plans of high deficits and high spending, the Canadian public will be expected to pay in 1983, $10 billion to service the debt alone. That $10 billion is greater than the entire budget of this country at the federal level when the Prime Minister (Mr. Trudeau) took office.


An hon. Member:: Oh, oh!


Sinclair McKnight Stevens: Mr. Speaker, the parliamentary secretary opposite who speaks sometimes-I understand he was the last in the lot and ended up being Parliamentary Secretary to the Minister of Finance by default-likes to comment about various deficits. I note he does not even sit in his own seat when he makes his comments.


Prosper Boulanger: Where do you stand in relation to Joe Clark, your leader?


Sinclair McKnight Stevens: My little friend here-


Prosper Boulanger: Little?


Sinclair McKnight Stevens: -this is the second time I have heard from him this year, and in honour of the occasion I should respond to him a second time. He asked me where I stand in relation to the Leader of the Opposition (Mr. Clark). I stand behind him.


Some hon. Members:: Oh, oh!


Sinclair McKnight Stevens: Because he will be the next prime minister of this country.


Some hon. Members:: Hear, hear!


Sinclair McKnight Stevens: Not only do I stand behind the Leader of the Opposition, but the bulk of the Canadian public are going to stand behind him, and they should be consulted before this bill is passed. That is why I move:

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That the motion be amended by deleting all the words after the word "that" and substituting the following therefor:
"Bill C-37, an act to amend the statute law relating to income tax, to amend
the Canada Pension Plan and to provide other authority for the raising of
funds, be not now read a second time but that it be read a second time this day
six months hence.


Mr. Deputy Speaker:: Order, please. I did not pay attention. Who seconded the hon. member's motion?


Walter David Baker: I did, Mr. Speaker.


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


Some hon. Members:: Question.


Mr. Peter Stollery (Spadina):: Mr. Speaker, first I want to take a moment to congratulate the Minister of Finance (Mr. Chretien) who, unlike the hon. member for York-Simcoe (Mr. Stevens), has contributed something over the last couple of years in these difficult economic times. He has contributed something to the economic advance of Canada-


Some hon. Members:: Oh, oh!


Peter A. Stollery: I notice that hon. members opposite are pretty loud tonight. Perhaps they could grant me the same courtesy that I granted them, but I do not suppose the word "courtesy" is part of their vocabulary. However, I would like to have a moment to say my piece, if the hon. member for Grenville-Carleton (Mr. Baker) does not mind too much.


Walter David Baker: I do not mind at all.


Peter A. Stollery: Thank you. I noticed that when the hon. member for York-Simcoe rose to make his short 40 minute speech, he said he would act in a non-partisan manner. All of us on this side were a little taken aback at that, but we thought we would listen as he gave us his non-partisan economic speech. But as it progressed one could see that we were being treated to the usual mixture of selected facts and phantasies of the hon. member for York-Simcoe. Let me say, particularly for those people who might not have picked it up, that you must not mix something like debt charges and debts and not explain that these are two different things. But we are used to that sort of mixture to which the hon. member for York-Simcoe treated us.
He mentioned that in 1958, rather an interesting date, just after the Conservatives took over from a Liberal administration, the debt charges they inherited from the Liberal administration were very low. The hon. member very conveniently did not mention that in 1962, after four years of a Conservative administration, the Canadian debt was at its highest since World War II; it was 35.4 per cent of our gross national product. After and including the problems in the 1960s, the world-wide problems brought about by the Vietnam war, the energy increases and the various difficulties of absorbing a justifiable demand by the third world for a better standard of living, after all those things, the Liberal government of the day faced the country with a debt, as a percentage of the GNP, of

about 17 per cent, less than in 1962 after four years of administration by the party opposite.


Some hon. Members:: Hear, hear!


Peter A. Stollery: The debt at that time was about 50 per cent less. One must ask the question: is this done to scare the Canadian people? Is this done to frighten Canadians, to make them lose confidence in themselves? Is this the kind of approach taken by a person who only yesterday was touted as the future minister of finance? Is that the kind of reaction he would like to see from the Canadian people to make them lose confidence in their own country?


Prosper Boulanger: Yes, that is their game.


Peter A. Stollery: I think that is a rather interesting attitude from a man who, as I said, until yesterday was touted as future minister of finance.
1 notice that when the hon. member for Fort William (Mr. McRae) mentioned that he had been in Brussels, he made the rather innocent comment that in his brief experience visiting Europe he found that Canadians live better than most people in Europe. I will return to this a little later. The hon. member for York-Simcoe heaped scorn on anyone who would suggest that Canadians live well, in fact that Canadians live better than anyone else in the world. When the hon. member for York-Simcoe hears someone say that Canada is the greatest in the world and has the highest standard of living, he cannot take it. He must scorn, that is the hon. member's approach.


Some hon. Members:: Hear, hear!


Peter A. Stollery: Perhaps he scorns because apparently he will not be the minister of finance if his party were to win the next election, which I think will not happen. The hon. member for York-Simcoe said that he would make a non-partisan comment on the economy, and I should like to point out to Canadians that they should not be frightened by the hon. member's scare tactic. They should not lose confidence in their country, and they should listen carefully when bankers talk about the economy. They should keep in mind that bankers are not always correct, that they are not always the best friends of small businessmen, and that they have particular views of economics.
Bankers do not talk about the standard of living of the average man or the statistics which have been referred to by members on this side of the House for so long. Anyone could take a stroll down the main street of any Canadian town and hear the views of small businessmen. We know perfectly well that from 1968 to 1976 personal incomes, wages, salaries, fringe benefits, pensions and investment incomes increased by 72.6 per cent. That increase affects not only the banking community but every Canadian living in any town or city across the country.
Hon. members opposite have been using the situations in other countries to compare with Canada. They have divided
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the gross national product by the work forces of countries which have experienced a decline in their work forces. I do not understand why the Conservative party insists on ignoring the fact, for example, that in Japan 2.6 million fewer people are working at the present time than in 1970. Of course the Japanese way of life is perfectly all right for the Japanese. Since the climate of our country is cold, many Canadians go to Florida during the wintertime. Perhaps we are being somewhat irresponsible by spending too much money outside the country, but I am sure Canadians on holiday would not want to follow one of those little red flags, the zaibatsu, which is carried by the Japanese when they are on holiday. Of course most of their holidays are company ones arranged on a co-operative basis, which is perfectly all right for the Japanese.
When hon. members opposite use Japan as a model, perhaps all features of Japanese life should be used equally. For example, what about the fact that in Japan people live in rather small spaces? The Japanese government has not traditionally provided services for its citizens. I am not one of those people who think that a government should not provide services for its people. I think governments should provide for their citizens. Canada should be proud of the fact that many services have been provided for its citizens.
When we are discussing the economics of the 1970s or any other time frame, we should remember what our fathers told us. 1 was born in the middle of the depression, so I remember only as it ended. Actually the depression did not end until 1947. The type of business one could do was based on one's best three years prior to World War II. This was very difficult in the type of business my family was in. In those days we all had fathers or friends of the family to answer questions. Everything was going well in the 1950s and 1960s, and I am sure hon. members asked questions concerning the cause of the depression. My father used to say, "Look, one thing is for sure. They never knew they had it. They never even started to guess why they had it until it was ten years over. They didn't know, and they won't know when a similar thing happens again."


David Orlikow: They are happening right now.


Peter A. Stollery: A depression is not happening right now. A depression means that there is declining growth, which is not happening at the present time. As was indicated earlier, we are experiencing the most difficult decade since the 1930s, for a variety of reasons with which we, as members of parliament, are familiar.
In this type of ongoing discussion, which has taken place for years in the House of Commons, one can follow one of two routes; one can indulge in the hyperbole concerning government spending, or one can take the economic route. I repeat that the percentage of the gross national product which is debt is not as high as it was in 1962. One can indulge in hyperbole and frighten people half to death, or one can gather many books written by economists. Today I went to the library and ordered a copy of the book entitled "General Theory of Employment Interest in Money" which was written by Keynes.
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David Orlikow: The Minister of Finance (Mr. Chretien) can read it as well.


Peter A. Stollery: One can read Galbraith or any number of books dealing with economics. I suspect most hon. members have read many of these books. When one reads the various books, one comes to the conclusion that one is not very much the wiser. If one has read 20 books written by 20 different economists, one will discover that they have 20 different approaches. After reading those books, perhaps one is somewhat more informed, but also more confused than before. The important thing is that the government must provide as much as possible for its citizens. If there is a declining growth rate, it should be absorbed as fairly and justly as possible by the citizens, particulary those who cannot protect themselves.
The Conservative party has said clearly through its mortgage tax credit proposal that instead of providing for the poor people, instead of making life easier for those people who are experiencing more difficult times because of the declining growth rate, it is going to make life easier for the rich. That is what the mortgage tax credit proposal means. That party is going to make life easier for the rich. It is going to give them $5 billion. We did not hear tonight about the famous stimulative deficit, but that was to be an $18 billion operation. There was to be $5 billion for the rich. I think it is important that people in Canada understand that different approach, and particularly the Conservative approach which was clearly enunciated during the byelection build-up. It was indicated there was to be an extra $5 billion for the rich. I think that is sinking in now.


An hon. Member:: It sunk in during the byelections.


Peter A. Stollery: I do not think the people in my constituency, with an average annual income of less than $12,000 and no possibility of getting any of that rich man's $5 billion, will take too kindly to that approach. The hon. member for Don Valley (Mr. Gillies) says one should not compare one's self with people in other parts of the country. We should not use any kind of measuring stick, but just sort of wander around and pluck things out of the air. Everybody knows that things are more difficult now than they were ten years ago. The Conservative party's answer to that is exactly the same as it was in 1930: protect the rich and make sure the poor people suffer. That is the record. There is to be $5 billion in mortgage tax credits for those people with expensive mortgages, but nothing for the people with small mortgages or for those who rent.


An hon. Member:: It's too bad you weren't running in the last byelection.


Peter A. Stollery: I do not know if the people of Canada have quite cottoned on to that, but they will, particularly when we go through some of the announcements apparently being made today to reinforce this Conservative position of favouring the rich and the well-to-do, favouring those who have and against

February 15, 1979
Income Tax
those who have not. I think the people of Canada will see through that. The next election may be very interesting.


An hon. Member:: It sure will be.


Peter A. Stollery: But not in the way hon. members opposite think.
Let me bring one more point to the attention of the House before ten o'clock. I should like to relate what has happened to the value of the dollar, and suggest why it has happened. This is another chestnut being dragged out by the Conservative party. I have looked at the statistics regarding the value of the dollar over the last two and a half years. I got all the statistics for each month, and I did so because of some of the wild things we heard yesterday. No one over there wants to talk about the Parti Quebecois, the separatists, or what effect the election of that party has had on the value of our dollar. If you mention the problem we have in this country as a result of one of the provinces with a government that wants to separate, you are practically shouted down for being cynical. We are not supposed to talk about this. My goodness, are we not supposed to realize what happened to the value of the Canadian dollar following the election of that party in Quebec in 1976?
Let me give the House some statistics in relation to the value of the dollar in the past couple of years. In September, October and November of 1976 the value of the Canadian dollar in relation to the U.S. dollar was par or $1.01. No one wants to talk about that fact. Following the Quebec election, the value of our dollar in relation to the U.S. dollar in December, January and February was 98 cents, 98 cents, and 97 cents. In March it dropped to 95 cents. In April, May, and June it was 95 cents, 95 cents, and 94 cents. Nobody wants to talk about that, and nobody wants to admit that perhaps there was a relationship between what happened in November, 1976, and the drop in the value of the Canadian dollar. I suggest that nobody but a fool could fail to understand that relationship.
I do not know anyone in the currency business, but I suppose currency is similar to cheese in that you are not going to keep cheese that has gone bad. Surely you are not going to keep milk that has gone sour. I suggest these people are not going to hold on to Canadian dollars when it looks as though the country is not going to be around much longer. People are not going to do that unless they are crazy. I cannot imagine the gnomes of Zurich and New York, whoever they are, if they really exist, holding on to Canadian money in a crisis situation such as this. I cannot imagine people like that being so stupid.
This opposition has no position in this regard. It is an opposition without position. It has lost its credibility, and that is the reason hon. members do not want to talk about this relationship. They suggest that what happened in November, 1976, had nothing to do with the drop in the value of our dollar. Are they really suggesting that the gnomes of Zurich and New York are going to hold on to hundreds of millions of Canadian dollars knowing there is a possibility that the country may not exist as it is now for much longer? That is just too stupid for imagination, and it is beyond imagination that such a group of individuals could seriously think they could form

the government of this country. That is the approach they have taken. They do not want to talk about it. In June, 1977, the value of the dollar dropped to 94 cents.


An hon. Member:: Please call it ten o'clock.


Peter A. Stollery: In July the value dropped to 94 cents, and in August it dropped to 93 cents. In September it was 93 cents, and in October it dropped to 90 cents. I do not think anyone could take very seriously a group that does not want to talk about this. Let me call it ten o'clock, Mr. Speaker, and continue on Monday.



PROCEEDINGS ON ADJOURNMENT MOTION

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

Stanley Howard Knowles: Mr. Speaker, on Monday, February 12, as reported at page 3109 of Hansard, I put a question to the Minister of Veterans Affairs (Mr. MacDonald) in these words:
In view of the fact that there are three or four outstanding items, such as the 48 per cent rule as it affects widows, revising the War Veterans Allowance Act, keeping the disability pension rate in line with the composite wage in the public service and so on, with which it would be desirable to deal before this parliament ends, would the minister do his best to bring before cabinet one or more of these issues so that parliament can deal with them in the name of our veterans before this session ends?
In the few minutes one has in the late show, I can expand only briefly on those four or five items, but I would like to impress upon the Parliamentary Secretary to the Minister of Veterans Affairs (Mr. Parent), who is here tonight to respond on behalf of his minister, that the heart of this question is simply this: are we going to get some veterans legislation before this session ends?
Over the last few days I have been pushed from one minister to another. When I asked the Minister of Veterans Affairs if he would be bringing forth any legislation, his reply was that it depends upon whether there is time. When I asked the government House leader or his deputy to make time for some legislation in the field of veterans affairs, I was told that it is up to the Minister of Veterans Affairs to submit the legislation. Today when I renewed my endeavours with a question to the government House leader, he said that he would be happy to prolong the session to get some of these things done, but since one does not know when the session will end, one does not know what "prolong" means. However, if by that he meant
February 15, 1979

that there is hope that we will get some legislation respecting veterans affairs in this session, I am very grateful.
I said that I would take a moment or two to expand upon these four or five topics. I need not take the time to develop them fully because my friend and I know the case from A to Z. First, there is the 48 per cent rule. This is becoming of concern to more and more veterans, especially as they get older. It bothers them to realize that in many cases if they die first their widows will not get a pension because their disability pensions are below 48 per cent. That rule simply must be changed.
Then there is the question of an over-all review of the War Veterans Allowance Act. This review has been promised to us repeatedly for the best part of a year. In fact on December 22, 1978, just before Christmas, the minister said in regard to that matter that "it is coming along quite well, and I hope to have something to present sometime in February." We are already in the middle of February, and I hope that that commitment will be carried out.
I also mentioned on Monday the desirability of keeping the 100 per cent disability pension rate in line with the composite salary index in the public service. It was adjusted last year to bring it in line because it had fallen behind, and it is slipping again. It seems to me that we ought to put this on a legislative basis so that we are not required to bring it up to date every three or four years.
A minor item which I had in mind when I asked my question the other day, and which is causing some irritation, is the fact that when the mail is disturbed or delayed at the end of the month certain pension cheques do not arrive on time. This is particularly annoying to veterans because their disability cheques are dated at the end of the month and, therefore, they do not receive them until the end of the month. Certain other cheques, such as old age security cheques, are sent out two or three days ahead of time, but disability cheques are not sent out in advance. I am told that the reason is because disability benefits stop the day a veteran dies. When an old age pensioner dies in the middle of the month the pensions lasts for the rest of the month. If that simple change could be made it would not cost very much and then these cheques could be sent out a little early.
Another main issue of concern to veterans these days, and to the organizations that represent them, is that of domiciliary care which is something that needs to be improved because our veterans are aging.
I have listed five subjects, and the parliamentary secretary cannot deal with them all in three minutes. He does not need to because I have set out the items. What he ought to be able to do, and what will boost his stock tremendously if he will do it tonight, is to assure us that before this session ends, before this parliament is dissolved and before an election is called, there will be legislation introduced on one or more of these items. I say to him that if it is, members of all parties in this
Adjournment Debate
House will co-operate and get that legislation through in no time at all.


Mr. Gilbert Parent (Parliamentary Secretary to Minister of Veterans Affairs):: Mr. Speaker, I do thank the hon. member for Winnipeg North Centre (Mr. Knowles) again for bringing the problems to the fore with regard to the veterans and the pensions. I am sure the hon. member is well aware that the Minister of Veterans Affairs (Mr. MacDonald) is acutely aware of the problems as they exist now. I am sure the hon. member realizes the minister has tried over the years, and has been very successful in making the lot of veterans through their pensions, and through the pensions of their widows, much better than it was at any time before.
As the minister said to the hon. member in his reply on Monday, the items are under consideration. The review of the War Veterans Allowance Act is nearing completion. The minister expects to receive a report on the outcome of that study shortly. As to whether the legislation will be brought forward depends again, as the hon. member was told today, on the amount of time that we have before the end of the session. There are some other variables.
The team designed to study the legislation has confirmed that the legislation, in parts, and the administration it requires, do not fully provide for the needs of those it seeks to serve. It has been outdated by contemporary social policy. Detailed proposals are currently being developed which will meet the present and future needs of war veterans allowance recipients and their dependants.
1 need not remind the hon. member that the subject of providing pro rata pensions for widows whose husbands were in receipt of disability pensions of 47 per cent or less has been discussed very often in this House over the years. Indeed this has been brought up by the hon. member for Winnipeg North Centre in the committees that we have sat on together over the last four years. It should be remembered, and I point this out only for the record, that the widow was pensioned whose husband's death occurred during war time or whose death was attributable to his service, and regardless of the degree of disability assessment. The question arises is whether, if death was not in any way attributable to military service, a widow's pension should be paid because of the service connection.
With respect to disability pensions, they were indexed, as the member fairly brought out earlier, on January 1 to reflect changes in the consumer price index. The basic rate for an unmarried 100 per cent pensioner is now $679 a month. In the case of a married 100 per cent pensioner the figure is $849 a month. If he and his wife have two dependent children his pension is increased to over $1,000 a month.
I wish an answer could be given specifically to the question which the hon. member brings up. I can tell him that this whole subject is under review and there is great sympathy on this side of the House with the over-all concept of what we are trying to do with the widows' pensions.

February 1 5, 1979
Adjournment Debate


Stanley Howard Knowles: We are ready to agree.


OFFICIAL LANGUAGES-INQUIRY WHETHER BUDGETARY CUTS WILL AFFECT FUNDS FOR TEACHING OFFICIAL LANGUAGES
Mr. Jean-Robert Gauthier (Ottawa-Vanier):: Mr. Speaker, this brief intervention relates to the federal-provincial agreements providing for the teaching of the official languages in our Canadian educational system. I raised this question in the House on the 25th of October last because I wanted to know the possible impact of the government's budgetary cuts and especially the impact of these cuts on federal-provincial programs on bilingualism in the educational system.
In answer to my question, the minister confirmed that the government had decided upon freezing these payments amounting to $140 million and he promised that he would try convincing the provinces to establish an accountability procedure whereby the public would be made aware of the breakdown of the federal funds provided to the provinces to help them incur the extra expenses required for the teaching of the second language and the teaching of official languages to minority groups.
Incidentally, that was proposed by the B and B commission in 1969 and the Liberal government of the day had been willing to sign agreements with the provinces in order to help them take up that national challenge, namely to allow linguistic minorities whose mother tongue was one of the official languages access to education in their own mother tongue and to allow Canadians of the linguistic majority to learn the second official language in all parts of the country if they so desired.
Mr. Speaker, as present agreements end before March 31, 1979 and as it is urgent that those agreements be signed in order for us to have the assurance that the provinces will continue to ensure the education of the minority groups and the teaching of the second language to those who so wish, I feel it is timely tonight to bring up one of the problems that seem to be of concern not only to the federal government but also the provinces.
I am thinking here of the question of the accounting, the matter of giving publicly a breakdown of expenditures made by the provinces, so that not only the people of the provinces concerned might know what is going on in their own province, but also all Canadians might be fully aware of the amounts spent on those objectives, namely encouraging and compensating the provinces for the additional expenditures incurred for the teaching of the second language and the education of the minorities. As we know, schooling in Canada is compulsory for all children. So, when talking about schooling expenditures it must be understood that there is no question of the federal government interfering in a provincial jurisdiction; instead, it

is a matter for it to try to make up for whatever the provinces may not be expanding with regard to that additional burden. Schools, desks, school buses, teachers, books, those exist for all students in all provinces, and I do not feel that, because I speak French in Ontario, 1 am a greater burden to the province than is the other guy who speaks English. So, in all fairness, both would be entitled to the same education, and that is what we are striving for. The agreements seem to be bogged down, Mr. Speaker, on the question of giving a public breakdown of the accounting. The provinces say: It is our jurisdiction, education is our responsibility, therefore the federal government has no right to interfere. We in the federal government do not want to interfere in education which is so essential, so well known in the Canadian context and where the provinces have full authority.
Some provinces or perhaps all of them refuse however to account for those expenditures. The problem is as follows: we, who live in a minority situation, do not have the assurance that those provinces spend the federal funds for the objectives which we think are pursued by the federal government. I think hon. members are aware that for several years we have been asking for access to the books, for public accountability. They refuse saying it is a provincial area of jurisdiction, and we just have to foot the bill, and then they will see how to spend the money.
The problem is that federal funds are transferred to an account called the general accounts of the province, then they are redistributed according to a formula which does not take the federal formula into account because payments are made according to a well established formula, while they are redistributed according to another formula which is sometimes not so well known.
Therefore I consider them as essential because we are just coming out of a period where we received the Pepin-Robarts report, which recommends that Canadians leave to the provinces the obligation to educate minorities in their own area of jurisdiction. Well, Mr. Speaker, I am not one of those who can make an act of faith in that philosophy or that proposal which would give the provinces complete freedom to act without having well established standards or criteria from the federal government to ensure something which, I think, is essential to the life of my country. In other words, wherever one lives in Canada, one would have access to education in his or her own mother tongue. You really treat minorities like simpletons when you try to make them believe everything has now change and that in less than ten years the provinces have earned the right to be trusted after ignoring the problem for years and years.
Mr. Speaker, I would simply like to conclude by saying that these agreements could be multilateral, or national with national criteria, or maybe we should consider bilateral agree-
February 15, 1979

ments if, as press reports and the minister of education claim, they do not trust the current formulas, let us find new ones, and if we cannot do it generally for all provinces, maybe we should consider entering into bilateral agreements with the provinces that are willing to do so.
Mr. Speaker, this is an urgent matter and we must have the assurance tonight that these programs will continue to be implemented and that the breakdown of accounts will be done openly and publicly so all Canadians can see for themselves and be assured that funds are well spent.


Gilbert Parent: Mr. Speaker, I thank you, and I thank my colleague from Ottawa-Vanier for his question. I want to assure him sincerely and immediately that we will continue this second language education program in this province. It is not only a question of continuing, Mr. Speaker, but far from rocking the boat with this program, the federal government believes that bilingualism in education in Canada is a matter of great importance.
Even in the next five years, Mr. Speaker, the federal government will spend a minimum of $852 million to teach the second minority language in Canadian schools. And the federal government has already devoted more than $1 billion to provide second language courses in the provinces since we first negotiated and accepted in 1970 to do so in every province. [English]
The present agreement signed with the provinces in March, 1974, made general reference to the importance of full accounting-
-as my colleague mentioned, the accounting-

-by provincial governments for the federal funds received. Progress in this regard has varied from province to province. It has been different throughout Canada, but a very considerable amount of information on provincial utilization of these funds has been made available by some provinces. In others progress has been less satisfactory from the federal point of view. Most notably, the province of Quebec has not accounted for the federal formula payment beyond providing information on the numbers of students and the provincial costs of education per pupil, the variables which are utilized in the calculation of the federal payments.
The federal government, therefore, is seeking to obtain a more specific "accounting" under future agreements through new arrangements which will ensure that its funds are being effectively used to develop and implement new initiatives or to help defray the demonstrated additional maintenance costs in each province relating to the provision of education in the minority official language and second official language instruction.
Adjournment Debate
Indeed, the minister stated only yesterday in the House that the dispute or the point of contention between the provinces and the federal government is not basically over amounts of money. The real question will be whether there will be true accountability, not to the federal government-

-not to the federal government but to Canadians to make sure that funds granted to the provinces will be used to teach the second language or the minority language in this country.


ENERGY-STEPS TO ENSURE ADEQUATE SUPPLY OF OIL TO EAST COAST REFINERIES
Mr. Howard Crosby (Halifax-East Hants):: Mr. Speaker, on February 13 I asked the Minister of Energy, Mines and Resources (Mr. Gillespie) a rather simple and straightforward question, and I naively expected an equally straightforward answer. The pith and substance of my question was the situation with respect to oil supplies to east coast refineries in the light of rumours that these supplies would be cut back.
This question did not come out of the blue. Earlier I had introduced a motion under Standing Order 43 regarding whether cutbacks were likely. The minister had made several statements in the House in response to questions from hon. members on his side, and he had indicated on those occasions, and then again in response to my questions, that he had had negotiations with Mexican authorities with regard to Mexican oil. He also spoke of arrangements with Venezuela. However, he did not deal with the question of cutbacks in supplies of foreign crude oil, which crude oil is necessary for the operations of east coast refineries.
One might have thought as a result of the minister's responses that there indeed was at that point in time no effective cutback of supplies and no need for real concern on the part of residents on the east coast of Canada. However, almost 24 hours later we learned through the media and other sources that there were indeed cutbacks of oil supplies and that this was a very serious problem for east coast refineries. So, I stand here this evening to explain to the House the urgent and pressing nature of the energy problem on the east coast, and particularly in the province of Nova Scotia.
Nova Scotia has the highest energy costs in Canada as a result of the world situation respecting the price of oil. Our government in Nova Scotia failed to take action in the early 1970s when it became evident that the price of oil worldwide would escalate. This in turn goes back to a decision taken years before that Canadian oil would not be available beyond the Ottawa Valley line and, that those on the east coast would have to rely on the availability of foreign crude oil for their domestic needs, and to operate the refineries which were constructed at about that time on the east coast.
The government knew, or must have known, in 1970 that there would be a problem-but nothing was done-just as today the minister must know that there is going to continue to be an energy problem on the east coast arising from the

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Adjournment Debate
reduction in the world supply of oil and the difficulties in the Middle East. I wanted to know what the minister has done about it. What he has told the House before and since is that certain arrangements had been made, and he mentioned an oil swap. He said that Canadian oil will be delivered to the central United States in return for their share of foreign crude oil available from the Middle East and other sources. But that oil swap has nothing to do with the minister. He did not take those steps.
Those arrangements were made among the international oil companies without any help or intervention from the minister, I suspect. The fact of the matter is that beyond those long range negotiations and the ordinary course of government activities, he has taken no steps to assure available and adequate supplies of oil for east coast refineries.
I wonder if the minister realizes and recognizes the serious effect of his inaction on the east coast. He has told us that he will get oil from Mexico. We read in the newspapers that the President of the U.S. is in the same place bidding for the same oil stocks. I have to ask: does this mean that we will engage in a Dutch auction with the United States for these dwindling oil stocks? If oil is available, what price are we going to pay for it? Will it be the worldwide price presently established by the OPEC nations, or will it be a premium price? I suspect that we will be paying a great deal more for our oil than we now are, and this in light of the fact, as I said, that in Nova Scotia we are paying one of the highest prices for energy in Canada.
My problem, and I am sure that of all Nova Scotians, is this: Several years ago we were told we would be paying $1 a gallon for gasoline, and many people would not believe it. Today, as a result of the inaction of the minister, we can look forward to paying $2 for a gallon of gasoline unless some immediate action is taken. What immediate action can be taken? The answer is obvious. We must look for alternative sources of energy. We have tremendous coal reserves in Nova Scotia which, if the minister would act now forcefully and quickly, could be developed so that they would be available, because the supply of Middle East oil is dwindling and will be dried up and gone. This is not a stable source, so we should not have to rely on it.
Like most Nova Scotians I am directly affected by this matter which is of prime and grave importance to us. I asked a question the other day in the House concerning the same matter. I wanted to know what action had been taken. I put the question to the Deputy Prime Minister (Mr. MacEachen), who is a great Nova Scotian, and who should know our problem. He preferred to fiddle with problems of parliamentary procedure while the oil refineries on the east coast burned for lack of oil.


Mr. Pierre Bussieres (Parliamentary Secretary to Minister of Energy, Mines and Resources and Minister of State for Science and Technology):: Mr. Speaker, I would like at the
outset to say to the hon. member that the Minister of Energy, Mines and Resources and Minister of State for Science and Technology (Mr. Gillespie) is very concerned, as is the government, not only since today but since the 1970's about the particular problem caused in eastern Canada by the oil crisis and he is also, if not more, sympathetic to the people of Nova Scotia than the people in all eastern Canada.
Very briefly, Mr. Speaker, I would like to recall certain facts about international crude oil supplies. We know that from October to December last there were sporadic interruptions in crude oil imports from Iran. We also know that since December 26 those imports of Iranian crude have come to a complete standstill. You must remember that Iranian crude oil in the world totalled 5 million barrels a day, or about 10 per cent of supplies in non-communist countries.
To make up for that shortage the other countries agreed to increase their production and crude exports. The present effects, on one hand, of the stoppage of Iranian exports and, on the other of higher exports by other oil-producing countries are basically this: the total amount of available crude in the world dropped by two to three million barrels a day, which is about a 4 to 6 per cent cutback in supply, not yet the critical point set by the international organization of oil-importing countries.
As concerns the situation in eastern Canada, I believe it is wrong to say that the minister and the government have done nothing. Mr. Speaker, if we go back to the events that I mentioned earlier, the crisis of the 70s, we can see all the phases we have gone through, all the steps that the government has taken to correct the situation. In my opinion the most outstanding aspect is that Canada's domestic price is different from the international price. This is because of the existence of a mechanism which allows adjustment of the prices. And we know this adjustment works.
Normally, we used to import 500,000 barrels of oil a day from Iran. We generally import 500,000 barrels a day. Of these 500,000 barrels, 100,000 or 20 per cent came from Iran. Following the reductions, our importers had some success in convincing other international crude suppliers to increase their supplies to offset this deficit.
It is quite obvious, Mr. Speaker, that there are unavoidable delays in exact accounting of the dates of delivery by internationals to Canadian importers. It is also quite obvious-and I believe that this is quite fundamental-that some delays are unavoidable if we are to provide accurate figures on the imports expected by refiners, which information must be communicated to the government.
However, we have seen that the Minister of Energy, Mines and Resources (Mr. Gillespie) did not spare any effort, to arrange for negotiations and to organize the exchange program which the hon. member mentioned, and that we can already feel the effectiveness of these measures.


Mr. Deputy Speaker:: The motion to adjourn the House is now deemed to have been adopted. Accordingly, this House stands adjourned until 2 p.m. tomorrow.
Motion agreed to and the House adjourned at 10.33 p.m.

Friday, February 16, 1979