1980-11-17

ROUTINE PROCEEDINGS


Mr. Geoff Scott (Hamilton-Wentworth):: Madam Speaker, I rise under the provisions of Standing Order 43 on a matter of importance to all buyers of 1981 automobiles. In view of reports that the "big three" car manufacturers are refusing to comply with the anti-corrosion code beyond the 1980 model year, I move, seconded by the hon. member for St. John's East (Mr. McGrath):
That the Minister of Consumer and Corporate Affairs report to this House as soon as possible on the implications the withdrawal could have on Canada's domestic car industry and on the Canadian consumer as a result of this serious erosion of the anti-rust code.


Madam Speaker:: For presentation, this motion requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


AIRPORTS
Mr. John McDermid (Brampton-Georgetown):: Madam Speaker, under the provisions of Standing Order 43 I rise on a matter of urgent and pressing necessity, especially for residents of Brampton, Etobicoke and Mississauga. Whereas additional construction activity at Toronto International Airport, such as new hangar buildings and additional taxiways, has citizens of the area concerned; whereas there appears to be a lack of communication between Toronto International Airport and the citizens it directly affects; and whereas there does not exist a long-range plan for Toronto International Airport, I therefore move, seconded by the hon. member for Simcoe South (Mr. Stewart):
That this House urge Transport Canada to produce within the next three months a long range plan covering the next decade for Toronto International
Airport so that the public and municipal councils may know what the future holds, and that once this plan is announced, provisions for public study and participation in discussion are readily available and widely announced.


Madam Speaker:: For presentation, this motion requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


NORTHERN AFFAIRS
Mr. Peter Ittinuar (Nunatsiaq):: Madam Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. In view of the fact that on Friday last the Minister of Energy, Mines and Resources (Mr. Lalonde) said that "the basic price for oil across this country is the same, but obviously there are additional costs related to transportation", and in view of the fact that northern consumers are, in actual fact, paying considerably more for oil once these transportation costs are included, and furthermore are unable to benefit from any incentives to convert to use of natural gas, I move, seconded by the hon. member for Comox-PowellRiver (Mr. Skelly):
That the Minister of Energy, Mines and Resources, consistent with the principle of equalizing oil prices across the country, move immediately to implement a program of cushioning the cost of transporting oil to northern regions of Canada.


Madam Speaker:: For presentation, this motion requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


NATIONAL UNITY
Mr. Jim Hawkes (Calgary West):: Madam Speaker, I rise under the provisions of Standing Order 43. In view of the fact that the present Liberal government has decided that Calgarians need to be educated about Canada, and in view of the fact that they are spending thousands of dollars on a 20-page newspaper supplement to advertise the fact that this is to be

November 17, 1980
Canada Information Week in Calgary, 1 move, seconded by the hon. member for Calgary Centre (Mr. Andre):
That this House adjourn for the week and all members of cabinet and the Liberal caucus travel to Calgary to meet with the people in their communities and coffee shops, so that in return they can learn how to be Canadians, how to work together with the people and provincial governments, and to develop constitutions and budgets that reflect the Canadian way of governing.


Madam Speaker:: For presentation this motion requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


VISIT OF MINISTER OF AGRICULTURE TO OLDS, ALTA.-MOTION UNDER S O. 43
Mr. Gordon Towers (Red Deer):: Madam Speaker, I rise under Standing Order 43 to draw to the attention of this House a matter regarding the recent visit of the Minister of Agriculture (Mr. Whelan) to Alberta.
In view of the fact that the Prime Minister (Mr. Trudeau) cannot afford to ignore western alienation any longer and that, rather than sending "Lean Mean Gene", as the minister refers to himself, to Olds to talk tough, Albertans would rather hear a more conciliatory tone from the federal government, and further, since it was reported that "Lean Gene" looked ridiculous going to the board of trade meeting in Olds to speak dressed in cowboy boots, a western shirt and string tie, and wearing a green cowboy hat, I move, seconded by the hon. member for Cambridge (Mr. Speyer):
That if the federal government really believes in meaningful dialogue, next time it send the organ grinder to Olds, not the monkey.


PROGRESSIVE CONSERVATIVE PARTY
Mr. Mark Rose (Mission-Port Moody):: Madam Speaker, I would like to move a motion under Standing Order 43. In view of reports in the press concerning the B.C. Tory convention over the weekend to the effect that the member for Richmond-South Delta (Mr. Siddon), referred to his fellow MP, the hon. member for North Vancouver-Burnaby (Mr. Cook), as having "very little forethought coming to the meeting and insulting people", and since this member was also described by another Tory as "consistently stupid", 1 move, seconded by the hon. member for Comox-Powell River (Mr. Skelly):
That this House congratulate the hon. member for Richmond-South Delta for his perception in recognizing these fundamental characteristics, which apply not only to Tory members from British Columbia but are shared in a number of instances by his colleagues from all parts of Canada.


Madam Speaker:: I am not sure that this motion is pressing and urgent.


INDUSTRY
Mr. Bill Domm (Peterborough):: Madam Speaker, the success of Canadian General Electric in Peterborough is dependent on our national energy package. An executive of the Canadian General Electric plant in Peterborough told me recently that the company's market is based on the expansion of industry and that the more developments in capital investment projects there are, the better it is from the company's point of view. This Liberal government's budget and the energy program is completely counterproductive to this aim in Ontario and thus threatens all of Ontario's industries.
I move, seconded by the hon. member for Durham-North-umberland (Mr. Lawrence):
That under pressing and urgent matters the government act immediately to reattract expansion and development industry to Canada for the good of Ontario and recognize that the government's complete lack of initiative in the area is costing us jobs and economic expansion in Ontario.


Madam Speaker:: For presentation, this motion requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


CANADA DEPOSIT INSURANCE CORPORATION ACT
Mr. Joe Reid (St. Catharines):: Madam Speaker, I too rise under the provisions of Standing Order 43 to move a motion of urgent and pressing necessity. 1 urge hon. members on the government side to listen carefully and hope they will adopt the motion.
With the increasing number of trust and finance companies being licensed by this government to do business in Canada, with the consumer price index now at 10.9 per cent, above that of the previous year, and with inflation continuing to rise to double digits, the $20,000 figure fixed over ten years ago as the limit for deposit insurance under the Canada Deposit Insurance Corporation Act is now worth only 47 cents in today's dollars. I move, seconded by the hon. member for Erie (Mr. Fretz):
That the Minister of Finance take immediate action to increase the amount of deposit insurance coverage required under the Canada Deposit Insurance Corporation Act from $20,000 to at least $50,000 so that depositors and purchasers of alleged guaranteed investment certificates do not have to take their lawyers with them when they walk into trust companies.


Madam Speaker:: For presentation, this motion requires the unanimous consent of the House. Is there unanimous consent?
November 17, 1980


Some hon. Members:: Agreed.


Some hon. Members:: No.


PRICE OF GASOLINE-MOTION UNDER S O. 43
Mr. Dan McKenzie (Winnipeg-Assiniboine):: Madam
Speaker, I rise under the provisions of Standing Order 43. In his Christmas householder the hon. member for Scarborough West (Mr. Weatherhead) appears to have inadvertently misinformed his constituents when he said that gas prices will have gone up by only 13.3 cents a gallon by the end of this year. Given the fact that the cheap gas promised by the Liberal government has not materialized because gas prices at the pump have gone up as much as 40 cents a gallon since last December, I move, seconded by the hon. member for Peterborough (Mr. Domm):
That this House instruct the hon. member for Scarborough West to correct the obvious error in his Christmas greeting so that no further misunderstandings arise.


Madam Speaker:: For presentation, this motion requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


THE ECONOMY'
Mr. Doug Lewis (Simcoe North):: Madam Speaker, I rise on a matter of urgent and pressing necessity under the provisions of Standing Order 43. Whereas Ministry of Finance officials have admitted that the inflation forecast for 1980 of 9.7 per cent used in the budget was too low, and whereas the Minister of State for Finance (Mr. Bussieres) is on record as stating that the government will take the measures necessary to stay within the forecast inflation rate increase, I move, seconded by the hon. member for Prince George-Bulkley Valley (Mr. McCuish):
That this government immediately table its plans to fight inflation for the balance of 1980, in keeping with its commitment.


Madam Speaker:: For presentation, this motion requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.
Oral Questions POST OFFICE


REPORTED APPOINTMENT OF POSTMASTER IN BOW RIVER CONSTITUENCY-MOTION UNDER S O. 43
Mr. Sid Parker (Kootenay East-Revelstoke):: Madam Speaker, I rise under the provisions of Standing Order 43 on a matter of urgent and pressing necessity. In light of the recent disclosure in the media that an unqualified resident of the Bow River constituency was recently hired as a postmaster in that region on the recommendation of her Conservative member of Parliament, a political friend and ally, I move, seconded by the hon. member for Prince Albert (Mr. Hovdebo):
That this House demand that the Postmaster General explain why the hon. member for Bow River is now in a position to appoint the relatives of campaign workers as postmasters, and especially that he be asked to comment on reports that these special considerations are being provided to the hon. member for Bow River in order that he might follow in the footsteps of his former colleague, the Hon. Jack Horner.


Madam Speaker:: The presentation of this motion requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.



ORAL QUESTION PERIOD


Hon. James A. McGrath (St. John's East):: Madam Speaker, in the absence of the Minister of Energy, Mines and Resources and the minister responsible for the constitution, the Minister of Justice, may 1 direct my question to the Deputy Prime Minister. The Prime Minister, in his letter to the Leader of the New Democratic Party on October 20, indicated that the government was prepared "to give the provinces the right to levy indirect taxation on non-renewable resources".
My question to the Deputy Prime Minister is whether it is now the position of the Government of Canada that it is prepared to extend this offer to include renewable resources, specifically hydroelectric power, and, if so, has this been officially communicated to the provinces?


Hon. Allan J. MacEachen (Deputy Prime Minister and Minister of Finance):: Madam Speaker, I am not aware of what has been communicated to the provinces on this subject. I understand that the Minister of Justice did make a statement to that effect before the joint committee. The hon. member will know more about the proceedings than I because I am not a member of that committee.

November 17, 1980
Oral Questions


James Aloysius McGrath: Madam Speaker, I merely wanted to clear up the matter to remove doubt and so that I could ask the Deputy Prime Minister if his colleague, the Minister of National Revenue, was announcing government policy when he said at a press conference last Friday, together with the leader of the Liberal party in Newfoundland, that this right to levy indirect taxation on renewable resources would "enable Newfoundland to recover the money it is losing to Quebec from the Upper Churchill." Is that the position of the government? Does the government hold the position-and I repeat-that this right to levy indirect taxation now gives the province of Newfoundland the right to regain the shortfall in its power sales to Quebec?


Allan Joseph MacEachen: I believe the Minister of National Revenue was merely reiterating what had been stated by the Minister of Justice in the committee, and 1 am not prepared to draw further legal implications about recovery of any shortfall, and so on, at this point.


James Aloysius McGrath: 1 merely want to know if it is now the policy of the Government of Canada that the right to establish indirect taxation on renewable resources gives the provinces the right to levy such a tax on hydroelectric power; and was his colleague, the Minister of National Revenue, speaking for the government when he stated quite clearly to the people of Newfoundland that this would give Newfoundland the opportunity to regain some $600 million in revenue which it is losing annually to the province of Quebec by virtue of being tied into a long-term contract?


Allan Joseph MacEachen: Madam Speaker, may I repeat for the third time now that the Minister of Justice stated the position of the government on this point-


James Aloysius McGrath: I am talking about the Minister of National Revenue.


Allan Joseph MacEachen: -before the joint committee, and that is the position of the government. It is that position which the Minister of National Revenue repeated on the weekend. I do not intend to go beyond that point until I read the words of the Minister of Justice and not have them provided for me through any other source.


INQUIRY RESPECTING INDIRECT TAXATION OF HYDROELECTRICITY SALES
Mr. David Kilgour (Edmonton-Strathcona):: Madam Speaker, my question is directed to the Minister of Finance in view of the absence of the Minister of Justice. 1 shall wait while he speaks to his assistant. I shall try again, Madam Speaker. His colleague, the Minister of National Revenue, indicated clearly over the weekend that his government will give the provinces the right to levy indirect taxes on hydroelectricity. The minister remained silent while the leader of the Liberal opposition in Newfoundland said that his province could increase its
revenues by $600 million each year. Can he-Madam Speaker, the Minister of Justice is now in the House. If I may be allowed, I could perhaps direct my question to him; it pertains to the topic his colleague dealt with.
Over the weekend, the Minister of National Revenue made it clear in Newfoundland that his government will give the provinces the right to levy indirect taxes on their resources, on hydroelectricity. The minister remained silent while his colleague, the Liberal leader in Newfoundland, said that his government could thus increase its revenue by $600 million each year. Can the hon. member confirm the remarks of his colleague and, if so, can he also confirm the amount and the fact that Quebeckers will have to bear the financial burden mentioned?


Hon. Jean Chretien (Minister of Justice and Minister of State for Social Development):: Madam Speaker, I have stated several times that we intend to include in the constitutional reform a provision allowing indirect taxation of natural resources. That is the proposal that was put forward at the constitutional conference last summer. Everyone is aware of that. What it would represent in government revenue, 1 am in no position to assess. It would depend on how provincial governments would use the new power the federal government would hand over to them.


David Kilgour: Madam Speaker, I have before me a copy of the statement he made on November 7 when he explained his position. Can he tell us, Madam Speaker, whether his colleague read the proceedings of the Quebec and Newfoundland contract before speaking as he did?


Joseph Jacques Jean Chrétien: Madam Speaker, I do not know exactly what was said by my colleague or by the Liberal leader in Newfoundland. I say that the position is quite clear. We suggested to the provinces last summer that they might levy an indirect tax on natural resources, which they were not allowed to do. Of course, if a province acquires taxing power, it is up to it to determine the amount of taxation it wants to levy. I have no comment nor speculation to make on the possible revenues any province might derive from the decentralization of powers which the federal government is ready to grant to the provinces.


MONOPOLIES
Mr. Ray Skelly (Comox-Powell River):: Madam Speaker, my question is directed to the Minister of Consumer and Corporate Affairs. It relates to the parallel investigation his
November 17, 1980

department is conducting into the simultaneous closing of The Ottawa Journal and the Winnipeg Tribune. Is the minister prepared to tell us whether his department has in fact completed that investigation and what his intentions are? Will he be referring information from that investigation to the Minister of Justice for possible action?


Hon. Andre Ouellet (Minister of Consumer and Corporate Affairs and Postmaster General):: Madam Speaker, the director of investigations is completing his investigation. As soon as it is completed, he will report to me and I will then make a decision on the basis of his recommendations. For the time being, it is too soon and 1 do not want to prejudice his findings.
[ English ]


Raymond John Skelly: Madam Speaker, 1 suspected the conclusions might have already been available, but in any event I have a supplementary question. Does the minister have any intention at all of acting on the fact that the Ottawa paper has now given notice that it intends to increase its advertising rates by some 25 per cent, and the Winnipeg paper, with the absolute lack of competition, has now indicated that it will be increasing its advertising rates to the tune of roughly 35 per cent? Now that this particular monopoly exists and the department seems to be fairly slow in completing this investigation, will the minister be taking any action related to these very dramatic hikes with an absolute lack of competition?
[ Translation]


André Ouellet: 1 will be pleased to convey immediately to the director of investigations the hon. member's representations.


Raymond John Skelly: Madam Speaker, 1 have a final question. Our long-term concern is that we are dealing with a whole variety of problems. Is the minister prepared to tell us when he will be bringing forward some legislation to prevent these kinds of things, rather than attempting to do very unsuccessful autopsies on them after the event?


An hon. Member:: Start a paper.


Raymond John Skelly: When in fact can we expect some legislation on controlling this lack of competition?
[ Translation]


André Ouellet: Madam Speaker, obviously the legislation on competition in Canada will have to be amended to be much more effective, and I share the views of the hon. member in that respect. To be more specific, I hope to introduce a bill to do just that early next year.
Oral Questions


NATURAL GAS EXPORT TAX-GOVERNMENT POLICY
Mr. Harvie Andre (Calgary Centre):: Madam Speaker, my question is for the Minister of Finance. The government's decision of last Friday not to raise the export price of natural gas on February 1, 1981, means that the export tax which will come into effect that day will not be paid by U.S. consumers but by Canadian producers and consumers. In answer to a question from the hon. member for Vancouver Centre on October 29, reported at page 4208 of Hansard, the minister said:
Are hon. members suggesting that we should levy a tax on Canadian consumers and not levy it on American consumers? Is that their policy?
My question to the minister is, very simply, is that his policy?


Allan Joseph MacEachen: No, Madam Speaker.


Harvie Andre: On the same day, October 29, in justifying his natural gas export tax and domestic tax, the minister said:
We thought no one could take exception to a tax levied on all consumers which affects all consumers, whether in Canada or the United States.
Given that these taxes will be paid only by Canadian consumers and not by American consumers, will the minister now cancel these taxes since his rationale or reasoning, at least as he gave it to the House on October 29, no longer applies?


Allan Joseph MacEachen: Madam Speaker, I disagree with the hon. member's interpretation of the rationale and reason. The tax is still in existence. What the hon. member has failed to note, obviously, is that the price of natural gas to the United States has not been increased at the present time at the request of the western provinces and the producing companies. There will be a further announcement made before mid-December but in the meantime there has been no withdrawal of the tax.


Harvie Andre: Madam Speaker, the rationale I quoted was the minister's rationale. He said the reason he had gone for this export tax plus domestic tax was that he would tax U.S. consumers as well as Canadian consumers. Given this decision to delay this price increase on February 1, which means that Canadian producers and consumers are the only ones paying this tax, will he at least delay the date of implementation until the rationale which he established comes into effect?


Allan Joseph MacEachen: Madam Speaker, the hon. member still does not understand the situation. The tax is still in effect. The producing provinces and the producing companies asked us to defer this particular price increase, and in the meantime they will bear the tax. We agreed to their representations but the tax will continue to prevail as we announced it. We announced this postponement as a result of the representations that were made by the producing provinces. We were attempting to be accommodating in this matter, and 1 am surprised that the

November 17, 1980
Oral Questions
hon. member does not accept it in that spirit rather than trying to score some temporary debating points in a situation that is bound to require accommodation on both sides from time to time.


NATIONAL RESOURCES
Hon. John C. C'rosbie (St. John's West):: Madam Speaker, my question is for the Minister of Justice. On Friday the Minister of National Revenue flew to Newfoundland especially to hold a press conference on constitutional matters with the new leader of the Newfoundland Liberal party. He said the proposed amendment to the constitutional resolution will provide to the provinces the right to levy indirect taxation on hydro resources. He said that this will enable Newfoundland to recover the money it is losing to Quebec from the Upper Churchill. He pointed out that the amendment was proposed some weeks ago by the national New Democratic Party and that the federal government has publicly announced its intention to accept the amendment.
My question for the Minister of Justice is: did the Minister of National Revenue properly inform the people of Newfoundland? Is it the official policy of the Government of Canada to permit indirect taxation of hydro resources so that Newfoundland can tax the Upper Churchill contract, thereby gaining something in the order of $600 million a year from Quebec consumers of hydroelectricity purchased from Newfoundland and Labrador? Is that the position of the Canadian government?


Joseph Jacques Jean Chrétien: Madam Speaker, we said during the summer that, if this policy were accepted by the provinces and inscribed in the constitution, natural resources could be taxed indirectly by provincial governments. This right does not exist for the provinces at this time, but may come into existence if we proceed with the constitutional amendments.
In terms of the usage of that power by the provinces, it will be up to them to decide how it will be used. The financial consequences of this devolution of power by the federal government to the provinces will also be in the hands of the provinces. I have no further comment to make.


Mr. Crosbie:: Madam Speaker, the minister may have no further comment to make, but we have further questions because he and his colleague are attempting to fool the people of Newfoundland. The leader of the Liberal party of Newfoundland, who was present with the Minister of National Revenue, said that the proposal would amount to $600 million a year for Newfoundland and went on to say:
That's the exciting part of it. If we get this amendment, we can announce to Quebec, "It was a good deal but it's a good deal no longer. How do you want to renegotiate"?
Does the Government of Canada intend to give to the government of Newfoundland the power to force Quebec to renegotiate the Upper Churchil contract with Hydro-Quebec, which would mean an increased cost to hydroelectric consumers in Quebec of $600 million a year now and untold billions in the future? Is that the position of the Government of Canada as stated by the Minister of National Revenue and the leader of the Liberal party of Newfoundland in a deceptive manner last Friday in St. John's?


Joseph Jacques Jean Chrétien: Madam Speaker, I just stated very clearly the position of the government, that we are willing to give the provinces the power to tax indirectly their resources.


John Carnell Crosbie: You're weaseling.


Joseph Jacques Jean Chrétien: Of course, once the federal government gives this power to the provinces, it is theirs to use. What the situation will be in a particular province is hypothetical.


John Carnell Crosbie: Not as far as your colleague is concerned.


Joseph Jacques Jean Chrétien: I am not a member of the administration of any provincial government. 1 am glad to see that there are people who recognize that this amendment, which I offered to the provinces this summer and for which the NDP is asking at this moment, will be good for the provinces. However, 1 am waiting to see what the Tory party will do when this amendment is put forward in committee.


IMMIGRATION
Mark Willson Rose: Madam Speaker, my question is directed to the Minister of Employment and Immigration. It concerns the problems at Stratford. Since a threatened actors' boycott of the Stratford festival next summer is probable unless a qualified Canadian artistic director is named, and since the hiring of a foreigner, in addition to being a slap in the face to creative Canadians, could mean the loss of as many as 1,000 jobs in that region, can the minister assure the House that he will turn down any work permit application for a foreign director attempting to enter Canada to assume this position, since there are a number of qualified Canadians available to fill this job with distinction?


Hon. Lloyd Axworthy (Minister of Employment and Immigration):: Madam Speaker, in a case like this it is a requirement that in determining a fair decision and making a fair choice we attempt to deal with the case on its merits. In this case officials of my office met with the board of directors of Stratford last week to determine what steps the board had taken to secure the services of a Canadian for the position of
November 17, 1980

artistic director. The board indicated that it had spent almost a full year interviewing a number of applicants, that it had offered the job to a number of Canadians, all of whom turned it down, and that it had finally made the choice of Mr. Dexter, a British citizen, on the ground that he would be the best qualified person to do the job. At that meeting we also asked the board for a specific schedule as to how it conducted the search and to what degree it sought out all possible avenues, and we are still assessing that information.
We will certainly follow the basic policy of the department, which is to ensure that Canadians who are qualified for a particular position have first chance at the job. But we will simply not turn down an application based on some form of public pressure. We will review the decision of the board to determine whether it was fair and impartial and whether it carried out its job according to the law.


CANADA COUNCIL
Mark Willson Rose: Madam Speaker, would the minister table the information which he received from the artistic directors? I thank the minister for his answer.
I would like to direct my supplementary question to the Secretary of State. I believe there is a last ditch attempt taking place through conciliation at a meeting this afternoon between the opposing parties. In view of his expressed concern for increasing opportunities for talented Canadian artists, does the minister intend to consult with the Canada Council about future grants concerning this matter in Stratford if a foreigner is in fact employed while qualified Canadians are available? If a Canadian is in fact appointed after these last ditch meetings, would the minister encourage Canada Council to increase its grants since inflation has eaten away at the grants which it received over the last three years?


Hon. Francis Fox (Secretary of State and Minister of Communications):: Madam Speaker, like my colleague the Minister of Employment and Immigration, 1 am most interested in seeing that this type of position is filled by a qualified Canadian if at all possible. As to my intervention with the Canada Council, I will ask my officials to get in touch with the people involved to seek their advice on the matter. However, 1 would be most reluctant to intervene politically and say that the grants should be increased or decreased depending on the name or quality of the artistic director chosen for any group in this country.
Oral Questions


AUTOMOTIVE INDUSTRY
Geoffrey Douglas Scott: Madam Speaker, my question is for the Minister of Consumer and Corporate Affairs. It has to do with General Motors, Ford and Chrysler pulling out of the anti-corrosion code as established by the minister's department and the provinces in 1978. Given the fact that these voluntary, anti-rust guidelines seem to have worked pretty well up to the end of the 1980 model year, will the government take the lead and come up with a national standard for all auto manufacturers and for the protection of the consumer?
[ Translation]


André Ouellet: Madam Speaker, obviously I will have to confer with my provincial counterparts following this decision by the automakers. The fact is, that after discussions, we may come to an amicable arrangement with the automakers. The program to which the hon. member referred is indeed voluntary and is only useful as long as the manufacturers are willing to implement it. They seem to have changed their minds, which means that consumers will have a choice to make and if they are unwilling to pay for this anti-corrosion guarantee, they will probably have to buy other makes than those offered by these automakers who will no longer follow this code.


Geoffrey Douglas Scott: Madam Speaker, given the answer to me in this House on November 14, 1978, by the then minister of consumer and corporate affairs, the hon. member for Notre-Dame-de-Grace, who said, "We feel that if the voluntary code is a success, we will not have to legislate", and given the fact that the code is now obviously in jeopardy, will the government now make the anti-rust guidelines mandatory?


André Ouellet: Madam Speaker, 1 must repeat, in reply to the hon. member's supplementary question, that I will have to confer with my provincial counterparts, because, as the hon. member probably knows, this is an area of mixed jurisdiction and it is necessary to secure the provincial legislatures's cooperation to adopt legislation making this code compulsory. 1 suggest to the hon. member that it might have been possible to act more promptly, had the previous task force not been abolished during the federal-provincial conference of consumer affairs ministers which was held last year in Newfoundland.

November 17, 1980
Oral Questions


NATIONAL REVENUE
Mr. John Gamble (York North):: Madam Speaker, my question is directed to the Minister of Finance. In light of the change in government which we anticipate in the United States as the result of the recent election there and some of the specific promises by the president-elect to reduce taxation, despite the fact that the minister's budget was recently passed by this House, is it his intention to reduce taxes in Canada in order to correspond with intended tax reductions in the United States, so as to offset the magnet-like effect of attracting business in North America to those jurisdictions with the lowest tax rates?


Allan Joseph MacEachen: No, Madam Speaker, that would not be the intention. As I pointed out in the budget speech, there is presently imbedded in the Canadian tax system, through indexation, the kind of decreases in taxation which occur as a result of indexation and which occur in the United States because of such announcements. These tax decreases take place automatically in Canada.


John Albert Gamble: Madam Speaker, what I am talking about, of course, are the intended dramatic tax reductions which are to occur in the United States and I recognize that it would be somewhat anticipatory for this government to introduce plans in this regard today. However, in light of the fact that taxes in the United States are to be reduced by 30 per cent over the next three years, would it not at least be wise for the government to give some indication to Canadian businesses and individuals in Canada that it will seriously examine the possibility of tax reductions in Canada to correspond with those in the United States when they do in fact take effect?


Allan Joseph MacEachen: All 1 would say on that point, Madam Speaker, is that the Canadian tax system compares favourably with that of the United States or any other tax system from the point of view of attracting investment and from the point of view of the burden on the taxpayer. Furthermore, one would want to wait and see what Congress does with presidential suggestions before following suit.


THE BUDGET
Mr. Don Blenkarn (Mississauga South):: Madam Speaker, my question is also for the Minister of Finance. The minister knows that this House and the people of Canada are disappointed with his medium-term projections which have the exchange rate totally out of whack and the inflation rate totally out of whack. It is clear that his projections have been
wrong. With regard to the deficit, the minister knows that interest rates have increased 1 per cent since the budget. Is he still of the assurance that his deficit next year will be no more than $13.75 billion and his deficit this year no more than $14.15 billion?


Allan Joseph MacEachen: Madam Speaker, maybe I should reiterate what I said since it is becoming more and more apparent that people are placing a great deal of reliance on my projections, even projections that are made for 1982 and 1983. We all ought to recognize, and I certainly do, that these projections are only that, and they are very risky. My hon. friends opposite ought to have learned that because they learned how wrong some of the projections they made in December were early in 1980. I do not fault the former government for that. It is a fact that has to be understood with respect to any projections that are made.
If hon. members are now asking me to confirm with absolute certainty what will happen based on projections, that is something I will not do. These are assumptions based upon the best possible reading of developments. When these developments change or do not occur, obviously the assumptions and the projections change. The sooner we understand that, the better debate we will have on economic questions in the country.


Donald Alex Blenkarn: I am pleased the minister has now indicated to the House that those projections were made using the rosiest coloured glasses. It is obvious at this point that those projections were wrong in every sense. Will the minister table in this House a proper set of projections which reflect an 84-cent dollar and 11 per cent inflation rates, so that business people across this country can see where they are going? Surely projections should be available for 1981. Let us not worry about 1982, 1983, 1984. However, with regard to 1981, where are we going with this budget?


Allan Joseph MacEachen: Madam Speaker, this gives me an opportunity to tell the hon. member that through this budget we are laying the foundations for a good recovery of the economy and solid economic growth in the future. That is where we are going.


Some hon. Members:: Hear, hear!
*	*	4=



ENVIRONMENTAL AFFAIRS


Mr. Gilbert Parent (Welland):: Madam Speaker, my question is for the Secretary of State for External Affairs and has to do with pollutants going into the Niagara River. In view of the fact there is a new administration in the United States, and in view of the fact that SCA Chemical Company has been dumping waste into the Niagara River for some time now, can
November 17, 1980

the minister bring us up to date as to what our government is doing with regard to dealing with this problem through the United States government?


Hon. Mark MacGuigan (Secretary of State for External Affairs):: Madam Speaker, this is a matter in which my colleague the Minister of the Environment is also interested because his department conducted a study on the effect of chemical pollution and found that chemical pollution of the Great Lakes would not be worsened by the operation of the SCA chemical waste plant there. With regard to the Niagara Falls, New York, sewage treatment plant, there has been a great deal of concern expressed by the Government of Canada. My colleague spoke on it several times. We sent a note on that subject to the United States in April and we are considering a further note at this time.



NATIONAL DEFENCE


Mr. Bob Ogle (Saskatoon East):: Madam Speaker, my question was for the Minister of National Defence but in his absence I will direct it to the Deputy Prime Minister. F-18 airplanes continue to malfunction and crash. Friday's Ottawa Citizen carried a story to the effect that U.S. defence secretary Harold Brown is mounting a campaign in the U.S. Senate to save the F-18 and has written to John Stennis, the chairman of the defence subcommittee in this matter, indicating, and I quote:
The costs of stopping and restarting production efforts by the prime contractor, McDonnell Douglas, and all subcontractors would be prohibitive and tantamount to program cancellation.
Will the Deputy Prime Minister inform the House what the Government of Canada is planning to do in relation to that last event, what costs would be incurred, and what are the present contingency plans?


Allan Joseph MacEachen: Madam Speaker, I will take that question as notice and try to provide the information to the hon. member later.


Robert Joseph Ogle: My supplementary is also for the Deputy Prime Minister. On the weekend the Deputy Prime Minister and the Secretary of State for External Affairs were in attendance at the North-South round table meeting here in Ottawa and gave some excellent input to that meeting. At that meeting, delegates from around the world indicated very clearly that one of the great problems of underdevelopment is the gap they see now between armament and underdevelopment. Will the Deputy Prime Minister inform the Minister of National Defence that we should buy at least one F-18 before they all crash, so that it can be placed in our national air museum to indicate the end of an era?


Some hon. Members:: Hear, hear!
Oral Questions


Allan Joseph MacEachen: Madam Speaker, I believe the hon. member's question was mainly rhetorical. However, I do not believe I ought to let him escape with the notion that equipping the Canadian Armed Forces so that Canada can participate in the common defence effort as a member of the NATO organization is a dishonourable objective or that it in any way interferes with Canada's determination to co-operate with others in bringing about disarmament throughout the world.



EXTERNAL AID


Mr. Bob Wenman (Fraser Valley West):: Madam Speaker, my question is for the Secretary of State for External Affairs. In view of the large surplus of petro dollars available to certain developing states, combined with Canada's status as an industrialized nation possessing technology that is badly needed in the Third World, has the minister considered giving priority to tripartite aid arrangements, whereby Canada would provide technological aid in conjunction with, for example, Arab financing of future development projects, and will the Prime Minister be discussing this subject during his current trip to the Middle East?


Mark R. MacGuigan: Madam Speaker, the issue of the recycling of oil revenues is a matter which concerns the government a great deal. We are certainly exploring co-operation, not only among developed countries but with developing countries such as Saudi Arabia, in dealing with this problem. This is certainly a general area which the Prime Minister is canvassing in his talks with the Saudi government. However, neither our goals nor his talks specifically focus on so-called tripartite arrangements. That is one possibility, but it is only one of a range of possibilities.


Robert Lloyd Wenman: A supplementary question, Madam Speaker. Recognizing, of course, that the difficulties being encountered in the Middle East as a result of the Iran-lraq crisis, and the nature of the multilateral aid from that region, makes tripartite aid even more imperative at the moment, will the minister consider initiating discussions between officials of CIDA and officials of the proposed Alternate Energy Corporation, Ener-tech Canada, to determine the potential applicability of renewable energy, particularly solar energy? I will give a specific example, such as the solar energy pumps used for pumping water in Somalia. Will the minister consider working with his colleague toward the transfer of technology to Third World countries like Somalia, particularly in relation to solar energy?


Mark R. MacGuigan: Madam Speaker, I will certainly be prepared to give that proposal very serious consideration. 1 might remind the hon. member and the House that in the recent budget it was made clear that Petro-Canada would be launch-

November 17, 1980
Oral Questions
ing a major international initiative with respect to assisting developing countries in discovering their own resources.



NATURAL GAS RESERVES-REPORTED STATEMENT OF NRC DIRECTOR

William Henry (Bill) Domm: Madam Speaker, my question is for the Deputy Prime Minister and Minister of Finance. It arises from the current massive program of conversion from oil to gas and the funding of municipalities so that this gas may be made available to them should they not have it available. A report in The Globe and Mail last week attributes to a director of the National Research Council the statement that Canada has only about a 20-year supply of natural gas. Is the minister aware of this statement and, if he is, does he feel it likely that we may have to enter into a massive program of reconversion from gas to some alternate energy source in the future when $650 million has already been earmarked for conversion from oil to natural gas? Is the minister aware that a director of the National Research Council is reported as stating that we only have a 20-year supply of natural gas available to Canadians?


Allan Joseph MacEachen: Madam Speaker, I am not aware of the comment attributed to the director of the National Research Council. As the hon. member knows, we are presently engaging in a program to encourage Canadians to switch from oil to a cheaper product, natural gas. That is based on the assumption that supplies of natural gas will be available not only at the present time but in increasing quantities from new discoveries, not only offshore but in the Arctic.


William Henry (Bill) Domm: Madam Speaker, a supplementary question on the same point. So that we do not find ourselves faced with the same problem as Great Britain where there was a massive conversion, almost 100 per cent, to natural gas and then, because of supply and cost, they had to reconvert-this year there was a 60 per cent increase in the price of natural gas in Great Britain-would the minister try to find out who is right? Are we already in a situation where we thought we had endless supplies of oil and now we find we do not? Are we in the same position in regard to natural gas were the National Research Council disagrees with the National Energy Board and the minister has been misled and misinformed, directing Canada into a program that will require massive reconversion from natural gas to some alternate energy source 20 years ahead, for which this government has no program?


Allan Joseph MacEachen: Madam Speaker, I can only repeat what I said to the hon. member. I believe his fears in this respect are groundless and that it is a prudent course of action at the present time for the Government of Canada to encourage Canadians to switch from dependence upon imported oil to dependence upon a Canadian source of energy. That seems to
me to make a great deal of sense both at the present time and for quite a distance into the future.



STATEMENT RESPECTING EMBARGO ON SALES TO U.S.S.R.

Mr. Stan J. Hovdebo (Prince Albert):: Madam Speaker, my question is directed to the Secretary of State for External Affairs and concerns a statement made by a fellow cabinet minister, the Minister of State for the Canadian Wheat Board on Friday in Regina, when he told Saskatchewan wheat pool delegates that Canada has removed any fixed ceiling placed on export grain sales by the Canadian Wheat Board to the U.S.S.R. This statement means that Canada has dropped its policy of embargo on grain to the Soviets. Can the minister confirm that this policy change has taken place and that the minister of state speaks with his knowledge and the approval of the entire cabinet?


Mark R. MacGuigan: Madam Speaker, no change has taken place in the government's policy that only normal sales will be made to the Soviet Union. What is occurring is an attempt to define what level normal sales should be interpreted to mean for the coming year.


Some hon. Members:: Oh, oh!


Mark R. MacGuigan: Hon. members opposite may laugh but there is a range. Surely they are not going to suggest that the western farmer should get the short end of the stick.


Stanley J. Hovdebo: A supplementary question, Madam Speaker, for the same minister. Obviously the minister in charge of the Wheat Board was making a genuine attempt to respect the opinion of western farmers. Similar statements were made by the Minister of Agriculture, so obviously these two ministers were speaking out of turn. Under the circumstances, what is the Canadian Wheat Board to do? Does the government's agreement with the United States allow the Canadian Wheat Board to negotiate with the Russians to replace the contract that is presently running out? May the Canadian Wheat Board sell grain to the U.S.S.R. or not?


Mark R. MacGuigan: Madam Speaker, of course the Wheat Board may sell grain to the U.S.S.R.. There has never been a complete embargo, only a partial embargo. The way in which it has been phrased is in terms of normal levels of trade in those products. That is still the rule. We are now into a new crop season and we have to try to establish what that means for this year. The Wheat Board is receiving instructions from the government and I believe it will be entering into negotiations with the Soviet government.
November 17, 1980



EMPLOYMENT


Mr. Maurice Foster (Algoma):: Madam Speaker, I have a question for the Minister of Employment and Immigration. In view of the high seasonal unemployment in many areas of Canada and the oversubscription of the community development program this winter, will the minister give consideration to increasing the funding for the community development program this winter?


Lloyd Axworthy: Madam Speaker, as we pointed out in the House last week, the Minister of Finance, in his generosity, was able to include additional funds in the budget to provide further work incentives and training opportunities for Canadians. The Minister of Industry, Trade and Commerce and I hope that we will be able to make some announcements concerning the wide range of programs within a very few weeks.



FISHERIES


Mr. Lloyd R. Crouse (South Shore):: Madam Speaker, I wish to direct my question to the Minister of Fisheries and Oceans. In view of the fact that the minister has received a telex from the Nova Scotia Fish Packers Association charging that the reallocation of 10,000 tons of codfish is in violation of the basic principle of the groundfish management plan, what changes, if any, does the minister contemplate to meet these objections?


Hon. Romeo LeBlanc (Minister of Fisheries and Oceans):: Madam Speaker, 1 would assume that if the fishermen represented by the hon. member were involved in an industrial dispute, then once that was settled, at the end of the season the quota which had not been caught should be primarily reserved for the fishermen of the area or the plants where they have traditionally delivered.
In the case of Newfoundland, there was a lengthy strike this summer. A part of the quota which is normally reserved for the inshore fishery was not caught. Plants were short of supply and I authorized that that fish could be made available to the plants which had been very seriously affected by the industrial dispute. That is the simple explanation.


Lloyd Roseville Crouse: Madam Speaker, since objections have been raised to the minister's plan of allowing additional foreign participation in the catching of this codfish, 1 would like to ask the minister why he did not reallocate any surplus quotas for 1980-81 to Canadian trawlers rather than foreigners; and will Canadians be allowed in 1981 to catch any part of the 10,000 ton quota not landed by the end of this year?
Privilege-Mr. Siddon


Roméo LeBlanc: Madam Speaker, the 10,000 quota is from the Canadian allocation. It was not caught by Canadian inshore fishermen because of the strike, as I said earlier. The trade association and the fishermen's union agreed that the way to allocate it was to the Newfoundland plants which were short of supply. They tried to get Canadian boats to catch some of this fish. In fact, because of the continuing strike at National Sea, the union did not agree to this procedure. Some foreign boats were brought in. Not enough of them could be found. The next question, which nobody ever asked, is whether the plants could afford the fish at the price that Canadian boats would have landed it?



PRIVILEGE


Mr. Thomas Siddon (Richmond-South Delta):: Madam Speaker, I rise on a question of privilege. I will try to be brief.
I would like to raise a question of privilege arising out of a comment made by the hon. member for Mission-Port Moody (Mr. Rose) earlier during the question period. I was not able to comprehend what the hon. member for Mission-Port Moody was trying to say when he proposed his motion under Standing Order 43 earlier today, but I do believe 1 heard him allege that this hon. member is consistently stupid, or that I might have used such a reference in relation to a Conservative colleague of mine from British Columbia.
The hon. member knows that neither of these allegations is true. In fact he knows full well that the only stupidity which is consistent in this House is the consistent inconsistence of the little red rump of the Liberal party which he represents. That was illustrated this past weekend by the open split among his own NDP cohorts in Nova Scotia where the former leader of the NDP apparently resigned in protest because he found the NDP to be full of Trotskyites.
The hon. member for Mission-Port Moody, who has been in this House for many years, should want to maintain normal parliamentary decorum by apologizing for his attempt to insult indirectly and unfairly one of my colleagues from British Columbia who is not here today to defend himself.


Mark Willson Rose: Madam Speaker, on the same question of privilege, I regret to report that the hon. member for Richmond-South Delta (Mr. Siddon), who is reported to be a professor of acoustics, apparently cannot listen any better than he thinks.
1 would like to repeat what 1 said. I said that he was quoted in the press concerning his colleague as saying he used "very little forethought coming to the meeting and insulting people", and since the member was also described by another Tory in British Columbia as "consistently stupid", I moved the motion congratulating the hon. member.
There certainly was no insult intended. It was actually a congratulatory message. Since the hon. member is talking

November 17, 1980
Order Paper Questions
about consistency, I would like to leave him with a quote from Emerson. One day, when Emerson was not doing anything else, he said that "Foolish consistency is the hobgoblin of little minds."


Some hon. Members:: Hear, hear!


Madam Speaker:: This exchange only proves to me that perhaps I should have asked the hon. member, since he started off by saying he was not sure whether the hon. member had said certain things, to consult the "blues" before he raises questions of privilege. However, the exchange was in good spirit, and there is obviously no question of privilege.



ROUTINE PROCEEDINGS

[Stage Direction]
[ Translation]

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. D. M. Collenette (Parliamentary Secretary to President of the Privy Council):: Madam Speaker, the following questions will be answered today: Nos. 650, 1,023, 1,194, 1,289, 1,513, and 1,575.
Madam Speaker, I would ask that the remaining questions be allowed to stand.


Mr. Howie: From January 1, 1977, to date, were studies done for the Department of the Solicitor General by outside consultants regarding child neglect or abuse?


Hon. Bob Kaplan (Solicitor General):: Between the period from January 1, 1977, to date, the Department of the Solicitor General and Health and Welfare Canada jointly contracted with the Tree Foundation of Canada for a research project to produce an inventory of research and demonstration projector dealing with child abuse and neglect in Canada. Copies of the report are available from Health and Welfare Canada.


Mr. Friesen: 1.	What are the job classification titles under which an individual would be employed in the Canadian Film Development Corporation?
2.	How many individuals were employed by the CFDC in (a) 1979 (b) 1980 to date and by job classification, how many received incomes per annum (i) of more than $60,000 (ii) between $50,000 and $60,000 (iii) between $40,000 and $50,000 (iv) between $30,000 and $40,000 (v) between $20,000 and $30,000 (vi) between $10,000 and $20,000 (vii) less than $10,000?
3.	How many individuals were employed by the CFDC on a contract basis in (a) 1979 (b) 1980 to date and what was the total amount paid for such services?
4.	What was the total amount of gross revenues the CFDC received from sources outside the government?


Mr. Peter Stollery (Parliamentary Secretary to Secretary of State and Minister of Communications):: I am informed by the Canadian Film Development Corporation as follows:
1.	Executive Director
Assistant Director (Montreal)
Assistant Director (Toronto)
Assistant Director-Planning and Policies Director-Distribution Administrative Director Assistant-Distribution (Montreal)
Assistant-Distribution (Toronto)
Assistant-Legal Counsel (Montreal)
Assistant-Legal Counsel (Toronto)
Co-ordinator-English Language Projects(Toronto) Co-ordinator-French Language Projects)Montreal) Film Consultant Accountant
Financial Analyst/Co-Production Manager
Secretaries
Receptionists.
2.	(a) 22
(i)	nil
(ii)	1 Executive Director
(iii)	0
(iv)	2 Administrative Director/Director, Distribution
(v)	3 2 Film Projects Co-ordinators/1 Financial Analyst-Co-production Manager
(vi)	16 Administrative Support Employees
(vii)	nil
(b) 18
(i)	nil
(ii)	1 Executive Director
(iii)	0
(iv)	1 Administrative Director
(v)	2 2 Film Projects Coordinators
(vi)	14 Administrative Support Employees
(viii)	nil.
3.	(a) Four
Amount paid: $74,000
(b) Four
Amount paid: $54,000.
4.	$1,258,176 in our fiscal year ending March 31, 1980.
November 17, 1980


Mr. Roy: 1.	Did the government take part in financing the building of the Cite de la sante in the city of Laval and, if so, under what program was this done?
2.	At the official opening presided over by the Premier of Quebec, did the federal Minister of Health and Welfare make a speech and, if not, for what reason?
3.	Did the Department of National Health and Welfare have a say in establishing the programs offered by the centre and, if not, for what reason?


Hon. Monique Begin (Minister of National Health and Welfare):: 1. Yes, under the Health Resources Fund Program. Committed-$ 15,956,495.50 Paid to date-$14,101,526.74.
2.	The Minister of National Health and Welfare participated at the official opening of the Cite de la sante (Laval).
3.	Yes. This is one of the projects submitted by the province within the approved provincial five-year program under the terms of the health resources fund program.


Mr. Corbett: Did the CBC pay for legal work, including appeals, in connection with the libel suit filed against the program "The Fifth Estate" by the former New Brunswick minister of justice, John B. M. Baxter and, if so, in what amount and to whom?


Peter A. Stollery: 1 am informed by the Canadian Broadcasting Corporation as follows: The CBC paid the legal costs in connection with the suit specified to Thomas B. Drummie, QC of Clark, Drummie & Co., Saint John, New Brunswick. With regard to the amount involved, it has not been customary for Parliament to require the CBC to provide such details of its internal management and administration as its business arrangements with outside individuals and companies. The background to this custom is explained in detail in the reply to question No. 2,530, May 22, 1975.


Mr. Herbert: What are the manufacturers names of the computers used by the armed forces at St. Hubert, Quebec and Ottawa, Ontario and is communication maintained from one to the other?


Mrs. Ursula Appolloni (Parliamentary Secretary to Minister of National Defence):: Manufacturers names of computers used at St. Hubert are as follows:
Digital Equipment Corporation
Sperry Univac
International Business Machines
Data General
Bank Act
Manufacturers names of computers used at Ottawa are as follows:
Digital Equipment Corporation Sperry Univac
International Business Machines
Data General
Hewlett Packard
Bunker Ramo
Perkin Elmer
Data Acquisition
Micro Computer Machine
GESCAN (General Electric)



ECLIPSE


[Stage Direction]
Honeywell
Computer communication is maintained at these two locations using Data General equipment as part of the SAMSON strategic communication network.

Mr. Howie: 1.	What is the status of the new training facility planned for CFB Gagetown?
2.	Has the project received Treasury Board approval and, if so, on what date is it planned to call for tenders?


Ursula Appolloni: I. It is expected that the design consultant will be appointed by April, 1981; the first construction package made ready for tender by the spring of 1983; and construction to be completed by the spring of 1986.
2. Yes. Spring of 1983.


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


Some hon. Members:: Agreed.

November 17, 1980
Bank Act



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Friday, November 14, consideration of Bill C-6, to revise the Bank Act, to amend the Quebec Savings Banks Act and the Bank of Canada act, to establish the Canadian Payments Association and to amend other acts in consequence thereof, as reported (with amendments) from the Standing Committee on Finance, Trade and Economic Affairs.
Hon. Pierre Bussieres (Minister of State (Finance)) moved:: Motion No. 27
That Bill C-6, an act to revise the Bank Act, to amend the Quebec Savings Banks Act and the Bank of Canada Act, to establish the Canadian Payments Association and to amend other acts in consequence thereof, be amended in clause 2
(a)	by striking out lines 46 to 48 at page 209 and substituting the following therefor:
"motor vehicle having a gross vehicle"
(b)	by striking out line 2 at page 211 and substituting the following therefor: "are situated;
"motor vehicle" means a motorized vehicle designed to be used primarily on a public highway for the transportation of persons or things but does not include
(<?) any fire engine, bus. ambulance or utility truck, or
(6) any other special purpose motorized vehicle that contains significant special features that make it suitable for a specific purpose and that is manufactured by a person other than the vehicle manufacturer who manufactured the basic chassis;"


Madam Speaker:: Is it the pleasure of the House to adopt the said motion?


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.
[ English]
Hon. Stanley Knowles (for Mr. Rae) moved:: Motion No. 28
That Bill C-6, an act to revise the Bank Act. to amend the Quebec Savings Banks Act and the Bank of Canada Act, to establish the Canadian Payments Association and to amend other acts in consequence thereof, be amended in clause 2 by striking out lines 14 to 17 at page 221 and substituting the following therefor:
"tomer and the".


Raymond John Skelly: Madam Speaker, it is my understanding that we are dealing now with motions Nos. 24 and 26.


Madam Speaker:: We are dealing with motion No. 28.


Raymond John Skelly: Madam Speaker, as a point of information, before beginning my discussion may I ask what the disposition of motions Nos. 24 and 26 was?


Madam Speaker:: Motions Nos. 24 and 26 could be grouped for debate. At any rate, they have not been dealt with yet. Exactly what will be done with motions Nos. 24 and 26 has not been announced in the House.


Donald Alex Blenkarn: Madam Speaker, on Thursday there was a House order which said that motions Nos. 24 and 26 would be grouped for debate and that an affirmative vote on motion No. 24 would necessitate a question being put on motion No. 26. Indeed, all of the amendments right through to motion No. 58 were dealt with by House order.


Madam Speaker:: 1 think 1 can now enlighten the hon. member. There was an order of the House concerning these motions. Motions Nos. 24 and 26 could be grouped for debate, and a negative vote on motion No. 24 will dispose of motion No. 26. An affirmative vote on motion No. 24 will necessitate a question being put on motion No. 26. However, before dealing with that we must deal today with motion No. 28.


Donald Alex Blenkarn: Thank you, Madam Speaker. I agree that we should proceed with motion No. 28 right through to motion No. 58 in accordance with the House order of November 13, and follow through with motions Nos. 24, 26, 29, 31, 32, 33, 34, 35 and so forth as that House order directed.


Madam Speaker:: That is correct.
Is it the pleasure of the House to adopt motion No. 28?


Some hon. Members:: Agreed.


Some hon. Members:: No.


Madam Speaker:: All those in favour of the motion will please say yea.


Some hon. Members:: Yea!


Madam Speaker:: All those opposed will please say nay.


Some hon. Members:: Nay!


Madam Speaker:: In my opinion the nays have it.


Stanley Howard Knowles: On division.


Madam Speaker:: 1 declare the motion negatived on divison.
Motion No. 28 (Mr. Rae) negatived.


Madam Speaker:: We are now on motion No. 30.


Stanley Howard Knowles: Motion No. 30
That Bill C-6. an act to revise the Bank Act, to amend the Quebec Savings Banks Act and the Bank of Canada, to establish the Canadian Payments
November 17, 1980

Association and to amend other acts in consequence thereof, be amended in clause 2 by striking out lines 32 to 36 at page 221.


Madam Speaker:: Those in favour of the said motion will please say yea.


Some hon. Members:: Yea!


Madam Speaker:: Those opposed to the said motion will please say nay.


Some hon. Members:: Nay!


Madam Speaker:: In my opinion, the nays have it.


Stanley Howard Knowles: On division.


Madam Speaker:: 1 declare the motion negatived on division.
Motion No. 30 (Mr. Rae) negatived.


Madam Speaker:: We are now on Motion No. 38.


Stanley Howard Knowles: Motion No. 38
That Bill C-6, an act to revise the Bank Act, to amend the Quebec Savings Banks Act and the Bank of Canada Act, to establish the Canadian Payments Association and to amend other acts in consequence thereof, be amended in clause 2 by adding immediately after line 43 at page 223 the following new subsection:
"(4.2) A borrower who tenders or pays to the lender all or any amount of the principal amount outstanding under a loan transaction is not liable to pay any penalty on the amount tendered or paid."


Madam Speaker:: Is it the pleasure of the House to adopt the said motion?


Stanley Howard Knowles: Madam Speaker, I rise on a point of order. When these motions are called, I wonder if the Chair would not mind giving the number of the motion each time before it is read so that we know what we are dealing with.


Madam Speaker:: The Chair will do that with pleasure. For your information, the one which I have just read is motion No. 38.


Raymond John Skelly: It was my understanding that we would deal with motion No. 25 of the hon. member for Edmonton West (Mr. Lambert) and that this would be consequential on motions Nos. 24 and 26 which would be dealt with next. Unfortunately we were caught a little unaware by what I perceived as a sudden shift in the order of business.


The Acting Speaker (Mr. Ethier):: Order, please. The Chair regrets that the hon. member is perhaps misinformed, but motion No. 25 was dealt with alone and was not grouped with motions Nos. 24 and 26.


Raymond John Skelly: I understand, Mr. Speaker, and I think it was unfortunate that we did not deal with motions Nos. 24 and 26 since they appear to be within the same realm. Nevertheless we find ourselves today in a situation where we propose the following addition:
A borrower who tenders or pays to the lender all or any amount of the principal amount outstanding under a loan transaction is not liable to pay any penalty on the amount tendered or paid.
Bank Act
We have had considerable discussion on this proposal. As a matter of fact, it forms one of the very important issues which we feel should be incorporated in the legislation. There was a great deal of discussion about this material appearing in the regulations. It was our feeling that the regulations are too flexible, that in fact there are situations where penalties can be applied and that this can change from time to time. The basic principle here is that anyone who owes money, and who is prepared to pay back the loans, should be encouraged by the banks which are financially sound and should not be required to pay a penalty if he is willing to pay back the full amount of that loan. 1 think it is fair to say that for my party it is very important that this item be enshrined in the legislation rather than in the regulations which can be adapted and shifted. If this were done, we would look differently at this particular piece of legislation. We are very concerned about this motion in particular.
As I stated before, the bill in front of us is not in what I would consider to be a satisfactory form. We are attempting to discuss these items as they come before us, but for a moment we might look at some of the other more serious items which are related to the motion before us regarding the prepayment of a loan and the penalties which are imposed, which we find unacceptable.
The other major concern we have with regard to this group of motions has to do with the condition of prepayment, and it deals with the disclosing of loans made by Canadian banks to foreign corporations. Another area of serious concern to us is the element of competition from other financial institutions. These provisions, along with this motion, have been laid out very clearly, and it is our hope that the government, which has already acknowledged this principle, will accept the proposition that there should be no penalties.
1 assume that the government accepts the proposition that a person attempting to discharge his obligation should not be penalized. As a matter of fact, he should be encouraged. We hope that the government will be in a position to respond in the affirmative on this matter, and I will be very interested to hear the remarks of the government on this motion because it is extremely important to our party.


Pierre Bussières: Mr. Speaker, motion No. 38 now before us aims at consolidating what is already written in the act, precisely on the suggestion of the member for Comox-Powell River (Mr. Skelly) and his colleague the member for Broadview-Greenwood (Mr. Rae).
I must say, Mr. Speaker, that when we discussed in committee this whole matter of penalty for the early repayment of a loan and the calculation of various costs that may seem hidden from the consumer, the committee was greatly impressed by the climate of these discussions and by the various proposals which were put forward. Following these discussions, we came up with clause 202 of the bill now before us which clearly indicates that the minister may make regulations prescribing

November 17, 1980
Bank Act
the manner in which the cost of borrowing and, if applicable, any rebate of interest shall be disclosed to a borrower; prescribing the manner of calculating the cost of borrowing; prescribing the circumstances under which the cost of borrowing is to be expressed also as an amount in dollars and cents; regulations specifying any class of loans or advances that is not to be subject to specified subsections of section 202; prescribing also the manner in which any rights, obligations, charges or penalties are to be disclosed to the customer; regulations prohibiting-and 1 am reading, Mr. Speaker, the new provisions of this legislation approved by the House-prohibiting the imposition of any charge or penalty referred to in this section or providing that such charge or penalty, if imposed, shall not exceed the amount prescribed in these regulations. The minister may also make regulations prescribing the manner of calculating the amount of repayment of a loan. If we examine motion No. 38 of the hon. member for Broadview-Greenwood, we find the following:
A borrower who tenders or pays to the lender all or any amount of the principal amount outstanding under a loan transaction is not liable to pay any penalty on the amount tendered or paid.
Under paragraph 8 of clause 202 of the proposed legislation, Mr. Speaker, we can see that the government has accepted this proposal, with the exception that instead of being a set provision of the legislation, until the new act is reviewed, the Minister of Finance (Mr. MacEachen) will achieve the same results by regulations made under the act. And why did we choose to act by regulation or to provide this flexibility rather than imposing the rigidity of a statute? We did so because we negotiate regularly with the provinces concerning this whole aspect of consumer protection, especially as concerns the relations between consumers the financial institutions. Moreover, as it has often been noted during these discussions, this area is even changing. The activities of banking or financial institutions are changing, and so that the purpose of sections or provisions of the act will adapt more easily to such changes, we have decided to proceed by regulations. As for the intent expressed in the motion of the hon. member, it will be met by us through the provisions of paragraph 8 of clause 202 which 1 have already read.


Hon. Marcel Lambert (Edmonton West):: Mr. Speaker, I agree with the minister there. This particular point as well as others relating to the global issue have been considered at considerable length in committee and 1 must say that all sides agreed to eliminate certain practices that have become unfair, namely, the 1978 regulation and others. The proposal made by the hon. members of the New Democratic Party was one of those the government had accepted. 1 would like it better if the minister had already prepared the regulation, if we could see it.
1 gave some advice to the minister because he is a young man. It has become a practice to listen to civil servants.
They must give in to the House. It must not be the other way around, that is the House and Parliament agreeing to the policies put forward by the civil servants. If we demand something, they will do it. Having said that, I wish to stress one thing. We did it very successfully in the past. When a minister presented a piece of legislation which was rather complicated, and if there were any regulations resulting from the act, everybody worked hand in hand not only to write the act itself, but also the regulations. So I can certainly assure the minister that we could have saved five to ten days of discussion in committee on the Bank Act, had we had the regulations at the same time as the bill. There is always that same old feeling that prevails among hon. members, that kind of mistrust of officials. Because we never know, as experience taught us, whether the regulations will indeed conform with the letter and the intent of the legislator and whether there will not be an about turn. Perhaps a certain tendency always remains.
That is why I for one would have liked it better, and no doubt the hon. member for Comox-Powell River (Mr. Skelly) would have agreed to withdraw the amendment put forward by his colleague from Broadview-Greenwood (Mr. Rae), had the regulations been available to us.
One of my colleagues asked me, what are we going to do here? My answer was, we accept in principle the thrust of the amendment. But in view of the regulations and the authority, we accept, and I accept in good faith on the one condition that we will shortly see the regulations in agreement with the intent of section 202(8).
Mr. Speaker, I would like to caution the minister about our expectations for the future, and 1 say this to all ministers. Where regulations are to be implemented simultaneously with the legislation or shortly thereafter, these regulations should be made available simultaneously with the legislation. It is as simple as that.
In this respect, I would like my colleagues to accept my comments. In my view, the amendment is not necessary.


Mr. Les Benjamin (Regina West):: Mr. Speaker, I rise to support the amendment. I remind the minister, who is a very nice man and a man of the people like myself, that there is a parable in the Bible about the moneychangers being driven from the temple, but since then I think they have "snuck in" the back door.
Many years ago 1 had a personal experience of borrowing money from a lending institution, which was to be repaid in 12 months. I paid it off in five months, and I was still required to pay the full service charges. I was penalized for paying it off early. The financial institution was very unhappy with me. It could not get away with charging me the full interest for 12 months, but its service and administrative charges applied as if 1 had taken the full 12 months to repay the indebtedness.
November 17, 1980

It should be included in the law that there be no penalty for early repayment, and there should be a benefit or refund for paying early. It should be statutory. There should be no penalty for making payments in advance of a scheduled date and there should be no penalty for making full payment of an indebtedness ahead of time.
If the minister wants other regulations which spell out the credit or benefit that a borrower should receive by way of refund of interest charges, administrative charges, carrying charges or any other, they would be good regulations; but surely it should be included in the law that there will not be any penalties for early payments or an early repayment of an indebtedness.
The minister can have his officials devise regulations which will spell out what kind of benefit shall be given by lending institutions to those who make payments early or make settlement in full ahead of time. If the minister wishes he can prescribe a schedule whereby someone who pays off a loan in one month instead of 12 receives a refund of 11 months of carrying and administrative charges and any other charges that the lovey-dovey finance company might dream up. I find it incredible that this should not be a matter of law in any case because for many years borrowers who were excellent repayers have been penalized for paying back too soon and too well.
In fact, I would like to see a regulation which would require a benefit even on the interest charges. For example, if someone borrows money at 15 per cent for 12 months and pays it off in six months, maybe he should then have to pay 14.5 per cent. What happens is that the money is returned and is available for lending to someone else all the sooner-someone else who may desperately need it. The minister could spell that out by regulation, if he wishes, or he could simply say that the bank shall refund some appropriate percentage of the interest charges. This might be a quarter of one per cent or one-tenth of one per cent, which would act as an incentive to people who repay their borrowings ahead of time. Surely that would be a great incentive for people to make a better effort to repay their indebtedness. Thus, they would not let their loan payments drag on or they would not be consistently late in making them.
Surely that would be of benefit to the financial institutions as well. It would keep their funds available for lending and rotating all the more frequently. So I do not understand why the minister cannot agree to put in the law simply that there shall be no penalty for early payment or early full repayment of an indebtedness. He should decide that no penalties should be applied or collected. Then, by regulation, he can encourage and even help the financial institutions to provide people with refunds on administration and service charges, which quite often are paid the day a loan is taken out.
I recall a particular loan I took out for a certain amount of money I wanted. Added to it were the service charges, and together this constituted the total loan. When I paid the loan off five months later did I get any refund of those service charges? I did not. The service charges were based on a
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12-month repayment period, and I paid the loan off within five months. 1 argued with the manager of that lending institution that I should not be charged administrative costs for 12 months when I had the loan for only five. I asked him why I should not just pay the administration charges assessed on my loan based on five months instead of 12. He said it was not the policy of the company. It may not be the policy of the company, but I thought it would be the policy of fair play that the company would have.
I was not assessed five-twelfths of the total administration charge but the full 12 months. They nailed me for the full 12 months. Why? If that is not similar to the moneychangers who were driven out of the temple, I do not know what is. For goodness sake why can the minister not say that is what should be the law in Canada? It should be statutory that no penalties can be charged for making early payments or early full repayment, and that by regulation the minister may require a lending institution to provide some kind of credit or refund to the borrower.
If we want to do something for people who borrow and who want to manage their own personal financial affairs even better, surely this is a good way to go about it. I hope the minister will reconsider, even though he has not been paying any attention to what I have been saying. I guess he is not interested in the matter. He has made up his mind, and it is a stone wall. I do not know why he cannot talk to his colleague some other time. I thought the minister would be somewhat more courteous than this. Would he mind asking his colleagues to go away somewhere? I would expect him to reconsider and to put in the statutes purely and simply what this amendment says, which is that no lending institution will be allowed to penalize someone.
Mr. Speaker, I wonder if the minister would get that idiot who is sitting with him to move somewhere else.


Some hon. Members:: Oh!


Some hon. Members:: Withdraw!


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


Leslie Gordon Benjamin: I withdraw that. I am glad the hon. gentleman left.
[ Translation]


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


The Acting Speaker (Mr. Ethier):: Is the hon. member rising on a point of order in respect of the remarks about himself made by the hon. member? The hon. member for Regina-West (Mr. Benjamin) just withdrew his remarks. Is the hon. member now raising a point of privilege?


René Cousineau: If the Chair feels that withdrawing the remarks is enough, that is fine with me. Thank you, Mr. Speaker.

November 17, 1980
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Leslie Gordon Benjamin: If the hon. gentleman wants to discuss this subject with the minister I hope he will get on his feet and do so. 1 hope he will support the amendment. I hope he will be courteous enough to allow the minister to listen to the members of the House of Commons who are trying to persuade him to accept the sensible, fair and decent amendment to the government's legislation. It would not be the first time that a minister has done that-listen to a private member of the House from another party.
Mr. Speaker, 1 am sure the minister does not agree that any financial institution should just be regulated by regulation when it comes to early full or partial repayment of indebtedness. It should be statutory that no lending institution may charge a penalty for early repayment. What can and should be regulatory is a requirement on lending institutions to provide some refund or benefit by way of a proportional refund of service or administrative charges, or any other kind of charges they dream up. This should be a requirement by regulation and should be left to the lending institutions, in whatever limited amount of competition there is amongst them, to advertise to their customers and members that if a loan is repaid so much earlier they will provide so much of a benefit, by way of either refund or credit. But you cannot avoid responsibility for not making it statutory that early repayment should not be penalized. After all, that is just ordinary fairness and decency to people who borrow money from time to time, and borrow it frequently, and pay it off on time or ahead of time, most of the time.
Those who pay off their loans ahead of time should be protected. Surely, making such a provision law would be better than to make it a regulation. I hope that the minister will agree with me and accept the amendment. Then he can make whatever additional regulations he wishes.


Donald Alex Blenkarn: Mr. Speaker, the proposer of this amendment does not bring to the attention of this House the fact that a great number of loans made by banking institutions are demand loans, for which payment can be demanded almost instantly, or which the borrower can pay off instantly without notice. What we are really talking about is a select loan called a personal loan. Surely the hon. member for Regina West (Mr. Benjamin) would not want large corporate borrowers who know their way around the marketplace, and who can jump in and out of the marketplace, to go to an institution and say, "Interest rates are down half a point today, so I am paying you off', but on the other hand if interest rates were to rise, the bank would not be in a position to demand its money.
We are talking about a particular kind of term loan which is made to individuals. That is the reason why section 202(5) sets out where a bank lends money to an individual it must specify the exact terms of repayment, the exact privileges offered, and the details of the contract must be totally spelled out. That is also the reason why through sections 202(7) and 202(8) the
minister can make regulations with respect to the kinds of terms and repayment allowances allowed to a borrower.
But surely, in a matter of commercial and corporate contracts, the New Democratic Party is not saying to this House that any term loan can be paid off without notice or bonus. Requiring some type of bonus on a loan is common practice. Canada Mortgage and Housing Corporation for example, charges individual borrowers three months' interest by way of bonus if the borrower wishes to pay off the mortgage. That is a common, open privilege, and clearly the lending institution must be able to recover its cost of setting up the loan and finding the funds in the first place.
I would expect the regulations which the minister will produce to be specifically designed to protect borrowers. The minister said in committee that he will get rid of the rule of 78 and that he will make sure that the calculation terms in loans is easily understood so there will be no gouging, or no situation where a person is charged three and four months' interest for paying back a loan, and that the terms of payment and terms of openness in bank loans to individuals are fair and reasonable. I do not know what else the minister could do other than to suggest that the matter be handled by regulation.
We live in a rapidly changing commercial world, and different types of personal loans are invented almost daily. Surely we must leave with the minister, in a bill which will run for another ten years, the right to make regulations concerning repayment. While on the face of it if any borrower is able to pay off any loan at any time he wants without bonus, would sound very good, if the New Democratic Party had any knowledge of how a business operates and how large business loans are made on a term basis, they would deem themselves pretty foolish for putting forth this amendment.


The Acting Speaker (Mr. I.aniel):: The question is on motion No. 38 in the name of the hon. member for Broadview-Greenwood (Mr. Rae).
Is it the pleasure of the House to adopt the said motion?


Some hon. Members:: Agreed.


Some hon. Members:: No.


The Acting Speaker (Mr. Laniel):: All those in favour of the motion please say yea.


Some hon. Members:: Yea!


The Acting Speaker (Mr. Laniel):: All those opposed to the motion please say nay.


Some hon. Members:: Nay!


The Acting Speaker (Mr. Laniel):: In my opinion, the nays have it.


Some hon. Members:: On division.
Motion No. 38 (Mr. Rae) negatived.
November 17, 1980


The Acting Speaker (Mr. Laniel):: We move now to motion No. 39.


Stanley Howard Knowles: Motion No. 39
That Bill C-6, an act to revise the Bank Act, to amend the Quebec Savings Banks Act and the Bank of Canada Act, to establish the Canadian Payments Association and to amend other acts in consequence thereof, be amended in clause 2 by adding immediately after line 28 at page 225 the following new section:
"202.1 (1) The minister has the power to order all chartered banks to lend a set percentage of their revenues at a level of interest determined by the Minister for the following purposes:
(a)	housing, including native housing;
(b)	farm improvement;
(c)	development of small business; and
(d)	economic development
(2) Notwithstanding any other section or part of this act, the minister shall
(a)	monitor any and all interest rates and service charges levied by a bank on any deposit, loan, or transaction, including credit card transactions;
(b)	determine the reasonableness of such rates and charges, taking into account:
(i)	the interest rates set by the Bank of Canada,
(ii)	the spread between charges to borrowers and charges to depositors, and
(iii)	actual costs incurred by the bank for the provision of any services for which it levies a charge; and
(c)	order any chartered bank to adjust any interest rates or charges if it is found that such interest rates or charges are unreasonable, following a determination as set out in subsection (2)."


Raymond John Skelly: Mr. Speaker, I recommend this particular motion to the House. Here is another area in which the hon. member for Mississauga South (Mr. Blenkarn) may want to give his questionable assessment of who understands business. I would have thought that possibly after the discussion the other night there would be a more open interpretation. The amendment reads in part:
The minister has the power to order all chartered banks to lend a set percentage of their revenues at a level of interest determined by the minister for the following purposes:
(a)	housing, including native housing;
(b)	farm improvement;
(c)	development of small business; and
(d)	economic development
(2) Notwithstanding any other section or part of this act, the minister shall
(a)	monitor any and all interest rates and service charges levied by a bank on any deposit, loan, or transaction, including credit card transactions;
(b)	determine the reasonableness of such rates and charges, taking into account:
(i)	the interest rates set by the Bank of Canada,
(ii)	the spread between charges to borrowers and charges to depositors, and
(iii)	actual costs incurred by the bank for the provision of any services for which it levies a charge; and
(c)	order any chartered bank to adjust any interest rates or charges if it is found that such interest rates or charges are unreasonable, following a determination as set out in subsection (2).
I would like to address my remarks to one small section of this amendment, that the minister has the power to order banks to lend at a set percentage of their revenue and at a level
Bank Act
of interest determined by the minister. We feel that this particular amendment would help small business. The hon. member for Edmonton West (Mr. Lambert) has introduced the proposition that chartered banks be restricted in the amount of mortgage loans they can make against real property. As a result we became concerned about the government's attitude toward small business. We have expressed our concerns on how this proposal would affect housing.
I would like to speak about the kind of problems we feel the small businessman faces and how this amendment would improve the situation. After discussing this legislation with some small businessmen in my riding, one particular individual's response comes to mind. 1 would suggest to the hon. member for Mississauga South, who seems to have wandered off-Oh! I see that he is still here. This small businessman said that financing was extremely difficult. He felt, considering his business and its location, that he was really at the mercy of the lending institutions. This small businessman has a very small market and does not rely on volume sales due to the small population. However, that same population expects him to maintain a large inventory. He maintains that inventory by borrowing. When the interest rates drifted up from 12 per cent, 13 per cent, to 14 per cent and on up to 19 per cent, this man had a very large inventory for a very small market. And interest rates today are climbing rapidly back to that level.
In the area in which this small businessman operates, everything which comes in and which goes out must be transported great distances. The transportation costs are tremendous. The government has caused high interest rates, with increased fuel costs and energy costs, all of which have caused the cost of this man's goods to climb higher. He said that the higher the costs go up, the fewer people to whom he is able to sell. He is carrying this large, varied inventory to have the products on hand for his customers, but they are buying less. In addition, in the particular area he conducts business, and it is the entire coast of British Columbia north of Vancouver, the people who purchase goods from his business have also been hit by federal government programs and policies.
In the fishing industry a large number of people who purchase goods from his enterprise have had their season and their opportunity to earn income literally destroyed by federal government policies. Openings and closings have operated in a detrimental way. The market is shrinking more. Therefore the fishing season is extremely bad. The projections for next year are bad. He is still at the mercy of the banks, the high interest rates, and the difficulty of lending.
The lumber industry is the other great employer in this area which provides the market for his goods. With the high interest rate program this government has put in place, the market for lumber and plywood for the housing industry has been cut to the bone. Those people who would normally buy goods have been laid off. Their income has been curtailed. That can be directly laid back to the federal government.
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November 17, 1980
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The next item is the cutback in unemployment insurance. Northern Vancouver Island and the coast of British Columbia have a cyclical economy. During the fire season, loggers are laid off. During the winter, with the snow they are also laid off. Fishermen have a poor season. In many Indian communities where the unemployment rate rises 75 per cent to 90 per cent, they normally would work a season in the cannery or for a short period of time in the industry when it was open. They would have unemployment insurance to fall back on in the winter. This unemployment insurance would find its way back into this man's shop. Yet the government, through some very foxy manoeuvres, managed to neglect the needs of the people in this whole area by cutting back on unemployment insurance eligibility. This means there is no income, income that normally would have gone into his business.
Now we have high interest rates, poor fisheries management, unemployment insurance legislation, and dramatic increases in fuel prices which reflect directly on transportation. These are the high costs that are being reflected in this individual's business. In the final analysis, there is a tremendous increase in the cost of goods. When I go shopping here and I look at the same products that are sold in the stores, there is no comparison. The difference is tremendous.
When the interest rates went up to 19 per cent, they could not fix a price. Every day suppliers would receive a price increase in the mail. When the interest rates went back down, the prices did not decline. They have continued to rise. The government policy is bearing very hard on small businessmen. The hon. member for Mississauga South might pay attention. It is very important. His support for this might lend itself to having the government improve the situation.
Small business is being harmed very seriously. This legislation is accelerating that kind of harm. We would like to see a serious move by the government to make this legislation more responsive to the needs of people. It is directly responsive to the needs of banks and the banking industry. We would like to see some kind of improvement for small businessmen.
I would like to summarize the benefits of this man's business. It is only one business of dozens and dozens in this region. Therefore, when we talk about the benefits, we can multiply them by a hundred. This individual buys goods in the community. Any income he earns remains in that community. The business is very small. He hires five people. Five jobs have been created.
A lot of the employment along the coast of British Columbia and along Vancouver Island is in single industry towns. There is one big employer. A number of people in the community work for that industry. I am talking about the paper industry, some sawmilling, fish processing plants and mining enterprises. The mines are eventually mined out and the town shuts down. Processors find it easier to centralize processing industries, whether it is logs or fish in Vancouver or Prince Rupert, moving those enterprises out of the central coast.
In a lot of the other ones, through the process of automation we have lost a tremendous number of jobs. The mills are more productive today, but the actual labour input is reduced. We
have a situation where the only other employer is small business. They hire mainly men. Generally women and young people have no opportunities in those communities except their opportunities through small businesses.
The majority of apprentices, whether they are welders, automobile mechanics, pipefitters and so on, are hired by small business, not by the major enterprises which get all the breaks, tax concessions, and grants for improvements. Most of the employment occurs there, as does most of the industrial training. They target a group of people who need help more than any others; the young people, women and those in the native community. There must be put into this legislation something to improve benefits for small business.
I will summarize by pointing out where this individual obtains financing. It is all from the bank. It is a line of credit that can only expand as much as his accounts receivable. At this point in time his accounts receivable seem to be a little slower as people do not have the money they anticipated, those who buy parts and equipment for fishing boats. The income is not there, so the accounts receivable are not met. The bank is now lending that money at a very high rate of interest. They expect it to go as high as it did last year, 19 per cent, which is enormous.
The bank loaned him money in order to buy and expand the business by way of a mortgage on real property, his home, his parent's home and his business. Therefore the proposition put forward by the hon. member for Edmonton West that the banks should curtail their activity in lending on real property mortgages is absolutely ludicrous. This business could not continue to exist. In fact it would never have come into operation. The five jobs would not be here, along with a very real service.
That is another source of money. When he has to extend his financing or stock, and his line of credit will not handle it, because the accounts receivable are fixed, he has to go back to that mortgage procedure and borrow more money. In the final analysis he can borrow money at a lower rate than the bank generally produces it on the line of credit approach. The banks have a very strong hold through the debenture and mortgage on real property and through the line of credit system.
In the legislation now before us, we do not find a responsibility to small business. The legislation should be more sensitive and have a greater ability to meet the needs of small business which provide a tremendous service in our communities.
There is one other area which concerns me. I know some of my colleagues will want to speak to this particular element. 1 refer to the question of native housing. In this amendment we state that we would like to see money set aside from the lending portfolio to deal with housing, particularly native housing, and we would like to see interest rates handled that way also.
There are many people here who probably have not had the opportunity to travel to native communities. They have not had the opportunity of seeing the housing problems that exist
November 17, 1980

there. Many of the urban members have not seen the very serious lack of decent housing in those communities.
Because of the structure of the Indian Act, we do not have the opportunity to provide native communities with conventional mortgages. This legislation should recognize the need for chartered banks which are tremendous mobilizers of capital. Whether through special institutions or by other means, native communities should have the right of access to the chartered banks, which are the major mobilizers of capital in our society; they should be able to approach those institutions for funds in order to build housing for instance. They cannot do that under the present circumstances. Instead, they are dependent upon federal government handouts. They are dependent on the charity of the federal government which designates how many new housing units may go into a community in any year. The need will never be met.
The needs of those who do not have steady employment may be met by government allocations, but a method should be developed whereby those people who have employment may approach the chartered banks for loans. This could lead to expansion of the amount of housing that is available within native communities.
At present there are very serious problems in the area of native economic development. My colleague, the hon. member for Cowichan-Malahat-The Islands (Mr. Manly), has dealt with the problem of access to adequate capital. The Bank Act is a reasonable place for provision of this responsibility, Mr. Speaker.
I see the minister shaking his head. I do not believe he accepts the proposition that the banks do not have some obligation to society. It may be difficult to place these provisions in the legislation, but the needs do exist in society. The chartered banks exist by virtue of charters and letters patent issued by this House. There are serious problems, of course, but I believe that a whole range of Canadians should have access to the capital that is mobilized by these institutions. It is unfortunate that the Bank Act does not contain provisions to help native communities establish economic enterprises and build a greater number of housing units to meet the needs of their people.
I shall conclude with those remarks, Mr. Speaker, and leave my colleagues to develop some of the other issues.


Mr. Jim Fulton (Skeena):: Mr. Speaker, I am pleased to have the opportunity to speak on this matter again today. I must say, following on the remarks of the hon. member for Comox-Powell River (Mr. Skelly) that our friends to the right and those across the floor seem to be mesmerized by the Bank Act. It is as if the overwhelming desire of both the Liberals and the Tories is to make sure that everything in this act is good for the banks. I believe there are other segments of society that should be treated fairly under the provisions of this act, however. My hon. friend made some points with regard to native housing, and this is an area which I feel
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strongly about as well. The minister should give very serious consideration to this to make sure that capital is mobilized in order to provide decent native housing.
I should like to direct the majority of my remarks today to the problems facing the small business sector. I believe this has been overlooked in the Bank Act. We all appreciate that venture capital is the key to the survival of the small business sector which is facing some very serious problems. This is necessary in order to provide new plants, new techniques, warehousing, distribution facilities, new retail and wholesale outlets.
Inventory is one of the key problems in the small business sector. The cost of carrying any commodity at all can amount to 16 per cent, 18 per cent, or 20 per cent or more per annum. Things are very different in the small business sector today than they were 15 or 20 years ago when, as a business became more successful, it was able to carry more inventory. In turn, this increased the number of customers likely to patronize it because of the variety of goods offered. Such is no longer the case. With increased interest rates and carrying charges, the cost of goods per unit is increased and, as a result, most small businesses have to limit their lines of goods.
In this situation, as capital becomes more difficult to find and as the line of goods offered is more limited, the large multinational companies move in and take over what would ordinarily be a lucrative small or medium-sized business. These companies have greater access to capital than do the small businesses.
I would urge all hon. members to consider carefully the proposal contained in the amendment that banks should make capital available directly to small business. High interest rates are a serious burden and the added restrictions put on available capital are creating problems for the small business sector.
This amendment would make money available through legislation. There is already a proliferation of high interest rates on private mortgages and loans. Any newspaper in almost any area of the country has advertisements in the classified columns which offer money at excessively high rates. A growing number of small businesses are forced to secure their funds in this way in order to survive.
In the first part of this year the monthly rate of small business bankruptcies increased 24.8 per cent over last year. The government has been vague on what it intends to do about this. There has been a short extension of the time that bonds will be available, but that does not really affect the problems facing the small business sector. Despite the fact that members to my right and across the floor claim to be the great, wise purveyors of small business, they rarely speak in this House on the subject.
Businesses with assets of less than $1 million comprise 90 per cent of the businesses in Canada and employ about half the work force. While these small businesses decline, large corporations and multinationals have continued to reap soaring profits. They are able to maintain their spot in the market-

November 17, 1980
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place through the use of internal cash flow which can keep their smaller plants open, even if those small units are in a negative cash flow position. In many cases they have a near monopoly on prices. They can employ the loss leader concept to attract customers, be it a couch or a car, nuts and bolts, nails, or whatever. In face of this competition, some small businesses fail within a short time. The large company also has extensive lines of credit available through the banks.
Motion No. 39 would have the effect of making a specific amount of capital directly available to small businesses. Last year, 75 per cent of bankruptcies were in the small business sector; 48 per cent of big business in Canada is foreign owned, whereas 96 per cent of small business is Canadian owned. That is an important aspect of the branch plant economy in Canada. We need an effective national strategy to deal with the small business sector so that it can move beyond the terminal growth stage of the 49 to 100-employee range, up to the big business sector where it can secure lines of credit as well as developing technologies that will give us international status.
Only 3 per cent of small business loans last year were under the Small Businesses Loans Act. I think that really points out the inadequacy of that act and the real need for an amendment to the Bank Act to provide a much greater level and availability of capital to that sector. That capital is also only eligible for plant expansion, equipment and land assembly, which really even more severely restricts it, particularly at a time when the actual carrying of inventory is one of the greatest problems faced by small business.
Small businessmen require working capital, and this would be legislated by the amendment proposed by the hon. member for Broadview-Greenwood (Mr. Rae) and the hon. member for Comox-Powell River. Small businesses raise money often by mortgaging their real property, so what in effect is occurring is that both the owner and frequently those individuals who are working in a small business take real risks with their own personal property, and in my view, and in the view of my party, the banks have a real social and economic responsibility to make low-cost long-term capital available to small business.
Without the present amendment as proposed, small business will be forced into the private money market, which will increase costs which often cannot be passed on to the consumer. Many small businesses across the country are in a marginal state and are forced to go by the banks and into the private money sector. Adding even a few cents, let alone a few dollars, to the cost of individual commodities forces consumers again to go to larger chains which are capable of having loss leaders and major sales to move much larger bulk units and bulk quantities of goods. That thereby essentially drives the small business sector under again.
Many members of this House tend to forget that half the work force in this country is directly employed in the small business sector. The main reason that this type of unfair competition goes on in this country is that there is no option for small business to go to in order to secure the type of
financing it requires either to carry larger inventories, to expand plant facilities, to improve premises or whatever, so again it falls into a situation whereby the medium and large corporations, and particularly the multinationals, have an extremely unfair competitive advantage. This is primarily because of policies which have been passed by this House in the past.
Small business in Canada accounts for 28 per cent of the total business sales, and again that is sort of a deceptive figure. But who would be helped most by this amendment? It would be firms in operation less than two years whose profits during the past year were down 61.5 per cent, and firms which have been in operation five to ten years and which have curtailed expansion during the past year by 19.5 per cent directly related not only to inflation but also to the lack of availability of venture and expansion capital. Therefore, what we are seeing is the increased loss of young enterprises, particularly, which are going through the maximum costs of business development, which are start-up costs, plant development, inventory, advertising, travel, and time spent finding customers and so forth. The medium-term businesses which have had growth curtailed by higher cost have found it extremely hard to find capital in the past five years. Very small businesses tend to be able to weather higher interest rates, and those are the businesses with only one to four employees.
High interest rates last year, however, saw a 56.2 per cent reduction in profits for businesses with 15 to 49 employees, and those small businesses with 50 to 99 employees saw a 59.1 per cent reduction. Medium-sized business appears from these figures to be hurt worst by the problems of capital availability. These problems then allow big business and multinationals to take over in those areas particularly where medium-sized businesses get sluggish for any period of time. They are able to move in and, through a growing number of manoeuvres, take over that market, and essentially push the Canadian businessmen out of that sector.
The sectors which will receive the most support by the proposed amendment are transportation, about 25.1 per cent; agriculture, forestry and fishing, 20.7 per cent; construction, 19.9 per cent; and manufacturing, 19.6 per cent. I think we have to look very carefully at the small business manufacturing sector in this country because it has one of our largest deficits with some $17 billion in trade deficit last year. It is an area of the economy that is seriously sagging, but there is certainly an abundance of entrepreneurs in this country who are capable of making almost any manufactured commodity that we use in our day to day lives.
Without some serious encouragement, which we have not seen in terms of any of the legislation in this present Parliament, we should certainly at least pass this amendment in order to ensure that small business has capital available at a reasonable interest rate so that we can move into that area not only in terms of affecting our balance of trade deficit but also in terms of creating more jobs in that sector for unemployed Canadians.
November 17, 1980

We have seen a reduction of profits over the past two years in the wholesale sector of 61.2 per cent and in construction of 58.9 per cent. There is a very serious domino effect. As 1 pointed out last week, the entire forest sector was overlooked in the budget of October 28. I think that is a serious oversight. Coming from British Columbia, I must say that to have the budget overlook what represents 50 per cent of our economy in British Columbia is quite sad. When we start tying together the forestry sector with the construction sector, we are looking at about 40 per cent of the most seriously impacted small businesses in this country, and it is related to an entire slowdown. In the amendment we have indicated a desire to make further funds available for housing, both urban and rural, and particularly for native housing, and in order to get forestry moving again we require funds to be made available so that we can have housing starts and get the construction and building trades moving again. This would have an effect in the forest sector, which is extremely sluggish not only in British Columbia but also across the country.
Those areas which are susceptible to inflation are the hardest hit. I refer to sectors which carry any inventory at all. They are also therefore prone to the impact of energy price increases. With the energy policy coming from the other side of the House, and the lack of any real mobilization to help the small business sector, I think it is important to have an amendment such as this which will force the banks, which make use of the small business capital but in fact move it on to areas where they can make more money, to make capital available to those sectors which are the most economically creative and carry the greatest potential.
Who in the small business sector is increasing output and requires such an amendment most? Between 1970 and 1976 Canadian owned and controlled manufacturing firms increased output by 112 per cent. During the same period U.S. branch plants in this country increased their output by only 85 per cent. I think that says a great deal about the potential and the productivity of the Canadian small business sector, which really has not received anything new from the government opposite. Canadian controlled manufacturing clearly out-produced American branch plants by 32 per cent. This amendment, among other things, would help Canadians to get moving, instead of U.S. controlled branch plants.
1 hope hon. members opposite, and particularly the minister, will seriously consider including this amendment in the Bank Act because, as 1 said in my opening remarks, it seems that too many members of this House, certainly hon. members opposite and to my right, are mesmerized by the name of this act, the Bank Act, and seem to think that this entire six-day exercise is to ensure that the interests of banks rather than those of consumers, native people, people who require housing, farmers and small business people in this country, are protected.


Mrs. Margaret Mitchell (Vancouver East):: Mr. Speaker, 1 wish to speak about this amendment from two points of view. The first is in relation to small businesses, and the second has to do with the economic development sector as it applies to community development in local communities. As my col-
Bank Act
leagues have already pointed out, unfortunately the past few years have not been good years for the small business sector.
The dominance of large corporations in our economy has made it very difficult for small businesses to compete without access to sophisticated financial, managerial and technical advice. As a result, bankruptcies have increased each year over the past several years. We also know that across Canada in June of 1980, 2,119 individuals and businesses have declared bankruptcy, an increase of 35 per cent over June, 1979. In the first six months of 1980, business bankruptcies have increased by 19 per cent over the last half of 1979, and more than doubled in the years between 1974 and 1979. Bankruptcies have been highest among small businesses in operation for under six years which were in need of capital and advice and did not get much of either. Both were complicated as interest rates increased dramatically in the early part of this year. As my colleagues have pointed out, this has tremendous implications for the Bank Act, for the amendments before us and for the role of banks in our society.
Rather than concentrating today on a more general point of view, I would like to bring to the attention of the House, Mr. Speaker, comments from several interviews that 1 conducted with local business people in my riding of Vancouver East. I think they are typical of the concerns of business people throughout Canada and have an implication for the Bank Act. When 1 phoned these people I explained to them that I would be speaking in the House on the Bank Act and I wanted their opinion on matters which concerned them.
First of all, a hardware merchant said:
I am not happy at all with high interest rates that are killing small businesses. The banks seem to have no sympathy with business customers.
Especially small business customers.
If an error is made, the customer pays, whether this is the bank's mistake or the customer's.
Then a TV and radio businessman, who wants to expand his business in the interest of young people in the community who, he knows, are looking for work, said:
Interest rates are preventing us from ordering the new stock we must have to keep customers and expand. I would like to start a small manufacturing business to develop a few jobs for young people in the riding. To do this I need R and D funds for a new type of TV tube production. When I inquired I was told federal business loans are not available unless I moved to an area like Kelowna.
Next, a small developer in the construction business, a person who is very concerned with the community and very much a part of the community, said:
Banks should cater to small business instead of pampering big businesses. Small businesses need capital at favourable rates or they cannot survive. Interest rates have pushed up the cost of building lots to $103,000-
-that is for the land-
-for a 33-foot lot to build a family house. Older family homes are now selling for $150,000 and newer ones for $185,000 in Vancouver East.

November 17, 1980
Bank Act
I would say again that this is in an average, ordinary, working class part of Vancouver, and we are talking about a three bedroom house for $185,000. He went on to say:
It is impossible for a person to build a house these days.
The culprit, of course, is the high interest rates.
Next, an accountant who helps many small businessmen and women, said:
The banks are quick to push programs that they can gain from with no concern that it exploits small business. For example, the Bank of Nova Scotia recently put out a fact sheet on "small business development bonds." These bonds offered at 9 or 10 per cent are tax free to banks, but the person borrowing them must pay high legal fees and other costs. The small businessman cannot include these as tax deductible expenses while the bank gets all the advantages. Who is the winner in this kind of deal? Ask them, who is the winner?
That is a good question. Next, a wholesale businesswoman said the following. It was difficult to find women in business because, as you know, Mr. Speaker, women in business find it very difficult to get credit, just as they find it very difficult to get a mortgage, no matter what their potential credit rating is. This woman said:
Small businesses that I deal with have to go into hock to start up and have debts and mortgages held by a bank. The banks cover all the risk when they give loans by requiring a personal guarantee. They are well covered and can claim a person's home if the business goes broke.
On the other hand, a supplier such as us-
This woman happens to be a supplier of arts and crafts materials to businesses.
-assumes all the risks and often must refuse some orders if the business seems a poor risk for credit. There are no guarantees the supplier will get paid when businesses go bankrupt.
I think the banks should assist small businesses with advice and realistic planning. Their services are mostly for big investors.
Here we hear it again. She went on to say:
Since they make sure they are fully protected and control all the customers' assets, the banks should provide a letter of credit that can be used with suppliers to guarantee they will be paid. As it is now, the supplier, who is also a small business person, takes the brunt of the bankruptcy. Bankers don't give small business any service at all. They take our money but don't give service.
I have heard this repeatedly.
Staff arc underpaid and there are not enough hired. Banks should provide advice and help for small businesses along with financial services.
Finally, a small manufacturer and importer, who is trying to help a number of low-income women who are mainly on welfare and trying to raise children on their own to develop a kind of co-operative business, said:
Chartered banks favour huge corporations. They lend to big businesses who have lots of assets and not to small businesses that could employ local people in manufacturing small items. For example-
This is just a small example.
-nail brushes are imported from Roumania. Only a $3,000 loan is needed to manufacture them locally and employ two or three people. Yet this is not available because banks pay no attention to small businesses.
The Federal Business Development Bank also is of little help. There is considerable potential for handicapped persons and persons now on welfare, many of them single mothers, to work at home on marketable items for sale through a co-operative organization. Initial loans for an investment in supplies and equipment are essential along with the hiring of a trainer and business promoter to develop market-oriented saleable items.
These loans are essential not just for crafts for charity which people buy because they feel sorry for handicapped people, but for sophisticated, market-oriented saleable items. But this fellow has tried and there was no way he could get help from the bank for this kind of thing. Finally, he said:
The Bank Act should include a section that requires banks to have a compulsory allocation of funds for low interest loans to small businesses.
Of course, he did not know about this amendment when he told me this. He went on to say:
Small businesses that can become secure and plan ahead become one of the best employers of local people. They can train and hire unemployed workers, but only if they can survive. The present high interest rates make this very difficult.
I do not need to add any more comments on the need for an interest loan program through the banks which would provide a reasonable rate of interest for credible small businesses, which of course would be investigated and would be found to be a good investment.
The second point I wish to raise has to do with paragraph (d) on economic development. This amendment proposes that the minister should have the power to lend reserves at a feasible rate of interest for what is called economic development. I should like to speak on the basis of the many years of experience which 1 have had in community development, having seen what has happened to a number of people who have been affected by government sponsored programs, such as LIP and Canada Works, and now the community development projects.
Over the past ten years citizen organizations have organized and developed a variety of very interesting and innovative experiments in self-help at the community level. In a limited way, these LIP and Canada Works projects encourage the initiation of new development by community people. This happens especially in poverty areas-in the inner cities, on Indian reserves, and 1 am sure in smaller communities throughout Canada. In the days when more money was available, this was an appreciable amount of employment. It was not at the rates we would have liked, nor continuous employment.
In my community-and I am sure this is typical of others- starts were made on more flexible child care services so that mothers could go to work and some people could train in child care. Food co-operatives were developed; public housing projects, home making services, home repairs and sheltered workshops were developed to make items for limited sale. As I said, the salaries were very minimal, sometimes less than unemployment insurance. It allowed projects to get started with a very small amount of overhead, often sponsored by parent organizations.
However, few community services could be developed which involved fund raising. This was a "no-no". They could not compete with the marketplace, so even though income might have been brought in during the initial period and put into a fund to maintain the ongoing service, this was really not allowed under the terms of reference. Many non-profit socie-
November 17, 1980

ties which sponsored such community service projects would have liked to continue them. These were necessary services of continuing need which would not be automated out of existence. So, it was a continuing potential for local employment as well.
Also they wanted to continue to hire local members of their community who needed work and could contribute more effectively because they knew the needs of the local community. Elowever, they had no ongoing funds to employ even one or two of the team of workers who were on Canada Works projects after projects were completed. Many of the people who were hired on these projects were young people with little job experience. Also many of them were highly-trained university graduates who could not get work. Many were women previously on welfare, and handicapped people who needed a protected work situation or a change to get started and prove that they were as good as anyone else.
These people gained confidence and skills if the project provided adequate training and administrative direction, but by the time their year was almost up, of course once again they were faced with the spectre of unemployment. Certainly this did not discourage motivation for responsible work habits.
Well, Mr. Speaker might well ask what this has to do with the Bank Act and the amendment. It is directly related to the amendment on economic development which we are proposing. The projects I mentioned demonstrated both a valid and important community need and a great potential for community employment. The organizational and development stage was completed when projects were finished. Usually they were ready to go on to become community enterprises. All they lacked was capital, and of course capital was not available through the government, banks or credit unions. In many cases a small co-operative was formed which could have continued these services if funds were available.
I recommend very strongly the endorsement of this amendment, and furthermore that credit unions and banks be empowered to assist communities, particularly low income communities, to develop what I would call a community development corporation and a revolving fund to encourage non-profit self-help services. Low interest loans could be used by reliable community enterprisers to help establish community services essential to people living in the community, each one helping another. Some of the income would come from social and government agencies now paying for homemaking services, transportation for the elderly, child care and other preventive services for low income communities.
Other services such as food co-ops, home repairs, housecleaning and maintenance would have a regular income from sales or pay for services by the community. Members on the other side of the House do not seem to be aware of the point that this kind of approach would be an investment in people, as well as in jobs and future businesses. It would hire local people who know the community needs and are able to relate sensitively to local services, rather than highly paid professionals and commercially run businesses.
Bank Act
In closing, I very much hope members will approve this amendment. We spoke the other day about housing needs; now we are talking about small businesses. It is important to have this amendment to the Bank Act to allow discretion for banks, and I hope credit unions, to offer low interest loans for reliable non-profit enterprises as well as for small businesses which will employ local citizens and strengthen communities.


Stanley J. Hovdebo: Mr. Speaker, I am glad of this opportunity to speak on this particular amendment to the Bank Act, because it is an area of concern for a great part of the Canadian economy. If we lower the interest rates in this particular area of concern, we can do a lot toward building up the economy of Canada.
Although I am basically concerned with the prominence of financial institutions and their control of the economy, that control of the economy by the banks and related institutions is almost devastating. We are at a point in our economy where small businesses, farms and such organizations are unable to operate without the effective financing of banks or other lending institutions. It has become particularly devastating. I challenge any member here to try to open a small business, to borrow the required financing to start a small business or farm, and after four or five years of operation, to check on how much money was made compared to how much was paid to financial institutions. Almost every small business which is started up now, and almost every farm which was started up in the last ten years, have found that they are paying an inordinate portion of their profits-if one can call them profits-or of the money they have made, to the financial institutions. Consequently, the financial institutions of the country are the only organizations which make profits on ongoing businesses, particularly small ones and farms.
It is a pretty bad situation when one considers the many hours of work, worry and risk taken in the development of small businesses or farms, and at the end of five or ten years finds that most of the profits or most of the money taken in has gone to financial institutions. What did they put up for it? Very little work, if any, and very little risk.
Over the years the failure rate of lack of payment by farmers particularly has been very small. It is around one per cent. So there is very little risk in loaning money to the development of a farm or a small business. The development requires the capital, and the donor gets 15 per cent to 20 per cent of the investment back and the entrepreneur, the worker, feels he is pretty lucky if he gets 5 per cent to 10 per cent back. With respect to this particular case we should look at this amendment, which suggests that we allow or require a certain amount of the revenues at a level of interest determined by the minister for the purposes which are listed in this amendment. We are living in a particular kind of jungle, as far as finance is concerned. It is the responsibility of this House, and has been the responsibility of banks-at least that is what we thought- to apply the rules under which you can survive in this jungle.

November 17, 1980
Bank Act
Before 1 go on to some of the factors here let us take a look at what the responsibilities of a bank are. We charter them. We give them the privilege of conducting the banking exercise in our communities. They are major economic actors in our communities and in our country. But what are their responsibilities and how do those responsibilities relate to this particular amendment? They control the cash flow for corporations and the cash flow and credit for individuals. They have a great scope of financial activities, and if this bill were to go through in the way it was originally proposed we would be extending the scope of those activities.
Banks should have some responsibility for our national goals. What are our national goals? They are closely related to farm improvement, the development of businesses, and the economic development of the country. Those are goals which this country and the people of this country have accepted, and which this government has accepted by being the representative of those people. So Canada needs an industrial strategy. Under this particular jungle operation that we have, as far as finances are concerned, we require some control over the finances which would allow those national goals to be achieved. If we consider that the banks are public institutions privileged to operate as public institutions in this country, then we should expect them to accept some of those responsibilities and be willing to provide a certain amount of money to the development of the country.
Maybe the limitations which the hon. member for Edmonton West (Mr. Lambert) suggested in an earlier amendment are a good thing because they may limit the amount of money that is available and consequently many people will not be working for the banks. Many people in this country feel that we have developed well and we have accepted the responsibility of small businesses and farms as being a major part of our economy, and we should therefore make available to them the kind of money which would allow them not only to survive but to make a major contribution to our economy.
Small businesses and farms are having a lot of trouble surviving because of the high interest rates. Therefore we have some responsibility to lower those interest rates so that those types of businesses can survive. In my own part of the country, in the farming area, when farmers go out of business they have been able to sell their land and, because of the price of land, been able to survive to some extent. They do go on to the labour market or attempt to find something else to do. I am not always sure that is a good alternative.
However, let us take a look at the small businesses. As the hon. member for Skeena (Mr. Fulton) mentioned, 75 per cent of bankruptcies today involve small businesses. The figures are quite interesting. In 1977 there were 3,905 bankruptcies in Canada. In 1978 there were 5,546 bankruptcies. The number is higher in 1979, and I am sure that 1980 will show an increased number of bankruptcies.
1 will refer again to some of the statistics which were given by the member for Skeena. In Canada 48 per cent of big business is foreign owned while 96 per cent of the small businesses in Canada are Canadian owned and operated.
When we look at the figures, 96 per cent of those people who are bankrupt are no longer contributing to the economy, nor are they hiring other Canadians. This Parliament has a responsibility to ensure that small businesses and farmers are not gouged by high interest rates of 19 per cent and 25 per cent. That is what they are paying.
If you were to try to buy a tractor in Saskatchewan right now you would need more capital than most farmers can afford. As a result, they are forced to go out and attempt to borrow if they wish to buy any kind of machinery. In the process they are asked to secure such loans with property. That property is the productive part of their farming operation. Small businesses are asked to secure their loans but putting their plants on the line. In other cases they are asked to secure loans with their stores and buildings. Then they are asked to pay up to 20 per cent of anything they earn with those plants or with that piece of machinery, to the finance company. That just does not contribute to the national economy.
The reason for interest back in the old days of the usurers was because some risk was involved, particularly with respect to farmers. Many of the loans which are made to farmers these days are secured by the federal government under the farm loans legislation. However, just because a loan is secured, it does not mean that the farmer receives the money at a lower rate of interest. The lending institutions do not have that kind of social conscience. They continue to take the highest level of interest possible.
Let us take a look at a situation where this amendment does not exist and interest rates continue to rise. This creates a situation of tight credit which causes interest rates to rise further. Every time the interest rate goes up, it creates a little more hardship for the small businessman or the farmer, the people who need the money to operate. Most businessmen, in order to keep up an available stock, or a farmer to get over seeding or harvesting, require a line of credit. In the past this was not a great problem, but with upwardly spiralling interest rates it is becoming the reason for many bankruptcies and why people are withdrawing from farming.
We constantly hear that it is important to keep producing the kinds of foods necessary to feed the world. It is also important that we keep farmers on the land, because it is good for our economy. Some say that farmers today produce twice as much as the farmers of 20 years ago. The fact is that there are less than half as many farmers today. While they are perhaps producing a little more food, there are fewer people producing that food. The people who left the farms are now either on the unemployment rolls or they have forced others onto the unemployment rolls.
We should try to give the farmer credit at an acceptable rate of interest in order to keep him on the land. That in part is the purpose of this amendment. If we restrict capital we will force interest rates higher. It is quite likely that the number of farmers or businessmen closed down as a result of bankruptcy will become so high that the family farm and the small
November 17, 1980

business as we know them today will disappear and we will fall entirely under the control of the large corporations.


Sidney James Parker: Mr. Speaker,
I welcome the opportunity to speak on this amendment. I commend my colleague, the hon. member for Broadview-Greenwood (Mr. Rae), for presenting it. I have noticed this afternoon how quiet the members of the Conservative party and the Liberal party have been on this amendment. This amendment could bring stimulus to the housing industry, which would help every Canadian. Canada Mortgage and Housing Corporation recently took a survey in my riding, and they found that in almost every community there was a .0 vacancy rate. The highest vacancy rate they could find was .05.
If this kind of proposal were put in the Bank Act, communities or groups would be allowed to get together to bring about land assemblies, and the average worker would be allowed through such a program to build housing which would meet the needs of the people.


Donald Alex Blenkarn: Get off it.


Sidney James Parker: I was involved in such a program, and I have seen what can be done. 1 saw a small community with backing from the federal government, the provincial government and the municipal government, put forward 25 acres of land and put in the services. The lots were sold at cost. The individuals involved were able to go to the banks and borrow money. Many of them began building their own homes with their own hands. Others hired contractors. The project, which occurred in the early seventies, stimulated housing in a way such a provision in the Bank Act would stimulate the industry.
I would like to speak about the problems of the small businessman. Many times on the campaign trail I heard the Conservative candidate or the Liberal candidate say that they were the champions of the small businessmen. Several small businessmen have come to me with problems. I can think of one group which operates a small tie mill. They were begging for contracts from CP Rail. These businessmen could not get financing because they did not have the contracts. But CP Rail is going across the line into Washington to buy thousands and thousands of railway ties. I am talking about small industries run by three or four people. In this case it was a small mill which hoped to make a business out of small scrub timber by making railway ties for the railways. If the Bank Act were amended to help small businessmen, we would see many such operations begin.
I have been in larger communities where there are the large shopping malls which have their own means of financing, gathering all of their loot together to squeeze out the small businessman who is unable to get a loan from a bank. If this small businessman is able to get a loan, the interest rates are so high he is unable to sell his goods or maintain an inventory, and he soon goes into bankruptcy. Every small businessman knows what I am talking about.
Crown Corporations
There is also the tourist industry. Businessmen in my riding promote winter skiing in particular. Once again interest rates will be a deciding factor in whether the business will be a viable operation or whether it will go into bankruptcy.
The other day a woman came to me with her problem. She was trying to develop a small business, but because the banks would not provide her with the capital, she was forced to go to the federal development fund. She faces the possibility of losing her business in December. As a result, I tried to determine how many more small businessmen were finding themselves in this kind of trap. I found many such businessmen in my own community.



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mr. Ethier):: 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 Vaudreuil (Mr. Herbert)-Public	Service-Translators'	dispute-State	of
negotiations; the hon. member for Winnipeg-Assiniboine (Mr. McKenzie)-Veterans Affairs-Request for increase in war veterans allowance and disability pensions; the hon. member for Comox-Powell River (Mr. Skelly)-Consumer Affairs- Justification for certain department stores to increase finance charges.
It being five o'clock, the House will now proceed to the consideration of private members' business as listed on today's order paper, namely, notices of motions.



PRIVATE MEMBERS' MOTIONS


Hon. Perrin Beatty (Wellington-Dufferin-Simcoe) moved:: That, in the opinion of this House, the government should consider the advisability of introducing legislation to increase control and accountability of Crown corporations such as the provisions of Bill C-27, an act respecting Crown corporations and matters relating or incidental thereto, which was introduced in the First Session of the Thirty-first Parliament.
He said: Mr. Speaker, on April 30 1 put down this motion because I felt it was a matter of great necessity in this country that action be taken in the very near future to bring an appropriate regime of accountability and control to the myriad of Crown corporations for which the federal government has responsibility. 1 am delighted that the president of the Treas-
4760

November 17, 1980
Crown Corporations
ury Board (Mr. Johnston) is present this afternoon to watch the debate and follow the activities here, because he is the minister who now has the responsibility for the Crown corporations bill and who, perhaps, can give some indication to the House as to what the intention of the government is in this regard.
Earlier in this session I raised questions with the President of the Treasury Board and with the Prime Minister (Mr. Trudeau), asking whether they intended to take action similar to that which was proposed by our government a year ago. It would have brought before Parliament legislation to increase accountability on the part of Crown corporations and bring an appropriate regime before Parliament which would allow the flexibility necessary to deal with Crown corporations. It would have addressed a number of concerns raised by the Auditor General, the public accounts committee, the Lambert commission and various other groups who are concerned about the lack of an adequate method of accountability for Crown corporations at the present time.
When I raised the issue in this House previously, I was given the firm indication by the government that it accepted the principles that were involved in the Crown corporations legislation. Indeed, the Prime Minister said that the bill which we introduced in the last Parliament was simply a bill that had been drawn up by the Liberal government and was available to us when we took over. That, of course, was not the case. However, the initiative of trying to bring an appropriate regime with accountability of Crown corporations before Parliament was an initiative which dates back to the previous Liberal government. It was under the Clark administration, the administration led by my leader, that action was finally taken to bring legislation before Parliament which would deal with the myriad problems which had been created by this lack of proper accountability.
Although the President of the Treasury Board and the Prime Minister indicated at that time that they took this matter seriously and action would be forthcoming, and although privately we had indications from some members of the government that action would be taken very early after Parliament resumed in the fall. Parliament has yet to see any indication of seriousness whatsoever on the part of the government with regard to Crown corporations. We have yet to see an indication on the part of the government that it is prepared to take action in bringing legislation before Parliament to address these numerous concerns which were repeated most recently by the former Auditor General of Canada, Mr. J. J. Macdonell. Hon. members will remember that this bill was designed to provide ministers and Parliament with improved means to control and direct the management of Crown corporations and to ensure that their performance was accountable to ministers and Parliament.
The bill, and I stress this, was not part of the former government's privatization initiative. It was quite unique and separate from privatization in that its purpose was to increase the effectiveness of the corporations' various public policy objectives. At the same time, the bill sought to clarify grey
areas of jurisdiction that are of concern to Crown corporation managers and to correct the unrestricted proliferation of Crown corporations and their subsidiaries.
Most Canadians do not know the fact, but it is the fact that it is possible for three public servants to go out this afternoon and incorporate a new federal Crown corporation for which the government and taxpayers of Canada would be responsible. It is possible to incorporate Crown corporations through a number of different measures, including even under provincial government legislation. What we were trying to do was to ensure that when a decision was made that a Crown corporation could be created, it was made with the full knowledge of ministers and it was done consistent with the policies of the government and policies approved by Parliament. We do not believe it is in the national interest to have Crown corporations proliferating without any idea as to the numbers involved and as to the reasons why they are even created.
The bill addressed itself only to the control, direction and accountability of corporations that are wholly owned, whether directly or indirectly, by Her Majesty in right of Canada. In total, Bill C-27 applied to 178 corporations. It did not refer to corporations that are not wholly owned by the federal government. In other words, where there was mixed or joint enterprise where the federal government was involved, this was not coming under the ambit of the Crown corporation bill. It was to be dealt with by separate legislation, somewhat further down the line.
I would like to mention, and I think it is of interest to members of the House and the Canadian people, that we always had to revise that number upwards. We got it up to 178 because we kept on discovering Crown corporations which the government did not realize existed, but for which the Canadian people and the Government of Canada were responsible.
One of the provisions in the bill would have required that unless a Crown corporation has been listed in one of the schedules to the bill, it would cease to exist. It would have to be wound up and the people of Canada would not be held responsible for its liabilities. This was a provision designed to enable us to find other Crown corporations which to date had still been able to elude detection by the government. 1 suspect this figure of 178 Crown corporations wholly owned by the Government of Canada is in fact probably low.
Our government was convinced that the natures of these joint corporations differed so widely that it would be impossible to provide for them in legislation designed for wholly-owned corporations. Nor did Bill C-27 refer to those corporations engaged in functions of an artistic, entertainment or journalistic nature as their primary undertaking. We recognized that the CBC and other cultural organizations had special requirements that historically created a large degree of independence from Parliamentary scrutiny. As such, we made both of these types of corporations the subjects of separate reviews.
I must stress that it was the intention of our government to bring the CBC and the other cultural organizations into some appropriate regime of accountability which would recognize
November 17, 1980

the need for some element of cultural autonomy, but would still respond to the concern that many Canadians have over the lack of accountability of Crown corporations today. I would be very disturbed if, in legislation brought forward by the present government, there were some attempt made to ignore trying to bring in an appropriate regime of accountability for those Crown corporations.
In general, our government was attempting to replace the traditional philosophy behind the Crown corporations' relationship to Parliament. The belief that Crown corporations ought to be incorporated at arm's length from the government of the day and Parliament is outdated and perverse. While the ostensible purpose behind the arm's length philosophy was to insulate Crown corporations from political intervention in their operations, the practical effect was to break the accountability chain between Crown corporations and the government. As a result, on many occasions an environment has been established whereby management has been unresponsive to public policy objectives. To guard against this situation, we proposed that the governor in council should have the power to issue legally binding directives to Crown corporations to pursue objectives that are in the national interest.
1 must stress the fact that these directives were to be issued openly, not secretly and not privately as they can be today. They were to be issued in full view so that Canadians would know the reasons and the nature of government involvement in the day to day operation of Crown corporations.
An example of how directive power might have operated was that the provision might allow the government to dictate the location of new facilities in areas of high unemployment, or the buying of goods and services from Canadian companies. This would be an example of where something could be required by the governor in council in the national interest but the Crown corporations would have the right and the power to apply for compensation, if the government's directives resulted in a loss of revenues to them. They could have some compensation to ensure that their profitability did not suffer as a consequence. We could also recognize the direct cost to the taxpayer in terms of directives which were issued in the national interest.
To protect against abuses, however, all powers exercised had to be done publicly and in the form of a written order in council. These directives would then be automatically tabled in Parliament within 15 days of issuance or, if Parliament was not sitting, within 15 days of the beginning of the subsequent session. This type of stipulation would assure that situations could not arise whereby individual ministers could issue directions orally without it being recorded for public scrutiny. Such a stipulation, 1 might add, is not envisaged in the current government's Canada Post corporation bill. In this bill, responsibility for directive powers can lie in the hands of an individual minister. Those directives can be given orally. This is one of the concerns I have. In the absence of an initiative of the Crown corporation legislation, similar to the one taken by the previous government, at least a number of provisions in the Canada Post Crown corporation bill appear to fly directly in
Crown Corporations
the face of the policy that was established by the previous government, and which the Prime Minister earlier in this session tried to claim as his own.
Some of the other measures we proposed to ensure the general control, direction and accountability objectives of Bill C-27 were, first, a series of provisions that sought to strengthen the boards of directors of Crown corporations when carrying out their responsibilities. These provisions would be nearly identical to those of the Canada Business Corporations Act as they apply to the duties, responsibilities and liabilities of boards of directors. For example, directors would be responsible for the appointment and setting of salaries for vice-presidents. Since this bill put a premium on effective and efficient management, the board is likely to seek out individuals with demonstrated management abilities.
I might also refer here to Bill C-42, the Canada Post Corporation Act, which is very different in that it requires that appointments of vice-presidents of the Canada Post Corporation will have to be ratified by the governor in council and that the governor in council will have the power to set salary schedules of Crown corporation vice presidents. This obviously flies in the face of the concept that the responsibility of the board of directors of a Crown corporation is to manage the day to day activities of the Crown corporation, free from political interference.
A series of provisions was designed to exert control over the financial expenditures and commitments of Crown corporations by requiring their capital budgets to be submitted to the government for approval and continuing scrutiny. At the same time, these provisions allowed for more responsibility and flexibility for members of the boards of directors to develop corporate plans, capital budgets and to manage their own debt financing.
A key provision in Bill C-27 was the clarification of the meaning and implications of the term "agent of Her Majesty" for Crown corporations, especially as it applies to financing. As a result, corporations wishing to arrange long-term borrowing from private sources would have to do so on their own credit rather than that of the Crown. Moreover, the bill called for the accurate reflection in the public accounts of all liabilities incurred by a Crown corporation since, of course, they are liabilities of the Crown until they are fully repaid with regard to principal and interest.
Finally, there was a series of provisions designed to improve the financial management and control of Crown corporations; a range of proposals to provide members of Parliament on both sides with substantially more information about the activities of the Crown corporations; and a provision that would require statutory authority and governor in council approval of any future acquisitions or incorporations by Crown corporations or their subsidiaries. In sum, the provisions of the bill our government introduced set out what we believe to be an effective, workable and comprehensive Crown corporations bill.

November 1 7, 1980
Crown Corporations
The need for the type of legislation proposed in Bill C-27, Mr. Speaker, was well known before our government was in office. For many years, questions have been asked in the House about activities of various Crown corporations of which ministers have little knowledge. The standard response of "I do not know, but I shall try to find out", proved not only frustrating to the opposition, but embarrassing to members of cabinet. The 1975 Estey inquiry into the affairs of Air Canada not only criticized the lack of accountability to the government, but disclosed details of questionable transactions, shortcomings of financial control accounting procedures, and of fiscal management in the corporation. These findings were substantiated by the Auditor General's 1976 report to the House. That report concluded as follows:
In the majority of the Crown corporations audited by the Auditor General, financial management and control is weak and ineffective. Moreover co-ordination and guidance by central government agencies of financial management and control practices in these Crown corporations is virtually non-existent.
Two subsequent reports from the Standing Committee on Public Accounts in July, 1977, known as the Polysar report, and the Atomic Energy of Canada Limited report in February, 1978, reiterated the Auditor General's findings.
I remind the hon. members on the other side of the House that it was the Privy Council office in 1977 that published the so-called "Blue Book" which dealt with many of the concerns raised in the reports I have just mentioned. The numerous responses to this book from Crown corporations, the Canadian Institute of Chartered Accountants and the Auditor General, led to the establishment of an interdepartmental task force in mid-1978.
1 know it is not the conventional thing in the deliberations of this House, Mr. Speaker, to refer to public servants, but perhaps I can break with the convention and say that in the time I worked with the public servants who served on the Crown Corporations task force, 1 was impressed by their dedication to the public interest and their concern in addressing those worries which the Auditor General, the Lambert report and members of Parliament, expressed about the need for proper accountability and control of Crown corporations. I should like publicly to express my appreciation to the members of the Crown corporations task force for the tremendous contribution they made.
The task force, which consisted of officials from the Privy Council office, the Department of Justice, Treasury Board, the office of the Comptroller General, the Department of Finance and a Crown corporation, redefined the policy expressed in the "Blue Book". This happened before the Clark government came to office in May, 1979, but that government saw the importance of this initiative and quickly introduced legislation in Parliament.
It was after these efforts took place that our government decided to act upon the further findings of the Lambert commission. It recommended, among other things, a more direct reporting relationship between Crown corporations, management, and Parliament. Our intent was to act upon the Lambert report and the many others that were filed during the
previous government's term of office. Although it would be impossible ever to devise a bill that everyone agreed upon, our government was satisfied that strong opposition would not come from any of the quarters affected by the bill. Moreover, let me re-emphasize that there was no ideological premise to the bill. It was designed to bring control, direction and accountability to Crown corporations of the variety any democratic system ought to be able to insist upon. In brief, Mr. Speaker, there would seem to be no reason why the current government should not want either to support the bill we introduced, or table a new one of similar substance without delay. Yet, Mr. Speaker, the government continued to sit on the legislation.
As 1980 draws to a close, are we to wait for yet another Auditor General's report criticizing the current control and direction of Crown corporations before action is taken by the government? Or is the government prepared to follow the course our government set, and restore public confidence in the abilities of Crown corporations to fulfil the policy goals their mandate dictates? Mr. Speaker, the time to move on legislation is now, while the initiative is still fresh. It would be a tragedy for Parliament and the Canadian people if this bill were allowed to wither, simply because of a lack of will to make hard decisions and bring legislation before the House without delay.
1 urge the government to give an indication to the House today that it is prepared to give attention to and address the concerns shared by members of Parliament on all sides of the House, and which were expressed by a number of Crown corporations, by the Auditor General, by the Lambert commission and by members of the public. This matter cannot be delayed. It begs for urgent attention.


Some hon. Members:: Hear, hear!


Mr. Robert Gourd (Argenteuil):: I would like to begin by sharing with members of the House the important past and current role of Crown corporations or public enterprises in the achievement of government objectives. Even before confederation, governments had chosen a public enterprise model to reach a particular goal. In 1841 a Board of Works was created in the United Provinces of Canada to construct a canal system, and a number of harbour boards were also set up as public enterprises before confederation.
In Canada, the development of federal public enterprise is almost completely synonymous with the development of the Crown corporation form of administration.
After confederation in 1867, the federal government continued to use the Crown corporation form for administration of harbour facilities throughout the dominion. All of the individual harbour Crown corporations were eventually subsumed into one-the National Harbours Board.
The year 1919 marked the point at which the federal government made a massive venture into public enterprise and created the company that remains our largest Crown corporation, the Canadian National Railways. The pre-war railway construction boom had ended with only the CPR in sound
November 17, 1980

financial condition and three new transcontinental roads tottering on the edge of bankruptcy. Because of the federal government's large investment in the railways, and to protect the image of Canada's credit in the foreign capital markets, the government took over ownership of the three railways and brought them together under the corporate umbrella of Canadian National.
The CN experiment, as it was called at the time, was embarked upon by the government with serious misgivings and with much public debate. In spite of early doubts, the federal government was to resort with increasing frequency to the Crown corporation form for the provision of essential services. In 1932 the Canadian Radio Broadcasting Commission, later known as the Canadian Broadcasting Corporation, was established to regulate and administer a national broadcasting service. In 1937 Trans-Canada Airlines was established by the federal government to provide domestic air services across the country. The government had hoped to establish TCA as a mixed enterprise in partnership with the private sector, but was unable to attract private investors. The corporation was consequently established as a wholly-owned subsidiary of Canadian National.
By 1939, aside from CN, the harbour corporations, TCA and the CBC, Crown corporations had been established to operate sea transportation services, market wheat, administer a central banking system, the Bank of Canada, and extend long-term credit to farmers.
The war years, 1939-45, marked a period of tremendous growth of Crown corporations. In scarcely more than five years, 32 Crown corporations were established to assist in production, procurement, construction and distribution for the war effort. The large majority of these corporations were established by the government under the Canada Companies Act pursuant to an authority vested in the minister of munitions and supplies by an act of Parliament.
Although most of the wartime Crown corporations were wound up with the arrival of peace, the federal government created a number of Crown corporations during the reconstruction period immediately following the war, and by 1950 there were 33 in operation. Now, in 1980, there are 63 Crown corporations in existence, excluding subsidiaries. Added to the pre-war and remaining wartime corporations have been marketing boards, a National Arts Centre, an export insurance and guarantee company, an oil company, and companies in the fields of telecommunications, administration of the St. Lawrence Seaway, coal mining, industrial development, electric power production, heavy water and nuclear reactor production and construction, uranium processing, sale and stockpiling, cultural support, unemployment insurance and science, medical and economic research and advice.
The federal Crown corporation is an adaption of the corporate form familiar to the private sector. Each corporation is created either by an act of Parliament or by a minister or cabinet by letters patent under the Canada Business Corpora-
Crown Corporations
tions Act or its predecessors. The latter is done pursuant to an authority vested in a minister or in cabinet by an act of Parliament.
For each Crown corporation an appropriate minister is designed, either by the legislation incorporating the company or by cabinet. The appropriate minister, in constitutional terms, reports to Parliament on behalf of the Crown corporation. Although there are exceptions, most Crown corporations are headed by boards of directors. In many cases the boards of directors consist, in whole or in part, of public servants. In the cases of those corporations that operate in a competitive market or that are expected to operate on a profit basis, the boards of directors are usually composed entirely-or at least a majority-of individuals from the private sector appointed by cabinet.
In a few cases, such as the Canadian Broadcasting Corporation, the legislation incorporating the corporation will state that directors must be appointed from certain regions of the country to obtain a regional balance on a board.
[Translation\
Quite often civil servants are appointed to the board of directors of Crown corporations. Members of Parliament or ministers are never appointed, however. The mechanism of federal Crown corporations is used precisely to make sure that the operations are not constantly the object of partisan interventions, government controls or debates in Parliament. The various governments have therefore always refused to appoint ministers or members of their own legislatures to the board of directors of these corporations lest this principle be violated.
In most cases, executive officers and directors of Crown corporations are appointed for a set term; however, most of their positions can be revoked before the end of their term. In certain cases, as for the Canadian Broadcasting Corporation, the positions of executive officers and directors are more secure and they cannot be removed without just cause. The directors of corporations incorporated by letters patent instead of by an act of Parliament are appointed by the competent minister as trustee shareholders. The directors then elect a chairman of the board and an executive director within the corporation or from outside. Usually they seek advice from the government which in turn suggests the person or persons who could fill the positions. The directors have always gone along with these suggestions. On the other hand, it frequently happens that they have already chosen a candidate which is nearly always accepted by the government. With few exceptions, the government is the sole owner of Crown corporations. When a corporation has shares, the minister in charge holds them in trust in the name of Her Majesty in the right of Canada. The government is not only the owner of the corporations, it is also their banker, although many of them can finance their own operation and pay out of their own revenues part of their capital costs. Most of them, when they need outside financing, can obtain subsidies, loans and advance payments from the

November 17, 1980
Crown Corporations
Consolidated Revenue Fund. Few are those which obtain financial requirements from private sources, and fewer even are those which do so without the government being called upon to provide security.

The Financial Administration Act is a landmark statute in the development of the Crown corporation form and in their control, direction and accountability. As stated previously, by 1950 there were in existence some 33 Crown corporations. Probably because of the diverse and often urgent requirements that led to their creation over a total of 30 years by successive governments, there was little in the way of consistency in the federal government's formal ability to control and direct Crown corporations or monitor their performance. The connection between Parliament and Crown corporations was particularly weak.
To rectify this situation, Parliament approved the Financial Administration Act in 1951. The act in its entirety provides a foundation for the financial administration of the Government of Canada. Part VIII applies solely to Crown corporations and provides a foundation for the financial relations between Crown corporations and the government on one hand and the government and Parliament on the other.
The issue of parliamentary scrutiny is addressed by having all Crown corporations' annual reports and annual capital budgets tabled in Parliament regardless of sources or requirements for financing.
The major focus of part VIII of the FAA is to define the ministry's powers with respect to Crown corporations, for the fundamental principle around which part VIII was built was that the ministry would exercise the owner's prerogatives with respect to Crown corporations while Parliament would hold the ministry to account for the exercise of those prerogatives. The information provided to Parliament through capital budgets and annual reports assists members of Parliament in holding the ministry to account. It also assists executives of Crown corporations themselves in accounting for their activities when they appear before parliamentary committees.
Before turning to a description of the powers vested in the government by part VIII, it is important to note that it groups Crown corporations in three classes or schedules attached to the FAA. The first group, schedule B, covers what are known as "departmental corporations" and includes those corporations responsible for "administrative, supervisory or regulatory services of a governmental nature." The second group, schedule C, known as "agency corporations", includes those corporations responsible for the "management of trading or service operations on a quasi-commercial basis" or for the "management of procurement, construction or disposal activities" on behalf of the government. In this group are to be found the remaining corporations established during the Second World War. The final group, schedule D, known as "proprietary corporations", includes those corporations managing "lending or financial institutions or commercial and
industrial operations" involving the production of, or dealing in, goods and the supplying of services to the public. This last group now lists the major commercially-oriented Crown corporations, including Canadian National, Eldorado Nuclear Limited, Air Canada and Petro-Canada.
On a continuum of independence, the corporations in schedule B are the least independent. For purposes of financial administration they are treated as departments of government under the more or less continuous direction and control of a minister.
At the other end of the continuum are located the schedule D corporations. Aside from the power to appoint and dismiss directors and the chairmen and chief executive officers of most schedule D corporations, the government's major powers of control and direction are limited by the FAA to the approval of annual capital budgets and appointments of auditors. Prior to tabling in Parliament, capital budgets are submitted by each corporation and approved by cabinet on the recommendation of the appropriate minister, the minister of finance and the president of the Treasury Board.
Located between the schedule B and the schedule D corporations, the schedule C corporations are "agents of Her Majesty". As well as submitting annual capital budgets for approval like the schedule D corporations, schedule C corporations must also submit annual operating budgets for approval by the approprate minister and president of the Treasury Board. The cabinet is responsible for appointing the auditor for each schedule C corporation and can also issue regulations respecting the contractural commitments of any or all schedule C corporations.
In addition, part VIII also provides for prescribing the form of annual budgets, regulating the reserves, banking accounts and treating of surplus moneys and requires the submission of annual and other reports to the minister. Annual reports were to include the audited financial statements of the corporation and the form and content was to be prescribed jointly by the appropriate minister and minister of finance. Finally, the reporting requirements for the auditor of a Crown corporation and the minimum content of the annual financial statements were set out in some detail in part VIII.
I would like to conclude by pointing out that it was the previous Liberal government which initiated a major study of the broad issue of the control, direction and accountability of Crown corporations. As a result, a blue paper was published in 1977 outlining the government's proposals regarding a renewed relationship between the government and Crown corporations. Such an initiative has led to important discussions among all interested parties of the role of Crown corporations and the appropriate degree of government and parliamentary scrutiny, control and direction necessary. I should add that an interdepartmental task force established by the previous Liberal government to advise the government on this important question continues to meet and to refine the options for consideration by this government.
November 17, 1980


Mr. Louis R. Desmarais (Parliamentary Secretary to Minister of Labour):: Mr. Speaker, I should like to say at the outset to the hon. member for Wellington-Dufferin-Simcoe (Mr. Beatty) that the control mechanism together with the issue of the accountability of Crown corporations is being examined at present by the Standing Committee on Public Accounts of which 1 am vice-chairman. Indeed, tomorrow morning three Crown corporations will be appearing before us at eleven o'clock. The committee's purpose is to examine whether or not the provisions of clause 63 of Bill C-27 should be implemented and how it should be done. Specifically, we are studying the advisability of having the auditors of a Crown corporation submit special reports under subclauses 2, 3 and 4 of clause 63. Subclause 2 reads as follows:
If, in the course of making his examination for the annual report under subsection (1), the auditor of a Crown corporation observes anything that he considers to be of significance and of a nature that should be brought to the attention of the board of directors of the corporation, including any case in which he has observed that
(a)	money has been expended without due regard to economy or efficiency, or
(b)	satisfactory procedures have not been established to measure and report the effectiveness of programs, where such procedures could appropriately and reasonably be implemented,
the auditor shall prepare a report, in addition to his annual report, in which he shall call attention to those observations.
Subclause (3) reads:
The auditor of a Crown corporation named in the schedules shall make the examination that in his opinion is necessary to report whether in the period under examination
(a)	money has been expended without due regard to economy or efficiency; or
(b)	satisfactory procedures have not been established to measure and report the effectiveness of programs, where such procedures could appropriately and reasonably be implemented.
Finally, subclause (4) reads:
A report under subsection (3) shall be made at least once every five years and at such additional times as the governor in council or the board of directors of the Crown corporation require or, in the case of a Crown corporation named in schedule B to the Financial Administration Act or schedule I to this act, as the auditor of the corporation deems necessary.
1 have a very keen interest in the subject of this motion, but I would not want to prejudge the examination of this question by the committee which will begin tomorrow morning. Having said that, it might be useful to review briefly what is being done in some of our provincial legislatures on this subject. This follows along the lines that were expounded upon by the hon. member for Argenteuil (Mr. Gourd) with respect to federal institutions.
Most of the electric power consumed by Canadians is produced by some form of public enterprise. In many parts of Canada, especially in the prairie provinces, telephone systems are owned and operated by government-owned corporations. All alcohol consumed legally by Canadians is distributed by some form of government enterprise, and, at the municipal level, most of the water consumed is provided through public enterprise, again all under provincial jurisdiction. The first major venture of British Columbia into public enterprise was
Crown Corporations
strikingly similar to the federal government's creation of the railroad.
The Pacific Great Eastern, now known as the British Columbia Railroad Authority, stands as a classic example of public enterprise established to provide essential services. Also British Columbia assumed control over B.C. Electric Company and B.C. Hydro to form yet another major public corporation, the British Columbia Hydro and Power Authority. The province has also established the following entities as public corporations: British Columbia Ferry Corporation, the Housing Corporation of British Columbia and the Insurance Corporation of British Columbia. It has enacted legislation concerning the accountability of the four previously mentioned corporations. Other involvement by this province has included the Ocean Falls Corporation, a pulp and paper mill enterprise; Panco Poultry Limited and British Columbia Petroleum Corporation, the sole marketing agent for all natural gas produced in the province.
Prior to the end of the Second World War there were only two Crown corporations in existence in Saskatchewan, one operating the provincial telephone system, the other a small power utility. In the period between 1973 and 1976, ten new Crown corporations were set up. Three of these were major proprietary natural resources corporations-the Saskatchewan Oil and Gas Corporation, the Saskatchewan Mining Development Corporation and Potash Corporation of Saskatchewan. The remaining seven were generally smaller in scale and most of them had a departmental or agency function. One of the remaining seven Crown corporations is the Saskatchewan Development Fund Corporation which serves as an investment vehicle for Saskatchewan residents, providing minimum risk investment and a source of capital to assist in the retention of the control of the Saskatchewan economy by residents of the province.
Almost from the beginning the government of Saskatchewan maintained a comprehensive system for the accountability and control of Crown corporations. The system consists essentially of four key elements: the practice of cabinet ministers serving as chairmen and directors of the boards of Crown corporations; the government finance office which itself is a holding Crown corporation; a general statute called the Crown Corporations Act and a select standing committee of the legislature on Crown corporations which scrutinizes the activities of corporations.

In Quebec, Mr. Speaker, Crown corporations are limited to those with an industrial, commercial and financial purpose. Before the sixties, the intervention of the Quebec government in the provincial economy had been limited to the creation of the Quebec sugar refinery and Hydro-Quebec. These two corporations were created to meet the needs of the day without any expression of a general desire for government intervention in the provincial economy by such corporations. In the early sixties, the government clearly made its intention known to set up industrially, commercially and financially-oriented Crown

November 17, 1980

Crown Corporations
corporations, the main purpose of which, despite very diversified aims, is to promote economic development and to contribute to the renewal of Quebec's industrial structure.
The establishment of the Societe generate de financement, the takeover of private power companies by Hydro-Quebec, the establishment of the Societe quebecoise d'exploitation miniere-SOQUEM-and of the Caisse de depot et de placement were the first concrete elements of this policy. A few years later, Mr. Speaker, the establishment of Sidbec and of the Societe quebecoise d'initiatives petrolieres was based on the same problematics.
In the early seventies, always in the same perspective, the Societe de recuperation, d'exploitation et de developpement forestier du Quebec-REXFOR-became really a government corporation and the Societe des traversiers du Quebec, the Societe quebecoise d'initiatives agro-alimentaires and the Societe de developpement immobilier were created. More recently, in difficult circumstances, the government established the Regie des installations olympiques which had the mandate to see that the works were completed in time for the Olympic Games; it is presently responsible for the administration and the marketing of the equipment which was used for those games.
Similarly, it must be pointed out that the James Bay Development Corporation, though very similar to the other corporations in many of its functions, does have a broader mandate, in that it is responsible for the development of a huge area of the province.
In Quebec, the control of public enterprises, in its application, resembles that which generally applies to Canadian and British corporations. That is readily understood since the fundamental principle was also adopted according to which the members of the board of directors are the main trustees of the public property whose administration they are responsible for. As a consequence, government interventions can only be justified by reference to elements of general policy: the creation of business and liquidation, determination of its sphere of activity, setting up of its board of directors, the requirement to present an annual operations report to the National Assembly. Those are as many controls which apply to the general administration of Crown corporations and which constitute the basic framework of relations between the government and public corporations in almost every country.
Of course, the financial structure constitutes the very core of that government control, even though it differs necessarily from that which applies in the integrated public service. Loans, usually, tariffs, rates of interest, contributions or fees, sometimes require prior authorization. But, as I have already said, that is the purpose of the study in the public accounts standing committee of the House, which study is scheduled to start tomorrow morning.

In Ontario, public enterprises exist in such varied areas as housing; energy, including utilities; economic development; transportation; culture and the arts. Recently the Ontario government established the Small Business Development Corporation in order to expand the small business sector and encourage more employment.
In Newfoundland, the Lower Churchill Development Corporation, established with the help of the federal government, identified market opportunities in Quebec, the maritimes and the United States for the proposed 1,600-megawatt Gull Island project in Labrador.
Alberta resorted to the public corporation model in order to provide regional air services by means of Pacific Western Airlines, and Manitoba continues to support industrial development through the Manitoba Development Corporation, the provincial lending agency.
All the previously-mentioned examples well illustrate the diversified use of public enterprises in Canada. They help emphasize the importance of such vehicles in the social, economic and cultural development of this country. Their control and accountability is all the more vital to Canadians and the federal government. Certainly, the federal government should lead the way in developing policies which will clearly indicate how they can best be controlled and how best we can achieve efficiency of operation. To help us get on with the job it would be very useful if the member for Wellington-Dufferin-Simcoe would prevail upon his hon. friends to help us clean up the backlog of legislation we face.
Mir. Marcel Roy (Laval): Mr. Speaker, I thank the hon. member who gives me the opportunity this afternoon to participate in this debate on the need for greater control over Crown corporations. 1 was particularly interested in this subject, Mr. Speaker, when we were in the opposition and the government was planning, under its program of privatization of Crown corporations, to sell to the private sector Canadair, a corporation with a brilliant record which is today the pride of all Canadians.
It was proposed to turn this corporation over to the private sector under the privatization program of Crown corporations. Mr. Speaker, I then introduced in the House a private bill, Bill C-237, an act to provide for the accountability to Parliament of Crown agencies, precisely in order to prevent a decision from being taken without all members having been informed, namely of the sale or the sale at a loss of a corporation such as Canadair to the private sector.
I heard the hon. member for Dollard (Mr. Desmarais) and the hon. member for Argenteuil (Mr. Gourd) structure somewhat the Crown corporations in the area of their industrial responsibility, at the service and commercial level. I think it is in that context that we must consider the development of our
November 17, 1980

Crown corporations. In my capacity as vice-chairman of a special committee, I would use as an example the Canadian Trade Corporation, which is to inquire into every possibility of developing Canadian trade and manufactured goods on the export markets.
The Liberal government is committed to the development of our export markets, the development of our manufactured goods trade, increasing our share of the global market for manufactured goods. To that end, we are considering every opportunity to find a vehicle for our small and medium-size businesses, our small manufacturers, to take part in that global market open to every nation. And we see how aggressively corporations from every nation are competing for that global market. We have been acting through various bodies, some government, some private and some mixed ones, Crown corporations acting with the private sector. I am thinking, for instance, of what France is doing to develop markets for its mixed corporations, with mixed credit provisions. That country is very aggressive on international markets.
Because the terms of reference we had on June 11 last simply referred to a national trade corporation, we received more than 150 briefs from manufacturers, across Canada and abroad . They told us: Please, do not set up another Crown corporation because you have too much control over them. You do not have enough leeway to take decisions at the right time. It is my feeling that the phrase "Crown corporation" scared the majority of manufacturers who made representations to committee members. When we talk about Crown corporations, as the hon. member for Argenteuil has mentioned, we have the corporations listed in Schedule B, which includes the Agricultural Stabilization Board and the Economic Council of Canada, those which come under schedule C, such as Loto Canada, which was then classified as a Crown corporation in this category, those in schedule D to which the hon. member for Argenteuil referred and which includes Air Canada, the Export Development Corporation, the Federal Business Development Bank and Canadair. These organizations have a private boad of directors made up of directors, industrialists and companies, which can act much more quickly within the activities of these Crown corporations. From the testimonies that we have heard, I believe that the manufacturers are mostly afraid to have more control which would greatly delay the decisions made by the boards of directors of these Crown corporations.
Mr. Speaker, what is important in the terminology or the designation of a Crown corporation-and this is exactly what the two previous speakers have tried to say-is the explanation of the activities and the role of these Crown Corporations. For my part, 1 would like to recall in this debate that when I introduced Bill C-237, an act to provide for the accountability to Parliament of Crown agencies, my objective was precisely to provide more information to members of Parliament, not only by receiving an annual report from Crown corporations, but
Bank Act
also by getting a bit more involved as need be in the planning and implementation programs of the next few years.
There are certain Crown corporations where we might make some improvement in this regard. When the annual report is published, we should as soon as possible refer it to a committee of the Senate or the House, so that the parliamentarians may have more information and play a more direct role in the activities of Crown corporations. I am happy to see that the hon. member for Dollard has stated that the objectives of the present government include a review of the role of these Crown corporations, and I understand that starting tomorrow, the Standing Committee on Miscellaneous Estimates will review the role and the evolution of Crown corporations.
1 will conclude on this point, Mr. Speaker. 1 suggest that it is a matter of defining our Crown corporations and of determining their responsibilities. According to my experience, when one mentions a national trading corporation, as I was able to learn last summer, manufacturers, businessmen, industrialists are afraid of this designation, because it is said, maybe due to excess control, maybe because decisions have to be made after consultation with several people. In the trade sector, decisions have to be made in due time, because we are aware of the aggressiveness of our competitors. Far from being opposed to Crown corporations, I suggest-


The Acting Speaker (Mir. Ethier):: Order, please. The hour provided for the consideration of private members' business having expired, I do now leave the chair until eight o'clock.
At 6 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.


[Stage Direction]
The House resumed consideration of Bill C-6, to revise the Bank Act, to amend the Quebec Savings Banks Act and the Bank of Canada Act, to establish the Canadian Payments Association and to amend other acts in consequence thereof, as reported (with amendments) from the Standing Committee on Finance, Trade and Economic Affairs and motion No. 39.
The Acting Speaker (Mr. Blaker):: Order, please. When the debate was interrupted at five o'clock this afternoon the hon.

November 17, 1980
Bank Act
member for Kootenay East-Revelstoke (Mr. Parker) had the floor on motion No. 39.


Sidney James Parker: Mr. Speaker, when I was interrupted at five o'clock, I was speaking about foreclosures and the Federal Business Development Bank. Concerned about the fact that the Federal Business Development Bank was affecting the borrowing of many people, 1 contacted its offices in an attempt to trace down how many loans in my riding it had foreclosed in the last year. I was told that this information was not available to me. It would appear the number is quite serious.
I would like to get back to the amendment introduced by my hon. friend from Broadview-Greenwood (Mr. Rae). It is very important that this amendment be given serious consideration by both sides of the House. I urge all hon. members to take the initiative and support the amendment because it would stimulate the housing industry to such an extent that the small entrepreneur would become involved in housing projects. I can foresee farmers coming forward and making use of the lower interest rates which would result. Small businesses would become more competitive and more involved once again, and there would be more economic development.
Rather than increasing unemployment, taxes and costs in general, the economy would be stimulated and more challenging, particularly in the business sector, the farm sector, the housing sector and the economic development sector. 1 do not wish to carry on the debate any longer, but I would encourage hon. members to take a serious look at the amendment and then support it.


Pierre Bussières: Mr. Speaker, 1 shall be very brief. The proposed amendment would allow the members of the New Democratic Party to give us a really exhaustive view of the kind of bank act that would meet the requirements of the socialist philosophy. Unfortunately, I must take exception with most members who have spoken for their failure to develop that socialist philosophy, as the amendment proposed by the hon. member for Broadview-Greenwood (Mr. Rae) provided them with a wonderful opportunity to do so.
As concerns our government, it has no intention at all to legislate and to control bank activities. It feels that the Bank Act establishes the framework and limits the operations and the activities of these institutions called banks in the best interests of Canadians. We are not ready to nationalize banks through the back door or in a round about way by saying to the banks: You are going to make mortgage loans to such and such a category of people rather than to another. You are going to make loans at a preferred rate to such and such a type of industry rather than to another. This amendment would nationalize chartered banks in a round about way, which this government is not ready to do.


The Acting Speaker (Mr. Blaker):: Is the House ready for the question?


Some hon. Members:: Question.


The Acting Speaker (Mr. Blaker):: All those in favour of the motion will please say yea.


Some hon. Members:: Yea!


The Acting Speaker (Mr. Blaker):: All those opposed will please say nay.


Some hon. Members:: Nay!


The Acting Speaker (Mr. Blaker):: In my opinion the nays have it.


Stanley Howard Knowles: On division.


The Acting Speaker (Mr. Blaker):: I declare the motion negatived on division.
Motion No. 39 (Mr. Rae) negatived.


The Acting Speaker (Mr. Blaker):: The House will now proceed to the consideration of Motion No. 40.


Stanley Howard Knowles: Motion No. 40
That Bill C-6, an act to revise the Bank Act, to amend the Quebec Savings Banks Act and the Bank of Canada Act, to establish the Canadian Payments Association and to amend other acts in consequence thereof, be amended in clause 2 by adding immediately after line 28 at page 225 the following new section:
"202.2(1) A bank shall inform its customers who may be eligible, of any federal government financial assistance programs offered through the banks.
(2)	A bank may not require a borrower to provide collateral in excess of 100 per cent of the value of a loan.
(3)	A bank shall provide a borrower who has applied for a loan and been turned down with a clear statement of the reasons why a loan was denied.
(4)	Where, on an application to, and in proceedings before, a superior court of a province, a county court or any court of competent jurisdiction in a province, it is determined by the court, that
(a) the credit charge rate in a lending transaction was unwarranted, or
(/>) the refusal of a bank to lend to a borrower was unwarranted, the court may reopen the transaction, set aside, either in whole or in part, revise or alter any agreement made or security given in respect of the transaction in the case of the transaction in the case of paragraph (a), require the lender to enter into a loan transaction, in the case of paragraph (6)."


The Acting Speaker (Mr. Blaker):: Is the House ready for the question?


Some hon. Members:: Question.


The Acting Speaker (Mr. Blaker):: All those in favour will please say yea.


Some hon. Members:: Yea!
November 17, 1980


The Acting Speaker (Mr. Blaker):: All those opposed will please say nay.


Some hon. Members:: Nay!


The Acting Speaker (Mr. Blaker):: In my opinion the nays have it.


Stanley Howard Knowles: On division.


The Acting Speaker (Mr. Blaker):: 1 declare the motion negatived on division.
Motion No. 40 (Mr. Rae) negatived.


Stanley Howard Knowles: Motion No. 41
That Bill C-6, an act to revise the Bank Act, to amend the Quebec Savings Banks Act and the Bank of Canada Act, to establish the Canadian Payments Association and to amend other acts in consequence thereof, be amended in clause 2 by adding immediately after line 42 at page 225 the following new subsection:
"(11) A bank shall cash all cheques issued by the Government of Canada
and shall not make a charge regardless if the person holds an account with the
bank, provided the person provides proper identification."


The Acting Speaker (Mr. Blaker):: Is the House ready for the question?


Some hon. Members:: Question.


The Acting Speaker (Mr. Blaker):: All those in favour of the motion will please say yea.


Some hon. Members:: Yea!


The Acting Speaker (Mr. Blaker):: All those opposed will please say nay.


Some hon. Members:: Nay!


The Acting Speaker (Mr. Blaker):: In my opinion the nays have it.


Stanley Howard Knowles: On division.


The Acting Speaker (Mr. Blaker):: I declare the motion negatived on division.
Motion No. 41 (Mr. Rae) negatived.


Marcel Joseph Aimé Lambert: Motion No. 42
That Bill C-6, an act to revise the Bank Act, to amend the Quebec Savings Banks Act and the Bank of Canada Act, to establish the Canadian Payments Association and to amend other acts in consequence thereof, be amended in clause 2 by striking out line 11 at page 231 and substituting the following therefor:
"banks;
(d) Canadian currency deposits with any bank that was a bank at the coming into force of this act and that, as at the end of the financial year immediately preceding the coming into force of this act, had total assets of three billion dollars or less, if such deposits have an original term of maturity of one year or more and are not encashable, and encashable
Bank Act
Canadian currency deposits with such a bank that are not encashable until
after one year from the date of issue; and" and that paragraph (d) be renumbered (e).
He said: Mr. Speaker, this is a very short point that I hope will commend itself to members opposite. The minister will recall that when the committee considered clause 208(8) at page 231, it had been agreed that Canadian currency deposits, particularly non-interest bearing demand deposits, should figure in the determination of reserves, but when there had to be some deposit liabilities contained, we had to consider which deposit liabilities of the banks required reserves. The original bill proposed that since deposit certificates with a maturity date of over one year were not really current liabilities, they would not require such deposit liabilities. However, discussion in the committee showed that instead of writing certificates for one year or 365 days, the banks were proposing to write them for 366 days which, of course, immediately took them out of the category of deposit liabilities requiring reserves.
In competition with the trust companies for the very same money which is invested in deposit liabilities, the banks have to maintain reserves. It should be remembered that the bill does not change the requirement for secondary reserves. The banks have been given a fair break on the question of reserves; lower reserves are being required than was the case 12 years ago and what the law calls for today. In so far as these deposit certificates were concerned, it was going to give them an advantage of about three-eighths of 1 per cent over the trust companies in the same field.
In the whole spectrum of financial institutions in Canada, we start out with the chartered banks, then the trust companies, caisses populaires, credit unions and a number of other quasi-banks. The trust companies, whether they are federally or provincially incorporated, constitute an important sector in that whole spectrum. In fact, they are the only ones allowed to carry out fiduciary responsibilities. Because they must invest 75 per cent of their money in mortgages, it is essential that they get the longer-term money, particularly the five-year certificates.
The committee agreed with this proposal which was made both here and in the Senate. However, I am prepared to put forward a moderating amendment, and this is the nature of it. It effects the change we brought about in the committee. It causes some real problems for the newer banks that are just starting up such as the Continental, the Northland and the Bank of British Columbia as well as the Canadian Commercial and Industrial Bank. Not all of these write certificates, but some may. I know that the Continental Bank in particular is rather hard pressed by this requirement upholding reserves. My amendment is very simple. I believe businesses which are starting up should be given a chance. That is what I am doing with this amendment. It states, if at the time of coming into force of this act, a bank and I quote:
-as at the end of the financial year immediately preceding the coming into force of this act, had total assets of $3 billion or less, if such deposits have an original term of maturity of one year or more and are not encashable, and encashable Canadian currency deposits with such a bank that are not encashable until after one year from the date of issue-

November 17, 1980
Bank Act
This means that the small nascent banks will not be caught by our deposit liability reserves on deposit certificates. The Mercantile Bank would come in at about $5 billion, but it has had a good 12 years in its present form plus some years of prior experience.
I therefore commend this amendment to hon. members. 1 think the minister has some sympathy for it. It is an enabling amendment to cover new banks which started up in the past four or five years. The Bank of British Columbia is a little older than that, but I understand it has not done much deposit certificate writing. However, this is a field of operations into which it may wish to move. I am not grinding any particular axe, except I wish to alleviate the burden we impose upon the banks with an amendment we made in committee.


Pierre Bussières: Mr. Speaker, in order to justify the position I will take in respect of the amendment before us, motion No. 42 of the hon. member /or Edmonton West (Mr. Lambert), I wish to review briefly rather than the change in provision in clause 202(8), to which the hon. member referred and that he wants to "correct" or to soften in a way, but a few provisions of the white paper and of the act as far as reserves are concerned.
First of all, let us consider that aspect, reserves, by comparing them with the situation provided for in section 72 of the present Bank Act. The first kind of reserves that we shall have and which is not provided for under present section 72 of the act is 3 per cent in compulsory reserves on deposits in foreign currencies, but which belong to Canadian citizens. Therefore, this is a new provision, 3 per cent on deposits in foreign currencies belonging to Canadians. This provision did not exist in section 72 of the existing act and it was included in the new legislation. According to section 72(1 )(a) of the existing act, 12 per cent of the demand deposit liabilities must be in reserves. The legislation before us, and which will come into force, I hope, within a few hours, reduces the compulsory reserves on demand deposit liabilities from 12 per cent to 10 per cent. It is therefore a 2 per cent reduction of the reserve requirement, a rather considerable amount considering the volume of currency involved.
Notice deposit liabilities amounted to $500 million, and this is extremely important for the kind of institutions which the member for Edmonton West (Mr. Lambert) wants to protect. Section 72 of the existing act specifies 4 per cent, while notice deposit liabilities have now been reduced from 4 per cent to 2 per cent. It is therefore an important relief for those first $500 of notice deposit liabilities which particularly affect those institutions. A 2 per cent reduction is most significant.
Notice deposit liabilities, under section 72 of the act, are for an amount exceeding $500 million. Therefore for the largest institutions section 72 now specifies 4 per cent, but now it will
only be 3 per cent. On the first $500 million, a greater reduction from 4 per cent to 2 per cent is granted to the smaller institutions, while over $500 million, the reduction is only from 4 per cent to 3 per cent. As for term deposits of residents in Canadian currency, as provided in clause 208(8), the hon. member indicated that we had brought in an amendment to restore or maintain a certain balance among financial institutions. We know that such reserves stipulated under section 72 of the existing act will no longer exist under the new legislation. We have agreed to reintroduce temporarily this reserve requirement-and I do say temporarily-until the government introduces legislation concerning trust and finance companies as well as savings banks. We will then create a new competitive environment for financial institutions such as trust and finance companies. This new competitive balance, so to speak, with respect to banks will allow us to reinstate the original provision and to remove the reserve requirements we had reintroduced.
However, in view of the reductions in the bank reserves, we have already provided, as I indicated and which are significant, it does not appear that the reinstatement of this provision will endanger the financial outlook of the banks and especially their competitiveness. We are maintaining the status quo in one area while providing many breaks in others where reserves are concerned, and that is why w? are opposed to the amendment proposed by the hon. member for Edmonton West.


Donald Alex Blenkarn: Mr. Speaker, the amendment before us deals with reserves. Its purpose is to change some of the conditions concerning reserves that we discussed with the minister and his assistant to protect trust institutions by giving them some advantage as the banks are already heavily in the mortgage industry. It came to our attention, however, that some of the smaller banks, particularly the Continental Bank, borrowed a great deal of money on term deposits. As we all know, the Continental Bank has been expanding rapidly and has been dealing with small business in particular. Indeed, in my community of Mississauga, it operates a first-class institution, which gears its entire activity to the small business community.
The amendment proposed by the hon. member for Edmonton West (Mr. Lambert) would protect banks with less than $3 billion worth of assets. It would give an opportunity for not requiring them to have a secondary reserve.
As the minister has pointed out, when our minds were directed to reserves being required, it was with the idea that if the large banks were given permission to borrow on deposit terms in excess of one year without filing reserves for those deposit terms, they would be able to compete seriously with the trust industry. The minister pointed out that until there was an amendment to the Loan Companies Act giving trust companies certain additional powers in terms of investment, the trust industry would be in serious difficulty concerning its GICs.
November 17, 1980

This amendment protects the smaller chartered banks in the country. It enables them to be competitive. In effect, the minister is saying that if you are going to be in the business, you have to be in it with the big boys all the way. The amendment protects some very small institutions in relative terms-the Northland Bank, the Continental Bank, the Bank of British Columbia, the Canadian Commercial Bank-and that is all it protects. It is particularly valuable to the Continental Bank, however.
The bank interest rates allowable on one to five-year GICs were published this morning. It appears that in order to raise money, the Continental Bank must pay between .25 per cent and .5 per cent more than the other chartered banks in Canada. In effect, with the reserve requirement, this increases what they must pay for their money by three-eights of 1 per cent. It is a serious penalty to the smaller banks.
One of the purposes of this bill was to improve competition. It may well be that our pressure convinced the government to change this section. We were directing our minds to the large institutions but the small institutions may have been very seriously penalized.
I think it would not do the government any harm to support this amendment since it would encourage the relatively small Canadian-owned banks, at least for the time being. As the minister has stated, this is a short-term problem. In committee, he promised to introduce a new bill in connection with the loan and trust companies. He promised it for this fall, but we have not seen it yet. We are concerned, because we think it should have been introduced long ago. The minister fails to understand the concept of removing the requirement for reserves on these relatively small institutions. A specific provision is required in order to bring this about.
The minister is suggesting that this particular reserve will be removed from all banks under a separate amendment to the Bank Act when the Loan Companies Act is amended. We are waiting for the amendment to the Loan Companies Act, but we suggest that in the meantime the requirement for a second reserve in accordance with the suggestion of my colleague from Edmonton should be reserved in the case of the small banks because these are Canadian-owned banks. What we should do is make sure that they have a little bit of a competitive advantage. I suppose it is very difficult theoretically to say one bank should be treated differently from another, but we do this in many places in this act. We treat the Mercantile Bank, for example, a little differently from other banks. We allow it to have the right to have its shares held a little differently. We are going to treat Citibank, a company which owns a foreign bank in this country as well as a piece of the Mercantile Bank, a little differently. I think we should treat smaller banks a little differently from the way we are prepared to treat the big five, six or seven, as the case may be.
These smaller banks need a bit of an advantage, a bit of assistance to carry on, particularly in the sense that there are three or four trust companies which are larger than these small
Bank Act
banks and lending institutions. We should give them the advantage of not having to file this reserve. This would give them an edge on their term deposits of one year to five years which I think is deserved and in the interest of Canada.
1 am very disappointed that the minister is not prepared to accept this amendment.


The Acting Speaker (Mr. Blaker):: Is the House ready for the question?


Some hon. Members:: Question.


The Acting Speaker (Mr. Blaker):: Is it the pleasure of the House to adopt the motion?


Some hon. Members:: Agreed.


The Acting Speaker (Mr. Blaker):: All those in favour will please say yea.


Some hon. Members:: Yea!


The Acting Speaker (Mr. Blaker):: All those opposed will please say nay.


Some hon. Members:: Nay!


The Acting Speaker (Mr. Blaker):: In my opinion the nays have it.


Marcel Joseph Aimé Lambert: On division.


The Acting Speaker (Mr. Blaker):: I declare the motion negatived on division.
Motion No. 42 (Mr. Lambert) negatived.


Stanley Howard Knowles: Motion No. 43
That Bill C-6, an act to revise the Bank Act, to amend the Quebec Savings Banks Act and the Bank of Canada Act, to establish the Canadian Payments Association and to amend other acts in consequence thereof, be amended in clause 2 by striking out lines 33 to 37 at page 238 and substituting the following therefor:
"for the financial year;
(0 the policy and guidelines used in credit extension, including
(i)	consumer credit standards and legal requirements
(ii)	interest rate charges
(iii)	loan fees, and
(iv)	the title insurance, closing costs, terms and conditions on real estate
loans, appraised value of property and collateral;
(g)	the policies regarding the purchase of goods and services, including
competitive bidding practices;
(h)	the policies for selecting sites for branches;
(i)	the real estate conflict of interest policy;
(j)	policies and procedures for safeguarding confidentially, records, customer information;
(k)	advertising practices;
(l)	procedure for customer complaints;
(m)	contributions to political campaign funds;
(n)	names and functions of bank legislative lobbyists;
(o)	policies on political contributions and activities involving foreign governments: breaches of those policies;

November 17, 1980
Bank Act
(p)	criteria for selecting recipients of charitable contributions and grants;
(q)	charts showing the organization and structure of the bank, its subsidiaries and affiliates, including foreign corporations and the functions and legal relationship between them;
(r)	the membership, functions and objectives of board and management committees; and
(s)	a statement of types of shares, size of holdings and residences of shareholders."


Robert Joseph Ogle: Mr. Speaker, this evening 1 would like to bring before the House some ideas which 1 feel are very important before we vote on motion No. 43 because this amendment has a direct relationship to the way banks are now influencing and working within the whole world. It has to do with the whole question of our knowing what banks are doing with respect to the whole world. I feel Canadians should have a very clear understanding and knowledge of what is happening in international banking. I believe, as does my party, that there should be a means by which Canadians can know this.
When we spoke about this bill at another stage, I dealt with the same question-the necessity that Canadians know what Canadian banks are doing with their money in other countries and particularly in countries which we call developing countries. Canadians have a right to know and must know what their savings-their money in the bank-are doing to other people, and this is why 1 feel that when it comes to disclosure of information we as Canadians have a very clear and distinct right to know what our banks are doing.
In the past few months international finance has undergone dramatic changes. Because of world inflation and the rise in international energy prices many countries in which Canadian funds have been invested have experienced severe crises with regard to financing. International banks fear-and probably rightly so-that many of their investments in foreign countries are becoming fragile and could in the long run prove to be poor investments because the Third World, consisting of the developing countries, is not able at this time and may not even in the future be able to pay the banks on the terms under which investments have been made. Banks are going to be looking for areas operating under what they feel are stable governments. Unfortunately, in many cases stable governments are governments which are the result of military takeovers or whose philosophies are such that the human rights of people who live under them will not be protected. Investments are more or less stable in such circumstances, but the investment of Canadian money by Canadian people is not leading to the true development of people in this situation but, in reality, is oppressing them. I refer particularly to the poor. For this reason I believe Canadian banks should be made to disclose where they have made their investments.
In line with that approach I would like to read into the record of this House the statement the Canadian Task Force on the Churches and Corporate Responsibility made to the government in relation to loans made to such countries as South Africa, Chile and Bolivia where there has been forceful destruction of human rights. In a brief to the Standing Committee on Finance, Trade and Economic Affairs this task force made the following recommendation on January 23, 1979:
In order that the Canadian public be in possession of information which permits it to form valid judgments about the foreign loan policies of Canadian banks and other financial institutions involved in international investment or underwriting and in order that clients and shareholders be given the legitimate choice of raising questions about these policy decisions, the task force submitted the following recommendations for inclusion in the revised Bank Act:
1.	that the Bank Act make provision for uniform and equitable public disclosure requirements of loans by Canadian banks, their subsidiaries and affiliates and by other financial institutions made directly or through consortia to foreign government or agencies of foreign governments of amounts totalling more than $1 million;
2.	that in the interest of public and shareholder accountability, Canadian banks and other financial institutions be required to disclose the amount and the dates of such loans and publish them as a matter of record;
3.	that in order to preserve the principle of client/banker confidentiality and in order to safeguard the principle of competition, financial institutions should not be required to disclose such loans prior to 30 days following signed agreements.
The people who presented this recommendation to the Government of Canada are no mean group. They represent the church people of the main church groups in Canada and speak for a great number of Canadian citizens.
Beyond being responsible for countries which, in many cases, are developing with great difficulty because of lack of funds, I should like to bring to the attention of the House the necessity for these kinds of loans made in international circles becoming public knowledge to Canadians. During the past summer, this government boycotted the Olympic Games in the U.S.S.R. and many young Canadians were deprived of the opportunity to participate in the games. The reason for the boycott was well founded, 1 suspect, in that it was a spoken testimony against the invasion of Afghanistan by the U.S.S.R. However, at the same time young Canadian athletes were being deprived of their right to compete in the Olympic Games, Canadian banks were making money for the loans they had made in Russia. For instance, the Bank of Montreal made two major loans to the International Investment Bank in Moscow, one for $500 million and one for $600 million. Those loans were in force during the time of the boycott. I do not see why it should be necessary for young Canadian athletes to be deprived of the one and only chance they will probably ever have to compete in international sport at that level and call this our protest against something which is a grave injustice in international order, namely, the invasion of Afghanistan, while at the same time Canadian banks are not deprived of anything and are not called upon to sacrifice anything in the name of a protest against the invasion.


An hon. Member:: Utter hypocrisy!


Robert Joseph Ogle: The Royal Bank of Canada also took part in this activity. We were able to discover this because of the Euromoney Syndication Service, not from any disclosure by the bank of what had happened. The participation by the Royal Bank of Canada in loans to the Bank for Foreign Trade of the U.S.S.R. amounted to $400 million U.S. in the first case and
November 17, 1980

$200 million U.S. in the second. These were loans which were in force at the time the Russian Olympic Games were boycotted at the expense of Canadian athletes. When 1 request that it be made public which Canadian banks are making international loans, I simply ask that justice be done for one and all, that when Canadian athletes are made to suffer, banks should likewise be responsible and, in a sense, be made to suffer. Furthermore, Canadians who have put their investment money into banks will know for sure that their money is not being used internationally to bring about the oppression of the poor wherever they may be.


The Acting Speaker (Mr. Blaker):: Is the House ready for the question?


Some hon. Members:: Question.


The Acting Speaker (Mr. Blaker):: Those in favour of the said motion will please say yea.


Some hon. Members:: Yea!


The Acting Speaker (Mr. Blaker):: Those opposed will please say nay.


Some hon. Members:: Nay!


The Acting Speaker (Mr. Blaker):: In my opinion, the nays have it.


Stanley Howard Knowles: On division.


The Acting Speaker (Mr. Blaker):: I declare Motion No. 43 negatived on division.
Motion No. 43 (Mr. Rae) negatived.


The Acting Speaker (Mr. Blaker):: The House will now consider Motion No. 44.


Stanley Howard Knowles: Motion No. 44
That Bill C-6, an act to revise the Bank Act, to amend the Quebec Savings Banks Act and the Bank of Canada Act, to establish the Canadian Payments Association and to amend other acts in consequence thereof, be amended in clause 2 by adding immediately after line 37 at page 238 the following new subsection:
"(3.1) A bank shall include in its annual statement and make available on
request
(0) the criteria and procedures for selecting all directors and their other corporate affiliations;
(6) a description of the functions and duties of directors;
(c) the retainers paid to directors;
(</) the total of loans made to directors and any companies to which they are affiliated;
(e) the guidelines covering conflict of interest:
(/) the criteria used to set salary structure, salary grade system and salary ranges;
(g)	the special benefits and programs available to employees; and
(h)	the number of overseas employees."


The Acting Speaker (Mr. Blaker):: Is the House ready for
the question?
Bank Act


Some hon. Members:: Question.


The Acting Speaker (Mr. Blaker):: Those in favour of the said motion will please say yea.


Some hon. Members:: Yea!


The Acting Speaker (Mr. Blaker):: Those opposed, will please say nay.


Some hon. Members:: Nay!


The Acting Speaker (Mr. Blaker):: In my opinion the nays have it.


Stanley Howard Knowles: On division.


The Acting Speaker (Mr. Blaker):: I declare the motion negatived on division.
Motion No. 44 (Mr. Rae) negatived.


The Acting Speaker (Mr. Blaker):: We go on now to Motion No. 46.


Mr. Benno Friesen (Surrey-White Rock-North Delta) moved:: Motion No. 46
That Bill C-6, an act to revise the Bank Act, to amend the Quebec Savings Banks Act and the Bank of Canada Act, to establish the Canadian Payments Association and to amend other acts in consequence thereof, be amended in clause 2 by striking out lines 45 to 49 at page 265 and lines 1 to 7 at page 266 and substituting the following therefor:
"(4) The Inspector, whenever he has reason to believe that an offence against this act or the Criminal Code of Canada has been or is about to be committed by a bank or by any director, officer or employee of a bank, shall make such examination and inquiry and at the conclusion thereof shall report to the minister and, if an offence is still believed to have been committed, also refer all relevant information and documents to the commercial crime branch of the Royal Canadian Mounted Police for immediate investigation and for the purpose of determining facts the commercial crime branch shall make or cause to be made such examination and inquiry and at the conclusion thereof shall report thereon to the Solicitor General of Canada, the Minister of Justice and the Minister of Finance, with recommendations as to whether charges should be laid."
Mr. Speaker, this is one of the motions that did not have the advantage of being before the committee, but nevertheless I would ask hon. members to consider its contents. It is often said that we must move into the twentieth century and into the 1980s. Indeed, much of the revised Bank Act before us today is designed to modernize the act to bring it into the 1980s. But there is one clause in particular which needs to be strengthened in order to update the act and to deal with the problems which we face in our society today. I think it is safe to say that the Bank Act continues to operate under the same premises as those which existed when it was first introduced, that is that banking institutions are fine, upstanding institutions, pillars of society and all that, that their sense of honour would prevent them from engaging in anything that might be considered fraudulent, and that it is inconceivable that there might be bank managers who would do something wrong.
However, times have changed and the motion before the House tonight attempts to deal with those changes. There is no

November 17, 1980
Bank Act
intention to cast any aspersions on head officers or on the broad banking policies. The object, rather, is to deal with problems of human nature which arise out of changes that have come about as a result of developments in our society. There was a time when the bank manager was a local person who knew everyone in the community and who was known to members of the community. That kind of camaraderie put constraints on the manager to behave in an honourable way with his clients. But with the kind of population growth we have experienced and with the depersonalization of the banking industry, particularly in the large urban centres, it is easy for the head office to be caught in the quandary of having employed people who are not always scrupulous. These people do not necessarily operate within the stated banking policy. The Bank Act does nothing to deal with potentially fraudulent activities being carried on by banking officials in any branch of the bank. I refer, for example, to clause 246 which refers to the Inspector General who will, from time to time, carry out inspections in the bank. The clause reads:
-if the need should arise, for the purposes of satisfying himself that the provisions of this act having reference to the safety of the interests of the depositors, creditors and shareholders of the bank and other provisions of this act are being duly observed and that the bank is in a sound financial condition, and at the conclusion of each examination and inquiry shall report thereon to the minister.
The thrust of that provision and of subsequent ones is to make sure that the banks remain solvent. That is a good motive. 1 think Canadian banks are probably some of the most solid institutions in the world and we respect them for being so, but that does not stop a clerk or an assistant manager or divisional manager of a bank from carrying on an activity that is fraudulent. For example, a few months ago 1 brought to the attention of the House the case of a family wishing to expand its business. In order to borrow money from the bank, it needed securities. The family left in deposit some blue chip securities for the bank to hold as collateral for that substantial loan. Time passed and the loan was paid off. After some time, the family went to the bank to collect its securities, but the bank manager asked, "What securities? We do not have any securities." They were nowhere to be found. Then followed a maze or a nightmare for that family trying to locate those securities. I raised the matter in the House by asking the Minister of Finance (Mr. MacEachen) about it. It was only after the publicity subsequent to my question that the bank came forward and said, "Oh, yes, we found them. Here they are, you can come and get them any time". I am sure head office was not saying that is what it wanted, but evidently some local officer tried to rip off the family, as he could have done had the matter not come to public attention.
We can no longer assume as we did 100 years ago when banking institutions were formed that all banks by the goodness of their hearts will carry on, in all their departments, division and branches, activities which are completely lawful. Therefore, the citizen who has very few means at his disposal to redress grievances, needs in particular, some kind of help
from the government to ensure that a bank will be brought to task if it carries on fraudulent activities.
As I said, I brought this matter to the attention of the Minister of Finance. Later on the member of Parliament in whose constituency these people lived, called me and said, "I think I know that case". He described it for me. Sure enough, he remembered it. I said, "If a private citizen did what this bank did, what would you call it?" He said, "Fraud. It would be fraud". I said, "If it is fraud for the private citizen, why is it not fraud for the bank to do it?" He said, "That is right, but it would be much better to leave it alone, let it go away, because these people will be hurt more if it is pursued than if it is left alone".
That is not good enough, and that is why I submitted the amendment asking that the Inspector General of Banks be empowered to conduct an investigation if, in the course of his examination of a bank, he is led to believe that some fraudulent activity is being carried on by an officer of the bank. He should be empowered to call in the commercial crime section of the RCMP to do an investigation, and if the RCMP finds the evidence, it should recommend that charges be laid against that officer of the bank, thereby protecting the depositor.
Some years ago a number of newspaper articles appeared in the Vancouver press dealing with evidently fraudulent or near fraudulent activities on the part of bank officers. One was called the "Greek connection". In order to redress their grievances, they took part in criminal activities, the destruction of property, to try to "get even" with the bank. The private citizen should not have to reach that point of exasperation. I know members who will say that if a depositor feels he has been fraudulently treated by a bank, he can sue, he can go to court. But, the family I referred to earlier does not have many resources. In fact, a couple of weeks ago a member told me about one of his constituents who laid down a $10,000 bond with the bank. His signature was on it; it had to be redeemed by him. Somebody in the bank allowed another party, albeit a friend, to redeem that bond, so that the actual owner never got hold of it. It was a fraudulent act. Of course the automatic response is-"Take them to court:" But not everyone has the resources to take multinational corporations to court. They do not have the necessary resources to stick with it. Under the present system such cases are usually handled in the civil courts. They are civil actions and, as hon. members know, most civil actions literally take years to be dealt with. The cost may represent a great deal for most private citizens but for a bank perhaps it is not much. Most private citizens cannot afford such litigation, and even if they could, any amount they might recover could be eaten up by legal fees.
I should like to relate my own experience of what happens when a matter is referred to the Minister of Finance. When I brought this particular matter to his attention some months ago, he said he would take note of my representation and get in touch with the inspector general, which he did. Later I heard from the inspector general, and I have a copy of his letter with me. He indicated that if I had evidence, it should be submitted to the RCMP. That is not good enough. It is an
November 17, 1980

endless round of buck passing. One makes a representation to the Minister of Finance; the minister goes to the Inspector General; the Inspector General comes back to the one making the representation who in turn goes back to the Minister of Finance. It is a circular route, and nothing really happens to protect the depositor.
I refer again to the phrase in the act that the job of the inspector general is simply to secure the solvency of banks. It assumes that all activities of bank officers will be upright and honest; sometimes incompetent perhaps, but at least honest. Times have changed, and that assumption cannot be made any more. There are people who will deliberately defraud. In these days of electronic banking, it becomes ever more possible for officers to defraud.
I ask hon. members to consider this amendment closely so that redress can be provided for the private citizen who does not have the wherewithal to engage in lengthy litigation and who can easily be victimized by the large multinationals at the hands of employees who do not necessarily have the greatest scruples in the world. I ask hon. members to consider motion No. 46, so that the inspector general is given the necessary powers to ensure for the citizens of Canada the benefit of proper redress of grievances.


The Acting Speaker (Mr. Blaker):: The question is on motion No. 46. Is the House ready for the question?


Some hon. Members:: Question.


The Acting Speaker (Mr. Blaker):: All those in favour of the motion will please say yea.


Some hon. Members:: Yea!


The Acting Speaker (Mr. Blaker):: All those opposed will please say nay.


Some hon. Members:: Nay!


The Acting Speaker (Mr. Blaker):: In my opinion, the nays have it.


Some hon. Members:: On division.


The Acting Speaker (Mr. Blaker):: I declare the motion negatived on division.
Motion No. 46 (Mr. Friesen) negatived.


Stanley Howard Knowles: Motion No. 47
That Bill C-6, an act to revise the Bank Act, to amend the Quebec Savings Banks Act and the Bank of Canada Act, to establish the Canadian Payments Association and to amend other acts in consequence thereof, be amended in clause 2 by striking out lines 27 to 47 at page 266.


The Acting Speaker (Mr. Blaker):: The question is on motion No. 47. Is the House ready for the question?


Some hon. Members:: Question.
Bank Act


The Acting Speaker (Mr. Blaker):: All those in favour of the motion will please say yea.


Some hon. Members:: Yea!


The Acting Speaker (Mr. Blaker):: All those opposed will please say nay.


Some hon. Members:: Nay!


The Acting Speaker (Mr. Blaker):: In my opinion, the nays have it.


Stanley Howard Knowles: On division.


The Acting Speaker (Mr. Blaker):: I declare the motion negatived on division.
Motion No. 47 (Mr. Rae) negatived.


Marcel Joseph Aimé Lambert: Motion No. 48
That Bill C-6, an act to revise the Bank Act, to amend the Quebec Savings Banks Act and the Bank of Canada Act, to establish the Canadian Payments Association and to amend other acts in consequence thereof, be amended in clause 2 by adding immediately after line 48 at page 268 the following new subsection:
"(5) Notwithstanding subsection (1), the inspector shall disclose, on a confidential basis, to any standing or special committee of Parliament charged with examining the business of banking, the Bank Act, or any other statutes of Parliament relating thereto, information
(a)	regarding the business or affairs of any bank carrying on business in
Canada
(b)	received in the course of an international exchange of information such
as is referred to in paragraph (2)(b)
(c)	furnished to the Inspector pursuant to subsection 303(7)
(d)	of a general nature pertaining to the business of banking
provided that such information is requested of the Inspector in a formal resolution adopted by such a committee. and by renumbering the present subsection (5) as subsection (6).
He said: Mr. Speaker, I would have thought my proposal would commend itself to all hon. members because it deals with the furnishing of information to standing committees of the House. In the 20 years I have been here, the occasions on which banking matters have gone before the Standing Committee on Finance, Trade and Economic Affairs have been few and far between, even taking into consideration the two revisions to the Bank Act. There was a time many years ago when we would see private bills to incorporate banks. That gave us an opportunity to go into the preliminaries, to find out who was there, what was being done, what was being proposed. But once the bill was passed one had to watch The Canada Gazette very carefully to see the order in council authorizing the issuance of the certificate to commence business. That was the last members heard of it. That was the last they heard about it until they saw the annual reports of such banks. That was the only information they had.
In the past there were one or two banks which, frankly, gave rise to questions as to whether all information had been fully disclosed or not. In fact, in connection with their operations

November 17, 1980
Bank Act
these banks gave pause to the Inspector General of Banks and to the minister of finance of the day. But what 1 want, particularly, is not to reflect on the Inspector General of Banks. He is bound by his position as a senior bureaucrat. Under this government senior bureaucrats seem to be bound to give as little information as possible, even to their own ministers. Members of this House who are parliamentary secretaries know that they get precious little information either. The administration in many departments is a closed book, and no legislation is coming forward on the basis of freedom of information to open this up. Hon. members know how frustrated they become because they cannot get information, particularly if they are on the government side. It is not that they would profit personally by the information but that such information would make better members of them-it would make them more intelligent in their dealings with legislation and give them greater knowledge in handling other problems. Many times when I have sat on the finance committee I have felt like one who was playing blind man's buff. The information was all on one side and it was not even disclosed to the government members. How can we discharge our obligations to discuss legislation as elected representatives of the people when the government will not trust members of this House with the necessary information? I have had 23 years of almost unbelievable frustration because of this situation. What kind of job was I to do? Was I to be like the proverbial first-time patron at the racetrack, the woman who claims she picks a horse by sticking a pin in the program. That is about the way it is done here.


Monique Bégin: Could a man not have done that?


Marcel Joseph Aimé Lambert: Mr. Speaker, I will correct myself. But the caricature usually relates to a woman going to the racetrack for the first time. She is outnumbered four times to one. Perhaps men do it, too, but I would not be so touchy. But then, they are usually luckier.
I am sure members on both sides, cabinet ministers of today and yesteryear included, will realize how little one knows about a subject when one is brought to decide upon it. What government members admit, and what cabinet ministers will tell you, is that party discipline is there. They feel that because they are the government the Lord has anointed them for the next four or five years, that they have all knowledge and that they can do no wrong. We know that is not so.
What I am asking of those members who sat through all the committee hearings this summer on the Bank Act and of other members who sat in 1978-79 during the public hearings and who worked on the committee report, those who saw a great number of changes, is that they read my amendment very carefully. Subsection (1) imposes a degree of silence; the Inspector shall not disclose to any other person except the minister, the deputy minister of finance, the governor of the Bank of Canada, a representative of the deputy minister of finance or of the governor of the Bank of Canada, if authorized in writing, or directors of the Canada Deposit Insurance Corporation, any information regarding the business or affairs
of a bank or its customers. Similarly, confidentiality is imposed with respect to information:
(b)	received in the course of an international exchange of information contemplated by paragraph (2)(b)\ or
(c)	furnished to the Inspector pursuant to subsection 303(7)
These are particular returns which are given to the Inspector General of Banks and I say in my amendment that notwithstanding this the inspector shall disclose on a confidential basis, to any standing or special committee of Parliament. That imposes a responsibility upon the members of any standing or special committee of Parliament charged with the examination of the business of banking-and I use that phrase because I think I know what it means, having tried to put it in the act. This is another reason why hon. members should vote for my amendment later tonight or tomorrow. My amendment says:
-the Bank Act, or any statutes of Parliament relating thereto, information
(a)	regarding the business or affairs of any bank carrying on business in Canada
I do not say "of its customers". Notice that.
Over in section 251(1 )(<a) the information that is to be kept secret is information concerning the business or affairs of a bank 1 do not think members need to know anything about the affairs of the customers, so it is deliberately left out of my amendment. But a different position is rather if it is regarding the business affairs of any bank or is:
(b)	received in the course of an international exchange of information such as is referred to in paragraph (2)(b)
(c)	furnished to the Inspector pursuant to subsection 303(7)
(d)	of a general nature pertaining to the business of banking
These are position papers within the Department of Finance or which the Inspector General of Banks may have, provided such information is requested of the inspector in a formal resolution adopted by such a committee. This is not merely somebody teeing off and saying, "Oh, I would like to know something about what happened to that particular bank". It is in keeping with the degree of knowledge of which members of a banking committee should be apprised.


Donald Alex Blenkarn: Absolutely.


Marcel Joseph Aimé Lambert: I am not being partisan. I am relying upon, shall I say, my experience in this committee. I think it would be a much better committee if in the ten-year period, say three or four years down the road, we could, for instance, seek information regarding the business of leasing automobiles and ask such questions as, "Where was it concentrated? What had been the trend as the result of the amendments we put; what had been the trends with regard to banking operations in data processing?"
Outside the revision to the Bank Act, there is no opportunity to summon the president of the Canadian Bankers' Association. The committees are very limited. One day there may be more congressional power in the committees, and I hope so. I also hope that the committee members will be fewer in num-
November 17, 1980

bers so that members may serve on one or two committees and there is not the massive change and platooning to keep up strength because of fear that there might be a vote. Some members join the committee and want to reinvent the wheel, as it were. They want to start from square one again, and that should not be allowed.


Donald Alex Blenkarn: You are absolutely right.


Marcel Joseph Aimé Lambert: Once a committee begins work, its membership should remain and when a member comes on, let him pick up the testimony of the past and read. The good Lord gave him the ability to read. To come to committee absolutely green on a subject and, as 1 say, reinvent the wheel, is not the way in which a committee should be conducted.
In any event, how does one obtain this information when the committee decides, two or three years down the road, that, for instance, it would like some information, about reciprocity? Remember, the Inspector General cannot be summoned on the examination of estimates. How much time can the finance committee spend on the examination of estimates when it is already overloaded? It would be lucky to have 80 minutes with the Inspector General of Banks in any full term, and that is not good enough.
What we require is a careful preparation of the information requested by the committee, and then the committee may debate that information. I hope it is not a case where one side sits there with a hedgehog mentality to protect the government's interests. All members are responsible for the passage and for intelligent consideration of legislation, and I would like to see an improvement in our work. This is what I would call a technical amendment within the act. Such an amendment has nothing to do with the operation of the banking system, but it certainly improves the readiness with which information would be available to members on the banking committee so that more informed decisions could be made.
I suggest that such a proposal should be implemented in many other fields. 1 hesitate to suggest income tax because we would never get around to studying all the questions, but there are many other fields of legislation, I think, in which this amendment could apply with equal facility. Hopefully, with the freedom of information legislation this will come about in some areas.	'
I believe I have qualified matters as much as possible in the amendment. The Inspector General is fully protected. The committee will take the responsibility of putting the matter on a confidential basis, and I know what my reaction would be if an hon. member of that committee suddenly became leaky tap. I think the rest of the committee would literally put the boots to that hon. member in their criticism of such bad behaviour. We as members of Parliament have responsibilities, and 1 do not have to engage in a lecture on that subject, nor would 1 wish to do so. I honestly and earnestly plead with members of the House to accept what I consider is a very important, non-partisan amendment to the Bank Act which will not affect the technical workings of the act but will affect the limits
Bank Act
which affect us in reaching intelligent and informed decisions regarding the banking system of this country.


The Acting Speaker (Mr. Blaker):: Does the minister rise on a point of order?


Pierre Bussières: Mr. Speaker, I rise on a point of order. I should like to answer briefly. I do not want us to be unable to go through all the amendments before ten o'clock. If 1 were convinced that the members of the committee on Finance, Trade and Economic Affairs, did not have sufficient information when they considered the Bank Act, 1 wold not hesitate to recommend that such an amendment be accepted. However, I am convinced that all the information needed to evaluate the work we have to do as members of Parliament can be secured in committee, and I relate that to the activity of the committee concerning the Bank Act, and I am convinced that we have all the information which is necessary; consequently 1 do not see the necessity for that amendment.


The Acting Speaker (Mr. Blaker):: The question is on motion No. 48 in the name of the hon. member for Edmonton West (Mr. Lambert).
Is it the pleasure of the House to adopt the said motion?


Some hon. Members:: Agreed.


Some hon. Members:: No.


The Acting Speaker (Mr. Blaker):: All those in favour of the motion will please say yea.


Some hon. Members:: Yea!


The Acting Speaker (Mr. Blaker):: All those opposed to the motion will please say nay.


Some hon. Members:: Nay!


The Acting Speaker (Mr. Blaker):: In my opinion the nays have it.


Some hon. Members:: On division.
Motion No. 48 (Mr. Lambert) negatived on division.


The Acting Speaker (Mr. Blaker):: We pass now to motion No. 49.


Stanley Howard Knowles: Motion No. 49
That Bill C-6, an act to revise the Bank Act, to amend the Quebec Savings Banks Act and the Bank of Canada Act, to establish the Canadian Payments Association and to amend other acts in consequence thereof, be amended in clause 2 by striking out subsections (2) to (8) of section 302 and sections 303 to 307 inclusive at pages 306 to 318.


The Acting Speaker (Mr. Blaker):: Is the House ready for
the question?

November 17, 1980
Bank Act


Some hon. Members:: Question.


The Acting Speaker (Mr. Blaker):: All those in favour of the motion will please say yea.


Some hon. Members:: Yea!


The Acting Speaker (Mr. Blaker):: All those opposed will please say nay.


Some hon. Members:: Nay!


The Acting Speaker (Mr. Blaker):: In my opinion the nays have it.
And more than five members having risen:


The Acting Speaker (Mr. Blaker):: Pursuant to Standing Order 75(11) the recorded division on the proposed motion No. 49 will be deferred.
We now move to motion No. 50.


Marcel Joseph Aimé Lambert: Motion No. 50
That Bill C-6, an act to revise the Bank Act, to amend the Quebec Savings Banks Act and the Bank of Canada Act, to establish the Canadian Payments Association and to amend other acts in consequence thereof, be amended in clause 2 by striking out line 29 at page 308 and substituting the following therefor:
"ten per cent of the total domestic assets"
He said: For the edification of certain members who felt 1 was wrong on my last stand and perhaps for the edification of the minister who came in contact with this act only this year, 1 want to point out that motion No. 50 is designed to restore to the legislation a conclusion which the banking committee reached in March, 1979. It was composed of senior members on the then government side along with others from this side.
The whole question had been very carefully considered with witnesses and public testimony, and had been discussed with the Inspector General of Banks. It was decided that the volume of business to be ultimately allowed for foreign banks within ten years, bearing in mind the degree of inflation that might be around, could go up to 10 per cent of the total domestic assets of Canadian banks. The original white paper had said 8 per cent of the assets contained in schedule Q, quite a different formula. I remember the then member from Montreal, Mr. Jacques Trudel-I see his successor-had been successful in negotiating on the government side and that was for 10 per cent. That was a more appropriate figure. Lo and behold, somebody in the Department of Finance or the Inspector General of Banks put it at 8 per cent. No one has ever told us why. There have been no reasons other than it was a judgment decision.
In putting forward this amendment, 1 want to question the inability to obtain the information as to why it was done, and to establish that bureaucratic decisions shall not prevail over decisions of House committees. We are charged with determining the policy and the legislation. I find it, frankly, a
supine attitude to accept, if we accept it, that the bureaucracy should tell a House committee or this House what policy should be.
I have put down this motion to discuss that point and to emphasize it. I do not like that situation. If hon. members will reflect upon it, I think they will agree with me. This happens all too often, particularly in legisation of this kind. There was public testimony. The committee worked hard and came to a conclusion. As is often the case, there was some negotiation. Then some faceless individual in the background made a change. They told me that the cabinet approved. Even on this side, I can tell you how cabinet approves. The bill slides through and that feature does not get drawn to the attention of the cabinet committee or of the whole cabinet in approving the legislation.
I know what happened at the time the hon. member for St. John's West (Mr. Crosbie) was minister of finance and a bill was okayed to go through with the figure changed. I do not know who changed it, but it was changed to some figure judged more important by a bureaucrat. That has to stop. If a House committee decides as a matter of policy that there shall be a certain level of activity by foreign banks as compared with Canadian banks, it is not up to any bureaucrat to downgrade that figure.
The minister cannot tell me why it is at 8 per cent. He has not been told. He was not responsible for that, except in the technical sense that he has been charged with bringing the legislation forward in this House and must assume responsibility for it. However, the point I want to make is that he does not know.
When dealing with my previous motion, the minister said he thought we already had sufficient information. The minister should blush a little, because the motion now before us points to a situation in which he knows the committee did not have the information it should have been given. We should have much more information. The previous committee set the figure at ten. The minister in this legislation says it is eight. No reasons have been given for the change.
Long before this minister ever came near the legislation, somebody had written in the figure eight. Why? That is something that we, as legislators, should know. It is a situation over which we have no control. We do not have the control over legislation that we should have in Parliament. That is a regrettable lesson I have learned over many years.


Pierre Bussières: Mr. Speaker, the hon. member is no longer asking why we do not accept his amendment, but why a suggestion made by a previous committee was not retained by the government. If we consider the amendment put forward by the hon. member for Edmonton West (Mr. Lambert), we see that it would increase the maximum of the collective domestic assets of foreign banks to 10 per cent of the domestic assets of all the banks which are
November 17, 1980

operating in the country. What we are saying is that 8 per cent, which is 2 per cent less, is sufficient for foreign banks.
It is quite obvious that a judgment decision was made on that 2 per cent margin; in this instance it was the government which decided that it would be preferable for Canadians and Canadian financial institutions that the volume of business for foreign banks be limited to 8 per cent of the total domestic assets of Canadian banks.


The Acting Speaker (Mr. Blaker):: Is the House ready for the question?


Some hon. Members:: Question.


The Acting Speaker (Mr. Blaker):: Is it the pleasure of the House to adopt the said motion? All those in favour of the motion will please say yea.


Some hon. Members:: Yea!


The Acting Speaker (Mr. Blaker):: All those opposed will please say nay.


Some hon. Members:: Nay!


The Acting Speaker (Mr. Blaker):: In my opinion the nays have it. I declare the motion lost.
And more than five members having risen:


The Acting Speaker (Mr. Blaker):: Order please. I said I declared the motion lost, but perhaps I spoke too quickly. I see that several hon. members have risen. I will undo what I have done.
In accordance with Standing Order 75(11) the recorded division on the proposed motion stands deferred.


Hon. Flora MacDonald (for Mr. Stevens) moved:: Motion No. 51
That Bill C-6, an act to revise the Bank Act, to amend the Quebec Savings Banks Act and the Bank of Canada Act, to establish the Canadian Payments Association and to amend other acts in consequence thereof, be amended in clause 2 by adding immediately after line 48 at page 309 the following:
"(2.1) Where a foreign bank would be deemed to be a corporation associated with another foreign bank under section 303(2) by reason of any class of its
shares being owned directly or indirectly by the other foreign bank and
(a)	not more than fifty percent of the issued and outstanding shares of such class are owned directly or indirectly by the other foreign bank at the coming into force of this act;
(b)	the issued and outstanding shares of any class of the first foreign bank owned directly or indirectly by the other foreign bank were owned by it prior to May 18, 1978; and
(c)	each of the foreign banks owned one or more subsidiary corporations that carried on business in Canada prior to May 18, 1978;
the other foreign bank shall, for the purposes of this part, be deemed not to own any shares of the first foreign bank."


The Acting Speaker (Mr. Blaker):: Is the House ready for the question?


Some hon. Members:: Question.
Bank Act


Marcel Joseph Aimé Lambert: Mr. Speaker, I am very pleased to see that those hon. members who do not know the first damned thing about this act are the first to call "question". The amendment proposed by my hon. friend from York-Simcoe (Mr. Stevens) is to protect the operation of Grindley's Bank. It introduces a "grandfather" clause. Grind-ley's Bank is caught in a bind. It has been operating for close to ten years and it has done some very good business. As a matter of fact, Mr. Speaker, I do not think there would be any Laser racing boats manufactured in Canada were it not for the financing provided by Grindley's Bank. That is only one item in the chapter, however.
The bank is owned 40-odd per cent by Citibank of New York, or what is known as Citicorp, and 50-odd per cent by Lloyd's Bank of England. That is a bank that is, frankly, caught by the legislation. We were hoping that we could let "grandfather" in.
The minister may have an answer that would satisfy my hon. friend. He had hoped to be here this evening but was detained in Toronto. On the basis of the progress made this afternoon, we anticipated that this legislation would not get through tonight so I put forward this explanation of the amendment. If the minister can give what he understands to be the solution, I shall be very glad. I think it would be Canada's loss if Grindley's Bank were to disappear.


Pierre Bussières: Mr. Speaker, I shall speak to the provisions dealing with the authorization for two foreign banks, which are associated, to have one subsidiary each in Canada; we know that under the bill now before us this cannot be done. Still, upon examination of the provisions of section 303, if I remember correctly, under paragraph (4), it is indicated that, notwithstanding paragraph (2) which restricts affiliations very severely, that "where less than 50 per cent of the issued and outstanding voting shares of a corporation that is a foreign bank are owned, directly or indirectly, by a foreign bank, the Minister may"-discretion is clearly indicated here-"by order, deem that corporation and foreign bank, not to be associated for such period ending not later than ten years after the coming into force of this Act as specified in the order and for the purpose only of allowing the corporation and the foreign bank each to have a foreign bank subsidiary and for such other purposes as may be specified in the order."
I have had talks with people who are close to the institutions that could be affected. We discussed the bill in general terms. They are aware that, by demonstrating the will and a plan to change their portfolio in such a way as to meet the requirements of section 303(4) that could be considered as a way out, of the problem created by the act as it now stands. And after discussing and examining this provision, it appeared to me that this type of possible alternative seemed quite acceptable to them.

November 17, 1980
Bank Act


The Acting Speaker (Mr. Blaker):: Is the House ready for the question?


Some hon. Members:: Question.


The Acting Speaker (Mr. Blaker):: Is it the pleasure of the House to adopt the said motion? All those in favour please say yea.


Some hon. Members:: Yea!


The Acting Speaker (Mr. Blaker):: Ail those opposed will please say nay.


Some hon. Members:: Nay!


The Acting Speaker (Mr. Blaker):: In my opinion the nays have it.


An hon. Member:: On division.


The Acting Speaker (Mr. Blaker):: I declare the motion negatived on division.
Motion No. 51 (Mr. Stevens) negatived.


Marcel Joseph Aimé Lambert: Motion No. 53
That Bill C-6, an act to revise the Bank Act, to amend the Quebec Savings Banks Act and the Bank of Canada Act, to establish the Canadian Payments Association and to amend other acts in consequence thereof, be amended in clause 2 by adding immediately after line 35 at page 321 the following new paragraph:
"(b) with the approval of the Inspector General of Banks, in relation to a business that, although engaged in financial activities, does not compete with banks incorporated under this act in both lending money and accepting deposit liabilities;"
and by renumbering the subsequent paragraphs accordingly.


Stanley Howard Knowles: Question.


Marcel Joseph Aimé Lambert: Mr. Speaker-


An hon. Member:: Not again.


An hon. Member:: Give us a break.


Marcel Joseph Aimé Lambert: Mr. Speaker if the hon. member requires a break, all he has to do is withdraw. It might improve his knowledge of banking!
This amendment would allow the use of the term "merchant banker" upon application to the Inspector General of Banks. There are certain prohibitions about using the word "bank". There are individuals in this country, however, who carry on the business of merchant banking and they would like to be able to advertise themselves as such.
if we are to build a fully mature financial system across the country, we certainly need merchant bankers. London, Frankfurt, New York, Paris-all the financial centres of the world have merchant bankers. I do not know whether it is because we have a boy scout attitude in this country, but for some reason we have excluded merchant bankers-and to the detriment of
our economic system. Merchant bankers from other jurisdictions have been encouraged to come to Canada under representative offices. They lend money, and then join the boards of Canadian firms; that is the function of the merchant banker.
1 seek the approval of the inspector general for that action, Mr. Speaker. The other conditions do not require the approval of the Inspector General. It seems to me that we could certainly use the title "merchant banker".
[ Translation]


Pierre Bussières: Mr. Speaker, if I may, I shall say very briefly that I am certain that the hon. member for Edmonton West (Mr. Lambert) is aware that I am very sympathetic to his amendment. Moreover, he knows why we must restrict the use of the term "bank" in the legislation. He knows that this is at the source of the difficulty that we have in defining the word "bank" and the expression "banking operation". I recognize these difficulties.
If we accepted the amendment, it is very obvious in my opinion that a very great number of financial institutions could fall under the limitation of operations defined by the hon. member for Edmonton West and that the Inspector General of Banks would receive a great number of applications to be designated as a bank. I know that the hon. member for Edmonton West is thinking of a particular case. However, other cases could occur if the amendment were accepted. The hon. member knows quite well that this limitation is related to the very nature of the legislation, as I have said, to the type of definition that we are using and to the control that we want to have over banking institutions. Finally, he also knows that to protect the public it is important that we should restrict use of the term "bank" to the institutions covered by the present legislation.


The Acting Speaker (Mr. Blaker):: Is the House ready for the question?


Some hon. Members:: Question.


The Acting Speaker (Mr. Blaker):: Is it the pleasure of the House to adopt the motion? All those in favour of the motion will please say yea.


Some hon. Members:: Yea!


The Acting Speaker (Mr. Blaker):: All those opposed will please say nay.


Some hon. Members:: Nay!


The Acting Speaker (Mr. Blaker):: In my opinion the nays have it.


Some hon. Members:: On division.
November 17, 1980


The Acting Speaker (Mr. Blaker):: I declare the motion negatived on division.
Motion No. 53 (Mr. Lambert) negatived.


Stanley Howard Knowles: Motion No. 58
That Bill C-6, an act to revise the Bank Act, to amend the Quebec Savings Banks Act and the Bank of Canada Act, to establish the Canadian Payments Association and to amend other acts in consequence thereof, be amended in clause 62 by adding immediately after line 39 at page 431 the following:
"(1.1) The Minister of Finance shall appoint an individual(s) to be a
director of the association."


The Acting Speaker (Mr. Blaker):: Is the House ready for the question?


Some hon. Members:: Question.


The Acting Speaker (Mr. Blaker):: Is it the pleasure of the House to adopt the motion? All those in favour of the motion will please say yea.


Some hon. Members:: Yea!


The Acting Speaker (Mr. Blaker):: All those opposed will please say nay.


Some hon. Members:: Nay!


The Acting Speaker (Mr. Blaker):: In my opinion the nays have it.


Stanley Howard Knowles: On division.


The Acting Speaker (Mr. Blaker):: I declare the motion negatived on division.
Motion No. 58 (Mr. Skelly) negatived.


The Acting Speaker (Mr. Blaker):: The House will now have before it the motions which have been grouped by the order made earlier. Motions Nos. 24 and 26 have been grouped for debate. A negative vote on motion No. 24 will dispose of motion No. 26, and an affirmative vote on motion No. 24 will necessitate the putting of the question on motion No. 26.


Marcel Joseph Aimé Lambert: Motion No. 24
That Bill C-6, an act to revise the Bank Act, to amend the Quebec Savings Banks Act and the Bank of Canada Act, to establish the Canadian Payments Association and to amend other acts in consequence thereof, be amended in clause 2 by striking out line 14 at page 177 and substituting the following therefor:
"that are made by the bank, and by any company engaged in mortgage
lending in which the bank has an ownership interest, on the security".


Marcel Joseph Aimé Lambert: Motion No. 26
That Bill C-6, an act to revise the Bank Act, to amend the Quebec Savings Banks Act and the Bank of Canada Act, to establish the Canadian Payments Association and to amend other acts in consequence thereof, be amended in clause 2 by adding immediately after line 29 at page 177 the following new subsections:
Bank Act
"(3) Should more than one bank have ownership interest in any individual company engaged in mortgage lending, the principal amount outstanding of all mortgages of that company shall be apportioned to each bank for the purposes of subsection (2) in direct proportion to each bank's ownership interest in that company.
(4) Should the aggregate principal amount outstanding of mortgage loans made by a bank and any company engaged in mortgage lending in which the bank has an ownership interest exceed the limitations imposed by subsection (2) when this Act comes into force, the bank and any mortgage lending company in which the bank has a controlling interest shall not be allowed to increase the total principal amount outstanding of mortgage loans until the bank is in compliance with the limitations imposed by subsection (2)." and by renumbering the present subsection (3) as subsection (5).
He said: Mr. Speaker, I would just recall to hon. members that we had a full debate on motion No. 25. Actually motions Nos. 24 and 26 are related to motion 25, and there would be no purpose in carrying on the debate. I trust hon. members will not go blithely into a voting stance but will see the reasoning behind motion No. 24.


The Acting Speaker (Mr. Blaker):: Is the House ready for the question?


Some hon. Members:: Question.


The Acting Speaker (Mr. Blaker):: All those in favour of the motion will please say yea.


Some hon. Members:: Yea!


The Acting Speaker (Mr. Blaker):: All those opposed will please say nay.


Some hon. Members:: Nay!


The Acting Speaker (Mr. Blaker):: In my opinion the nays have it.


Marcel Joseph Aimé Lambert: On division.


The Acting Speaker (Mr. Blaker):: I declare the motion negatived on division.
Motions Nos. 24 and 26 (Mr. Lambert) negatived.


Stanley Howard Knowles: That disposes of motion No. 26 too.


The Acting Speaker (Mr. Blaker):: As I indicated prior to putting the question, a negative vote on motion No. 24 would dispose of motion No. 26. Accordingly, both motions Nos. 24 and 26 are negatived on division.
Motions Nos. 29, 31 and 32 are grouped for debate, and a vote on motion No. 32 will dispose of motions Nos. 29 and 31.


Stanley Howard Knowles: Motion No. 29
That Bill C-6, an act to revise the Bank Act, to amend the Quebec Savings Banks Act and the Bank of Canada Act, to establish the Canadian Payments Association and to amend other acts in consequence thereof, be amended in clause 2 by striking out line 28 at page 221 and substituting the following therefor:
"manner prescribed by subsection (6), the".

November 17, 1980
Bank Act


Stanley Howard Knowles: Motion No. 31
That Bill C-6, an act to revise the Bank Act, to amend the Quebec Savings Banks Act and the Bank of Canada Act, to establish the Canadian Payments Association and to amend other acts in consequence thereof, be amended in clause 2 by striking out line 1 at page 222 and substituting the following therefor:
"by subsection (6), the way in which the".


Stanley Howard Knowles: Motion No. 32
That Bill C-6, an act to revise the Bank Act, to amend the Quebec Savings Banks Act and the Bank of Canada Act, to establish the Canadian Payments Association and to amend other acts in consequence thereof, be amended in clause 2 by striking out lines 4 to 24 at page 222 and substituting the following therefor:
"(6)(a) A bank shall disclose to depositors the rate of interest and manner of calculation that reflect the annual rate of interest;
(h)	for accounts where a depositor may have to give prior notice for the withdrawal of funds, earnings shall be given, on the basis of the rate disclosed, for exactly the number of days an amount has remained on deposit;
(c)	where earnings are offered on deposits, a bank shall use a daily balance method of calculating interest earnings, however
(i)	the minister may grant temporary exemptions to institutions operating on a manual accounting system where they may face serious problems in adapting to a calculation method based on the daily balance concept, and
(ii)	this subsection shall not come into force until the day that is six months after the Banks and Banking Law Revision Act, 1980 is assented to;
(d)	a bank shall credit a depositor's account or otherwise pay earnings as follows:
(i)	for fixed term deposits, at the end of the term, exceeds one year, the rate disclosed shall reflect annual compounding.
(ii)	for variable term deposits crediting shall be made once a year, and
(iii)	a depositor shall be credited with earnings whenever an account is closed; and
(e)	a bank shall disclose to depositors once each year the terms and conditions under which their deposits are held."


The Acting Speaker (Mr. Blaker):: Is the House ready for the question?


Some hon. Members:: Question.


The Acting Speaker (Mr. Blaker):: All those in favour of the motions will please say yea.


Some hon. Members:: Yea!


The Acting Speaker (Mr. Blaker):: All those opposed will please say nay.


Some hon. Members:: Nay!


The Acting Speaker (Mr. Blaker):: In my opinion the nays have it.


Stanley Howard Knowles: On division.


The Acting Speaker (Mr. Blaker):: Accordingly motions Nos. 29, 31 and 32 negatived on division.
Motions Nos. 29, 31 and 32 (Mr. Rae) negatived.


The Acting Speaker (Mr. Blaker):: Motions Nos. 33, 34 and 35 have been grouped for debate and will be voted on separately. Shall I dispense?


Some hon. Members:: Dispense.


Mr. Lawrence:: No, I would like to hear the amendments. Hon. Stanley Knowles (for Mr. Rae) moved:
Motion No. 33
That Bill C-6, an act to review the Bank Act, to amend the Quebec Savings Banks Act and the Bank of Canada Act, to establish the Canadian Payments Association and to amend other acts in consequence thereof, be amended in clause 2 by adding immediately after line 43 at page 222 the following:
"(2.1) Specific charges in connection with a loan or advance that are payable by the borrower shall include where applicable
(a)	costs of administration, including any service, transaction or activity charge;
(b)	loan fees, finder's fees, brokerage fees and similar charges;
(c)	charges for an approval, investigation or credit report;
(d)	charges for any guarantee or insurance to protect the bank against the borrower's default or other credit loss;
(e)	charges for the insurance of the life or health of the borrower; and
(f)	charges for the consolidation and refinancing of the lending transactions."


The Acting Speaker (Mr. Blaker):: Is it the pleasure of some hon. members that 1 pursue the other amendments referred to in this group and read them?


Some hon. Members:: No. Dispense!


Allan Frederick Lawrence: Yes, read them, please. Take your time, too. We are going to be here until at least ten o'clock.


Stanley Howard Knowles: On a point of order, Mr. Speaker, may I point out that motion No. 34 is more than two columns long. 1 think common sense would suggest that it could be put into Hansard as if it had been read.


Allan Frederick Lawrence: No. 1 am sorry. We are not going to vote tonight.


The Acting Speaker (Mr. Blaker):: There is usually unanimous consent to proceed in a certain fashion. That unanimous consent has been denied, and the Chair has no option but to proceed with the reading of the motions.


Stanley Howard Knowles: Motion No. 34
That Bill C-6, an act to revise the Bank Act, to amend the Quebec Savings Banks Act and the Bank of Canada Act, to establish the Canadian Payments Association and to amend other acts in consequence thereof, be amended in clause 2 by striking out lines 44 to 46 at page 222 and lines 1 to 36 at page 223 and substituting the following therefor:
"(3) A bank shall not grant to a person a credit in respect of loans or advances repayable in Canada or make to a person a loan or advance repayable in Canada unless the cost of borrowing as calculated and expressed in accordance with subsection (4), in addition to all other terms of the loan or advance as defined in this act, or otherwise prescribed, has been disclosed by the bank to such person and his or her guarantors in the manner prescribed at or prior to the time when the credit is granted or the loan or advance is made. (a) Except where a loan or advance is secured by a mortgage on real property, where the total of loans and advance and the cost of borrowing is
November 17, 1980

to be repaid in fixed amounts on fixed dates, the bank shall disclose to the borrower and his or her guarantors:
(i)	the net amount of the loan
(ii)	the cost of borrowing as an amount in dollars and cents
(iii)	the total obligation of the borrower
(iv)	the effective annual percentage rate of interest
(v)	the dollar amount that the borrower is required to pay periodically on the unpaid balance, and
(vi)	the number of frequency of periodic payments.
(6) Where a loan or advance is secured by a mortgage on real property, the bank shall disclose to the borrower;
(i)	the net amount of the loan
(ii)	the effective annual percentage rate of interest
(iii)	the dollar amount that the borrower is required to pay periodically
(iv)	the total obligation of the borrower
(v)	the term of the mortgage, the number and frequency of periodic payments
(vi)	the net amount outstanding at the end of the term of the mortgage.
(c)	Where the total of loans and advances and the cost of borrowing is repayable on the demand, the bank shall disclose to the borrower the effective annual percentage rate of interest.
(d)	Where an arrangement allows the borrower thereunder to obtain loans or advances of variable amounts periodically, the bank shall disclose to the borrower:
(i)	the maximum amount, if any, that may be outstanding under the credit
(ii)	the term of each period for which a statement of account is furnished
(iii)	the minimum charge, if any, for each period or the minimum annual charge in dollars and cents
(iv)	the length of the period, if any, during which the borrower may discharge his obligation without incurring any cost of borrowing
(v)	the effective annual percentage rates of interest that apply on the unpaid balance.
(e)	Where a lending transaction provides for a variable rate of interest the bank will:
(i)	disclose such provision to the borrower in a manner and form prescribed by this act
(ii)	insure that the variable rate of interest is directly related to an index that is readily available to the borrower, and
(/) A bank may provide additional information or explanations with any disclosure required by this Act, but none shall be stated, utilized or placed so as to contradict, obscure or detract attention from the information required by this act.
(g)	A bank shall disclose to the borrower and his or her guarantors the information required to be disclosed by subsection (3)(/>) and (c), (d) and <*).
(i)	as part of the proposed contract between the bank and the borrower
(ii)	in a statement given to the borrower and his or her guarantors, or
(iii)	in a promissory note to be signed by the borrower and his or her guarantor
(h)	A bank shall disclose to the borrower and his or her guarantors information required to be disclosed by subsection (3)(a) in a separate statement in the form set out in the regulations.
(/') In order to fulfil the requirements for disclosure of the cost of borrowing in a transaction involving more than one borrower, the bank shall disclose the information required to be disclosed by this act to the borrowers and their guarantors.
(j)	Any information required to be disclosed by a bank to a borrower and his or her guarantors pursuant to this act, shall be given in person or sent by mail to the most recent addresses of the borrower and his or her guarantors."
Bank Act


Stanley Howard Knowles: Motion No. 35
That Bill C-6, an act to revise the Bank Act, to amend the Quebec Savings Banks Act and the Bank of Canada Act, to establish the Canadian Payments Association and to amend other acts in consequence thereof, be amended in clause 2 by adding immediately after line 36 at page 223 the following new subsection:
"(3.1)(a) Where a lender:
(i)	fails to make full disclosure to a borrower and his or her guarantors regarding the lending transaction between them as and when required by this act, or
(ii)	fails to give to a borrower a copy of any agreement evidencing the lending transaction between them, as required under this act;
the effective rate of interest in respect of the lending transaction is the prime rate on the day the transaction is entered into.
(b) Subsection (a) does not apply in respect of a failure to make full disclosure to a borrower and his or her guarantors in respect of a lending transaction where a court finds in proceedings relating to the lending transaction commenced by the lender, that the error, omission or insufficiency in the disclosure to the borrower and his or her guarantors was not of such a nature as to be likely to mislead or deceive."


The Acting Speaker (Mr. Blaker):: Is the House ready for the question?


Some hon. Members:: Question.


The Acting Speaker (Mr. Blaker):: The hon. member for Winnipeg North Centre (Mr. Knowles) corrects me. The order indicates that the motions are to be voted on separately. Accordingly, may the Chair assume that they have now been read and put to hon. members?


Some hon. Members:: Agreed.


The Acting Speaker (Mr. Blaker):: The question is on Motion No. 33. those in favour of the said motion will please say yea.


Some hon. Members:: Yea!


The Acting Speaker (Mr. Blaker):: Those opposed, will please say nay.


Some hon. Members:: Nay!


The Acting Speaker (Mr. Blaker):: In my opinion, the nays have it.


Stanley Howard Knowles: On division.


The Acting Speaker (Mr. Blaker):: I declare the motion negatived on division.
Motion No. 33 (Mr. Rae) negatived.


The Acting Speaker (Mr. Blaker):: The question is on motion No. 34. Those in favour of the said motion will please say yea.


Some hon. Members:: Yea!


The Acting Speaker (Mr. Blaker):: Those opposed, will please say nay.
4784

November 17, 1980
Bank Act


Some hon. Members:: Nay!


The Acting Speaker (Mr. Blaker):: In my opinion the nays have it.


Stanley Howard Knowles: On division.


The Acting Speaker (Mr. Blaker):: I declare the motion negatived on division.
Motion No. 34 (Mr. Rae) negatived.


The Acting Speaker (Mr. Blaker):: The question is on Motion No. 35. Those in favour of the said motion will please say yea.


Some hon. Members:: Yea!


The Acting Speaker (Mr. Blaker):: Those opposed, will please say nay.


Some hon. Members:: Nay!


The Acting Speaker (Mr. Blaker):: In my opinion the nays have it.


Stanley Howard Knowles: On division.


The Acting Speaker (Mr. Blaker):: 1 declare the motion negatived on division.
Motion No. 35 (Mr. Rae) negatived.


The Acting Speaker (Mr. Blaker):: Motions Nos. 36 and 37 have been grouped together for debate and the vote on motion 37 will dispose of Motion No. 36.
Is the House ready for the question?


Some hon. Members:: Question.


Allan Frederick Lawrence: Will you read the motion, Mr. Speaker, please.


Stanley Howard Knowles: Motion No. 36
That Bill C-6, an act to revise the Bank Act, to amend the Quebec Savings Banks Act and the Bank of Canada Act, to establish the Canadian Payments Association and to amend other acts in consequence thereof, be amended in clause 2 by striking out lines 37 and 38 at page 223 and substituting the following therefor:
"(4)(a) The cost of borrowing shall be calculated on the".


Stanley Howard Knowles: Motion No. 37
That Bill C-6, an act to revise the Bank Act, to amend the Quebec Savings Banks Act and the Bank of Canada Act, to establish the Canadian Payments Association and to amend other acts in consequence thereof, be amended in clause 2 by adding immediately after line 43 at page 223 the following:
"(b) The cost of borrowing shall be calculated on an interest bearing method
and on no other basis."


Hon. Yvon Pinard (President of the Privy Council):: With regard to those two motions, Mr. Speaker, rather than speak on them-

I move, supported by the hon. Minister of State for Finance, under the provisions of Standing Order 6(5), that the House sit beyond the ordinary hour of adjournment to consider this bill at the report stage, and perhaps also on third reading.


The Acting Speaker (Mr. Blaker):: The House has heard the motion of the President of the Privy Council (Mr. Pinard) under Standing Order 6(5)(a) that the House sit beyond the normal adjournment hour in order to continue its study of Bill C-6.


Allan Frederick Lawrence: Is that a debatable motion?


Some hon. Members:: Order.


The Acting Speaker (Mr. Blaker):: All those opposed to the motion please rise.
And more than ten members having risen:


The Acting Speaker (Mr. Blaker):: More than ten members having risen, I declare the motion lost.
Motion negatived.


The Acting Speaker (Mr. Blaker):: Is the House ready for the question on motions Nos. 36 and 37?


Some hon. Members:: Question.


The Acting Speaker (Mr. Blaker):: Those in favour of the motions will please say yea.


Some hon. Members:: Yea!


The Acting Speaker (Mr. Blaker):: Those opposed, will please say nay.


Some hon. Members:: Nay!


The Acting Speaker (Mr. Blaker):: In my opinion, the nays have it.


Stanley Howard Knowles: On division.


The Acting Speaker (Mr. Blaker):: I declare the motions negatived on division.
Motions Nos. 36 and 37 (Mr. Rae) negatived.


The Acting Speaker (Mr. Blaker):: Motions Nos. 45 and 54 have been grouped for debate and a vote on Motion No. 45 will dispose of Motion No. 54.


Stanley Howard Knowles: Motion No. 45
That Bill C-6, an act to revise the Bank Act, to amend the Quebec Savings Banks Act and the Bank of Canada Act, to establish the Canadian Payments Association and to amend other acts in consequence thereof, be amended in clause 2 by adding immediately after line 35 at page 246 the following new subsection:
"(3) A bank shall within 60 days after the end of the calendar year make a
return to the minister in the form set out in schedule R with respect to all new

November 17, 1980

loans and with respect to any syndicated or joint loans to foreign governments or their agencies during that calendar year."


Stanley Howard Knowles: Motion No. 54
That Bill C-6, an act to revise the Bank Act, to amend the Quebec Savings Banks Act and the Bank of Canada Act, to establish the Canadian Payments Association and to amend other acts in consequence thereof, be amended in clause 2 by adding immediately after schedule Q the following new schedule R:
Schedule R (Subsection 223(3))
Return of New Bank Loans made to foreign governments and their agencies for the year ended December 31st, 19 Country A
sub-total
Country B
Total new loans made to foreign government and their agencies
sub-total


The Acting Speaker (Mr. Blaker):: Is the House ready for the question?


Some hon. Members:: Question.
[ Translation]


Yvon Pinard: Mr. Speaker, I move, supported by the hon. Minister of State responsible for Finance, that we sit beyond the hour of adjournment under the provisions of Standing Order 6(5).


The Acting Speaker (Mr. Blaker):: The House has heard the motion of the President of the Privy Council (Mr. Pinard) to continue to sit beyond the normal hour in accordance with Standing Order 6(5)(a). But that motion has just been put.


Allan Frederick Lawrence: Enough of these games.


The Acting Speaker (Mr. Blaker):: Will those opposed to the motion please rise?
And more than ten members having risen:


The Acting Speaker (Mr. Blaker):: More than ten members having stood in their place, I declare the motion lost.
Motion negatived.


Some hon. Members:: Question!


Some hon. Members:: Ten o'clock!


The Acting Speaker (Mr. Blaker):: Shall I proceed with the motions or shall I see the clock?


Stanley Howard Knowles: Mr. Speaker, you were about to put the question on motion No. 45. We do not intend to debate it but we intend to ask for a recorded vote. I suggest we be permitted to do that tonight so that members know how many recorded votes there are.
Adjournment Debate


The Acting Speaker (Mr. Blaker):: Is that agreed?


Some hon. Members:: Agreed.


The Acting Speaker (Mr. Blaker):: Is it the pleasure of the House to adopt the said motion?


Some hon. Members:: Agreed.


Some hon. Members:: No.


The Acting Speaker (Mr. Blaker):: Those in favour of the said motion will please say yea.


Some hon. Members:: Yea!


The Acting Speaker (Mr. Blaker):: Those opposed, will please say nay.


Some hon. Members:: Nay!


The Acting Speaker (Mr. Blaker):: In my opinion, the nays have it.
And more than five members having risen:


The Acting Speaker (Mr. Blaker):: Pursuant to section 11 of Standing Order 75, the recorded division on proposed motion No. 45. stands deferred.


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


The Acting Speaker (Mr. Blaker):: The President of the Privy Council on a point of order.


Yvon Pinard: Mr. Speaker, in view of the discussions that have been held and in view of the good faith shown by my colleagues opposite, which 1 presume still exists, I ask for unanimous consent to sit beyond the normal hours tonight in order to complete the report stage of Bill C-6.


Some hon. Members:: Agreed.


Allan Frederick Lawrence: If unanimous consent is required, it is not given.


The Acting Speaker (Mr. Blaker):: Is the hon. President of the Privy Council (Mr. Pinard) referring to Standing Order 6(5) or Standing Order 6(6)?


Yvon Pinard: Mr. Speaker, 1 have not moved a motion this time, I have simply appealed to the good faith of my colleagues opposite and asked for unanimous consent. I presume that my colleagues agree, except one.

November 17, 1980
Adjournment Debate


Allan Frederick Lawrence: Mr. Speaker, I deny unanimous consent. It is ridiculous for the House to start voting on approximately 12 motions at ten o'clock at night.


Some hon. Members:: Oh, oh!


The Acting Speaker (Mr. Blaker):: Order, please. I take the comments of the hon. member for Durham-Northumberland (Mr. Lawrence) as constituting a denial of unanimous consent.


Allan Frederick Lawrence: That is perfectly correct.



PROCEEDINGS ON ADJOURNMENT MOTION

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

Mr. Hal Herbert (Vaudreuil):: Mr. Speaker, on November 7 I put a question to the President of the Treasury Board (Mr. Johnston) which was answered by his parliamentary secretary. It dealt with the alleged refusal of Treasury Board officials to permit the Department of the Secretary of State to predetermine the amounts of the salary deductions which would apply during the slowdown period. Of course I was referring to the strike of the translators. On the preceding Monday, November 3, an agreement was reached on the essential points. As a matter of fact, on the day in question I gave the President of the Treasury Board my understanding of the agreement which the translators were prepared to accept. Essentially it was the agreement which was eventually signed.
However, from that Monday until the following Friday, there was continuing conflict on one point. It was that the translators who had admittedly been on a "go-slow" campaign for some weeks in the summertime were to be penalized. A deduction would be made from their salaries, and they wanted some idea of either the amount to be deducted or the basis upon which the deduction was to be calculated.
The problem we are running into is one we have encountered in many instances in negotiations. It came up again in a release of the Public Service Alliance of Canada dated November 12 protesting the threat of what they term "unwarranted disciplinary action". In this second case it was again the threat of a deduction from salary or non-payment of salary should certain employees who ordinarily provided services in both official languages choose to speak only one language. In the second case, involving the Social Sciences and Humanities Research Council, the employees are not paid a bilingualism bonus and that is their particular problem. The difficulty, Mr. Speaker, stems from the fact that in both cases there is a classification difficulty and, as we know, classification is not bargainable.
1 have brought up the subject many times in the past five years. It was almost five years ago-in fact in February next we will be celebrating the fifth anniversary-that a report was tabled in this House popularly known as the Finkelman committee or, more properly, the Joint House of Commons and Senate Committee on Employer-Employee Relations in the Public Service. That committee tabled 72 recommendations to improve the bargaining situation and morale in the public service. No action has been taken on any of those 72 recommendations and I suggest we are finding ourselves in difficulty today because no action has been taken. Although we have the excuse of the elections having taken place and changing governments, we cannot get away from the fact that five years later we still have these problems recurring on almost a monthly basis.
1 am not going to pronounce on whether classification should be bargainable or not. In fact, that was not one of the recommendations although it was suggested that it be discussed by the parties. In both cases-in the translator's strike and the problem with the second group of the Public Service Alliance of Canada-part of the difficulty stems from separating the normal requests of a bargaining group from this issue of classification which, according to existing legislation, is not bargainable.
Mr. Speaker, the issue still remains. The strike of the translators was settled but I repeat my request to the President of the Treasury Board (Mr. Johnston) and to whichever hon. gentleman is speaking for him tonight: when are we to get some answer from the President of Treasury Board on actions he proposes, either in the way of acceptance or refusal, with regard to the 72 recommendations to improve working conditions and morale in the public service which were tabled in this House in February almost five years ago?


David Michael Collenette: Mr. Speaker, the government commends the hon. member for Vaudreuil (Mr. Herbert) for his initiative this evening in raising this question.
As was announced by the Treasury Board on November 10, 1980, a settlement has been reached with the Canadian Union of Professional and Technical Employees representing the translation group, subject to ratification by the union members. This agreement was reached with the assistance of Mr. Maurice Cantin, Acting Chairman of the Public Service Staff Relations Board, following earlier mediation attempts by Mr. Ken Strike.
The agreement incorporated recommendations made by Mr. Strike and, as has been announced, included an understanding concerning actions taken during the strike by the Department of the Secretary of State to dock the pay of employees who were at work but who did not perform their work in accord-
November 17, 1980

ance with departmental directives or standards. This agreement provides that in certain instances the over-all number of person days for which the department had determined that payment should not be made would be limited to 1,000 and recognizes the principle that pay should be directly related to satisfactory performance of the work. This understanding does not apply to disciplinary actions taken by the department for unlawful actions committed during the strike. In such cases, employees can, of course, resort to the normal grievance procedure. Further consultation on a number of these matters is taking place between the department and the union.
The Treasury Board is nearing the conclusion of a review of employer-employee relations in the public service. The hon. member is very familiar with the various important events which have taken place in the review of employer-employee relations in the public service over the past several years. This review, of course, commenced with Mr. Jacob Finkelman's report which was received in March, 1974. As the hon. member is fully aware, the Special Joint Committee on Employer-Employee Relations in the Public Service of Canada reported to Parliament in 1976. Earlier, in 1975, as a result of preliminary recommendations of that committee, amendments to the Public Service Staff Relations Act were enacted, principally providing for a full-time Public Service Staff Relations Board. I should note that while Mr. Finkelman recommended a series of changes in the Public Staff Relations Act, he found that the basic structure of the legislation was sound. In its report, the Special Joint Committee recommended the establishment of a special task force to review the Public Service Employment Act and the role of the Public Service Commission in personnel management and employer-employee relations in the public service.
Together with that recommendation, as the hon. member will recall, the committee recommended that the review include an examination of the role assigned to the Public Service Commission and its relationship with Treasury Board and the Public Service Staff Relations Board. In response to this recommendation, the government in 1977 established the Special Committee on the Review of Personnel Management and the Merit Principle, which produced what is known as the D'Avignon report. The report of his committee was received in September, 1979.
It should also be noted that during this same period, the Royal Commission on Financial Management and Accountability had been established. Its report was published in March, 1979. As the President of the Treasury Board noted in his reply to questions posed by the hon. member before the Standing Committee on Miscellaneous Estimates on November 3, 1980, Mr. W. A. B. Anderson has the responsibility, under his direction, for co-ordinating the government's response to both the Lambert report and the D'Avignon report.
As the President of the Treasury Board noted at that time, it is his intention to bring forward a complete response to the
Adjournment Debate
recommendations of these two reports. As mentioned earlier, the Treasury Board is in the process of completing a review of employer-employee relations in the public service, including the recommendations of the Finkelman report, the report of the special joint committee and certain pertinent recommendations of the D'Avignon report and the Lambert report. It is anticipated that this review will be completed in the not-too-distant future and that it will be followed by the introduction of any necessary amendments to the appropriate legislation.
In conclusion, I note that the President of the Treasury Board, in replying to the hon. member's last question before the Standing Committee on Miscellaneous Estimates, indicated that he "has made some very constructive suggestions in the past" and hoped he would continue to do so in the future.


VETERANS AFFAIRS-REQUEST FOR INCREASE IN WAR VETERANS ALLOWANCE AND DISABILITY PENSIONS
A. Daniel McKenzie: Mr. Speaker, on November 4, 1980, as reported at page 4400 and 4401 of Hansard, I asked the acting Minister of Veterans Affairs (Mr. Lamontagne) the following questions:
The minister must be aware of the fact that recipients of war veterans allowance have been particularly hard hit by the cruel and devastating budget brought down by the Minister of Finance, in contrast to measures proposed by this party which would have protected these veterans. Will the minister recommend to cabinet that the war veterans allowance and disability pensions be increased, in view of the fact that any benefit from the veterans affairs will passed in July has now been wiped out?
My supplementary question was:
I should like to ask the acting minister if the government will incorporate in the Pension Act on a permanent basis a formula to keep the basic rate of disability pension adjusted to increases in the pay scales of the five selected categories of public service workers in order to offset the harmful effects of this harsh budget?
As Conservative spokesman for veterans affairs, I feel it is my duty to get some straight answers out of the government as to how it intends to cushion the devastating effect of this budget on veterans with low and fixed incomes. The Crosbie budget had built in an energy tax credit which would have resulted in a rebate of $200 a year for a family of four, or $80 per individual taxpayer. I have been receiving letters from pensioners and widows. Typical of these letters is the one 1 received from London, Ontario, dated November 10. It reads:
I read in our paper that the government is going to give $21 million to improve veterans health care. That's nice, but what are they going to do for us poor veterans widows? They gave us a $10 raise recently. It should have been $100 more per month so we could at least be equal to a senior citizen. We are all living far below the government poverty line, so we should at least be brought up to that level. Don't you agree?
I certainly agree. I would also like to point out that OAP recipients who receive the guaranteed income supplement and live at home have now fallen 22 per cent below the poverty line.
Unless there is a substantial increase in the basic rate of disability pensions and a parallel increase in WVA rates, veterans will be falling very far below the poverty line. We were most pleased to see the minister's announcement of the program for aging veterans last week. We have long supported
4788	COMMONS DEBATES	November 17, 1980
Adjournment Debate
the idea of veterans being able to maintain themselves in their own homes where possible, and we welcome this step. However, this offers assistance to only a very small percentage of veterans. We must work to help the neglected categories. Very few veterans can afford to run a car these days. In some cases, however, a small car provides transportation to and from medical appointments plus limited city driving. With gas up as much as 40 cents a gallon, some of these veterans will have to take their cars off the road. To add insult to injury, some Liberal members are stating in their "Householders" that by the end of this year, gasoline will have gone up 13.3 cents per gallon though we know the figure should be 40 cents a gallon. That is a cruel hoax on every Canadian citizen.
It is estimated that the basic rate of disability pension will fall $500 behind the basic rate for the five selected categories of public servants by 1981. This is just not good enough. The government must act now to tie the basic rate to the five categories. Our veterans should not have to go cap in hand year after year asking for an increase. They should have the same security as the civil servants and the ability to plan ahead for their needs.
In presenting a motion in this House on November 4, my hon. friend from Bow River (Mr. Taylor) stated the following:
Whereas more than 10,000 widows of deceased veterans and some 9,000 of their children were promised pension benefits over the next six years under Bill C-40, whereas many of these widows are left below the poverty line and may not survive until 1986 or 1987 and since the care of veterans and their widows and children is a national obligation and not just another piece of social legislation, I move-
That this House request the government to find the money this year to pay these widows and children their proper pension benefits.
I hope the parliamentary secretary will have some good news for us.


Mr. John Campbell (Parliamentary Secretary to Minister of Veterans Affairs):: Mr. Speaker, in responding to the hon. member's question, I would state that I have just returned from a visit to France and Belgium where I visited the graves of our fallen comrades. 1 would like to point out that our benefits in Canada are superior to those in other countries.
I thank the hon. member for Winnipeg-Assiniboine (Mr. McKenzie) for an opportunity to provide the House with information concerning the positive action taken by this government to help Canada's veterans and their families.
In July 1980 a bill which made very significant improvements to veterans legislation received royal assent. Contrary to the implication contained in the hon. member's, question, all war veterans allowance recipients will continue to have their allowances increased quarterly in keeping with any increases in the consumer price index. In addition, the allowances of those under 65 years of age were increased by $10 per month
for single recipients and $12 per month for married recipients effective July 1, 1980.
Furthermore, similar increases will be automatically awarded annually until by April 1, 1986, the allowance levels for recipients over and under 65 years of age will be identical. Bill C-40 also provided that all future increases in either OAS or GIS rates will automatically be incorporated in the same amounts in WVA and CWA.
Over the next six and a half years some $150 million will go to veterans because of these measures and because of this government's promise to help those persons who need it most.


Stanley Howard Knowles: If they live.


John Campbell: On January 1, 1981 the basic rate of disability pensions is being increased by 9.7 per cent in accordance with the rise in the consumer price index. This means that the amount payable to an unmarried disability pensioner whose disability is assessed at 100 per cent will be increased to $811 a month or $9,737 a year. Married 100 per cent pensioners with two dependents will receive $1,196 a month or $14,629 per year. All other pensions and allowances will be increased in the same proportion.
The Government of Canada remains committed to helping veterans and their families. We are always looking for ways to improve veterans' legislation to meet changing needs of veterans. To answer my hon. friend's interjection at the moment widows are presently receiving pensions at the 47 per cent to 38 per cent rate, and next April 1 widows of pensioners who were receiving pensions of between 48 per cent and 33 per cent will be eligible for these benefits. Those disabled veterans I was able to see during my visit to those countries are certainly entitled to it. Members of the Legion, two presidents of councils, have agreed that the proposals put forward by the late minister, the Hon. Daniel J. MacDonald, are to their benefit.


Stanley Howard Knowles: Six and a half years is a long time for 75-year-old widows to wait.


The Acting Speaker (Mr. Blaker):: Order please. The motion to adjourn the House is now deemed to have been adopted. Accordingly, this House stands adjourned.
May I remind hon. members that the House will sit tomorrow morning between the hours of 11 a.m. and 1 p.m. for the further consideration of Bill C-6?
It being 10.30 p.m. this House stands adjourned until eleven o'clock tomorrow morning pursuant to special order made on Wednesday, November 5, 1980.
At 10.21 p.m. the House adjourned, without question put, pursuant to Standing Order.

Tuesday, November 18, 1980